Aveneu Park, Starling, Australia

1. the parties where trust is the

1.     Under
English Law, what are the basic ingredients of a contract and do contracts need
to be in writing?

 

A
contract is an understanding between at least two people, making a commitment
upon them to fulfill or not to fulfill a few duties set down particularly in
the agreement. The contract makes a legal relationship of rights and duties on
the parties where trust is the main issue for business.

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There
is some agreement that is not considered as contracts for e.g. religious
agreement, non-business agreements, charitable agreement and so on (lawyers, 2007). While creating
contract between two parties there must be the offer given by one party whereas,
other party should be accessible to accept that offer. If the obligation is not
fulfilled as per the agreement is done than courts on the party can take the
action. Furthermore, the contract is cleft into four ingredients which are
offer and acceptance, intention to create legal relationship, capacity and
consideration.

 

1.1  
 Offer and acceptance

An
offer is a target demonstration of an interest by the offeror to go into an
agreement that makes the power of acceptance to the offeree. According to the
section 2 in law offer is considered as a proposal that is made by promise or offeror
and to whom offer is made is considered as the promise or also called offeree. It
also explains that the offer must be complete and unqualified and should not be
conditional (sexton, 2016).

Another
thing that is important in contract is difference between offer and invitation
to treat. Offer is created when a person shows their willingness to get into a
legal contract whereas the invitation to treat (I.T.T) is an action to call
other parties to make an offer so that the contract can be formed.

Sometimes
due to the differences in offer and invitation to treat can be misleading and
misinterpreted (russream, 2017). Invitation to treat
lack intention to create legal relation.

 Example of invitation to treat could be
advertisement as it makes seller flexible to deny to sell goods as prices
wrongly marked. As there is a case between Pharmaceutical Society Verse Boots
in 1953 where the case states that the goods displayed in a shop is basically
regarded as an invitation to treat rather than the offer. (teacher, 2013)

 

Acceptance can remain characterized as an unqualified
acceptance, interconnected by the offeree to the offeror, to all terms of the
proposal, made with purpose of accepting. A entirely compulsory contract is
just designed if an offer is accepted. Acceptance is a final and unqualified
acceptance of the significant amount of terms of the offer. The offer need to
be acknowledged without presenting any new terms unclear.Acceptance does not
occur until communicated to the client making the offer  (teacher, 2013). Communication of
acceptance is the situation when the agreement is shaped and the acceptance
must be as assigned by the client. Based on to Section4 (1) CA 1950, the
communication of acceptance is considered completed when it is communicated
with offeror and should be distinguished from counter offer. A counteroffer is
a recommendation that is made due to unwanted offer. Counter offer reject the
previously made offer and make it more desirable for the individual for making
new offer. Counter offer is conditional where buyer have right to reject or to
counter back offer whereas, seller have right to counter with the price until
he feels reasonable. (Teacher, 2013).

There
is the case of Hyde v Wrench in 1840 where the defendant offered to sell a farm
to claimant for £1,000. Claimant refused and counter back offer
for £950. But later claimant agrees with the original offer of £1000. This time
seller denied to sell his farm and claimant carried an action for precise
performance. When the case was brought into law the law says that there was no
contract. The law says that when the counter offer is made that it will
automatically destroy the original offer and it is no longer exposed to the
offeree to agree.

 

 

1.2     Intention to create legal relationship

        Intention to create legal relation in
contract law signifies whether court regard the    agreement as a contract or not. Contract
should be legally binding agreement. When an offer is accepted it is considered
as an agreement but not essentially to be a contract. To be a true contract
there must be intention to create legal relation as court believes in evidence
so the agreement done under the law gives the legal values (Teacher,
2013).

Intention to create
legal relation also explain intention to be serious agreement where it
indicates that the contract parties should be sure about the contract before
moving into serious agreement. If there is no intention to create legal
relation the parties cannot sue each other and contract may have considered as
mere promise (Teacher, 2013).

 

 

 

1.3  Consideration

Consideration in contract law is concerned with the bargain of the
agreement where the promises are exchanged between both the parties’ promisor
and promise. Consideration in contract helps in receiving the benefit as well
as suffer the loss. In contract it is further categorized into bilateral and
unilateral contract. The bilateral contract is an agreement where parties on
the both side exchange the common promises which is considered as the
appropriate consideration. In unilateral contract agreement is done by one
party makes a promise in exchange for the performance of other party where
performance is consideration for the first party, while that party is consideration
for the performance (Weitzenbock, 2012).

 

 

 

 

There are rules that is bind with consideration and some of them
are:

 

 

 

 

a.    
Consideration must not be past

While making consideration in contract if one
party performs act willingly, and other party then makes agreement than that
type of consideration is supposed to be in the past.

 

 

b.   
Existing public duty

 

To do a certain work if someone under the
public duty, and the approving to do the same task is not enough consideration
for contract.

 

 

c.     Existing
contractual duty

 

When a party promises to do something they are certain to do it as
per the contract which is not a valid consideration.  (Teacher, 2013)

 

 

 

 

 

 

 

 

 

 

1.4  Legal capacity

While entering into contract, parties must have
contractual capacity. there are certain people and classes of people that do
not have ability to go into an agreement with the consequence that resulting
contract will not be enforceable against them.

There is certain level of individuals lack full
capacity to contract and the contract formed by those parties are often
voidable. (Forbes, 2006). When the parties are referred
incapable or below the age then contract is not formed.

 

 

 

a.    
Minors

At common based law people younger than 21 were assigned “infant”
and had just a limited ability to contract. From January 1, 1970, the Family
Reform Act 1969 decreased the time of dominant part to 18 and approved the term
“minor” as another option to “infant” which is presently preferred as term (smith, 2000).

 

b.    Mental capacity

A
person needs the mental capacity to perceive the issues that should be
considered, to acquire, get comprehend and hold significant information that
include advise and to measure the information in the balance in reaching a
decision (Clarks, 2013).

 

 

 

 

 

2.     Discuss whether English
law will presume there to be an “Intention to Create Legal Relations” in the
scenario concerning White Fluff Ltd and Bread-Basket Ltd.

 

As discussed in
paragraph “intention to create legal relation” 
is intention to enter a legally binding contract by both parties and
also shows interest to tolerate the consequences (Teacher,
2013)

As per the case, Alison
runs a flour organization called “White Fluff Ltd”. Sue, who is Alison’s
closest friend is in a difficult situation as she can’t freshly bake breads for
predictable time since her organization’s flour suppliers failed to deliver
flour according to their long term agreement. Alison as friend was glad to help
Sue by giving her flour and this has proceeded for the past ten weeks.
According to the inquiry it has asked weather for this situation the English
law will assume there to be an “Intention to Create Legal Relations” or not.

For the contract to be
valid there should be certain requirement to be fulfilled. “Intention to Create
Legal Relation” is one the important element in contract. For a contract to be
legally valid there must be “Intention to Create Legal Relation”. As per the
interrogation the question has been raised that if the English law will suppose
an “Intention to Legal Relations” or not.

(Gulati, 2011). With reference to the English law, there
will be a consideration of the basic elements on which basis the agreement was
made and if the contract is commercial or domestic, before proceeding to create
legal relation (Gulati,2011). With respect to the English laws, the preferences
for creating a legal relation with business contracts is higher and more
acceptable whereas the preference to create legal relations with a domestic or
social contract is low. The given case is related to the domestic contracts, hence
we figure out the relatable cases and the results concluded.

For reference
of the context we take, Balfour vs Balfour case. This is a case related to
domestic contract law in terms to intention to create legal relation (stone,2013).
According to this case, it explains about a situation where the husband
(defendant) and wife (claimant) stayed together in Sri-Lanka. But due to the
ill health of Mrs. Balfour they had to part ways. Mr. Balfour went back to Sri-Lanka
to earn his living and also gave his words to send Mrs. Balfour monthly
maintenance fees whereas Mr. Balfour stayed at London. The early days of the
agreement went fine but in the later days Mr. and Mrs. Balfour had to part their
ways permanently by choice. Eventually after the disintegration husband stopped
sending the monthly allowance and the wife sued him for not abiding by his
given words. According to the English law the agreement made between Mr. and Mrs.
Balfour was a domestic contract hence the court preferred not to create legal
relation.

But, not
necessarily the court always doesn’t perform a legal relation on the domestic
contracts. For example, we can consider the case of Merritt vs Merritt on which
the law presumed a legal relation despite of it being a domestic contract.
Merritt vs Merritt 1970 1 WLR 1211 is a case that explain about the following
situation.  With accordance to this case,
husband, Mr. Merritt(defendant) and wife, Mrs. Merritt (claimant) had their
matrimonial home in joint names while they were in a relationship. After
getting dispatched Mr. Merritt signed an agreement to pay £40 monthly and also
give his share of the house to Mrs. Merritt if the wife acknowledges to pay
charges of the mortgage. Mrs. Merritt did pay off the charges but even after
the charges being fully paid off Mr. Merritt did not abide by his promises
declaring that it was a domestic contract and the law does not enforce its
legal relations on a while Mrs. Merritt had declared the house to be hers under
the agreement made. But the court declared to be the presence of a legal
relation as the spouses are separated and there isn’t any opposing factor to
not create a relation. This declaration of the law made Mr. Merritt pay off his
promises. Keeping “Balfour vs Balfour” and “Merritt vs Merritt
” case in consideration, Alison and Sue case can be related with Balfour
vs Balfour case as both Alison and sue have a domestic relation between them with
no hatred as friends. Also, with comparison of Merritt vs Merritt case, there
aren’t any agreements made in the hope of a gained profit between White Fluff
ltd and bread basket ltd.

Considering
there to be two companies involved, questions may arise if there is the
intention of profit or mutual gain involved behind the acquaintance but in
reality there isn’t any other foreign intentions involved.  By looking at the facts, it is crystal clear
that the only reason for supplying flour was for the existing friendship.
Therefore, there is no need of creating any legal relations and quite clearly
there aren’t even any contracts made. Both the companies “white fluff
ltd” and “Bread basket ltd” work together in harmony and there aren’t
any legal considerations to be made as well. In conclusion, as the agreement is
a domestic one, the English law will suppose not to create legal relation
between white fluff ltd and bread-basket.

 

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