Intention To Create Legal Relations (Business)

Question 1

What is the presumption regarding intention to create legal relations in business contracts?

Answer 1

In business contracts, there is a presumption that there is an intention to create legal relations, making them legally binding.

(Esso Petroleum v Customs)

Question 2

What is required for a business contract to be legally binding?

Answer 2

Both parties need to give consideration for the contract to be legally binding.

Question 3

How can the presumption of legal intent in contracts be rebutted?

Answer 3

The presumption can be rebutted by using clear words indicating no legal intent, such as ‘act of goodwill’ or ‘gentlemen’s agreement’.

(Edwards v Skyways, Jones v Vernons Pools)

Question 4

What are examples of contracts that are legally binding despite involving free gifts or competition prizes?

Answer 4

Contracts involving free gifts and competition prizes are legally binding.

(McGowan v Radio Buxton, Esso Petroleum v Customs and Excise)

Question 5

Who has the burden of proof when establishing no legal intent?

Answer 5

The party trying to establish no legal intent has the burden of proving that the rebuttal applies.

Question 6

What happens if the contract is not clearly domestic or commercial?

Answer 6

If the contract is not clearly domestic or commercial, the person seeking to enforce it must show legal intent.

(Sadler v Reynolds)