Social Relation Business Relationship

Question: Describe about the Social Relation for Business Relationship. Answer: Issue The question of law to be determined in this case is; whether there is Derrick and Carmel had the intention to be legally bound and whether consideration was given and if it met the standards set by law. Rule The general rule that is applicable in social relation is that there exists a rebuttable presumption that there is no intention to be legally bound by any agreement made.[1] Conversely, an objective test to determine the intention of parties in a social relationship has been adopted by a majority of judicial decision which appears to eschew the application of the rebuttable presumptions as was observed in Ermogenous v Greek Orthodox Community of SA Inc.[2] On the matter of consideration, it is the general rule that consideration must be provided for a contract to be valid and enforceable. The consideration can either be the performance of an act or profit, benefit or interest that may be incurred in a promised transaction. [3]Some scholars appear to relate intention and consideration, and they argue that consideration determines the intention of the parties. The nerve of the reasoning of the preceding argument is that if consideration is present, then the parties intended to be legally bound. It should, however, be borne in mind that intention is an independent desideratum for a contract formation. In Woodward v Johnston [4] the claimant agreed to help the husband repair a dredge by cleaning the rust. The claimant dutifully performed this task during the weekend. The court held that such a relationship did not demonstrate that the parties had the intention to be legally bound because the claimant could not rebut the presumption that there was in intention to be bound. The presumption will, however, be rebutted in circumstances where a commercial agreement exists between a domestic relationship transaction. Moreover, the court in Todd v Nicol[5] While applying, the rebuttable presumptions ruled that they are rebutted if attention is paid to the nature of the relationship at the time of making the agreement and the extent to which the parties went to perform the promise. It is apparent from the test applied in Tods case that if the agreement goes beyond what would reasonably be inferred as a social agreement, the presumption will be rebutted. The judicial ink that has been spilled in recent cases in Australia is a manifest that the rebuttable presumption test has fallen into disfavor and the Objective test has taken root. It is of interest to note that the objective test has been applied in a case where the court held that the court should take into account the conduct of the parties and the wording displayed by the agreement and determine if on a balance of probability an intention to be legally bound will be inferred. The courts have applied the objective test in several instances to escape the use of the rebuttable presumption test. As has been noted in the Curie case consideration may be either a profit or interest following a promise. In this case, there was an agreed consideration of $20000. It has been held that the consideration must be given by the promisor to the promise and a promise cannot be enforced if a consideration has not been given.[6] It must also be demonstrated that consideration has an economic value and is not ambiguous in nature. In Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd[7] the court held that consideration must be the price that is paid fro the promise that has been made in the agreement. As such the promise should be valuable of benefit. In the case above Dunlop sold tires to a person on an agreed basis that they will not be sold at a certain undercut price. However, subsequent buyers of the tyres sold them at a lower price and the court held that there was no agreement between them and Dunlop and that there was no valuable consideration that had been given to enable the agreeme nt to be enforced. It is imperative to note that consideration must not necessarily be adequate. As a matter of course consideration must only be sufficient. In Chappell v Nestle[8] Lord Somervell argued that a sufficient consideration is based on the free will of the contracting parties to determine the final value of it. A more persuasive position was arrived at in Thomas v Thomas[9] where the court stated that a consideration of 1 pound as annual rent was sufficient and disregarded the argument that consideration must be adequate. Application Derrick and Carmel are cousins and therefore there relationship can be regarded as a domestic relationship. The fact that the relationship is a domestic one triggers the application of the rebuttable presumption test is strictly applied then the result will be that there was no intention to be legally bound. It can thus be argued that although Derrick and Carmel are great friends and cousins, the nature of their engagement is purely business related as it refers to a commercial service. It can be conceded that an intention to be legally bound existed in the agreement. The fact that agreement between Derrick and Carmel was of a business nature and a consideration of $20000 was given it can be stated that the consideration had an economic value and was very clear from the commencement of the transaction. It can be observed that Derrick and Carmel agreed on the final price after a counter offer which shows that the consideration was determined based on the free will of the parties who n egotiated. Conclusion In light of the above arguments and application of the law it can be concluded that the two parties had the intention to be legally bound by the agreement. However, as some scholars have noted the court determines the intention of both parties but on the real aspect the parties may have had a different intention when entering into the agreement. It could be argued that the court cannot determine what was in the minds of the parties realistically. This put other parties of the agreement at the peril of facing a miscarriage of justice. With regards to consideration, the amount that had been paid by Carmel is sufficient consideration and therefore he can enforce the promise in a court of law raising the above arguments. It is, however, advised that the rebuttable presumptions should not be entirely extinguished because it is most socially agreements that the parties will not likely end up in court incase of any failure to meet the obligations stated in the agreement. The onerous task sh ould be placed on the claimant asserting that there is an intention to be legally bound to rebut the presumptions that an intention to be bound existed in the social or domestic agreement. 1 (b). Issue The issue to be determined in this case whether there was an agreement between the parties for the contract to be enforceable and whether Carmelo is in a proper legal position to compel Derrick to give him the premium travel option. Rule The general rule is that for an agreement to be established there must be a consensus ad idem which is a meeting of the minds between parties entering into contract. The meeting of the minds will be evinced by an offer and a valid acceptance is communicated to the pother party to the agreement. The agreement can be said to have been settled once the other party is in acceptance to final terms that have been proposed and not during a counter offer. An offer has been defined in Australian Woollen Mills Pty Ltd v The Commonwealth[10] as a statement of expression of willingness to enter into a contractual agreement. It, however, begs the critical question on who made the offer in this case. Carmelo made an inquiry over the phone and asked Derrick if he can be booked fro the NBA final tour. Derrick replied with an offer which he communicated to Carmel. However, Carmel replied with an offer of a new price of 20000 pounds. It has been held in Hyde v Wrench[11] that when new terms are made by a party to a contract to an offer they cannot be deemed as an acceptance but rather a counter offer. Further, in the case where an offer and a counter-offer is made the situation is legally regarded as a battle of the forms I which case the last offer that is made and accepted wins the battle. It can thus be agreed that a valid offer in this case was made by Carmel. Acceptance must be communicated to the offeror in an effective manner.[12] It is of particular significance to note that the acceptance that was made by Derrick was communicated through email. The rules relating to acceptance by email state that an acceptance will be made when the email has been received.[13] This differs from the traditional position that has been taken by the postal rule that acceptance is deemed to have been made once the letter has been posted. It therefore follows that the acceptance was made when it was received by Derrick. Additionally, the general legal position is that the agreement is made the place where the acceptance has been received. The acceptance made must be clear and devoid any ambiguity. Essentially it must be one that will not trigger issues to do with interpretation in court. According Brambles Holdings v Bathurst City Council[14] the acceptance may also be implied. This means that acceptance may also be implied from the conduct of the parties w here they carry pout themselves in a manner that shows that they have accepted the terms and they are actually performing the contractual obligations already. It is also a rule of acceptance in contract law that acceptance must be made in relation to the offer that was made. In R v Clarke,[15] the plaintiff had stated in an interview that he was going to give information concerning the murder of two police officers to clear his name because he was under investigation. There was a reward that was to be given to any person who gave such evidence that will lead to the arrest of the real murderers. The plaintiff information led to the conviction the true murders. When he wanted to enforce the reward it was affirmed in court that the acceptance made to give the information was not in relation to the offer but to clear his name from any criminal suspicion. The acceptance that was made in the case of Derrick and Carmel was truly in response to the offer that had been made and therefore the acceptance can be said to be valid. Application Having demonstrated that there was a valid agreement which met the legal requirements of offer and acceptance it can be conceded that Carmelo can claim from the premium service that had been agreed on in the contract. In this case, Carmelo has a right to enforce the agreement as had been agreed. The fact that Derrick is offering a service that is poor implies that he is in breach of the contract that had been agreed between the two parties. In this case, it is advised to Derrick that may apply for damages where he will be awarded damages by the court fro the loss of the money without a service. In this case, he will be compensated an equal amount that he had paid to Derrick. Additionally, he may also be awarded punitive damages which are intended to punish the defendant fro breaching the contract. Apart from the punishment factor in the remedy, it is also intended to deter him from breaching another agreement in future. The court may award unliquidated damages for non-economic loss f actors such as pain and suffering if it is shown that Derrick suffered emotional distress and trauma from the loss of that great opportunity to tour the NBA finals. However, according to the Civil Liability Act 2002 a limit has been placed on the amount of money that can be awarded as damages for non-economic loss Lastly, Carmel may apply from the order of specific performance in court to compel Derrick to perform that which was his obligation in the agreement. This order will only be granted in circumstances where it is shown that damages will not adequately compensate the plaintiff. Conclusion It can be concluded that the requirement of an agreement has been established from the facts of the case in point because it has been demonstrated above that the requirement of offer and acceptance have been as required by law. In addition, the fact that that the parties, in this case, exercised their freedom of contract and engaged in offer and counter offer is sufficient evidence that the final price and terms agreed satisfied the requirement of an agreement. Having noted that there is a valid agreement it can also be concluded that Derrick can insist ion being given the premium accommodation and tour option because that was what he had bargained for. This promise can be legally enforced because all the essential elements required to form a valid and enforceable contract have been met. Most importantly it has been demonstrated that the parties had the intention to be legally bound by the terms that they had agreed on. Suffice to say; the failure to honor the promise in the agreed t erms by Derrick will attract a liability in breach of contract. References Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 153 Brogden v Metropolitan Railway Company (1877) L.R. 2 App. Cas. 666 Coward v Motor Insurers Bureau [1962] 1 Lloyd's Rep 1 Chappel v Nestle [1960] AC 87 Coulls v Bagots Executor and Trustee Co Ltd (1967) 199 CLR 460 Currie v Misa (1875) LR 10 Ex 153 Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd [1915] UKHL 1 Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8 Hyde v Wrench (1840) 49 ER 132 Jones v Vernon's Pools Ltd. [1938] 2 All ER 626 R v Clarke (1927) 40 CLR 227 Thomas v Thomas 1842 2 QB 851 Todd v Nicol [1957] S.A.S.R. 72