In today’s fast-paced business world, companies must rely on one another to do business. In this case, Microapple signed a binding contract with BigBuy distributor committing to sell its product “The Applejack” exclusively. The contract had stated that BigBuy distributor was to be the one and only seller of Applejack to the public” and she stated that Microapple would “sell BigBuy all of 1,000,000 units of AppleJacks to BigBuy for $200 per unit if BigBuy did not sell any other gaming console from November 22, 2015 to December 25, 2015.” BigBuy’s president then accepted Microapple’s offer and thus officially made it into a binding contract. After learning about the poor performance by the Applejack, BigBuy then broke its contract with Microapple when they decided to sell Sonysam product, the Andalxy; alongside the Applejack to make up for lost profit.
There are many important elements of a contract, these elements include, Agreement, Consideration, Capacity, Legality and The Proper Form. All of these are vital requirements which go into a valid and enforceable contract. In this paragraph, I will explain each element and its purpose. An agreement is the first and one of the most crucial elements. Agreement between two parties is an expression of terms set by forth by both parties. The agreement makes sure both parties have made a consent to an agreement with each other. The two sub-elements within the agreement category include; offer and acceptance. Offer is the “Promise or commitment to perform or refrain from performing actin in the future”. The offer in this situation would come from when Microapple’s salesperson Jewel emailed big box distributor BigBuy with the offer to sell the AppleJack exclusively. The elements of an offer come from Serious,” 1) objective intention of an offeror to make offer 2) Terms of offer are reasonably certain 3) Offer must be communicated to the offeree.” Then the second sub-element comes from an agreement, which is the act of accepting the offer. Accepting of an offer comes from 1) Voluntary, which means not forced acceptance. 2)The act of; therefore (words or conduct (silence in a minority of instances)) that expresses assent or agreement 3Must be accepted by the actual offeree 4) Mirror image.” Acceptance must be communicated by either Bilateral or Unilateral. Consideration states that each party to a contract must provide something of value that persuades the other to enter the agreement. The value exchanged does not need to be a form of currency. Instead, it may consist of a promise to perform an “act that one is not legally required to do or a promise to refrain from an act that one is legally entitled to do” (US Legal). Capacity states that a person who enters a contract of any form possesses any legal capacity which they can be held liable for. This basically entitles a party to be liable for any contract they agree to with the given circumstances that they are not a minor, mentally incapacitated, or intoxicated. Even when a party does not understand the consequences of a binding agreement, they could still be held liable under the contractual duties until a court has adjudicated the issue by evidence of the party’s mental abilities. Legality states that both parties must be required to perform their obligations under legal terms. An agreement between private parties creating mutual obligations enforceable by law. All Obligations set forth by both parties must be legal in terms of the law. If one party fails to do so, neither party will be required to perform their binding duties. When both parties agree to a binding contract, one party will not be given the right to cancel the contract. This is an important element because it validates whether the contract can valid under the law. If it cannot be validated, then there is an issue with the contract and must be fixed in order to prove validity. If the contract violates any law, it is deemed illegal and will not and cannot be valid. An illegal contract is one that was made for an illegal purpose and subsequently violates the law. These 4 elements are required to ensure that one has a valid contract. The element needed to make a contract enforceable is the proper form. This element is one of the most important, even though a not very contract is required to be written to be binding and valid on accounts of both parties. There is a set of legislation set by each state which requires certain types of contracts which must be written to be enforceable. According to the statute of frauds laws for most states, the types of contracts which must be written to be enforced include ” 1) Contracts for the transfer or sale of land 2) Contracts for the sale of goods over $500 3) Contracts that cannot be fully completed within one year of signing (according to the contracts terms) 4) Contracts related to marriage 5) Contracts involving a promise to pay another person’s debt 6) Contracts that will continue beyond the lifetime of a party performing the contract,” (Johnson) Also there is the need for a persons who are of legal age and deemed mentally competent are allowed to create a contract.
In this case of Microapple vs BigBuy, I do not believe that there is enough evidence to prove that each element listed above was abided by. BigBuy had made an agreement with Microapple in which stated that BigBuy distributor was to be the one and only seller of Applejack to the public. Both parties agreed to the contract after Microapple had reduced the price per unit to $150 from $200. Since there was a counteroffer, the counteroffer automatically rejects the previous offer and requires there to be an acceptance under the terms of the counteroffer or there is no valid contract. Microapple accepted the counteroffer, thus satisfying the requirements of Agreement and its sub-elements of offer and acceptance. So, the first element was in fact followed by both parties. The second element included consideration, which requires both parties to provide something of value. Microapple was providing its new product while BigBuy was providing its distribution power to sell the Applejack exclusively to its customers. So as far as the second element goes, it was followed. The third element entitles capacity. While it is hard to tell if BigBuy’s president was a minor, mentally incapacitated, or intoxicated. The third element was in fact followed because it was through an email service. The Fourth element of a contract included the Legality of the contract. Which states that both parties must follow their legal obligations which were made in the contract. BigBuy then violated this element of the contract when it sold Sonysam’s product, the Andalxy. BigBuy was not legally allowed to sell any other product during the time period of November 22, 2015, to December 25, 2015, other than the Applejack. The fifth element included the proper form. The reading does not state any form of legal contract to be signed. This is where the first offence comes into play. While the agreement was made over email, no official contract was drawn up by either party, and nothing was signed; thus, causing this case to be not enforceable.
Since all the four initial elements of the contract were followed by both parties, the contract was in fact valid. BigBuy did agree to sell the “Applejack” exclusively in its stores and did provide something of value to Microapple. Both parties had a valid consensual agreement to the contract and BigBuy and Microapple did not violate any legal terms set forth by the law. So, in terms of validity, this contract was valid.
The fifth element of a contract makes the contract enforceable under law, in this case of Microapple vs BigBuy, there was no written contract formed by either party. This agreement needed to have a valid written contract because it was a “Contracts for the sale of goods over $500” (Johnson) The cost of good in question was $200,000,000 thus, requiring a written agreement to make it enforceable. Furthermore, making this contract non-enforceable. While there was an email conversation and agreement made by Microapple’s salesperson Jewel and BigBuy’s president, where they had discussed price and quantity. Because there was nothing signed and nothing written by either party, this contract can be deemed not enforceable. All in all, without key components which make a contract enforceable, this contract between Microapple and BigBuy not enforceable.