Intention to create legal relations Flashcards
What is meant by ‘Intention to create legal relations’?
Parties must INTEND to enter into a legally binding arrangement in which the rights and obligations of the agreement are enforceable.
What is the general view regarding intention in business agreements?
Business agreements are presumed to be legally binding.
What is a case for business agreements ?
Edwards v Skyways - The agreement had been made in a business context which raised a strong presumption that the agreement is legally binding
How can intention in business agreements be rebutted through a certain type of agreement? Name a case.
In business, there can be a so-called ‘gentlemen’s agreement’ which is usually discovered by a term that states the contract is binding in honour only.
Jones v Vernons Pools
How can intention in business agreements be rebutted a different way? With case. (letter)
Letters of comfort - Letters of comfort are a written assurance usually provided by a parent company in respect of its subsidiary’s financial obligations to a bank
Kleinwort Benson ltd v MMC - The comfort letter had no legal effect. The fact that MMC BHD had refused to act as guarantor demonstrated they did not
intend to be legally bound.
What is the general view regarding intention in social and domestic agreements? (case)
In social and domestic agreements, the law raises a presumption that the parties do not intend to create legal relations.
Balfour v Balfour - The agreement was a purely social and domestic agreement and therefore it was presumed that the parties did not intend to be legally bound.
How can be presumption regarding social and domestic agreements not being legal be rebutted?
If there is evidence of either:
1) The agreement in writing
2) The agreement coming after the couple have separated (Merrit v Merrit)
3) The presence of a third party or if money has changed hands (it is more likely to be binding)
4) In addition, giving up financial security can provide evidence (Parker v Clarke)
