Paper Example on Buyer-Seller Contract Dispute: Who Will Prevail?

1. What are Buyer's potential claims against the seller? What are the seller's potential defenses? Who is likely to prevail should this case go to court?

The outlined case scenario in the question presents a series of mutual contract agreements between the various parties. These are the Buyer, the Seller, the Investor, and the 'someone.' There are four important parts of the case study to consider deeply.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

To begin with, the Seller makes an offer for the sale of the courier van. The said offer is open for consideration by any person that sees the advert sign bearing the words "FOR SALE," his contacts in the form of a telephone number and the price of "$25,000 cash", that he embeds on the van on offer. On seeing this, and having an idea of beginning a courier service, the Buyer makes efforts to reach the Seller via the given contact details to arrange for the purchase of the van. Secondly, the buyer reaches the Seller, and they make another crucial contract relevant to this case. Being that the Buyer does not have the full amount at hand and that he has to borrow the money from a different source, that would be delivered in a week, the Seller agrees to this request by telling him to mail a cheque of $5000 on the same date. The seller mus also give the remainder of $20000 on a date before or on 1st of November on the same year. The buyer mailed a cheque of the said $50000 later that night to the Seller as per the agreement.

Thirdly, the Investor presents the Buyer with a loan of $20000 to completely pay for the van and actualize his plans to set up the document courier service. The Investor does this after hearing the Buyers plans for the business that is projected to rake in $50000 in profits per year, and seeing the Buyer's continuous commitment towards the planned venture by spending additional $1200 on business cards, flyers and a mobile phone, on top of the $5000 down payment for the van. Finally, the Seller prefers the higher amount of $35000 from 'someone,' because it is more than the $25000 offered by the Buyer, therefore, had not cashed the $5000 cheque at the time the Buyer called to complete the remaining $20000. Instead, the Seller offered to give the van to the Buyer only if he would pay the $20000 plus an additional $400 monthly, for the next 25 months.

After closely examining the incidences in the case study, and basing our arguments especially on the Buyer and the Seller, the two are likely to have claims against each other. On the part of the Buyer, he is justified to blame the Seller for agreeing to sell the van to the 'someone' because he had fulfilled all the contents of their purchase agreement on his side. The agreement included an initial mailing of $5000 and payment of the remaining $20000 by the 1st of November, something he wanted to do when he requested for the meeting with the Seller on 28th of October. This can be construed as a breach of the contract by the seller since he now refuses to give the van as per the initial agreement, and instead, brings up additional agreements. A question arises here that, 'Was the Seller justified to agree to sell the van to the 'someone,' considering that there was already a running contract between him and the Buyer?

Moreover, the Buyer can blame the Seller for requiring him to pay $35000 in total for the van. This is way more than the agreed amount and the amount on the advert sign of $25000. Although this move by the Seller might be driven by the fact that he had received an offer of $35000 from 'someone,' a question arises that 'Was the Seller legally justified to raise the price of the van at the last minute against the advertised amount and the contract price?

On his defense, the Seller is likely to state that his action of agreeing to sell the van to the 'someone' was only motivated by the view that he could have underpriced the van in his advertisement and that he had not deposited the $5000 from the Buyer. This means that nothing barred him from entering into other purchase agreements about the same van. Well, from his point of view, he could have just returned the $5000 mail to the Buyer and proceeded to sell the van at $35000 to the 'someone' at a better price, because he is the one who considered the terms of payments that they were currently working with. Secondly, a question arises that 'Which seller does not want more money for his goods and, therefore, make a good profit margin?'. The answer is definitely none and the seller, on receiving the offer of $35000 from the 'someone', is also persuaded to believe that he could make more money from the van, on top of the $25000 he had placed as the price of the same van on the advert and as per their initial agreement with the Buyer.

If the case is brought to court, the Buyer is likely to prevail. Concerning Carlill v Carbolic Smoke Ball Company [1893] 2 QB 256, the advertisement by the Seller can be treated as an offer to sell the van, and that approach by any person on the same could be backed legally (Hough & Kuhnel-Fitchen, 2017). Also, drawing from Entores v Miles Far East Corp [1955] 2 QB 325, the receipt of the $5000 email by the Seller can be used to mean his acceptance of the installment payment by the Buyer in the agreed two batches, but before the 1st of November. The act of mailing the cheque of $5000 by the Buyer as agreed can be used to assert his intentions to commit to the initial agreement terms according to the Henthorn v Fraser [1892] 2 Ch 27. Further, the failure by the Seller to inform the Buyer of his acceptance to sell the van to the 'someone,' despite the running contract makes him conflict the law. Drawing from Hyde v Wrency [1840] 3 Beav 334, even in case of the revocation of an offer, the same should be communicated to the offered, failure to which the revocation remains ineffective. This case study has the nature of an ordinary financial transaction, and any agreement should be adhered to with keen attention on the legal aspects according to Edwards v Skyways Ltd [1964] 1 WLR 349. The above justifications are adequate to prove that the Seller intended to breach the contract between him and the Buyer since his various actions appear to contravene the general principles of basic legalities on contracts. On the other hand, the Buyer's fulfillment of his part of the bargain gives an assurance of his adherence to the basic legal principles of their contract, and therefore, he is likely to prevail before a court of law.

2. Assume Buyer prevails in his lawsuit against the seller. What remedy(s) is buyer likely to receive from the court?

It is clear that the Buyer was committed to fulfilling the contracts as per the agreement between him and the Seller. He committed to send the $5000 in time and also went ahead to take the loan of $20000 from the investor to pay the full amount in time. Further, he believed that his plan to begin the document courier service was going to be successful, from the fact that he had reached an agreement to acquire the van and, therefore, proceeded to print posters and flyers and buy a phone at an extra cost of $1200. Having done all these, the final denial by the Seller to give out the van on the, unless he added some monthly payments of $400 for the next 25 months to make the payment a total of $35000 as promised by the other buyer, is simply unfair and unacceptable. Therefore, he qualifies for damages or remedies after prevailing during the case.

According to Stickney v Keeble [1915] AC 386, when the damage is deemed inadequate, similar to the case study. This because the Seller was only in the process of breaching the contract and hence causing the damages to the Buyer ultimately, the court is bound to either take an order for specific performance or apply for injunctions on the parties that were plotting an unjust act against the other (Lindgren, 2016). Specific to this case, the court may issue an interlocutory or permanent injunction to the Seller, ordering him not to do anything that that may further lead to the breach of the initial contract and reverse the effects of the existing breach while awaiting the full hearing. Later in the judgment, the Seller can be ordered to give the Buyer the said van as they had agreed initially on the payment of the remaining $20000. At this point, the interests of both the parties will have been catered for. While the Seller will have obtained the $25000 he has expected for the van and as per the initial contract, the Buyer would also be able to begin his document courier service and, therefore, pay back the loan he had obtained from the investor in time.

Question 2

Explain the meaning and implications of the following terms and concepts. In your answers, also identify and describe any legal framework(s) that affect or incorporate them.

a) Chattel Mortgage

Under the chattel mortgage arrangement, the purchaser can borrow money that he or she uses to buy movable personal goods from the lender. The lender secures the loan with a mortgage over the bought movable property, and the buyer gains the legal ownership of the property at the time of the purchase, but the mortgage is removed after the loan has been fully repaid. According to the Bills of Sale Act (1978) and the Bills of Sale Act (1978) Amendment Act (1882), the recognition of a chattel mortgage as a form of security interest or collateral for lenders in certain financing situations is accepted, but the acceptance must be according to the acts for it to constitute valid security. For corporate entities and other companies, this type of security usually lies under the Companies Act (2006).

b) Perfection

This pertains to all the additional steps that are required to be taken as far as the security interests are concerned in a bid to make them effective against the third parties. According to the ruling of the common law in Dearle v Hall [1828] 3 Russ 1, the regulations may govern both the perfection against the third parties and also prioritize the competing security interests. Several types of perfection include notice, registration or filing and possession.

c) Fixture

A fixture is defined as something that is attached to some property like land in such a way that it becomes recognized as part of it. Drawing reference from Australian Provincial Assurance Co Ltd v Coroneo [1938] 38 SR(NSW) 701, a fixture is different from a chattel in that while the former is a property fixed on land for a particular purpose but permanently, the former can be presently fixed on land but can be moved around at some point in time.

d) Torrens

Torrens refers a system of registration and transfer in which the state creates and maintains the registers of the land holdings, which serves as the full evidence of the title of the person recorded as the owner and of all the legal interests contained in the register. In the Transfer of Land Act 1958 (Vic), which states that upon the registration, the registered person as the holder of the property enjoys all the legal rights that appertain the property. The indefeasibility can only be defeated in the circumstances of fraud committed by the registered interest holder as seen in the case of Petrovic v Glantchnig [1972] NZLR 594, judicial action or inconsistent legislation.

e) Leasehold

This refers to the arrangement where one makes a legal agreement with the freeholder to own a property for a given duration of time, after which the ownership returns to the freeholder. According to the Leasehold Reform Act (1967) and the Leasehold Reform Act (2002), the tenants of the houses are given the right to the freehold, and enfranchisement or extension. The Act also provides that the lands reserved for public use should remain so (Korthals, 2017).

References

Hough, T., & Kuhnel-Fitchen, K. (2017). Optimize Contract Law. Routledge.

Korthals Altes, W. (2017). L...