The doctrine of ‘intention to create legal relations’
This essay will firstly provide a presentation of the doctrine of intention to create legal relations. In a second step I will try to verify the statement made by Collins in connection with the courts’ task to find out what the parties’ intentions are. Current developments will be examined.
B. The doctrine of intention to create legal relations
The intention to create legal relations is a major principle of Contract Law. According to A.W.B. Simpson this doctrine might date back to the landmark decision of Carlill v Carbolic Smoke Ball Company in 1893, but it was not really established until 1919 by the landmark decision of Balfour v. Balfour.
The doctrine’s focus is on whether the parties intended to be legally bound to the contract, the ‘subjective element of the contract’. Recognition of the existence of domestic and social agreements to which parties do not mean to be legally bound has resulted in a presumption that, correspondingly, no contract is recognised. Commercial transactions, on the other hand, are treated with a strong presumption that legal relations were intended.
Collins’ above statement reflects that in trial where the issue is disputed, the parties allege to have had a contrary understanding at the time of whether or not the agreement has legal effect. Collins states that it is ‘likely’ that the parties’ assertions are honestly what they intended, so either way, the affect the court gives to the doctrine will not be based simply on the parties’ intentions. Instead the courts will falsify the real legal intention to give affect to other considerations although expressed as a finding of fact.
Furthermore, Collins criticises the doctrine as an unsuitable approach because findings of fact of the parties’ will is impossible. Intentions are not accessible to outsiders and one ‘cannot lead evidence on their own subjective intuitions.’ Not surprisingly the parties’ intention has to be ‘objectively judged’ with the ‘different presumptions for domestic and commercial agreements.’
C. Hidden Policy Considerations?
Starting from this classification the question arises how judges practically take such an objective approach. Collins suggests that they ‘must rely on hidden policy considerations.’
Chen-Wishart even states that ‘it is now widely accepted that the presumptions of intention to create legal relations are based on public policy’ In Literature we find numerous policies that courts might follow under the guise of estimating the parties’ contractual intent.
According to Adams and Brownsword the role of this argument is mainly to limit the cases that can be brought before the courts or ‘to avoid swamping the judicial system with social and domestic disputes.’ We can identify this practical argument by looking at the decision Balfour v Balfour where Atkin LJ commented that the ‘the small Courts of this country would have to be multiplied one hundredfold if [...] [social and domestic] arrangements were held to result in legal obligations.’
2. De minimus non curat lex
Another policy similar to the ‘Floodgates’-argument is suggested by Ramsay, according to the principle De minimis non curat lex: ‘the law does not concern itself with trifling matters’. This policy can be neglected as it implies domestic disputes would be unremarkable a priori.
3. Protecting social relationships
Much importance is given to the policy that private lives of the citizens should be protected from too much interference from the courts. Chen-Wishart calls this ‘Freedom from contract.’ Adams and Brownsword therefore correctly state that the ‘“sanctioning” presence of courts might inhibit social relationships.’
The bond of matrimony is the paradigm of social relationships and it is not surprising that the above mentioned policy can be found in the decision Balfour v Balfour where Atkin LJ said: “Agreements such as these are outside the realm of contracts altogether. The common law does not regulate the form of agreements between spouses...The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts. The terms may be repudiated, varied or renewed as performance proceeds or as disagreements develop, and the principles of common law...find no place in the domestic code...In respect of these promises each house is a domain into which the King’s writ does not seek to run.”
The case concerned an agreement made between a married couple that the husband would give his wife £30 per month so that she could provide for herself while he lived abroad. His wife, Mrs. Balfour, brought an action to enforce the payments after they separated and Mr. Balfour stopped to pay. It was held that agreements which are made in the domestic sphere are presumed to be without the intention to create legal relations. This presumption is rebuttable. This decision was distinguished in Merritt v Merritt where it was held that this presumption is rebutted if husband and wife were separated when the agreement was made. Same is applicable to agreements between friends that have been made to enter into competitions, like in Simpkins v Pays. This idea of keeping the law out of the domestic sphere might be a characteristic of ‘liberal democratic society’ ; nevertheless the approach in Balfour v Balfour has been criticised as suffering from gender inequality.
 Carlill v Carbolic Smoke Ball Company,  1 QB 256
 (McKendrick 2003:288; Balfour v. Balfour,  2 KB 571)
 (Patel 2005:1)
 (Collins 2003:104/105)
 (McKendrick 2003:295)
 (Jill Poole 2003:158)
 (Collins 2004:105;)
 (Chen-Wishart 2005:111)
 (Adams and Brownsword 1995:22)
 (Chen-Wishart 2005:111)
 (Balfour v. Balfour at 579)
 (Adams & Brownsword 2004:93-94)
 (Balfour v Balfour all at p. 579)
 Merritt v Merritt,  1 W.L.R. 1211
 Simpkins v Pays,  1 W.L.R. 975
 (Clarke 1994:1)
 (Lias 2005:2)