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Statement 1: The intention of the parties is naturally to be known from the terms of the agreement and the surrounding circumstance. Statement 2: It is for the court in each case to find out if the…

Question and options

Statement 1: The intention of the parties is naturally to be known from the terms of the agreement and the surrounding circumstance.
Statement 2: It is for the court in each case to find out if the parties intended to enter into legal obligations.
Statement 3: The test of contractual intention is objective, not subjective.
  1. Statements 1 and 3 are correct
  2. Statements 2 and 3 are correct
  3. Statements 1, 2 and 3 are correct
  4. Statements 1, 2 and 3 are wrong

Answer and explanation

Correct answer: C - Statements 1, 2 and 3 are correct
All three are accepted principles: intention is gathered from the terms and surrounding circumstances, the court decides in each case whether legal relations were intended, and the test is objective (Balfour v Balfour, Rose and Frank).

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