Contract Formation: Intention to Create Legal Relations
- Created by: Chloe Budd
- Created on: 04-05-16 22:50
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- Intention to create legal relations
- Character and purpose of the rule
- This rule has a clear purpose - to prevent courts being clogged with cases where no legal liability should be attached
- In Dalrymple v Dalrymple 1811 it was said contracts should not be:
- mere matters of pleasantry
- never intended to have any legal effect whatsoever
- the sport of an idle hour
- never intended to have any legal effect whatsoever
- mere matters of pleasantry
- The law distinguishes between agreements needing court enforcement and gratuitous promises in which the law shouldn't intervene
- 2 rebuttable presumptionshave developed in the case law
- if agreements are purely domestic or social in nature then the presumption is no intention the agreement is legally enforceable
- Individuals can challenge these with evidence
- in a business or commercial context the presumption is that the parties do intend agreements to be legally binding
- Individuals can challenge these with evidence
- if agreements are purely domestic or social in nature then the presumption is no intention the agreement is legally enforceable
- Social and domestic arrangements
- Agreements between husbands and wives will not usually create legal relations as the courts are unwilling to interfere in relations of marriage
- Balfour v Balfour 1919 - a non-enforceable promise to provide maintenance payments
- This will be different if the couple was estranged before the agreement was reached
- Merritt v Merritt 1970 - at this point each looking out for their own input
- Arrangements between parents and children do not usually create legal relations, especially if the agreement is vague or ambiguous
- Jones v Padavatton 1969 - the case where a daughter gave up her job in America to study for the English Bar due to agreement with her mother who wanted to be with her
- The domestic arrangements presumption is rebutted if a party suffers obvious detriment because of the domestic agreement
- In Parker v Clarke 1960 this was the case - the Parkers sold their house and the Clarke changed his will
- If money is paid more likely to be binding
- More likely to be foreseeable that it is legally enforceable - Simkins and Pays 1955
- The courts can accept the agreement is severable with some parts legally enforceable and others not as in Julian v Furby 1982
- Agreements between husbands and wives will not usually create legal relations as the courts are unwilling to interfere in relations of marriage
- Commercial and business dealings
- An informal agreement made in a broader business context may still be enforceable
- Edwards v Skyways Ltd 1964 - context dependent.
- Giving free gifts may create legally enforceable arrangements where this is actually a way of extending business
- Esso Petroleum Ltd v Commissioners of Custom and Excise 1976 giving out free World Cup coins with petrol purchases
- This extends to prizes in competitions as in McGowan v Radio Buxton 2001
- It is possible to expressly exclude legal enforceability,as when the arrangement is not one enforceable in contract law
- Jones v Vernon's Pools 1938 stating it was binding in honour only
- So-called honour pledges which are binding in honour not law also fail
- Rose and Frank Co v J R Crompton and Bros 1925
- For policy reasons public bodies have non-enforceable informal arrangements
- Robinson v Customs and Excise Commissioners 2000
- An informal agreement made in a broader business context may still be enforceable
- Character and purpose of the rule
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