Week 1 - The Nature and Importance of Contract Law PDF

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The Nature and Importance of Contract Law (Week 1) Definitions Contract –An agreement or set of promises that is legally binding. Promise – An undertaking to do something, or to refrain from doing something. Some promises are binding even though not contracts. All contracts are legally binding promises, butnot all legally binding promises are contracts.

Legally binding – Law will

enforce or compensate for

non-compliance.

The Nature of Contract Law Unlike most areas of law, contractual obligations are self-imposed. Generally, parties are free to decide:  Whether or not to enter into a contract at all  What obligations they will undertake towards each other; and even  The consequences of the breach of their obligations However, there are limits to contractual freedoms:  Illegality

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Misleading conduct Unconscionable dealing Unfair terms Statutory restrictions or requirements Consumer protection Anti-discrimination legislation.

But, within such limits, contract law provides a framework for the parties to create their own law.

Justifications for Contract Law There are typically two reasons justifying contract law: 1. Moral – The law enforces promises because it would be unjust otherwise. People shouldkeep promises. 2. Economic(Utilitarian) – Promotes mutually beneficial exchanges of resources and increases social wealth. Creates confidence/trust that parties will perform in future.

Doctrinal influences on Contract law

There are many doctrinal influences on contract law. Some of the more important ones include:  Freedom of contract (will theory): Individuals are free to decide: a) Whether or not they enter into a contract b) What terms they accept c) What the consequences of non-compliance will be.  Sanctity of contract: A contract, once made, is sacred as it is the expression of the coming together of two wills. It should enforce strictly in accordance

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with its terms, and not rewritten by the courts (because it is illogical, confusing, harsh, incomplete). Economic analysis of contract law: Analyses contract law by reference to their ability to promote efficient market outcomes. It places high value on voluntary exchanges. Furthermore, it assumes that individuals are best placed to assess their own interests and welfare. Critical legal theory: Argues that contract law pushes and reinforces a particular ideological agenda that privileges the interests of some groups over others.Contract law preferences the market values (vs community values), individualism (vs altruism) and formal ‘freedom’ (vs substantive freedom). Feminist perspective on contract law: Contract law embodies masculinist values while seeming neutral. Moreover, it ignores gendered power discrepancies in relationships, by only viewing transactions in the abstract. Good faith: In recent years, courts have departed from classical contract theory and recognized the importance of implied duties of ‘good faith’ or ‘cooperation’ in contractual relationships....