Intention to create legal relations is the final element of any binding contract between parties. It sits alongside offer, acceptance and consideration.

The intention is all about how serious the parties are to be legally bound. As stated in Dalrymple v Dalrymple (1811), Contracts are not “mere matters of pleasantry and badinage” but should be intended to create a legal relationship between the parties.

When thinking about intention to create legal relations it is often helpful to split things into domestic and commercial agreements.

Domestic agreements are presumed to not be binding (Balfour v Balfour [1919]) but that presumption can be rebutted if the subject matter is serious enough (Merritt v Merritt [1970]), there is a mutuality of obligations and/or there is performance of the agreement (Pettitt v Pettitt [1970]).

In a similar fashion other domestic relationships can also rebut the presumption of no intention to create legal relations such as parent and child (Jones v Padavatton [1969]) and even roommates (Simpkins v Pays [1955]).

On the other hand the presumption for commercial agreements is that there is an intention to be legally bound.

Although this presumption can be rebutted in the context of 'advertising puff' (Carlill v Carbolic Smoke Ball Co [1893]) and an express intention not to be bound (Rose and Frank v Compton [1923]; Kleinwort Benson Ltd v Malaysian Mining Corporation Bhd [1989]) it is very difficult to do so.