business legal analysis

Agreements and Contracts in Corporate Law

Agreements and contracts are central to corporate law since most business deals require binding commitments with the parties engaged in the deal. Multiple business cases necessitate a different reading of business law in order to resolve pertinent problems that typically occur as a result of the parties’ competing interests.

Johnny’s Point of View

To begin, in order for any contract to be created or operate, certain main conditions must be present. There must be agreement conditions under which the parties signing the contract express an explicit intent to abide by the agreement, and the agreement must be definite and precise enough to be upheld by a court of law. The contract between parties must have some form of enforcement to enable the court to compel the parties to honor their respective obligations. The second element of a contract are parties which are persons that are offering or accepting the handover of rights. The third element of a contract is assent whereby parties clearly indicate their agreement or indicate their acceptance of the same bargain. This is done through a meeting of minds where one party puts an offer on the table, and the other party accepts the offer. Assent by the parties is a reflection that the parties were entering the contract believe and understand that the terms of the contract are enforceable and all the parties will act as per the agreed upon terms. An offer is a demonstration of party’s willingness to be bound by the agreement.

Johnny’s Mental Incapacity

Johnny is mentally incapacitated as demonstrated in this case because he is still recuperating from the mental breakdown that he suffered whenhe was 16 years of age. The time when Johnny makes a decision to sell his piano to Chuck, he is suffering from some mental illness even though he had been treated before and was now recuperating from the mental breakdown. The law clearly stipulates that if a party or a person is not able to fully interpret and understand the terms or the consequences of his actions of entering the contract due to mental illness, then the person is said to lack the capacity of entering into the contract (Ashcroft, John & Jane 69). If such a person enters a contract, it is considered to be null and void because of the mental condition.

Johnny’s Incapacity and Lack of Specific Terms

The case of Johnny is exactly that which the party is mentally incapacitated to enter into a contract. Johnny is not proven to be mentally stable enough to understand the consequences of entering into the contract to sell his piano. He could argue that he only made a decision to sell his piano after being compelled by Chuck with an enticing offer. This means that Johnny never thought of the consequences of entering the contract due to the mental illness he was suffering from.

Secondly, Johnny and Chuck entered the contract to exchange ownership of the piano without specified terms of the agreement. Lack of the specific terms of reference for the contract makes the business contract between Johnny and Chuck, not legally binding. Johnny as a party in the transaction was not told what he was to do specifically after the sale of the piano and likewise, the contract did not spell out what Chuck was supposed to do who was the buyer in the transaction.

Chuck’s Arguments

Chuck has many arguments on which he can stand to defend his position as a buyer of the piano. First, Johnny’s mental health status had gained stability during the time of the transaction when Johnny sold the piano to Chuck. Johnny is receiving treatment and is gradually recovering from his mental illness condition. Due to medication and therapy that Johnny was receiving at the time of the transaction, it shows that Johnny was mentally stable and therefore could clearly understand the transaction of sale of the piano to Chuck. From the case, it is clear that Johnny was not incapacitated to understand the terms of the transaction because the first time Chuck offered him $250, Johnny became hesitant and refused the offer because it was lower than the price he had bought that piano for. Eventually, when Chuck offers Johnny $500 for the old piano, Johnny accepts the offer and transfers ownership of the piano to Chuck.

All these events clearly indicate that as much as Johnny was undergoing therapy to help him fully recover from his mental illness. In this case, Johnny cannot be considered as a mentally incapacitated person who does not understand the business contract. Therefore, the business transaction involving Johnny and Chuck is binding since Johnny made the decision to sell his piano when he was mentally stable and conscious.

Chuck could also argue that during the transaction, there was “meeting of the mind” and assent whereby Johnny and Chuck negotiated on what the piano was worth. Chuck gave Johnny the first offer which he rejected but then proposed a counteroffer of $500 which Johnny accepted. This is a crucial element of a business contract because it is an indication that the final offer for the business contract is acceptable to all the parties bound by the contract. Johnny accepted the counter-offer presented to him by Chuck, receiving $500 for his piano and he willingly accepted the transfer of ownership of the piano to Chuck. For this reason, acceptance of the offer by Chuck totally seals the contract making it binding to Johnny.

This case is further complicated by the fact that Johnny does not give any satisfactory reason why he wishes to revoke the business transaction and have his piano back. The business contract can only be revoked if one of the parties fails to meet its obligations in the process of enforcing the contract. In this case, Chuck has not done anything contrary to the contract that can cause Johnny to demand back his piano because everything was discussed and acceptable by both parties.

Chuck, in this case, could also argue that he was not aware of the mental state of Johnny that he was on medication and was recuperating from some mental breakdown. Johnny’s condition was hidden, and he never showed any signs whatsoever that he was mentally impaired or ill. According to the business law, consent of the mentally ill party determines whether the contract is null and void (Miller 23). In a case where mental illness is concealed and the party acts normally, entering and agreement or contract binds all the parties. The case of Johnny and Chuck is a perfect example where no party displayed any form of mental incapacity.

Works cited

Miller, Roger LeRoy. Business Law Today, Standard: Text & Summarized Cases. Nelson Education, 2015.

Ashcroft, John D, and Janet E. Ashcroft. Law for Business. Mason, Ohio: South-Western, 2013. Print.