English contract law

For instance, in 1317 one Simon de Rattlesdene alleged he was sold a tun of wine that was contaminated with salt water and, quite fictitiously, this was said to be done "with force and arms, namely with swords and bows and arrows".

Increasingly, the English law on contractual bargains was affected by its trading relations with northern Europe, particularly since Magna Carta had guaranteed merchants "safe and secure" exit and entry to England "for buying and selling by the ancient rights and customs, quit from all evil tolls".

[15] Around the same time the Common Pleas indicated a different limit for contract enforcement in Bret v JS,[16] that "natural affection of itself is not a sufficient consideration to ground an assumpsit" and there had to be some "express quid pro quo".

"[25] The same year, the Judicature Act 1875 merged the Courts of Chancery and common law, with equitable principles (such as estoppel, undue influence, rescission for misrepresentation and fiduciary duties or disclosure requirements in some transactions) always taking precedence.

[26] The essential principles of English contract law, however, remained stable and familiar, as an offer for certain terms, mirrored by an acceptance, supported by consideration, and free from duress, undue influence or misrepresentation, would generally be enforceable.

Traditionally, English law has viewed the display of goods in a shop, even with a price tag, as an invitation to treat,[44] so that when a customer takes the product to the till it is she who is making the offer, and the shopkeeper may refuse to sell.

[50] Statute imposes criminal penalties for businesses that engage in misleading advertising, or not selling products at the prices they display in store,[51] or unlawfully discriminating against customers on grounds of race, gender, sexuality, disability, belief or age.

Along with a number of other critics,[70] in a series of cases Lord Denning MR proposed that English law ought to abandon its rigid attachment to offer and acceptance in favour of a broader rule, that the parties need to be in substantial agreement on the material points in the contract.

In Butler Machine Tool Co Ltd v Ex-Cell-O Corp Ltd[71] this would have meant that during a "battle of forms" two parties were construed as having material agreement on the buyer's standard terms, and excluding a price variation clause, although the other court members reached the same view on ordinary analysis.

[112] However, in the leading case of Williams v Roffey Bros & Nicholls (Contractors) Ltd,[113] the Court of Appeal held that it would be more ready to construe someone performing essentially what they were bound to do before as giving consideration for the new deal if they conferred a "practical benefit" on the other side.

Since the introduction of legislation regulating unfair terms, English courts have become firmer in their general guiding principle that agreements are construed to give effect to the intentions of the parties from the standpoint of a reasonable person.

[168] Reflecting the modern position since unfair terms legislation was enacted,[169] the most quoted passage in English courts on the canons of interpretation is found in Lord Hoffmann's judgment in ICS Ltd v West Bromwich BS.

For instance, under section 12–14, any contract for sale of goods carries the implied terms that the seller has legal title, that it will match prior descriptions and that it is of satisfactory quality and fit for purpose.

This test derives from Liverpool City Council v Irwin[184] where the House of Lords held that, although fulfilled on the facts of the case, a landlord owes a duty to tenants in a block of flats to keep the common parts in reasonable repair.

In employment contracts, multiple standardized implied terms arise also, even before statute comes into play, for instance to give employees adequate information to make a judgment about how to take advantage of their pension entitlements.

Apart from physical impossibility, frustration could be down to a contract becoming illegal to perform, for instance if war breaks out and the government bans trade to a belligerent country,[218] or perhaps if the whole purpose of an agreement is destroyed by another event, like renting a room to watch a cancelled coronation parade.

[219] But a contract is not frustrated merely because a subsequent event makes the agreement harder to perform than expected, as for instance in Davis Contractors Ltd v Fareham UDC where a builder unfortunately had to spend more time and money doing a job than he would be paid for because of an unforeseen shortage of labour and supplies.

Although it probably would not have been avoidable under the mistake in equity doctrine anyway, Lord Phillips MR held that a rescue company could not escape from an agreement to save a ship because both parties were mistaken that the distressed vessel was further than they originally thought.

[241] By contrast, in Bunge Corporation v Tradax SA[242] the House of Lords held that giving notice for a ship to start loading the soya bean cargo four days late, when the contract expressly stipulated the date, should allow the right to terminate regardless of the actual consequences of the breach.

[254] Sometimes potential profits will be too uncertain, or a general fall in market prices means that even claiming damages for the thing itself would leave one in a negative position, and so the courts allow a claimant to choose whether to sue, not for a failure in expectations, but to cover her expenses in preparing for the contract, or the "reliance interest".

If damages would be an inadequate remedy, for instance, because the subject matter was a unique painting, or a piece of land, or was to deliver petrol during an oil crisis,[259] a court may compel literal or specific performance of the contract's terms.

While Lord Nicholls stated, other than compensatory damages are not an adequate remedy, that "no fixed rules can be prescribed" and their Lordships were eager to not hamper the development of the law, the cases where such awards have been made in contract have all involved some quasi-proprietary element.

However, outside insurance, partnerships, surety, fiduciary relations, company shares, a narrow range of regulated securities,[275] and consumer credit agreements,[276] the duty on negotiating parties to disclose material facts does not extend to most contracts.

A bare majority in the House of Lords held that to protect the certainty of commercial dealings through a signed document, the contract between the finance company and the crook was void (the same consequence as if there had never been any offer mirrored by an acceptance).

[309] One potential exception to this pattern, and now very heavily restricted, is the defence of "non est factum", which originally applied in favour of illiterate people in the 19th century allowed a person to have a signed contract declared void if it is radically different from what was envisaged.

[312] This would have allowed escape from an agreement if without independent advice one person's ability to bargain for better terms had been heavily impaired, and would have essentially given courts broader scope to change contracts to the advantage of weaker parties.

[313] However, in 2020 the Supreme Court of Canada approved Bundy and acknowledged that a general doctrine of unconscionability, based upon unequal bargaining power, was part of Canadian law in Uber Technologies Inc v Heller.

[315] In three main situations, English law allows people who lack legal capacity to contract to escape from enforcement of agreements and recover property that was conveyed, to reverse unjust enrichment.

[333] These have included agreements to overthrow a friendly government,[334] to publish libel,[335] to obstruct bankruptcy proceedings,[336] to procure a knighthood,[337] to violate exchange control regulations,[338] or to defraud the tax authorities.

[370] In the most influential economic theories of a similar time, John Stuart Mill argued that while laissez faire should be the general rule, there were major exceptions covering consumers, any long-term contract, the governance of large organizations, employment relations, and for insuring people's welfare.

A contract is an agreement enforceable in court. Contract law regulates all sorts of transactions, from buying a tube ticket to computerized derivatives trading.
The Court of Common Pleas (here in 1480) was, with the Court of King's Bench , the common law court that heard early cases about broken agreements in debt . Until 1602 it resisted hearing cases without claimants risking perjury .
Merchants trading within the North European Hanseatic League followed a law of the merchant, or lex mercatoria , whose principles were received into the English law of contract.
Unidroit , based in Rome and established in 1926 under the League of Nations to unify private law , maintains the influential Principles of International Commercial Contracts of 2004. [ 30 ] A similar effort is the Principles of European Contract Law of 2002. [ 31 ]
An English and a Frenchman shake hands on an agreement.
"Read the advertisement how you will, and twist it about as you will," said Lindley LJ of the Smoke Ball advert, "here is a distinct promise expressed in language which is perfectly unmistakable".
The Valkyrie II , sunk by the aptly named The Satanita , had to be paid for because of a tacit contract of the racers.
Jones v Padavatton [ 82 ] held that a daughter studying for the bar at Lincoln's Inn could not sue her mother to keep a house.
A bill of exchange , for instance a cheque , is an order by one person to another (typically a bank) to pay a sum of money to a third person. Under BEA 1882 s 3 it must be written and signed.
The old case of Stilk v Myrick [ 105 ] held that sailors could not enforce a promise for higher wages for getting home on fewer crew when their contract required them to perform in all emergencies. At the time, there was no doctrine of economic duress , and significant fear of mutiny on the high seas.
In the River Douglas Catchment Board case [ 132 ] Denning LJ delivered the first of many critiques of the privity rule, before CRTPA 1999 .
As the Great Exhibition 1851 saw the height of industrial commerce in the British Empire , and the depths of Dickensian poverty, English contract law fashioned a theory of freedom of contract , or laissez faire . [ 143 ] Today the law aims for fairness where one contracting party (e.g. a consumer, employee or tenant) is much less "free" due unequal bargaining power . [ 144 ]
Parker v South Eastern Rly Co , [ 149 ] a case from Charing Cross station, held to incorporate terms, people need to give reasonable notice of them before a contract.
All English contracts are, after ICS Ltd v West Browmwich BS , [ 163 ] involving a compensation scheme for poorly advised investors, interpreted objectively and in their context.
The leading case on implied terms, Equitable Life Assurance Society v Hyman , [ 183 ] held individualized terms are implied when essential to reflect the parties' "reasonable expectations". The Equitable Life directors defeated their customers expectations, and this ultimately led to its collapse. Its archives are now housed at Staple Inn , Holborn .
The Competition and Markets Authority in Canary Wharf can take up consumer protection cases after receiving complaints. It has done very few.
Clauses governing when a contract can be terminated, and what remedies are available are particularly important in commercial contracts , such as for shipping and the sale of goods , to achieve business certainty.
The burning down of the Surrey Music Hall in Taylor v Caldwell [ 216 ] frustrated the contract to hire it.
In Bell v Lever Bros Ltd , [ 226 ] a golden parachute deal struck over dinner at the Savoy Hotel was held to still be enforceable despite a mistake about the crooked director's involvement in a cartel.
The third in a trilogy of cases involving Frederick Gye 's colourful tenure as the Royal Opera House manager, Bettini v Gye [ 234 ] held the right to terminate is a question of construction.
Inspired by Frederick Pollock , the drafter of the Sale of Goods Act 1893 and the Marine Insurance Act 1906 , Mackenzie Chalmers distinguished conditions and warranties as two main kinds of term.
The famous case of Hadley v Baxendale [ 247 ] about the lost profits of a flour miller at Gloucester 's docks, was updated in The Achilleas , so the extent of damages reflect the "background of market expectations". [ 248 ]
When compensatory damages are an inadequate remedy, restitution may be awarded as where a record company exploited a licence to Jimi Hendrix records in breach of contract. [ 258 ]
The financial crisis of 2007–08 , like the Great Depression from 1929, [ 268 ] began with contract regulation failing to ensure terms were transparent, and permitting unjust exchanges among parties of unequal bargaining power , particularly in consumer credit contracts, and derivative financial contracts. [ 269 ]
A strict duty of disclosure and good faith applies to selling most financial products, since Carter v Boehm [ 272 ] involving insurance for an East India Company fort.
A statement of opinion by an expert, which proves false, will be taken as a factual misrepresentation, as in Esso Petroleum Co Ltd v Mardon . [ 286 ]
Third parties, particularly banks, will not see their security cancelled over undue influence claims if they ensure people seeking mortgages have independent advice.
Heavily intoxicated people will be bound to contracts for "necessaries", which can ironically include more alcohol.
While all monopolies are illegal and void, [ 327 ] contracts that unreasonably restrain trade are illegal. Nordenfelt v Maxim, Nordenfelt Gun Co held that a clause to "not compete... in any way" was void. [ 328 ]