Intention To Create Legal Relations Flashcards
Why is the intention to create a legal relationship a key element?
- To prevent agreements never intended to create legal liability taking up courts’ time.
- To protect parties, who, due to all circumstances, might reasonably expect that they are not entering formal legal contracts.
What are the two rebuttable presumptions that the courts have developed?
- That there is no intention to create a contract governing family and social agreement.
- That there is an intention in business agreements
What is a reputable presumption?
A reputable presumption is an initial assumption that be be overturned by evidence to the contrary
What is the rebuttable presumption relating to family and social agreements?
An agreement between family, friends and spouses are not intended to create legal relationships and therefore, are not enforceable.
CASE: Balfour v Balfour
Husband and wife live apart but happily married.
He promises to pay £30 a month while living apart.
Not enforceable
CASE: Jones v Padavalton
Mother entered into agreement with daughter.
Found not to be legally binding as no intention to create legal relationship.
How can the presumption relating to family and social agreements be rebutted?
It does not mean there can never be contract where parties close relationship.
If the behaviour of the parties indicates that they did intend to be legally bound - they will be but strong evidence needed to convince court.
Two examples:
1. Once relationship has broken down (e.g divorce) any agreement likely to be binding.
CASE: Merritt v Merritt
- If one party puts themselves at a disadvantage then it is strong evidence that they consider it legally binding.
CASE: Parker v Clark
CASE: Simpkins v Pays
CASE: Merritt v Merritt
(Family and social agreements)
A husband promisee wife that she could keep the house if she paid off mortgage.
He made promise on written note.
Court held that this was a business arrangement - contract.
The fact it was in writing also helped.
CASE: Parker v Clark
(Family and social agreement)
Parker agreed with Clark that Parker would sell house and move in with Clark.
Parker sold house and gave money to daughter.
Parker agreed share household expenses and Clark would leave Parker the house.
Clark changed will.
Later argued but court held that there was a legally binding contract.
CASE: Simpkins v Pays
(Family and social agreement)
Old lady, daughter and lodger enter completion and agreed to share winnings.
Entry made in the name of the old lady and won £750 but refused to share it.
Lodger went to court and won
What is the rebuttable presumption relating to commercial or business agreements?
An agreement is presumed to be legally binding, because:
- Need for certainty in such transaction
- Importance of trader to be able to rely on promise
How can the presumption relating to commercial and business agreements be rebutted?
- “Mere puffs” - extravagant claims not intended to be binding
- If all correspondence between parties indicolite’s that they didn’t intend to create legally binding agreement me - courts will agree
CASE: Volumatic Ltd v Ideas for Life
CASE: Blue v Ashley - An honour clause - clause in contract that has effect that agreement is not legally binding.
CASE: Rose and Frank v Crompton Bros - Letter of Comfort - issued when supplier is selling goods to be company that is a subsidiary of rich parent company.
- Subject to Contract - parties agree on agreement but will mark correspondence as “S2C”.
It indicates, although agreement reached, parties do not intend for it to be binding until formal contract exchanged.
