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.

Contract Creation

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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.

Offer

Met Not Met

Acceptance

Met Not Met

Consideration

Met Not Met

A Lawful Object

Met Not Met

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Do the parties have a contract at this point?

Yes No

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Why or why not?

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Does U.C.C Article 2 (Sales), Section 201 apply in this situation?

Yes No

Why or why not?

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Consider the following two choices. What choice would you make if you were Bob?

Ask Mike to sign a written contract. Move forward, because each side mutually understands the terms.

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Are you satisfied with how the contract is written?

Yes No

In consideration of the mutual promises and other valuable consideration exchanged by the Parties as set forth herein, Buyer agrees to buy, and Seller agrees to sell the property hereinafter described; and the Parties, intending to be legally bound, hereby further agree as follows:

A. Description of Procured Vehicle

1. Make: Toyota

2. Model: Corolla / S Series (1.8L 4-cyl 4AT)

3. Body Type Sedan

4. Body Color: Classic Silver Metallic

5. Year: 2012

6. Miles: 8,561

7. Vehicle Identification Number ("VIN"): JT4RN38S5D0578903

B. Consideration

1. Purchase Price: The purchase price to be remitted by Buyer to Seller for the Procured Vehicle is $25,000.00 U.S. Dollars

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If no, please Rewrite the contract terms.

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.

Did Bob's suggestion constitute a counteroffer? Or was it simply an offer to modify an existing contract?

Yes No

Why or why not?

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]

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Can Bob enforce the original terms?

Yes No

Why or why not?

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