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Intention to Create Legal Relations

Published online by Cambridge University Press:  16 January 2009

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Extract

The aim of this article is to examine the purpose and effect of the alleged rule of English law that an agreement supported by consideration will not be enforceable as a contract unless there is additional proof of an intention to create legal relations.

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Articles
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Copyright © Cambridge Law Journal and Contributors 1970

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References

1 [1969] 1 W.L.R. 339. For comment, see N. Selwyn, “Collective Agreements and the Law” (1969) 32 M.L.R. 377; K. Foster, “The Ford Case and After” (1969) 113 S.J. 295; and Note (1969) 85 L.Q.R. 314.

2 Chloros, A. G., “The Doctrine of Consideration and the Reform of the Law of Contract” (1968) 17 I.C.L.Q. 137, 147Google Scholar (a paper commissioned by the Law Commission).

3 The fullest exposition of the viewpoint opposite to that of Professor Chloros is still to be found in Professor C.J. Hamson's critique of the Report of the Law Revision Committee (Cmd. 5449) in (1938) 64 L.Q.R. 233.

4 [1969] 1 W.L.R. at 350.

5 These centred around the fact that Fords' proposals had been accepted by only a slender majority (7–5) of the unions on the N.J.N.C. and a formal document had not been signed on behalf of each of the 19 union. His Lordship thought it “strongly arguable” that the N.J.N.C. was simply a negotiating body and until the document was signed there was no binding agreement (at 356). He left open the question whether a large number of agents (as on the N.J.N.C.) could bind their principals unless they acted unanimously (at 357).

6 An interim injunction had been granted some days earlier and the present proceedings resolved themselves into a hearing on the question whether that injunction should be continued for a further seven days, and, in addition, whether a mandatory injunction ordering the defendants to countermand strike instructions should be granted for that period.

7 S. 4 (4) prevents the “direct enforcement” of “any agreement made between one trade union and another.” In law, many employers' associations fall within the statutory definition of a “trade union.” The Government proposes to modify this section so as to put such agreements in the same position as those between trade unions and individual employers (In Place of Strife, Cmnd. 388, para. 46).

8 [1969] 1 W.L.R. at 350.

9 Report of the Royal Commission on Trade Unions and Employers' Associations (Cmnd. 3623, 1968), paras. 470–474; written evidence to that Commission submitted by Confederation of British Industry, paras. 172–173, Ministry of Labour, pp. 76, 80, and Trade Union Congress, paras. 339, 341; Court of Inquiry into the causes and circumstances of a dispute between the parties represented on the National Joint Industrial Council for the Electricity Supply Industry (Cmnd. 2361, 1964), para. 140; Ministry of Labour, Industrial Relations Handbook (1961), p. 19Google Scholar; Kahn–Freund in The System of Industrial Relations in Great Britain (ed. Flanders, and Clegg, ) (London 1954), pp. 5558.Google Scholar

10 Op. cit. (note 9); and in Law and Opinion in England in the 20th Century (ed. Ginsterg, ) (London 1959), p. 215Google Scholar, and Labour Relations and the Law (London 1965), pp. 2527.Google Scholar For an earlier view to this effect, see Tillyard, F. and Robson, W. A., “The Enforcement of the Collective Bargain in the U.K.” (1938) 48 Economic Journal 15.CrossRefGoogle Scholar

11 [1969] 1 W.L.R. at 356.

12 “Collective Agreements under War Legislation” (1943) 6 M.L.R. 112. See, too, his earlier note in (1940) 4 M.L.R. 225.

13 e.g., Gayler, J. L., Industrial Law (London 1955), pp. 170174.Google Scholar See gencrally McCartney, J.B. in Labour Relations and the Law, pp. 4047.Google Scholar

14 There are several cases in which the issue has arisen indirectly and the judicial dicta are conflicting. Those appearing to support legal enforceability are: Smithies v. National Association of Operative Plasterers [1909] 1 K.B. 310, 337, 341Google Scholar; East London Bakers' Union v. Goldstein,The Times, 9 June 1904Google Scholar; Bradford Dyers' Association Ltd. v. National Union of Textile Workers, The Times, 24 July 1926Google Scholar; Rookes v. Barnard [1961] 2 All E.R. 825, 827Google Scholar (Sachs J.); Hynes v. Conlon [1939] 5 Ir.Jur.R. 49.Google Scholar Dicta to the contrary may be found in Rookes v. Barnard [1963] 1 Q.B. 623, 658, 675Google Scholar (C.A.); Pitman v. Typographical Assn., The Times, 22 September 1949Google Scholar; Springy v. N.A.D.S. [1956] 1 W.L.R. 585, 592Google Scholar; Ardley and Morey v. London Electricity Board, The Times, 16 June 1956Google Scholar; Read v. Friendly Society of Operative Stonemasons [1902] 1 K.B. 732, 737, 740Google Scholar; Young v. C.N.R. [1931] A.C. 83, 89Google Scholar (P.C., Canada). The latter decision must now be read in the light of Canadian legislation giving legal status to collective agreements: see Carrothers, A. W. R., Collective Bargaining Law in Canada (Toronto 1965), esp. pp. 326330Google Scholar on the nature of collective agreements at common law.

15 At 350. The “objective” nature of the test of intention has often been stressed: Coward v. Motor Insurers' Bureau [1963] 1 Q.B. 259, 271Google Scholar; Connell v. Motor Insurers' Bureau [1969] 2 Q.B. 494, 505Google Scholar; Edwards v. Skyways Ltd. [1964] 1 W.L.R. 349, 356.Google Scholar

16 [1958] 1 W.L.R. 16, 23–24.

17 “They are incorporated into the contract of employment of each man, in so far as they are applicable to his situation”: per Lord, Denning M.R. in Camden Exhibition and Display Ltd. v. Lynott [1966] 1 Q.B. 555, 563Google Scholar (italics added). These comments on the effect of a statement issued under s. 4 of the Contracts of Employment Act 1963 referring the employee to the terms of a collective agreement which are impliedly incorporated in the individual's contract seem equally relevant where, as in the Ford case, there is an express incorporation.

18 Indeed, it is generally thought that most “no–strike” clauses are not appropriate for incorporation in individual contracts: see the comments by K.W. Wedder–burn in (1961) 24 M.L.R. at 583–584; (1962) 25 M.L.R. at 526–530.

19 At 343, and, during argument: “I sigh and I sigh…” The Times, 4 March 1969Google Scholar

20 At 344.

21 At 346.

22 At 356.

23 Counsel for one of the unions contended that, even if the agreements were enforceable, they did not prevent the union from striking in the circumstances of the case. It was unnecessary for his Lordship to deal with this argument, but it seems to have been based on the actual wording of the agreements.

24 Williston on Contracts, 3rd ed.. s. 21; Hamson, C. J., loc. cit. [note 3]; R. Tuck (1943)Google Scholar 21 Canadian B.R. 123; K. O. Shatwell (1954) 1 Sydney L.R. 289, 314–315; J. Unger (1956) 19 M.L.R. 96 (on Simpkins v. Pays [1955] 1 W.L.R. 975).Google Scholar

25 Tamplin v. James (1879) 15 Ch.D. 215, 221.

26 [1919] 2 K.B. 571; Unger, loc. cit. [note 24].

27 At 578–579.

28 (1860) 9 C.B. (N.S.) 159.

29 [1969] 1 W.L.R. 328.

30 [1933] 1 K.B. 793.

31 Cf.Balfour v. Balfour at 574, 576, in which “there was no bargain on the part of the wife at all.”

32 At 335.

33 At 336.

34 At 334

35 Loc. cit. [note 24] at 98.

36 Treitel, G. H., The Law of Contract, 2nd ed. (London 1966), p. 105.Google Scholar

37 I do not contend that the actual result in this case was erroneous. Indeed, there is much to commend the view that there was no request (in the legal sense) in relation to the 1964 agreement.

38 [1969] 2 W.L.R. 966.

39 At 983 (Lord Hodson).

40 At 992 (Lord Upjohn). Lord Reid (at 973) appears to limit the principle to “non-financial” arrangements. Where the parties are at arm's length, at the time of their agreement, the courts usually impute an intention to be bound: Merritt v. Merritt, The Times, 15 May 1969Google Scholar; cf. Gould v. Gould [1969] 3 W.L.R. 490.Google Scholar

41 [1967] 2 Q.B. 31, 41, 45; J.W. Harris (1967) 30 M.L.R. 584.

42 [1947] 1 All E.R. 258, 260 (C.A.); and [1946] 1 All E.R. 650 (Goddard L.C.J.).

43 It was said that the “language of contract” used by the parties indicated an intention to contract. This may be understood to mean that the documents were to be construed as importing a promise and request (see Salmon L.J. at 45). Compare Booker v. Palmer [1942] 2 All E.R. 674Google Scholar, where the informality of the statement made it impossible to imply a promise. But lack of formality is not decisive: Parker v. Clark [1960] 1 W.L.R. 286.Google Scholar

44 Treitel, op. cit., p. 105.

45 [1913] A.C. 30. On the “objective” test in this context, see Wedderburn, K. W. “Collateral Contracts” [1959]Google Scholar C.L.J. 58, 77.

46 At 47.

47 At 44.

48 [1893] 1 Q.B. 256.

49 At 273 (and Bowen L.J. at 266, and Lindley L.J. at 271). This approach is also explicit in Licences Insurance Corp. and Guarantee Fund (Ltd.) v. Lawson (1896) 12 T.L.R. 501 (statements made “in the course of … arguments and of a somewhat warm discussion”) and Dimmock v. Hallett (1866) L.R. 2 Ch.App. 21. A number of other cases cited in the books in the context of “intention to create legal relations” are, in fact, concerned with the construction of alleged promises and the related question of mistake: Beesly v. Hallwood Estates Ltd. [1960] 1 W.L.R. 549, 558Google Scholar; Cf. British Homophone Ltd. v. Kunz (1935) 152 L.T. 589Google Scholar; Parke v. Daily News Ltd. [1962]Google Scholar Ch. 927, 948; J. H. Milner & Son v. Percy Bilton Ltd. [1966] 1 W.L.R. 1582Google Scholar; and cases on agreements “subject to contract” (Treitel, op. cit., p. 10).

50 [1963] 1 Q.B. 259.

51 Connell v. Motor Insurers' Bureau [1969] 2 Q.B. 494.Google Scholar Lord Denning said he was “not altogether satisfied” with Coward v. M.I.B.

52 [1968] 1 All E.R. 1145.

53 See Williams, Gla'nville, Joint Torts and Contributory Negligence (London 1951), p. 312.Google Scholar

54 Rose and Frank & Co. v. J. R. Crompton Bros. Ltd. [1923] 2 K.B. 261; [1925] A.C. 445; Appleson v. H. Littlewood Ltd. [1939] 1 All E.R. 464Google Scholar; Jones v. Vernon Pools Ltd. [1938] 2 All E.R. 236Google Scholar; Lee v. Sherman's Pools [1951]Google Scholar W.N. 70; Guest v. Empire Pools (1964) 108 S.J. 98.Google Scholar

55 [1964] 1 W.L.R. 349.

56 At 355.

57 It is not possible within the scope of the present article to examine the wide variety of requirements of good faith which exist in civil law systems, either as separate rules or as implicit in rules which bear a superficial similarity with those of English law, and which I believe it would be necessary to introduce into English law if the doctrine of consideration were abolished.

58 Balfour v. Balfour at 579.

59 ibid; and see Duke L.J. at 577, and Salmon, L.J. in Jones v. Padavatton at 332.Google Scholar

60 State of South Australia v. The Commonwealth (1962) 108 C.L.R. 130Google Scholar, 154.

61 Pfizer Corpn. v. Ministry of Health [1965]Google Scholar A.C. 512, 535, 544, 548, 552, 571 (H.L.).

62 Willmore v. South Eastern Electricity Board [1957] 2Google Scholar Lloyd's Rep. 375, 380.

63 Lane v. Cotton (1701) 1 Ld.Raym. 646; Triefus v. Post Office [1957] 2 Q.B. 352.Google Scholar Successive Post Office Acts have been framed on this basis.

64 Lord Mansfield gave a clear exposition of this policy in Whitfield v. Lord Le Despencer (1778) 2 Cowp. 754. See, too, Gibson v. The East India Company (1839) 5 Bing.N.C. 262, in which the Court of Common Pleas distinguished between the acts done by the Company in its trading capacity and its capacity as Government of India. The remedy in respect of the latter was said to be “petition, memorial or remonstrance” and not action in a court of law.

65 e.g., Sutton & Shannon on Contracts (6th ed., 1963), p. 55.Google Scholar The Australian courts have also explained the non-justiciability of political arrangements in terms of intention: State of S. Australia v. The Commonwealth (note 60).

66 Chamberlain, N. W., “Collective Bargaining and the Concept of Contract” (1948) 48 Columbia L.R. 829Google Scholar; and Shulman, H., “Reason, Contract and Law in Labor Relations” (1955) 68 Harvard L.R. 999Google Scholar; cf. Summers, C. W., “Collective Agreements and the Law of Contracts” (1969) 78 Yale L.J. 525Google Scholar; Cox, A., “The Legal Nature of Collective Bargaining Agreements” (1958) 57 Michigan L.R. 1Google Scholar; and Carrothers, A. W. R., Labour Arbitration in Canada (Toronto 1961), pp. 41Google Scholar, 68.

67 Cf. the Ford case, in which they were treated as prima facie dealing with commercial relationships.

68 Cmnd. 3623, para. 471.

69 The Government has announced that the Industrial Relations Bill, to be published in 1970, will provide that collective agreements can be made legally binding only by an express written provision in the agreement (In Place of Strife, Cmnd. 3888, para. 46). Apparently, no special rules for the interpretation and enforcement of such agreements will be laid down. Moreover, it is not clear whether the parties will be free to provide that their agreement shall be a contract but that the ordinary courts shall have no jurisdiction over it: see, e.g., Czamikow v. Roth, Schmidt & Co. [1922] 2 K.B. 478Google Scholar; and generally, Halsbury, , Laws of England (3rd ed.), Vol. 9, p. 352Google Scholar, and Leigh v. N.U.R. [1970] 2 W.L.R. 60, 65.Google Scholar