Irrelevant.4

Even the most convinced advocates of the standard approach concede that, on

occasions, the ‘agreement’ model is hard to sustain in any wholly convincing

way, but here the admitted exemptions are not seen as bringing the whole

notion into question. Treitel states:

A contract is an agreement giving rise to obligations which are enforced or

recognised by law. The factor which distinguishes contractual from other legal

obligations is that they are based on the agreement of the contracting parties.

This proposition remains generally true, in spite of the fact that it is subject to a

number of important qualifications.

The first such qualification is that the law is often concerned with the objective

appearance, rather than with the actual fact, of agreement.

‘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 a 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.’5

4 Atiyah, 1986 (reprinted 1990), pp 19–20

5 Blackburn J in Smith v Hughes [1871] LR 6 QB 597.

22

Agreement

This objective principle is based on the needs of commercial convenience.

Considerable uncertainty would result if A, after inducing B reasonably to

believe that he (A) had agreed to certain terms, could then escape liability

merely by showing he had no ‘real intention’ to enter into that agreement ...

The idea that contractual obligations are based on agreement must, secondly,

be qualified, because contracting parties are normally expected to observe

certain standards of behaviour. These are the result of terms implied by law.

For example, a person who sells goods or enters into a contract of employment

is bound by many such implied terms. The parties may be able to vary or

exclude some such terms by contrary agreement but, unless they do so, they

are bound by many duties to which they have not expressly agreed and of

which they may have never thought ...

The idea that contractual obligations are based on agreement must, thirdly, be

qualified in relation to the scope of the principle of freedom of contract. In the

19th century, judges took the view that persons of full capacity should, in

general, be allowed to make what contracts they liked: the law only interfered

on fairly specific grounds such as misrepresentation, undue influence or

illegality. It did not interfere merely because one party was economically more

powerful than the other and so able to drive a hard bargain. This attitude

became particularly important when the courts recognised the validity of

standard form contracts by which one party excluded or limited his common

law liabilities. In the present century, this practice of contracting on standard

terms has become very common and it is arguable that a customer who

contracts on such standard terms has them imposed on him and does not

really ‘agree’ to them at all. This argument is particularly strong where the

supplier has a monopoly or where all suppliers in a particular field use the

same standard terms. The customer may then only be able to accept those

terms or do without the goods or services in question and, in many cases, he

cannot in practice do without it ...