Title: Contract Law: fulfilling the reasonable expectations of honest men Authors: Johan Steyn Subject/keywords: Contracts, the reasonable man, privity, consideration, international commerce Key arguments: · the reasonable expectations of honest men is an obsolete premise, as it is wholly subjective and requires a completely neutral judge o it only satisfies a hypothetical, and synthetic, expectation of a bystander which is pre- prescribed by the courts . it is implicit when parties agree to a contract and sign it that they are subject to their own expectations which they deem as reasonable . the meaning of 'reasonable' is now more concerned with the context of the contract and what both parties intended when entering into said agreement · the reasonableness of a contract in relation to the parties subject to it are sometimes not of substantive importance, if a matter of policy is in opposition to the mere existence of the contract · some contracts are not made on a linear timeline and therefore it is not always clear what the expectations of the parties are (e.g. building contractors) and therefore it cannot be decided if they are reasonable in the circumstance · privity of contract contradicts the reasonable man rationale, e.g. in consumer-retailer-manufacturer relationships o warranty is reasonable in the circumstance but it would not be recognised by the court as proper consideration or contract etiquette due to it benefitting a third party o decision in Dunlop Pneumatic Tyre Co. Ltd v Selfridge Co. Ltd is inconsistent with the primary function of the law of contract to facilitate commercial dealings o ignores that many contracts are formed for the benefit of a third party and in international commerce benefits are relayed to third parties or come from someone other than the promisee o Law Commission (Law Com. No 242, Cm. 3329 (1996)) has called for statutory revision of the privity rule but only as a starting point and not constructed in such a way that prevents the courts from developing the rule o development of the law surrounding privity should only happen when a situation calls for such o courts are now much more lenient on privity and consideration in favour of practical justice and the needs of modern commerce . CoA held that parties are bound by their promise since consideration is present in the form of practical benefit 'is it not arguably a decision contrary to good faith and the reasonable expectations of the parties?' (to restrict agreements that benefit third parties if they are entered into in good faith) · the concept of good faith is being rejected by many lawyers despite it being prevalent in international commerce, despite it being analogous with reasonableness, due to the malleable nature of the term o there is a requirement that parties must act honestly, and this is not something to be apposed to o Walford v Miles (2 A.C. 128 p. 138E 1992) held that agreements made in 'good faith'
would not be recognised nor upheld in the English