Facts
- The Parkers (a younger couple) and the Clarks (an older couple; Mrs. Parker being Mrs. Clark’s niece) entered into an agreement whereby the Parkers would sell their house and move in with the Clarks.
- The Clarks promised the Parkers, Mrs. Parker's sister, and her daughter a share in their property to be left to them via their wills, and that the Parkers would share household expenses.
- The terms were clearly communicated in a letter from Mr. Clark to Mr. Parker, specifying the expense-sharing arrangement and the promise about the will.
- The Parkers sold their house and moved in with the Clarks, acting upon the agreement.
- The relationship deteriorated over time, leading to the Clarks asking the Parkers to leave the residence.
- The Parkers sued the Clarks for breach of contract, claiming the agreement was legally binding.
Issues
- Whether an agreement between family members in a domestic context can give rise to legally binding obligations.
- Whether the conduct and written commitments between the parties demonstrated a sufficient intention to create legal relations.
- Whether detrimental reliance by the Parkers (selling their house and moving in) established the presence of contractual intent.
Decision
- The court found that the agreement between the Parkers and the Clarks did constitute a legally binding contract.
- Mr. Clark’s letter was considered strong evidence of explicit terms and intent, going beyond a mere domestic or social understanding.
- The Parkers’ act of selling their house in reliance on the Clarks’ promises was a critical factor, evidencing an understanding by both parties of legal consequences.
- The presumption against an intention to create legal relations in family agreements was rebutted by the specific facts and the objective evidence of reliance and commitment.
- Judgment was given in favour of the Parkers.
Legal Principles
- Agreements between family members are generally presumed not to be legally binding, but this presumption can be rebutted by clear evidence of intention and conduct.
- Detrimental reliance (where a party changes their position to their detriment based on a promise) is persuasive evidence that an agreement was meant to have legal effect.
- Written correspondence and explicit promises can demonstrate sufficient seriousness to overcome the assumption of a mere social or domestic arrangement.
- The courts assess intention to create legal relations objectively, considering the context and actions of the parties rather than their subjective beliefs.
- Parker v Clark stands as authority that domestic agreements may be enforceable where compelling objective evidence shows intent to contract.
Conclusion
Parker v Clark established that domestic or familial agreements can be legally binding when there is clear objective evidence of intent to create legal relations, especially where one party has relied to their detriment on explicit written promises. The case illustrates that the courts evaluate such matters based on the specific facts, and that reliance and documentary evidence can override presumptions against enforceability in family contexts.
