Intention to create legal relations Essay

Before looking at if the intention to make out legal relations should be utilize to replace condition, it is important to look at how these doctrines fit into the essential elements in a rationalise. Their use will then be discussed, together with the doctrine of promissory estoppel. In evaluating these principles reference will be made to pillowcase law, judicial comment and of leading contract academics achievement. Finally, thought will be given to the upcoming of rumination, and if it is bland necessary today, when so many other(a) countries pull in adopted alternative approaches to ensuring that contracts atomic number 18 binding.In the general anatomyation of contracts two elements are vital. Firstly, the offer, an indication by one someone prepared to contract with another, on certain terms, which are fixed, or capable of being fixed at the time the offer is made.1 Secondly, at that place must be an acceptance, an unconditional assent to a definite offer.2 Thes e two combine to create certainty that a contract has been formed, for, as in Scammell v Ouston (1941),3 if an agreement is uncertain on some important issuethe courts will determine on that point is no contract.4 Following this, the elements of consideration and intent reserve the contracts body and substance5So, what is implyt by consideration and the intention to create legal relations? side of meat law usually requires proof that the parties gull made a bargain, or agreement,6 this is known as the benefit and detriment test. (Currie v Misa (1875))7 or a benefit to one party or a detriment to another.8 So, in practical terms consideration can be defined as what one party in an agreement is giving, or promising, in exchange for what is being given, or promised, by the other side. 9 This provides mutuality, making the contract enforceable. The Oxford Dictionary of practice of law definition states, Consideration is essential to the validity of any contract other than one ma de by deed. Without consideration an agreement not made by deed is not binding it is a nudum pactum (naked agreement) governed by the apothegm ex nudo pacto non oritur bring through (a right of action does not arise out of a naked agreement.)10 English law does not rely on formality as a way of identifying intention to create a legally binding contract.Instead it focuses on offer, acceptance and consideration.11 If these are present,and unless rebutted by contrary evidence, courts travel on the basis of two legal presumptions, that there is no intention to be bound in domestic or social arrangements, but there is intention to be bound in commercial agreements.12 Professor B.A.Hepple claims that there is no need of a separate requirement of intention, and that a bargain, involving mutuality is sufficient. These views are not generally accepted as it is widely agreed that identifying the parties intentions is essential to the role of the courts when establishing if a contract was made.13(mf)It is useful to look at wherefore English law has become so reliant on the consideration element of a contract, and why it has frequently been used as the badge of enforceability,14 Professor Atiyah argues that consideration originally meant a reason for enforcing an agreement.15 Early forms of contract law mainly involved agreements regarding debt, covenant, or detinue ie., wrongful detention of property, and were only binding if under seal. This method, which inevitable a degree of form such as writing or a deed, was used to pr flatt fraud and proved that there was an intention to create legal relations. Consideration was first used in the sixteenth ampere-second when, in order to enforce informal agreements, the law of assumsit was developed.16 So, while that the law would, still not enforce merely costless promises, the law had to develop an element that could distinguish between a proper contractual agreement, and something less that would not.17Due to the Law o f Property Miscellaneous Provisions Act 1989, form is still required for contracts involving the sale of land. It is similarly used to offer consumers protection in hire procure and consumer credit agreements. In the English Common law system, a promise is not legally binding as part of a contract notwithstanding if it is made in a deed or supported by some consideration. 18 Sir Guenter Treitel Q.C., describes the purpose of consideration as,to put some legal limits on the enforceability of agreements even where they are intended to be legally binding and are not vitiated by some incidentorsuch as mistake, misrepresentation, duress or illegality.19This is a peculiarity found only in English law. In some civil law countries, promises that in England would not be considered binding collectible to lack of consideration, can be en coerce if they have been made in some notarised writing. The European Civil Law systems were formed around the fifteenth century and based on the Roman C atholic Code of Canon law and the value of good faith. Due to this, their courts take the view that all lawful and unfeigned agreements are contracts.20 As English law has developed there has been an insistence on the use of consideration and intention to create legal relations in order to enforce a contract. (Balfour v Balfour (1919))21 Although it may not be easy to find consideration in a contract, (Ward v Byham (1956))22 it could be asked why it is thought to be necessary at all.Originally, the basic idea of consideration was to show that A had bought Bs promise.23 (Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915))24 However, there was a general principle of non-interference in the concerns of other people. thitherfore, the doctrine was not strictly enforced it was enough to provide sufficiency of consideration it did not have to be adequate. This meant that, the consideration provided by one party need not equal in value the consideration provided by the other party.25 (Thomas v Thomas (1842))26 Since this case it was assumed that consideration must have at least some economic value, and that it must be, something which has some value in the eye of the law.27(mf)The use of the word sufficiency also causes uncertainty. Courts have decided it must be real, not as in White v Bluett (1853)28 where a son tried to use a promise to stop complaining over the dispersal of his fathers property as consideration. Although, there was an economic element, as a father promised not to enforce the repayment of a debt owed to him by his son, it was held that,The son had no right to complain, for the father might make whatdistribution of his property as he liked and the sons abstaining from what he had no right to do can be no consideration.29 In this case the court took the view that this type of moral obligation could not be used as any form of value, in other cases the courts appear to well-nigh invent consideration so contracts can be enforced.30 As in Ward v Byham (1956) where happiness was used.In Chappell & Co v Nestle Co Ltd., (1960),31 the base of Lords held that chocolate wrappers undeniable to buy records in a special promotion were part of the consideration. The wrappers had no monetary value, for upon receipt Nestles would plainly discard them.32 Therefore, even something valueless could be used as consideration. From this it can be seen that consideration does not guarantee fairness of bargains. Indeed it could be argued that, as this would not fit the benefit and detriment test, this type of nominal bargain33 should not be allowed.This is the close problematic area of the rules surrounding consideration. To start with, the position that consideration need not be adequate, just sufficient, means it does not need to be of equal value to that which the other party is offering. This could lead to injustice. There could be some perfectly good reason why A sells his Mercedes to B for a token amount, but what if he is under dure ss, perhaps being blackmailed by B.34 Similarly, it is quite fair that, as in Stilk v Myrick (1809)35 performance of an existing contractual duty was held to be insufficient consideration. An employee should not be allowed to hold his employer to ransom in this way, unless it is proven that the situation changed significantly, and he has undertaken a considerable extra workload after the promise of extra pay. (Hartley v Ponsonby (1857))36So why do the courts permit the token element in bargains at all? It has been said that, consideration was originally the reason for the enforcement of a promise.37 Therefore, even token bargains have a purpose by providing evidence that the parties take the agreement seriously, and show an intention to create legal relations.The doctrine of consideration was also used was where transmutation promises were made regarding the part payment of debts. The general rule as established in Pinnels case (1602)38 was that the gift of a horse, hawk or robe, e tc in satisfaction is good. 39 The assumption being that providing something in consideration might be more beneficial to the plaintiff than waiting for the money.40 This rule was confirmed in the House of Lords in Foakes v Beer (1884)41. This practical benefit was also the principle in Williams v Roffey Brothers (1990)42 where it was advantageous to pay more for the same work. However, the rule in Pinnels Case can be avoided by providing extra consideration, altering the way payment is made, by paying ahead, at a different time or place or via third party.43 Possibly due to this, the Law revision Committee 1937 recommended the abolition of the rule in Pinnels Case, but so outlying(prenominal) that has not happened.44Lord Denning tried a different approach with his use of the equitable principle of promissory estoppel. In his obiter statement in Central capital of the United Kingdom Property Trust v High Trees House (1947),45 he stated that, a promise intended to be binding, inten ded to be acted upon, and in fact acted on, is binding so far as its terms properly apply.46Due to this it was held that a promise could be enforced without consideration if it would be wrong for that person to go back on a promise and there has been a reliance on it.47 He based his views on Lord Cairns comments in the earlier equitable going case of Hughes vMetropolitan Railway (1877)48It has been suggested that the promisee must have suffered a detriment from reliance on a promise. Lord Denning denied that this was necessary, claiming that someone just needed to have acted on the belief induced by the other party. (W J Alan & Co v El Nasr (1972))49. Other limitations exist, promissory estoppel only applies to the modification or discharge of an existing contractual obligation, 50 therefrom legality is a shield not a sword, it will not allow someone to use equity to instigate a cause ofaction.51 (Coombe v Coombe (1951)52The promise not to enforce rights must be clear and unequiv ocal, in The Scaptrade (1983)53 it was held that the fact that they hadnt enforced their wax rights in the olden was not sufficient. It must be inequitable for the promisor to go back on his promise, in D & C Builders v Rees (1966)54, Mrs Rees had forced the builders to accept her cheque by inequitable means and so could not rely on promissory estoppel,55 for he who comes to equity must do so with clean hands. 56 This doctrine is also contrary to the House of Lords decisions in Jorden v Money ( 1854)57 and Foakes v Beer (1884)As can be seen from these cases, unlike in the past when a gentlemans word was his bond, people can no longer be relied upon to keep gratuitous promises, however seriously meant. They are also likely to use litigation if they later wish to go back on them. Treitel points out that, the doctrine of consideration has attracted much criticism, 58 as even the most flimsy evidence is given as consideration, so its use has become somewhat dubious. The doctrine is a n historical accident that foreign systems do without. 59To overcome these problems, parliament could extend the scope of existing legislation by using form to prove the intention to create legal relations in more situations than now. That would mean that although not needed for basic everyday events like shopping, or private domestic arrangements eg., babysitting, all other contracts of a financial or contractual temperament would have to have written agreements.As Treitel says, English law does recognise, in the deed, a perfectly safe and relatively simple means of making gratuitous promises binding. 60These would be subject to the usual rules applying to the Sale and Supply of Goods Act 1994, the Consumer Protection Act 1987, the Supply of Goods and Services Act 1982, etc., In the event of a bitterness regarding a contract with no written agreement, the courts could consider it to be void, as there was no proof of an intention to create legal relations and therefore the contr act has no legal effect.Any money paid out under such a contract would be recoverable and any work that has been done maybe compensated on a quantum meruit basis.61 Care would also have to be taken to ensure the rights of third parties are protected.62 The use of form as proof of the intention to create legal relations would provide a useful safeguard against rashpromises.63 Although, this does not solve the problem of action in reliance on an informal promise the court maybe able to give some effect to the promise under the doctrine of waiver or in equity.64