Discuss about the Contract Law for Air Great Lakes Pty Ltd.
As a result of the facts that have been provided in this question, it needs to be decided if the promise made by Richard’s father, according to which he was going to pay $200 per week to Richard can be enforced in a court of law. This issue can be determined by considering if the essential elements that are required for creating a valid contract are present in this case, including the intention of the parties to form a legal relationship.
The position under the contract law is that the presence of certain elements is essential in order to create a valid contract. In this context, a valid contract can be described as an agreement that can be enforced by the law. These elements include offer, acceptance, lawful consideration and at the same time, it is required that the parties should have the intention that they should form a legal relationship. It is one of the essential elements, that is necessary for forming a valid contract that such intention to the present one part of the parties to the agreement. This requirement has been introduced so that it can be established that the parties intended to accept the legal consequences of entering into the agreement. Therefore in such cases, according to the law of contract, the evidence regarding the intention of the parties to enter into a legal relationship is generally demonstrated by establishing that consideration is present (Atiyah, 2000). The result is that if a particular thing has been specified by the promisor as the price that has to be paid in return of the promise, under the contract, generally it can be said that it was the intention of the parties to be legally bound by the promise. However, it needs to be mentioned in this regard that the requirement to establish the intention of the parties to be legally bound by the agreement is an independent requirement. As a result this element needs to be established separately. Consequently, in some cases it is possible that although consideration is present however, it cannot be concluded that it was also the intention of the parties to be legally bound by the agreement. In this way, the court has to adopt an objective approach when it has to decide the question if the parties had the intention of being legally bound by the contract (Beatson, Burrows and Cartwright, 2010).
In such cases, the law contract provides that when this issue has to be decided by the courts, there are certain presumptions that are applicable in case of different types of contracts. Therefore, when the agreement between the parties is a social or a domestic agreement, the presumption is present according to which, the parties did not have the intention of entering into legal relations (Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd., 1989). As against this position, when a particular agreement has been created by the parties in context of trade or commerce, a presumption exists that this intention was present on the part of the parties to the agreement. Recently in some decisions, it has been mentioned by the High Court of Australia that this presumption cannot be used to deal with the issue of the intention of the parties. Consequently, in each case, it has to be established that the parties had the intention of forming legal relations without the help of these presumptions (Ermogenous v Greek Orthodox Community of SA Inc., 2002).
However, in case of domestic family arrangements, it can be presumed that the parties did not have the intention of entering into legal relations, at least when these parties have harmonious relations. The result is that in case of domestic family arrangements, it is not very easy to prove that it was intention of the parties that they should form legal relations for example in Balfour v Balfour (1919). Similarly the facts of Jones v Padavatton (1969) can also be applied to the present case. In this case also, it was the decision of the court that a presumption is present in this case according to which, the parties did not have the intention that the family arrangement, that was based on good faith, should be enforceable in a court of law.
In this case, Mrs Padavatton was working in Washington when her mother, Mrs. Jones wanted her to go to London to study at the bar. While at the beginning, Mrs Padavatton was not willing to leave her job but later on she agreed. Mrs. Jones wanted that after completing her study, she should join her legal practice in Trinidad. Under these circumstances, Mrs. Padavatton went to London and started her study. On the other hand, Mrs. Jones started to pay an allowance to her but the allowance proved to be insufficient and she had lived in a single room along with her son. Later on, Mrs. Jones purchased a large house so that her daughter can live comfortably and at the same time, the rent from other rooms can be used by her as the maintenance. But when Mrs. Padavatton could not complete her studies and moreover, he also married someone, Mrs. Jones wanted the possession of the house. On the other hand, Mrs. Padavatton tried to enforce the contract under the law. But the court arrived at the conclusion that the arrangement between the mother and daughter was domestic in nature and therefore it can be presumed that it was not intended to be enforced by the law.
Similarly in this case also, it has to be seen if the promise according to which Richard’s father had agreed to pay $200 per week to Richard if he mowed the front and back yards of the property. It also needs to be mentioned at this point that Richard’s father had been paying $350 to a garden contractor for the upkeep of the family’s property. Later on Richard’s father declined to pay the above said amount, and said that as a member of the family it was the responsibility of Richard to look after their property. Richard’s father also said that due to the reason that Richard got free board and lodging, Richard should do the work for free. In this case, it is a family arrangement between father and son and as a result can be presumed that the parties are not have the intention of entering into legal relations. As there is no evidence presented by this presumption, it can be said that which it cannot legally enforce the promise made by his father.
In his question, Frere Bros have entered into an agreement with the famous film star Joe. According to this contract, Joe agreed to work only in the films being made by Frere Bros during the period of the contract. Although this contract was for five years, in the first year of the contract itself, Joe agreed to work in the film that was being made by Pretty Pictures. Now, Frere Bros. want to know if any remedies are available to them as a result of the breach of contract that Joe is going to commit.
In this context, the law contract provides certain remedies to a party to the contract if a breach of contract has taken place on part of the other party. Therefore the main remedies that are available under the contract law to the innocent party include remedies of damages, intention and specific performance. However the remedy of damages can be claimed by the innocent party in case of a breach of contract as a matter of right but remedies of specific performance and specific performance can be granted only at the discretion of the court (Collins, 2003). The result is that whenever there is a breach of contract, and the innocent party has suffered a loss or injury as a result of such grief, the party can claim damages as a matter of right. In this regard, he needs to be mentioned that the damages awarded by the court can be substantial or nominal. The nominal damages awarded by the court when the innocent party has not suffered any significant loss due to the breach of contract (McKendrick, 2009). But when the innocent party has suffered a substantial loss or injury, the court may decide to the substantial damages as the monetary damages. However, substantial damages can be claimed by the innocent party if such a party is in a position to establish that the loss suffered innocent party was the result of such a breach. At the same time, a defense is available to the other party which may claim that reasonable steps are not taken by the innocent party to mitigate the loss.
Apart from the remedy of damages, in some cases, the court may also decide to what the remedy of specific performance. At this point it is worth mentioning that it is the discretion of the court to grant the remedy of specific performance. However when the relief of specific performance has been granted by the court, an order is made by the court according to which the other party has to perform its obligations that it was required to perform under the contract. Likewise, the court orders the grant of the remedy of specific performance generally in cases where adequate relief may not be provided by an order of damages. An example of such a situation can be given of the case where the contract has a unique subject matter (Falcke v Gray, 1859). Due to the reason if a replacement can be found of the subject matter of the contract, even if it may take a long time, generally the relief of specific performance will not be awarded by the courts.
According to the common law rules that are related with the relief of specific performance, this release will not be awarded by the courts if constant supervision of the court may be required for a considerable period or if the obligations of the parties and the contract have not been mentioned clearly. Hence in Co-op Insurance v Argyll Stores (1997), it was the decision of the court that an order of specific performance cannot be made according to which the shop should be kept open during the normal business hours because it will require constant supervision from the court in order to enforce the order.
Apart from these two remedies, in some cases the court may decide to grant an injunction that there has been a breach of contract. However like the media specific performance, an injunction is also an equitable remedy. Consequently, it is the discretion of the court to grant this remedy or not in a particular case. However the court may decide to grant the remedy of injunction only if adequate relief will not be provided to the innocent party by an order of damages for the purpose of compensating the innocent party as in such case, the innocent party wants to prevent the defendant from breaching its contractual obligation (Peel and Treitel, 2011). Therefore in such cases, the court may grant prohibitory injunction or it may order a mandatory injunction. For the purpose of deciding if an injunction should be granted in a particular case, there are certain factors that have to be considered by the court. These factors are the same that need to be considered before making an order of specific performance. For this purpose, the test of balance of convenience is used by the courts. In this test, the court considers it the benefit provided to the injured party outweighs the detriment that will be suffered by the other party. In this way, the contract law provides that an injunction will not be granted by the court if it will result in compelling the other party to do something that cannot be asked to do by a decree of specific performance. On the other hand, if there is an emergency involved, the court may grant an interim injunction according to which the other party will be restrained from acting.
Therefore in the present case also, the most adequately remedy that may be claimed by Frere Bros will be the remedy of injunction. According to this remedy, Joe can be prevented from breaching the contract and acting in the film of Pretty Pictures.
References
Atiyah, P.S. 2000 An Introduction to the Law of Contract, Clarendon
Beatson, J. Burrows A. and Cartwright, J. 2010 Anson’s Law of Contract, 29th edn OUP
Collins, H. 2003, Contract Law in Context 4th edn CUP
McKendrick, E. 2009 Contract Law 8th edn Palgrave
Peel E and Treitel, G.H. 2011, Treitel on the Law of Contract, 13th edn Sweet and Maxwell
Case Law
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd. Supreme Court of New South Wales [1989] 2 NSWLR 309
Balfour v Balfour [1919] 2 KB 571)
Co-op Insurance v Argyll Stores ([1997] 3 All ER 297
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Falcke v Gray ([1859] 4 Drew 651
Jones v Padavatton [1969] 2 All ER 616
Discuss about the Contract Law for Air Great Lakes Pty Ltd.
As a result of the facts that have been provided in this question, it needs to be decided if the promise made by Richard’s father, according to which he was going to pay $200 per week to Richard can be enforced in a court of law. This issue can be determined by considering if the essential elements that are required for creating a valid contract are present in this case, including the intention of the parties to form a legal relationship.
The position under the contract law is that the presence of certain elements is essential in order to create a valid contract. In this context, a valid contract can be described as an agreement that can be enforced by the law. These elements include offer, acceptance, lawful consideration and at the same time, it is required that the parties should have the intention that they should form a legal relationship. It is one of the essential elements, that is necessary for forming a valid contract that such intention to the present one part of the parties to the agreement. This requirement has been introduced so that it can be established that the parties intended to accept the legal consequences of entering into the agreement. Therefore in such cases, according to the law of contract, the evidence regarding the intention of the parties to enter into a legal relationship is generally demonstrated by establishing that consideration is present (Atiyah, 2000). The result is that if a particular thing has been specified by the promisor as the price that has to be paid in return of the promise, under the contract, generally it can be said that it was the intention of the parties to be legally bound by the promise. However, it needs to be mentioned in this regard that the requirement to establish the intention of the parties to be legally bound by the agreement is an independent requirement. As a result this element needs to be established separately. Consequently, in some cases it is possible that although consideration is present however, it cannot be concluded that it was also the intention of the parties to be legally bound by the agreement. In this way, the court has to adopt an objective approach when it has to decide the question if the parties had the intention of being legally bound by the contract (Beatson, Burrows and Cartwright, 2010).
In such cases, the law contract provides that when this issue has to be decided by the courts, there are certain presumptions that are applicable in case of different types of contracts. Therefore, when the agreement between the parties is a social or a domestic agreement, the presumption is present according to which, the parties did not have the intention of entering into legal relations (Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd., 1989). As against this position, when a particular agreement has been created by the parties in context of trade or commerce, a presumption exists that this intention was present on the part of the parties to the agreement. Recently in some decisions, it has been mentioned by the High Court of Australia that this presumption cannot be used to deal with the issue of the intention of the parties. Consequently, in each case, it has to be established that the parties had the intention of forming legal relations without the help of these presumptions (Ermogenous v Greek Orthodox Community of SA Inc., 2002).
However, in case of domestic family arrangements, it can be presumed that the parties did not have the intention of entering into legal relations, at least when these parties have harmonious relations. The result is that in case of domestic family arrangements, it is not very easy to prove that it was intention of the parties that they should form legal relations for example in Balfour v Balfour (1919). Similarly the facts of Jones v Padavatton (1969) can also be applied to the present case. In this case also, it was the decision of the court that a presumption is present in this case according to which, the parties did not have the intention that the family arrangement, that was based on good faith, should be enforceable in a court of law.
In this case, Mrs Padavatton was working in Washington when her mother, Mrs. Jones wanted her to go to London to study at the bar. While at the beginning, Mrs Padavatton was not willing to leave her job but later on she agreed. Mrs. Jones wanted that after completing her study, she should join her legal practice in Trinidad. Under these circumstances, Mrs. Padavatton went to London and started her study. On the other hand, Mrs. Jones started to pay an allowance to her but the allowance proved to be insufficient and she had lived in a single room along with her son. Later on, Mrs. Jones purchased a large house so that her daughter can live comfortably and at the same time, the rent from other rooms can be used by her as the maintenance. But when Mrs. Padavatton could not complete her studies and moreover, he also married someone, Mrs. Jones wanted the possession of the house. On the other hand, Mrs. Padavatton tried to enforce the contract under the law. But the court arrived at the conclusion that the arrangement between the mother and daughter was domestic in nature and therefore it can be presumed that it was not intended to be enforced by the law.
Similarly in this case also, it has to be seen if the promise according to which Richard’s father had agreed to pay $200 per week to Richard if he mowed the front and back yards of the property. It also needs to be mentioned at this point that Richard’s father had been paying $350 to a garden contractor for the upkeep of the family’s property. Later on Richard’s father declined to pay the above said amount, and said that as a member of the family it was the responsibility of Richard to look after their property. Richard’s father also said that due to the reason that Richard got free board and lodging, Richard should do the work for free. In this case, it is a family arrangement between father and son and as a result can be presumed that the parties are not have the intention of entering into legal relations. As there is no evidence presented by this presumption, it can be said that which it cannot legally enforce the promise made by his father.
In his question, Frere Bros have entered into an agreement with the famous film star Joe. According to this contract, Joe agreed to work only in the films being made by Frere Bros during the period of the contract. Although this contract was for five years, in the first year of the contract itself, Joe agreed to work in the film that was being made by Pretty Pictures. Now, Frere Bros. want to know if any remedies are available to them as a result of the breach of contract that Joe is going to commit.
In this context, the law contract provides certain remedies to a party to the contract if a breach of contract has taken place on part of the other party. Therefore the main remedies that are available under the contract law to the innocent party include remedies of damages, intention and specific performance. However the remedy of damages can be claimed by the innocent party in case of a breach of contract as a matter of right but remedies of specific performance and specific performance can be granted only at the discretion of the court (Collins, 2003). The result is that whenever there is a breach of contract, and the innocent party has suffered a loss or injury as a result of such grief, the party can claim damages as a matter of right. In this regard, he needs to be mentioned that the damages awarded by the court can be substantial or nominal. The nominal damages awarded by the court when the innocent party has not suffered any significant loss due to the breach of contract (McKendrick, 2009). But when the innocent party has suffered a substantial loss or injury, the court may decide to the substantial damages as the monetary damages. However, substantial damages can be claimed by the innocent party if such a party is in a position to establish that the loss suffered innocent party was the result of such a breach. At the same time, a defense is available to the other party which may claim that reasonable steps are not taken by the innocent party to mitigate the loss.
Apart from the remedy of damages, in some cases, the court may also decide to what the remedy of specific performance. At this point it is worth mentioning that it is the discretion of the court to grant the remedy of specific performance. However when the relief of specific performance has been granted by the court, an order is made by the court according to which the other party has to perform its obligations that it was required to perform under the contract. Likewise, the court orders the grant of the remedy of specific performance generally in cases where adequate relief may not be provided by an order of damages. An example of such a situation can be given of the case where the contract has a unique subject matter (Falcke v Gray, 1859). Due to the reason if a replacement can be found of the subject matter of the contract, even if it may take a long time, generally the relief of specific performance will not be awarded by the courts.
According to the common law rules that are related with the relief of specific performance, this release will not be awarded by the courts if constant supervision of the court may be required for a considerable period or if the obligations of the parties and the contract have not been mentioned clearly. Hence in Co-op Insurance v Argyll Stores (1997), it was the decision of the court that an order of specific performance cannot be made according to which the shop should be kept open during the normal business hours because it will require constant supervision from the court in order to enforce the order.
Apart from these two remedies, in some cases the court may decide to grant an injunction that there has been a breach of contract. However like the media specific performance, an injunction is also an equitable remedy. Consequently, it is the discretion of the court to grant this remedy or not in a particular case. However the court may decide to grant the remedy of injunction only if adequate relief will not be provided to the innocent party by an order of damages for the purpose of compensating the innocent party as in such case, the innocent party wants to prevent the defendant from breaching its contractual obligation (Peel and Treitel, 2011). Therefore in such cases, the court may grant prohibitory injunction or it may order a mandatory injunction. For the purpose of deciding if an injunction should be granted in a particular case, there are certain factors that have to be considered by the court. These factors are the same that need to be considered before making an order of specific performance. For this purpose, the test of balance of convenience is used by the courts. In this test, the court considers it the benefit provided to the injured party outweighs the detriment that will be suffered by the other party. In this way, the contract law provides that an injunction will not be granted by the court if it will result in compelling the other party to do something that cannot be asked to do by a decree of specific performance. On the other hand, if there is an emergency involved, the court may grant an interim injunction according to which the other party will be restrained from acting.
Therefore in the present case also, the most adequately remedy that may be claimed by Frere Bros will be the remedy of injunction. According to this remedy, Joe can be prevented from breaching the contract and acting in the film of Pretty Pictures.
References
Atiyah, P.S. 2000 An Introduction to the Law of Contract, Clarendon
Beatson, J. Burrows A. and Cartwright, J. 2010 Anson’s Law of Contract, 29th edn OUP
Collins, H. 2003, Contract Law in Context 4th edn CUP
McKendrick, E. 2009 Contract Law 8th edn Palgrave
Peel E and Treitel, G.H. 2011, Treitel on the Law of Contract, 13th edn Sweet and Maxwell
Case Law
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd. Supreme Court of New South Wales [1989] 2 NSWLR 309
Balfour v Balfour [1919] 2 KB 571)
Co-op Insurance v Argyll Stores ([1997] 3 All ER 297
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Falcke v Gray ([1859] 4 Drew 651
Jones v Padavatton [1969] 2 All ER 616
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