FACTS OF CASE: 

A husband and the wife got married in the year 1941. In the year 1949 they decided to purchase a building plot and later on built a house. The property was in the husband’s name,  backed with a considerable sum on a mortgage with the building society. They brought up three children, two daughters, and a boy. Since the expenses were huge so the wife went out to work and contributed money towards the household expenses. 

The house which was earlier in the name of the husband was put in joint name by an agreement between the couples. Unfortunately, by that time the husband had formed an attachment with another woman. So, he decided to desert his wife.

He then left the house and went on to live with the other women. The wife wanted to enter into some arrangement with the husband for her and her children’s future.  

Husband and wife came to an agreement whereby the husband would pay her £40 per month payment: the wife would pay the mortgage on the house to the building society. The outstanding amount was only £180. When the entire mortgage will be paid off, the husband would transfer his share of the house to her. This part of the agreement was written down. The wife was herself going out for work and earning £7 a week.  

He wrote the words given below on a piece of paper: 

“In consideration of the fact that you will pay all charges in connection with the house at 133,  Clayton Road, Chessington, Surrey until the mortgage repayment has been completed, when the mortgage has been completed, I will agree to transfer the property into your sole ownership. Signed. John B. Merritt 25.5.66.” 

After the agreement was entered the paper was taken away by the wife with her. She then ensured to pay the outstanding balance of the mortgaged property out of the money the husband gave her i.e £40 a month and out of her earnings. After a few years, the entire mortgage was paid off by the wife. 

Then the wife asked the husband to transfer the house his share into her name. Later he refused to do so. The wife claimed breach of contract  

ISSUE BEFORE THE COURT: 

Did the parties intend to be legally bound by the agreement which they made? 

JUDGEMENT: 

The wife first brought an action in the court Chancery Division. Judge Justice Stamp,  decided that considering the facts and circumstances of the case, the house should now belong to the wife and passed an order for conveyance in the wife’s name. Since the husband was not happy with the order he decided to file an appeal. 

The matter then was heard by the Court of Appeal before the bench comprising Justice  Widgery and Justice Karminiski. 

The counsel for the husband Mr. Merritt contended that the agreement between them was a  domestic agreement and there was no intention to create legal relations so there is no enforceable contract between them. He further went on to argue that the contract was insufficiently certain to be enforceable by the court of law. Even Mrs. Merritt had failed to provide consideration for the promise which he made. A family arrangement such as this has already been considered by the courts in the case of Balfour v Balfour and Jones v  Padavatton. So the wife could not sue him.  

Both the parties were living together in amity. Domestic arrangements of such nature are not intended to create a legal relationship. Counsel for the husband then relied on the judgment of  Gould v Gould. When the couple decides to separate and the husband promises to pay a sum as maintenance to the wife during the separation, the court imputes to them an intention to create legal relations. The counsel for the husband further went on to say that the agreement  was uncertain because of the arrangement for £40 a month maintenance 

Counsel for Mrs. Merritt argued that they were in the process of separating, and the presumption that there was no intention to create legal relations is wrong. She claimed there was every intention of creating a legal relationship and that has paid off all the expenses of her home and finishing off the mortgage payments amounted to consideration.

She paid the outstanding amount to the building society. It was ample consideration. The husband indeed paid her £40 a month which she may have used to pay for the building society. But still, her act of paying was good.  

The judge after hearing both the parties gave a decision in favor of the wife and dismissed the appeal. 

LEGAL PRINCIPLE INVOLVED 

Intention to enter into a legal relationship is one of the important aspects of elements in a  contract. Intention to enter into a legal relationship can be said as an intention to enter into a legally binding contract or agreement.

It can be considered one of the necessary elements in the formation of a contract. It clearly shows the readiness of the parties involved to accept the legal consequences of having entered into such an agreement.

Intention to create legal relations is an essential element for every contracting party which leads to entering into a legally binding contract. 

The following points can be considered while determining the intention to create a legal relationship: – 

1)The parties to the contract must have the obvious mind to enter into a serious contract 

It is due to their ‘intention’ to be the consenting mind to which both the parties have to agree. In case there is no agreement by both of the parties, it can make the contact being a void agreement. Thus, both the contracting parties will make it a binding contract. 

2)To make a contract enforceable, legal, and binding, there must be an intention to create  legal relations

The intention to create a legal relationship is one of the essential elements of a contract. In case there is no intention to create legal relation, the contract can be assumed as not a legal contract. It will lead to the contract not being enforceable because there is no intention on the part of parties to create legal relations at the beginning, which will not make contracting parties be in a legally binding relationship. 

3)In the absence of intention, the parties cannot sue each other 

With no intention to create legal relations, it may mean that the contracting parties are not being legally binding and these circumstances will make the contract unenforceable.  Therefore, when the contract is enforceable, the contracting parties can seek justice and make the contract enforceable in a court of law. 

4)The contract may become a mere promise if the intention to create legal relations is absent 

When there is no intention on part of the parties to create a legal relationship, it will make the contract become merely a promise. Merely making a promise is like a simple promise that arises when there is no intention on the part of the parties to create legal relations. 

5)The contract may lack the binding effect in the absence of the intention to create legal relations. 

When there is no intention to create a legal relationship, it will make the contract, not a  binding one. 

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