Reference no: EM133202016

Question: Stacey Smith owns a lot in the hills of Pennsylvania and wants to build a house according to a particular set of plans and specifications. She solicits bids from bidding contractors and receives 2 bids: one from Carlton for $260,000 and one from Feldberg for $258,000. One night, while having a drink with friends during happy hour Stacy is telling her friends about her desire to build this home and her uncertainty of the costs associated with the project. Siegel, although laughing with others at the table, had heard Stacey's story and leaned across the table and said, "you are being taken for a ride because you are a lady.If you let me, I will build your house for half of that price, no more than $125,000!"Delighted, Stacy jumps on the offer and says I accept. I will have money for you tomorrow to get started. The next day Siegel shows up at the property and Stacey pays him a $100,000 down payment to cover most of the construction costs One month after beginning construction of the house, Siegel contacts Smith and tells her that because of inflation and a recent price hike for materials, he will not complete the construction unless Smith agrees to pay an extra $150,000. Smith reluctantly agrees to pay the additional sum. 4 months later Smith has an unfortunate accident resulting in her death. Stacy's only son, Tom wants the construction completed.

This discussion is a continuation of the story from the first Contracts Formation discussion - with additional facts!

Tom, Stacey's sole survivor and her very mature and intelligent 17 year old son, who graduated from high school early and is a Senior in College, where he has completed his business law class. He wants to continue live in the new home under construction, but wants to turn the property into a horse breeding ranch and build a 16 unit stable. He contacts Siegel who learns that Tom is about to graduate from college. As Siegel prepares the contract for Tom, he asks, "You are old enough to do this right?" Tom agrees he is a senior in college and signs an additional contract for the completion of a 16 unit stable for $65,000, due upon completion. A year later the Stable Project is completed, and Siegel asks for his final payment of $65,000. Tom never replies, and finally Siegel files suit for recovery of his $65,000.

Do not discuss contract questions of Agreement - offer and acceptance, or Consideration. Limit this discussion to legal theories covered in Chapters 14 & 15.

Using F-IRAC consider the Contract Formation questions for this contract between Tom & Siegel. Is it valid, is it enforceable.
Hani Ibrabhim:

RULE:In accordance to contract law, minors (persons under 18 years) may enter into contracts allowed by law but the contracts are voidable at the minor's option. A minor may get into contracts which involve acquisition of necessities. Once a minor contracts for necessities, they are binded by the contract and it ceases to be voidable. Disaffirmance of a contract, which is the avoidance of a contractual obligation, can be done anytime while still a minor or within reasonable time after achieving legal age. In cases where the commodity contracted is not a necessity, the minor is allowed to disaffirm the contract. Following the disaffirmance of the contract, the minor is obliged to restore the adult to pre-contract position. According to the objective theory of contracts also, a contract is legally binding if in the opinion of a reasonable person who is not a party to the contract, an offer has been made and accepted. By the standards of a reasonable person therefore, if the parties to the contract fit the requirements of the objective theory of contracts, the contract is therefore enforceable.

Rima Frank:ANALYSIS:

The current case requires a determination as to whether there was a valid contact for the construction of 16 unit stable and is the contract is enforceable to Tom to pay $65,000 for the work Siegel did.Generally, in the case of unilateral mistake the mistaken party still can not relief from the contract and normally the contract can be enforceable. In the fraud the innocent party can enforce contract and seek damages from harm. The contract can be voidable but in the same time can be enforceable. In this case we see the fraud from Tom when he lied about his age. He could not enter the contract when he is a 17-years old minor. By the law he can entered it when he is 18+. He should know it, however he studied business law in the College. But when Siegel asked him about the age, Tom lied and deceive that he is too young for the contract. The contract could be voidable and not valid. But Siegel without knowing the true facts did his job and his duties by contact and he finished construction, so now contract is enforceable and now Tom has his own duties to Siegel. This contact is voidable but still enforceable as Siegel did construction and now he has rights to seek for recovery of his $65,000. In current case we see fraud because the lying about the age is misrepresentation of facts, we see intent to deceive that Tom said that he is old enough to enter the contract, innocent party Siegel relies to misrepresentation that Tom is older than 18 sighed contract and did the construction, finally harm occurred due to misrepresentation that Siegel did his work and did not receive money for it.The contract fraud we can also see in the "Sarvis v. Vermont State College" case, when the hired teacher lied about his criminal history and when the College found out about his lie they fired him. They fired him not because of his criminal history, but because of the fraud and lying of facts. The similarity of this case and the current case is that the lying is the fraud of misrepresentation which should lead to seek for harm which in this case if dismissal, but in the current case is money recovery.