Overview and Introduction-
This term paper will focus its attention towards the discussion of one of the sine-qua-non, contractual law fundamental of “the intention to create legal relations.” The paper starts with the facts of the case, next is the issue/s involved, arguments advanced by both the parties, judgment with the reasons, followed by an analysis of the overall case and legal principle done by the author, focusing on ex cogitate thinking.
So, under common law, a contract is a legally enforceable agreement when certain requirements are met. They are- a valid offer, acceptance and communication, competency and capacity of parties, real consideration and most importantly the intention to create legal relations. Under no circumstance, can a contract be created by the parties wanting and willing to enter into legal obligations sans legal intention. It is pertinent to mention here that the intent is required to be present in the mind of all the parties to a contract.
By the intention to create legal relations, we mean that the parties will perform their obligations as per the agreed terms and as such the non-performance of them or any of them, gives a right to sue to the party who has suffered as a result of non-performance or breach of contract. This is because all the parties had entered into a contract with this very legal intent to be bound by the terms and conditions of the contract.
The Intention to Create Legal Relations- As Viewed From the Lens of Balfour v Balfour
The case of Balfour v Balfour is an ancestral-yet landmark case law which has delved and discussed in detail the principle of the intention to create legal relations. The case was decided by the Kings Bench in England in the year 1919 and till date serves a judicial precedent in India, Australia, Canada, United States and other common law countries.
This case considered whether there was an intention to create legal relations when a married couple entered into an arrangement pursuant to which the husband would pay his wife money while they were living separately as a result of illness.The Court held that domestic agreements between spouses were not intended to create legal relations, with the onus on the party claiming a contract to show there was such requisite intention.
Facts of the case are-
- That the defendant (Mr Balfour) was an English Civil Servant who was posted on official duty in Ceylon, Sri Lanka.
- That the defendant was putting up together in Sri Lanka with his wife Mrs Balfour, who is the plaintiff in this case.
- That both the plaintiff and defendant went back to their home country, during the defendant’s vacation being sanctioned by the British crown.
- That when the vacation period expired, the defendant returned back to Sri Lanka and the plaintiff choose to stay back in London on account of medical advice received from the doctors concerning arthritis.
- That the defendant promised to pay an amount of 30 GBR Pound every month as maintenance and medical expenses towards the treatment of the plaintiff, until he returned back to England.
- That the defendant on one occasion, decided to live permanently separate from his wife.
- That the plaintiff sued the defendant to enforce her right concerning the amount of maintenance, which the defendant did not pay.
Legal Issues Involved-
- Whether or not the there exists a valid contract between both the parties ?
- Whether or not the defendant is liable for breach of contract, if any ?
The plaintiff sued the defendant on the basis of his promise to pay 30 pounds as maintenance to her in the lower court, where in Justice Sargant acceded to the claim of the wife, by upholding the existence of consideration and a valid contract between both the parties. This judgment was challenged and finally the Court of Appeal of the Kings Bench comprising of Lord Justice Atkin, Duke and Warrington ruled in favour of the defendant, thus addressing and nullifying the contentions of the plaintiff.
The counsel for the plaintiff contended before the bench of Lord Atkin that the locus standi of his client is grounded on the basis of an existing contractual obligation which was not met by the opposite party. The counsel claimed the existence of a valid contract to convince the judges. There was no dispute towards the existence of an offer, its acceptance and competency of the parties (being adults). The promise by the defendant to pay 30 pounds per month in return of the plaintiff staying in England for treatment and the defendant moving back to Sri Lanka was valid consideration. This is real consideration as it is quid pro quo to the plaintiff staying back in London. Furthermore, the wife placed reliance on the husband’s promise and acted in a certain conduct. This also reeks of the existence of the intention to create legal relations. The plaintiff’s counsel contended that there cannot be a ubiquitous presumption that domestic relationships are outside the clutches and ambit of the operation of the law.
Moreover, this showed that the defendant had been in breach of an essential terms i.e. condition of the contract and was liable to compensate the plaintiff for her loss and giving her due amount plus damages.
The defendant’s counsel vociferously and vehemently rebutted the arguments advanced by the opposite side. In his submissions before the honourable bench, the defendant’s counsel pointed out that the since the relationship between parties was domestic and personal in nature, there can be no existence of a legally enforceable agreement, as law is muted to a significant extent in the cases of family/domestic setups or arrangements. This is a custom, which due to the nature and degree of relationship can be treated as a rule in the case of family relationships. Therefore the fulfilment of other elements pertaining to offer, acceptance and consideration plus others does not even arise since the intention to create legal relations is absent.
Therefore, it can be never said that the defendant was in breach of any terms and conditions of the contract.
Judgment Rendered by the Kings Bench-
The Kings Bench overturned the judgment which was passed by Justice Sargant. The court appreciated the facts before it, determined and re-affirmed the issues for determination and after analysis vide studying the law and its development with respect to informal agreements concluded with the decision that intention to create legal relations is absent in the case of domestic relationships. This presumption is heavily grounded since both the parties manifest natural love and affection for each other and the party who claims the existence of contract must prove the same. Ergo, the onus of proof qua proving the existence of a contract in informal-domestic environment lies on the asserting such contention.
In this context and at this stage it is appropriate to re-produce the wordings of Lord Atkin as they were when he delivered the judgment in 1919-
“ Such arrangements made between husband and wife are arrangements in which there are mutual promises, or in which there is consideration in form within the definition that I have mentioned. Nevertheless they are not contracts, and they are not contracts because the parties did not intend that they should be attended by legal consequences. The small Courts of this country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations. They are not sued upon, not because the parties are reluctant to enforce their legal rights when the agreement is broken, but because the parties, in the inception of the arrangement, never intended that they should be sued upon. Agreements such as these are outside the realm of contracts altogether. The common law does not regulate the form of agreements between spouses. Their promises are not sealed with seals and sealing wax. The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts. In respect of these promises each house is a domain into which the King’s writ does not seek to run, and to which his officers do not seek to be admitted.”
A bare perusal of the above passage by Lord Atkin tells us that in domestic relationships, the consideration is often an emotion of love and care and the intention is not to enforce obligations, with the intent that if not performed, a law suit will be commenced against the breaching party. In other words the judgment said that intention to create legal relations is present in commercial or non-domestic relationships where the consideration is money or kind and the intent from the commencement of the relation is to enter into a binding agreement, backed by the force of law.
Therefore, the court dismissed the contentions of the plaintiff-wife and said that the husband-defendant had no legal duty towards the payment of 30 pounds every month to his wife on the basis of contractual setting, since a contract never existed only.
Judgment Analysis and Conclusion-
In my personal opinion, the judgment has been rightly delivered by the Kings Bench. Man in personal settings as close as relationship between himself and his wife, cannot be taken as, making promises to his partner, with the intent of creating a legally binding agreement. Such promises or those one involving a mother and her child, brother and sister, etc, are based on shared values of love, respect and love. The court is right when it says that in such relationships the hesitancy to sue may not be missing but what is lacking is the intent, the legal intent since beginning.
Assuming arguendo, that the Kings Bench had declared that the wife has a right to sue the husband for contractual obligations performed in a domestic relationship, it would not only open floodgates in matrimonial cases but also will have a rapturous effect on other personal-informal establishments. The court has been very careful in its analysis and understanding of the issue. It nowhere has completely denied the existence of legal intention in domestic boundaries, but has said that there is a rebuttable presumption which can exist, provided the party who alleges the existence if the contract proves it. What this means is that if the plaintiff is able to prove that despite being placed in a family setting with the defendant, legal intention existed in the mind of both parties, the court will have to give due credence to the active status of the contract.
We, all have to appreciate the legal methodology used by the honourable court in its ruling, given the fact that at that time, no such similar judicial precedent existed. In fact, this case of Balfour v Balfour has thrown light on the intention to create legal relations and has made the law more clear in regards to the same. One can find not only the case-law being taught to students in schools around the world, but courts inclusive of our Apex Court have adhered to the principles as laid out in Balfour’s case.
In conclusion, I would reiterate my inclination towards the reasoning behind the judgment in Balfour’s case, since the same is well-grounded, thoroughly researched, debated and moreover it offers more clear light on the fundamental of intent to create legal relation, especially in informal settings. Therefore, lays the importance of viewing “the intention to create legal relations” principle through the prism of Balfour v Balfour.
This article is authored by Siddharth Arora, he is working as a Contract Administrator and Consultant with IEC Consultants. He is also enrolled as an Advocate with the Bar Council of Punjab and Haryana. The author can be contacted at [email protected].
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