The Learning & Resource Section

Intention to Create Legal Relations

In contract law, in order for an agreement to be binding, there is a requirement of an intention to create legal relations between the parties. For an agreement to be legally binding and have an intention to create legal relations, law has created a distinction between two types of agreements: agreements made within social and domestic relations and agreements made in a commercial environment.

Agreements made in Social and Domestic Relationships:

It is generally presumed under the law that agreements made within social and domestic relations have no legal force. There is no intention to create legal relations between the parties.

Cases: Balfour v Balfour

Balfour v Balfour[1919]

A man had promised his wife a £30 per month allowance as she could not travel with him abroad on overseas service as she was ill. He later suggested

However, this presumption can be rebutted if one party can provide evidence. For example:

1. A party may provide a written agreement (Errington v Errington [1952])

2. The parties may have separated. (Merritt v Merritt [1970])

3. If there is a third party to the agreement (Simpkins v Pays [1955])

Or lastly, if a party acted on his or her detriment in reliance on the agreement (Parker v Clark [1960])

Merritt v Merritt

A husband and wife had a house that was mortgaged. The man decided to leave his wife but the house they lived in was in joint names. The husband promi

Errington v Errington & Woods[1952]

A father bought and mortgaged a house for his Son and Daughter-in-law to live in. The house was in his own name, however he promised them once they ha

Simpkins v Pays[1955]

A lodger and two members of a shared house entered newspaper competitions in the lodger’s name but all paid equal shares of the entry money. Between

Parker v Clarke (1960)

A young couple that were looking for a new home were persuaded by an older couple to sell their house and move in with them. They made a promise where

Agreements made in a Commercial Environment:

Agreements made in a commercial context are generally assumed to hold that the parties involved did intend to create legal relations

Case: Esso Petroleum v Commissioners of Customs & Excise [1976]

Esso Petroleum Co. Ltd v Commissioners of Customs and Excise (1976)

During a World Cup, Esso had agreed to give away free World Cup coins with every four gallons of petrol. As this was happening, the Customs and Excise

This type of agreement can be rebutted if there is evidence to prove otherwise. The defendant must prove to the court that there was no intention to create legal relations or the agreement must expressly state that there is no intention to be legally bound.

Case: Rose & Frank v Crompton Bros [1925]

Rose and Frank Co. v J R Crompton & Bros (1923)

A firm sold paper for tissue manufactures. They acted as their New York agents. In the contract that was signed, the firm gained sales and distributio