Describe about the Business Legal Relationship for Business Presumptions.
1. There are various elements of a contract that must be present in the contract for it to be legally bound the parties and be enforceable. Of particular significance to this discussion will the intention to create a legal relationship or to be legally bound. The question that is at task now is whether the arrangement between Richard and his father is legally enforceable and to be specific whether the two parties possessed the requisite intention to be legally bound. From the common law perspective it has been regarded that the parties must have a meeting of the mind for the contract to be enforceable, which can be interpreted to imply that the parties must have an intention to be bound when entering into a contract.
It is apt that we underscore the fact that the relationship between Richard and his father was a family relationship. The test for determining the intention of the parties was hitherto, determined by the rebuttable presumptions that an intention to create a legal relationship existed between the parties. In family and social agreements such as the one before us now, promises even if they were breached, the rebuttable presumption was that they were not legally enforceable in court as was held in Jones v Padavatton, (1969). The case of Wakeling v Ripley (1951) is a perfect epitome of the matter between Richard and his father and application of the presumptions. In this case Mr. Ripley promised his sister and brother in law that he will let them live in his house without paying rent and eventually leave for them the house if they came to take care of him. The two agreed but contrary to their expectations Mr. Ripley did not honor this arrangement. In this case there was sufficient evidence to rebut the presumption that an intention did not exist.
From the foregoing, it is apparent that the position is that if the clamant party can show that they suffered a detriment as a result or reliance on the promise then the presumptions is rebutted. It thus follows that if Richard can show that he relied on the promises made by his father and thus suffered a detriment as a consequence then the presumption that an intention did not exist between the two family colleagues is rebutted. Conversely, the presumption that the intention does exist will not apply where a family agreement is one of a commercial in nature (Roufos v Brewster, 1971). It is thus advised to Richard that of he can show that there was a commercial agreement between him and his father then the presumptions will not apply as an intention will be automatically construed from the commercial nature of the agreement.
A more modern approach to the precept of intention to create legal relationship has been developed by various precedents. The use of rebuttable presumptions to determine an intention seems to have been extinguished and replaced by an objective test. It has thus been stated that the test should be whether reasonable persons will infer that an intention existed from the agreement (Edmonds v Lawson, 2000). The court will thus determine whether in the Richards case reasonable persons who could be parties to the contract could infer that there was intention to be legally bound. The objective test has been successfully applied in Soulsbury v Soulsbury (2007) where the court held that, where a spouse agreed to forego payment of maintenance to the expense that the other party will bequeath her property in his will, the requisite intention to be legally bound existed between the two.
In Gray v Gray (2004) Young CJ and Bryson JJA found a loan agreement between a mother and son to be legally binding. They refused to apply the presumptions contending that a proper assessment should be made on every peculiar state of affairs and the context in which the parties are dealing with each other, whether by applying the foregoing the court will evince an intention to be legally bound. A more persuasive position was reached in Ashton v Pratt (2012) where the court held that one should have into consideration the subject matter of the agreement, the personal relationship of the parties that existed when they were entering into the agreement and all other surrounding circumstances, to determine the intention of the parties.
The has court further stated in Tadrous v Tadrous (2010) that the only fair and just path to follow which is also the safest way, as has been argued, is through an objective examination of the actual circumstances and context of the parties and later from such an examination one can deduce whether there was an intention to be legally bound or whether the agreement was merely a sincere agreement which reflected love and trust between the parties but was legally insufficient. Applying the object examination in Richards case will help show that indeed Richard relied on the promise that his father gave him and undertook the work which the father previously paid the contractor for.
It can be conceded that from the above arguments and taking all facets of the case involving Richard and his father into perspective, there was an intention to be legally bound between the two parties and it is thus advised that Richard can enforce the agreement. The overwhelming evidence submitted by this solution shows that the rebuttable presumptions have since lost meaning and if in determining Richard’s case an objective test is undertaken, then the plausible conclusion will be that an intention existed. The above submissions have dissected the precept of Intention to be legally bound, showing Richard the various key dimensions and facets that will be involved so as his claim may not only succeed but the outcome will be fair, just and reasonable.
2. It is a general principle in contract law that once a person who has the capacity to enter into contract appends his or her signature on the agreement it is deemed that they have read and understood the terms of the agreement and therefore they bound by the agreement regardless of whether or not they actually read the contract. Once this contract is breached, the other party can bring an action for breach of contract and the will thus ask the court to be awarded remedies.
Joe has entered into an agreement on the condition that for five years he will not act for any other film company apart from the one that he is currently signed to. Joe breaches the agreement and decides that he will act for another company a year after singing his first contract. Joe will be held in breach of the contract and the law that will apply here is Contract law Remedies that will be available for the fist company that Joe signed a contract with and breached. The following remedies will thus be available to Frere Bros.
An application for an injunction can be made to the court where an injunction is regarded as an order by the court prohibiting the continuation of a certain act. An injunction could be either mandatory or prohibitory. Prohibitory injunction is the most common type of injunction that is granted by the courts and it is granted by the court so that a party can refrain from preforming an act that amounts to a breach of contract. This is an equitable remedy that rests on the discretion of the court (Page One Records v Britton, 1968). It has been held that an injunction will not be granted where it is meant to compel or to order to refrain from something that that is incapable of performance.
In Lumley v Wagner (1852) an injunction was granted by the court to prevent a singer from performing at another concert for three months. It thus follows that Frere Bros can apply for an injunction that will serve to order Joe to desist and refrain from engaging in the other contract and acting for the other film company. The injunction may be successful because Joes already has an existing contract with Frere Bros that he willingly signed to.
On the hand specific performance is another equitable remedy that is available to a breach of contract law. Specific performance is where the court orders someone who has breached a contract to continue with the performance of the contract in the manner that is stipulated in the contract. It is imperative to note, the courts in most instances would wish to compel someone to perform act that from the outset he or she does not wish to continue to perform. It is thus submitted that an order of specific performance will be granted where a monetary compensation will not be sufficient.
It can be concluded that Frere Bros can apply to the court for an order of specific performance against Joe, since it may be discovered that monetary compensation will be insufficient because either Joe is unable to pay, or the amount of money that they are to gain pursuant to the contract is much more than that which can be awarded by the court as compensation. To this extent, Joe will be compelled by the court to uphold is earlier contract not enter in another contract for the five years he will be acting for Frere Bros.
Damages is also a remedy for a breach of contract where they are compensatory in nature to restore the claimant who is the innocent party back to the position they were in had the breach not occurred. It has been held in Hadley v. Baxendale (1854) that damages must arise as a result of the breach of the contract or as a result of that which the parties had in contemplation will amount to a breach at the time of making the contract. It is submitted that Frere may apply for the remedy of General damages which may be as a consequence of the breach by Joe. If Frere may have paid any amount to Joe, the courts will only allow Joe to benefit to the extent that he worked for. Any excess payments that may have been made in the belief that Joe will honor the contract for the agreed five years may be recovered by Frere in form of general damages.
Nominal damages on the other hand are awarded where on the face of it there has been a breach of the contract but there has been no actual financial loss by the innocent party. In this case the court awards damages fro punitive purposes for the legal wrong of breach of the contract. It thus advised to Frere Bros that if they have not suffered any actual financial loss they can pray that the court exercise its discretion and make an award of the nominal damages which will act as a civil punishment for the legal wrong of breaching the contract.
In conclusion, a breach of the contract could also lead to the remedy of discharge which is not a remedy in the strict legal sense. Pursuant to the fact that there may be no award of damages or any other equitable remedy the innocent party may apply to the court for that they be discharged from responsibilities in the contract. Thus Frere Bros, If it comes to their attention that they will not suffer any financial loss or the court may not make any award to them, they may apply to the court to discharge their obligations in the contract and this will act to prevent Joe from later enforcing the contract which he had actually breached.
References
Ashton v Pratt [2012] NSWSC 3
Edmonds v Lawson [2000] EWCA Civ 69
Gray v Gray [2004] NSWCA 408
Hadley v Baxendale [1854] EWHC Exch J70
Jones v Padavatton [1969] 2 All ER 616
Lumley v Wagner [1852] EWHC (Ch) J96
Page One Records v Britton [1968] 1 WLR 157
Roufos v Brewster [1971] 2 SASR 218
Soulsbury v Soulsbury [2007] EWCA Civ 938
Tadrous v Tadrous [2010] NSWSC 1388
Wakeling v Ripley (1951) 51 SR (NSW) 183
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