Law, Ethics, and Corporate Governance
May 29, 2011
1. Betty drove three hours in one-hundred degree heat. Explain if this fact has any bearing on whether or not the dealer must perform in accordance with the published advertisement.
Betty’s drive time and the corresponding temperature do not obligate the dealer to perform in accordance to the advertisement. By law, an advertisement is not a contract or an offer. It is defined as an invitation to treat, which is "an expression of willingness to negotiate” (Burrows, 2007). A person or entity making an invitation to treat does not intend to be bound contractually with anyone accepting the invitation (Burrows, 2007).
The fact that invitations to treat are never meant to establish any contractual obligations between buyer and seller, (Burrows, 2007) suggests that the dealership’s advertisement did not constitute a contract. Subsequently, it was not legally bound to perform any specific obligations to Betty.
2. When Tony said over the phone “three thousand dollars firm,” explain whether he was making an offer that, if accepted, would bind the dealership in contract.
Tony’s offer (Miller, et al, 2004) was communicated during a phone conversation and not in writing. The offer would be subject to the test of a verbal contract to determine its legality. The dealership would only be bound to the offer if it passes the test.
In order to be considered valid, a verbal contract must contain three elements: an offer, acceptance of the offer, and some type of consideration from both parties. (“Verbal Contract Information,” 2011). In our case study, (Miller, et al, 2004) consideration was established when Betty agreed to exchange a vehicle in her ownership for three thousand dollars towards the purchase of a vehicle in stock from the dealership. An argument could be made that Tony communicated an offer (three thousand dollars for a trade in vehicle) and Betty willingly accepted the... [continues]
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