Question

Provide a written response to each of the following 2 scenarios:

1. Luke Skywalker entered into a written contract to purchase a building from Darth Vader for $100,000. Darth Vader tendered a deed to the property and demanded payment of the unpaid balance of $70,000, which was due on the purchase price. As a result of a temporary decline in Luke Skywalker’s business as a result of the economic effects of COVID-19, Luke Skywalker did not possess and could not borrow the unpaid balance of $70,000. Luke Skywalker asserted that it was impossible for him to perform the contract.

REQUIRED:

Explain whether Darth Vader is able to enforce the sale of the building under contract law? If not, then what remedies would be available to him? (7.5 points)

2. Buzz tells Andy that he paid $90,000 for his farm in 2014, and that he believes it is worth twice that in the year 2020. Relying upon these statements, Andy buys the farm from Buzz for $120,000. The day after entering the agreement, Andy had turned 18 years old. Buzz was well-aware of Andy’s age.

While Buzz did pay $90,000 for the farm in 2014, its value has increased only slightly, and it is presently not worth $180,000. On discovering this, Andy offers to reconvey the farm to Buzz and sues for the return of his $120,000.

REQUIRED:

Is Andy entitled to the return of his $120,000? Explain (7.5 points)

Answer 1

Scenario 1 :

Luke Skywalker entered into a written contract to purchase a building from Darth Vader for $100,000 & Luke Skywalker is neglecting to pay balance amount of $70,000. This is case of Non performance of obligation under contract. Considering the same, we would have to review the terms of contract. When the contract contains a clause providing that a party who fails to perform is to pay a specified sum to the aggrieved party for such non-performance, the aggrieved party is entitled to that sum irrespective of its actual loss. If the amount is grossly excessive in relation to the loss resulting from non-performance, and the other circumstances, the specified sum may be reduced by an arbitral tribunal or court to a reasonable amount notwithstanding any agreements of the parties to the contrary. Generally, in case of purchase of property, Agreement contains Forfieture Clause, i.e., party can forfeit the amount already received.

Hence in this case, Darth Vader can forfeit $30,000 received by it.

Scenario 2:

Contract entered by minor is void-ab-initio. Here, Buzz was very well aware of the fact that Andy's age is less than 18, i.e., Andy is a minor. Hence, Buzz is obligated to pay back Andy $1,20,000 irrespective of the fact its value has doubled or not.