English Legal Concepts Overview Part 2 Beethoven

ELC OVERVIEW
*MS = Member State
*MPC = Model Penal Code




CONTRACT LAW

English contract law: this is how we do it
1. Introduction: Traditionally, general principles of good faith or unconscionability
aren’t a thing in English contract law (the American UCC likes good faith a bit
more). The British have a tendency for literal and strict interpretation of contracts.
They have a reluctance to re-write contracts or to explore the underlying intentions.
If they want to determine the objective meaning of the contract, they apply the
reasonably person test.
2. Application
3. Conclusion


Is this a contract?
1. Introduction: All agreements ≠ contracts. A contract = an agreement between
two or more parties that is legally enforceable and it generates legally recognized
rights and obligations (duties). The general rule privity of contract entails that only
the parties to the contract are entitled or bound by the terms of the contract  third
parties have neither rights nor obligations. There are diferent types of contracts:
- a) Simple contracts: do not have to be in written form;
- b) Contracts that must be in writing, e.g. a transfer of shares/copyright;
- c) Speciality contracts: contracts that must be by deed, e.g. transfer of land.
N.B. Unlike in civil law, in common law there are no nominate contracts (a
standardized contractual relationship that has a special designation attached to it,
e.g. lease, purchase and sale, loan, insurance). However, similar results are reached
through terms implied in from legislation, e.g. sale of goods, partnership.
There are three required elements for a contract:
- 1) Agreement made up of ofer and acceptance;
- 2) Intention to create a legally binding relationship;
- 3) Presence of consideration.
2. Application

,- Step 1a: Is there an oferr
- Ofer (set of terms)  legally binding on the oferor if the ofer is accepted by the
oferee.
- An invitation to treat ≠ an ofer. An invitation to treat = an invitation to others to
make ofers.
- Step 1b: Has the ofer been acceptedr
- Acceptance  contract comes into existence  both sides are legally bound.
- Mirror image rule: there must be unconditional assent to all the terms of the ofer.
Not unconditional assent to all the terms of the ofer = counter ofer  revokes the
original ofer. (N.B. The American UCC handles this diferently).
- Step 2: Is there an intention to create legal relationsr
- Presumption: domestic or social arrangement NOT  intend to create legal
relations.
- Presumption: commercial agreements  intended to be legally binding.
- Presumptions may be rebutted by clear evidence to the contrary.
- Step 3: Is there a consideration presentr
- A contract must be a bargain where a party gives something of value to the other
party and receives something of value in return (= wederkerigheid). This could be a
promise, an act or a forbearance (refraining from doing something that one has a
legal right to do).
- Bilateral consideration: an exchange of promises.
- Unilateral consideration: an act done in return for a promise.
- No consideration (only one party has given something of value)  no binding
contract because of lack of consideration.
- N.B. Do you want to make a one-sided promise (=eenzijdige rechtshandeling)
legally enforceable, e.g. a gift  there must a deed or nominal consideration.
- N.B Consideration does not to be adequate, but it must be suficient (it must have
some recognisable economic value, even if trivial; in the USA: also non-fnancial
value possible).
- N.B. Past consideration ≠ generally not valid.
- N.B. Equity doctrine of promissory estoppel: in certain restricted circumstances,
the court will enforce a promise even without consideration to make a one-sided
promise enforceable, but:
- there must already be a contractual relationship between the parties;
- it must be unfair for the promisor to go back on his promise to the promisee.


3. Conclusion

, Pre-contractual liability
1. Introduction: Because of a lack of the principle of good faith in English contract
law, the emphasis is on consideration and not good faith. There is no general duty to
negotiate in good faith. There may not be any intention to create legal relations in a
pre-contractual phase. Letters of intent are in principal not enforceable.
2. Application
3. Conclusion


Terms of the contract: how much you are in the
poo if you break this term
1. Introduction: The Parol Evidence Rule means that if the contract is in the form
of a formal written contract, no outside evidence can be used to vary the terms of
the written contract, unlike the civil law system. Therefore, the evidence of parties’
behaviour before or after the contract is generally excluded. The court is not
concerned with the parties’ real intentions, but with how a reasonable person would
read the contract.
Not all contract are of equivalent signifcance. There are three categories:
I. Conditions
II. Warranties
III. Innominate
2. Application
- Situation 1: Does this qualify as a conditionr
- A condition = a fundamental term.
- Breach of condition  innocent party the right to 1) claim damages & 2) treat the
contract as terminated if he/she so wants.
- Situation 2: Does this qualify as a warrantyr
- A warranty = a minor term of a contract.
- Breach of warranty  right to claim damages. NOT to treat the contract as
terminated.
- N.B. USA: warranty = guarantee (promises mad by seller in the context of sale of
goods contracts).
- Situation 3: Does this term qualify as an innominate term?
- An innominate term – intermediate term. Parties disagree about what it is.
- Situation 4: Is this term an express term or an implied termr
- Express terms = oral/written terms explicitly agreed by the parties.
- N.B. That one party described a term as a condition/warranty NOT  court ought