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Legal Validity Of Domestic Contracts And Consideration: A Case Study

The Rule of Valid Contract for Domestic or Social Agreements

Issue: Whether Ali has right to take action against the Charlie for breach of contract or not in context of agreements held between the siblings?

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Law:for the purpose of valid contract, an agreement must intend to create legal relations, and generally presence of consideration provides evidence in this regard. However, situation is different in context of domestic or social agreements because in these parties does not intend to create legal relations with each other, especially at the time when relations are harmonious at the time of entering into the contract. In other words, when any contract is of social nature then law assumes that there is no legal intention on part of the parties to create binding relations.

Case law:in case Balfour v Balfour, [1919] 2 KB 571, Court stated that parties does not intend to create legal relation with each other, even though consideration is present in the case. Agreement held between the spouses cannot be considered as valid agreement because parties to the contract do not have intention that they can face legal consequences. In these contracts actual consideration is natural love and affection. In case Wakeling v Ripley (1951) 51 SR (NSW) 183, in this case central issue was whether or not agreement between the family members was legally enforceable or not. In this case Court held that agreement between parties was legally enforceable, because of the serious effect of migration on their lives.

Explanation- in the present case, contract held between the parties is the domestic contract, and as per the basic rule in case of domestic or social agreements parties does not intend to create legal relations with each other, especially at the time when relations are harmonious at the time of entering into the contract. In this case also, parties to the contract do not intend to create legal relations with each other. As stated by Court in case Wakeling v Ripley (1951) 51 SR (NSW) 183, in this case central issue was whether or not agreement between the family members was legally enforceable or not. In this case Court held that agreement between parties was legally enforceable, because of the serious effect of migration on their lives. In the present case, this contract seriously affects the life of Ali as he paid accurate consideration for the same and terms of the contract are negotiated by lawyers. Therefore, it can be said that contract between parties was not mere family arrangements as Ali’s life get serious effect from this and he paid adequate consideration. Therefore, Ali has right to sue the Charlie for breach of contract. 

Issue: Whether performance of the public duty can be considered as valid consideration or not?

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  1. Law: when law imposed duty on public officials to perform the particular task then performance of such task cannot be considered as the good consideration. However, officials do anything extra which is more than merely perform an existing duty then it is considered as the good consideration. In other words, if public officials perform any task which is not fall under their existing duty and require extra efforts then such performance merits good consideration.
  2. Case law: this can be understood through case law Glasbrook v Glamorgan County Council, [1925] AC 270. In this case, Court stated that mere performance of the public duty by the police does not required any extra payment and any such promise which required to do so will be unenforceable. However, if individual required any extra kind of service then any promise to pay extra for this will be enforceable.
  3. Explanation: In this case, Nick required special kind of service and he also make promise from the local police to pay extra for this service. In this case provisions of above mentioned case will apply, and as per these provisions, if individual required any extra kind of service then any promise to pay extra for this will be enforceable. In this case public officials perform such task which do not fall under their existing duty and require extra efforts, and because of this such performance merits good consideration. Therefore, duty demand by nick falls under the extra services and it can be considered as the good consideration which means Nick will not win the case in the Court. 
  1. Issue:Whether Helen has right to sue Mike for the remaining amount of the Debt, or repairing of BMW steering can be considered as the good consideration?
  2. Law: as per the common rule, if any part payment is made in context of debt then such part payment is not considered as good consideration in lieu of promise made by creditor to forgo the balance. However, exception related to this rule is also there, which stated that in case payment is made with any other thing.  
  3. Case law:this common rule, that lesser payment made by party cannot satisfy the who debt was the rule which is known as the rule in Pinnel’s case and later this rule was confirmed in case law Foakes v Beer, (1884) 9 App Cas 605. This case also states the exceptions related to this rule, and as per these exceptions if remaining payment in context of debt is made with something else then it was considered as the good consideration.
  4. Explanation:in the present case, Mike stated to the Helen that he is not able to pay debt of $5000 due to her because of non-availability of the job opportunities. Helen replied that Mike can pay $1000 to her on 24th June and also repair the steering of her BMW in exchange of which she will not sue Mike for remaining debt. In this case, part payment of the debt can be considered as good consideration because in this exception stated in case law Foakes v beer is applied which stated if remaining payment in context of debt is made with something else then it was considered as the good consideration. Therefore, in this Helen has no right to sue the Mike for balance payment of the debt.   
  1. Issue:Whether Lizzie is bound to pay $140 to the owner of DVD store and with its onerous terms, and whether Lizzie get any previous notice related to this term before signing the contract?
  2. Law: Section 24 of the ACL stated that term is considered as unfair term if it results in considered imbalance of rights and obligations between the parties to the contract, and such term is not important for the purpose of protecting the legitimate interest of the party who get advantage from this term, and such term result in disadvantage to the other party if such term is applicable. If any onerous term is stated in the contract which cause significant imbalance in the right of the parties, then such term must be bring in the attention of the parties before signing the contract. In other words, reasonable notice related to the onerous terms must be given to the party, which means extra notice is required for onerous terms.
  3. Case law:this can be understood through case law Interfoto Picture Library v Stilletto [1989] QB 433, in this case Court stated that term was onerous in nature and was not incorporated in the contract. Court further stated that, if any person wants to rely on the onerous term then such person must take extra measures to bring those terms to the attention of the party.
  4. Explanation: In the present case, DVD store incorporate term in the contract related to the delay payment of the DVD. However, generally this delay payment is $5 in complete DVD industry but DVD store owner set it to $20 which is unreasonable. In this case this term can be considered as onerous term and it requires extra measures on the part of the owner of DVD store to take this measure in the attention of the Lizzie. In this case, measures of the above stated case are applied, and as per this case no reasonable notice related to the onerous terms is given by owner to the Lizzie. Therefore, this term can be considered as the onerous term and no notice is provided for this term to Lizzie. If DVD owner file case in the Court then he will not succeed.  
  1. Issue:Whether drycleaners can rely on the exclusion clause they stated in the receipt or Toni can sue them for distortion of their dress, and whether receipt is contractual in nature?
  2. Law:exclusion clause can be incorporated by the party in the contract for the purpose of excluding or limiting the liability of one party in case of breach of contract or negligence. Party can rely on the clause if such clause is incorporated into the contract, and clearly stated in the contract. In case document is signed by the plaintiff then such clause is part of the contract and bound on parties. This clause is applicable even though person does not read or understand the terms of the document. 
  1. Case law:this can be understood through case law Curtis v Chemical Cleaning Co [1951] 1 KB 805. Court stated that drycleaners must not escape their liability for damage to the material of the dress and it was not possible for them to rely on the exemption clause because scope of this clause had been misrepresented by the defendant’s assistant. In case L’Estrange v Graucob [1934] 2 KB 394 Court of Appeal, Court stated that by signing the order form claimant was bound by all the term of  the contract and no matter whether claimant read or understands the term or not.
  2. Explanation-in the present case, drycleaners can rely on the clause because this clause incorporated into the contract, and clearly stated in the contract. in this case, Tori cannot deny the clause on the grounds that he did not read the document. In this provisions of case law L’Estrange v Graucob [1934] 2 KB 394 Court of Appeal is applied in which, Court stated that by signing the order form claimant was bound by all the term of  the contract and no matter whether claimant read or understands the term or not. Therefore, Tori cannot take action against the drycleaners. 
    1. Issue:Whether Sandra owns any right against the Smith’s for supplying calculator which is not fit for her purpose?
    2. Law:as stated by the Australian consumer law, there are number of consumer guarantees which applied automatically such as product sell by seller must be reasonably fit for any purpose specified by the customer and agreed by the seller. Section 55 of the Competition and Consumer Act 2010 (Schedule 2) stated that, in case goods are not fit for the particular purpose, then he consumer has right to remedy. The type of remedy depends on the major and minor issue, and in case product does not do particular job or achieve any particular purpose which is agreed at the time of buying falls under the category of major issue. In this case, consumer can reject the product and choose a refund or replacement, or seller will be under obligation to compensate the buyer for any drop in value.
    3. Case Law:this can be understood through example, David Jones v. Willis (1934) 52 CLR 110. In this case, plaintiff purchased pair of shoes from the defendant and retailer was the distributor of the shoes but not the manufacturer. In this case, Court stated that there were breaches of conditions because shoes were un-merchantable and fails to fit for the purpose. 
  1. Explanation-in this case, Sandra clearly specifies her purpose before purchasing the copier to Mr. Smith. Mr. Smith recommends her a specific model of copier that Sandra purchases for $12,000. Later, she discovered that machine purchased by her is very slow. In this product sell by seller does not reasonably fit for any purpose specified by the customer and agreed by the seller. In case goods are not fit for the particular purpose, which means implied warranty stated under section 55 is breached and consumer has right to get remedy. Provisions of above stated case are applied and customer has right to sue the seller. Therefore, Sandra owns right against the Smith’s for supplying calculator which is not fit for her purpose and she will succeed in her claim against Smith.

Legal Validity Of Domestic Contracts And Consideration: A Case Study

The Rule of Valid Contract for Domestic or Social Agreements

Issue: Whether Ali has right to take action against the Charlie for breach of contract or not in context of agreements held between the siblings?

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Hire a Pro to Write You a 100% Plagiarism-Free Paper.
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Law:for the purpose of valid contract, an agreement must intend to create legal relations, and generally presence of consideration provides evidence in this regard. However, situation is different in context of domestic or social agreements because in these parties does not intend to create legal relations with each other, especially at the time when relations are harmonious at the time of entering into the contract. In other words, when any contract is of social nature then law assumes that there is no legal intention on part of the parties to create binding relations.

Case law:in case Balfour v Balfour, [1919] 2 KB 571, Court stated that parties does not intend to create legal relation with each other, even though consideration is present in the case. Agreement held between the spouses cannot be considered as valid agreement because parties to the contract do not have intention that they can face legal consequences. In these contracts actual consideration is natural love and affection. In case Wakeling v Ripley (1951) 51 SR (NSW) 183, in this case central issue was whether or not agreement between the family members was legally enforceable or not. In this case Court held that agreement between parties was legally enforceable, because of the serious effect of migration on their lives.

Explanation- in the present case, contract held between the parties is the domestic contract, and as per the basic rule in case of domestic or social agreements parties does not intend to create legal relations with each other, especially at the time when relations are harmonious at the time of entering into the contract. In this case also, parties to the contract do not intend to create legal relations with each other. As stated by Court in case Wakeling v Ripley (1951) 51 SR (NSW) 183, in this case central issue was whether or not agreement between the family members was legally enforceable or not. In this case Court held that agreement between parties was legally enforceable, because of the serious effect of migration on their lives. In the present case, this contract seriously affects the life of Ali as he paid accurate consideration for the same and terms of the contract are negotiated by lawyers. Therefore, it can be said that contract between parties was not mere family arrangements as Ali’s life get serious effect from this and he paid adequate consideration. Therefore, Ali has right to sue the Charlie for breach of contract. 

Issue: Whether performance of the public duty can be considered as valid consideration or not?

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  1. Law: when law imposed duty on public officials to perform the particular task then performance of such task cannot be considered as the good consideration. However, officials do anything extra which is more than merely perform an existing duty then it is considered as the good consideration. In other words, if public officials perform any task which is not fall under their existing duty and require extra efforts then such performance merits good consideration.
  2. Case law: this can be understood through case law Glasbrook v Glamorgan County Council, [1925] AC 270. In this case, Court stated that mere performance of the public duty by the police does not required any extra payment and any such promise which required to do so will be unenforceable. However, if individual required any extra kind of service then any promise to pay extra for this will be enforceable.
  3. Explanation: In this case, Nick required special kind of service and he also make promise from the local police to pay extra for this service. In this case provisions of above mentioned case will apply, and as per these provisions, if individual required any extra kind of service then any promise to pay extra for this will be enforceable. In this case public officials perform such task which do not fall under their existing duty and require extra efforts, and because of this such performance merits good consideration. Therefore, duty demand by nick falls under the extra services and it can be considered as the good consideration which means Nick will not win the case in the Court. 
  1. Issue:Whether Helen has right to sue Mike for the remaining amount of the Debt, or repairing of BMW steering can be considered as the good consideration?
  2. Law: as per the common rule, if any part payment is made in context of debt then such part payment is not considered as good consideration in lieu of promise made by creditor to forgo the balance. However, exception related to this rule is also there, which stated that in case payment is made with any other thing.  
  3. Case law:this common rule, that lesser payment made by party cannot satisfy the who debt was the rule which is known as the rule in Pinnel’s case and later this rule was confirmed in case law Foakes v Beer, (1884) 9 App Cas 605. This case also states the exceptions related to this rule, and as per these exceptions if remaining payment in context of debt is made with something else then it was considered as the good consideration.
  4. Explanation:in the present case, Mike stated to the Helen that he is not able to pay debt of $5000 due to her because of non-availability of the job opportunities. Helen replied that Mike can pay $1000 to her on 24th June and also repair the steering of her BMW in exchange of which she will not sue Mike for remaining debt. In this case, part payment of the debt can be considered as good consideration because in this exception stated in case law Foakes v beer is applied which stated if remaining payment in context of debt is made with something else then it was considered as the good consideration. Therefore, in this Helen has no right to sue the Mike for balance payment of the debt.   
  1. Issue:Whether Lizzie is bound to pay $140 to the owner of DVD store and with its onerous terms, and whether Lizzie get any previous notice related to this term before signing the contract?
  2. Law: Section 24 of the ACL stated that term is considered as unfair term if it results in considered imbalance of rights and obligations between the parties to the contract, and such term is not important for the purpose of protecting the legitimate interest of the party who get advantage from this term, and such term result in disadvantage to the other party if such term is applicable. If any onerous term is stated in the contract which cause significant imbalance in the right of the parties, then such term must be bring in the attention of the parties before signing the contract. In other words, reasonable notice related to the onerous terms must be given to the party, which means extra notice is required for onerous terms.
  3. Case law:this can be understood through case law Interfoto Picture Library v Stilletto [1989] QB 433, in this case Court stated that term was onerous in nature and was not incorporated in the contract. Court further stated that, if any person wants to rely on the onerous term then such person must take extra measures to bring those terms to the attention of the party.
  4. Explanation: In the present case, DVD store incorporate term in the contract related to the delay payment of the DVD. However, generally this delay payment is $5 in complete DVD industry but DVD store owner set it to $20 which is unreasonable. In this case this term can be considered as onerous term and it requires extra measures on the part of the owner of DVD store to take this measure in the attention of the Lizzie. In this case, measures of the above stated case are applied, and as per this case no reasonable notice related to the onerous terms is given by owner to the Lizzie. Therefore, this term can be considered as the onerous term and no notice is provided for this term to Lizzie. If DVD owner file case in the Court then he will not succeed.  
  1. Issue:Whether drycleaners can rely on the exclusion clause they stated in the receipt or Toni can sue them for distortion of their dress, and whether receipt is contractual in nature?
  2. Law:exclusion clause can be incorporated by the party in the contract for the purpose of excluding or limiting the liability of one party in case of breach of contract or negligence. Party can rely on the clause if such clause is incorporated into the contract, and clearly stated in the contract. In case document is signed by the plaintiff then such clause is part of the contract and bound on parties. This clause is applicable even though person does not read or understand the terms of the document. 
  1. Case law:this can be understood through case law Curtis v Chemical Cleaning Co [1951] 1 KB 805. Court stated that drycleaners must not escape their liability for damage to the material of the dress and it was not possible for them to rely on the exemption clause because scope of this clause had been misrepresented by the defendant’s assistant. In case L’Estrange v Graucob [1934] 2 KB 394 Court of Appeal, Court stated that by signing the order form claimant was bound by all the term of  the contract and no matter whether claimant read or understands the term or not.
  2. Explanation-in the present case, drycleaners can rely on the clause because this clause incorporated into the contract, and clearly stated in the contract. in this case, Tori cannot deny the clause on the grounds that he did not read the document. In this provisions of case law L’Estrange v Graucob [1934] 2 KB 394 Court of Appeal is applied in which, Court stated that by signing the order form claimant was bound by all the term of  the contract and no matter whether claimant read or understands the term or not. Therefore, Tori cannot take action against the drycleaners. 
    1. Issue:Whether Sandra owns any right against the Smith’s for supplying calculator which is not fit for her purpose?
    2. Law:as stated by the Australian consumer law, there are number of consumer guarantees which applied automatically such as product sell by seller must be reasonably fit for any purpose specified by the customer and agreed by the seller. Section 55 of the Competition and Consumer Act 2010 (Schedule 2) stated that, in case goods are not fit for the particular purpose, then he consumer has right to remedy. The type of remedy depends on the major and minor issue, and in case product does not do particular job or achieve any particular purpose which is agreed at the time of buying falls under the category of major issue. In this case, consumer can reject the product and choose a refund or replacement, or seller will be under obligation to compensate the buyer for any drop in value.
    3. Case Law:this can be understood through example, David Jones v. Willis (1934) 52 CLR 110. In this case, plaintiff purchased pair of shoes from the defendant and retailer was the distributor of the shoes but not the manufacturer. In this case, Court stated that there were breaches of conditions because shoes were un-merchantable and fails to fit for the purpose. 
  1. Explanation-in this case, Sandra clearly specifies her purpose before purchasing the copier to Mr. Smith. Mr. Smith recommends her a specific model of copier that Sandra purchases for $12,000. Later, she discovered that machine purchased by her is very slow. In this product sell by seller does not reasonably fit for any purpose specified by the customer and agreed by the seller. In case goods are not fit for the particular purpose, which means implied warranty stated under section 55 is breached and consumer has right to get remedy. Provisions of above stated case are applied and customer has right to sue the seller. Therefore, Sandra owns right against the Smith’s for supplying calculator which is not fit for her purpose and she will succeed in her claim against Smith.

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