Intention to Create Legal Relations Flashcards
Balfour v Balfour (1919)
Facts: an agreement between husband and wife, resulting from her inability (due to illness) to return with him to his place of work. He agreed to pay her £30 per month while they were apart. The marriage later broke up and the wife sued the husband for his failure to make the promised payments.
Held: domestic arrangements of this kind are clearly not intended by the parties to be legally binding. Onus was on the wife to establish a contract and she had failed to do so.
Merritt v Merritt [1970]
Facts: Mr Merritt and his wife jointly owned a house. He left to live with another woman. Mr Merritt would pay her £40 a month and eventually transfer the house to her, if she kept up the monthly mortgage repayments. When the mortgage was paid he refused to transfer the house.
Held: the fact that the Merritts were separated when they signed the contract, allowed the courts to assume that their agreement was more than domestic.
Balfour v Balfour vs Merritt v Merritt:
Lord Denning distinguished between the two aforementioned cases in the following terms: ‘The parties there [Balfour v Balfour] were living together in amity. In such cases, their domestic arrangements do not ordinarily intend to create legal relations. It is altogether different when the parties are not living in amity but are separated, or about to separate. They then bargain keenly. They do not rely on honourable understandings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations.’
National lottery ‘syndicates’, case:
Simpkins v Pays (1955)
Facts: three women, P, D and D’s granddaughter lived in the same house. The regularly entered the newspaper fashion completion, which required the listing of eight items in order of merit. Each of the women made a listing and all three submitted on the same form. There were no fixed arrangement as to who paid the entry fee or postage, but the form was submitted in the defendant’s name. When one of the lines won £750, which was paid to the defendant, the plaintiff sued to recover a third share of this.
Held: judge held that there was, on the evidence, an agreement to ‘go shares’ if one of the lines won, and that this was intended to be legally binding.
Judge reasoning related to ‘mutuality in the arrangement between the parties’ and felt their agreement was beyond the ‘sort of rough and ready’ statement made in family associations which are not intended to be binding. There was a clear understanding as to what would happen in the event of a win.
Commercial agreement, simple, case:
Edwards v Skyways (1964)
Facts: plaintiff was a pilot who had been made redundant. As part of the arrangements for this, he was offered and accepted payment which was stated to be ‘ex gratia’. Company then found that the terms offered would be more expensive than realised, and denied there was any obligation to make the payment.
Held: judge held ‘ex gratia’ did not mean ‘legally binding’ but simply recognised that prior to being made, there had been no such obligation to make the payment. Once it had been made however, it was legally binding and there was no evidence to overturn this presumption. Pilot succeeded.
Commercial agreement, rebutted, case:
Rose & Frank Co v Crompton Bros (1925)
Facts: claimants and defendant’s entered an agreement for the supply of some carbonised tissue paper. Under the agreement the claimants were to be the defendant’s sole agents in the US. The contract contained an honourable pledge clause which stated the agreement was not formal or a legal agreement and shall not be subject to the jurisdiction of the courts in either England or the US. The defendants terminated the agreement early and the claimants brought an action for breach.
Held: honourable pledge clause rebutted the presumption which normally exists in commercial agreements that the parties intend to be legally bound by their agreements.
