In addition to this, capacity is also an essential element of a contract. It means that the parties to the contract must be capable to enter into the contract. People of sound mind, of the age of majority, and acting of their own free will can enter into a contract. Here, Harvey and Peter both are capable of entering into a contract hence their contract is a valid contract.
After Harvey has made the oral offer and Peter has accepted it, Sarah makes an offer which is also valid as it has been acted upon when she sends the cash amount. But, as Sarah has communicated the offer late, and Harvey’s offer has been communicated first, so Peter is liable to sale the flat to Harvey on that very day, and wait for his cheque instead of accepting Sarah’s cash. But later in the scenario it has been mentioned that although Harvey has communicated the offer saying that he would dispatch the cheque the same day, his cheque reaches Peter via post a week later, so if Peter has accepted Sarah’s cash and has sold the flat to her, he can take advantage of the late arrival of cheque and can tell Harvey that he waited for a day and then upon not receiving any cheque from his side, sold it for cash.
In this scenario, the contract between Peter and the owner is an oral or verbal contract. Peter shows his intention of purchasing the timber and makes an offer to the owner. His offer is a valid offer as he communicates it to the owner, and moreover, makes express terms by paying £ 50 and taking assurances not to sale it to someone else. His offer is a valid one as it has been verbally communicated to the owner and the owner’s acceptance is also valid as he has assured Peter that he will not sell the timber to anyone else. Both have an intention to create a legal relation, hence this element also exists. The elements of consideration, certainty and capacity are also present hence it is a valid contract. Now it is binding upon both the parties to fulfil the terms of the contract. Initially, the breach of the terms of the contract has been committed by Peter who does not go back the same day. According to Peter’s promise, he is supposed to collect the timber from the owner on the same day in the evening, but he does not show up. Officially, the owner is liable to wait for Peter till the evening, but as Peter arrives the next day, so the breach of contract has already been committed. In this scenario, Peter cannot claim any damages or compensation from the owner, as he himself did not fulfil the terms of the contract.