Is it a legally binding contract?
In order to know your rights under sale of goods and/or service agreements, it is important firstly to understand the basic principles of contract law. Contract law is all about enforcing promises and making them legally binding irrespective of whether there is something in writing to this effect. Despite the word ‘contract’, and contrary to popular belief, a written contract is not required in order for these obligations to exist in law. A contract may also be formed verbally or by implication, simply by one party making an offer and the other party accepting that offer – even purchasing an item in a shop, or getting into a taxi are examples of this. Of course it must be proved that both offer and acceptance were clearly communicated and understood, that both parties were legally capable of making those promises, and there was something being offered in exchange for the promise (usually money). And while ‘putting it in writing’ is not necessary for a legally binding contract to exist, as the next section will show us, it may be hard to prove what was otherwise agreed.
Comment by Shaun on 29 August 2008:
Hi , can anyone help me out?
I was selling my vehicle on eBay and about a day before the auction was to end, I had a phone call from a potential buyer who asked me how much I would accept for the vehicle. I told him the amount and he promptly visited me and paid a 10% deposit. When I went to cancel the listing on ebay, I found that someone had placed a bid on ebay and that I was unable to cancel the auction due to it having less than 24 hours till it was due to end. The secound buyer visited almost immediately and paid for the vehicle and took it away. When I found out about this mistake , I did contact the original buyer who had left a deposit and explained the situation to him, however, he was very angry and upset and informed me that he would be taking me to court as i had broken the contract. I had contacted him to explain and to ask for his address to return his deposit to him.
Now, I have received a letter from this guys solicitors stating that he wants his initial deposit back plus £30 fee which the guy paid to transfer the insurance which he had taken out on the vehicle and another £300 to compensate him for his disappointment. A total of £500. the letter says that I must make payment in seven working days or it will be referred to the courts!
Can anyone help me out with this situation or point me in the right direction for me to get some advice?
Comment by Catriona on 2 September 2008:
Shaun, an offer was made and accepted - therefore a legally binding contract exists. This is strengthened by the deposit - being an intention to buy in good faith. You are in breach of this contract, so the buyer had the right to feel aggrieved and to claim damages. However, damages must be seen to be reasonable (see the section on damages as to how this is measuered), covering all out of pocket expenses. Claiming for injury to feelings etc is still a bit of a grey area and can only legitimately be claimed for consumer cases in regard to leisure activities. I would say £300 is a little unreasonable and only the court can force you to pay this. My advice would be to return the cheque and offer to cover his expenses plus a little something extra for the effort. But I wouldn’t go as far as agreeing to £500. he is unlikely to go to court to make a claim for ‘disappointment’!