Intention to create legal relations Definition The parties

Intention to create legal relations Definition: The parties to a contract must intend the agreement to be legally binding. (page 16)

Key Points 1. The law presumes that where there is a commercial (business) arrangement between the two parties there will be an intention to be bound a legal contract (an intention to create legal relations). 2. This is called a Commercial agreement. 3. It should be easy to spot this as it will be a company or business trying to sell to either an individual or other company. 4. The law also presumes that where people make arrangements between family or friends then they DO NOT wish to form a legal contract. 5. This is called a Domestic arrangement. 6. It should be easy to sport as there will be no companies or businesses involved or the persons are closely related.

VERY IMPORTANT - 1. The law allows both domestic and commercial presumptions over intention to create legal relations to be challenged (rebutted). 2. This is by using evidence to show there was an intention to create legal relations, in a case of a domestic agreements. 3. OR there wasn’t an intention to create legal relations, in a commercial agreements.

Commercial agreements that are not an Intention to create legal relations • There are only two examples you need to know 1. Where the party offering the goods or service says in writing that there is no commercial agreement about all or part of the offer then this will mean there is no contract. 2. A contract to sell land, and therefore a house, has to be evidenced in writing to be legally valid under the Law of Property Act 1925. If there is no evidence then it presumed there is no commercial agreement.

Domestic agreements that are an Intention to create legal relations • There are three exceptions you need to know about: 1. Agreements made linked to a marriage break up 2. Formal Agreements made between parents and children: For such an agreement to be a contract there needs to be something much more formal, such as a deed (a formal written and witnessed document). 3. Agreements based on social arrangements: an agreement to share winnings in a lottery syndicate.

Task 1. Create two situations from your own knowledge where there is an intention to create legal relations in a commercial agreement. 2. Do the same activity for domestic arrangements which do not create an intention to create legal relations. 3. Write down an example from your own experience of a situation that rebutts the presumptions of a commercial agreement creating an intention to create legal relations. 4. Write down an example from your own experience of a situation that rebutts the presumption of a domestic agreement stopping an intention to create legal relations. 5. Complete the essay on page 19.