Prior to beginning work on this discussion forum, review Chapter 9 of the textbook. Then address the following scenario:
In 2002, Ken and Laila Johnson (the Johnsons) purchased a home for their son Evander. The original cost of the home was $80,000 and the Johnsons made a down payment of $10,000. The title to the property remained in their name as there was some concern about some gambling debt that Evander had incurred a few years before.
At the time of the purchase, Evander was engaged to his long-time girlfriend Asa, who was a dentist. They moved into the house and agreed to pay the Johnsons $550 a month to cover the monthly mortgage and tax costs.
In 2003, the couple married and continued to live in the house. In addition to making the monthly payments to Evander’s parents, they also made some substantial improvements to the property. However, some of these improvements were made without the consent of the Johnsons, including the installation of an in-ground swimming pool in 2017.
In 2019, the Johnsons believed that they should give the property to their son and daughter-in-law. At this time, Ken discovered that this would require that the home be refinanced. He then approached Evander about this possibility, which was contingent on if the current mortgage would be paid-off and if they could be repaid the original down payment of $10,000. However, this proposal was never communicated to Asa and the property was never transferred.
In 2022, Evander and Asa separated, and she moved out of the house. Subsequently, she filed for divorce. A primary reason for this dissolution was that she had earned most of the income during the marriage.
In 2023, the Johnsons sold the property to a third-party for $280,000. Asa then sued the Johnsons for her interest in the property stating she had earned ownership through a contractual agreement with them.
Discuss if a contract was formed between the Johnsons and Evander. How about between the Johnsons and Asa? Did the elements of valid contract exist in either of these situations?
If the elements of valid contract did not exist, explain other legal arguments that Asa could use to establish an enforceable contract.
Describe any damages or amount of money that Asa would seek in her lawsuit. How could the proper amount be determined?
Explain whether Asa would win her lawsuit against the Johnsons.
Chapter citation
Seaquist, G. (2012). Business law for managers. Zovio.