#3107 - Introduction - GDL Contract Law

- Historical development of contract law.

• originally: only debt of specific sum enforceable in courts.

• by 1602: Slade’s Case – assumpsit (‘he promised’) a general form of claim.

• by end of 18C: general legal framework

• 19C: development – growth in response to social + commercial demands.

  • post-industrial rev: most rapid growth – laissez-faire approach.

    • e.g. Printing & Numerical Registering Co v Sampson [1874-5]: ‘contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by the Courts of Justice’.

• today: principle of freedom of contract still, but with more paternalism/interventionism – courts concerned about unequal bargaining power.

- Simple contracts: vast majority (vs. speciality contracts).

• agreement: reached or deemed to be reached by parties.

• rights + obligations: arise from agreement.

• (some contractual relationships – specific rules: e.g. employment + consumer contracts).

- Essential elements: ‘C.I.A.’.

• 1. Agreement: consists of clear offer (by offeror) + acceptance (by offeree).

• 2. Intention to create legal relations + capacity (i.e. must be capable of making a contract).

• 3. Consideration: anything of value promised to another mutual exchange of consideration needed for binding contract.

- Manner of agreement: any possible as long as parties in communication.

• writing

• word of mouth

• inference: from conduct of parties + circumstances of case

• or: any combination of above.

- The test of agreement: intention of parties paramount.

• test needed: courts decide disputes.

  • (a) whether agreement was reached at all; or

  • (b) terms of agreement: only if existence of contract established.

• principles of dispute settlement: large function of contract law.

- Intention and agreement.

• evidence of intention: express terms + conduct.

• objective test: Smith v Hughes [1870-71] – ‘reasonable man’: to avoid abuse.

  • but: subjective intentions sometimes considered:

    • Hatrog v Colin & Shields [1939]: offeror made clear mistake in terms of contract (price per pound instead of per piece) + offeree aware.

    • offeree cannot “snap up” offer which he knows/should reasonably know was made in error.

• disputes: court can impose implied terms to effect presumed intention of parties.

- Offer and acceptance: usual analysis to determine whether agreement reached.

• bilateral contract: 1 party accepts firm offer of another.

• unilateral contract: offer/proposal in terms which call for an act to be performed by 1 or more other parties.

- Rights and obligations: arise where binding contract made.

• correlative: each party’s obligation correlates to the other’s right.

- Breach of contract: a party neglects or refuses to honour a contractual obligation.

• right of action: accrues to other party on breach.

• remedies:

  • damages (by right): money to put aggrieved party in position he would have been in if contract not breached.

  • specific performance (court discretion): contract-breaker must carry out contractual promise – never awarded where damages suffice.

- Form: no general requirement in English law – binding promise est’d by consideration

… BUT: special requirements for some specific kinds of contract.

• reason: written evidence disputes less likely + safeguards vulnerable party.

• 1. contracts under seal: ‘specialities’ – most formal.

• 2. execution of a deed: common law requirement – had to be under seal.

  • s1(1)(b) Law of Property (Miscellaneous Provisions) Act 1989 s1(1)(b) – no longer a requirement; + no longer a requirement for companies incorporated under Companies Acts.

  • companies not incorporated under Companies Act: still need to seal...