Week 7 Lecture slides

Week 7 Lecture slides - LAW101 Law, Business & Society...

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1 LAW101 Law, Business Week 7 Contract Law - the elements Pt 2 What is a contract? An agreement which the courts will enforce Contracts For a contract to exist there must be: 1. An agreement between the parties a. An offer and b. An acceptance 2. An intention to be bound by the agreement 3. An exchange of consideration (value) Intention to contract What is intention to contract? • The fact that parties have reached agreement does not necessarily mean that a contract has been formed. Intention to contract What is intention to contract? • Parties must intend their agreement (promises) to be legally binding. • If the parties did not intend their agreement to have legal consequences there can be no contract and the Court will not intervene in a dispute. Intention to contract The test on intention Intention can be either: EXPRESS (specifically stated) – but rarely is; or IMPLIED (from words, conduct or surrounding circumstances)
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2 Intention to contract Expressly NO intention ‘honour’ clauses – Not entered into as formal agreement – Binding in ‘honour’ only Rose & Frank Co v Crompton Bros Ltd [1925] Jones v Vernons Pools Ltd [1938] 2 All ER 626 Intention to contract Expressly NO intention ‘subject to contract’ clauses – Document not in its final form – Subject to preparation of written document Masters v Cameron (1954) Intention to contract IMPLIED intention OBJECTIVE test – what a ‘ reasonable person ’ would have taken a party to have intended, – not subjective (what the party actually intended) Intention to contract IMPLIED intention Traditionally: Social, family, domestic, voluntary PRESUMED NO INTENTION Commercial or business PRESUMED INTENTION TO BE BOUND Intention to contract Intention to contract • The High Court affirmed in Ermogenous v Greek Orthodox Community of SA Inc (2001): – Intention is an essential element of contract formation. – However, simply applying ‘presumptions’ may no longer be the appropriate test for intention.
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3 Intention to contract Non-commercial agreements • Under the ‘traditional’ approach no intention is presumed to exist, though this is rebuttable by the evidence produced by the plaintiff. Intention to contract Non-commercial agreements - Lotteries and competitions • A social arrangement may result in an intention to contract where it is clear from the facts that it is what the parties would have intended: - Trevey v Grubb (1982) 44 ALR 20 Intention to contract Non-commercial agreements - Agreements between husband and wife • Traditionally in domestic situations: – Where the husband and wife are living together at the time of the agreement, no intention: - Balfour v Balfour [1912] 2 KB 571 – Where the husband and wife are separated at the time of the agreement, intention may exist - Merritt v Merritt [1970] 2 All ER 760 Intention to contract Non-commercial agreements - Other domestic arrangements • The courts may look at the words and
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This note was uploaded on 06/16/2010 for the course LAW 121 taught by Professor Aresa during the Spring '08 term at Uni. West.

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Week 7 Lecture slides - LAW101 Law, Business & Society...

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