Contract Law - Lecture 1 A contract is a voluntary agreement which is legally binding. Agreement contract- sales of goods (car), supply of services (courier), hire of goods (a van), credit agreement (phones, bank loan), employment (your part time job) etc. Contract law establishes rules and principles regarding: · Formation of contracts · Enforceability of contracts . Contents of contracts · Setting aside of contracts . Frustration of contracts · Performance of contracts · Breach of contracts · Remedies Role on contract law: Enforcing promises, regulating the market, facilitating exchanges . It informs parties of what they are expected to do regarding a contract . It specifies the interpretation of the contents of a contract . It clarifies what will happen if the contract is not performed · It encourages performance by establishing remedies in cases of breach Puts people in the condition they would have been if the contract has been fulfilled/before they suffered a loss due to the contract. Development of Contract Law · The general principles of contract law were developed mainly through common law, derived from precedent. · However, there has been statutory interventions at different stages · Also, we have legislation that covers particular types of contracts, example employment contracts Freedom of contract Ideology/classical theory . Suggests that parties are free to enter into a contract and free to determine the terms · Based on an 'exchange' of promises . Each transaction is viewed as 'discreet' . The role of the court is that of 'umpire' or 'arbiter' . Contractual obligations are based on what the parties 'agreed' at the time of the contract . This 'will theory' is linked to the freedom of contract theory
How this theory came about . Reflective of the dominance in the 19th century of laissez-faire economic attitudes . As a results of increasing commercialisation, the thinking was to enable wealth creation by allowing business people to regulate themselves . The courts only intervened to settle disputes Modification of the freedom of contract ideology . Recognition of the fact that parties may be of unequal bargaining power · Weaker parties (e.g. consumers) may need protection · Statutory intervention - Sales of goods act 1893 . Expansion of consumer protection legislation in the 2ffth and 21st century Current position · Freedom of contract concepts are still prevalent in commercial contracts · Consumer contracts are subject to tighter regulation Common law and equity . The common law was a body of principles which were interpreted strictly . Where the results reached by common law was 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 1875 fused the administration of both bodies of law · Principles of equity play a significant role in contract law Recommended books: JC's smiths the law of contract Contract