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Home » Law of Contract » Contract: Intention to Create Legal Relations (NG)

Contract: Intention to Create Legal Relations (NG)

N.B. This article is particular to Nigeria.

Intention to Create Legal Relations

Arguably, this is also one of the elements of contract. The parties must have intended to enter into a legally binding arrangement before such contract can be enforceable, otherwise, the court will lack the jurisdiction to entertain such matter.

Professor Williston argued that animus contrahandi which is another name for intention to create legal relation should not be compulsory as element of contract since there is already the doctrine of consideration.

However, despite the arguments, it is a settled position of law that under the common law and in Nigeria, intention to create legal Relation is prerequisite as an element of contract. In Akin Akingun & Associates v Odu ‘A Investment Co., the court held that “where there is failure of any of the requirement of a valid contract such as intention to create legal relations, then there is failure of contract as it is incomplete”.

Read also: Promissory estoppel in contract

In determining whether there is an intention to enter into legal relation by the parties, the court will do it objectively looking at each circumstances and conducts of the parties.

In RTS Flexible Systems Limited V Molkerei Alois Muller & Co, the court held that both parties had intention to enter into legal relation based on the fact of the case. Both parties had been acting based on the terms of a contract which was impliedly “subject to contract” and has the probability of boding to a formal contract.

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Social or Domestic Agreements

Generally, the presumption of law is that social or domestic agreements are not intended to be legally enforceable. They are merely gentleman’s agreement binding in honour only.

Thus, in Balfour v Balfour, an unfulfilled promises by an husband to his wife which was enforced by the wife was dismissed by the court reason because she furnished no consideration for the promise and that there is no intention to create legal relation in a domestic agreement.

Read also: Variation of Contractual Rights

Also, in Jones v Padavatton, a mother promised her daughter a house and fulfilled the promise, she latter sought to recover the possession of the house after both of them fell out. The court held that the agreement was a domestic one and lacked intention to create legal relation, and that mother can also claim the house if she wishes since domestic contract is only binding in honour.

However, the principle can be upturned in a situation where spouses are not living in amity and their relationship had become a hostile one.

Thus in Meritt v Meritt, given the fact of the case, it was shown that the couples are not in amity, the agreement of the transfer of the ownership of house which they extended into was then held as binding by the court.

In determining whether there is an intention to create legal relation in instance of spouses who are not living in amity, the court will carefully consider the language used. In Gould v Gould, a separating husband promised the wife $15 so long as he had it. The court held that the agreement was unenforceable since it was not sufficiently certain.

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Commercial Agreements

In commercial transactions, there is presumption that parties intended to create legal relations. This assumption is very heavy to be rebutted by a party objecting to it.

In Esso Petroleum Co. Ltd v Commission of Customs and Excise, the court held that there was an intention to create legal relations by the plaintiff’s unilateral offer of a world cup coin for wherever purchase 4 gallons of petrol.
Instances where the assumption to create legal relations in a commercial contract may be rebutted include.

  1. Inserting an express statement to this effect in a written statement. Where a clause is inserted that the agreement will only be binding in honour.

    In Amadi V Pool House Group & Nigerian Pools Co. The defendant denied the receipt of the coupon which the plaintiff had won a prize by pointing to the defendant of a clause stating that the agreement is only binding in honour. The court uphold the effectiveness of the clause.

    Read also: Contract in law

    Another possible rebuttal of the presumption may also be found in the cases of advertisement where the defendants assets that their statements are to be regarded as a mere puff in that they puff up the product in order to make it more attractive, and such words are not to be taken seriously. This is the line of argument that failed in Carbill V Carbalic Smoker Ball Co.

Contributed by: Adedokun Samuel

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