Lecture 2 Intention to create legal relations

Intention to create legal relations

Intention to create legal relationsIt must be shown that the parties to the agreement intended to be legally bound by the agreement.

Intention to create legal relations

Types of agreementsIntention to create legal relationsIntention to create legal relations

Social and domestic agreements(Presumption – parties do not intend legal relations

Business or commercial agreements(Presumption – parties do intend to create legal relations

Intention to create legal relations

Commercial agreementsCourts will presume that agreements arrived at in a commercial context are intended to be legally enforceable. The presumption can be rebutted.CASE: Jones v Vernon’s Pools Ltd [1938]

Intention to create legal relations

Jones v Vernon’s Pools Ltd [1938] 2 All ER 626

Facts:VP ran a football pools operation in the UK. During a dispute the court had to determine whether a contractual relationship existed between VP and each entrant.

Intention to create legal relations

Jones v Vernon’s Pools Ltd [1938]The following appeared on each coupon:“It is a basic condition of the sending-in and acceptance of this coupon that it is intended and agreed that the conduct of the pools and everything done in connection therewith and all arrangements relating thereto (whether mentioned in these rules or to be implied) and this coupon and any agreement or transaction entered into or payment made by or under it shall not be attended by or give rise to any legal relationship, rights, duties or consequences whatsoever or be legally enforceable on the subject of litigation, but all such arrangements, agreements and transactions are binding in honour only.”

Intention to create legal relations

Jones v Vernon’s Pools Ltd [1938]Issue: Is there a commercial contract? Is there a relationship that is binding?

Intention to create legal relations

Jones v Vernon’s Pools Ltd [1938]Decision:Because the relationship is clearly commercial there is a presumption that the relationship is binding. However, the court held that the clause in the coupon was sufficient to rebut the presumption. Therefore, there was no contract between VP and the entrants.

Intention to create legal relations

Ferguson v Littlewoods Pools Ltd [1997] SLT 309Members of a football pools syndicate thought that they had won a £2.5 million jackpot on the Littlewoods pools, but then discovered that the Littlewoods collector had never passed their coupon on to the company and had stolen their stakemoney. Littlewoods refused to make a pay-out. The collector was convicted of theft. The syndicate members raised an action against Littlewoods. but it was dismissed as irrelevant by Lord Coulsfield on 28 March 1996 (Ferguson v Littlewoods Pools Ltd 1996 GWD 21-1187; 1997 SLT 309).

Intention to create legal relations

Ferguson v Littlewoods Pools Ltd [1997] SLT 309Lord Coulsfield held that Different considerations played a part in the development of the rules with different emphases in different cases. In some cases the ground of decision is that the parties cannot have intended that the transactions should have legal consequences. In others it was beneath the dignity of the court to enter into the question who won or lost a particular wager, and in others stress is put on the f

act that such transactions do not have commercial significance, and it may be that, in some of those cases, a general disapproval of gaming or wagering can be detected.

Intention to create legal relations

Ferguson v Littlewoods Pools Ltd [1997] SLT 309The primary ground of dismissal was the doctrine of sponsiones ludicrae, i.e. that a debt arising from a gambling transaction such as a football pool is unenforceable in the courts (McBryde, Contract, 577-581).

Intention to create legal relations

Agreements that can not be legally enforceableagreements binding in honor only domestic agreements gambling or wagering agreements social agreements