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Consideration is an adequate test of liability in contract; the so-called doctrine of intention is superfluous. Discuss the statement in the light of decided cases. Free essay! Download now

Home > University > Law > Consideration is an adequate test of liability in contract; the so-called doctrine of intention is superfluous. Discuss the statement in the light of decided cases.

Consideration is an adequate test of liability in contract; the so-called doctrine of intention is superfluous. Discuss the statement in the light of decided cases.

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The tacit implication in elevating any one particular doctrine in favour of the other is to necessarily exclude the fact that methods of enforceability in contract law are multi-faceted. Legal jurisdictions may adopt varying methods in order to enforce an agreement: the Continental system recognises only the doctrine of intent1 whereas the USA has, by virtue of s90 of the American Restatement, tended to employ a system based upon reliance2 (analogous to the innovative doctrine of Promissory Estoppel advanced in the High Trees Case3 per Denning). Conversely, the UK contractual system based upon consideration and intention to create legal relations has its foundations within commercialism and bargain, in lieu of the notion of “good faith” embodied within the Civil Law systems4.

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The tacit implication in elevating any one particular doctrine in favour of the other is to necessarily
exclude the fact that methods of enforceability in contract law are multi-faceted. Legal jurisdictions may adopt varying methods in order to enforce an agreement: the Continental system recognises
only the doctrine of intent1 whereas the USA has, by virtue of s90 of the American Restatement, tended to employ a system based upon reliance2 (analogous to the innovative doctrine of Promissory Estoppel advanced in the High Trees Case3 per Denning). Conversely, the UK contractual system based upon consideration and intention to create legal relations has its foundations within commercialism and bargain, in lieu of the notion of “good faith” embodied within the Civil Law systems4.

The law may be loath to concede, that the principle of intention has ever been marginalised in
favour of consideration, or that the courts do anything other than give effect to the objective
purpose behind a contract. To adopt such an impartial approach is to potentially, provide
a more effective means by which contracts are upheld. This line of reasoning was followed in Edmonds v Lawson5 where Lord Bingham stated that a party’s intentions were to be “…determined objectively, and not by requiring [sic] into their respective states of mind”6. Within a Consent
Theory of Contract, R, Barnett7posits that “permitting a subjective inquiry into the promisor’s
intent could … enable a promisor to fraudulently undermine …perfectly clear agreements… [They] could insist on enforcement [if in their] interest, but if it were no longer advantageous…avoid the contract…”

The latter proposition is of particular importance when ascertaining liability within commercial contracts where the presumption is that any such agreement is intended to be legally binding, the reasoning being that the courts will always attempt to encourage certainty to support the concept of market individualism8. In Edwards v Skyways9, Megaw J asserted that to rebut the presumption of intent within commercial contracts would place a “heavy onus” on the party wishing to do so10.



1 Richard Stone, The Modern Law of Contract (5th ed; Cavendish Publishing, 2004), p.112.
2 Id at 108-109.
3 [1947] KB 130, Laurence Koffman & Elizabeth MacDonald, The Law of Contract, (2nd ed, Tolley Publishing Company Limited, 1995), pp.67-70.
4. Ewan McKendrick, Contract Law - Text, Cases & Materials, (1st ed, Oxford University Press, 2003), pp.533-534.
5 Richard Stone, op. cit. p.115.
6 Id.
7 Randy E Barnett, A Consent Theory of Contract, Columbia Law Review March 1986), p.4
8 Ewan McKendrick, Contract Law - Text, Cases & Materials, op. cit. p. .15.
9 [1964] 1 WLR 349, Richard Stone, op. cit. p. 120
10 Id. at 120.

Detractors of the doctrine of intention may assert that the courts hold a certain degree of judicial licence when assigning liability (a distinctly subjective approach and never the underlying premise of the doctrine). Collins, has suggested that in circumstances “[where]… one party intended a legal agreement and the other wanted [it] to be merely morally binding…we are forced to [conclude] that…courts must rely upon hidden policy considerations when determining the intentions of the parties”11. Furthermore, Treitel12 has identified circumstances in which the presumption of an intention to be legally bound may be rebutted. The most relevant for the purpose of this discussion is within the context of domestic agreements.

The leading case of Balfour13 illustrates that agreements made within domestic situations
“… [are] clearly not intended by the parties to be legally binding.” – Atkins LJ14. In the case of
Jones v Padavatton15 an analogous line of reasoning was followed as it would be highly impractical to formalise all assertions made within the course of familial relations as binding, otherwise, even
the most innocuous of statements would become enforceable. This approach is, perhaps, indicative
of the policy decisions of which Collins refers and an antiquated system which still has its foundations in patriarchy.

Conversely, the case of Merritt16 provides a discordant result. The husband signed a document
stating “…in consideration of the fact…you will pay all charges in connection with the house …I
will … transfer the property in your sole ownership”. The Appeal Court held that unlike Balfour, the parties had anticipated a legal contingency and were not living together “… in amity” – Denning, LJ17
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