Principles Or Issue Of Law Case Study

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Question 1: Using the four-step process, discuss whether the element of consideration required for the formation of a legally enforceable contract is present in the above scenario. Step 1: Identify the principles or issue of law. The principle or issue of law is that for a valid contract to be formed there must be consideration to be legally bound by both parties. Step 2: Explain the rule(s) of law relevant to the principle/area/issue of law identified in step one with reference to authority. Consideration must move from the promisee. The party who alleges that the contract was breached must demonstrate that the promise breached was purchased or bargained for. In spite of the fact that consideration must flow from the promisee, it need not move to the promisor. This was seen in the case of Official Trustee in Bankruptcy v Arcadiou. Mrs Arcadiou mortgaged her property as part of a round of transactions for her son and daughter-in-law. In turn, her son mortgaged his property to a bank to help his father’s business. The trustee tried to remove the home mortgage from her land to make it accessible for her creditors at the point when Mrs Arcadiou was proclaimed bankrupt and argued …show more content…

In the case of Woodward v Johnston, Mrs Woodward agreed to help her husband do some work to start a gravel supply business. Mr Johnston promised to give her 10 percent of the business in return. Mrs Woodward worked for 18 months, assisting her husband with many tedious tasks. After all her work Mr Johnston did not formalise her 10 percent and kept the profits to himself. Mrs Woodward set out to rebut the presumption that due to their relationship there was no intent to be in a legally binding contract. However it was held that nobody forced Mrs Woodward to work and she was free to do as she pleased. Hence, the arrangement was not recognised as a contract but a family

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