A treaty is a legally binding agreement. Once an offer has been accepted, there is an agreement, but not necessarily a contract. The element that turns any agreement into a real treaty is “the intention to create legal relations”. It is necessary to demonstrate that the parties envisaged that the agreement would be subject to contract law. If evidence of intent is found, the agreement creates legal obligations that allow for the prosecution of any party who initiates an offence. In its simplest form, the intention to create legal relationships means that the parties intend to enter into a legally binding agreement in which the rights and obligations arising from the agreement are applicable. As simple as it may seem, the question of whether the parties to the negotiations intended to create legal relations is extremely sensitive to the facts. It is relatively certain that representatives of a company who meet in a formal business scenario to negotiate a contract intend to create legal relationships. But what about two people discussing a joint venture over a drink in a bar? This is precisely the question that was put to the court in Blue v Ashley [2017] EWHC 1928. Generally speaking, agreements concluded in a commercial context assume that the parties concerned intend to establish legal relations.
Although assumptions are no longer used, the parties generally do not intend to create legal relations in most national or social agreements, at least if the agreement is concluded while relations are harmonious. It was inconsistent between the parties that the pub meeting was an informal social setting. Mr. Blue argued that Mr. Ashley had nevertheless made him an offer to be bound by legal relations and that Mr. Blue had accepted that offer. The burden of proving that there is no intent rests with the party claiming that no legal effect was foreseen and that the burden is heavy (Edwards v Skyways, Kingswood v Anderson and Barbudev v Eurocom Cable). This type of agreement can be refuted if there is evidence to the contrary.
The defendant must prove to the court that there was no intention to establish legal relationships or the agreement must explicitly state that there is no intention to be legally bound. The intention to create legal relationships is often overlooked, but this case shows how this principle can sometimes be decisive for the applicability of a treaty. When it comes to an agreement, the parties normally intend to be legally binding….