Intention / Vagueness +

Certainty.

For contract…
• INTENTION TO CREATE LEGAL
RELATIONS

• Domestic/ social arrangements

• Intention of the parties objectively
assessed – do not intend agreement
to have legal consequences

• Public policy – law of contract

should not intervene in domestic
situations as courts would be
swamped by trifling claims.
Balfour v Balfour
• The Plaintiff and the Defendant were
a married couple.  The Defendant
husband and the Plaintiff wife lived
in Ceylon where the Defendant
worked.  In 1915, while the
Defendant was on leave, the couple
returned to England.  When it was
time to return to Ceylon, the Plaintiff
was advised not to return because of
her health. 
Contd…
• Prior to the Defendant returning, he
promised to send the Plaintiff £30
per month as support.  The parties"
relationship deteriorated and the
parties began living apart.  The
Plaintiff brings suit to enforce the
Defendant"s promise to pay her £30
per month.  The lower court found
the parties" agreement constituted a
contract.   
Contd…
• Issue. Does the husbands
promise to pay £30 per month
constitute a valid contract
which can be sued upon?
Contd…
• There exist certain agreements
which do not result in contracts
within the meaning of the term
‘contract’ in our law. For
example- two parties agree to
take a walk together, there is
an offer and acceptance of
hospitality.
Contd…
• It is quite common, and it is the natural
and inevitable result of the relationship of
husband and wife, that the two spouses
should make arrangements between
themselves for allowances, by which the
husband agrees that he will pay to his wife
a certain sum of money, per week, or per
month, or per year,
Contd…
• to cover either her own expenses or
the necessary expenses of the
household and of the children of the
marriage, and in which the wife
promises either expressly or
impliedly to apply the allowance for
the purpose for which it is given. To
my mind, those agreements, or many
of them, do not result in contracts at
all.
• Reasoning:
• Prevent unnecessary litigation
• Keep law out of marriage relationship

• Rule creates presumption that parties in

domestic/social agreements do not intend
to create legal relations.

• Conversely

• Presumption in commercial agreements is

parties DO intend to create legal relations.
 Initial presumption based on policy
h/w parties intentions are relevant to
the rebuttal of the presumption.

• Generally in domestic/social
agreements parties will have no
discernible intention one way or
other.
• Difficult to rebut due to strength of
initial presumption
• Clear evidence of contrary intention
must be provided.
• Husband + Wife

• Balfour v Balfour – presumption applicable

where parties are not separated and living
together amicably.

• Merritt v Merritt
• In 1941, the Merritt couple married and
loaned money from the bank for them to
construct their house. The house was
owned by Mr Merritt, but the couple shared
on the paying their loan, and was only
made a conjugal property in 1966. 
Contd…
• Nonetheless, the couple
decided to separate and Ms
Merritt agreed to continually
pay for the loan of the house
and Mr Merritt promised to
transfer the sole ownership of
the property to Ms Merritt once
it has been fully paid. 
Contd…
• This agreement was made into writing, but
when the time came that the house
deemed to be transferred to Ms Merritt, Mr
Merritt refused to do so.

• Parties who have separated are deemed to

bargain keenly therefore there was
intention to create legal relations.

• Applicable to cohabitees married or

otherwise.
• Agreements b/w parents + children

• Jones v padavatton
• Mother persuaded D to give up work + read
for English Bar by promising $200
maintenance per month
• Agreement later varied mother bought
house + for her to live rent room and
maintain herself by renting other rooms.
• They fell out + mother sought possession
of house
• Daughter claimed contractual right to
remain in the house.
• COA – No intention to create legal
relations.
• 2 different views:

• Danckwerts LJ: family arrangement

depending on good faith of the promises
not intended to be rigid contractual
agreement.
• Fenton – Atkinson LJ : they placed trust in
one another to honour promises.

• Alternatively:

• Salmon LJ: Neither could intend that D

should have no legal right to receive nor M
no legal obligation to pay- but agreement
lacked certainty in relation to its duration.
• Clear implication that studies should be
completed w/n reasonable time.
• Social arrangements

• Lens v Devonshire Social Club

• Winner of competition at golf club
could not sue for prize as no one
intended entry to competition would
give rise to legal consequences

• O Brien v MGN Ltd

• Competitions regularly featured in
newspapers can give rise to legal
relations b/w organiser +
participants.
• Simpkins v Pays

• Competition entered into b/w Def,

granddaughter + lodger intended to
create legal relations as there was
mutuality of agreement b/w the
parties.
• Parties acted in reliance of
agreement by sharing costs of entry.
• Agreement not related to running of
household.
• Entered competition w/ expectation
that winnings would be shared
amongst them.
• Coward v Motor Insurance Bureau.

• A gave B lift to work on motor cycle.

• B contributed to expenses.
• Issue: Did A carry B for a reward?
• Held No- sharing lifts to work = widespread
practice.
• In absence of contrary evidence acts
reluctant to conclude lifts to work in
exchange for daily/weekly sum involved
legal contractual relationship.
• Hazards of everyday life e.g shift change,
holidays, overtime, or incompatibility
arising meant unlikely one legally bound
to carry + other to be carried to work.
• Presumption rebutted by
contrary intention (objective)

• 3 important factors include:

• Business Context- Snelling v
John G Snelling
• Detrimental reliance on the
agreement – Parker v Clarke
• Certainty – Vaughn v Vaughn
Commercial Agreements
• Esso petroleum v Commissioners of
Customs + Excise
• Esso supplied garages with world
cup coins, 1 to be given away w/
every 4 gallons of petrol.
• C + E sought purchase tax on coins
• Majority of HOL held ItCLR.
• Coins supplied as a matter of
contractual obligation.
• Esso envisaged bargain b/w garage
owner + customer
• Reasoning:

• Whole transaction took place in

commercial setting
• Undesirable to allow commercial promoter
to claim action was a mere puff
• Coins of little value h/w contemplated to
be attractive to motorists + result in large
commercial advantage in running scheme.

• Viscount Dilhorne dissenting:

• Did not regard offer of a free coin a
business matter.
• Rebutting the Presumption:

• Express stipulation of the parties - Honour

clause
• Rose + Frank Co v J R Crompton + Bros
• Stated agreement not entered into as a
formal/ legal agreement + not subject to a
definite expression + record of purposes +
intention of parties.
• Not legally binding as not intended to have
such effect.
• Clause interpreted restrictively + clear
words must be used to create HC.
• Courts must consider as matter of
construction whether effect of words
used rebuts presumption.

• Edwards v Skyways
• Def employers promised to make ex
gratia payment to employees made
redundant.
• Later alleged not binding
• Held: ex gratia does not mean that
agreement is to be w/o legal effect,
merely indicate party agreeing to
pay does not admit any pre existing
contractual liability to do so.
VAGUENESS + CERTAINTY OF AGREEMENT

Parties have expressed themselves in vague,

incomplete or uncertain terms –
Is the contract still enforceable?

Courts function not to make contract b/w

parties but to interpret contract + grant
remedies where appropriate.

Alternatively:
Courts would face back lash from
commercial community if they denied legal
effect to agreement b/w parties.
• Courts must ask: Is the
agreement sufficiently certain?
• Involves question of degree
• Case law inconsistent as some
judges more willing to find
existence of contract despite
lack of certainty.