Chapter 1: Sourcebook on Contract Law

contract law principles may state a general rule, very often, the law for the

purposes of employment contracts may differ.

The classical model of contractual relations outlined above works on the

basis of freedom of contract. It assumes the contract arena is a level playing

field on which all participants are equal in terms of bargaining power. But this

Is patently not the case. Many of the rules developed in the 20th century

recognise that individual consumers do not have the same bargaining

strength as a multinational company. The consumer requires protection,

especially in the light of the widespread use by business of the ‘standard form’

contract.3 Some rules towards this end have been developed at common law

but, to a large extent, common law development has been hindered by the

conflict between the needs of consumers and the principle of freedom of

contract espoused in the classical theory.

Even in the field of purely commercial contracts, where the classical theory

appears to have its strongest hold, there are exceptions. What must be

appreciated is that traders operate on an international level and the ancient

law merchant had started to develop before the 19th century classical theory

took hold. In order to cater for the needs of the trading community, some of

the classical rules were modified to take account of established trading

practice. Thus, a number of the rules gathered together under the doctrine of

consideration4 are modified to take account of practices established many

years earlier by the trading community. For example, the rule that

consideration must not be past has no application in relation to bills of

exchange, for the simple reason that to insist on this classical principle would

go against centuries of established trading practice.

In the light of these observations, it is probably better to regard English

contract law as a law of contracts, rather than a law of contract, despite the

existence of a generalised framework of rules which govern most contracts

and with which this book is concerned.

A problem which will be encountered in a number of the following

chapters is that, for one reason or another, a contract may fail. This may be

due to a formation problem5 or there may be present some vitiating element

such as a mistake,6 a misrepresentation7 or an element of actual or presumed

coercion.8 Alternatively, the contract might terminate due to some external

event beyond the control of the parties or due to a breach of contract by one of

the parties. If the contract fails, the terms of the contract may not be available

3

4

5

6

7

8

See Chapter 8.

See Chapter 3.

See Chapters 2 and 3.

See Chapters 2 and 6.

See Chapters 4, 13 and 14.

See Chapters 7 and 14.

2

What is Contract Law All About?

to govern the relationship between the parties. Instead, some other aspect of

the law may have to be invoked in order to resolve the issue. What this serves

to illustrate is that the law of contract is not just about making contracts and

that there are overlaps with other areas of law concerned with private law

rights and obligations. Thus, where a contract fails, it may be the case that

there has been a partial performance by one party which has conferred a

benefit on the other. If the contract itself is unable to determine how this is to

be paid for, it may be necessary to have recourse to restitutionary principles