Intention to create a legal relationship

By:- Khushi Mittal

Offer: In law of contract an offer is a agreement or promise in exchange performance by another party. An
offer can be revoked or terminated under creation or conditions. There are also tomes when an offer be
negotiated to create a counter offer .

General offer: General offer is the offer can be accepted by anyone. This type of offer is made
with a particular person but to the public at large to give an reward to anybody who finds a lost
dog. This general offer can be deemed to be accepted. It is settled that two manifestation of a
willingness to make the same bargain do not continue a contract unless is made with reference to
the other.

Introduction of intension to create legal relationship

The need of 'intension to create legal relations' constitutes one of the most significant condition of
a valid contract is many jurisdictions around the globe-both developed and developing. The
existence of intension to create legal relations in addition to prove the existence of consideration
becomes quite burdensome at time. The requirement to prove such intention can be justified in
countries where consideration is not a requirement for a forming a valid and legally enforceable
contract.

It is a pertinent to note that there is a divide between the common law countries where the western
countries e.g.-U.S and U.K. require the establishment of' intension to create legal relations 'in
addition to the existence of consideration. But emerging economies like India and china does not
require it.

Q. What is intension?

Intension to enter a legally binding agreement or contract .thus, both the contacting parties will
enable to be serious into the contract .
Q. What is legal relationship?

The author who prefer that the order in definition begins with the creditor the civil obligation is
defined as the legal relation where one party ,called creditor has the legal possibility to claim to
the other party ,called debtor ,to execute his performance or performances to which he is bond,
under the state of coercion .

Q. What is intention to create legal relations?

The parties must have intended their agreement to have legal consequences .The law will not
concern itself with purely domestic or social agreement.

Law of contract intention to create legal relation mean-

Intention to create legal relations means that the parties must intend to enter into a legally binding
arrangement in which the rights and obligations of the agreement are enforceable. The parties to a
negotiation did intent to create legal relations is highly fact sensitive. It is relatively certain that
representatives of a business, meeting in a formal commercial scenario to negotiate a contract to
intend create a legal relations.

The intention to create legal relations is a vital and principle of contract law .As A.W.R.
Simpson stated ,the doctrine might date back to the landmark decision of Carllil vs. carbolic smoke
ball company in 1893,but however, it was in a firm position until 1919,after the case of balfour vs
balfour whether or not the parties intended to be legally bound to the contract is the doctrine 's
main concern.

 Parties must intend to create legal relations.

 Intention to contract means that the party involved is ready to accept the legal consequences
if he or she doesn’t perform his part of the contract
 This intention will be inferred from the language they use and circumstances in which they
use it.
 To measure agreements can be looked at here –
a) Commercial / Business agreement
 b) Domestic and social agreements

Intention to create legal relation or in another words intention to be legally bound is a contract law.

It is established whether a court should be presumed that parties to an agreement and it is

enforceable by law. It is an agreement legally enforceable by the parties and deemed to have
intended it to be a binding contract.

Identifying intention to create legal relations-

A contract is legally binding agreement. The offer has been accepted, there is an agreement, but
not necessarily a contract .If the evidence of intent is found , the agreement gives rise to legal
obligation whereby any party in breach may be sued.

There are lot of cases that explains us –

1. Blue V. Ashley:-The case concerned an action brought against the well known entrepreneur
, Michael Ashley . Mr. Ashley was pursued by a business consultant by the name of Mr.
Jeffrey Blue. Mr. Blue alleged that he had been employed by Mr. Ashley's and three other
representatives of Sports Direct, Mr. Ashley (after drinking at least 8pints of beer) had
promised to pay a euro 15 million bonus to Mr. Blue if he could ensure that Sports Directs
Share price moved above euro 8 per share .It was common ground between the parties that
the meeting in the pub had been an informal social setting . Mr. blue alleged that Mr. Ashley
had nonetheless made him an offer, intending to be bound by legal relations and that Mr.
Blue had accepted that offer .

Subsequently, the share price of sports direct did indeed rise above euro 8per share. When
Mr. Ashley refused to pay Mr. Blue the euro 15 million. Mr. Blue issued proceedings in
the High Court to recover the sum.

Conclusion: A small business in particular may be attracted to the idea of an informal

agreement ( based may be upon a handshake or a gentleman agreement). Such an informal
accord could be dangerous. It is particularly so if the agreement was formed in an
environment that would not lend itself to normal business negotiations. It is vitally
 important for parties who wish to form a binding legal contract that they properly write out
the terms so that there can be no disagreements as to the intention to the parties.

The intention can be different in different relationships it can be between –

For example of intension between business there is a case -

 Carllil V. Carbolic smoke ball comp. :- In section 1893 1 Q B 256. In this case in the
advertisement it was stated that euro 100 would be bail as reward to a purchaser of the
Carbolic smoke ball, who used it three times a day for two weeks and yet caught influence.
It was also stated that euro 1000 had yet deposited with the alliance bank to show their
sincerity. The plaintiff relying on the said statement purchased a smoke ball from a
chemist, used it in accordance with the direction and caught influenza . She sued the
defendant to claim the reward of euro 100. The defendant pleaded that the advertisement
was a mere and there is no legal relationship was ever contemplated. The court rejected
this plea and held that the statement of deposit of euro 1000 with a bank and the defendant
had contemplated legal liability. The defendant were held liable to pay the amount of
reward advertised by them.
Conclusion:-If there is no intention to create legal relationship no binding promise will be
created.

There are some cases which explains about the relationship between husband and wife .
 Merritt V. Merritt:-The husband left the matrimonial home to live with another women.
The husband and wife were joint owners of a building. The building was subject to a
mortgage to a building society . At instance of the wife the husband wrote a singed a paper
. According to this note the wife was to pay all the outstanding amount in respect of the
building and the husband was to transfer the building in the sole ownership wife. The court
held that the parties intended to create legal relationship and therefore the agreement was
binding. In commercial agreements it is presumed that the parties intend to create legal
relationship but this presumption may be rebutted.
 Balfour V. Balfour:- A husband employed in a Government port in Ceylon came to
England with his wife on leave. Due to illness his wife was not able to go back to Ceylon
. The husband promised to pay euro 30 per month to his wife until rejoined in Ceylon. The
 husband refused to pay the said amount. The wife sued him for the amount. The court held
that the husband was not liable as there was no intention to create a legal relationship.

Example of the relationship between parents and the children.

 Johnes v Padavatton : Mrs. Johnes lived in Trinidad and her daughter lives in Washington
in USA and she was doing a job of secretary there. Mrs. Johnes persuaded her daughter to
leave her job and to study law in England. Mrs. Johnes promised her to pay her monthly
allowances. Now after five years the daughter failed to pass the Bar exam. Her mother
bought her a house and said that now she will not pay him the monthly allowances despite
this she can earn money by renting the house. They both agreed. Now after sometime a
dispute occurred between them regarding the possession of the house. The daughter sued
her mother. The court held that since there was no intention to create a legal relationship
so the mother is the real owner of the house.