Business Law

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

1BUSINESS LAW
Q. 1.
In the case of Ermogenous v Greek Orthodox Community (2002) 209 CLR 95, the
presumption test has been denied by the court and has been hinted to be replaced with the
objective test when deciding upon the intention that the parties hold while entering into a
contract to create legal relationship. Previously, it has generally been held by the court that
the commercial agreements created with the intention of forming legal relations and domestic
agreements are treated to have lacked the same. This contention has been rejected by the high
court in this case and applied the objective test, which requires due consideration to be
extended to the circumstances of the case.
Q. 2.
The initial clause implies the lack of intention of the courts to create legal relations as the
same has mentioned in an express manner that the agreement will not create any valid
contract between the parties. In the latter clause, the agreement has been prohibited from
being resorted to litigation and will enforced by ADR. The latter clause would treat the
agreement to be enforceable but not by litigation but by other forms of dispute resolution.
Q. 3.
Issue
Is Donald liable to make payment of the balance amount towards the debt.
Rule
Part payment is not a valid consideration even if accepted by the other party in full
settlement of the debt. The other party may still sue for the rest of the amount.

2BUSINESS LAW
However, doctrine of promissory estoppel prevents a person from refusing to accept a
promise when the party to whom the promise has been made has acted in the furtherance of
that promise.
Any part payment accepted by from a third party would be construed to be full settlement
of the debt and the person accepting cannot claim the balance of the debt.
Case
Hirachand Punamchand v Temple [1911] 2 KB 330
Answer
a) In this case, Donald would be held liable for making payment with respect to the rest
of the amount as the same has been accepted by Ace Finances Ltd reluctantly and is
not to be considered to be a valid consideration. Ace Finances Ltd can claim the rest
of the amount form Donald.
b) In this case, Ace Finances Ltd cannot claim the rest of the amount as the same has
been promised by them and Donald has sold his car based upon that promise. Donald
will not be liable to claim the rest of the amount.
c) In this case, Ivanka has made the payment to the Ace Finances Ltd as a full settlement
and she is a third party with respect to the contract. Hence, Ace Finances Ltd cannot
claim the rest of the amount.
Q. 4.
Issue
Is Bill liable not keeping his promise to Chelsea by not gifting her the Ferrari.