Intention to create legal relations Flashcards
Baird Textile Holdings Ltd v Marks & Spencer plc [2002]
Quote per Mance LJ:
“For a contract to come into existence, there must be both (a) an agreement on essentials with sufficient certainty to be enforceable and (b) an intention to create legal relations.”
Walton v Walton
“In many cases of promises made in a family or social context, there is no intention to create an immediately binding contract.”
Why is the law reluctant to assume there was?
“such promises are often subject to unspoken and ill-defined qualifications.” e.g the promise in this case. When made, Mrs Walton did not know what the future might hold. Anything might happen which could make it quite inappropriate for the farm to go to the plaintiff. But a contract, subject to the narrow doctrine of frustration, must be performed come what may…But none of this reasoning applies to equitable estoppel, because it does not look forward into the future and guess what might happen. It looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.”
Rose and Frank co v Crompton Brothers (1925)
Not reasonable to believe promise was binding because of express qualification that to the contrary
per Lord Phillimore at 454: “the overriding clause in the document is that which provides that it is to be a contract of honour only and unenforceable at law.”
Winn v Bull (1877)
Not reasonable to believe promise was binding because of express qualification that it is only subject and dependent on a later formal contract
agreement made expressly “subject to the preparation and approval of a formal contract”: see per Jessell MR at 32: “where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says: it is subject to and is dependent on a formal contract being prepared.”
RTS Flexible Systems Ltd v Molkerei Alois GmbH [2010] 1 WLR 753 (SC):
Express qualifications not always effective
despite initial agreement saying that it “shall not become effective until each party has executed a counterpart and exchanged it with the other” – a contract arose in the absence of such execution as the subsequent conduct of the parties was such (per Lord Clarke at [86]) that: “a reasonable, honest businessman…would have conclude that the parties intended that the work should be carried out for the agreed price on the agreed terms, including the terms as varied by [a later agreement between the parties], without the necessity for a formal written contract, which had been overtaken by events.”
RTS Flexible Systems Ltd v Molkerei Alois GmbH [2010] 1 WLR 753 (SC):
Express qualifications not always effective
despite initial agreement saying that it “shall not become effective until each party has executed a counterpart and exchanged it with the other” – a contract arose in the absence of such execution as the subsequent conduct of the parties was such (per Lord Clarke at [86]) that: “a reasonable, honest businessman…would have conclude that the parties intended that the work should be carried out for the agreed price on the agreed terms, including the terms as varied by [a later agreement between the parties], without the necessity for a formal written contract, which had been overtaken by events.”
Leonard v Pepsico Inc 88 F Supp 2d 116 (NY, 1999), affd 210 F 3d 88 (2d Cir, 2000):
Promise may not be binding due to the nature of the promise being a joke
“an obvious joke, of course, would not give rise to a contract…on the other hand, if there is no indication that that the offer is ‘evidently in jest’, and that an objective, reasonable person would find that the offer was serious, then there may be a valid offer.”
Walton v Walton (CA, 14 April 1994) per Hoffmann LJ:
Promise may not be binding as the party clearly did not intend to be bound to the strict enforcement of contractual duties that “a contract, subject to the narrow doctrine of frustration, must be performed come what may.”
Balfour v Balfour [1919] per Warrington LJ at 574-575:
Promise may not be binding as it would require the court to be implying intentions onto the party that it would be unreasonable to believe that they held
“If we were to imply such a contract in this case we should be implying on the part of the wife that whatever happened and whatever might be the change of circumstances while the husband was away she should be content with this £30 a month, and bind herself by an obligation in law not to require him to pay anything more; and on the other hand we should be implying on the part of the husband a bargain to pay £30 a month for some indefinite period whatever might be his circumstances.”
Policy reasons to refuse a contractual duty
Balfour v Balfour [1919] per Atkin LJ at 579:
“Agreements such as these are outside the realm of contracts altogether. The common law does not regulate the form of agreement between spouses. The consideration that [one] really obtains for them is that natural love and affection which counts for so little in these cold courts. The terms may, be repudiated, varied or renewed as performance proceeds or as disagreements develop and the principles of the common law as to exoneration and discharge and accord and satisfaction are such as to find no place in the domestic code.”
Jones v Padavatton [1969] 1 WLR 328 (CA) per Danckwerts LJ at 331-2:
“Of course, there is no difficulty, if they so intend, in members of families entering into legally binding contracts in regard to family affairs. A competent equity draftsman would, if properly instructed, have no difficulty in drafting such a contract. But there is possibly in family affairs a presumption against such an intention (which, of course, can be rebutted. I would refer to Atkin LJ’s magnificent exposition of the situation in regard to such arrangements in Balfour v Balfour…the present case is one of those family arrangements which depend on the good faith of the promises which are made and are not intended to be rigid, binding agreements.”
Policy reasons to refuse a contractual duty
Balfour v Balfour [1919] per Atkin LJ at 579:
“Agreements such as these are outside the realm of contracts altogether. The common law does not regulate the form of agreement between spouses. The consideration that [one] really obtains for them is that natural love and affection which counts for so little in these cold courts. The terms may, be repudiated, varied or renewed as performance proceeds or as disagreements develop and the principles of the common law as to exoneration and discharge and accord and satisfaction are such as to find no place in the domestic code.”
Policy reasons to refuse a contractual duty
Don’t always apply
Jones v Padavatton [1969] per Danckwerts LJ at 331-2:
“Of course, there is no difficulty, if they so intend, in members of families entering into legally binding contracts in regard to family affairs. A competent equity draftsman would, if properly instructed, have no difficulty in drafting such a contract. But there is possibly in family affairs a presumption against such an intention (which, of course, can be rebutted. I would refer to Atkin LJ’s magnificent exposition of the situation in regard to such arrangements in Balfour v Balfour…the present case is one of those family arrangements which depend on the good faith of the promises which are made and are not intended to be rigid, binding agreements.”
Policy reasons to refuse a contractual duty
Don’t always apply
Parker v Clark [1960] 1 WLR 286:
The Parkers give up own home to move in with the (older) Clarks, on the basis of the Clarks’ promise that the two couples would live together and share the running costs of the household, and that the Clarks, on the death of the survivor, would leave the house to the Parkers: per Devlin J at 293-294: “I cannot believe with that the defendant really thought that the law would leave him at liberty, if he so choose, to tell the Parkers when they arrived that he had changed his mind, that they could take their furniture away, and that he was indifferent whether they found anywhere else to live or not.”
When and when is intent presumed
Domestic/social promises: No intent
Mere puffs: No intent
Commercial: Usually intent
