Contract Law

Running head: CONTRACT LAW
CONTRACT LAW
Name of Student
Name of University
Author Note

CONTRACT LAW1
Table of Contents
Question 1........................................................................................................................................2
Issue.............................................................................................................................................2
Rule..............................................................................................................................................2
Application..................................................................................................................................2
Conclusion...................................................................................................................................3
Question 2........................................................................................................................................3
Issue.............................................................................................................................................3
Rules............................................................................................................................................3
Application..................................................................................................................................4
Conclusion...................................................................................................................................5
Reference.........................................................................................................................................6

CONTRACT LAW2
Question 1
Issue
In the current case the primary issue is whether Nick has any binding contract with Frank.
Rule
As per the common law of contract a verbal agreement between two parties would not
always be seen as to be legally bound. For the consideration of a verbal agreement to be legally
bound and for being effective there are two factors that needed to be considered- first factor is
that the party should have an intention of entering into a relationship that is legal and second
factor for a verbal agreement to be legally bound there should be an exchange of consideration
(McKendrick & Liu, 2015). It can however be seen that sometimes the verbal agreements are not
easy to prove as there is a lack of of evidence that could prove the requirements for constituting a
contract has been fulfilled. For a verbal agreement to be a contract a few factors should be
considered. This factors are- offer, acceptance, consideration, and intention. As per various
judgements of the court any verbal agreement would be considered as invalid and ineffective if it
could be proved that there was a lack of intention of the parties to be creating a legal
relationship. If there is no exchange of consideration then also a verbal agreement is invalid. This
was seen to be discussed by Gibbs CJ in the case Hospital Products Ltd v United States Surgical
Corp (1984) that on the intention of the parties a statement relies as whether it would be
promissory or representational.
Application
Applying the judgement of the case Hospital Products Ltd v United States Surgical Corp
(1984) in the current scenario it can be seen that Nick did not respond to the offer of Frank to be
paying $1000 to Nick if he could abstain for one month from alcohol. In this scenario it is seen
that there was no intention of the parties to be creating a legal relationship. There was no
intention or consideration exchanged between Nick and Frank. Hence the important factors of
verbal agreement are not fulfilled. Further it is seen that Nick already had joined Alcoholics
Anonymous, a group to quit drinking, as he had been concerned about his health. And Nik was
further seen to be admitting that he had joined the AA group for his health concerns and not for