Business Law & Ethics: Contract Law, Promissory Estoppel, Unilateral Offer

INTRODUCTION TO BUSINESS LAW & ETHICS
Contract Law
STUDENT ID:
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Question 1
Issue
The issue is to determine if there is an enforceable legal contract between Fran and Marco
based on the given facts.
Relevant Law
For the formation of an enforceable contract, the following elements have to be present1.
 There should be a valid agreement which should be based on a legal offer and legal
acceptance.
 There must be mutual consideration present for both the parties involved.
 There should be intention present on the part of the contracting parties to enter into
legal relations.
In contracts enacted in social/domestic aspect, one of the key issues is whether intention to
enter into legal relations is present or not. Where agreements are enacted between relatives
or in social context, it is presumed that intention to enter into legal relations is not present2.
This is apparent in the verdict of Jones v Padavatton3. As a result, the contracting parties
must have explicitly specified the intention to legally enforce the agreement through their
conduct or otherwise. Only then, such contracts may be enforceable. In the absence of any
such explicit conduct, the court would assume that no intention to form legal contract is
present unlike commercial contracts4.
Application
Based on the given facts, it is apparent that Fran and Marco are brothers and hence the given
agreement is in a social context. While the other elements are present in this case, it needs to
be ascertained whether intention to enter into legal relation does exist on the part of both the
parties or not. The given facts indicate that a legal employment agreement has been drafted
using the services of a lawyer and both parties before giving their consent to the agreement
have thoroughly inspected the agreement. Further, the agreement has been duly signed in the
presence of requisite witness. It is apparent that through the conduct of using the services of
1 Andy Gibson, Douglas Fraser, Business Law (Pearson Publications., 8th e, 2014)
2 Shayne Davenport, Business and Law in Australia (Thomson Reuters, 4th ed, 2012)
3 Jones v Padavatton [1969] 1 WLR 328
4 Robert Bryan Vermeesch, Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 12th ed. 2011)