Contract law

• A void contract is a contract that is not legally enforceable and has no legal effect.
• Statements of non-binding principles of contract law include the Unidroit Principles of International Commercial Contracts and the Principles of European Contract Law
• Basic principles of contract law include reaching agreement, consideration, and intention to create legal relations
• The law polices the terms of contracts and the procedures by which a contract is concluded
• The law of contract generally limits its scope to the parties involved, unless a third party is granted rights under the Contracts (Rights of Third Parties) Act 1999
• The Contracts (Rights of Third Parties) Act 1999 has modified the doctrine of privity of contract, allowing contracting parties to confer rights of action upon third parties
• Consideration in English contract law requires something of value to be given in return for a promise to render it enforceable
• A contract may be set aside under various circumstances:

  • Fundamental mistake (Chapter 16)
  • Misrepresentation (Chapter 17)
  • Duress (Chapter 18)
  • Undue influence (Chapter 19)
  • Illegal object or method of performance
  • Event occurring after the contract making performance impossible, illegal, or different from what was contemplated (Chapter 21)
• Assuming a valid contract, failure to perform an obligation without a lawful excuse is a breach of contract (Chapter 22)
• A breach of contract gives the innocent party a claim for damages to restore them to the position if the contract had been performed according to its terms (Chapter 23)
• If the breach is of an important term, the innocent party may terminate further performance without liability (Chapter 22)
• The law generally provides a money substitute for performance, not performance itself (Chapter 24)
• Many contracts today are subject to specific regulation, departing from general contract law principles
• The law of contract has seen significant changes, with more attention to fairness and substantive terms in modern contracts
• Standard form contracts are widely used, with industry-wide forms like JCT contracts in construction
• Standard form contracts between businesses and consumers have given rise to legal challenges, especially with one-sided terms and exclusion clauses
• Parliament and European regulations have intervened to control unfair terms in standard form contracts, providing consumers with greater protection
• The law has adjusted slowly to the existence of standard form contracts, which are now common
• Modern contracts have become increasingly complex, including a vast array of clauses to provide for various eventualities
• Some clauses in contracts are designed to take away rights that the law would otherwise give, such as exclusion and limitation clauses
• Other clauses respond to the perceived rigidities of common law, like hardship and force majeure clauses
• Drafting clauses in contracts is challenging; they must be wide enough to achieve their purpose but not over-broad to avoid falling foul of legislative or judicial controls
• European Contract Law has seen a debate on further harmonization, possibly leading to a European Civil Code
• The Draft Common Frame of Reference (DCFR) was produced as a set of rules for harmonizing European contract law
• The European Commission has considered various options for harmonizing European contract law, including a binding instrument or an optional instrument
• An optional Common European Sales law has been proposed, applicable only when both parties agree to it, primarily for cross-border contracts
• Transnational contract law offers uniform rules or principles that can be adopted by contracting parties, such as the Unidroit Principles of International Commercial Contracts and the Principles of European Contract Law
• These principles are not legally binding but can be incorporated into contracts by parties as neutral terms
• The Principles of European Contract Law set forth general rules for international commercial contracts
• These Principles are applied when parties have agreed that their contract be governed by them
• They may also be applied when parties have agreed that their contract be governed by general principles of law, the lex mercatoria, or similar frameworks
• In cases where parties have not chosen any law to govern their contract, these Principles may be applied
• The Principles can be used to interpret or supplement international uniform law instruments
• They can also be used to interpret or supplement domestic law
• The Principles may serve as a model for national and international legislators
• The Principles are intended to be applied as general rules of contract law in the European Communities
• They apply when parties have agreed to incorporate them into their contract or have agreed that their contract is to be governed by them
• These Principles may provide a solution when the system or rules of law applicable do not address the issue raised
• The Principles of European Contract Law may play a role in the development of rules or principles relating to the interpretation of contracts
• They may contribute to the production of a future European or international code of contract law