Intention to Create Legal Relations Flashcards
Edmonds v Lawson [2000] Objective Test
Whether parties intended to enter into legally binding relations is an issue to be determined objectively: would the ordinary reasonable man have believed there was an intention?
Judges are suspicious of this and prefer to strike down on other grounds e.g. uncertainty or vagueness
Family, Domestic or Social Agreements - Husband & Wife
Balfour v Balfour [1919]
H promised to pay £30 p/m to W while away. Failed to honour, so she sued for breach of contract.
Held no intention to create legal relations: presumption not rebutted (still married & good terms)
Family, Domestic or Social Agreements - Husband & Wife
Merritt v Merritt [1970]
H left fam home (in joint name with W and subject to mortgage) to live with another woman.
H and W had convo in his car and he promised to pay her £40 p/m to pay the rest of the mortgage.
W then made him put it in writing: she would pay the mortgage off and when she finished, he would transfer the house into her name.
Held presumption rebutted: Diff bc they’re separated & it was intended to create legal relations
Family, Domestic or Social Agreements - Parent & Child
Jones v Padavatton [1969] UK
M + daughter entered into agreement if she came home to study for bar, she’d get $200 allowance
M bought house and D lived with her and tenants. Few years later, M claimed possession of house
Applied the objective test: Held two agreements were clear: (1) that D leave and study for the bar for a fixed sum and (2) that M allowed her to live in the house. Neither in writing and no duration.
Thus, no intention to create legal relations: merely a family arrangement.
Family, Domestic or Social Agreements - Uncle & Nephew
Mackey v Jones [1959]
M’s uncle promised his mum (14 at time) if he came to live with him and look after his farm he’d leave the farm to the boy, but the uncle died and left it to a third party.
Held no intention here: presumption was not rebutted in the circumstances.
Family, Domestic or Social Agreements - Other Relationships
Hynes v Hynes [1984]:
Agreement bw 2 brothers to transfer business held enforceable (siblings)
Family, Domestic or Social Agreements - Other Relationships
Leahy v Rawson [2003]
Relationship bw L and non-marital partner’s brother deemed insufficiently close for presumption
Court limited the presumption, holding it only applies to parent and child and spouse relationships
Business & Commercial Agreements - General Presumption
Esso Petroleum v Commissioner for Customs & Excise [1976]
: There is an intention to be legally bound, but rebuttable:
Transaction where football tokens were offered to anyone who bought 4 gallons of E’s petrol held to be a legally enforceable contract: “whole transaction took place in business relations setting”.
Held the purpose was commercial as it was designed to encourage more people to buy its petrol.
Business & Commercial Agreements - Exceptions
General rule?
A clear expression of a lack of intention can rebut the presumption. Can be a clause.
“Honour Clause” a clause seeking to exclude liability entered into a “gentleman’s agreement” i.e. an agreement that is binding as a matter of honour, not of law.
Business & Commercial Agreements - Exceptions
Rose & Frank Co. v Crompton [1923]
Parties agreed R would distribute C’s goods (carbon paper) in the USA.
Agreement contained an honourable pledge clause: “this is not entered into as a formal legal agreement and shall not be subject to legal jurisdiction”.
Held the presumption of intention was displaced by the honourable clause: ruled out any intention
Business & Commercial Agreements - Exceptions
Cadbury v Kerry Co-op & Dairy Disposal Co Ltd [1982]
Or it can be clear evidence to rebut the presumption:
D was owner of creameries that supplied milk to C. C was planning to expand, so D agreed to ensure an adequate milk supply to facilitate this. But, C then sold number of creameries to K.
D made agreement with K (as a condition of sale) that it’d continue to supply to C.
Although not involved in the agr directly, C sought to enforce it against K, but held the relevant clause
was not binding as it was, at best, a commitment that K&C would negotiate in the future
Business & Commercial Agreements - Letter of Comfort
Kleinwort Benson v Malaysia Mining Corp [1989]
Promises made which you hope to keep, but don’t wish to be legally bound by. Useful in commerce:
K (bank) lent money to subsidiary of M. During negotiations, M sent K letter: ‘it is our policy to ensure the sub is at all times in a position to meet its liability to you under the arrangements’.
This letter was sent after a refusal by M to provide a formal guarantee on the sub’s behalf.
Court held words ‘it is’ to be a statement of current intent and contracts are ones of future intent.
Held the statement was not intended to be legally binding: merely stating company policy.
Business & Commercial Agreements - Letter of Intent
AC Controls Ltd v BBC [2002]
Letter used to indicate the intention of the issuer to enter into contractual arrangements, in due course:
Statement re enforceability of such agreements:
LIs may give rise to a binding contract if the words, objectively, give rise that conclusion.
Letters of intent may give rise to an “if” contract (A will pay B if certain acts are rendered). No obligation on B, but if B acts, then A is liable to pay.
Contracts can come into being from such letters if the only thing outstanding is dotting the “I”s and crossing the “T”s and a transaction’s been fully performed.
In interpreting the letter, it may be necessary to consider the factual background.
Lottery Syndicates
Simpkins v Pays [1955]
P lived in her house w granddaughter and lodger (S). They often entered into a fashion competition in the newspaper paying a small fee each time. Granddaughter won £750.
S sought some of the fee. Held, given risks and profits involved in such situations, there was int.
Clark recognises there is a presumption due to the fact that there may be substantial winnings.
Religious Arrangements
Zevevic v Russian Orthodox Christ Cathedral [1988] Canada
Priest and church sued for failing to perform funeral service. Priest said they were traditionally paid
for this. Held no intention to create legal relations (this is the presumption).
