INTENTION

Introduction

• Not provided for in the Contracts Act

• Refers to „intention to create legal obligations‟

▫ Created at the time of contract

• That is, an intention to become legally bound, with legal consequences to sue and be sued

• Generally, intention is derived depending on whether it is a ...

▫ Social and domestic agreement

▫ Commercial contract

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Intention

Choo Tiong Hin & Ors v Choo Hock Swee

(1959) 25 MLJ 67

… an agreement is not a contract in the strict sense of the word, unless it is the common intention of the parties that it shall be legally enforceable. Such an intention is normally inferred from the nature of the agreement. ”

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Intention

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Intention

Choo Tiong Hin & Ors v Choo Hock Swee (1959) 25 MLJ 67

“ … an agreement is not a contract … unless it is

the common intention of the parties that it shall be legally enforceable. Such an intention is normally inferred from the nature of the agreement.

For instance … in the case of agreements relating

to social engagements, it is inferred as a matter of course that there is no common intention to create legal obligations”

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Intention

Introduction

• What is a social and domestic agreement?

• It can be seen from the perspective of:

1. Subject matter, and/or agreements of a social nature

2. Relationship between parties Refers generally to spouses, parents and children,

etc

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Intention

Balfour v Balfour

Husband and wife.

Husband went to Sri Lanka to work. Wife unable to follow, and stayed in UK. Husband agreed to pay £30/month.

Held … no intention to create legal relations, thus no contract.

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Intention

Jones v Padavatton

Mother and daughter.

D (Washington) accepted an offer from Mum to go to UK to do law, and was provided maintenance. Nothing in writing, no terms recorded. House was then bought in London, which daughter stayed. Other rooms rented to provide maintenance. Mum paid for the house, and house in mum‟s name. Rent not taken by mum, no accounts of rent.

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Intention

Court of Appeal:

Only a family arrangement.

“depends on the good faith of the promises which are made and are not intended to be rigid, binding agreements”

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Intention

Exception

• All presumptions can be rebutted

• If an intention to be bound can be shown, then there is a contract

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Intention

Merrit v Merrit

Husband and wife.

Seperated. Husband agreed to transfer the house to the wife, as long as wife paid the instalments. This was put in writing. Husband later refused to transfer.

Court of Appeal … there is intention.

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Intention

COMMERCIAL AGREEMENTS

To be continued …..

Choo Tiong Hin & Ors v Choo Hock Swee (1959) 25 MLJ 67

… an agreement is not a contract in the strict

sense of the word, unless it is the common intention of the parties that it shall be legally enforceable. Such an intention is normally inferred from the nature of the agreement.

For instance, in the case of agreements

regulating commerce for business, it is obvious that the parties intend legal consequences to follow;

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Intention

Introduction

• The presumption is that there is an intention to be bound

• However, if one can show that there is no such intention, the presumption is rebutted

• Onus of proof to rebut falls on the one alledging that there is an intention

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Intention

• What must be looked at is the surrounding

circumstances

• Even if it deals with commercial relationships,

must view:

▫ The wordings of the agreement

▫ Nature of the agreement

▫ Background an agreement was reached

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Intention

Rose and Frank Co v JR Crompton & Bros Ltd

“ This arrangement is not entered into, nor is this memorandum written, as a formal agreement, and shall not be subject to legal jurisdiction in the Law Courts either of the United States or England, but is only a definite expression and record of the purpose and intention of the three parties concerned, to which they each honourably pledge themselves, with the fullest confidence – based on past business with each other – that it will be carried out through each of the three parties with mutual loyalty and friendly co-operation”.

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Intention

“ This arrangement is not entered into, nor is this memorandum written, as a formal agreement, and shall not be subject to legal jurisdiction in the Law Courts either of the United States or England, but is only a definite expression and record of the purpose and intention of the three parties concerned, to which they each honourably pledge themselves, with the fullest confidence – based on past business with each other – that it will be carried out through each of the three parties with mutual loyalty and friendly co-operation”.

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Intention

Home Insurance Co Ltd & St Paul Fire and Marine Insurance Co Administratia

Asigurarilor De Stat

Insurance contract.

“This treaty shall be interpreted as an honourable agreement rather than as a legal obligation”

Disputes “shall be referred to two arbitrators”

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Intention

Esso Petroleum v Commissioners of Custom and Excise

Petrol sales promotion: for every four gallons of petrol, a coin bearing the likeness of an English soccer team member who played in the World Cup competition in Mexico in 1970 will be given.

Q: is there a legally binding contract between dealers and customers for the coin?

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Intention

True it is that the respondents are engaged in business. True it is that they hope to promote the sale of their petrol,

but it does not seem to me necessarily to follow or to be inferred

that there was any intention on their part

that their dealers should enter into legally binding contracts with regard to the coins ;

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Intention

• The offer of a gift of a free coin cannot properly be regarded as a business matter.

• Such an offer is not “the subject-matter of the

agreement.” • No reason to imply any intention to enter into

contractual relations from the statements on the posters that a coin would be given if four gallons of petrol were bought.

• No reason to impute that every motorist who went to a garage where the posters were displayed to buy four gallons of petrol had any intention to enter into a legally binding contract for the supply of a coin to him.

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Intention

“On the acceptance of his offer to purchase four gallons there was no doubt a legally binding contract for the supply to him of that quantity of petrol, but I see again no reason to conclude that because such an offer was made by him, it must be held that, as the posters were displayed, his offer included an offer to take a coin. “

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Intention

END