What Is Intention in a Contract – A Brief Guide
A contract is a legally binding agreement between two or more parties. To be valid, a contract must contain certain elements, including an offer, acceptance, consideration, and intention. In this article, we will explore what intention means in a contract and why it is an essential element of any legally binding agreement.
What Is Intention?
Intention is the mental state of the parties to a contract, which indicates that they are serious about entering into a legally binding agreement. In other words, it is the intent of the parties to create legal relations. The intention can be express or implied, depending on the circumstances surrounding the agreement.
Express intention refers to the explicit statement of the parties to the contract that they intend to create legal relations. For example, a contract between two companies may start with a clause that states, `This agreement is intended to create legal relations between the parties.`
Implied intention, on the other hand, is inferred from the conduct of the parties and the nature of the agreement. If the parties` conduct suggests that they intend to enter into a legally binding agreement, the courts will infer an intention to be bound, even if there is no express statement to that effect.
Why Is Intention Important in a Contract?
Intention is an essential element of a contract because it distinguishes a legally binding agreement from a social agreement. A social agreement is an informal understanding between two parties, which is not intended to create legal relations. For example, if two friends agree to meet for coffee, there is no intention to create legal relations.
On the other hand, a contract that involves a business transaction is intended to create legal relations. For example, if a person hires a contractor to renovate their home, there is an intention to create a legally binding relationship between the parties.
If there is no intention to create legal relations, there can be no contract. Therefore, intention is a crucial element of any legally binding agreement, and it must be present for the contract to be enforceable.
Conclusion
In conclusion, intention is a crucial element of any legally binding agreement. It indicates the parties` mental state, which demonstrates that they are serious about entering into a legally binding relationship. Intention can be express or implied, and it must be present for the contract to be enforceable. Therefore, it is essential to ensure that the intention is clear in any contract to avoid disputes and ensure that the agreement is legally binding.