Intention to Create Legal Relations

2347 Words Oct 29th, 2010 10 Pages
Intention to create legal relations

Statement of the Rule
To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly (Rose and Frank Co v JR Crompton & Bros Ltd).

It is open for the parties to use express language to indicate an intent (or lack of) to impose legal obligations on each other. Alternatively, this intention can be impliedly from the circumstances.

The courts use an objective test in making a determination about the intention of the parties. In making an objective determination of the parties, intention the court looks at the surrounding circumstances and asks if a reasonable person would regard the agreement as intended to be
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The could held that in the circumstances the agreement was something more than a familial relationship because of the serious consequences of the arrangements for the plaintiffs, namely the husband giving up his salaried position and pension and both of them moving permanently to Australia.

Roufos v Brewster

Mr. and Mrs. Brewster owned a motel at Coober Pedy while their son in law, Roufos, ran a small store. Roufos drove the Brewster’s truck to Adelaide for repairs. It was agreed between them that if Roufos could arrange for someone to drive the truck back to Coober Pedy, Roufos could transport goods for his business back on the truck. The truck was involved in an accident and the Brewster’s sued Roufos for the cost of repairs.

The court held that the parties had entered a binding contract as the setting of the agreement was commercial and no domestic or social.

d) Social Relationships
The presumption of lack of legal intent can extend beyond familial relationships to agreements entered into in a social context, or agreements made between friends. In Heslop v Burns the deceased allowed his fiends to stay in a house owned by him free of charge. In an action for possession by the deceased’s estate the friends argued they were in possession as tenants at will but were unsuccessful, the court finding that in the circumstances in which possession was given the parties had not entered legal relations.

Commercial Agreement

Presumption
Where