The Issue of Contract Law - Assignment Example

Customer’s Name Customer’s Course Tutor’s Name January 30, 2013. Question 1 Issue The issue is of Contract Law 1where a couple who are not English native speakers seek advice from an adviser on purchasing a farm. Undue influence and Unconscionability will be used to argue out the case as with undue influence, the couple is lead to believe that the stated price fits for the value of the land and with this; they rely on the offer given by the accountant who happens to be their adviser. The accountant has more power in the decisions that the couple is to make as they rely on his knowledge which makes the couple to suffer from Unconscionability because they will suffer financial loss as a matter of selling the land at a lower price than the market value. Rule Where one of the parties enters into a contract and either of the party seems to be oppressed with either the condition or consideration stipulated, it is said to be undue influence. This is so because one of the parties may not have adequate knowledge to rely on and the other party takes advantage of the situation. Under Contract Law, Unconscionability is said to be where one party is oppressed in the consideration given and with this a contract can cease to exist with a court notice. Contract law, where a party have reached an agreement, this indicates that there is creation of legal relations and in this case there is express intention to create a contract. If not satisfied by the contract, freedom is given to both the offer and offered to terminate the contract where there is a right to return any consideration that had been given. Consideration however should possess some legal value but does not necessarily have to be adequate as it is the party’s decision to decide on the adequacy of the consideration. Common law states that there can be compensation of damages in instances of reliance loss. Application The case of Commercial Bank of Australia Ltd v. Amadio, 2dealt with unconscionability where Pa couple wanted to secure the son’s debts which accrued in his falling business. Due to not much knowledge, the son misled the parents who guaranteed him and they did not take much interest to ask the bank what was being guaranteed. The sons business failed and through unconscionability, it was held that one of the parties involved in the contract was taken advantage of meaning that there was no equity being practiced. It therefore made the courts rule out the case on grounds of unconscionability .The case of Australian Woollen Mills Pty Ltd v The Commonwealth,3 deals with a situation where there was an intention of buying and though an agreement made, the contract was sealed by having a consideration. In the case it was held that there was no existence of a contract as there was no consideration that had been given by commonwealth while buying the wool. Conclusion The couple relied on the Adviser as they thought he was honest in his dealings and being paid the amount of$ 600,000 stated that they relied on his information. This means that there was undue influence where on e of the party took advantage of the other and in the case, the couple were taken advantage of due to their old age. As a remedy, the courts can decide that the contract cease from being enforceable as one of the party will suffer financial loss. The couple has the right to retain the land until the right person offering the right market value introduces them. As a matter of Unconscionability, the courts have the right to ask the accountant to return back the money and he shall be given back the consideration which he had made earlier. Question 2 Issue The case deals with contract law under promissory estoppels and consideration where there has been an agreement of building a house that amounts to $200,000.Acontract is entered to when there is an offer and acceptance which is sealed by a consideration of paying part of the payment being $20,000.In the process of the contract, an added amount is requested due to the work demand where the offeree reluctantly agrees to add the amount. At the end of the contract, no money is added on top of what was agreed where the acceptor of the contract is seeking for advice on the steps to take in order to claim back his money. Under promissory estoppels, one party relied on the other only to be disappointed at the end of the contract. The case seeks to find out if there are any rules applicable to sue Ben and if Andrew has any right to receive the remaining consideration. Rule For a contract to be reached there has to be rules that have been abided with and failure not to obey the rules will lead to a breach of contract. A contract can be discharged as a result of breach of contract where either of the parties does not obey to what they were supposed to do. Actual breach occurs where a party does not obey the stipulated time that had been agreed to close the contract (Sweeney, O'Reilly and Coleman 2007, p.554). To close a contract, there has to be a consideration and it should be agreed by both parties under the contract. Failure not to honour the consideration is deemed that a contract has not been sealed and there can be with holding of any property about to be exchanged. Due to promissory estoppels, a party can be taken advantage of where one of them fulfils their duties and the other does not. As a matter of trust in either of the parties, this leads to unfair terms of the contract which the courts can decide for the party that has breached to pay for the damages. Contract estoppels largely contribute in judging the case as it is through relying on the promise that the plaintiff is about to suffer loss as a result of completing the house with no additional payment for the expenses incurred. Application The case of Walton Stores (Interstate) Ltd v Maher, 5relates to promissory estoppels where it was held that one of the parties had made a promise and the promise was relied upon. As a result of the above, it was said that there was existence of promissory estoppels hence the defendant was charged with fulfilling his promise through payment of a consideration. In the case of Drennan v. Star Paving Co.6, the issue was about the extent of reasonableness that would be binding when there was reliance of a binding offer. Through this there was application of promissory estoppels that ruled out that due to the promise of a consideration, the defendant was guilty of the charges made against him. Stilk v Myrick7a case about consideration spells out that there was duty in the contract to pay the contractors works through consideration. Conclusion Andrew has the right to receive the whole amount of money that he had worked for and the money that would cater for the extra expenses he incurred while building the house. In his part, his promise of constructing for Ben a house has been completed but on the side of Ben, he has refused to pay up for the expenses that he had initially agreed. To advice Andrew, he has the right to ask the courts to with hold the property until he receives full payment of the property. He also has the right to sue Ben for not paying up t the contract in terms of full payment of the amount agreed. By been reluctantly agreeing to pay for the $5000,this was a sign of a promise where not binding by what he said might be thought to be a breach of a promise after the service he asked for has been completed. This is because Andrew relied on the words of be n which made him continue with the services he was offering. In this case, Ben is liable for any expense that Andrew underwent to construct the house and if he does not pay up, Andrew will suffer loss as a result of relying to his promises. References Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447 Contract Law Stilk v Myrick [1809] EWHC KB J58 Sweeney, Brendan, Jennifer N. O'Reilly & Coleman, Andrew. Law in Commerce. Fourth Ed. n.p.: Chatswood, N.S.W.: LexisNexis Butterworths, 2007. Walton Stores (Interstate) Ltd v Maher (1988) 76 ALR 513 Read More