Case name & citation: Wakeling v Ripley (1951) 51 SR (NSW) 183
Year of the case: 1951
Jurisdiction: The Supreme Court of New South Wales
Area of law: Intention to create legal relations
Facts of the case (Wakeling v Ripley)
The defendant (Ripley) wrote a letter to his sister (Wakeling) in England and requested that she and her husband relocate to Sydney, Australia in order to care for him.
To move to Australia, the Wakelings made it clear to Ripley that they would have to make a number of sacrifices, including Mr. Wakeling giving up his pension and salary-based employment at Cambridge University. Also, Mr. Wakeling asked Ripley about what he could guarantee his family in the future.
In return, Ripley promised that they could live rent-free and that he would leave his house to them in his will. He also enclosed a copy of his will wherein he left the bulk of his estate to the Wakelings.
On the basis of this correspondence, the plaintiffs quit their jobs in England, sold their property there, and moved to Australia. They took care of the defendant for several months.
But, following an argument between the two parties, some misunderstandings arose and the defendant sold his house and altered his will.
The plaintiffs then sued the defendant for breach of the alleged contract between them. They sought to recover damages.
The issue raised in “Wakeling v Ripley”
Was the agreement between Ripley and the Wakelings intended to be legally binding?
Intention to be legally bound: A basic view
The intention to be legally bound is one of the key elements of contract formation. A contract cannot be said to exist unless the parties intend to engage in a legal relationship and be legally bound by it. This intention can be expressly declared by the parties or may be implied by their actions. In relation to implied intention, the Courts have established the following presumptions, though rebuttable:
- In contracts involving domestic, social and family matters, the parties do not intend legal enforceability.
- In contracts involving business and commercial matters, the parties do intend legal enforceability.
Judgement of the Court in “Wakeling v Ripley”
The Court decided in favour of the Wakelings.
Sufficient evidence was found to believe that the parties had made a definite and binding contract. The correspondence between the parties regarding the arrangements for relocation to Sydney was such that it demonstrated their intention to be legally bound.
The Court determined that, based on the evidence, the parties intended to enter into a legal relationship, and thus the presumption had been rebutted.
It was observed that the consequences of breaching the promise were economically serious. The plaintiffs (the Wakelings) had left what they had only when they were assured that there was a definite agreement with the defendant.
Hence, even though it was a family arrangement, it was found that the parties were intended to be legally bound.
Significance of the case
The decision demonstrates that the Courts objectively examine all the relevant facts and circumstances surrounding an agreement between family members to determine whether or not there is a legal relationship between the parties and whether the presumption can be rebutted.
When can the presumption be rebutted?
The presumption in domestic agreements can be rebutted by evidence of the real intention of the parties. The following factors are relevant:
- what the parties say to each other, either orally or in writing
- the context in which the statements were made
- the conduct of the parties
- how severe the consequences would be to the innocent party if the commitments made by the other party were to be breached.
If evidence shows that the parties intended to be legally bound, the presumption can be rebutted. And the contract is deemed to be enforceable as it was in the given case.
In contrast, the Courts have decided the other way round in many instances. For example, in Jones v Padavatton (1969), the Court determined that a contract entered into between a mother and her daughter was null and void since there was no evidence that the parties intended to be legally bound. In other words, the presumption that the parties did not intend to be bound by the agreement was not rebutted.
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