Discuss the Rebutting presumption of the Law there can be legally binding contracts among family members and social members

Discuss the Rebutting presumption of the Law there can be legally binding contracts among family members and social members


In accordance with contract act 1872 a contract is an agreement which can be enforced by law between two or more parties that results in creating an obligation to perform or to restrain from doing particular things. The word “party” refers to an individual person, company, or corporation. It does not matter who the parties are, contracts almost always consist the following essential elements:

  • Parties who are capable, eligible and competent to enter into a contract. For instance, a mentally handicapped person could not enter into a contract. Minors can enter into contracts, but can void them in most cases before they reach majority age.
  • Must ensure mutual agreement by all the parties; for example all parties involved must have a meeting on a specific subject on which the contract will be made. Each party either promises to perform an act that the party is not legally required to perform, or promises to abstain from performing an act that it is legally entitled to perform.

Formation of a Contract

In the eyes of the law, a contract is formed whenever there is an offer, an acceptance of that offer and sufficient “consideration” to make the contract valid.

  • An offer is what allows the person or business to whom the offer is made to reasonably expect that the offering party is willing to be bound by the offer and enforced by law on the terms proposed. The terms of an offer must be specific, clear and certain.
  • An acceptance to the offer is a clear expression of the accepting party’s agreement to the terms of that offer.
  • Consideration is a legal term given to the bargained-for exchange between the parties to the contract it is something of some value exchanging from one party to the other. Each party to the contract will get some benefit from the formed agreement, and will incur some obligation in lieu for that benefit.

Presumption that there cannot be a legally binding contract between family and social members

A contract between family members or social members can be both legally binding and not binding depending on the circumstances. It can be said clearly, that it is not feasible to give judicial oversight or judgment of every agreement entered into between parties as social circumstances are many and numerous and it would be unrealistic for the state, through the judiciary, to be called on to resolve disputes based on purely social arrangements and defaults.

These matters and issues are numerous and there is a lot of variation in them. Unprecedented events occur between family and social members every now and then. As a consequent it is practically impossible to give any judiciary oversight in such matters with uncertainty. In general the law presumes such social and family matters which do not lead to any serious consequences for the parties involved are not intended to be legally binding. For example I would like to site the case of Lens V Devonshire Club which took place in the year 1914 published in the” The Times “newspaper in December 4. In that case the court held that the winner of a competition held by a golf club could not sue for his prize where the parties concerned with that competition never intended that there should be any legal results flowing from the conditions posted and the acceptance by the competitor of those conditions. In Balfour v Balfour in the year 1919 the same thing happened. The defendant who is the husband worked in Ceylon, came to England with his wife on a holiday. He later returned to Ceylon alone, the wife remaining in England as her health was not fit for the atmosphere there in Ceylon. The defendant promised to pay the plaintiff £30 per month as maintenance, but when the marriage broke up the husband refused to keep up the payments that he once promised. The wife sued. It was held that the wife could not win the case. As the court held that (1) she had provided no satisfactory consideration for the promise to pay £30; and (2) agreements between husbands and wives are not contracts because the parties do not intend them to be legally binding. There is another case in this regard which is Jones v Padavatton in the year 1969. In the year 1962, Mrs. Jones offered to her daughter that if she would give up her job in the states and come to England and study to become a barrister she would give her a monthly allowance. In order to solve accommodation problems Mrs. Jones bought a house in London for her daughter where she lived and received rents from other tenants. But in 1967 things went bad and they fell out and Mrs. Jones claimed the house from her daughter even though the daughter had not even passed half-way of her Barrister Course. The court held its general presumption and gave decision in favor of Mrs. Jones. The court held that the first agreement to study was nothing more than a family arrangement and was not intended to be legally binding. Again even if it was so it could only be validated for a reasonable time, in this case maximum five years. The following agreement was mere a family agreement and there was no intention to create legal relations which is enforceable by law. So, the mother was not held responsible on the maintenance agreement and could also redeem the house.

However in family or social matters if a particular case shows or the scenario suggests that the parties’ intentions or motives were to create legally binding relationships which is indeed enforceable by law the general presumption of law will not hold any more. Although past cases show it is quite difficult to rebut the general presumption which is held by law. As it is difficult to find out the true intentions of the parties involved however if it can be shown that the transaction had the opposite intention the court may take initiatives to rebut the presumption and find the vital intention of the contract. In this connection the court generally takes an objective test to find out the true intentions. Here are some cases in this regard:

In Merrit v Merrit case in the year 1970the husband went out leaving his wife. They met to make the following arrangements for their future lives. The husband agreed to pay the wife £40 per month for maintenance, out of which the wife would pay the mortgage for the house. And on the completion of the mortgage he would transfer the house from joint names to the wife’s name. He wrote this down on a piece of paper and signed it, but later in time of execution he refused to transfer the house to his wife. The court rebutting presumption gave verdict in favor of the wife and it was held that when the agreement was signed, the husband and wife were no longer living together; therefore the intentions of the agreement must have been intended to be legally binding, as their future actions would depend on it. This intention was further evidenced and backed by the writing given by the husband. So, the husband had to transfer the house to the wife.

In Parker v Clarke case in the year 1960, Mrs. Parker who was the niece of Mrs. Clarke, they made an agreement that the Parkers would sell their own house and after that will live with the Clarkes. Living under the same roof they would share the bills and later the Clarkes would leave the house to the Parkers. Mrs. Clarke wrote a note to the Parkers giving them all the details of expenses and also gave them confirmation of the agreement. Based on their agreement the Parkers sold their house and shifted to the Clarkes house. Mr. Clarke suddenly changed his will about leaving the house to the Parkers. Later on the couples fell out after that the Parkers were asked to leave the house. AS there was a breach of contract the Parker family claimed for damages and filed a suit. The court rebutting the general presumption gave verdict in favor of the Parker’s family. It was held by the court that the exchange of letters between the two families evidenced and showed the two couples were serious and the agreement was intended to be legally binding as the Parkers had sold their own home accordingly, and Mr. Clarke changed his will. As a result the Parkers were entitled to damages.

In Tanner v Tanner case in the year 1975. A man agreed and made promise to a woman that the house in which they had lived together without being married should be there for her and the couple’s children for future security. The court rebutting the general presumption gave verdict in favor of the women. And it was held by the court that the promise had legal bindings because, in reliance on it, the woman had moved out of her rent-controlled flat.

In Simpkins v Pays case in the year 1955 the woman defendant, her grand-daughter, and the plaintiff who was a paying lodger shared a house. They all made contributions weighing one-third of the stake in entering a competition in the defendant’s name. At one week a prize worth £750 was won but the defendant refused to share the prize with them, following that the plaintiff sued the woman for a third. The court rebutting the general presumption gave verdict in favor of the plaintiff and it was held that the presence of the outsider rebutted the presumption that it was a family agreement and not intended to be legally binding. Rather the mutual arrangement was a joint venture in which cash was contributed in the expectation of sharing any prize.[1]

The intention of the parties to create legal relationship

The parties specifically the family members or the social members entering into contracts must be conscious and clear about the agreement they are signing. And they must be serious and last but not the least they must intend to create a legally enforceable relationship. The intention is to be investigated out by the court, it sometimes become difficult for the court to find out what is in the parties mind. For that the court might apply various techniques such as objective test to ensure the validity of the intention of the parties. Court will not interfere in family matters unless there is any clear evidence that the parties were truly intending to get into an agreement which is legally binding. Mere family issues are not enforceable by law for instance husband and wife living under the same roof as one household are presumed not be intended to be legally binding unless the agreement states to the contrary. Again the presumption against a contractual intention will not apply to the spouses who are not living together in amity while the agreement was made. Agreements that are more domestic in nature such as agreements between parents and child are presumed not intended to be legally binding.

Agreement that leads to serious consequences for the parties involved:

From our study above we can conclude that any social agreement or family agreement that leads to serious consequences as that happened in the case of Parker V Clarke and Tanner V Tanner the court would rebut its presumption and would hold the agreement legally binding and enforceable by law. On the contrary if it does not lead to any serious issue for the parties or if it is a trivial issue or some family dispute the court would take it general stand and it will hold its presumption to be effective and there will be legally binding contract.

Thus, we can conclude in one sentence that there can be legally binding contracts in family and social issues.


From the discussion above we can easily draw conclusion that family and social contracts can be legally binding based on some facts such contract


ELEMENTS OF A CONTRACT, ‘The Law Handbook’ available from

http://www.lawhandbook.org.au/handbook/ch12s01s02.php [Accessed 1 February 2013]

The Contract Act’ available from

http://bdlaws.minlaw.gov.bd/print_sections_all.php?id=261872 [Accessed 1 February 2013]

‘Cases On Intention’ available from

<href=”#ixzz2KxqfGrz0″>http://www.lawteacher.net/contract-law/cases/intention-cases.php#ixzz2KxqfGrz0 [Accessed 6 February 2013]

Holgate, S. ‘Settling property and financial matters: informal agreements are not legally binding’ available from

http://www.slatergordon.com.au/blog/settling-property-and-financial-matters-informal-agreements-are-not-legally-binding/ [Accessed 8 February 2013]

Intention to Create Legal Relations: When is there a contractual intention: available from

http://www.insitelawmagazine.com/ch2intention.htm [Accessed 8 February 2013]

ELEMENTS OF A CONTRACT, ‘The Law Handbook’ available from

http://www.lawhandbook.org.au/handbook/ch12s01s02.php [Accessed 1 February 2013]

The Contract Act’ available from

http://bdlaws.minlaw.gov.bd/print_sections_all.php?id=261872 [Accessed 1 February 2013

[1] Law Teacher, ‘Cases On Intention’ available from<href=”#ixzz2KxqfGrz0″>http://www.lawteacher.net/contract-law/cases/intention-cases.php#ixzz2KxqfGrz0 [Accessed 6 February 2013]