Contract Law

Balfour v. Balfour

[1919] 2 KB 571

Facts

Mr and Mrs Balfour were a married couple who had been living together in Ceylon, where Mr Balfour worked.
They travelled to England during Mr Balfour’s leave.
Mrs Balfour developed health problems, and her doctor advised her not to return immediately to Ceylon.
Mr Balfour returned alone and orally promised to send his wife £30 every month for her maintenance.
At the time of this arrangement, the parties were still living as husband and wife and had not separated in contemplation of divorce.
Their relationship later deteriorated, and Mr Balfour stopped making the payments.
Mrs Balfour sued to enforce the promise.
The trial court treated the arrangement as binding, but Mr Balfour appealed.

Whether the husband’s promise to pay his wife £30 per month was intended to create a legally enforceable contract.
Whether ordinary domestic arrangements between spouses are contractual.

A valid contract requires not only agreement and consideration but also an intention to create legal relations.
In ordinary domestic or family arrangements, the law generally presumes that the parties do not intend their promises to be legally enforceable.
This presumption may be rebutted where the circumstances show that the parties intended legal consequences, especially where:
they are separated or dealing at arm’s length;
the arrangement is written and precise;
property or substantial financial rights are involved;
reliance and seriousness indicate a legal bargain.
The court applies an objective test based on the circumstances surrounding the promise.

The Court of Appeal accepted that Mr Balfour had made a promise to provide £30 per month.
However, the central question was not simply whether words of promise had been used.
The court considered the context in which the promise was made.
It was made while the parties were still in an ordinary marital relationship.
The arrangement concerned household maintenance and was similar to everyday understandings made between spouses.
Such arrangements are usually based on mutual trust, affection and domestic cooperation, rather than legal enforcement.
If every domestic promise between spouses were treated as contractual, courts could be asked to decide countless ordinary family disagreements.
The parties had not recorded the arrangement in a formal document or used language showing that legal proceedings were contemplated.
There was also no evidence that they negotiated as independent commercial parties.
Atkin LJ explained that the law distinguishes between:
agreements intended to produce legal obligations; and
social or domestic arrangements that the parties expect to regulate privately.
Mrs Balfour could not rebut the presumption that this was only a domestic arrangement.
The later breakdown of the marriage could not retrospectively convert the earlier non-contractual understanding into a contract.
The case should be distinguished from an agreement made after spouses have separated, where financial arrangements are more likely to be intended as legally binding.

The Court of Appeal held that the promise was not legally enforceable.
The parties did not intend to create legal relations when the arrangement was made.
Mrs Balfour’s claim therefore failed.
Use this case for: ordinary domestic agreements between spouses are presumed not to create legal relations unless the circumstances show otherwise.