Did Parties Intend to Be Legally Bound

To establish a contract we need to identify an agreement; offer-acceptance, intention to be bound and an exchange of consideration.

For Robbie to be able to enforce the full $500, he needs to show that the statement ‘$500 for the return of my ring’ was a contractual promise. To have any legal significance the agreement must contain a ‘promise’. The ‘terms’ have indicated that a promissory statement was present, so the contract is legally enforceable and valid. In Clark v Earl of Dunraven and Mount-Earl (the satanita), [1] the court was asked to determine an agreement.

Contract classification is to determine whether they are ‘bilateral’ or ‘unilateral’. Bilateral contracts ensure a promise for a promise; unilateral contracts ensure a promise for an act. The contract between the parties is determined to be unilateral. However, specific facts indicate otherwise and consider it to be bilateral instead. If the contract is social the law presumes the parties did not intend to be legally bound. [2] This can be rebutted. [3] Where one party has significantly changed their position in reliance of the agreement, it is considered that there was intention to create legal relations. In Riches v Hobgen, [4] the Supreme Court found an intention to enter into legal relations. Once the contract is identified as ‘commercial’ the law presumes that the parties did intend to be legally bound. [5]

The ‘offer’ was to ‘the world at large’ and there were no exemption clauses indicated. The reward can be viewed as an ‘intention to treat’, were there is no offer but willingness to begin an offer-acceptance process, yet this is still not enough to demonstrate an intention to be bound. [6] This can be rebutted. [7] The statement is an offer. Robbie called Carly and it turned out she did not live far from the campus. He ‘agreed’ to return the ring with intention for the reward. An acceptance converts the promise of the offeror into an agreement then both parties are bound. It is clear that consideration was promised within the agreement, making the contract enforceable. [8] When the promisor is going back on their word the promisee can plead the defence of promissory estoppel like in the case of Waltons Stores (Interstate) Ltd v Maher. [9]

Although Robbie forgot to ask about the reward, there is a clear assumption that his intention was ‘ring for money’. Refusing to pay would be a breach of contract. For Robbie to enforce the full $500 reward the agreement must be legally binding. There was evidence of agreement which created legal relations. Further, Carly gave $200 which indicated her intention to be legally bound, even though she stated to Robbie ‘it was not really out of your way’. Unless revoked before the offerees’ acceptance, the offeror must fulfil all the contract requirements. The parties did intend to be legally bound, therefore there is a legally enforceable contract and Robbie would be entitled to the full $500 reward.

Was undue influence a factor to question the existence of a valid contract?

To determine a valid contract there must be an agreement; offer-acceptance, intention to be bound and an exchange for consideration.

In order to be exempt from contract, Robbie needs to demonstrate the presence of ‘undue influence’ making the contract ‘void’. There was a ‘statement of intention’ between the parties-payment for MP3 player. This was after Kieran found out about the reward money. Automatically he stated ‘Wow, you are so lucky. If you are interested in getting even luckier, I am selling my MP3 player’. ‘I think you will be really sorry if you don’t take this opportunity to get a bargain’. In Scammell v Ouston, [10] the courts made the contract ‘void’ for terms of ‘uncertainty’. The onus is on Robbie to show ‘undue influence’. This case is of non-commercial nature, it is presumed by the courts that the parties did not intend to create legal relations. [11] To create validity there must be an offer. However, the offer made by Kieran was on uncertain terms, thus making it an invalid offer. In return Robbie stated “Ok. I’ll take it”. This is not an acceptance but a ‘statement of intention’; this is viewed as a declaration of interest to accept though is not binding, as there usually is no intention. [12] Undue influence is determined to be a factor for the interest in the MP3 player. It is not a genuine offer, so it is not binding like in Garcia v National Australia Bank. [13]

Although Robbie indicated interest at first, he later found out the price of brand new MP3 players, and they were just the same. He advised Kieran by email that he was no longer interested in purchasing the MP3 player. However, Kieran’s statement was ‘Too late. You agreed to buy it’. It can be determined that due to the relationship of the parties; the courts can actually determine the concept of undue influence. [14] As there was no establishment of an offer because of ‘uncertain terms’, there is no acceptance to create a binding agreement. Hence, there is no evidence of a legally enforceable contract. If an offer and intention can be established, than the agreement is made apparent; making it contractually enforceable by law, where Robbie is obligated to purchase Kieran’s MP3 player.

Was there just a friendly arrangement with no intention to create legal relations?

To determine legality between the parties there must be an agreement; offer-acceptance, intention to be bound and an exchange of consideration.

The onus of proof is on Ivy, she must show that there was intention to create legal relations, through oral agreement. This case is of ‘Social’ nature and is presumed that the parties did not intend any legal relations. [15] If an agreement is in existence with the parties, we must determine whether there was a valid contract by offer. Otherwise there is an indication of willingness in which there is no intention of being bound. [16] Robbie said ‘I’ll split the reward with you’, this is viewed as willingness however no actual offer being indicated. This can be rebutted. [17] As no genuine offer is existent there is no agreement. In addition, offer and acceptance are used as an aid in analyses and may sometimes prove inconclusive. Consideration is essential to form a valid simple contract as established in Roscorla v Thomas. [18] Robbie may have indicated a promise however there was no act or promise in return so Ivy cannot enforce the contract. This is a gratuitous promise and is unenforceable unless under seal, so Robbie is not obligated to give Ivy a share of the reward, as they are friends it is assumed that they did not intend to create legal relations. Ivy can plead the defence of ‘promissory estoppel’ to indicate intention and show that she relied on Robbie’s promise. As it would appear unconscionable (unfair) the courts would decide to make the contract enforceable. [19]

Can Ivy claim the rest of the money from Nick?

To establish a contract there must be an agreement; offer-acceptance, intention to be bound and an exchange of consideration.

In the main agreement between the parties there is an existing valid contract which was created on clear and certain terms- ‘$100 for desk’. Due to the implied financial position of Nick, Ivy stated ‘Just give me the $50 in total’. There is no indication that Ivy is dismissing the whole debt allowing him to forget the rest of the money. [20] Where there is payment of a lesser sum in discharge of a debt, there is not sufficient consideration to support the discharge; the debtor is promising do no more than what they are already contractually bound to do.

The main contract established agreement and Nick stated that he would pay the following week. This is a promissory statement to be bound in exchange for consideration. He is legally obligated to pay $100. [21] There is assumption that Nick made a false statement with regard to his financial position. This is evident when Ivy sees him eating at an ‘expensive restaurant’. The new contract is not legally enforceable as it does not exist. The implied promise is unsupported by consideration. The main contract terms are valid and contractually enforceable. Ivy can claim the $50 owed by Nick.