Summary
Summary Intention to Create Legal Relations
Considers whether there is an intention to create legal relations. Considers business and non-business contexts. Perfect for problem questions.
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Chapter 6Intention to create legal relations
6.1 Introduction:
The juristic basis of the doctrine.
The doctrine is based on the intention of the parties, objectively interpreted.
Whether or not the parties intended on their agreement having legal consequences.
The doctrine as based on public policy; as a matter of public policy, the law of contract ought
not to intervene in domestic situations because the courts would then be swamped by
trifling domestic disputes.
The Scottish Law Commission stated (1977) that the law should not enforce ‘entirely social
engagements… even though the parties themselves may intend to be legally bound thereby.’
Up to the courts to determine whether the agreement is ‘entirely social’ and thus not legally
enforceable.
6.2 Balfour v Balfour:
Balfour v Balfour [1919] 2 KB 571-> wife sought to enforce a promise by her husband to pay
her £30 per month while he worked abroad.
Action failed because the wife had not provided any consideration for the promise of her
husband and that it was held that the parties did not intend their agreement to be attended
by legal consequences.
Atkin LJ-> ‘agreements such as these are outside the realm of contracts altogether’.
Did Atkin LJ inquire into the intention of the parties or did he lay down this rule as a matter
of policy? In his judgement he stated that ‘the small Courts of this country would have to be
multiplied by one hundredfold if these arrangements were held to result in legal
obligations.’ Which suggests that it was more policy based.
^ Wanted to avoid unnecessary litigation.
The statement ‘each house is a domain into which the King’s writ does not seek to run’->
basis for not finding an intention to create legal relations.
The rule laid down in Balfour created the presumption that parties to a domestic agreement
do not intend to create legal relations.
Two categories; domestic and commercial; commercial agreements where the presumption
is that the parties did intend to create legal relations.
Both presumptions can be rebutted.
The presumption under Balfour is a matter of policy which is one ‘of keeping contract in its
place; to keep it in the commercial sphere and out of domestic cases, except where the
judges think that it has a useful role to play.’ 1
While this policy may have been appropriate for Victorian marriages such as that of the
Balfours, it is not entirely clear that it is appropriate for modern society in which family
law ‘has steadily embraced contract as its governing principle.’ 2
6.3 Rebutting the presumption:
The role of intention as marginal
In many domestic and social agreements the parties have no discernible intention one way
or the other.
1
Hedley, 1985
2
Freeman (1996)
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