ITCLR + Consideration + Privity

Definition - ITCLR

Each party must intend for it to be legally binding

Social + domestic agreements

Presumed no ITCLR

Business + commercial agreements

Presumed ITCLR

social + domestic - Exceptions (3)

If money has changed hands / third party involved

If financial security at risk

If it has been documented

Consideration

What one party gives in exchange for performance / promise

What are the 3 rules on consideration?

Consideration must be sufficient

Must not be past

Must not be an existing duty

Consideration must be sufficient but need not be adequate

Some value even when not enough

Past consideration

If work already carried out it is a mere gift

Past consideration - exception

If payment promised and understood all along - not past

Existing duty

If obliged to do it anyways - not good consideration

Existing duty - exception

Only if it provides extra benefit

Common law privity rule

People in a contract are bound to / benefit

3rd party cannot claim / be claimed against

Contracts (right of third party) act

Allows 3rd party to enforce terms of a contract

s.1 of Contracts act

If contract states 3rd party may do so

Or contract is specifically made to benefit 3rd

Exception to privity rule - Special cases

Jackson vs Horizon holidays - can claim on behalf of whole family

Collateral contract

Secondary contract - allows entry of 3rd party

Agency

Someone authorised to make a contract on behalf of a person or business