“Finally, I Will Suggest That

“Finally, I will suggest that the modern law of ‘intent to create legal relations’ essentially reduces to this: that where the parties were dealing at arms’ length, promises will generally be enforced; but in domestic contexts, contractual liability will be imposed only if the party seeking enforcement has already performed one side of the bargain and is simply seeking reciprocity. The courts will not enforce an executory agreement. Beyond this, I argue, there is no requirement of an ‘intention to create legal relations’.”

Stephen Hedley (1985) OJLS 391: Keeping Contract in its Place – Balfour v Balfour and the Enforceability of Informal Agreements.

Discuss this statement and use the appropriate relevant case law

In this essay, I will discuss the traditional view on the law of intention to create legal relations and the court’s presumptions in favour or against this point of view. I will discuss whether intention is a separate doctrine or a legal fiction, in relation to how it is treated by the courts. It is Hedley’s view that intent to create legal relations is a label used by the courts to enforce a contract when there are limits to other grounds they may use but it is not a legal doctrine . It limits the number of cases going through the courts and gives a clear definition as to what should be enforceable and what shouldn’t. In basic terms, it is defined that any arrangement made in a domestic or social setting would not qualify to be enforced in court because it is without intention to create legal relations. However, no rule is without exception. If it can be proven that the intention was there through other means, for example, if the contract was written, or the social relationship had broken down, then the contract would be enforceable in court and breach of the contract would give rise to a legal remedy.

A traditional view of the law of intention to create legal relations is that a contract will only be formed if both parties intend their agreement to be upheld in a court of law . Due to the many forms of communicating a contract, e.g. orally, in writing, etcetera, this can lead to ambiguity as to whether intention was present to begin with.

In Balfour v Balfour [1919] a husband moved to Ceylon while his wife remained in England due to illness. The husband agreed to pay the wife £30 a month in maintenance . They later separated permanently and the wife tried to enforce the agreement. The judge held that it was not a legally binding contract between husband and wife because it was a domestic agreement. Hedley states that ‘while the courts had previously refused to enforce agreements where the parties had deliberately excluded legal sanctions, this was the first time they had denied liability

simply because the plaintiff could not prove that legal sanctions were intended. Balfour v Balfour introduced a new obstacle for plaintiffs, which had not been there before.’ Lord Denning used Balfour to argue his point that Balfour should be used to sweep contract entirely out of the field of domestic relations, leaving the way clear for broad equitable principles .

Intention is easy to identify if it is written down. This can be demonstrated by Errington v Errington Woods [1952] where the contract was agreed orally. The widow of the father took the daughter-in-law to court to attempt to evict her but was not successful on the grounds that the agreement between the father and daughter-in-law was unilateral and could only be withdrawn if the daughter-in-law failed to meet the payments . Once the payments were being made to the building society, the couple had upheld their side of the contract and the father would be bound to do the same. In my view, intent is demonstrated in this case by the daughter-in-law continuing to make payments for the house despite it not being written down. However, by not having the intention in writing, it left the courts to decipher whether intent was present. This supports Hedley’s view because it was his belief that ‘in domestic contexts, contractual liability will be imposed only if the party seeking enforcement has already performed one side of the bargain and is simply seeking reciprocity’ as stated above. The unilateral aspect of this agreement provides enough grounds for the court to enforce the contract, despite the domestic context. In lieu of the father’s death, the mother took on the responsibility of the agreement and was therefore liable to sign over the house to the daughter-in-law once her side of the agreement had been met. This is also supported by Jones v Paddavaton [1969] where the agreement was domestic between mother and daughter and therefore not legally binding, despite the mother playing an active role in persuading the daughter to enter the contract.

It could have been argued that intent was not present in Errington v Errington Woods [1952] because it is accepted that intent to create legal relations cannot be assumed in a domestic/social agreement unless there is clear evidence for this . Merritt v Merritt [1970] is an example of where intention is assumed because the agreement took place after a marriage breakdown and therefore could not be considered domestic. The agreement that the wife would own the marital home if she paid off the remainder of the mortgage was written in this case but it was the agreement being made after the separation that made this case legally binding. This case (Merritt v Merritt [1970]) supports Balfour v Balfour [1919] because it supports the idea that intent for legal relations can only be created outside of a domestic setting. The arrangement was made between the husband and wife when they were amicable and not separated so therefore would be considered domestic.

It is also important to look at intent in a commercial context because this differs from a domestic one. Lots of businesses enter into many contracts a day and they must be differentiated from domestic contracts in order to protect the financial interests of the company and the

In conclusion, I think Hedley’s view is important in the field of law. It, when other reasons are lacking, will support or challenge a decision to make a contract legally binding. Having a clear distinction allows consistency throughout courts. They will not enforce a contract made in a domestic setting unless it can be proven there was intent to create legal relations as demonstrated above by Errington v Errington Woods [1952] where one party was seeking reciprocity.