Advanced Contract Law Lecture 1 30/09/19
Introduction
A theoretical perspective of contract law
• A closed system of rules – to be applied and considered in a formal and mechanistic way; or
• An example of dynamic law and values imposing justice to achieve different theoretical aims
and objectives- shape and reconfigure certain issues, alter according to the needs of the
economy ‘organic’
= mismatch what our society needs
Theories at play- (For contract theories in semester 2)
• Classical view of law – freedom to contract, non-interventionist, economic efficiency
• Market-individualism prevails- at basis of classic view
• Formalistic and rule based
Criticisms of the formalistic approach – artificial and inflexible.
Growing away from laissez-faire
• A consumer-welfarism approach- influenced in case law to changing economic world
• Much more interventionist
• Imposing moral based standards onto the contractual rules the parties have adopted
• Criticisms – which standards? Are they sufficiently certain?
• Intervening views
• Realism– more flexible and interventionist
• Formalism v contextualism
• Facilitative v regulative
• Certainty v flexibility
Normative theories
Do not help to evaluate but help to explain
• Contract as promise
• Contract as reliance
• Contract as relations
• Lots of others
Terminology- brief reminder
‘Offeror’ - promisor
‘Offeree’ - promisee
Note: A contracting party can be the offeror for one contractual promise and the offeree for another
contractual promise
, Advanced Contract Law Lecture 1 30/09/19
Bilateral contracts
• A bilateral exchange of contractual obligations- works both ways
S->B
S<-B
• The buyer can sue the supplier if the supplier fails to meet their obligation to supply
• The supplier can sue the buyer if the buyer fails to meet their obligation to pay
Unilateral contracts
• A unilateral promise to be obliged only if the other performs (it is not a gratuitous promise)
EG. A dog owner promises a reward if a member of the public finds his lost dog
If a member of the public finds his dog, the finder may sue the dog owner for failing to
meet his obligation to pay if the search has been prompted by the unilateral offer.
There is no obligation on the public to perform. The dog owner cannot sue the member
of the public if they fail to find the dog
Why is formation important?
• Gives rise to legal implications – both negative and positive
• It is important to understand:
- is there a (valid) contract?
- who are the parties to the contract?
- where and when is the contract made?
- what are the terms?
Legal requirements of a contract
Offer & Acceptance
Consideration
Intention to create legal relations
Certainty
Capacity
In certain circumstances, formalities
The objective perspective
“If, whatever a man's real intention may be, he so conducts himself that a reasonable man would
believe that he was assenting to the terms proposed by the other party, and that other party upon
that belief enters into the contract with him, the man thus conducting himself would be equally
bound as if he had intended to agree to the other party's terms."
Smith v Hughes (1871) LR 6 QB 597
“In contracts you do not look into the actual intent of a man’s mind. You look at what he said and
did.”
Denning in Storer v Manchester City Council [1994] 1 WLR 1403 at p.1408
Introduction
A theoretical perspective of contract law
• A closed system of rules – to be applied and considered in a formal and mechanistic way; or
• An example of dynamic law and values imposing justice to achieve different theoretical aims
and objectives- shape and reconfigure certain issues, alter according to the needs of the
economy ‘organic’
= mismatch what our society needs
Theories at play- (For contract theories in semester 2)
• Classical view of law – freedom to contract, non-interventionist, economic efficiency
• Market-individualism prevails- at basis of classic view
• Formalistic and rule based
Criticisms of the formalistic approach – artificial and inflexible.
Growing away from laissez-faire
• A consumer-welfarism approach- influenced in case law to changing economic world
• Much more interventionist
• Imposing moral based standards onto the contractual rules the parties have adopted
• Criticisms – which standards? Are they sufficiently certain?
• Intervening views
• Realism– more flexible and interventionist
• Formalism v contextualism
• Facilitative v regulative
• Certainty v flexibility
Normative theories
Do not help to evaluate but help to explain
• Contract as promise
• Contract as reliance
• Contract as relations
• Lots of others
Terminology- brief reminder
‘Offeror’ - promisor
‘Offeree’ - promisee
Note: A contracting party can be the offeror for one contractual promise and the offeree for another
contractual promise
, Advanced Contract Law Lecture 1 30/09/19
Bilateral contracts
• A bilateral exchange of contractual obligations- works both ways
S->B
S<-B
• The buyer can sue the supplier if the supplier fails to meet their obligation to supply
• The supplier can sue the buyer if the buyer fails to meet their obligation to pay
Unilateral contracts
• A unilateral promise to be obliged only if the other performs (it is not a gratuitous promise)
EG. A dog owner promises a reward if a member of the public finds his lost dog
If a member of the public finds his dog, the finder may sue the dog owner for failing to
meet his obligation to pay if the search has been prompted by the unilateral offer.
There is no obligation on the public to perform. The dog owner cannot sue the member
of the public if they fail to find the dog
Why is formation important?
• Gives rise to legal implications – both negative and positive
• It is important to understand:
- is there a (valid) contract?
- who are the parties to the contract?
- where and when is the contract made?
- what are the terms?
Legal requirements of a contract
Offer & Acceptance
Consideration
Intention to create legal relations
Certainty
Capacity
In certain circumstances, formalities
The objective perspective
“If, whatever a man's real intention may be, he so conducts himself that a reasonable man would
believe that he was assenting to the terms proposed by the other party, and that other party upon
that belief enters into the contract with him, the man thus conducting himself would be equally
bound as if he had intended to agree to the other party's terms."
Smith v Hughes (1871) LR 6 QB 597
“In contracts you do not look into the actual intent of a man’s mind. You look at what he said and
did.”
Denning in Storer v Manchester City Council [1994] 1 WLR 1403 at p.1408
