There may be situations where, despite the identification of an agreement and consideration, the courts feel that an agreement should not be enforced because the parties did not intend that it should create legal relations. The main approach is based on two presumptions:
If the agreement is a ‘domestic’ agreement, the courts will presume that it is not intended to be legally binding. It will be up to the party wishing to enforce to overturn that presumption.
If the agreement is ‘commercial’, the courts will presume that it is intended to be legally binding. It will be up to the party wishing to escape from the agreement to prove that the presumption should be overturned.144The most frequent issues relate to the categorisation of the agreement (as domestic or commercial), and the evidence that is necessary to overturn the presumption.