The Art of Gift Giving: A Legal Analysis

Although Christmas is the time of giving, and although most people (at least in western societies) expect to wake up on Christmas morning and receive a gift from under the Christmas Tree, very few people stop to consider the legal implications of gift giving.
For this reason, and at the risk of boring our clients senseless, we take this opportunity to explore the idea, at least in a legal sense, of gifts.
There are several legal requirements that need to be made out before one could be said to have given, or indeed received, a gift.
First of all the Giver of the gift must have clear title to the gift.
Secondly, the Giver must also display a clear intention to transfer the gift to the Receiver. The intention can be recorded in a deed or similar document or simply inferred from the actions of the Giver.
Thirdly, the gift must be given to the Receiver (whether actually or impliedly).
One of the leading cases in Australia on the subject is the case of Rowland v Stevenson [2005] NSWSC 325.
This rather curious case deals with a step-father who on his step-son’s birthday gave his step-son the gift of a boat. At the time, he stated words to the effect of “You can have the boat”. Rather unequivocal, you would think.
He also provided the step-son with a boat shaped birthday cake (very kind indeed) and the keys to the boat and the step-son, from that moment on, paid all the insurance premiums for the boat (the actual boat, not the cake).
In later days, the step-father had a change of heart. He attempted to rescind the gift and take the boat back after a falling out between the parties. The step-father argued that because he had only handed his step-son the keys to the boat and not the boat itself an intention to give the gift of the boat could not be implied. (One wonders at this point whether the case was better suited to the Family Court.)
The matter ended up before the New South Wales Supreme Court and the Court found that constructive delivery of a large chattel is sufficient to make out the legal requirements of a gift.
The court analysed the step-father’s actions in relation to the giving of the gift and found that there was constructive delivery of the boat by means of the step-father handing his son the keys to the boat. The provision of the cake didn’t assist the step-father’s case either.
For the Grinches out there, the court also found that there exists the ability to give a conditional gift. A gift of property, for example, could be made subject to existing charges (eg outstanding finances) and the condition that the gift would revert back to the previous owner if the finance payments were not made. (I would advise that if you are considering giving a gift of such complexity that it is subject to finance, it should probably be the subject of a written agreement between the parties to the transaction).
The famous example of such gifts is the engagement ring. There are cases where courts have found that the provision of an engagement ring is conditional upon the parties becoming married at a later date and if the marriage does not go ahead the ring should be returned as a result of the failure of consideration and the resulting breach of contract (not strictly a gift case but worth mentioning).
For completeness, in cases where the gift is a gift of money the inference that a gift has been given without the money actually passing between the parties is very difficult to imply from behaviour of the parties. Money has to actually be handed over before the gift can be said to have been given (ie it’s extremely difficult to infer from behaviour that you intend to give someone money at a future date. The up-shot of this is that you should feel free to promise your relatives large sums of money you don’t actually have in vague terms to be given at some undetermined future date)1
You’ll be pleased to know that in Rowland v Stevenson the step-son was permitted to retain the boat.
In any event, we at Mornington Legal unequivocally and unconditionally hope you have a Merry Christmas and that your gifts are not subject to conditions, and that if you do receive a boat for Christmas, that the intention of the giver is clear.
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[1 Not actual legal advice]

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