Intention to Create Legal Relations Flashcards
What is meant by intention to create legal relations?
It means there must be intention to enter into an agreement that has legal ramifications
Why is it necessary for there to be intention to create legal relations for there to be a contract?
Necessary as it distinguishes legal contracts from domestic or social arrangements
What is the test for deciding if the parties had intention to create legal relations?
Objective test - would reasonable people with regards to the actions of the parties in the particular circumstances, regard the agreement as intended to be binding?
What is the presumption in relation to commercial agreements and intention to create legal relations?
Presumption that there was an intention to create legal relations
What is the presumption in relation to social/domestic agreements and intention to create legal relations?
Presumption that there was not an intention to create legal relations.
How is the presumption in favour of intention to create legal relations rebutted in commercial settings?
Party wishing to assert that there no intention has onus of rebutting presumption - heavy burden.
Would likely require clear wording in agreement that there was no intention to create legal relations - ambiguous wording will not suffice
What is the effect of using the words ‘subject to contract’ in the context of intention to create legal relations?
Creates a strong inference the the parties do not intend to create legal relations until the formal execution of a contract
Any agreement ‘subject to contract’ is therefore prima facie not binding
How is the presumption against intention to create legal relations rebutted in domestic/social settings?
Question of examining the circumstances of case and language used by the parties
What effect does the fact spouses were separated or in the process of separating when agreement was made have on presumption against there being an intention to create legal relations?
Courts are more willing to rebut the presumption
