John, Hazel and Penny are neighbours. They have lived next to each other for many years and spend much time together on a daily basis going to restaurants, cafes and other social events. For several years they have also been playing the lottery together. Every week they each put money into a jar labelled "money for the lottery". They have agreed that the money will be placed in the jar by 5.00pm on the evening before the lottery is conducted. They have also agreed that if anyone forgets to put the money in the jar one week then they need to put double the amount of money in the jar the week after. John collects the money and buys the lottery ticket. They have agreed that if they win first prize in the lottery, they will share the winnings as follows: John 40% (because he goes to the effort to go to the store and buy the ticket each week), Hazel 30% and Penny 30%. Finally, they have agreed that they will play the lottery together for a period of five years and then they will re-examine if they will continue with the arrangement.

One week, the friends win first prize in the lottery! Hazel and Penny rush to John's house so they can all go together to collect the first prize. When they arrive at John's house however, John says that he will not share the winnings with them. He says he bought the ticket and will keep the whole first prize. He says that their agreement is not binding because it is a social or friendship agreement which has no legal standing. Advise Hazel and Penny on whether they are entitled to their share of the first prize.