Contract law regulates the day to day business of buying and selling goods or performing services.A contract is defined in law as an agreement between two parties with an offer, acceptance,and consideration. Jill and Joan now have a corporation—Sports Unlimited, Inc. Ed comes in and decides to buy a tent priced at $225. He offers $225 to Sports Unlimited, which accepts the offer by ringing it up on the cash register. The consideration is what is exchanged; that is, $225 and the tent. When the store accepts the price, there is a binding contract. Suppose a sign clearly in Ed’s view says “All returns must be made within thirty days with cash receipt.” This sign becomes part of the agreement.
If Ed brings the tent back twenty-nine days later, he can get his money back; if he brings it back thirty-one days later, it would be too late. Even though it is not stated by either party, if Ed used the tent on a camping trip, it would not be returnable. If, however, the tent leaked, it is not “fit for the purposes for which it was intended” and Ed could get his money back within a reasonable time.
Suppose Sam and Mike form Quality Mechanics partnership and Mary comes in and says, ‘‘The brakes aren’t right, please fix them by 5 P.M.’’ and Mike says, ‘‘It will be done!’’ A contract now exists, even though many terms are missing. Sam and Mike have agreed to fix what is wrong with the brakes, and Mary has agreed to pay a reasonable price. The brakes may need a simple adjustment or a complete overhaul—Sam and Mike agree to do only what is necessary. If they also tune up the engine, Mary need not pay for the tune-up.
Warranties and guarantees are of two types—implied and express. If nothing else is said, it is implied that a product is guaranteed to be fit for the purposes for which it is intended. A tent will not leak for a reasonable time and an article of clothing will stand up to reasonable wear and tear. Today, most products come with express (written) warranties. Most common are limited warranties, whereby the manufacturer guarantees all parts and workmanship for a period of one year. If the product breaks down or wears out after that, the customer is responsible, although extended warranties can be purchased on many products, such as cars and appliances. Occasionally products are clearly labeled ‘‘Sold as is—no warranty of any kind.’’
