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Itclr Essay

1) In order to determine if there was an intention to create legal relations (ITCLR), courts use an objective test of whether a reasonable person would conclude the parties intended to enter a legally binding contract. 2) There is a general presumption that social and domestic agreements do not have ITCLR, but this can be rebutted with evidence to the contrary. Commercial agreements are strongly presumed to have ITCLR. 3) Exceptions to presuming ITCLR exist for vague offers like "mere puffs", honor clauses stating a contract is not legally binding, and terms marked "subject to contract" during negotiations. Overall, courts consider ITCLR on a case by case basis depending on the specific

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233 views2 pages

Itclr Essay

1) In order to determine if there was an intention to create legal relations (ITCLR), courts use an objective test of whether a reasonable person would conclude the parties intended to enter a legally binding contract. 2) There is a general presumption that social and domestic agreements do not have ITCLR, but this can be rebutted with evidence to the contrary. Commercial agreements are strongly presumed to have ITCLR. 3) Exceptions to presuming ITCLR exist for vague offers like "mere puffs", honor clauses stating a contract is not legally binding, and terms marked "subject to contract" during negotiations. Overall, courts consider ITCLR on a case by case basis depending on the specific

Uploaded by

Cleveland Roy
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© © All Rights Reserved
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ITCLR ESSAY.

In order to determine whether there was ITCLR, the court will generally use an objective test by
assessing whether a ‘reasonable person’ would conclude that the parties intended to enter into a
contract. Essentially, there is a general presumption that there is no ITCLR for social and domestic
agreements. In terms of agreements between spouses living together as one household, the courts
would assume that they do not intend to be legally bound to any agreements, unless there is evidence
to the contrary. In Balfour v Balfour the husband refused to pay his wife a promised monthly allowance
of 30 pounds after separated. The courts ruled that the husband was not bound by his promise, as at the
time the agreement was made there was no ITCLR. In contrast, in Merritt v Merritt, the court held that
there was ITCLR as the court held that the parties were separating thus it was presumed that any
agreement between them was intended to be legally binding. Thus, in the latter case, it is evident that
ITCLR is a vital component in determining whether a contract is to be legally binding.

In terms of agreements between parent and child, it is presumed that arguments between a parent and
a child were not intended to be legally binding, but the presumption can be rebutted. In Jones v
Padavatton, the court ruled that agreements made by a mother to her daughter were not made with
ITCLR. They were merely family arrangements in which both parties were happy to trust each other to
keep the bargain. It is admitted that despite the presumption, the court still allows rebuttals in order to
identify whether there is indeed ITCLR thus indicating that it is an important element. Similarly, in
relation to social agreements, the court would presume that such agreements were made without
ITCLR, but this presumption can be rebutted. In Simpkins v Pays, a grandmother, granddaughter and
another lodger entered into a weekly newspaper competition where they shared the cost of entry but
only one name was filled in the form. The court ruled that the plaintiff was entitled to a share of the
winnings as they all contributed to the competition with the exception that any prices would be shared,
and thus there was ITCLR.

With regards to commercial agreements, there is a strong presumption that parties intended to be
legally bound when they make a commercial agreement, and this presumption can only be rebutted
with clear contrary evidence. In Esso Petroleum v Customs and Excise Commisioners, the court ruled
that there was ITCLR when Esso offered ‘coins’ showing members of the England football squad team to
their customers, as it is undesirable to allow the company to make promises in advertisements that they
were not bound to keep. In J Evans and Sons v Andrea Merzario, the court ruled that an ITCLR can be
inferred, even though the promise to keep the goods below the deck was made the course of ‘courtesy
call’ unrelated to any particular transaction, and the future duration was not specified. This is because
the parties had previously done business together and the goods were always transported below deck.
The plaintiff would not agree to a change in method this time if the promise was not made. In Bear
Stearns Bank v Foram Global Equity, both parties had a phone conversation where the price and the
product were agreed upon, but the details were left to be decided by lawyers. The court ruled that there
was an ITCLR when the parties made the deal on the telephone, as the parties made the statement that
the deal is ‘closed’, and this type of deal is often made orally. Thus, the strong presumption that there is
ITCLR when it comes to commercial agreements indicates that the court is generally of the view that
ITCLR is an important element and is presumed to exist especially in the context of commercial
agreements.

There are exceptions to the presumption. When an offer is extremely vague and clearly not intended to
be taken seriously, it is known as ‘mere puffs’. In the case of Weeks v Tybald the court ruled that a
man’s offer to give 100 pounds to any suitable man who would marry his daughter was not intended to
be taken seriously, thus there was no ITCLR. This principle can sometimes be applied to extravagant
language used in advertisements. In the case of Carlil v Carbolic Smokeballs, the defendants tried to
argue that they did not intend to create legal relations when they offered 1000 in the bank for this
purpose, to demonstrate their sincerity. Besides that, an honour clause is also an exception to the
presumption. In the case of Rose and Frank v Compton Bros the contract in question contained an
‘honourable pledge clause’ and the court ruled similarly as the contract states that it is ‘binding in
honour only’. Apart from that, an agreement ‘subject to contract’ is also an exception as parties who do
not intend to be legally bound until a formal contract is exchanged. In Confetti Records v Warner Music
UK, the terms were sent to the claimant marked ‘subject to contract’ and as such, such a term will
indicate that at this point of negotiation there is no ITCLR. It is observed that ITCLR has been used to
uphold the sanctity of the laissez-faire principle as there the courts often decide on the existence of
ITCLR depending on the facts of each case.

All in all, it is opined that ITCLR is indeed important, thus the statement made by the question is
inaccurate.

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