Intention to create legal relations, certainity of terms and formalities

Overview of intention to create legal relations

Intention = needed to form a binding contract / objective test for identifying intention

Early case on intention (W v B 1853)

White v Bluett 1853 - father promised to forgive son’s debt of stopped complaining about the will, executor tried to sue the son for his debts - court ruled there was no intention

Social contexts and intention - B v A 2017

Blue v Ashley 2017 / A promised B £15mn if he could get Sport Direct’s share price to £8, B did this and wanted money / A refused to pay more than £1mn / court ruled there was no intention (context = between friends, social setting, intoxicated)

Blue v Ashley 2017 in depth (Lord Leggatt on reasonable/objective test)

Blue v Ashley, Lord Legatt / ‘no reasonably person… would have thought the offer was serious’

Social contexts and intention - L v DC 1914 case

Lens v Devonshire Club 1914 / winner of golf tournament not allowed to sue for a prize - no intention for competition to have legal consequences / social context = no intention

Domestic contexts and intention - B v B 1919

Balfour v Balfour 1919 / married, Mrs B fell ill and advised not to travel, Mr B promised to provide her with money til then / relationship broke down / Court of Appeal - domestic context = no legal intention

Balfour v Balfour 1919 - in depth (Lord Atkin quotes)

Balfour v Balfour, Lord Atkin / can be ‘agreements between parties which do not result in contracts’ / ‘common law does not regulate the form of agreements between spouses’

Domestic contexts and intention - M v M 1970 (contrasts B v B)

Merritt v Merritt 1970 - agreement made after separation, in writing, clear terms and consideration / clear intention

Domestic contexts and intention - J v P 1969 (supporting B)

Jones v Padvattan 1969 / mother would give daughter a house + allowance if she became a lawyer and moved back to the UK / daughter did this, but didn’t pass the bar exam / years later, mom wanted the house / court ruled the agreement was domestic + 6 years (too much rope elapsed)

Jones v Padavatton 1969 in depth (Lord Danckwerts)

Jones v Padavatton, Lord Danckwerts / ‘such an arrangement is not intended to create actionable legal rights’

Commercial contexts and intention - overview

Different presumption - commercial context = assumed an intention to create legal relations

Commercial contexts and intention - Key case (E v S 1969)

Edwards v Skyways 1969 / Skyways airline promised a redundant pilot an ex gratia payment, but later refused / court ruled the term ‘ex gratia’ didn’t prevent a legally binding contract (commercial context = clear intention) / reinforced objective test + burden of proof on contract denier

Edwards v Skyways 1964 - in depth (Lord Megaw)

Edwards v Skyways, Lord Megaw / ‘where the subject matter… is not domestic or social, but related to business affairs, there is a legally binding contract’

Commercial contexts and intention - R&F v JR C 1924

Rose & Frank v JR Crompton 1924 / parties in a sole office agreement for sale of goods in the US / agreement included a clause stating it was not formal or legal / agreement terminated - sued for breach of contract / Lords ruled the clause overruled the commercial context

Commercial contexts and intention - R&F v JR C 1924 - Lord Phillimore quote

Rose & Frank v JR Crompton 1924 / Lord Phillimore: ‘the overriding clause in the document’

Certainty of terms - Lord Leggatt quote in B v A

Blue v Ashley, Lord Leggatt: ‘the basic requirements of a contract are that… the parties have reached an agreement which… is sufficiently certain and complete’

Certainty of terms - S v O 1941 (lacked necessary)

Scammer v Ousten 1941 / O agreed to buy a new van from S, purchase on hire for 2yrs / specific terms never agreed on, S withdrew, O sued / Lords ruled there was no enforceable contract - terms too vague, lacked necessary certainity

Certainty of terms - W v M 1992 (lock-out)

Walford v Miles 1992 / M decided to sell company, negotiated with W (buyer) / M assured he wouldn’t negotiate with others, but sold to another - W sued / Lords ruled that the alleged ‘lock-out’ agreement not enforceable as there’s no certain terms, so no contract

Certainty of terms - F&G S v FF 1967 (sufficient certainty)

F&G Skyes v Fine Fare 1967 / S produced chicks, agreed for a long term supply to FF (supermarket) / contract specified the 1st year, later years to be agreed upon later / court ruled the agreement was binding - clear terms of first yr, commercial content, clear future intention = sufficient certainty

Certainty of terms - H v A 1932

Hillas v Argos 1932 - supports idea of ‘sufficient certainty’

Certainty of terms - BTH v M&S 2001

Baird Textile Holdings v M&S 2001 / B supplied M&S for 30yrs, M gave notice no longer purchasing from B / B sued (implied contract + reliance, so promissory estoppel) / Court of Appeal dismissed this - no formal agreement or certain terms, promissory estoppels require a pre-existing contract (shield not a sword)

Formalities

No general requirement for formalities / but can substitute for consideration + is necessary in some classes of contract / evidentiary, cautionary and channeling functions of formalities

Academic - Michael Freeman (contracting in the haven: Balfour v Balfour revisited) - overview

Michael Freeman / flaws with the privacy argument/separation of domestic agreement - negatively impacts women / subjective approach to intention also problematic

Academic - Lon Fuller (consideration and form) - overview

Lon Fuller outlined the evidentiary, cautionary and channeling functions of formalities in contracts

Formality case - M v B 1825

Morley v Boothby 1825 / formality is needed to ensure people know what they’re being bound to, contracts invalid without some level of formality

Academic - Stephen Hedley (keeping contract in its place) - overview

Hedley argues that separating domestic agreements from commercial contracts = key / against orthodox view - intention doesn’t need its own doctrine (offer, acceptance, and consideration is enough)

Academic - Stephen Hedley (keeping contract in its place) - Quote

Stephen Hedley: ‘I argue there is no requirement of an ‘intention to create legal relations’’

Academic - Jonathan Morgan (in defence of Baird Textiles) - overview

Morgan supports Baird - judges righty to refuse a contract based on history/long term commercial relationships (contrasts relational contract theory and Ian Macneil’s arguments of taking social/moral standards into account) / in favour of classical offer/acceptance approach

Academic - Jonathan Morgan (in defence of Baird Textiles) - quotes

Jonathan Morgan / ‘the law of contract should be plain and simple’

Academic - Ashton and Turner (a contemporary reimagining of ICLR doctrine) 2022 - overview

Ashton and Turner argue that the domestic and commercial distinction is problematic - real world agreements don’t always neatly fit into these 2 categories / more nuanced, case-by-case approach needed