Intention to be legally bound
Where an agreement is of a social nature (e.g. friends) or domestic nature (e.g. husband and wife) it is presumed that there is no intention to be legally bound, but this may be rebutted on the facts of the case (Balfour v Balfour; Simpkins v Pays). The intention of the parties will be judged objectively, but the court is more likely to find intention where, for e.g. the parties were not in amity when the agreement was made (Merritt v Merritt); where the agreement was essentially a commercial one (Snelling v John G. Snelling); or where one party has acted to their detriment in reliance upon the agreement (Parker v Clark).
Where an agreement is of a commercial nature, the general presumption is that these agreements are intended to be legally binding, but this may be rebutted where the words used have the effect of nullifying an intention to be legally bound (This was the difference in Rose and Frank v JR Compton and Edwards v Skyways). In express agreements, the onus of proving there was no intention is on the party who asserts no legal effect is intended. However, where an agreement is implied contract inferred from conduct, the onus of proving there was on a contract is on the party who asserts that legal effect was intended (Baird Textile Holdings v Marks & Spencer).
