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Elements in a Contract - Domestic and Social Agreements
Social and domestic agreements i.e. agreements made between friends and agreements made between family members are generally not treated or regarded as legally binding agreements unless there is some consideration that suggests or implies otherwise.
In Re Hudson (1885) Hudson promised to pay £4,000 per year to a chapel, for 5 years, to help it pay off its debt. He died before the last 2 installments could be made and his estate refused to pay the outstanding installments. It was held that a contract had not come into existence and that there was only a gratuitous promise in place. As a result Hudson’s estate could discontinue the payments if they so desired.
Agreements between spouses and partners
In Balfour v Balfour (1919), the husband while working overseas agreed to send regular payments to his wife. Subsequently the relationship went downhill and the husband stopped sending his wife money. Mrs. Balfour brought an action against her husband and it was held that the agreement that was in place was a purely social agreement and that it didn’t amount to a contract.
The situation however is different when it comes to former partners who are legally separated. In Merritt v Merritt (1970) - a husband and wife separated and there was an outstanding debt owing on the house which the couple had jointly purchased. The couple entered into an agreement whereby the husband would pay the wife a certain amount of money each month until the mortgage was fully paid off and once the mortgage was out of the way, the house would be transferred to the wife.
The husband failed to transfer his interest in the house to the wife once the payments were complete and the wife brought an action against the husband. It was held that there was a binding agreement and that it was enforceable at law.
Agreements between other family members
In Jones v Padavatton (1969) a mother persuaded her daughter to leave her high paying job in the US and move to London to complete her bar. In addition to giving her a certain amount of money each month the mother also purchased a house for her to help her financially until she completed her exams. The daughter subsequently moved to London but did not complete her bar as agreed but chose to marry and settle down instead.
The mother then sought possession of the house and the court held that there wasn’t a legally binding agreement in place and that the agreement between the mother and daughter was not intended to have legal consequences.
In Todd v Nicol (1957) the defendant invited the plaintiff, her sister in law, to come and live with her, with the promise that upon her death the family house would eventually be hers. The plaintiff sold her belongings and moved to the defendant’s house in reliance of the defendant’s promise. The relationship took a turn for the worse and the defendant refused to honor her promise. It was held that there was a binding agreement on the grounds that the changes that took place were so substantial that consideration was implied.
In both Jones v Padavatton (1969) and Todd v Nicol (1957), the defendant in the former and the plaintiff in the latter, had made substantial changes to their lives and had to some degree acted to their detriment, based on the promise of another party and therefore had provided some form of consideration.
In Simpkins v Payns (1955) a tenant, landlady and her granddaughter entered into a weekly competition run by a newspaper. A coupon was sent in, in the landlady’s name each week and all three took turns to send in the entries and the nominal sum which accompanied the entries based on an agreement that should any of them win the prize, it would be split or shared three-ways. The landlady won the prize and upon winning refused to give the tenant his share of the winnings. The tenant brought an action in court against the landlady and it was held that there was indeed a valid contract.
In Trevey v Grubb (1982) three friends contributed regularly to purchasing a lottery ticket and eventually the defendant won. The defendant refused to share the prize money and the plaintiff sued. The court decided along the lines of Simpkins v Payns (1955) and held that the plaintiff was entitled to his share of the prize money.
The plaintiffs in both the cases contributed regularly by either submitting the entries or purchasing the tickets and therefore had provided some form of consideration that entitled them to their share of the winnings. Hence there was some measure of certainty in the agreements.
In Wilson v Burnett (2007) three friends came to an agreement that if they were successful at bingo on a particular evening, they would split the prize money three-ways. One of the friends was extremely successful and won in excess of £100,000. The other two friends brought an action to claim their share of the prize money.
It was held that the issue before the courts was to decide whether there was a binding agreement made between the friends, prior to playing bingo that evening and if the agreement was of sufficient certainty. The plaintiffs were unsuccessful in their claim.
© 2017 Kathiresan Ramachanderam and Dyarne Jessica Ward