"Intention to create legal relations could be used to replace the doctrine of consideration. There is no reason in principle why a gratuitous promise seriously meant should not be enforced."

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"Intention to create legal relations could be used to replace the doctrine of consideration. There is no reason in principle why a gratuitous promise seriously meant should not be enforced."

Critically evaluate this statement.

Before looking at if the intention to create legal relations should be used to replace consideration, it is important to look at how these doctrines fit into the essential elements in a contract. Their use will then be discussed, together with the doctrine of promissory estoppel. In evaluating these principles reference will be made to case law, judicial comment and of leading contract academics work. Finally, thought will be given to the future of consideration, and if it is still necessary today, when so many other countries have adopted alternative approaches to ensuring that contracts are binding.

In the formation of contracts two elements are vital. Firstly, the "offer," an indication by one person prepared to contract with another, on certain terms, which are fixed, or capable of being fixed at the time the offer is made.1 Secondly, there must be an "acceptance", an unconditional assent to a definite offer.2 These two combine to create certainty that a contract has been formed, for, as in Scammell v Ouston (1941),3 "if an agreement is uncertain on some important issue...the courts will hold there is no contract."4 Following this, the elements of consideration and intent provide the contract's "body and substance"5

So, what is meant by "consideration" and "the intention to create legal relations"? English law usually requires proof that the parties have made a bargain, or agreement,6 this is known as the benefit and detriment test. (Currie v Misa (1875))7 or " a benefit to one party or a detriment to another."8 So, in practical terms consideration can be defined as what one party in an agreement is giving, or promising, in exchange for what is being given, or promised, by the other side. 9 This provides mutuality, making the contract enforceable. The Oxford Dictionary of Law definition states, "Consideration is essential to the validity of any contract other than one made by deed. Without consideration an agreement not made by deed is not binding; it is a nudum pactum (naked agreement) governed by the maxim ex nudo pacto non oritur action (a right of action does not arise out of a naked agreement.)"10 English law does not rely on formalities as a way of identifying intention to create a legally binding contract. Instead it focuses on offer, acceptance and consideration.11 If these are present, and unless rebutted by contrary evidence, courts operate on the basis of two legal presumptions, that there is no intention to be bound in domestic or social arrangements, but there is intention to be bound in commercial agreements.12 Professor B.A.Hepple claims that there is no need of a separate requirement of intention, and that a bargain, involving mutuality is sufficient. These views are not generally accepted as it is widely agreed that identifying the parties' intentions is essential to the role of the courts when establishing if a contract was made.13


It is useful to look at why English law has become so reliant on the consideration element of a contract, and why it has frequently been used as the "badge of enforceability,"14 Professor Atiyah argues that "consideration" originally meant a "reason for enforcing an agreement."15 Early forms of contract law mainly involved agreements regarding debt, covenant, or detinue ie., wrongful detention of property, and were only binding if under seal. This method, which required a degree of form such as writing or a deed, was used to prevent fraud and proved that there was an intention to create legal relations. Consideration was first used in the sixteenth century when, in order to enforce informal agreements, the law of assumsit was developed.16 So, while that the law would, "...still not enforce merely gratuitous promises, ... the law had to develop an element that could distinguish between a proper contractual agreement, and something less that would not."17
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Due to the Law of Property Miscellaneous Provisions Act 1989, form is still required for contracts involving the sale of land. It is also used to offer consumers protection in hire purchase and consumer credit agreements. In the English Common law system, a promise is not legally binding as part of a contract except if it is made in a deed or supported by some consideration. 18 Sir Guenter Treitel Q.C., describes the purpose of consideration as,

"...to put some legal limits on the enforceability of agreements even where they are intended to be legally binding and ...

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