intention to create legal relations Flashcards
domestic and social agreements
the courts presume that the parties to the agreement do not intend to create legal relations.
commercial agreements.
Presumed that parties to the agreement do intend to create legal relation.
Domestic agreements: husband and wife.
Balfour v Balfour 1919
D was stationed abroad - promised wife an allowance.
Wife sued for breach of the promise.
D’s promise was unenforceable - no intention to create legal relations.
Rationale.
Floodgates argument. Lord Atkin: “the small courts of tis country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations”
Domestic agreements: Parent and Child.
Jones v Padavatten 1969.
Mother promised daughter allowance.
M brought D house to live in - then claimed possession.
Held: no intention to have legal relations. The mother was entitled to possession of the house.
Rebutting the presumption
Presumption that the parties did not intend to create legal relations can be rebutted.
- Context in which agreement was concluded.
- The parties have acted to their detriment on reliance upon the agreement.
Context in which agreement was concluded: commercial setting.
Snelling v John G Snelling Ltd 1973.
3 Brothers directors of a company.
Entered into an agreement relating to the running of the company.
Held: legal relations was created.
Context in which agreement was concluded: Parties are separating.
Merrit v Merrit 1970.
Husband left his Wife.
Agreement: Wife makes mortgage payments and Husband would transfer house to her.
Wife paid off mortgage but Husband refused to transfer house.
CA held: agreement was enforceable as a contract.
The parties have acted to their detriment on reliance upon the agreement. Social agreements.
The court presumed that the parties did not intend to create legal relations.
Simpkins v Pays 1955.
Lodger, Landlady, Landlady’s Granddaughter.
Competition: agreed prize shared.
Entry sent landlady’s name - Refused to share.
Held: there was a binding agreement.
The parties have acted to their detriment on reliance upon the agreement. Commercial agreements.
Presumption that there is an intention to create legal relations and the presumption is not an easy one to rebut.
Esso Petroleum Co. Ltd v Customs & Excise Commissioners 1976.
Majority held: there was contractual intention. Colins supplied as a matter of contractual obligation.
Contractual capacity.
capacity to enter into contracts may be limited where one of the parties is:
- A minor
- Intoxicated
- Mentally impaired.
- A corporation acting outside its powers.
certainty and completeness
Agreements where essential terms are vague.
Loftus v Roberts 1902.
Agreement to employ an actress at a west end salary. Held: too vague.
Privity of Contract:
Only a party to a contract can enforce rights of have duties enforced against him under a contract.
If two parties to a contract agree one of them will provide a benefit to a third party the third party is unable to enforce rights. (Contracts Rights of Third Parties Act 1999.)
If two parties agree that an obligation should be imposed on a third party, they will be unable to force the third party to undertake that obligation.
Alison promises Bernard that she will pay £1,000 to Oxfam if Bernard gives up smoking for a year. The contract is enforceable by Bernard. Oxfam can only enter a contract if they are written into it.
Rationale to the doctrine
Law must draw a line at some point to set the limits to the range of liability to third parties.
Classical law - two party bargains.
Imposition of burdens - Burden of a contract should not be placed on a third party.
Exception to the doctrine.
Statutory exceptions. Assignment of contractual rights. Agency. Exemption clauses. Enforcement of the Contract for the Benefit of the Third party. Collateral Contracts. Trusts. Restrictive Covenants. Contracts (rights of third parties act 1999).
