The law states that for any contract to be valid, there must be an intention from the involved parties to be legally bound. Thus, for any contract to be enforceable, the following three requirements must be fulfilled. They are intention, agreement and consideration. In this case, the existence of intention by parties to enter into a legally binding contract is the element to be discussed.
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Contracts will be lawfully enforceable if at the time of entering into the contract, the involved parties intend to make it legally binding. The process of judging intentions is usually done objectively. The court asks if in such a circumstance, a person who is reasonable regards such an agreement as having a binding intention.
Though the test is objective, courts rely more on presumptions to assist in ensuring that the involved parties have intentions of making the agreement legally binding. In case the arrangement is made between members of a family or even amongst friends, the courts’ presumption is that the parties involved have no intention to legally bind themselves. However, if the circumstances surrounding the case indicate the business context, then the involved parties will be legally bound.
In the Balfour V Belfour case, the court determined that the contract was not lawfully enforceable because it was a domestic arrangement, and at the time of making the agreement, there was no intention to be legally bound.
In case one party has to argue that the intention to bind legally really existed, then the there must witness and prove the same. For instance, in Merritt V Merritt case, the court determined that the parties intended to bind themselves legally. This was because of available evidence presented. This implies that contracts made in business or commercial context are legally binding unless another party proves the contrary.
In the Esso Petroleum Ltd v Commissioners of Customs and Excise case, the court determined that circumstances surrounding the promotion exercise indicated an intention for the parties to be legally bound. For instance, the promotion activity was made under commercial contexts.
Another case in which circumstances surrounding the case were applied in determining the intention to be legally bound is that of Ermogenous v Greek Orthodox Community of SA Inc. The court held that circumstances indicated that there was no intention to be legally bound. By considering Placer Development Ltd v Commonwealth (1969) 121 CLR 353 case, the court determined that the government was not under any obligation to pay subsidy as subsidy promise was useless if specifications were not stated.
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Since contracts are enforceable only when at the time of making the agreement, there has been an intention to bind the parties legally; an objective assessment of Claire and her cousin Phil’s agreement need to be undertaken. The issue is whether a reasonable person will regard the promotion advert on the social network as an intention to bind it legally or not. The parties involved are family members. However, there are facts indicating that arrangements were made in a commercial or business context.
Though the involved parties are cousins, the promotion arrangement seems to have been made in a business context. This is because the cake cost is substantial and indicates commercial rate and not the reduced rates for relatives; the courts will rely on the presumption that the circumstances surrounding Claire and Phil’s case show an intention to be legally bound at the time the promotion is made.
To argue against the case, Phil will have to provide extra facts to rebut the presumptions. There is one fact that might be argued by Phil to prove that when the arrangement was being made, there were no intentions to bind the parties legally. Though the arrangement had specified starting time, it did not indicate the duration upon which it would last for. Additionally, the promotion arrangement was made in form of an advertisement which did not amount to an offer. Moreover, though not indicated after seeing a mistake on the offer, Phil withdrew it. On this ground, a reasonable person will regard the arrangement as not having an intention to bind those involved legally.
In conclusion, the promotional advertisement was not lawfully enforceable as Phil did not intend to be legally bound by the time he was making it.