An internal agreement between two people – usually in a family relationship – is an agreement that defines their rights and obligations. However, contrary to normal contractual conditions, it is considered, in domestic contractual cases, that there was no intention to enter into a legally binding agreement and that the courts are often reluctant to enforce it. The Court of Appeal ruled that their appeal should fail. Two members of the Tribunal focused their decision on the absence of any consideration on the part of the woman. Lord Atkin stressed, however, that these national rules, even if they are being considered, are clearly not legally binding by the parties. He used the example of the man who agreed to provide money for his wife in exchange for their « housekeeping and maintenance of the household and children. » If it is a contract, each could sue the other for non-compliance with the promised commitment. The woman had failed to enter into a contract and had not done so. The concept of a « national » agreement should be more related to the purpose than to the relationship between the parties. For example, if a woman agrees to sell her car to her brother for $1,500, there is little reason to deny contract status to that agreement and it must be considered binding unless there is evidence to the contrary.

« The parties [at Balfour vs. Balfour] lived together in Un DerUt. In such cases, their national rules are generally not intended to establish legal relationships. It is quite different if the parties do not live in Derity, but are separated or about to separate. They negotiate zealously. They do not rely on honourable agreements. Presumably, they intend to establish legal relationships. Balfour v Balfour [1919] 2 KB 571 is a leading English contract law case. He found that there is a rebuttable presumption against the intention to create a legally enforceable agreement if the agreement is internal in nature. The willingness of an innocent party to go to court to enforce a broken agreement should not be considered conclusive as to the intention to establish legal relations. There are many minor trade agreements for which the parties are unlikely to feel that it would be helpful to have the courts fix an offence. However, the parties clearly intend to create binding commitments. Moreover, even in the case of large commercial transactions, the parties often prefer to settle disputes in a manner that does not involve the use of lawyers.

This does not mean that they do not intend to make their agreements legally binding. The Court of Appeal unanimously held that there was no binding agreement, even though the depth of their argument was different. Warrington LJ first gave his opinion, the heart being part of this passage. [1] When an agreement is a trade agreement, the parties intend to conclude that it is legally binding. In such a case, it will be difficult to show anything else. Again, the intent review is objective. If the parties to a trade agreement do not provide for it to be binding, they can use so-called « honour clauses » to emphasize that the agreement is binding only in its honour, not in law.