Chapter 25- Intentions to create legal relations

Question 1

What are the two rebuttable presumptions that the courts have created when intending to create legal relations

Answer 1

• In commercial agreements, there is a strong presumption that there is an intention to be legally binding
• In social/domestic agreements, the parties do not intend to the agreements to be legally binding.

Question 2

Describe commercial agreements

Answer 2

• These agreements are usually precise, consistent and clear
• They often involve large sums of money

Question 3

State an example case for Intentions to create legal relations for commercial agreements

Answer 3

• Esso Petroleum v Customs and excise Commissioners:
  Esso ran a sale where one ‘coin’ would be given for every 4 gallons of petrol. The court held that there was intent to create legal relations, because despite the coins’ negligible monetary value, Esso would derive commercial benefit from it.

Question 4

Describe social and domestic agreements:
Husband and Wife

Answer 4

• Generally the agreements will not be held to be binding and the parties can sort out their problems by themselves, however this can be rebutted.

Question 5

State an example case for Husband wife where there was a legal agreement between them.

Answer 5

Merritt v Merritt
The husband refused to transfer ownership to the wife after she had paid off the mortgage as promised.

Question 6

Describe social and domestic agreements:
Child and Parent

Answer 6

Domestic agreements between parent and child are also presumed not to be legally binding. The courts will need to look at the purpose of the agreement and this will determine whether it’s binding or not

Question 7

State an example case for Child and Parent

Answer 7

Jones v Padavatton
The mother gave the daughter monthly allowance and a house during her Bar studies. After she failed her exams, the mother sought possession of the house. The court held that the agreements were not intended to create legal relations and the mother was entitled to the house.

Question 8

Describe social and domestic agreements:
Other social agreements

Answer 8

also often presumed to not be legally binding however if money is involved, it does not matter whether it is social, there is always a binding contract.

Question 9

State an example case for other social agreements

Answer 9

Wilson v Burnett
The defendant had discussed the idea of sharing the winnings, but argued that no agreement had been reached. The court upheld this, as there was no intention to create legal relations.

Question 10

Is there a need for the ‘intention’ requirement?

Answer 10

• It can be argued that features of a contract; offer, acceptance AND consideration can be present but the ‘intention’ to create a legal relation may not be there. (Balfour)
• in court, it may lead to floodgates of litigation and several cases will arise
• intention would encourage more contracts, but also allows flexibility by permitting rebuttals