Contracts Essay

In: Other Topics

Submitted By kimolu
Words 905
Pages 4
ISSUE:
Bernie lives in Richmond, VA. On February 1, he advertises his car for sale for $13,500 in the newspaper. On March 1, Vivian offers to purchase the vehicle for $12,000.
Vivian shows up at Bernie's house on March 10 to complete the negotiation and transaction. She tells Bernie that she's willing to pay $12,500 for the car but she needs another three weeks to raise the money. Bernie agrees to wait, but only of Vivian will put down a deposit of $1,000.
Vivian agrees and Bernie drafts a one page agreement that reads as follows:
Bernie agrees to sell his 2006 Ford Fusion to Vivian for $12,500 and Vivian agrees to purchase the same for such price. The transaction shall take place no later than March 31.

In the event that the seller breaches this agreement, the seller must refund the purchaser's deposit, but the parties shall be limited to this remedy and only this remedy.

In the event that the buyer breaches this agreement, the seller may keep the buyer's deposit, but the seller shall be limited to this remedy and only this remedy.

Vivian reads and signs the agreement and gives Bernie a check for $1,000.

On March 24, Vivian, after realizing that she will not be able to pay the $12,500 for the car, calls Bernie to tell him that she's pulling out of the deal. Bernie says, "Fine, but I'm keeping the deposit in accordance with our agreement."

Vivian is suing for her $1,000 deposit back, claiming that there was no mutuality of consideration for the agreement and that the contract was therefore void.
Vivian v. Bernie (Mutuality of Consideration)

RULE:
The general rule of law is that where the consideration for the promise of one party is the promise of the other party, there must be absolute mutuality of engagement, so that each party has the right to hold the other to a positive agreement. Both parties must be bound or neither is bound.…...

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