intention to create legal relations - FORMATION

Question 1

definition of intention to create legal relations

Answer 1

both parties must have intentions
to be legally bound when entering
agreement
- presumption that there is
intention to create legal relations
for commercial arrangements
unless evidence to suggest
otherwise

Question 2

social relationships with cases

Answer 2

presumed there is no intention to create legal relations unless evidence to contrary

Balfour v Balfour, agreement
within family, family/social
agreements not deemed to be
binding
Meritt v Meritt, signed agreement
suggested intention to be legally
bound

Question 3

business relationships with cases

Answer 3

presumed there is intent to be legally bound unless evidence to rebut this

Esso Peteoleum Ltd v Commissioners of Custom and Excise

Question 4

rule of privity

Answer 4

(established in Dunlop v Selfridge)- only a person who is a party to a contact can sue on it BUT EXCEPTIONS:
- collateral contracts (A second contract running alongside the original contract between the same two parties or one of them with a third party); each party held accountable (Shanklin Pier v Detel Products, There was a collateral contract because the contrast between the pier company and the contractors induced the contract between the contractors and the Detel products)

Question 5

who can benefit from privity

Answer 5

• only those bound by a contact can:
  1. benefit from its existence
  2. enforce promise

S1 Contracts (rights of third parties)
Act 1999- Someone not party to
contract can enforce if:
-Third party named in contract
-Contract expressly states third
party can enforce contract
-Contract allows third party to
benefit from contract

Question 6

cases for intention to create legal relations

Answer 6

1. Edwards v Skyways, agreement
was made in business context,
strong presumption intended to be
legally binding
2. Jones v Vernons, assumption can
be rebutted if evidence suggests
otherwise (coupons stated words
binding in honour only and shall
not give rise to legal relations)
3. Balfour v Balfour, agreement
within family, family/social
agreements not deemed to be
binding
4. Meritt v Meritt, signed agreement
suggested intention to be legally
bound