Question 1

If my friend and I agree he'll pay for petrol if I drive on a long journey, is that a contract?

Accepted Answer

It is highly unlikely to be a legally binding contract. This is a classic social arrangement where the courts presume there is no intention to create legal relations. For it to be binding, there would need to be unusual evidence suggesting a formal, business-like arrangement, such as a written agreement or it being part of a formal car-pooling syndicate where money regularly changes hands and there is a clear intention to share costs legally (*Simpkins v Pays*).

Question 2

Does putting an agreement in writing automatically make it legally binding?

Accepted Answer

Not automatically, but it is very strong evidence of an intention to be legally bound. In a domestic context, a written document was a key factor in rebutting the usual presumption in *Merritt v Merritt*. In a commercial context, where an agreement is already presumed binding, a written document clarifies the terms. However, even a written commercial agreement can be made non-binding if it contains a very clear 'honour clause' like in *Rose and Frank Co*.

Question 3

What's the real difference between *Balfour v Balfour* and *Merritt v Merritt*? They both involve a husband and wife.

Accepted Answer

The crucial difference is the state of the relationship when the agreement was made. In *Balfour*, the couple was living together amicably, so the court presumed their arrangement was based on mutual trust, not legal intent. In *Merritt*, the couple was separated and negotiating the terms of that separation. They were dealing 'at arm's length' in a more hostile and formal context. The court concluded that in such circumstances, the parties must have intended their agreement to have legal consequences and be enforceable.

Intention to create legal relations

What you need to know

Intention to create legal relations