9 - 10. Formalities

Question 1

6.1) What is the principle of informality in contract law?

Answer 1

• Contracts do not require a specific form to be valid
• Makes contract-entering more efficient and easy

Question 2

6.2) What types of exceptions to the principle of informality exist?

Answer 2

Written form:
- Dispels future misunderstandings
- Forces parties to truly thinka bout contracting
- France: employment, residential house building, life insurance, real estate agent, and marriage agent contracts
- Germany: suretyship and lease contracts

Deed:
- Strictest formality
- Civil law: notary signs a deed along with parties stating intentions to be bound, warning parties about consequences of their actions
- Common law: maker of promise signs document and is attested by witness, makes gratuitous promises enforceable, giving something away on the spot is an exception

Question 3

6.3) What are three functions of contract formalities?

Answer 3

• Warning: Parties become aware of consequences of entering a contract (financial, personal risks)
• Information: Inform parties of obligations
• Evidentiary: Create evidence of the contract’s existence to mitigate potential for disputes (probationis causa)

Question 4

6.4) What happens if a contract does not meet the required formalities under the law?

Answer 4

• Contract is void or voidable depending on whether formality protects one (voidable) or both parties (void)

Question 5

6.5) What is proprietary estoppel in English law?

Answer 5

• Prevents party from denying promise when another party relied on the promise?

Question 6

6.6) What is the “cure of the lack of form” in contract law?

Answer 6

• Remedy the absence of a required formality
• 1: court adds a legal consequence in the benefit of the party who required the formality (Germany -> indefinite lease if not in writing)
• 2: performance of obligations cures defect of lack of formalities (Germany -> guarantor performs obligations in suretyship agreement to create validity)
• 3: deception by one party making the other believe no formalities required (Germany -> good faith, England -> proprietary estoppel, France -> abuse of right)