that the parties intended to create a legally binding contractual
relationship. In RTS Flexible Systems Ltd v Molkerei Alois Muller
GmbH & Co KG UK (Production) 2010 3 All ER 1 Lord Clarke, at
paragraph 45, describes the applicable test to be as follows:
‘Whether there is a binding contract between the parties and, if so, upon
what terms depends upon what they have agreed. It depends not upon
their subjective state of mind, but upon a consideration of what was
communicated between them by words or conduct, and whether that
leads objectively to a conclusion that they intended to create legal
relations and had agreed upon all the terms which they regarded or the
law requires as essential for the formation of legally binding relations.
Even if certain terms of economic or other significance to the parties have
not been finalized, an objective appraisal of their words and conduct may
lead to the conclusion that they did not intend agreement of such terms to
be a precondition to a concluded and legally binding agreement.’
The essential terms of an agreement must at all times be present and
must be clear and unequivocal. The court cannot impose a binding
contract on the parties upon which they had not agreed. It cannot read
into an agreement terms and conditions which in effect would support its
validity and enforceability.
[29] In that case, the respondent sued the appellant for breach of contract on the
premise of an agreement whereby he agreed, among other things, to coach
players for the national team, assist at tournaments for which the defendants,
one of whom was the appellant, would pay him. He however never received any
payment. This agreement he alleged was made in a conversation he had with the
appellant about conducting the training of junior and senior table tennis
players on behalf of the Jamaica Table Tennis Association. The learned Resident
Magistrate accepted that there was a binding contract and ruled against the
appellant. On appeal however, it was observed at paras. 14-16 that:
In the case under review, the performance of an obligation is at the heart
of the dispute between the parties. Even if there was an arrangement
between the parties for the respondent to undertake the training of
persons to participate in the table tennis tournaments, the terms of such
arrangement are vague…the respondent stated that he performed the
services upon which the parties agreed but there is nothing to show that
the parties had agreed upon a specific period during which the
respondent should carry out the services which he said he had done over
a two year period. Further, there is no evidence that a fixed amount was
agreed upon as to the respondent’s remuneration…further, there is no
evidence that there was any arrangement with the respondent for the use
of the JTTA‟s facilities…
[30] Further at para. 19 it was stated that :
Even if there had been negotiations or discussions between the parties,
the evidence does not reveal that these led to a binding and enforceable
contract between the parties. No definitive terms had been negotiated
which would have had a contractual effect. It cannot be said that, as
legally required, all essential terms had been agreed on. There being no
agreed terms, there is nothing to show that the parties intended to create
legal relations. Any discussions between them cannot be taken higher
than pre-contractual negotiations contemplated by them to enter into a
binding agreement…
[31] In Cheshire, Fifoot and Furmston’s Law of Contract, 15
th
Ed., p. 142 the
learned author Michael Furmston also makes it clear that:
It is therefore contended that, in addition to the phenomena of agreement
and the presence of consideration, a third contractual element is required-
the intention of the parties to create legal relations.
[32] It is trite law that a valid offer and acceptance constituting an agreement,
consideration and an intention to create legal relations are the three fundamental
elements of a contract. It is important to make two further observations: 1) the
onus of proving that there was a legally binding agreement is on the person who
makes the assertion. In this instance, it is the claimant who must prove that on a
balance of probabilities, there was an agreement for which consideration was
given by the parties with the intention of creating legal relations; 2) in
arrangements made between close relations, there is a presumption that persons
do not usually intend to create legal relations. Such a presumption is however
rebuttable.
[33] In
Jones v Padavatton [1969] 2 All ER 616, Salmon LJ opined at p. 621 that:
Counsel for the mother has said, quite rightly, that as a rule when
arrangements are made between close relations, for example, between
husband and wife, parent and child or uncle and nephew in relation to an
allowance, there is a presumption against an intention of creating any
legal relationship This is not a presumption of law, but of fact. It
derives from experience of life and human nature which shows that
in such circumstances men and women usually do not intend to
create legal rights and obligations, but intend to rely solely on family
ties of mutual trust and affection. This has all been explained by
Atkin LJ in his celebrated judgment in Balfour v Balfour([1919] 2 KB
571 at pp 578–580; [1918–19] All ER Rep 860 at pp 864, 865). There
may, however, be circumstances in which this presumption, like all
other presumptions of fact, can be rebutted.(Emphasis added)
[34] In
Jones v Padavatton, the appellant sought recovery of possession of a house
she owned in England. She had agreed with her daughter that as consideration
for her daughter pursuing her legal studies, she would allow her daughter to
occupy the house and use the rent income received from the house as
maintenance. At p. 620 Danckwerts LJ stated:
I have reached a conclusion that the present case is one of those family
arrangements which depend on the good faith of the promises which are
made and are not intended to be rigid, binding agreements. Balfour v
Balfour was a case of husband and wife, but there is no doubt that the
same principles apply to dealings between other relations, such as father
and son and daughter and mother.
[35] The question in the instant case is whether the claimant has rebutted the
presumption that the facts disclose no more than one of those family
arrangements that depends on mutual trust and affection grounded in family ties.
The words and conduct of the parties in the circumstances must be assessed
objectively to determine whether the true inference is that the ordinary man and
woman, speaking or writing as they did in such circumstances, would have
intended to create a legally binding agreement.