Contract Law Tutorial 1 Reading O'Sullivan & Hilliard Chapters 1,2,4 Chapter 1 Classic contractual theory Classical contract theory has 3 related threads: (i) contract is a bargain meaning it is an exchange of promises; (ii) contracts are the will of the parties and it is their intention to 'bind' themselves; (iii) freedom of contract and everyone has to decide whether they want to contract or not. (i) Challenged due to unilateral contracts where the contract is conditional as to the offeree executing the terms and is not bound to having to execute the terms; also many bilateral contracts are done instantaneously so the promise to perform is not seen; where a person acquires a car on hire purchase or books a holiday it fundamentally does not look like a contract. (ii) Challenged due to the printed standard form and 'implied terms' in contracts which parties may not be aware of. 'meeting of the minds' challenged as a parties' intentions judged objectively and not subjectively. (iii) Absolute freedom of contract does not exist due to rules about illegal contracts and contractual incapacity. Freedom to make a contract is restricted e.g. tenants and obtaining a new lease and practical pressures such as a phone contract. Outlaw of discrimination affects freedom of whom to make a contract with. Freedom to choose contents of a contract is restricted by acts. Individualist ethos and clear legal rules Two features of contract law: individualist ethos and the commercial importance of clear, 'bright-line' legal rules. Individualist ethic means that parties are expected to look after their own interests and there is nothing that prevents 'abuse' or a party pulling out of negotiations at the last minute. There is no doctrine of good faith. Critics argue that it may be in the parties' interests to act in good faith to benefit them in the long term e.g. better relationship with the parties may lead to goods being sold at lower prices. Idea of 'good faith' is very hard to apply. Enforcing good faith may involve rules where a party must disclose all material information which would mean that the better prepared and more knowledgeable party loses their advantage in negotiations. Clear legal rules in contract are evident despite leading to harsh decisions in some cases. Commercial parties need to know where they stand. Chapter 2 Traditionally, an offer and acceptance is an indication of one party's willingness to enter into a contract - it displays the intentions of the parties. In many contracts offer and acceptance does not happen and may be outdated since everyday tasks e.g. buying an item from the supermarket does not involve two parties coming to an agreement. Also, complications with complex, multilateral contracts e.g. Satanita. When a contract is made is done objectively i.e. not always what the parties actually intended but what they appeared to be.
Imply terms into a contract. E.g. Selling a car would involve it to function to a satisfactory level. If we strictly used the offer and acceptance