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Intention

The document discusses the concept of 'Intention to Contract' as a necessary element in forming a contractual bond, distinguishing it from 'willingness to be bound'. It classifies agreements into social and domestic agreements, which are generally not legally binding, and commercial agreements, which usually are presumed to create legal relations. The document also highlights cases that illustrate these principles and the conditions under which the presumption can be rebutted.

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12 views10 pages

Intention

The document discusses the concept of 'Intention to Contract' as a necessary element in forming a contractual bond, distinguishing it from 'willingness to be bound'. It classifies agreements into social and domestic agreements, which are generally not legally binding, and commercial agreements, which usually are presumed to create legal relations. The document also highlights cases that illustrate these principles and the conditions under which the presumption can be rebutted.

Uploaded by

athanamarumugam
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Intention to Contract

 Intention to contract is a necessary element in the


contractual bond.

Intention to contract is not the same thing as the


‘willingness to be bound’.

 ‘Willingness to be bound’ means the offeror’s readiness to


perform his promise if the other party accept it.

 ‘Intention to Contract’ means the readiness of each party


to accept the legal consequences if he does not perform
his contract.
 We can classify agreements into

1) Social and Domestic Agreements.

A domestic agreement is one made between two people – usually


in a family relationship – which outlines their rights and
responsibilities. Unlike normal contractual relationships, however, it
is presumed in domestic agreement cases that there was no
intention to create a legally binding agreement and courts are often
reluctant to enforce them.

2) Commercial Agreements.
1) Social and Domestic Agreements
 In social and domestic agreements the law raises a presumption
that the parties do not intend to create legal relations.
 Within the class of social and domestic agreements those between
husband and wife are the most likely to be held to be not contractual.
Balfour v Balfour [1919]
A husband worked overseas and agreed to send maintenance payments to
his wife. (Husband Promised to pay her $30 per month) At the time of
the agreement the couple were happily married. The relationship later
soured and the husband stopped making the payments. The wife sought to
enforce the agreement.
Atkin L.J. said: "...one of the most usual forms of agreement which does
not constitute a contract appears to me to be the arrangements which
are made between husband and wife...and they are not contracts
because the parties did not intend that they should be attended by
legal consequences."
Jones v Padavatton [1969]
 A mother agreed with her daughter, a secretary in the United
States, that if she would give up her job and read for the Bar in
England the mother would provide maintenance for her.
 The daughter came to England and began to read for the Bar.
Later the agreement was varied, the mother agreeing to provide
a house for the daughter.
 The daughter then married and did not complete her studies.
 The mother sought possession of the house.
Issue - The question for the court was whether there existed a
legally binding agreement between the mother and daughter or
whether the agreement was merely a family agreement not
intended to be binding?
Held - On the mother's claim for possession of the house the Court
of Appeal held that the arrangement was not intended to be legally
binding that the mother was entitled to possession.
However this presumption may be rebutted by evidence to
the contrary.

1) When there is a written agreement


2) When the parties have separated

Merritt v Merritt [1970]


A husband left his wife and went to live with another woman. There was £180
left owing on the house which was jointly owned by the couple. The husband
signed an agreement whereby he would pay the wife £40 per month to
enable her to meet the mortgage payments and if she paid all the charges in
connection with the mortgage until it was paid off he would transfer his share
of the house to her. When the mortgage was fully paid she brought an action
for a declaration that the house belonged to her.

The agreement was binding. The Court of Appeal distinguished the case of
Balfour v Balfour on the grounds that the parties were separated. Where
spouses have separated it is generally considered that they do intend to be
bound by their agreements. The written agreement signed was further
Parker v. Clark (1960)

Devlin J. said that "...The question whether or not


there is a binding contract must, of course,
depend on the intention of the parties, to be
inferred from the language they use and from the
circumstances in which they use it."
2) Commercial Agreements
 Where an agreement is made in a commercial context, the
law raises a presumption that the parties do intend to
create legal relations by the agreement.

Esso Petroleum v Customs & Excise [1976]


In commercial agreements there is a presumption that the parties do
intend to make a legally enforceable contract. Thus it is not
necessary, in the ordinary run of commercial transactions, for the
plaintiff to give affirmative evidence that there was such an
intention. But the defendant may defeat the presumption by
reference to the words used by the parties and/or the circumstances
in which they used them.
 This presumption also can be rebutted by evidence to the
contrary.

Honour Clauses
If the parties have expressly declared that a transaction is not be binding in law the
courts will give effect to that declaration.
Rose & Frank Co v Crompton Bros [1925]
The claimants and defendants entered an agreement for the supply of some carbonized
tissue paper. Under the agreement the claimants were to be the defendant's sole agents
in the US until March 1920. The contract contained an honourable pledge clause which
stated the agreement was not a formal or legal agreement and shall not be subject to
the jurisdiction of the courts in neither England nor the US. The defendants terminated
the agreement early and the claimants brought an action for breach.

Held: The honourable pledge clause rebutted the presumption which normally exists in
commercial agreements that the parties intend to be legally bound by their agreements.
The agreement therefore had no legal affect and was not enforceable by the courts
Appleson v H Littlewood Ltd
[1939]
 a punter claimed to have won £4 335 on the football pools but
the defendants refused to pay. The pools form which the
claimant had completed contained the rules and conditions.
 Rule 2 said, ‘It is a basic condition of the sending in and the
acceptance of this coupon that … any agreement entered
into or payment made by or under it shall not be
attended by or give rise to any legal relationship, rights,
duties or consequences whatsoever or be legally
enforceable or the subject of litigation, but all such
arrangements, agreements and transactions are binding in
honour only’.
Held - if the clause or phrase is clear in meaning and properly
communicated in a transaction (such as, the phrases is “binding in
honour only”), the courts have held that a clause or phrase in an
agreement can replace the normal presumption.

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