9084 · 3.1.3
Intention to create legal relations flashcards
Revision flashcards for Cambridge 9084 Intention to create legal relations (syllabus 3.1.3). Flip, recall, then mark a real past-paper question.
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What is the legal presumption regarding intention in domestic and social agreements?
The law presumes that there is NO intention to create legal relations. The leading case is *Balfour v Balfour* (1919).
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What is the legal presumption regarding intention in commercial agreements?
The law presumes that there IS an intention to create legal relations. This provides certainty in business. A key case is *Esso Petroleum Ltd v CCE* (1976).
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How was the domestic presumption rebutted in *Merritt v Merritt* (1970)?
The presumption was rebutted because the husband and wife were separated and the agreement was made in writing. They were dealing 'at arm's length', not as an amicable couple.
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What is an 'honour clause' and what is its effect?
An 'honour clause' is an express term in an agreement stating it is not legally binding. Its effect is to rebut the presumption of intention to create legal relations in a commercial context. The key case is *Rose and Frank Co v JR Crompton and Bros Ltd* (1925).
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What is the 'objective test' for intention to create legal relations?
The court assesses the parties' intention by looking at what a reasonable person would conclude from their words, conduct, and the surrounding circumstances, not what the parties subjectively believed.
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What was the key factor for rebuttal in *Parker v Clark* (1960)?
Detrimental reliance. One couple sold their own home and moved in with another based on a promise they would inherit the property. This significant action was evidence of legal intent.
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How does *Simpkins v Pays* (1955) illustrate rebuttal in a social context?
Three people (a grandmother, granddaughter, and a lodger) regularly entered a newspaper competition together, sharing the cost. When they won, the court found a binding agreement to share winnings, rebutting the social presumption due to the mutual arrangement and pooling of money.
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What is the significance of *Edwards v Skyways Ltd* (1964)?
It shows the strength of the commercial presumption. An airline's promise to make an 'ex gratia' (voluntary) payment to a redundant pilot was held to be legally binding, as the business context meant there was an intention to create legal relations.
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What is a 'letter of comfort' and is it binding?
A letter from a parent company to a lender about a subsidiary's debt. It is usually not legally binding as it's seen as a statement of policy, not a promise or guarantee, unless its wording is clearly promissory. Case: *Kleinwort Benson v Malaysia Mining Corp* (1989).
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Collective agreements?
Trade union/workplace deals — presumption against legal enforcement unless clear intent (Ford Motor Co v AUEFW). In the UK, this is now governed by statute (TULR(C)A 1992).
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What evidence rebuts domestic presumption?
Written formal agreement, separation, business-like conduct, explicit promise to pay, or significant detrimental reliance by one party.
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Intention and other elements?
All four formation elements required — lack of intention means no contract even if agreement + consideration exist.