Is this contract valid?

Question

Does this contract meet the requirements to be enforced by a court? If not, what challenges might be raised?

Promissory Note

Principal Amount: £500.00 GBP

Date:

1. For value received, the undersigned (the “Promisor”) at _________, promises to pay to the order of _______(the “Promisee”) at ________ the sum of £500 shall the Promisor fail to meet his target of 47.5 work hours per week between 6th - 26th June 2016.

2. Sum shall be paid in full within seven days of the end date of said period.

3. This agreement will be governed and interpreted according to English law. All disputes and claims arising under the Agreement (including non-contractual disputes and claims) will be subjected to the exclusive jurisdiction of the English courts.

Promissor (name):

Promissor (signature):

Date:

Answer 1

Having done a bit of brief research, I find that "legit" is a synonym for "good". So, no. The header announcing a "principal amount" serves no purpose and could be misinterpreted as indicating that there is a loan. There is no reason to indicate the date twice, which gives rise to two different values of "date". The phrase "For value received" can be interpreted in at least two ways, one being "in exchange for some unspecified value to be received at some future date by Promisor", and "in exchange for a specific value already received by Promisor". Under the later interpretation, Promis(s)ee probably could not breach but under the former, Promis(s)ee could. So it makes a difference. You can just pay to the Promis(s)ee, and not imply that you are creating a pay-to-order instrument such as a check. That still leaves you the option to pay with a check. Or was the intent to say "pay on demand"?

The expression "the sum of £500 shall the Promisor fail to meet his target" is not grammatical in US English, and I'll leave it to a UK speaker to judge if this is, over there. I assume that this is supposed to express conditionality, in which case "if" is a useful term. Then the meat of the contract, I guess, is that if the Promisor fails to meet somebody's target of 47.5 work hours per week, then Promisor has to pay Promissee £500 (and not otherwise). It's really not clear how anyone would know whether "meet a target of 47.5 work hours per week" has come to pass. Does that mean "work at least 47.5 hours per week"? Does that mean "for each of the three weeks within the time period" (or did you mean "work 47.5 hours within some one week, within the 3 week period"). Being explicit that the work obligation extends for 3 weeks would be legit (vide supra).

Supposing that the second clause means "Promisor will pay £500 by 5:00pm 2 July 2016", you should put it that way. Or if you mean "Promisor will pay £500 by 5:00pm 3 July 2016", say that. Deadlines for performance should be stated very directly and clearly, and require no calculation and interpretation. And I'd suggest including a clause stating that "Promissor" and "Promisor" are used interchangeably in this contract. Or else be consistent in spelling.

Note that almost any contract can be given some interpretation. From the perspective of creating a contract, the first concern should be over clearly expressing the intentions of the two parties in written form. After all, you don't have a contract if there is no meeting of the minds.

Answer 2

Have a look at What is a contract and what is required for them to be valid?

Looking at your pro-forma:

1. Intention seems fine - it's a formal signed document so the parties seem to intend to be legally bound.
2. Agreement is OK, what they have agreed seems clear.
3. Consideration one party has paid an unspecified amount (not a problem) and the other has made a promise; so is the consideration is good? Maybe, the 47.5 hours is described as a target; it is not clear if this is a pre-existing contractural obligation (to the promisor or a third-party) or not. If it is, then there may be issues that the promisee's consideration is (partially) "past".
4. Legal Capacity may be an issue depending on who the parties are but if they have legal capacity this doesn't wreck it.
5. Genuine Consent seems fine - there is little room for the parties to argue they were talking at cross-purposes.

6. Legality of Objects and here we hit the snag or snags:

   • if the promisor and promisee are in an employer/employee relationship then such an agreement would fall foul of English employment law.
   • "exclusive jurisdiction of the English courts." Is a problem - you cannot exclude the jurisdiction of other courts just because you want to and trying to do so may make your contract void, even in an English court.
   • it is possible that the payment of £500 for failing to meet a contractural target could be a penalty and penalties are illegal under English law

Is the contract poorly drafted and ungrammatical? Yes, but that does not, of itself, make it unenforceable: so long as a coherent meaning can be extracted from it, that's fine. It has two places for being dated which could lead to inconsistent dates but since nothing turns on when the contract was made that shouldn't matter - I have seen plenty of contracts including from major banks where there are numerous opportunities to stick in the wrong date.

Answer 3

I can see a couple issues. Maybe problems.

1. Clarity. The word "shall" should be "should". Otherwise, it is not grammatically correct. In which case it could be attacked as being unclear. And no meeting of the minds.

2. Consideration. Just because the contract says there was consideration, it doesn't mean there actually was any. In this case, I don't see any reason to think there is any. It doesn't really make sense given the nature of the content of the agreement on its face.