Chapter 5
Consideration and form
- No legal system treats all agreements as enforceable contracts
- There exists rules which identify the types of agreement that are to be treated as
enforceable contracts; the function is to give the ‘badge of enforceability’ to certain
agreements; the function is performed by the doctrine of consideration and other
formalities-> consideration and form as distinct from doctrines such as duress.
5.1 Requirements of form
- Requirements of form are no longer significant features of English contract law except in
residual category of contract-> other jurisdictions place heavy reliance on this; based off of
the Statue of Frauds which operates in previous English colonies (e.g. Canada)
- A unilateral promise is only enforceable when it is met by a deed.
- A written document is required for the constitution of a contract or unilateral obligation for
the creation… of land.
- Functions of formal requirements:
1. Evidentiary function-> evidence of the existence of a contract-> in regards to
consideration, evidences intention to be bound.
2. Cautionary function-> acting as a check against ‘inconsiderate action’-> recognised by
Parliament in s.60&61 in 1974 CCA.
3. Channelling function-> formalities provide a simple and external text of enforceability.
- Formalities tend to be time-consuming.
- Which contracts should be governed by requirements of form? -> no such requirement to
contracts of indemnity
- Actionstrength Ltd v International Glass Engineering [2003] -> claimed that an oral
agreement was unenforceable as it was not evidenced in writing-> CA held.
- The distinction between a guarantee and an indemnity is a difficult one to draw.
- Difficult to establish a theory which explains why certain contracts are subject to
requirements of form while others only need to be evidenced in writing. Some contracts
need to be made in writing whilst others need only to be evidenced in writing.
- What type of writing is required? Must the contract be signed? -> What constitutes as a
signature? Must all of the terms be contained in one document?
- Does electronic form constitute as evidenced writing? Pereira Fernandes S A v Mehta [2006]
-> judges held that electronic communication sufficed as evidence.
- Difficulty in the requirement of form-> where an innocent party has acted to his detriment
upon a contract which did not comply with the relevant formalities.
- Could the claimant enforce the oral contract despite the fact that it did not comply with the
formal requirements? -> English law-> no; the defect in the form rendered the contract
unenforceable but not void.
- The courts have been strict in their interpretation of new Acts-> oral contracts are no longer
permitted-> parliament intended that questions regarding a contract should be ascertained
through the physical writing of the contract-> specifically in the interest of land.
- Parliament did not intend, by enacting s.2 of the 1989 Act to make it easier for people who
have genuinely contracted to escape their contractual obligations-> will not provide any
comfort to such a party.
Consideration and form
- No legal system treats all agreements as enforceable contracts
- There exists rules which identify the types of agreement that are to be treated as
enforceable contracts; the function is to give the ‘badge of enforceability’ to certain
agreements; the function is performed by the doctrine of consideration and other
formalities-> consideration and form as distinct from doctrines such as duress.
5.1 Requirements of form
- Requirements of form are no longer significant features of English contract law except in
residual category of contract-> other jurisdictions place heavy reliance on this; based off of
the Statue of Frauds which operates in previous English colonies (e.g. Canada)
- A unilateral promise is only enforceable when it is met by a deed.
- A written document is required for the constitution of a contract or unilateral obligation for
the creation… of land.
- Functions of formal requirements:
1. Evidentiary function-> evidence of the existence of a contract-> in regards to
consideration, evidences intention to be bound.
2. Cautionary function-> acting as a check against ‘inconsiderate action’-> recognised by
Parliament in s.60&61 in 1974 CCA.
3. Channelling function-> formalities provide a simple and external text of enforceability.
- Formalities tend to be time-consuming.
- Which contracts should be governed by requirements of form? -> no such requirement to
contracts of indemnity
- Actionstrength Ltd v International Glass Engineering [2003] -> claimed that an oral
agreement was unenforceable as it was not evidenced in writing-> CA held.
- The distinction between a guarantee and an indemnity is a difficult one to draw.
- Difficult to establish a theory which explains why certain contracts are subject to
requirements of form while others only need to be evidenced in writing. Some contracts
need to be made in writing whilst others need only to be evidenced in writing.
- What type of writing is required? Must the contract be signed? -> What constitutes as a
signature? Must all of the terms be contained in one document?
- Does electronic form constitute as evidenced writing? Pereira Fernandes S A v Mehta [2006]
-> judges held that electronic communication sufficed as evidence.
- Difficulty in the requirement of form-> where an innocent party has acted to his detriment
upon a contract which did not comply with the relevant formalities.
- Could the claimant enforce the oral contract despite the fact that it did not comply with the
formal requirements? -> English law-> no; the defect in the form rendered the contract
unenforceable but not void.
- The courts have been strict in their interpretation of new Acts-> oral contracts are no longer
permitted-> parliament intended that questions regarding a contract should be ascertained
through the physical writing of the contract-> specifically in the interest of land.
- Parliament did not intend, by enacting s.2 of the 1989 Act to make it easier for people who
have genuinely contracted to escape their contractual obligations-> will not provide any
comfort to such a party.
