Woolworths supermarket is a big chain in Australia that majorly deals in groceries. They have many chains in different locations in Australia. The case of Woolworth v Kelly deals with the adequacy of the consideration. This is the case were the worker of the company claims the amount of pension and other payments such as annuity.
- What are the essentials of a valid contract?
- What was the case of Woolworth v Kelly about?
- What do you mean by adequacy of consideration with reference to Woolworths v Kelly.
Woolworths Supermarket
Woolworths is a chain of Australian Supermarkets which was founded in the year 1924. It specializes in groceries but also sells many other items like health & beauty products, stationery, magazines, household products, etc.
Contract Law of Australia
The contract law of Australia is not a codified legislation rather it is overseen by the courts and is a common law. The main feature of contract law is that there is freedom of contract which means that the parties are free to strike whatever bargain they want to choose. There are five essentials of a valid contract under the Australian contract law which includes an agreement between the parties but not a unilateral contract then consideration is also present which means a requirement of bargain or the supply of service, property, or money but does not involve undertaking any particular act in the exchange of anything. The third essential is the capacity to enter into legal relations and the fourth is the intention of the parties to enter into legal relations. If any of the elements is not present then it is meant that the agreement is not enforceable as the contract under the law. The law of contract to have binding force upon the parties must fulfill all the given essential conditions to the contract. Noncompliance with any of the essentials will make the contract invalid and it will not be enforced by the law.
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Consideration can be anything that is stipulated and is legal by a promiser. The consideration must have some value in the eyes of Law and it must be in existence.
Adequacy of Consideration means that to have the contract lawfully valid it is important that there exists some consideration at a fair value that can either be equivalent to or proportional to the offer made by the offeror.
Facts
Sir Theo Kelly was a clerk at Woolworths Limited in 1928 and in 1940 he grabbed the position of leadership in a very short time. At the time of his retirement, the control of the company was passed to other directors who changed the policies of the company. A dispute arose which relates to the pension entitlement. Kelly was entitled to the amount of pension and also quarterly payments or annuity. He ordered the company and made declarations to claim the money from the company. This resulted in filing an appeal by the company to the court to claim the amount due from the company.
Legal Issues
- Kelly is entitled to claim pension and annuity?
- Whether the adequacy of the consideration be determined?
Decision
It was held by the court that the amount of consideration varies in different situations and it can easily be calculated. The amount may seem inadequate to the court but it may be different for the person claiming it. The claimant may have value for consideration or may also have sentimental reasons. The court can't indulge in such evaluation and promises that were made between the parties. The court further said that if these evaluations had to be made, they must be made by the lawyers trained for the same. This will further increase the disputes between the parties in case of non-agreement.
The court also explained that there is generally no need for an inquiry into the adequacy of the consideration. The doctrine of considerations needs that there must be something given in return for the promise so that the contract can be made binding and enforceable by the law.
Criticism of the Judgement
It is generally seen that different people place different values on things and the judiciary is not trained in the subject of economics and other things which helps them to decide on such issues. Different judges may offer different judgments on the same issues which may result in uncertainty.
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