CONTRACTUAL INTENTION
20. An agreement, even if supported by consideration, is not binding as a contract if it was made without an intention to create legal intentions. That is, the parties must intend their agreement to be legally binding.
21. In the case of ordinary commercial transactions, there is a presumption that the parties intended to create legal relations. The onus of rebutting this presumption is on the party who asserts that no legal effect was intended, and the onus is a heavy one.11
22. Many social arrangements do not amount to contracts because they are not intended to be legally binding. Equally, many domestic arrangements, such as between husband and wife, or between parent and child, lack force because the parties did not intend them to have legal consequences. In Balfour v Balfour [1919] 2 KB 571, a husband who worked abroad promised to pay an allowance of £30 per month to his wife, who was in England. The wife's attempt to enforce this promise failed: the parties did not intend the arrangement to be legally binding. (Note that in addition, the wife had not provided any consideration.)
23. An agreement which is made "subject to contract" (typically, agreements for the sale of land) or a "letter of comfort" is generally unenforceable. The words normally negate any contractual intention, so that the parties are not bound until formal contracts are exchanged.
E. FORM
1. The general rule is that contracts can be made informally; most contracts can be formed orally, and in some cases, no oral or written communication at all is needed. Thus, an informal exchange of promises can still be as binding and legally valid as a written contract. There are statutory exceptions to this rule. For example: (i) a lease for more than 3 years must be made by deed: Law of Property Act 1925, ss 52, 54(2); (ii) most contracts for the sale or disposition of an interest in land must be "made in writing": Law of Property (Miscellaneous Provisions) Act 1989, s 2; (iii) contracts of guarantee are required to be evidenced in writing: Statute of Frauds, s 4.
II CONTENTS OF A CONTRACT
The terms of a contract can be divided into express terms and implied terms.