Chapter 1 Guidance on answering the questions in the book

Chapter 1 Guidance on answering the questions in the book

Introduction

1. 'Contract law probably works well enough in practice but its theory is a mess.' Discuss.

There is much disagreement about the basis of contractual liability; that is, in the answers to the question ‘why should the law enforce voluntarily undertaken obligations (see 1.4 Why are contracts enforced)?’ 

  • Note the main theories and compare them (eg promise and will, reliance, welfare maximisation, promoting distributive justice);
  • Is there any common ground despite the obvious differences (e.g. respect for the parties’ agreement)? 
  • What difference does it make which one we subscribe to (e.g. the will theory has difficulty explaining implied terms but economic theories do not)? 
  • Discuss how well (or not) each theory explains the major features of contract law, such as:
    • the objective test of intentions;
    • the enforceability requirements (eg consideration);
    • vitiation factors;
    • controls over the contents of contracts; and
    • the remedies for breach of contract (eg the primacy of damages).

What difference might the theory make when we consider how to improve the law? In what direction should the law aim: eg towards greater fairness, efficiency, autonomy?

2. To what extent does contract law enforce promises?

The focus of this question is on the main theory of contractual liability, the will or promissory theory.  Note the importance of voluntariness (and hence promise?) to the imposition of contractual obligations in all theories of law.  See 1.4 Why are contracts enforced? especially 1.4.1 Promise-keeping and will theories.

  • How well does it explain the major features of contract law, such as:
  • the objective test of intentions;
  • the enforceability requirements (eg consideration, promissory estoppel);
  • vitiation factors;
  • controls over the contents of contracts; and
  • the remedies for breach of contract (eg the primacy of damages). 

A second dimension of this question is the enforcement of contract parties’ ‘performance interest’. To what extent do courts compel parties to do what they promised, or to pay the money equivalent of performance (ie cost of cure)?

A third dimension is the extent to which the institution of contract might differ from that of promise.  Courts enforce all contracts but not all promises.  What does this mean? 

3. 'The study of contract law is a study on the restrictions on the freedom of contract.' Does modern contract law interfere too much with contractual freedom?

See 1.3 Values reflected in contract law.

There are two parts to this question:

  • The descriptive one – note how freedom is restricted directly or indirectly by the vitiation doctrines (eg duress, undue influence), the doctrines controlling the contents of contract (both primary and secondary or remedial terms) and by statutes such as the Unfair Contract Terms Act 1977 (UCTA) and the Consumer Rights Act 2015 (CRA). 
  • The prescriptive one – what is the justification for restricting contractual freedom (eg standard form contracting, inequality of bargaining power, substantive unfairness, market failure, defective consent)?  Are they good reasons?  Does the current law reflect your conclusion about the right level of restriction?  If not, how should it be addressed?

4. What problems are caused by the prevalence of standard form contracts?

See 1.3.4 Negotiated/standard form contracts

10.1 The problem of standard form contracts.

This question concerns the challenge to classical contract law posed by standard form contracting.  The sub-questions you should consider are:

  • What is the difference between the picture of bargaining assumed by classical contract law and that of standard for contracting (eg in terms of equality of bargaining power, comprehension and negotiability of terms)?  The different paradigms of contracting affect the problems that might arise and the necessary legal response to them.
  • What potential problems arise from the latter (eg inequality of bargaining power, non-negotiability, comprehensibility, substantive unfairness)? 
  • How have courts and Parliament modified the principles of classical contract law to meet these problems (eg interpretation of exemption clauses, special rules on incorporation of onerous and unusual terms, UCTA and the CRA, chapters 10-11)?  Has the law drawn the correct lines: between business and consumer contracts; between negotiated and non-negotiated terms; between exemptions of liability, other non-core and core terms?
  • Should the law intervene more or less? How should the concerns for certainty and fairness and respect for the parties’ intentions be balanced? Refer to the Law Commission’s Report on ‘Unfair Terms in Contracts’ (Report 292, 2005).

5. What values are, and what values should be, promoted by contract law? Illustrate with examples.

This is a very open question and invites you to discuss the many (and often conflicting) influences on the principles and application of contract law.  These are discussed at 1.3.  Organize them in such a way as to tell an interesting story and present your view about where the balance should lie between cut-throat self-interest and more restrictions to protect from unfair contracts and bad faith contracting.

  • Where do you think the emphasis should lie? 
  • At what point is that emphasis pushed back by countervailing policies?  What is the interaction between potentially conflicting policies?  Does it depend on the nature of the contract and the status of the parties?