Contract Law Essay Help: An Introduction to Contract Law in the UK
Contract Law Cases referred to in this section:
Beswick v Beswick (1968) AC 58, (1967) 2 All ER 1197, HL
Bremer Handelsgesellschaft mbH v Toepfer (1980) 2 Lloyd's Rep 43, CA
Grey v Ellison (1856) 1 Giff 436
Ingham v Emes (1955) 2 QB 366, (1955) 2 All ER 740, CA
Kelner v Baxter (1866) LR 2 CP 174 at 185
Re Brockman (1909) 2 Ch 170, CA
Re Chappell, ex p Ford (1885) 16 QBD 305, CA
In English Law, a ‘contract’ may be defined as a promise or set of promises which the law will enforce (Pollock Principles of Contract (13th Edn) p.1).
The law seeks to enforce contractual promises against a Promisor:
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for economic reasons (“the economic necessity of compelling the observance of bargains”)
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for moral reasons (“the moral justification that the promise was freely given”) (Halsbury’s Laws of England: Contract: 602: The Nature of Contract)
There is a general principle in contract law that the parties may freely contract on whatever terms they wish. However, for this to be true there must be equality of bargaining power and where there is no such equality, the general assumption of freedom of contract is not so readily applied (for example, see the Consumer Credit Act 1974 s 173; the Unfair Contract Terms Act 1977; and Unfair Terms in Consumer Contracts Regulations 1999, SI 1999/2083).
Further, the Courts have, using the principles of equity, seriously interfered with the notion of free-dom of contract, employing the rules of promissory estoppel, specific performance, injunction, con-sideration, undue influence and the notion of unconscionable bargains, and looking at the intention of the parties rather than the letter of the Contract in question (Halsbury’s Laws of England: Contract: 613: Good Faith in English Law).
A contract may be described as ‘simple’ where it is not a contract of record or has not been made by deed. Such a contract may be express (wholly or partly) or it may be implied (wholly or partly). Express terms will be set out either by words or in writing; implied terms are inferred from the words or conduct of the parties (Re Chappell, ex p Ford (1885) 16 QBD 305, CA).
For a contract to be valid:-
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there must be two or more separate and definite parties: a Promisor and a Promisee. Generally an arrangement with two branches or departments of the same firm would not therefore constitute a contract (Grey v Ellison (1856) 1 Giff 436) unless the branches or departments act as separate legal entities (Bremer Handelsgesellschaft mbH v Toepfer (1980) 2 Lloyd's Rep 43, CA).Where a person has two capacities, he may contract in his representative capacity with himself as an individual (Beswick v Beswick (1968) AC 58, (1967) 2 All ER 1197, HL).
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The parties must exist at the time the contract is made, and so a contract purported to be made by a proposed company would be void (Kelner v Baxter (1866) LR 2 CP 174 at 185 per Willes J).
the parties must have reached an agreement on specific matters (i.e. there must be 'consensus ad idem' - a ‘meeting of minds’) -
there must be an intention to create legal relations
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the promises of each party must be supported by consideration or by some other sufficient factor that the law considers to be sufficient.
Where a contract lacks some essential element, it may be described as “void, voidable, unenforce-able, not properly executed (or) cancellable” (Halsbury’s Laws of England: Contract: 607: Imperfect Contracts).
Void: a contract is void where, from the beginning, it has no legal effect (‘void contract’ is a paradox since the purported agreement is never really a contract)
Voidable: a contract is voidable where it is initially valid but one of the parties has some right to elect to avoid it.
Unenforceable: a contract is deemed “unenforceable” where the law will not enforce it but it is still recognized to be valid (and thus, may be indirectly enforceable, such as where a party holds a col-lateral security, e.g. a mortgage, as in (Re Brockman (1909) 2 Ch 170, CA). It remains a binding contract – it is not void as it may be possible to cure the defect (and so it would become directly en-forceable) and it is not voidable as no party has a right of avoidance.
Not properly executed: a regulated contract that is not properly executed remains binding on the creditor or owner, but may only be enforced against the debtor or hirer by order of the Court.
Cancellable: A cancelable contract is one that the law has made as such, for the protection of one of the parties. The contract remains binding until the party (usually with the weaker bargaining posi-tion) chooses to cancel it in the manner allowed for by the Contract.
In addition, it should be noted that the Court may strike down an agreement on the grounds of illegality, incapacity, mistake, duress, misrepresentation, implied terms (see Ingham v Emes (1955) 2 QB 366, (1955) 2 All ER 740, CA), frustration and unfairness.
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