THE DOCTRINE OF INTENTION TO CREATE LEGAL RELATION

ABSTRACT

The doctrine of intention to create legal relations is a fundamental concept in contract law, determining whether an agreement gives rise to legally enforceable obligations. This article explores the evolution, scope, and application of this doctrine, examining the factors that determine when parties intend to create legal relations. The discussion delves into the distinction between social, domestic, and commercial agreements, and the role of context, language, and conduct in ascertaining intention. The article also considers the implications of this doctrine for contract formation, enforceability, and dispute resolution. By providing a comprehensive analysis of the intention to create legal relations doctrine, this article aims to clarify its significance and operation in contract law, offering valuable insights for legal practitioners, scholars, and students alike.

KEYWORDS

Proposal, acceptance, valid, intention, relationship, legal, parties.

INTRODUCTION

The legal framework for forming a contract between two or more parties in India is provided by ‘The INDIAN CONTRACT ACT, 1872’, where the Contract is explained to be an agreement between the parties to the contract that is enforceable by the law, here the agreement is to form the consideration of the promise or set of reciprocal promises. However, the agreement can also be stated as proposal by one of the parties to the contract and acceptance by the other party to whom the proposal is proposed. It could be said that; the complete base of contract law is relied on the proposal and acceptance between the contracting parties. The contract can be said to be incomplete or invalid without the proposal and acceptance between the contracting parties, that is there is no contract without proposal and acceptance. The proposal and acceptance between the parties can is also called as a promise made. So here are the two major parts of contract: ‘proposal and acceptance’. While The doctrine of intention to create a legal relation is one of the valid essential of proposal. A key concept in contract law that establishes whether an agreement between parties is legally binding is the Doctrine of Intention to Create a Legal Relation. It demands that the parties have a clear desire to make a legally enforceable contract, which must be manifested in the parties’ words, deeds, and circumstances. This idea acts as a bar for the establishment of contracts, guaranteeing that the law will only recognize and uphold sincere and purposeful agreements. It gives contractual relationships clarity and predictability by making a distinction between just social or domestic understandings and legally enforceable responsibilities.

Proposal

Section 2(a) [1] of the Indian Contract Act, explains proposal as a significance by a person to another of his willingness to do an act or to restrain from doing an act, with a view of obtaining the assent of the other, to do such act or abstinence, thus it is said to make a proposal. The one who makes the proposal is a ‘proposer’ or ‘offerer’ and the one to whom the proposal is made is a ‘proposee’ or ‘offeree’.

Acceptance

Section 2(b)[2] of the Indian Contract Act, explains acceptance as when the person to whom a proposal is made, signifies his assent, the proposal is said to be accepted. On acceptance of a proposal or the offer it becomes a promise. In order to become a binding contract, the acceptance of the offer or proposal has to be according to certain rules. The rules given by of Indian Contract Act regarding valid acceptance are as follows:

The acceptance of proposal must be absolute and unqualified as per Section 7[3].
There must be a prescribed manner to accept the proposal.
The acceptance of proposal must be made before the offer or proposal expires.
The mere mental acceptance of proposal is not considered to be valid.
The acceptance of proposal must be communicated by a person who has the authority to accept.
The acceptance cannot be a mere statement of intention.
The acceptance has to be made by a certain person.
An act done in ignorance 0f proposal is not acceptance.
The acceptance may be implied or expressed.

Lawful Consideration

Section 2(c)[4] explains the consideration to be valid and lawful in a contract.

When both parties agree to do or not to do something it is said to be a consideration.
The consideration in a contract can be present, past, or future.
Lawful consideration helps to abstain from unlawful activities in a contract.
Agreements which have unlawful consideration are void.
Past consideration – A person can enter into an agreement for which he has performed certain activities.
Future consideration – When both parties agree to do or not to do certain things in the future, it is said to be a future consideration.
Present consideration – When both parties enter into a contract and presently decide to do or not to do something, it is called present consideration.

Essentials of a Valid Proposal

The essentials of a valid proposal are as follows:

The proposal may be signified in any manner that is by signs or gestures.
The proposal may be to do or abstain from doing an act.
The proposal has to be made with the intention of obtaining the assent of the other.
There must be an intention to create a legal relationship.
The proposal may be expressed or implied.
The proposal made must be clear and unambiguous.
The proposal must be made to a certain person.
The proposal must be communicated to the offeree.
The proposer cannot dictate terms.

From the above given essential the major essential of- ‘The doctrine of intention to create a legal relationship’ in given in detail below:

The Doctrine of Intention to Create a Legal Relationship

The major element of contract is considered to have the intention to create a legal relation. It could be also stated as the intention of contracting parties to enter into a legally binding agreement or a contract. The offer must be intended to and capable of creating legal relation between the parties.

To enter into a serious contract the parties to the contract must have the obvious mind. The intention to create a legal relation is required to make a contract enforceable, legal and binding. In absence of the intention the parties cannot sue each other. The binding effect of the contract may lack due to the absence if intention to create a legal relation.

The existence of intention can be determined in the following ways-

By the reasonable man test which is also known as objective test. It is not up to the promisor to decide whether or not they intended to form a legal relationship; however, if a reasonable man could reasonably conclude that they intended to bind the promisor, the court will assume that they did.
And the other test is of rebuttable presumption, it establishes the burden of proof that may be rebutted by evidence in the contrary. In rebuttable presumption, a court is required to assume that something is true until evidence to the contrary is presented.

The agreements can be segregated in following ways that is-

1. The social/other domestic agreement- This includes the agreement between husband and wife; the agreement between parents and child; the agreement between friends.

As per the legal norms, the agreement between husband and wife/ parents and children/ friends; have been presumed not to be intended to create legal relation; but it may differ depending upon the facts of the case.

2. The commercial agreement- It is presumed to have a intention to create a legal relation when it comes to commercial agreement. In typical commercial agreements, the plaintiff does not have to provide definitive proof that such an intention existed. The defendant, on the other hand, may challenge the presumption by pointing to the words used and the circumstances that prevailed.

In contract law, the importance of the doctrine of intention to establish a legal relationship can be seen in the following ways:

Decides Enforceability: It decides if an understanding is legitimately restricting and enforceable.
It prevents parties from being bound by unintended or informal agreements and “prevents unintended contracts.”
It encourages parties to use unambiguous language in their agreements and “promotes clarity.”
Recognizes Social and Homegrown Agreements: It recognizes social/homegrown arrangements and business arrangements.
Provides Certainty: In contractual relationships, it provides certainty and predictability.
Protects Parties: It prevents parties from being compelled to take on unwelcome legal responsibilities.
Encourages Clear Communication: It encourages clear communication and the articulation of intentions in a clear and concise manner.
Supports Business Transactions: By ensuring that only deliberate agreements are implemented, it ensures that business transactions run smoothly.
Keeps up with Rule of Law: It keeps up with law and order by guaranteeing that agreements are framed and implemented in a fair and unsurprising way.
Guarantees Justice: It guarantees equity by forestalling accidental or unreasonable legally binding commitments.

The Doctrine of Intention to Create a Legal Relationship is necessary for preserving the effectiveness and integrity of contract law and for promoting contractual relationships that are clear, certain, and equitable.

CASES RELATED TO THE DOCTRINE TO CREATE A LEGAL RELATION:

Carlill v Carbolic Smoke Ball Company[5]

This instance proves that although sales puffery in ads usually doesn’t aim to establish a contract with potential buyers, in this situation it did as the Defendant raised their language to a promise, based on their own honesty.

Balfour v Balfour[6]

Lord Justice Atkin in this case ruled that a husband and wife never intend to form a legal relationship when they enter into an agreement, and that the nature of the agreement was entirely domestic. When a contract is signed, both parties must intend to establish a legal relationship; only then can it be enforced in court. Additionally, a court will never take into account daily domestic agreements between spouses. The contract did not apply to the agreement at all.

Merritt v Merritt[7]

Here, Mr Merritt’s attempt to overturn a decision did not succeed. The presumption of no intention to create legal relations does not apply when parties are in the process of separating or are already separated. The agreement was definite enough to be upheld, and Mr Merritt’s commitment to paying the mortgage was enough compensation. Mrs Merritt had full entitlement to the matrimonial home.

Jones v Padavatton[8]

The mother’s plea was granted and she was given custody. It is believed that familial agreements rely on trust, family connections, and love, without the desire to establish legally enforceable contracts in court. This assumption can be challenged, however, the informal nature of the agreement between mother and daughter strongly suggested that there was no such intention, and the daughter had no rebuttal to her mother’s claim for the house.

Parker v Clark[9]

The assertion from the younger couple (the Parkers) was upheld. This occurred because both the circumstances and the wording in the correspondence indicated that the agreement was legally binding. Mr Clark’s original letter to the Parkers met the requirements of the 1925 Law of Property Act. The letter constituted a valid contractual offer, entitling the Parkers to damages. The compensation was for the abandonment of their residence during the relocation and the absence of the anticipated inheritance from the Clark family home.

Coward v M.I.B.[10]

In this instance, neither party intended for there to be a binding contractual obligation to carry and be carried to and from work. Since Mr. Coward was not a passenger for whom Mr. Cole was responsible, the MIB were not obligated to comply with the judgment.

Simpkins v Pays[11]

The court judged that, regardless of family relations and an informal context, in the agreement between the parties, there was a reciprocity, with the help of which they agreed with the way of presenting the forecasts in The G -Yu on a weekly basis, and that if there was success, the three shared people would be the same money price. Despite the internal context, filling out Mr. Simpkins’s coupon was not a voluntary service for Mr. Payments, but rather in accordance with the agreement, according to which each party had actions accordingly, thus demonstrating the intention to create legal relations. The court held that a mutual agreement, no matter how informal, constitutes a legally binding agreement to divide the shares into three parts.

CONCLUSION

In conclusion, the doctrine of intention to create legal relations remains a vital component of contract law, serving as a threshold requirement for determining the enforceability of agreements. Through its application, courts distinguish between mere social or domestic understandings and legally binding obligations. The doctrine’s nuanced approach, considering factors like context, language, and conduct, ensures that only genuine contractual intentions are recognized.

As the legal landscape continues to evolve, the intention to create legal relations doctrine adapts, reflecting changing societal values and commercial practices. Its significance extends beyond contract formation, influencing dispute resolution and the interpretation of agreements.

Ultimately, this doctrine safeguards the integrity of contractual relationships, preventing unintended legal consequences and promoting certainty in business and personal dealings. By grasping the intricacies of this doctrine, legal practitioners, scholars, and individuals can better navigate the complexities of contract law, fostering more effective and enforceable agreements.

REFERENCES

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[1] THE INDIAN CONTRACT ACT,1872, 2(a), No. 9 Act of Parliament, 1872 (India)

[2] THE INDIAN CONTRACT ACT,1872, 2(b), No. 9 Act of Parliament, 1872 (India)

[3] THE INDIAN CONTRACT ACT,1872, 7, No. 9 Act of Parliament, 1872 (India)

[4] THE INDIAN CONTRACT ACT,1872, 2(c), No. 9 Act of Parliament, 1872 (India)

[5] Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

[6] Balfour v Balfour [1919] 2 KB 571

[7] Merritt v Merritt [1970] 2 All ER 760, [1970] 1 WLR 1211

[8]Jones v Padavatton [1969] 1 WLR 328

[9] Parker v Clark [1960] 1 WLR 286

[10] Coward v M.I.B. [1962] 1 All ER 531 CA

[11] Simpkins v Pays [1955] 1 WLR 975

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