Intention to Create Legal Relations Flashcards
What is required for a contract to exist?
The parties must have intended to create legal relations, alongside offer, acceptance, and consideration (RTS Flexible Systems v Molkerei Alois Muller 2010).
How do courts assess intention to create legal relations?
Courts consider whether a reasonable person would think the parties intended to create legal relations.
Does the formality of the contract affect the presumption of intent?
Yes, if a contract is in writing, it usually indicates intent to create legal relations.
Can an agreement with offer, acceptance, and consideration still lack intention to be legally binding?
Yes, some agreements are not intended to be legally binding, even with offer, acceptance, and consideration, such as social or domestic agreements (Coward v Motor Insurers’ Bureau 1963).
What is the presumption for social or domestic agreements?
Social or domestic agreements are presumed not to create legal relations (Balfour v Balfour 1919), but this presumption can be rebutted (Merritt v Merritt 1970).
What was significant about Merritt v Merritt (1970)?
he court found intent to create legal relations in a social agreement because the agreement was in writing, rebutting the presumption that it wasn’t binding.
What is the presumption for commercial agreements?
Commercial agreements are presumed to create legal relations unless expressly stated otherwise (Esso Petroleum v Commissioners of Customs and Excise 1976).
What was decided in Esso Petroleum v Commissioners of Customs and Excise (1976)?
Offering ‘world cup coins’ in exchange for petrol was a commercial agreement, demonstrating intent to create legal relations despite no direct advantage to the petrol company.
What does “binding in honour only” mean in contracts?
It means that the agreement is not legally binding, and the parties only pledge to honour the terms (Rose and Frank v Crompton Bros 1925).
Can commercial agreements exclude legal enforceability?
Yes, parties can specify that their agreement is “binding in honour only,” meaning it is not legally enforceable (Rose and Frank v Crompton Bros 1925).
