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Legally Binding Agreements, Slides of Contract Law

Harvard UniversityContract Law

The concept of legally binding agreements. It explains that agreements made between family members, friends, and for voluntary or charitable services are not legally binding unless there is proof of intention to be legally bound. Agreements made in a commercial context are intended to be legally binding. The document also distinguishes between formal and informal agreements and explains that informal agreements are only enforceable if there is consideration. The document cites several legal cases to support its arguments.

Typology: Slides

2022/2023

Uploaded on 03/14/2023

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Intention to be legally bound
- Carlill v Carbollic Smoke Ball Co (1893) 1 QB 256 : when both sides have an intention to be
legally bound.
- When agreements are made between family members, these are not intended to be legally
binding.
Balfour v Balfour (1919) 2 LB 571
Cohen v Cohen (1929) 42 CLR 91
- If it can be proven that even between family members there was an intention to be legally
bound.
Merritt v Merritt (1970) 2 All ER 760
Wakeling v Ripley (1951) 51 SR (NSW) 183 – consequence were so serious
- Agreements made between friends and agreements to provide voluntary and charitable
services are not legally binding. So the person who wishes to treat it as legally binding must
provide proof in order to show that he or she intended for it to be legally binding.
Teen Ranch Pty Ltd v Brown (1995) AILR 5-036
Ermogenous v Greek Orthodox Community of SA Inc (2002) HCA 8 ; (2002) 209 CLR 95 –
binding as it was an employment contract
- When agreements are made in a commercial context, they are intended to be legally bound,
and the parties that wish to prove otherwise have to onus to provide proof as to no intention
to be legally bound.
Esso Petroleum Co Ltd v Commissioners of Customs & Excise (1976) 1 All ER 117
- When certain delays are made to either the performance or the signing of the contract itself.
Masters v Cameron (1954) 91 CLR 353
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
- In a letter of comfort made by a debtor to a creditor, it may or may not be considered legally
bounding depending on whether or not anything promissory was mentioned in the letter.
Commonwealth Bank of Australia v TLI Management Pty Ltd (1990) VR 510
Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502
FORMAL AND INFORMAL AGREEMENTS
A formal agreement is something executed in the form of a “deed”, which means that it should be
signed and sealed by the maker. A third party witness is also required to this act. Formal
agreements are legally binding.
An informal agreement is something that is not executed in a “deed”. An informal agreement is only
enforceable if at the time of the contracting, each party gives something in exchange (
CONSIDERATION)
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Intention to be legally bound

  • Carlill v Carbollic Smoke Ball Co (1893) 1 QB 256 : when both sides have an intention to be legally bound.
  • When agreements are made between family members, these are not intended to be legally binding. Balfour v Balfour (1919) 2 LB 571 Cohen v Cohen (1929) 42 CLR 91
  • If it can be proven that even between family members there was an intention to be legally bound. Merritt v Merritt (1970) 2 All ER 760 Wakeling v Ripley (1951) 51 SR (NSW) 183 – consequence were so serious
  • Agreements made between friends and agreements to provide voluntary and charitable services are not legally binding. So the person who wishes to treat it as legally binding must provide proof in order to show that he or she intended for it to be legally binding. Teen Ranch Pty Ltd v Brown (1995) AILR 5- Ermogenous v Greek Orthodox Community of SA Inc (2002) HCA 8 ; (2002) 209 CLR 95 – binding as it was an employment contract
  • When agreements are made in a commercial context, they are intended to be legally bound, and the parties that wish to prove otherwise have to onus to provide proof as to no intention to be legally bound. Esso Petroleum Co Ltd v Commissioners of Customs & Excise (1976) 1 All ER 117
  • When certain delays are made to either the performance or the signing of the contract itself. Masters v Cameron (1954) 91 CLR 353 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
  • In a letter of comfort made by a debtor to a creditor, it may or may not be considered legally bounding depending on whether or not anything promissory was mentioned in the letter. Commonwealth Bank of Australia v TLI Management Pty Ltd (1990) VR 510 Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502

FORMAL AND INFORMAL AGREEMENTS

A formal agreement is something executed in the form of a “deed”, which means that it should be signed and sealed by the maker. A third party witness is also required to this act. Formal agreements are legally binding.

An informal agreement is something that is not executed in a “deed”. An informal agreement is only enforceable if at the time of the contracting, each party gives something in exchange ( CONSIDERATION )

CONSIDERATION

  • Consideration given to the other party, does not have to be equal in value to the one given by the other party Thomas v Thomas (1842) 2 QB 851
  • Consideration is anything that includes giving something or doing something that is burdensome to the person doing it. A promise can also be given in exchange. Currie v Misa (1875) LR10Ex 153
  • A consideration cannot be a thing that was already previously given as a consideration. Stilk v Myrick (1809) 2 Camp 317 – ship pay extra cash Roscorla v Thomas (1842) 3 QB 234; 114 ER 496
  • Bilateral contracts are an exchange of promises.
  • Unilateral contracts is where one party promises to do something only if the other party undertakes a particular task.
  • For unilateral contracts past considerations are accepted Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256
  • If someone is asked to perform an act and promised an act in return sometime in the future, the person who performs the previous act isn’t subject to past consideration, which means the same act performed as a consideration previously can be performed again. Pao On v Lau Yiu Long (1980) AC 614 Ipex Software Services Pty Ltd v Hosking (2000) VSCA 239
  • Past consideration is acceptable if it causes benefit to the other party or if it causes some sort of detriment to the person performing the act. Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723
  • If two parties agree on a compromise, it can be considered as sufficient consideration. Ballantyne v Phillot (1961) 105 CLR 379.
  • If A promises to do B something in return for B performing something for C, then this is sufficient consideration.( Promised to third party as consideration) Pao On v Lau Yiu Long (1980) AC 614; (1979) 3 All ER 65.

- Past consideration is not a good consideration - R V Clarke [1927] HCA 47; Clarke gave

information for freedom but wants reward as well but it was a past consideration

AGREEMENT

  • When the details of a promise are left at the discretion of one person alone, it is considered illusionary and not usually enforceable. Placer Development Ltd v Commonwealth (1969) 121 CLR 353
  • Sometimes if the promises made have not complete but sufficient detail the courts will try their best to enforce whatever is enforceable. Ipex Software Services Pty Ltd v Hosking (2000) VSCA 239.
  • If a contract is made on the assumption that an event will occur in the future, the contract only exists once that event occurs. Masters v Cameron (1954) 91 CLR 353