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Contract Law: Intention to Create Legal Relations & Capacity Intention to Create Legal Relations (ICLR)?
Need for ICRL to make valid contract: Rose and Frank v Crompton Bros)---'To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly' (Atkin LJ). Objective assessment of parties' intentions in making an offer, would a reasonable man think ICLR? (Smith v Hughes) o 'reasonable man'/objective test (Bowerman v ABTA): would reasonable man have thought ICLR.
Presumption 1---commercial agreements, presumption of ICLR
? Commercial agreements: o Presumption = ICLR (Well Barn Farming v Backhouse; Bunn & Bunn v Rees & Parker): 'heavy burden' to show no ICLR in commercial relations. Well Barn Farming: 'slight importance' and temporary nature of arrangements? still evidence of ICLR. o Bowerman v ABTA: apply 'reasonably man' test; re ABTA document in the window saying 'ABTA arranges reimbursement', was unilateral offer to contract; 'reasonable man' would read the document as an offer of a promise.
? Rebutting presumption of commercial setting = iCRL o Express rebuttal: if specific wording/express clause to that effect, 'honourable pledge clauses' (Rose & Frank v Crompton): headnote said: 'this agreement is not entered into . . . as a formal or legal agreement'. Must use clear words, express clause will rebut presumption.
? Language to show no ICLR must be sufficiently clear (Edwards v Skyways: expression 'ex gratia' was insufficient to show lack of ICLR, presumption hard to rebut, not rebutted).
? Objective assessment of evidence enough to rebut presumption (Baird Textile v M&S). o Statements said in anger/jest (on an objective view): Licences Insurance Corp v Lawson: feisty board meeting; Lawson, angry, says vote with me on this and if it goes wrong, I will personally reimburse you? not minuted, no ICLR, made in heat of moment---objective view, reasonable man wouldn't have thought ICLR. o Adverts: o Generally ITTs, a prior negotiating step, no ICLR. Non-binding sales talk. o If ITT arises in business context: presumption = any offer in response to that invitation = ICLR. o Carlill v Carbolic: hELD: unilateral offer was legally binding---
deposit of PS1000 showed ICLR. 1
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