Issue
Whether the agreement between Peggy-Sue and Buddy was intended to create legal relations.
Laws
In Fleming vs Beevers, the defacto parties owned a house in common so that when one party died, the house would pass to the estate of the written will. Unfortunately, the defendant died before he could leave his part of the property in the will. The plaintiff went to court demanding the share of the property he and the deceased had agreed upon. The court of appeal held that the agreement between the deceased and the plaintiff was intended to have a legal effect, and the plaintiff was awarded the share of the property.
In Spellman vs Spellman, a husband promised his wife a car to settle their marriage differences. The husband later refused to transfer the ownership of the car to the wife, and the wife sued him for the enforcement of the agreement. According to the jury that settled the case, the agreement between the wife and the husband wasn’t intended to create legal relations, and thus the wife had no legal rights in the car.
In Simpkins v Pays, a grandmother, granddaughter and a lodger joined a competition run by the Sunday Empire News every week. The tickets were sent bearing the grandmother’s name, but all the three parties made a prediction in turn. The agreement was that no matter who wins, the winnings would be shared among the three in equal proportions a contract that the grandmother later broke. It was held that the parties had a clear expectation of creating legal relations as they had contributed equally towards the competition.
Application
The first essential element of a valid contract is the intention to create legal relations. In every case, it’s the responsibility of the court to determine whether the agreements between parties in the conflict was intended to create legal relations. Additionally, the court must determine the circumstances in which such agreements were entered and whether they were intended to be legally binding. In other words, the court ought to answer the question; “was the agreement between the defendant and the plaintiff intended to create a contractual force?” in the language of the law, a contract must be executed on commercial circumstances to be legally binding. In that case, an agreement between family members doesn’t carry legal relations but relies solely on mutual trust and affection like in the case of Spellman v Spellman. In that case, the agreement had no commercial basis having been made only to settle a sour relationship. However, where family members provide evidence that their agreement was intended to create legal relations, such a contract is enforceable.
Consequently, an agreement between friends is legally non-binding unless the parties provide evidence of intentions to create legal intentions. In Fleming v Beevers, the friends entered into an agreement not on the mutual basis but on commercial terms that one party’s share would pass to the other party in case of death through a written will. Even though the will wasn’t written by the time of one party’s death, and the parties were friends, the agreement clearly intended to create legal relation. In Simpkins v Pays, the parties had both family and friends ties. However, their agreement had intentions to be legally binding by the fact that all parties had clear expectations of winning having contributed equal finances towards a gambling competition. The parties were thus bound to share the winnings equally.
Conclusion
Peggy-Sue deserves the half share of $130000 lotto ticket as in the face of the law; both parties intended to create legal relations despite their friendship ties.
References
Fleming v Beevers [1994] 1 NZLR 385
Simpkins v Pays [1955] 1 WLR 975