4LW003 Contract Law Intention to Create Legal Relations Outline Notes Intention to create legal relations is one of the essential requirements to entering a contract. Parties must demonstrate that they intend to be legally bound in an enforceable contract. To determine intention objectively the courts have established two rebuttable presumptions: · Social and domestic agreements = presumed not to be legally bound · Business and commercial agreements = presumed to be legally bound Social and Domestic Agreements As noted above social and domestic agreements are generally presumed not to be legally binding. The presumption can however be rebutted if there is evidence to rebut the presumption. · Husband and Wife o Balfour v Balfour (1919) o Merritt v Merritt (1970) . Parent and Child o Jones v Padavatton (1969) · Other social arrangements o Simpkins v Pays Business and Commercial Agreements As noted above business and commercial agreements are generally presumed to be legally binding. The presumption can however again be rebutted if there is strong evidence to rebut the presumption. The courts apply the presumption very strictly in this circumstance: . Bowerman v Association of British Travel Agents Ltd (1996) · University of Plymouth v European Language Centre (2009) . Edwards v Skyways Ltd (1964) It is recognised the presumption can be rebutted in the following ways: · Honourable pledge clause o Rose & Frank Co v J R Crompton & Bros Ltd (1925) · Letters of comfort o Kleinwort Benson Ltd v Malaysian Mining Corp Ltd (1989)