| Under UK law, an agreement supported by | | | | whether parties have created legal relations, |
| consideration is not enough to create a legally | | | | courts will look at the intentions of the parties. If |
| binding contract, the parties must also have an | | | | in the course of business transactions, the parties |
| intention to create legal relations. Often, the | | | | clearly and expressly make an agreement stating |
| intention to create legal relations is expressly | | | | that it ought not be binding in law, then a court will |
| stated by the contracting parties. In other | | | | uphold those wishes. However, if a court is of the |
| situations, the law will readily imply the intention, | | | | view that there is any ambiguity of intention, or |
| because of the nature of the commercial dealings | | | | that such intention is unilateral, such contract will |
| between the parties. | | | | be voided. The burden of rebutting the |
| The presence of consideration is often indicative | | | | presumption of legal relations in commercial |
| of the intention to create legal relations, though | | | | agreements lies on the party seeking to deny the |
| there are situations where the presumption of the | | | | contract. In terms of commercial contracts |
| intention can be rebutted, thus determining that | | | | involving large sums of money, case law has |
| there is no contract and no legal liability. | | | | determined that it is a heavy burden. |
| In many domestic agreements, for example | | | | It has been decided in the UK, that so called |
| those made between husbands and wives and | | | | “Letters of Comfort”, which express a |
| parents and children, there is no intention to | | | | parties intention on business dealings can amount |
| create legal relations and no intention that the | | | | to an intention to create legal relations and so bind |
| agreement should be subject to litigation. Familial | | | | a party in contract, but that it will depend on the |
| relationships do not preclude the formation of a | | | | nature of the specific wording used. |
| binding contract, though to create contractual | | | | Agreements between companies and trade unions |
| relations, there must be a clear intention on either | | | | have also raised the question of the intention to |
| party to be bound. | | | | create legal relations. Collective agreements are |
| While there are conflicting legal authorities on | | | | generally not intended to be legally binding. It has |
| whether specific facts involving familial relations | | | | been held that specific provisions of collective |
| result in binding and enforceable agreements, it | | | | agreements can be incorporated into individual |
| seems settled that in domestic agreements there | | | | contracts of employment and thus legally binding. |
| is a rebuttable presumption that the parties do | | | | The intention to create legal relations is an |
| not have intention to create legal relations. | | | | essential feature of contract law in the UK, and |
| In commercial agreements, there is a rebuttable | | | | the existence of the intention will depend on the |
| presumption that parties intend to create legal | | | | nature and form of the contract and the |
| relations and conclude a contract. In determining | | | | contracting parties. |