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Business Law Issue: Assignment

   

Added on  2021-06-18

6 Pages1237 Words89 Views
Running Head: BUSINESS LAWBUSINESS LAWName of the Student:Name of the University:Author Note

1BUSINESS LAWIssue:In this given scenario the issue that exists is whether there was an intention of the parties to belegally bound by the contract and whether John is entitled to enforce the agreement with Alex.Relevant Rule:Intention to create legal relations is an essential element of a valid contract. The party whowishes to enforce the contract with other party must establish that the parties to the contractintended to create legal relations. As held in the case Air Great Lakes Pty Ltd v KS Easter(Holdings) Pty Ltd [1989] 2 NSWLR 309, it had been held by the court that a considerationgenerally implies the intention of the parties to be legally bound, however the intention to createlegal relations still remains an independent essential element of a valid contract. A contractwould not be enforceable in which consideration is present but the former pre condition has notbeen fulfilled. In case of commercial agreements, the courts generally assess that the parties intended to belegally bound. An objective test is applied by the courts to assess the intention of the parties incommercial agreements. In the case Rose and Frank & Co v Crompton [1923] 2 KB 261, ithad been held that in circumstances where the parties to the contract do not intend be legallybound, they can use honor clauses to indicate that the agreement in honor and legally. Howeverthis presumption of the courts in assessing the intention to create legal relations has beendiscarded. In the case Kleinwort Benson Ltd V Malaysia Mining Corporation Bhd [1989] 1WLR 379, it had been held in case of commercial and business relations, there is a presumptionthat the parties have the intention to be legally bound by the terms of the contract, and howeverin exceptional cases this presumption is rebuttable.

2BUSINESS LAWIn case of family and domestic agreements the courts generally presume that the parties to thecontract did not intend the contract to be legally binding. However, in terms of exception thispresumption can be rebutted as held in the case Balfour v Balfour[1919] 2 KB 571. However inthe recent notable case Ermogenous v Greek Orthodox Community of SA Inc(2002) 209CLR 95, it had been held by the high court of Australia that no presumption is to be taken intoconsideration while assessing the intention of the parties to create legal relations even in case ofdomestic or family agreements Further it had been held in the case .It can be stated that the courts do not generally apply the subjective test to assess and evaluatethe intention of the parties as this might give the party who wishes to avoid the fulfillment of theresponsibilities of the contract an easy loophole to escape his liability. Instead as held in theCarlill v Carbolic Smoke Ball Company [1893] EWCA Civ 1, the courts apply the objectivetest to assess whether a reasonable third party in the circumstances of the case would havethought that the parties intended to create legal relations. It can be stated that the rebuttable presumption imposes the burden of proof; however the burdenof proof can be rebutted upon the presentation of evidence to the contrary. ApplicationAs it has been discussed before a contract can be enforceable if the parties to the contractintended to create legal relations. It has been provided through the facts of the case Jon agreed towork for Alex for the remuneration of four hundred dollars per week. Alex had agreed to payhim four hundred dollars and had asked John to join work from Monday at 7 the following week.John had clearly followed his instructions and started working for him on the agreed date.Therefore in this case the intention of the parties to the contract can be analyzed by the

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