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Contract law comprises all the relevant laws and regulations that are commonly used in handling promises among people in the society. According to Carter, W., Peden, E and Tolhurst, G. (2007), the Australian contract law is guided by the country’s common laws basing on the statutes that explain the basis of formulating contracts among employers and employees. The contract law is divided into common law of contract and the consumer law. The law undergo the following stages: the formulation, scope and content, avoidance, the performance & termination procedure and the remedies upon breaching the contract. In such cases, a common law contract among employees exists regardless if it is a written agreement or not.
Alex’s right to an extra $20,000 and a share in the farm
In the above case, George and Alex come up with an informal agreement. George asks Alex to postpone his studies at the Sydney University in order to come and aid in running his firm with Stella who is his step mother. George promises to pay Alex a sum of $30,000 per month and pledges him a share of the firm’s total property. Alex agrees to the proposition of his father and decides to put on hold his second year studies. George and Alex agree on the offer without having a written contract among them. Their agreement is based on verbal accord that the contract law recognizes. Verbal agreement among employers and its employees is recognized by Australian law and in case the employer breaches the contract, he or she is feasible to the mutual contract.
After three months of working, Alex finds it difficult working with Stella, where the former asks his father for permission to stop working due to the bad relationship with Stella’s step mother. In the process, George persuades Alex to bear with Stella and continue working on the firm. In return he promises to pay him an additional amount of $ 20,000 on his salary. Alex also expects payment from George for the construction of a shed in the firm. Upon the return of George after one year, he disagrees with Stella on the agreement of paying Alex $50,000 where Stella insists on paying him $30,000. Stella persists that she was not involved in the decision of paying Alex an additional amount of $20,000. George does not keep his promise of paying Alex $50,000 and giving him a share in the firm’s property.
In Paul Latimer’s book, Australian Business Law (2010), Alex will sue George for not meeting his contract on paying him $30,000 with an additional $20,000 after the first three months as a salary for the work he carried out for the one year while at the firm according to the contract law. George is accountable according to the contract that existed between him and his son Alex, and by which both parties are bounded to. The breaching of the contract by George gives Alex an opportunity of taking legal actions against him as he sacrificed his entire one year of school to work on the firm.
In the case of the additional $20,000 on Alex salary by George, Stella has the right of being against it as she is part of the ownership of the firm and George was suppose to involve her in the decision of paying Alex an additional amount on the previous salary. The property is owned jointly by the couple, thus any decision should be agreed upon by both parties.
On the other hand, Alex should claim for the $20,000 extra payment as it was part of the contract between him and George. The contract evidently indicated a reciprocal agreement between him and the father regarding the additional amount. According to the contract law, George is liable and must meet his obligation on the contract to Alex on his work during the last 9 months.
Consider whether there has been intention to enter into legal relations.
According to the case, there were intentions of entering into legal relations as there is a mutual agreement leading to a contract between George and Alex, according to Blum’s book, ‘Contracts: examples & explanations’. (2007) p.207. George persuades Alex to postpone his studies and per-take on his father’s duty at the firm. The fact that George and Stella have allowed Alex to work on the firm is an indication of a consideration of a contract. The law of contract acknowledges any mutual agreement either verbal or written among two or more parties on condition of the existence of a mutual agreement on the task. In the above case, while ruling, there is need of listening on what both parties said before commencing. George promised Alex an additional $20,000 upon accepting to remain calm and work with Stella until George comes back. On the other hand, Alex agrees the offer and volunteers to stay and work with her step mother despite the misunderstanding between them. According to the context of their statement, there is an indication of understanding that legally binds them together as George and Stella agree to convince Alex to postpone his studies in order to work at their rural property business in Western NSW.
Discuss whether there has been any form of consideration on Alex’s part for the extra $20,000 and share in the house (for example, has there been any practical benefit?)
The consideration of the extra $20,000 to Alex should be implemented according to their agreement as they were legally bounded by the promise (Alex and George). After listen on either side of the party, Alex and George’s claims, the context of their statement leading to the promise of paying an additional $20,000 comes out clearly. George’s conduct after return has contradicted the situation as he is unable to convince her wife, Stella for the extra payment to Alex as an appreciation for being patient with her. Although George and Stella disagreed over the additional amount, the contract still existed between George and Alex as such agreement was legally bonded by the law. In the long run, Alex has lost a whole year after forfeiting his studies in order to work in their rural property on behalf of his father who was travelling to Greece to visit her sick mother. However, while working at the property Alex has gained much knowledge on the managing of business which is part of his future career as he is studying a business related course at the University (Khoury & Yamouni, 2007).
Consider whether promissory estoppel could apply. You should analyse this, even if you
Decided there was consideration. Ensure that, as part of your analysis, you cover Brennan J’s six points from
Estoppel is a term used to refer to the act of denying the existence of a promise among two or more parties. The term is useful in preventing the use of unjust terms from being used in justifying false assumption on a pledge among parties. In such scenario, a promise is approached at two perspectives. Blum, 2007, p 207-8, explains the basis of coming up with a promise. The promise made in the context of the pre-existing legal relationship among the two parties (father and child). The promise is viewed as a defence on the side of Alex as there is consideration of the contract. The promise that is made in circumstances of no pre-existing legal relationship lacks consideration while pursuing the dispute.
In George and Alex’s case, the application of promissory estoppels could be considered as there was a contractual relationship between George, Stella and Alex. The presence of promise and promissory leads to the existence of a promissory estoppels case. The forfeiture of George to meet his promise to Alex brings out the breaching of the contract. This is made possible by not necessarily the lack of enforceable contract, but the reliance on promise from the father (George), thus making it unfair for him not to fulfil the agreement. The promise of $20,000 to Alex is an example of a pledge or gift promised by George, and according to promissory estoppels, he must fulfil it .
According to Brennan, in relation to the concept of consideration, George has the responsibility of fulfilling his promise to Alex. George’s promise had a motive of keeping Alex on duty while away. George has the obligation of paying Alex the funds agreed upon. The concept of request for performance by George to Alex is another mutual agreement as Alex carries out his duty to the maximum while at the property of his father. The promise of the additional $20,000 by George should pay for the services rendered by him for the last nine months.
The performance of Alex has satisfied both George and Stella as he is supposed to be accorded all the agreed payment after the return of the father as indicated in the articles of Paul Latimer in his book, ‘Australian Business Law’ 30th edition in 2011 .