Intention to be legally bound

Intention to be legally bound, otherwise "intention to create legal relations", is a concept used in contract law, particularly English contract law, to denote whether a court should presume that parties to an agreement wish it to be enforceable at law.

A contract is a legally binding agreement. Once an offer has been accepted, there is an agreement, but not necessarily a contract. The element that converts any agreement into a true contract is "intention to create legal relations". The courts seek evidence that the parties to the agreement intended that it should be governed by, and subject to, the law of contract; so that the agreement gives rise to legal consequences. Each party thus adopts a legal obligation, and each may seek a remedy in the event of breach.

The concept is closely related to the "will theory" of contracts as espoused by German jurist Friedrich Carl von Savigny in his nineteenth century work System des heutigen Römischen Rechts (1840). It had been a prominent concept through the nineteenth century that contracts were based on a meeting of minds between two or more parties, and that their mutual consent to a bargain, or their intention to contract, were paramount. While it is generally true that courts wish to uphold the parties' intentions, courts moved in the later half of the nineteenth century to a more objective stance for interpretation, whereby the emphasis moved to the way in which the parties had manifested their consent to a bargain to the outside world. Given this change, it was still said that "intention to be legally bound" was a necessary element for a contract, but it came to reflect a policy about when to enforce agreements, and when not to.

A contract is a legally binding agreement. Once an offer has been accepted, there is an agreement, but not necessarily a contract; and the element that converts any agreement into a true contract is "intention to create legal relations". There must be evidence that the parties to the agreement intended that it should be governed by, and subject to, the law of contract; so that the agreement gives rise to legal consequences. In a contract, each party accepts a legal obligation, and each may seek a remedy in the event of breach.

There are two judicial devices assist a court to decide whether there is intent: the Objective Test, & the Rebuttable Presumption.

Counterintuitively, the best way of discovering whether the parties intended to contract is not to ask them, as this "subjective test" would give the rogue an easy loophole to escape liability. (He would reply, "No!".) Instead, just as in Carlill v Carbolic Smoke Ball Company [1893], the court applies the "objective test" and asks whether the reasonable bystander, after taking into account all the circumstances of the case, thinks that the parties intended to be bound. Since the advertisement stated that the company had "deposited £1,000 in the Alliance Bank to show sincerity in the matter", the court held that any objective bystander who read this would presume an intention to contract.

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