Formation (Certainty & Intent of Legal Relations)

Question 1

Fleming v Beevers

Answer 1

INTENT - Social

A de facto couple purchases a property in Queenstown as tenants in common (1/2 share), with the agreement that they will leave their half of the property to each other in their respective Wills. Mr. Beever dies suddenly without amending his will.

Miss Fleming sues Mr. Beever estate for breach of contract because their promise to change their Wills was contractual.

Court recognisede the presumption that familial relations are not intending to create contarctual arrangements may no longer be as strong because the circumstances of familiar relationships are so broad (presumption may no longer exist). Each case will turn to its own facts.

Held there was intent to create legal relations because putting something in your Will and talking to lawyers suggests a legal arrangement, they had done more than what was preparatory to enforcing the contract and they kept their money seperate which reflected an intent to create legal relations.

The quality of consideration may reflect the intention to create legal relation.

Question 2

Ashton v Pratt

Answer 2

INTENT - Social

Ms. Ashton was an escort to Mr. Pratt who promised to support her financially in return for her being his mistress. When Mr. Pratt died she sought to enforce his contract.

Held no intent to create legal relations.

Relevant factors that lead to this case having no intention was: family relationship, lack of detail, informal language of the agreement, unknown duration, services Mrs. Pratt was providing was contrary to legal policy, and overall significant lack of certainty.

Question 3

Fletcher Challenge

Answer 3

INTENT - Commercial
CERTAINTY

Two large companies enter into negotiations to transfer shares in a gas field and a head of agreement was drafted.

Held no legal intent.

There was no enforceable contract because head of agreement had not ben consolidated into a proper contract.

The parties were not ad idem on the terms of the contract and therefore the level of certainty required for the head of agreement to be enforceable was not reached. It was simply an agreement to agree in the future upon further negotiations.

Held that were a contract is incomplete on consequential matters then it is not certain.

Question 4

Tower Insurance v Nicon

Answer 4

INTENT - Commercial

Dispute between Nicon (CHCH demolition contactor) sued Tower insurance (insured numerous properties damaged in CHCH earthquakes).

Held was legal intent.

The agreement was intended to have immediate effect and did have, so the parties were relying on the HOA and therefore the was no need for a later contract.

Head of agreement cannot be used a shield to avoid legal obligation.

Question 5

Deng v Zheng

Answer 5

INTENT - Cultural

Deng and Zheng were in a long term commercial relationship which engaged in property development and construction projects. They agreed to end their business relationship but attempts at a complete and amicable separation of their interests was unsuccessful and resulted in this litigation.

Case showed that social setting may provide an explanation for the commercial setting. Sometimes required to assess if the intent of commercial relationship be gleaned from looking at the social setting. Held culture can be important in contracts but only in some cases will it be relevant to determine intention.

Shows difficulties when commercial settings also have social element to it - had been working with each other for very long time so lots of informalness - court looked at facts of case, terms of agreement and actions of parties, but also cultural considerations. Court noted that cultural considerations can be taken into account.

SC says it depends on the practices of that particular family/relationship as to whether there is intent requiring evidence of how that particular family/relationship operates.

Question 6

Wellington City Council v Body Corporate

Answer 6

CERTAINTY

For an agreement to have contractual force, it must be in terms defined with a sufficient degree of certainty regarding the parties obligations.

Question 7

Biotechnology Australia Pty Ltd v Pace
SC, AUS

Answer 7

CERTAINTY

Biotech offered a salary package to Dr Pace which included an option to join senior staff equity sharing scheme. This offer was never made.

Held that the contract lacked certainty because there was numerous elements to the senior equity scheme that was not negotiated and left the future discretion. Although the court has a desire to not frustrate a contract the terms was so uncertain that it would be inappropriate for the court to fill in the gaps.

There is a tension between the courts desire to uphold contract (parties freedom of contract) with their unwillingness to uphold ambiguous or uncertain terms.