Unit 4 – Other Formative Requirements: Intention, Certainty, Completeness

Intention to Create Legal Relations - Family Relations

Balfour v Balfour Domestic agreements outside the scope of courts (public policy)
[1919] Husband & wife, support payments
Establishes rebuttable presumption that domestic agreements are NOT
intended to form legal relations
Jones v Padavatton Domestic agreements outside the scope of courts (public policy)
[1969] Mother & adult daughter, property
-To rebut the presumption: clear evidence is required of: (1) intention to give
rise to legal consequences; (2) reliance on the agreement; (3) certainty of terms
-This agreement was not binding, it lacked intention and certainty
Merritt v Merritt Rebuts presumption; after marriage breakdown, given written intent, parties
[1970] intended to form legal relations
Darke v Strout Rebuts presumption; after marriage breakdown, parties intended to form legal
[2003] relations
Consideration found, woman gave up statutory rights to maintenance

Intention to Create Legal Relations - Commercial Agreements

-Presumption of an intention to create legal relations in commercial agreements
-Mere puff is not enforceable because it is not intended to be taken literally and is not promissory in
nature
Edmonds v Lawson If contracting parties are dealing at arm’s length (no existing ties of family,
[2000] friendship, corporate structure), court will find a contractual intention
Klienwort Benson Comfort letter rebuts intention
Ltd v Malaysia -Comfort letter wording was a statement of policy and was not an intention to
Mining Corporation create legal relations
Berhad
Rose and Frank Co. Honour clause rebuts intention
v J. R. Compton and -Clause (1) excluded the courts, and (2) stated the agreement is binding in
Brothers Ltd honour only
Blue v Ashley Informal setting (pub, drinking, oral contract) – no intention found
[2017]
Macinnes v Gross Informal setting (dinner), subsequent communications indicated formal
[2017] agreement not yet concluded – no intention found

Certainty of Terms

Scammell v Ouston An enforceable contract requires certainty of its terms

[1941] Agreement not enforceable, terms were uncertain, required further agreement
between the parties
If terms uncertain, there is no contract for the courts to interpret; it is not up to
the courts to create terms
Hillas v Arcos If parties have relied on agreement, and there is generally accepted trade usage,
courts will infer a term or find essentials of a contract
-Differs from Scammell v Ouston because the latter was an executory contract;
the former contract had been performed and the option exercised
RTS Flexible Agreement was reached on all terms of “economic significance”, objective
Systems v Molkerei intention of the parties words and deeds suggested they intended to enter a
Alois Muller Gmbh binding contract, despite certain terms not being confirmed.
& Co KG

Complete Agreement

Courtney & No such thing as an agreement to agree; a contract to negotiate is not

Fairbairn Ltd. v enforceable
Tolani Brothers Reasoning: if agreement is incomplete, it is not up to the courts to complete the
(Hotels) Ltd agreement. Nothing to interpret.
Walford v Miles -A lock-out agreement (undertaking not to negotiate with third parties)
could be enforceable if (1) time limit and (2) consideration. Neither was
present.
-No implied term to negotiate in good faith
-Collateral agreement was simply an agreement to negotiate and was therefore
unenforceable
Barbudev v Communication contained the clause “terms to be agreed”, held to be as
European Cable unenforceable as an agreement to agree
Management
Bulgaria
May and Butcher No agreement on prices or dates (language was “to be agreed at the time…”) –
Ltd v R therefore, no contract
Foley v Classique Agreement stated “prices [of petrol] to be determined from time to time” AND
Coaches Ltd contained arbitration clause which related to the subject matter of the
agreement
-Parties behaved as if in a contractual agreement for 3 years
-therefore, valid contract found
Sudbrook trading -If the contractual machinery was simply a means of ensuring a fair price was
Estate Ltd v paid (reversion clause in a lease) and not an essential factor in determining the
Eggleton price, the court may substitutre its own machinery