This lesson introduces intention to create legal relations and explains how courts decide whether an agreement is meant to be legally binding. This matters because acceptance of an offer creates an agreement, but it does not automatically create a contract.
A contract is a legally binding agreement. An offer and its acceptance establish an agreement, but the parties must also have intended that their agreement should be governed by contract law. When that intention is established, the agreement can give rise to legal obligations, and a party who breaches them may be sued.
All flashcards
What is intention to create legal relations?
The requirement that parties must be regarded as intending their agreement to be legally enforceable before it is treated as a contract.
How is an agreement different from a contract?
An accepted offer creates an agreement, but a contract requires the necessary elements, including intention to create legal relations.
What is the objective test for contractual intention?
Whether a reasonable person, considering the circumstances, would understand the parties' words and conduct as showing an intention to be legally bound.
What did the bank deposit indicate in *Carlill v Carbolic Smoke Ball Company*?
The company's statement that it had deposited £1,000 to show sincerity supported the conclusion that it intended to be bound by its reward offer.
What is a rebuttable presumption?
A starting assumption that can be displaced by evidence to the contrary and affects the burden of proof.
Quiz questions
What is the general starting presumption for an agreement between family members?Answer: It was not intended to create legal relations.
How does a court generally assess contractual intention in a social agreement between friends?Answer: It decides the case on its merits, using the objective test.
What is the general starting presumption for commercial agreements?Answer: They are intended to be legally binding.
Under section 179 of the Trade Union and Labour Relations (Consolidation) Act 1992, what can displace the presumption that a collective agreement is not legally enforceable?Answer: A written agreement expressly stating that the parties intend it to be legally enforceable.
What may an honour clause in a commercial agreement indicate?Answer: That the parties intend to rely on honour rather than legal enforcement.