Rose and Frank v. J.R. Crompton and Brothers Ltd.
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Rose and Frank Co. v J.R. Crompton & Bros Ltd [1923] 2 KB 261; [1925] AC 445 is a leading decision on English contract law.
[edit] Background
Two business men signed an agreement regarding the production and sale of carbon paper. The agreement included the clause:
This arrangement is not entered into, nor is this memorandum written, as a formal or legal agreement ... but it is only a definite expression and record of the purpose and intention of the ... parties concerned to which they each honourably pledge themselves with the fullest confidence, based upon past business with each other, that it will be carried through by each of the ... parties with mutual loyalty and friendly co-operation.
The relationship between the two parties broke down and one of the parties broke the agreement. Rose and Frank Co. sued on enforcement of the agreement.
[edit] Decision of the Court of Appeal
The Court held that there was no legal contract. The clause had the effect of negating any other objective evidence of intention to create legal relations. Justice Vaisey, writing for the Court, reasoned that it was a gentlemen's agreement, "which is not an agreement entered into between two persons, neither of whom is a gentleman, with each expecting the other to be strictly bound, while he himself has no intention of being bound at all."
He further stated that parties are capable of forming an agreement that does not give rise to legal relations. "The reason of this is that the parties do not intend that their agreement shall give rise to legal relations. This intention may be implied from the subject matter of the agreement, but it may also be expressed by the parties. In social and family relations such an intention is readily implied, while in business matters the opposite result would ordinarily follow."
