AF108: INTRODUCTION TO LAW FOR COMMERCE

WEEK 4: TUTORIAL QUESTIONS

Part A

On 14th January, 2013, Freida placed an advertisement in the Fiji Times to sell her house for
$200,000. The advertisement also stated that the seller was willing to consider an ‘offer close
to $200,000.’ Myra and Eric, who have been married for two years, saw the advertisement
and decided to go and inspect the property the next day. Upon inspecting the house, the
couple decide that this is the “Dream Home” they wanted. The only problem the couple faced
was that they could only come up with $180,000 cash. They make an offer of $180,000 to
Freida to which Freida replies: “That is far too low than what I expected, I’m sorry.” She then
tells them, “I will sell the house to you for $190,000, why don’t you two discuss this at home
and let me know.” On 18th January, 2013, Myra and Eric meet their friend Cathy at MHCC.
Cathy seemed very excited and told the couple that she had just bought a house for $190,000
from her work-mate Freida. The couple feel cheated and they now consult you for advice.

Advise Myra and Eric as to their rights (if any) under Contracts Law. Refer to relevant
cases to support your answer.

A valid contract is an agreement made between two or more parties (including business
organizations) that creates rights and obligations that are enforceable by law. Therefore, Myra
and Erica did not create a valid contract with Freida. (there was no rights and regulations
enforced by the law).

Part B

For the following scenarios identify whether these are domestic and social or
commercial agreements and discuss whether the presumption about such agreements
could be rebutted or not.

1. Mere’s old uncle, John wished to spend his remaining life years with his niece. Mere
had been like a daughter to him. Uncle John persuades Mere and her husband to
emigrate from Fiji to Australia and promises to accommodate them in his house for
free. He also promises the couple that they will inherit his property when he dies.

The couple sell their Fiji home and give up their jobs as teachers to live with the uncle
in Australia. After a couple of months Uncle John has a dispute with the couple and
forces them to leave the house. He later sells the house and moves to stay in a
Retirement Home. The couple are angered by Uncle John’s actions. Is there anything
they could do?
The above scenario is a domestic and social agreement. This case is similar to the
Wakeling v Ripley case. Thus, compared to it the following can be stated:
Was the agreement between Ripley and the Wakelings a mere domestic arrangement
that was not legally binding, or was it a legally binding contract?
 I think that there is ample evidence that the plaintiffs were insistent on having the
matter put on a clear footing and in the form of a legal bargain between them before
they agreed to adopt the suggestion that they should come out to live in Australia. The
consequences for the plaintiff were so serious, in taking the step that they did, that it
would seem obvious that they were anxious to get a definite assurance and a definite
agreement as to the provision that was to be made for them. ... I think that the parties
did intend to enter into a binding and enforceable contract or, at any rate, there was
ample evidence from which the jury could draw such an inference.

2. Wati and Bob have been married for 3 ½ years. Bob had always showered Wati with
expensive gifts. One Saturday morning Wati and Bob visit Real Jewellers to repair a
watch that was bought by Bob. While in the shop Wati sees a diamond necklace set
and requests Bob to buy the set for her. Bob tells Wati that he would get the set for
her on their 4th wedding anniversary. On the day of the anniversary, Wati calls up all
her friends to tell them that Bob will be gifting her a diamond necklace. Bob gets Wati
a gold necklace instead. Wati feels humiliated. She now wishes to sue Bob for
breaching the agreement they had reached at the jewellery shop. If she sues, will she
succeed in her claim?
Is the agreement enforceable? Did the parties intend to create a legal
relationship? Establishing intention of parties Objective test –Would the words
or conduct of the parties lead a reasonable person to conclude that they intended
to create a legal relationship? The parties are married. While Bob made
promises to his wife they never intended it to have a legal effect. The
arrangement is purely domestic is nature. The nature of the relationship is such
that they exchange many ideas and promises but don’t intend it to be legally binding.
Two presumptions about legal intentions The following two common law
presumptions apply in regard to legal intention:- and to create legal relations. It
is difficult to prove that agreements between family members- and, to a lesser
extent, between friends- are legally enforceable. Presumption can be rebutted
(overturned) if there is sufficient evidence to do so. Relevant factors in assessing
the nature of the agreement:- How friendly were the parties Did the agreement
have a commercial aspect to the personal relationship? What was the size and
nature of the consideration given by each party? How serious would the
consequences be for the parties if the agreement was not performed? Balfour v
Balfour- a financial agreement between a husband and wife did not create legal
relations. Business or commercial agreements The presumption that these
agreements create legal relations may be rebutted, especially if there was an
express term that no legal intention was to be created. Wakeling v Ripley
 3. Joel and his friends are professional musicians. One evening over dinner, the
friends decide to form a band of their own. The band is called the “White Rose”.
After playing at a couple of functions, the Band gets enough recognition and is
approached by the manager for Wonda Vacations, a resort. An agreement is reached
whereby the Band agreed to play for the resort on a weekly basis for a sum of $500
(per week). A statement in the agreement read that the agreement was not to be
legally binding and that the parties agreed to act “with mutual respect and friendly co-
operation.” Two weeks later, White Rose is approached by a group of overseas
musicians who provide them with a touring opportunity. White Rose leaves with the
tour group without notifying the resort. The resort now sues the Band. Will it succeed
in its claim?
This a commercial agreement as there has been a valid that both parties agreed to. Wonda
vacations would succeed in the claim. The presumptions about the case would not be rebutted
because there is sufficient evidence (agreement) to support the conclusion made by the court..