Chapter 8 Self-test questions

. In which of the following circumstances will an intention to create legal relations usually be presumed?

A transaction between a parent and a child.

A transaction between friends at the pub.

Both options (a) and (b) are correct.

None of the above.

. Why are the courts reluctant to enforce domestic promises?

The parties are unlikely to intend their promises to be binding.

Domestic promises should not be subject to an intrusive legal process.

There would be a risk of excessive litigation if domestic promises were enforceable.

All of the above are correct.

. In which of the following domestic circumstances is the court likely to presume that the parties did intend to create legal relations?

A and B enter into an ante-nuptial agreement.

A and B agree that A will take the bins out if B does the washing up.

A and B agree that if A reads for the Bar, B will pay A £100 per month.

None of the above are correct.

. How might the presumption that legal relations are intended in commercial transactions be rebutted?

The parties may subjectively believe that they do not intend to create legal relations.

The parties may expressly or impliedly exclude any intention to enter into legal relations.

The party who asserts that no legal effect was intended can declare it after he signs the agreement.

The presumption may not be rebutted.

. When will a 'letter of comfort' be regarded as a binding guarantee?

Always.

Never.

When the letter uses ambiguous language, the court will assume that the letter was intended as a guarantee.

When the document is construed as a whole, and indicates that contractual liability was intended by the parties.

. When is a 'letter of intent' likely to be regarded as intended by the parties to give rise to legal relations?

Where the transaction envisaged in the letter has been performed on both sides.

Where the letter expressly states 'subject to contract'.

Only where the letter is followed by a binding agreement.

Letters of intent never give rise to legal relations.

. In borderline transactions, how do the courts determine which presumption of legal relations should apply?

The presumption will always be that the parties intend to create legal relations.

The presumption will always be that the parties do not intend to create legal relations.

Principles of interpretation guide the courts' decisions.

The subjective intentions of the parties guide the courts' decisions.

. Why did Leggatt J conclude that the offer made to the defendant in Blue v Ashley was not intended to be legally binding?

The agreement was concluded in a pub.

The parties did not sign a written agreement.

Alcohol had been consumed.

The business purpose of the meeting was to meet investment bankers, not to negotiate contractual bonus with the claimant.

. Which presumption did the majority in Preston v President of the Methodist Conference use to conclude that there was no intention to create legal relations between a priest and her church?

The commercial presumption.

The domestic/social presumption.

Both options (a) and (b) are correct.

None of the above.

. In which of the following cases was an intention to create legal relations not found?

Modahl v British Athletic Federation

Preston v President of the Methodist Conference

Esso Petroleum Ltd v Commissioners of Customs and Excise

RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Productions)

. Which of the following is a reason to keep the requirement of intention to create legal relations, for a binding contract to be formed?

It keeps contract law out of domestic arrangements.

It overlaps with offer and acceptance.

Its presumptions are difficult to apply.

It ensures that gratuitous promises are enforceable.

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