Facts of the case:
Mr. and Mrs. Balfour were married. In Ceylon, Mr. Balfour worked as a civil engineer. Mr. Balfour and his wife had a holiday to England in 1915, but his wife became ill and her doctor informed her she couldn't return to Ceylon due to her arthritis. They decided that Mrs. Balfour would stay in England while Mr. Balfour would return to Ceylon. Mr. Balfour promised Mrs. Balfour that he would pay her $30 every month until he returned.

However, the marriage deteriorated and the husband stopped paying the payments. Mrs. Balfour, on the other hand, decided to seek enforcement of the agreement and went to court. In the year 1918, Mrs. Balfour filed a lawsuit in court against Mr. Balfour for failing to pay the sum owed to her.

Procedural History:
The contract was deemed to be binding by the lower court, which was presided over by Justice Sargant, an Additional Judge of King's Bench, who ruled in favour of the plaintiff (Mrs. Balfour), noting that the husband was obligated to financially support his wife, resulting in a legal contract. She obtained her decree nisi in July and an order for alimony in December. After then, the matter was appealed to the Court of Appeal.

Issue Raised:

1. Does Mr Balfour promise to pay £30 per month to Mrs. Balfour establish a valid contract which can be sued?
2. Do domestic agreements come under the scope of contract law?

Rule:
The rule here is whether an agreement between spouses is an enforceable contract or only a social agreement. The idea is clarified when we learn that Mrs. Balfour sued her husband not because he owed her a social obligation as her spouse, but because he failed to honour his commitment.The rule that applies to determine if an agreement is enforceable by law, we must examine whether it fulfills all of the following conditions:

• Offer & acceptance
• Intention to create legal obligation
• Consideration
• Competence of Parties
• Free consent

According to the idea of creating legal intentions, in order for a contract to exist, both parties involved must have the intention to engage into a legally binding contract and be willing to suffer legal penalties if either one of them fails to comply. The existence of legal connections between the parties is correctly verified by evaluating the conditions present at the moment of contract execution.

Analysis
The lower court bench, led by Justice Sargant J, ruled that Mrs. Balfour's consent was significant consideration to make this agreement an enforceable contract. Mrs Balfour filed a contract lawsuit, arguing that Mr Balfour owed maintenance not just because he married her, but because he had promised to do so. However this decision got reverserd. Mrs. Balfour won at first instance, but her case was unanimously overturned on appeal.

The Appellate Court bench of Warrington LJ, Duke LJ, and Atkin LJ found that the agreement between Mr. Balfour and Mrs. Balfour was not enforceable and that the two parties had no intention of establishing an enforceable contract.[1] This agreement is not contract because parties did not expect for their actions to be accompanied by legal repercussions.

Atkin LJ used the intention to form legal relations theory which holds that agreements or mutual promises between spouses or legally married couples, commonly known as domestic relationships, cannot become enforceable contracts because the courts would be swamped with petty cases and if such domestic agreements are accepted by a court of law, it will open the door to an endless number of lawsuits.

The agreement in question was not a formal contract, but rather a domestic commitment that could not be enforced in court. The three Justices focused primarily on the parties' husband and wife relationship, holding that a promise between the couple would not constitute a contract.

Conclusion
The overall conclusion of the case is that an agreement between spouses is not an enforceable contract and the Intention to create obligation is required to create a legal contract, which was found to be absent in the instance of Balfour v/s Balfour. According to the court of appeal, the agreement was primarily social and domestic in character, and it was presumed that the parties did not intend to be legally bound.

The purpose of a party to form a legal relationship is determined by evaluating the circumstances at the moment the contract is made. It makes no difference whether a promise is made or not; it is the party's responsibility to keep it to the best of their abilities. According to the domestic agreement, a commitment made inside the family does not become a contract until and unless both parties want to engage into a formal obligation.

We acquired a new perspective on contract validation from the case of Balfour vs. Balfour. A contract is binding and enforceable under common law only when the parties intend to create legal relations.

References:

1.  Book referred:
   Chapter, "Contracting in the Haven: Balfour and Balfour Revisited" by M.D.A. Freeman from the book Exploring the boundaries of Contracts by Roger Halson, 1996.
2. Databases: Lexis Nexis; JSTOR;
3. Hedley, S. (1985) Keeping contract in its place--Balfour v Balfour and the enforceability of informal agreements, Oxford journal of legal studies, 5(3), pp. 391–415.

End-Notes:

1. Stephen Hedley, Keeping Contract in Its Place--Balfour v Balfour and the Enforceability of Informal Agreements, Vol. 5, Oxford Journal of legal studies