The development of certainty and intention has been driven by a series of authoritative appellate decisions that remain central to the teaching syllabus and examination. Each case illustrates a particular facet of the doctrines and the tensions between party autonomy, commercial practicality, and legal policy.
Balfour v Balfour [1919] 2 KB 571
This Court of Appeal decision established the domestic presumption against legal intention. Mr Balfour, a civil servant stationed in Ceylon, agreed to pay his wife £30 per month while she remained in England for health reasons. The marriage later broke down, and Mrs Balfour sued on the promise. Atkin LJ held that agreements between spouses living in amity are not contracts: 'the common law does not regulate the form of agreements between spouses... they are not contracts because the parties did not intend that they should be attended by legal consequences.' The presumption applies to all cohabitees in ongoing domestic relationships, though it is rebuttable upon separation or where the arrangement is of substantial value.
Rose & Frank Co v JR Crompton & Bros Ltd [1925] AC 445
The House of Lords confirmed that an express 'honour clause' can rebut the commercial presumption. The parties' distribution agreement stated: 'This arrangement is not entered into... as a formal or legal agreement, and shall not be subject to legal jurisdiction in the Law Courts... but is only a definite expression and record of the purpose and intention of the parties concerned, to which they each honourably pledge themselves.' The House held that the clause was effective and the arrangement was not a contract, although individual orders placed under it were enforceable as separate contracts.
Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503
This House of Lords case illustrates the courts' willingness to uphold commercial agreements by implying terms and construing vague language against the backdrop of trade practice. The parties agreed to purchase '22,000 standards of softwood goods of fair specification' with an option to buy further timber in the following season. The option did not specify type, size, or price. The House of Lords, reversing the Court of Appeal, held the contract enforceable: the agreement was sufficiently certain because (i) the parties had performed a similar contract, (ii) trade custom supplied the missing details, and (iii) the price could be determined by reference to the seller's posted list. Lord Tomlin stated that 'the problem is to be solved by reference to the circumstances of the case' and that the court should seek to validate rather than destroy bargains.
Scammell v Ouston [1941] AC 251
Here the House of Lords found fatal uncertainty and declined to imply terms. The parties agreed to purchase a van 'on hire purchase', but left all terms (deposit, instalments, duration, interest) unspecified. No previous course of dealing or custom could supply the detail. The House held the agreement void: 'on hire purchase' was a generic label, not a sufficiently certain term, and the court would not write the contract for the parties. The case illustrates the outer limit of the Hillas principle.
Merritt v Merritt [1970] 1 WLR 1211
The Court of Appeal held that the domestic presumption against intention is rebutted when spouses have separated. Mr and Mrs Merritt, having separated, agreed in writing that Mr Merritt would transfer the matrimonial home to his wife once she had paid off the mortgage. Lord Denning MR distinguished Balfour v Balfour: 'once the parties are not living in amity... the situation is entirely different.' The written, formal nature of the agreement and the separation rebutted the presumption.
Walford v Miles [1992] 2 AC 128
The House of Lords held that an agreement to negotiate in good faith is too uncertain to enforce. The parties had entered a 'lock-out' agreement whereby the defendants promised not to negotiate with third parties for two weeks, in return for the claimants' promise to provide a comfort letter from their bank. The claimants sought to imply a duty to negotiate in good faith. The House refused: such a duty is inherently uncertain (how long must one negotiate? on what terms?), and it is inconsistent with each party's right to pursue its own interests. The decision remains controversial but is binding authority that English law does not recognise a general duty of good faith in negotiation.
Edwards v Skyways Ltd [1964] 1 WLR 349
Megaw J held that an 'ex gratia' payment promised by an employer was nonetheless contractual. The defendant airline made redundancy payments described as 'ex gratia'. The court found that the commercial context raised a strong presumption of legal intention, and the phrase 'ex gratia' (meaning, literally, 'as a favour') was insufficient to rebut it. The case is authority that labels are not determinative; the court looks to the substance and context of the agreement.