 Hello, this is Waylon Chow. Welcome to this series on forming contracts. This video is part D on intention to form legal relations. Remember, there are three essential elements to form a contract. We will focus on the second element, which is an intention to create legal relations. Here are our friends, Ahmed and Sonya. They're doing some studying together at a cafe. You know, Ahmed says to Sonya, you've got sick laptop. I wish I had one like that and Sonya says, yeah I love it. I would never sell it and Ahmed says, okay, how about if I give you $10,000 for it and Sonya says, wow, I'll take that so the next day Sonya asked Ahmed to pay that $10,000 for the laptop Is Ahmed obligated to buy Sonya's laptop for $10,000? One of the essential requirements to form a legally binding contract is an intention to create legal relations So we're asking, did the parties intend to form a legally binding contract? So we're trying to figure out. What did they intend? We can't simply read the minds of the parties to determine their actual intent and We actually don't even try to figure out what the parties were actually thinking So instead we ask the reasonable person Specifically, in the particular situation, would a reasonable person believe that the parties intended to create a legally enforceable agreement? Or another or a different or a variation of that question is Was a binding agreement reasonably expected based on the circumstances? So just telling us to ask the reasonable person is not all that helpful. It doesn't give us any specific guidance on Determining whether or not there was intention The courts have provided some helpful guidance to help us determine whether or not There is intention to form legal relations One thing the courts have said is that a reasonable person ignores unrealistic and exaggerated proposals Courts have also said that political promises are not intended to be legally binding The courts have also provided us with a two-step process to determine intention The first step is to set a presumption The presumption depends on the particular type of context of situation if the situation was in a commercial context the parties are presumed to intend legal relations if The context was a family or social context then the parties are presumed to not intend To form legal relations. So once you set the appropriate presumption There is a second step to determine whether or not that presumption has been rebutted or confirmed Based on the actual facts or evidence of what happened We so we look at the actual things that happened in a particular fact situation And we ask ourselves are there facts that a reasonable person would see as indicating intent or lack of intent Do those do those facts rebut or confirm the presumption that we had set in step one and also Putting an agreement in writing and signing it is usually a clear indication of intention to create legal relations So is poor Ahmed obligated to pay ten thousand dollars to Sonia for her laptop The the issue here is whether or not Ahmed and Sonia had an intention to create a legally binding contract So we need to apply that two-step process to determine intention Firstly, we presume there was no such intention since the agreement was made in a social context While Ahmed and Sonia were meeting as friends studying together at the cafe Secondly so that second step that presumption is not rebutted by anything else that happened in particular The agreement for the sale of the laptop was not put into writing as well The exaggerated price of ten thousand dollars for the laptop confirms a lack of intention to form a binding contract So therefore we can conclude that there was no intention to form legal relations and Ahmed is not obligated to buy Sonia's laptop