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Ford Motor Co v Amalgamated Union of Engineering and Foundry Workers  2 QB 303
Collective agreements and the intention to create legal relations.
Ford Motors and trade unions reached collective agreements concerning employment conditions, signed by their representatives. When a union strike took place concerning the conditions the company brought an action for an injunction pursuant to the agreements, attesting the collective agreements to be legally binding. The unions argued that no legally enforceable contract resulted from the collective agreements.
The question arose as to whether the parties intended the collective agreements between the company and the unions to form a legally binding contract.
As a point of law, the Court reiterated that when agreements are reached in a commercial context, the presumption is that the parties intended for the agreement to be legally binding, unless an express provision declares otherwise. However, the Court held that, even though they are concluded in a commercial environment, in the case of collective agreements, where there is no express provision, it is necessary to examine the context and surrounding circumstances, in order to ascertain the intention of the parties to be legally bound. The relevant circumstances include the wording of the agreements, their nature, the background in which they were reached, the knowledge and opinions of parties’ representatives, and other facts that show the parties’ intentions that the agreements are binding in law. On the facts, the agreements did not contain express provisions concerning their binding effect, and the Court held that the commercial context of the agreements is outweighed by their wording and nature, as well as the parties’ voiced opinions. Examining a range of factors, the Court concluded that the collective agreements primarily constituted the parties’ optimistic aspirations and did not contemplate legal enforceability. Thus, the Parties did not have the intention to make the collective agreements binding at law.
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