15 terms

Intention to Create Legal Relations

Ermogenous v Greek Orthodox Community of SA
Relevant To: Intention - status of 'presumptions'

Issue: Was Archbishop Ermogenous a contractual employee of the church, or was the role of archbishop such that it was intended to be spiritual, and not a binding legal contract.

Held: Ermogenous was an employee - the court should be careful using general 'presumptions' about what type of arrangements are intended to be binding, and instead look at the circumstances and factual matrix of the specific case.
Balfour v Balfour
Relevant To: Intention - domestic relations

Issue: Was a wife entitled to high level of support from her (now separated) husband that he had promised while they were still 'happily' married?

Held: Because they were still married at the time, there was no intention that it be binding. However Lord Atkin based this on a general presumption that domestic arrangements were no intended to be binding, which has since been overruled in Ermogenous
Todd v Nicol
Relevant To: Intention - family relations

Issue: Was a promise made to sister/niece that if they came to Australia to live with her, they'd be promised free rent/the house when she died intended to be legally binding?

Held: Yes, it was - the fact that she even went so far as to change her will was evidence that she was serious about it, and the hassle of selling up and moving to Australia was a sufficiently serious matter that it established an intention to enter into a legitimate, binding agreement. (That said, it was still held that they had breached the agreement through their behavior, and ended up losing out)
Popiw v Popiw
Relevant To: Intention - family relations. Consideration - existing duty.

Issue: Was a husband's promise to transfer his house to their joint names if his wife returned to live with him intended to be legally binding, and if so, did her return constitute sufficient consideration?

Held: Yes, it was - the law would not have forced her to live with him, so her return constituted valid consideration, and the arrangement was not of a type 'made in the ordinary course of a matrimonial relationship', and they went so far as to visit the solicitor to begin arrangements. (That said, it ultimately failed because it wasn't in writing, which was a statutory requirement for real property transfers)
Wakeling v Ripley
Relevant To: Intention - family relations

Issue: Was a brother's promise to provide a home for his sibling's family if they moved to Australia intended to be legally binding?

Held: Yes, it was - the serious nature of the decision to move internationally combined with the plaintiff negotiating assurances prior to moving was sufficient to create a binding contract.
*Riches v Hogben
Relevant To: Intention - family relations & estoppel - scope of remedy

Issue: Was a promise by an elderly woman to buy her son a house if he moved his family to Australia to live with and take care of her intended to be legally binding?
If so, to what extent could estoppel provide a remedy given that the promise was not in writing and as such not legally binding?

Held: Yes, it was intended to be binding - it was a serious agreement, and not a mere 'family arrangement'. Because of the substantial detrimental reliance, equity could fulfil the agreement - but it required that the mother continue to be cared for, and permitted to continue living on the property in the 'granny flat'.
The Satanita
Relevant To: Third party contracts/intention in competitions

Issue: Was entry into a race on terms including accepting full liability for consequential loss binding between competitors?

Held: Yes - in addition to entering into a contract with the race organisers, the moment the other competitors departed led to a subsequent contract with them.
Trevey v Grubb
Relevant To: Intention - social arrangements

Issue: Was a lotto syndicate between friends a 'contractual agreement' to share the proceeds of a win?

Held: Yes, it was - there was a lot of money at stake, repeated behaviour, and statements about 'more chance to win with more people' suggesting an intention to split the proceeds of any such win.
Edwards v. Skyways
Relevant To: Intention - effect of 'ex gratia'

Issue: Was the classification of a redundancy payout as 'ex gratia' (made to avoid paying tax on a legally enforceable agreement) sufficient to make it non-contractual when they decided to back out on paying it?

Held: No - 'ex gratia' only means without liability - the promise to pay was still made in a business context, and only a few of the parties cared about the taxation issue - it was not specifically agreed upon by the parties that the promise NOT be legally binding.
Rose & Frank v. Crompton Bros
Relevant To: Intention - intention to exclude the law

Issue: Was a clause specifically stating that the agreement was a matter of honour and would not be subject to legal jurisdiction sufficient to prevent a contract from forming in circumstances that would otherwise have led to it?

Held: Yes - as long as the document clearly and specifically indicates a lack of intention to establish legal relations, it cannot be enforced contractually, in the same way circumstances that imply a lack of intention cannot be enforced.
Pirt Biotechnologies v Pirtferm
Relevant To: Intention - intention to NOT form a contract

Issue: Was a letter of intent stating 'The parties at this stage do not seek a contractual obligation' sufficient to prevent a contract from forming?

Held: Yes, but it had to be viewed in light of the surrounding factual matrix - not necessarily conclusive in and of itself.
Kleinwort Benson v Malaysia Mining Corp
Relevant To: Intention - effect of 'letter of comfort'

Issue: Was a letter of comfort from a parent company stating that it was their policy to ensure their subsidiary is in a position to meet its liability a contractual promise?

Held: No, it was merely a statement of fact/policy - not a promise.
Factory 5 v Victoria
Relevant To: Intention - post-agreement actions

Issue: Could post-agreement actions be used to evidence whether or not the parties intended to enter into a binding agreement?

Held: Yes, it can, but only if it is relevant/probative when looked at in context.
Australian Woollen Mills v Cth
Relevant To: Intention and Consideration - Government Policy

Issue: Was a policy scheme that promised subsidies to manufacturers who purchased Australia wool actually a unilateral contract?

Held: No - there was no intention to create legal relations, and the wool was merely a condition of obtaining the gifted subsidy, it did not constitute consideration for a promise.
Shahid v Australasian College of Dermatologist
Relevant To: Intention - education/commercial situations

Issue: Was the college a commercial organisation, and was there an intention that its appeal processes constitute a contract?

Held: Yes, the college earned substantial revenues through teaching and maintained commercial relationships with professionals. And as the appeal process was specifically set out, and required such a large fee, it suggested a very strong intention that the exchange of monetary consideration for a service would be legally binding.