Intention to Create Legal Relations
| Author | John D. McCamus |
| Pages | 118-145 |
118
CHA PTER 4
INTENTION TO CREATE
LEGA L R EL ATIONS
A. INTRODUC TION
An agreement entered into by two part ies will be enforceable only if the
parties have entered into t he agreement with the intention of creating
legal relations. Social ar rangements, for example, are often made with-
out any intention that a legally enforceable agreement has been cre ated.
In a leading case,1 thi s proposition was illustrated with reference to an
agreement by two partie s to take a walk together, or a situation in which
hospitality is offered and accepted. No one would suggest that, i n ordi-
nary circumstances at least, such arrangements would be expected by
the parties to re sult in contracts enforceable at law. Similarly, the many
agreements entered into by fami ly members with respect to the details
of daily life are not normally expected to be enforceable. Unsurpris-
ingly, an Ontario court has held that election promises by politicians
are not expected to create binding contracts.2 In commercial contexts,
it is less likely th at agre ement s would be entered i nto w ithout an e xpec-
tation of enforceability. Nonetheless, there are a variety of commercial
situations in which part ies might wish to have an understanding that
does not engage the full majesty of legal enforceabil ity. As we shall see,
courts have generally assumed an absence of intention to create legal
2 Canadian Taxp ayers Federation v Ontario (Minister of Finan ce) (2002), 73 OR
(3d) 621 (SCJ).
Intention to Creat e Legal Relations 119
relations in family a nd social settings and a presence of an intention to
create legal relations in commercial settings. The test for the presence
of the intention is objective. Thus, a promisor’s private intention that
no enforceable agreement be created will not prevail i f the conduct of
the promisor is such that the promisee reasonably believes that a bind-
ing agreement is intended.3
The requirement that parties must intend legal relations is obvi-
ously one of a cluster of doctrines designed to is olate f rom the un iver se
of promising behaviour those promises and agreements th at are appro-
priately subject to legal enforcement. Thus, the doctrine is ev idently
related to the rules of offer and acceptance4 and the doctrine of consid-
eration.5 Indeed, it is sometimes suggested that the doctrine of inten-
tion is indisting uishable from one or both of these doctrines.6 Ty pic al ly,
however, the doctrine is treated separately and it can be distingui shed,
if narrowly, from those related doctrine s. The doct rine of consideration
holds that a promise wil l be enforceable where it is made in return
for something of value given by the promisee. In effect, consideration
doctrine limit s enforceability to promises made as p art of a bargain.
There may be many bargain s, however, especially in non-commercial
settings, which fail to meet the en forceability threshold, not because
of the absence of consideration but, rather, because the part ies had
no intention of creating legal relations. Nonetheless, at the margins of
the doctrine of consideration, as we shall see,7 it appears that courts
are more likely to find the existence of considerat ion in circumstances
where the court believes that the parties intended to create a legally
binding relationship. The rules of offer and acceptance, on the other
hand, are designed to determ ine whether the communications between
negotiating parties are such that a true consensus ad idem has been
achieved on the terms of the agreement. Thi s is not the objective of the
requirement of intention to create legal relations. On the other hand,
in determining whether or not a part icular communication amounts to
an offer, we have seen that it is relevant to consider whether the offeror
intended that the offeree could, by acceptance of the offer, create a
3 See generally A Robe rtson “The Limits of Voluntarine ss in Contract” (2005)
29 Melbourne UL Rev 179; M Pratt, “Pr omises, Contracts, and Volunta ry
Obligations” (2007) 26 Law & Phi l 531.
4 See Chapter 2.
5 See Chapter 7.
6 See, for example, R Tuck, “Intent to Contract and Mutu ality of Assent” (1943)
21 Can Bar Rev 123; B Hepple, “Intent ion to Create Legal Relations” (1970) 28
Cambri dge LJ 122.
7 See Chapter 7, Section B(1).
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