Business And Corporation Law : Contract Law And Dispute Resolution
In this situation, when Jane goes to overseas than she offers her sports car to Jack. This car is in good condition with market value of around $25000. Jack accepts this offer. Now, purpose of this discussion is to determine, whether consideration is present in given situation or not and also to ascertain the legally enforceability of agreement.
Rules: In a contract, the agreement will be enforceable, if consideration between two parties is available (Denney, 2011). Consideration is an important aspect to make a contract valid. In Australian contract law, consideration is a price that one party makes a promise to buy other party’s promise. If one party offers to other party, but the consideration is not present in given case than the agreement cannot be enforceable by law.
Evidence: In September 2003, Paul as a seller and Steiner as a buyer entered in to an agreement. In this agreement Paul agreed to sell his 10-acre real property in $500000 and Steiner accepted this offer. The agreement is provided on Steiner’s own expenses for necessary permits from the government. Mr. Steiner pursued approvals and permits by spending of $60000. After one year, Mr. Paul decided that he will not go longer to sell property and instructed to terminate the agreement. Steiner sued on Paul to enforce the agreement but the court gave decision in favor of seller, because the agreement was unenforceable due to not support by consideration (Gibson Dunn, 2016).
Conclusion: In the given case, when Jane goes to overseas, than she only offers to give her car to Jack. In this offer, the information related to offer price is not available. Here, only market value of car is available, but not the quoted price by Jane. So, there is no consideration in given case. The acceptance is not enough to make agreement enforceable. Therefore, the agreement is not enforceable according to law.
In second situation, Jane offers her sport car to Jack for $25000 and Jack accepts this offer. Here, the issue is to ascertain presence of consideration and legality of agreement between both parties.
Rules: An agreement will be enforceable, if the offer, consideration, and free acceptance are available between two parties (Ehrlich, 2011). If the there is absence of any these aspects, than the agreement will be not enforceable according to law.
Evidence: Mr. Balfour and Mrs. Balfour lived in England on a vacation. Mrs. Balfour remained in England for a medical treatment and Mr. Balfour agreed to send a specific monthly amount of money to Mrs. Balfour until she come return. But, Mrs. Balfour sued for compensation to equal amount of the income and Mr. Balfour agreed to send. After five months Mrs. Balfour granted an order for child support. The court gave judgment in favor of Mrs. Balfour because, Mr. Balfour’s promise to send the money was enforceable by law and the consent was sufficient consideration for the agreement (Lawnix, 2015).
Conclusion: In case of Jane and Jack, Jane offers her sports car to Jack for $25000. Jack accepts this offer. In this situation, offered price of $25000 is a consideration for Jane. At the same time, car is consideration for Jack. So, it can be concluded that offer, consideration, and acceptance are clearly available in given situation. Therefore, agreement between Jane and Jack is enforceable by law.
c): Issue: Here, Jane offers to sell her Lotus Super car to Jack for $2500. But, the market value of this type of car is around $25000. Jack accepts this offer. In this case, issue is that whether consideration is present and whether both parties are legally bounded by the agreement or not.
Rule: If in a case, the consideration between two parties is inadequate but, the offer and acceptance are clearly defined than the agreement will be enforceable according to law (McKendrick and Liu, 2015). It is because a consideration will be valid consideration, if it has some economic value for the party. This offer is accepted by other party and communicated in proper way. So, to enforce an agreement, consideration must be sufficient and not required to be adequate.
Evidence: In case of Wakeling Vs Ripley (1951), the defendant lived alone in Sydney. The plaintiffs were his sister and sister’s husband, who was lecturer in Cambridge University. The defendant wrote to his sister to convince her and her husband to live with him. He also promised that he will leave all his property upon his death and he will provide a home for live. The plaintiffs become agreed on the basis of this consideration. The husband resigned his lectureship and came to live with defendant. After one year, parties quarreled and the defendants break his promise. He disinherited the plaintiffs and sold his house. The plaintiffs sued in court on defendant and awarded £12000 as compensation. In this case, the defendant become liable for consideration, because he promised to plaintiffs that showed the agreement had bound both parties to follow the consideration according to law. Consequently, the defendant was liable for the breach of the agreement and the agreement was enforceable by law (Contract law, 2013).
It can be concluded that consideration is present in given case. Event through, this consideration is inadequate but, it has an economic value in the eyes of law and Jack performs activity in terms of accepting the agreement, which is essential for a valid consideration. This consideration is also offered and accepted by both parties with proper communication. Therefore, this agreement is enforceable by law.
In this case, the shipbuilder and northern ocean tankers agree upon a contract to build a tanker. This contract was signed in US dollar but in this case there was no provision regarding the fluctuation of currency. The United State currency was devaluated after the completion of half of the work. By the devaluation of currency, the shipbuilder stands out with a loss and he was demanding for the payment of excess amount of US$3 million, otherwise he would stop the work. Northern ocean tankers reluctantly agreed to pay more, because he already booked a charter to deliver on time. Now, the northern ocean tanker company wants to recover the excess amount after the nine month of delivery. Here the problem in this case is to identify, whether the buyer can recover the excess amount or not.
In this above case, there is valid contract and consideration is also present, because of the free intention of both parties. In this case, any provision related to currency fluctuation, was not expressed in at the time of contract. In this case the shipbuilder forced to northern ocean tanker to pay excess amount so, the duress law is applicable. This contract is void contract, but at the time of currency fluctuation, shipbuilder threatens to northern ocean tanker to pay US$3 Million.
Duress can be defined as the situation, in which one party is agreed upon a contract by force or unlawful constraint by another party (Stim, 2011). Northern ocean tankers came into contract with shipbuilders by the illegal force. In this contract, free consent was not present at the time of paying excess amount due to currency fluctuation by northern ocean tankers. So the contract is voidable. In this case, the northern ocean tanker did not entered into contract voluntarily. In duress law, illegitimate threats are involved. In a contract duress arises when one party threaten to another party to sign a contract. Duress law protects the interest of threatened party which enters into an unlawful contract. The actor of duress has no chances to escape by the order of law. According to the duress law, if a contract is signed under the duress, this contract is declared as invalid by court (Eidenmuller, 2011). Mainly duress can be of three types such as duress to person, duress to goods and economic duress, these are discussed as follows:
Duress to Person:
Duress to person can be explained as threat or violate to a person to enter into a contract, whether it is lawful or not in the eyes of law. In this case, a person needs to agree upon a contract by pressure of another party. This type of contract is not enforceable by law. Duress to person arises, when any person or company is forced to act according to the will of against party in the contract.
Duress to Goods:
Duress to goods can be defined as a situation, when any property or goods is damaged or seized by another party to come into the contract (Waddams, 2011). The defended party needs to enter into contract; otherwise his property or goods are not released. Duress of goods is an unlawful pressure by the actor party. In case of duress to goods, the defended party only needs to demonstrate that the threat was only reason to agree on that contract. The defendant party can recover the loss by filing a case on the other party. In this type of duress, there is a lack of genuine consent of the both party.
Economic duress is generally addressed in the commercial contracts. It can be defined as the economic pressure by one party to another to force them to form the contract (Meiners et al., 2011). This type of economic duress includes the financial pressure by a party to threaten another party. Economic duress is accepted by a party, because the party has no other alternatives.
In given case, economic duress is made by shipbuilder on the northern ocean tankers to pay the excess amount of US$3 million, otherwise shipbuilder would not deliver the tanker on time. Due to economic pressure, northern ocean tankers paid the excess amount to the shipbuilder.
In this case shipbuilder forced buyer to pay more money, otherwise he will breach the contract. On the basis of analysis the case, it can be said that buyer have a right to recover the excess amount from the shipbuilder, because northern ocean tanker agreed the condition of shipbuilder due to economic duress. According to the contract law, in a contract only one party’s benefit is not legal, there should be mutual benefit for parties. In this situation, buyer has a right to recover the extra money that was paid by him (Butler et al., 2013). In this case the buyer has a right to recover the exceed money, but not sure because of the long time has been passed away.
“North Ocean Shipping v Hyundai Construction”
In this case, Hyundai Construction and North Ocean Shipping Company signed a contract to build a ship and payment needs to be made in American dollar. After the paying first installment the American dollar devalued by 10 percent. At this time Hyundai threaten the North Ocean Shipping Company to pay additional money, otherwise it would not deliver the ship. Therefore North Ocean paid the extra amount to the ship builder. After 8 months of time, North Ocean claimed for the losses, but court failed the provide claim due to passage of long time from incident and claimant’s failure to claim on quick basis. North Ocean could not recover the extra money paid by him to Hyundai.
On the basis of above analysis, it can be concluded that North Ocean has a right to claim for the payment, which was paid due to the currency devaluation. The company has the right to recover the excess money, because threat under economic duress was created by Hyundai. But, still the company cannot recover the extra payment paid to Hyundai construction, as it didn’t sued at right time. For instance the same situation arose with North Ocean Shipping and Hyundai construction. In this case, court has dismissed the claim of party due to failure to quickly sue the default party.
Butler, D.A., Christensen, S., Dixon, B. and Willmott, L. (2013) Contract Law Case Book. Oxford University Press.
Contract law (2013) Wakeling v Ripley. [Online], Available at: https://contractlaw-courtney.weebly.com/intent-to-create-legal-relations.html (Accessed: 20 August 2016).
Denney, J. (2011) Respect and Consideration. USA: Lulu.com.
Ehrlich, R. (2011) A Little Consideration. UK: Author House.
Eidenmuller, H. (2011) Regulatory Competition in Contract Law and Dispute Resolution. UK: Bloomsbury Publishiung.
Gibson Dunn (2016) California Supreme Court Decision Provides Framework for Real Property Purchase Agreements in California. [Online], Available at: https://www.gibsondunn.com/publications/pages/CaliforniaSupremeCtRealPropertyAgreements.aspx (Accessed: 20 August 2016).
Janig, R. (2012) Commercial Law: Selected Essays on the Law of Obligation, insolvency and arbitration.
Lawnix (2015) Balfour v. Balfour – Case Brief Summary. [Online], Available at: https://www.lawnix.com/cases/balfour-balfour.html (Accessed: 20 August 2016).
McKendrick, E. and Liu, Q. (2015) Contract Law: Australian Edition. UK: Palgrave Macmillan.
Meiners, R. E., Ringleb, A.H. and Edwards, F. L. (2011) The Legal Environment of Business. USA: Cengage Learning.
Stim, R. (2011) Contracts: The Essential Business Desk Reference. USA: Nolo.
Stone, R. and Devenney, J. (2015) The Modern Law of Contract USA: Routledge.
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Waddams, S. (2011) Principle and Policy in Contract Law: Competing or Complementary concepts. UK: Cambridge University Press.
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