Formation of Contract: Intention to Create Legal Relations

Question 1

Edwards v Skyways Ltd.

Answer 1

• The agreement to actually pay redundancy package is binding even though it is described as ex gratia.

Question 2

Jones v Vernon Pools

Answer 2

• The football pool coupon, which he signed, stated that the transaction was ‘binding in honour only’.
• This rebutted the presumption in the business contract.

Question 3

Esso Petroleum Co. Ltd v Commissioners of Customs and Excise

Answer 3

• An Esso was clearly trying to gain more business from the promotion, there was held to be legal intention in the arrangement.

Question 4

McGowan v Radio Buxton

Answer 4

• A prize in a competition is part of a legally binding contract.

Question 5

Kleinwort Benson Ltd. v Malaysian Market Cooperation

Answer 5

• The claim based on the comfort letter failed as there was no legal intention.
• If Kleinwort had required a legally binding guarantee it should have insisted one.

Question 6

Sadler v Reynolds

Answer 6

• Situations can fall into ‘half-way house’ between domestic and commercial.
• The person alleging it is legally binding must show that in the case.

Question 7

Balfour v Balfour

Answer 7

• The agreement was not binding as it was a domestic arrangement between an amicable married couple.

Question 8

Merritt v Merritt

Answer 8

• The agreement was binding as it was an arrangement between a separate married couple about future maintenance payments.

Question 9

Jones v Padvatton

Answer 9

• There’s a presumption that cohabitants would not intend to create enforceable contractual obligations between themselves.

Question 10

Simpkins v Pays

Answer 10

• If money has changed hands, then even if the arrangement is made socially, it is more likely to be a commercial arrangement and therefore legally binding.

Question 11

Parker v Clarke

Answer 11

• If parties put their financial security at risk for an agreement, then it must have been intended that the agreement should be legally binding.