Business Law - Derrick’s - Carmelo - Assessment Answer

Business Law Assignment

Case Scenario

Derrick runs a sports tourism agency in Perth. His business provides clients with unique opportunities to attend high profile American sporting events, and meet professional athletes in a private setting. His business also organises the flight, hotel and restaurant reservations for these tours, so that clients can better enjoy the overall experience.

In March 2016, Derrick’s cousin Carmelo, phones Derrick and asks him to book Carmelo a place on the NBA (National Basketball Association) finals tour to take place in June 2016. For the cost of $30,000, participants of this tour are secured tickets to every finals game, and get to attend pre-game functions with past greats of the game such as Michael Jordan and Magic Johnson. Derrick needs to check the availability of places left on that tour, so he says to Carmelo that he will email him back once he has figured out what he can offer him. Later on that day Derrick emails Carmelo the following:

“Hey Cuz. Good to hear from you today. I have one available spot left on the NBA finals tour running in June 2016. The package includes premium travel and accommodation in each city, so the best I can do pricewise is $25,000. I can’t wait around with this for long, so if you are in, you need to let me know by close of business tomorrow. An email or text will be fine. Cheers Derrick.”

The next morning Carmelo reads the email and is happy with everything that Derrick has stated except the price. A qualified accountant who tries to help out his family whenever he can, Carmelo has done Derrick’s personal and business tax returns for the past 10 years for a nominal fee, which has saved Derrick a lot of money over the years. Two hours before the close of business, Carmelo sends Derrick an email that reads:

“Thanks for letting me know that Derrick. I am in on the tour, but I am only willing to pay $20,000, as times are a bit tough with the accounting business. The rest you can cover for all of that work that I have done for you over the years.”

Upon receiving Carmelo’s email, Derrick immediately responds by writing, “Fair enough and all good. You have my bank details so deposit the $20,000 by the end of the month. You are going to enjoy this trip Cuz!”

In late May 2016, a week before the tour is to start, Derrick goes over the tour documentation, and realises that because he had dealt informally with Carmelo concerning his participation on the tour, he had not booked flights and accommodation for him. Because of the popularity of this impending finals series, only the cheapest flights and accommodation are able to be secured for Carmelo at this late stage. When Derrick notifies Carmelo of this, Carmelo is upset, and insists that Derrick take the cheap flights and accommodation, and give to him Derrick’s premium travel and accommodation for the tour. Derrick refuses to do this, citing the need to stay with the rest of the touring party at all times. After hearing this, Carmelo notifies Derrick that he will be seeking legal advice on the matter.

Assignment Task

Using the four-step process, discuss the elements of intention and consideration required for the formation of a contract. In particular, consider whether these elements have been met in order for there to be an enforceable contract between Carmelo and Derrick.

Assume that the elements of intention and consideration required for the formation of a contract exist. Using the four-step process, discuss whether the element of agreement required for the formation of an enforceable contract can be established. Can Carmelo require Derrick to provide him with the premium travel and accommodation for the tour?

The elements of intention and consideration required for the formation of a contract:

1 . In order to establish any legal contract the three main elements that must be present are agreement, intention and consideration. There are some important elements present of intention in any contract that should be considered while forming any contract. First of all the minds of the contracting parties have to be obvious in order to enter into the contract. When two or more parties decide to enter into the contract, the parties should be able to understand the contents of the contract. The main reason behind it is the intention of parties in the contract should agree each other. If there is no intention by both parties in the contract then it can be considered as void agreement. Secondly, if there is no intention present of both parties for creating the legal relation then the contract cannot be considered as a legal contract. In such cases, the parties present in the contract cannot take legal steps against each other. Without any intention to create legal relations there will not be any binding effect. The contract or agreement is less powerful if no intention is present between the parties.

On the other hand, consideration is also an important element of formation of any contract. There are various definitions present of consideration. Consideration can be something which has values or worth as services or products. Apart from this, as per the case of Currie V Misa, consideration can also be defined as the consideration can involve interest, right, benefit or profit of a party in the contract which might result from the responsibilities, detriment, and forbearance of the promisee. Consideration is referred as one of the primary requirements for formation of a contract.

Consideration of elements that have been met in order to be an enforceable contract between Carmelo and Derrick:

Whether the elements of the contracts have been met or not in the contract between Carmelo and Derrick, it will be analyzed through the four step process.

Step-1:

The first step is identification of principles or issue of the law. For any valid contract the intention should be legally bound by both the parties in the contract. In case of Derrick and Carmelo, both the parties have intention in the contract. The law identified in this case is Contract Law.

Step-2:

The second step of the four step process states that the legal rules and regulations regarding the particular law which has been identified in the first step should be analyzed with respect to their application. There are mainly three elements present as per the contract law in order to formation of a contract and they are intention, agreement and consideration. When the agreements are established between the friends or family members the court considers that the parties present in the agreement are not legally bound. Any person who wants to create an agreement with family members or friends, he needs to provide some additional circumstances through which the intention can be bound legally. For example, in case of Tweddle V Atkinson in 1861, the first party John Tweddle stated that he will pay some money to the son of William Guy and on a similar note, William Guy also promised to pay some money to John Tweddle after the marriage of their son and daughter. But, William could not give the amount of money promised by him. It was concluded in the court that the consideration was done by the William, not his son. His father made the promise. So, the son cannot be considered guilty.

Step-3:

Application of the law to the facts of the case of Derrick VS Carmelo:

As the agreements can be established only after all elements are fulfilled, an objective assessment can be undertaken for the agreements made between Derrick VS Carmelo. The parties in the case are family members. So, in this case, the agreement has not been made in any business context. As the parties in the context are family members and the agreement is established in social context, the main focus of the courts will be on the presumptions the parties in the case the agreement cannot be considered legally bound and in order to enforce the agreement, Carmelo needs to provide some additional facts. There are some facts present in the case based on which Carmelo can argue that the parties intended for the agreement.

The first one is the exchange of emails of both parties which shows that Derrick as well as Carmelo both intended for the agreement. Carmelo called Derrick and asked for the space in NBA finals tour. As reply to the request Derrick called Carmelo and stated that one spot is available for the price of $25,000 and the reply to the mail should be sent in two days due to the demand for the space. As reply, Carmelo sent his reply via email within the specific time that he is interested in participating in the tour but he also quoted the price of $20,000 for the tour. In the last reply, Derrick sent a mail stating that $20000 is fine and he also requested Carmelo to deposit the money into his bank account.

As all the parties involved in the agreement intended for it, the court can regard the agreement as intended to be binding.

Step-4:

Conclusion:

In conclusion, it can be stated that the agreement is legally enforceable as the parties in the agreement, Derrick and Carmelo intended to be bound legally when the agreement was made. In this case, Carmelo can take legal steps due to the breach of the agreement.

2 .A contract is quite more than just an agreement between two or more parties. Apart from the elements of an agreement i.e. intention and consideration, there are some other elements also present for a successful contract. There should be offer and acceptance, a price paid, intention for the agreement, legal capacity to enter into a contract of the own free will of the parties, proper understanding of the consent etc.

The offer and acceptance are two most important elements of a successful contract. In order to form a contract, one of the parties should provide the offer and the other party should accept the offer. There are some differences exist between the willingness to deal and the negotiation. For example, if one party X offers to sell some paintings to another party Y, before the agreement is formed, Y decided not to purchase the paintings. In this stage, even everything has been discussed by them but no legally binding contracts is present between X and Y, the contract is not fulfilled. An offer can be made to a group of people, to a particular person or the offer can be made in an open way to the entire world. There are some terms present in the offer which should be specified by the party who is providing the offer and the offer should be accepted by considering the terms. The first party can withdraw the offer before the offer is accepted. In order to withdraw the offer, the first party should communicate with the interested parties regarding the withdrawal of the offer. The acceptance occurs when the second party accepts the offer posted by the first party after considering all the terms and conditions of the offer.

Intention to create legal relations is another important element of the contract as per the four step process. The intention in any contract has to be judged objectively. The court can ask whether a reasonable person can regard the agreement in the circumstances regarding the agreement to be binding. The main reason behind it is the intention of parties in the contract should agree each other. If there is no intention by both parties in the contract then it can be considered as void agreement. Secondly, if there is no intention present of both parties for creating the legal relation then the contract cannot be considered as a legal contract. In such cases, the parties present in the contract cannot take legal steps against each other. If there is no intention present to create legal relations between the parties then the contract can be just of mere promise.

The next element of a successful contract is consideration. Consideration is basically the price which is paid to the other party for the promise. The price has to be something which is worth value. It does not necessarily be money.

The fourth element for a contract is that the people entering into a valid contract should be completely free to enter into a contract. There are some groups of people present, who are not eligible for entering into a legal contract such as people having mental impairment, bankrupts, minor people, prisoners etc. In order to enter into a contract, there should be some free wills present by the parties in the contract and the consent should be given through proper care because the consent might be affected by the mistakes of the parties, false statements, undue influence etc.

In the case between Carmelo and Derrick, Carmelo can take legal actions against Derrick for providing him the premium travel and accommodation for the tour instead of the cheapest ticket and accommodation. Carmelo called Derrick and asked for the space in NBA finals tour. As reply to the request Derrick called Carmelo and stated that one spot is available for the price of $25,000 and the reply to the mail should be sent in two days due to the demand for the space. As reply, Carmelo sent his reply via email within the specific time that he is interested in participating in the tour but he also quoted the price of $20,000 for the tour. In the last reply, Derrick sent a mail stating that $20000 is fine and he also requested Carmelo to deposit the money into his bank account. The main issue in the case is that a week before the tour starts, Derrick started the documentation work and he found that as he dealt with Carmelo regarding the trip, he did not book any flight and accommodation for him for the tour. The mistake has been occurred from the end of Derrick because he failed to make the formal agreements between him and Carmelo but the exchange of mails can work as the evidence for Carmelo. He can produce the copy of emails at the court for the proceedings. In this case, Derrick is bound to provide the premium travel and accommodation to Carmelo even for an increased cost or he might need for pay damages to Carmelo for his negligence in dealing with the matter formally. In conclusion, Carmelo can take legal steps due to the breach of the agreement by considering the copy of emails as the proof of the matter.