Legal Updates

In a gift agreement the examination of the contractual intent requirement must be more rigorous and at a higher level

January 17, 2022

An elderly woman transferred, without consideration, the rights to her apartment to a non-profit organization, but later sought to cancel the gift and receive back the rights in the apartment.

The Court voided the gift transaction and returned the rights in the apartment to the elderly woman. A gift transaction, similar to a contract, is entered into by way of an offer and an acceptance, whereby the offer and the acceptance must meet the cumulative requirements of intent and specificity. Intent is examined by an objective external test which checks whether a reasonable person would have concluded the existence of a binding agreement and in fact views the totality of the circumstances of the case to find external indications which may point to the intention of each party to enter into the agreement. In the case of a gift transaction, and because it is primarily a one-sided transaction, the recipient's reliance interest diminishes in the face of the need to express the grantor’s desire and a higher level of intent is therefor required to ensure that the gift is given knowingly and freely. Here, the elderly woman did not properly understand that it was a gift agreement but thought that it was a will that could be amended at any time thereafter, similar to wills she had made and amended in the past. Therefore, she lacked the intent required to enter into a gift agreement and the gift agreement must be voided and her rights to the apartment restored.