Intention And Consideration As Prerequisites For An Agreement

When we approach this question what we may be really asking is, can you have one element without the other and still have an enforceable contract? There are may ways to prove a parties serious intention to be legally bound, For example it is a fact that a deed can be demonstrated as legal enforceable even if there is on consideration so to speak. We can also see countless examples around the world of civil law systems which function well despite not having a doctrine of consideration, or even in-fact direct equivalents – although intention is still given weight. This is enough to suggests that perhaps consideration is unnecessary for some agreements and to that end, may only be substitute for formality in intention, a catch all of sorts? where parties display clear intention to be bound then the majority of time where offer and acceptance are present, consideration becomes a formality. This would lead me to the conclusion that consideration is but a secondary concern, even when it comes to promise – intention through conduct is still the decisive proving factor and should be increased as such.

Does the consideration test function better than the intention test?

This part of the discussion holds the most room for subjective opinion, however, objectively the facts will hopefully advocate for themselves. This papers position is that the consideration test is very unlikely to work significantly better than the intention test, in fact, if one of the tests should be reduced it should be the consideration test. All doctrines of the intention to create legal relations have undergone criticism, however, consideration has undergone the most – McKendrick tells us “it is unlikely that English law would adopt the doctrine of consideration were it to be given the opportunity to start afresh”. The doctrine has also been called needlessly confusing and justifications for such a doctrine illusionary and untenable.

The idea of fundamentally reducing or abandoning the doctrine of consideration is not by any stretch a new one. In 1937 a committee report proposed significant reform/replacement for laws 0of consideration, including writing as a substitute or the personal obligation to practice good consideration.

This was followed up in 1968 with a second committee report. here, it was reiterated the first committee’s reports, this time outline that the reforms would be so substantial that abolition, with an expansion of the doctrine of intent, may be the wisest course of action going forward. This report concludes with an uncharacteristically decisive statement – “English law would lose nothing if the doctrine of consideration were to be abolished”.

Since the aforementioned reports, there have been no end of cases on this issue both in England and in other common law jurisdictions.

Comparison of positions in Common Law Jurisdictions

To give this paper guidance on the issue I feel that it is sensible to look at countries with similar legal systems to that of ours. In this area it is prudent to look at three common law systems that show the different approaches taken – The USA, England and Australia & New Zealand – it can be said that all others fall in one of the frameworks demonstrated here.

Commercial Agreements

The USA take the approach that in commercial circumstances enforceability is a default; intention is irrelevant unless explicitly manifest (expressed) that there is no intent to be bound.

In England, the approach is – as we know – that intention is required, but there is the presumption that intention would exist unless evidence shows powerfully to the contrary.

Australian system is at first glance similar to that of England, With both requiring intention to form commercial legal agreement. The big difference here however is the abandonment of the presumptions, this means in any arising commercial disagreement party intending to enforce an agreement must prove intention to be found by the defender.

Domestic/Social Agreements

In this area, USA and English rules are even more similar, with the intention to create legal relations required for both jurisdictions. In the US it is presumed that there are no binding obligations unless special manifestation is voiced – Similar to England where such agreements are prima facie unenforceable by presumption.

For Australia, as above, they have abandoned the presumptions as with commercial agreements and require a positive proving of explicit intention to be bound (although are significantly less to allow the agreements to be enforceable)

We see here, in practice, two extremes of the spectrum and what this paper shall call a baseline stance of intention. America has vastly reduced the rule of intention by making it almost standard as part of every agreement. Australian has vastly increased the role intention in order to provide maximum protection and effectivity in the law. There is no real consensus on which approach is better, this paper argues that the increase in onus in the jurisdiction of Australia, as its litigation rates due to levels of certainty in are agreement are far lower.

Conclusion

Using the above, this paper hopes to have adequately justified its position highlighting the importance of intention in the process. It is true that the doctrine of intention is not perfect and may be in need of a change from time to time, however, I feel that significant take away here is how seriously flawed doctrine of consideration is. The abolition of consideration has long now been debated by academics, law officials and even other systems. All of whom seem to be travelling toward or already reaching the conclusion that if one of the doctrines must be abandoned it must be consideration, and to that effect, the law of intention is well placed to increase in importance. We can see that with only minor amendments that intention is able to pick up the slack, parts of consideration should, of course, remain as sub-tests to that of intention, but should by no means be crucial. this could in turn make for a more effective test.