There is now a fair amount of legislation controlling unfair practice in
consumer contracts, and if a similar case should revisit the courts it is
possible that the practice of honourable pledge clauses may fall foul of the
Unfair Terms in Consumer Contract Regulations 1999. It is certainly
against the spirit of the European Directive which led to the regulations,
and the courts should look for an opportunity to outlaw the practice.
One business-like situation where it is presumed that legal intent exists is
when employers and trade unions meet to discuss pay settlements or working
conditions. In order to facilitate collective bargaining, it is presumed that any
agreements made are not intended to be binding unless this is expressly
stated in writing. This principle was applied in the case of Ford Motor Co Ltd
v Amalgamated Union of Engineering and Foundry Workers (1969).
The existence of legal intent is therefore an important element in the
formation of a contract. The presumptions operate to prevent social
arrangements turning inadvertently into legally binding contracts, but, on the
other hand, to ensure that the reasonable and realistic intentions of the parties
are supported by law. It has been argued by academics, notably Atiyah, that
as there are at present three major formation requirements (offer and
acceptance, consideration and legal intent), consideration is not strictly
necessary. If this line was to be pursued by the courts, legal intent would play
an even greater role in the formation of a contract. In that situation, it would
be even more important that the parties honour their obligations when they
clearly set out to form a legally binding agreement, and the presumption of
legal intent is one way of ensuring that this happens.
Summary
An intention to be legally bound (or to ‘form legal relations’) is required as
a formation element of a contract, in addition to offer, acceptance and
consideration.
Social and domestic arrangements
The presumption and its rebuttal
A presumption exists in social and domestic situations that there is no legal
intent and that arrangements are not therefore enforceable.
- The presumption can be rebutted by evidence that the parties were
serious in their intention to be legally bound.
74 Contract law
Do you think that the average player of these competitions
understands the significance of these clauses?