Step 1: The legal issue is whether Sophie, Nicole and Joel had the intention to create a legally binding agreement while they are friends.
The court’s objective approach in assessing intention to create legal relations. Intention will be judged objectively based on reasonable person
The judges may presume that spouses and friends may not have the intention to be legally bound. The case is Balfour v Balfour. The spouses travelled to England and the wife fell sick. The wife had to stay in England due to her sickness and a promise was made by the husband to provide his wife with some of money until she got better. However, they separated and the husband stop providing her with the agreed some of money. Did the parties have an intention for a legally enforceable contract? The court agreed that the agreement was not legally enforceable because the Mr B did not expect to deal with the legal repercussions. Therefore, the court decided that there is no intention for legally enforceable contract.
The judges may presume that the agreement between spouses are not legally enforceable. The case is Cohen v Cohen. The couple agreed for 100 sterling pounds allowance when there was a discussion beforehand that the defendant promised to pay the plaintiff on a quarterly instalment the money for a dress allowance. After separation, Mr Cohen stopped. Was the promise intended to be legally enforceable? The court agreed that the promise was not legally enforceable since the court viewed the promise merely as a discussion at the time the couple were together and that there was no legal consequences agreed on
The judges may presume that the intention not to be legally bound can be rebutted in some cases. The aggrieved party must show evidence to prove. The case is Merritt v Merritt. The spouses separated and there was discussion on mortgage payment which the husband agreed to transfer the house if the wife completed it. After complete payment, the husband refused to transfer. Has the presumption been rebutted? The court agreed that marriage has broken when the husband left his wife to live with his mistress. The discussion of the house transfer was summarised in writing. Therefore, the court decided that the presumption has been rebutted.
The judges will presume that there is always an intention in commercial or business transactions to be legally bound for the formation of a valid contract. The case is Esso Petroleum Co Ltd v Commissioners of Customs and Excise (1976). A set of commemorative coins were produced by Esso Petroleum as items for collectors with conditions which the motorists needed to purchase 4 gallons in order to get the coin. The coins which was intended to be promotional was subjected to a purchase tax according to Commissioner of Customs and Excise as the coins were produced for general sale numerously. Has the Esso established the intention of the conditions relating to the coins to be legally binding ? The court agreed that the intention of the promotion were to be legally binding. As such, the collectibles coins are subject of a purchase tax.
The court will decide that the agreement is legally bound based on the connected facts. Both party must have the same cognition in the agreement. Ermogenous v Greek Orthodox Community of SA Inc is the case. The archbishop was invite to Australia to serve as an archbishop for 23 years. The Community agree to pay him for his accumulated leave but then at the end of his appointment the Community refuse to pay the archbishop. In this case the agreement has enforced? The court agreed that the agreement had involved monetary and economic benefit. Therefore, the court that the agreement is enforceable.
The court will presume that the intention to be legally bound based on the employment contract with Ermogeneous is enforceable. Both parties must have the same understanding the employment contract. Ermogenous v Greek Orthodox Community of SA Inc is the case. The archbishop was invited to Australia to serve as an archbishop for 23 years. The Community agreed to pay him for his accumulated leave but then at the end of his appointment the Community refused to pay the archbishop. In this case does the contract provide evidence of intention to be legally enforced? The court agreed that the agreement had involved monetary and economic benefit. Therefore, the court that the agreement is enforceable.
The court’s objective approach in assessing intention to create legal relations. Intention will be judged objectively based on reasonable person Test. As an agreement is only legally enforceable if the parties intend to be legally bound at the time the agreement is made, an objective assessment of the circumstances in which Super and Celeb Joel and Nicole and Sophie made the agreement needs to be undertaken. The question is whether, in the circumstances, a reasonable person would regard the rental agreement as intended to be binding.
The presumption regarding social and domestic agreements. The court will presume that agreements between spouses and friends are not legally enforceable.The parties here are friends. Given that the parties are friends and the rental agreement appears to have been made in a social context, the courts will rely on the presumption that in these circumstances Nicole and Joel and Sophie did not intend to be legally bound at the time the agreement was made.
Rebutting the presumptions concerning intention. The presumption can be rebutted when the relationship fails and the aggrieved party is able to provide evidence that there was a contract. To enforce the rental agreement Sophie will have to prove additional facts to rebut this presumption. One such fact may be that the rental payment is substantial and appears to be a commercial rate, not a reduced rate for friends. The agreement is also for a reasonable length of time.
They have agreed that Joel, Nicole and the baby will stay at the beach house for four weeks. However, there is nothing in the facts to suggest the agreement is in writing, this would assist Sophie in establishing that contrary to the presumption, the parties intended the rental agreement to be legally binding.
In conclusion, it is not likely that the rental agreement is legally enforceable because Nicole and Joel and Sophie had not intended to be legally bound at the time the agreement was made. A contract has not been formed and Sophie cannot enforce the agreement between her and Nicole and Joel in order to receive payment. Sophie will not get her $4000.