Is There an Enforceable Contract between Taylor and Smith - Essay Example

Name Course Lecturer Date Business Law Part 1 Issue Is there an enforceable contract between Taylor and Smith? Rules The doctrine of promissory estoppels binds people who make promises in business or in other matters. The doctrine requires fulfilment of the obligation as made in the representation. According to the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, a contractual like obligation arises once a person makes a promise that the other party really believes will be performed1. According to Waltons Stores (Interstate) Ltd v Maher (1988), a promissory estoppel has the following elements2: 1. Legal relationship: There must be a pre-existing or anticipated legal relationship between the two contractual parties. In many cases, the legal relationship in question is contractual. 2. Promise: The defendant must make a representation regarding his future conduct to the other contractual party. Often, the representation takes the form of a promise. 3. Conduct to induce reliance: the defendant must have acted in a way to induce the plaintiff to rely on the promise, and believe the promise will be carried out. 4. Detrimental Reliance: The plaintiff must have suffered loss or harm as a result of relying on the defendant’s representation about his future actions. 5. Unconscionable: It would go against the interests of justice to let the defendant ignore performance of the promise. Application In this case, it is clear than an enforceable promise between Smith and Taylor existed as all the elements of the promissory estoppel are present. The first element is concerned with whether Taylor and Smith had an existing or anticipated legal relationship3. Taylor had been offered a job by Smith at the end of his studies. This fact means that the two parties were due to enter into a contract of employment, and this can be treated as an anticipated legal relationship between the two parties. Thus, the facts of the case easily fulfil the first element of promissory estoppel. The second element of promissory estoppel asks whether the defendant made a promise, or a representation regarding his future conduct towards the plaintiff4. It is clear that a promise was made to Taylor regarding the possibility of getting a Job at Smith’s after finishing his studies. Smith’s recruiter had told Taylor; “You have a position with us next fall provided you successfully complete your law program”. This is a clear and unambiguous promise which creates the impression that Taylor would be guaranteed a job by Smith once he had completed his studies5. The third element examines whether the defendant acted in a way to induce reliance or to encourage the belief the promise will be carried out6. In the case, Smith conduct suggested that they would hire Taylor soon after he completed his studies. Smith sent Taylor a stipend to help him cover the expenses of moving and starting life in Melbourne. This stipend is a clear indication the law firm intended to employ Taylor, and that is why they were assisting him to move and settle in Melbourne. The court will also investigate whether the plaintiff reliance on the promise caused him/her some detriment or loss. In many cases finding out whether the plaintiff suffered harm or loss as a result of reliance on an unperformed promise is a straightforward issue7. In this case, Taylor refused a job offer from another law firm in order to take up Smith’s offer. In addition, he incurred expenses in moving and settling in Melbourne in anticipation of the promised job. Finally, the court will examine the facts to find out if the defendant’s refusal to perform the promise is unconscionable8. In this case, it would not be in the interest of justice for Smith to withdraw their offer of employment once Taylor had incurred the expenses of moving to Melbourne to take up the job offer. In addition, it would be unfair as Taylor has already rejected another job offer in order to be available for the opening promised by Smith. In conclusion, the two parties do not have a binding contract. Instead, Smith made a binding promise to give Taylor a job once he completed his studies. The promise is enforceable under the equitable doctrine of promissory estoppel. Defence Lack of consideration Generally, courts will not enforce a promise in the absence of consideration.9 In Currie v Misa (1875) LR 10 Exch 153, the court considered consideration to be either a benefit or detriment to contractual parties10. In this case, Taylor had not offered any consideration in exchange for the promise of employment. However, the doctrine of promissory estoppels asserts that consideration is not necessary to make a promise binding on the defendant11. Remedies Courts provide equitable remedies to people who have suffered detriment as a result of relying on the promise of the plaintiff12. In this case, the court may order Smith to repay Taylor the expenses incurred in moving and settling in Melbourne. The court may also ask Smith to perform their promise. However, the enforcement of a promise is rare and only occurs when it’s the only way justice can be served. Issue Is the Caravan part of the land? Rules The determination of whether the property of a tenant remains with the landlord at expiry of a lease is made by applying the doctrines of fixtures as set out in Belgrave Nominees v Barlin Scott Air Conditioning (Aust) Pty Ltd (1984) VR 94713. The test for determining whether the Caravan is a Chattel or a fixture involves examining14: 1. The intention of annexation as evident by degree of annexation; 2. The purpose of annexation. Application The intention test involves an objective examination of facts. The test is concerned with the extent of physical attachment (the ease or removal); the nature and relationship of the chattel to the property; whether the user contemplated the chattel to be permanent or temporary; and the relationship of the owner of the chattel to the property owner15. In this case, the degree of physical attachment is small as it’s the caravan’s wheels which have sunk into the land. Although the caravan cannot be carted away, it can be easily dug up and new wheels fixed. The caravan can also be removed with minimum damage to the land. Secondly, the court will have to determine the nature and relationship of the chattel and the estate. The second factor is determined in regard to the nature of the chattel and the common understanding of similar chattels and their relations to realty16. In this case, the caravan is a temporary chattel that is meant to be moved away after sometime. A person would also not expect a caravan to be attached to property at the time of purchase as it is easily removable. The contemplated period of stay on the property is important. It is clear that Jenny intention was to stay on Bob’s piece of land until expiry of her lease. Jenny had parked her Caravan at the beachfront property after leasing the land and had made no move to build a more permanent dwelling on the land. Cases determining whether a property of leased land is a chattel or a fixture focus more on the purpose of annexation since Palumberi v Palumberi NSW ConvR 55 28717. In this case, the purpose of parking the caravan on the land leased from Bob was to provide Jenny with a temporary place to live until expiry of the lease. Palumberi v Palumberi created a guiding test that is concerned with whether the intention was for the chattel to remain on the property temporarily or for an indefinite period of time. In the case, it is clear that Jenny’s intention was for the caravan to remain on the leased land temporarily until the lease had expired. Jenny did not take any action to permanently fix the caravan on the land. Instead, the wheels of the caravan had sunk into the soil slowly over the years. The facts in the case between Bob and Jenny bear close resemblance to those of Belgrave Nominees v Barlin Scott (1984). 18In the 1984 case, the court decided that air conditioning units installed on the plaintiff’s property were part of the real of estate. The court asserted that the air conditioning units were intended to be permanent fixture as they rested on their own weight and were not fixed by bolts. In contrast, the caravan is attached to the land by wheels which have sunk into the earth, but are by no means permanents fixation into the ground. The two cases contrast as most factors in the 1984 case indicate the air conditioning units were fixtures. Conclusion Application of the doctrine of fixture reveals that Bob is wrong in preventing Jenny from removing the caravan. The nature of the caravan, Jenny’s intention in annexing the caravan and the purpose of the caravan indicate it is a chattel and cannot be considered to be part of the land. Bibliography A. Articles/Books/Reports Adams, John Norman, and Roger Brownsword. Understanding contract law. Sweet & Maxwell, 2007. Lindgren, Kevin E., John W. Carter, and David J. Harland. Contract Law in Australia (Butterworth-Heinemann, 2011) Treitel, Guenter Heinz. The law of contract (Sweet & Maxwell, 2003) Ziff, Bruce H. Principles of property law (Carswell, 2000) B. Cases Belgrave Nominees v Barlin Scott Air Conditioning (Aust) Pty Ltd (1984) VR 947 Currie v Misa (1875) LR 10 Exch 153 Palumberi v Palumberi NSW ConvR 55 287 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Read More