Oral contracts are equally binding and enforceable as written contracts (Thorpe and Bailey, 1999). However, the biggest disadvantage with oral contracts is the difficulty in ascertaining the precise terms should the parties differ. Where the parties are unable to prove their respective positions, the court will have recourse to the intention of the parties. In this scenario, the contract between Vivian and Hicks is oral, and to such extent Vivian can sue for breach of contract. It is however not clear what the terms where. Vivian claims that Hicks agreed to pay for all damages, whereas Hicks says he only agreed to pay for gasoline.
The performance of contractual obligations is not absolute; thus a party may be discharged from performance by supervening circumstances. One such circumstance is when a contract is frustrated. The doctrine of frustration arises when supervening circumstances occur rendering the performance of the contract impossible or illegal (Thorpe and Bailey, 1999). If a contract is frustrated, both parties are discharged from their obligations. Therefore, for instance if the subject matter of the contract is destroyed by fire, the contract is frustrated and both parties are discharged from their obligations
The application of doctrine of frustration is however qualified when it comes to contract for sale of land. Ordinarily, risk of loss passes to the buyer once the contract is made, regardless of whether the contract is completed. This is especially so where land is sold with fixtures. If however parties have agreed that risk of loss passes upon completion, then the destruction of the land would frustrate the contract.
In this scenario then, for Hicks to sue for damages it will depend on the parties’ agreement on passing of risk of loss. If the parties did not agree or mention the risk of loss, then the general rule would apply, and therefore Hicks can sue for damages. On the other hand, if the parties agreed that the risk of loss would pass on completion, then the contract would be frustrated and Hicks cannot sue for damages.
All other contracts are unenforceable and the other party has no remedy in law against the minor. In equity however, the minor may be required to restitute or restore the property or benefits acquired. The minor may also be required to forfeit any future benefit that may accrue from the contract. For voidable contracts, the minor has the option of avoiding or affirming the contract at the attainment of the age of majority. If the minor chooses to repudiate the contract, they are relieved from future liabilities but cannot recover the money paid under the contract.
With respect to the scenario, the contract between Smooth and Jeremy may be regarded as invalid since a car cannot is not within the scope of necessaries. Accordingly, Smooth cannot enforce the contract against Jeremy. By law Smooth may be required to return the money Jeremy had already paid since the contract was void from the beginning. In equity however, Jeremy may be required to restore the benefits he got from using the car, which would be in form of forfeiting the money he has already paid.
On the other hand, since the contract involves a permanent property (the car) and a continuing obligation (the monthly payment), the contract may be regarded as voidable. Consequently, in as long as Jeremy does not void the contract, Smooth may enforce it against him. If however Jeremy repudiates the contract, it will become unenforceable against him. The repudiation frees him from future obligation to pay the monthly payment, but Smooth cannot restitute the money paid; this is the position at law and equity.
Thorpe, C. P. and Bailey, J. C. L. (1999). Commercial Contracts: A Practical Guide to Deals,
Contracts, Agreements, and Promises (Revised Edition). London: Kogan Page Limited. Print.