CONTRACT LAW - LECTURE 1 - 24/09/19 - Contract = a voluntary agreement which is legally binding. - Simple and complex contracts are governed by the same principles. - Contract law is in all aspects of everyday life. Types: - Contract of sales of goods - Contract of supply and services - Contract of hire of goods - Contract of credit agreement - Contract of employment Contract law establishes rules and principles regarding: - Formation of contracts - Enforcement of contracts - Contents of contracts - Setting aside of contracts - Frustration of contracts - Performance of contracts - Breach of contracts - Remedies Roles of contract law: - Enforcing promises - Regulating the market - Facilitating exchanges - Informs parties of what they are expected to do regarding the contract - It specifies the interpretation of the contents of the contract - It will clarify what will happen if the contract is not performed - It encourages performance by establishing remedies in cases of breach - Creates stability by providing information Development of contract law: - Developed primarily through common law (rules and principles passed down by precedent through generations, from 1700's) - However, there has been statutory interventions at different stages - Also, we have legislation that cover particular types of contracts, for example employment contracts Freedom of contract/Classical theory: - Based on an 'exchange of promises'
- Each transaction is viewed as 'discreet' - The role of the court is as an 'umpire' or 'arbiter' - Contractual obligations are based on what the parties 'agreed' at the same time of the contract Freedom of contract - Reflective of the dominance in the 19th century of laissez-faire economic attitudes - As a result of increasing commercialisation, the thinking was to enable the wealth creation by allowing businesspeople to regulate themselves. - The courts only intervened to settle disputes. - Parties were free to enter the contract and free to decide the terms of the contract. Modification of the Freedom of contract ideology - Recognition of the fact that parties may be of unequal bargaining power. - Weaker parties (consumers) may need protection - Statutory intervention (Sale of Goods Act 1993) - Expansion of consumer protection legislation in the 20th and 21st century. Current Position - Freedom of contract concepts are still prevalent in commercial contracts - Consumer contracts are subject to tighter regulation - Recognises the amount of 'freedom' within a contract Common Law and Equity - Common law = body of principles which were interpreted strictly by courts of law - When results reached by common law were harsh, it was possible to petition the King, and later, the Lord Chancellor, to provide a remedy using their discretion - The court of chancery dealt with these petitions and the law that was applied here became known as equity - The Judicature Acts of 1873 and 187fi fused the admin of both bodies of law - Principles of equity play a significant role in contract law