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Formation of a Contract

Intention to Create Legal Relations

  • 3 things to know
  • Paper 3

Overview

Recall questions on why intention is essential, the presumptions for commercial and domestic agreements and the evidence that rebuts each.

What you need to know

Answer each one before you reveal it.

Your recallNot started
Key term

Why is intention to create legal relations considered an essential requirement for a valid contract?

Key term

What principle was established in Balfour v Balfour?

Key term

Why might a court find that an agreement between family members to share competition winnings is legally binding?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Why is intention to create legal relations considered an essential requirement for a valid contract?

    Model answer

    Because the parties must intend their agreement to be legally binding and enforceable by the courts; without this intention, the agreement cannot constitute a contract.

  2. 2

    What presumption applies to commercial or business agreements regarding intention to create legal relations?

    Model answer

    There is a rebuttable presumption that the parties intend to create legal relations.

  3. 3

    A commercial contract contains a clause stating the agreement is 'binding in honour only'. What is the legal effect?

    Model answer

    The clause rebuts the commercial presumption, meaning the agreement does not create legal relations and is not enforceable by the courts.

  4. 4

    What type of evidence can rebut the presumption against legal relations in domestic agreements?

    Model answer

    Evidence showing the parties did intend legal consequences, such as the serious nature of the agreement or reliance by one party.

  5. 5

    What principle was established in Balfour v Balfour?

    Model answer

    That agreements between spouses living together in amity are presumed not to create legal relations.

  6. 6

    If a husband and wife who are happily married make an agreement about household expenses, would this normally be enforceable?

    Model answer

    No, because under Balfour v Balfour, agreements between spouses living together in amity are presumed not to create legal relations.

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