Intention to create legal relations

Question 1

Business contracts
AO1 PRE (EP v C)

Answer 1

Business contracts have a presumption that there IS an ICLR and are legally binding. (ESSO PETROLEUM v CUSTOMS) Both parties must give consideration.

Question 2

Business
If Rel:
AO1 REB (EvS) (J v VP) (KB v MM)

Answer 2

This presumption can be rebutted where clear words are used to show no legal intent (EDWARDS v SKYWAYS) such as ‘act of goodwill’ or ‘binding in honour/gentleman’s agreement’ (JONES v VERNONS POOLS) or where words used are too vague to be a specific promise (KLEINWORT BENSON v MALAYSIAN MINING).

Question 3

Business
If Rel:
AO1 Gifts (McG v RB) ( EP v C and E)

Answer 3

Contracts involving free gifts and competition prizes are legally binding (McGOWAN v RADIO BUXTON, ESSO PETROLEUM v CUSTOMS and EXCISE)

Question 4

Business
AO1 LEGAL INTENT (SvR)

Answer 4

The party trying to establish no legal intent has the burden of proving that the rebuttal applies, which in this case is [ ]. If the contract isn’t clearly domestic or commercial, it will be for the person seeking to enforce it to show legal intent. (SADLER v REYNOLDS)

Question 5

[If domestic]
AO1 PRE (BvB) (J v P)

Answer 5

Domestic contracts, between family members or friends, have a presumption that there’s NO ICLR, so aren’t legally binding. (BALFOUR v BALFOUR, JONES v PADAVATTON)

Question 6

Domestic
If Rel:
AO1 REB (SvP) (MvM) (PvC) (PvL / WvB)

Answer 6

This presumption can be rebutted where there’s a commercial basis to the contract, where both parties have given consideration. Usually, this involves money changing hands (SIMPKINS v PAYS) the basis is no longer ‘love and affection’ (MERRITT v MERRITT) and/or the parties acted on the promise (PARKER v CLARK). There must be sufficient evidence to rebut the presumption (PECK v LATEAU/WILSON v BURNETT)

Question 7

Domestic
If Rel:
AO1 KIND + FAMILY (A v M I B) (S v S)

Answer 7

Apparent domestic arrangements may be held to be business arrangements if they go beyond ‘social kindness’ (ALBERT v MOTOR INSURER’S BUREAU). Family business agreements CAN be legally binding, as long as there’s no rebuttal. (SNELLING v SNELLING).

Question 8

Domestic
If Rel:
AO1 PRE-NUP (G v R)

Answer 8

Pre-nuptial agreements are increasingly seen by the courts as legally binding (GRANATINO v RADMACHER)

Question 9

Domestic
If Rel:
AO1 CLEAR WORDS

Answer 9

Where clear words are used to show no legal intent (act of goodwill) a contract between family members may not be legally binding even if it has a commercial basis.

Question 10

Domestic
AO1 LEGAL INTENT (SvR)

Answer 10

The party trying to establish legal intent has the burden of proving that the rebuttal applies, which in this case is [ ]. If the contract isn’t clearly domestic or commercial it’ll be for the person seeking to enforce it to show legal intent. (SADLER v REYNOLDS)