INTRODUCTION

Intention to create legal relation

In a law of contract known’s, Williston argued that animus contrahendi 1as a concept of
intention to create legal relationship 2The parties must intend to enter into legally binding
arrangement in which the rights and obligations of the agreement are enforceable. Or the parties
must consider the agreement to be legally binding. offer and acceptance, an agreement must be
characterized by intention. The parties must have intended to create legal relations. Intention is
one of the basic elements of a contract as common law. An agreement is unenforceable unless
the parties there to intend such a consequence, that agreement will not be regarded by the courts
as a contract. The law divides the agreement into two groups, social & domestic agreements and
business agreements. The Indian contract act 1872 3does not have any express provision to
define the concept of intention to create legal relationship between the parties . but over the years
there have been several national and international precedents wherein it was held that to create a
binding effect over a contract , parties must have an intention to create legal relationship.

The importance’s of the intention in creating legal relationship its be material aspects that govern
the concept of intention is

i) The parties cannot sue each other in the absence of intention

ii) If the intention to create legal relations is absent then the contract is a mere promise

iii) The contract will not have a binding effect if there is no intention to create legal
relations

The sources of contract law have laid down two test to determine the existenceof an intention to
create legal relation ,

1) OBJECTIVE TEST in the court will from an opinion based on how a reasonable person
would think , the types of circumstances at that time and what was the intention of the parties.

2) REBUTTABLE PRESUMPTION in several cases such as family , social agreement

TEST OF OBJECTIVITY

The test of contractual relations should always be objective and not subjective , in the objectivity
test , it doesn’t matter what parties intend but what a reasonable man at the time creating a
1
Maxim animus contrahendi
2
The book to intention to crate legal relation H.k lucke
3
The Indian contract act 1872
4
https;//advocatespedia.com/INTENTION TO CREATE LEGAL RELATION
contract will think . The court will look at the perspective of a reasonable man and not the intent
of the parties. The case of simpkins vs pays (1955) 5a mother , her daughter and their paying
guest decided to participate in crossword puzzles, all on the name of mother , the express for the
same were contributed by all the women at that time , without any obligation . they won one of
the games , but the mother was reuctant to share the prize money with her daughter and the
paying guest , The court in this case held that any prudent man considering this situation would
have thought that there must be an intention to share the prize . therefore the mother was bound
to share the prize with the daughter and the paying guest.

Social and domestic agreements

This group covers agreements between family members, friends and workmates. Or the husband
and wife The law presumes that social agreements are not intended to be legally binding. In the
case of Balfour v Balfour (1919) AC 6the husband agreed to pay his wife monthly support until
she rejoined him in Sri Lanka. The reunion did not eventuate and the husband failed to honor the
agreement. The wife sued for breach of contract but was unsuccessful. The court held that that,
in the absence of an express intention, the presumption was clearly against enforceability. Their
agreement involved matters of a social or domestic nature and there were no facts to rebut the
presumption that applies. Ascertainment of intention

The exceptions the presumption against a contractual intention will not apply where the spouses
are not living together in amity at the time of the agreement

Merritt v Merritt (1969) 7Mr. Merritt had left his wife to go and live with another woman, and
subsequently met his spouse to resolve various financial arrangements. Sitting in Mr Merritt’s
car, they decided that he would pay his wife £40 a month, out of which she was to pay the
outstanding mortgage payments on their house; he would transfer the house to her sole
ownership when the mortgage was paid off. Mrs. Merritt then refused to get out of the car until
her husband put the agreement in writing. Eventually, he signed a piece of paper stating what
they had agreed. The wife duly paid off the mortgage, but the husband then refused to transfer
ownership of the house to her. The Court of Appeal upheld the wife’s claim. Lord Denning
pointed out that the presumption. It was held that when the agreement was made the husband and
wife were no longer living together, therefore they must have intended the agreement to be
binding as they would base their future actions on it. The intention was evidenced be writing.
The husband had to transfer the house to the wife.

Business and commercial agreements.

5
The case of simpkinsvs pays (1955)
6
Balfour v Balfour (1919) AC
7
Merritt v Merritt (1969)
In business agreements the presumption in that the parties intended to create legal relations and
make a contract. These presumptions can be rebutted my inclusion of an express statement to
that effect in the agreement.

Commercial agreements

If an agreement ia a commercial one the parties will normally intend that it to be legally binding.
Though it will not be presumed that there is such an intention, it will normally not be difficult for
the plaintiff to prove this element. Where the parties to a commercial agreement do not intend to
be binding, they may demonstrate this by including an “honor clause “indicating that the
agreement is binding in honor only – not legally. In the same case as the one referred

In Rose and Frank Co v JR Crompton and Bros Ltd (1925) HL 8, the court saw no public
policy why it should not give effect to an express intention not to form a legal relationship.
Nevertheless, the words used in the contract must be clear and unambiguous.

THE MAIN BODY

The question will be to decribed how intention to create legal relationship affects contract

INTENTION AND CONSIDARETION

The genal rule is that an agreement without consideration is void under section section 25 of the
contract act (cap 345 R.E 2019) ,9 consideration center on exchange of value must be given value
embedded in good or services,As laid down earlier that many countries have recognized
‘intention to create legal relations’ as separate requirement for enforcing an otherwise valid
contract. example in that category, which requires this along with the tri-requirement of offer,
acceptance and consideration adopted by lord Akin in Balfoul vs Balfoul Hepple argue that many
domestic agreement may involve mutual promise of the one part given as the price for the other
so that in other concept of bargain is central to the test of enforceability of contract 10 and the
vital element Professor Samuel Williston in the U.S. have criticised this view emanating in
England. He opined that the separate element of intention is foreign to the common law,
imported from the Continent by academic influences in the nineteenth century and useful only in
systems which lack the test of consideration to enable them to determine the boundaries of
contract.11 The insistence on a requirement of intention in addition to the other elements of a
8
The case of Rose and Frank Co v JR Crompton and Bros Ltd (1925) HL
9
section 25 of the contract act (cap 345 R.E 2019) ,
10
English law dictionary
11
Author Professor Samuel Williston in the U.S
validly formed contract (offer, acceptance, consideration) is unnecessary. This view has been
taken not only by Williston in U.S. but also Hepple in the UK. Hepple argues that the problems
with this area derive largely from a failure to take account of the particular approach to
consideration adopted by Lord Atkin in Balfour v. Balfour. Hepple argues that many domestic
agreements may involve mutual promises, ‘and yet not be contracts because the promise of the
one party is not given as the price for the other’. In other words, the concept of the bargain is
central to the test of enforceability of contracts and the vital elements in the identify, 12

INTENTION OF THE PARTIES

The parties terms contract presupposes the existences of two sides and parties , one proposing the
other accepting its another commonly referred as offeree and offeror it’s a parties.The parties in
element of valid contract in basic for intention to create legal relation . The construction of a
contract has to determine the common intention of the parties or, if no such intention can be
determined, the meaning that reasonable parties of the same kind as the parties would give to it
in the same circumstances, taking into account,in particular , the nature and purpose of the
contract , in the contract of the parties and the meaning commonly given to contract term and
expression in the trade concerned. The intention to create legal relation with the both parties
must intend to enter into a contract legally binding arrangement in which the rights and
obligation of the agreement are enforceable.

INTENTION OF AGREEMENT (OFFER AND ACCEPTANCE)

The intention to create legal relations is one of the necessary element in the formation of a
contract , a long side offer and acceptance and also consideration . offer its is a set of term
moving from one party to another with intention of the former to be bound by them , see the
section 2 (1) of the contract acts (cap 345 R.E 2019) 13, Acceptances this is the external
manifestation of assent by the the offeree , the section 2 (1)(b) of the contract act (cap 345 R.E
2019) ,14 However in certain cases its possible to have a intention binding a contract without a
matching offer and acceptance , the section 9 of the contract act (cap 345 R.E 2019).15

12
Author Hepplein the U.K
13
section 2 (1) of the contract acts (cap 345 R.E 2019)
14
section 2 (1)(b) of the contract act (cap 345 R.E 2019) ,
15
section 9 of the contract act (cap 345 R.E 2019).