Legal Intent in Contract Law

What is Legal Intent in Contract Law?

Lord Denning outlined that ‘would reasonable people regard this agreement as intended to be legally binding?’ Intent in contract law is referred to as having the intention to form a legal contract, it is not enough that both parties are involved in a contract, but there must be an intention to create a legal relation. This is because an agreement can exist but may not be legal, therefore, it needs to have legal intent.

Is there Legal Intent in Family and Social arrangements?

In family and social arrangements there is difficulty to suggest legal intent that would become contracts because of the domestic arrangement such as between husband and wife. In social situations there may be an offer, acceptance and consideration, to do something for something in return but there may not be anything that legally binds that agreement. In the case of Balfour v Balfour (1919), it was ruled that because husband and wife were living in amity, there was no legal intent when an agreement was made because of the domestic situation as husband and wife, and that their dispute should be settled without legal proceedings. In this case it was presumed that legal intent does not exist.

The legal definition of presumption is something that is expected to be taken as the truth. The legal definition of rebuttal is that it is expected that the presumption is not true.

In the case of Merritt v Merritt (1970), the husband and wife became separated when they made an agreement. The husband promised to pay for certain expenses, he did not, and defended himself by claiming that the agreement was made within his family and did not have legal relations. However, the court found the agreement to be enforceable because the agreement was made when they were not in living amity and when they became separated. The presumption of legal intent was rebutted in this case because there was evidence that they were not living together. Therefore, the court may enforce an agreement if it is made when husband and wife are not living in amity or are separated.

In Jones v Padavatton (1969), there was an arrangement between mother (Jones) and daughter (Padavantton), the court decided that the arrangement was between family members and was not intended to become legal agreements because the agreements were not referred as contracts because of their uncertainty.

In the case of Simpkins v Pays (1955), this was between grandmother, granddaughter and a lodger. The lodger wanted a share of prize of a competition that the lodger entered into with grandmother and granddaughter. The court decided that due to the arrangement, it was referred to as a legal relation. Therefore, the lodger was entitled to one-third of the prize.  

Is there Legal Intent in Commercial Agreements?

Usually there is legal intent in commercial agreements because this usually involves the exchange of money for goods and services. In the case of Carlill v Carbolic Smoke Ball Co (1893), the court decided that the contract would be enforceable and therefore sided with the consumer.

Legal intent can be rebutted; a written clause in a contract with a rebuttal is called an honourable pledge clause. This has happened in the case of Rose and Frank v Crompton (1925). This was later confirmed in the case of Kleinwort Benson v Malaysia Mining Corporation (1989). In this case the courts found that there is no legal and contractual obligation but only a moral obligation. In the case of Jones v Vernon’s Pools Ltd (1938) there was rebuttal because the consumer is usually unaware of a clause which means that the Pools company is not obliged to pay out.

Certain Act of Parliament can make a contract become unenforceable. For instance section 29 of the Post Office Act 1969 illustrates that accepting letters and parcels does not create a contract between the post office and the senders. Furthermore, section 179 of the Trade Union and Labour Relations Act 1992 outlines that conditions which are agreed between employers and trade unions are not legal and not enforceable, but the conditions only become legally binding and enforceable when conditions are in writing. An example of this is in the case of Ford Motors AUEFW (1969).

When forming a contract, legal intent becomes an important part of that contract. Offer and acceptance, consideration and legal intent form a contract. It is possible that a contract can be formed without consideration; however, legal intent is still important in forming a contract.