An essential ingredient of a binding contract is an intention to create legal relations. But what if, as in MacInnes v Gross, a contract is claimed to have been made over dinner in a smart restaurant? What principles might a court apply in looking for this intention?
• Where there is an express agreement, in an ordinary commercial context, the burden of disproving the intention is a heavy one;
• Where there is no express agreement, the party claiming a binding agreement has been made has to prove the intention;
• The degree, or lack, of precision in expressing the alleged agreement may be relevant; and
• Vagueness/uncertainty may be a ground for concluding that the parties did not reach an agreement.
The court may decide that there is no agreement because no definite meaning can be given to what was said. The more complicated the subject matter, the more likely the parties are to want to record their contract in a written document, so that they can review all the terms before being committed to any of them; and if there is a “trigger” event (for instance, on which commission becomes payable) express identification of the event is essential.
The court decided that there was no intention to create legal relations and therefore on this (and other grounds) no binding contract had been made over dinner. The fact that the key discussion took place over dinner in a smart restaurant did not, of itself, prevent the making a binding contract. A contract can be made anywhere, in any circumstances. But the fact that the alleged agreement was made in a highly informal and relaxed setting meant that the court should look closely at the claim that, despite the setting, there was an intention to create legal relations. In doing so the court noted that the claimant said, in a subsequent email, that there was an agreement “on headline terms”, he was unaware of any similar remuneration agreements concluded over dinner in this way and business matters were not always to the fore at this dinner. Neither party had told anyone else they had reached a binding agreement and the claimant had not produced any written contract or draft, an omission that the court regarded as critical. Its absence was the final reason for the court’s decision on this issue.