The Role of Intention in Contract Law: Mere Promise vs. Legal Obligation

“All promises are not contracts — but all contracts begin with a promise.” 

This simple distinction lies at the heart of contract law. One of the key elements that determines whether a promise becomes a legally binding contract is intention — specifically, the intention to create legal relations. 

But what exactly does that mean? And how does the law draw the line between casual promises and enforceable agreements?

1. The Importance of Intention in Contract Law

For any agreement to be legally enforceable, it must have offer, acceptance, consideration, and intention to create legal obligations. Without this final ingredient, the arrangement remains a mere social or moral commitment.

The law doesn't want to interfere in every dinner plan, birthday promise, or friendly handshake. That's why intention to be legally bound is essential — it helps filter out casual commitments from contracts enforceable in a court of law.

2. Mere Promises: Social and Domestic Agreements

Imagine this: A mother promises her daughter a gift if she scores well in exams. The daughter does, but the mother changes her mind.

Is the daughter entitled to sue?

Probably not. Courts usually presume that agreements made in social or domestic contexts lack the intention to create legal relations. These are mere promises, based on trust, not law.

This principle was confirmed in the case of Balfour v. Balfour (1919), where a husband’s promise to pay his wife a monthly allowance wasn’t enforceable — because the court saw it as a domestic arrangement, not a contractual one.

3. Legal Obligation: Commercial and Business Agreements

Contrast that with business settings. If two companies sign an agreement about product delivery, it’s assumed they intend legal consequences.

In commercial contexts, the courts generally presume that the parties do intend to be legally bound — unless there's evidence to the contrary (like a clause stating “this is not a legally binding agreement”).

The case of Esso Petroleum Co Ltd v Commissioners of Customs and Excise (1976) emphasized this: the court ruled that commercial dealings carry a presumption of legal enforceability.

4. When Does a Promise Become a Contract?

So, how do you know when a promise crosses the line into contract territory?

✅ Clarity and specificity

✅ Presence of consideration (something in return)

✅ Formal documentation or conduct suggesting a business arrangement 

✅ Context — social vs commercial

If all these factors are aligned, and both parties intended legal consequences, the promise becomes a binding contract.

5. Real-World Implications

Whether you’re an entrepreneur drafting deals, a freelancer agreeing on project terms, or a consumer relying on verbal assurances — understanding intention is crucial. A handshake and a smile might seem enough, but without the legal intention, you're on shaky ground.

Pro tip: Always clarify expectations in writing, especially in professional settings. A simple clause like “Both parties agree to be legally bound by this agreement” can save a lot of trouble later.

Conclusion

The line between a friendly promise and a legally binding agreement is not always clear — but intention is the deciding factor. While social promises rely on goodwill, legal contracts rely on enforceable terms.

In short: not all promises are contracts, but all contracts need the promise to be serious.

Next time you make or accept a promise, ask yourself: Do we both intend for this to be legally binding?

If yes, it’s time to call it what it is — a contract.

Want to dive deeper into contract law or draft an enforceable agreement? 📩 Contact our legal team today for clear, actionable advice. Visit Us- https://www.dcorpo.legal/