Merritt v Merritt [1970] 1 WLR 1211

Facts

• Mr. and Mrs. Merritt, after separating, entered into a written agreement in which the husband promised to transfer the matrimonial home into the wife's sole name once she finished paying the mortgage.
• The couple was no longer cohabiting at the time of the agreement.
• The context of separation and the existence of a documented agreement distinguished this case from prior domestic arrangements where such agreements were typically unenforceable.

Issues

1. Whether an agreement between separated spouses regarding future property rights demonstrates an intention to create legal relations, rebutting the usual presumption in domestic arrangements.
2. Whether the written nature of the agreement between the Merritts was sufficient evidence of legal intent.
3. Whether reliance on the agreement by one party (the wife paying the mortgage) supports its enforceability.

Decision

• The court held that the presumption against legal intent in domestic arrangements did not apply because the Merritts were separated.
• The written agreement was evidence of their intention to create legal relations.
• The agreement was enforceable, and the husband was required to transfer the matrimonial home to the wife upon her completion of the mortgage payments.

Legal Principles

• There is a rebuttable presumption against an intention to create legal relations in domestic and social agreements, based on trust and mutual understanding, as established in Balfour v Balfour.
• The presumption does not apply where parties are separated or in the process of separation; in such cases, the courts are more likely to find contractual intent, particularly when the agreement is in writing.
• Reliance on the agreement (such as one party altering their position to their detriment) is a compelling indicator of legal intent and enforceability, as seen in Parker v Clarke and Tanner v Tanner.
• Commercial or business agreements carry a strong presumption of legal intent, but this can be rebutted by express terms such as “honourable pledge clauses” (Rose v Crompton Bros, Jones v Vernon Pools).
• The term “ex gratia” in a business context does not necessarily indicate an absence of legal intent (Edwards v Skyways).
• Vagueness in language can negate contractual intent (JH Milner v Percy Bilton).
• The existence of legal intent is assessed objectively based on circumstances, language, and conduct, not the parties’ subjective beliefs.

Conclusion

Merritt v Merritt established that a written agreement between separated spouses is presumed legally binding due to the context of separation and the clear objective intention as evidenced by the parties’ conduct, reinforcing the distinction between domestic agreements in ongoing relationships and those made amid separation.