What do we mean by "legal relations" in a contract?

The concept of "legal relations" in the context of a contract refers to the parties' intention to create enforceable obligations and rights. This means that when parties enter into a contract, they must intend for their agreement to have legal consequences, which allows either party to seek legal remedies if the terms of the contract are not adhered to. This intention is a fundamental principle of contract law, as it differentiates informal agreements from those that are legally binding.

In commercial contracting, establishing legal relations is crucial because it assures all parties that the commitments made are serious and subject to legal scrutiny. Without this intention, a contract would lack the enforceability needed to resolve disputes or uphold obligations if one party fails to comply with the agreed terms.