Tuesday, May 28, 2024

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CONTRACTMODEL ANSWER

INTENTION OF LEGAL RELATION

โ€œTo create a contract there must be a common intention of the parties to enter into legal obligation.โ€ Discuss.

Every contract is based upon mutual trust and confidence and every party to contract gives his consent to enter into a contract only on one belief that each and every party to contract will perform his contractual obligation. Every contract binds the parties legally and if any party to contract fails to perform his obligation, then the aggrieved party has right to file a suit and claim remedy from wrongdoer.

An aggrieved party can file a suit against another party who has breached the contract only if at the time of making contract, there was common intention of the parties to enter into legal obligation. If the parties had no intention to enter into legal obligation, then in such a case, even if any party does not perform his obligation, the aggrieved party cannot file a suit and claim remedy from the wrongdoer.

Indian Contract Act, 1872, prescribes proper procedure to make a valid contract. According to this act, to make a valid contract, there must be an offer and acceptance of that offer and alongwith offer and acceptance, there must be an intention to enter into legal obligation. Intention of parties plays very important role.

If the parties do not have an intention to enter into legal obligation but only to enter into social obligation, then in such a case, even if there is an offer and acceptance, that will not make a valid and lawful contract.

In the leading case of Rose and Frank Co. vs. Crompton and Bros. Ltd., the Honโ€™ble court held that an offer and its acceptance can result in valid contract but it is necessary that offer should be made with an intention to create legal relationship. Promise in case of social engagements is generally without an intention to create legal relationship. Such an agreement, therefore, cannot be considered to be a valid and lawful contract.

Moreover, in the lamdmark case of Balfour vs. Balfour, the Honโ€™ble court held that the law of contract is not made for personal family relationships. As there was no intent to be legally bound when the agreement was agreed upon, there can be no legally binding contract.

According to the Indian Contract Act, 1872, an intention to enter into legal obligation is very important because if parties have same intention and if any party to a contract breaches the contract, then an aggrieved party can prove the common intention and claim remedy from the wrongdoer. But if they have no intention to enter into legal relationship, then even if any party breaches the agreement, the aggrieved party cannot file a suit and claim remedy from the wrongdoer.

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