Author: Shreyansh Rathi, Rajiv Gandhi National University of Law, Patiala
Court: Court of Appeal of England And Wales (Civil Division)
Appellant: Mr. Balfour
Respondent: Mrs. Balfour
Equivalent Citations: (1919) 2 KB 571
Judges: Lord Justice Warrington, Lord Justice Duke, LordJustice Atkin
Intention to create Legal Relations is one of the most important essentials of Indian Contract act, 1872 in order for a contract to be valid. Section 10 of Indian Contract act makes it essential that there need to be an intention to create legal relations and thus agreement of domestic or social nature does not qualify to be valid contract.
Balfour v. Balfour is a leading case law relating to this essential of contract. In this case, it was recognized by the court that if an agreement arises such that it would constitute valid contract in ordinary circumstances, it is not necessary it would be valid contract when there is no intention to create legal relation and out of domestic agreement between the spouses.
Facts of the Case:
The present case is an appeal filed by the husband, Mr. Balfour against the ruling of Justice Sargent, Additional Judge of King’s Bench Division, who had held that a valid contract had arisen between him and her wife as per the facts of the cases. The appeal had been filed in the Civil Division of Court of Appeal.
The parties in the present case were Mr. Balfour and his wife Mrs. Balfour. They had got married in 1900. Mr. Balfour held the position of Director of Irrigation under Government of Ceylon (present day Sri Lanka). The couple had been residing in Ceylon till 1915 with some short visits to UK. In November, 1915, they went England for a vacation while the husband was on leave. After residing for more than half of a year, in August 1916, the husband had to return Ceylon because of job commitments. However, his wife, who was suffering from Rheumatic Arthritis, was advised by the doctor to stay there till November 1916.
On 8th August, 1916, the day he was supposed to leave, he entered into an agreement with his wife vowing to pay £24 for that month and £30 for all subsequent months till she returns to Ceylon. There was admission by wife that such agreement was made when there were no prior differences among them. The payment of the above mentioned amount continued for some months but with time their relations deteriorated and ultimately he stopped payment of that amount to the wife, following which she brought a suit for enforcement of the verbal agreement made between them and the lower court ruled in her favor. The case in question is an appeal filed by the husband in Court of Appeal against this decision of the lower court.
Questions before the court
1. Whether the agreement qualified as a valid contract between them?
2. Did Mr. Balfour intend to create legal relations by the agreement?
3. Did such verbal agreement between spouses create legal consequences or just domestic and social agreements?
4. Whether domestic and social agreements can be enforced and comes within the ambit of Contract law?
The case of Balfour v. Balfour was primarily a case of English Law and gave rise to the doctrine of Legal Relationship as an essential in Contract law. Although the case did not involve any other legislation and act other than English Contract law, the doctrine of Intention to create legal relations was primarily focused.
In English Law of Contract, an agreement is considered contract only when it is legally enforceable and recognized by law with legal consequences. Thus, it is recognized that agreement of domestic or social nature are not contracts due to their lack of enforceability.
Judgement in Brief
The three judge bench, in their judgement, observed that the agreement which was created between the husband and wife was an ordinary domestic agreement between the spouses and as no prior disputes were present between them at the time of agreement, it could be inferred that there was no intention of creating legal relations and giving rise to legal consequences. Thus the agreement between them lacked any legal enforcement and in the unanimous decision, the bench overturned the decision of the lower court and absolved Mr. Balfour to act as per terms of the agreement.
Lord Justice Warrington observed in his opinion that the agreement between spouses in this case was just a friendly agreement. He believed that it is both expressly and impliedly determinable that there was no intention of creating legal relations while entering into agreement as there were no bargains made by wife on the amount to be provided and it was implied that husband would pay as long as he is able to. As a conclusion, he believed it to be an ordinary social and domestic agreement between spouses with no legal enforceability because of its triviality.
Lord Justice Duke added a few points to these observations. He observed that the basis of their communication was their personal relationship that could not be a part of their suit. Along with this, the agreement was entered into a time when they were living amicably and not in dispute. Also, no consideration was flowing from wife to the other spouse and no promise was being made by husband to his wife for such payment. Thus, the contract never came into existence between them.
Finally, Lord Justice Atkin observed that such agreements of domestic nature do not satisfy the requirement of contract law of legal enforceability and creation of legal relations. It is widely known that the commonest forms of agreement which do not qualify as contract are those which are entered between spouses. The only consideration that flows between them is that of love and affection which has no legal value and thus does not meet essential of having consideration so as to form a valid contract. The non-performance of such agreement, thus, does not give rise to any legal consequences.
Analysis of the Judgement
In the case of Balfour v. Balfour, the main question that arose in front of the Court of Appeal was that whether an ordinary agreement between the spouses when everything is fine between them, gives rise to a valid contract or doesn’t amount to any contract because of being domestic or social in nature and thus having no intention of creating legal relations. Although Justice Sargent of lower court gave decision in favor of the wife upholding the agreement as contract, the three judge bench of Court of Appeal in its unanimous decision held that such ordinary domestic agreement between the spouses lacking consideration from wife’s side and no intention of creating legal relations on the part of husband did not qualify as contract and thus was unenforceable.
The Court made the observation that in cases of domestic relationships of spouses, the mutual promises between them are not made with the intention of creating legal relationships and legal consequences. Thus, such agreements do not give rise to valid contract. This judgement gives a strong precedent for all subsequent cases that may arise on the same subject matter otherwise; the court would be flooded with thousands of unimportant domestic disputes. The judgement also gave birth to a renewed interest and attention towards the importance of ‘intention to create legal relations’ in the Contract Law.