CONTRACT LAW-1

BALFOUR v BALFOUR (1919)

SUBMITTED TO-

ASST. PROF. KHUSBOO CHAUHAN

SUBMITTED BY- SNEHA

4TH SEM B.A.LL.B

DATE- 20th MARCH, 2020

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INTRODUCTION

There is no provision in the Indian Contract Act requiring that an offer or its acceptance
should be made with the intention of creating a legal relationship. But in English Law it is a
settled principle that “to create a contract there must be a common intention of the parties to
enter into legal obligations.” It was pointed out in early case that “contracts must not be the
sports of an idle hour, mere matters of pleasantry and badinage, never intended by parties to
have any serious effect whatsoever.” It is not every loose conversation that is to be turned
into a contract, although the parties may seem to agree.” The case of Balfour has become well
known principle for this. Balfour vs. Balfour is a leading English contract case dealing with
intention to create legal relation theory, relationships, maintenance and marriage in contract
law.

Here the court distinguished the case from Balfour v Balfour1 on the fact that Mr and Mrs
Merritt, although still married, were estranged at the time the agreement was made and
therefore any agreement between them was made with the intention to create legal relations.
The ratio in this case was that Arrangements made between husbands and wives are not
generally contracts as the parties do not intend to be legally bound by the agreements.

Legal intention to form the contract and consideration were two important concepts which
were used to know before starting this case. It is very important to discuss this case whose
principles are propounded till now. Here, I tried to focus on the concept of “intention to
create legal relationship” Mr Balfour and his wife went to England for a vacation, and his
wife became ill and needed medical attention. They made an agreement that Mrs. Balfour
was to remain behind in England when the husband returned to Ceylon (Sri Lanka) and that
Mr. Balfour would pay her £30 a month until he returned. This understanding was made
while their relationship was fine; however the relationship later soured. The lower court
found that there was sufficient consideration in the consent of Mrs. Balfour and thus found
the contract binding, which Mr. Balfour appealed.

CONTRACT - According to sec.2 (h), a contract is defined as an agreement enforceable

before the law. 2

1
Balfour v Balfour 2KB 571 (1919)
2
Indian Contract Act, 1872 section 2(h).

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AGREEMENT - According to sec.2 (e), every promise or set of promises forming
consideration for each other. 3

Domestic arrangements between husband and wife: In Balfour v. Balfour (1919) 2 KB

571, a husband working in Ceylon, had agreed in writing to pay a housekeeping allowance to
his wife living in England. On receiving information that she was unfaithful to him, he
stopped the allowance: Held, he was entitled to do so. This was a mere domestic arrangement
with no. intention to create legally binding relations. Therefore, there was no contact.

INTENTION TO CREATE LEGAL RELATIONS

The Law recognises that often the parties do not intend to create a legally binding contract.
The Law therefore says that there must be an intention to create legal relations and make a
distinction between social and domestic agreement (where the assumptions is that there is no
intention to create legal relations) and commercial and business agreements (where the law
assumes that the parties intend the agreement to be legally binding).

LEGISLATION CITED

Indian Contract Act, 1872

Married Women’s Property Act, 1882

SYNOPSIS OF RULE OF LAW

Agreements between husband and wife to provide monies are generally not contracts
because generally the “parties do not intend that they should be attended by legal
consequences.”

SIGNIFICANCE OF THE CASE

The case is often cited in conjunction with Merritt v Merritt 4 (1970) 2 All ER 760; (1970) 1
WLR 1211. Here the court distinguished the case from Balfour v Balfour on the fact that Mr
and Mrs Merritt, although still married, were estranged at the time the agreement between
them was made and therefore any agreement between them was made with the intention to
create legal relations. Both cases are often quoted examples of the principle of precedent.5

3
Indian Contract Act, 1872 Section 2(e).
4
Meritt v Meritt 2 All ER 760 (1970)
5
Black’s Law Dictionary, p.1059 (5th ed. 1979)

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FACTS OF THE CASE

Mr Balfour was a civil engineer, and worked for the government as the Director of Irrigation
in Ceylon (now Sri Lanka). Mrs Balfour was living with him. In 1915, they both went to
England for a vacation, and his wife became ill and needed medical attention. She had
developed rheumatic arthritis.6 Her doctor advised her to stay in England, because a jungle
climate would be detrimental to her health. They made an agreement that Mrs Balfour was to
remain behind in England when the husband returned to Ceylon (Sri Lanka) and that Mr
Balfour would pay her £30 a month until he returned. For few months, he sent the amount but
later differences arose between them and he stopped paying the amount of maintenance. This
understanding was made while their relationship was fine; however the relationship later
soured. In March 1918, Mrs Balfour sued to keep up with the monthly payments of £30
against her husband to recover the amount of arrears.

PROCEDURAL HISTORY

An additional judge of King’s Bench Division presided by Justice Sargant, held that the
husband was under an obligation to support his wife and there exists a valid contract between
the husband and the wife is valid. The consent of the wife to this arrangement of monthly
transfer was a valid consideration to constitute a binding contract between the parties.

BENCH

Full bench (Lord Warrington, Lord Duke and Lord Atkin)

ISSUES

1. Was Mr Balfour's offer intended to be legally binding?

2. Does the fact that they were husband and wife matter?

JUDGEMENT

The Court of Appeal unanimously held that there was no enforceable agreement, although the
depth of their reasoning differed. Warrington LJ gave his opinion in this manner:

“The matter really reduces itself to an absurdity when one considers it, because if we
were to hold that there was a contract in this case we should have to hold that with
regard to all the more or less trivial concerns of life where a wife, at the request of her

6
Goldman L, et al., eds. Rheumatoid arthritis. In: Goldman-Cecil Medicine. 25th ed. Philadelphia, Pa.: Saunders
Elsevier; (Dec. 31, 2016), https://www.clinicalkey.com.

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husband, makes a promise to him, that is a promise which can be enforced in law. All I
can say is that there is no such contract here. These two people never intended to make
a bargain which could be enforced in law. The husband expressed his intention to make
this payment, and he promised to make it, and was bound in honour to continue it so
long as he was in a position to do so. The wife on the other hand, so far as I can see,
made no bargain at all. That is in my opinion sufficient to dispose of the case.”7

The judgement of lord Warrington was reasonably based on the ‘intention to bargain’. He
contented the need to differentiate this agreement husband and wife from other agreement
which take place on daily basis, a general conversation between husband and wife. He
emphasised that ‘it can only be determined either by proving that it was make in express
terms or that there is a necessary implication from the circumstances of parties, and the
transaction generally, that such a contract was made’.

According to Duke L J, the parties are not yet separated, the promise made is still as husband
and wife.

“In the Court below the plaintiff conceded that down to the time of her suing in the
Divorce Division there was no separation, and that the period of absence was a period of
absence as between husband and wife living in amity. An agreement for separation
when it is established does involve mutual considerations.”

Lord Justice Atkin took a different approach, he mainly focused on the legal relation. He said
that there was no such intention to create legal relations 8 and domestic agreements between
husband and wife cannot turn into a legal or valid contract. According to him, agreements
between husband and wife to provide monies are generally not contracts because generally
the ‘parties do not intend that they should be attended by legal consequences’.

Lord Atkin held that the law of contracts is not made for personal family relationships. As
there was no intent to be legally bound when the agreement was agreed upon, there can be no
legally binding contract. Atkin holds that if the courts were to allow all wives to come to
court when agreements had been broken with their husbands then the courts would be
overrun with frivolous cases.

Lord Atkin explained this principle thus: “There are agreements between parties which do not
result in contract within the meaning of that term in our law. The ordinary example is where
7
Warrington LJ, 2 KB 571, pp.574-575
8
Carlill v Carbolic Smoke Ball Company 1QB 256 (1893)

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two parties agree to take a walk together, or where there is an offer and acceptance of
hospitality. Nobody would suggest in ordinary circumstances that these arrangements result
in what we know as contracts, and one of the most usual form of agreement which does not
constitute a contract appears to be the arrangement which are made between husband and
wife. These arrangement do not result in contract at all, even though there may be what
would constitute consideration for the agreement. They are not contract because parties did
not intend that they shall be attended by legal consequences.”

Warrington, concurring in the result, agreed substantially with Atkin, but added that there
was no bargain of any kind made by Mrs. Balfour sufficient for a binding contract.

In case of Jones v. Padavatton, judges followed that principle laid down in Balfour v. Balfour
that the presumption against the intention to be bound in family matters has not been
rebutted. This view was also propounded in cases like Shadwell v. Shadwell, Jones v.
Padavatton, Pettitt v Pettitt and many other cases.

In the case of (1896 Plate v Durst)9 defendant promised plaintiff £1000 and a diamond ring
if she would remain his domestic servant for 10 years, and she did, but then he claimed the
promise was only in jest. Held that there was a valid contract. “Jokes are sometimes taken
seriously…if such is the case, and thereby the person deceived is led to give valuable
services in the full belief and expectation that the joker at his word, and gave him good
reasons to smile”.

ANALYSIS

The Judgement of Lord Warrington was reasonably based on the ‘intention to bargain’. He
connoted that there is a need to differentiate the agreement between husband and wife which
takes place on general or daily basis. He prominence more on that ‘it can only be
determined either by proving that it was make in express terms or that there is a
necessary implication from the circumstances of parties, and the transaction generally,
that such a contract was made.’ According to him a contract to bind the duty on a party
whatever circumstances arises is not sufficient to decide the situation of the parties and one
can’t decide the outcome of the contract by the positions of parties.

Lord Duke questioned the necessary element of establishing a contract i.e. consideration.
According to him, one has to determine whether there is any evidence of such exchange of

9
Plate v Durst, 32 LRA 404 (1896)

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promises as would make the promise of the husband the basis of valid or legal agreement. He
suggested that ‘it is very difficult to say that whether the relationship of husband and wife is
live and promises are exchanged, they must be consider to be promise of contractual nature.
In order to establish a contract there should be something more than mere mutual promise
having regard to domestic relationship of parties.

Lord Atkin gave a different connotation and said that ‘nobody would suggest in general
situations that those agreements result in what know as a contract, and one of the most usual
form of agreement result which does not consist a contact appears to him be the arrangement
which are made between husband and wife. It is quite general as well as ordinary and it is the
natural and sure result of the relationship of husband and wife, that the two partners can make
arrangements between themselves’. He also justified that the deliberation is obtained for them
is that unconditional love and affection between them which court cannot interrupt. The
unique thing of this case is that Mrs Balfour is suing her husband for the promise which is
promised by him to pay her money £30 as a maintenance under the Contract law and not
under the conjugal rights which was promised by Mr Balfour. The claim was without any
precedent and the judgement will show how unwilling and hesitant they were to extend the
law of contracts into the area of conjugal rights and matrimonial rights and duties of partners.
Lord Warrington and Lord Duke figured out that the relationship between both the parties is
self-enough to displace the inference of contract. Parliament has created the rights and duties
between spouses, and if particular spouse intended to substitute a different scheme they had
to take this very clear. Lord Atkin was of the same view but he relied on the requirement of
‘intention to create legal relationship’ for all contracts. The court in precedents has denied
to enforce an agreement where the parties had intentionally excluded legal sanctions but in
this case for the very first time the court denied liability because the plaintiff could prove that
legal obligation were intended. Balfour v Balfour created a new concept which being a
hindrance for the plaintiff in this case. Lord Atkin’s judgement emphasised on new attention
and the requirement of ‘intention to create legal relationship’ achieved prominence.

In my Opinion mere agreements, or promises, intended to create mere social, political, or

family obligations or obligations of honour, or understood by both parties as a jest, do not
create a contract. There must be an intention to create obligations enforceable between the
parties by legal sanctions. There must be conjugal relations. An agreement intended to create
moral obligations only, and not legal rights or obligations, does not create a contract. When
Mr Balfour promised his wife to pay some amount of money then she took it in a contract

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manner but that was in a usual manner or we can say that a normal or personal conversation
between a husband and wife. If every women start suing their husband on daily normal
promises then there will be never ending disputes will arise in the marriage institution. An
agreement between spouses may consist of mutual promises and yet cannot become a
contract precisely because the promise of one party is not given as price for the other. And if
really Mrs Balfour wants to sue her husband for not giving her the maintenance then she
needs to file the case in terms of conjugal rights, not in the terms of contract.

IMPORTANT CASES CITED

Merritt v Merritt10

Shadwell v. Shadwell11

Jones v. Padavatton,12

Pettitt v. Pettitt13

McGregor v McGregor14

Plate v Durst (1896)15

Gould v Gould16

Banwari Lal v Shukhdarshan Dayal17

Diwell v Farnes (1959)18

RELATION WITH INDIAN CONTRACT

10
Merritt v Merritt 2 All ER 760 (1970).
11
Shadwell v Shadwell (1860) 142 ER 52
12
Jones v Padavatton (1968) 1 WLR 328
13
Pettitt v Pettitt (1970) AC 777
14
MCGregor v MCGregor 35 N.Y.218(N.Y.1866)
15
Plate v Durst, 32 LRA 404 (1896)
16
Gould v Gould 245U.S 151 (1917)
17
Banwari Lal v Shukhdarshan Dayal, AIR 11973 SC 814

18
Diwell v Farnes 1 WLR 624 (1949).

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In Indian law of contract it is still disputable that the requirement of intention to create legal
relation is required or not as in a manner developed in English law. The Supreme Court has
expressed its reservation about the need this separate requirement of “intention to contract”
under the Contract Act. Going by the criticism which is already there in the West, the court
found that it was the necessity of those system where consideration was not a requisite of
enforceability. Thus it is still an open question whether the requirement of “intention to
contract” is applicable under the Indian Contract Act in the way in which it has been
developed in England.

But earlier to this, a limited recognition of the applicability of this principle in India could be
inferred from the decision of the Supreme Court in Banwari Lal v Sukhdarshan Dayal. In
an auction sale of plot of land, a loudspeaker spelling out the terms, etc., of the sale, one of
the statements being that a plot of a certain dimension would be reserved for a Dharamshala
(public inn). Subsequently, that plot was also sold for private purpose. The purchaser sought
to restrain this. CHANDRACHUD J (afterwards CJ) said: microphones…have not yet
acquired notoriety as carriers of binding resentations. Promises held out over loudspeakers
are often claptraps of politics. In the instant case, the announcement was, if at all, a puffing
up of property put up for sale.

In a subsequent case on the subject, the Supreme Court noted the general proposition that in
addition to the existence of an agreement and the presence of consideration there is also the
third contractual element in the form of intention of the parties to create legal relations, and
also noted that this proposition, though accepted in English Law, has not passed
unchallenged. The court than cited the following passage from Cheshire and Fitfoot’s LAW
OF CONTRACT: “…the criticism of it made by Prof. Williston demands attention, not
only as emanating from a distinguished American jurist but intention is foreign to the
common law, imported from the Continent by academic influences to the 19 th century
and useful only in system which lack the test of consideration to enable them to
determine the boundaries of contract.”

AGREEMENTS WHICH ARE NOT CONTRACTS19

19
Indian Contract Act, 1872 Sec 2(e).

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 Agreements in which the idea of bargain is absent and there is no intention to create legal
relations are not contracts. These are:

(a) Agreements relating to social matters: An agreement between two persons to go

together to the cinema, or for a walk, does not create a legal obligation on their part to abide
by it. Similarly, if I promise to buy you a dinner and break that promise I do not expect to be
liable to legal penalties. There cannot be any offer and acceptance to hospitality.

(b) Domestic arrangements between husband and wife: In Balfour v. Balfour (1919) 2 KB
571, a husband working in Ceylon, had agreed in writing to pay a housekeeping allowance to
his wife living in England. On receiving information that she was unfaithful to him, he
stopped the allowance: Held, he was entitled to do so. This was a mere domestic arrangement
with no. intention to create legally binding relations. Therefore, there was no contract.20

Three consequences follow from the above discussion.

To constitute a contract, the parties must intend to create legal relationship.

The law of contract is the law of those agreements which create obligations and those
obligations which have their source in agreement.
Agreement is the genus of which contract. Is the specie and, therefore, all contracts
are agreements but all agreements are not contracts.

A proposal or an offer is made with a view to obtain the assent to the other party and when
that other party expresses his willingness to the act or abstinence proposed, he accepts the
offer and a contract is made between the two. But both offer and acceptance must be made
with the intention of creating legal relations between the parties. The test of intention is
objective. The Courts seek to give effect to the presumed intention of the parties. Where
necessary, the Court would look into the conduct of the parties, for much can be inferred
from the conduct. The Court is not concerned with the mental intention of the parties, but
rather with what a reasonable man would say, was the intention of the parties, having regard
to all the circumstances of the case. For example, if two persons agree to assist each other by
rendering advice, in the pursuit of virtue, science or art, it cannot be regarded as a contract. In
commercial and business agreements, the presumption is usually that the parties intended to
create legal relations. But this presumption is rebuttable which means that it must be shown
that the parties did not intend to be legally bound.

20
Indian Contract Act, 1872

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CONCLUSION
The concept of “intention to create legal relationship”21 is a useful one in case where the
parties make no specific declaration on the matter. But because it has become so prominent
and widely accepted that many cases are decided relying on this principle even when they
have no necessary connection or relation with the doctrine. The result in these cases would
have remain the same if the law lacked requirement of legal relationship requirement which is
introduced by lord Atkin in Balfour v. Balfour.

The judgement given by Lord Atkin is one of that how is most certainly quoted in the
text book and in the following judgements. His judgement clearly identifies the
existence of intention to create legal relationship and then he applies it to the facts of
the case of BALFOUR v BALFOUR. The judgement of other two judges were more
ambiguous. The main problem for Lord Warrington was whether or not it was
possible to apply a contract on the facts of case and while he made reference to
question of whether or not the parties intend to make a bargain which could be
enforced by law to create legal relationship of husband and wife. The judgement of
Lord Duke was based on doctrine of consideration.22 As the law then stood, a wife
has authority, under some situations to pledge her husband credit for sustainable
requirements. In essence, this was the common law remedy available to a wife who
was not support financially by her husband. Thus it was argued on behalf of Mrs.
Balfour that she had supplied consideration for promise to pay £30 a month refraining
from pledging her husband credit for necessaries. However, Lord Duke held that she
has not supplied consideration for her husband promise. His reasons for show
concluding appears to have been simply that the parties were still husband and wife at
the time the promise was made and this brings us back to the point that the reason for
the failure of claims is to be found in this fact that the parties were husband and wife,
and had not separated, at the time the promise was made.

REFERENCES
21
Errington v Errington Woods [1952] 1 KB 290
22
Currie v Misa LR 10 Ex 893(1875)

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Hepple, B. A. “Intention to create Legal Relations”. The Cambridge Law Journal 28.1
(1970): 122- 137.
Chloros, A. G. “The Intention to Create Legal Relations”. The modern Law Review
23.3 (1960): 331-334
Unger, J. “Intent to Create Legal Relations, Mutuality and Consideration”. The
Modern Law Review 19.1 (1956): 96-100
Hedley, Stephen. “Keeping Contract in Its Place—Balfour v Balfour and the
Enforceability of Informal Agreements”.Oxford Journal of Legal Studies 5.3 (1985)
391—415.
Singh, Avtar. Law of Contract.11th ed. Lucknow: Eastern Book, 1985.
Burrows, A.S. A Casebook on Contract.5th ed. Oxford: Hart Pub., 2011.

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