Intention to create legal relations CASES

The concept of “intention to create legal relations” is a fundamental principle in English contract law, serving as a crucial element in determining the enforceability of agreements. This doctrine asserts that for a contract to be legally binding, the parties involved must have intended to enter into a legal relationship, thereby being bound by the terms of their agreement (Hepple, 1970; Mckendrick, 2020; McKendrick, 1997).

Presumptions in different contexts:

Domestic and social agreements:

In these contexts, there is a general presumption that the parties do not intend to create legal relations. This means that agreements made in a domestic or social setting, such as between family members or friends, are typically not considered legally binding unless there is clear evidence to the contrary (Taylor and Taylor, 2019; Arvind, 2019; MacDonald, Atkins and Krebs, 2018).

Commercial agreements:

Conversely, in commercial contexts, the presumption is that the parties do intend to create legal relations. This presumption can be rebutted if there is explicit evidence, such as an “honour clause,” indicating that the parties did not intend for the agreement to be legally enforceable (Arvind, 2019; Merkin and Saintier, 2019).

Objective determination:

The intention to create legal relations is generally assessed objectively. This means that the courts will look at the conduct and statements of the parties to determine whether a reasonable person would conclude that there was an intention to be legally bound (Merkin and Saintier, 2019).

Role of consideration:

While consideration is a separate requirement for contract formation, it often overlaps with the intention to create legal relations. Some argue that the presence of consideration should inherently indicate an intention to create legal relations, although this is not universally accepted (Gulati, 2011).