Law Formation of Contract

Review the essential elements of a valid and enforceable contract and decide whether a valid, void or voidable contract has been formed in each of the following situations. Provide a legal explanation for your decision.

1. Last year, Smith, the owner of a retail business, in an attempt to reduce employee absenteeism due to illness, offered to give any employee who quit smoking for a year a $500 salary bonus. A number of employees agreed to quit smoking for the year and succeeded but Smith has now refused to pay the bonus claiming he cannot afford it since business was poor this year. The employees maintain that they had a valid and enforceable contract with Smith and he must pay.

2.Al suffers from manic-depression, a mental illness characterized by periods of extreme emotional highs and deep depressions. During a manic episode, Al decided he was going to renovate his home and entered into an agreement with his local Rona store to purchase several thousand dollars worth of building supplies. The suspicions of the salesman who negotiated the agreement were not aroused as Al acted like any other customer.

The building supplies were delivered several weeks ago but Al has refused to complete payment. He is now in a deep depression and realizes that he cannot carry out his grandiose plans. Rona is threatening legal action if they are not paid. Al maintains no valid enforceable exists and he does not have to pay.

3. Ann offered to sell an old painting she found in her attic to an art dealer for $2,000. After examining the painting, the dealer realized it was a genuine Group of Seven painting worth several hundred thousand dollars and immediately accepted the offer. Ann has now discovered her error and wants the painting back. The dealer maintains he has a valid and enforceable contract and can keep the painting.

4. John worked for a company which provided home care for the elderly and disabled. Every day, he would visit several homes where he would deliver food and give medication and physical therapy to various clients. Bob, a man with very poor eyesight, was one of his clients. John and Bob became good friends and John would often read newspapers and books to Bob because reading bothered his eyes. One afternoon, John advised Bob that he required him to sign an agreement with the home care company to continue his home care.

Unknown to Bob, the document he was given to sign by John was not an agreement on home care but an agreement which provided that in gratitude for the services provided to him, John would be entitled to live rent free in Bob’s house for three years when Bob could not longer live on his own. Bob has now been admitted to a nursing home and John has moved into his house. Bob’s family is demanding that he vacate.

5.George, a 17 year old from Midland was coming to Sheridan College for the business program. During the summer, he went to the housing service at the College and found a room to rent. George went to the landlord and signed a one year lease commencing in September at a rent of $300 a month. Two months after the semester started, George had an opportunity to share an apartment with another student at a cost to him of $150. George, therefore, vacated his room and moved into the apartment. His landlord has contacted him and is demanding $3000, the balance of the rent owing under the one year lease.