Intention

Question 1

What are situations in which Intention to create legal relations may arise?

Answer 1

1. Commercial transactions –> question may arise whether the parties intended to make an honourable rather than legal commitment
2. Social domestic context –> agreement to help friend move furniture is NOT clearly intended to be legally binding vur agreement such as employment or sale of sth value is intended to attract legal consequences
3. Transactions w Government = Agreement is made b/w gov and indiv –> lead government to reach an agreement w a particular indiv. to provide some assistance
4. Preliminary agreements = Parties bound immediately or some time in future?

Question 2

What does ‘Intention - to be determined objectively’ mean?

Answer 2

• Reasonable person regard each party as having intended to create legal relations?
  Look at external factors –>
  a) What they said/did
  b) Circumstances in which they did or say it
  c) Status of parties to agreement
  d) Parties relationship

Question 3

What is meant by Role of Presumptions?

Answer 3

Commercial Transactions = presumption of intention = Party DENYING there was an intention to create legal relations bears onus of est. there was no such intention

Domestic and Social Arrangements = presumption against intention = party asserting there was an intention to create legal relations would bear onus of est. that agreement was intended to be legally binding

Other contexts = no presumption either way = onus on party demanding there WAS intention to create legal relations

Question 4

What is a letter of comfort?

Answer 4

Document given to financier in situation when guarantee might otherwise be given –> given by parent company to bank that is lending money to subsidiary

Question 5

What is a Preliminary Agreement

Answer 5

• Parties negotiate w principal terms of a transaction
• Enter preliminary agreement w intention to record their agreement more formally and fully in the future
• Typically states that ‘agreement is subject to contract’ and ‘subject to preparation of a formal contract’

Question 6

What if a party wants to withdraw after the Preliminary agreement is entered into but before the final agreement is signed

Answer 6

Broken into 3 (+1) categories
–> Parties have reached finality w all terms of their bargain and intend to be IMMEDIATELY bound –> parties are contractually bound to perform the terms of the preliminary agreement whether or not formal agreement comes into existence
–> Parties have COMPLETELY agreed and have no intention to depart from or add to them –> but have still made performance of one or more of the terms conditional upon execution of a formal document = parties contractually bound to join in bringing the formal contract into existence and then to carry that formal contract into execution
–> Parties do NOT intend to make a concluded bargain, unless and until they execute a formal contract –> terms of the agreement have no effect

Question 7

What is the 4th category?

Answer 7

One in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms