Contract - Intentions to create Legal Relations - Lecture 12 Requirement for a legally enforceable contract · Offer · Acceptance · Consideration · Intention to create legal relations Approach of the courts RTS Flexible Systems Ltd v Molkerei Alois Muller [2010] - Per Lord Clarke Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formulation of legally binding relations. Example: · Santa and Rudolph agree to live together · Santa agrees to do all the shopping and cooking in return for Rudolph agreeing to do all the cleaning and washing . Offer, acceptance and consideration are all present · Is agreement intended to be legally enforceable? To decipher if it is legally enforceable there are 2 presumptions: rebuttable presumptions - evidence based 1. Domestic and social arrangements - presumptions of 'no intention to create legal relations' 2. Commercial agreements - presumption of 'intention to create legal relations' Domestic and Social Arrangements NO INTENTION TO CREATE LEGAL RELATIONS Balfour v Balfour (1919) . Lord Atkin - agreements of this kind are outside the realm of contracts altogether Jones v Padavatton (1969) . Use of mother's house - relationship at the time of the agreement is important. Presumption can be rebutted · Merritt v Merritt (1970) - position is different where marriage is coming to an end or the spouses are separated · Radmacher v Granatino (2010) - courts should give effect to ante-nuptial or post nuptial agreements Significance and importance of actions for rebuttal
· Parker v Clark (1960) - sharing house with a view to inheritance - actions are important · Simpkins v Pays (1955) - agreement to share winnings - was enforceable - the terms of the agreement are important . The presumption is the starting point Things taken into consideration . However, it can be rebutted · The relationship between parties, · the subject matter, . the significance · importance of the actions undertaken by parties Commercial Agreements Presumption is difficult to rebut / overturn · Edwards v Skyways (1964) - 'ex gratia' - does not override presumption . Esso Petroleum v Commissioners of Customs & Excise (1976) - promotional advertising can intend to create legal relations Explicit language may be needed to rebut . Rose & Frank Co JR Crompton and Bros (1925) Letters of Comfort Kleinworth Benson Ltd v Malaysia Mining Corp (1989) · Used by businesses and frequently framed in ambiguous language · Aimed at encouraging a lender to advance funds to a third party · Associated British ports y Ferryways NV (2009) - Per Kay LJ- ... a letter of comfort, properly so called, does not