Law531 law/531 contract creation and management simulation (answers

Business Standards Transcript

Speaker: Narrator, Robert “Bob” Johnson, Michael Smith

Narrator: Bob is a local used-car dealer and he’s feeling pretty good at the moment. He’s about to close a great deal with another used-car dealer, Mike. Mike has agreed to pay Bob more than he expected for a like-new car on his lot. The car’s on consignment from its owner, Al. Bob and Mike had talked about the deal over the phone and e-mail. During Mike’s visit to Bob’s dealership they settled on a final figure of $25,000.00. Once Bob received the payment, he would then write a check to Al for $22,000.00 and keep $3,000 as a consignment fee. All he had to do was say yes.

Mike: Sounds great. I can’t believe you’re letting this go for so little. I mean for $25,000 (pause) I feel like I’m stealing. 

Bob: Yeah, right? 

Mike: Take care.

Narrator: The next day when Mike got into his office, the phone rang.

Bob: Hey Mike, this is Bob. Hey, I know you were going to write me a check for $25,000, but could you write two checks instead? (Pause) One for Al for $22,000 and one for me for $3,000. 

Narrator: Mike thought about it for a moment and came back with an unexpected response. 

Mike: I’m going to have to reject your counteroffer, Bob. (Pause) No, we HAD a deal but you just rejected my original offer. (Pause). Look, there’s nothing on the table from my side anymore. (Pause) I tell you what? I’ll give you $20,000. 

[End of Audio]

To enforce a contract, the following four requirements must be met. Determine if each requirement has or has not been met, and then explain your answer. Do the parties have a contract at this point? Does U.C.C Article 2 (Sales), Section 201 apply in this situation?Consider the following two choices. What choice would you make if you were Bob? Rewrite the contract terms. Did Bob’s suggestion constitute a counteroffer? Or was it simply an offer to modify an existing contract? Can Bob enforce the original terms?