Legal Relations: Intention

[Flash Card 1 of 2]

• agreement only legally binding if parties intended to be legally enforceable
• difficult to establish / courts use rebuttable presumptions to determine

Domestic agreements

• general presumption: parties did not intend to create legal relations
• spousal maintenance / verbal agreement / no intent to be legally binding / policy reasons Atkin LJ: ..small courts of this country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations... (Balfour v Balfour [1919])
• rebuttable presumption / not heavy onus / taken into account: if at arms length / large sums of money
• D pay ex wife (P) maintenance / P pay off mortgage / D sign house ownership to P / held: formal binding agreement / Denning: ..different when separated .. do not rely on honourable understandings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations... (Merritt v Merritt [1970])
• weekly competition / P lodger / £250 winnings to be shared equally / enforceable / Sellers J: there was ..a mutuality in the arrangement between the parties... (Simpkins v Pays [1955])

bits of law

Legal Relations: Intention

[Flash Card 2 of 2]

Commercial agreements

• general presumption: parties intended the agreement to be legally binding / more difficult to rebut
• ex gratia / redundancy payment / held: D not rebutted presumption merely not admit any pre-existing liability (Edwards v Skyways [1964])
• parties may expressly rebut presumption
• P supply D carbonising tissue / honourable pledge clause : .. [agreement not] a formal legal agreement and shall not be subject to legal jurisdiction in the Law Courts... / held: ..clause in question expresses in clear terms the mutual intention of the parties not to enter into legal obligations... (Rose & Frank Co v Crompton Bros [1923])

Esso Petroleum Ltd v Commissioners of Customs & Excise [1976]

• world cup coins / We are giving you a coin with every four gallons of Esso petrol you buy
• P argued £200 000 purchase tax owed as coins produced in quantity for general sale / D argued gift
• HoL (majority): commercial transaction / posters were unilateral offer / buying 4 gallons was acceptance & consideration
• Lord Simon (majority): ... The whole transaction took place in a setting of business relations... The coins may have been themselves of little intrinsic value; but all the evidence suggests that Esso contemplated that they would be attractive to motorists and that there would be a large commercial advantage to themselves...
• Lord Russell (dissenting) : .. benevolence is not a necessary feature of a gift, which may well be motivated by self interest... / minimal value of coins important

bits of law