Intro to Contract Law

Question 1

What is a contract (layman vs. legal definition)?

Answer 1

• Layman’s definition: A promise or agreement between two parties
• Legal definition: A legally enforceable agreement that contains promises and if breached, gives rise to a remedy

Question 2

What are the 3 purposes of contract law?

Answer 2

• enforce promises
• regulate markets
• facilitate commercial transactions

Question 3

What is the will theory in contract law?

Answer 3

The idea that contractual obligations arise from the free will of the parties, emphasising freedom of contract

Question 4

How did Lord Toulson describe freedom of contract?

Answer 4

“Parties are ordinarily free to contract on whatever terms they choose, and the court’s role is to enforce them”

Question 5

Who was Lord Denning, and what was his contribution?

Answer 5

Lord Denning (1899–1999) was a judge known for aiding weaker parties. He developed principles like promissory estoppel and inequality of bargaining power but faced resistance from senior judges

Question 6

What are the limitations of the will theory?

Answer 6

It doesn’t fully explain doctrines like consideration, duress, frustration, and statutory controls (e.g., Unfair Contract Terms Act)

Question 7

What are the 6 key classical theories of contract law?

Answer 7

1. Sanctity of Promises: Enforcing promises is essential for a rational society
2. Will Theory: Contracts form through mutual agreement
3. Reliance Theory: Focuses on compensating losses due to reliance
4. Equivalence Theory: Supports enforcement of promises involving quid pro quo
5. Formalism: Emphasises respecting customs and rituals in contract formation
6. Realism/Distribution of Risk: Views contracts as tools to manage uncertainty.

Question 8

What are 4 criticisms of classical contract theory?

Answer 8

1) Power imbalances (e.g., rich employers vs. poor employees)
2) Monopoly suppliers impose unfair terms
3) It overlooks the need to protect weaker parties
4) Contracts often involve unfair terms (e.g., Thompson v LM & S Railway)

Question 9

What is an example of a case illustrating unfair contract enforcement?

Answer 9

Thompson v LM & S Railway (1930) – A woman was denied compensation for injury due to an exclusion clause in a contract she didn’t know about and possibly couldn’t even read