Business Law Case Law Under Contract

Question: Describe about the Business Law for Case Law Under Contract. Answer: Solution 1 Issue Whether there is a contract between Carmelo and Derrick? Relevant Law Elements of contract A contract is an agreement which can be enforced as per law of the land. A contract is formed when an offer is made by one i.e. an offeror to another i.e. an offeree, and offeree accepts the same. But only offer and acceptance alone does not concludes a contract rather there should also be consideration in return of the promises to be performed, contractual intention of the parties and the parties who are in contract must be major and of sound mind i.e. they must have contracting capacity. Thus, the basic contract elements are: (The LawHandBook, 2016). An offer is an intention of an offeror to be in a contract which is communicated by him to another (offeree). An acceptance is said to occur when the offer of the offeror is confirmed by the person i.e. an offeree to whom it is made. Capacity means that the parties to a contract must be of sound mind and major and be capable of contracting. The parties who are entering into a contract must have the intention to bind each other legally and want to be in legal relation with each other. A consideration is the sum whether in kind or cash which is paid to the person who performs the promise as per the contract. But, as per the requirements, the elements of intention to be in legal relation and consideration have to be analyzed in the present answer. Consideration A consideration is the motivation which is given to the performer of the contract so as to perform the promise as per the terms of the contract. The basic elements that govern consideration are: (Lawskool, 2016). A consideration may be in monetary terms or it may also be in kind. A consideration can be related to present or future event. But in case if consideration is related to past promise then the same is not valid and is not considered as a good consideration and is held in Roscorla v Thomas (1842). A consideration is valid when the same is not adequate but must be sufficient. (Chappell v Nestle (1960)). When the promisor after the compliance of the service promises to pay for such service then in such kind of promise any past consideration is valid and enforceable and is held in Ipex Software v Hosking (2000). In case when additional consideration is being added to any promise which already exists between the parties then such additional consideration must accrue due to some additional benefit. In case there is no additional benefit that is accruing due to that extra consideration then that additional consideration is not enforceable by the parties to the contract and is held in (Lampleigh v Braithwait (1615)). There can be consideration even between the persons who are in domestic or social relations. for instance in Dunton v Dunton (1892) the husband promised to pay wife if she behaved in a particular manner and the wife did so accordingly. Then it was held that it was a valid consideration and the contract is valid. (McKendrick Liu, 2015) Intention To Be In Legal Relation An intention to be in legal relation means that the parties to the contract must have the intention to be legally bound by the words of contract and perform the promise as stated in the contract. Their intention must be to be in legal and contractual relation and their intention must not be casual. The basic principles that govern the legal intention are: (J Clark, 2016). Generally, in case of the commercial connections it is presumed that the parties have intention to be bound themselves and there is intention to be in legal relation. This presumption always prevails unless it is rebutted by any of the parties. For instance, In case law of Rose and Frank Co v Crompton [1923] the parties though were in an agent and principal relation with each other but then also the intention to be in legal relation was not there. Likewise in case of social and domestic connections, the presumption is that there is no legal intention unless the same is rebutted by any party and is held in Balfour v Balfour (1919). On the contrary, in case law of Jones v Padavatton (1969) the intention to be in legal relation was found to be present in the domestic or social relations between the parties to a contract. The presence of element of intention to be in legal relation depends upon the situation and circumstances. In one situation the intention may be present but the same may be absent in another situation. Application of law Derrick and Carmelo were cousins and Derrick was requested by Carmelo to book a seat in NBA event. Derrick makes an offer and specifies that one place is left and points that a premium travel/accommodation at a price of $25,000 is available. To this Carmelo replied that he can only pay $20,000 and rest can be recovered from the services which Carmelo had offered Derrick over the years. To this Derrick accepted and asked Carmelo to deposit the amount of $20,000. In instant case, the intention of both the parties is very clear that they wanted to be in legal relation. Although being cousins the general presumption may states that they do not had any intention to bind themselves and to perform the promise. But, the partys intent to abide by the contract legally and thus there is presence of the legal intention. In case of consideration, there is consideration but the part of consideration is related to past as Carmelo asked to adjust an amount of $5000 towards the work done by Carmelo in past which is not valid as per law as only for the present work and future work consideration is valid and not for work done in past. Also, Derrick never promised to adjust the payment as only it is the promisor who can promise consideration after the completion of the work. Conclusion Thus, there is an offer and acceptance along with legal intention. But there is no valid consideration as it relates to past which is not good and hence there is no contract between them. Solution 2 Issues Whether all the elements of an agreement required for the formation of an enforceable contract are present in the transaction between Carmel and Derrick? Whether Carmelo as per law can force Derrick to provide him with the premium travel and accommodation for the tour? Relevant Law A contract is sum of an offer, its acceptance along with consideration, intention of parties to bind themselves and capacity of the parties. An agreement comes into existence as and when an offer is made and the same is accepted. Thus, mere offer and acceptance brings an agreement into existence. But if the other elements of contract, that is, consideration, capacity and intention are also added to an agreement then it is valid contract. Thus, form above statement it can be stated that all the agreements are not contracts but all contracts are agreements. An agreement is a wider term as compared to a contract. (The LawHandBook, 2016) Now, as per the given problem it is presumed that there is presence of consideration and intention to be in legal relation in the transaction between Carmelo and Derrick. The other contractual elements that is, offer and its acceptance must be analyzed. Offer An offer is the intention that is communicated by one party to another party for the formation of contract with each other. The one who communicates his intention to be in contract with other is an offeror. And the second party to whom the same is communicated is an offeree. The concept of offer was discussed in Carlill v Carbolic Smoke Ball Co (1893). An offer can be for a specific person or for the general public. In case it is for a specific person then only that person can accept the offer but if the offer is for the world at large then anybody can accept the same by acting upon it. For example, If A offers to give an award of $500 to anybody who finds his dog and on this B knowing the offer finds the dog and hands over to A then in that case A is bound by his words and will have to pay B. Also, an offer is complete when same is communicated to the person for whom it is intended. An offer must be clear and specific as a vague offer is not a valid offer. An offer can be made oral ly or by written mode also. Acceptance An acceptance is said to occur when the offer made by an offeror is assented by the offeree. In case the offeree does not assents to the offer with the terms contained in it and thus gives his own terms prior accepting then in that case the same is not acceptance but rather a counter offer is made by the offeree to the original offeror and is held in Hyde v Wrench[1840]). In case of counter offer, the counter offer becomes the new offer and this can be accepted or rejected by the offeror. If the offeror who made the offer at the first instance accepts the counter offer then there is a contract otherwise not. But once the counter offer is made the original offer of the offeror cannot be accepted by the offeree without assent of the offeror as it ends upon the counter offer coming into play. An acceptance is complete when it is communicated to an offeror and is held in R v Clarke(1927). But in case of postal acceptance rule the acceptance is complete when the letter regarding acceptance is posted or put in transit. It does not matter when the same reaches the offeror, once the same is posted then the acceptance is said to be complete. An acceptance must be same and should be mirror image of the offer. In case of deviation in acceptance of an offer the same is not termed as a valid acceptance. When all the elements of contract are present then only a contract comes into existence. Application of Law Issue 1 An offer is made by Derrick to provide his services to Carmelo $25,000. But Carmelo replied to Derrick that Carmelo can only pay $20,000 and rest can be adjusted by Derrick for the work done by Carmelo over the years. Derrick made an offer to Carmelo to which Carmelo made a counter offer and thus the original offer of Derrick came to an end. Derrick then accepted the offer of Carmelo and stated that she should deposit amount in Derricks account. As from the above facts it is clear that there was an offer and it was accepted so there is a concluded agreement as an agreement only should have offer and acceptance which are thus there. Further, in order to be categorized as a contract the agreements must have intention to be in legal relation, consideration in return of performance of promise and the parties to the contract must have capacity to be in a contract. In the given problem, it is presumed that the consideration and intention to be in legal relation is already present, so the only left out ingredient are capacity of parties which is assumed to be present in the given case. Thus, since all the ingredients from offer, acceptance, consideration, intention and capacity all are present so there is a concluded contract. Issue 2 In case Derrick breaches his promise as made to Carmelo then Carmelo can surly seek action as per the law of contract but cannot force him to provide his own premium travel and accommodation for the tour Conclusion There exists an agreement between Derrick and Carmelo. Thus the contract is enforceable by law and Derrick will have to fulfill his promise as made to Carmelo or else he will have to pay damages to Carmelo. Reference List Books/Articles/Journals McKendrik Liu. 2015. Contract Law: Australian Edition. Palgrave Macmillan. Case laws Balfour v Balfour (1919) Chappell v Nestle (1960). Carlill v Carbolic Smoke Ball Co (1893). Dunton v Dunton (1892). Hyde v Wrench[1840] Ipex Software v Hosking (2000). Jones v Padavatton (1969) Lampleigh v Braithwait (1615) Roscorla v Thomas (1842). Rose and Frank Co v Crompton [1923]. R v Clarke(1927) Online Material Clark J, Intention to create legal relations (2016), Accessed 25th October 2016. https://www.australiancontractlaw.com/law/formation-intention.html. Lawskool. Contract Law summary (2016), Accessed 25th October 2016. https://www.lawskool.com.au/content/contract_law_summary_2012_-_sample.pdf. Moles Bangia, Consideration - in Acceptance of Contract (1998), Accessed 25th October 2016. https://netk.net.au/Contract/04Consideration.asp. The LawHandBook, Essentials elements of a contract, (2016), Accessed 25th October 2016. https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/.