Contract Law Module - Lesson 4: Intention to Create Legal Relations

Key Concepts

Objective Criteria in Contract Formation: Courts use objective criteria, focusing on actions and statements, to determine parties' intentions in forming contracts.
Subjective Intentions: Sometimes people don't intend for their promises to be legally binding, even if they appear so objectively.

Close Personal Relationships: In cases involving spouses, parents, and children, courts usually presume no intention to create legally binding agreements.
Rebuttable Presumption: This presumption can be overturned with appropriate evidence.

Background: Mr. and Mrs. Balfour were married and lived in Ceylon. Mrs. Balfour stayed in England due to illness while Mr. Balfour returned to Ceylon.
Agreement: Mr. Balfour promised to pay Mrs. Balfour £30 per month.
Trial Outcome: Initially, the court found Mr. Balfour was obligated to pay as there was consideration.
Appeal Outcome: Court reversed the decision, finding no legal contract as the couple did not intend to create a legally enforceable agreement.
- Reasoning: Agreements between spouses in harmony are typically not intended to be legally binding.

Commercial Agreements: Generally presumed that parties intend legal relations.
Rebuttable Presumption: Can be rebutted if parties explicitly express no intention to create legal obligations.

Background: RFC was a distributor for JRC's products, with a clause stating that their agreement was non-legal and non-litigable.
Court Decision: Agreement was not legally enforceable as parties can decide not to create legal rights.

Presumption Variability: Intention presumption varies between personal and commercial contexts, and clear expressions of intent can rebut these presumptions.

Next Lesson: Concept of Estoppel
Action Items: Answer knowledge check questions before proceeding to lesson 5.
Questions: Post any questions on the OWL discussion forum for answers in writing or during weekly Q&A sessions.