Elements of a legally enforceable contract

Discuss about the case study Contract Law for Legally Enforceable.

The issue in this case is if the promise made by Jane to give her car to Jack is legally enforceable in view of the fact that consideration is not present to support the promise made by Jane.

In this way, the present issue deals with the role of consideration under the contract law. The contract law as prescribed that offer, acceptance and consideration are the essential elements that should be present in case of a legally enforceable contract. According to the contract law, a contract is considered as valid and enforceable by the law only if the above mentioned elements are present (Atiyah, 1990). According to the law, each party should provide consideration for the promise that has been received by it under the contract. In the same way, the law provides that past consideration is not a valid consideration (Re McArdle, 1951). Therefore, consideration can be described as anything of value. Due to this reason, it is required that consideration should be something real and illusionary consideration is not valid (Thomas v Thomas, 1842).

 In this case, Jane had promised to give his car to Jack at the offer was accepted by Jack. But in return, Jack has not made a promise to pay any price for the car or in other words there is no consideration. But in this regard, according to the law of contract, a contract can be legally enforced only if consideration is present to support such a promise. In the present case, Jack has not given any consideration in return of the promise made by Jane to give his Lotus super sports car.

Therefore it can be said that Jack does not have an enforceable agreement in this case.

The issue in this question is if the elements of a valid contract are present when Jack accepted the offer to purchase the Lotus super sports car from Jane at a price of $25,000.

As mentioned above, there are certain elements that should be present in an agreement to make it to legally enforceable contract. These elements include offer, acceptance and consideration. Apart from it, it is also require that the party should have the intention of entering into a legal relationship and in the same way, they should also have the capacity to create a valid contract (Beatson, Burrows and Cartwright, 2010). Therefore when an offer made by one party to the contract is accepted by the other party, in return of a valid consideration, it is said that a legal contract has been created between the parties (White v Bluett, 1853).

Adequacy of consideration

In the present case, Jane had made an offer to sell his Lotus super sports car for $25,000 to Jack. The market value of the card is also around $25,000. Therefore this offer is accepted by Jack and he agrees to pay $25,000 for the car to Jane. Under these circumstances, it is clear that the essential elements that are necessary for creating legally enforceable contract are present in this case and as a result, Jack has legally enforceable contract.

In this case, Jack can enforce the contract against Jane.

The issue in this case is related with the adequacy of consideration. Jane had made an offer to sell her Lotus Super 7 sports car at a price of $2500 while in reality; the market price of the car was around $25,000. The offer was accepted by Jack and as a result, an issue arises in this contract is enforceable by Jack.

The relevant rule of law related with the adequacy of consideration provides that the validity of contract does not depend on the adequacy of consideration. The only requirement is that considered it should be something of value in the eyes of law (Beale, (ed) 2002). According to the law contract, it is not necessary that the benefit that has been conferred on the other party or the detriment suffered by the promisee in return of the promised should be equal to their responsibility that has been assumed by the promisor. In other words, it can be said that it is not necessary that the consideration should be adequate. As a result, any real consideration, also a small it may be, is sufficient for supporting a promise made by the other party. In Chappell & Co Ltd v Nestle Co Ltd (1959), the court reiterated the doctrine of the contract law according to which the consideration is required to be sufficient but it is not necessary that it should also be adequate.

In the present case, Jane had offered to sell the car at $2500 while in reality the market price of the car was around $25,000. But by applying the principle that the consideration should be sufficient and it is not necessary that the consideration should be adequate, it can be said that when the offer made by Jane was accepted by Jack, and the enforceable contract has been created between the parties.

Therefore in this case, Jack can enforce this promise against Jane.

The issue in this case is related with the impossibility of the promise made by the fires according to which they had agreed to pay extra US $3 million to the shipbuilders in case the shipbuilders completed the tanker on time. It was particularly important for the buyer that the bank that should be completed on time as they already had a charter for the tanker.

Case law examples

According to the traditional position under the contract law, it has been provided that a promise can be considered as enforceable only if he has been supported by consideration (Atiyah, 2000). This is particularly the case in Stilk v Myrick (1809) where the ship’s Master had made a promise to the crew that the wages of the two deserters will be distributed among the rest of the members of the crew who had remained on the ship. However when the crew tried to enforce this promise, it was stated by the court that this promise was not enforceable due to the reason that any consideration has not been provided by the members of the group for the promise made by the captain. The court stated that the members of the crew were already under a contract complete the voyage. Similarly the position adopted by the court in this case also appears to have been applied in the case is related with partial payment in the full satisfaction of the debt. By example in Pinnel’s case (1602), the defendant had not provided any consideration return of the promise made by the plaintiff not to sue on the partial payment accepted by it.

However, the situation was significantly changed by the decision given Williams v Roffey (1990). In this case, Roffey had entered into a contract with Williams for doing some carpentry work. The parties agreed that the price will be £20,000 for the carpentry work. However, after some time, Williams found themselves in financial difficulties. On the other hand, Roffey were concerned that if the work was not completed on time, they may be held liable under the penalty clause that was present in the main building contract with a third-party. Therefore, they made a promise to pay an extra amount to Williams for every flat that was completed on time. But later on, Roffey decided against paying this extra amount. The plaintiff sued them for the extra money promised by them. It was argued by the defendant that Williams had only done what they were already bound to do under the contract by completing the work on time. However the decision of the court in this case was that the defendant, Roffey was found by the promise to pay extra money on the completion of the work on time. The court further stated that they require consideration has been provided by Williams in this case As Roffey had achieved a practical benefit in the form of avoiding the penalty and also by avoiding the need for finding a new sub-contractor.

Conclusion

In this way, it was stated by the court that the promise for paying the extra amount if the work was completed on time was legally enforceable and as a result, the amount can be legally recovered by the other party. Under these circumstances, a rule of the contract law has been developed according to which the promise of paying extra amount if the work was completed on time was legally enforceable if the party that had made the promise of paying the extra amount was going to attain any advantage or avoid any laws as a result of the completion of the work on time. In the same way, in such a case it is also required that the promise for paying the extra money should not be the result of any economic duress or fraud and therefore in such a case, the benefit that the party making the promise is going to receive as a result of the word being completed on time could act as a good consideration for this promise.

When the above-mentioned rules of contract law are applied to the facts of this case, it can be said that in this case also the buyer has made a promise according to which they were going to pay extra amount to the shipbuilder so that the work of making the tanker can be completed on time as the shipbuilder was set to suffer the loss as a result of the devaluation of the US currency by the government.

Under these circumstances, the shipbuilder asked for the payment of extra US $3 million otherwise they will stop the work. Under these circumstances, the buyer reluctantly agreed to pay the extra amount. The reason was that the buyer already had the charter for the tanker and therefore it was very important that the tanker was delivered on time.

On these grounds, in the present case, it can be said that the promise made by the buyer to pay extra US $3 million to the shipbuilder was legally enforceable if such promise was not made as a result of the economic duress on part of the shipbuilder. As in this case, the buyer was going to achieve an end wanted by the completion of the ship on time, it can be said that the promise of paying the extra amount was legally enforceable.

References

Atiyah, P.S. 1990, Essays on Contract, Oxford University Press, New York

Atiyah, P.S. 2000 An Introduction to the Law of Contract, Clarendon

Beale, H., (ed) 2002 Cases, Materials and Text on Contract Law (Hart

Beatson, J.  Burrows A. and Cartwright, J. 2010 Anson’s Law of Contract, 29th edn OUP

Chappell v Nestle [1960] AC 87

Pinnel’s Case [1602] 5 Co. Rep. 117

Re McArdle (1951) Ch 669

Re Wragg Ltd [1897] 1 Ch 796

Stilk v Myrick [1809] EWHC KB J58

Thomas v Thomas) (1842) 2 QB 85

White v Bluett (1853) 2 WR 75

Williams v Roffey Bros and Nicholls Contractors) Ltd (1990) 1 All ER 512