Old presumption that family and social agreements are not meant to be binding.

Balgour v Balgour (1919) o H – W oral ‘agreement’
 £30 pm Maintenance [more generous than any court minimum?]

Most H-W ‘agreements’ not legally enforceable. o Possible to be binding. o Depends on (objective) intention.

Would W have accepted obligations?

Burden on spouse (W) to show contract o Presumption is against.

Balfour is extreme exception: o Any presumption/assumption often rebutted.

Family Law Act 1975 (Cth)
Binding Family Agreements
Wakeling v Ripley (1951)
 ‘I will keep you for all time and I trust with no worry, for the future. Just clear out, in fact leave everything, if you cannot sell them give away ...’
Todd v Nicol (1957)

Letters D to P1, P2 (sister in law and niece) o D wanted company of sister-in-law and niece.
 ‘Come and live with me rent free’
 Intent to after will: ‘if I die, yours for life’

P paid to come from Scotland.

P and D fell out during lifetime.

Held was intention.

Permanent future arrangement affecting financial security.
Popiw v Popiw (1959)

H-W living apart.

H promise o Return and I’ll transfer house into joint names’ o NB: Evidence?
Riches v Hogben p1986]

Son (64) agrees to come to Australia to look after mother (88)

She will buy a house in his name (in fact kept it in hers)


7 days after moving in, she ejects him.

Held binding: o Reasonable people would regard it so o Considerable expense by S o Certain.
Clubs and Competitions

The Satanita: Clarke v. Dunraven [1897] A.C. 59 o Entry to yacht race: competition rules o Each racer contracts with each other, eg about collision damages
Lotteries and competitions

Can be binding, consider e.g. o Mutuality o Seriousness of statements o Repetition
Simpkins v. Pays [1955]

Competition entry not a mere friendly arrangement
Trevey v. Grubb (1982) 44 ALR 20

Tattslotto coupons filled in by T and G o W (G’s mother joined in) o W selected winning square o Shared costs 25% each o Enforceable agreement in those proportions
Presumption that agreements in commercial context are intended to be binding

Like all presumptions, can be rebutted - rare o Advertisements

Carlill o Ex gratia payments

Edwards v. Skyways [1964] 1 All ER 494

Pilot made redundant

Promised "ex gratia" redundancy pay-out

"ex gratia" (= not bound to make it, ie "without liability")

Does not imply agreement of no legal effect
'Subject to Contract'

Masters v Cameron (1954)
 'Honour' Clauses and 'Gentleman's Agreements‘

o Rose & Frank v. Compton [1925] AC 445

Burden of proof on person saying there is no contract

"Honourable pledge" clause in business agreement

Showed intent not to have a formal or legal agreement

Unenforceable
 “Heads of Agreement”, “Memorandum of Agreement”, “Letters of Intent” , “Letters of
Comfort”, “Termsheets” o Confusing usage: beware of label - need to examine content

Helmos Enterprises Pty Ltd v Jaylor [2005] NSWCA

Certainty and intention to create legal relations

Separate but overlapping evidence

Examples: o “Heads of Agreement”

Anaconda Nickel v Tarmoola (2000)

Coal Cliff v Sijehama (1991) NSWCA

Factory 5 Pty Ltd v State of Victoria [2010] o “Letter of Intent”

Pirt Biotechnologies v Pirtferm [2001] WASCA

"The parties at this stage do not seek a contractual obligation but require for the time being a clear indication as to their respective interests…” o “Letter of Comfort”

Kleinwort Benson v MMC [1989] 1 ALL ER 785
 “It is our policy to ensure that the business of [M] is at all times in a position to meet its liabilities to you under the [loan facility] agreements”

Held: no settled meaning – language was statement of present fact not future promise o “Termsheet”
 Maple Leaf v Rouvray [2009] 2 Lloyd’s Rep 475, 511

This termsheet shall serve as the legally binding document until such time as agree[ment] amongst the parties is finalised”

Signature may be significant o Government schemes

Australian Woollen Mills v Commonwealth [1954]

Government wool subsidy scheme in wartime

P tried to enforce subsidy scheme as a contract

Held: o No intention to make a contract

No statutory authority

Anyway, no bargaining P and Gov o Eg request, invitation to purchase wool o No inducement to buy wool

So what was it? o Conditional gift

o Administrative arrangement only

Difficult categories o Burden on person alleging contract

Ermogenous v Greek Orthodox Community (2002) o Hellenic association appointed Archbishop o Archbishop sued for unpaid leave o Was there an employment contract? o Held

Religious minister may have contract to perform spiritual duties

Extensive rights of control exercised

Shahid v Australasian College of Dermatologists [2008] o Educational contracts?
 S applies for training positions and appeals decisions

College appeal procedures in training handbook + fee

College regarded itself as not bound
 eg complete discretion on remedies

Q did each appeal application create a contract? o Held

Each lodging of appeal was intended to create legal relations

Objective position?

Handbook detailed and comprehensive o Formalities, “parties”, grounds (“error of law”)

Commercial relationship o S major commitment of time energy and money o Fees for seminars, sitting exam, appeals o Major factor - indicated intention to be bound

Intention to create legal relations o Certain agreements may not be intended to be binding – negative

Which informal promises should be binding? o Should one-sided promises alone be enough? o Indicia of seriousness?

Civil law systems o Roman law Causa

Legally recognisable reason for enforcing a promise

Worry about promises of gifts/donations, out of estates o French law – such promises have to be notarised – ie witnessed in front of an official and documented

Old forms of action required something other than agreement

o Covenant [deed] – “signed, sealed, delivered”

Property Law Act 1974 (Qld) ss.45-47

Powers of Attorney Act 1998 (Qld) ss.11-12 o Debt – quid pro quo o Assumpsit – consideration

Common law systems o Informal promise treated seriously if “consideration”

Currie v Misa (1875) LR 10 Ex 153, 162, Lush J o “A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party , or some forbearance, detriment , loss, or responsibility, given, suffered, or undertaken by the other.”

Thomas v. Thomas (1842) 2 QB 851, Patteson J o “Consideration means something which is of some value in the eye of the law, moving from the [promisee] ; it may be of some benefit to the [promisor] or some detriment to the [promisee], but at all events it must move from the promisee.”

Dunlop v Selfridge [1915] AC 847, 855, Lord Dunedin [Sir Frederick Pollock] o “An act or forbearance of one party , or the promise thereof, is the price for which the promise of the other is bought , and the promise thus given for value is enforceable.”

Carlill v Carbolic Smoke Ball Co , Bowen LJ, 271 o “Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff…”
NB: In 99% of problems, there is no problem or issue with consideration as it is clearly evident (eg buying cars, property ... things in exchange).

The problem arises when giving gifts, where there is no reciprocity. Or if there is some sort of contractual variation, a promise to pay more or one to accept less money.
 “Good” and “bad” consideration o Is it legally recognised? o Promise “supported” by consideration o Consideration to be “sufficient” (to the content of the contract)
 “adequacy” irrelevant (to the amount of consideration given …) o “Gratuitous” promise
 Consideration “moving” from promisee
 “Executed” consideration o Contract performed
 “Executory” consideration o Contract still to be performed

 Distinguish “Motive” and Consideration o Thomas v. Thomas (1842) 2 QB 851

Executors agree with W
 “In consideration of [H’s] desire” they would convey premises to W for life, provided W pay “£1 yearly towards ground rent”, and “shall keep premises in good and tenantable repair”

Consideration to be in exchange for promise quid pro quo . o Australian Woollen Mills v Commonwealth (1954) 92 CLR 424 o Beaton v McDivitt (1987) 13 NSWLR 162

It is not enough that one relies on a statement – consideration is not reliance. It has to be in exchange for something. ‘Consideration is the price of the promise’.

Consideration and conditional gifts o A promises to pay B £1000 on B’s arrival in Sydney (from Melbourne)

Conditional gift o Alternative context

A needs B urgently for work and B expresses concern about costs

Infer promises in exchange for performance o In Carlill
, one of the arguments was that the advertisement was ‘a gift’ and that it held no contractual footing. Bowen said this was a load of crap.

Consideration must move from promisee o Coulls v. Bagot’s Executor and Trustee Co
(1967) 119 CLR 460

Promise by N to H and W

H provides consideration: any consideration moving from W?
 Good consideration if H provides consideration jointly with W.

Beaton v McDivitt (1987) 13 NSWLR 162 o M owned 25 acre lot of land - not using all

July 1977 invited B to

Move onto land rent free and work it organically

When subdivided will transfer deeds
 26 December B agreed to “accept” “offer”

Was having difficulty with own landlord o 1978-1980

B Constructed form of residence out of rock

Attempted to work land – poor soil

7 years rent free, but spent $1000 on shrubs etc o Falling out

Council requires home demolition

M bars B from property

o Legal Question

Was B working the land in exchange for M promise to transfer lot to B? o Held 2-1 was a contract

High Court had accepted bargain doctrine of consideration in Australian Woollen
Mills

Here bargain was working the land in exchange for transfer

Need link between consideration and promise o Roscorla v. Thomas [1842] 3 QB 234

Sale of Horse
 Later 'warranty' [ i.e. promise] about soundness
 Held: “Past” consideration – ie not linked
 Easy “exception” to past consideration allegation o Lampleigh v. Brathwait (1615) 80 E.R. 255
 “Mere voluntary courtesy” not enough for consideration, but

Services at promisor's request, and

Later promise to pay
 Raise implication that payment would be made

Pao On v. Lau Yiu [1980] AC 614, 629 o Good consideration if

1. Act at promisor's request

2. Parties understood at start that act was to be remunerated

3. Payment legally enforceable
 Look out for “in consideration of you having done X, we promise Y”

Consideration must be sufficient o ie enough to be recognised by law

Law will not enquire as to its adequacy o Exact value [eg was it worth the promise?] is irrelevant
 ‘Nominal’ consideration is sufficient o ‘Peppercorn’ rent (by declaring there’s something in exchange, we are indicating that this is legally binding) o Look for wording “in consideration of …..”
 Some ‘commercial’ value o Chappell v Nestle [1960] AC 87

Motive and Consideration o Thomas v Thomas (1842)

Compromises and forbearances (if we had a dispute about rent because you think a peppercorn isn’t enough, we might say that we terminate the lease and I give you $500 to go away. In exchange for you not suing me, I take an amount of money.) o Bona fide compromise of doubtful claim

