Question

It is 2002 and George Bluth is negotiating with Iraqi government officials for The Bluth Company (TBC) to build a residential subdivision in the suburbs of Baghdad. Due to the Iraq war, it is currently against the law for American companies to do business with the Iraqi government. Regardless, George calls and leaves an offer via voicemail to purchase 200 acres of land from Saddam Hussein, Iraq’s president, for $2 million. After a night of hard partying, Saddam returns home to his palace to find the voicemail from George. Saddam is still drunk when he calls George back and leaves the following voicemail reply: “I accept your offer, but can only sell you 199 acres for $2 million.”

Please answer the following question:

Did TBC and Saddam Hussein form a valid contract? (Hint: Evaluate each of the elements of a valid contract and determine whether it was satisfied)

Answer 1

In order to determine the validity of contract ,it is evaluated in terms of the elements of a valid contract which are as follows:

1.Offer and Acceptance:

• Offer by TBC :Purchase 200 acres of land from Saddam Hussein, Iraq’s president, for $2 million.
• Acceptance by Saddam: The reply by Saddam suggests the acceptance : “I accept your offer, but can only sell you 199 acres for $2 million.”

2. Mutual consent of the parties : The parties involved should agree on the same thing at same terms for the contract to have mutual consent. In this case ,there is no mutual consent among the parties (Saddam and TBC) since the offer by TBC is for 200 acres land while the acceptance suggested is only for 199 acres of land.

3. Lawful subject matter: The contract is against the law which forbids the American companies to do business with Iraqi government.

4.Competency and capacity of the parties: In order to be competent a party needs to be of sound mind and should be permitted by law to enter into the contract. In this case, Saddam is in drunk state and therefore doesn't have a sound mind. Also, the American law disqualifies Iraqi governement to do business with the American companies.

5.Consideration: The contract should have a 'quid pro quo' i.e. something in return which in this case is the price of value $2 million to be paid by the party TBC for the 200 acres it wants to buy from Saddam.

The elements of a valid contract between TBC and Saddam Hussein are violated and therfore the contract is invalid.