Intention to Create Legal Relations

Question 1

in social and domestic context the presumption is that the intention is not to create legal relations:

Answer 1

Balfour v Balfour (1919)
- Husband moves to Ceylon

• Agreements between parents, childrens, spouses, siblings and friends have no legal effect

Question 2

Rationale behind family and relationships contracts

Answer 2

“de minimis non curat lex” - Floodgates and maintenance of family and social relationships

´- Objective test

(Carlill v Carbolic Smoke Ball Co)

(Lens v Devonshire Golf Club)

• Different rules for social & domestic agreements and for business & commerical agreements

Question 3

Exeptions to the social and domestic rule

• Seperated couples

Answer 3

Seperated:

Merritt v Merritt (1970) - Husband promises house

-

Consideration is executed:

Pettitt v Pettitt - Home improvements

Question 4

Social & Domestic context
Exception for unilateral offers

Answer 4

Errington v Errington Woods (1970)

• Deceased fathers promis to transfer house if mortgage is paid

Question 5

Exception where family engages in purely commercial agreement

Case authority:

Answer 5

• *Snelling v John G Snelling Ltd**
• Borthers agreement regarding their company

Question 6

Presumption applies to agreements between parent and child

Answer 6

• *Jones v Padvatton**
• Mothers promise to support daughters legal studies

Question 7

Exception to the social context when consequences are serious

Answer 7

Parker v Clark (1960)

• Uncle/Aunts promise to give share of house to niece if she lived with them

Question 8

Exception to the rule where child in law is involved

Answer 8

Harwick v Johnson (1978)

• Son and Daughter in law are promised house in return for the rent

Question 9

Presumption of social non binding context applies to friends

Case authority

Answer 9

• *Coward v Motor Insurance Bureau**
• Motorcycle crash

-

Heslop v Burns

• Lodgers seek to remain in deceased house

Question 10

Exception to the social context rule among friends -
When there is mutually e.g. in distribution of a prize money agreement

Case authority

Answer 10

Simpkins v Pays (1955)

• Granny, granddoughter & lodger participate in competition

Question 11

Exception to the social rule among friends agreement - business context

Answer 11

Headley v Clarke (1965)

• Payment of real estate commission

Question 12

Business & Commercial Context

Presumption is that the parties are intended to create legal relations

Case authority

Answer 12

• *Edwards v Skyways** (1964)
• Redundant pilot promised “ex gratia” payment

Question 13

Exeption to the business context rule
- Where the agreement explicitly excludes intention

Answer 13

• *Rose & Frank Co v JR Crompton & Bros Ltd
• Two businesses who made their non binding intention clear**

Question 14

Exception to the business context rule “gentlemans agreement”

Answer 14

Sousa v Marketing Board (1962)
- Board had promised to sell bananas

Question 15

Exception to the business & commercial context rule
- Where the agreement involves gambling

Answer 15

• *Jones v Vernon Pools (1938)**
• “Binding in honour only”

Question 16

Business and commercial context rule exception -
Where the agreement is “subject to contract”

Answer 16

• *Masters v Cameron (1954)**
• Property transaction not complete until final agreements are exchanged

Question 17

Business & Commercial Context
- Exception where there is a “comfort letter”

Answer 17

Kleinwort Benson v Malaysia Mining Corporation
Bank was given written assurance about debt

Question 18

Business & Commercial Context Rule

• Exception where the offer is a “mere puff”

Case authorities

Answer 18

Carlill v Carbolic Smoke Ball Co

• The defendant tried in the litigation process to claim that the offer was a mere puff, which the court dismissed

-

Esso Petroleum v Commissioners of Customs an Excise
- Football coins

-

Heilbut Symons & Co v Buckleton (1913)

Intention to establsh rubber company

Question 19

Summary of Intention

Answer 19

• Presumption of no intention to create legal relations in social & domestic agreement
• > Balfour v Balfour
• Presumption can be rebutted
• > Merritt v Merritt, Pettitt v Pettitt, Parker v Clark, Simpkins v Pays
• -
• Presumption to create legal relations in Business & Commercial Agreements
• > Edwards v Skyways
• Presumption can be rebutted
• > Rose & Frank v JR Crompton, Sousa v Marketing Board, Maters v Camern, Esso Petroleum v Cms of Customs