Why is it important to identify that there is an intention to create legal relations?

Beijing Law Review, 2011, 2, 127-133

doi:10.4236/blr. 2011 23013 Published Online September 2011 (http://www.SciRP.org/journal/blr)

Copyright © 2011 SciRes. BLR

127

‘Intention to Create Legal Relations’: A

Contractual Necessity or an Illusory Concept

Bhawna Gulati

International Trade and Economic Laws (CITEL), Jindal Global Law School of O. P. Jindal Global University, Jindal, India.

Email:

Received July 20th, 2011; revised August 22nd, 2011; accepted September 1st, 2011.

ABSTRACT

‘Intention to create legal relations’ forms the basic ingredient of any valid contract in many jurisdictions around the

world. The paper argues that such requirement is neither required nor is purposeful if any particular jurisdiction has

‘Consideration’ as the basic requirement to prove the formation of validly formed contract. The paper postulates that

‘consideration’ in itself is, and should ideally be, indicative of such intention. Therefore, as far as common law coun-

tries are concerned,‘consideration’ in itself should be capable of dealing with the intention of the parties and there

should not be any separate requirement of proving an ‘intention to create legal relation’. By na tural corollary, the re-

quirement to prove su ch ‘intention’ can be justified in countries where ‘consideration’ is not a requirement for a form-

ing a valid and legally enforceable contract. The paper, while dealing with the proposed postulations, also deals with

the difference in presumption with regard to such intention while dealing with contractual relations that arise in do-

mestic set-up as differing from those arising in a commercial set-up.

Keywords: Contrac t Law, Intention to Create Legal Relations, Domestic Contracts, Contract Law Theories,

Consideration

1. Introduction

The requirement of ‘Intention to create legal relations’

constitutes one of the most significant conditions of a

valid contract in many jurisdictions around the globe—

both developed and developing. Allegedly, Contract Act,

being an Act governing relations between private parties,

cannot be interpreted in the court of law without giving

much weightage to the intention of the parties forming

such contract. To prove the existence of ‘intention to

create legal relations’ in addition to prove the existence

of ‘consideration’ becomes quite burdensome at times.

English Law specifically requires the existen ce of ‘inten-

tion to create legally binding contract’ for enforcing a

contract despite the existence of ‘consideration’ for the

contract. The main argument of this paper is that ‘con-

sideration’ in itself is, and should ideally b e, indicative of

such intention. Therefore, as far as common law coun-

tries are concerned, ‘consideration’ in itself should be

capable of dealing with the intention of the parties and

there should not be any separate requirement of proving

an ‘intention to create legal relation’. By natural corol-

lary, the requirement to prove such ‘intention’ can be

justified in countries where ‘consideration’ is not a re-

quirement for a forming a valid and legally enforceable

contract. This will hold good for the countries based on

civil law system. But the requirement of proving such

intention in common law countries have been criticised

by scholars and require immediate action by the legisla-

ture and judiciary.

It is pertinent to no te that there is a divide between the

common law countries where the western countries e.g.

U.S and U.K. require the establishment of ‘intention to

create legal relations’ in addition to the existence of ‘con-

sideration’, but emerging economies like India and China

does not requir e it.

Moreover, to decide whether such an intention is pre-

sent in a particular agreement between the parties, the

court starts with initial presumptions depending upon

whether the agreement is originating in a domestic set-up

or is it purely a commercial transaction. Disentangling

domestic influence from the commercial transaction be-

comes difficult in some situations due to increasing in-

teraction between the familial relations and commercial

relations, thereby blurring the distinction between do-

mestic contracts and commercial contracts. This takes a-

way the logic for having different presumption in such

‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept

128

extricable situation. Besid es, ‘intention’ itself is a decep-

tive concept as th e real intention might never come to the

knowledge of the interpreter and in such situations the

dilemma of how to gather the ex istence or non-existence

of such intention haunts the very decision based on it.

Another problem arises when parties to the contract

comes from different social and cultural background and,

therefore, perceive differently in a given situation. This

problem of different perception is even more complex

than the problem arising in the case of manipulative hu-

man tendencies. The author is conscious of the fact that

the courts, in different jurisdiction s, have dealt with such

issues differently. The paper, however, is based more on

the theoretical argument of whether ‘intention to create

legally binding relations’ is worthy enough to be re-

garded as a separate requirement for contract law? Or

else can it be considered a part of the requirement of

‘consideration’ because consideration to a large extent

indicates intention of the party from whom it is moving.

2. Why Contract Law: An Inquiry into

Contract Law Theory

‘I cannot marry you’ said the En glish boy. ‘But you pro-

mised me that you will marry me’ pleaded the girl. ‘Pro-

mises are made to be broken’ answered the boy. ‘But

what about the ti me I inve sted in this relationship?’ asked

the girl. It feels quite obnoxious to think of the fate of

such conversations that make people helpless when a

promise is broken or an obligation remains unfulfilled.

One wonders at times that why contract law, as existing

in some countries e.g. U.K., that has the ability to hold

anyone responsible to pay 2 dollars for a cup of coffee,

leaves the boy (in the illustration) free from any obliga-

tion. What is so peculiar about domestic/personal rela-

tions that keeps them out of courts’ interference and

rather make them go unattended and disregarded, even

though the damage can be much more than in case of any

commercial breach of promise?

This is not a rarest of the rare cases that takes one to

the dilemmatic situatio n of rival contract theories. Such a

perplex question has been talked quite a lot by the scho-

lars interested in the theory of contractual intention and

ancillary subjects.

That brings us aptly to discuss briefly the primeval

question of contract law theory, i.e. why contracts are

enforced? Different theories have divergent views to deal

with this question. ‘Will theory’ of contract law main-

tains that commitments are enforceable because the pro-

misor has “willed” or chosen to be bound by his com-

mitment.” According to the classical view, the law of

contract gives expression to and protects the will of the

parties, for the will is something inherently worthy of

respect.” [1] Since the theory is will ba sed and is binding

because the parties freely assumed the contractual obli-

gations, the enforcement will not be morally justified

unless the person subjected to the performance obligation

has made a genuine commitment. This draws the atten-

tion of the enfo rcer to the subjective intention of the pro-

misor at the time the promise was made. However, such

situations sometimes lead to a dilemma where the con-

tract interpreter or enforcer has to choose between the

subjective intention of the promissor and the expectations

of the promissee from such a promise. If the secret direc-

tion of the intention, said every man of sense, could in-

validate a contract, where is our security? And yet a

metaphysical schoolman might think, that where an in-

tention was supposed to be requisite, if that intention

really had no place, no consequence ought to follow, and

no obligation be imposed [2].

It is pertinent to note that under the will theory the

contract is enforceable because it is intended by the par-

ties out of their free will. But how far the theory is going

to provide appropriate results when objective intention

differs from the subjective intention? The law enforces

obligations which parties appear to have assumed rather

than those which they have actually assumed. The scope

of voluntary undertaking (consent) is further stretched to

include implied and even imputed promises and so may

be taken ‘far beyond anything remotely clos e to what the

parties had in m ind [3] .

Another theory explaining the enforceability of con-

tracts is the theory of private autonomy. The principle of

private autonomy “simply means that the law views pri-

vate individuals as possessing a power to effect, within

certain limits, changes in their legal relations.” [4] Auto-

nomy theory argues that people should be free to make

worthwhile choices. Another theory is that of consent

which stands for the proposition that a contract is a pro-

duct of wilful interacting individuals. All the above

stated theories require, theoretically at least, the exercise

of free will and manifestation of intention for undertak-

ing certain obligation. The rule, as stated in Rose and

frank Co v. JR Crompton & Bros Ltd [5], is ‘to create a

contract there must be a common intention of the parties

to enter into legal obligations, mutually communicated

expressly or impliedly.’ But n ot in the real world the will

is so ‘free’ and the intention is so explicitly manifested.

A person’s will may be influenced by the limited experi-

ences he encounters in his life and it might also depend

on the perceptions being shaped due to the surrounding

circumstances. An illustration will help explaining the

point more clearly: An Indian went to a Singaporean ho-

tel and ordered a vegetarian pizza. When it was served,

he noticed with surprise that it had sea food in it. The

pizza which was non vegetarian as per Indian standards

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‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept129

was a perfectly vegetarian pizza according to Singapo-

rean experience. Notably, both the Indian and the hotel

owner were willing to perform the contractual obligation

but both had different perceptions of a vegetarian pizza.

How will the contract law theories or the courts enforc-

ing contract law principles deal with such situations is

not very clear.

The very justifications for not enforcing the familial

contracts, as provided by courts in various cases, are

based on fallacious premises. In Balfour case [6], Lord

Atkin stated that domestic contracts are not contracts as

the parties did not intend that they should be attended by

legal consequences. But this applies even to the comer-

cial transactions like in the coffee case illustrated earlier.

Many a times the parties do not contemplate legal con-

sequences unless the other party commits breach.

However, with the changing times and changing di-

mensions of familial relations, this attitude towards so-

cial agreements seems to have changed. Freeman classi-

fies Balfour v Balfour [6] as a ‘Victorian Marriage’ and

sees the marriage of today ‘less regulated’ and ‘more

dependent upon individual choice.’ For him ‘Marriage

has become a ‘personal rather than a social institution.’’

He pleads for a change in the treatment of presumptions

in domestic spheres [7].

Noteworthy, there are many laws which interfere in

domestic relations between parties and thereby witness

the most personal arrangement which the human beings

try to protect from outside intervention. Legislations re-

garding Family Law, Divorce Act, Succession Act, etc,

are some illustrative pieces of legislation. Considering

the changing nature of domestic/social relations, the

court should not differentiate the inten tion that th e parties

had in mind while dealing in their personal or commer-

cial matters. Therefore, the traditional practice of shifting

burden of rebuttal of the presumption of ‘intention to

create legal relations’ in such contracts is unreasonable

and lacks justifiable ba sis.

Relational contract theorists argue that commercial re-

lationships ‘are not governed by contractual intentions,

but reflect a variety of influences, including social norms

and the norms of conduct that develop within the rela-

tionship’ [8 ]. More often than not, the parties d o provide

for, in detail, all the contractual terms and consequences

that will flow from a particular transaction. In su ch cases

it is grossly unreasonable to go in to the question of what

the parties intended at the time they entered into a con-

tract. In both types of arrangements, domestic as well as

commercial, asking what the parties intended at the time

of contracting may be ‘an utterly unreal question, since

in all probab ility the parties did not con sider the question

at the time of the inception of the agreement’ [9].

In both commercial and family arrangements, rela-

tional contract theory indicates that the parties are more

concerned with the preservation of ongoing relationships

than with the availability o f legal san ctions. In bo th types,

at the outset of the arrangements the parties may not sub-

jectively consider it likely that contract law will control

or regulate their arrangements. They may instead rely on

social or relational norms to do the job. Relational re-

searchers have demonstrated that in business relation-

ships, as well as family relationships, ‘co-operation with-

out reference to legal entitlements is normal’ [10]. In

both commercial and family agreements, the long-term

nature of the relationship and related agreement impedes

the ability to settle finally all terms at the time of co ntract

formation. Therefore, to draw a demarcation on the basis

of different intention prevailing in the minds of the par-

ties is ill founded.

Analysing the changing scenario prevailing in modern

day domestic set up and considering the drastic trans-

formation in the way people perceive their relationships,

it is apparent that dividing line between the domestic and

commercial contracts is shrinking. People are becoming

more and more commercial even in familial relatio ns and

security of transaction is becoming a matter of priority.

In such situation the legal requirement of the parties’

intention to be contractually bound continues to impede

the enforcement of family contracts. The distinction be-

tween commercial contracts, which are presumptively

enforceable, and family contracts, in which intention

must be proved, cannot be justified. The very reasons for

which the different presumptive in tention theory evolved

between commercial and domestic contracts become

otiose. If the requirements of consideration and agree-

ment are thought to be inadequate to distinguish enfor-

ceable from unenforceable arrangements, then a more

appropriate method needs to be devised to achieve this

purpose than one which is ostensibly focused on a ficti-

tious inquiry as to party intention, and which actually

masks an anachronistic and inappropriate judicial senti-

ment [11].

3. Intention: Objective or Subjective

After focussing on different theories of why contracts are

enforced and then placing ‘intention to create legal rela-

tions’ in each of those theories, the next discussion

should aim at analysing various standards (objective and

subjective) used b y Eng lish Courts while finding wheth er

such intention exists or not. This part of the paper will

examine the different approaches employed by courts

while dealing with the issue of ‘intention’ in any particu-

lar contract. What intention do the courts take into ac-

ccount while dealing with different situations before

them—the ‘subjective’ intention or the ‘objective’ inten-

tion? In Merritt v. Merritt [12], Lord Denning held “…

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‘Intention to Create Legal Relations’: A Contractual Necessity or An Illusory Concept

130

the court does not try to discover the in tention by looking

into the minds of the parties. It looks at the situation in

which they were placed and asks itself: Would reason-

able people regard this agreement as intended to be le-

gally binding?” Also in Smith v Hughes [13] it was de-

cided that a person’s conduct with regard to the quality

of the subject matter proposed by the other party is de-

termined by the reasonable man regardless of the per-

son’s actual intentions.

However, Courts usually try to cloth the doctrine of

intention using th e objective intention hypothesis. One is

generally bound to do what a reasonable in terpretation of

one’s behaviour implies and not to what he had in mind.

If one party has a secret intention then that intention is

void. The objective test of intentions is one of the rules

of engagement necessary to protect the integrity of the

contracting process and to prevent its abuse. Holding par-

ties to the objective stan dard not only prevents them from

reneging on their under takings but also g ives them strong

incentives to take care not to misrepresent their own in-

tentions (even innocently) nor to misinterpret the inten-

tions of others and also extends the practice beyond on-

going relationships where it would otherwise not exist

[14].

Having discussed the policy justification for courts’

favouritism of objective intention over subjective inten-

tion, one should not forget that such a choice of objective

over subjective intention might not always lead to equi-

table justice to the parties. Some philosophers argue that

autonomy theory leads to social justice but what about

the justice to the parties. When the whole contract re-

volves around party autonomy and party chosen obliga-

tions then why under the garb of objectivity the subjec-

tive interpretation is suppressed. It is true that objective

standard prevent parties from reneging on their under-

taking but when the promissor never intended to under-

take the obligatio n, which though objectively arise in the

facts and circumstances of a particular case, objective

standard is too burdensome. At times it is quite probable

that the parties perceive different meaning for the same

set of words. This is most common when parties belong

to different cultural set up and cross cultural differences

that influence their tak e on different situations.

In some cases there is also another problem of how

and when a contract is said to be formed. The presence of

consideration is often indicative of the intention to create

legal relations, though there are situations where the

presumption of the intention can be rebutted, thus deter-

mining that there is no contract and no legal liability.

Additionally the courts require ‘intention to create legal

relations’ as an essential ingredient apart from the estab-

lishment of other prerequisites to prove the validity of

any contract and rely on the presumptive intention theory.

The next section deals with the different presumptions

that the courts use depending upon whether the contract

is a domestic contracts and commercial contracts i.e.

whether the parties are placed in a domestic set-up or

whether they are related to each other in a commercial

set-up.

4. Presumption of ‘Intention’—Domestic v.

Commercial Contracts

This part illustrates the difference in presumption which

is employed by the courts while dealing with the ques-

tion of intention in cases of contracts arising in domestic

set-up as opposed to those arising in commercial set-up.

In domestic agreements, for example those made be-

tween husbands and wives and parents and children,

there is presumption of no intention to create legal rela-

tions and no intention that the agreement should be sub-

ject to litigation. In contrast to this, there is a rebuttable

presumption in commercial agreements that the parties

intend to create legal relations. While there are conflict-

ing legal authorities on whether specific facts involving

familial relations result in binding and enforceable agree-

ments, it seems settled that in do mestic agreements there

is a rebuttable presumption that the parties do not have

intention to create legal relations. However the problem

arises when the contract is formed in such intermingled

circumstances that it is not clear whether the transaction

is purely domestic or whether it is commercial. The most

common example that will illustrate this situation is

found in many Asian countries i.e. family businesses.

Suppose the nephew is asked by his uncle to look after

the accounts of the business, can the nephew take the

uncle to the cou rt for the sum of mone y due for services?

Yet another example can be nephew attending the pro-

fessional tutorial classes conducted by uncle. Can the

uncle make the nephew pay under the law of contract?

The uncle may as a matter of fact prove his case and

make the nephew pay for the tuition provided but the

catch in the situation is that if we take the traditional

presumption theory of ‘no intention to create binding

legal relations in domestic/social contracts, the promissee

(uncle) is unnecessarily burdened to rebut the presump-

tion.

In the era of modern contract law theory, the distinc-

tion between the public and private and between the

market and the family seems quite otiose [11]. Even if

we take the husband-wife cases, in the past, brides and

grooms traditionally pro mised to “love, honour and cher-

ish” as part of a lifetime commitment. But these days,

high divorce rates and a healthy scepticism now affect

our notions of romance, and more precise statements

about a couple’s obligations may be needed.

As stated earlier, the court, in Balfour v Balfour [6],

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held that the agreement was a purely social and domestic

agreement and therefore it was presumed that the parties

did not intend to be legally bound. Similarly in Jones v

Padavatton [15], the court held that the agreement was

purely a domestic agreement which raises a presumption

that the parties do not intend to be legally bound by the

agreement. In the latter case the daughter left her secured

job relying on the promise made by the mother. If the

promise cannot be enforced where is the security of

transactions? Under the cover of domestic relations the

promisor can exploit the promissee without any obliga-

tion enforceable in the court of law by the promissee

against the promisor. The court could have reached the

same decision and decided the case in favour of the mo-

ther on the ground that the daughter could not perform

effectively her part of the obligation, since she could not

complete her studies. But the court seems to have chosen

the easy way out of denying the presence of any intention

to create legal relations. But why the promissee should

be taxed so heavily for relying on the promise made by

the close family member? Even if we look at the dome-

stic contracts involving husband and wife one can easily

make out the clear serious intention when the promise is

being made but just because the parties are in amity and

have cordial relations, the promissee is burdened to prove

the intention to create a legal transaction. If the parties

can show the presence of offer, acceptance and consi-

deration, there should not be a separate requirement of

proving intention to create legal relations. It is very dif-

ficult to even show the consideration in such cases be-

cause of the nature of consideration is quite different

from the apparent economic consideration present in the

commercial transactions. What if a husband promises to

give a monthly allowance of $ 300 to his wife in return

of the wife promising to leave her job and take care of

the house? The courts will not enforce such a promise

holding that it’s too personal and familial to be dragged

in the cou rt of law. Or even if the court enforce, the wife

have to undertake the burden of proving the intention to

create binding legal relations. Just because the promise

was made when parties were happily living with each

other resolves the husband, prima facie, from performing

his promise. What about the wife who sacrificed her ca-

reer relying on the husband’s promise. Why the courts

have to look into the external factors of how happy or

cordial the marital relations were? Ironically it is only

when the parties are in complete harmony that the hus-

band will realise and ackn owledge the worth of th e sacri-

fice being made by the wife. Once they are on the verge

of separating, why will he pay the wife for promises she

kept throughout the matrimony.

Contract law is about giving effect to the promises

made by the parties exercising their free will and auton-

omy. The court does not have to go into the obscure

question of whether parties contemplated that they can

go to the court to get their promises enforced. If I walk

into the cafe and order a coffee, it will neither occur to

me nor to the cafe owner that we are binding each other

in a legally binding relationship unless one of us fails to

perform. And even if it occurs or we foresee such a con-

sequence of dealing for a cup of coffee, is this promise

more serious than the one made between the husband and

wife which led the wife to leave her job. In domestic

contracts, parties are most unlikely to have considered

the question of enforcement of their agreement at all, so

proof of an actual intention or lack thereof, is impossible

in almost all cases. Requiring proof of intention imposes

a considerable impediment to the enforcement of non-

commercial contracts, which carries with it attendant

risks and costs [16]. Husbands and wives in the basic

family home pattern often have divergent interests which

have not always been appreciated by the courts.

While discussing the dilemma that one might reach in

certain cases where it is difficult to assume the presu mp-

tion against the ‘intention of creating legal relations’, S

Hedley [17] gave an interesting example in following

words:

“The fallacy to be avoided ..... consists of asking the

question ‘whether there is a contract?’, but forgetting

that a court is almost invariably faced with a particular

claim based on an alleged contract. The perspective

given by the claim made alters everything. Take variation

of the classic academic conundrum in this area: Jack and

Jill agree to go out to d inner and to split the bill. By ask-

ing the academic question ‘Is there a contract?’ we are

immediately in the realm of the abstract. If however we

approach the matter form a practical standpoint, we

must know what claim is being made. If Jill is suing Jack

because Jack has refused to go to dinner at all, the argu-

ments against liability are compelling. Surely, Jack can-

not be taken as giving an outright commitment to go to

dinner—what if he is ill, or they cannot agree on a suit-

able restaurant? But imagine that the two already had

their dinner, for convenien ce Jill pays the bill in full, but

jack subsequently refuses to pay in half. The perspective

changes. It is no longer obvious that the contract cannot

be enforced.”

It is ironic that contract, treated in the market context

as the most appropriate vehicle for regulation of private

arrangements between individuals, is not regarded as an

enforceable mechanism for regulating private arrange-

ments between individuals within the home [11]. The

‘apparent intentions’ of the parties are no more than a

smokescreen for policy choices about the relationship

between law and the private, domestic sphere, which

seem based on unsophisticated assumptions about what is

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‘natur al’ in that cont ext [9].

Keeping the above stated analysis in mind, it appears

that the line dividing the presumption of intention to cre-

ate legal relation in domestic and commercial contracts is

illusory and is often used by the courts to give effect to

numerous policies under the guise of estimating the par-

ties’ contractual intent. Having thus reached the conclu-

sion that no such demarcation should be considered rele-

vant in the contract law, one encounters an obvious ques-

tion, which does not, though, have an obvious answer.

Whether the requirement of intention to create legal rela-

tions is indeed required and whether it serves any pur-

pose different from the other requirements e.g. offer,

acceptance and consideration? Though, theoretically it is

easier to postulate that a promise made within the do-

mestic setting or between family members raises pre-

sumption of ‘no intention’ to create legal relations and

commercially the presumption of presence of such inten-

tion, this supposition creates more problems and only

confuses the whole state of affairs. Th e author, th erefor e,

strongly feels that the presumption starts from the basic

fallacy and it should be done away with in light of the

changing nature of ‘familial’ relationships.

5. ‘Intention’ and/or ‘Consideration’

As laid down earlier that many countries have recognised

‘intention to create legal relations’ as separate require-

ment for enforcing an otherwise valid contract. English

law is the best example in that category, which requires

this along with the tri-requirement of offer, acceptance

and consideration. This part of the paper will focus on

the correctness of such an approach by looking from a

theoretical as well as practical standpoint. Professor Sa-

muel Williston [18] in the U.S. have criticised this view

emanating in England. He opined that the separate ele-

ment of intention is foreign to the co mmon law, imported

from the Continent by academic influences in the nine-

teenth century and useful only in systems which lack the

test of consideration to enable them to determine the

boundaries of contract [19]. The insistence on a require-

ment of intention in addition to the other elements of a

validly formed contract (offer, acceptance, consideration)

is unnecessary. This view has been taken not only by

Williston in U.S. but also Hepple [20 ] in the UK. Hepple

argues that the problems with this area derive largely

from a failure to take account of the particular approach

to consideration adopted by Lord Atkin in Balfour v.

Balfour. Hepple argues that many domestic agreements

may involve mutual promises, ‘and yet not be contracts

because the promise of the one party is not given as the

price for the other’. In other words, the con- cept of the

bargain is central to the test of enforceability of contracts

under English law and the vital elements in the identifi-

cation of a bargain are offer, acceptance and considera-

tion. These three elements should be treated to- gether as

indicating bargain. Thus an analysis which tries to sepa-

rate out agreement (that is, offer and acceptance) from

consideration is missing the point of why the courts

started looking for evidence of these three elements in

the first place [21].

‘This separation of agreement from consideration....

has resulted in a fundamental point being overlooked.

This is that the common law recognised at an early stage

that usually parties do not define their intention to enter

into legal relations. Consequently, th e fact that they have

cast their agreement into the form of bargain (offer, a-

cceptance, consideration) provides an extremely practical

test of that intention. This test of bargain renders super-

fluous any additional proof of intention [20].

Accordingly, Hepple regards the court as falling into

error in trying to identify an additional element of inten-

tion in the cases such as Ford Motor Co Ltd v. AEF [22].

The intention requirement requires the manifestation of

objective intention. The argument in effect introduces a

rule of formality into the formation con tracts. The formal

requirements become not writing, or signature, but offer,

acceptance and consideration. The parties who fulfil

these basic elements will be d eemed to have made a bar-

gain, unless pr oved otherwise.

It is important to note here that many jurisdictions do

not recognise ‘intention to create legal relations’ as a se-

parate requirement to enforce an otherwise valid contract.

India [23] and China are good examples where there is

no separate requirement of proving the intention to create

legal relations. It is inferred from the other elements that

are present. The element of intention in contract law is

vague and lacks certainty as to what it requires actually

to prove its presence or absence by a particular party.

6. Conclusions

The discussion on the subject of ‘intention’ as one of the

important ingredient of a valid contract is well debated

by not only scholars but also courts. The paper has at-

tempted to unfold the various aspects spinning around

that discussion. The paper strongly argues for abandon-

ing the requirement of proving ‘intention to create legal

relations’ in case of countries that requires the existence

of ‘consideration’ for forming a valid and enforceable

contract. Therefore, in case of common law countries,

where consideration is one of essentials of a valid con-

tract, the requirement of proving ‘intention to create legal

relations’ should not be pressed upon. The consideration

in itself can be taken as a proof strong enough to indicate

the presence of intention of forming a legally binding

contract. Professor Williston pointed out this proposition

stating that the common law does not require any po-

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sitive intention to create a legal obligation as an element

of contract….A deliberate promise seriously made is

enforced irrespective of the promisor’s views regarding

his legal liability [18].

REFERENCES

[1]Cohen, “The Basis of Contract,” Harvard Law Review,

Vol. 46, 1933, pp. 553, 575.

[2]D. Hume, “An Inquiry Concerning the Principles of Mo-

rals,” In: C. Hendel, Ed., Hackett Publishing Co., Indian-

apolis, 1957.

[3]M Chen-Wishart, “Contract Law,” Oxford University

Press, Oxford, 2005, pp. 22.

[4]D. Kennedy, “From the Will Theory to the Principle of

Private Autonomy: Lon Fuller’s “Consideration and

Form”,” Columbia Law Review, Vol. 100, No. 1, 2000,

pp. 94-175. doi:10.2307/1123557

[5]Rose and Frank Co. v J. R. Crompton and Bros Ltd., 2

KB 261, 1923.

[6] Balfour v. Balfour, 2 KB 517, 1919.

[7]M. Freeman, “Contracting in the Haven: Balfour v Bal-

four Revisited,” Exploring the Boundaries of Con- tract,

Dartmouth Publishing Group, Sudbury, 1996, pp. 75-77.

[8]E. Posner, “A Theory of Contract Law under Conditions

of Radical Judicial Error,” 94 North-westernUniversity

Law Review 749, 2000.

[9]S. Wheeler and J. Shaw, “Contract Law: Cases, Materials

and Commentary,” Oxford University Press, Oxford,

1994, pp. 150.

[10]S. Hedley, “Keeping Contract in Its Place —Balfour v

Balfour and the Enforceability of Informal Agreements,”

Oxford Journal of Legal Studies, Vol. 5, No. 3, 1985, p.

396.doi:10.1093/ojls/5.3.391

[11]M. Keyes and K. Burns, “Contract and the Family:

Whither Intention,” Melboume University Law Review,

Vol. 26, No. 3, 2002, p. 577.

[12] Merritt v. Merritt, 1 WLR 1211, 1970.

[13] Smith. v Hughs, LR 6 QB 597,1871.

[14]M. Chen-Wishart, “Objectivity and Mistake: The Oxy-

moron of Smith v Hughes,” In: J. Neyers, R. Bronough, S.

G. A. Pitel, Eds., Exploring Contract Law, Hart Publish-

ing, Oxford, 2009, Available at SSRN:

http://ssrn.com/abstract=1551980

[15] Jones v. Padavatton, 1 WLR 328, 1969.

[16]Todd v. Nicol, SASR, 1957, pp. 72, 77.

[17]S. Hedley, “Keeping Contract in its Place: Balfour v. Bal-

four and the enforceability of Informal agreements,” Ox-

ford Journal of Legal Studies, Oxford University, Oxford,

1985, pp. 391, 408.

[18]S. Williston, “Williston on Contracts,” 3rd Edition,

Rochester, New York, 1957.

[19] R. E. Barnett, “Contracts: Cases and Doctrine,” 4th Edi-

tion, Aspen Publishers, Frederick, 2008.

[20]B. Hepple, “Intention to Create Legal Relations,” The

Cambridge Law Journal, Vol. 28, No. 1, 1970, p. 122.

doi:10.1017/S0008197300011636

[21]R. Stone, “The Modern Law of Contract,” 5th Edition,

Routledge Cavendish, London, 2002, pp. 25-123.

[22] Ford Motor Co. Ltd. v. AEF, 1 WLR 339, 1969.

[23]A. Singh, “Contract and Specific Relief,” 10th Edition,

Eastern Book Company, New Delhi, 2008. Also see CWT

v. Abdul Hussain, 3 SCC 562, 1988.

How important is the intention of the parties to a contract?

What is an example of intention to create legal relations?

What is the importance of having a valid agreement?

How do you determine intentions to be bound?