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INTENTION TO CREATE LEGAL RELATIONS
The court considers the objective conduct of the parties as a whole to determine if the parties intended to create legal relations.
Elias LJ in Attrill v Dresdner Kleinwort (2013)
Andrews: But for borderline cases, a more nuanced approach is adopted: the court will inquire closely into what the parties actually thought to be the case, such as in Parker v
1 Commercial contexts
Aikens LJ in Barbudev v Eurocom Cable Management Bulgaria Food (2012): "In a commercial context, the onus of demonstrating that there was a lack of intention to create legal relations lies on the party asserting it and it is a heavy one". Another authority is Esso
Petroleum v Customs & Excise Commissioner (1976).
Accordingly, there is a presumption to create legal relations in commercial contexts.
This presumption can be rebutted in a few ways.
(i) Using the formula 'subject to contract'.
Grant v Bragg (2009): Where the parties have agreed that informal agreement should be finalised in writing on paper, the effect is to render the parties' dealings implicitly 'subject to contract'. The phrase need not be explicitly used.
However, RTS Flexible Systems Ltd v Molkerei (2010): The parties' conduct can indicate a joint indication to disapply the 'subject to contract' bar, provided that all the points of dispute have been resolved during negotiations and the parties have made substantial performance under the agreement.
Salvation Army Trustee v West Yorkshire Metropolitan CC (1980): Estoppel can override the
'subject to contract' bar.
(ii) Where parties expressly render a commercial agreement legally ineffective
Rose & Frank Co v Crompton Bros (1925)
(ii) Depending on the specific facts of the case
Apply the following cases analogously:
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