Uncertainties Surrounding Implied Contract

Business Law
Prof: Aliya Ramji
Kuldip Manak
Student ID: 50023432
March 27, 2014
Word Count: 500

The legal issue that arises when advising for Martha in this scenario is whether she entered into an enforceable contract or was this merely a gratuitous promise made by Bob.
In order for there to be a legally binding contract three requirements must be met, there must be an agreement, an intention to create legal relations and consideration. In order for there to be an agreement there needs to be an offer made by one party with is accepted by the other by promise or performance. There was presumably an offer made by Bob to pay the $1000 which Martha had accepted. In commercial agreements (made in the course of business) the presumption lies that there is an intention to create a contract which is not the case in social agreements. It is debatable whether this was an intention to create a contractual obligation, as although the two had met at the TBREA networking event, Martha’s recommendation to Raj were made personally. Most importantly there was no consideration given in this scenario to complete the terms of a contract.
The three rules of consideration are, consideration must not be ‘past’, consideration must be sufficient and it must move from the promisee. As Martha had made the referral which was accepted by Bob before the promise of payment was made, the promise came after the performance the consideration was in the past therefore not valid. In addition the question about whether there was sufficient consideration is not valid as there was no consideration which passed from Bob to Martha. As Bob had given a call to Martha to thank her for her referral, Martha should not have interpreted this to be an implied contract, Bob simply made a gratuitous promise which Martha can ask Bob to respect but cannot hold