LLB 120 Lecture Notes - Lecture 7: Coober Pedy
Week 7: 115-131
Intention
The third requirement. The parties must manifest an intention to create legal relations
A party will only be regarded as making an offer or an acceptance if that parry manifests an
intention to be legally bound
The Objective Approach
The court is concerned with whether the parties manifested an intention to create legal
relations and not whether they actually intended to do so
The court looks at the situation in which they were placed and asks if the reasonable person
would regard the agreement as intended to be binding
Factors the court looks at:
• The subject matter of the agreement
• The status of the parties to it
• Their relationship to one another
• Other surrounding circumstances
Presumptions
Agreements made in a commercial context are presumed to be made with the intention to
create legal relations
Agreements made in other contexts are not presumed to be made with an intention
I the ase of oerial trasatio’s the urde of disproig itetio is therefore o a
person denying the enforceability of such a transaction
I the ase of other trasatio’s the ous rests o the perso seekig to efore suh a
agreement
Commercial Transactions
Presumption of legal enforceability
Presumption that commercial transactions are intended to create legal obligations
Letter of comfort is a document given to a financer in a situation in which a guarantee might
otherwise be given
Non-binding commercial agreements
Parties can, if they wish, enter into a non-binding commercial agreement. The courts will
give effect to an express stipulation that an agreement is not to be legally binding
Sometimes described as honour clauses as they provide that the agreement will be binding
in honour only
See Rose & Frank Co v J R Crompton & Bros Ltd – pg 121
Agreements Between Family Members
Presumption might harden into a rule of law
This applies to a domestic context where the principle that an intention to create legal
relations is not to be presumed seems to have made it difficult to establish a contract
between spouses, even where the agreement in question involves substantial financial
matters
No legal rule that domestic or social agreements between spouses are not usually intended
to be binding – each case is decided on its own facts
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
The parties must manifest an intention to create legal relations. A party will only be regarded as making an offer or an acceptance if that parry manifests an intention to be legally bound. The court is concerned with whether the parties manifested an intention to create legal relations and not whether they actually intended to do so. The court looks at the situation in which they were placed and asks if the reasonable person would regard the agreement as intended to be binding. Factors the court looks at: the subject matter of the agreement, the status of the parties to it, their relationship to one another, other surrounding circumstances. Agreements made in a commercial context are presumed to be made with the intention to create legal relations. Agreements made in other contexts are not presumed to be made with an intention.
