Intention To Create Legal Relations

Question 1

Provide an introduction for intention to create legal relations.

Answer 1

• Once offer + acceptance have taken place- agreement is formed.
• Must be evidence of intention to create legal relations + make contract legally binding.
• Courts will check all parties intended to make the agreement a legal contract.

Question 2

Explain intention to create legal relations in business / commercial agreements.

Answer 2

• Only 1 party needs to be a business.
• Courts start by presuming agreement is legally binding- assume parties intended to enter a legally binding contract, unless there clear evidence to the contrary.
• Rose + Frank v Crompton: presumption can be rebutted, if able to show there was no intention to form a legally binding agreement at that time.
• Jones v Vernons Pools: presumption also rebutted in ‘gentleman’s agreements’- contract is ‘binding in honour only’ (just taking each others word- no legal impact)
• Edwards v Skywars: burden of proof is on person seeking to establish there’s no legal intention.
• Edmunds v Lawson: each case will be decided on its own facts.
• Eason Petroleum: offer of a free gift- where to promote a business, can still be held legally binding.
• McGowan v Radio Buxton: prizes offered in competitions- promotes business, legally binding.
• Kleinwort Benson: letter of comfort (written assurances of a company’s subsidiary’s financial obligation to bank) isn’t legally binding.

Question 3

Explain intention to create legal relations in social + domestic arrangements.

Answer 3

• Balfour v Balfour: social domestic arrangements presumed not to be legally binding, but presumption can be rebutted.
• Merritt v Merritt: where husband + wife are already separated, agreement between them may be taken as intended to be legally binding.
• Jones v Padavatton: where families make arrangements that appear to be business arrangements, the courts must ask- was it purely a social matter or something with much more legal intent?
• Simpkin v Pays: if one party can show agreement was legally binding, courts will accept there’s a valid contract (usually where moneys been exchanged).
• Wilson v Burnett: cases are always tested objectively, don’t show doubt or it isn’t a contract.
• Parker v Clarke: if parties put their financial security at risk- legally binding.