Contract Law 1
Intention to Create Legal Relations
In order for a contract to be valid there must be intention to create legal relations. Enright notes ‘the requirement of intention to create legal relations is a final doorkeeper in contract. It determines which agreements supported by consideration shall be covered by contract law and which shall merely be morally binding.’ This requirement was expressly stated for the first time in Heilbut, Symons & Co V Buckleton. Friel notes that important as there are a great many agreements and arrangements that, though possessing many of the characteristics of contract, probably are not intended to attract legal consequences. Intention to be legally bound operates on the basis of presumptions. The test for intention is objective. The court will impute intention to create legal relations to the parties on the basis on external factors rather than on the workings of the parties’ minds. Intention and Presumptions
There are two presumptions in this area:
1. There is a presumption that agreements between family members or friends are not intended to be legally binding. 2. There is a presumption that agreements which are made in a commercial context are intended to be legally binding. Social and Domestic Arrangements
A close family of social relationship raises a presumption of lack of intention to create legal relations. The seminal case, Balfour V Balfour involved maintenance payments to be sent home to his wife while he was working abroad. The court held that agreements between husband and wife are not intended to be legally binding. The closer the blood relationship the more readily the presumption will be raised and the more distant the degree of blood relationship, the more likely the courts will infer an intention to be legally binding. This can be seen in Simpkins V Pays where an informal agreement between a landlord and his lodger, to enter into a weekly competition, held lodger entitled to share of winnings, despite landlord’s evidence that there was no intention to be legally bound. Rogers V Smith shows the same principal in Balfour V Balfour applied to other family relationships. It was held in this case that the agreement between a mother and her son did not attract legal relations. Likewise in Mckay V Jones where a nephew had worked on his uncle’s farm for some years without payment, claimed that the uncle had promised to the farm when he died. Deale J. Ruled that it was nothing more than a statement of intention or wish by the deceased…..no promise was made as the agreement was between family members. In contrast to this case is McCarron V McCarron where a child worked without reward for 16 years. The child was said to have lost out more in McCarron and therefore had a greater detriment or reliance on the compensation promised. The dates between this cases may explain the different points of view.
In Leahy V Rawson found that an agreement between her non-marital partner’s brother, did not attract the presumption as it only applies to the closest family kinships, such as parent and child and spouses. The courts also held the same principal in social arrangements as was shown in Hadley V Kemp. In this case the court raised the presumption that an agreement as to the sharing of songwriter’s loyalties with other members of his band (Spandau Ballet) was not intended to create legal relations. Enright notes that a degree of intimacy is required between the parties in order to raise the presumption. The issue is not of status but closeness. We can contrast Balfour with Merritt V Merritt. As in Balfour, the parties were husband and wife and the agreement concerned an allowance, yet, in Merritt, the court chose to enforce the agreement. Merritt is distinguished however, on the grounds that the husband and wife were separated, so they were not in a close relationship any longer and so the presumption of lack of intention to create legal relations could not be...
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