Contract - ICLR Flashcards
How is ICLR determined in commercial contracts?
There is a presumption of an intent to create legal relations. This will persist unless it is rebutted on the facts.
How is ICLR determined in social/domestic settings?
There is a presumption of that ICLR is NOT INTENDED. This must be rebutted on the facts for there to be a valid contract.
EG: Family agreements, allocation of domestic chores, agreement to meet friends for dinner are NOT contracts.
In the case of adverts, is there ICLR?
Generally, adverts are only seen as “invitation to treat”.
To be legally binding, they must be sufficiently clear (applies to offer & acceptance and ICLR):
- Carbolic Smoke Ball [unilateral offer]: was sufficiently clear
- Esso Petroleum [unilateral offer]: was sufficiently clear (Court found intention based on the commercial context of the offer and the extra profit Esso would make through the scheme. People would get a World Cup coin if they bought 4 gallons of petrol).
What is the significance of wording “subject to contract”.
This wording strongly shows that the parties are not fully agreed on the contract terms, and therefore ICLR is unlikely.
In the domestic context, are there factors that make ICLR more likely to be upheld?
Yes, for example, if the couple are separating or separated when agreement was reached (Merritt v Merritt).
Example where ICLR was rejected because there was insufficient evidence to rebut the presumption:
A mother promised to pay her daughter $200 per month if she gave up her job in the US and went to London to study for the bar. The mother then bought a house for the daughter to live in. The daughter dropped out of her studies and the mother sought possession of the house. The daughter argued that there was a binding contract for her to stay: (Jones v Padavatton).
What is the significance of Blue v Ashley?
This case shows that where there deals are negotiated in a social situation, over lots of alcohol, with no formal written agreement, and over-the-top offers and counter-offers - these are all factors which show that ICLR is unlikely to be upheld.
This also applies to offer & acceptance - an agreement on all material contract terms is unlikely to be found.
If one party has already signed, is this a relevant factor?
Yes, the fact that the contract was not finished, but one party had already signed, as a significant factor in showing ICLR
(Anchor 2010 v Midas Construction).
What is the significance of wording like “binding in honour, only”.
This will likely show that there is no ICLR, because the agreement was not intended to bind the parties AS A CONTRACT.
(Jones v Vernon’s Pools (1938).
