intention to create legal relations - w3 Flashcards
(13 cards)
intention to create legal rights
the 3rd element
the objective approach
4.10 - 4.170
the objective approach - ‘would reasonable people regard the agreement as binding’
lord denning in merritt v merritt -> 4.20
shahid v australasian college of dermatologists -> 4.50 illustarte the factors stated in ermogenous i.e.
consideration
agreement
intention to create legal rights
- statements
- conduct
- relationship of parties
- subject matter of contract
- surrounding circumstances
“objective test”
intention to create legal rights
old english common law
the objective approach
two presumptions traditionally used:
- domestic, family and social arrangements
presumption that parties do not intend to be bound - balfour v balfour 4.120
- commercial agreements
- presumption that parties intend to be bound
distractive
intention to create legal rights
agreements with government
other situations
4.170 - 4.240
government intending to enter into commercial agreement
arrangment implementing government policy, administration of regulatory regime
- australian wollen mills v the commonwealth 3.100 - subsidy
- placer development v commonwealth 5.190 - subsidy
- administration of papua new guinea v leahy 4.190 - government tick eradiction program
- anictomatic v northern territory of australia 4.180 - $18 plate number application (8 factors considered by the court)
intention to create legal rights
honour clause
other situations
- businesses can provide that the agreements are not legally bdinging
“honour clause”; rose & frank v compton 4.210
intention to create legal rights
preliminary agreement - it depends…
other situations
parties agree to be bound while expecting to make a further contract to substitute the first contract with additional terms
intention to create legal rights
three aspects of certainty
certainty
completeness of agreement
agreement to have essential terms:
- nature/type of agreement - what are the main terms - parties, sunject matter, price
- what are the main terms in a lease, in a sale & purchase of land contract
two case examples of agreement lacking in essential terms:
- hall v busst 5.70
anz v frost holdings pty ltd 5.80
certainty of terms
need common intention of parties - terms clearly set out and described
bad if absence of meaning, obscure language incapable of definite meaning
- however may be cured if a court can construe/attribute meaning to it, or alternative meaning exist
words can have more than one meaning, provided not vague or ambigous:
- upper hunter county district council v australian chiling and freezing co ltd 5.120 - “supplier’s costs” - not void for uncertainty, arbitration clause provided means of resolution
- whitlcok v brew 5.100 - “upon such reaonsbale terms as commonly govern such a lease” - terms uncertain
- biotechnology v pace 5.40, 5.160 - terms of share equity scheme uncertain
promise must not be illusory
- unfettered discretion on party to preform
biotechnology v pace 5.40, 5.160 - terms of share equity scheme uncertain
- setting up of share equity scheme dependent on biotech the nature and rights of participants
placer development v commonwealth 5.190
- commonwealth to pay subside od “an amount or at a rate to be determine by the commonwealth from time to time”
- majority held - total discretion as to payment
- note dissenting views - there is obligation to determine what the subsidy is (within the limit) and to pay it
intention to create legal rights
need for certainty and agreement to negotiation in good faith
in uncertain, what avenues of cure might be available?
- rules of construction
- specify a formula
- external standards
- third party determination - upper hunter – county district council
- severance - cf waiver
5.140
general questions
which of the following statements are reasons why the high court in the greek orthodox case discourages the use of presumptions?
intention to create legal rights
- the utility of presumptions is limited to identifying who bears the burden of proof
- presumptions are too complex for judges to apply consistently
- presumptions fail to resolve the difficult cases that actually reach litigation
- presumptions distract attention from the fundamental question of objective intention
- presumptions are based on outdated social norms
general questions
a contract for building works specifies that the final price will be “agreed upon completion.” is this contract enforceable?
intention to create legal rights
- yes, because courts can determine a fair rpice
- no, becuase this is an agreement to agree
- yes, because there is an agreement to negotiate in good faith
- no, because the price term is always something difficult to be left behind
general questions
anna agrees to lease her apartment to ben but says “you can tell me when you would like to move in and how much you would like to pay later.” is this agreement enforceable?
intention to create legal rights
- yes because anna’s statement shows intention to create legal relations
- yes, becuase ben can decide when to move in and pay a reasonable rent, and that’s certain enough
- **no, because ben has unfettered discretion to determine how to perform, and that’s known as illusory **
- no because verbal agreements are not enforceable
general questions
when we say uncertainty can be ‘cured’, it means to tolerate and enforce an unacceptably ambigous term
intention to create legal rights
false
general questions
match the following to each other
intention to create legal rights
a contract states the prive will be “market rate plus 10%” - formula providing an objective standing
a contract states that is a party can’t agree on a price, the president of the law society will determine it - third-party determination mechanism
a contract has one unclear term but the rest is perfectly clear - severance of the problematic term
a cotract states “we will agree on the prive later” with no further mechanism - cannot be cured - remains uncertain
