Question

Juan entered in an oral contract to buy Luke's vacant building for $50,000. He gave Luke a $5,000 deposit. They intended to reduce their agreement to a written contract letter. Pursuant to their oral agreement, Juan took possessions of the building and spent $30,000 making improvements so that it would be capable of being rented to the public. Due to the rise in the value of similar properties. Luke served Juan with a notice to vacate the building. Luke contends the oral contract is unenforceable and that Juan must vacate the building.

a. What is Luke's best argument that the contract is unenforceable?

b. What arguments could Juan make to argue that the contract is enforceable?

c. With whom do you agree? Why?

Answer 1

In most cases when it comes to the process of enforcing an oral contract it might not be simple but with the status of fraud then it enforceability becomes very simple. In the case of Luke and Juan, the contract is very enforceable. First is the deposit which Juan give to Luke. In this case, the 3500 dollars which were given out will act as the legal sign of commitment. The deposit was made after an agreement was reached between the two parties.

Under the provisions of the status of fraud, an agreement is reached in circumstances where a deposit is paid, and it will act as the component showing the agreement. In the case, one partner wants to make the deal unreal it will be regarded as the status of fraud by the party. In this case, even Juan had gone to the extent of making improvements to the building which means that he had spent some money. The improvement would only be made of there was something which guided the operation. In this case, the guiding is the oral contract in the process. It is these two components that make Juan and Luke have a contract that is enforceable.