For today’s post we will take a look at the 3rd key element of a contract which is Intention to Create Legal Relations.
Intention to Create Legal Relations
Both parties must intend for their agreement to be legally binding. This means that they must have a genuine intention to create legal relations. The following case clearly delineates how and when a promise to a spouse can be considered or not considered to be a legally binding contract.
Balfour v. Balfour: In this case, a husband promised to pay his wife an allowance of £30 per month while he was working in Ceylon. The husband later refused to pay the allowance when the couple separated. The court held that the agreement was not legally binding because the parties did not intend for their agreement to create legal relations. In this case, the agreement was more of a domestic arrangement than a contract.
There are some nuances to this case that are worth elucidating. Mr. Balfour was a civil engineer, and worked for the Government of Ceylon as the Director of Irrigation. Mrs Balfour was living with him in Ceylon. They were both British subjects. In 1915, they both traveled back to England during Mr Balfour’s leave. Mrs Balfour had developed rheumatoid arthritis and went to see her doctor in England. Her doctor advised her to stay in England, claiming that the climate in Ceylon would be detrimental to her arthritis. Mr Balfour before setting sail back to Ceylon, orally promised her £30 a month until she was fit to join him again in Ceylon. The relationship between Mr. and Mrs. Balfour deteriorated over time and Mr Balfour wrote saying it was better that they remain apart. In March 1918, Mrs Balfour sued him (via a divorce proceeding) to keep up with the monthly £30 payments.
The Court of Appeal held that there was no enforceable agreement. Sir Thomas Warrington who wrote the 1st opinion on this case stated: “The matter really reduces itself to an absurdity when one considers it, because if we were to hold that there was a contract in this case we should have to hold that with regard to all the more or less trivial concerns of life where a wife, at the request of her husband, makes a promise to him, that is a promise which can be enforced in law. All I can say is that there is no such contract here. These two people never intended to make a bargain which could be enforced in law. The husband expressed his intention to make this payment, and he promised to make it, and was bound in honour to continue it so long as he was in a position to do so. The wife on the other hand, so far as I can see, made no bargain at all. That is in my opinion sufficient to dispose of the case.”
Sir Henry Duke gave a 2nd opinion stating: “In the Court below the plaintiff conceded that down to the time of her suing in the Divorce Division there was no separation, and that the period of absence was a period of absence as between husband and wife living in amity. An agreement for separation when it is established does involve mutual considerations.”
Therefore we can conclude that if Mrs. Balfour had first gotten a separation agreement with Mr. Balfour where the £30 per month allowance was codified as a term of the agreement, then it would have been a binding legal agreement. However, no separation agreement was made and Mrs. Balfour offered no consideration in return for the £30 per month allowance. In other words, the lack of consideration on Mrs. Balfour’s behalf proved that she had no intent to create legal relations regarding the £30 a month promise of her husband.