Intention to create legal relations

• What is a crucial requirement for a contract to be valid?

  The parties must intend legal binding
• What types of agreements have different rules regarding legal intention?

  Business, social and domestic agreements
• What is the default assumption regarding business agreements?

  They are presumed legally binding
• In a business agreement dispute, who has the responsibility to prove there was no intention to create legal relations?

  The person seeking to prove it
• In Edwards v Skyways Ltd [1969], what did Skyways Ltd promise Edwards?

  An ex gratia payment
• In Edwards v Skyways Ltd [1969], why could Edwards enforce the agreement?

  It was made in a business context
• What did the court decide in Edwards v Skyways Ltd [1969]?

  The agreement was legally binding
• What does it mean for a presumption to be "rebutted"?

  Proved not to be true
• In what circumstances can business agreements be "binding in honour only"?

  When they are not meant to be enforceable
• In Jones v Vernon's Pools [1938], what clause did the football pools company insert on all coupons?

  “Binding in honour only.”
• In Jones v Vernon's Pools [1938], why did Mr. Jones not receive the money he claimed he won?

  The agreement was not legally binding
• When can offers of a free gift be legally binding?

  If they promote a business
• In Esso v Commissioners of Customs and Excise [1976], what did Esso give with every four gallons of petrol purchased?

  A World Cup coin
• In Esso v Commissioners of Customs and Excise [1976], why was the agreement deemed legally binding?

  Esso tried to gain more business
• Why was tax payable in Esso v Commissioners of Customs and Excise [1976]?

  There was intention to be bound
• What principle from Esso v Commissioners of Customs and Excise [1976] also applies to competitions?

  Intention to be bound
• In McGowan v Radio Buxton [2001], what prize was stated in the radio competition?

  A new Renault Clio Car
• In McGowan v Radio Buxton [2001], why was Radio Buxton held to be legally bound?

  It was a business agreement
• What is a letter of comfort?

  A written assurance by parent company
• Why might a parent company issue a letter of comfort instead of a guarantee?

  They don't want to be obligated to pay
• What legal issue do letters of comfort raise?

  Whether they are legally binding
• In Kleinwort Benson v Malaysian Mining Corporation [1989], who lent money to Metals Ltd?


  Kleinwort Benson
• In Kleinwort Benson v Malaysian Mining Corporation [1989], what did MMC provide instead of a guarantee?

  A letter of comfort
• What did the court decide in Kleinwort Benson v Malaysian Mining Corporation [1989]?

  A letter of comfort is not binding
• Why did the claim fail in Kleinwort Benson v Malaysian Mining Corporation [1989]?

  KB should have insisted on a guarantee
• What is the initial presumption regarding agreements between family members or friends?

  No intention to create legal relations
• Can the presumption of no legal intention in social and domestic agreements be challenged?

  Yes, it can be rebutted
• In Balfour v Balfour [1919], how much did the husband promise to pay his wife per month?

  £30
• In Balfour v Balfour [1919], why was the agreement not legally binding?

  It was made amicably
• In Balfour v Balfour [1919], why was the presumption of a social and domestic agreement not rebutted?

  They were happy together
• In Merritt v Merritt [1970], what was the relationship between the parties?

  They were separated
• In Merritt v Merritt [1970], why was the agreement deemed legally binding?

  The parties were separated
• In Merritt v Merritt [1970], when can the presumption of no intention to create legal relations in a social and domestic agreement be rebutted?

  When the parties are separated
• In Simpkins v Pays [1955], who filled in the newspaper competition form?

  The lodger
• In Simpkins v Pays [1955], why was the lodger required to share the winnings?

  Money had been paid
• In Simpkins v Pays [1955], when can the presumption of a social and domestic agreement be rebutted?

  When money changes hands
• In Wilson v Burnett [2007], what prize did one of the women win at bingo?

  Over £100,000
• In Wilson v Burnett [2007], why was there no legally binding agreement to share the winnings?

  They asked if she would share
• In Wilson v Burnett [2007], what did the women asking if she was ‘going to share’ suggest?

  No agreement was in place
• When do courts generally consider an agreement legally binding if parties put their financial security at risk?

  They must have intended it