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Concept
Intention to create legal relations
Summary
Intention to create legal relations, otherwise an "intention to be legally bound", is a doctrine used in contract law, particularly English contract law and related common law jurisdictions.
The doctrine establishes whether a court should presume that parties to an agreement wish it to be enforceable at law, and it states that an agreement is legally enforceable only if the parties are deemed to have intended it to be a binding contract.
A contract is a legally binding agreement. Once an offer has been accepted, there is an agreement, but not necessarily a contract. The element that converts any agreement into a true contract is "intention to create legal relations". There must be evidence that the parties intended the agreement to be subject to the law of contract. If evidence of intent is found, the agreement gives rise to legal obligations whereby any party in breach may be sued.
In English law, there are two judicial devices to help a court to decide whether there is intent: the earlier objective test, and the later rebuttable presumption. Both tests are used together in combination.
Counterintuitively, the best way of discovering whether the parties intended to contract is not to ask them, as this "subjective test" would give the rogue an easy loophole to escape liability. (He would reply, "No! I did not intend to be bound".) Instead, just as in Carlill v Carbolic Smoke Ball Company, the court applies the "objective test" and asks whether the reasonable bystander, after taking into account all the circumstances of the case, thinks that the parties intended to be bound. Since the advertisement (pictured) stated that the company had "deposited £1,000 in the Alliance Bank to show sincerity in the matter", the court held that any objective bystander who read this would presume an intention to contract.
Rebuttable presumption
The rebuttable presumption establishes a burden of proof; but the burden may be rebutted by evidence to the contrary. The civil standard of proof is "a balance of probabilities", while the criminal standard of proof is "beyond reasonable doubt".
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