INTENTION TO CREATE LEGAL RELATIONS

C. State the general rule and exceptions in relation to :

(i) Domestic and social agreements

(ii) Commercial agreements

Social agreement basically include agreements between spouses, parents, children etc.
the general rule in the relation in social and domestic agreement is no intention to be
bound in social agreements,plus not to gain benefit from each other. Besides, this
agreement is not intended to sue each other as well. As in the case of Balfour v
Balfour, husband went to Sri Lanka to work. His sick wife stayed in London and he
promised to pay her monthly. From this, the court held that this is social agreement
therefore no intention to be bound as they were living in amity. In exception all
presumptions can be rebutted and if an intention to be bound can be shown, then there
is a contract. For the case of Merrit v Merrit, separated husband agreed to transfer a
house to wife but wife must pay installments. The agreements were put into writing.
Wife did so but husband refused to transfer. The court held there was intention to
create legal relation as they were not living in amity and the agreement is put into
writing. The wife can take action on the breach of contract by her husband as they
were separated and not living in amity. They have intention to create legal relation.
-IS AN exception because put in writing and didn’t trust each other anymore

Commercial agreement basically has the intention to offer something to get

something or profits from the transcation. The general rule of commercial agreement
is presume that there is intention to facilitate trade and commerse and promote
certainty in business transaction, plus unless the term of the agreement provide that its
not intended to be legally binding. As for in the case of Esso petroleum v
Commissioners of Customs and Excise, in Esso for every 4 gallons of petrol
purchased, he would be given a coin bearing issue is whether esso is selling the petrol
alone or the coins along with the petrol. The court held that no intention shown by
both the dealers and buyers to enter into legally binding contract in regards to the
coins which has little intrinsic value. There were engaged in business and esso
petroleum hopes to promote the sale of petrol. Not necessarily follow that their
intention on part of dealer should enter into any legally binding contracts with regard
to the coins. The fact in this case negatived any contractual intention on the part of
the customer and on the part of the dealer as to the coin and were sufficient to rebut
any presumption to the contrary.
-minimal value of coin – 2/5 judges agreed