Chapter 2: Intention to Create Legal Relations Flashcards
What is the definition of consideration
An exchange of goods to enforce an agreement
What are the 2 types of consideration
Executed consideration
* Something has already been exchanged for a promise
Exectory consideration
* A promise made in return for a promise (anticipated)
What does it mean to have ITCLR?
Contract is legally binding if both parties ITCLR
If there are no enforceable contract then the parties are free to go back to their words
What are the 2 methods courts use to distinguish transactions
- Intention of parties
- Public policy reasons
Why do courts apply public policy reasons
Law should not intervene in domestic situations as otherwise court would be filled with disputes
What are the 3 types of agreements
- Domestic agreements (blood-related)
- Social agreements (non-blood related)
- Commercial agreements (business agreements)
What are the presumptions under domestic agreement by courts
Courts presume that domestic agreements don’t intend to be legally bound unless there is evidence proving otherwise
Balfour v Balfour
Facts: Husband agreed to pay wife sum of money, later divorced and husband refused to pay after
Held: not bound to pay spoken agreement and at the time agreement was made there was no ITCLR
Merritt v Merritt
Facts: Divorced couple, the husband agreed to pay $40 to the wife to pay of mortgage until finished, then would give the house to the wife’s ownership
The wife had him sign a physical contract to do so
Held: Court held there was a legally binding contract
Jones v Padavatton
Facts: Mother and daughter made an agreement that she would pay her monthly income to support her bar exam
A second agreement where the mother bought a house for her and she could rent out rooms for allowance
Neither agreement was put in writing
Held: Court ruled that they never ITCLR but was just family arrangements based on trust (needs to be made into physical contract)
What is the presumption of social agreements by courts
That parties may have actual intention to create an agreement, but don’t actually expect to bring each other to court
Courts assume that there is no intention to be enforceable, but with evidence, can be rebuttable
Simpkins v Pays
Facts: Woman and granddaughter entered into competitions sharing cost with a claimant (man)
The claimant filled a form where the defendant would be promised to share any winnings. After winning refused to pay
Held: upheld the claimant’s claim, considering they had** all contributed to the competition** with the expectation that any prize would be shared
What is the presumption of commercial agreements by courts
strong presumption that parties intend to be legally bound, unless there is very clear contrary evidence, the presumption will not be rebutted
What are exceptions that parties are lacking contractual intent
- The burden of proof by the claimant is required to prove that the contract has concluded (no agreement)
- The presumption can be rebutted where the words of a contract, or an offer, suggest that legal relations were not intended
- If an offer is extremely vague or clearly not intended to be serious, the law will not give its acceptance contractual effect
Esso Petroleum Ltd v Customs and Excise Commissioners [1976]
Facts: Esso ran sales promotion where coins of footballers were given away for every four gallons of petrol
Case arose whether Esso had to pay tax, whether or not it was a contract of sale
Held: HOL ruled that it was not being sold so it was not liable for tax, but there was ITCLR
