ExpertEasy2 marksMultiple Choice
ACCA · Question 06 · Corporate and Business Law
In the context of intention to create legal relations, what is the legal presumption regarding commercial agreements?
In the context of intention to create legal relations, what is the legal presumption regarding commercial agreements?
Answer options:
A.
There is a presumption against legal relations unless the agreement is in writing.
B.
There is a strong presumption that the parties intended to create legal relations, which can only be rebutted by clear evidence.
C.
There is no presumption; intention must be proven by the claimant in all cases.
D.
Commercial agreements are only binding if they contain a 'subject to contract' clause.
How to approach this question
Identify the standard presumption applied to business/commercial agreements.
Full Answer
B.There is a strong presumption that the parties intended to create legal relations, which can only be rebutted by clear evidence.✓ Correct
In commercial contexts, the courts presume an intention to create legal relations. This can be rebutted by express words, such as an 'honour clause' (e.g., Rose & Frank Co v Crompton Bros).
Common mistakes
Confusing the presumption for commercial agreements with the presumption for domestic/social agreements.
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