Question

ABC Corp is a manufacturer of industrial machinery and received a call from Mo who introduced himself as the new entry level assistant in the purchasing department at XYZ Corp. Mo asked to purchase 10 industrial ovens for a price of 10000 dirhams each which is the price his boss the Head of Purchasing indicated Mo could agree to. ABC’s Director of Sales responded that ABC could supply the 10 ovens but for a price of 11000 each. Mo agreed and sent a purchase order that he signed to ABC Corp that indicated 10 ovens for 11000 per unit. ABC Corp shipped the ovens to XYZ Corp. However, when the ovens arrived and the Head of Purchasing at XYZ Corp saw the invoice, he called the Director of Sales at ABC Corp and said that either ABC Corp has to change the invoice or the ovens would be returned, because they were not the price that XYZ Corp was willing to pay which was 10000 dirhams each.

Do ABC Corp and XYZ Corp have a valid contract? Explain all contract elements in detail.

Answer 1

ABC Corp and XYZ Corp have a valid contract based on the elements of offer, acceptance, consideration, capacity, and legality. Mo's offer was accepted by ABC Corp's Director of Sales through a signed purchase order, fulfilling the requirement for mutual agreement. Both parties provided consideration, and there were no capacity or legality issues mentioned in the question.

Step-by-step explanation:

ABC Corp and XYZ Corp do have a valid contract. A valid contract consists of several elements, including offer, acceptance, consideration, capacity, and legality. In this case, Mo from XYZ Corp made an offer to purchase 10 industrial ovens for a price of 10000 dirhams each. ABC Corp's Director of Sales responded with a counter-offer, which Mo accepted by signing the purchase order. This exchange of offers and acceptance indicates a mutual agreement and therefore forms a valid contract between ABC Corp and XYZ Corp.

Furthermore, both parties provided consideration, which is something of value exchanged between the parties. ABC Corp agreed to supply the ovens, and XYZ Corp agreed to pay the price of 11000 dirhams per unit. The consideration on both sides fulfills another requirement for a valid contract.

It's important to note that there was no mention of any capacity or legality issues in the question provided. Therefore, assuming that both parties have the legal capacity to enter into a contract, and there are no illegal terms or actions involved, the contract between ABC Corp and XYZ Corp is valid.