Freedom of contract Flashcards
(10 cards)
freedom of contract
Principle of the common law is freedom of contract.
19th century definition of a contract is a ‘set of promises which the law will enforce’
There are mutual promises between the promisor and the promisee.
The rights and obligations or duties are created by the agreement between the parties to the contract.
Theretore, contract law is based on promising.
promising
To promise is to assume an obligation to the promise by means of a communication to the promise to that effect.
An agreement involves the making of a promise in return for a promise (or performance)
if an agreement is recognised as a contract in law, the law recognises a contracting party as having incurred a legal obligation to perform the promise.
examples
1) past consideration not good
2) certainty
3) separation of powers
4) terms implied by statute & CRA
1) past consideration not valid
the argument against allowing past consideration as a valid form of considetation is made to prevent opening the floodgates to dubious claims.
Although the cost of litigation would stop most people from commencing litigation, particularly consumers against traders.
2) certainty
The terms of a contract must be certain.
E.g. an offer must be certain before it can be accepted.
In Gibson v MCC ‘may’ created uncertainty so there was no offer.
3) separation of powers
courts will be careful when moving away from the common law principle of freedom of contract.
They will be reluctant to imply terms into a contract that could then set a precedent in similar contracts. eg officious bystander test
The courts are mindful of separation of powers - the courts interpret and apply the law and Parliament creates it.
4) terms implied by statute & CRA
- there is NO FoC
Freedom of contract is eroded when parliament creates an act that implies terms in a contract.
The Consumer Rights Act 2015 inserts terms, rights and remedies that cannot be excluded by businesses in order to protect consumers.
The right to exclude terms has become less frequently available under legislation and as the courts attempt to limit exclusion clauses.
4) terms implied by statute & CRA
- there IS FoC
There is still freedom of contract.
If you do not like the terms of a contract, do not enter it.
Prior to implied term, there lacks much freedom if one party is in a much stronger position (business) than the other (consumer).
CRA offers protection to consumers e.g. s69 if a term could have different meanings the meaning that is most favourable to the consumer will prevail.
4) terms implied by statute & CRA
- problems
The problem is establishing which terms will be in the contract and which will be disallowed by the law.
While the CRA applies in many contracts there are still other contracts in which it does not even though they involve consumers.
Further, putting an exclusion clause in a standard form, non-negotiable contract is not illegal.
The term may be ineffective but only where the affected party has the will (and means) to challenge big business.
4) terms implied by statute & CRA
- conclusion
arguably legislation such as the CRA restores the balance between traders and consumers so that a contract is a freely negotiated deal with no imbalance whilst allowing traders to make a profit (which is the purpose of most traders).
