Intention of Parties in a Contract

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⁣⁣Intention of Parties in a Contract

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In order to identify if there is an intention for the parties to be legally bounded, the parties must provide proof that an intention exists. The intention is identified in an objective manner.⁣

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For the intention to be proven, the court will have to ask if a reasonable person would consider the agreement to have the intention to bound them in the contract? ⁣

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Another important aspect of an intention is that the court will look into the circumstance and use these circumstances to determine whether or not there is an intention for the parties to be legally bound in a contract. ⁣

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On Commercial Relationship⁣

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There is a presumption that commercial relationships intend to create legally binding contracts with their agreements. ⁣

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On Domestic or Social Agreements ⁣

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There is a presumption that domestic or social agreements do not intend to create legally binding contracts. ⁣

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In order to determine if there is an intention to legally bind the parties in a domestic or social agreement, the court will look at the following:⁣

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• If the alleged rights and obligations of the parties are stipulated clearly which makes it look more like a contract where they are bound;⁣
• If one or any of the parties have spent money, has been inconvenienced, or has experienced substantial detriment, then there is likely a binding contract between the parties;⁣
• If the intention has a more social flavor, such as a car pool; or⁣
• If the parties contemplated in taking legal action or actions currently or in the future.⁣

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Two Types of Intentions⁣

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There are two types of intentions which includes expressed or implied intentions. ⁣

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Expressed intentions are rare. However, implied intentions can create an agreement which can result to either a social or a business contract. ⁣