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  1. 1. Intention to CreateLegal Relation
  2. 2.
    • The parties mustintendthe agreement to belegally binding .
    • But how does the court knows?
    • Objectivelyjudge the situation by what was said and done.
    • Divides agreements into :
    • social & domestic agreements
    • business agreements
  3. 3.
    • Agreements betweenfamilymembers,friendsandworkmates .
    • The law presumes that social agreements are not intended to be legally binding.
    • Balfour v Balfour [1919]
    • Jones v Padavatton [1969]
    • Lens v Devonshire Club (1914)
  4. 4. Balfour v Balfour [1919]
    • The husband worked in Ceylon, came to England with his wife on holiday.
    • He later returned to Ceylon alone, the wife remaining in England for health reasons.
    • The husband promised to pay his wife 30 per month as maintenance.
    • The marriage broke up. The husband failed to keep up the payments.
    • The wife sued.
    • Court of first instanceheld: Mrs.Balfour was entitled to the 30.
  5. 5. Balfour v Balfour [1919]
    • Held
    • Court of Appeal - The wife could not succeed because:
    • she had provided no consideration for the promise to pay 30; and
    • agreements between husbands and wives are not contracts because the parties do not intend them to be legally binding.
  6. 6.
    • If it can be shown that the transaction
    • had anopposite intention
    • Meritt v Meritt [1970]
    • The husband left his wife.
    • The husband agreed to pay 40 per month maintenance, out of which the wife would pay the mortgage.
    • When the mortgage was paid off, he would transfer the house from joint names to the wife's name.
    • He wrote this down and signed the paper, but later refused to transfer the house.
  7. 7. Meritt v Meritt [1970]
    • Held
    • When the agreement was made, the husband and wife were no longer living together, therefore they must have intended the agreement to be binding.
    • This intention was evidenced by the writing.
    • The husband had to transfer the house to the wife.
  8. 8.
    • If a social agreement will haveserious consequencesfor the parties
      • Parker v Clarke [1960] aunt & niece
      • Tanner v Tanner [1975] couple leaving together without marriage
  9. 9. Parker v Clarke [1960]
    • Mrs Parker was the niece of Mrs Clarke.
    • An agreement was made that the Parkers would sell their house and live with the Clarkes.
    • They would share the bills.
    • Clarkes promised that they would leave the house to the Parkers.
    • Mrs Clarke wrote to the Parkers giving them the details of expenses and confirming the agreement.
    • The Parkers sold their house and moved in.
    • Mr Clarke changed his will leaving the house to the Parkers.
    • Later the couples fell out and the Parkers were asked to leave.
    • Parkers claimed damages for breach of contract.
  10. 10.
    • Held
    • The exchange of letters showed that the 2 couples were serious and the agreement was intended to be legally binding because
    • the Parkers had sold their own home, and
    • Mr. Clarke changed his will.
    • Therefore the Parkers were entitled to damages .
    Parker v Clarke [1960]
  11. 11.
    • Where the parties to the
      • agreementshare a householdbut
      • arenot related , the court will examine all the circumstances
    • Simpkins v Pays [1955]
    • The defendant, her granddaughter, and the plaintiff shared a house.
    • They all contributed 1/3 of the stake in entering a competition in the defendant's name.
    • A prize of 750 was won
    • but on the defendant's refusal to share the prize, the plaintiff sued for 1/3.
  12. 12. Simpkins v Pays [1955]
    • Held
    • thepresence of the outsiderrebutted the presumption that it was a family agreement and not intended to be binding.
    • The mutual arrangement was a joint enterprise to which cash was contributed in the expectation of sharing any prize.
  13. 13. Try this
    • John announced that he pay50 to anyone who would clean the rubbish in his garden. The following person responded :
    • His wife, Bernice
    • His ex-wife, Betricia
    • His mistress, Betty
    • His son, Benjamin
    • His nephew, Brian (whom he never met before)
    • His neighbour, Ben
    • His gardener, Balasingam
    • Which of the above is/are legally bound?
  14. 14.
    • In business agreements, the
    • presumptionis that the parties
    • intend to createlegal relations
    • and make a contract.
  15. 15.
    • Unless if it isexpressly excludedin the contract between the parties
    • Rose and Frank Co v Crompton Bros Ltd [1925]
    • Orion Insurance v Sphere Drake Insurance [1990]
  16. 16. Rose and Frank Co v Crompton Bros Ltd [1925]
    • The defendants were paper manufacturers
    • entered into an agreement with the plaintiffs whereby the plaintiffs were to act as sole agents for the sale of the defendant's paper in the US.
    • The written agreement contained a clause that :
    • it wasnotentered into as aformal or legal agreementand wouldnot be subject to legal jurisdictionin the courts but was a record of the purpose and intention of the parties to which theyhonorably pledgedthemselves, that it would be carried through withmutual loyalty and friendlyco-operation.
    • The plaintiffs placed orders for paper which were accepted by the defendants.
    • Before the orders were sent, the defendants terminated the agency agreement and refused to send the paper.
  17. 17.
    • Held
    • the sole agency agreement was not binding owing to the inclusion of the "honorable pledge clause".
    • As to the orders which had been placed and accepted, the court finds that a contract had been created and the defendants, in failing to execute them, were in breach of contract.
    Rose and Frank Co v Crompton Bros Ltd [1925]
  18. 18.
    • If the clause isambiguous , the courts will intervene andinterpretit.
    • Edwards v Skyways [1964]
    • JH Milner v Percy Bilton [1966] *
    • JH Milner v Percy Bilton [1966]
    • A property developer reached an"understanding"with a firm of solicitors to employ them in connection with a proposed development
    • but neither side entered into a definite commitment.
    • The use of deliberately vague language was held to negative contractual intention.
    Unless if it is expressly excluded in the contract
  19. 19.
    • There are situations where it would appear at first sight that the parties had entered into a commercial agreement, but, nevertheless, a contract is not created.
    • Mere puffs
    • Letter of Comfort
    • Letter of Intent
    • Collective Agreements
    • Free Gifts
    Commercial Contracts that have no ITCLR
  20. 20.
    • For the purposes of attracting
    • customers, salesmen may make
    • vague exaggerated claims in adverts.
    • Such statements arestatements of opinionor"mere puff"and are not intended to form the basis of a binding contract.
    • Buta more specific pledgessuch as, "If you can find the same holiday at a lower price in a different brochure, we will refund you the difference",are likely to be binding .
    • A statement will not be binding if the court considers that it was not seriously meant.
    • Weeks v Tybald (1605)
    • Heilbut, Symons & Co v Buckleton (1913)
    (1)Mere puffs
  21. 21. Heilbut, Symons & Co v Buckleton (1913)
    • Heilbut was a rubber merchants who were underwriting shares of what they claimed was a rubber company.
    • Buckleton called up a manager at Heilbut to inquire about the shares.
    • In response to the questions, the manager stated that they were "bringing out a rubber company".
    • Based on this statement, Buckleton purchased a large amount of shares.
    • The shares turned out not to be for a rubber company at all, the shares did very poorly.
    • Buckleton sued for breach of warranty.
  22. 22.
    • Heilbut mademisrepresentation butwasnotdonefraudulently .
    • statement was made in answer to aninquiry for information.
    • The court nevertheless,allowedthe plaintiffs claim forbreach of warrantyin the statement
    Heilbut, Symons & Co v Buckleton (1913)
  23. 23.
    • This is a document supplied by a 3rd party to a creditor, indicating a concern to ensure that a debtor meets his obligations to the creditor.
    • Depending on the terms,such letters may beeitherbindingcontractsor informaland uncert