Formation Of A Contract - Intention To Create Legal relations Flashcards
What is intention to create legal relations
Courts need to clarify if parties actually intended to form a contract. When it is unclear if the intention is domestic or business agreements, burden of proof lies with claimant to prove there was intention to create legal relations.
(Sadler v Reynolds)
What are business agreements?
Contracts between 2 or more businesses
- Presumed to be legally binding but may be rebutted
What is the first term under business agreements
Binding in honour only
-If a contract is simply binding in honour only, it will not be contractually enforceable.
Case: Jones v Vernons Pools (No contractual obligation as claimant signed coupon meaning there was no intention)
What is the second term under business agreements?
Free Gift/Prize
-This can be legally binding for instance samples or vouchers.
-When prizes are offered at competitions there are intentions to create legal relations
Case : McGowan v Radio Buxton (Intention to create legal relations for sports car so claimant had to be compensated)
What is the third term under business agreements?
Letter of comfort
-Not seen to be usually legally binding
Case: Kleinwort Benson ltd v Malaysian mining corporation (MCC) (not legally binding and didn’t have to pay)
What are social and domestic arrangements?
Agreements made between individual and business or just individuals. Presumed to be non-legally binding but this may be rebutted
What is the first term under social agreements?
Spouses
Case : Balfour and Balfour (If agreements are made during marriage it is domestic, there was no intention to create legal relations as they were now separated)
Case : Merritt v Merritt (Where there is a loss or lack of love and affection the social agreement may be legally binding as husband and wife were separated when agreement was made)
SIDE RULE
Case: Radmancher v Granatino made prenuptial agreements legally binding.
What is the second term under social agreements?
Family agreements
-When families make agreements that appear to be business arrangements, the court has to assess whether the matter is domestic or with legal intent.
Case : Jones v Padvatton (neither daughter of mother intended legal relations)
What is the third term under social agreements?
Lottery Syndicates
-If money has been paid its more likely to be business arrangement
Case : Simpkins v Pays (Grandmother bound to split money as it was arranged between families that they would split cash prize) —-> SIDE RULE : In the case of Wilson and Burnett, there should be some sort of record of the agreement or it could be deemed as social chatter.
What is the fourth term of Social agreements?
Financial Security at risk
-If parties put their own financial security at risk, then they must have intended for the agreement to be legally binding.
Case: Parker v Clarke (Legally-binding as the young couple had given up security so they were entitled to damages)
