Business Law & Ethics: Enforceable Contracts, Promissory Estoppel, and Consideration

This article discusses the essentials of enforceable contracts, the application of promissory estoppel, and the importance of consideration in business law and ethics. It includes case studies on each topic and provides a comprehensive understanding of these concepts. The article covers the basics of contract law, including the presence of lawful agreement, valid consideration, and intention to create legal relations. It also explains the doctrine of promissory estoppel and its application in various scenarios. Finally, it discusses the importance of consideration in contracts and how past consideration is not considered valid. The article is relevant for students studying business law and ethics.

INTRODUCTION TO BUSINESS LAW & ETHICS
CONTRACT LAW
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Student Name

Question 1
Issue
The issue is to comment whether Fran and Macro have enacted an enforceable contract or not.
Rule
Two parties would enter into enforceable contractual relationship only when the given essentials
are satisfied.
 Presence of lawful agreement (valid offer and acceptance)
 Presence of valid consideration for the contracting parties
 Intention on the part of parties to enact enforceable contract
Intention of the parties to enter into contractual relationship is a key requisite aspect when the
parties are connected through the social/ domestic relation. It is because when the family
members are enacting an agreement, then it is assumed that in pre-contractual phase, parties do
not have intention to make legal relationship and thus, no enforceable contact would be formed
between the parties. Hence, the innocent party cannot sue the other party for not performing the
contractual obligations. The evidence of this aspect can be viewed in the judgement of Jones v
Padavatton1 case. Hence, it is essential that parties with domestic relations must express the
intention to create legal relations for enacting an enforceable contract verbally or through
appropriate conduct2.
Application
It can be seen from the case information that Fran and Marco are brothers and hence related.
Therefore, the nature of agreement enacted between the parties is of domestic nature. Hence, it is
essential to determine whether the parties have clear intention to enact enforceable contract or
not. It is apparent from the facts that in pre-contractual period, Fran and Marco have hired a
lawyer to complete the employment agreement and other essential aspects. This is the
representation of the fact that Fran and Marco had clear intention to enact legal relation and
hence, Fran has to complete the contractual liability or else Marco has the legal right to sue Fran
for not fulfilling the contractual duties.
Conclusion
It can be concluded based on above facts that Fran has to complete the contractual obligations for
Marco or else Marco can sue Fran and ask for damages.
1 Jones v Padavatton [1969] 1 WLR 328
2 Michael Lambiris, Griffin Laura, First Principles of Business Law (Oxford University Press., 10th ed, 2017)
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Hence, Fran cannot appoint Jane in place of Marco due to the presence of enforceable contract
between Fran and Marco.
Question 2
Issue
The central issue is to determine whether there is an application of doctrine of promissory
estoppel for the given scenario when Fran has extended a promise to Octavia.
Rule
The promissory estoppel doctrine would be applicable when one party has extended a promise to
other party and the other party by relying on the promise has started some additional work. In
such cases, it is essential that work done by the other party must be related to the promise made
by the offeror party3. Further, it is imperative to note that the legal relationship would be formed
between the parties on the account of the applicability of doctrine of promissory estoppel
irrespective of the fact that the offeror party later does not enter into legal relation.
The application of doctrine of promissory estoppel can be explained by the example shown
below4:
 Let party x extend a definite promise to party y.
 In belief of the presence of agreement for the extended promise, party y has commenced
some work.
 Further, let party x not fulfil the promise then party y would have to bear damages.
 Moreover, party x does not inform party y regarding the revocation of the promise.
 In this case, doctrine of promissory estoppel would be enforceable and parties x and y would
bound with the legal obligations.
Application
It is apparent from the case facts that offeror Fran has extended a promise to Octavia that she
will ready to take her warehouse on rent. Moreover, Fran also informs Octavia that she will
ready to take the warehouse on rent only when there would be extractor fan in kitchen. Octavia
who is ready to rent her warehouse to Fran has accepted the term and has informed Fran they she
will bear the expense of installation of the extractor fan. Also, Octavia contacted Fran again to
ascertain if she should go ahead with fan installation or not to which Fran agreed. It can be
concluded that Octavia has performed the installation of fan action based on the promise
extended by Fran. Hence, in this regards, doctrine of promissory estoppel would be applicable.
3 Ibid, 2, p. 95
4 Ibid 2, p. 112
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Conclusion
Based on the above discussion, it can be concluded that doctrine of promissory estoppel is
applicable. If Fran denies completing the promise then Octavia has to right to recover the
damages from Fran.
Question 4
Issue
The issue in the present case is to determine whether Fran is liable to issue free chocolates to
Arjun for a month.
Rule
A essential aspect of contract is the presence of consideration. It is imperative that consideration
must be mutually present even though it is not the same for both the parties. One of the key
aspects related to consideration is that it must not be in the form of past consideration which is
not considered a valid consideration. Hence, any contract based on past consideration would not
be considered as enforceable and would be essentially void 5.
Application
It is apparent from the given aspects that Fran wanted to hire an apprentice for the shop and in
this regards, she was preparing an offer notice for the public that would be displayed in shop.
Also, as per the notice whosoever would arrange for an apprentice for the shop, he/she will get
free chocolates for a month. However, she did not extend this offer since notice was not
displayed. Meanwhile, her regular customer Arjun came in the shop and was talking to Fran.
Arjun during his casual interaction decided to extend the details of his neighbour. Once he had
extended the details of the neighbour, did he come to know about the potential offer. However,
considering that Arjun had already provided detail, he cannot demand free supply of chocolate
on the basis that an enforceable contract has been enacted. The consideration in this case is past
since before the extension of offer by Fran, the consideration has occurred and hence no
enforceable contract occurs between Arjun and Fran.
Conclusion
It can be said that no enforceable contract is enacted between Fran and Arjun and hence the latter
cannot demand free supply of chocolates for a month from Fran.
5 Ibid, 2, p. 114
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