Contracts

Topic

Contracts

Instructions

Erma, a merchant, receives a brochure from Ammco regarding some merchandise that is sold in Erma’s business.  Erma then sends in a purchase order ordering 25 units of merchandise (which exceeds $500.00 in value).  Ammco upon receipt of the order, sends a letter of confirmation containing additional information which states that the price did not include shipping and insurance costs and that the shipping costs and insurance would be added on to the total contract price.  Furthermore, Ammo delegates the obligation of shipping the merchandise to Ecco.  While the goods were in transit, the truck was hijacked and all the merchandise, including Erma’s order. Applying “common law contract principles” are there Party issues?  Formation issues? Proof issues? Performance issues? Breach and Discharge issues?  What are the available remedies?

Answer preview

This contract can be termed as a Free on Board Contract as all the costs are borne by the buyer upon the goods been loaded on the ship with the inclusion of insurance and shipping cost. Hence, considering that all the parties have the capacity to enter into the contract and then a person can state that there are no issues of contention when it comes to the parties. Additionally, the contract involves three parties that is the buyer, the seller and the carrier of the goods to the specified destination. Hence, all parties are in agreement on the issues that relate to the contract.

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