LAWS 1008 University of South Australia SP2 2019

Contracts A- Study and Reading Guide

Week Four- Intention to create legal relations, Formalities, Capacity
Required Reading
Stewart, Swain and Fairweather, pp75-79, 102-107
Key Cases
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Intention to Create Legal Relations

For an agreement to be legally (rather than just morally) binding, the parties must have an intention
to create legal relations – this means that they intend the promises to be legally enforced. This
intention may not be present in social or domestic contexts.
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Jones v Padavatton [1969] 2 All ER 616 (Salmon LJ at 621)

Family, social and domestic agreements

Husband and wife
Balfour v Balfour [1919] 2 KB 571
Mother and daughter
Jones v Padavatton [1969] 2 All ER 616
Voluntary associations
Cameron v Hogan (1934) 51 CLR 358 (High Court at 370-371)
Government contracts
Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424

Commercial agreements
Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117

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LAWS 1008 University of South Australia SP2 2019

Formalities
Contracts to be made in writing in South Australia
At common law there is no requirement that a contract be in writing to be a valid contract.
Contracts can be oral, written, partly oral and partly written or even formed via conduct. However,
there are a number of statutory exceptions to this general rule.
Examples
 Contracts of guarantee
 Contracts dealing with an interest in land
 Consumer credit contracts
 Building works
We will look at the relevant legislation for each of these examples in the lectures.
The written requirement may refer to the content of the contract as well as, in some instances, the
need for each party’s signature.
Joinder
Depending upon the terms of the relevant statute, it may be possible to satisfy the requirement of
writing if the relevant information is contained in more than one document.

Effect of Non-compliance with Formalities

A failure to comply with formalities may lead to three different outcomes:
a) Contract is Enforceable
b) Contract is Valid but Unenforceable
c) Contract is Void

Capacity
Classes of persons lacking contractual capacity are:
d) Minors
e) The mentally incapacitated
f) The intoxicated