contract + promises

Question 1

contract

Answer 1

a legally enforceable agreement involving one or more promises

Question 2

post contract formation

Answer 2

• parties liable for non-fulfilment of contract
• no need to wait until there has been reliance

Question 3

two main issues in contract law

Answer 3

• interpreting the parties words/conduct -> is it reasonable to understand this person is making a binding commitment, if so what are they promising?
• which promises should be enforced -> not all promises are legally binding contracts, (use offer + acceptance, legal relations, consideration)

Question 4

morality of promise seeking

Answer 4

• justifies the enforcement of promises
• associated with idea that contract is an expression of the ‘will’ of parties and involves consensus or ‘meting of minds’ between contracting parties

Question 5

(counter) - scepticism about the role of promises in contract law

Answer 5

[do promises play a central role?]
- Patric Atiyah argues:
-> courts often work backwards from conclusion by deciding that there should be an obligation then finding/not a promise
- s1 of argument: law often imply promises in stereotypical situations where it is reasonable to expect legal liability (getting on a bus, ordering food)
-

Question 6

scepticism of promises: not all promises are legally enforceable

Answer 6

• not all promises are legally enforceable, “if there are good reasons for enforcing some promises and not others, might those reasons provide better explanation for contractual liability than that of the importance of promise keeping itself?”

Question 7

most common contract

Answer 7

sale of goods

Question 8

conferring of benefits; unjust enrichment

Answer 8

• usually a reason for imposing legal liability that is more pressing than the notion the promises have been made and need to be kept
• reason being the need to make sure the benefits conferred via the parties exchange have been paid for

Question 9

conferring of benefits; unjust enrichment: example

Answer 9

• take car but don’t pay for it, either return or be liable for value
• a) lost promises payment and b) has the car
• no explicit promises are made in simple sales good; do not seem like paradigmatic/typical contracts

Question 10

the liberal contract theory

Answer 10

Charles Fried:
- enforcing promises promotes the dignity and autonomy of promisors because of the convention of promise-making allows people to “determine their own values”

Question 11

orthodox position on conferring benefits:

Answer 11

• if you sue for goods you are enforcing a promise
• if you want to make a person liable for not breaking a promise, but for receiving a benefit they did not pay for; you need to invoke a different branch of law -> unjust enrichment/restitution

Question 12

unjust enrichment

Answer 12

a legal principle that states that no one should receive a benefit at the expense of another without compensating the other party

Question 13

British Steel Crop v Cleveland Bridge & Engineering Co Ltd [1984] ER QBD

Answer 13

• claimant made steel nodes by request of defendant
• (even though parties were at odds on the terms of the draft contract, no formal agreement was ever signed)
• held there was no contract because there was too much left to be agreed
• judge awarded claimant a quantum meruit for work that had been supplied
• C could claim a reasonable sum for the work supplied

Question 14

restitution in the absence of a contract

Answer 14

where work is done in the anticipation go a contract which never materialises, it may be possible to claim payment for the reasonable value of the work via the restitutionary remedy of quantum merit

Question 15

quantum merit

Answer 15

quantum meruit is a common law method of assessing damages that allows a claimant to recover a reasonable amount for services rendered or goods supplied

Question 16

law of contract redundant? -> no

Answer 16

• existence of a contract precludes a claim in unjust enrichment
  (Barton v Morris [2023])

Question 17

Barton v Morris

Answer 17

• contract was for Mr B to get a fee only if the buyer he introduced paid 6.5 million for the property
• SC held Mr B couldn’t get around this by making a claim in unjust enrichment for his trouble in finding the buyer who ended up paying 6m for the property

Question 18

the existence/or non of a contract is vital for determining the terms on which the good/servicrs were supplied

Answer 18

• in issues like British Steel usually come around because of the existence or non of terms governing what should happen in the event if delay and whether there is any limit or exclusion of the contractors liability

Question 19

contracts and reliance

Answer 19

some argue the purpose of enforcing a contract is primarily to ensure that someone who relies on a promise should not suffer loss as a result of that reliance

Question 20

main implications of contract + reliance theory:

Answer 20

• contracts are rather made to make people responsible for the consequences of inducing reliance in others -> emphasis “will” of the parties
• contract law would be hard to separate from tort
• contracts ought not to be enforced when no one has performed or relied

Question 21

in favour of reliance theory: more consistent with harm principle

Answer 21

[Mindy Chen-Wishart, Contract Law, 2022 7th edn 21]
- arguable that enforcing contracts to protect against detrimental reliance is more consistent with the harm principle (Mill on Liberty)
- only interfere an individuals liberty to prevent harm from others, any other interference is “paternalism” and to be deprecated
- for reliance theorists, moralistic paternalism involved in holding people to their promises simply because it is good for you to be held by them

Question 22

in favour of reliance: more psychologically realistic

Answer 22

• people are more sensitive to losses than gains

Question 23

in favour of reliance: fits with the object test of intention

Answer 23

• the idea that contracts are enforced to protect against detrimental reliance arguably fits better with the objective test of intention than theories that the emphasis voluntary nature of a promise
• since the objective approach looks to how a reasonable person would interpret the relevant words and not what the promisor actually meant to say

Question 24

difficulties with reliance theory

Answer 24

• the clear orthodox position in English Law is that contractual liability arises as soon as agreement is made before any act of reliance
• main remedies for breach of contract are expectation based, not reliance ->
• hard to explain why certain statements and not others generate liability without invoking the idea of a voluntary commitment

Question 25

other reasons for enforcing contracts

Answer 25

argued that contract law performs a role of reinforcing “artificial trust” in the market, allowing people to have more confidence in buying and selling goods and services than they would otherwise have “facilitating reliance on business agreements”

Question 26

3 stages of contract

Answer 26

• formation
• content + terms
• end of contract/breach

Question 27

objectivity in contract law:

Answer 27

• parties communications are best to be interpreted objectively
  ‘whose views determine the impression given?’
  
  • ‘the governing critertion is the responsible expectations of honest men’ / what a resonable person has been led to believe the position to be
  • Reasonable person is judged in terms of the reasonable promise to whom the words have been conveyed

Question 28

objective test

Answer 28

• “whatever a mans real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms, proposed by the other party and that other party upon that belief enter contract with him”
• “a contract is formed when there is, to all outwards appearances, a contract”
  (Smith v Hughes) 1971 LR 6 QB 597 607 [Blackburn J]

Question 29

advantages of objective approach:

Answer 29

• promotes certainty and the formation of reasonable expectations; if liability in contract were to hinge a persons later testimony; this would make it hard for anyone to plan
• mind reading is currently impossible, we can know the state of another persons mind by relying on external manifestations (words + behaviour)

Question 30

reasonable person/The Investors Compensation Scheme Principle

Answer 30

A) in the position of someone who has just walked into the conversation without having any background context
OR
B) taken to have all the background knowledge that the parties could be expected to have (this is the answer nowadays
- background = includes absolutely everything which would have affected the way in which the language of the document would’ve been understood by a reasonable man

Question 31

contextual agreement

Answer 31

• The Investors Compensation Scheme accord that a document a sense that contradicts the conventional or dictionary meaning of its words if it is clear that “something must have gone wrong with the language”

Question 32

fixing typos + case

Answer 32

• Hartog v Colin & Shields 1939 3 All ER 566
• sellers offered to sell 3000 hare skins
• claimed “per pound” instead of “per piece”
• buyers purported to accept and claimed damages for breach of contract when the seller refused to deliver at lower price
• court held there was no contract because the buyer could not reasonably have supposed that offer contained the offers real intention

Question 33

limits to contextual approach:

Answer 33

• case law has identified some categories of words/conduct that are conventionally treated as either contractual offers or else invitations to treat, and also conventional rules as to what counts as acceptance
• L’Estrange v F Graucob Ltd 1934 2 KB 394;
  > terms of a written contract document are binding on a party who has signed the document and that is “immaterial that the defendant had not read the agreement and did not know its contents”