Oral Contract and Preliminary Negotiations

The definition of a contract is considered to be a legally binding agreement based on mutual respect and understanding between the concerned parties in relation to the scope and substance of the agreement. The mutual agreement can be achieved through offer and acceptance. An offer reveals that the parties engaged in the agreement are willing to follow the contract requirements. In this respect, Knutsen should have followed this concept to let the offeree create a binding agreement through valid offer acceptance. Specifically, Knutsen should have formed a clear intent to be contractually bound. In fact, the contract terms did not specify that 34% should be imposed on each pound.

Though Mr Singoff had complaints concerning the terms of an express contract, he would not be able to appeal in case the terms had not been preliminary negotiated. In fact, the difference often exists between the intent to offer and preliminary negotiations. Despite that, the offer should be clearly and definitely communicated before the contract comes into effect. In particular, the offer should have been presented as unconditional acceptance based on the mutual accent of Knutsen and Signoff. Judging from the case, the assent was not reached, and, therefore, Knutsen had no ground for suing Signoff. Concurrently, the offeree could not rely on a “grade and yield” basis unless it was stipulated by the contract.

The case should be considered from the perspective of contract irregularities and check use. Specifically, Knutsen failed to mention the interest rates to claim those in future. He should also have refused the check because the contract was not carefully followed. As a result, the contract could not be regarded as valid. Additionally, Knutsen did not have the right to collect because he had already cashed the check.