Legally bound by express contrary intention

Whether the competition organizers had the intention to be legally bound by express contrary intention? And if Jason gets the prize from the competition organizers, can Jason get rid of sharing the prize with Mai by applying the presumption in the social arrangement?

Rules:

Commercial arrangement refer to where the arrangement between the parties is of a commercial nature, it is presumed that the parties do intend to be bound by this agreement and that, therefore, such agreement is legally enforceable by either party against the other. However, the presumption may be rebutted by evidence shows an intention to the contrary. Honour clauses refer to declarations to the effect that an otherwise commercial agreement is binding in honour only can operate to rebut the presumption in favour of enforceability. [1] 

The presumption in the social or domestic arrangement is that the parties do not intend any legal obligations to arise from what they promised. [2] The presumption however, can be rebutted by evidence of implied contrary intention. [3] 

Application:

In typical commercial situations it will be difficult to rebut the presumption in favour of enforceability of agreements arising from those situations. [4] There must be a clear overt intention to rebut that presumption. [5] In this case, the condition on the entry form [6] can be an honour clause. In the Jones case [7] , where Vernon’s Pools, in its defence, relied upon the honour clause which appeared in the type of coupon which Jones alleged he had posted. It may be argued that the clause was effective to prevent any action being taken against Vernon’s Pools in a court of law since it had stated clearly that any dealings between the parties were not intended to be legally binding. And thus it can be seen that the honour clause provided by the competition organisers have the effect to avoid the presumption in this reward for the winning entries arrangement.

It should not be thought that rebutting the presumption in cases of social arrangements is limited to situations involving spouses [8] or family members [9] . The possibility of such a rebuttal can apply to situations where there is no marital or family connection. According to Simpkins case [10] , the three shared the costs of entry and it was agreed that they would all share equally in any prizes that were won, it can be argued there was a clear intention that the parties would share equally any winning they received by the nature of the agreement. It is arguable that Jason and Mai have the intention to be legally bound as Mai contributed half of the entry fee and Jason agreed to share the prize money with Mai.

Tentative conclusion:

A declaration of an intention to the contrary will rebut the presumption of the commercial agreement. [11] The competition organisers are unlikely obliged to pay Jason the prize of $10000 by relying on the honour clause. If the competition organizers pay out the prize money, Jason can be forced to share the money equally with Mai.

Question (b)

Issues:

Whether Jason could use the principle of promissory estoppels to defeat the Ali wish to go back on its promise [12] ?

Rules:

Promissory estoppels refer to prevent a person going back on a promise which would vary a contractual obligation.

Pre-requisites for application of promissory estoppels in Australia seem to be [13] :

a clear and unequivocal representation or promise by the promisor (express or implied from conduct) to promisee about some future matter

the defendant intends the plaintiff to rely upon the representation or promise

The defendant knows the plaintiff will suffer detriment if not fulfilled

The plaintiff acts or abstains from acting in reliance on the assumption or expectation

The plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled

The defendant has failed to act to avoid that detriment whether by fulfilling the assumption of expectation or otherwise.

Application:

First of all, it can be seen that the promise [14] verbally made by Ali is understandable and unambiguous. Secondly, base on the case facts, Ali had induced Jason into the legal relationship by making the promise. Therefore, it can be argued that Ali intends Jason to count on the promise. According to Waltons Stores case [15] , it can be seen that Waltons Stores was aware of Maher’s activities and yet it did nothing either to correct his assumption that he had an enforceable contract or to stop the building activities, even though it had decided not to proceed with the project, and it may be argued that Maher had acted, to his detriment, in reliance on Walton Stores’ conduct. Similarly, if Ali decides to renege on the promise, promissory estoppels can be considered to apply in the case as Ali may have an unconscionable conduct of disobeying the promise. In addition, it can be argued that Jason has paid the monthly rental payments, to his detriment, in reliance on Ali’s unconscionable conduct. Fifthly, Jason may suffer a financial loss as a result of going back on the promise by Ali. As with the Maintiendrai case [16] , where Maintiendrai’s going back on promise caused the material disadvantage suffered by Quaglia, one of the two judges King CJ saw the incurring of arrears as constituting the required detriment. Lastly, it can be argued that the detriment will not be avoided if Ali fails to fulfill the promise.

Tentative conclusion:

If Ali goes back on the promise, Jason may apply the promissory estoppels rule to avoid the lost and thus it can be argued that Jason is entitled to insist on Ali continuing with the five year lease on the basis of $2000 per month without annual increases and payment of council and water rates.