Formation of a contract: Intention to Create Legal Relations Flashcards
Once offer and acceptance have taken place and consideration is established, what must the courts need to identify?
The parties intended to form a contract, did they intend to create legal relations?
What is the presumption on business agreements?
There is ITCLR
What happens with the presumption is rebutted in business agreements?
There is no ITCLR
What is the presumption on social/domestic agreements?
There is no ITCLR
What happens when the presumption in social/domestic agreements is rebutted?
There is ITCLR
What can intention be?
Express or implied
Where does the burden of proof lie?
With the claimant
What does ‘binding in honour mean’?
No ITCLR, no contractual agreement
Jones v Vernon Pools
Facts: Claimant beleived they had winning coupons in football pools, coupons stated they were ‘binding in honour’ only
Held: As claimant signed coupon there was no contractual obligation for the pools company to honour agreement, no ITCLR
Edward v Skyways
Facts: Defendant refused to pay ex gratia money to claimant when he was made redundant
Held: Payment was legally binding
What is the rule on free gifts being offered to promote a business?
It can be legally binding
Esso Petroleum Co. Ltd v Commissioners of Customes anf Excise
Facts: Esso gave free world up coin whehn petrol was purchased
Held: Esso had ITCLR when they offered the gift as this was to attract more custom, so had to pay tax on gift
When prizes are offered in competitions what do companies have?
ITCLR
McGowan v Radio Buxton
Facts: Claimant entered competition and prize was a car, given a 4-inch model as his prize when he won
Held: There was ITCLR so claimant had to be compensated
Free gift AO3
P - Cases have been deciced in line with each other, making it consistent
DP - Complies with ROL, lawyers able to advise clients
WDP - Not on case-by-case basis, unfair
What is a letter of comfort?
A letter providing assurance that an obligation will be fulfilled
Is a letter of comfort usually legally binding?
Nope
Kleinworth Benson Ltd v MMC
Facts: Claimant lent MMC’s subsidiary business £10m, MMC wouldn’t act as garantor for moey but issued a ‘comfort letter’ assuring the bank it would be paid, subsidiary went out of money so claimant claimed on basis of comfort letter
Held: Letter wasn’t legally binding, MMC weren’t obliged to do anything
Comfort letter AO3
P - Conflicts with SoP
P - Confuses lay people
P - Judges are experienced
Balfour v Balfour
Facts: Husband promised wife income of £30, when marriage failed, she made claim for money she was promised
Held: Agreement made when married so was a domestic agreement, no ITCLR
Merritt v Merritt
Facts: Husband left wife, promised to pay income if she paid off mortgage
Held: ITCLR as couple were separated when agreement was made
What did Radmacher v Granatino establish?
Prenups are legally binding as long as both parties intended to be legally bound when agreement was made.
What did Radmacher v Granatino establish?
Prenups are legally binding as long as both parties intended to be legally bound when agreement was made
What will happen when families make agreements that appear to be business arrangements?
The court has to assess whether the matter is a domestic one of one with legal intent
Jones v Padvatton
Facts: Mother allowed daughter to stay in her house whilst she studied for the bar, she hadn’t passed the bar several years later, mother evicted her
Held: Mother and daughter didn’t have ITCLR
If money has been paid is it likely to be a business agreement or social?
Business
What is also usually a business arrangement?
Lottery syndicates and competitions
Simpkins v Pays
Facts: Grandmother refused to pay other two when in lottery syndicate with granddaughter and lodger
Held: Bound to split money as it wasn’t a social agreement
What did Wilson and Burnett state
There should be some record of the agreement otherwise it may be deemed to be ‘social chatter’
What must they have intended if parties put their own financial security at risk
Must have intended the agreement to be legally binding
Parker v Clarke
Facts: Couple were promised they would inherit their property when old couple died, they asked young couple to leave
Held: Legally binding, young couple gave up their security, entitled to damages
