Deck 8: Intention to Create Legal Relations

Question 1

Parties to a commercial agreement who do not wish the agreement to be legally binding:

A)can expressly declare that they do not intend to create legal relations.
B)are unable to prevent the agreement from being legally enforceable.
C)need not do anything.
D)can expressly exclude the jurisdiction of the courts.

Answer 1

A

Question 2

The existence or an intention to create a legally binding agreement is a question of law.

Answer 2

False

Question 3

In which type of agreement is the onus on the defendant to show that legal relations were not intended?

A)Domestic agreements.
B)Social agreements.
C)Commercial agreements.
D)Voluntary agreements.

Answer 3

C

Question 4

In determining whether the parties to an agreement intended to form a contract,why do the courts so often rely upon legal presumptions?

A)Because parties frequently lie about their intention.
B)Because it is rare for both parties to have the same intention.
C)Because parties rarely express their intention.
D)Because that is the law.

Question 5

A 'rebuttable' presumption is:

A)one which can be disputed with factual evidence.
B)one which cannot be disputed by either party.
C)a presumption based upon the evidence.
D)a reasonable presumption.

Question 6

Which of the following would best describe the decision in the case of Kleinwort Benson Ltd v Malaysian Mining Corporation [1988] 1 WLR 799?

A)The letter was a 'comfort letter.'
B)The letter written by the holding company was not contractually binding.
C)The letter was not a guarantee.
D)All of the above.

Question 7

When a business advertises their product,the courts generally presume that:

A)the merchant did not intend to enter into contracts with purchasers of their product.
B)the merchant did not intend to immediately create legal relations with viewers of the advertisement.
C)the merchant intended any contract with a purchaser to be legally binding.
D)the merchant intended their statements to be legally binding.

Question 8

Why did the decision in Banque Brussels Lambert SA v ANI Ltd (1989)21 NSWLR 502 differ from the decision in Kleinwort Benson Ltd v Malaysian Mining Corporation [1988] 1 WLR 799?

A)Kleinwort Benson was an English case.
B)The words used in the Banque Brussels case were promissory in nature.
C)The Banque Brussels case involved a subsidiary.
D)The Kleinwort Benson case involved a subsidiary.

Question 9

The case of Ermogenous v Greek Orthodox Community of South Australia Incorporated (2001)209 CLR 95 is authority for the principle that:

A)intention to create an enforceable agreement remains an essential precondition to contractual liability in Australia.
B)the category of social or domestic agreements now includes religious institutions.
C)the existence of intention to create an enforceable agreement is a question of fact.
D)intention to create an enforceable agreement is no longer an essential precondition to contractual liability in Australia.

Question 10

In which of the following cases did the court decide that an 'honour clause' in an agreement between a British firm and an American firm indicated that the firms did not intend to create legal relations?

A)Rose and Frank Co.v Crompton and Bros Ltd [1925] AC 445.
B)Edwards v Skyways Ltd [1964] 1 WLR 349.
C)Carlill v Carbolic Smoke Ball Co.[1893] 1 QB 256.
D)Jones v Vernon Pools Ltd [1938] All ER 626.

Question 11

A subjective test is used to determine the state of minds of the parties.

Question 12

By including the wording 'this agreement is subject to contract' it is clear that the parties do not yet intend to be legally bound to a contract.

Question 13

What is the courts' rationale for presuming that agreements made between parties in a commercial context are intended to be legally binding? Is this a fair presumption?

Question 14

In which of the following cases did the court decide that dealings with the government do not give rise to an intention to create legal relations?

A)Banque Brussels Lambert SA v Australian National Industries Ltd (1989)21 NSWLR 502.
B)Ermogenous v Greek Orthodox Community of South Australia Incorporated (2001)209 CLR 95.
C)Australian Woollen Mills Pty Ltd v The Commonwealth (1954)92 CLR 424;[1954] HCA 20.
D)None of the above.

Question 15

In which of the following cases did the court decide that an agreement to purchase two restaurants was contractually binding?

A)Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8.
B)Jones v.Vernon's Pools Ltd [1938] 2 All ER 626.
C)Masters v Cameron [1954] HCA 72.
D)Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235.

Question 16

Which of the following is NOT one of the possibilities identified by the High Court in Masters v Cameron (1954)91 CLR 353?

A)That the parties had reached final agreement.
B)That the parties had reached agreement but just wanted the deposit to be paid.
C)That the parties had reached agreement but wanted it to be recorded.
D)That the parties had postponed agreement until a formal contract was signed.

Question 17

The decision in Jones v Vernon Pools Ltd [1938] All ER 626 was based on the fact that:

A)the agreement was a social one.
B)the agreement was 'subject to contract.'
C)the ticket had been lost.
D)the coupon contained an 'honour clause.'

Question 18

In the case of Carlill v Carbolic Smoke Ball Co.[1893] 1 QB 256,the court decided that the advertisement:

A)Was only an invitation to treat.
B)Contained clear evidence of an intention to create legal relations.
C)Was presumed not to contain an intention to create legal relations.
D)Was nothing more than an advertising puff.

Question 19

Explain the two legal presumptions that assist courts to determine the intention of parties that enter into agreements with each other.What does it mean when these presumptions are called 'rebuttable'?

Question 20

Why was a letter of comfort held to be contractually binding in the case of Banque Brussels Lambert SA v Australian National Industries Ltd (1989)21 NSWLR 502?

A)The letter was vaguely written.
B)The wording of the letter lacked a guarantee.
C)The wording of the letter did not establish intent.
D)The wording of the letter was promissory and intended to create a legally binding obligation.

Question 21

In Darmanin v Cowan [2010] NSWSC 1118 the court found that the parties did not intend to be legally bound because:

A)Ms Darmanin had not spent money fitting out the cottage.
B)Ms Darmanin accepted assistance from the Cowans.
C)the Cowans offered assistance to Ms Darmanin.
D)there was a lack of documentation of the arrangement.

Question 22

It is assumed that a contract of employment is intended between volunteers and charitable organisations.

Question 23

Whilst the common law may not consider that advertisements indicate an intention to create legal relations,statute law has introduced penalties for various types of conduct which are designed to deter flagrant breaches of commercial good behaviour.Discuss.

Question 24

What is the courts' rationale for presuming that agreements made between family members are not intended to be legally binding? Is this a fair presumption?

Question 25

The law presumes that in social agreements the parties intend to create legal relations.

Question 26

In relation to the question of whether the parties could be objectively seen to intend to create legal relations,the courts take into account a number of factors.What are those factors?

Question 27

A volunteer worker may not be covered for workers compensation because:

A)they are not an employee.
B)they are unlikely to work on a regular basis.
C)they are working under a domestic agreement.
D)they only work for non-profit organisations.

Question 28

By its nature,a commercial contract can only be intended as legally binding by the parties.

Question 29

It is presumed that advertisements are not intended to create legal relations.

Question 30

In a non-commercial agreement,the onus is on the plaintiff to demonstrate intention.

Question 31

In Shortall v White [2007] NSWCA 272 the presumption against intention was rebutted because:

A)the parties had separated at the time.
B)the agreement would have been against public policy.
C)the promise was made before the relationship had broken down.
D)the promise was made before they were married.

Question 32

In commercial agreements,the courts presume that the parties did intend to create legal relations.

Question 33

The intention of the advertiser should be properly reflected in the advertisement.

Question 34

Courts deem all domestic agreements as non-binding.

Question 35

Describe the purpose of a letter of comfort.

Question 36

In which of the following cases did the court decide that a volunteer worker injured while working was not entitled to worker's compensation?

A)Teen Ranch Pty Ltd v Brown (1995)38 AILR 5-036.
B)Darmanin v Cowan [2010] NSWSC 1118.
C)Ashton v Pratt (No 2)[2012] NSWSC 3.
D)Shortall v White [2007] NSWCA 372.

Question 37

In which of the following cases did the court decide that a gentleman's alleged promises to his mistress were not contractually binding?

A)Ashton v Pratt (No 2)[2015] NSWCA 12.
B)Cohen v Cohen [1929] HCA 15.
C)Darmanin v Cowan [2010] NSWSC 1118.
D)Shortall v White [2007] NSWCA 272.