Contract Law Summary week 1
What is contract law and what are the sources?
Why Contract Law?
Contracts are defined as legally binding agreements, irrespective of whether they are written
down or not. Contract law is the set of rules and principles that governs transactions among
parties, thereby establishing those parties’ enforceable rights and obligations.
Contracts always occur, some are agreements, and some are contracts. Does it have to be
binding? No, they don’t have to be binding. Do they always need to have an obligation? No,
they don’t
A contract gives rise to obligations between the parties to the contract and the failure to
perform these obligations gives the right to a remedy.
A market economy, the development of it, as is now prevalent to almost the entire world
(not in north Korea) is based on the premise that people and companies should make their
own bargains based on voluntary exchange of goods and services.
Contract law ensures that these contracts are binding, enforced in the courts in case the
other party does not perform. This turns contract law into cement of modern society: it
enables market actors to participate in economic and social life. It allows planning by
individual members of society.
The society is changing, you will enter relationships outside your status, you can become
an economic actor. When those relationship become the fabric of our society, we need to
have a system that makes those relationships stable, important and binding. All of this
have a chilling effect on the society, on the economic, political society and we therefore
need a binding force, the contracts. Those will be enforced.
We need to have a system those relationships stable, binding, so that we can have an
economy that is stable and binding, we need to have a binding force, these forces are
contracts. Movement of statement was the birth of contracts. We need contracts because
we want a stable, economy, politic, society
Types of Contracts
Most rules and principles of contract law are designed to apply to any contract, regardless of
the type of party and which type of obligation the parties have. It does not matter whether
the contract concerns a purchase of a pen or one billion euro.
Systematic rigidity: law must treat all contracts and parties equally, not matter what the
contract is about or who they are.
The law must treat all contracts and parties equally, no matter what they contract about or
who they are. What one party is entitled to, must also be afforded to the other party.
One can classify contracts on basis of the parties involved, the main characteristics of the
contracts, and the reason why party’s wanting to be bound.
Lawyers distinguish between different contracts: contracts are usually distinguished on the
basis of who concludes them
,Contracts can also be distinguished on the basis of their main characteristics: what parties
need to do under the contract depends on the type of contract they concluded (type of
performance)
Specific contracts: governed by their own specific rules, laid down in civil codes or developed
by the courts, examples of contracts found in civil codes: mandate, sale of goods
Specific contracts do have a name, but they are not dealt with in detail in statutory law. E.g.
distributive contracts
In case of a contract, this obligation arises voluntarily because a party intends to be legal
bound. In case of a tort, the obligation is imposed upon a person independent of its
situation. Tort: concerns usually victims claiming damages for personal injury.
This distinction between voluntary and non-voluntary obligations is as old as the civil law
tradition itself: it was already set out as the summa divisio (ultimate partition)
Classification of contracts:
- By type of parties/WHO
B2B / B2C / C2C
Based on WHO concludes them.
Contracts concluded between two individuals: consumer to consumer.
The relevance of this distinguishing is that legislators and courts sometimes make rules
specifically designed for B2B or B2C contracts
- By type of performance – special contracts
Contracts that are so frequently concluded that the law provides specifc answers to
questions regarding such contracts.
- Character:
It can also be distinguished based on their character: what parties need to do under the
contracts depends on the type of contract they concluded.
- By reason for performance
A promise in exchange for a promise
The reason why parties want to be bound distinction made here between contracts in which
each party assumes an obligation in order to obtain the performance to which the other
party, in exchange, obliges itself towards the first party (bilateral contracts) and contracts in
which a party is not promised anything in return for its performance (uniliteral contracts).
- Bilateral Contracts, Two or more parties are engaging with each other / wederkerige
overeenkomst, two obligations come into being
- Unilateral contract, eenzijdige overeenkomst, a unilateral contract is a contract created by
an offer that can only be accepted by performance. Example when donor agrees to transfer
ownership of a good to the done is not because she receives anything in return, but because
she intends to benefit the done.
,What family of Law does Contract Law belong to?
Contract belongs to family of private law
In civil law a more comprehensive system of private law. Private law consists of the rules and
principles that deal with the relationships between private actors such as individuals and
companies.
The law of contract, tort and restitution are often lumped together under the heading of law
of obligations. Because they can all give rise to so called obligations. Next to contract law,
field of tort law, restitution, property law, trust law, inheritance law, family law and
company law are part of the overall system of private law.
Contract (private law)
- Private Regulations
- Contractual Liability
- Person Better-off by enforcement of promise
- Private parties – plaintiff v. defendant
- Obligations fixed by parties to the contract
Successful claim = remedy for the plaintiff
Difference with contract and tort, in contract we determine the rules, the rules are made by
us. If I drink some water, and I spill it, and someone slips, there are consequences when you
break something -> who is going to deal with that? Tort law, we did not have a relationship,
but I did cause a lot of economic damage. Contract law is our relation and tort law there is
no relationship -> it has become after something happened that caused damage (no
contractional agreement). Contracts put you in a better place, tort law protects you from
what you already have.
Fundamental Principles of Contract Law: Freedom of Contract/Binding
Force/Informality/Contractual fairness
- Freedom of contract
The autonomy of parties to make the choices they desire in contracting. Freedom of contract
also entails that parties can determine the contents of their contracts. Freely, out of the will
of both parties. No force to enter in a agreement, you are free to decide if you want to
participate in a contract.
- Binding Force
Agreements lawfully entered into have the force of law for those who have made them.
- Absence of Formalities
Principle of Informality - Contracts do not require any particular form.
If consensus ad idem is what creates the binding effect
Pacta suntan servenda- agreements must be kept
Hugo Grotuis- breaking a promise is morally wrong
HOWEVER – A particular may form be required by law for certain contracts to be valid
- Contractual Fairness
(procedural and substantive, contract deals with procedural)
, Conditions under which contractual autonomy is exercised are often flawed, and the law
therefore needs to intervene to protect one party against the other.
Procedural fairness requires that an unequal position among the parties is remedied, mostly
by obliging a party to put the weaker one in the same position in order to allow it to make an
informed decision.
A contract should show procedural fairness.
Procedural fairness, requires that an unequal position between the parties is remedied.
NOT substantive fairness = the contents of the contract is up to the parties even if to
anybody else the contract seems to be a ‘bad contract’
- sometimes principles are so obvious that they aren’t written out
Multi-Level Sources of contract law. Official Sources - National Law /
International Conventions. Informal Sources - Restatements / Principles /
Commercial Custom / Academic Writings.
Rules of contract law are widely diverse in nature. Categorising allows us to distinguish
between three types of rules relevant to contract law:
- Parties themselves
The party agreement, consisting of what the parties agreed upon when entering into the
contract, typically includes the price of the good or service and the qualities it must possess.
It also depends on the type of contract and the relationship between the parties what it is
that they add to the essentials.
- rules that emerge from the official national, European and supranational sources official
sources
It is clear that in most cases the party agreement alone cannot set all rights and obligations
under the contract. Parties only discuss those elements of the contract that they consider
essential. Such matters are not covered by general conditions, the law should provide so-
called default rules that are automatically applicable if the parties have not made any other
arrangements.
- Default rules are rules that parties can deviate (=afwijken) from; they are applicable
subject to agreement otherwise and fill the gaps left open by the parties.
- Parties would like to contract in a way that it is considered contrary to law, public
policy or good morals for example paying someone to give birth to a baby
Both facilitative and mandatory laws can flow from the ‘official’ national, European and
supranational sources.
National: Official contract law at the national level is primarily produced by the legislature
and the courts. In civil law countries, general rules on contract law are typically found in the
civil code.
Next to the civil law countries have more specific statutes in which contract law can be
found. The dominant source of contract law in the common law family is not legislation but
the case law developed by the courts.
European law
Contract law also flows from European sources. Unlike the same suggests, a directive obliges
each of the 28 EU- Members states to implement its rules into national law. after this
implementation, the directive’s rules are in force as if they had been created by a national
What is contract law and what are the sources?
Why Contract Law?
Contracts are defined as legally binding agreements, irrespective of whether they are written
down or not. Contract law is the set of rules and principles that governs transactions among
parties, thereby establishing those parties’ enforceable rights and obligations.
Contracts always occur, some are agreements, and some are contracts. Does it have to be
binding? No, they don’t have to be binding. Do they always need to have an obligation? No,
they don’t
A contract gives rise to obligations between the parties to the contract and the failure to
perform these obligations gives the right to a remedy.
A market economy, the development of it, as is now prevalent to almost the entire world
(not in north Korea) is based on the premise that people and companies should make their
own bargains based on voluntary exchange of goods and services.
Contract law ensures that these contracts are binding, enforced in the courts in case the
other party does not perform. This turns contract law into cement of modern society: it
enables market actors to participate in economic and social life. It allows planning by
individual members of society.
The society is changing, you will enter relationships outside your status, you can become
an economic actor. When those relationship become the fabric of our society, we need to
have a system that makes those relationships stable, important and binding. All of this
have a chilling effect on the society, on the economic, political society and we therefore
need a binding force, the contracts. Those will be enforced.
We need to have a system those relationships stable, binding, so that we can have an
economy that is stable and binding, we need to have a binding force, these forces are
contracts. Movement of statement was the birth of contracts. We need contracts because
we want a stable, economy, politic, society
Types of Contracts
Most rules and principles of contract law are designed to apply to any contract, regardless of
the type of party and which type of obligation the parties have. It does not matter whether
the contract concerns a purchase of a pen or one billion euro.
Systematic rigidity: law must treat all contracts and parties equally, not matter what the
contract is about or who they are.
The law must treat all contracts and parties equally, no matter what they contract about or
who they are. What one party is entitled to, must also be afforded to the other party.
One can classify contracts on basis of the parties involved, the main characteristics of the
contracts, and the reason why party’s wanting to be bound.
Lawyers distinguish between different contracts: contracts are usually distinguished on the
basis of who concludes them
,Contracts can also be distinguished on the basis of their main characteristics: what parties
need to do under the contract depends on the type of contract they concluded (type of
performance)
Specific contracts: governed by their own specific rules, laid down in civil codes or developed
by the courts, examples of contracts found in civil codes: mandate, sale of goods
Specific contracts do have a name, but they are not dealt with in detail in statutory law. E.g.
distributive contracts
In case of a contract, this obligation arises voluntarily because a party intends to be legal
bound. In case of a tort, the obligation is imposed upon a person independent of its
situation. Tort: concerns usually victims claiming damages for personal injury.
This distinction between voluntary and non-voluntary obligations is as old as the civil law
tradition itself: it was already set out as the summa divisio (ultimate partition)
Classification of contracts:
- By type of parties/WHO
B2B / B2C / C2C
Based on WHO concludes them.
Contracts concluded between two individuals: consumer to consumer.
The relevance of this distinguishing is that legislators and courts sometimes make rules
specifically designed for B2B or B2C contracts
- By type of performance – special contracts
Contracts that are so frequently concluded that the law provides specifc answers to
questions regarding such contracts.
- Character:
It can also be distinguished based on their character: what parties need to do under the
contracts depends on the type of contract they concluded.
- By reason for performance
A promise in exchange for a promise
The reason why parties want to be bound distinction made here between contracts in which
each party assumes an obligation in order to obtain the performance to which the other
party, in exchange, obliges itself towards the first party (bilateral contracts) and contracts in
which a party is not promised anything in return for its performance (uniliteral contracts).
- Bilateral Contracts, Two or more parties are engaging with each other / wederkerige
overeenkomst, two obligations come into being
- Unilateral contract, eenzijdige overeenkomst, a unilateral contract is a contract created by
an offer that can only be accepted by performance. Example when donor agrees to transfer
ownership of a good to the done is not because she receives anything in return, but because
she intends to benefit the done.
,What family of Law does Contract Law belong to?
Contract belongs to family of private law
In civil law a more comprehensive system of private law. Private law consists of the rules and
principles that deal with the relationships between private actors such as individuals and
companies.
The law of contract, tort and restitution are often lumped together under the heading of law
of obligations. Because they can all give rise to so called obligations. Next to contract law,
field of tort law, restitution, property law, trust law, inheritance law, family law and
company law are part of the overall system of private law.
Contract (private law)
- Private Regulations
- Contractual Liability
- Person Better-off by enforcement of promise
- Private parties – plaintiff v. defendant
- Obligations fixed by parties to the contract
Successful claim = remedy for the plaintiff
Difference with contract and tort, in contract we determine the rules, the rules are made by
us. If I drink some water, and I spill it, and someone slips, there are consequences when you
break something -> who is going to deal with that? Tort law, we did not have a relationship,
but I did cause a lot of economic damage. Contract law is our relation and tort law there is
no relationship -> it has become after something happened that caused damage (no
contractional agreement). Contracts put you in a better place, tort law protects you from
what you already have.
Fundamental Principles of Contract Law: Freedom of Contract/Binding
Force/Informality/Contractual fairness
- Freedom of contract
The autonomy of parties to make the choices they desire in contracting. Freedom of contract
also entails that parties can determine the contents of their contracts. Freely, out of the will
of both parties. No force to enter in a agreement, you are free to decide if you want to
participate in a contract.
- Binding Force
Agreements lawfully entered into have the force of law for those who have made them.
- Absence of Formalities
Principle of Informality - Contracts do not require any particular form.
If consensus ad idem is what creates the binding effect
Pacta suntan servenda- agreements must be kept
Hugo Grotuis- breaking a promise is morally wrong
HOWEVER – A particular may form be required by law for certain contracts to be valid
- Contractual Fairness
(procedural and substantive, contract deals with procedural)
, Conditions under which contractual autonomy is exercised are often flawed, and the law
therefore needs to intervene to protect one party against the other.
Procedural fairness requires that an unequal position among the parties is remedied, mostly
by obliging a party to put the weaker one in the same position in order to allow it to make an
informed decision.
A contract should show procedural fairness.
Procedural fairness, requires that an unequal position between the parties is remedied.
NOT substantive fairness = the contents of the contract is up to the parties even if to
anybody else the contract seems to be a ‘bad contract’
- sometimes principles are so obvious that they aren’t written out
Multi-Level Sources of contract law. Official Sources - National Law /
International Conventions. Informal Sources - Restatements / Principles /
Commercial Custom / Academic Writings.
Rules of contract law are widely diverse in nature. Categorising allows us to distinguish
between three types of rules relevant to contract law:
- Parties themselves
The party agreement, consisting of what the parties agreed upon when entering into the
contract, typically includes the price of the good or service and the qualities it must possess.
It also depends on the type of contract and the relationship between the parties what it is
that they add to the essentials.
- rules that emerge from the official national, European and supranational sources official
sources
It is clear that in most cases the party agreement alone cannot set all rights and obligations
under the contract. Parties only discuss those elements of the contract that they consider
essential. Such matters are not covered by general conditions, the law should provide so-
called default rules that are automatically applicable if the parties have not made any other
arrangements.
- Default rules are rules that parties can deviate (=afwijken) from; they are applicable
subject to agreement otherwise and fill the gaps left open by the parties.
- Parties would like to contract in a way that it is considered contrary to law, public
policy or good morals for example paying someone to give birth to a baby
Both facilitative and mandatory laws can flow from the ‘official’ national, European and
supranational sources.
National: Official contract law at the national level is primarily produced by the legislature
and the courts. In civil law countries, general rules on contract law are typically found in the
civil code.
Next to the civil law countries have more specific statutes in which contract law can be
found. The dominant source of contract law in the common law family is not legislation but
the case law developed by the courts.
European law
Contract law also flows from European sources. Unlike the same suggests, a directive obliges
each of the 28 EU- Members states to implement its rules into national law. after this
implementation, the directive’s rules are in force as if they had been created by a national
