Intention to Create Legal Relations; Capacity

Question 1

For a contract to be binding, what do both parties need to intend?

Answer 1

To be legally bound by it

Question 2

How must intention to be legally bound be communicated?

Answer 2

Mutually, either expressly or impliedly

Question 3

What is the presumption regarding intention to be legally bound in domestic situations (married couple, family member)?

Answer 3

That the parties do not intend to be legally bound

Question 4

What is required to rebut the presumption against intention to be legally bound in domestic situations?

Answer 4

Objective evidence to the contrary

Question 5

Even where objective evidence to the contrary is used to rebut presumption against intention to be legally bound in domestic situations, what will prevent it from being rebutted?

Answer 5

If either party has actual knowledge that the other does not intend to be legally bound

Question 6

If either party has actual knowledge that the other does not intend to be legally bound

Answer 6

Same as domestic

Question 7

What is a situation in which the courts have found the presumption against intention to be legally bound in social situations to be rebutted?

Answer 7

Where friends or family members join together to enter a race or competition

Question 8

What trap on the exam concerning a social situation should we look out for?

Answer 8

Social parties, e.g. friends or family, acting within a commercial context

Question 9

What is the presumption regarding intention to be legally bound in commercial situations?

Answer 9

Strong presumption that the parties intend to be legally bound

Question 10

What is required to rebut the presumption against intention to be legally bound in commercial situations?

Answer 10

Clear and unambiguous evidence to the contrary

Question 11

If a commercial party does not intend to be legally bound, what should they do to rebut the presumption?

Answer 11

State that their agreement is “subject to contract” or “binding in honour only”

Question 12

What is the implication in a commercial situation where an agreement is subject to contract?

Answer 12

That a legally binding agreement will follow

Question 13

What is the effect of a contract entered into by a minor?

Answer 13

Voidable by the minor, with some exceptions

Question 14

When is a minor bound by a contract?

Answer 14

When they ratify the contract

Question 15

How does a minor ratify a contract?

Answer 15

By adopting it after they turn 18