Importance of a Contract

Posted: August 26th, 2021

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Importance of a Contract

Should Ready Mix Company be Able to Collect the Balance Of $3,676.80?

Contracts are a fundamental part of conducting businesses, and they bid each other. For a legally binding contract, it should have the essential elements, which include an offer, consideration, legal intent, competent parties, and acceptance of the offer. Offer refers to the reason for the contract and states what the parties agree to by signing the contract. Consideration of the contract refers to the payment of one party to another to complete the contract. This is usually expressed as a monetary value. Also, the contract should be legal, not entered under duress. Equally, parties involved should be competentenough, demonstrated by mature mental capacity. Hence, the fundamental elements are the basis that illustrates the legality of a binding contract.

Consequently, Ready Mix Company cannot claim the balance of $3,676.80 based on the following grounds of elements of a contract. Initially, ACME Construction is the one that was awarded the contract by the City of Metropolis to perform the project that required 4,000 PSI compressive strength as part of the contract upon which ACME agreed. ACME contracted Ready Mix Company to supply concrete requirements for the project, and there is no written agreement. The contract is not legally binding since there isno proof for the agreement. Thus, it is an implied contract due to the large amount involved. Ready Mix Company honored the contract and supplied concrete as per City’s Engineer mix specifications. However, the contract did not meet 4,000 PSI as required by the City of Metropolis on thirteen occasions. Hence, Ready Mix Company cannot claim the penalty amount charged $3,676.80 on ACME Construction. There was neither a written agreement between the two firms nor did the contracted company meet the contract specifications of 4,000 PSI. Besides, there was no direct contract between the Ready Mix Company and the City of Metropolis to make the contract legally binding.

Scope of Ready Mix Company Contract

The contract that was entered between Ready Mix Company and ACME Construction is not legally binding. There was no written agreement to indicate the terms of the contract where both parties would have signed. Besides, ACME Construction subcontracted the Ready Mix Company to supply concrete in the project after the City of Metropolis awarded ACME Construction a contract. Ready Mix Company did not meet the primary requirement of 4,000 PSI compressive strength as a basic stipulated on the contract between ACME Constructions and City of Metropolis. Even after consecutive thirteen tastings, the project did not meet the standards. Additionally, there is no legal contract between Ready Mix Company and the City of Metropolis as the company was subcontracted by a third party to deliver the required materials. Thus, the contract lacks the essential elements of a valid contract and is not enforceable in the court of law.

What Could Have Been Done to Avoid this Dispute?

Ready Mix Company would have exercised due diligence in making a contract with a valid one to avoid such a dispute. It would have achieved this by drafting the terms and conditions of the contract and signing the contracts by both parties to ensure legal bindingbetween the parties. Besides, the contract agreement would have stipulated the terms of work and the requirement of contract specifications of 4,000 PSI in undertaking the project. Observing the elements on the contract would have validated the contract, therefore, making it a basis to claim the balance of $3,676.80.