Merritt v Merritt [1970] 1 WLR 1211 serves as the primary authority for rebutting the presumption against intention to create legal relations in domestic agreements. It establishes that when spouses are separated and bargaining at arm’s length, their arrangements are generally intended to be legally binding.

Facts of the Case

A husband left his wife to live with another woman. He signed a written agreement promising to pay the wife £40 a month. Furthermore, the agreement stated that if the wife finished repaying the mortgage on their jointly owned matrimonial home, he would transfer the property into her sole ownership. After the wife completed the mortgage payments, the husband refused to transfer the house.

Legal Issues

The central issue was whether this arrangement was a legally enforceable contract or merely a domestic arrangement lacking intention to create legal relations. Under the rule in Balfour v Balfour, agreements between spouses are initially presumed not to be legally binding. The court had to determine if the facts of this case were sufficient to rebut that presumption.

Judgement

The Court of Appeal ruled in favour of the wife, finding that a binding contract existed. The court reasoned that:

  • Because the couple was already separated at the time of the agreement, they were not living in “amity” but were bargaining at arm’s length.
  • In such a state of separation, parties do not rely on “honourable understandings” but rather intend their arrangements to have legal effect.
  • The fact that they recorded the agreement in writing further evidenced their intent to leave nothing to chance.

Authority and Significance

This case is a landmark for defining the limits of the domestic presumption in contract law.

  • Contextual rebuttal: it demonstrates that the presumption against legal intent in social and domestic settings is rebuttable based on the specific circumstances of the parties.
  • Arm’s length bargaining: it establishes that once a relationship has broken down, the policy reasons for excluding the law from the domestic sphere (as seen in Balfour) no longer apply.
  • Formalities: while contract law generally does not require writing, the presence of a written document in a domestic setting is a strong indicator of a serious intention to be legally bound.