Disputes about whether something was given as part of a contract or as a gift are not uncommon. These disputes generally hinge on whether a person gave something to someone gratuitously or voluntarily, rather than as part of a bargaining transaction.
When someone gives money or something to someone else, this transaction will usually fall within 1 of 3 main categories:
In civil litigation, the law on gifts is relevant when someone brings a claim for repayment of money under a contract or an agreement, when in reality the money or thing that is claimed was given as a gift, and so it does not have to be returned or compensated for.
A contract refers to a transaction where two or more people agree to exchange goods or services between each other. When you give something in exchange for something else, this is called ‘consideration’, which is a fundamental element of a contract.
In brief, contracts are two-sided exchanges – usually money for things.
You can read more about contracts on our page about contract disputes and Elements of a contract.
A quasi-contract is a contract between people that is implied, even though they have not expressly agreed to a contract. It is a contract that is presumed to exist by a court, based on the circumstances and the roles of the parties in a transaction. Its main purpose is to prevent people being unjustly enriched.
An example would be when a person has provided a good or service to someone else with an expectation or an implication that payment (or something else) would be given in exchange.
To provide a “gift” is to give something without expecting or gaining any benefit.
Unlike a contract, a gift is given without “consideration”, and unlike quasi-contract, a gift is given without a reasonable expectation that something will be given in exchange.
The person giving a gift can be referred to as a “donor” and the person receiving a gift can be referred to as a “donee”.
When a person gives someone else money, a good, or a service, one of three common scenarios will usually arise. Either:
(a) the money, good or service was given with an agreement in place that you would get something in exchange. For example, if you agreed to sell a machine to someone and they agreed to pay you for it – this would be a contract; or
(b) the money, good or service was given without an agreement, but with an expectation that you would get something in exchange. For example, if you paid money towards a family member buying, renovating and selling a house with an understanding that you would receive a share in the proceeds – this would be quasi-contract; or
(c) the money, good or service was given voluntarily or gratuitously without an expectation of receiving anything in return. For example, if you gave a boat to your parent as a birthday present – this would be a gift.
Giving a gift requires both the person giving and the person receiving to agree or consent to the transaction.
The agreement or consent is usually verbal or by conduct; for example, by accepting the gift and not taking steps to return it.
Almost anything can be a gift; money, personal property, real property, and even services.
Many disputes about gifts and contracts come about when a person claims that they should get their money back because they haven’t received something in exchange.
You can claim your money back under a contract, but you cannot claim this money back if it was a gift.
If a person promises to provide a gift but later does not follow through with it, then the gift will usually not be enforceable. In most cases, it is only after a gift has been given that it can no longer be revoked.
Because of this, the main ways that a gift can be revoked are if the donor has not yet given possession of the gift to the donee, or if a deed was signed which gives the donor the right to revoke the gift.
There are some scenarios where a gift is given conditional upon something in return. If a gift was given and it was conditional upon something, then by law it might not be a gift, and you may be able to claim back the gifted money or thing.
The relationship between the donor and the donee is also important in determining whether something was a gift.
The question of whether a good or service was given as a gift becomes more clear-cut when the person providing the good or service is a professional. For example, if you engaged a professional to do work for you, even if you did not first agree on a cost for the work, then the law might presume that a reasonable expectation still existed that the professional would be paid.
On the flip side, a dispute about the repayment of a gift can be much more complex when the people giving and receiving the gift are family members or relatives, such as if they are mother and daughter, uncle and nephew, or brother and sister. In these scenarios, the court may be more likely to find that something was given out of love and affection rather than in the course of bargaining.
It is fundamental when discerning between a gift and a contract whether the object was given gratuitously or in pursuance of an agreed obligation or a debt.
The evidence that can prove that something was a gift includes:
Even if you do not have written evidence that something was a gift, if you recall that the person mentioned to you that something was a gift, and you received the gift, then that can be enough to prove your case.
If you are involved in a dispute about a gift or a contract, contact Gibbs Wright Litigation Lawyers today for confidential consultation about your legal rights and options.
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