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The history of contract law dates back to ancient civilizations and the development of contract law has been heavily influenced by Ancient Greek and Roman thought. There have been further significant developments in contract law during and since the Middle Ages and especially with the development of global trade.
"If a man fails to fulfill an agreed contract - unless he had contracted to do something forbidden by law or decree, or gave his consent under some iniquitous pressure, or was involuntarily prevented from fulfilling his contract because of some unlooked-for accident - an action for such an unfulfilled agreement should be brought in the tribal courts, if the parties have not previously been able to reconcile their differences before arbitrators (their neighbors, that is)."
English contract law's history was heavily influenced by Ancient Greek and Roman thought. In The Laws , Plato devoted little attention to forms of agreement, but recognized the same basic categories for cancelling agreements as exist today. Roman law identified discrete categories of contractual transaction, each with its own requirements, which needed to be fulfilled in order for promises to be enforced. The general kind, stipulatio , required various words to be used to generate an obligation, or in a contractus litteris it could be written down. There were four categories of consensual agreement, [1] and four kinds of contract creating property rights, such as a pledge ( pignus ) or a secured loan ( mutuum ). More than appeared from the general rules in Ancient Greece, Roman law represented an early division between specific kinds of contract, depending on the transaction's nature. [2]
During the Middle Ages, the English court system was minimal and so a number of In the local and manorial courts, according to the first treatise by Ranulf de Glanville, Treatise on the laws and customs of the English Kingdom in 1188, if people disputed the payment of a debt they, and witnesses, would attend court and swear oaths (called a wager of law). [3] They risked perjury if they lost the case, and so this was strong encouragement to resolve disputes elsewhere. The royal courts accepted claims, without a wager of law, if "trespass on the case" was alleged. A jury would be called, but to access the royal courts, which were fixed by Magna Carta to meet in London, some breach of the King's peace had to be alleged. But gradually, the courts allowed claims where there had been no such trouble, no tort vi et armis , even though it was still necessary to inventively plead this. For instance, in 1317 one Simon de Rattlesdene alleged he was sold a tun of wine that was contaminated with salt water, "with force and arms, namely with swords and bows and arrows". [4] The Court of Chancery and the King's Bench started to allow claims without the fictitious allegation of force and arms from around 1350. Otherwise, a breach of covenant required production of proof of an agreement from a seal. However, in The Humber Ferryman’s case [5] a claim was allowed, without any documentary evidence, against a ferryman who dropped a horse overboard that he was contracted to carry across the River Humber. Despite this liberalisation, in the 1200s a threshold of 40 shillings for dispute value had been created. Though its importance tapered away with gradual inflation, it foreclosed court access to most people. [6] Moreover, freedom to contract was firmly suppressed among the peasantry. After the Black Death, the Statute of Labourers 1351 prevented any increase in workers' wages, fuelling among other things the Peasants' Revolt of 1381.
With the courts' hostility to restraints on trade, the doctrine of consideration was forming, that to enforce any obligation something of value needed to be conveyed. [7] Some courts remained sceptical that damages might be awarded purely for a broken agreement (that was not a sealed covenant). [8] Other disputes allowed a remedy, notably in Shepton v Dogge [9] where a defendant had agreed in London, where the City courts' custom was to allow claims without covenants under seal, to sell 28 acres of land in Hoxton. Although the house itself was outside London at the time, in Middlesex, a remedy was awarded for deceit, but essentially based on a failure to convey the land. The resolution of these restrictions came shortly after 1585, when a new Court of Exchequer Chamber was established to hear common law appeals. In 1602, in Slade v Morley , [10] a grain merchant named Slade claimed that Morley had agreed to buy wheat and rye for £16, but had backed out. Actions for debt were in the jurisdiction of the Court of Common Pleas, but it had required that there needed to be both (1) proof of a debt, and (2) a subsequent promise to repay the debt, so that a finding of deceit (for non-payment) could be made against a defendant. [11] But if a claimant wanted to simply demand payment of the contractual debt (rather than a subsequent promise to pay) he could have to risk a wager of law. The judges of the Court of the King's Bench was prepared to allow "assumpsit" actions (for obligations being assumed) simply from proof of the original agreement. [12] With a majority in the Exchquer Chamber, after six years Lord Popham CJ held that "every contract importeth in itself an Assumpsit". [13] Around the same time the Common Pleas indicated a different limit for contract enforcement in Bret v JS , [14] that "natural affection of itself is not a sufficient consideration to ground an assumpsit" and there had to be some "express quid pro quo ". [15] Now that wager of law, and sealed covenants were essentially unnecessary, the Statute of Frauds 1677 codified the contract types that were thought should require some form.
Increasingly, English contract law was affected by its trading relations with northern Europe, particularly since Magna Carta guaranteed merchants "safe and secure" exit and entry to England "for buying and selling by the ancient rights and customs, quit from all evil tolls". [16] In 1266 King Henry III had granted the Hanseatic League a charter to trade in England. The "Easterlings" who came to trade brought goods and money that the English came to call "Sterling", [17] and standard rules for commerce that formed a Lex Mercatoria , the laws of the merchants. Merchant custom was most influential in the coastal trading ports like London, Boston, Hull and King's Lynn.
In the 1500s, litigation sharply increased, although the causes are unclear and it may have been due to a centralization of lawsuits in the King's Bench and Common Pleas. [18] The Chief Justices received a large portion of their income from fees paid by litigants, mostly in civil disputes. [18]
Over the late 17th and 18th centuries Sir John Holt, [19] and then Lord Mansfield actively incorporated the principles of international trade law and custom into English common law as they saw it: principles of commercial certainty, good faith, [20] fair dealing, and the enforceability of seriously intended promises. [21] As Lord Mansfield held, "Mercantile law is not the law of a particular country but the law of all nations", [22] but also that "the law of merchants and the law of the land is the same". [21]
Over the industrial revolution, English courts became more and more wedded to the concept of "freedom of contract". It was partly a sign of progress, as the vestiges of feudal and mercantile restrictions on workers and businesses were lifted, a move of people from "status to contract". [23] On the other hand, a preference for laissez faire thought concealed the inequality of bargaining power in contracts of employment, consumer, and tenancy. At the centre, captured in nursery rhymes like Robert Browning's Pied Piper of Hamelin in 1842 was the fabled notion that if people had promised something "let us keep our promise". [24] But then, as if everybody had the same degree of free will, a generalised law of contract purported to cover every form of agreement was expounded. Courts were suspicious of interfering in agreements, whoever the parties were, so that in Printing and Numerical Registering Co v Sampson Sir George Jessel MR proclaimed that "contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice." [25] The Judicature Act 1875 merged the Courts of Chancery and common law, with equitable principles (such as estoppel, undue influence, rescission for misrepresentation and fiduciary duties or disclosure requirements in some transactions) always taking precedence. But the essential principles of English contract law remained stable and familiar, as an offer for certain terms, mirrored by an acceptance, supported by consideration, and free from duress, undue influence or misrepresentation, would generally be enforceable. The rules were exported across the British Empire, as for example in the Indian Contract Act 1872. [26] Further requirements of fairness in exchanges between unequal parties, or general obligations of good faith and disclosure were unwarranted because was said that liabilities "are not to be forced upon people behind their backs". [27] Parliament's statutes, outside general codifications of commercial law like the Sale of Goods Act 1893, left people to the harsh "freedom of contract" of the market until the property qualifications for Parliament were reduced, and the electoral vote finally became democratic. [28]
Over the 20th century, legislation and changes' in court attitudes effected a wide-ranging reform of 19th century contract law. [29] First, specific types of non-commercial contract were given special protection where "freedom of contract" appeared far more on the side of large businesses. Consumer contracts came to be regarded as "contracts of adhesion" where there was no real negotiation and most people were given "take it or leave it" terms. [30]
In the UK, the courts began by requiring entirely clear information before onerous clauses could be enforced, [31] the Misrepresentation Act 1967 switched the burden of proof onto business to show misleading statements were not negligent, and the Unfair Contract Terms Act 1977 created the jurisdiction to scrap contract terms that were "unreasonable" considering the bargaining power of the parties. Collective bargaining and growing number of employment rights carried the employment contract into an autonomous field of labour law where workers had rights, like a minimum wage, [32] fairness in dismissal, [33] the right to join a union and take collective action, [34] and these could not be given up in a contract with an employer. Private housing was subject to basic terms, such as the right to repairs, and restrictions on unfair rent increases, though many protection was abolished during the 1980s. [35] This reduced the scope of the general law of contract, and meant that most contracts individual people made in their ordinary lives were shielded from the power of corporations to impose whatever terms they chose in selling goods and services, at work, and in people's home. [36] Nevertheless, classical contract law remained at the foundation of specific contracts, unless particular rights were given by the courts or Parliament.
Internationally, the UK had joined the European Union, which aimed to harmonise significant parts of consumer and employment law across member states. Moreover, with increasing openness of markets commercial contracts were receiving ideas from abroad. Both the Principles of European Contract Law, the UNIDROIT Principles of International Commercial Contracts, and the practice of international commercial arbitration was reshaping thinking about English contract principles with the rest of the globalising economy.
English law is the common law legal system of England and Wales, comprising mainly criminal law and civil law, each branch having its own courts and procedures.
Estoppel is a judicial device in common law legal systems whereby a court may prevent or "estop" a person from making assertions or from going back on their word; the person so prevented is said to be "estopped". Estoppel may prevent someone from bringing a particular claim. Legal doctrines of estoppel are based in both common law and equity. Estoppel is also a concept in international law.
A quasi-contract is a fictional contract recognised by a court. The notion of a quasi-contract can be traced to Roman law and is still a concept used in some modern legal systems. Quasi contract laws have been deduced from the Latin statement "Nemo debet locupletari ex aliena iactura", which proclaims that no one should grow rich out of another person's loss. It was one of the central doctrines of Roman law.
The forms of action were the different procedures by which a legal claim could be made during much of the history of the English common law. Depending on the court, a plaintiff would purchase a writ in Chancery which would set in motion a series of events eventually leading to a trial in one of the medieval common law courts. Each writ entailed a different set of procedures and remedies which together amounted to the "form of action".
Assumpsit, or more fully, action in assumpsit, was a form of action at common law used to enforce what are now called obligations arising in tort and contract; and in some common law jurisdictions, unjust enrichment. The origins of the action can be traced to the 14th century, when litigants seeking justice in the royal courts turned from the writs of covenant and debt to the trespass on the case.
Compurgation, also called trial by oath, wager of law, and oath-helping, was a defence used primarily in medieval law. A defendant could establish their innocence or nonliability by taking an oath and by getting a required number of persons, typically twelve, to swear they believed the defendant's oath. The wager of law was essentially a character reference, initially by kin and later by neighbours, often 11 or 12 men, and it was a way to give credibility to the oath of a defendant at a time when a person's oath had more credibility than a written record. It can be compared to a legal wager, which is the provision of surety at the beginning of legal action to minimize frivolous litigation.
In contract law, a non-compete clause, restrictive covenant, or covenant not to compete (CNC), is a clause under which one party agrees not to enter into or start a similar profession or trade in competition against another party. In the labor market, these agreements prevent workers from freely moving across employers, and weaken the bargaining leverage of workers.
In the Roman litigation system, while the Legis Actiones procedure was in force during the early Republic, both parties had to lay down a legal wager at the preliminary hearing, probably to discourage frivolous litigation. In some cases, if the party lost, the wager went to the other party, to compensate him for his inconvenience, rather than to the court to cover costs.
Restraints of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. It is a precursor of modern competition law. In an old leading case of Mitchel v Reynolds (1711) Lord Smith LC said,
it is the privilege of a trader in a free country, in all matters not contrary to law, to regulate his own mode of carrying it on according to his own discretion and choice. If the law has regulated or restrained his mode of doing this, the law must be obeyed. But no power short of the general law ought to restrain his free discretion.
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd[1942] UKHL 4 is a leading House of Lords decision on the doctrine of frustration in English contract law.
Consideration is a concept of English common law and is a necessity for simple contracts but not for special contracts. The concept has been adopted by other common law jurisdictions.
English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the Industrial Revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.
The Bill of Middlesex was a legal fiction used by the Court of King's Bench to gain jurisdiction over cases traditionally in the remit of the Court of Common Pleas. Hinging on the King's Bench's remaining criminal jurisdiction over the county of Middlesex, the Bill allowed it to take cases traditionally in the remit of other common law courts by claiming that the defendant had committed trespass in Middlesex. Once the defendant was in custody, the trespass complaint would be quietly dropped and other complaints would be substituted.
The Court of King's Bench, formally known as The Court of the King Before the King Himself, was a court of common law in the English legal system. Created in the late 12th to early 13th century from the curia regis, the King's Bench initially followed the monarch on his travels. The King's Bench finally joined the Court of Common Pleas and Exchequer of Pleas in Westminster Hall in 1318, making its last travels in 1421. The King's Bench was merged into the High Court of Justice by the Supreme Court of Judicature Act 1873, after which point the King's Bench was a division within the High Court. The King's Bench was staffed by one Chief Justice and usually three Puisne Justices.
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date, and the activities and intentions of the parties entering into a contract may be referred to as contracting. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or equitable remedies such as specific performance or rescission. A binding agreement between actors in international law is known as a treaty.
Contract law regulates the obligations established by agreement, whether express or implied, between private parties in the United States. The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law.
Baltic Shipping Company v Dillon, the Mikhail Lermontov case, is a leading Australian contract law case, on the incorporation of exclusion clauses and damages for breach of contract or restitution for unjust enrichment.
Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 is an English land law and English contract law appeal decision. The case, decided by Denning LJ, confirmed positive covenants can supplant privity of contract in contracts to improve land and secondly a covenant should be implied where the contract shows an intention that the obligation would attach to the land. The case thirdly held in that context, a somewhat uncertain description of lands which was capable of being rendered certain by extrinsic evidence was sufficient to enforce the covenant.
Slade's Case was a case in English contract law that ran from 1596 to 1602. Under the medieval common law, claims seeking the repayment of a debt or other matters could only be pursued through a writ of debt in the Court of Common Pleas, a problematic and archaic process. By 1558 the lawyers had succeeded in creating another method, enforced by the Court of King's Bench, through the action of assumpsit, which was technically for deceit. The legal fiction used was that by failing to pay after promising to do so, a defendant had committed deceit, and was liable to the plaintiff. The conservative Common Pleas, through the appellate court the Court of Exchequer Chamber, began to overrule decisions made by the King's Bench on assumpsit, causing friction between the courts.
The history of English contract law traces back to its roots in civil law, the lex mercatoria and the industrial revolution. Modern English contract law is composed primarily of case law decided by the English courts following the Judicature Acts and supplemented by statutory reform. However, a significant number of legal principles were inherited from recording decisions reaching back to the aftermath of the Norman Invasion.
