When entering into that agreement or making a promise, do you have the plan that if the other party fails to honor the agreement or fails to keep to the promise you will go to court to ask the court to force the other party to honor the promise?
If the answer is yes, then there is the presence of what is called “the intention to create legal relations” in that agreement but the court will not just take your word for it; the court will apply the reasonable man’s test in determining if really there was an intention to create legal relation in the contract, if the court finds out that there was no initial intention to create legal relation then the case will be thrown out because the court lacks the jurisdiction to entertain such a case.
The intention to create legal relations is one of the essential elements of a valid contract. It is an important factor that validates a contract and makes a contract legally binding alongside other ingredients of a valid contract like offer, acceptance, and consideration.
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The requirement of intention to create legal relations in contract law is aimed at sifting out cases that are not really appropriate for court action because not every agreement leads to a legally binding contract that can be enforced through the courts and when an agreement is legally non binding then the court has no jurisdiction over such agreement.
When parties in a contract had no initial wish or interest to create a legally binding contract that could be enforced in court the court will honor that wish and demand that they settle out of court when there is a breach.
When you have proven that there is a valid offer, the offer was accepted and there is a suitable consideration, the next thing the court looks after is “whether the parties while making the contract had the intention to use the court to enforce the contract In case there is a breach”? If the answer is no then the court has no jurisdiction over the contract.
To determine which agreements are legally binding and have an intention to create legal relations, the law distinguishes between social and domestic agreements/promises from agreements or promises made in a commercial context in the strict sense of it.
It can be seen that the intention to create legal relations, therefore, seeks to keep agreements between family and friends (domestic and social contracts) outside the purview of the court’s jurisdiction. When family members or friends enter into a contract, the court has no jurisdiction to enforce that such contract because of the absence of the critical legal factor called intention to create legal relations.
In social and domestic agreements there is a general presumption that the parties do not intend to create legal relations in the contract. For instance, Siblings who entered into the agreement to do the dishes or do house cleaning on the “turn by turn” bases obvious have no intention to enforce that contract in court if one of the siblings fails to keep to the agreement, the other sibling cannot go to court and ask the court to enforce such agreement. The siblings only have the moral duty/obligation to honor that promise but that moral duty does not transcend to legal duty and the court has no jurisdiction over contracts of such nature. Also, if a husband promises to buy the wife a car, the wife cannot go to court and seek the court to enforce such a promise because there was no intention to create legal relations while making such a promise by the husband. More so, two friends who have agreed and promised each other to meet in a lounge also have the moral duty to honor that promise and obviously have no intent to drag each other to court over the breach of that promise.
The general rule is that if there is no intention to create legal relations then there will be no legally binding agreement/contract. This general rule is just a rebuttable presumption and this presumption can be rebutted when the agreement between friends is written down and signed by both parties and in the presence of a witness or the contract, although between friends or family members is of a commercial context.