business law

Elements of Contract Law

Project Rationale:
The students will examine the typical issues of contract law in scenarios taken from a common setting, the purchase of an automobile.

Problem Statement:
For purposes of this exercise, assume the following facts to be true. John wants to buy the hottest new Italian sports car, the Sognare. He haggles with the salesman, but finally agrees to buy the car for $45,000.
What would be the result in the following situations? (Consider each situation in isolation):

Situation A:
John leaves the dealership in the car, and gets onto the expressway. He accelerates to 95 miles per hour, loses control, and crashes into a guardrail. John is seriously hurt. It turns out that in his excitement over such a large commission, the salesperson failed to have John sign the agreement to purchase the car.
Is it a valid contract?
Why or why not?

Situation B:
Suppose John did sign the contract. John, although he looks much older, is only 17 years old. If John turns 18 three weeks later, what, if anything, can be done to solidify the agreement between John and the dealership?

Situation C:
When John was 15, a judge, acting on the professional opinions of two psychiatrists, ruled John to be insane. Even after reaching the age of 18, John continues to suffer from the serious mental illness.
What, if any, bearing does his mental state have on the contract to purchase the car?

Situation D:
John’s mother, Andrea, is so convinced that John is going to hurt or kill himself driving the car that she takes out a life insurance policy on him. She names John’s fiancée, Heather, as the beneficiary. Four months later, Andrea’s fears come true, and John loses his life in a one-car crash on a country road. The insurance company refuses to honor the policy claiming John had a mental illness and that Andrea and John had withheld this information from them. Andrea is so upset over John’s death that she does nothing.
Does Heather have any legal recourse under the life insurance policy?
If so, on what theory?

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