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CELE SQE1 模拟练习

Examination Timing: 00H01M10S

Two companies, Alpha Ltd and Beta Ltd, began trading with Gamma Ltd under an agency agreement. The three companies entered into a comprehensive agreement concerning sales and purchases, which included a clause stating that the agreement was to be 'in honour' only and not legally enforceable.


Would this arrangement give rise to a binding contract?

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The arrangement would not create a binding contract due to the 'in honour' clause, which explicitly removes the intention to create legal relations, a necessary element for forming a valid contract. In Rose and Frank Co v JR Crompton & Bros Ltd [1925] AC 445, the House of Lords upheld that an agreement containing an 'honour clause' is not legally binding, as it clearly indicates that the parties did not intend to create legal relations. The explicit wording in the clause effectively rebutted the presumption of enforceability that typically applies to business agreements.


Key Point: In English contract law, parties can rebut the presumption that business agreements are intended to be legally binding by including clear and explicit wording in the agreement. Such clauses, often referred to as 'honour clauses,' demonstrate the parties' intention not to be legally bound, thus negating the formation of a binding contract.

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