Intention to create legal relations between spouses who have separated (Merritt v Merritt)

Agreements between spouses living together in amity are ordinarily not intended to create legal relations (Balfour v Balfour). In Merritt v Merritt the Court of Appeal held that this is altogether different where the parties are separated or about to separate: they then bargain keenly and do not rely on honourable understandings, and Lord Denning MR said it may safely be presumed that they intend to create legal relations. The court asks objectively whether reasonable people would regard the agreement as intended to be binding, rather than looking into the parties' minds. Daniel and Rosa had separated, discussed the arrangement at length and recorded it in a signed note. Rosa provided consideration by paying off the car loan. The agreement is therefore legally binding.

Why A is wrong: Merritt v Merritt holds that the domestic presumption does not apply once spouses have separated or are about to separate.

Why B is wrong: Rosa's payment of the loan, which Daniel requested in return for his promise, is good consideration, as the wife's mortgage payments were in Merritt.

Why C is wrong: There is no rule that contracts between spouses must be made by deed; Merritt enforced a signed note.

Why D is wrong: Intention is judged objectively by what reasonable people would conclude, not by the promisor's private state of mind.