INTENTION TO CREATE LEGAL RELATIONS
INTRODUCTION
⇒ For there to be a contract the parties must have intended to create legal relations.
⇒ An objective approach is taken as confirmed in RTS Flexible Systems v Molkerei Alois Müller
[2010]:
"It depends not upon their subjective state of mind, but upon a consideration of what was
communicated between them by words or conduct, and whether that leads objectively to a
conclusion that they intended to create legal relations."
In other words, the court asks whether or not the reasonable person would have thought the parties
intended to create legal relations.
USE OF FORMALITY
⇒ The intention of the parties can be looked at through how the contract is made.
⇒ If the contract is in writing and it says the parties intend to create a legally binding contract then
this is usually sufficient.
⇒ The existence of offer, acceptance and consideration may prove there is an intention to create
legal relations.
⇒ The reason for this requirement (i.e. the requirement for the parties to intend to create legally
binding relations) is that some contracts have offer, acceptance, and consideration but nobody
would think it was a legally binding contract:
For example, let's say you tell your parents that you will tidy your room if they give you a bar of
chocolate in return: there is offer, acceptance and consideration, but cannot be said to be a legally
binding contract.
Also see the case of Coward v Motor Insurers’ Bureau [1963].
⇒ The presumed intent of the parties can be domestic or commercial (see below)
DOMESTIC AGREEMENTS
⇒ Where an agreement is domestic/family/social it is generally accepted that these are non-
contractual because the parties are unlikely to have thought that their dispute could end in court
(i.e. it is unlikely such parties would have intended to have created legal relations).
On the other hand (as is explored in the next section) where an agreement is commercial, the parties
must have intended to have legal effect so these agreements are usually contractual.
⇒ Balfour v Balfour (1919) demonstrates how a domestic agreement is not usually intended to have
created legal relations (and therefore will not be contractual).
⇒ As an intention to create legal relations is about a presumption of the parties' intent to be legally
bound, it is possible that this presumption can be disproved.
⇒ Also see the case of Simpkins v Pays (1955).
INTRODUCTION
⇒ For there to be a contract the parties must have intended to create legal relations.
⇒ An objective approach is taken as confirmed in RTS Flexible Systems v Molkerei Alois Müller
[2010]:
"It depends not upon their subjective state of mind, but upon a consideration of what was
communicated between them by words or conduct, and whether that leads objectively to a
conclusion that they intended to create legal relations."
In other words, the court asks whether or not the reasonable person would have thought the parties
intended to create legal relations.
USE OF FORMALITY
⇒ The intention of the parties can be looked at through how the contract is made.
⇒ If the contract is in writing and it says the parties intend to create a legally binding contract then
this is usually sufficient.
⇒ The existence of offer, acceptance and consideration may prove there is an intention to create
legal relations.
⇒ The reason for this requirement (i.e. the requirement for the parties to intend to create legally
binding relations) is that some contracts have offer, acceptance, and consideration but nobody
would think it was a legally binding contract:
For example, let's say you tell your parents that you will tidy your room if they give you a bar of
chocolate in return: there is offer, acceptance and consideration, but cannot be said to be a legally
binding contract.
Also see the case of Coward v Motor Insurers’ Bureau [1963].
⇒ The presumed intent of the parties can be domestic or commercial (see below)
DOMESTIC AGREEMENTS
⇒ Where an agreement is domestic/family/social it is generally accepted that these are non-
contractual because the parties are unlikely to have thought that their dispute could end in court
(i.e. it is unlikely such parties would have intended to have created legal relations).
On the other hand (as is explored in the next section) where an agreement is commercial, the parties
must have intended to have legal effect so these agreements are usually contractual.
⇒ Balfour v Balfour (1919) demonstrates how a domestic agreement is not usually intended to have
created legal relations (and therefore will not be contractual).
⇒ As an intention to create legal relations is about a presumption of the parties' intent to be legally
bound, it is possible that this presumption can be disproved.
⇒ Also see the case of Simpkins v Pays (1955).
