Capacity to be bound to the contract

Capacity to be bound to the contract Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our Law Essay Writing Service . You can view samples of our professional work here . Capacity to be bound to the contract In the aspect of law, a contract is a legally binding agreement between two or more parties which contain elements of a valid legal agreement which is enforceable by law. An agreement is said to be reached when an offer offered by the offeree has been accept by the acceptor as an acceptance. These parties must have the capacity to be bound to the contract and the contract must not be insignificant, vague, unfeasible, or against the law. In daily life, most contracts can be and are made orally, such as purchasing a can drink or stationeries. Any oral agreement between two parties can form a legal binding contract as long as the good or service provided is legal. However, some contracts require material evidence, written documents for example purchasing a house as sometimes written contracts are required by either the parties, or by statutory law within various jurisdictions. When disputes arise among parties of the contract, the courts will have t o decide the judgment based on wheatear to place emphasis on intention of parties to the contract or other policy of considerations. 2.0 Intention to Create Legal Relations 2.1 Definition The Law recognizes that often the parties do not intend to create a legally binding contract. The law therefore says that there must be an intention to create legal relations and make a distinction between social and domestic agreement (where the assumption is that there is no intention to create legal relations) and commercial and business agreements (where the law assumes that the parties intend the agreement to be legally binding). 2.2 Social and Domestic Agreements 2.2.1 Agreements treated as not legally binding The cases suggest that agreements within families will generally be treated as not legally binding. For example, in Jones V Padavattan (1969), Mrs. Jones offered a monthly allowance to her daughter if she would give up her job in the USA and come to England and study to become a barrist er. Because of accommodation problems, Mrs. Jones bought a house in London, where the daughter lived and received rents from other tenants. They later quarreled and the mother sought repossession of the house. The courts decided that there was no intention to create legal relations and that all the arrangements were just part of ordinary family life. Therefore, the mother was not liable on the maintenance agreement and could also claim the house. In Balfour V Balfour (1919), the issue was the promise made by a husband to pay his wife allowance while he was abroad. He failed to keep up the payments when the marriage broke down. The wife sued but it was held that arrangements between husband and wives are not contracts because the parties do not intend them to be legally binding. The court also decided that she had given no consideration for the husband’s promise. 2.2.2 Agreements treated as legally binding In the case of Merritt V Merritt (1970), the husband had already left h is wife and they met to make arrangements for the future. The husband agreed to pay 40 pounds per month maintenance, out of which the wife would pay the mortgage. When the mortgage was paid off he would transfer the house from joint names to the wife’s name. He wrote this down and signed the paper, but later refused to transfer the house. The court was held that when the agreement was made, the husband and wife were no longer living together; therefore they must have intended the agreement to be binging and their intention to base their future actions on the agreement was evidenced by the writing. The husband had to transfer the house to the wife.