Intention to Create Legal Relations Flashcards
What shows intention to create legal relations?
Not mere statements of intention, but an objective test of whether there was a determination to create legal relations.
Social and domestic arrangements are presumed not to be intended to have legal force
Balfour v Balfour
Husband worked abroad. Wife too ill to follow. He promised her £30 a month until he came back. They drifted apart, and Mr Balfour wrote saying it was better that they remain apart.
In March 1918, Mrs Balfour sued him to keep up with the monthly £30 payments. In July she got a decree nisi and in December she obtained an order for maintenance.
HELD: The Court of Appeal unanimously held that there was no enforceable agreement.
Example of domestic-based dealing that showed intent to have legal force and be more than just domestic arrangement
Merrit v Merrit
Mr. Merritt and his wife jointly owned a house. Mr Merritt left to live with another woman. They made an agreement (signed) that Mr. M would pay Mrs. M a £40 monthly sum, and eventually transfer the house to her, if Mrs. M kept up the monthly mortgage payments. When the mortgage was paid Mr. M refused to transfer the house.
HELD: The nature of the dealings, and the fact that the Merritt’s were separated when they signed their contract, allowed the court to assume that their agreement was more than a domestic arrangement.
Commercial agreements are presumed to be legally binding (unless clear evidence to contrary)
Edmonds v Lawson
Head of a barristers’ chambers, “employed” a pupil barrister. L argued that E’s acceptance of an unpaid pupillage was not a binding apprenticeship and that E was therefore not a worker entitled to the national minimum wage. L said the arrangement was educational in nature, not commercial, and that it was not enforceable.
HELD: “When, as the culmination of a long process of application, short-listing and interview an offer is formally made and formally accepted it would in our judgment be surprising to infer that the parties intended to bind themselves in honour only.”
Parties in commercial settings may expressly state contract is non-binding
Rose & Frank v Crompton
Sole U.S. distributor of J.R. Crompton’s carbon paper products. Parties signed a new document which included a “gentleman’s agreement” clause ‘This arrangement is not entered into, nor is this… a formal or legal agreement and shall not be subject to legal jurisdiction in the law courts’
The relationship between the two parties broke down, sued on enforcement of the agreement.
HELD: there was no legal contract. The clause had the effect of negating any other objective evidence of intention to create legal relations.
