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Elements of a Legally Binding Contract

Discuss about the Law for Jones Entitlement to Claims.

For the purpose of determining if Jones is entitled to the two amounts he is claiming from Ivor, the legality of the contract between them is needed to be analyzed. In the absence of legality of the contract, the entitlement of Jones to the two amounts will be needed to be scrutinized. In this context it is mentionable that a set of promise or promise which is legally binding may be considered as a contract. In a contract, a promise may be considered as an individual’s undertakings of doing or refrain from doing something in return of which the individual makes a promise[1]. Only when certain criteria are met, promise may be considered to be legally binding. In regards to Australian contract law, for a contract to be legally binding need to have an agreement consisting of acceptance and offer, consideration, intention of formulating legal relations, abiding to the legal formalities along with the parties to have legal capacity to enter into a contract[2].  In this context is the case of Jones is analyzed it may be stated that the contract was legally binding.

It is due to the fact that in the contract between Jones and Ivor, the promise to pay $50,000 was made by Ivor to be paid to Jones in exchange completion of the work of installation of underfloor heating pipes. This was accepted on the part of Jones. This establishes the presence of acceptance, offer and consideration in the contract[3]. Both the parties were having legal capacity of entering in the contract and have intention of entering into a legal relation. On this basis it may be stated that the contracted formed between Ivor and Jones had legal basis. In this contract it has been stated by Ivor that on completion of the specified work under the contract, the offered amount i.e. $50,000 will be paid to Jones. Thus, considering the legality of the contract and the specified promise made by Ivor to Jones, the completion of the work entitles Jones to the specified amount of $50,000. Herein the promisor, Ivor who stipulated the amount of $50,000 to be paid to Jones followed by the completion of the mentioned work, due to the presence of offer, acceptance makes it binding and obligatory on the part of the promisor to pay the offer price. This entitles Jones to the first offer of $50,000 on completion of the work as mentioned in the contract.


There is another aspect of the discussion which is also needed to be mentioned here. On the part of Jones as he accepted to the terms of Ivor of completion of the work in exchange of $50,000 makes him legally binding to the contract. Thus, followed by accepting to the terms of the contract makes Jones liable to complete the specified tasks to which he agreed to under the contract. Under the contract it was further stated that Jones will only receive the stipulated amount only after he has completed the specified tasks. However, in case of Jones it may be observed that though he had initiated the work as mentioned in the contract, however on realizing that he had underquoted the job and miscalculated the floor area lead him to leave the work in the middle way. This may be considered as breach of contractual terms basing on which Ivor may seek remedies.

Entitlement of Jones to Claimed Amounts

However, it may be observed that on leaving the work in middle way, for the purpose of successful completion of the work and having concern of the project being held up, lead Ivor to make the offer of paying extra amount of $15,000 on the condition of continuing with the work. Jones agreed to this terms, order to the required materials and continued with the work. This establishes that under the new contractual terms a new offer and promise of paying an extra amount of $15,000 have been made by for the continuation of the work by Jones, to which he agreed. As a result of agreement to the terms he offered the required materials for the work, indicating the continuation of the work[4]. This reflects the performance of consideration of the part of Jones for the promise made by Ivor. Under this offer and promise made by the promisor i.e. Ivor in the contract entitles Jones for receiving the mentioned specified offer of paying $15,000, of which $5,000 was remaining. Furthermore, the existing contractual duty also makes it essential for Ivor to clear the remaining due to $5,000 out of $15,000. Thus on the basis of the above made discussion, it may be stated that the existing contractual duty and promise made under the contract makes it contractual obligation for Ivor to pay the two amounts claimed by Jones. It will not be wrong to state here that on the basis of the contractual obligation of Ivor makes Jones entitled to the two claimed amounts of $5,000 and the initial amount of $50,000. 


However, in context to the case of Jones the presence of elements of duress and undue influence may not be completely ignored[5]. Considering the fact that Ivor was dependent on Jones for the completion of the work, makes Ivor the weaker party. Herein, using the power Jones had considering the position of the stronger party as Ivor was dependent on him, he used his power in an illegitimate way and created pressure by accepting the terms of the contract initially and leaving it in the half way. It is the use of illegitimate pressure due to which Ivor was bound to make the offer of $15,000. Other than that, the complete dependence on Jones for the successful completion of the work also results in inequality of power between Ivor and Jones. In regards to Jones, suddenly quitting his work reflects ‘undue’ use of his power. Considering these facts, the presence of aspects of undue influence and duress can be observed which entitled Ivor with the power of rescinding the contract and considering it to be voidable[6]. Under these aspects, he may receive a remedy from his contractual obligations, resulting on the part of Jones in not being eligible of his claimed amounts i.e. $15,000 and $50,000. Thus, considering the presence of aspects of offer, acceptance, consideration and act in reliance on the offer made by Ivor on the part of Jones it may be stated that he is entitled to the two amounts he is claiming for. In this context the case of Carlill v Carbolic Smoke Ball Co. is mentionable here[7]. In this case Mrs. Carlill was entitled to the claimed reward on the basis of the fact a contract was present wherein offer and acceptance could be noticed. In alignment of this argument, it may be stated that offer, acceptance and a legally binding agreement may be noticed in case of Jones entitling him to the claims. However, if the fact that he has failed in completion of the decided tasks in the contract prior which he made the claims whereas in the contract it was specified that only after completion of the due work he would receive the stipulated amount, he left the mentioned work in the middle way, and the presence of the presence of aspects of duress and undue influence results in non-qualification of Jones for the claimed amounts.

Presence of Duress and Undue Influence

For determining the obligation of Evans for the promise he made not the demand the shortfall amount the validity of the contract is needed to be analyzed. In context to the provided case of Evans, it may be observed that elements of legally binding contract i.e. promise, offer, acceptance, intention of legally binding relation, legal capacity of entering in a contract and consideration may be present making it a legally binding contract. To get in depth of the matter, it may be observed that an offer was made by Ivor that if Evans accepts the lesser amount of $100,000 in payment of the debt then he will recommend his colleagues of the Evan’s timber yard to which Evans agreed to. This reflects the presence of offer, acceptance, and promise in the contract which is establishes the legal validity of the contract.  It is also worth mentioning here that on agreeing the terms of the contract Evans made the promise of not demanding the shortfall amount. This establishes the presence of consideration in the agreement. Other than that, both the parties had intention of entering into a legal relation and had the legal capacity of entering into a contract[8]. Considering these facts it may be stated that the contract between Evans and Ivor was legally binding on the involved individuals. This makes it obligatory due to contractual obligation on the part of Evans and Ivor to perform the promises and consideration mentioned on the part of either of the involved parties[9]. Considering the above discussed aspects, on the part of Ivor it will be required to pay Evans the mentioned amount of $100,000 and recommend to all his colleagues about the timber yard of Evans. As Evans had agreed to the offer made by Ivor, he will be needed to comply with the consideration of not demanding the shortfall of $20,000 for the purpose of receiving the stipulated offer by Ivor. Considering these aspects of the contarct between Evans and Ivor it may be stated that under his contractual obligation he is not liable to demand for the shortfall of $20,000. It is the contractual obligation of Evans which makes him bound to the promise he made of not demanding the shortfall. In case Ivor, if he had not complete the offer made by him of paying $100,000 and recommending the timber yard to his colleagues then Evans may have considered the contract to be void followed by which he may have demanded the due shortfall. As in case of Evans, no such instance may be observed, Evans remains bounded to his promise.  

Furthermore, the ground on which Evans is demanding the shortfall of $20,000 have no legal grounds. It is due to the fact that, the contract between Evans and Ivor had to terms wherein it was specified that Evans on observing an increase in the business would result in legally bounding his promise[10]. The recommendation made by Ivor may not result in reflecting in the business of Evans, which does not imply that Ivor had not completed the offer he made. Thus, the grounds on which Evans was claiming the shortfall is not justified and have not legal backing under the contractual law, resulting in making him bound to his promise. In this context the case of JJ Savage v Blakney (1970) 119 CLR 435, High Court of Australia is mentionable wherein the High Court provided with the judgment that the specification of the speed of the boat cannot be considered as a promise, it may be considered as an expression of opinion which results in lack of need to be bound to the promise which was not the case in Evan’s context making him bound to his promise[11].        

Comparison with the Carlill v Carbolic Smoke Ball Co. Case

In certain cases like that of Ivor’s contract with Owen, it may be observed that, disclaimer may be provided on documents that do not appear to be a contract or its part. As an instant a disclaimer may be present in ticket or receipt as observed in case of Ivor. The place where the product or services are supplier also presents disclaimer. It can also be seen to be present in Owne’s counter.  For the effectiveness of the disclaimer and considering it to be a part of the contract to which involved parties are needed to be bounded, it is needed to be available for viewing at the time of formulation of the contract i.e. prior availing the services. In case of Ivor it may be noticed that he was provided with the followed the instance where he had dropped a mirror, wherein the contract has been already formulated. This results in questioning the validity and inclusion of the disclaimer in the contract between Ivor and Owen. In case the disclaimer had been provided during formulation of the contract, then, whether it is constructive noticed or not would have been analyzed to determine its effectiveness[12]. In case the disclaimer is provided after the payment or formulation of the contract as observed in case of Ivor, the court will take into consideration if a reasonable individual would consider the receipt to be a part of the contract and judge if the individual would read it. Herein, the case of Darlington Futures Ltd v Delco Australia Pty Ltd (1986) is mentionable wherein it has been stated that under Australian law aspects of exclusion clause would be interpreted in regards to its ordinary and natural meaning which is applicable in cases of disclaimer as well[13]. Thus, as the disclaimer has been provided after the formulation of the contract, its effectiveness and inclusion in the contract is questionable. However, the fact that the disclaimer was present in Owen’s counter is also needed to be taken into consideration. 

Australian Contract Law (2012) Australiancontractlaw <https://www.australiancontractlaw.com/law/formation-agreement.html>

Carlill V Carbolic Smoke Ball Co (2013) Australiancontractlaw <https://www.australiancontractlaw.com/cases/carlill.html>

Carter, John, "Good Faith In Contract: Why Australian Law Is Incoherent" [2014] SSRN Electronic Journal

CASE STUDY: Darlington Futures Ltd V Delco Australia Pty Ltd (Exclusion And Limitation Of Liability Clauses) (2015) legalvision <https://legalvision.com.au/exclusion-and-limitation-of-liability/>

Collins, Hugh, "European Social Policy And Contract Law" (2007) 1(1) European Review of Contract Law

Consideration (2012) Australiancontractlaw <https://www.australiancontractlaw.com/law/formation-consideration.html>

Contracts In Australia (2018) lawbuddy <https://www.lawbuddy.com.au/contracts-in-australia/>

Dalton, Tymber, Contractual Obligation (Siren Publishing, Inc., 2012)

Ellinghaus, M. P, Australian Cases On Contract (Code Press, 2009)

Enonchong, Nelson, Duress And Undue Influence (Sweet & Maxwell, 2008)

Hollyman, RJ, Falsehood & Breach Of Contract In New Zealand (Thomson Reuters New Zealand Ltd, 2017)

JJ Savage V Blakney (2013) Australiancontractlaw <https://www.australiancontractlaw.com/cases/savage.html>

Kaiser, Mary and Anita Brookner, "Undue Influence" (2007) 74(3) World Literature Today

Oliver Wendell Holmes, Jr, The Common Law (Dancing Unicorn Books, 2017)

Scha?fer, Kerstin Ann-Susann, Application Of Mandatory Rules In The Private International Law Of Contracts (Peter Lang GmbH, Internationaler Verlag der Wissenschaften, 2012)

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