Chapter 4 Intention To Create Legal Relations Flashcards
Without intention, can you create a legally binding contract?
No, without intention. Both parties will not be in a legally binding contract
What is the objectivity test?
The objectivity test states that if a reasonable person viewing all circumstances of the case would consider that the promisor intended his promise to have legal consequence, there is intention to create legal relations.
What is the general rule regarding social and domestic agreement?
What are the exceptions to this rule?
The general presumption is that social and domestic agreements lack the necessary intention to form a contract. If intention is absent, promise is not legally enforceable and cannot be enforced in court.
Exception being that if there was a written contract between both parties, such evidence can be entered into court to show that legal relations are intended. With intention, promise is legally enforceable.
What is the general rule regarding commercial agreements?
What is the exception to this rule?
The court makes a general presumption that in a commercial agreement, there is necessary intention to create legal relations.
The exception is if the parties expressly stated that their agreement is to not be legally binding.
[Honor clause] With an honorary clause present in the contract. Contract will lack intention to create legal relations and hence, is not enforceable.
Define the concept of privity of contract
Define the case study
The doctrine of privity states that only parties that enter into a contract can sue or be sued.
Case study: Price V Easton
Case detail: A debtor owed Price 13 pounds. A debtor agreed to perform work for Easton if he agreed to repay Price the 13 pounds. Easton agreed. After the work was done, Easton failed to repay the debt owed to Price. Price sued Easton.
Court found that Price was not privy to the contract between Easton and debtor. Therefore, he could not sue Easton for loss.
