Commercial Agreement Vs Social Agreement

As far as social agreements are concerned, there is no presumption and the case is decided exclusively on the merits. The requirement that contract law intend to create legal relationships must reflect common sense. If the contract is commercial, premeditation is presumed. Informal agreements with family and friends should not justify intent and should not involve lawyers or courts. This agreement is not entered into as a formal or legal agreement, nor in writing and is not subject to the legal jurisdiction of the courts of the United States or England, but it is only a clear expression and record of the subject matter and intent of the three parties concerned, to whom they undertake with honor and the greatest confidence, on the basis of previous transactions, that it is conducted by each of the three parties with mutual loyalty and friendly cooperation. A more formal written agreement between husband and wife on certain financial arrangements following marital separation may be legally binding. It is difficult to say anything else. Few plaintiffs in court successfully argued that their business agreement was invalid because the parties did not intend to create legal relationships. The policy of the law is always to enforce trade agreements, not to beat them for no good reason. As far as commercial transactions are concerned, there is a strong presumption of a valid contract: these agreements, in which the parties have conveyed themselves as foreigners, are considered binding. However, “honor clauses” in gentlemen`s agreements are recognized as a regulation of the intention to create legal relationships, as in the pools of Jones v Vernon[13] (where the clause “This agreement is only honorific” was effective). Care must be taken not to formulate a clause in such a way as to try to exclude the jurisdiction of a court, because the clause is void, as in Baker v Jones.

[14] If a contract contains both an “honor clause” and a clause that attempts to exclude the jurisdiction of a court (as in Rose & Frank v Crompton)[15], the court may apply the blue pencil rule that disfigures the offending party. The court then recognizes the rest, provided that it is still useful and that it remains in accordance with the agreement of the parties. The hurtful clause was as follows: the doctrine determines whether a court should consider that the parties to an agreement wish it to be legally enforceable and states that an agreement is legally enforceable only if it is considered that the parties believe that they intend to enter into a binding contract. The law recognizes that these situations are analogous to gifts: transactions are carried out for personal reasons and not for the purpose of commercial profit. Most people would think that it would be very unusual for their family agreements to have a legal effect. Where the parties explicitly state in their contract that they intend to establish legal relationships, the courts always maintain that agreement. As with any contract, the best way to ensure that the expression is recorded and cannot be challenged later is through the use of a written agreement….