Merritt v Merritt
Court of Appeal
Citations:  1 WLR 1211;  2 All ER 760; (1970) 114 SJ 455;  CLY 1226.
A married couple built a house in 1949, funded with a mortgage and registered in the husband’s name. They later agreed that the husband would transfer the house into their joint names. However, before this occurred, the husband deserted his wife to live with another woman.
Afterwards, the husband agreed to pay the wife £40 a month, out of which she would pay the amount outstanding on the mortgage (£180). She insisted that he sign a document stating that in consideration of her paying the mortgage until it was paid off, he agreed to transfer sole ownership of the house to her. The wife paid off the mortgage, at which point the husband reduced his maintenance payments to £25 a month.
The wife attempted to enforce the agreement to transfer the house, arguing that a contract had arisen. The husband denied this. He argued that the parties did not intend to be legally bound due to the domestic nature of their relationship.
- Did the parties intend to be legally bound by the agreement to transfer the house?
The Court of Appeal held in favour of the wife. There was sufficient evidence that the parties intended to be legally bound on the facts.
This Case is Authority For…
The test for the existence of intention to be legally bound is whether a reasonable bystander would think that the parties intended to be legally bound by the agreement.
The presumption against intention to be legally bound does not apply where a husband and wife have separated. However, there is no presumption in favour of such intention (as there is in commercial arrangements).
The existence of a written or formal agreement is evidence that the parties intended to be bound by an arrangement.