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The valid contract - Case Study Example

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In a valid contract, the promise made by one must be accepted by another and it must be legally binding to both parties. A promise is an offer made by one to do or not to do something to another. When the offer made by the former (promissor) is accepted by the latter (acceptor), it becomes a contract…
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Download file to see previous pages However, a point to be noticed in this context is that to be legally binding, the promise made by the party and its acceptance must be aimed at forming a legal relationship. Anything made out of natural relationship (or domestic arrangements) are assumed not to create any legally binding obligations. Nevertheless, the case -Parker Vs Clark [1960] NLR 286- demonstrates that although domestic arrangements are assumed not to create legally-binding obligations, in some cases this assumption may be overruled by the facts .
obligations. Moreover, Irene made the offer without having any intention to avail consideration from Gina. The offer is made just out of natural relationship. Therefore, it is not possible for Gina to approach the court for justice and get the promised money from Irene. Though, Gina has made some promises after the promise by Irene, this does not amount to a promise, which is legally enforceable.
In this context, the case Balfour v Balfour [1919] 2 KB 571 is worth notable as "it demonstrates the strong presumption that domestic agreements, even if framed in contractual terms, are not intended to create legal obligations" (Law Glossary, 2006).
Usually, when an order is made by one party to another for the supply of certain goods for a consideration, it becomes a contract. Both parties are legally binding to the terms of the contract are obliged to perform their part. If any of them makes a default, the aggrieved party can claim compensation from the defaulted party as the transaction is legally enforceable. When one is making an offer to another on the strength of the offer made by a third party, and if the third party makes a default and it subsequently results in the non performance of the offer, the third party is no way affected by the default of the promissor.
In the given case, though Irene has made a promise to pay Gina a sum of 15000 and subsequently defaulted to pay the sum, the offer (s) business or personal made by Gina will in no way affect Irene as the first offer itself is not a legally binding one. Therefore, it is not legally obligatory for Irene to pay the remaining amount to Kolumbie, the aromatherapy oil supplier.
Is Gina liable to Jaymark Fitness for the 4,000 balance on her debt
When an offer is made out of the strength of the offer of another and the subsequent default of the original offer, the second offer cannot be performed and will result in breach of contract. But, it is to be noticed that whether the original offer is legally binding or not. In the given case, the original offer is a domestic arrangement and it is out of the natural relationship between Irene and Gina. However, when Gina has placed an order for 10,000 worth goods and after the default by Irene, Gina could not keep the promise that the payment shall be paid later. Gina informed Jaymark that she could not pay the 10,000 owed but could manage 6,000 and that if Jaymark tried to sue her for more, she would declare herself bankrupt and Jaymark would get nothing at all. Jaymark reluctantly agreed to accept the 6,000 in full and final satisfaction of the debt. Therefore, Gina is not ...Download file to see next pagesRead More
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