QLD Car Loan Repayment Contract between Mother and Daughter - Valid?

[AmicableDad]

Upon our daughter getting her driving licence my ex wife and I loaned our daughter $5000 to purchase a car being $2500 from me and $2500 from her. It was originally a verbal car loan agreement that she would pay back the $5000 over the course of 2 years and this money would be used to buy our youngest daughter a car. The $5000 loan was provided for from funds held in a joint bank account awaiting property settlement due to our separation. The car was registered in the ex wifes name to reduce the insurance premium for the vehicle.

Due to a number of unfortunate circumstances we asked the ex wife to transfer the registration across to our daughter. She would only do this upon our daughter signing a loan contract between my ex wife and daughter This loan repayment contract was drawn up by the ex wife with no legal consultation involved.

Upon the change of registration and signing of this loan repayment contract I was shown the contract where it stated the $5000 loan was to be paid in full back to my ex wife and failure to pay this in full would result in the car being taken by the ex wife. Yes that is right, Mother to take car from Daughter.

My question is
1. Given I am excluded from the receiving any repayments how would I go about challenging the validity of the contract and would it be worth it?
2. Should I advise the ex wife of my validity concerns, we repay the her the reduced total of $2500 (she is entitled to) and await her pursuit of the remainder of the contract terms?

I look forward to your response.

Regards.

 

[Sarah J]

Hi Amicabledad,

This is an unfortunate situation.

Generally, when parents pay a sum of money to their children, the presumption of advancement assumes that the parents did not intend for the money to repaid back. The oral agreement and the contract will both rebut this presumption.

In relation to your questions:

1. An oral agreement is enforceable against the parties to the contract. Hence you are able to reclaim this money from your daughter. The issue is whether you can prove the existence of an oral agreement. To get the money directly from the ex-wife would be more difficult.

2. The contract may be valid. However, your daughter could argue that the loan was $2500 and that there was a mistake in the face of the contract. The issue, again, is whether she is able to substantiate her claims. The mother may argue in response that alternatively, the parties agreed that she transfer the registration over in exchange for $5000 (repayment of 2500 and an extra 2500 on top).

It may well have been an honest mistake. You can give your ex wife the benefit of the doubt and not worry about this matter until she actually tries to enforce the contract for the extra $2500.

 

[AmicableDad]

Hi Amicabledad,

This is an unfortunate situation.

Generally, when parents pay a sum of money to their children, the presumption of advancement assumes that the parents did not intend for the money to repaid back. The oral agreement and the contract will both rebut this presumption.

In relation to your questions:

1. An oral agreement is enforceable against the parties to the contract. Hence you are able to reclaim this money from your daughter. The issue is whether you can prove the existence of an oral agreement. To get the money directly from the ex-wife would be more difficult.

2. The contract may be valid. However, your daughter could argue that the loan was $2500 and that there was a mistake in the face of the contract. The issue, again, is whether she is able to substantiate her claims. The mother may argue in response that alternatively, the parties agreed that she transfer the registration over in exchange for $5000 (repayment of 2500 and an extra 2500 on top).

It may well have been an honest mistake. You can give your ex wife the benefit of the doubt and not worry about this matter until she actually tries to enforce the contract for the extra $2500.

Hi Sarah J,
Thank you for your comments. Fortunately my daughters and son can support the original oral agreement.

 

[Sarah J]

I hope it all works out, AmicableDad.