Business Law and Sale Contract

Contractual transactions

Contractual transactions are distinguished by various factors that must be present in order for a business transaction to be legal and enforceable. The paper investigates the case of the wine manufacturer and dealer to see whether a deal was established between the two of them. The decision is based on the requirements for forming a binding contract, taking into account whether the application of the late approval amounts to the formation of an agreement.

Outline

The first section is an outline that describes the contract of sale of goods and the situation at hand. Secondly, the main body determines if the argument of the defendant was correct and if it could be more effective under the civil law of Germany. Finally, there is the conclusion which summarizes the entire paper in a paragraph.

Table of Contents

Executive Summary

Introduction

Defendant’s Argument

German Civil Law

Conclusion

References

Introduction

A contract of sale of goods is an agreement through which one party concedes to transfer the ownership of the property to another individual. In the contract, the seller is the person who initially owns the goods, while the buyer acquires the property in question from the former. The case under study assumes the nature of a contract of sales of goods. As it is the situation with all types of contract, there are the elements of offer and acceptance. The paper looks into the nature of these variables as it pertains this case on the sides of both the complainant and the defendant.

Defendant’s Argument

A contract of sales of goods has a bilateral nature where the property in the goods passes from the seller to the buyer. In this sense, an individual cannot purchase nor sell items to oneself as it is an ambiguous situation (Abadi and Kalkoshki 2017, p.100). Referring to the current case, the wine distributor was the buyer, while the manufacturer was the seller. However, there lacked the execution of the entire sales contract due to timing technicalities. According to the seller, the acceptance had to be received by 7th September, but the buyer was not in a position to satisfy that condition. It is the seller’s fault that the buyer could not file the acceptance in time because of the initial misdirection of the offer. If the former could have directed the offer correctly, probably the distributor’s acceptance could have been received in time as demanded by the wine producer.

An agreement to sell goods has terms and conditions that must be met before the contract is executed to completion. There is an intention to sell the property in question at a particular period in the future, more so when the outlined conditions are satisfied. It is different to a contract of sale where there is the actual transfer of property in the goods from the ownership of the seller to that of the buyer (Abadi and Kalkoshki 2017, p.100). All the terms and conditions as advanced by the seller should be thoroughly comprehended by parties privy to the contract and complied with in the course of executing the contract in totality.

In line with this argument, it is clear that between the wine producer and the distributor existed an agreement to sell goods, but not a sale contract. The producer had agreed to sell the wine to the producer, on the condition that the acceptance is received within a specified period, failure to which the contract could not be executed. On the other hand, the distributor accepted the offer within the specified period, but could not deliver it to the seller in time. There were the elements of both offer and acceptance as it is required for the contract to be enforceable in law. However, despite the presence of these elements of a contract, there was a communication hitch that caused the delay in the delivery of the acceptance in real time. It is for this reason that the seller was not aware of the acceptance and proceeded to trade the wine with another distributor.

In a sale contract, it is essential that the offer is communicated to the other party privy to the contract for following acceptance or rejection. The offeror is free to channel the communication of the offer in any means disposable to him or her (Abadi and Kalkoshki 2017, p.103). The wine producer being the offeror in this instance had an obligation to transmit his offer to the potential buyer in different ways possible. In the communication process, there was the element of misdirection, which could be taken to be an innocent error. The result was that the offer was received late and hence the acceptance was filed way after the provided period. Due to the wrong direction of the offer, it is possible that the seller can argue that it was intended for the plaintiff in question. For this reason; it could have been necessary to make a fresh offer to the potential buyer. As a result of this miscommunication on the part of the seller, the offer was compromised because it affected the entire contractual process. For this reason; the offer is voidable at the will of the offeror.

After the communication of the offer, it is upon the offeree to communicate back with either the acceptance or the rejection. If the offeree is interested in the offer, the acceptance is expected to be definite and unconditional, and if one is not interested, it is in a party’s discretion to reject the proposal. In the case of an acceptance, the offeree is required to submit it to the offeror within the prescribed or a reasonable time (Bayern 2015, p.67). When the time limit is fixed, the approval has to be given within the specified time. If time is not fixed, the acceptance has to be given within a reasonable period depending on the circumstances and facts of different cases.

The acceptance has to be given prior to the lapse of the offer. A valid and enforceable contract is created only by the approval is communicated before the offer is withdrawn or elapses. An acceptance which is given at such a time when there is a withdrawal of an offer or when it is rendered invalid does not result in the creation of a legal relationship between the parties (Bayern 2015, p.67). The potential buyer received the offer late but could be reasonably in time to communicate the acceptance. It was in the distributor’s capacity to choose a prompt medium of communication that could reach the manufacturer in time. For example, the use of an official e-mail could have avoided the situation of late communication. Since the acceptance can be communicated through a channel of the offeree’s choice, it was his own undoing not to transmit it in time. In this sense, the wine producer and distributor had not engaged in a contractual capacity.

All contracts are deemed valid and enforceable when there is the presence of all consensual elements (Bayern 2015, p.67). Between the wine producer and distributor, there lacks the evidence of an agreed consideration of executing the contract. It is unclear the amount for which the distributor was to purchase the wine from the manufacturer. Consideration is a critical contractual element that cannot be overlooked in assessing the legitimacy and validity of a contract. For this reason; it is sensible to conclude that there lacks concrete evidence showing that there was the creation of a contractual relationship between the producer and the distributor.

German Civil Law

The defense argument of the seller cannot be more effective pursuant to the civil law of Germany. It is the case because, under the law, parties should agree on one or various conditions before the execution of the contract. The conditions cannot exclusively comply with one party’s will and discretion in the transactions. If under the contract, those obligations become erroneous, the parties can either adjust or terminate the pact (Smits 2017, p.53). In a contractual setting, parties are bound to agree on different conditions and time limits for particular provisions. In this case, the seller did not consider time limits input from the potential buyer, and hence his defense cannot be valid under the German civil law.

Under the civil law in Germany, in case there is an objective interpretation which is inconsistent with the comprehension of both parties privy to the contract, their subjective view is decisive. The indulgence of the parties has to be shown with any form of evidence including the behavior of parties (Smits 2017, p.54). Also, if the contract has one invalid provision or an unpremeditated niche, the gap has to be replaced with a requirement that is as close as possible to the point that the parties could have reached considering their economic position in the contract. The German civil law provides for extensive consultation between the parties privy to the agreement (Smits 2017, p.54). In this sense, the law provides that both the seller and the buyer should largely engage in consultative activities and hence it was unlawful to fix a personal time limit. The seller should have solicited for the input of the potential buyer before proceeding with the cancellation of the contract.

Conclusion

A sale contract entails the transfer of ownership of property of goods from the seller to the buyer. An agreement to sell entails an intention to transfer the ownership of products from the seller to the buyer in the future after the satisfaction of specific terms and conditions. There lacks the evidence that there was the creation of a valid and enforceable contract between the wine producer and the distributor. It is the case because the offer was compromised and the acceptance was given well after the provided time limit. Due to these factors, the contract is voidable at the discretion of the offeror. Further, the contract lacks the element of a consensual executory consideration, and hence it cannot be enforced in this respect. Pursuant to the German Civil Law, the argument of the defendant cannot be deemed to be effective. He should have been more consultative both in setting the time limit and terminating the contract and awarding it to another distributor. In conclusion, the defense argument of the defendant that they did not create a contract is correct, but under the German Civil Law, this thought pattern could not be deemed valid.

References

Abadi, M.A. and Kalkoshki, A.A., 2017. Delivery of Goods on International Sales. J. Pol. & L., 10, p.100-103.

Bayern, S., 2015. Offer and Acceptance in Modern Contract Law: A Needles Concept. Cal. L. Rev., 103, p.67.

Smits, J.M. ed., 2017. Contract law: a comparative introduction. Edward Elgar Publishing., p.53-55