![4
Gould v. Gould [1969] 3 All ER 728.
• In this case, a contractual intention was negatived when a
husband (who was leaving his wife) undertook to pay her
£15 per week “so long as I can manage it”.
• The word “so long as I can manage it” in the case of Gould
was considered as uncertain and does not create an
intention to enter into a legally binding contract.](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-4-320.jpg)
![5
Jones v. Padavatton [1969] 2 All ER 616
• The vagueness of an arrangement may show that there is
no intention to create legal relations](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-5-320.jpg)
![Simpkins v. Pays [1955] 3 All
ER 10
The defendant and the defendant’s granddaughter in this
case made an agreement with the claimant that they
submitted a weekly coupon in the defendant’s name to a
Sunday newspaper fashion competition. The coupon
contained a forecast by each of them. On one occasion, a
forecast by the granddaughter was correct and the
defendant received a prize of £750. The claimant sued for
her share of that sum. The defence given by the defendant
was that there was no intention to create legal relations but
that the transaction was a friendly arrangement binding in
honour only.
Held: There was an intention to create legal relations. The
evidence showed that it was not merely a friendly domestic
arrangement but a joint enterprise. Thus, the parties
expected to share any prize that was won.
11](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-11-320.jpg)
![12
Parker v. Clark [1960] 1 W.L.R. 286
• The defendants in this case, an elderly couple, agreed with the
plaintiffs (who were twenty years younger) that if the plaintiffs would
sell their cottage and come to live with the defendants and share
household expenses, the male defendant would leave them a portion
of his estate in his will. The plaintiffs sold their cottage and moved in
with the defendants. But difficulties developed between the two
couples. The defendants then repudiated the agreement by requiring
the plaintiffs to find somewhere else to live. As a result of this, the
plaintiffs claimed damages for breach of contract. It was argued by
the defendants that the agreement amounted to no more than a
family arrangement.
Held: The circumstances indicated that the parties intended to affect
their legal relations and thus the defendants were liable.](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-12-320.jpg)
![Edwards v. Skyways Ltd [1964] 1 All ER 494
15
D who had promised to make an ex-gratia payment to the
employees contended that they were not bound to fulfil their
obligation
The Court held that the use of the words “ex gratia” with
regards to the airline pilot’s contractual redundancy payment
did not alter the presumption. Therefore, the airline had to
make payments because the agreement was enforceable](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-15-320.jpg)
![‘Honour clauses’
If the parties have expressly declared that a transaction is not
to be binding in law, the courts will give effect to that
declaration.
Rose & Frank Co v JR Crompton & Bros Ltd
Jones v Vernon’s Pools Ltd [1938] 2 All ER 626
17](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-17-320.jpg)
![Jones v. Vernon’s Pools Ltd [1938] 2 All ER
626
The claimant in this case had sent a successful football
coupon to the defendants but the defendants denied
receiving it and relied on a clause printed on every
coupon. The clause provided that the transaction
should not “give rise to any legal relationship.....or be
legally enforceable .... but ..... binding in honour only”
The Court held that: This clause was a bar to any action
in a court of law.
18](https://image.slidesharecdn.com/itclr-230210214931-ce51fd61/85/ITCLR-pptx-18-320.jpg)
ITCLR.pptx
- 1. INTENTION TO CREATE LEGAL RELATIONS VILMAH BALAKRISHNAN
- 2. Introduction It refers to intention to create contractual relationship In other words, both parties must have intention to be bound by their obligations under the contract If this element is absent, there is no contract, i.e. the contract is void It is either express or implied from circumstances. Express – based on what both parties intended. Implied - based on legal presumption which depends on type of agreement. Contracts Act 1950 is silent on this element. Therefore, English common law can be referred to 2
- 3. Vague and uncertain terms Where the terms of the document signed by the parties are vague and uncertain, the courts will construe that there was no intention to create legal relations (Phiong Khon v Chonh Chai Fah) 3
- 4. 4 Gould v. Gould [1969] 3 All ER 728. • In this case, a contractual intention was negatived when a husband (who was leaving his wife) undertook to pay her £15 per week “so long as I can manage it”. • The word “so long as I can manage it” in the case of Gould was considered as uncertain and does not create an intention to enter into a legally binding contract.
- 5. 5 Jones v. Padavatton [1969] 2 All ER 616 • The vagueness of an arrangement may show that there is no intention to create legal relations
- 6. Label used by the parties to call the agreement is irrelevant The court is not bound by the label of a document but has to construe the nature and purport of a document from its language and other admissible evidence. Woo Yew Chee v Yong Yong Hoo Malayan Banking Bhd v PK Rajamani Perkayuan OKS No 2 Sdn Bhd v Kelantan State Economic Development Corp. 2 classes of cases: Social, family or other domestic agreements – it is inferred as a matter of course that there is no common intention to create legal relations. Commercial agreements – the intention to create legal relations is presumed and the party seeking to deny it must rebut it. 6
- 7. Social, family or other domestic agreements A party to a social, family or other domestic agreement will not be held liable in contract unless there is positive evidence that the party intended to enter into a contractual relationship. The courts will infer the presence/ absence of an intention to create legal relations from the language used by the parties and the circumstances in which they use it. 7
- 8. Agreement between husband and wife Generally, the law presumes that an agreement made between husband and wife is not intended to create legal relations; Balfour v Balfour. However, an agreement made between spouses who are not living in amity but are separated, or about to separate, will be held by the courts as being a bargain made with the intention of being legally enforceable; Merritt v Merritt. 8
- 9. Agreement between parent and child Jones v Padavatton Choo Tiong Hin v Choo Hock Swee 9
- 10. Other domestic agreements Same principle applicable. However, it was held that there was an intention to create legal relations in the following cases: Simpkins v Pays Parker v Clarke 10
- 11. Simpkins v. Pays [1955] 3 All ER 10 The defendant and the defendant’s granddaughter in this case made an agreement with the claimant that they submitted a weekly coupon in the defendant’s name to a Sunday newspaper fashion competition. The coupon contained a forecast by each of them. On one occasion, a forecast by the granddaughter was correct and the defendant received a prize of £750. The claimant sued for her share of that sum. The defence given by the defendant was that there was no intention to create legal relations but that the transaction was a friendly arrangement binding in honour only. Held: There was an intention to create legal relations. The evidence showed that it was not merely a friendly domestic arrangement but a joint enterprise. Thus, the parties expected to share any prize that was won. 11
- 12. 12 Parker v. Clark [1960] 1 W.L.R. 286 • The defendants in this case, an elderly couple, agreed with the plaintiffs (who were twenty years younger) that if the plaintiffs would sell their cottage and come to live with the defendants and share household expenses, the male defendant would leave them a portion of his estate in his will. The plaintiffs sold their cottage and moved in with the defendants. But difficulties developed between the two couples. The defendants then repudiated the agreement by requiring the plaintiffs to find somewhere else to live. As a result of this, the plaintiffs claimed damages for breach of contract. It was argued by the defendants that the agreement amounted to no more than a family arrangement. Held: The circumstances indicated that the parties intended to affect their legal relations and thus the defendants were liable.
- 13. Other domestic arrangements Many do not amount to contracts because the parties do not intend to create legal relations. 13
- 14. Commercial agreements Presumption that the parties do intend to make a legally binding contract. Guthrie Waugh Bhd v Malaiappan Muthuchumaru Onus of proving that there is no such intention is on the party who asserts that no legal effect is intended. Presumption may be rebutted by reference to the words used by the parties and/or the circumstances in which they used them. 14
- 15. Edwards v. Skyways Ltd [1964] 1 All ER 494 15 D who had promised to make an ex-gratia payment to the employees contended that they were not bound to fulfil their obligation The Court held that the use of the words “ex gratia” with regards to the airline pilot’s contractual redundancy payment did not alter the presumption. Therefore, the airline had to make payments because the agreement was enforceable
- 16. Advertisements A statement in an advertisement inducing a contract may be a ‘mere puff’ if it was not seriously meant and that this should be obvious to the person to whom it is made. INote: In Carlill v Carbolic Smoke Ball Co, the bank deposit was strong evidence that the defendant had contemplated legal liability when they issued their advertisement. 16
- 17. ‘Honour clauses’ If the parties have expressly declared that a transaction is not to be binding in law, the courts will give effect to that declaration. Rose & Frank Co v JR Crompton & Bros Ltd Jones v Vernon’s Pools Ltd [1938] 2 All ER 626 17
- 18. Jones v. Vernon’s Pools Ltd [1938] 2 All ER 626 The claimant in this case had sent a successful football coupon to the defendants but the defendants denied receiving it and relied on a clause printed on every coupon. The clause provided that the transaction should not “give rise to any legal relationship.....or be legally enforceable .... but ..... binding in honour only” The Court held that: This clause was a bar to any action in a court of law. 18
- 19. Memorandum of Understanding (MOU) Merely an agreement to contract or an agreement to negotiate. Generally not valid and enforceable as a contract. Sia Siew Hong v Lim Gim Chian However, each case must be decided on its own facts; Ismail bin Mohd Yunos v First Revenue Sdn Bhd – both MOUs were binding on the parties. 19
- 20. Ambiguous words Where a party wishes to rebut the presumption, he must use clear words. The onus of proving that the words exclude legal relations is on the party who asserts it. Edwards v Skyways Ltd – the use of the words ‘ex gratia’ did not rebut the presumption that there was intention to create legal relations. 20
- 21. Collective bargaining in industry Not intended to create legal relations between the parties. Ford Motor Co Ltd v Amalgamated Union of Engineering & Foundry Workers 21