LW11011 PLS I - Week 2 Enforceable & Unenforceable Agreements PDF

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Remember to Check-In ([email protected]) On-campus attendance & engagement Open the app / Your device will find the Click the ‘Check-In’ icon Wait until it turns solid calendar beacon green Online attendance & engagement Open the app / Click the Watch link Close the confirmation View your lesson on your calendar screen normal device Enforceable (& Unenforceable) Agreements and Formalities Private Law of Scotland I LW11011 Week 2 Un/Enforceable agreements To understand whether a contract is enforceable or unenforceable, we need to consider the following: Incomplete agreements Intention to create legal relations Conditional agreements Formalities Incomplete agreements Agreements to agree are not enforceable “For there to be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything which is necessary to be settled between the parties. Of course, it may leave something which still has to be determined, but then that determination must be something which does not depend on agreement between the parties.” per Lord Dunedin, May & Butcher Ltd v The King 2 KB 17 at 21. Parties had failed to agree on price to be paid under the contract – essential element of contract? No contract for uncertainty: McArthur v Lawson (1877) 4 R 1134 “In order to create a contractual obligation an agreement must be reasonably definite. Vague general understandings cannot be enforced.” Gloag on Contract p 11. See also LP Dunedin W&B 3-10 text at note 24 Certum est quod certum redid potest Terms left to be determined … “that determination must be something which does not depend on agreement between the parties” Term determined by arbitration: Foley v Classique Coaches 2 KB 1 contract enforced Term determined by reference to open market value: Scottish Wholefoods Collective Warehouse Ltd v Raye Investments Ltd 1994 SCLR 60 contract enforced Term determined by agreement between parties’ quantity surveyors: Courtney & Fairbairn v Tolaini Bros (Hotels) Ltd 1 WLR 297 contract not enforced Executed agreements Sale of Goods Act 1979 s.8 Payment quantum meruit for services rendered, Wilkie v Scottish Aviation Ltd 1956 SC 198 Agreement that price is not an essential term: R&J Dempster v Motherwell Bridge and Engineering Co Ltd 1964 SC 308 Valid contract Dissensus on price, implied term: Avintair v Ryder Airline Services Ltd 1994 SLT 613 (W&B 2-36) The courts implied a term to the effect that the party carrying out work was entitled to reasonable payment. Intention to create legal obligations Not every agreement creates a contract. It is important that both parties intended to be legally bound by their agreement. Presumptions: Social agreements are not contracts/not legally enforceable Commercial agreements are contracts/are legally enforcebale Note: Presumptions may be rebutted. Each case will turn on its own circumstances. Look for the intention of the parties and/ or engagement. Look for element of patrimonial interest in social agreements. Intention to create legal obligations Social agreement Balfour v Balfour 2KB 571 - not legally binding Robertson v Anderson 2003 SLT 235 (W&B 3-04) -legally binding Commercial agreements Rose and Frank Co v JR Crompton & Bros Ltd AC 445 (W&B 3- 06) – no contract WS Karoulias SA v Drambuie Liqueur Co Ltd (No2) 2005 SLT 313 (W&B 3-02) RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG UKSC 14 (W&B 3-03) Conditional agreements Pure obligations = due at once Future obligations = due on occurrence of a certain event Contingent obligations = either: Suspensive = due on occurrence of uncertain event or Resolutive = due until occurrence of uncertain event So, conditions may be suspensive or resolutive Avoid confusing conditions in the sense used here with contractual terms Formalities: Requirements of Writing (Scotland) Act 1995 The general rule: “S.1(1) Subject to subsection (2) below and any other enactment, writing shall not be required for the constitution of a contract, unilateral obligation or trust. The exceptions: S.1 (2) Subject to subsections (2A) and (3) below, a written document complying with section 2 of this Act shall be required for- (a) the constitution of- (i) a contract or unilateral obligation for the creation, transfer, variation or extinction of a real right in land; (ii) a gratuitous unilateral obligation except an obligation undertaken in the course of business; and (iii)……………………” Formalities: Requirements of Writing (Scotland) Act 1995 What if you I wanted to rent or sell a house, flat or business premises – would the agreement need to be in writing? Would there be any exceptions? S.1(3) -(4) outline a number of steps, and if these are followed then the parties will be bound: Must be an unwritten contract for an interest in land One of the parties (A) has acted or refrained from acting in reliance on the contract With the knowledge and the silent consent of the other party (B) to the unwritten contract As a result of (B’s) actions, (A) has been affected to a material extent (B) would not be entitled to withdraw – personal bar