Intention to Create Legal Relations Flashcards
Why is the intention to create legal relation vital in contract law?
The law/ Cts will NOT get involved unless there is an intention from the parties to get the law involved
What are the 2 presumptions surrounding ICLR?
- Domestic + social arrangements - there isn’t ICLR
2. Commercial agreements - there is ICLR
Are the presumptions about an ICLR rebuttable?
Yes, generally they are
If you can provide evidence to the suggest otherwise, the law can change its mind
Is there a presumption that there is an ICLR between husbands + wives?
Cases?
No - unless the agreement itself states that it does
Balfour v Balfour (1919)
Jones v Padavatton (1969)
Balfour v Balfour (1919)
Husband worked overseas
Agreed to send maintenance payments to his wife
At the time of the agreement the couple were happily married
Relationship later soured + the husband stopped making the payments
Wife sought to enforce the agreement
Held: Agreement = purely social + domestic agreement
= presumed that parties didn’t intend to be legally bound
Jones v Padavatton (1969)
Mother promised to pay her daughter $200 a month
If she gave up her job in the US + went to London to study for the bar
Daughter = reluctant but her mother persuaded her
Mother actually meant Trinidad dollars - less than 1/2 of what she = expecting
Mother then agreed to purchase a house for the daughter to live in - could rent out other rooms (maintenance)
Daughter didn’t complete her studies
Mother sought possession of the house
Held: agreement = purely a domestic agreement
= presumption that the parties didn’t intend to be legally bound by the agreement
= no evidence to rebut this
What did Lord Atkin state in the case of Balfour v Balfour (1919)?
Agreements of this kind are outside the realm of contracts altogether
Why is there a presumption that there is no ICLR in domestic/ social agreements?
Prevent the Cts from overflowing
Name 2 cases that illustrate that the presumption for domestic agreements can be rebutted
- Merritt v Merritt (1970)
2. Radmacher v Granatino (2010)
Merritt v Merritt (1970)
Husband left his wife
Went to live with another woman
= £180 left owing on the house which was jointly owned by the couple
Husband signed an agreement
Would pay £40 per month, enable her to meet mortgage payments
+ if she paid all charges connected to mortgage until = paid, he would transfer his share of the house to her
Mortgage = fully paid
She brought an action for a declaration that the house belonged to her
Held: agreement = binding
CA distinguished Balfour v Balfour
Grounds that the parties were separated
Where spouses have separated = generally considered that they do intend to be bound
Written + signed agreement = further evidence of ICLR
Why was the case of Merritt v Merritt (1970) distinguished from Balfour v Balfour (1919)?
On the grounds that the parties were separated
Where spouses have separated = generally considered that they do intend to be bound
Written + signed agreement = further evidence of ICLR
Radmacher v Granatino (2010)
French investment banker married a very wealthy German national
Prior to marriage an anti-nuptial agreement = signed by both parties
Agreement provided that each party forego any interest/ benefit from the other’s property acquired either before/ during the marriage
Had 2 children
Divorced after 9 years
Husband claimed ancillary relief against wife’s assets
Held: anti-nuptial agreement = valid
If freely entered into, with all information available to both parties + in the absence of pressure, such agreements should be upheld, unless it would be unfair to do so
Are domestic agreements between parents + children presumed to create legal relations?
Case?
No - Jones v Padavatton (1969)
Parker v Clark (1960)
Ds = elderly married couple
Mrs P = Mrs C’s niece
Mr C suggested they move into their home with them
Mr P expressed concern that = mean their selling own house
Mr C wrote to Mr P stating the C would bequeath their home to Mrs P, her sister + her daughter on their death
P sold their home + moved in with the C
C told P the arrangement = not working, they would have to move out
P brought an action for breach of contract
Held: P = successful
Language used in the letter + surrounding circumstances indicated both parties intended to be bound
Mr C’s letter = sufficient to satisfy s40(1) Law of Property Act 1925
Amounted to contractual offer
Ps = entitled to damages for the loss of the prospect of inheritance + the loss of the value of the benefit of living in the house
Simpkins v Pays (1955)
Grandmother, granddaughter + a lodger entered into a weekly competition run by the Sunday Empire News
Coupon = sent in the Grandmothers name each week
All three made forecasts
Took it in turns to pay
Had agreed that if they won, would share the winnings between them
Grandmother received £250 prize + refused to share it
Lodger brought the action to claim 1/3rd of the prize
Held: = binding contract despite the family connection as the lodger was also party to the contract
This rebutted the presumption of no ICLR
What is the starting point for social/ domestic agreements?
That there is no ICLR
BUT, this can be rebutted if there is evidence to the contrary
Give 3 factors that may be considered when deciding to rebut the presumption of domestic/ social agreements
- Relationship between the parties
- Subject matter of the agreement
- Significance + importance of the actions undertaken by the parties
How easy is it to rebut the presumption for commercial agreements?
Very difficult
Explicit language may be needed to rebut
Rose & Frank Co v JR Crompton and Bros (1925)
For commercial agreements, who is the burden of proof placed on?
Burden of proof is on the party who is claiming that there was no ICLR
Edwards v Skyways (1964)
Claimant = airline pilot working for D
He = to be made redundant
D: if he withdrew his contributions to the company pension fund, they would pay him the equivalent of company contributions in an ex gratia payment
Claimant agreed
Withdrew his contributions
Company then ran into further financial difficulty
Went back on their promise relating to the ex gratia payment
Held: agreement had been made in a business context
Raised a strong presumption that the agreement is legally binding
Claimant could enforce the agreement + = entitled to £
Esso Petroleum v Commissioners of Customs & Excise (1976)
Esso ran a promotion
Any person purchasing 4 gallons of petrol would get a free coin from their World Cup Coins Collection
Customs and Excise Commissioners: coins = liable to purchase tax
“Produced in quantity for general sale,” under the Purchase Tax Act 1963, Sch 1, Group 25
Esso: coins = free gifts, there was no sale with ICLR + produce a legal effect
Held: = ICLR
Coins = offered in a commercial context
Raised presumption that they did intend to be bound
There was no extra consideration given by the petrol buyers (separate contract)
Coins were not for resale
Can advertisements intend to create legal relations?
Case?
Yes
Esso Petroleum v Commissioners of Customs & Excise (1976)
Rose & Frank Co v JR Crompton and Bros (1925)
US company + English company entered into a sole agency agreement in 1913 for the sale of paper goods in the USA
Written agreement contained clause - = not a formal nor legal agreement, and an “honourable pledge” between business partners
Subsequently, US company placed orders for paper which were accepted by the British company
Before the orders were fulfilled, British company terminated the agency agreement + refused to send the goods, claiming that the 1913 agreement was not legally binding
Orders didn’t create legal obligations
Held: honourable pledge clause rebutted the presumption which normally exists in commercial agreements
Agreement had no legal effect + = not enforceable by the Cts
What does the Rose & Frank Co v JR Crompton and Bros (1925) indicate might be needed to rebut the presumption in commercial agreements?
That the ICLR may only be rebutted in commercial agreements if there is an express provision in the contract
In this case - ‘honourable pledge clause’
The will of the parties (freedom to contract) will prevail over the desire of some judges to control commercial agreements
