Requirements for the making of a contract. Page 43


1. the parties must intend to create legal relations.

2. the terms must be precise.

3. agreement is complete and does not need further negotiation.


Intention to create legal relations indicates that in the case of a dispute the parties envisage a court adjudicating.

Domestic agreements are not contracts. Agreements between immediate family or between friends over something informal are not contracts.


Intention to create legal relations is judged objectively.

Edmonds v Lawson 2000.


Social and domestic agreements – presumed not to be contracts.

Balfour v Balfour 1919.

Husband working abroad agreed to pay wife set amount.

The couple separated. She sued him for the money. The court found against her because there had been no intention to create legal relations.

Atkin LJ ruled on this. If the courts accepted such cases they would be overwhelmed.

Jones v Padavatton 1969.

Agreement between mother and adult child was not a contract.

Coward v MIB 1962. Agreement to drive someone to work in return for petrol money – not a contract.

There is a rebuttable presumption that domestic and social agreements are not contracts. This presumption CAN be overcome SOMETIMES.

Merritt v Merritt 1970 – the presumption was rebutted. Here spouses intended to create legal relations.

Darke v Strout 2003 – couple’s agreement about child support. There was a letter setting out the terms. A contract was held to exist.

The woman had given up statutory rights as part of the deal so this was consideration.

Soulsbury v Soulsbury 2003 – a spouse forewent maintenance payments in return for a bequest. This was a contract.

Simpkins v Payes 2003. Co- habitees agreed to enter a competition – this was held to be a contract.



These are presumed to be contracts.

Esso Petroleum Ltd v Commissioners of Customs and Excise 1976.

Sale of land normally ‘subject to contract’. This displaces any presumption of contractual intention.

A comfort letter – Kleinwort Benson Ltd v Malaysia Mining corporation Berhad 1989. made sure there was no contract



A contract needs certain terms for it to be enforced.

Scammell v Ouston 1941. Agreement not enforceable because the terms were uncertain.

Viscount Maugham said that because the terms were uncertain there was no consensus ad idem.

THE Court is not there to make the terms.

In cases where parties have relied on an agreement a court may infer terms.

Hillas v Arcos 1932 – court inferred intent based on agreements and trade usage.


There may be a mechanism to agree terms and not a figure. If the contract says 1% above the Bank of England’s base rate this is still certain even though people do not know what the rate will be in future.

A meaningless term can be ignored and the rest of the contract is still enforceable. Nicolene Ltd v Simmonds 1953.




An agreement must be complete to be a contract.

Courtneyn and Fairbairn Ktd v Tolani Brothers (Hotels) Ltd 1975. Agreement to negotiate is not a contract.


Sale of Goods Act 1979. Where a contract omits the price a reasonable price will be paid. The contract can be enforced.

Foley v Classique Coaches Ltd 1934. Court implied necessary terms to make contract enforceable because a party had already a cted in reliance on it.




contractual intention is a question of fact.



About Calers

Born Belfast 1971. I read history at Edinburgh. I did a Master's at UCL. I have semi-libertarian right wing opinions. I am married with a daughter and a son. I am allergic to cats. I am the falling hope of the not so stern and somewhat bending Tories. I am a legal beagle rather than and eagle. Big up the Commonwealth of Nations.

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