Issue

Describe about the Business and Corporations Law for Law Principles.

The central issue in the given situation is to ascertain if the parties actually intended to enter into legal relations for the enforcement of mutual obligations. This is imperative as this is a key requirement for the enactment of a valid and enforceable contract and that too in cases where the parties are inter-related. Richard’s claim on the weekly allowance of $ 200 would essentially depend on the enforceability of the contract in view of the relevant case law.

Law

In order to ensure that a valid contract be enacted between the parties, there are a host of conditions that need compliance with. Firstly, there has to be a legal acceptance derived on the basis of valid exchange of offer and acceptance driven by mutual consent and free will. The other elements which are pivotal for contract enactment are the presence of legal consideration along with the capacity of the parties to enter into a contractual relationship. Yet, another relevant pre-requisite is the intention on the part of parties involved to enter into a legal relation and thereby ensure that in case of breach, legal intervention could be sought to ensure discharge of contractual obligation (Carter, 2012).

This is a key requirement which has immense significance as all promises or agreements are not legal contracts as they are not meant to be bound by law but rather on moral grounds. For instance, there may be an agreement between two friends with regards to going to the theater and in such case if one of the parties does not decide to turn, the other party surely would not drag the defaulting party to the court for relief. Hence, the key element that is found missing in such agreements is the intention to create legal relations by the concerned parties. Such kind of moral promises which lack legal sanctity are quite common in case of domestic and social agreements. As a result, it is imperative to distinguish agreements that are entered into in trade and those which are essentially domestic and social agreements (Davenport & Parker, 2014).

In the verdict of the Belfour v Belfour (1919) 2 KB 571, it was established that in case of domestic and social arrangements, if the intention on the part of the parties involved to be legally bound could be clearly established beyond doubt, then only such intentions would be inferred to be present or else the default assumption in such cases to begin with would be that no such intention is present. A leading case in this regard is the Jones v Padavatton (1969) 1 WLR 328 case (Paterson, Robertson & Duke,2015).  As per the relevant case details, Mrs Jones promised her daughter Mrs Padavatton to compensate her at the rate of $ 200 every month in case she agreed to move to London to become a lawyer. The daughter was reluctant to accept the offer as she was working in US but eventually agreed to the offer due to constant persuasion of her mother. The mother expected that after studying law, her daughter could work with her in Trinidad. However, there were disputes between the two parties at the initial stages only with regards to the currency of the denomination with the daughter ending up as the aggrieved party (Gibson & Fraser, 2014).

Law

In order to improve the situation, the mother purchased a huge house for her daughter so that she could earn additional income by rending the rooms that were lying vacant. However, after some time the daughter got married and she left her law studies incomplete. The mother claimed that since the daughter failed to complete her legal studies, hence the house possession should no longer be with the daughter. The court in the case presented opined that the nature of the agreement between the parties was of domestic nature and hence governed by the presumption that the parties do not intent to bind each other in legal relations since nothing contrary has been brought forward explicitly which indicates the opposite to be true (Pendleton & Vickery, 2005).

The given situation needs to be analysed in the wake of the decision taken in the Jones v Padavatton (1969) 1 WLR 328 case. As per the relevant case facts, Richard and his father have entered into an agreement whereby Richard is required to mow the yards (both front and back) present on the property owned by the family and ensure that the tidy state of the gardens. Considering that the property size was huge, it would take atleast half a day every week to discharge his obligations in return of which, he would receive a compensation of $ 200 weekly. This work was previously being performed by the garden contractor who used to charge $ 350 for the same amount of work. The father later could not afford making the promised weekly payment ordered that Richard should give his services for free as it the responsibility of the family members for keeping property well maintained and tidy. Besides, he also indicated that by ensuring Richard’s stay in the house, he was able to gain access to boarding and lodging absolutely free of cost.

There is no evidence in the situation to deny the presumption that with regards to the promise, there was lack of intention on the end of the parties so as to enter into legal relations considering the fact that it is a domestic agreement. Thus, in the absence of intention to make legal relations, the given contract is not enforceable and hence Richard cannot demand payment of $ 200 weekly allowance citing their agreement.

Conclusion

From the above arguments, it is evident that there is no enforceable contract for Richard and thus he cannot claim the weekly allowance promised by his father for his services.

Application

To opine on the potential remedies that Frere Bros may avail for the conduct of Joe which effectively amounts to breach of contract.

Rule

In accordance with relevant provisions of contract law, breach of contract refers to a situation when one of the parties to the contract fails to discharge the contractual obligations bestowed upon by the contract. The extent and nature of breach of contract can vary from case to case (Gibson & Fraser, 2014).. With regards to breach of contract by the defaulting party, the innocent party or the party which discharges its contractual obligations has access to certain remedies that are discussed below.

Damages

In accordance with the contract law terminology, damages may be defined as the loss incurred by the innocent party due to the breach of contract by the defaulting party. The practice of paying damages as compensation to the innocent party is also well captured in the common law as apparent from the verdict of the Addis v Gramophone (1909). The primary intent behind authorizing damages is to ensure that the valid interests of the innocent party are protected and to ensure that the incidence of breach of contract remains within check. In case of damages arising from contract breach, then also compensation is one aspect while punishment to the defaulter is also another significant purpose (Taylor & Taylor, 2015). This is imperative considering the incidence and significance of contractual relationships in trade and commerce which need to be complied with. When the damages are awarded to the innocent party, the court does not take into consideration the paying capacity of the defaulting party and the damages are directly driven by ascertaining the extent of loss caused to the innocent party due to contract breach (Carter, 2012).

This is another remedy which is available in the event of contract being breached. As per this, the court orders the defaulting party to perform the specific acts that it had to perform as per the contract and it failed to perform as indicted by the verdict in the Nutbrown v Thornton, (1805) case. This order is granted by the court in which the court either prompts a particular action or restrains the defaulting party from indulging into a particular activity. Specific performance as a remedy is readily deployed for the fulfillment of any transaction that was previously established.  This remedial action empirically has been quite useful in safeguarding the valid contractual interests of the innocent party as adequate compensation derivation is not possible in each case (Davenport & Parker, 2014).  Specific performance remedy is deployed by court only under the specific cases when the damage alone would not be able to provide justice and relief to the interests of the innocent party. However, in cases, where the contract terms are of ambiguous nature, the court may refuse to grant specific performance as it is difficult to ascertain the contours of contractual obligations objectively. Thus, in cases, where specific performance remedy may lead to defaulting party undergoing annual hardship, then the court may exercise its discretionary powers to denial grant of the same. However, never the less, the remedy of specific performance is a key tool for safeguarding the legitimate interests of the innocent party in cases where damages may not suffice adequately to uphold equity and fairness (Pathinayake, 2014).

Conclusion

Injunction

Yet another remedy which may be available in cases of breach of contract is injunction. As indicated in the verdict of the Lumley v Wagner (1852), injunction refers to the court orders where the defaulting party should discontinue a particular practice in the present and also ensure that the same practice is not repeated in the future till the expiry of the contract (Pendleton & Vickery,2005). The two major types of injunction that could be utilized are the mandatory injunction and the interlocutory injunction. Interlocutory injunction is an interim measure for ensuring the contract‘s subject matter is maintained while the matter is still under litigation and the final orders have not been passed. Mandatory injunction refers to the final court order which directs the actions to be taken by the defaulting party (Paterson, Robertson & Duke, 2015).

Application

As per the relevant case facts, Frere Bros has executed an enforceable contract with Joe who happens to be a renowned film actor. As per the contract, for a period of five years, Joe cannot work with any other company except Frere Bros. As a result, he could not entertain films produced by other companies or production houses before the contract does not come to an end. However, during the contract period, Joe signed a film with a company other than Frere Bros and hence caused a breach of contract. The list of remedies that Frere Bros has to its disposal has been discussed in the earlier section. Clearly, one of the obvious options could be damages and in case it does not suffice, then the court order could sanction either a specific performance or an injunction. Here, the major problem is the fact that Joe is doing a film with other producers which he is not supposed to do. Hence, a remedy is required by the innocent party i.e. Frere Bros so as to ensure that the defaulting party i.e. Joe does not work with other companies in the present and also in the future till the contract expires.  Therefore, the most suitable remedy for Frere Bros considering the case facts would be injunction.

Conclusion

Based on the arguments presented with regards to the current situation and the set of remedies available with Frere Bros, it is prudent that they should aim for injunction which is the most suitable one under the current circumstances as currently the film with the other company has not been produced, thus damage does not make sense in this case.

References

Books

Carter, J 2012, Contract Act in Australia, 3^rd eds.,  LexisNexis Publications, Sydney

Davenport, S & Parker, D 2014, Business and Law in Australia, 2^nd eds., LexisNexis Publications, Sydney

Gibson, A & Fraser, D 2014. Business Law, 8^th eds., Pearson Publications, Sydney

Paterson, J, Robertson, A & Duke, A 2015, Principles of Contract Law, 5^th eds., Thomson Reuters, Sydney

Pathinayake, A 2014, Commercial and Corporations Law, 2nd eds., Thomson-Reuters, Sydney

Pendleton, W & Vickery, N 2005.  Australian business law:  principles and applications, 5^th eds., Pearson Publications, Sydney

Taylor, R & Taylor, D 2015, Contract Law, 5^th eds., Oxford University Press, London

Case Law

Addis v Gramophone [1909] AC 488

Balfour v Balfour [1919] 2 KB 571

Jones v Padavatton [1969] 1 WLR 328

Lumley v Wagner (1852) 42 ER 687

Nutbrown v Thornton (1805) 10 Ves 159