Legal Business Agreement For Orthodox Community: Elements Of Enforceable Contracts & Remedies For Breach Of Contract

Issue 1: Presence of Intention for Enforceable Contract

Describe about the Legal Business Agreement for Orthodox Community.

1.Issue

The critical issue in this case is to comment on the presence of the intention from the party to enter into legal relationship and determine that whether Richard has enforceable contract with his father or not.

Rule

There are certain essential elements of the valid enforceable contracts. There needs to be a valid agreement between the two parties along with the presence of the legal consideration for both the parties involved for the enactment of a contract. Another significant requirement that has to be fulfilled for enactment of an enforceable contract is that the concerned parties entering the contract must have an intention to create legal relations (Carter, 2012).

It is noteworthy that all agreement by default are not enforceable contracts in a court of law as some of these are justifiable on moral grounds rather than legal principles. An example of this is in the form of an agreement between brother and sister whereby the brother would give the sister a watch as a present on the upcoming Christmas if she scores well in her exams. In the case that the sister does score well and the brother is not able to gift a watch at Christmas, it does not imply that the sister would sue the brother in court of law for breach of contract (Gibson & Fraser, 2014). Such agreements between friends or family members are referred to as domestic or social agreements. These agreements are segregated from the commercial agreement since it in the latter, the intention to create legal relations can be assumed to be present by default (Davenport & Parker, 2014).

As per the Belfour v Belfour (1919) 2 KB 571, it was ruled the for social and domestic agreements, it is imperative for the parties to clearly prove that intention to be bound legally was indeed present in the contract for it to be held enforceable. However, in such cases the court with approach the case with the presumption that such an intention is not there and looks at evidence which seeks to establish the contrary (Flitzpatrick et. al., 2014).

A application of the above presumption was witnessed in the Jones v Padavatton (1969) 1 WLR 328 case. In this case, there was a promise from Mrs. Jones to her daughter (Mrs Padavatton) that if she agrees to study law in London, then a monthly compensation of $ 200 would be provided to the daughter. The daughter agreed to the proposal although initially she was reluctant. The two parties had dispute as soon as the daughter went to UK to study law as there was confusion in context of the currency of payment and daughter getting lesser than expected compensation.  With the intention of improving the condition, the mother bought a house and allowed the daughter to keep tenants and thereby improve her financial situation. But, shortly afterwards the daughter left her studies unfinished as she entered into a marriage. The mother demanded possession of house citing the breach of contract by the daughter as she could not finish her law course. However, the court went with the presumption that no legal intentions exist and therefore held the contract as unenforceable (Pendleton & Vickery, 2005).

Key Elements of Enforceable Contracts

However, in the Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 case, it was held that it would be incorrect to rely on the presumption of non-existence of legal intent in domestic and social agreements and thus the factual elements and circumstantial evidence must be considered to determine the presence of any commercial relation between the parties (Flitzpatrick et. al., 2014).

Facts

In this present case, Richard enters into an agreement with his father to conduct mowing in the front and back yards on the property acquired by the family. The house is situated on an one hectare property and the area of the yard is also very large, which required half day in a single week to mow the yards. The contractual amount was set as $200 for a week. His father agreed to pay this amount to Richard. Earlier, he had hired a gardener for this work and paid him $350. After four consecutive weeks his father denies to pay this contractual amount and asks Richard that he should continue to mow without compensation amount since, it is every family member’s duty to maintain the family property. He also states that there would not be any charge of boarding or lodging for Richard, if he carries the mow free of cost.

As per the highlights of the Jones v Padavatton (1969) 1 WLR 328 case, if the presumption of non-existence of legal intention in domestic agreements in upheld, then there is not enforceable contract between Richard and his father. However, in wake of Ermogenous v Greek Orthodox Community of SA Inc (2002), it is imperative to consider the circumstantial facts from which it is apparent that indeed the parties have an enforceable contract. This is because the father was earlier paying the gardener for this and it is a sizable work requiring considerable time and effort for which Richard ought to be compensated at the agreed rate. Further, since father is a millionaire, there are no affordability issues and the father is merely acting in bad faith.

Conclusion

From the above argument and removal of the presumption clause, it may be fair to conclude that an enforceable contract does exist between Richard and his father and thereby the father is obliged to make the agreed weekly payments to Richard failing which he can approach court of law.

The central concern in the given case is to offer Frere Bros some potential remedies for relief in regard to breach of contract by Joe.

Difference between Domestic and Commercial Agreements

Rule

As per contract law, breach of contract is a specific situation in which a particular contractual party does not fulfil the obligations arising from the contract. The exact nature and intensity of contract breach tends to be determined at the level of individual case (Gibson & Fraser, 2014).  In relation to breach of contract, the innocent party (i.e. one who complies with the contract) has been offered some remedies that promote equity and justice in such cases as is apparent from below.

Damages

Damages are commonly defined as the loss (usually expressed in monetary terms) that has been caused to the innocent party as a result of the contract breach. In accordance to the verdict in the Addis v Gramophone (1909) case, it is apparent that the concept of paying damages in the form of compensation to the aggrieved party is very well accepted and put to use in the common law. These are provided with the following dual intentions (Flitzpatrick et. al., 2014).

Ensure that the interests of the aggrieved party are safeguard since it complied with the contractual obligations.

By providing that the burden of these damages is borne by the defaulting party, it ensures that such incidents remain under control.

The twin intentions stated above assume significance value when consideration is given to the underlying importance of relationships of contractual nature in the field of trade and commerce. It is noteworthy that while awarding damages, the court does not consider the underlying capacity to pay of the defaulter and instead the quantum of damages awarded to the aggrieved party is driven by the underlying magnitude of loss suffered (Carter, 2012).

Yet another remedy for the aggrieved party to avail is the specific performance. In accordance with the arguments and subsequent decision of the Nutbrown v Thornton (1805) case, in specific performance, there are orders from the court that require defaulter to perform the certain contractual activities which it had to perform but did not so as the contract was breached (Paterson, J, Robertson, A & Duke, 2015). Thus, as per this order to court directs the defaulter to engage in fulfilment of specific contractual actions or activities. This has proved to be an effective remedy in the for upholding the interests of the aggrieved party as adequate monetary compensation may not be sufficient or possible for any given case (Taylor & Taylor, 2015).  It is noteworthy that this remedy is used by court only in those cases when providing damages would not be sufficient to safeguard the interest of the aggrieved party. However, in the event of presence of ambiguous terms in the contract, the granting of specific performance may be denied by the court on the premise that it is not possible to objectively ascertain the underlying contractual obligations (Pathinayake, 2014).

Factual Evidence and Circumstances for Enforceable Contract

Injunction

Injunction is yet another remedy available to the aggrieved party under the breach of contract. This is a court order as per which the defaulter is restrained from indulging in a specified activity that he/she may be indulging at the present (and might be causing breach) and also refrains defaulter from indulging in the same till the contract expires (Pendleton & Vickery,2005). A relevant case to be discussed in this regard is Lumley v Wagner (1852) case. As per this case, Mile Wagner has enacted a contract with Benjamin Lumley as per which she would perform only at a particular theatre for a period of three months after the contract execution. However, she was approached by the theatre owner who gave her a large amount of money to sing for her and she agreed to sing for the theatre owner even before the three months were over. Lumley decided approached the court for relief and the court responded by providing an injunction which forbade her from performing for others in the present and also till the time the contract was successfully discharged  ((Flitzpatrick et. al., 2014).

Application

It is apparent from the given case that Joe and Frere Bros have a legal and enforceable contract in play whereby Joe (a famous actor) could exclusively work for Frere Bros and not any other company for duration of five years. However it is given that Joe entered into a contract for doing a film with another company during the contract period and therefore breached the contract. The remedies at the disposal of Frere Bros in this case have already been highlighted. The key concern for Frere Bros in the given situation is that Joe is doing a film for another company and hence the aggrieved  party(Frere Bros) needs a remedy so that the defaulting party (Joe) could be effectively restrained from acting in other’s film till the contract ends. Hence, as discussed in a similar case Lumley v Wagner (1852), the apt remedy for the given case is injunction which would restrain Joe for signing films with others in the present and future both.

Conclusion

On the basis of the above discussion, it would be prudent to conclude that in the given situation the most apt remedy for Frere Bros in order to safeguard its valid business interests is to sought an injunction order from court restraining Joe from acting in films offered by other companies for the contract duration.

References

Books

Carter, J 2012, Contract Act in Australia, 3^rd eds.,  LexisNexis Publications, Sydney

Davenport, S & Parker, D 2014, Business and Law in Australia, 2^nd eds., LexisNexis Publications, Sydney

Fitzpatrick, JF, Symes, CF, Veljanovski, A & Parker, D 2014 , Business and Corporation Law, 2^nd eds., LexisNexis Publications, Sydney

Gibson, A & Fraser, D 2014. Business Law, 8^th eds., Pearson Publications, Sydney

Paterson, J, Robertson, A & Duke, A 2015, Principles of Contract Law, 5^th eds., Thomson Reuters, Sydney

Pathinayake, A 2014, Commercial and Corporations Law, 2nd eds., Thomson-Reuters, Sydney

Pendleton, W & Vickery, N 2005.  Australian business law:  principles and applications, 5^th eds., Pearson Publications, Sydney

Taylor, R & Taylor, D 2015, Contract Law, 5^th eds., Oxford University Press, London

Case Law

Addis v Gramophone [1909] AC 488

Balfour v Balfour [1919] 2 KB 571

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Jones v Padavatton [1969] 1 WLR 328

Lumley v Wagner (1852) 42 ER 687

Nutbrown v Thornton (1805) 10 Ves 159