Issue
Whether Peggy-Sue could sue Buddy for a half share of the $1,300,000
Laws
In Taverner v Swanbury a fourteen years old lad agreed to work in his father’s garden until the younger brother finished schooling. The father, in turn, agreed to provide the boy with food, clothes and pocket money, something he later extensively failed to honor. The court held that such an agreement was not intended to create legal relations.
In Balfour v Balfour, a husband worked abroad and promised to be sending his wife some maintenance payments in honor of their happily working marriage. Later on, their marriage soured, and the husband stopped sending cash to his wife, which prompted the wife to seek compensation through the court. The court held that the agreements between the husband and the wife were solely a social agreement with no intention to create legal relations.
In Welsh v Jess, Welsh and his friend Jess entered into a fishing contest and agreed to share the money they would later win. Jess later won $6,000 but refused to share the winnings with Welsh arguing that their agreement was only social and they had no intentions to enforce it. The court held that the parties were bound to share the winnings equally, having contributed an equal entrance fee.
Application
The rule of the thumb in law is that parties to a contract must have intentions to create legal relations. Generally, social agreements between friends or family members are not legally binding as they carry no legal ties. However, social contracts are sometimes enforceable under certain circumstances. The court decision to declare a social agreement as socials binding is based on two judicial devises; the objective test and the rebuttable presumption. The objective tests state that any bystander would think that parties to a contract intended to create legal relations even when subjectively one party to such contract is a rogue who carries no intentions to honor the agreement. For instance, in Welsh v Jess, any neutral bystander can see that both Welsh and Jess hand intentions of entering into a legally binding contract. Having pooled the entrance fee together, it is clear that the parties intended to share the winnings.
The rebuttable presumption, on the other hand, would hold that, it would be presumed that parties intend to create legal relations in a commercial context. Second, family contracts would be presumed to be legally non-binding unless it’s crystal clear that the parties intended to have legal relations. That said, in Taverner vs Swanbury, the parties didn’t intend to create any legal relations with their social agreement only made on a mutual basis. Similarly, in Balfour vs Balfour, the husband and the wife had no intentions to create a legally binding relationship. It’s crystal clear that the parties only entered into an agreement based on their affectionate feelings towards each other which in the lens of law is legally non-binding.
Conclusion
The contract between Peggy-Sue and Buddy passes the objectivity test, and thus Peggy-Sue should sue Buddy for a share of the $1,300,000 winning.
References
Balfour v Balfour [1919] 2 KB 571
Welch v Jess [1976] NZ
Taverner v Swanbury [1944] SASR 194