Intention to create legal relations
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ï»¿~ ~ âA mere statement of intention made in the course of conversation will not constitute a binding promise, though acted upon by the party to whom it was madeâ¦â¦â¦â According to this questionit asks whether the mere fact that a statement of intention to createa contract which is formed when an offer by one party is accepted by the other party, how the parties becomes legally bounded to act accordingly to the actions of the agreement? A contract does not exist simply because there is an agreement between people. The parties to the agreement must intend to enter into a legally binding agreement. To discuss this first we have to think about the legal capacity of a contract. So then we have to see whatâs the difference between a legally binding promise or an agreement and a mere promise which has no legal consequences. For this purpose theremust be a clear view to see what are requirements of an agreement to be a legally binding contract. First the parties must intend the agreement to be legally binding.
Balfour. She did not rebut the presumption.ââ. This statement clearly shows that the rebuttable presumption on social and domestic agreements is that parties do not intend to be legally bound when they enter in to agreements. But as it is meant to be the presumption can be rebutted. Merritt v Merritt (1970) is a best example for such a rebutted presumption. In this case the husband left the matrimonial house to live with another women and he agreed to his wife in writing to pay her Â£40 per month maintenance from which she had to repay the mortgage and, when the repayment was completed, to transfer the house into a sole ownership. The wife did in fact pay off the mortgage but the husband changed his mind. She sued and succeeded because the court of appeal decided that there was clear intent. Crucially, they were legally separated.So itâs clear in Balfour, on the other hand Merritt case illustrates that the courts want to avoid unwanted litigations rushing in the courts by these social and domestic agreements and the parties had entered a binding contract as the setting of the agreement was commercial and no domestic or social.
And it statedthat it was a basic condition of the relationship between the parties that any transaction entered into in respect of the pool should not be attended by or gives rise to any legal relationship. And it was held that the words âBinding in honour onlyâ were contained on each coupon and these words were sufficient to rebut the presumption. On these examples clearly shows when the agreements arrive in a commercial context the courts presume that the parties of the agreement do intent to create legally binding relations and that presumption can be rebutted. According to the above facts itâs clear that an agreement of the parties is becomes with the all three combination of intention, offer and acceptance crucial element to make a legally binding agreement. So, only just saying that a party to create an agreement with intention to create legal relation does not make any sense to the other party if the agreement even carried out and then breached, but there must be clear evidence to justify that whether or not the parties really intended them to be so exposed or to find really what is in the parties mind. Reference, 1. P. Richards: The law of contract 09thEd.
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