A. Introduction

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 111-113

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An agreement entered into by two parties will only be enforceable if the parties have entered into the agreement with the intention of creating legal relations. Social arrangements, for example, are often made without any intention that a legally enforceable agreement has been created. In a leading case,¹this proposition was illustrated with reference to an agreement by two parties to take a walk together, or a situation in which hospitality is offered and accepted. No one would suggest that, in ordinary circumstances at least, such arrangements would be expected by the parties to result in contracts enforceable at law. Similarly, the many agreements entered into by family members with respect to the details of daily life are not normally expected to be enforceable. In commercial contexts, it is less likely that agreements would be entered into without an expectation of enforceability. Nonetheless, there are a variety of commercial situations in which parties might wish to have an understanding that does not engage the full majesty of legal enforceability. As we shall see, courts have generally assumed an absence of intention to create legal relations in family and 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

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promisor’s private intention that no enforceable agreement be created will not prevail if the conduct of the promisor is such that the promisee reasonably believes that a binding agreement is intended.

The requirement that parties must intend legal relations is obviously one of a cluster of doctrines designed to isolate from the universe of promising behaviour, those promises and agreements that are appropriately subject to legal enforcement. Thus, the doctrine is evidently related to the rules of offer and acceptance²and the doctrine of consideration.³Indeed, it is sometimes suggested that the doctrine of intention is indistinguishable from one or both of these doctrines.⁴

Typically, however, the doctrine is treated separately and it can be distinguished, if narrowly, from those related doctrines. The doctrine of consideration holds that a promise will be enforceable where it is made in return for something of value given by the promisee. In effect, consideration doctrine limits enforceability to promises made as part of a bargain. There may be many bargains, however, especially in non-commercial...