Formation of a contract: Intention to Create Legal Relations

Question 1

Once offer and acceptance have taken place and consideration is established, what must the courts need to identify?

Answer 1

The parties intended to form a contract, did they intend to create legal relations?

Question 2

What is the presumption on business agreements?

Answer 2

There is ITCLR

Question 3

What happens with the presumption is rebutted in business agreements?

Answer 3

There is no ITCLR

Question 4

What is the presumption on social/domestic agreements?

Answer 4

There is no ITCLR

Question 5

What happens when the presumption in social/domestic agreements is rebutted?

Answer 5

There is ITCLR

Question 6

What can intention be?

Answer 6

Express or implied

Question 7

Where does the burden of proof lie?

Answer 7

With the claimant

Question 8

What does ‘binding in honour mean’?

Answer 8

No ITCLR, no contractual agreement

Question 9

Jones v Vernon Pools

Answer 9

Facts: Claimant beleived they had winning coupons in football pools, coupons stated they were ‘binding in honour’ only
Held: As claimant signed coupon there was no contractual obligation for the pools company to honour agreement, no ITCLR

Question 10

Edward v Skyways

Answer 10

Facts: Defendant refused to pay ex gratia money to claimant when he was made redundant
Held: Payment was legally binding

Question 11

What is the rule on free gifts being offered to promote a business?

Answer 11

It can be legally binding

Question 12

Esso Petroleum Co. Ltd v Commissioners of Customes anf Excise

Answer 12

Facts: Esso gave free world up coin whehn petrol was purchased
Held: Esso had ITCLR when they offered the gift as this was to attract more custom, so had to pay tax on gift

Question 13

When prizes are offered in competitions what do companies have?

Answer 13

ITCLR

Question 14

McGowan v Radio Buxton

Answer 14

Facts: Claimant entered competition and prize was a car, given a 4-inch model as his prize when he won
Held: There was ITCLR so claimant had to be compensated

Question 15

Free gift AO3

Answer 15

P - Cases have been deciced in line with each other, making it consistent
DP - Complies with ROL, lawyers able to advise clients
WDP - Not on case-by-case basis, unfair

Question 16

What is a letter of comfort?

Answer 16

A letter providing assurance that an obligation will be fulfilled

Question 17

Is a letter of comfort usually legally binding?

Answer 17

Nope

Question 18

Kleinworth Benson Ltd v MMC

Answer 18

Facts: Claimant lent MMC’s subsidiary business £10m, MMC wouldn’t act as garantor for moey but issued a ‘comfort letter’ assuring the bank it would be paid, subsidiary went out of money so claimant claimed on basis of comfort letter
Held: Letter wasn’t legally binding, MMC weren’t obliged to do anything

Question 19

Comfort letter AO3

Answer 19

P - Conflicts with SoP
P - Confuses lay people
P - Judges are experienced

Question 20

Balfour v Balfour

Answer 20

Facts: Husband promised wife income of £30, when marriage failed, she made claim for money she was promised
Held: Agreement made when married so was a domestic agreement, no ITCLR

Question 21

Merritt v Merritt

Answer 21

Facts: Husband left wife, promised to pay income if she paid off mortgage
Held: ITCLR as couple were separated when agreement was made

Question 22

What did Radmacher v Granatino establish?

Answer 22

Prenups are legally binding as long as both parties intended to be legally bound when agreement was made.

Question 23

What did Radmacher v Granatino establish?

Answer 23

Prenups are legally binding as long as both parties intended to be legally bound when agreement was made

Question 24

What will happen when families make agreements that appear to be business arrangements?

Answer 24

The court has to assess whether the matter is a domestic one of one with legal intent

Question 25

Jones v Padvatton

Answer 25

Facts: Mother allowed daughter to stay in her house whilst she studied for the bar, she hadn’t passed the bar several years later, mother evicted her
Held: Mother and daughter didn’t have ITCLR

Question 26

If money has been paid is it likely to be a business agreement or social?

Answer 26

Business

Question 27

What is also usually a business arrangement?

Answer 27

Lottery syndicates and competitions

Question 28

Simpkins v Pays

Answer 28

Facts: Grandmother refused to pay other two when in lottery syndicate with granddaughter and lodger
Held: Bound to split money as it wasn’t a social agreement

Question 29

What did Wilson and Burnett state

Answer 29

There should be some record of the agreement otherwise it may be deemed to be ‘social chatter’

Question 30

What must they have intended if parties put their own financial security at risk

Answer 30

Must have intended the agreement to be legally binding

Question 31

Parker v Clarke

Answer 31

Facts: Couple were promised they would inherit their property when old couple died, they asked young couple to leave
Held: Legally binding, young couple gave up their security, entitled to damages