INTENTION TO ENTER INTO LEGAL RELATIONS

Much academic controversy has been generated by the question,

whether in addition to offer, acceptance, and consideration, a fourth
ingredient, namely, The Intention To Enter Into Legal Relations, is
essential to the formation of a contract. The controversy is academic
because in practice it is clear that at least at common law, the
requirement of intention is essential. Virtually, every relevant decision
is based on that assumption and the issue before the court is, therefore,
narrowed down to the question, whether or not, in that particular case,
there had been an intention to enter into legal relations?
Thus, a discussion of this subject in textbooks is, therefore, confined to
rules for determining the presence or absence of intention in different
categories of agreement. Where it is found that the intention was
present, then, of course, the agreement would be actionable, but where
the finding is negative, i.e., that there was no intention, the agreement
would not be actionable; the existence of a contract is negated.
The greatest exponent of the school of thought that intention to
enter into legal relations is irrelevant to the formation of a contract, is
Professor Williston. His views may be summarised in this well-known
passage:
...the common law does not require any positive intention to create
a legal obligation as an element of contract... A deliberate promise
seriously made is enforced irrespective of the promisor's views
regarding his legal liability.'
Whilst this assertion may be true with regard to commercial contracts,
in which the contractual intention is presumed, it is inapplicable to
social and domestic engagements to which the contrary presumption
applies.
Thus, as another writer queried: “Would an acceptance of an
invitation to a bottle party normally create a contract?" Or better still, if
A and B agree to lunch together and A promises to pay for the food if B
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will pay for the drink, is there a contract between A and B? After all
there is offer, acceptance and consideration, But the simple answer is

that the parties never intended to enter into a contract with each other.
Thus, whilst it is admitted that in most cases the parties are silent
with regard to this element, it is because this is taken for granted as
being present, and only in rare cases in which a dispute subsequently
arises will the issue be expressly and consciously considered. As we
shall see, in those cases in which the contractual intention is presumed
to exist, the parties can exclude it by stating so expressly. This is itself
an indication that the contractual intention is an integral element in the
formation of a contract.

1. DOMESTIC AND SOCIAL ENGAGEMENTS

For the purposes of considering the presence or absence of the

contractual intention in agreements, the latter may be classified into (i)
social and domestic engagements, (ii) commercial agreements and (iii)
intermediate situations.
(i) Social and domestic engagements: With regard to this, there
is a presumption in law that contractual intention is absent
and the parties to such an agreement cannot sue each other on
it.
Thus, in Balfour v. Balfour, a Briton was employed by the
Government of Ceylon. He returned home on leave with his wife,
but the latter was unable to go back to Ceylon with him because of
ill-health. He then promised to make her an allowance of 30 pounds
a month until she joined him. When he failed to make this payment,
she sued him to enforce the promise. The Court of Appeal held that
there was no contract between the parties because the contractual
intention is absent in cases between husbands and wives.
As a natural consequence of their relationship, spouses make
numerous agreements involving payment of money and its
application to the household, themselves and their children. There is
offer, acceptance and consideration; nevertheless, such agreements
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“are not contracts because the parties did not intend that they should
be attended by legal consequences”.
This principle has been applied in several other cases. Thus, in
Spellman v. Spellman, a husband promised to buy his wife a car in
order to improve their strained relations. He then entered into a hire-
purchase agreement in respect of the car which was delivered to their
home. When he refused to transfer the car to his wife, she sued him to
enforce the agreement. It was held that this was a purely domestic
arrangement not intended to create any legal relations and accordingly
the wife acquired no legal rights in the car.

In Jones v. Padavatton,' the principle appears to have been carried to a

rather harsh extreme. The facts were that Mrs Jones lived in Trinidad
and her daughter worked at the Indian Embassy in Washington D.C.
Mrs Jones wished her daughter to become a barrister and offered to
make her a monthly allowance while she read for the Bar in London.
The daughter reluctantly accepted the offer and went to London in
1962. In 1964, Mrs Jones bought a house in London and the daughter
lived in a part of it whilst the other part was let out and the rents used
for her fees and maintenance. In 1967, when the daughter had only
passed Part I of the Bar, the parties had a serious quarrel and Mrs.
Jones brought an action claiming possession of the house. The County
Court's decision dismissing Mrs Jones' claim was reversed by the Court
of Appeal. It was held that the agreements to pay the daughter a
monthly allowance and to allow her possession of the house were not
binding, because they were not meant to create legal relations.
Family arrangements are based on good faith, not on law. There was
nothing in the agreement, nor available evidence, to show that the
mother had renounced her right to dispose of the house as and when
she pleased.

The rule that social and domestic agreements are not legally
binding is based on a presumption. Consequently, the presumption can
be rebutted and when this happens, such an agreement will be held
binding. For example, it has been held that when spouses are not living
in amity, particularly when their relationship has degenerated to the
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level of mutual hostility and distrust, an agreement between them

would be binding.
Thus, in McGregor v. McGregor, where a husband and his wife
had taken out cross-summonses against each other for assault, it was
agreed in settlement that each should withdraw his or her action, the
parties should live apart and that the husband should pay the wife a
weekly sum for the maintenance of herself and the children. This
agreement was held binding on the husband. The presumption of
absence of the contractual intention was rebutted by the hostile
relations between the parties.
In Merritt v. Merritt,' after a husband and his wife had separated,
they met and agreed that the husband should pay the wife 40 pounds
monthly and that out of this, the wife would pay off the mortgage on
their matrimonial home, and after this the husband would transfer the
house to her. After the wife had paid the mortgage, the husband refused
to transfer the house to her. The wife sued for the specific performance
of this agreement. It was held to be binding. According to the Court of
Appeal, the presumption that agreements between husband and wife are
not intended to create legal relations does not apply when they are not
living in amity, but are separated or are about to separate. The court, in
such circumstances, held Lord Denning, looks at the situation in which
the parties are placed and asks itself: “Would reasonable people regard
this agreement as intended to be binding?”

Where the performance of a domestic or social engagement

involves great sacrifices on the part of one or both parties, the
presumption against the presence of contractual intention may be
rebutted, particularly where the plaintiff has performed his own part of
the agreement.
In Parker v. Clark, on the invitation of the defendant, who was
the plaintiff's uncle, the plaintiff and his wife sold their house and
moved into the defendant's house. It was also agreed that the Parkers
would share the living expenses with the Clarks and that Clark would
leave the house to Parker in his will. After a quarrel between the
couples, the Clarks attempted to evict the Parkers on the ground that
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the agreement was not a binding one. It was held to be binding. The
presumption against the existence of the contractual intention in a
contract between relations did not apply in this case because of the
extremely onerous nature of the steps he had taken-the drastic and
irrevocable act of disposing of his own house in pursuance of the
agreement. According to the court, Clark could really not have thought
that the law would allow him, if he chose, to tell the Parkers when they
had arrived that he had changed his mind, that they could take their
furniture away and that he was indifferent as to whether they found
anywhere else to live or not.

 A cousin promises to contribute ₦200,000 towards your law school fees

but later reneges. Was there an intention to create legal relations?
 A cousin promises to contribute ₦500,000 towards your wedding but
later reneges. Was there an intention to create legal relations?

2. COMMERCIAL AGREEMENTS

The law presumes the presence of the contractual intention in

commercial agreements. Not surprisingly, there is hardly a case in
which the validity of a commercial agreement has been challenged for
absence of the contractual intention. Contracting parties subconsciously
accept it as a matter of fact.

However, there are two situations in which defendants have advanced

the plea of absence of the contractual intention in order to escape
liability:

(1) where they assert that their promise was a mere puff, not
intended to be taken seriously or literally;
In this case, it is the test of the reasonable man that is applied in
determining whether the defendant's promise was a mere puff. It is
obvious, for example, that an advertisement claiming that regular
drinking of Ovaltine will make the consumer a great goal scorer in
football matches, cannot be taken seriously by reasonable men.
The same applies to an advertisement that men who use Maclean's
toothpaste become successful and important. These product
promotional exercises usually involve wild exaggerations and
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unfounded claims which no reasonable person takes seriously.

However, this cannot be said of the advertisement which states that Lux
toilet soap will give the user a clear, smooth and soft skin. This claim is
sufficiently credible and is within the realm of possibilities.
It will, however, be difficult in some situations for the court to
decide whether it is confronted with a mere puff or an agreement that is
intended to have legal effect. The facts of the old case of Weekes v.
Tybald present just such a situation. The defendant said, in
conversation with the plaintiff, that he would give 100 pound to anyone
who married his daughter with his consent. The plaintiff married the
defendant's daughter with his consent, and afterwards sued to claim the
100 pounds when the defendant failed to pay it to him. The action
failed and it was held that “it is not reasonable that the defendant
should be bound by such general words spoken to excite suitors”. In
other words, the defendant's promise was a mere puff.

But it could arguably have been regarded as a valid offer which would
ripen into a binding contract on the performance of the act stipulated in
the offer as in any other unilateral contract. I will be recalled that in
Carlill v. Carbolic Smoke Ball Co., where the defendants claimed that
the regular use of their product would protect the user from influenza,
they were held bound by this promise. Of course, the claim to have
deposited 10,000 pounds in a bank for the purpose of paying 100
pounds to anyone who used the smoke ball and yet succumbed to
influenza, was held to be an indication of their seriousness.

(2) where the agreement itself contains a clause expressly excluding

the intention to enter into legal relations. (SPORT BET)

This second situation entails where the agreement contains a clause that
expressly excludes the contractual intention, the most common
example is to be found in football pool agreements between stakers and
the pools companies.
Typical of these is the one in Amadi v. Pool House Group and
Nigerian Pools Co
It is a basic condition of the sending in and acceptance of every
coupon, that it is intended and agreed that the conduct of the pools
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and everything done in connection therewith and all arrangements

relating thereto... shall not be attended by or give rise to any legal
relationship, rights, duties or consequences whatsoever, or be
legally enforceable, or the subject of litigation, but all such
arrangements, agreements and transactions, are binding in honour
only.
In that case, the plaintiff staked the sum of 1pound 16 shillings in a
football pool and claimed that on the basis of his correct entry he had
won 50,009 pounds 12 shillings. The second defendants claimed that
the plaintiff's coupon was never received by them even though their
agents, the first defendants, claimed that they forwarded the coupon to
the second defendants. The latter denied any liability by reliance on the
“honour” clause above. Omololu, J.,held that the “honour” clause
operated to exclude any contractual liability. Explaining why clauses of
this nature were necessary in a football pool agreement, he stated that if
the pools companies were liable to defend themselves in court at the
insistence of every one of their stakers who thought he had won,
pandemonium would result. The business could not be carried on for a
day on terms of that kind. It could only be carried on, on the basis
that everyone is trusting them and taking the risk themselves of
things going wrong. There was a wealth of authorities on which the
court relied.
In Lee v. Sherman's Pools, a football pool staker alleged that the
coupon he staked had won the sum of 1,270 pounds 13 shillings and
that the football pool promoters refused to pay him the prize money. It
was held by the Court of Appeal that the action was not maintainable
because the rules governing the entry, which contained an “honour”
clause, negatived a contractual intention. Thus, anyone who signed the
coupon was bound by the condition and there was, therefore, no
arguable point for decision.

Also in Jones v. Vernon's Pools Ltd., where the court was called
upon to interpret a similar provision in another football coupon,
Atkinson,J., stated as follows:
That is a clause which seems to me to express in the fullest and
clearest way that everything that follows in these rules is subject to
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the basis or overriding condition that every thing that is promised,

every statement with relation to what a person sending the coupon
may expect, or may be entitled to, is governed by that clause. If it
means what I think they intend it to mean, and certainly what
everybody who sent a coupon and who took the trouble to read it
would understand, it means that they all trusted to the defendant's
honour, and to the care they took and they fully understood that
there should be no claim possible in respect of the transactions.
In subsequent Nigerian cases, this principle has been adopted and
applied. However, in Buko v. Nigerian Pools Company, the Supreme
Court was requested to distinguish between the English and Nigerian
cases on the ground that whilst in England the stake money is not
forwarded with the coupon, but only sometime after the week's
matches, in Nigeria the money is paid and forwarded along with the
coupon. Thus, according to this argument, the English cases constitute
“executory” contracts, to which the “honour” clauses could apply,
whereas the Nigerian cases constitute “executed” contracts to which the
clause cannot apply.
The facts of the case itself were that although the plaintiff
appeared, on the basis of the entries in his coupon, to have won some
money, there were good grounds for suspecting the genuineness of the
coupon, for it was received from Port Harcourt instead of Benin where
it was submitted. For this and other reasons, the Supreme Court was
able to hold that the plaintiff's entry was validly disqualified without its
having to consider the validity of the alleged distinction between
Nigerian and English cases. Nevertheless, before doing this, the court
had expressed its views on the legal effect of the “honour” clause in
these words:

Now, so far as rule 2 [“honour” clause] is concerned the intention

was to ensure that the relationship between the parties was to be
that of honour, in other words, a gentleman's agreement rather than
to create a legal relationship. The courts have long accepted that
the law does not impute an intention to enter into legal relationship
where the circumstances and the conduct of the parties negative
any intention of the kind and in Rose & Frank Co. v.J.R. Crompton
& Bros. Ltd. it was held where there was such a term (as in Rule 2
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here which has been set out) in an agreement between the parties,
that this agreement did not become a legally binding contract.
Unfortunately, in Denemu v. Mak-Bob (Fixed Odds) Pool Ltd.
and Tijani, Douglas, J., sitting in the Port Harcourt High Court, failed
to take the Supreme Court's hint, and instead fully embraced the view
that the English situation was different from the Nigerian one for the
reasons stated above, i.e., that whilst the stake money does not
accompany the coupon in England, it does so in Nigeria, and that the
“honour” clause is only effective in the English situation which
involves an executory contract, but wholly inapplicable to the Nigerian
situation which involves executed contracts.
With due respect, this is a clear misconception of the legal effect of
an “honour” clause. The ratio decidendi of all the pools cases is that
once the parties have agreed beforehand that the contract was not to be
legally binding, none of the parties could bring an action in court to
enforce the agreement. It becomes entirely left to the discretion and
“honour” of the parties. In this regard, it is completely irrelevant
whether the stake money was paid during or after the contract was
concluded. In other words, the question whether the contract is
executory or executed does not arise.
Apart from Denemu's case, all other reported Nigerian cases have
consistently followed the decisions laid down in the earlier English
cases, namely, that once an “honour” clause is included in a contract,
such a contract has no legal force and cannot be sued upon.

The case of Rose & Frank Co. v. Crompton Bros. so heavily relied
upon by the court, is distinguishable from the typical football pool case.
In that case, there was a major contract clearly divisible into many
smaller units. The major contract was one for the supply of foods over
a period of seven years. A particular order placed by the plaintiffs,
therefore, constituted a small contract within the major one. The major
contract contained a clause similar to the honour clause in the football
pool cases. When the defendants terminated the contract unilaterally, it
was held that they were not liable for breach of contract because of the
“honour”clause. The House of Lords, however, added that the
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defendants were obliged to supply any goods already ordered by the

plaintiffs before the contract was terminated. This situation is,
therefore, similar to other agreements in which a party agrees to supply
another party with goods over a period of time. This is a severable
contract with several offers, acceptances and considerations (in other
words several smaller contracts)within it.

In Denemu's case, as in other pools cases, there was just a single

non-severable transaction which was not legally binding.
It is interesting and deserving of note that about eighteen months
after Gorden Denemu v.Mak-Bob(Fixed Odds)Pools Ltd. and Tijani
was decided in Port Harcourt, Adefarasin, Ag. C.J., delivering
judgment in a similar case in the High Court of Lagos, came to the
opposite conclusion in the following words:
It is now settled law that there can be transaction between parties
which are intended to be only gentlemen's agreements and not to
be enforceable in courts of law and which have the effect of
ousting the jurisdiction of the courts in pool cases. The long line
of judicial decisions in this field was adopted and applied by this
court by the decision of the late Omololu J. in Amadi v. Pool
House Group (Nig.)Ltd. and Another [1966] 2 All N.L.R. 254. I
entirely accept the decision and reasoning in that case.

3. INTERMEDIATE SITUATIONS
There are intermediate situations which can neither be described as
domestic and social engagements nor as commercial agreements.
Examples include the car pool or similar arrangements between friends
or workmates under which one party gives lifts to the others to and
from work, and the passengers contribute towards petrol and
maintenance of the car, or pay a regular sum to the owner of the car.
Quite popular in Nigerian cities, is the “school run” arrangement, in
which one parent “runs” his children and the children of other parties in
the agreement to and from school. This is done in turns. What happens
if a passenger in a car pool case refuses to pay his contribution, or a
parent whose turn it is to do the “school run” refuses to pick up the
other children?
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Such authority as there is suggests that such agreements are also

not binding. Thus, in the car pool type case of Coward v. Motor
Insurers Bureau, Upjohn, L.J., held that in the absence of evidence
that the parties intended to be bound contractually, the courts should be
reluctant to conclude that the daily carriage by one of another to work
upon payment of some weekly sum involved them in any legal
contractual relationship. He gave the following cogent reasons for his
views:
The hazards of every day life, such as temporary indisposition, the
incidence of holidays, the possibility of a change of shift or different
hours of overtime, or incompatibility arising, make it most unlikely
that either contemplated that the one was legally bound to carry and
the other to be carried to work.
One other area in which there is considerable uncertainty, is in the
area of collective agreements between employers and employees. Are
such agreements binding in law or in honour only? It appears that at
common law, there is a presumption that the parties do not intend to
enter into legal relations unless it is clearly established that the parties
intended to conclude a binding agreement.
It should, however, be noted that by sections 13 and 15 of the
Wages Boards and Industrial Council Act 1973, a wages agreement
is binding on the employers and workers to whom they relate on the
order of the Minister of Labour. Also by section 2(3) of the Trade
Dispute Act 1976, a collective agreement deposited with the Minister
of Labour becomes binding on the employers and workers to whom
they relate once the minister makes the appropriate order.
Still on the general question of the contractual effect of collective
bargaining agreements, the Court of Appeal has given guidelines as to
when they are to be regarded as binding on the parties, i.e., employers
and employees.

In ACB v. Nwodika, Ubaezonu, JCA, held that the contractual

effect of such agreements depends on a number of factors such as
incorporation into the contract of employment, the pleadings by the
parties to a case, evidence before the court and the conduct of the
parties.
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On the issue of incorporation of the collective bargaining

agreement into the contract of service, Tobi, JCA, raised the question
whether such incorporation could be regarded as having been effected
by any of various circumstances. These included, (i) references by one
document to the other, (ii) the lifting of portions of one document into
the other or (iii)by interpolation. In the final analysis, according to the
learned Justice of Appeal, it was the duty of the court to search for the
real intention of the parties and to find out whether in case of a dispute,
they had intended that the two documents be read together.
In this particular case, the court held that the collective
bargaining agreement in question was binding because the
appellant bank had relied on it in an earlier case and indeed in this
case, one of the appellant' witnesses had also admitted that it was
binding on the parties.