Contract Law

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

CONTRACT LAW1
Question 1:
Issue:
The issue involved in the present case study is whether Frank has any legal claim for an
amount of 1000 $ against Frank, his uncle.
Rules:
One of the most important elements of forming a contract which is legally binding is
presence of the legal intention of the parties (Smits 2017). This element can convert any type of
agreement into a contract. In general the intention forms a significant element in case of
commercial agreements as they are assumed to result into legal consequences (Adriaanse 2016).
This is entrenched in the landmark decision given in Helmos Enterprises Pty Ltd v Jaylor Pty Ltd
[2005] NSWCA 235 by the Court of Appeal (NSW). However where the parties of the contract
involved into social or domestic agreements they do not possess legal intention. Family
agreements are considered not to be giving rise to legal relationships unless and until there exist
clear evidence in contradiction. This is a very common presumption in case of social and
domestic agreements that the parties involved in it have no legal intention as observed in the case
of Jones v Padavatton [1969] 1 WLR 328. However this presumption can be e reputed if
evidences to the contrary have been produced. Such evidences are presence of a written contract
as seen in Errington v Errington Woods [1952] 1 KB 290, presence of a third party to such
contract as observed in Simpkins v Pays [1955] 1 WLR 975 or where the parties had separated
from one another as observed in the decision given in the case of Merritt v Merritt [1970] 1 WLR
1211. In general the court applies the objective test to decide whether the parties to the contract

CONTRACT LAW2
have any legal intention to be bound by it as seen in Carlill v Carbolic Smoke Ball Company
[1893] 1 QB 256.
Application
From the facts of the present case it is seen that Frank is very much disturbed regarding
the heavy drinking addiction of his nephew Nick. Hence in order to keep him away from this
addiction he made an offer that he will be paying $1,000 on the condition that Nick will keep
himself abstained from taking alcohol for a period of one month which will start on 1st of July.
This shows a social and domestic agreement is formed between them following the case of Jones
v Padavatton [1969] 1 WLR 328. On the other hand, Nick himself has become very conscious
about his degrading health and before the proposal made by his uncle comes into his knowledge,
he availed a membership in a group called Alcoholics Anonymous, hereinafter referred to as AA.
For such membership, he signed the document that he will be doing his best to keep himself
away from this addiction of drinking. This showed a legally enforceable contract is formed
between Nick and AA. During the entire month of July neck did not even touch alcohol. The
reason behind it as admitted by him is that he is concerned about his degrading health and also
the promise he made to the group instead of any financial reward. Hence from the above
discussion it is seen that the agreement between Frank and Nick was more of a social nature as
there lacks legal intention as seen Balfour v Balfour [1919] 2 KB 571. Further such agreement
does fall into any of the 3 exceptions to social and domestic agreement as mentioned above.
Frank was more concerned about the addiction of Nick rather than creating any legal relation
with him, hence the reward of $1000 does not amount to a consideration. Thus due to the
absence of a legal intention, Nick cannot claim 1000 $ from his uncle as a reward against
overcoming the addiction.