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English Contract Law/Introduction

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English Contract Law
INTRODUCTION

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Contract Law is one of the central subjects that form the Law of England and Wales. It focusses on the rules for legally binding agreements and all types of contracts and parties. A thorough comprehension of the subject is essential because the principle of enforcing agreements is vital for the stability of society and has an impact on individuals and businesses, for example the use of basic contractual principles in other areas of law such as the supply of services, the sale of goods, and employment law. This book concentrates on the rules and factors which govern the formation, content, enforceability, and termination of a contract.

Contract law has a long history, with major developments that took place during the nineteenth century, rooted in the principles of freedom of contract and laissez faire.

Sources

Contract law has three main sources: case law, legislation, regulations (often building on European Union directives), for example:[1]

Elements

A contract has five essential elements, which must all be present at the same time:

  • Agreement
    • Offer
    • Acceptance
  • Consideration
  • Capacity
  • Certainty
  • Intention

Agreement

Agreement is a difficult element to define without giving examples. Consider the following types of agreements, some of which are legally enforceable and others are not:

  • A tenancy agreement
  • An agreement to meet for coffee
  • A loan agreement
  • An agreement to share a car for travelling to and from work
  • An agreement to enrol in an organization
  • An agreement to purchase a new laptop computer

How does the law determine the existence of an agreement? There are two general ways of approaching this question: subjective (the parties intentions) and objective (the outward evidence). The law follows the objective approach and looks at the outward evidence, rather than just what the parties were intending, because sometimes an agreement may not be apparent from their intentions alone. This approach was confirmed recently in RTS Flexible Systems Ltd v Molkerei.[3]

Notes

  1. Although the United Kingdom has commenced the process of withdrawing from the European Union, this book assumes that EU regulations and directives will continue to affect English contract law for the foreseeable future, at least until a Great Repeal Act is passed by Parliament.
  2. [1893] 1 QB 256 CA
  3. [2010] UKSC