4. Contracts and informal relations

This chapter focuses on the requirement that the parties to a contract must have the intention to create legal relations for it to become legally binding. It considers how we decide whether the parties to a particular agreement had the intention to enter into legal relations, showing that English law operates by means of rebuttable presumptions. It then examines cases where the presumption is that the parties did not intend to create legal relations—that they intended their transaction to be merely friendly or social, rather than legal. It also discusses commercial transactions, where the presumption is reversed, and more specifically the types of commercial transactions that are structured to place them outside the bounds of legal enforcement. The chapter includes the case of Balfour v Balfour [1919] 2 KB 571 (CA).