Intention to create legal relations

• Intention to create legal relations:

  • Domestic
  • Commercial
  • Presumptions and rebuttals
• Presumptions:

  • Business agreement - Presumption is that parties do intend to be legally bound
  • Social/Domestic agreement - Presumption is that parties do not intend to be legally bound
• Burden of proof = The party attending to rebut the relevant presumption. (Sadler v Reynolds)
• Commercial/business agreements:

  Presumption in commercial agreements parties intend to be legally bound.

  Due to the formal nature of the relationship. Presumption can be rebutted by words such as seen in so called 'gentlemen's arguments'
• Evaluating intention to create legal intentions

  1. Intention and the objective standard
  2. Is the presumption in domestic agreement otudated?
  3. Consideration as an alternative
• Intention and objective standard

  Objective (if it a business/social domestic agreement) standard under lines importance of integrity (honestly and good moral principles) and good faith in contracts protects against misrepresentation of intentions
• Intention and objective standard

  • Objective test shows legal binding intention
  • Courts look for evidence of intention when they are trying to uphold contract honesty and good moral principles
  • When making intentions encourages to have good faith and care
  • (Meritt v Meritt) and (Esso petroleum v Castoms)
• Domestic agreement presumptions

  • Outdated because of societal/changes when enforcing legal rights
  • There is only traditional presumption against legal intent in family agreements
  • (Radmakher v Grandtino). Family dynamics and relationships may have shifted
• Social and Domestic agreements (Parker v Clarke)

  • Agreements between family members, friends
  • Agreements that were not ever meant to be legally binding
• Consideration as an alternative

  • Global legal systems UK, focus on the concept of a bargain in contracts
  • Raises question about the need for both intention and consideration in forming a contract
  • A call for fairness in acknowledging fairness losses from broken agreements in social contexts
  • Cases have shown that consideration can be key to deciding if a contract is enforceable. 'Honour only' clauses might offer a way to maintain contract freedom while preventing losses