ITCLR-Smith and Davies

8.
Intention to create legal relations
JC Smith's The Law of Contract (2nd edn)

Paul S. Davies
Publisher: Oxford University Press Print Publication Date: Apr 2018

Print ISBN-13: 9780198807810 Published online: Sep 2018
DOI: 10.1093/he/
9780198807810.001.0001
8. Intention to create legal relations
Chapter: (p. 102) 8. Intention to create legal relations
Author(s): Paul S. Davies
DOI: 10.1093/he/9780198807810.003.0008
Key Points
• Intention to create legal relations is an essential and distinct

element in the formation of a contract. This intention is assessed
objectively.
• In a domestic or social context, there is a presumption that the
parties do not intend to create legal relations.
• In a commercial context, however, the reverse applies and it is
presumed that the parties do intend to create legal relations.
• No matter which presumption initially applies, that presumption
may be rebutted by evidence to the contrary.
Page 1 of 12
For a contract to be formed, the parties must intend to create legal

relations between them. This intention is usually assessed objectively,
using well-established principles of interpretation.1 As Lord Clarke said in
RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH and Co KG (UK)
Productions:2
Whether there is a binding contract between the parties and, if so,

upon what terms depends upon what they have agreed. It depends
not upon their subjective state of mind, but upon a consideration of
what was communicated between them by words or conduct, and
whether that leads objectively to a conclusion that they intended to
create legal relations and had agreed upon all the terms which they
regarded or the law requires as essential for the formulation of
legally binding relations.
However, some cases have suggested that a party’s actual intentions may
be taken into account if that intention is or ought to be reasonably known
to the other party. The existence and extent of this exception is far from
settled.3
Assessing the parties’ words and conduct to see whether there is an

intention to create legal relations is a difficult exercise. The court is
assisted by two presumptions. In domestic and social transactions, there
is a presumption that agreements are not intended to be legally binding.
In commercial transactions, there is a presumption that legal relations
are intended. This chapter takes each in turn.
(p. 103) 1 Domestic and social transactions
Imagine the following exchange. A says to B: ‘I will host the book

club and provide dinner on Wednesday if you will do so the following
week.’ B replies, ‘I agree.’ All the elements of a bargain that we have
come across so far are present here, since there is an offer, acceptance,
and consideration. But it is extremely improbable that this is a binding
contract. In the unlikely event of the matter coming before a court, it
would almost certainly be held that this exchange was only a social
transaction and not a contract because there was no intention to create
legal relations. The key point is that an intention to create legal relations
is an essential and distinct element in the formation of a contract.
In a purely domestic or social transaction (like the arrangements for the

book club), an objective approach to the parties’ intentions might lead to
the conclusion that there was no intention to create legal relations. In the
leading case of Balfour v Balfour,4 a man was returning to his
employment abroad and leaving his wife in England. They agreed that he
would pay her a monthly allowance. But the Court of Appeal, reversing
the judge at first instance, held that the agreement was not intended by
the parties to have legal consequences, even if the wife was giving
consideration by accepting the agreed sum each month in lieu of the
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husband’s obligation to maintain her. The parties had not explicitly said
that they had no intention to create legal relations, but it was the court’s
inference from the circumstances that led to its decision.
In another case, Jones v Padavatton,5 a mother promised her daughter

that, if the daughter gave up her job in America and read for the Bar in
England, the mother would pay her $200 maintenance per month. The
daughter complied with her side of the agreement, and the arrangement
was then varied such that the mother bought a house in London for the
daughter to live in, rather than pay maintenance. After some time, the
daughter had still not successfully taken the Bar exams, and she fell out
with her mother. The mother sought possession of the house, which was
granted by the Court of Appeal. The court found that there was no valid
contract between the mother and daughter since there was no intention
to create legal relations.
Balfour v Balfour and Jones v Padavatton are leading examples of how

domestic agreements are presumed not to be legally binding since the
parties are presumed not to intend to create legal relations. There are
obviously many domestic arrangements where it would be wholly
inappropriate for the courts to intervene, such as the arrangements
between spouses for keeping up with household chores and expenses.
This is not only because such promises may be trivial, but also because
domestic and social promises should not be subject to an intrusive legal
process. Moreover, from a practical point of view, the court system simply
could not withstand being swamped by the excessive litigation which
might arise if purely domestic promises resulted in binding contracts.
However, even the leading decision of Balfour v Balfour is perhaps close

to the borderline between situations where there is an intention to create
legal relations and those where there is not. Spouses may, and often do,
demonstrate an intention to create legal relations where property is
concerned. Moreover, the presumption that legal relations are not
intended does not apply where spouses are not living amicably, but are
separated or about to separate.6 Following the (p. 104) decision of the
Supreme Court in Radmacher v Granatino,7 it is now clear that, when
deciding whether to make ancillary financial orders on the breakdown of
a marriage, a court should give effect to ante-nuptial or post-nuptial
agreements if it is fair in all the circumstances to do so and the relevant
agreement was freely entered into with a full appreciation of its
implications. Admittedly, the court did not decide whether such
agreements should be classified as contractual, but the majority did
emphasise that ‘It is, of course, important that each party should intend
that the agreement should be effective.’8
This is an area where it is difficult to lay down precise rules. However, it

appears that the significance and importance of the action to be taken by
one party in reliance on the promise of the other may persuade the court
that the promise must have been intended to be legally binding. For
example, an agreement to share a house was held to be a contract when,
Page 3 of 12


as both parties knew, it was necessary for one of them to take the drastic
and irrevocable step of disposing of his own residence in order to adopt
the arrangement.9 Similarly, an intention to create legal relations was
found in Simpkins v Pays where there was an arrangement between A, A’s
granddaughter, and A’s lodger to enter a Sunday newspaper fashion
competition. Although the competition was entered into in A’s name, each
party filled in one line of the entry, and a binding contract was formed
between the parties such that, when A won the competition, the winnings
were to be split equally between the three parties.10 This decision is
significant as it means that in the vast majority of cases the agreement
between members of a lottery syndicate to split any winnings between
them is contractually binding.
Binding contracts have also been recognised between spouses regarding

‘the ownership or tenancy of the matrimonial home, bank accounts,
savings or other assets’11 and between brothers concerning the running
of a family company.12 In all these instances, the subject matter of the
promise was clearly quite important. A promise by a husband to take the
bins out if his wife does the washing-up is far less important, and remains
unlikely to be legally binding.
2 Commercial transactions
Commercial transactions are considered in a different manner

to domestic transactions by the courts. In ordinary business matters,
there is a strong presumption that legal relations are intended.13 Whilst
the ordinary shopper in the high street does not have a conscious
intention to create legal relations as he makes his various purchases, he
is undoubtedly entering into a series of contracts for the sale of goods.
For example, if he is poisoned by the fish purchased from the local
fishmonger, he will have a cause of action on the terms implied into the
contract by section 14 of the Sale of Goods Act 1979 or section 9 of the
Consumer Rights Act 201514 that the fish is of satisfactory quality and
reasonably fit for eating. The truthful (p. 105) shopper might admit under
cross-examination that it had never crossed his mind that, when he
bought the fish, he was making a contract; but that would not matter in
the least. The matter would be judged objectively.15
The presumption that legal relations are intended is not irrebuttable, but
the burden of rebutting the presumption is placed upon the party who
asserts that no legal effect was intended; ‘the onus is a heavy one’.16 One
example of the courts finding it difficult to decide whether the
presumption was rebutted on the facts is Esso Petroleum Ltd v
Commissioners of Customs and Excise.17 Esso displayed posters offering
one ‘World Cup Coin’ with every 4 gallons of petrol. Each coin bore the
head of one of the 30 members of the England squad for the 1970 World
Cup. The Commissioners of Customs and Excise argued that the coins
were ‘produced in quantity for general sale’, which meant that Esso was
liable to pay purchase tax on these coins. Esso argued that there was no
contract of sale of the coins, and that Esso was simply making an offer of
Page 4 of 12


free gifts of the coins. This issue was of great financial importance: if
there was a contract of sale of the coins, then Esso would be liable to pay
around £200,000 in purchase tax. Pennycuick J, and the majority of the
House of Lords, held that there was a valid contract to supply the coins.
But this was by no means an obvious conclusion. The Court of Appeal had
thought that Esso was simply making an offer of free gifts of the coins,
and the two dissenting judges in the House of Lords (Viscount Dilhorne
and Lord Russell) agreed, saying that there was no intention to enter into
legal relations as regards the coins. It was, of course, extremely
improbable that anyone would ever have sued on a contract to supply one
of these coins of minute intrinsic value, but that did not deter the majority
from holding that there was a binding contract. Although Viscount
Dilhorne thought the offer of a ‘free’ coin was not properly regarded as a
business matter, Lord Simon, in the majority, stressed that the advertising
was for commercial advantage and that the transaction took place in a
setting of business relations.
However, even in a commercial transaction, the parties may expressly

exclude any intention to enter into legal relations. In Rose and Frank Co v
JR Crompton and Brothers Ltd,18 the parties entered into an agency
arrangement for the sale of tissues, which was clearly a commercial
transaction. The following provision was included in the agency
arrangement:
This arrangement is not entered into, nor is this memorandum

written, as a formal or legal agreement, and shall not be subject to
legal jurisdiction in the Law Courts either of the United States or
England, but it is only a definite expression and record of the
purpose and intention of the three parties concerned, to which they
each honourably pledge themselves …
Because of this ‘honourable pledge clause’, as it was called, it was held

that the arrangement was not a binding contract. But that conclusion
applied only to the arrangement to which it was expressly stated the
clause should apply. The presumption that legal relations were intended
came into effect again when subsequent orders were given and accepted,
without any such ‘honourable pledge’ clause, and so binding contracts
were formed.
It should be noted that there is a rule of public policy that an

(p. 106)
agreement purporting to oust the jurisdiction of the courts is ‘illegal’ and

void. How is this to be reconciled with Rose and Frank’s case? The
answer seems to be that any attempt to set up another contract-enforcing
authority to the exclusion of the courts is void, but there is nothing
contrary to public policy in an agreement that the transaction should not
be enforceable at all, by anyone. As Scrutton LJ said in the Court of
Appeal in Rose and Frank’s case, the parties may ‘exclude all idea of
settling disputes by any outside intervention …’19 But, to avoid the public
Page 5 of 12


policy ban, it is probably necessary that the agreement, like that in Rose
and Frank, should not be enforceable, even by the private sanctions of an
association with which the defaulting party has contracted.20
(a) Letters of comfort
A modern development is the use by business people of ‘letters of

comfort’. These appear usually to take the form of encouragement to a
lender to advance money to a third party. They are frequently, and
perhaps deliberately, phrased in equivocal and ambiguous language, and
fall short of being a guarantee. In Kleinwort Benson Ltd v Malaysia
Mining Corp Bhd,21 the claimants agreed to make a loan of £10 million to
Metals Ltd, a wholly owned subsidiary of the defendants. The defendants
had declined to guarantee repayment by Metals Ltd but offered instead a
letter of comfort to the claimant. In that letter, the defendants stated that
it was their ‘policy to ensure’ that Metals Ltd was at all times in a position
to meet its liabilities. Hirst J held that, in a commercial banking
transaction, this amounted to an undertaking, and therefore that there
was a contract between the claimants and defendants. However, the
Court of Appeal held that, on a proper interpretation of the document, the
defendants were at liberty to change their ‘policy’ at any time, and did
not intend to be contractually bound to keep that policy in place. As a
result, the very serious consequences of the repudiation by the
defendants of any ‘moral responsibility’ were not a matter for the court.
Clearly, whether or not there is a binding contract is a question for the

courts to decide on the particular facts of a case. This was recognised
more recently in the Court of Appeal by Maurice Kay LJ, who said: ‘I
regard a letter of comfort, properly so called, as one that does not give
rise to contractual liability. The label used by the parties is not necessarily
determinative. It is a matter of construction of the document as a
whole.’22
(b) Letters of intent
Slightly different, perhaps, is a ‘letter of intent’. Such letters envisage the

possibility of later entering into a contract, but may be expressly stated to
be ‘subject to contract’, such that there is as yet no binding agreement.23
However, where the envisaged transaction has then been performed on
both sides, it will often be ‘unrealistic’ to argue that there was no
intention to enter into legal relations.24 This has been confirmed by the
Supreme Court in RTS Flexible (p. 107) Systems Ltd v Molkerei Alois
Müller GmbH & Co KG (UK Productions).25 The claimant, RTS, was
negotiating a contract for the construction and installation of equipment
to be used by Müller. Detailed negotiations took place, and work began on
the basis of a letter of intent. The letter of intent expired, but RTS
continued to supply the goods and services to Müller, who paid some, but
not all, of the envisaged contract price. Although the original negotiations
were said to be ‘subject to contract’, the Supreme Court pointed out that
any intention not to be bound before signature could be ‘waived’.26 A
Page 6 of 12


‘subject to contract’ clause is no more than an indication that, determined

objectively, the parties do not intend to create legal relations until the
contract is signed. The Supreme Court held that the parties’ own conduct
indicated that they must have intended to create legal relations, and no
longer required an executed and signed contract. The Supreme Court
Justices found that ‘[a]ny other conclusion makes no commercial sense’,
and that ‘the reasonable, honest businessman … whether he was an RTS
man or a Müller man … would have concluded that the work should be
carried out for the agreed price on the agreed terms … without the
necessity for a formal written agreement, which had been overtaken by
events.’27
(c) Trade unions
One common exception to the principle that an intention to create legal

relations is presumed in the context of commercial agreements involves
trade unions. Collective agreements between trade unions and employers
do not give rise to legal relations. This was recognised at common law,28
and by statute it is now ‘conclusively presumed’ that this is the case,
unless the agreement is in writing and states that the parties intend that
the agreement should be a legally enforceable contract.29
3 Borderline transactions
It can sometimes be difficult to determine which presumption

should apply, in which case the court can only rely on principles of
interpretation. In Blue v Ashley,30 the defendant, the founder of Sports
Direct, said that he would pay the claimant, a financial consultant, £15
million if Sports Direct’s share price reached £8 per share. The
agreement had been made in a pub after a large amount of alcohol had
been consumed. Was this a commercial transaction, or one made in a
social setting? Without referencing either presumption, the judge held
that there was no intention to create legal relations. While the pub visit
had a business purpose, that purpose was for the claimant and defendant
to meet some investment bankers on behalf of Sports Direct, not to
negotiate a contractual bonus for the claimant. Moreover, the
conversation between the parties that evening had been light-hearted and
jocular, ranging from the performance of Newcastle United FC (which the
defendant owned) to ‘banter’ about the defendant’s wealth. This seems
inconsistent with a serious intention to create legal relations concerning
such large sums. Moreover, the agreement lacked commercial sense,
since it was (p. 108) not clear that the claimant could have taken any
steps which would have any significant effect on Sport Direct’s share
price. Leggatt J unsurprisingly concluded that any offer made by the
defendant was not intended to be legally binding.
In Preston v President of the Methodist Conference,31 Baroness Hale

disagreed with the other Justices of the Supreme Court on the question of
whether there was an intention to create legal relations, and therefore a
contract, between a Methodist priest and her church. The majority held
Page 7 of 12


that there was no intention to create legal relations. Lord Sumption, who
gave the leading judgment, said that ‘[t]he question is whether the
parties intended these benefits and burdens of the ministry to be the
subject of a legally binding agreement between them’, and that this
required the court to ‘examine the rules and practices of the particular
church and any special arrangements made with the particular
minister’.32 This involves a very fact-specific inquiry into the nature of the
particular relationship, with little help from any ‘presumption’ either way.
Baroness Hale, on the other hand, thought that ‘it would be very odd
indeed if a minister who was not paid her stipend or was threatened with
summary eviction from her manse could not rely upon the terms of her
appointment either to enforce the payment or to resist a possession
action’33 and that therefore an intention to create legal relations should
at least be presumed.
4 The future of intention to create legal relations
The lack of unanimity in cases such as Esso Petroleum Ltd v

Commissioners of Customs and Excise, and Preston v President of the
Methodist Conference highlights that it will not always be easy to decide
whether or not an intention to create legal relations is present in
particular disputes. Another example is Modahl v British Athletic
Federation,34 where Diane Modahl, an international 800-metre runner,
successfully argued that there was a contract between her and the British
Athletic Federation when Modahl accepted an invitation from the
federation to run on its behalf. Nevertheless, there was a strong dissent
from Jonathan Parker LJ in the Court of Appeal, who could not discern
any intention to create legal relations.
Such decisions highlight some of the difficulties that arise from the
doctrine of intention to create legal relations. As a result, some have
contended that it should be abolished in its entirety. This is highly
unlikely to happen, and would only shift the same issue to the prior
question of whether the offer or acceptance was intended to be legally
binding, rendering that stage of analysis more uncertain. Indeed, it is
perhaps more likely that intention to create legal relations takes on a
larger role as a result of the loosening of the requirements of
consideration,35 although this would still leave the problem of how to deal
with gratuitous promises. The current, orthodox approach is likely to
prevail for some time to come. Both consideration and intention to create
legal relations are required for a binding contract. The latter will
essentially continue to keep contract law out of domestic arrangements,
but make sure it applies to commercial agreements, unless an objective
interpretation of the particular facts of a case suggests otherwise.
(p. 109) Question
In Baird Textiles Holdings Ltd v Marks & Spencer plc, Mance LJ said:
Page 8 of 12


[59] For a contract to come into existence, there must be both

(a) an agreement on essentials with sufficient certainty to be
enforceable and (b) an intention to create legal relations.
[60] Both requirements are normally judged objectively.

Absence of the former may involve or be explained by the latter.
But this is not always so. A sufficiently certain agreement may
be reached, but there may be either expressly (i.e. by express
agreement) or impliedly (e.g. in some family situations) no
intention to create legal relations.
Should an intention to create legal relations always be assessed

objectively, and should it be presumed in some contexts?
For guidance on how to answer this question visit the Online

resources at www.oup.com/uk/davies2e/
Here you will also find links to the key cases in this chapter, multiple
choice questions with instant feedback, and example essays from
students which have been ‘marked’ by the author.
Further Reading
B Hepple, ‘Intention to Create Legal Relations’ (1970) 28 CLJ 122
(especially 127–37).
Argues that there is no need for a requirement of ‘intention to create

legal relations’ and that, where there is offer, acceptance, and
consideration, some bargains are not enforceable for policy reasons. (NB:
this article pre-dates the Trade Union and Labour Relations
(Consolidation) Act 1992, s 179.)
S Hedley, ‘Keeping Contract in its Place—Balfour v Balfour and the

Enforceability of Informal Agreements’ (1985) 5 OJLS 391.
Criticises ‘intention to create legal relations’ as obscuring the true

reasons for judges’ decisions. Contends that the cases on ‘intention to
create legal relations’ essentially mean that where the parties were
dealing at arm’s length, promises will generally be enforced; but in
domestic contexts, contractual liability will be imposed only if the party
seeking enforcement has already performed one side of the bargain and
is simply seeking reciprocity.
Page 9 of 12


M Freeman, ‘Contracting in the Haven: Balfour v Balfour Revisited’ in R

Halson (ed), Exploring the Boundaries of Contract (Ashgate, 1996).
Criticises ‘intention to create legal relations’ as failing to promote

personal autonomy, contrary to developments in family law, and
problematic in its approach towards women.
M Keyes and K Burns, ‘Contract and the Family: Whither

Intention’ [2002] Melbourne University Law Review 577.
Criticises the justifications given for treating domestic transactions

differently from commercial transactions in Balfour v Balfour, and argues
that contract law’s policy of non-intervention in family life is contrary to
developments in estoppel and family law.
P Giliker, ‘Taking Comfort in Certainty: To Enforce or Not to Enforce the

Letter of Comfort’ [2004] LMCLQ 219.
Argues that it is commercially desirable for letters of comfort not to be

enforced, and that the different approach in France should not be
followed.
P Saprai, ‘Balfour v Balfour and the Separation of Contract and

Promise’ [2017] Legal Studies 1.
Considers the implications of the doctrine of intention to create legal

relations on theories of contract as promises.
Notes:
1 See Chapter 12.
2 [2010] UKSC 14, [2010] 1 WLR 753 [45].
3Novus Aviation Ltd v Alubaf Arab International Bank BSC [2016] EWHC
1575 (Comm) [54]–[59] (Leggatt J).
4 [1919] 2 KB 571, CA.
5 [1969] 1 WLR 328, CA.
6 Merritt v Merritt [1970] 1 WLR 1211.
7 [2010] UKSC 42, [2011] 1 AC 534.
8 Ibid, [70].
9 Parker v Clark [1960] 1 WLR 286 (Devlin J).
10 Simpkins v Pays [1955] 1 WLR 975 (Sellers J).
11Radmacher v Granatino [2010] UKSC 42, [2011] 1 AC 534 [142] (Lady

Hale).
Page 10 of 12


12Snelling v John G Snelling Ltd [1973] QB 87 (discussed further in

Chapter 10, Section 6(c)).
13Although there must first be ‘an agreement on essentials with sufficient

certainty to be enforceable’, per Mance LJ in Baird Textiles Holdings Ltd v
Marks & Spencer plc [2001] EWCA Civ 274, [2002] 1 All ER (Comm) 737
[59], discussed in Chapter 7, Section 2(e)(i).
14 See Chapter 13, Section 3.
15This might also explain the importance placed on the fact that the
Carbolic Smoke Ball Co deposited £1,000 at the Alliance Bank in Carlill v
Carbolic Smoke Ball Co [1893] 1 QB 256, discussed in Chapter 4.
16Edwards v Skyways Ltd [1964] 1 WLR 349, 355 (Megaw J); Attrill v
Dresdner Kleinwort Ltd [2013] EWCA Civ 394, [2013] 3 All ER 607 [79]–
[81] (Elias LJ).
17 [1976] 1 WLR 1.
18 [1925] AC 445.
19 [1923] 2 KB 261.
20 Baker v Jones [1954] 1 WLR 1005.
21 [1989] 1 All ER 785.
22Associated British Ports v Ferryways NV [2009] EWCA Civ 189, [2009]

1 Lloyd’s Rep 595 [24].
23For further consideration of agreements said to be ‘subject to contract’,

see Chapter 5, Section 5.
24G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25, 27
(Steyn LJ).
25 [2010] UKSC 14, [2010] 1 WLR 753.
26 Ibid, [86]–[88].
27 Ibid, [86].
28 Ford Motor Co Ltd v AEF [1969] 1 WLR 339.
29 Trade Union and Labour Relations (Consolidation) Act 1992, s 179.
30 [2017] EWHC 1928 (Comm).
31 [2013] UKSC 29, [2013] 2 AC 163.
32 Ibid, [26].
33 Ibid, [45].
Page 11 of 12


34 [2001] EWCA Civ 1447, [2002] 1 WLR 1192.
35 See eg Chapter 7, Section 2(e)(ii).
Page 12 of 12


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8.

Intention to create legal relations

JC Smith's The Law of Contract (2nd edn)

Publisher: Oxford University Press Print Publication Date: Apr 2018

8. Intention to create legal relations

Chapter: (p. 102) 8. Intention to create legal relations

Author(s): Paul S. Davies

• Intention to create legal relations is an essential and distinct

For a contract to be formed, the parties must intend to create legal

Whether there is a binding contract between the parties and, if so,

Assessing the parties’ words and conduct to see whether there is an

(p. 103) 1 Domestic and social transactions

Imagine the following exchange. A says to B: ‘I will host the book

In a purely domestic or social transaction (like the arrangements for the

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

In another case, Jones v Padavatton,5 a mother promised her daughter

Balfour v Balfour and Jones v Padavatton are leading examples of how

However, even the leading decision of Balfour v Balfour is perhaps close

This is an area where it is difficult to lay down precise rules. However, it

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

Binding contracts have also been recognised between spouses regarding

Commercial transactions are considered in a different manner

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

However, even in a commercial transaction, the parties may expressly

This arrangement is not entered into, nor is this memorandum

Because of this ‘honourable pledge clause’, as it was called, it was held

It should be noted that there is a rule of public policy that an

agreement purporting to oust the jurisdiction of the courts is ‘illegal’ and

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

(a) Letters of comfort

A modern development is the use by business people of ‘letters of

Clearly, whether or not there is a binding contract is a question for the

(b) Letters of intent

Slightly different, perhaps, is a ‘letter of intent’. Such letters envisage the

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

‘subject to contract’ clause is no more than an indication that, determined

(c) Trade unions

One common exception to the principle that an intention to create legal

It can sometimes be difficult to determine which presumption

In Preston v President of the Methodist Conference,31 Baroness Hale

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

4 The future of intention to create legal relations

The lack of unanimity in cases such as Esso Petroleum Ltd v

(p. 109) Question

PRINTED FROM OXFORD LAW TROVE (www.oxfordlawtrove.com). © Oxford University Press,

Subscriber: City University of London; date: 07 June 2021

[59] For a contract to come into existence, there must be both

[60] Both requirements are normally judged objectively.

Should an intention to create legal relations always be assessed

For guidance on how to answer this question visit the Online

Argues that there is no need for a requirement of ‘intention to create

S Hedley, ‘Keeping Contract in its Place—Balfour v Balfour and the