Intention to create legal relations

What is the definition of a contract?

An agreement which is binding in law

What are the 4 legal requirements needed for an enforceable contract?

• Intention to Create Legal Relations

• Agreement (Offer and Acceptance)

• Consideration- (something given by each party)

• Privity- Only the parties to a contract have rights and obligations under that contract

How are intentions to create legal relations by the courts looked by?

What is required by the courts to determine depending on the agreement?

They are looked at objectively (from a reasonable man)

A presumption

What is meant by a presumption?

A conclusion or interference of fact which the court must or may draw from certain other established facts

A presumption is something the court will believe to be true unless D can prove otherwise

What is the term for defendants proving against a presumption?

A Rebuttal

What is the presumption for business and commercial agreements?

That there is an intention to create legal relations

How can commercial/business agreements which are presumed to be intending to create legal relations be rebutted?

If there is specific, strong, clear wording that says there is no intention to be legally binding

How can the case of Edwards V Skyways be used to show a commercial/business agreements to be intending to create legal relations?

Edwards V Skyways

• Negotiations taken place about rights and payments to redundant airline pilots

• Skyways tried to avoid making the agreed ex gratia (Without admitting that the payment was intended to be legally binding) payment in Edward’s redundancy

How can the case of Jones V Vernon’s Pools be used to show a commercial/business agreements to be intending to create legal relations being rebutted?

Jones V Vernon’s Pools

• Jones claimed that he had a winning football pool coupon, the coupon which he signed, stated that the transaction was “binding in honour only”, as the agreement was based on the honour of the parties and not legally binding

• Therefore, there was no intention to create legal relations

How can the case of Esso Petroleum Co. Ltd V Commissioners of Customs be used to show a commercial/business agreements to be intending to create legal relations being rebutted?

Esso Petroleum Co. Ltd V Commissioners of Customs

• Esso gave a world cup coin with every 4 gallons of petrol purchased

• The court questioned whether this free gift should attract tax, as Esso was clearly trying to gain business from this promotion

• It was held to be an intention to create legal relations as a contract to supply, but not sell the coins. As the coins existed to boost sales of the petrol

How can the case of McGowan V Radio Buxton be used to show a commercial/business agreements to be intending to create legal relations?

McGowan V Radio Buxton

• CLMT entered a radio competition, this prize was stated to be a Clio car, the winner was given a 4-inch scale model of the Clio

• Radio Buxton argued that there was “no intention to create legal relations” but the courts disagreed and found that there was an intention to be legally binding

What are other examples business/ commercial agreements will use to not be intending to be legally binding?

“Subject to contract” can be used to avoid there being an intention to create legal relations

What is the presumption taken by the courts if it is a social/domestic agreement?

That there is NO legal intention to create a contract due to the informality, risk of a floodgate of cases etc,

How can the case of Balfour V Balfour be used to show a domestic agreement to NOT be intending to create legal relations?

Balfour V Balfour

• Mr Balfour worked abroad, his wife stayed in England

• He promised her an income of £30 a month

• Later the marriage failed ad she petitioned for divorce and claimed her £30 a month

• It was held that the agreement had been made at an amicable point in their relationship, not in contemplation of divorce and it was therefore purely domestic and NOT intending to be legally binding

How can the case of Merritt V Merritt be used to show a domestic agreement to NOT be intending to create legal relations being rebutted?

Merritt V Merritt

• Mr Merritt had left his wife

• An agreement to pay his wife an income if she paid the outstanding mortgage was held to be intending to create legal relations and was enforced by the courts

How can the case of Jones V Padavatton be used to show a domestic agreement to NOT be intending to create legal relations?

Jones V Padavatton

• A mother and daughter came to an arrangement where the mother agreed to provide a house in which her daughter could reside whilst she studied and to maintain her daughter if she agreed to study for the bar. The daughter commenced her studies and the mother paid her an allowance.

• The Mother and daughter fell into dispute as to the occupancy of the house, and the mother sought possession

• It was held that there is a presumption that family arrangements are based on mutual trust, family ties and affection, and that there is no intention to create legally binding contracts capable of enforcement in the courts

How can the case of Wilson V Burnett be used to show a social agreement to NOT be intending to create legal relations?

Wilson V Burnett

• 3 young women worked together, they attended a bingo session, where one of them won a local prize of £153 ,and then a national prize of £100,000

• The question was whether there was a contract between them to share the winnings

• The suggestion of a prior agreement was undermined by the fact that when one of them won the local prize, they were waiting for the National prize’s result

• This suggested that an intention to create legal relations did NOT exist, so the claim failed

How can the case of Simpkins V Pays be used to show a social agreement to NOT be intending to create legal relations being rebutted?

Simpkins V Pays

• A lodger and 2 members of the household entered competitions

• The lodger filled in the form in the landlord’s name

• One of the entries won, the claim was made by the lodger on the basis that there was an understanding that they would share any winnings

• Their action succeeded as this was more than just a social arrangement and so there was an intention to create legal relations

How can the case of Parker V Clarke be used to show a social agreement to NOT be intending to create legal relations being rebutted?

Parker V Clarke

• A young couple were persuaded by an older couple to sell their house to move in with them, with the promise that they would inherit the property on their death

• Later the couples fell out with each other and the young couple was asked to leave

• The young couple successfully argued that they had a legally binding agreement, by giving up their security it indicated that there was an intention to be legally binding

Why is there a presumption that domestic/social agreements are not often contracts?

They lack consideration and clarity and certainty, they are often vague and subject to alteration