Understanding Intention in Business Law

BUSINESS LAW
STUDENT ID:
[Pick the date]

Question 1
The traditional approach in the context as ascertaining intention for creation of legal relations has
been to rely on presumptions which have been historically highlighted. This is evident from
Jones v Padavatton [1968] EWCA Civ 4 where it was indicated that the underlying presumption
is that intention is not present in social or domestic agreement but it is present in commercial
agreements. In Ermogenous v Greek Orthodox Community case, the above approach was
rejected and instead it was indicated that more should be given to the individual circumstances
connected with the case at hand (Andrews, 2014).
The High Court clearly highlighted that taking the presumption into consideration for judging
intention leads to unnecessary distraction from the relevant case facts and the underlying
circumstances which require objective analysis. In this case, the Full Bench had ruled that
employment contract was not enforceable owing to lack of intention relying on presumptions of
the nature of relationship between employer and Bishop. However, the High Court overturned
this decision by considering the circumstances surrounding the enactment of employment
contract and deemed it enforceable (Gibson and Fraser, 2014).
Question 2
The clause (a) indicates that the document under consideration does not lead to an enforceable
contract and hence thereby does not result in any legal relationship between parties. Further, any
dispute regarding the document would not be be decided by the law courts as they do not have
jurisdiction over the document (Paterson, Robertson and Duke, 2015). In case of clause (b), the
agreement is such that any aspect related to this cannot be arbitrated or contested in any court. It
might be possible that that matters related to the agreement ought to be resolved relying on
alternative dispute mechanism only (Carter, 2015).
Question 3
Issue
Based on the given facts, the key issue is to ascertain if the outstanding debt obligations of
Donald would be successfully discharged or not.

Rule
A key question in relation to existing debt obligation settlement is whether part payment could
be considered as valid consideration. This issue was addressed by Foakes v Beer [1884] UKHL
1 case where it was outlined that the creditor would never end up being incentivized when part
payment of debt is carried out for discharging the debt (Edlin, 2015). In the recent times, a more
practical view is taken considering that partial payment of debt is an incentive against potential
bankruptcy of the client. In this context, the verdict of the Musumeci v Winadell Pty Ltd (1994)
34 NSWLR 723 case is pivotal as it highlights that part payment of debt is a valid consideration
when the practical benefit obtained by the creditor exceeds the remedy related payment obtained
from breach of contract (Taylor and Taylor, 2015).
Application & Conclusion
a) Donald is willing to discharge the complete outstanding obligation by payment of $ 2,000. It
is evident that Donald is jobless and hence is facing financial difficulties. Considering this
scenario, obtaining the complete amount of $ 2,500 would be difficult through legal means.
Thus, practical benefit by receiving $ 2,000 would serve as valid consideration and result in
enforceable contract.
b) Donald before selling his car had made it clear that the proceeds from car would be given for
the settlement of complete debt. The company agreed to that arrangement. If the company
intended to sue Donald anyways, they should have rejected his offer and pursued the legal
means. The demanding of $ 500 by the company six months later clearly amounts of breach
of earlier contract regarding discharging of debt.
c) Ivanka (daughter of Donald) is willing to pay $ 2,000 only on the condition if the company
would not be sued for the remaining $ 500. The company agrees for the same. Again valid
consideration seems to be present taking into notice that Donald’s debt is being paid by her
daughter. This represents poor financial situation of Donald. As a result, the contract with
the daughter is legally binding and the debt is discharged.
Question 4