Project Three- Contract Law

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Apr 3, 2024

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Project Three: Contract Law Name: Courtney Johnson Student ID: 2745555 Program(s) of Study (Major): Accounting w/conc in Forensic Accounting/Fraud Exam Anticipated Graduation Date: June 2028 After reading the case, all elements involved in a contract are present in the contract between Lou and The Friendly Dawg. The first element of a contract is the agreement. The agreement is defined as consisting of an “offer that is made by one party, who is considered the offeror, and is accepted by another party, which is the offeror” (Kubasek, 2023). The agreement was originally between the landlord Lou and the original owner of The Friendly Dawg. After the original owner of The Friendly Dawg passed away, his son Dave inherited and took over the agreement. The next element in a contact is consideration. Consideration refers to the negotiated exchange or what each party will receive in return for their promise within the contract (Kubasek, 2023). The exchange in this situation can be seen as Lou offering the space for lease and Dave offering to pay $500 a month in rent. The third element is called contractual capacity. Contractual capacity “is the legal ability to enter into a binding agreement” (Kubasek, 2023). Dave and Lou are both over the age of majority, do not appear to be intoxicated, and they do not suffer from mental illness. Therefore, both parties have the legal ability to enter into the contract. The fourth and final element of a contract is legal object. Legal object means “that to be enforceable, the contract cannot be either illegal or against public policy” (Kubasek, 2023). According to the scenario, nothing is said about the contract being illegal or against public policy, so it is believed

that this element is present. Since all four elements are present in the scenario, the contract is valid. Since I do not know what is in the actual contract between Lou and The Friendly Dawg, I am unsure of any rights, claims, defenses, obligations, and remedies. However, there might be an obligation of Lou to make sure the building systems function correctly. If the air conditioner is malfunctioning and needs repair, the landlord is responsible to address the issue, unless the tenant caused damages that necessitate the repairs, as per city ordinances. But Lou and The Friendly Dawg could have signed a longer-term lease, which is a little more complicated. For example, if they set a 10-year lease, they would have decided which party was responsible for which repairs to the unit. And in longer term leases, unless the repair is a major one, the tenant is typically responsible for the repairs to the unit (Kubasek, 2023). Dave may have a right to withhold the rent. Depending on who is responsible to fix the air conditioning unit, withholding rent is “usually justified by the landlord’s breach of the implied warranty of habitability” (Kubasek, 2023). Dave would be allowed to only withhold the amount of the repairs and it would need to be placed in an escrow account and it would stay there until Lou makes the necessary repairs (Kubasek, 2023). There does not seem to be a contract breach regarding the addition of live animals in the store. Lou also advised the employee “Very exciting! Good luck” when they told him what renovations they were doing. This points to Lou being aware of what is going on and nothing in the contract that states no live animals. The lease that originated between Dave’s dad and Lou only describes the business as a pet store, with no mention of selling live animals. So, depending on the whole complexity of the lease agreement and city ordinances, Dave may also be in breach of contract for not paying rent.

To analyze the contract between Sunshine Yoga and Lou we need to look at the four elements of a contract, which are agreement, consideration, contractual capacity, and legal object. I believe there is a question of validity in regards to the contract between Lou and Sunshine Yoga. Since there was an agreement at the bar between the owner of Sunshine Yoga, Jasmine, and Lou, the agreement would be considered present. The consideration is present as well; Lous is offering the space and Jasmine is offering $300 a month in rent. In the third element, contractual capacity, we see a question about the validity of the contract. Since contractual capacity is the legal ability to enter into the contract, we need to look at Lou and Jasmine to see if they could make the contract. Because this agreement was made in a bar and it is possible that both parties were intoxicated, it is unclear if they have the legal ability to enter into the contract. The final element, legal object can be considered as present because the agreement is not against public policy or illegal. Because there is a question regarding the third element of a contract, the contract is invalid. One claim is that Jasmine never pays rent on time, and she constantly bothers Lou with minor issues. Even if someone views the contract between Sunshine Yoga and Lou as an informal contract, Jasmine still has an obligation to pay rent on time. Since rent is not being paid on time, Jasmine could be considered in breach of contract. However, since Lou is the landlord, he has an obligation to uphold the covenant of quiet enjoyment for Jasmine, and according to Jasmine's complaints about noises that the parrots and dogs over at The Friendly Dawg are making, this has not happened. The covenant of quiet enjoyment is defined as “a promise that a tenant has the right to quietly enjoy the land (Kubasek, 2023). Jasmine is entitled to a securely maintained property and that right was neglected when the snake escaped through the air vents and into Sunshine Yoga, causing Jasmine to experience a heart attack. I think one remedy that could help

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the issues between Lou and Jasmine would be for them to enter into a formal, written agreement. Evictions within the US are goverened by the state and by certain municipalities (The Investopedia Team, 2023) Since evictions vary by state and it is not clear what state this scenario is in, I will use Oregon as my basis. After assessing the scenario, Lou has grounds to evict both Sunshine Yoga and The Friendly Dawg. In the state of Oregon, Lou has the right to evict Dave and The Friendly Dawg because he stopped paying his rent and has made the premises unsafe for the other tenants with the addition of the live animals (Dillman, 2023). Since Jasmine of Sunshine Yoga has failed to pay rent on time, Lou must give at least 10 days’ notice to Jasmine before he evicts for nonpayment. However, if she pays the full late amount due during that 10- day notice period, Lou is not allowed to file for an eviction (osbar.org, n.d). If Lou reassesses his current contracts with both The Friendly Dawg and Sunshine Yoga and moves both to a formal contract, this could help remedy the situation. These agreements should encompass resolutions that address the concerns of all parties involved. This will help foster a more constructive business relationship for everyone.

References  Kubasek Nancy, Browne M. Neil, Dhooge Lucien J., Herron, Daniel, Barkacs Linda. (2023). Dynamic Business Law, Sixth edition. McGraw-Hill LLC.  The Investopedia Team. (August 12th, 2023). Eviction: Definition and How it Works Under the Law. https://www.investopedia.com/terms/e/eviction.asp  Beth Dillman. (N.D.). The Eviction Process in Oregon: Rules for Landlords and Property Managers. https://www.nolo.com/legal-encyclopedia/the- eviction-process-oregon-rules-landlords-property-manager.html#:~:text=Legal%20cause%20is%20defined%20by,unit%20(among%20other%20things ).  Author Unknown. (N.D.). Landlord and Tenant Law. https://www.osbar.org/public/legalinfo/landlordtenant.html#:~:text=Renters%20who%20rent %20month%2Dto,an%20eviction%20for%20unpaid%20rent .

Project Three- Contract Law

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