Subject: Aspect of Contract . What is the legal obligation (if any) in the follo
ID: 427570 • Letter: S
Question
Subject: Aspect of Contract
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What is the legal obligation (if any) in the following situations? Give reasons for your answers.
1. Each month, Henry, Kate and their grandson, Sam, enter a general knowledge competition, each paying AED10 towards the entry fee. Sam always emails the entry form, pays the entry fee and receives the confirmation of entry. Last month, they won the competition and the prize was AED 6000. Sam refuses to share the AED 6000. Advise Henry and Kate. All family members – please apply rule about family agreements with respect to an intention to create legal relation.
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2. Mike called the police when he discovered a thief had stolen his car. When they arrived, he told Reem, the officer in charge, that he would give each of the 3 police officers AED600 if they returned the car to him by 9am the next day when he was due to go on a driving holiday. The police officers recovered the car and returned it to Mike by 8am the next day. Mike has refused to make the payment to the police officers. Advise the police. Existing obligation is not good consideration for a new promise-apply here
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3. Maitha buys a washing machine as a gift for her mother from Home Supplies Ltd. The washing machine stops working ten days later. Who can sue Home Supplies ltd for breach of contract and why? What has been the impact of the Contracts (Rights of Third Parties) Act 1999 in situations like this and why? How would the Act change the position of the mother?
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4. Bob borrows money from Fair Bank to set up his own small business, selling fitness books and equipment which pays for his own lessons to become a fitness trainer.After a few months Bob’s main supplier finds out he is only 17 and refuses to trade further with him. This means Bob doesn’t have enough business to pay for his lessons to become a trainer. He is also behind with payment of his mobile telephone account.
Advise Bob about the enforceability of each of the four contracts he has entered into:
i. For the bank loan (On-going obligation –unenforceable)
ii. With the supplier of the fitness books and equipment
iii. For his lessons to become a fitness trainer (Training contracts are enforceable for a mother)
iv. For his mobile phone. (Is mobile phone a necessary)?
Note: in the above question the bold requirements are important to do
Explanation / Answer
Answering the first 6 questions:
1. In this case, even though family relations are involved, there is a considerable existence of mutuality in the arrangement happening between the grandparents and the grandson. All the 3 members were equal participants in the competition and so there existed an intention to create legal agreement. Hence it is imperative for Sam to share the prize money with his grandparents.
2. This is a clear example of a promise involved in a legal duty. It is the duty of the police to find Mike’s car for him. The police is not walking an extra mile or doing a favor to Mike. The police finding Mike’s lost car, was within the scope and purview of their duty. Hence even though Mike had made a promise to give AED600 to each police officer if they found his car by 9 am, the promise is not enforceable, as it gets overrided by the existing obligation of the legal duty of the police.
3. In this case, the washing machine was a gift from Maitha for her mom. As the washing machine stopped working, the person, on who’s name, the bill was made and who was involved in the deal, will have the power to sue the company. As Maitha was involved in the transaction, so she has full rights to sue the company for the defective machine. Though the machine was bought for the benefit of Maitha’s mother, she, being a third party, will not be allowed to sue the washing machine company.
4.a) The bank loan remains enforceable on the consignee of Bob as it is an ongoing loan. Bank did not lend money to Bob with the condition that if supplier is not working with him, the Bank will forget about the loan. Bob is obliged to return the loan to bank as per the loan contract. As he is a minor, the brunt will be on the cosigner of the loan to repay the loan amount.
b) Bob needs to check the terms and conditions of the contract between him and the supplier to check whether there was any condition placed on the age for doing business.