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Intention To Create Legal Contract Via The IRAC Analysis Of Balfour Vs Balfour,1919

Intention to create legal contract via the IRAC analysis of Balfour vs Balfour,1919 [1]
Facts
  1. Plaintiff (Mrs. Balfour) and Defendant (Mr. Balfour) were a married couple. Ceylon (Sri Lanka) was their home, where Mr. Balfour worked as the Director of Irrigation. 1915 was when the couple took a vacation in England.
     
  2. When it was time to return to Ceylon, in 1916, Mrs. Balfour was advised not to return due to her medical condition (rheumatoid arthritis.). On the day he was supposed to leave (August 8), Mr. Balfour gave Mrs. Balfour 24 (pounds) for that month. An agreement was made where Mr. Balfour promised to send 30 per month while Mrs. Balfour recovers. When this agreement was reached, their relationship was in a good condition. However later on, it got bitter and the husband stopped making the payments and wrote to make this separation permanent and later on the couple got a divorce.
     
  3. In 1918, Plaintiff, Mrs. Balfour, brought a suit to enforce Mr. Balfour's promise to pay her 30 pounds every month. According to the lower court, the agreement was made for a valid contract. Unsatisfied with the judgment, Mr. Balfour appealed to Court of appeal.

Procedural History
Justice Sargent, an additional judge on the King's Division Bench, presided over the case at first. The court ruled in favor of Mrs. Balfour. It was held that the husband had an obligation to support the wife. The husband then filed an appeal in the Court of Appeal (Civil Division), which resulted in a decision change.

Issues:
  1. Whether agreements between spouses, in this case sending 30 pounds by the defendant to the plaintiff, constitute a legally binding contract?
  2. Did Mr. and Mrs. Balfour intend to enter into a legally binding contract?
  3. Is the contract between Mr. and Mrs. Balfour valid in the eyes of law?

Rules Under English Law:
  1. Domestic and social agreements:
    Domestic arrangements are traditionally said to have no contractual value as opposed to commercial contracts. Objectivity is used to determine whether an agreement is intended to have legal consequences. This means that courts consider whether two parties in a particular situation would desire to engage in a legally enforceable contract rather than examining a person's thoughts.
     
  2. 'Animus Contrahendi':
    The intention to enter into contracts is a necessary component of contract law. This means that the parties must have the intent to enter into a legally binding contract. A statement must be made with the intent that it will be binding upon acceptance to be considered an offer. Even if supported by consideration, an agreement is not a contract if it is made with no intention of establishing a contractual relationship. Parties must intend to enter into a contract with enforceable rights and obligations, and they must intend for legal ramifications in the event of contract breach.
     
  3. Consideration, also known as 'quid pro quo,' is essential for any contract:
    In a contract, consideration is something given in exchange for something of value. The technical requirement is either a disadvantage suffered by the promiser or a benefit obtained by the other person. A contract is unenforceable and invalid if there is no consideration.
     
  4. When both spouses agree to a divorce, the divorce terms are legally binding on them for the duration of the divorce. If one of the terms specifies the amount of the wife's income, she does not have the authority to pledge her husband's credit for necessities if her income is insufficient.[2]

Analysis:
Mr. Balfour contended that the agreement was merely a domestic arrangement until Mrs. Balfour returned to Ceylon and that no agreement of separation existed. He had no intention of entering into a legally binding contract. Mrs. Balfour contended that her husband was obligated to pay her maintenance because he entered into the domestic agreement by agreeing to pay her 30 pounds to support her agreement to return to England.
  1. Since the agreement between the plaintiff and the Defendant is a domestic one; it does not meet the contract law requirements of legal enforceability and the formation of legal relations. As a result of the spousal relationship, many agreements involving legal consideration would arise. However, these do not form a contract as there is no intention to form legal relations. Such agreements are not governed by contract law. This doctrine is factual, as ruled under 'Jones v Padavatton.,1969[3]', highlighting how domestic agreements, such as those between a mother and her daughter, are legally unenforceable.
     
  2. Applying the doctrine of Animus Contrahendi, the intention to enter into a contract did not exist between the parties. The husband's promise to financially support his wife was a temporary domestic arrangement until Mrs. Balfour returned to Ceylon. This promise did not intend to form a legally binding agreement and cannot be deemed an offer. Even though consideration was flowing from Mr. Balfour's side (30 pounds), this cannot be considered a valid contract since the parties never intended to be sued in case of breach of contract when they initially entered into the agreement.
     
  3. Consideration means something of value in exchange for something of value. Although consideration flows from Mr. Balfour to Mrs. Balfour in the form of 30 pounds, the inverse is not valid. Mrs. Balfour stayed in England, and her husband assented to the same. This is not valid consideration. Hence, no consideration went towards the husband. The absence of a valid consideration means that there was no contract between the parties.
     
  4. The agreement was a temporary arrangement until Mrs. Balfour joined Mr. Balfour in Ceylon and was entered into when the spouses were living amicably and not in dispute. Hence, there was no agreement for separation in this case, unlike Eastland v Burchell [4], where the agreement for separation because of the divorce was the decisive factor in the judgment. Thus, the judgement in the above case of was said to be inapplicable to the case at hand.

Conclusion:
  1. The case of "Balfour vs. Balfour (1919)" shows that a basic domestic agreement reached inside a family cannot be enforced in a court of law since it lacks legally binding authority.
  2. The second criteria was the parties' intention to engage in a legal relationship.
  3. Thirdly, parties must provide valid consideration for a contract to be valid. Since both these elements were absent in this case, the agreement cannot be deemed to be a valid contract.
  4. The agreement between the parties does not qualify as an agreement for separation because it was made while both parties were living amicably.
Since the elements of a valid contract are absent in the above case and it is not an agreement for separation, there no contract exists between the parties.

The three-judge bench, which included Lord Justice Duke, Lord Justice Warrington, and Lord Justice Atkin, unanimously stated that the husband and wife's agreement was a standard domestic agreement between spouses and in this landmark judgement, Justice Atkin invoked the doctrine of 'intention to create legal relations', which is an essential element for constituting a contract.

References:
Cases:
  1. Balfour v Balfour [1919] 2 KB 571
  2. Eastland v Burchell' (3 QBD 432 1879)
  3. Jones v Padavatton [1969] 1 WLR 328
Online sources:
  1. Keeping Contract in Its Place - Balfour v. Balfour and the Enforceability of Informal Agreements
    https://heinonline.org/HOL/LandingPage?handle=hein.journals/oxfjls5&div=27&id=&page= Last accessed- 19/10/2021
  2. Eastland v/s Burchell. - Penn Law: Legal Scholarship,
    https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=2874&context=penn_law_review Last accessed- 18/10/2021
  3. Balfour V Balfour And The Separation Of Contract And Promise
    https://discovery.ucl.ac.uk/id/eprint/1522477/ Last accessed- 21/10/2021
  4. Balfour Vs. Balfour- Case Analysis [1919] 2KB 571
    https://www.legalserviceindia.com/legal/article-4531-balfour-vs-balfour-case-analysis-1919-2kb-571.html last accessed- 19/10/2021
End-Notes:
  1. Balfour v Balfour [1919] 2 KB 571
  2. Eastland v Burchell' (3 QBD 432 1879)
  3. Jones v Padavatton [1969] 1 WLR 328
  4. Supra 2

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