Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Q. 1.
The High Court has refused to recognise the presumptive test to be applicable in making
the evaluation of the presence of the motive to create the relationship of legal nature at the
time of effecting agreements in the case of Ermogenous v Greek Orthodox Community
(2002) 209 CLR 95. The court in this case has made suggestions towards the application of
the objective test and to refrain from the usage of the test of presumption. Under the
presumptive test, it is a general inclination of the courts to treat commercial agreements to be
instituted with a motive of the creation of the relationship of legal nature. The domestic
agreements under this test are preferably treated to be devoid of any motive, which can create
legal relationship. This view of the court has been denied in this present case and the court
has suggested the use of the objective test in the future cases. The objective test would more
focus on the circumstances of the case and would not extend consideration to any such
presumptions. This would be more appropriate in evaluating the motive, which might have
created the legal relations. This test would ensure an error free conclusion in contrast to the
presumption test.
Q. 2.
The first clause that has been provided implies the absence of the motives of the parties
involved in that particular agreement to enforce that agreement. It indicates the lack of the
desire of the parties to form any legal relations while entering into the agreement. And hence
it will render the contract to be unenforceable. However, the second clause that has been
provided implies the agreement to be unenforceable in the court of law, but it does not render
the contract to be unenforceable altogether. The clause will render the contract to be
enforceable through other means of dispute resolution and only restricts the resolution by
litigation.

2BUSINESS LAW
Q. 3.
Issue
Whether any liability has been accrued towards Donald in any of the three situations
mentioned.
Rule
Part payment cannot be treated as a valid consideration even if the same has been accepted
by the other party to a contract. The person accepting such a part payment would still be
entitled to enforce the rest of the payment to be made. However, the same can be denied if
there has been a previous payment already made with respect to the balance amount.
The doctrine of promissory estoppel can be construed to be an exception to this doctrine,
which restrains a person from denying a promise of accepting a part payment owing to which
the other party has acted in the furtherance of the same.
Any part payment that has been made by a third party would be treated to be a full
settlement of the debt and will extinguish the right of the balance amount of the party
accepting such payment.
Case
Hirachand Punamchand v Temple [1911] 2 KB 330
Answer
a)
In this case, Donald will be held liable for the payment of the rest of the payment. This is
because part payment cannot be treated to be a full settlement of the debt and is not a valid
consideration.
b)