06_Intention - Contracts 01 Intention PART VI INTENTION I A...

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Contracts 01 – Intention P ART VI I NTENTION I G ENERAL A PPROACH A Basic Principle Both parties to the contract must manifest an intention to be legally bound ( Australian Woollen Mills ). The presence of this intention is determined objectively based on an inference from conduct. The analysis is highly factual; courts will look to the surrounding circumstances, including actions and statements of each party, to determine the objective manifestation of their intention. B Contextualisation There is considerable overlap between the requirement of intention and other requirements of formulation (offer, acceptance). Intention may be problematic in the following scenarios: Commercial context – honour commitments Social or domestic context – agreements relating to substantial matters Government context – policy announcements Preliminary agreements – intention to be binding? II P RESUMPTIONS A Traditional Types The traditional approach to determining intention looks at the class into which the agreement falls and the context in which it was made. 1 Purely social or domestic agreements It may be presumed that the parties did not intend to create a legally enforceable agreement 2 Business or commercial agreements It may be presumed that the parties did intent to be contractually bound Importantly, both of these presumptions are rebuttable. The party attempting to enforce the promise bears the onus of demonstrating intention. © Jaani Riordan 2004 Page 1 of 9 http://www.jaani.net/
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Contracts 01 – Intention B Present Role As a result of Ermogenous , the role of presumptions is solely to determine who bears the onus of proof. For example, in a commercial context, the prima facie presumption that the parties intended a promise to be contractually binding has the effect of shifting the onus of proof onto the defendant to establish that no such intention was actually present. However, the High Court in Ermogenous warned against the misuse of presumptions. As a result, the approach of earlier cases may not survive (though the outcome may still be the same). The focus of the courts should be on the intentions of the parties as evidenced by Subject matter of the agreement Status of parties to the agreement Relationship of the parties to one another Other salient circumstances Ermogenous v Greek Orthodox Community: Facts E served as the archbishop of the Greek Orthodox Community After E resigned, he claimed to be entitled to various leave entitlements GOC resisted making the payments E argued that he was employed under a contract of employment and therefore entitled to the leave payments Issue Had the archbishop and the church made a contract? Was there intention to create a legally enforceable agreement?
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06_Intention - Contracts 01 Intention PART VI INTENTION I A...

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