Potential Causes of Action for Breach of Contract and Specific Performance

CARDWARE, INC.

An Auction is defined as the public sale of a property to the highest bidder and its purpose is to obtain the best financial return for the property and to allow fair and free competition among bidders. Auctions usually result in competition between bidders and the acceptance of the winning bid is denoted traditionally by the fall of the gavel or other audible or visible means signifying the bidder that they are entitled to the property on the payment of the bid. Once a bid has been accepted, the seller has no right to accept a higher bid nor can the buyer withdrawal the bid. Any agreement which may restrict the opportunity to bid freely is against public policy and is void. According to auction law, a binding contract is created by the auction (Stimmel-law, n.d.). The vendee is entitled to have the property delivered to the bidder once the terms of sale have been fulfilled. The refusal of delivery will be considered a breach of contract. Once a bid has been accepted a conventional executory contract of sale exists.

Contract law states the first step for a valid contract is that an offer must be formally made by one party to another. An offer is an expression of willingness to contract on specified terms which are made with the intention that it is binding once accepted by the person it is addressed to. The element of intent needs to be determined in order to ascertain whether a contract has been formed. Intent is decided by the objective theory of contracts or the party’s intention to enter into a contract by outward, objective facts as understood by a reasonable person. Objective facts include what was said when entering into the contract, how the party acted or appeared and the circumstances surrounding the transaction (Basic Principles of English Contract Laws, n.d.).

As stated by the law of contract, following the offer the contract must be accepted by the offered party. Pearl had been looking forward to the auction for this specific dress for months. Pearl and Jade making competitive bids for the dress were the offers to the seller. The tow battled bidding and it appeared that Pearl got the dress for $8,500. The seller must accept the offer which may be in a written or spoken form. When Pearl made the final bid of $8,500 and Cassie smiled and nodded that was a visual sign the bid was accepted. Although there may have been a reserve on the auction, the dress was not withdrawn before the winning bid was visually accepted.

The last basic principle of the law of contract is consideration. Consideration is when the value of something was exchanged between the agreeing parties. Any promises made must be supported by legally adequate and bargained-for-consideration or something of value received or promised to make a deal. Primary basis for the enforcement of a promise is consideration under common law. When the consideration ends with liability to the promisee or a benefit to the promiser it is considered to have legally sufficient value. The law must also recognize both parties to have the contractual capacity to qualify them as competent parties to enter into the contract. (Miller, R.L. 1947, p. 133 & p. 163). The dress was “something of legally sufficient value” and all parties entered a promise under auction law.

Under circumstances, specific performance may be requested when dealing with personal property (stimmel-law, n.d.). There were several bids offered before the Pearl’s final bid was accepted with a smile and a nod. A contract of sales was established when the dress was put up for sale and the offer was accepted. Pearl being the highest bidder may enforce the acceptance of the bid if the sale was without reserve and there was no right to withdraw the property set in place. Cassie’s refusal to take the money in exchange for the dress after the offer was accepted is a breach of contract. Monetary damages would be proven an inadequate form of compensation for the claim due to the dress being unique and would not be able to be purchased anywhere else. The dress was used in a film and had also been show cased in the Silkadonia Actors Guild Museum. Specific performance would be able to be enforced by way of presenting the dress to Pearl for the accepted bid. According to contract laws and auction laws, conditions of the contract were not met.

Along with the criteria for specific performance being met the defendants would not have a defense for their failure to meet the conditions of the contract. According to FindLaw, none of the defense elements can be met. There was no statue of fraud committed due to the agreement being partially performed and denying the enforcement would be fraud. The defendant, Pearl did not do anything unethical during formation of the contract. She also looked in making a claim within a reasonable time. The specific performance would not create any undue hardship or burden to the defendants. If there was a reserve placed on the item, neither the auction house nor Candie pulled the item before the highest bid was accepted. There was no misrepresentation or unintentional error on part of the defendant.

To summarize the equitable remedy of specific performance may be ordered in this case. All the criteria for specific performance were met. The defendant’s actions were in breach of the contract as well as unethical according to auction laws. The unique qualities of the dress make monetary damages inadequate. It would be difficult for the defendants to defend their actions. Pearl does have grounds for a breach of contract case.

References:

Basic Principles of English Contract Laws (n.d.). Retrieved from

http://www.a4id.org/wp-content/uploads/2016/10/A4ID-english-contract-law-at-a-glance.pdf

Exception to Statute of Frauds Validates Oral Contract for Sale of Property (n.d.). Retrieved from

http://gmsattorneys.com/exception-to-statute-of-frauds-validates-oral-contract-for-sale-of-property/

Make Sure You Know the Basic Principles of Law of Contracts (n.d.). Retrieved from

https://contract-law.laws.com/law-of-contract

Miller, Leroy Roger (1947). Fundamental of Business Law [E-book] Retrieved from https://purdueuniversityglobal.vitalsource.com/#/books/9781305482920/cfi/6/16!/4/16/14/8/2@0:100

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