Learning Outcome: After completing this lesson students will be able to - a) understand the juristic basis of doctrine of intention to create legal relations b) differentiate between the presumptions relating to domestic agreements and commercial transactions

1. LAW OF
CONTRACT
PREETI KANA SIKDER
Assistant Professor
Department of Law & Justice

2. WHAT IS A
CONTRACT?

3. LET’S DISCUSS A
HYPOTHETICAL
SCENARIO

4. INTENTION TO
CREATE LEGAL
RELATIONS

5. DOCTRINE OF INTENTION TO
CREATE LEGAL RELATIONS
• The fact that the parties have reached agreement
does not necessarily mean that they have
concluded a legally enforceable contract, even
where the agreement is supported by
consideration.
• Intention to create legal relations has been held
to be an essential element in any contract.

6. JURISTIC BASIS OF THE
DOCTRINE
•It could be said that the doctrine is based on the
intention of the parties.
•Alternatively, it could be said that the doctrine is
based upon public policy

7. BALFOUR V BALFOUR (1919)
• The husband (defendant) was a civil servant stationed in
Ceylon.
• His wife alleged that, while they were both in England on
leave and when it had become clear that she could not
again accompany him abroad because of her health.
• Husband promised to pay her 30 pounds a month as
maintenance during the time that they were thus forced to
live apart.
• When the husband stopped paying, the wife (plaintiff) sued
for breach of agreement.

8. LORD JUSTICE ATKIN IN
BALFOUR V BALFOUR (1919)
“Agreements such as these are
outside the realm of contracts
altogether. The common law does
not regulate the form of agreements
between spouses…The consideration
that really obtains for them is
natural love and affection which
counts so little in these cold Courts.”

9. Did he inquire into the intention of
the parties or did he lay down this
rule as a matter of policy?

10. LORD JUSTICE ATKIN IN
BALFOUR V BALFOUR (1919)
“…it would be of the worst possible
example to hold that agreements
such as this resulted in legal
obligations which could be enforced
in the Courts…the small Courts of this
country would have to be multiplied
one hundredfold if these agreements
were held to result in legal
obligations.”

11. It was the need to prevent what was, in the opinion of
the court, unnecessary litigation and the desire of the
court to keep the law out of the marriage relationship
(‘each house is a domain into which the king’s writ does
not seek to run’) which were the predominant factors
behind the finding that there was no intention to create
legal relations.

12. MERRITT V MERRITT (1970)
• The husband and wife owned a home jointly which was subject to a
mortgage. The husband left the wife to live with another woman.
• Later, The husband agreed to pay the wife 40pounds per month out
of which she must pay the outstanding mortgage fee. The wife made
him record this agreement in writing.
• The husband wrote in a piece of paper: ‘in consideration of the fact
that you will pay all charges in connection with the house…until
such time as the mortgage repayments have been completed I will
agree to transfer the property in to your sole ownership.’

13. MERRITT V
MERRITT (1970)
AFTER THE WIFE HAD PAID OFF
THE MORTGAGE, THE HUSBAND
REFUSED TO TRANSFER THE
HOUSE TO HER.

14. Court of appeal held that the parties had
intended to affect their legal relations and an
action for breach of contract could be
sustained
A DEPARTURE FORM BALFOUR V
BALFOUR WAS MADE

15. BASIC PRESUMPTIONS
• The rule laid down in Balfour has been interpreted subsequently as a
presumption that parties to a domestic agreement do not intend to
create legal relations.
• Cases concerning intention to create legal relations are thus commonly
divided into two categories;
– the first, concerning domestic and social agreements, where the presumption is
that the parties did not intend to create legal relations, and
– the second, concerning commercial agreements, where the presumption is that the
parties did intend to create legal relations.

16. B O T H P R E S U M P T I O N S
M A Y B E R E B U T T E D B Y
E V I D E N C E O F
C O N T R A R Y
I N T E N T I O N

17. D O M E S T I C
A G R E E M E N T S
“CLEAR” EVIDENCE IS REQUIRED OF
AN INTENTION TO CREATE LEGAL
RELATIONS

18. COMMERCIAL
AGREEMENTS
PRESUMPTION IS THAT THE
PARTIES TO DO INTEND TO
CREATE LEGAL RELATIONS AND
THIS PRESUMPTION IS A
‘HEAVY’ ONE.

19. ESSO PETROLEUM LTD V COMRS
OF CUSTOMS AND EXCISE (1967)
• The Esso Petroleum devised a sales promotion scheme linked to the
1970 World Cup. It involved the production of many millions of ‘coins’
bearing the likeness of various members of the English squad.
• The advertisement said in press and in television ‘one coin given with
every four gallons of petrol’
• Their intention was that the coins would be distributed to Esso
retailers and public would be encouraged to buy Esso petrol in order
to collect sets of coins.

20. ESSO PETROLEUM LTD V COMRS
OF CUSTOMS AND EXCISE (1967)
• While the House of Lords was trying to determine whether these coins
would be subject to a purchase tax, they had to determine first if the
advertisement of coins was intended to create legal relations.
• The majority of the judges placed heavy reliance on the onus of proof in
commercial transactions and held that there was an intention to create
legal relations.

21. Rose and frank co
v J R Crompton
and bros ltd [1925]
P O S T - C L A S S T A S K

22. THANK YOU