Merritt v Merritt [1970] 1 WLR 1211

Agreements between spouses can be legally binding if there’s clear intention to create legal relations — particularly where they are separated or dealing at arm’s length.

Facts

Mr and Mrs Merritt were married but had grown apart. Mr Merritt left the matrimonial home to live with another woman. The house was in joint names, but the mortgage was not yet paid off. After leaving, Mr Merritt signed a written agreement, drafted on the back of an envelope, stating that he would pay his wife £40 a month and that once the mortgage was paid off, he would transfer the house into her sole name.

Mrs Merritt paid off the remainder of the mortgage herself and then sought to enforce the agreement and obtain the legal title to the house. Mr Merritt refused, prompting her to bring a claim in court.

Procedural history

The case was heard in the High Court where the judge ruled in favour of Mrs Merritt, declaring that the house belonged to her alone. Mr Merritt appealed this decision to the Court of Appeal, arguing that the agreement was a domestic arrangement and therefore not legally binding.

Issues

1. Was the agreement between Mr and Mrs Merritt intended to create legal relations?
2. Was the written agreement enforceable as a legally binding contract?

Judgment

The Court of Appeal, comprising Lord Denning MR, Karminski LJ and Widgery LJ, dismissed the appeal. The court held that the agreement was legally enforceable, and Mrs Merritt was entitled to the house.

Reasoning

Lord Denning MR

Lord Denning made clear that the presumption against legal intent in domestic arrangements did not apply in this case, as the couple were no longer in a state of marital harmony:

“They were not living in amity, but were separated or about to separate. In such cases their dealings are conducted at arm’s length.”

He continued:

“The document signed by the husband was not a friendly arrangement, but a businesslike agreement, intended to be acted upon.”

Lord Denning stressed that the presence of a written document added weight to the claim that legal relations were intended:

“It is obvious. They made an agreement on which the wife was to act and did act.”

He also rejected the argument that the agreement lacked consideration, pointing out that the wife paid off the mortgage as agreed:

“She performed her side of the bargain. She paid off the mortgage.”

Karminski LJ

Karminski LJ agreed with Lord Denning’s reasoning and concluded that the agreement was clearly intended to be binding and supported by consideration.

Widgery LJ

Widgery LJ also concurred, noting:

“Where parties are not living in amity but apart, and are negotiating over financial matters, their arrangements may well give rise to binding obligations.”

Ratio decidendi

Where a husband and wife are no longer living in marital unity and make a written agreement concerning financial or property matters, there is a strong presumption that they intend to create legal relations, and such agreements are enforceable where consideration is present.

Obiter dicta

Lord Denning emphasised that:

“The cases where there is no intention to create legal relations are confined to arrangements made while the parties are living in amity.”

While not strictly necessary for the decision, this clarifies the principle that the presumption against legal intent does not extend to separated spouses.

Full text: https://www.bailii.org/ew/cases/EWCA/Civ/1970/6.html

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