Deck 9: Intention to Create Legal Relations

Question 1

Domestic agreements can never be binding.

Answer 1

False

Question 2

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.

Answer 2

A

Question 3

In which of the following cases did the court decide that a husband's promise to his wife to pay her maintenance while they were forced to live apart was not contractually binding?

A) Balfour v Balfour [1919] 2 KB 571.
B) Wakeling v Ripley (1951) SR(NSW) 183.
C) Simpkins v Pays [1955] 1 WLR 975.
D) Shortall v White [2007] NSWCA 272.

Answer 3

A

Question 4

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

In which of the following cases did the court decide that an agreement between three friends to share the prize money in a lottery was contractually binding?

A) Teen Ranch Pty Ltd v Brown (1995) 38 AILR 5-036.
B) Balfour v Balfour [1919] 2 KB 571.
C) Merritt v Merritt [1970] 2 All ER 760.
D) Trevey v Grubb (1982) 44 ALR 20.

Question 7

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 8

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

Question 9

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 10

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 11

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.

Question 12

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 13

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 14

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 15

In Wakeling v Ripley (1951) SR (NSW) 183 the court found that a promise by a brother to his sister was legally binding because:

A) The sister had asked him for help.
B) He had put it in writing.
C) His behaviour was unreasonable.
D) The promise had serious consequences.

Question 16

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

Question 17

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

Question 18

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 19

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 20

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 21

What is a letter of comfort?

Question 22

Why was a promise to make an ex gratia payment held to be contractually binding in the case of Edwards v Skyways Ltd [1964] 1 WLR 349?

A) The parties used clear words.
B) The agreement was commercial and promissory in nature.
C) The parties were both corporate entities.
D) The promise had serious consequences.

Question 23

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 24

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 25

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

Question 26

Commercial agreements are always intended to be legally binding.

Question 27

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 28

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 29

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 30

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.

Question 31

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) Balfour v Balfour [1919] 2 KB 571.
C) Wakeling v Ripley (1951) SR(NSW) 183.
D) Simpkins v Pays [1955] 1 WLR 975.

Question 32

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 33

Advertisements are presumed not to intend legal relations.

Question 34

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 35

A volunteer intends to create legal relations.