Explain why it is important to have the intention to create legal relations when entering into a contract and why is consideration of the parties to the agreement necessary : The intention to create legal relations can be defined as follows. “An agreement will only become a legally binding contract if the parties so wish. This will be strongly presumed in the case of commercial agreements but otherwise presumed if the agreement is of a friendly, social or domestic nature. Source (HNC Unit 5 Business Law Course Book) In determining whether the parties intend their agreements to be legally binding, the court is guided by two presumptions. The parties to a domestic or social agreement do not intend to be legally bound. The parties to a business agreement intend to be legally bound. These are only presumptions and can be refuted by sufficient evidence to the contrary. Domestic and Social Agreements Balfour v Balfour (1919) Merritt v Merritt (1976) Simpkins v Country (1955) Commercial Agreements Jones v Vemons Pools (1938) Source (HNC Business Law Notes) One of the essential elements in creating a binding contract , this intention is implied by the fact that it is not expressly denied. If expressly disclaimed (as in what is called a Gentlemen's Agreement), the contract may not be enforceable. Consideration {text:bookmark-start} {text:bookmark-end} If you review a legal agreement or contract, you will usually see a sentence in the opening paragraph stating that the parties agree on a sum of money or "other property and valuable consideration." The concept of consideration has a long history in law, but simply means something of value. An exchange of consideration between parties to an agreement is necessary middle of paper..... . people are vulnerable by dependence and deserve the protection of the state against the risk of abuse or exploitation. Therefore, any agreements made are voidable and a court can declare that person a ward of the state and grant a. power of attorney to a designated legal guardian (in England and Wales this is a specific function of the Court of Protection (www. Wikipedia.com) Drunkenness/drug abuse Section 3 of the Law of Protection). Sale of Goods Act 1979 provides that they are required to pay a reasonable price for basic necessities, in the same manner as minors. Other types of contracts are governed by common law. If a person is drunk at the time of entering into the contract, they will be able to escape their responsibilities if they can demonstrate that they did not understand the content of the contract and that the other person was aware of it. Source (business law Denis Keenan and Sarah Riches)