Intention to create legal relations

Question 1

Domestic arguments

Answer 1

Presumption of the court - there is NO intention to create legal intentions. These are agreements between family memebers or close friends, such as between spouses, parents and children, or friends. If there is clear evidence of legal intent, the presumption can be rebutteed. Usually not legally binding and requires evidence of legal intent.
Examples: James v Padavatton (1969) & Balfour v Balfour (1919)

Question 2

Commerical agreements

Answer 2

Presumption of the court - there IS an intention to create legal relations. These are agreements made in a business or professional context, such as between companies or employers and employees. Usually legally biniding and requires evidence of no legal intent.
Example: Edwards v Skyways (1969) & Blue v Ashley (2017)

Question 3

Burden of proof

Answer 3

Burden of proof is on the party that wishes to displace the presumption. Not just pressumptions but starting points that mustbe rebutted with evidence on the contrary of the parties burden of proof. The party that wants to displace the presumption that has to bring evidence.

Question 4

Social & Domestic agreements
Balfour v Balfour (1919)

Answer 4

In this case, a husband promised to pay his wife a monthly allowance while he worked overseas. Later, they separated, and the wife sued to enforce the promise. The court decided that the agreement wasn’t legally binding because:

It was a domestic agreement made between a married couple.
No intention to create legal relations was shown—they didn’t plan for the courts to enforce it.
The case established that social or domestic agreements, like those between spouses, are usually not legally enforceable unless there’s clear evidence they intended it to be.

Question 5

Jones v Padavatton (1969)

Answer 5

In this case, a mother promised to support her daughter financially if she left her job in the U.S. to study law in England. The daughter agreed, but later, they disagreed, and the mother tried to take back a house she had given the daughter to live in. The court decided the agreement wasn’t legally binding because:

It was a family arrangement, not a formal contract.
There was no intention to create legal relations—it was more of a personal understanding.
The case shows that agreements between family members are usually not enforceable unless it’s clear they intended it to be legally binding.

Question 6

Parker v Clarke (1969)

Answer 6

In this case, a young couple (the Parkers) agreed to sell their house and move in with an older couple (the Clarkes), based on the Clarkes’ promise to leave them their house in a will. Later, the Clarkes changed their minds, and the Parkers sued. The court decided the agreement was legally binding because:

The Parkers made significant sacrifices, like selling their house, relying on the promise.
There was clear intention to create legal relations, as the arrangement had serious financial consequences.
This case shows that family or domestic agreements can be enforceable if there’s evidence that the parties intended to be legally bound.

Question 7

Blue v Ashley (2017)

Answer 7

This case involved a pub conversation where Mike Ashley (owner of Sports Direct) allegedly promised Jeffrey Blue £15 million if he could get the company’s share price to a certain level. Blue claimed this was a legally binding agreement. The court ruled it was not binding because:

It was made in a casual setting, with no serious intention to create legal relations.
The conversation was informal and not intended as a formal contract.
The case highlights the importance of intention to create legal relations, especially in informal settings.

Question 8

Edwards v Skyways (1969)

Answer 8

This case involved an employer’s promise to pay an “ex gratia” payment to an employee who was leaving the company. The employer later refused to pay, claiming the promise wasn’t legally binding. The court held the promise was binding because:

Commercial agreements are presumed to have legal intent, unless proven otherwise.
The term “ex gratia” (out of goodwill) didn’t negate the intention to create a binding contract.
This case reinforces the presumption that business agreements are legally enforceable.

Question 9

Bowerman v ABTA (1996)

Answer 9

In this case, a travel agent displayed a notice from ABTA (Association of British Travel Agents) stating that customers would be refunded if the travel company went bankrupt. When the company went bust, a customer (Bowerman) claimed a refund. The court ruled the notice was legally binding because:

The notice clearly conveyed an intention to create legal relations with customers.
It was reasonable for the customer to rely on the notice as part of their decision to book.
This case shows how public notices can create legally binding obligations if they demonstrate clear intent.