What makes a gift valid?

The validity of gifts is governed by contract law. Most often, gifts are made in circumstances where both the person making the gift (the donor) and the person receiving the gift (the donee) are happy with the giving and the receiving of the gift. Such gifts may take the form of a large sum of money, an item worth a significant amount, or an item of sentimental value or significance. But what happens where the donor later disputes the validity of the gift and wants it back?

What constitutes a valid gift in law?

In English law, for a gift to be valid, three elements are required:

1. A voluntary intention on the part of the donor to make the gift to the donee;
2. The delivery of the gift to the donee; and

1. The acceptance of the gift by the donee.

Disputes are most likely to be concerned with the first element – the voluntary intention of the donor to make the gift. Such scenarios can include the mistake or intoxication of the donor, or whether the gift was intended to be an absolute gift or a conditional gift.

When is a gift not valid?

Examples of a gift potentially being considered invalid could include:

Gift made in error

A donor of a gift may claim that it was gifted in error or by mistake. Examples may be where the donor has made the gift on the misunderstanding that there had been some action taken by the donee to merit such a gift, or simply where the donor has given the gift to the wrong person. In such cases, it is likely that the court would order the donee to return the gift.

Gift made whilst under the influence

What happens if the gift was given when the donor was under the influence of alcohol and the donor claims that they have no memory of giving the gift?

In the absence of other factors that can affect the validity of a contract (such as duress), the donor would only be able to reclaim the gift if they could show that there was no intention to make the gift, either as a matter of fact or because they were intoxicated to the point that they lacked mental capacity to have such intention. In reality, if the donor does not recall making the gift, they will have a considerable evidential problem. If there is no corroboratory evidence from a third party, the dispute may well come down to the donor’s (lack of) evidence against that of the donee.

In cases alleging intoxication, the courts have been seen to examine the intention to create legal relations (i.e. a contract).

In the case of Blue v Ashley [2017] EWHC 1928, the judge had to consider the existence of an intention to create legal relations on the part of entrepreneur Mike Ashley, who was alleged to have made a contract to provide a £15 million bonus to a contractor whilst having drinks at a bar. The judge concluded that while the intoxication was not definitive in this case, the informal setting, and the jocular nature of the conversation meant that it was unlikely that the parties intended to create a contract. He also noted that the original purpose of the meeting was not to discuss bonus arrangements, and that it made no commercial sense for Mr Ashley to have made the alleged offer as it would have been out of character for him to do so.

In the case of Aspinall’s Club Ltd v Mo [2023] EWHC 2036 (KB), a high-stakes gambler Lester Hui was held liable for £590,000 losses in Aspinall’s casino. When his losses reached £500,000, he requested a £300,000 extension to his line of credit and was granted £100,000. It was held that, despite his intoxication (he claimed that he was “blackout drunk”), there was an intention to create a contract, given that he had lost £400,000 on previous occasions and yet still driven his Bentley home.

Conditional or absolute gift?

A relevant consideration will be whether the gift was intended to be a conditional gift (conditional upon the occurrence of an event or situation) or an absolute one.

One common scenario is where a donor gives an engagement ring to the donee upon their engagement to be married. If that engagement is subsequently broken off, can the donor insist on the return of the ring? Much will depend on the donor’s intention at the time of giving the ring. If the gifting of the ring was intended to be absolute, and not conditional upon the wedding taking place, it is likely that the courts would not order the return of the ring to the donor. If, however, the ring was a family heirloom that had been passed down through generations, it is likely that the courts would find in favour of a donor who argued that the gifting of the ring was conditional upon the wedding going ahead. In this scenario, having a prenuptial agreement dealing with what should happen to engagement gifts would protect against such dispute.

If you have questions or concerns about the validity of a gift, please contact our Dispute Resolution team.