Intention to Create legal Relations Flashcards
Intention - Social and Domestic
There is a rebuttal presumption that there is NO intention to create legal relations in social/domestic situations
Intention - Commercial
In commercial scenarios, there is a presumption that the parties DO intend to create legal relations
Balfour v Balfour (1919)
Leading case - no intention to create legal relations
Husband worked abroad and agreed to pay his wife £30 p/m.
When he stopped paying, the wife sued.
Action failed because:
There was no consideration provided by the wife.
There was no intention the arrangement would be legally binding.
Which is the leading case which demonstrates that social/domestic arrangements are not intended to create legal relations?
Balfour v Balfour (1919)
Merritt v Merritt (1970)
Rebuttable Presumption on Social/Domestic Arrangements
Husband left wife for another woman.
Agreed to per his former wife £40 p/m which she would use to pay the mortgage.
Upon the mortgage being paid, he agreed he would transfer the house to her.
The wife did pay the mortgage, but husband refused to transfer the house.
COA held that there was an intention to create legal relations and compelled the husband the transfer the house to the wife.
In this case, the wife insisted that the agreement be put in writing, this helped demonstrate the intention to create legal relations.
Which social arrangement demonstrated that relations could give rise to an intention to create legal relations?
Competition
Simpkins v Pays 1955
Three friends played a weekly competition together in the paper. The entries were submitted in the defendant’s name only, but all three people contributed.
There was no regular arrangement regarding postage costs or other expenses. They won the competition, but the defendant didn’t share.
Court held that there was sufficient “mutuality in the arrangements between the parties” to establish a legally binding commitment to share the winnings.
In which case was Simpkins v Pays (1955) not followed?
Wilson v Burnett (2007)
In this case, three friends played bingo together.
When one of the friends won, they did not share the winnings with the others.
The court found that no contract had been formed between the three friends.
The claimant’s case was undermined by the fact that a previous smaller win had not been shared, and the discussion between the three individuals used language that asked “if she would share”, indicating that no formal agreement had been reached or intended.
McGowan v Radio Buxton (2001)
Commercial Agreement - intention to create legal relations
The defendant held a contest to win a car.
The car was in fact a practical joke and the prize was a small wooden car.
The judge agreed that there was no hint that the car would not in fact be a real car, and ordered the defendant to provide the claimant with a real car.
Objective rebuttal of commercial agreement presumption
Jones v Vernon’s Pools (1938)
A contractual clause inserted on the pool’s coupon provided that Vernon’s Pools were not legally bound by those who submitted a completed entry form.
It was held that this clause was sufficient to demonstrate that there was no intention to be legally bound.
Jones v Vernon’s Pools (1938)
Objective rebuttal of commercial agreement presumption
A contractual clause inserted on the pool’s coupon provided that Vernon’s Pools were not legally bound by those who submitted a completed entry form.
It was held that this clause was sufficient to demonstrate that there was no intention to be legally bound.
Blue v Ashley (2017)
No intention to create legal relations - commercial
The defendant was the owner of Sports Direct.
He went to the pub with the claimant, and after much drinking there was a discussion about a bonus payment.
It was stated that if Sports Direct’s share price rose above £8, then Blue would be entitled to a bonus.
The share price rose above £8, which would have led to a bonus payment of £15m to Blue.
The court held that no reasonable person would have thought that the offer made by Ashley was serious, and those present at the meeting all thought it was a joke.
Is a letter of comfort intending to create legal relations?
It depends on the wording:
Kleinwort Benson v Malaysian Mining Corp (1989)
The court agreed in this case that the letter of comfort amounted to no more than a statement of the companies intention at that time, and that it did not amount to a promise that the company would not subsequently change its mind.
Capacity to contract
Nash v Inman (1908)
In this case, the claimant provided the defendant (a minor) with 11 fancy waistcoats.
The court held that the waistcoats were not a necessity, therefore the claim failed.
Contracts for neccessaries
Contracts for necessaries may be binding.
The product/service must be suitable to the actual needs of the person in question.
The person must then only pay a reasonable price for those necessaries, which is not necessarily the market price of the product.
The burden of proof to demonstrate a valid contract is on the person providing the product or service.
