Intention to create legal contracts Flashcards
Balfour v Balfour [1919] 2 KB 571
In the case of domestic agreements there is a presumption that there is no intention to be legally bound
The Plaintiff and the Defendant were a married couple. The Defendant husband and the Plaintiff wife lived in Ceylon where the Defendant worked. In 1915, while the Defendant was on leave, the couple returned to England. When it was time to return to Ceylon, the Plaintiff was advised not to return because of her health. Prior to the Defendant returning, he promised to send the Plaintiff £30 per month as support. The parties’ relationship deteriorated and the parties began living apart. The Plaintiff brings suit to enforce the Defendant’s promise to pay her £30 per month. The lower court found the parties’ agreement constituted a contract.
Merritt v Merritt [1970] 2 All ER 760
The presumption that there is no intention to be legally bound in domestic agreements is merely a presumption and may be rebutted if there is evidence to the contrary.
* Mr and Mrs Merritt married in 1941. They held their matrimonial home in joint names. In 1966 Mr Merritt left the family home to live with another woman. Mr Merritt agreed to pay Mrs Merritt £40 per month. At Mrs Merritt’s request, he signed a document confirming that when she had repaid the balance on the mortgage, he would transfer the matrimonial home into her sole name. Mrs Merritt paid off the mortgage and successfully acquired a declaration that the house belonged to her. Mr Merritt appealed. * HELD- Mr Merritt’s appeal was unsuccessful. When parties are in the process of separating, or are separated, the presumption of there being no intention to create legal relations does not apply. The arrangement was sufficiently certain to be enforceable, and the paying of the mortgage was ample consideration for Mr Merritt’s promise. Mrs Merritt was entitled to the matrimonial home entirely.
Jones v Padavatton [1969] 2 ALL ER 616
Agreements between parent and child are also governed by the presumption that there is no intention to create legal relations
* A mother and daughter came to an arrangement whereby the mother agreed to maintain her daughter if she agreed to study for the bar. The daughter commenced her studies and the mother paid her an allowance. The arrangement was later altered and the mother agreed to provide a house in which her daughter could reside whilst she studied. Mother and daughter fell into dispute as to the occupancy of the house, and the mother sought possession. It was held the daughter was entitled to remain in possession and the mother appealed. * HELD-The mother’s appeal was successful and she was awarded possession. There is a presumption that family arrangements are based on mutual trust, family ties and affection, and that there is no intention to create legally binding contracts capable of enforcement in the courts.
Hardwick v Johnson [1978] 1 WLR 683
Agreements between parent and child are also governed by the presumption that there is no intention to create legal relations
* Mrs Hardwick purchased a house in Wiltshire for £12,000 for her son and his wife to live in. It was agreed that Mr and Mrs Johnson would pay Mrs Hardwick £7 a week, and this was supposed to pay off the purchase price. The couple made a few payments but they then ceased, and Mrs Hardwick did not chase the outstanding payments. Mrs Johnson became pregnant, and Mr Johnson left her for another woman leaving her in the family home. Mrs Hardwick sought possession of the house. * HELD- Mrs Hardwick would not revoke the contract as lon g as she continue to pay the £7.
Parker v Clark [1960] 1 All ER 93
Exception to te presumption that domestic arrangements are not intended to be legally binding also applies to friendly agreements made outside the family circle.
* The Clarks were an elderly married couple. Mrs Parker was Mrs Clark’s niece, and Mr Clark suggested she and her husband move into their home with them. Mr Parker supported the idea but expressed concern that it would mean their selling their own house. Mr Clark wrote to Mr Parker stating the Clarks would bequeath their home to Mrs Parker, her sister and her daughter on their death. The Parkers sold their home and moved in with the Clarks. The Clarks told the Parkers the arrangement was not working, and they would have to move out. The Parkers brought an action for breach of contract.
* HELD-
The Parkers were successful in their claim. The language used in the letters and the surrounding circumstances indicated that both parties intended the agreement to have legal force. Mr Clark’s letter was sufficient to satisfy s40(1) Law of Property Act 1925 and amounted to a contractual offer.
Rose & Frank v Crompton [1925] AC 445
Where an agreement has a commercial nature it is presumed there is an intention to create legal relations. This presumption can of course be rebutted by evidence to the contrary.
The parties may expressly state in their agreement that it is to have no legal effect whatsoever as in this case.
* An American company and English company entered into a sole agency agreement in 1913 for the sale of paper goods in the USA. The written agreement contained a clause stipulating that it was not a formal nor legal agreement, and an “honourable pledge” between business partners. Subsequently, the American company placed orders for paper which were accepted by the British company. Before the orders were fulfilled, the British company terminated the agency agreement and refused to send the goods, claiming that the 1913 agreement was not legally binding and that, consequently, the orders did not create legal obligations. as to the 1913 agreement, the Court gave overriding weight to the provision in the agreement that expressly provides that it is to be solely an “honourable pledge”, as demonstrating that the parties did not intend the arrangement as a legally-binding contract.
Edwards v Skyways [1964] 1 All ER 494
The onus of proving that a commercial agreement is not legally binding rests on the person who alleges it has no legal effect. This is a heavy burden to discharge.
* An airline company in financial difficulties was making a number of its pilots redundant. The airline company agreed with the British Airline Pilots Association to pay each pilot an ‘ex gratia payment’ equivalent to the company’s contribution to the pension fund, upon being made redundant. This was initially the subject of a resolution of the company’s Board, and agreed upon at a meeting between the company’s representatives and the Association’s representatives. The claimant opted to leave the company and claim the payment of his contributions to the pension fund. The company conceded that there was consideration, yet held that there was no legally enforceable obligation, but a mere ‘moral’ one. HELD- The Court held that where an agreement is reached in the course of a business affairs, and not in a domestic or social context, the presumption is that the parties have intended to create legal relations and that their legal relations should be affected. The onus Is on the party rebutting this presumption to show that they expressly intended to create a mere ‘moral’ agreement and not a legal obligation.
Taylor v Brewer (1813) 1 M & S 290
Where the terms of a promise leave its performance to the discretion of the promisor, it may affect whether parties should be taken to have intended to create legal relations.
Licences Insurance Corp v Lawson (1896) 12 TLR 501
Whether the promise was made in jest or in anger may affect whether parties should be taken to have intended to create legal relations.
