A contract is a formal accord between
two or m...
Contract Law: Refusing to Honor a Promise
A contract is a formal accord between
two or more parties with a promise to perform or not to perform particular
tasks or acts. The agreement creates a legal duty for each party involved in
the contract and maintains a right to seek remedy in case of any form of breach
of such an agreement1. A contract falls in the category of English
common law although the state may intervene to settle conflicts between the
parties to a contract. Alex and George got a contract immediately Alex made the
promise to pay house rent and accepted by George. There was also another
contract between the parties agreed on the sale of the Lucian Freud print with
the promise of selling other of George’s prints to Alex. Therefore, Alex should
be aware that a contract existed between the parties. Alex and George are in a
bilateral agreement because they both have an obligation in the contracts
formed. George has the responsibility of hosting Alex while Alex is obliged to
pay monthly rent for staying in the house. The agreement on the sale of the
Print is also bilateral because, Alex is paying and George is giving the prints
There are elements that require to be satisfied so as the
parties involved can form a legally binding contract. Therefore, for a contract
that is binding to exist between Alex and George, there is a need to confirm
whether all the terms elements existed between the parties during the
agreement. These are:
For any contract to be valid, all the
parties involved must have the ability to understand and appreciate the agreed
terms. Legal incapacity to get into a contract may arise from infancy,
insanity, drunkenness, and incorporations.
If an individual is an infant that is
less than eighteen years of age, then such a contract is not binding. The infant
can avoid the obligations of such a contract by just not doing anything about
it. They, however, can ratify the contract upon reaching majority age. However,
if the infant had taken any action on the contract, they must take affirmative
action whereby the contract is rescinded.
The parties must, however, return any consideration received because of the
If a person is legally declared insane
before getting into a contract, then the contract is void. However, if the
person was yet to be declared insane before the contract, then the contract is
Any contract made a person when they
are drunk such that they are incapable of making sound judgments or understand
the obligations of a contract are voidable. However, the person can ratify the
agreement upon sobering.
The agreement between Alex and George
allowing her to stay at George’s house as long as she pays a monthly rent of
Â£1,000 was made between two sane parties. Both Alex and George have the
capacity to get into a binding contract. None of them was declared insane or
drunk during the making of the contract, and hence, the agreement was binding.
Alex should, therefore; stay assured that a contract existed between them on
tenancy and to sell the prints to her in future.
The most fundamental element of a
contract is that one party makes an offer and then they bargain come to a
common ground where there is acceptance of the offer. An offer is a promise to
act or refrain from acting in a given way.
The offeror makes an offer so that the other party can either reject or accept.
In the case, George made an offer of Â£1000 Monthly rent for Alex his estranged
wife to stay at their house. He also accepts that he would sell all or the
chosen prints to Alex in the future following his first sale of Lucian Freud
print for Â£10,000. It was George that made the offer to Alex to make the sale
of the print.
Acceptance came from Alex and hence
marked the contract. The acceptance is at a point where there is a meeting of
the minds or mutual assent. The two parties should fully be aware of their
obligations and consequences and then accept the terms at their free will. The
offer and acceptance of an offer do not necessarily have to be expressed orally
or in writing.
Alex has a binding contract with George since she made the
acceptance to George’s offers. She accepted to pay the house rent and to
purchase the Prints as George had made the offer. It was the information and
the offer that George made that made her accept paying the quoted amounts and
hence that makes the contract binding. Alex, therefore, holds the power to
enforce the contract on staying in the house and of buying the prints since the
circumstances affecting their relationship came later. Arising circumstances do
not change what was already agreed.
George had a chance to withdraw the
offers to Alex before she made the acceptance and hence cannot revoke it later.
The circumstances surrounding his failure to follow through his promise are
baseless and not covered for in the contract. There were no such terms as that
the offer would be withdrawn in case their relationship got worse and hence the
contract has to be enforced. George has no ground to breach the contract that
he has with Alex since the circumstances that are making him consider
withdrawing from the contract are not fundamental parts of the agreement.
Hence, there was no form of breach from Alex’s end.
Contracts are based on bargain and
exchange. Each party to a contract has to receive something of value and gives
the other party something of value. Consideration is the name that brands the
value given by every party. Consideration may take the form of a significant
expenditure of money or effort, a promise to execute some service, or agreement
to avoid doing something that has value. It is the presence of consideration
that separates a contract from a gift. A gift is a voluntary transfer of
property of something of value to another party without a promise of receiving
anything of value in return.
There are three major rules of consideration:
has to be sufficient but is not needed to be adequate. The size of
consideration does not matter as long as it has value in the eyes of the law.
For example buying a house for a penny is sufficient to constitute a legally
binding contract. There are cases where a collateral contract exists whereby
the existence of one consideration provides for another.
must not be from the past. A promise to repay some consideration made in the
past does not qualify as consideration.
of obligation. The contract must bind all the parties and if not so none of
them is bound. Therefore, when one party does not make a sufficient
consideration, then the other party is not obligated to complete their end of
The consideration given by Alex of
Â£1000 per month for staying in the house with George and Â£10000 for the print
is sufficient. It is sufficient in the sense that it is what George asked for
to get the contract, and Alex is honoring the consideration fully. By paying
her rent every month, she is honoring her party of the contract. On the part of
the print, she agreed to pay the sum for the print following the offer that she
can buy any or all of the other prints that George had which meant that it
influenced her decision when accepting the contract and also setting the
consideration. The two parties also had a mutual obligation in that George gave
the rent to Alex meaning that he had accepted the contract as he also received
the money. There was a mutual exchange of value and hence the consideration was
within the rules.
and Intention to Create Legal Relations
Every contract is presumed that the
parties have the full intention to be bound by law unless they state otherwise.
Therefore, whether parties to a contract do not need to explicitly express the
intent to make the contract legal since it is deemed enforceable by law by its
existence. However, the parties to a contract may state that law should not
enforce their contract. Such as the Rose & Frank Co v JR Crompton &
Bros Ltd, that was an agreement between two businesses. The contract was not
enforced because it contained an ‘honor clause’ that stated that the parties
wished not to allow any review or enforcements by a court of law.
Domestic and the social agreements are
also not enforceable in the legal terms. For example, agreements between
parents and children or between couples. An example of such a case is the
Balfour v. Balfour case where the husband had agreed to be paying some money on
a monthly basis to the wife. When the husband stopped paying, the court refused
to enforce the agreement.
Alex has an enforceable case because
they are estranged with the husband. Alex has a chance to win the case and have
the court enforce the contract just as the case with Merritt v Merritt. In the
case, Mr. Merritt and his wife jointly owned a house. However, Mr. Merritt left
to stay with another woman, and the Mr. and Mrs. Merritt made a written
agreement that Mrs. Merritt would be paying a monthly sum of £40. The agreement
was that Mr. Merritt would ultimately transfer the house to her once she
completed paying her mortgage to him. Unfortunately, Mr. Merritt changed his
mind and refused to transfer the house after his wife finished making the
payment. The Court of Appeal decided that the nature of the dealings and that
the couple was estranged during the making of the agreement made the court
assume that the contract was more than just a domestic arrangement. During the
making of the agreement between George and Alex, the couple was already
estranged, and so the contract may fall in the same ruling as the Merritt case.
The purpose to which the agreement made must be within the
law. It must not conflict with the applicable rules that may result to
restrictions by law enforcers. For example, making a contract to engage in
illegal activity is not binding. The agreement between Alex and George are all
legal in that they do not conflict with any laws. It is lawful to contract on a
house and on purchasing a print.
and certainty of terms
The terms of every agreement need to be
sure and not vague at all. The terms of every contract must be clear enough to
all the parties and can be ascertained in a court of law if the contract is to
be perceived as enforceable. The terms also need to be complete and clear to
all the parties. The terms or the issues not noted in the terms of the
agreement are perceived not to be fundamental to the enforceability of the
should push George to follow the contract through because; he did not bring up
the issue on their relationship in the terms of the agreement. Worsening of
their relationship is, therefore, not defense for George to avoid his
obligation to the contract since they were not part of the terms of the
contract that they formed.
The proof of some or all of the
elements of a contract can be done in the form of writing, orally or just by
conduct. The remedies for any form of breach of contract can damage that may
take the form of compensation in monetary terms or of specific performance. The
performance of a party is enforced through a court injunction thus offering the
aggrieved party the benefit of the bargain. Alex should, therefore, anticipate
receiving the significant damages should she seek a court redress to the breach
of contract by George.
George has engaged in breach of
contract, and so Alex should seek legal action against him. It is because,
George is not performing according to the contract that they had with Alex by
removing from the house and also failing to agree to sell her the other prints
as per the agreement. The court is bound to offer her damages. Several types of
damages may be issued to her by the court. Such as the compensatory damages for
the breach of contract disadvantaged her by George. George may also be issued
an injunction to allow Alex stay in the house and to sell the prints to her as
agreed on the contract.
In conclusion, Alex and George had
valid contracts that are enforceable by law. Therefore, Alex can sue George for
breach of contract. It is because, George made an offer that Alex accepted to,
and they agreed to an amount set as the consideration for the contract. The
fact that all the parties are of a capacity to get a contract and that there
was a mutual deal between the parties made the contract binding. The contract
is also actionable under the law because they were already separated when
making the contract and so the restraint of the court from taking action on
domestic agreements does not apply in their case. With all the elements of a
binding contract present in the contract made between Alex and George, then
Alex stands a chance to get an injunction against George’s defaulting from the
agreement or also to seek for any damages that she may have accrued due to his
breach of contract.