For a contract to be legally enforceable, the law requires certain essential ingredients to be present.
The High Court in London recently considered one such ingredient: the intent to create legal relations.
Background
The claimants, a husband and wife, have built a significant property portfolio over the years. They have supported all six of their children financially, particularly their three sons, who are involved in the family business. That support included loans to one of their sons, the defendant.
The claimants wanted to split their assets fairly between their children, which is where the fallout started. They asked the defendant son to repay over £640k lent to him. He refused, claiming there never was an intent to create legal relations.
Judgment
“It is presumed that in domestic arrangements and family affairs, that there is not an intention to create legal relations”.
Mr Dias KC, sitting as a Deputy High Court Judge, observed that:
“In such cases, given that our experience of the world that matters within a family are often sorted out without an intention of strict enforcement through the courts, the legal presumption operates in the opposite direction: it is presumed that there is no intention to create legal relations… However, that presumption can be rebutted by evidence of contrary intention.”
This means that a parent couldn’t sue their child for the repayment of a ‘loan’. However, as a rebuttable presumption, it can be proven otherwise with evidence.
Finding for the claimants, the High Court rebutted the presumption. It held that the defendant son was liable to repay the loans. The Judge concluded with a quote from a previous case:
“it is distressing that [they] could not settle their differences amicably and avoid the bitterness and expense which is involved in this dispute carried as far as this court.”
Comment
Disputes can be stressful, especially those within your own family. Thinking that they will never happen doesn’t mean that they won’t…
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