This Case Analysis has been done by Saumya Singh Thakur (a law student at NMIMS School of Law, Mumbai )
INTRODUCTION
Balfour v. Balfour is an important case in contract law. This is so because it was the first case that defined the concept of ‘intention to create legal relations and its usage. It was held that if there was an agreement, between two people which would normally constitute a contract, the same need not be true in case the parties to the agreement were spouses.
FACTS OF THE CASE
Court: Court of Appeal of England and Wales
Full Case Name: Balfour v Balfour,
Date Decided: 25 June 1919
Citation: (1919) 2 KB 571
Judges: Atkin, Warrington, and Duke LJJ
Appellant: Mr Balfour
Respondent: Mrs. Balfour
This is an appeal by the husband against the decision of the Additional Judge of the King’s Bench Division. Justice Sargant, who had presided over the proceedings of the Court, had held that there was a valid contract existing between the parties. This appeal was filed under the Court of Appeal (Civil Division).
Mr Balfour, the appellant, was the Director of Irrigation under the Government of Ceylon. He married his wife Mrs Balfour in 1900, after which they decided to settle down in Ceylon. Both of them came to England in 1915 and were to return to Sri Lanka in 1916 when Mr Balfour’s leave expired as a result of which he had to return to Sri Lanka. But just before he could do so, Mrs Balfour had developed rheumatoid arthritis (an autoimmune condition, whereby the body misinterprets the joint linings to be foreign and hence attacks the same). On the day he was supposed to leave (August 8), Mr Balfour gave Mrs Balfour 24 GBP for that month. Both of them agreed that he would send 30 GBP to her for every subsequent month
Issue
- Was Mr. Balfour offer intended to be legally binding?
- Was there a valid contract between the two?
Argument by Appellant: In Balfour v Balfour the promise made by Mr Balfour of providing monthly expenses to his wife was a domestic agreement and not a legal agreement. Or the husband didn’t have any intention of creating a legal agreement.
Argument by Respondent: In Balfour v Balfour the wife is deemed to be given an amount of money as the husband entered into a domestic contract by offering his wife 30 GBP and the wife agreed and stayed back in England.
JUDGEMENT
The facts regarding the decision that 30 GBP would be the amount that Mr Balfour would send to his wife were inferred from a set of letters that Mrs Balfour had submitted before the Court as evidence. Warrington, L.J. questioned whether what took place between the parties could be called a contract or whether it was a mere arrangement. He then added that no contract took place ‘in express terms’ because if it were so, then it would mean on Mrs Balfour’s part that she had to be content with 30 GBP that her husband sent and on Mr Balfour’s part that he had to pay 30 GBP for an indefinite period of time, irrespective of his circumstances – both of which are implications that cannot be made. He concluded by saying that the judgement given by Justice Sargant cannot stand and that the appeal should be allowed.
Atkin, L.J. said that there can be agreements that do not become contracts and that the appellant said that there was no contract in this case. He said that agreements between a husband and a wife are things that are the usual forms of agreements that cannot be called contracts. He said that agreements in these cases cannot be contracts because legal obligations were never intended. He said that terms of the agreements such as these can be edited, removed, or added (as the case may be) as the performance of the contract proceeds. He also added that the appeal should be allowed.
Duke, L.J. concurred with the opinion of both these judges.
In short, the court said that it is essential that both the parties should intend that an agreement be legally bounding so as to become enforceable. Also, the court will not interfere between the spouses in their day to day affairs. The agreement was purely social and domestic in nature and therefore it was presumed that the parties did not intend to be legally bound. Atkin held that the law of contract was not made for personal family relationships. As there was no intention to be legally bound when the agreement was agreed upon, there can be no legally binding contract. Atkin holds that if the courts were to allow all wives to come to court when the agreement had been broken with their husbands then the courts would be overrun with frivolous cases. Warrington, concurring in the result, agreed substantially with Atkin but added that there was no bargain of any kind made by Mrs Balfour sufficient for a binding contract.
RATIO
Promises in spousal (or for that matter, family) roles aren’t legally binding.
CASE ANALYSIS
In the present case at first instance Sargant, J., held that Mrs Balfour’s consent was sufficient consideration to render the contract enforceable and the defendant appealed. But an appellate court, it was held by a bench of Warrington LJ, Duke LJ, Atkin LJ that it is not an enforceable contract. Warrington LJ and Duke LJ did so mainly because they doubted that the wife gave consideration. Atkin LJ, on the other hand, invoked the intention to create legal relationsdoctrine to decide the case, a doctrine that up to that point could only be found in the textbooks[1].
It can be said that the Doctrine is based upon public policy; that is to say that, as a matter of policy, the law of contract ought not to intervene in domestic situations because the courts would then be swamped by trifling domestic disputes.
The Court was of the view that mutual promises made in the context of an ordinary domestic relationship between husband and wife do not usually give rise to a legally binding contract because there is no intention that they are legally binding. However, the Court did concede that there may be circumstances in which a legally binding agreement between a husband and wife may arise. The case is notable, not obvious from a bare statement of facts and decision. The claim was under contracts and not under the conjugal rights held by Mrs Balfour. This was a claim without precedent and the lordship’s judgement will show how reluctant they were to extend the law of contacts into the area of matrimonial rights and duties, in which it had previously played very little part. Lord Atkin’s judgement attracted new attention and the requirement of ‘intention to create legal relationship’ achieved prominence. The intention is sometimes referred to as an animus contrahendi. As Salmon LJ made clear in the later case Jones v/s Padavatton[2], this is a factual, not legal, presumption.
The test of contractual intention is a matter of objectivity, not subjectivity. What matters is what a common person would think in given circumstances and their intention to be. It is clear from a series of judgements (Shadwell v/s Shadwell[3], Pettitt v/s Pettitt[4]) apart from the present case, the requirement of intention to create a legal relationship is a necessity.
It is still an open question whether in the express provisions in the Indian Contract Act,1872, the requirement of intention to contract is applicable in India.
LAWS INVOLVED
The case of Balfour v. Balfour was primarily a case of English Law and gave rise to the doctrine of Legal Relationship as an essential in Contract law. Although the case did not involve any other legislation and act other than English Contract law, the doctrine of Intention to create legal relations was primarily focused.
In English Law of Contract, an agreement is considered contract only when it is legally enforceable and recognised by law with legal consequences. Thus, it is recognised that agreements of domestic or social nature is not contracts due to their lack of enforceability.
OTHER JUDICIAL DECISIONS
The two cases below talk about the concept of ‘no intention to create legal relations when it comes to family arrangements:
Spellman v/s Spellman
Mr and Mrs Spellman were the parties in this case. They bought a car through the hire purchase system in hopes that their married life might be better (for they were going through some problems). In the registration book, Mr Spellman wrote down Mrs Spellman’s name, upon which she questioned whether the car washers. He replied in the affirmative. But after three weeks, Mr Spellman took the car with him (but left the registration book with his wife) for their marriage was not working out. The hire purchase agreement did not allow Mr Spellman to separate from the ownership of the car, nor did it let him assign the benefit of the said agreement.
It was held that Mrs Spellman did not get any rights over the car or the benefit of the hire–purchase agreement. This was because the agreement was considered to be a domestic one that did not bear ‘intention to create legal relations.’ This case focuses more on the aspects of hire – purchase agreement rather than the fact that it was a domestic agreement. The principle established in Balfour v. Balfour was reiterated in this case for the above-mentioned reason, even though Balfour v. Balfour does not appear to be expressly cited.
Jones v/s Padavatton
The parties, in this case, were Mrs Violet Jones and her daughter Mrs Ruby Padavatton. In this case, both of them had an arrangement that Mrs Jones would pay maintenance for her daughter, provided her daughter studied for the Bar in England. Later they altered the arrangement whereby the mother gave her daughter a house to live in during her studies. There came a dispute when the possession of the house was questioned, and Mrs Jones appealed.
Balfour v. Balfour was cited in this case in order to support Mrs Jones’ appeal for she argued that the arrangement was one between the family members and that she had no intention to create legal relations and so she ought to get possession of the house. She also argued that even if the Court deemed the arrangement to be a valid one, the terms of the same were vague to come to any conclusion.
Mrs Padavatton argued that the arrangement did constitute a valid contract and hence there was the intention to create legal relations. She also added that her studying for the Bar amounted to consideration for the said contract.
Mrs Jones’ appeal was successful. The Judges – Salmon LJ and Atkinson LJ – had a different rationale, although they reached the same conclusion. Salmon LJ spoke about two major factors – one, whether there was the intention to create legal relations and two, whether the terms of the so-called contract were adequate in order for them to be enforceable or not. Salmon came to the conclusion that there was no intention to create legal relations and also says that the terms of the contract were too vague. Atkinson LJ considers three major arguments – one, same as that of Salmon, whether there was the intention to create legal relations between the parties, two – whether the mother in order to support her daughter ever wanted to create legal relations and three, had the daughter ever thought of her completing her education to be a contractual duty. Atkinson LJ said that there was no intention to create legal relations because the daughter claimed to be distraught when her mother sued her, which was ample reason. He then proceeds to say that both the mother and daughter never anticipated any issues or legal relations too.
CURRENT SCENARIO
Balfour v/s Balfour is one of the leading cases in English law since it was then decided that agreements between husband-wife are not considered as contracts since it is presumed that the two parties do not have a legal intent to create legal relations.
It is a landmark case since it gave birth to the “doctrine to create legal intentions”.
This doctrine has been used later in many cases as a precedent like in the case of Spellman v/s Spellman.
In Emorgenous v. Greek Orthodox Community of SA Inc (2002) 209 CLR 95, it was held that if there was no intention to create legal relation, there can be no remedy. This case is of vital importance whose viewpoint is not likely to change in the next few years.
REVIEWS
In my opinion, I agree with the judgement laid out. Mrs Balfour should have entered into a contract if she intended to enforce it legally. This case has been imperative in broadly differentiating legal and domestic (social and family) agreements. It had been pointed early that contracts must not be the sports of an idle hour, mere matters of pleasantry and badinage, never intended by the parties to have any serious effect whatsoever[5]. It is not a very loose conversation that is to be turned into a contract although the parties may seem to agree. The case of Balfour v/s Balfour has become well known as an illustration of this principle. This case has helped to establish an element of a valid contract that is, the intention to create a legal relationship. This case has become an important landmark case and has been used as a precedent for a number of other cases such as Gould v/s Gould[6], Simpkins v/s Pays and in a few Indian cases such as Mrs Rajabu Fathima Buhari and another v. S.V Ramakrishna Mudaliar and others.
CONCLUSION
At common law, a contract is not enforceable unless the parties intended the contract to create legal relations. Whether or not the parties intended to create legal relations is determined accurately by examining the circumstances existing at the time of the execution of the contract. Whether promise is made or not, it is between the parties to uphold it to their fullest potential. The parties cannot enforce and the judge who had made the decision concluded that the court cannot come into martial affairs and it is up to their full knowledge for solving their own problem. So the Balfour v Balfour gave a new perspective to contract validation.
BIBLIOGRAPHY
- Balfour v Balfour [1919] (Court of Appeal).
- Jones v Padavatton [1968] (Court of Appeal).
- Paterson, J., Robertson, A. and Duke, A., 2016. Contract: Cases and Materials. 13th ed. Sydney: Thomson Reuters, pp.148-149.
[1]S LeakeThe Elements of the Law of Contracts (London: Stevens and Sons, 1st edn, 1867) p 9
[2][1969] 2 All ER 616 at 621
[3](1860) 9 C.B. (n.s.) 159
[4](1969) 2 WLR 966
[5]Dalrymple v Darlymple, (1811) 161 ER 665, per Lord Stowell
[6] Costigan, Cases on Contracts, (3 rdEdn.) 32
