Doctrine of Intention to Create Legal Relations

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“In cases where the issue is litigated, it seems likely that one party intended a legal agreement and the other wanted the agreement to be merely morally binding. This contradiction removes any possibility of justifying the limits of contracts on the basis of the joint intent of the parties. We are forced to the conclusion that the courts must rely on hidden policy considerations when determining the intentions of the parties” [Collins, H (2003) The Law of Contract pp.104-105]

Critically assess the doctrine of intention to create legal relations in the light of the above statement and relevant legal developments.

An intention to create legal relations is vital in creating a valid contract as it ensures that both parties are willing to be bound by the terms of their agreement. There are four essential elements every contract must contain, those being an offer, an acceptance which coincides exactly with that offer, consideration, and an intention to plead legal relations. However in the case stipulated above the two parties’ intentions are clearly different, therefore the courts are forced to determine the intentions of the parties through an objective approach, and as Collins suggests above, by relying on hidden policy considerations.

In this essay I will be addressing the various aspects of the doctrine of intention to create legal relations, and ways in which the law attributes to determining the intentions of the parties and whether an agreement is legal or merely morally binding.

The Doctrine of Intention to Create Legal Relations

“The establishment of the intention to create legal relations is a question of fact and may be established by evidence”. In domestic and social agreements there is a presumption that the parties have no intention of creating legal relations, and therefore evidence must be given to confirm that the parties did in fact intend to create legal relations. For example, in Balfour v Balfour, whereby the spouses were still on good terms, the courts held it not legally binding as social/domestic arrangements are not intended to create legal obligations “unless the agreement makes it clear that this is to be the case”. 

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Therefore in the case of social agreements the intention to create legal relations is usually disregarded on the basis of previous assumptions, because at the point when the ‘agreement’ was formed there was no indication that the arrangement was intended to be a contract. A couple of exceptions are where the family circumstances have changed drastically for the worse since when the contract was formed, in which case intention to create legal relations usually stands. For example, in Merritt v Merritt the wife’s action was rebutted, because in comparison to Balfour v Balfour, the parties had already separated and were on ...

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