Intention to Create Legal Relations in UK Law

An intention to create legal relations is normally presumed in the case of an express or apparent agreement satisfying the first requirement: see Chitty on Contracts (28 th Ed.) It is otherwise, when the case is that an implied contract falls to be inferred from parties' conduct: Chitty, para.2–147. It is then for the party asserting such a contract to show the necessity for implying it.

Where there is an express agreement on essentials of sufficient certainty to be enforceable, an intention to create legal relations may commonly be assumed: Chitty, para. 2–146. It is then for the party asserting a contract to show the necessity for implying it: see The Aramis [1989] 1 Ll.R. 213, Blackpool and Fylde Aero Club Ltd. v. Blackpool B.C. [1990] 1 WLR 1195, The Hannah Blumenthal [1983] AC 854 and The Gudermes [1993] 1 Ll.R. 311

In my view, with respect, Mr Mulholland has misunderstood the ET's decision. The Tribunal did not hold that there was no intention to create legal relations. These two men were employer and employee; in effect, legal relations already existed between them. If words had been uttered that were capable of amounting to a contractual promise, it could not sensibly have been suggested that there was no intention to create legal relations.

The earlier cases, as explained, do not exclude that possibility; strong statements in Percy leave it open to Employment Tribunals to find, provided of course a careful and conscientious scrutiny of the evidence justifies such a finding, that there is an intention to create legal relations between a church and one of its ministers (Lord Nicholls paragraph 26, Lord Hoffmann paragraph 63, Lord Scott paragraph 137 and Baroness Hale paragraph 151).

In my judgment, this evidence is admissible even on the assumption that it was not known to the employees when the offer was made. But a rule of this nature must not be allowed to work an injustice. So a party who in fact knows that the other party does not intend to create legal relations cannot seek to contend otherwise by asserting that the evidence, objectively analysed, supports his case. He knows the truth and should not be allowed to deny it: Pateman v Pay (1974) 232 E.G.467.

The identity of the parties to a contract is fundamental. Like the nature and amount of the consideration and the intention to create legal relations it is a question of fact and may be established by evidence. Such evidence is admissible even where the contract is in writing, at least so long as it does not contradict its express terms, and possibly even where it does: see Young v Schuler (1883) 11 QBD 651Chitty on Contracts 28th edn p 633.

There are indeed many arrangements or happenings in church matters where, viewed objectively on ordinary principles, the parties cannot be taken to have intended to enter into a legally-binding contract. Without more, the nature of the mutual obligations, their breadth and looseness, and the circumstances in which they were undertaken, point away from a legally-binding relationship.