Australia Contract Law

Before confirming that the parties have satisfied the required formal elements of a contract, a most important issue to consider is whether both parties have capacity to enter into a contract. In Alan and Bridget (parents) condition, Carlos (son) Company was in loss and was not able to repay the loan, decided to take a refinance, assuming the refinance will help the company comeback to its normal condition. Capacity states, the legal ability of the party to enter into a contract. Law will not support a party if their reason is simply a mistake or misunderstood a contract. However, the requirement is planned to protect people of senior age, mental disability from being taken advantage of who may not fully understand of what they’re doing. At first, there is a presumption that a contracting party has full capacity. If it does become an issue after a contract has been entered into, it will be the job of the party claiming …show more content…
In Australia contract law is primarily regulated by the 'common law', but increasingly statutes are supplementing the common law of contract - particularly in relation to consumer protection. From looking at the issue of the Alan and Bridget, we can find two issues i.e. Carlos provided wrong Information to their parents, creating a false trust and made them enter into the contract. In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a settlor, who transfers some or all of his or her property to a trustee. The trustee holds that property for the trust's beneficiaries. According to Trust law, Carlos has clearly broken the Trust Law by misleading his parents to enter the contract and also by himself without the required capacity to enter the contract, he lodged to the contract and finally bought disaster to his parents, losing their house and closing his