Contracts between Family Members - Essay Example

Contract Law (APA Referencing) Name: University: Tutor: Course: Date: Introduction Contract law is a composition of all the laws and regulations that are directed towards the enforcement of certain promises. Contract law is mainly based on the common law but there are statutes that are supplementing it especially in the field of customer protection. In the case we are looking at, James saw an advertisement in a magazine for pet toys where the prices were at least $5.00. He requests for ten toys and sends $50.00 by mail for the payment of the ten toys he had asked for. The manager of the store receives the money but on checking, the actual price was $9.00 per toy. She responds to James informing him of this. In return, James writes back to her offering to pay $7.00 per item since he was going to buy items in bulk but the manager informed him that she could only allow him to buy each item at $8.00. James did not receive this mail on time and came to collect his toys. He is given the toys at $9.00. He refuses to pay. Aspects of Contract There are various aspects of a contract that deem it valid. Conditions are the particular terms that form the roots of the contract. These are the essential rules that are to be followed for the contract to be successfully carried out. If any of the conditions of the contract are broken or not followed to the book, the contract is treated as discharged. The innocent party gets the legal right to ignore any other conditions that bound him to the contract. On the other hand, there are also warranties in a contract. Warranties in a contract are not the compulsory terms. They are subsidiary to the main terms of the contract. The breach of a warranty does not entitle the discharge of the contract but the offended party is allowed by law to sue for damages. We can look at some examples of cases that can clearly show the differences between warranties and conditions in a contract. One is the Poussard versus Spiers and Poud case. Mrs. Poussard was an opera singer who was hired by the opera company for her services from the 28th November. She however fell sick and was not able to sing as was required in the contract. Due to her absence, the opera company had to hire another singer and they could only hire her if they were giving her the chance to perform for the entire period of time that Mrs. Poussard had been offered in the first place. When Mrs. Poussard got better, they did not take her in and they refused to pay her. When Mrs. Poussard went to court to sue the company, the court ruled that the conditions of the contract were broken therefore the contract was discharged. The condition in this case was that Mrs. Poussard would perform from 28th November but she did not make it (Kapoor, 2009, viewed on 1st May, 2010). The situation was different in the case of Gye versus Bettini. Bettini was also an opera singer hired to sing in London from 30th March. It was also agreed that he would arrive in London six days earlier so as to practise for the performances. He fell sick and he got to London only three days before the performance. The company did not allow him to perform saying that he had breached the contract. However, the court ruled in favour of Bettini saying that the arrival 6 days before the concert for practise purposes was a warranty and not a condition of the contract hence the contract still stood (Kapoor, 2009, viewed on 1st May, 2010). There are two types of warranties and conditions. There are those that are expressed in the contract and there are those that are implied by law into the contract. He condition as to the title of a person is an implied condition. It is generally implied that a seller is the person selling the good. It is also implied that the description of a product shall mean the actual product and there shall be no other product being offered. In the case of James and Mary in the toys sale contact, it was implied that the toy store was selling toys. It was however expressed in the contact that the toys being sold will be offered at a discount (Kapoor, 2009, viewed on 1st May, 2010). Contracts between family members Any agreements that were made between family members were assumed to be highly private in the past; they were not included in contract law. This has changed as it has been argued that the separation of contracts between family members from other contracts does not “serve any legitimate purpose” (Australian Legal information institute, 2002, viewed on 18th April, 2010). The surest way of enforcing a contract between family members is establishing that there was intention to make the agreement enforceable. Intention was recently affirmed as one of the essential conditions of a contract be it between family members or otherwise. For intention to be established, one of the parties involved should seek enforcement of the contract. This party is the one left with the task of proving that the agreement was meant to be “contractually enforceable” (Australian Legal information institute, 2002, viewed on 18th April, 2010). “The significance of intention as a barrier to enforcement of family agreement has been undermined by developments in the law of estoppel” (Australian Legal information institute, 2002, viewed on 18th April, 2010). In the law of estoppel, the difference between family agreements and commercial agreements is totally ignored. In the situation of James and Mary, it would be advisable to apply the law of estoppels. This would ensure that in case any party does not adhere to the rules of the contract, the other party can sue and get justice. In the case of James and the toy store, there was intention that can easily be established. The fact that Petz R Us published an advertisement in a magazine shows intention to sell the toys hence the laws of contract are enforceable even if James and Mary were siblings. “The distinction between commercial contracts, which are presumptively enforceable, and family contracts, in which intention must be proved, cannot be justified” (Australian Legal information institute, 2002, viewed on 18th April, 2010). Breach of contract The case where James arrives at the pet shop and find that there are no toys available can be treated as a breach of contract law. More precisely, the case can be looked at as a case of misleading conduct. This is because, in the advertisement, Petz R Us implied that they have pets in stock and they are willing to sell them at the said discount of $5.00. “Misleading and deceptive conduct occurring in trade or commerce is prohibited by section 52 of the Trade Practices Act 1974 (Cth)” (Australian Contract Law, 2010, viewed on 19th April, 2010). This section of contract law prohibits a company from indulging in any kind of activities that would mislead would be buyers. It is considered as deception. Deception in a contract can be considered as a breach of contract. There are different types of breaches in a contract. This one is the ‘Actual breach’. This is when one of the parties involved in the contract does not fulfil what the contract expects him to fulfil. Petz R Us advertised for toys and this implied that they had a sufficient supply of toys. When a breach of contract occurs, the offended party has various options. Firstly, the offended party could opt for renunciation. This is when he refuses to perform his obligations as expressed in the contract. In our case, James would refuse to pay for the toys. Another approach that was open for James was to sue for damages. Damage is considered as a monetary compensation of the offended party during a breach. The court looks at the supposed financial position that the offended party would be at if the contract would have gone smoothly and asks the offending party to compensate him accordingly (Larson, 2003-2007, viewed on 27th April, 2010). In our case, James would ask for compensation for his trouble of sending the first letter with the order of ten toys. James would also be compensated on his trouble of travelling to the pet store to collect the toys. The example of the case of Gwam investments versus Outback health Screenings both of Australia shows the payment of damages. Outback Health Screenings (OHS) approached Gwam special vehicles and asked them if they could design and construct a mobile drug testing unit that could be fitted to the back of a four wheel drive vehicle. Gwam prepared drawings and a quotation which were accepted by OHS. OHS went on and bought an Isuzu. When Gwam fitted the mobile unit on the Isuzu, it was found that the allowed weight of the vehicle was exceeded and thus it could not travel on public roads. OHS sold the Isuzu for a lesser price than they had bought it and bought a truck which adhered to the weight regulations. An Australian court ruled that Gwam should pay damages to OHS for breach. The implied term that the constructed mobile unit would fit on the rear of a four wheel drive vehicle was to be followed by Gwam as they were constructing the unit. It was also Gwams duty to advise OHS on the type of van to purchase. Therefore, Gwam was asked to compensate OHS for the money they lost during the buying and selling of the Isuzu and also the purchase of the truck (Bartlett, 2010, viewed on 1st May, 2010). To avoid such a case, Mary should have indicated a phrase like “while stocks last” in the advertisement in the paper. This would cover her i an instance where the toys run out. She would defend herself using the phrase and claim that James was late to come to the store. The fact that the advertisement read that the toys would be sold at a low price of $5.00 and they were actually $9.00 can also be considered as a breach of the contract. James had a right to assume that the price of the ten toys he wanted was $50.00 and he could treat this case as one of falsely implied terms. Mary could have avoided this case by indicating in the advertisement that the price was “from as low as $5.00”. This would have implied that there might be toys of a higher price than $5.00. References Australian legal information institute. (2002). Contract and the family. Retrieved from http://www.austii.edu.au , viewed on 18th April, 2010. Bartlett K. (2010). Damages for breach of contract: the heavy cost of a vehicle that weighed too much. Retrieved from http:// www.thefreelibrary.com/damages+for+breach+of+contract:+the+heavy+cost+of+a+vehicle+that+weighed+too+much0224943349, viewed on 1st may, 2010. Holm, E., (2009). A Contract law workbook. Sydney: Thomson Reuters. Jadedean. (2009). Aspects of a contract and business law. Retrieved from http://www.oppapers.com, viewed on 21st April, 2010. Julie Clarke. (2010). Contract and Consumer Law. Retrieved from http://www.australiancontractlaw.com, viewed 19th April, 2010. Kapoor. (2009). Conditions and Warranties. Retrieved from http:// www.scribd.com/doc/16173667/conditions-and-warranties-ppt, viewed on 1st may, 2010 Larson. A. (2003-2007). The statutes of frauds and contract law. Retrieved from Retrieved from http:// www.expertlaw.com/library/business/statute-of-frauds, viewed on 17th April, 2010. Sweeney, B. & O’Reilly, J. (2007). Law in commerce (3rd ed.). Chatswood, NSW, Australia: LexisNexis. Read More