Question 1

An agreement between two commercial parties will usually be considered to demonstrate an intention to create legal relations?

Accepted Answer

This is a general principle of contract law. When two commercial parties enter into an agreement, it is presumed that they intend to create legally binding obligations on each other. This presumption can be rebutted in certain circumstances, such as when the agreement is not sufficiently clear or certain, or where the parties expressly state that they do not intend to create legal relations.

Question 2

Explain the rule laid out by the Privy Council in Pao On v Yau Liu Long and when it will apply.

Accepted Answer

In the case of Pao On v Yau Liu Long, the Privy Council laid out the rule that a person who has received a benefit under a contract cannot deny the validity of the contract when it is being used against them. This rule is known as the "doctrine of estoppel by deed."

This rule will apply when a party has received a benefit under a contract and then later tries to deny the validity of the contract in order to avoid their obligations. In such cases, the party will be estopped from denying the validity of the contract and will be bound by its terms.

The rule is aimed at preventing parties from taking advantage of a contract when it suits them and then denying its validity when it does not. It promotes fairness and consistency in contractual dealings.

Question 3

To what extent could it be argued that consideration is essentially identical to the concept of reliance?

Accepted Answer

Consideration and reliance are two distinct legal concepts, but they are closely related in the context of contract law. Consideration refers to something of value that is exchanged between parties to a contract, while reliance refers to the act of relying on a promise or representation made by another party.

It could be argued that consideration is essentially identical to the concept of reliance to some extent. This is because both consideration and reliance involve some form of exchange or benefit between parties. In a contract, one party may provide consideration in the form of money, goods, or services, while the other party may rely on the promise or representation made by the first party.

However, it is important to note that consideration and reliance are not entirely identical. Consideration is a necessary element for the formation of a legally binding contract, while reliance may not always be required for a contract to be enforceable. Additionally, consideration is often seen as a bargained-for exchange, while reliance may be based on a party's trust or belief in the other party's promise.

In conclusion, while consideration and reliance share some similarities, they are not identical concepts. Consideration is a fundamental element of contract law, while reliance may play a role in the enforcement of certain contracts. Both concepts are important in understanding the dynamics of contractual relationships, but they are distinct in their legal implications.

Question 4

Why is it important to know if there is an intention to create legal relations?

Accepted Answer

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Question 5

In what situations would we automatically assume that there was an intention to create legal relations?

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Question 6

In what situations would we automatically assume that there was not an intention to create legal relations?

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Question 7

In what social situations or transactions might the law consider that there was an intention to create legal relations?

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Question 8

Do the rules on intention to create legal relations make the mistake of assuming that commercial parties are fully aware of the law whilst assuming that non-commercial parties are not?

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Question 9

To what extent, if at all, is the requirement that there be an intention to create legal relations one that the law really needs to impose?

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Question 10

Does Sadler v Reynolds indicate a more nuanced approach to the question of whether parties have an intention to create legal relations?

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Question 11

Would an agreement between friends to play a lottery together and share any winning equally be regarded as one demonstrating an intention to create legal relations?

Accepted Answer

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Question 12

Should the Court of Appeal decision in Williams v Roffey be regarded as a great leap forward, preventing rigid rules getting in the way of business practice or an act of vandalism against rules that must remain intact?

Accepted Answer

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Question 13

Why is past consideration not regarded as 'good' consideration?

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Question 14

Are the rules on what can and cannot constitute valuable consideration sufficiently clear? If not, how might they be improved?

Accepted Answer

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Question 15

An agreement between two non-commercial parties will usually be considered to demonstrate an intention to create legal relations?

Accepted Answer

An agreement between two non-commercial parties is generally considered to not demonstrate an intention to create legal relations, as it is assumed to be a social arrangement. However, this can be rebutted if there is clear evidence to the contrary, such as if the agreement is in writing and contains specific obligations and consequences for breach.

Question 16

In Edmonds v Lawson Lord Bingham reiterated the principle that the intention to create legal relations must be ascertainted objectively?

Accepted Answer

Lord Bingham did indeed reiterate the principle that the intention to create legal relations must be ascertained objectively in the case of Edmonds v Lawson.

Question 17

In Edwards v Skyways an ex gratia payment by the claimant's former employer was considered to be outside of the scope of their usual commercial activities and so lacked an intention to create legal relations.

Accepted Answer

In Edwards v Skyways, the court held that the ex gratia payment promised by the employer was binding and had an intention to create legal relations, despite being described as "ex gratia". The context was such that the parties intended the agreement to be legally enforceable, especially within the commercial context of an employment settlement.

Question 18

Cases such as Sadler v Reynolds indicate an acknowledgment that there are many existing and potential cases that exist in a 'grey area' between the purely commercial and purely domestic transactions

Accepted Answer

The statement correctly describes the acknowledgement of grey area cases in commercial and domestic transactions in the Sadler v Reynolds case.

Question 19

In which case was an agreement to share the cost of commuting between colleagues held not to be legally binding? A) Smythe v Motor Insurance Bureau B) Woollard v Blythe C) Coward v Motor Insurer' Bureau D) Balfour v Balfour

Accepted Answer

In Coward v Motor Insurers' Bureau, the court held that an informal agreement between colleagues to share commuting costs was not intended to create legal relations, and thus was not legally binding.

Question 20

Balfour v Balfour concerned an agreement to pay for what? A) To invest in shares in his absence B) To cover the expenses of Balfour's wife C) An outstanding bank loan D) The cost of Balfour's wife travelling to Ceylon

Accepted Answer

The case of Balfour v Balfour concerned an informal agreement between a husband and wife, where the husband promised to pay his wife certain amounts of money while he was away working in Ceylon (now Sri Lanka). The court ultimately found that this agreement was a domestic arrangement rather than a legally enforceable contract, since there was no intention to create legal relations. Therefore, the wife was not entitled to the amounts promised by her husband. This case established the principle that agreements made in a domestic context are generally not legally enforceable unless there is clear evidence that the parties intended to create a legally binding contract.

Quiz 4: Intention to Create Legal Relations

An agreement between two commercial parties will usually be considered to demonstrate an intention to create legal relations?

Explain the rule laid out by the Privy Council in Pao On v Yau Liu Long and when it will apply.

To what extent could it be argued that consideration is essentially identical to the concept of reliance?

Why is it important to know if there is an intention to create legal relations?

In what situations would we automatically assume that there was an intention to create legal relations?

In what situations would we automatically assume that there was not an intention to create legal relations?

In what social situations or transactions might the law consider that there was an intention to create legal relations?

Do the rules on intention to create legal relations make the mistake of assuming that commercial parties are fully aware of the law whilst assuming that non-commercial parties are not?

To what extent, if at all, is the requirement that there be an intention to create legal relations one that the law really needs to impose?

Does Sadler v Reynolds indicate a more nuanced approach to the question of whether parties have an intention to create legal relations?

Would an agreement between friends to play a lottery together and share any winning equally be regarded as one demonstrating an intention to create legal relations?

Should the Court of Appeal decision in Williams v Roffey be regarded as a great leap forward, preventing rigid rules getting in the way of business practice or an act of vandalism against rules that must remain intact?

Why is past consideration not regarded as 'good' consideration?

Are the rules on what can and cannot constitute valuable consideration sufficiently clear? If not, how might they be improved?

An agreement between two non-commercial parties will usually be considered to demonstrate an intention to create legal relations?

In Edmonds v Lawson Lord Bingham reiterated the principle that the intention to create legal relations must be ascertainted objectively?

In Edwards v Skyways an ex gratia payment by the claimant's former employer was considered to be outside of the scope of their usual commercial activities and so lacked an intention to create legal relations.

Cases such as Sadler v Reynolds indicate an acknowledgment that there are many existing and potential cases that exist in a 'grey area' between the purely commercial and purely domestic transactions

In which case was an agreement to share the cost of commuting between colleagues held not to be legally binding?

Balfour v Balfour concerned an agreement to pay for what?