Introduction

According to Section 2 (h) of the Indian Contract Act: ‘An agreement enforceable by law is a
contract.’ A contract, therefore, is an agreement the object of which is to create a legal
obligation, i.e., a duty enforceable by law.

Apart from offer, acceptance, and consideration, the final ingredient for a contract to
be entered into which is enforceable at law is that the parties must have an intention to create
legal relations. Without it there is no binding contract. Under Indian law, an agreement supported
by consideration is not enough to create a legally binding contract; the parties must also have an
intention to create legal relations. Often, the intention to create legal relations is expressly stated
by the contracting parties. In other situations, the law will readily imply the intention, because of
the nature of the commercial dealings between the parties. Generally it is assumed that in social
and domestic type of agreements this type of intention is absent, but parties do intend to create
legal relations in commercial agreements. It is assumed that this doctrine was not clearly
established until 1919.

Alternatively, it can be said that the Doctrine is based upon public policy; that is to say that, as a
matter of policy, the law of contract ought not to intervene in domestic situations because the
courts would then be swamped by trifling domestic disputes. We can have an example of it; I
promise to pay my wife ₤50 if she will type the manuscript of this chapter of the book. My wife
agrees. Does this agreement create a legally enforceable contract? On the face of it there appears
to be no reason why it should not. We have reached agreement and the agreement is supported
by consideration. But it is likely that an English Court would conclude that we had not entered
into a legally binding contract because we lacked an ‘an intention to create legal relations’,
which has been held to be an essential element in any contract.

It could be said that the doctrine is based on the intention of the parties, objectively interpreted;
that is to say, my wife and I did not intend that our agreement would have legal consequences.
But my wife certainly expected to receive the money if she typed the manuscript, although it is
unlikely that neither of us intended that she would have to go to court in order to get her money.

It was observed by the Scottish Law Commission, 1977,

“it is, in general,l right that courts should not enforce entirely social engagements,
such as arrangements to play squash or to come to dinner, even though the parties themselves
may intend to be legally bound thereby”.

In Singapore Contract Law, Section 4 describes the requirement of Intention to Create

Legal Relation1

1
Law of Contract Singapore 4(1)
 “In the absence of contractual intention, an agreement, even if supported by
consideration, cannot be enforced. Whether the parties to an agreement intended to create legally
binding relations between them is a question determined by an objective assessment of the
relevant facts”

Family and Social Agreements

In domestic arrangements it is generally assumed that the parties do not intend to
relate legal relations. In many domestic agreements, for example those made between husbands
and wives and parents and children, there is no intention to create legal relations and no intention
that the agreement should be subject to litigation. Familial relationships do not preclude the
formation of a binding contract, though to create contractual relations, there must be a clear
intention on either party to be bound.

While there are conflicting legal authorities on whether specific facts involving familial relations
result in binding and enforceable agreements, it seems settled that in domestic agreements there
is a rebuttable presumption that the parties do not have intention to create legal relations.

Much importance is given to the policy that private lives of the citizens should be
protected from too much interference from the courts. Chen-Wishart calls this ‘Freedom from
contract.’ 2

2
(Adams & Brownsword 2004:93-94)
 CASE COMMENT:
Jones v Padavatton [1969] 1 WLR 328

Agreement for mother to maintain daughter; whether intention to create legal relations

Court; Court of Appeal

Decided;29 November 1968

Citation(s);[1968] EWCA Civ 4, [1969] 1 WLR 328; All ER 616

Judge(s) sitting;Lord Justice Danckwerts, Lord Justice Salmon, Lord Justice Fenton Atkinson

FACTS:

A mother and daughter came to an arrangement whereby the mother agreed to maintain her
daughter if she agreed to study for the bar. The daughter commenced her studies and the mother
paid her an allowance. The arrangement was later altered and the mother agreed to provide a
house in which her daughter could reside whilst she studied. Mother and daughter fell into
dispute as to the occupancy of the house, and the mother sought possession. It was held the
daughter was entitled to remain in possession and the mother appealed.

Issues:

1. Does intention of both parties to make an agreement be legally binding in order to be an

enforceable contract?

2. Under what circumstances will a court decline to enforce an agreement between mother
and daughter?

HELD:

1.Yes. Both parties must intend that an agreement be legally binding in order to be an
enforceable contract.

2.The court will not enforce agreements between mother and daughter and are presumed not to
create contracts, unless there is clear indication to the contrary.

Held:

The daughter argued the agreement between herself and her mother amounted to a legally
binding contract and, as such, she should be entitled to remain in occupation of the house. She
claimed there had been an intention to create legal relations and she had provided consideration
for her mother’s maintenance by studying for the bar. The mother argued there was merely an
informal family arrangement, there had been no intention to create legal relations and she was,
therefore, entitled to recover possession of the house. Even if there was an enforceable contract,
she asserted the terms of the arrangement were too vague for the court to enforce.

The mother’s appeal was successful and she was awarded possession. There is a presumption
that family arrangements are based on mutual trust, family ties and affection, and that there is no
intention to create legally binding contracts capable of enforcement in the courts. This
presumption can be rebutted, but the lack of formality regarding the agreement between mother
and daughter strongly indicated there was no such intention and the daughter had no defence to
her mother’s claim for the house.

COMMENTS:

The case of Jones v. Padavatton concerned whether or not a legally enforceable contract existed
between the parties, in the case a mother and daughter. The judgements of Salmon LJ and Fenton
Atkinson LJ, although reaching the same conclusion have very different reasoning. Salmon LJ
considered that two main factors needed to be addressed; whether or not the parties had intended
a legally binding contract ,and whether the terms of the contract were sufficient to be legally
enforceable.

The English law operates generally on an objective approach based on what a reasonable person
in the position of the parties would have intended. Salmond LJ follows this approach in his
judgement, stating it is a presumption of fact that when arrangements are made between family
members, they are not intended to create a legal relationship but are rather based on mutual ties
of trust and affection.

This presumption was established by Atkins LJ in his explanation of the case Balfour v Balfour
and is cited by Salmon LJ, however he does go on to accept that in some circumstances just
because a , ‘‘ Contracting party is unlikely to extend his pound of flesh does not mean he has no
legal right to.’’ I consider that the principle illustrated by Balfour V Balfour , although
fundamental for many cases , may not be so relevant considering the circumstances of this case.

In a society of increased domestic disruption , illustrated through statistics such as rising divorce
rates, it is very arguable that family arrangements are becoming more likely to be intended as
legally enforceable. In considering the very special circumstances of this case, I consider it is
possible to distinguished it from that of Balfour v Balfour and rather follow the approach of
Fenton Atkinson LJ, studying the specific intention of the parties rather than the presumption
derived fro the case of Balfour v Balfour.

Salmon LJ considers the second factor to be addressed is whether the terms of the agreement
were sufficient enough to be legally enforceable. He considers the intentions of the daughter
were clear – to leave Washington and study for the Bar in England, but did not consider the
mother would have intended to give up all her rights concerning the house. The arrangents were
too vague to have to have contractual intent.