Intention to create legal relationship Introduction Offer+ acceptance= agreement, may not legally enforced yet.

. Must include ITCLR. This means is that the parties intend that legal consequences attach to their agreement. greement !ill "e "inding !ith recourse to some e#ternal ad$udicator %a court or ar"itrator& for its enforcea"ility. These are agreements "et!een friends %e.g. agrees to host the "ridge clu" at her house if ' !ill "ring the food to feed the clu"& or agreements made "et!een family mem"ers %e.g. sister agrees !ith "rother that she !ill not play her radio loudly if "rother !ill (eep his hamster securely in its cage&. In this conte#t there is generally an offer "y one party, !hich is accepted "y the other party and supported "y consideration.
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 )o far, the agreement loo(s li(e an enforcea"le contract. *o!e+er, they pro"a"ly do not intend a "reach of the agreement to result in legal action. Their agreement lac(s an intention to create legal relations and is thus not a contract "ecause they did not intend it to "e. The agreement has no legal effect at all. *o!e+er, e+en though they intend to "e legally "ound, court !ill depend circumstances !hich in+ol+ed pu"lic policy. In the case of domestic and social agreements, it is presumed that there is not an ITCLR. In the case of commercial agreements, it is presumed that there is an ITCLR.

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 The facts of the case may displace the presumption the la! !ould other!ise ma(e.

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Rebuttable presumption 'alfour + 'alfour must "e seen as a case !hich esta"lishes a re"utta"le presumption that domestic agreements are not intended. re"utta"le presumption is a presumption made "y courts as to a certain state of facts until the contrary is pro+ed. *o!e+er, e+idence of intention to re"ut is not so useful sometimes, Reason: -. .ery difficult to find e+idence intention in domestic and social cases /. .ery difficult to re"ut the strong presumption, o In domestic and social agreement, need +ery clear e+idence o In commercial, +ery difficult to discharge strong presumption of ITCLR.

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mere su"$ecti+e intention is not enough There must "e o"$ecti+e e+idence. The determination depend on objective and context is all0 important. The courts !ill not examine the states of mind of the parties to the agreement %a su"$ecti+e approach&, "ut !ill ask whether or not reasonable parties to such an agreement !ould possess an ITCLR. )ee dmonds v Lawson %/111&. pplies regardless of !hether the agreement is a social or domestic one or a commercial one.

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!omestic "greement "greemen #o ITCLR t btw husband and wife $alfour v $alfour %-2-2&. 3, o *us"and !ould "e !or(ing o+erseas, he promised to pay his !ife an amount of money each month. o 4hen the parties separated, the !ife sued the hus"and for this monthly amount. *, o lthough there is agreement "ut it 5!as not intended "y either party to "e attended "y legal consequences6. o The parties did not intend that the agreement !as one !hich could "e sued upon. o "tkin L% a. rest upon pu"lic policy arguments 7 that as a matter
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of policy, domestic agreements, commonly entered into, are outside the $urisdiction of the courts. ". 8+en consideration !ithin agreement, there is no contract as there is no ITCLR c. *e said that consideration for spouse "y the love and affection which not take into account into 5cold6 court. d. If there is the contract formed, then hus"and can sue the !ife for not perform the e#press or imply o"ligation such as ta(e care of house or children e. If such agreements could "e litigated in the courts, the courts !ould soon "e overwhelmed b& such cases. o This case lay do!n principle of presumption that domestic and social agreement did not ITCLR.
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o Commercial agreement has ITCLR

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Situations whether rebut or not the presumption 'eparating ITCLR (rebut) couples and certaint& issue *erritt v *erritt -291 o 3, Married couple had separated. 'efore deserting the !ife, the hus"and !rote on a piece of paper that :. . . !hen the mortgage repayment has "een completed I !ill agree to transfer the property into your sole o!nership.: 4hen finish payment, hus"and refuse to transfer o *, Lord ;enning, 4hen a hus"and and !ife are li+ing together in amity it is natural enough to presume that their discussions a"out money
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matters are not intended to create legally "inding contracts. Of course, once that natural lo+e and affection has gone, as it normally has !hen the marriage has "ro(en up, there is no room at all for the application of such a presumption. +resumption of ITCLR is different when the parties are not living in amit& but are separated, or about to separate. They then "argain (eenly. They do not rely on honoura"le understandings. The& want ever&thing cut and dried. It ma& safel& be presumed that the& intend to create legal relations. In -ould v -ould, "ut for that element of uncertainty, I am sure the ma$ority !ould ha+e held the agreement to "e "inding.

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11 | P a g e

'eparating but no certaint&

#o ITCLR

-ould v -ould -291 o 3, *us"and and !ife separated *us"and promise to pay !ife <-/ per !ee( , 5as long as I can manage it6 o *, o There is no dispute as to the !ords that !ere used in ma(ing this oral agreement. To my mind, therefore, it is of no significance !hether the agreement is %as it is& an oral agreement, rather than an agreement in !riting. o $ut ."s long as I can manage it/ import such uncertaint& as to indicate strongl& that legal relations were not contemplated. o 3urthermore, such
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uncertainty appears to my !ay of thin(ing to gi+e rise to insolu"le pro"lems. Couple did not separate but made agreement involvement of asset issue ITCLR (rebut)

-ranatino v Radmacher /1-1 3, o "out pre0nuptial agreement regard to matrimonial assest *, o There is "inding agreement e+en hus"and and !ife still li+e together o )uch as agreement sharing o!nership of the matrimonial home, "an( account or other asset o If parties who have made such an agreement, whether ante0nuptial or post0nuptial, then decide to live apart, we can see no reason wh& the& should
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not be entitled to enforce their agreement.

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+arent allow the child to sta& at home and sought to get back the house possesion

#o ITCLR

%ones v +adavatton %-2=2& 1: o Mum !ant her daughter ga+e up her $o" in >) and study "ar in >? "y promising her </11 for maintenance fee o )u"sequently mum agree to "uy house for daughter to li+e and let another room to "e rented to pro+ide the maintenance fee o ;aughter fail in e#am. o % fter @ year& Mum sought for possession of the house and "ring an action o ;aughter use the agreement as a defence 2: o "greement is no intended to be legall& bound as it is too vague and uncertain
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o Mum entitled the possession o There is also evidence show that even daughter believe there is no ITCLR, she said, a mother !ill not sue her daughter in court. o 'almon L%: interpret "y using other route to reach conclusion Original agreement %mum as( daughter to gi+e up her $o" in >) and agree to pay her </11& enforcea"le due to detriment suffered "y daughter *o!e+er, it is implied term that agreement !ill last only reasona"le time In this case, study 'ar, @ years0 reasona"le greement no longer +alid 3ith the further arrangement of the house, the agreement is ver& vague and, so Ao ITCLR. %Mother did not said that ho! long does the daughter allo!ed to stay, so no
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certain, and so, no ITCLR& o "nother principle, Confirm Balfour-husband and wife presumption can extent to other relations like parents and children etc

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"sk relative to sta& together and after chased them out4

ITCLR (rebut)

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+arker v Clark -2=1 3, ; as( B li+e !ith them ; agree to share the house !ith B, o CIf !e go fifty0fifty on maintenance of house it !ould cost you half of the D/11 odd as set out and half the running e#pense of food, drin(s, etc., "ut I thin( it !ould "e fair if your share of the D/11 !as the same as you no! pay at the 5Thim"le6 %B6s house& if it is less than D/11. o I !ould pay for a daily !oman four mornings a !ee(, ha+e a T... and a ne! car. o Eou could sell out and pay off your mortgage and in+est proceeds to increase your income. o I hope your family +ote for or against this !ill "e unanimous. B ha+e to sell their o!n house
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 The agreement is +ery detail in terms and ; e+en ma(e a !ill to lea+e the house to B. B sold the house and come and stay !ith ; *o!e+er, ;. told B. that the partnership !as not !or(ing, and that the plaintiffs !ould ha+e to find some other place to li+e. B "rought action against ; ; claim there is no ITCLR *, ITCLR Language of the letter taken with the surrounding circumstances, showed that the parties intended to enter into an agreement in the terms of the letter which was binding in law, and not a mere unenforceable famil& arrangement Ao dou"t a proposal "et!een relati+es to share a house, and a promise to ma(e a "equest of it, may +ery !ell amount to no more than a family arrangement of the type
20 | P a g e

considered in Balfour v. Balfour, !hich the courts !ill not enforce. 'ut there is equally no dou"t that arrangements of this sort, and in particular a proposal to lea+e property in a !ill, can "e the su"$ect of a "inding contract. The 5uestion must, of course, depend on the intention of the parties, to be inferred from the language the& use and from the circumstances in which the& use it. On the plaintiffFs side, I accept his e+idence that he considered that he !as ma(ing a "inding contract. "n important factor in this was that he disposed of his own residence. It does not matter for this purpose !hether it !as or !as not a term of the contract that he should sell CThe Thim"leGH the important thing is that the contract re5uired him to give up his occupation of 6The Thimble,G and that he
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!as al!ays quite clear, and made it quite clear, that he !ould not gi+e up occupation unless he also ga+e up the o!nership and parted !ith the property. 2e would not have done that, he sa&s 7 and I believe it 7 unless he thought that he was securing another permanent home. There is, undou"tedly, in the arrangement a lac( of formality, upon !hich Mr. Bar( greatly relies. This, I think, is largel& explained b& the relationship between the partiesH it is easier to demand formal documents from a stranger than it is from a relati+e and friend. It is clear that the plaintiff constantly relied upon the letter as a sort of title to his rightsH he (ept it and referred to it !hene+er his rights !ere called in question ! said that the object of the letter was to induce the
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+arkers to come to 6Cramond89 and he agreed also that he made the will in fulfilment of the promise. I am satisfied that an arrangement "inding in la! !as intended "y "oth sides.

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>ncertainty issueI On this +ie!, no time "eing mentioned, the duration of the agreement !ould "e su"$ect to reasona"le notice on either side. It is clear, I thin(, that it !as intended as a long0term arrangement. $ut an agreement to last for life must be exceptional, and would certainl& be improbable in the case of two &oung couples. *o!e+er, the circumstances here are unusual. The defendants are both over :; and, describing their condition in 'eptember, <=>>, ! said: 6$oth of us were in ver& bad health and neither of us thought we had much chance to live long.8 In these circumstances there is, I thin(, sufficient in the language of the letter to indicate that the agreement
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!as to "e for the duration of the defendantsF li+es

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%oined competition ITCLR and finall& one of (rebut) them win4 'hare the pri?e4 'impkins v +a&s -2@@ 3, o ; and ;6s grand daughter and B are housemates o They enter into a competition as a group and contri"uted equally o Only ;6s daughter a!arded at the end o B "ring action to claim *, o the facts the parties had entered into the competition as an informal s&ndicate on the understanding that whichever forecast in an& coupon was successful the& should 6go sharesG in the priJeH o there was mutualit& in the arrangement between the parties and an intention to create legal relations could
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be inferred9 o !as, therefore, entitled to reco+er a one0third share of the priJe.

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'ocial "greement Introducti on "tkin L.%. in Balfour set an e#ample, o If / people agree to !al( together, there is offer n acceptance of hospitality "ut this agreement can6t "e regarded as contract -et into #o ITCLR competition and cannot get the pri?e Lens v (!C) !evonshire Club, the Times -2-K o *, 4inner of a competition held "y golf clu" cannot sue for the priJe Reason: no one involved in the competition intended that legal conse5uences should flow from enter into a
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competition -et into regular competition and cannot get the pri?e ITCLR (rebut)

@/$rien v *-# Ltd /11/ *, o ITCLR formed o There is regular competition of national ne!spaper

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Contribution to a lift

#o ITCLR

Coward v *I$ -2=/ 3, o The e#ception to the pro+iso in the Road Traffic ct -2L1 s.L=%-&%"& %ii&, to the effect that a dri+erFs third party insurance must co+er a passenger !ho is carried :for hire or re!ard: means a monetary re!ard legally reco+era"le "y the carrier under an e#press or implied contract of carriage. o The e#ception does not apply !here there !as no intention to create legal relations. o " pillion passenger on a motor c&cle was a passenger for hire or reward within the meaning of section AB (<) of the "ct of <=A;. o 1or some <: months he had travelled on the pillion to and from the factor&
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 *, o

where he and the rider of the c&cle worked and he paid a weekl& sum for his transportation.

4hether this arrangement contemplated that the parties !ould enter into a legal relationship enforcea"le in the courts of this country. o >pon this point the fact that "oth parties are dead, !e "elie+e, matters little, for if the question had "een posed to Co!ard or Cole, :!id &ou intend to enter into a legal relationship4C each would probabl& have answered CI never gave it a thought.C o The practice !here"y !or(men go to their place of "usiness in the motor0car or on the motor0cycle of a fello!0 !or(man upon the terms of ma(ing a contri"ution to the costs of transport is !ell (no!n and !idespread. o In the absence of evidence that the parties intended to be bound contractuall&, we should

31 | P a g e

be reluctant to conclude that the dail& carriage b& one of another to work upon pa&ment of some weekl& (or it ma& be dail&) sum involved them in a legal contractual relationship. o The ha?ards of ever&da& life, such as temporary indisposition, the incidence of holidays, the possi"ility of a change of shift or different hours of o+ertime, or incompati"ility arising, make it most unlikel& that either contemplated that the one was legall& bound to carr& and the other to be carried to work. o The rider and pillion passenger never intended to enter into a legall& binding obligation of carriage the pillion passenger was not carried for hire or reward.

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Contrast Regular journe I!C"R # rebut$ and expected to be paid "lbert v *I$ -29 D, a dock worker, regularl& carried fellow dock workers to and from work in his car when the& were working in the same dock as himself. It was a regular and understood arrangement that the& should pa& him something in cash or kind. n accident occurred in !hich the plaintiffFs hus"and, a fello! doc( !or(er !ho !as a passenger in the car in pursuance of the arrangement, !as (illed. Blaintiff "rought the present action against the Motor InsurersF 'ureau claiming the full amount of the damages and costs "y +irtue of their agreement !ith the Minister of Transport.
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The question !as !hether M had "een "ound to insure against passenger lia"ility on the "asis that his car had "een :a +ehicle in !hich passengers are carried for hire or re!ard: !ithin the pro+iso to section /1L %K& of the Road Traffic ct -2=1.

# per Lord ;ono+an, Lord Bearson and Lord ;iploc(& :a +ehicle in !hich passengers are carried for hire or re!ard: meant a +ehicle used for the systematic carrying of passengers for re!ard, not necessaril& on a contractual basis, but going be&ond the bounds of mere social kindness and amounting to a business activit&H and that, on the facts as found "y 4illis N., MFs +ehicle had "een so used fter all, if the passenger elects to go "y private transport he will usuall& know the driver, often ha+e some idea as to the condition of the +ehicle and if he thin(s that either presents a ris( he need not run it.
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 There is, therefore, no justification for imposing the additional burden on all private car owners to insure all potential passengers. $ut where public transport is concerned the position is different. There is no difficult& in identif&ing a motor omnibus or a taxicab as such a vehicle. On the foregoing construction of the pro+iso one scarcely need do more than loo( at it. There is likewise no difficult& in identif&ing a private motor car as such a vehicle if one is told, for example: Cthis is one of a fleet of private cars used for hiring out.C LOR; ;OAO. A I agree that the carriage must be for reward. " reward given for carriage is not the same thing. In the present case there has been regular and s&stematic
35 | P a g e

carriage of passengers b& Duirk for about eight &ears. !river expected to be paid either in cash or in kind, and the passengers he carried expected to make such pa&ment. That there !as no legally "inding contract I regard as immaterial. 8+en !ithout any such contract, Muir( !as, on the facts found "y the trial $udge, carrying on part0 time the "usiness of carrying passengers for re!ard !ith the consequence that the +ehicle he !as using !as !ithin the scope of the pro+iso. It was akin to a business profit. .I)CO>AT ;IL*ORA8. To hold that passengers are carried for hire or reward, one must be able to sa&: Cthat man was using his car to carr& passengers for hire or reward.C
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Share the expense not I!C"R If a party of people, one of !hom o!ned a car, decided to go on holiday together in the car and agreed to share the car e#penses, I do not thin( that ordinarily one !ould say that in those circumstances the dri+er !as carrying passengers for hire or re!ard. Regular journe and expected to be paid @n the other hand, if the driver of a car regularl& takes passengers on journe&s on the understanding that he will receive something for doing so, whether it be in cash or in some other form, the regularit& of the operation ma& show that it had a business or commercial character. I thin( that there must be more than a mere social arrangement to make the use of the vehicle that of carr&ing for hire or reward.
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%utual benefit btw neighbor no hire or reward If a num"er of mothers agree that in turn one of them !ill ta(e all their children to school, that may "e to their ad+antage and "enefit them "ut I do not thin( the dri+er of the car could properly "e descri"ed as dri+ing the children for hire or re!ard. Isolated occasion no enough even though carriage for reward If the dri+er of a car ta(es !ith him t!o strangers as passengers on the understanding that they !ill ma(e a payment for the $ourney, the conclusion may "e reached that they are "eing carried for hire or re!ard but such use of a car on one isolated occasion ma& not suffice to show that the operation was of a business or commercial character. If he does it frequently, still more if he does it regularly, he is going outside the normal use of a pri+ate car as such and the
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+ehicle is one in !hich passengers are carried for hire or re!ard. In the present case the carriage of passengers for money payments !as done frequently and regularly, and clearly !hate+er element of repetition or use character is required "y the phrase :are carried: did e#ist. Carriage for reward but not reward for carriage The payment must "e made for the $ourney. If a man accepts a lift !ithout any e#pectation or understanding that a payment !ill "e made, he is not "eing carried for re!ard !hile he is in the car and !ill not "ecome a passenger for re!ard if he +oluntarily gi+es the dri+er a present at the end of the $ourney. The dri+er !ill "e re!arded for the carriage "ut there !ill "e no carriage for re!ard.
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 Turning no! to the facts of this case I thin( that the conclusion must "e that Mr. Muir( !as carrying the passengers !ho paid him for hire or re!ard and so !as required to ha+e a policy co+ering claims "y passengers in force. 1or some eight &ears he had held himself out as read& and willing to carr& fellow dockers to and from work in his car. It !as a regular and understood arrangement that those !ho !ent !ith him should ma(e a payment for their transport. 4illis N. held that he !as :running an unofficial taxi service, partly to help his friends and partly to finance his motoring e#penses.: In my +ie!, this arrangement !as of a "usiness or commercial nature.

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Commentar of important lift up point Connell v. *otor Insurers. $ureau E<=B=F G D.$. H=H an arrangement !here"y the o!ner of a pri+ate motor car carried a passenger on three occasions for a stipulated re!ard !as held to "e a contract. Lord ;enning M.R. in the course of his $udgment said, :I must confess that I am not altogether satisfied a"out the ground gi+en for the decision in Co!ardFs case O-2=LP - M.'. /@2. It is often a +ery nice question !hether there is a legally "inding contract !hen a dri+er gi+es a man a lift. %important point& I should have thought that, in the ordinar& wa&, when a man agrees to carr& a man for pa&ment, there is a

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contract, albeit informal, no matter whether the pa&ment is b& wa& of contribution to the petrol or a reward for the lift. I !ould agree therefore !ith the $udge that there !as a "inding contract here. $ut in an& case, contract or no, it is a fine point, and it !ould "e a pity if these cases turned on it. I do not thin( they do turn on it. I would prefer to put the decision in Coward.s case on the ground that the motor0 c&cle was not .a vehicle in which passengers are carried for hire or reward. F It !as a pri+ate motorcycle gi+ing a man a lift. )o Cole !as not "ound to insure against in$ury to passengers ... I propose to decide the present case on this simple ground, the car dri+en "y Mr. 8nglish !as not a +ehicle in !hich passengers !ere normally or ha"itually carried for hire or re!ard.:
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Commentar& 'o expectationIreliance on the contract b& the parties be the main issue "lbert v *I$ LOR; ;OAO. A o !river expected to be paid either in cash or in kind, and the passengers he carried expected to make such pa&ment. o That there !as no legally "inding contract I regard as immaterial.

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Talk about sharing #o ITCLR pri?e and later win the pri?e 3ilson v $urnett /119 o 3, ; !ith B !ent to a 'ingo hall ; "ought a "oo( and a!arded a national priJe of <-11,111 B claim that they are agreed to share the !inning equally ; said that only discuss a"out the agreement "ut not actually made Issue, !hether there is sufficient certain and "inding agreement in the discussion o *, o The reality, I thin(, is that the claimants. bare bones account of what the& sa& was agreed at their place of work, taken alone, scarcel&

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stands as an agreement binding and enforceable in law. o *a+ing considered the $udgeFs $udgment as a !hole, it !as in my +ie! a sufficiently adequate $udgment, in !hich the $udge made a critical finding of fact unfa+oura"le to the claimants. o This finding was open to him on the limited oral evidence, !hich !as truly capa"le of "earing directly on the su"$ect. Comment ar This indicate that if agree to share the priJe, the "etter !ay is to ha+e certain agreement "efore this. The most proper one is in !ritten form %in case of +eck v Lateu -29L, there is re"ut presumption "y this !ay a"out !inning priJe
45 | P a g e

issue& o T!o !omen attended "ingo sessions together and had an arrangement to pool their !innings

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Commercial "greement Introducti on Courts !ill generally presume that an ITCLR .ery difficult to re"ut

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2onour #o ITCLR (rebut) clause %ones v Jernon/s +ools Ltd -2LQ 3, B post coupon to ;6s foot"all pool ; denied of recei+ing it. In the condition, 5all transactionR. )hould "e "inding in honour %not "inding "y la!& only6 *, it is open to the parties to state that an agreement is binding in honour onl& but not legal enforceable B had no legal claim from the coupon +ool compan& had no obligation to pa& out the winnings If otherwise, then man& people will alleged that the& had sent the winning coupon. Bool company !ill "e in trou"le Then business can be carried
48 | P a g e

out on such terms but onl& can on basis of trust. If things !ent !rong, entrant !ould need to ta(e the ris(.

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x0 gratia

ITCLR

dwards v 'k&wa&s Ltd -2=K 3, ;0 company, B0pilot %!or(er& ; has the agreement that if pilots made redundant, they !ill "e gi+en e# gratia instead of pension fund. If you are made redundant, your employer tells you to lea+e "ecause your $o" is no longer necessary or "ecause your employer cannot afford to (eep paying you. 8# gratia0 n e# gratia payment is one that is gi+en as a fa+our or gift and not because it is legall& necessar& B decide to ta(e the e# gratia payment "ut ; refuse to pay.

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*, B succeed to claim That the words 6ex gratia8 in a promise to make a pa&ment, although indicating that pre0existing legal liabilit& was not admitted, did not carr& a necessar& or even probable implication that the promise was intended to be without legal effect %post, p. L@=&H nd, there "eing no special circumstances !here"y such an implication could "e gi+en to the !ords, the company had failed to esta"lish that the parties affirmati+ely intended not to enter into legal relations in respect of the companyFs promise to pay %post, p. L@9&. The plaintiff, therefore, !as entitled to reco+er the contri"utions paid "y the company to the fund for him.

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Comf #o ITCLR (rebut) ort letter Kleinwort $enson Ltd v *ala&sia *ining Corporation $erhad %-2Q2& 3, B agreed !ith ; to ma(e <-1 million loan to ;6s su"sidiary company, M B pro+ided !ith letter of comfort "y ; stated that it is al!ays their policy to ensure M to meet lia"ility under the loan M !ent into liquidation

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 *, 4ording of letter only statement of ;6s policy on that time. This cannot ensure that policy cannot "e changed in the future that the concept of a comfort letter, to !hich the parties had resort !hen the defendants refused to assume $oint and se+eral lia"ility or to gi+e a guarantee, !as (no!n "y "oth sides at least to e#tend to or to include a document under !hich the defendants would give comfort to the plaintiffs b& assuming, not a legal liabilit& to ensure repa&ment of the liabilities of its subsidiar&, but a moral responsibilit& onl&.

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"greement of #o ITCLR Lsubject to contract/ Introducti on n agreement may "e made :su"$ect to contract:, either e#pressly, or "y implication. )uch an agreement is incomplete until the details of a formal contract ha+e "een settled and appro+ed "y the parties. 'ut e+en !hen the terms of the formal contract ha+e "een agreed, there is no binding contract until the parties have gone through the procedure necessar& to indicate that the agreement is no longer Csubject to contract: %Rose and 1rank Co v %R Crompton M $ros) 8.g. in contracts for the sale of land b& private treat&, !hen there has "een an :e#change of contracts:. 'efore the :e#change:, there is certain as to the terms of the agreement, "ut there is no
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contract "ecause neither party intends to "e legally "ound until the :e#change of contracts: ta(es place.

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2onour clause but ITCLR conduct the transactions for A &ears Rose and 1rank Co v %R Crompton M $ros. -2/@ 3, ; enter agreement !ith B !ith a 5honoura"le pledge clause6 %*onour clause 7 e#press declaration in transaction !hich not "inding to la!& Clause, This agreement is not entered into legal agreement and not su"$ect to any legal $urisdiction fter L years, "efore terminated, ; recei+ed the order from B. They refuse to fulfill the order. B sue for "reach of ctt

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 *, ccording to the course of business between the parties which is narrated in the unenforceable agreement (honour clause), goods !ere ordered from time to time, shipped, recei+ed, and paid for, under an esta"lished systemH "ut the agreement "eing unenforcea"le, there !as no o"ligation on the merican company to order goods or upon the 8nglish companies to accept an order. 2owever, "n& actual transaction between the parties gave rise to the ordinar& legal rights9 3or the fact that it !as not of o"ligation to do the transaction did not di+est the transaction !hen done of

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its ordinary legal significance. Soods !ere ordered, shipped, and recei+ed. 4as there no legal lia"ility to pay for themI One stage further "ac(. Soods !ere ordered, shipped, and in+oiced. 4as there no legal lia"ility to ta(e deli+eryI I apprehend that in each of these cases the merican company !ould "e "ound. If the goods !ere short0 shipped or inferior in quality, or if the nature of them !as such as to "e deleterious to other cargo on "oard or illegal for the merican company to "ring into their country, the merican company !ould ha+e its usual legal remedies against the 8nglish companies or one of them. $usiness usuall& begins in
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some mutual understanding without a previous bargain. The unenforcea"le agreement cannot %it is true& "e relied upon as cancelling the pre+ious agreements, "ecause it !as to ha+e no legal !eight. $ut the parties who entered into the relations implied b& the unenforceable agreement must ha+e pre+iously cancelled, as the& could do b& mutual consent, all the earlier agreements.

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Commentar The *ouse of Lords therefore decided that, without reference to the arrangement contained in the original document, each time an order was accepted, a binding contract came into existence based upon the parties. conduct. This is a perfectly $ust and sensi"le solution to the pro"lem of e#ecuted transactions !ithin an unenforcea"le agreement. 'ut !hat of the decision that the agreement itself is de+oid of contractual forceI

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 It ma& be asked, wh& is the honourable pledge clause binding on the parties if there is no binding contract as stated b& the clause itself4 lthough it seems illogical that the clause should "e "inding, perhaps the ans!er lies in the pragmatic readiness of the courts to gi+e effect to the clear intentions of the parties. In the Court of ppealFs decision in Rose and 3ran( + Crompton t(in L.N. said, :I find myself dri+en to the conclusion that the clause in question e#presses in clear terms the mutual intention of the parties not to enter into legal o"ligations in respect to the matters upon !hich they are: recording their agreement.
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 I ha+e ne+er seen such a clause "efore, but I see nothing necessaril& absurd in business men seeking to regulate their business relations b& mutual promises which fall short of legal obligations, and rest on obligalions of either honour or self0 interest, or perhaps both.

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Contrast !ransaction for &' (o I!C"R ears but uncertain issue $aird Textile 2oldings Ltd v *a rks M 'pencer +lc ', !ho had supplied clothing to MT) for L1 years until MT) terminated the arrangement !ithout !arning, appealed against a finding dismissing their argument that there had "een an implied contract requiring MT) to gi+e reasona"le notice of termination. MT) cross appealed in respect of a finding that the issue of !hether they should "e estopped from terminating the arrangement !ithout gi+ing reasona"le notice should proceed to trial. lleged o"ligation on MT) to acquire garments from 'aird is insufficientl& certain to found any contractual o"ligation "ecause there are no o"$ecti+e
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criteria "y !hich the court could assess what would be reasonable either as to 5uantit& or price. This is not a case in !hich, the parties ha+ing e+idently sought to ma(e a contract, the court see(s to uphold its +alidity "y construing the terms to produce certainty. Rather it is a case in which the lack of certaint& confirms the absence of an& clear evidence of an intention to create legal relations. It cannot be said, let alone with confidence, that the conduct of the parties is more consistent with the existence of the contract sought to be implied than with its absence.

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!ifferent "pproach Introduction parties deal at no e#isting ties of family, friendship or corporate structure, the court !ill find a contractual intention. dmond v Lawson /111 3, B claimed that pupillage "arrister !ill form a contract of employment under s.@K %L& %a& of Aational Minimun 4age ct -22Q *, There is ITCLR The issue !hether the parties intended to create legal relations !as to "e determined objectivel&, and !ith particular reference to the specific conte#tH that the defendantsF offer of pupillage follo!ed a long, time0consuming and e#pensi+e process of direct

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practical significance to cham"ers as a !hole, since it "enefited all mem"ers to attract the a"lest pupils from !hom future tenants might "e recruitedH that to the pupil the offer of pupillage in a flourishing set of cham"ers !as of potential professional and financial consequence, since it guaranteed the opportunity to display the pupilFs quality and to see( a tenancyH that the regulatory materials !ere impliedly incorporated into the arrangement, ma(ing detailed terms unnecessary to recordH that, since the agreement to underta(e pupillage pro+ided cham"ers !ith a pool of selected candidates !ho might "e e#pected to compete for recruitment as tenants, a pupil such as the claimant pro+ided consideration for the cham"ersF offer "y agreeing to enter into that arrangementH and that, accordingly, the claimant and the defendants
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had made a "inding contract 'ut, pupillage !as not a ctt of apprenticeship and B !as not 5!or(er6 under the act. )o still no entitle to recei+e national minimum !age

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)ifficult to determine whether social or commercial 'adler v Re&nold /11@ 3, C0 ghost!riter claim damage for "reach of ctt from ; C alleged that he enter oral agreement !ith ; to ghost!rite ;6s auto"iography C6s argument "ased on meetings "efore !hich including social nature of meeting as it is in+ol+ed their !i+es. *o!e+er, ; enter agreement !ith another !riter to produce auto"iography C sue for "reach of ctt *, The approach of the courts to contractual intention has
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regard to, %i& the nature of the relationship "et!een the partiesH %ii& the conte#t in !hich agreement !as reachedH and %iii& any e#press declaration of intent. % Chitty on Contracts /2th 8dition .ol - paras /7-9@, /7-@2, /7-@9& Contractual intention is normall& judged objectivel&. LIn the absence of N an expression Eof the absence of contractual intentionF N the legal effect of an agreement which is clearl& intended to give rise to some legal relations is not determined b& the subjective intentions of the parties or of one of them R % Chitt& para /7 -@=&.
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 The facts of this case place the agreement "et!een the parties some!here between an obviousl& commercial transaction and a social exchange. In my $udgment, the onus is on C to esta"lish an intention to create legal relations, albeit that the onus is a less heav& one than that which would be re5uired to establish such an intent in the context of a purel& social relationship.

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@ther Commercial T&pes: Introducti on Aormally no legal lia"ility due to ad+ertisement mere puff Mere puff al!ays +ague in terms to "e legally enforcea"le +recise word expressed but not serious mean #o ITCLR "dvertisement

3eeks v T&bald -=1@ 3, ;, after a drin( offer <-11 to the man !ho married his daughter !ith his consent C accepted the offer ; refused to pay *, ; not "ound The !ord !ere simply to e#cite the suitor
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+recise and serious means

ITCLR (rebut)

Carlil v Carbolic 'moke $all 3, ;efence0 no intention to "e legally "ound *, Company deposited <-111 proof of the intention

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'eparating ITCLR view in LCoins given/ issue sso +etroleum Ltd v Commissioners of Customs and xcise %-29=& 1: %not so rele+ant, details under 5consideration6& 8sso produced millions of free :4orld Cup coins:. 8ach coin "ore a li(eness of mem"ers of the 8ngland squad for the -291 4orld Cup. They ad+ertised that they !ould gi+e a!ay a coin !ith the purchase of four gallons of petrol. The main issue in the case !as !hether the coins !ere produced for sale, and therefore su"$ect to purchase ta#. *, The *ouse of Lords held %Lord 3raser dissenting& that, e+en if there !as a contract, there !as no sale as such.
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:sale: in+ol+ed, under the rele+ant legislation, a contract for !hich the consideration !as a money price. In this case, the consideration for the coin !as the entry "y the motorist into another contract to "uy the petrol. This resulted in a unilateral contract under !hich the petrol station proprietor "ound himself to pro+ide a coin to anyone purchasing four gallons of petrol. Important: Issue of ITCLR On the issue of contractual intention the majorit& of the court was evenl& divided. Lords )imon and 4il"erforce considered that the circumstances !ere commercial in nature. Lord )imon said sso and the garage proprietors put the material out for their commercial advantage, and designed it to attract the custom of

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motorists. The whole transaction took place in a setting of business relations. It seems to me in general undesira"le to allo! a commercial promoter to claim that !hat he has done is a mere puff, not intended to create legal relations The coins may ha+e "een themsel+es of little intrinsic +alueH "ut all the e+idence suggests that 8sso contemplated that they !ould "e attracti+e to motorists and that there !ould "e a large commercial ad+antage to themsel+es from the scheme, an ad+antage to !hich the garage proprietors also !ould share. ;ifferent +ie!, .iscount, If !hat !as descri"ed as "eing a gift, !hich !ould "e gi+en if something !as
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purchased, !as something of value to the purchaser, then it could readily "e inferred that there !as a common intention to enter into legal relations. $ut here, whatever the cost of production, it is clear that the coins were of little intrinsic value. I do not consider that the offer of a gift of a free coin is properl& to be regarded as a business matter in the sense

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Collective "greement Introducti on greement "et!een trade union and employer regulation pay and condition of !or(s. Ao ITCLR >nder s.-92%-& and %/& of Trade >nion and La"our Relation %Consolidation& ct -22/ Collecti+e agreement not to ha+e "een intended "y parties to "e legally enforcea"le contract unless it is in !riting and e#pressly pro+ided.

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