Question

In: Operations Management

Provide an "example" of an enforceable contract and explain "why" it is enforceable (not from the...

Provide an "example" of an enforceable contract and explain "why" it is enforceable (not from the textbook make a fictional case).

Solutions

Expert Solution

Before stating an example it is necessary to understand some basic prerequisites for a contract to be enforceable:

  1. Due consideration: Exchange of some sort of value and approval by both the parties
  2. Legal capacity: No alcoholic/other influence and contractee should be of legal age
  3. Legal aspect: An illegal contract is not a contract (Eg: A contract to steal a bank)
  4. Consent should be genuine: Agreement should be under no stress or undue influence
  5. No error in judgement: Both parties should be have a similar understanding about the terms of the contract

Example:

A customer buys a specific model of a new black Audi A8 from the showroom. He has asked the showroom to deliver the car at his home to which both the parties have agreed. The customer signs the acceptance form needed to deliver the car. In the evening the showroom sends an executive to deliver the car and collect the payment. The customer has had a change in mind meanwhile and refuses to accept the car and asks that he needs to check a few other cars before deciding. He suggests that it shouldn;t be an issue as he as not used it and they will easily find a new buyer.

In this case the Audi showroom owner can enforce the contract on the customer as all the parameters of a contract were in place. Yes, ideally in terms of goodwill the Audi showroom owner could possibly let go but in legal terms he is well within his rights to enforce the contract.


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