Flashcards in Intention to create legal relations Deck (16):
Enforceability of contract - presumed absent from agreements in domestic and social spheres.
Allowed discretion where principles gave weird result.
Presumed in commercial agreements. Each presumption can be rebutted on the evidence.
Intention isn't determinative - freedom of contract Law doesn't concern itself with subjective intention.
Albert v Motor Insurers’ Bureau (1972)
FACTS: Accident in car share - deceased passenger, carried for payment. Driver not insured for that, claim brought on behalf of deceased by Moto Insurer's Bureau. Carried for reward? Payment was flexible. HL HELD: found arrangement beyond social kindness, even if not strictly contractual, to render Bureau liable.
Lord Cross - dissent - not necessary that parties direct attention in creation of legally binding relationship. Taxi driver doesn't think of that. Contract doesn't depend on whether action would be brought to enforce it in case of default.
Balfour v Balfour 1919
FACTS: H and W - he was to pay her £30 a month till he joined him in Ceylon. Later decided to live separately. Wife sued for payment. AC - no contract, not binding promise. Otherwise - all promises...
Agreements between people in a domestic relationship are not presumed to be binding.
Warrington LJ - denied Balfour made any response to husband's promise which would let Court see arrangement as a bargain.
Duke LJ - doubtful that exchange of promises could be an enforceable contract.
Atkin LJ - outside scope of contract law. Usual forms of agreement made between husband and wife. No intention for legal consequences. Policy reasons.
Stephen Smith - Contract Theory:
principle of why domestic agreement Mr/Mrs B unenforceable:
Special value associated with these agreements is diminished if legally enforceable. They differ from commercial agreements, not personal advantage, but to promote shared interests - even strengthening the relationship itself. Expressive of and constitutive feature of parties relationship - making and performing these agreements is an integral part of these relationships, why it is valuable.
Merritt v Merritt (1970)
FACTS: H promised W after separation would pay £40 a month provided she pay mortgage instalments on house, promised to convey it to her once mort paid off. Broke 2nd promise, wife obtained sole beneficial ownership. H argued on appeal no intention to create legal relations. AC HELD - B v B - no application, because parties were together at the time of agreement.
Denning: domestic relations not intended to create legal relations. But different when parties separate or about to. Then they bargain keenly, no reliance on honourable understandings...it may be safely presumed they intend LR.
Presumption didn't apply, because situation no longer domestic.
Pettitt v Pettitt (1970)
FACTS: Husband claimed B interest in marital home, was in his wife's ownership. Asserted had arisen from work carried out by him. HL denied - required express agreement to change B ownership of property. Diplock - dissented, observed B v B didn't deprive arrangements between spouses of all legal effect.
Diplock - Where acquisition or improvement is made as a result of contributions in money/moneys worth the prop interests in resulting from their contributions depends on their common intention as to those interests.
Acting in concert - because many ordinary domestic arrangements between man and wife don't possess legal characteristics of contract. Shouldn't be that there is common intention that no legal consequences flow from their acts in performance of mutual promises re acquisition/improvement or addition to real/personal property..
Stephen Hedley - "Keeping Contract in its Place 1985" -
J and M go to dinner, agree to split bill. Can't sue if M doesn't go to dinner. Can sue if J pays in full and then M decides not to pay her back.
Vital to see whether seeking enforcement of an executed or an executory contract.
Jones v Padavatton (1969)
FACTS: J agreed to provide monthly allowance to daughter. In return daughter to leave job in Washington to study Bar to practise in Trinidad. Daughter did. Then agreement changed. After 6 years daughter didn't pass exams. Relation broke down, J sought possession of property. Daughter resisted. AC allowed J's appeal - no enforceable contract - domestic one. Vaguely expressed, intended to be flexible. Binding in honour only. .
HELD Salmon LJ - thought might be contract as called to Bar or giving in within reasonable time. Didn't happen, agreement terminated
Fact agreements intended to be flexible, domestic sphere, claims of conscience over legal enforceability.
To rebut presumption against Lr?
Agreement must contrast with domestic sphere - i.e. indications agreement was meant as enduring, not makeshift allocation of rights/burdens, Formal and accurate drafting to enable inference to be made. Serious nature of subject matter. Fact that was relied upon, perhaps to marked detriment of one of parties.
Parker v Clark (1960)
Pl were married, concluded agreement with defs (older couple, were related, had provided some care). Pl would move in, sharing expenses, In return, defs promised to leave house to Pl. In reliance, Pl sold home, lent part of proceeds to daughter to help her buy a flat. Relationship between couples deteriorated, Pl moved out, brought an action for damages. HELD - unrealistic for defs to argue no LR because of drastic and irreversible character of Pl reliance. Both sides must hve envisaged legal remedy sould be available of agreement were breached.
Putative breach of contract to find intention to create lr?
C shouldn't be found in contemplation of detriment to which pl might be subjected were promised payments withheld (BoC) - Shadwell v Shadwell.
C must be found in agreement itself, or its performance. Det through boC not C, too late, and can't have been requested by promisor. Intention for LR must also be located within defined period of time. attitudes once performance of contract begun irrelevant. Relevant intention must exist at time agreement is made. But may be found in parties' expectation as to future, and future performance/non performance. Horizon of contemplation - possibility of breach, harm which would arise in consequence if parties had no legal remedy.
Simpkins v Pays (1955)
FACTS: Def and grand-daughter took part every week in newspaper fashion competition, helped by lodger. Pl filled in form, entry fee and cost of postage shared, one of entries won - grand-daughter, received £750. Def refused to pay Pl 1/3. HELD - Pl succeeded - basis of arrangement was on sharing.
Sellers J - "mutuality in arrangement between parties. Not formal, but was agreed the forecast should go in name of def, if success no matter who won, all should share."
Mutuality begs q - but parties struck bargain, if that is enough to show legal r intended then consideration is all that is needed.
McKendrick - reason for rebuttal of presumption (against LR) probably found as parties acted in reliance upon agreement re sharing of expenses of entering competitions, agreement not made in connection with running household...but shared expense was trivial, and Sellars said wasn't vital. Could be part of consideration moving between parties. But large sum of money at stake -should law allow def to keep money promised to others?
Mutuality - proposition about parties'' relationship in time. No need for renegotiation anticipated. Doesn't need flexibility of agreement re who does the ironing. Supposed to provide assurance - ie a contract.
Commercial agreements - strong presumption for LR
Edwards v Skyways (1964)
FACTS: Co promised ex gratia payment to employee accepting voluntary redundancy. Didn't pay, said wasn't legally bound. Def - agreement too vague to be enforced, no intention for LR.
HELD: Employee gave C by abandoning pension rights in favour of payment. Megaw J - company had to bring evidence why presumption that LR were intended shouldn't apply, onus to rebut was heavy. Not enough that payments were ex gratia - while could mean co accepted no liability to pay already, didn't mean promise when accepted shouldn't be binding.
Edmonds v Lawson (2000)
FACTS: Pupil barrister, former GDL student sued Head of Chambers and two pupil masters at 23 Essex Street - claimed was entitled minimum wage during pupillage year. Pupillage otherwise unfunded. Had to bring self within provisions of National Minimum Wage Act 1998 - required had a contract from chambers, that was a "worker."
Re 1 - defs argued no intention to create LR. No C moving from Cl.
AC dismissed - held relationship was contractual, but wasn't a worker within sense of Act.
Lord Bingham LCJ
LR - objective, not subjective test. Context important.
Doesn't matter if unlikely to sue - same as if employee is unlikely to be sued if fails to turn up on appointed day of starting a contract.
Rose and Frank Co v Crompton and Brothers (1923)
FACTS: US and UK company, entered agency agreement. "Honourable Pledge Clause".
Defs terminated agreement without notice, Pl sued for BoC. HELD: HL Clause was sufficient to prevent legal relations arising. But Lr created by placing and acceptance of specific orders under agreement from time to time.
AC Scrutton LJ - "can accept proposal with result that agreement gives no LR, because of their intention. May be implied, or expressed. Social and family situations intention is readily implied, while in business matter opposite implied. No reason why parties shouldn't intend to rely on eachother's good faith and honour. If express that intention that is it.
Gives effect to Honourable Pledge Clause, but raises Q whether 1 party toa commercial agreement can escape being bound by careful drafting (Avoiding promissory words) when other has no intention of going without legal remedies in event of breach.
Kleinwort Benson Ltd v Malaysia Mining Corporation (1989)
FACTS: Sought security for a loan (Pl). Defs refused guarantee, but provided "comfort letter". Metals went into liquidation, Pl sought repayment of loan, defs denied contractual liability. HELD Hirst J CFI - comfort letter was "contractual in status" - applied presumption of LR in Skyways. AC reversed, distinguished Skyways on ground that involved promise, whereas here didn't. Defs stated their policy, didn't promise what would be in future.
Gibson LJ - "comfort letter drafted to not express contractual promise, consistent as being a statement of fact. No meaning of assuming more than moral responsibility re the debts. Nothing to show the parties intended para 3 to be a contractual promise.
But this criticised by Rogers CJ - Australian case - futurity in "all times". does it mean policy can be changed overnight? McKendrick - significance of letter of comfort, lawyers fought over its wording. Hallmarks of a carefully drawn doc, current policy of parent company but doesn't make any commitment re the future.