Magneto

Coltan
Magneto Coltan Workout
Contracts
Author: Pedro Quintero Igeo
Internship company: Airbus Helicopters Espaa

This document develops the answers to the questions about Contracts which were proposed as
work for the Magneto Coltan Module.

Pedro Quintero Igeo

Magneto
Coltan
Workout
For the past five years Fastbuild Ltd, a company that specializes in the building of
houses, has entered into one-yearly contracts with Bricklast Ltd for the supply of
house bricks. Each of these contracts has been preceded by protracted
negotiations in which new terms and conditions have been agreed between the
parties. In the most recent set of negotiations, for a proposed contract in 2012, the
parties had agreed on the type and quantity of bricks to be supplied, the specified
quantity easily exceeded Bricklast Ltds expectations in comparison to previous
contracts. Fastbuild Ltd then sends Bricklast Ltd a letter of intent which includes
the following statement: In accordance with our negotiations, we intend to
contract with you, purchasing 2.5 million bricks (type previously agreed) for the
year 2012 at a price to be confirmed. Bricklast Ltd purchases additional
machinery in order to manufacture the increased quantity of bricks and goes into
immediate production.
What the activity is about?
Consider the legal positions of the parties if negotiations between them terminate.
And Fastbuild Ltd refuses to purchase the bricks from Bricklast Ltd.
Answer the following questions. Be concise.

Pedro Quintero Igeo

Magneto
Coltan
Does the letter of intent constitute an offer?
From the theory a completely defined and valid offer should comply with next features:
1) The offer must be reasonably defined
In the case we are dealing with, the offered is only partially defined: only the
quantity of bricks is determined. However there is a lack of information about
some important points of the agreement, i.e. there is no information about
bricks price, delivery times, quality features
2) The offer must have serious intention
Obviously the offers have serious intention. This is demonstrated by all the
previous years of business and negotiations between both companies.
3) The offer must be communicated to the offeree
All the involved parts of the possible agreement are aware of the
communication. The offeree was informed by the offeror through the mentioned
intend letter.
Knowing, that the intend letter cannot be legally considered as an offer by itself (if it
was accompanied by some other documents where more information is given, all these
document could constitute an offer, obviously depending on which information is
given). In order to be considered as an offer more information must be given in order to
clarify all the terms of the possible agreement.

Pedro Quintero Igeo

Magneto
Coltan
If an offer was made, was there acceptance?
Now, we are going to suppose that the letter of intent contained all the necessary
information to be considered as an offer.
There is not a real acceptance. The purchase of new machinery of Bricklast is not
necessary due to the offer made by Fastbuild.
Obviously it is very probably they are going to increment the production because of the
receipt of the intend letter. However imagine that, at the same time of the Fastbuilds
offer, another one was made by a different customer. The increment of production could
be due to this second offer.
In order to be able to consider being acceptance we must dispose of a written and signed
document by the offeree. Also, after the acceptance a contract should be set.

Pedro Quintero Igeo

Magneto
Coltan
If there was offer and acceptance, was there consideration present?
In the theory related with this workout, three main features are set in order consideration
to be stablished:
1) Must be sufficient
2) Must not be from the past
3) Must move from the promise.
Again, due to the important lack of information, there is not consideration in this case.

Pedro Quintero Igeo