Business Binding Contract Essential Elements

Question: Describe about the Business Binding Contract for Essential Elements. Answer: Introduction It is apt to commence with the prominent position that for a contract to be valid and enforceable there are essential elements that include offer, acceptance, consideration and an intention to be legally bound, that must be present. Offer, Acceptance, Consideration Issue From the onset Heavy made an offer to Traynor that he would want to loose 10kilos and she would like that Traynor assist him. We are also expected to determine if Traynor made a valid acceptance by responding that he was okay with performing three sessions a week. In addition, it is noted that there were payments that were agreed on between the two and it is to be deduced of there is a valid consideration. Law The rule that governs an offer can be understood from defining an offer first. It is an expression of willingness to enter into a legally binding contract.[1] It was affirmed in Storer v Manchester City Council[2] that the offer must be one that is certain and free from any ambiguities and is capable of acceptance. Acceptance of an offer, on the other hand will only be effective it is communicated to the Offeror or where the Oferee makes an objective inference that makes the offeror believe that an acceptance was made.[3] It is paramount to note that for a contract to be formed there must be a consideration which is a profit, benefit or loss that one party to the contract enjoys.[4] It has been held in Chappell v Nestl[5] that the consideration must be sufficient and one that was made based on the free will of the contracting parties. Application It can thus be stated that Heavy made an offer that is acceptable in law and one that was clear free from any ambiguities and therefore the offer was capable of being accepted. Traynor properly communicated the acceptance to Heavy by leaving the voice mail message which Hevvy was able to retrieve. It is also submitted that Traynor and Heavy agreed on a consideration of $30 per session which was based on the free will of both parties Intention to be Legally Bound Issue The fundamental question here is whether an intention to be legally bound existed between Hevvy and Traynor which is one of major concern in determining the enforceability of the contract. Law It is apparent that the nature of the relationship between Hevvy and Traynor is one of a commercial nature. For commercial relationships, it is normally presumed that the parties had an intention to create a legal relationship.[6] However, it has been held that an objective test should be conducted to determine if a reasonable person would infer that an intention to be legally bound existed between the parties.[7] Suffice to say the contracts of a commercial nature must always be in writing. Application It can thus be stated that the agreement between Hevvy and Traynor was a casual agreement and therefore it can be inferred that they did not intend that the agreement be legally binding. The agreement between Hevvy and Traynor was one that was agreed upon over the phone. In the Law of contract for a contract to be binding it has been held that it must be in writing. It can thus be agued that the contract was not binding because there was no written argument which would have displayed the intention to be legally bound. Conclusion It can be concluded that even if it is evidenced that an offer, acceptance and consideration were validly made, where there is no intention to be legally bound the agreement cannot be enforceable. The contract did not also meet the requirement of writing. Defenses Issue As has been noted in the facts of the case, Traynor has claimed that because of the construction work that is going on in his route to their meeting place it will be more expensive for him to come and assist Hevvy lose weight. Law The law applicable here is that one of frustration of contracts. Where due to the occurrence an event or any thing else the contract cannot be performed because of commercial or physical reasons it is said to be frustrated.[8] Frustration has the effect of discharging the contract. It has been held that the frustration that the frustration must occur without the fault of either party.[9] Application Traynor can thus defend himself by the use of the doctrine of frustration since the construction that was being done along his route was not a consequence of his fault. Further, the construction has since made it commercially impossible for Traynor to meet his obligations to Hevvy. (b). Remedies If the contract was enforceable the following remedies could be sought by Hevvy. Specific Performance It is advised that Hevvy could seek the equitable remedy of specific performance so as to compel Traynor to perform the contract as they had earlier agreed. This remedy is used by the courts where the defendant cannot adequately compensate the plaintiff.[10] Damages It should be borne in mind that damages may be awarded for the loss for future prospect.[11] In this case Hevvy is disappointed since he had begun losing some kilos and Traynor breached the agreement before even she reached her expected target. He will therefore be awarded damages for loss of expectation. (b). Mortgages over real property This is an interest in a real property that secures the payment of a debt. The buyer of the real property in this case passes an interest on the real property such as land, to a facility such as a bank to secure the payment of a debt which was money that was advanced to the buyer to acquire the property. It is vital that the mortgages should be registered with the registrar of titles in the respective state. In Australia, mortgages are governed by the Property law Act which gives the Mortgagee the power of sale and dispose of the property incase of default in paying the debt.[12] The legislations that govern mortgages however vary from state to state. In New South Wales for instance, mortgages are governed by the Real Property Act which negates the requirement of a notice when the mortgagee want to take possession of the property after default by the mortgagor.[13] Security Interests This is an interest in personal property or any other assets that is made by an agreement to secure the performance of an obligation which in most instances is the payment of a debt.[14] Security interest in Australia is governed by Personal Property Securities Act 2009. The Act creates a register referred to Personal Property Security Register that a secured party enters details of the perfect the security in register. Collateral It is the personal property to which a security has attached and is sometimes referred as the personal property that has been described in the Personal Property Security Register. The law that guides the enforcements of collaterals in Australia is the Financial System Legislation Amendment (Resilience and Collateral Protection) Act 2016 which was recently brought to force. Additionally, the government has formulated the Financial System Legislation Amendment (Resilience and Collateral Protection) Regulation 2016 which also regulates the enforcement of Collaterals. The Mirror Principle The idea inherent in the mirror principle is that the registration of a land title that is due must reflect all the fundamental details and facts of the land to be registered that the purchaser must know before the purchaser buys the land. The land that is the subject of the transaction must have been registered under the Real Property Act 1886 (South Australia). The Mirror principle is predicated on Torrens system of land registration which the registrar ensures that the owner of the title receives a clean tile to the land. This had the effect of curing the deficiencies of the deed registration system. Grantee A grantee has been in the Land Titles Act 1925 (the Act) referred to as a person whom a document of title such as a transfer or a conveyance is made to. This implies that he is the person who the title of the interest in land is being transferred to. In most instances when a buyer is purchasing land he will be referred to as the grantee because the title in the land is being passed to him through the transfer or conveyance. The grantee is normally bound to accept the title where it is a clean title. Bibliography Books Beale Hugh, Chitty on Contracts, (Sweet Maxwell Ltd 2004) Cases Australian Woollen Mills Pty. Ltd. v. The Commonwealth [1954] 92 CLR 424] Chappell v Nestl[1960] AC 87 Currie v Misa (1875) LR 10 Ex 153 Day Morris Associates v Voyce [2003] All ER (D) 368 Davis Contractors v Fareham UDC [1956] AC 696 Dunk v George Waller [1970] 2 QB 163 Edmonds v Lawson [2000] EWCA Civ 69 Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1975] UKHL 4 Storer v Manchester City Council [1974] 3 All ER 824 Cohen v Roche [1927] 1 KB 169 Legislations Personal Property Securities Act 2009 Property Law Act 1974 Real Property Act 1900 (NSW)