Beijing Law Review, 2011, 2, 127-133 127

doi:10.4236/blr. 2011 23013 Published Online September 2011 (http://www.SciRP.org/journal/blr)

‘Intention to Create Legal Relations’: A

Contractual Necessity or an Illusory Concept
Bhawna Gulati
International Trade and Economic Laws (CITEL), Jindal Global Law School of O. P. Jindal Global University, Jindal, India.
Email: [email protected]

Received July 20th, 2011; revised August 22nd, 2011; accepted September 1st, 2011.

ABSTRACT
‘Intention to create legal relations’ forms the basic ingredient of any valid contract in many jurisdictions around the
world. The paper argues that such requirement is neither required nor is purposeful if any particular jurisdiction has
‘Consideration’ as the basic requirement to prove the formation of validly formed contract. The paper postulates that
‘consideration’ in itself is, and should ideally be, indicative of such intention. Therefore, as far as common law coun-
tries are concerned, ‘consideration’ in itself should be capable of dealing with the intention of the parties and there
should not be any separate requirement of proving an ‘intention to create legal relation’. By natural corollary, the re-
quirement to prove such ‘intention’ can be justified in countries where ‘consideration’ is not a requirement for a form-
ing a valid and legally enforceable contract. The paper, while dealing with the proposed postulations, also deals with
the difference in presumption with regard to such intention while dealing with contractual relations that arise in do-
mestic set-up as differing from those arising in a commercial set-up.

Keywords: Contract Law, Intention to Create Legal Relations, Domestic Contracts, Contract Law Theories,
Consideration

1. Introduction quirement for a forming a valid and legally enforceable

contract. This will hold good for the countries based on
The requirement of ‘Intention to create legal relations’
civil law system. But the requirement of proving such
constitutes one of the most significant conditions of a
intention in common law countries have been criticised
valid contract in many jurisdictions around the globe—
by scholars and require immediate action by the legisla-
both developed and developing. Allegedly, Contract Act,
ture and judiciary.
being an Act governing relations between private parties,
It is pertinent to note that there is a divide between the
cannot be interpreted in the court of law without giving
common law countries where the western countries e.g.
much weightage to the intention of the parties forming
U.S and U.K. require the establishment of ‘intention to
such contract. To prove the existence of ‘intention to
create legal relations’ in addition to the existence of ‘con-
create legal relations’ in addition to prove the existence
sideration’, but emerging economies like India and China
of ‘consideration’ becomes quite burdensome at times.
English Law specifically requires the existence of ‘inten- does not require it.
tion to create legally binding contract’ for enforcing a Moreover, to decide whether such an intention is pre-
contract despite the existence of ‘consideration’ for the sent in a particular agreement between the parties, the
contract. The main argument of this paper is that ‘con- court starts with initial presumptions depending upon
sideration’ in itself is, and should ideally be, indicative of whether the agreement is originating in a domestic set-up
such intention. Therefore, as far as common law coun- or is it purely a commercial transaction. Disentangling
tries are concerned, ‘consideration’ in itself should be domestic influence from the commercial transaction be-
capable of dealing with the intention of the parties and comes difficult in some situations due to increasing in-
there should not be any separate requirement of proving teraction between the familial relations and commercial
an ‘intention to create legal relation’. By natural corol- relations, thereby blurring the distinction between do-
lary, the requirement to prove such ‘intention’ can be mestic contracts and commercial contracts. This takes a-
justified in countries where ‘consideration’ is not a re- way the logic for having different presumption in such

Copyright © 2011 SciRes. BLR

128 ‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept

extricable situation. Besides, ‘intention’ itself is a decep- respect.” [1] Since the theory is will based and is binding
tive concept as the real intention might never come to the because the parties freely assumed the contractual obli-
knowledge of the interpreter and in such situations the gations, the enforcement will not be morally justified
dilemma of how to gather the existence or non-existence unless the person subjected to the performance obligation
of such intention haunts the very decision based on it. has made a genuine commitment. This draws the atten-
Another problem arises when parties to the contract tion of the enforcer to the subjective intention of the pro-
comes from different social and cultural background and, misor at the time the promise was made. However, such
therefore, perceive differently in a given situation. This situations sometimes lead to a dilemma where the con-
problem of different perception is even more complex tract interpreter or enforcer has to choose between the
than the problem arising in the case of manipulative hu- subjective intention of the promissor and the expectations
man tendencies. The author is conscious of the fact that of the promissee from such a promise. If the secret direc-
the courts, in different jurisdictions, have dealt with such tion of the intention, said every man of sense, could in-
issues differently. The paper, however, is based more on validate a contract, where is our security? And yet a
the theoretical argument of whether ‘intention to create metaphysical schoolman might think, that where an in-
tention was supposed to be requisite, if that intention
legally binding relations’ is worthy enough to be re-
really had no place, no consequence ought to follow, and
garded as a separate requirement for contract law? Or
no obligation be imposed [2].
else can it be considered a part of the requirement of
It is pertinent to note that under the will theory the
‘consideration’ because consideration to a large extent
contract is enforceable because it is intended by the par-
indicates intention of the party from whom it is moving.
ties out of their free will. But how far the theory is going
2. Why Contract Law: An Inquiry into to provide appropriate results when objective intention
Contract Law Theory differs from the subjective intention? The law enforces
obligations which parties appear to have assumed rather
‘I cannot marry you’ said the English boy. ‘But you pro- than those which they have actually assumed. The scope
mised me that you will marry me’ pleaded the girl. ‘Pro- of voluntary undertaking (consent) is further stretched to
mises are made to be broken’ answered the boy. ‘But include implied and even imputed promises and so may
what about the time I invested in this relationship?’ asked be taken ‘far beyond anything remotely close to what the
the girl. It feels quite obnoxious to think of the fate of parties had in mind [3].
such conversations that make people helpless when a Another theory explaining the enforceability of con-
promise is broken or an obligation remains unfulfilled. tracts is the theory of private autonomy. The principle of
One wonders at times that why contract law, as existing private autonomy “simply means that the law views pri-
in some countries e.g. U.K., that has the ability to hold vate individuals as possessing a power to effect, within
anyone responsible to pay 2 dollars for a cup of coffee, certain limits, changes in their legal relations.” [4] Auto-
leaves the boy (in the illustration) free from any obliga- nomy theory argues that people should be free to make
tion. What is so peculiar about domestic/personal rela- worthwhile choices. Another theory is that of consent
tions that keeps them out of courts’ interference and which stands for the proposition that a contract is a pro-
rather make them go unattended and disregarded, even duct of wilful interacting individuals. All the above
though the damage can be much more than in case of any stated theories require, theoretically at least, the exercise
commercial breach of promise? of free will and manifestation of intention for undertak-
This is not a rarest of the rare cases that takes one to ing certain obligation. The rule, as stated in Rose and
the dilemmatic situation of rival contract theories. Such a frank Co v. JR Crompton & Bros Ltd [5], is ‘to create a
perplex question has been talked quite a lot by the scho- contract there must be a common intention of the parties
lars interested in the theory of contractual intention and to enter into legal obligations, mutually communicated
ancillary subjects. expressly or impliedly.’ But not in the real world the will
That brings us aptly to discuss briefly the primeval is so ‘free’ and the intention is so explicitly manifested.
question of contract law theory, i.e. why contracts are A person’s will may be influenced by the limited experi-
enforced? Different theories have divergent views to deal ences he encounters in his life and it might also depend
with this question. ‘Will theory’ of contract law main- on the perceptions being shaped due to the surrounding
tains that commitments are enforceable because the pro- circumstances. An illustration will help explaining the
misor has “willed” or chosen to be bound by his com- point more clearly: An Indian went to a Singaporean ho-
mitment.” According to the classical view, the law of tel and ordered a vegetarian pizza. When it was served,
contract gives expression to and protects the will of the he noticed with surprise that it had sea food in it. The
parties, for the will is something inherently worthy of pizza which was non vegetarian as per Indian standards

Copyright © 2011 SciRes. BLR

 ‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept 129

was a perfectly vegetarian pizza according to Singapo- tional contract theory indicates that the parties are more
rean experience. Notably, both the Indian and the hotel concerned with the preservation of ongoing relationships
owner were willing to perform the contractual obligation than with the availability of legal sanctions. In both types,
but both had different perceptions of a vegetarian pizza. at the outset of the arrangements the parties may not sub-
How will the contract law theories or the courts enforc- jectively consider it likely that contract law will control
ing contract law principles deal with such situations is or regulate their arrangements. They may instead rely on
not very clear. social or relational norms to do the job. Relational re-
The very justifications for not enforcing the familial searchers have demonstrated that in business relation-
contracts, as provided by courts in various cases, are ships, as well as family relationships, ‘co-operation with-
based on fallacious premises. In Balfour case [6], Lord out reference to legal entitlements is normal’ [10]. In
Atkin stated that domestic contracts are not contracts as both commercial and family agreements, the long-term
the parties did not intend that they should be attended by nature of the relationship and related agreement impedes
legal consequences. But this applies even to the comer- the ability to settle finally all terms at the time of contract
cial transactions like in the coffee case illustrated earlier. formation. Therefore, to draw a demarcation on the basis
Many a times the parties do not contemplate legal con- of different intention prevailing in the minds of the par-
sequences unless the other party commits breach. ties is ill founded.
However, with the changing times and changing di- Analysing the changing scenario prevailing in modern
mensions of familial relations, this attitude towards so- day domestic set up and considering the drastic trans-
cial agreements seems to have changed. Freeman classi- formation in the way people perceive their relationships,
fies Balfour v Balfour [6] as a ‘Victorian Marriage’ and it is apparent that dividing line between the domestic and
sees the marriage of today ‘less regulated’ and ‘more commercial contracts is shrinking. People are becoming
dependent upon individual choice.’ For him ‘Marriage more and more commercial even in familial relations and
has become a ‘personal rather than a social institution.’’ security of transaction is becoming a matter of priority.
He pleads for a change in the treatment of presumptions In such situation the legal requirement of the parties’
in domestic spheres [7]. intention to be contractually bound continues to impede
Noteworthy, there are many laws which interfere in the enforcement of family contracts. The distinction be-
domestic relations between parties and thereby witness tween commercial contracts, which are presumptively
the most personal arrangement which the human beings enforceable, and family contracts, in which intention
try to protect from outside intervention. Legislations re- must be proved, cannot be justified. The very reasons for
garding Family Law, Divorce Act, Succession Act, etc, which the different presumptive intention theory evolved
are some illustrative pieces of legislation. Considering between commercial and domestic contracts become
the changing nature of domestic/social relations, the otiose. If the requirements of consideration and agree-
court should not differentiate the intention that the parties ment are thought to be inadequate to distinguish enfor-
had in mind while dealing in their personal or commer- ceable from unenforceable arrangements, then a more
cial matters. Therefore, the traditional practice of shifting appropriate method needs to be devised to achieve this
burden of rebuttal of the presumption of ‘intention to purpose than one which is ostensibly focused on a ficti-
create legal relations’ in such contracts is unreasonable tious inquiry as to party intention, and which actually
and lacks justifiable basis. masks an anachronistic and inappropriate judicial senti-
Relational contract theorists argue that commercial re- ment [11].
lationships ‘are not governed by contractual intentions,
but reflect a variety of influences, including social norms
3. Intention: Objective or Subjective
and the norms of conduct that develop within the rela- After focussing on different theories of why contracts are
tionship’ [8]. More often than not, the parties do provide enforced and then placing ‘intention to create legal rela-
for, in detail, all the contractual terms and consequences tions’ in each of those theories, the next discussion
that will flow from a particular transaction. In such cases should aim at analysing various standards (objective and
it is grossly unreasonable to go into the question of what subjective) used by English Courts while finding whether
the parties intended at the time they entered into a con- such intention exists or not. This part of the paper will
tract. In both types of arrangements, domestic as well as examine the different approaches employed by courts
commercial, asking what the parties intended at the time while dealing with the issue of ‘intention’ in any particu-
of contracting may be ‘an utterly unreal question, since lar contract. What intention do the courts take into ac-
in all probability the parties did not consider the question ccount while dealing with different situations before
at the time of the inception of the agreement’ [9]. them—the ‘subjective’ intention or the ‘objective’ inten-
In both commercial and family arrangements, rela- tion? In Merritt v. Merritt [12], Lord Denning held “…

Copyright © 2011 SciRes. BLR

130 ‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept

the court does not try to discover the intention by looking The next section deals with the different presumptions
into the minds of the parties. It looks at the situation in that the courts use depending upon whether the contract
which they were placed and asks itself: Would reason- is a domestic contracts and commercial contracts i.e.
able people regard this agreement as intended to be le- whether the parties are placed in a domestic set-up or
gally binding?” Also in Smith v Hughes [13] it was de- whether they are related to each other in a commercial
cided that a person’s conduct with regard to the quality set-up.
of the subject matter proposed by the other party is de-
4. Presumption of ‘Intention’—Domestic v.
termined by the reasonable man regardless of the per-
Commercial Contracts
son’s actual intentions.
However, Courts usually try to cloth the doctrine of This part illustrates the difference in presumption which
intention using the objective intention hypothesis. One is is employed by the courts while dealing with the ques-
generally bound to do what a reasonable interpretation of tion of intention in cases of contracts arising in domestic
one’s behaviour implies and not to what he had in mind. set-up as opposed to those arising in commercial set-up.
If one party has a secret intention then that intention is In domestic agreements, for example those made be-
void. The objective test of intentions is one of the rules tween husbands and wives and parents and children,
of engagement necessary to protect the integrity of the there is presumption of no intention to create legal rela-
contracting process and to prevent its abuse. Holding par- tions and no intention that the agreement should be sub-
ties to the objective standard not only prevents them from ject to litigation. In contrast to this, there is a rebuttable
reneging on their undertakings but also gives them strong presumption in commercial agreements that the parties
incentives to take care not to misrepresent their own in- intend to create legal relations. While there are conflict-
tentions (even innocently) nor to misinterpret the inten- ing legal authorities on whether specific facts involving
tions of others and also extends the practice beyond on- familial relations result in binding and enforceable agree-
going relationships where it would otherwise not exist ments, it seems settled that in domestic agreements there
[14]. is a rebuttable presumption that the parties do not have
Having discussed the policy justification for courts’ intention to create legal relations. However the problem
favouritism of objective intention over subjective inten- arises when the contract is formed in such intermingled
tion, one should not forget that such a choice of objective circumstances that it is not clear whether the transaction
over subjective intention might not always lead to equi- is purely domestic or whether it is commercial. The most
table justice to the parties. Some philosophers argue that common example that will illustrate this situation is
autonomy theory leads to social justice but what about found in many Asian countries i.e. family businesses.
the justice to the parties. When the whole contract re- Suppose the nephew is asked by his uncle to look after
volves around party autonomy and party chosen obliga- the accounts of the business, can the nephew take the
tions then why under the garb of objectivity the subjec- uncle to the court for the sum of money due for services?
tive interpretation is suppressed. It is true that objective Yet another example can be nephew attending the pro-
standard prevent parties from reneging on their under- fessional tutorial classes conducted by uncle. Can the
taking but when the promissor never intended to under- uncle make the nephew pay under the law of contract?
take the obligation, which though objectively arise in the The uncle may as a matter of fact prove his case and
facts and circumstances of a particular case, objective make the nephew pay for the tuition provided but the
standard is too burdensome. At times it is quite probable catch in the situation is that if we take the traditional
that the parties perceive different meaning for the same presumption theory of ‘no intention to create binding
set of words. This is most common when parties belong legal relations in domestic/social contracts, the promissee
to different cultural set up and cross cultural differences (uncle) is unnecessarily burdened to rebut the presump-
that influence their take on different situations. tion.
In some cases there is also another problem of how In the era of modern contract law theory, the distinc-
and when a contract is said to be formed. The presence of tion between the public and private and between the
consideration is often indicative of the intention to create market and the family seems quite otiose [11]. Even if
legal relations, though there are situations where the we take the husband-wife cases, in the past, brides and
presumption of the intention can be rebutted, thus deter- grooms traditionally promised to “love, honour and cher-
mining that there is no contract and no legal liability. ish” as part of a lifetime commitment. But these days,
Additionally the courts require ‘intention to create legal high divorce rates and a healthy scepticism now affect
relations’ as an essential ingredient apart from the estab- our notions of romance, and more precise statements
lishment of other prerequisites to prove the validity of about a couple’s obligations may be needed.
any contract and rely on the presumptive intention theory. As stated earlier, the court, in Balfour v Balfour [6],

Copyright © 2011 SciRes. BLR

 ‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept 131

held that the agreement was a purely social and domestic omy. The court does not have to go into the obscure
agreement and therefore it was presumed that the parties question of whether parties contemplated that they can
did not intend to be legally bound. Similarly in Jones v go to the court to get their promises enforced. If I walk
Padavatton [15], the court held that the agreement was into the cafe and order a coffee, it will neither occur to
purely a domestic agreement which raises a presumption me nor to the cafe owner that we are binding each other
that the parties do not intend to be legally bound by the in a legally binding relationship unless one of us fails to
agreement. In the latter case the daughter left her secured perform. And even if it occurs or we foresee such a con-
job relying on the promise made by the mother. If the sequence of dealing for a cup of coffee, is this promise
promise cannot be enforced where is the security of more serious than the one made between the husband and
transactions? Under the cover of domestic relations the wife which led the wife to leave her job. In domestic
promisor can exploit the promissee without any obliga- contracts, parties are most unlikely to have considered
tion enforceable in the court of law by the promissee the question of enforcement of their agreement at all, so
against the promisor. The court could have reached the proof of an actual intention or lack thereof, is impossible
same decision and decided the case in favour of the mo- in almost all cases. Requiring proof of intention imposes
ther on the ground that the daughter could not perform a considerable impediment to the enforcement of non-
effectively her part of the obligation, since she could not commercial contracts, which carries with it attendant
complete her studies. But the court seems to have chosen risks and costs [16]. Husbands and wives in the basic
the easy way out of denying the presence of any intention family home pattern often have divergent interests which
to create legal relations. But why the promissee should have not always been appreciated by the courts.
be taxed so heavily for relying on the promise made by While discussing the dilemma that one might reach in
the close family member? Even if we look at the dome- certain cases where it is difficult to assume the presump-
stic contracts involving husband and wife one can easily tion against the ‘intention of creating legal relations’, S
make out the clear serious intention when the promise is Hedley [17] gave an interesting example in following
being made but just because the parties are in amity and words:
have cordial relations, the promissee is burdened to prove “The fallacy to be avoided ..... consists of asking the
the intention to create a legal transaction. If the parties question ‘whether there is a contract?’, but forgetting
can show the presence of offer, acceptance and consi- that a court is almost invariably faced with a particular
deration, there should not be a separate requirement of claim based on an alleged contract. The perspective
proving intention to create legal relations. It is very dif- given by the claim made alters everything. Take variation
ficult to even show the consideration in such cases be- of the classic academic conundrum in this area: Jack and
cause of the nature of consideration is quite different Jill agree to go out to dinner and to split the bill. By ask-
from the apparent economic consideration present in the ing the academic question ‘Is there a contract?’ we are
commercial transactions. What if a husband promises to immediately in the realm of the abstract. If however we
give a monthly allowance of $ 300 to his wife in return approach the matter form a practical standpoint, we
of the wife promising to leave her job and take care of must know what claim is being made. If Jill is suing Jack
the house? The courts will not enforce such a promise because Jack has refused to go to dinner at all, the argu-
holding that it’s too personal and familial to be dragged ments against liability are compelling. Surely, Jack can-
in the court of law. Or even if the court enforce, the wife not be taken as giving an outright commitment to go to
have to undertake the burden of proving the intention to dinner—what if he is ill, or they cannot agree on a suit-
create binding legal relations. Just because the promise able restaurant? But imagine that the two already had
was made when parties were happily living with each their dinner, for convenience Jill pays the bill in full, but
other resolves the husband, prima facie, from performing jack subsequently refuses to pay in half. The perspective
his promise. What about the wife who sacrificed her ca- changes. It is no longer obvious that the contract cannot
reer relying on the husband’s promise. Why the courts be enforced.”
have to look into the external factors of how happy or It is ironic that contract, treated in the market context
cordial the marital relations were? Ironically it is only as the most appropriate vehicle for regulation of private
when the parties are in complete harmony that the hus- arrangements between individuals, is not regarded as an
band will realise and acknowledge the worth of the sacri- enforceable mechanism for regulating private arrange-
fice being made by the wife. Once they are on the verge ments between individuals within the home [11]. The
of separating, why will he pay the wife for promises she ‘apparent intentions’ of the parties are no more than a
kept throughout the matrimony. smokescreen for policy choices about the relationship
Contract law is about giving effect to the promises between law and the private, domestic sphere, which
made by the parties exercising their free will and auton- seem based on unsophisticated assumptions about what is

Copyright © 2011 SciRes. BLR

132 ‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept

‘natural’ in that context [9]. cation of a bargain are offer, acceptance and considera-
Keeping the above stated analysis in mind, it appears tion. These three elements should be treated to- gether as
that the line dividing the presumption of intention to cre- indicating bargain. Thus an analysis which tries to sepa-
ate legal relation in domestic and commercial contracts is rate out agreement (that is, offer and acceptance) from
illusory and is often used by the courts to give effect to consideration is missing the point of why the courts
numerous policies under the guise of estimating the par- started looking for evidence of these three elements in
ties’ contractual intent. Having thus reached the conclu- the first place [21].
sion that no such demarcation should be considered rele- ‘This separation of agreement from consideration....
vant in the contract law, one encounters an obvious ques- has resulted in a fundamental point being overlooked.
tion, which does not, though, have an obvious answer. This is that the common law recognised at an early stage
Whether the requirement of intention to create legal rela- that usually parties do not define their intention to enter
tions is indeed required and whether it serves any pur- into legal relations. Consequently, the fact that they have
pose different from the other requirements e.g. offer, cast their agreement into the form of bargain (offer, a-
acceptance and consideration? Though, theoretically it is cceptance, consideration) provides an extremely practical
easier to postulate that a promise made within the do- test of that intention. This test of bargain renders super-
mestic setting or between family members raises pre- fluous any additional proof of intention [20].
sumption of ‘no intention’ to create legal relations and Accordingly, Hepple regards the court as falling into
commercially the presumption of presence of such inten- error in trying to identify an additional element of inten-
tion, this supposition creates more problems and only tion in the cases such as Ford Motor Co Ltd v. AEF [22].
confuses the whole state of affairs. The author, therefore, The intention requirement requires the manifestation of
strongly feels that the presumption starts from the basic objective intention. The argument in effect introduces a
fallacy and it should be done away with in light of the rule of formality into the formation contracts. The formal
changing nature of ‘familial’ relationships. requirements become not writing, or signature, but offer,
acceptance and consideration. The parties who fulfil
5. ‘Intention’ and/or ‘Consideration’
these basic elements will be deemed to have made a bar-
As laid down earlier that many countries have recognised gain, unless proved otherwise.
‘intention to create legal relations’ as separate require- It is important to note here that many jurisdictions do
ment for enforcing an otherwise valid contract. English not recognise ‘intention to create legal relations’ as a se-
law is the best example in that category, which requires parate requirement to enforce an otherwise valid contract.
this along with the tri-requirement of offer, acceptance India [23] and China are good examples where there is
and consideration. This part of the paper will focus on no separate requirement of proving the intention to create
the correctness of such an approach by looking from a legal relations. It is inferred from the other elements that
theoretical as well as practical standpoint. Professor Sa- are present. The element of intention in contract law is
muel Williston [18] in the U.S. have criticised this view vague and lacks certainty as to what it requires actually
emanating in England. He opined that the separate ele- to prove its presence or absence by a particular party.
ment of intention is foreign to the common law, imported
6. Conclusions
from the Continent by academic influences in the nine-
teenth century and useful only in systems which lack the The discussion on the subject of ‘intention’ as one of the
test of consideration to enable them to determine the important ingredient of a valid contract is well debated
boundaries of contract [19]. The insistence on a require- by not only scholars but also courts. The paper has at-
ment of intention in addition to the other elements of a tempted to unfold the various aspects spinning around
validly formed contract (offer, acceptance, consideration) that discussion. The paper strongly argues for abandon-
is unnecessary. This view has been taken not only by ing the requirement of proving ‘intention to create legal
Williston in U.S. but also Hepple [20] in the UK. Hepple relations’ in case of countries that requires the existence
argues that the problems with this area derive largely of ‘consideration’ for forming a valid and enforceable
from a failure to take account of the particular approach contract. Therefore, in case of common law countries,
to consideration adopted by Lord Atkin in Balfour v. where consideration is one of essentials of a valid con-
Balfour. Hepple argues that many domestic agreements tract, the requirement of proving ‘intention to create legal
may involve mutual promises, ‘and yet not be contracts relations’ should not be pressed upon. The consideration
because the promise of the one party is not given as the in itself can be taken as a proof strong enough to indicate
price for the other’. In other words, the con- cept of the the presence of intention of forming a legally binding
bargain is central to the test of enforceability of contracts contract. Professor Williston pointed out this proposition
under English law and the vital elements in the identifi- stating that the common law does not require any po-

Copyright © 2011 SciRes. BLR

 ‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept 133

sitive intention to create a legal obligation as an element Oxford Journal of Legal Studies, Vol. 5, No. 3, 1985, p.
of contract….A deliberate promise seriously made is 396. doi:10.1093/ojls/5.3.391
enforced irrespective of the promisor’s views regarding [11] M. Keyes and K. Burns, “Contract and the Family:
his legal liability [18]. Whither Intention,” Melboume University Law Review,
Vol. 26, No. 3, 2002, p. 577.
REFERENCES [12] Merritt v. Merritt, 1 WLR 1211, 1970.
[13] Smith. v Hughs, LR 6 QB 597,1871.
[1] Cohen, “The Basis of Contract,” Harvard Law Review,
Vol. 46, 1933, pp. 553, 575. [14] M. Chen-Wishart, “Objectivity and Mistake: The Oxy-
moron of Smith v Hughes,” In: J. Neyers, R. Bronough, S.
[2] D. Hume, “An Inquiry Concerning the Principles of Mo-
G. A. Pitel, Eds., Exploring Contract Law, Hart Publish-
rals,” In: C. Hendel, Ed., Hackett Publishing Co., Indian-
ing, Oxford, 2009, Available at SSRN:
apolis, 1957.
http://ssrn.com/abstract=1551980
[3] M Chen-Wishart, “Contract Law,” Oxford University
[15] Jones v. Padavatton, 1 WLR 328, 1969.
Press, Oxford, 2005, pp. 22.
[16] Todd v. Nicol, SASR, 1957, pp. 72, 77.
[4] D. Kennedy, “From the Will Theory to the Principle of
Private Autonomy: Lon Fuller’s “Consideration and [17] S. Hedley, “Keeping Contract in its Place: Balfour v. Bal-
Form”,” Columbia Law Review, Vol. 100, No. 1, 2000, four and the enforceability of Informal agreements,” Ox-
pp. 94-175. doi:10.2307/1123557 ford Journal of Legal Studies, Oxford University, Oxford,
1985, pp. 391, 408.
[5] Rose and Frank Co. v J. R. Crompton and Bros Ltd., 2
KB 261, 1923. [18] S. Williston, “Williston on Contracts,” 3rd Edition,
Rochester, New York, 1957.
[6] Balfour v. Balfour, 2 KB 517, 1919.
[19] R. E. Barnett, “Contracts: Cases and Doctrine,” 4th Edi-
[7] M. Freeman, “Contracting in the Haven: Balfour v Bal-
tion, Aspen Publishers, Frederick, 2008.
four Revisited,” Exploring the Boundaries of Con- tract,
Dartmouth Publishing Group, Sudbury, 1996, pp. 75-77. [20] B. Hepple, “Intention to Create Legal Relations,” The
Cambridge Law Journal, Vol. 28, No. 1, 1970, p. 122.
[8] E. Posner, “A Theory of Contract Law under Conditions
doi:10.1017/S0008197300011636
of Radical Judicial Error,” 94 North-western University
Law Review 749, 2000. [21] R. Stone, “The Modern Law of Contract,” 5th Edition,
Routledge Cavendish, London, 2002, pp. 25-123.
[9] S. Wheeler and J. Shaw, “Contract Law: Cases, Materials
and Commentary,” Oxford University Press, Oxford, [22] Ford Motor Co. Ltd. v. AEF, 1 WLR 339, 1969.
1994, pp. 150. [23] A. Singh, “Contract and Specific Relief,” 10th Edition,
[10] S. Hedley, “Keeping Contract in Its Place —Balfour v Eastern Book Company, New Delhi, 2008. Also see CWT
Balfour and the Enforceability of Informal Agreements,” v. Abdul Hussain, 3 SCC 562, 1988.

Copyright © 2011 SciRes. BLR