advice for a friend

Hangballlouie

I hope someone in here can advise me with an issue a friend finds himself in.

Last January he loaned a friend a big chunk of money (well, big to him as he is only a student).

They both wrote out a contract between them stating that this occurred and they both signed and dated it. It was just done on an A4 sheet of paper.

The friend is now refusing to pay him back, saying he cannot afford it. He is not saying he will give it next year etc, just that he is never giving it back and there is nothing my friend can do about it.

Would the contract they did between them be legally binding?

Thanks

Procrastastudy

hangballlouie wrote: »

I hope someone in here can advise me with an issue a friend finds himself in.

Last January he loaned a friend a big chunk of money (well, big to him as he is only a student).

They both wrote out a contract between them stating that this occurred and they both signed and dated it. It was just done on an A4 sheet of paper.

The friend is now refusing to pay him back, saying he cannot afford it. He is not saying he will give it next year etc, just that he is never giving it back and there is nothing my friend can do about it.

Would the contract they did between them be legally binding?

Thanks

It very much depends but on the face of it why not?

The issue is if the other guy can't afford to pay it back what does your friend expect?

I'm assuming this is a hypothetical scenario and you're not here seeking legal advice in breach of the charter I'm sure you read.

Hangballlouie

Procrastastudy wrote: »

It very much depends but on the face of it why not?

The issue is if the other guy can't afford to pay it back what does your friend expect?

I'm assuming this is a hypothetical scenario and you're not here seeking legal advice in breach of the charter I'm sure you read.

Purely hypothetical. Thanks for the reply. I assumed that the guy wouldn't have to pay it back due to it not witnessed by a legal professional or am I mistaken?

YellowFeather

In a nutshell, what's needed for a contract to be valid is: an offer (setting out the terms of the agreement); acceptance of that offer; and, some form of consideration (in that the contract has to be worth something). There's no need for any witnesses or anything like that - we enter into binding contracts every day - all the time, all the time!!

It sounds like your friend's contract is completely binding, but, depending on the circumstances, he/she will have to consider whether it is worth chasing.

Hangballlouie

YellowFeather wrote: »

In a nutshell, what's needed for a contract to be valid is: an offer (setting out the terms of the agreement); acceptance of that offer; and, some form of consideration (i.e., the contract has to be worth something). There's no need for any witnesses or anything like that - contracts happen every day all the time, all the time!!

It sounds like your friend's contract is completely binding, but, depending on the circumstances, he/she will have to consider whether it is worth chasing.

Interesting read, thanks YellowFeather.

chops018

YellowFeather wrote: »

In a nutshell, what's needed for a contract to be valid is: an offer (setting out the terms of the agreement); acceptance of that offer; and, some form of consideration (in that the contract has to be worth something). There's no need for any witnesses or anything like that - we enter into binding contracts every day - all the time, all the time!!

It sounds like your friend's contract is completely binding, but, depending on the circumstances, he/she will have to consider whether it is worth chasing.

There must be an intention to create legal relations. The courts will usually apply an objective test when looking at this - would an ordinary reasonable man believe that there was an intention to be legally (contractually) bound in the circumstances.

The courts might see the A4 piece of paper as too uncertain or vague, but maybe not if it was signed etc. and the other guy admitted to this. Just saying that it may present a problem.

It's worth noting that for business/commercial relationships there is a presumption that each intends to be legally bound, although this can be rebutted.

Such a situation would be judged on their own facts.. things like part performance, offer and acceptance, formal and evidentiary requirements may also be looked at.

Side Show Bob

hangballlouie wrote: »

a big chunk of money

"Hypothetically"how much are we talking here?

Victor

chops018 wrote: »

There must be an intention to create legal relations.

This wasn't a soft loan "could I borrow €20 until I get paid?". That they bothered to write it down would indicate that there was an intention to create legal relations.

Whether what was written down is binding is another matter, e.g. "John has given Mick €500" could easily be interpreted as a receipt.