Module 2A discussion solution - posted PDF

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Module 2A discussion solution Legal issue: Was the agreement to sell four season's tickets each year to Fobasco Ltd a binding contract? Applicable law: To have a binding contract, the following three essential elements must be present: 1. An agreement has been formed with a valid offer and valid acceptance; 2. There is an exchange of consideration between the parties; and 3. There is an intention to create legal relations (i.e. an intention for form a binding contract). Intention to create legal relations is presumed if the agreement was formed in a commercial context. No intention is presumed if the agreement was formed in a social or family context. After determining the presumption, look at the actual facts of the case to see if the presumption is rebutted or confirmed. Those actual facts are looked at from the point of view of a reasonable person. Apply the law to the facts: Apply the three essential elements of a contract to this case: 1. Agreement: The facts state that Eddie Cogan agreed to sell four of his season’s tickets to Fobasco Ltd., a company owned by his friend and business associate, David Fingold. This agreement continued for 10 years with Fobasco purchasing tickets from Cogan annually. Therefore, it is clear that there was an agreement between Cogan and Fobasco Ltd. 2. Consideration: Cogan agreed to sell four season’s tickets to Fobasco Ltd. The facts do not state the price, if any, that Fobasco Ltd promised to pay. The word “sell” strongly implies that some price was paid. It is probably safe to assume that Fobasco agreed to a price (probably face value) for the tickets. Therefore, there is an exchange of consideration in this case. 3. Intention: In determining the presumption, you could argue either a social or commercial context. It was social in that Cogan and Fingold (Fobasco’s owner) were friends. It was commercial in that Cogan and Fingold were business associates and the agreement was with Fingold’s corporation, not Fingold personally. And the tickets were used for business purposes to drum up business with prospective customers. Therefore, depending on the context that you choose and support, you could say either there was intention presumed or there was no intention presumed. Whatever your presumption is, the next step is to look at the actual facts to see if anything rebuts or confirms that presumption. There are a couple of key facts that indicate that the parties did not intend to form a binding contract. First, at no time during the 10 preceding years did Cogan and Fingold put their agreement in writing. Having an agreement in writing and signed by the parties is usually clear proof of an intent to form a binding contract. Second, the fact that the Cogan and Fingold did not put an end date to their agreement to sell season’s ticket every year. Having an agreement that seems to continue forever indicates that there was no reasonable intention to form a binding contract. Since the requirement for intention was not met, there is no binding contract between Cogan and Fobasco Ltd....