International Bachelor of LAW Program 2018-2019
Contract Law Course Notes by 18024580 Page 1 of 32
Course notes
Lecture 1: Contract Law and its sources
▪ Why Contract Law?
We need contract law for economic and social stability.
Contract: a legally binding agreement that will be enforced by the law (written or not)
i.e. contract law is about how to identify the contracts
e.g. buying products; taking out insurance; downloading software
Contract law: the rules and principles that govern transactions among parties
- To ensure that contracts are binding and can be enforced in the courts in case the other party does not
perform
- Cement of modern society
o To enable market actors e.g. individuals, companies, government bodies, municipalities, NGOs, etc to
participate in economic and social life
A contract gives rise to obligations between the parties to the contract and the failure to perform these
obligations gives the right to a remedy.
The development of the Market Economy (Status to Contract)
- Move from Agricultural to industrial economy
- Liberalism: every individuals’ right to shape his/her own life
- People (not the government) make their own agreements
- Voluntary exchange: the needs of the people to ensure that supply and demand correspond to each other
General character of contract law
Transactions are governed by
a) Principles: e.g. freedom to decide what the conditions are
b) Rules: the formation of the contract through offer and acceptance, performance, damages, etc
All contracts and parties are treated equally
▪ Types of Contracts
Supply Chain: Supplier > Distributer > Manufacturer > Retailer > Logistics > Consumer
Classification
Based on (1) the parties involved, (2) the main characteristics of the contract and (3) the reason why partied
want to be bound
Types of parties: who concludes the contracts
B2B-contracts: contracts between two or more commercial parties (commercial contracts)
B2C-contracts: contracts between a business and a consumer (consumer contracts)
C2C-contracts: contracts concluded between two individuals
, International Bachelor of LAW Program 2018-2019
Contract Law Course Notes by 18024580 Page 2 of 32
By Reason for Performance: what parties do under the contract
1761 Traité des Obligations (Pothier)
- Bilateral contracts: each party assumes an obligation in order to obtain the performance to which each
party, in exchange, obliges itself towards the first party.
i.e. a promise in exchange for a promise
e.g. the sale of a bike
- Unilateral contracts: a party is not promised anything in return for its performance
i.e. a promise in exchange for an act
e.g. found in French Code Civil (art 1106), German BGB (320) and Dutch Civil Code (art 6:621)
TERMINLOGY
Specific contracts: contracts governed by their own specific rules, laid down in national civil codes or developed
by courts e.g. (international) sale of goods; barter; lease; mandate; donation; marriage; the employment contract; etc.
Closed system of contracts: ex nudo pacto action non oritur: only those contracts that fell under one of the
accepted categories were binding, whereas ‘naked’ agreements were not.
- Contractus re ‘real contracts’: delivery of goods
- Commodatum: e.g. borrow a lion and give back the same lion
- Mutuum ‘consumption’: e.g. borrow wine and give back a similar quantity of a comparable wine
- Pignus ‘pledge’
- Depositum: deposit a good to be looked after by somebody else
Regulated contracts: contracts constrained mandatory rules
- Main decision: enter into contract
e.g. employment contracts and residential leases
- Public law to private law
▪ Family of Law Contract Law
CONTRACT (Private Law) TORT (Private Law) CRIMINAL LAW (Public Law)
Private regulations Private regulations State regulations
Contractual liability Extra-contractual liability Criminal liability
Person better-off by enforcement of Protects what a party already has State punishes wrongful conduct
promise
Plaintiff v Defendant Plaintiff v Defendant The State v The Offender
Obligations fixed by parties to the Obligations fixed by law Crimes defined by the State
contract
Successful claim = remedy for Successful claim = remedy for Successful trial = punishment
plaintiff plaintiff
▪ Fundamental Principles of Contract Law
Main principles
1. Freedom of contracts: everyone should be allowed the autonomy to make the choice they desire.
- Freedom regarding content: whatever terms
- Freedom (not) to contract: whenever it desires
- Freedom to choose the other party: with whomever
2. Binding force: binding upon the parties
Binding = consequence if contract is breached
i.e. each party must perform the obligations it took upon itself and if it fails to do so, the Court can intervene at the
request of the other party.
Contract Law Course Notes by 18024580 Page 1 of 32
Course notes
Lecture 1: Contract Law and its sources
▪ Why Contract Law?
We need contract law for economic and social stability.
Contract: a legally binding agreement that will be enforced by the law (written or not)
i.e. contract law is about how to identify the contracts
e.g. buying products; taking out insurance; downloading software
Contract law: the rules and principles that govern transactions among parties
- To ensure that contracts are binding and can be enforced in the courts in case the other party does not
perform
- Cement of modern society
o To enable market actors e.g. individuals, companies, government bodies, municipalities, NGOs, etc to
participate in economic and social life
A contract gives rise to obligations between the parties to the contract and the failure to perform these
obligations gives the right to a remedy.
The development of the Market Economy (Status to Contract)
- Move from Agricultural to industrial economy
- Liberalism: every individuals’ right to shape his/her own life
- People (not the government) make their own agreements
- Voluntary exchange: the needs of the people to ensure that supply and demand correspond to each other
General character of contract law
Transactions are governed by
a) Principles: e.g. freedom to decide what the conditions are
b) Rules: the formation of the contract through offer and acceptance, performance, damages, etc
All contracts and parties are treated equally
▪ Types of Contracts
Supply Chain: Supplier > Distributer > Manufacturer > Retailer > Logistics > Consumer
Classification
Based on (1) the parties involved, (2) the main characteristics of the contract and (3) the reason why partied
want to be bound
Types of parties: who concludes the contracts
B2B-contracts: contracts between two or more commercial parties (commercial contracts)
B2C-contracts: contracts between a business and a consumer (consumer contracts)
C2C-contracts: contracts concluded between two individuals
, International Bachelor of LAW Program 2018-2019
Contract Law Course Notes by 18024580 Page 2 of 32
By Reason for Performance: what parties do under the contract
1761 Traité des Obligations (Pothier)
- Bilateral contracts: each party assumes an obligation in order to obtain the performance to which each
party, in exchange, obliges itself towards the first party.
i.e. a promise in exchange for a promise
e.g. the sale of a bike
- Unilateral contracts: a party is not promised anything in return for its performance
i.e. a promise in exchange for an act
e.g. found in French Code Civil (art 1106), German BGB (320) and Dutch Civil Code (art 6:621)
TERMINLOGY
Specific contracts: contracts governed by their own specific rules, laid down in national civil codes or developed
by courts e.g. (international) sale of goods; barter; lease; mandate; donation; marriage; the employment contract; etc.
Closed system of contracts: ex nudo pacto action non oritur: only those contracts that fell under one of the
accepted categories were binding, whereas ‘naked’ agreements were not.
- Contractus re ‘real contracts’: delivery of goods
- Commodatum: e.g. borrow a lion and give back the same lion
- Mutuum ‘consumption’: e.g. borrow wine and give back a similar quantity of a comparable wine
- Pignus ‘pledge’
- Depositum: deposit a good to be looked after by somebody else
Regulated contracts: contracts constrained mandatory rules
- Main decision: enter into contract
e.g. employment contracts and residential leases
- Public law to private law
▪ Family of Law Contract Law
CONTRACT (Private Law) TORT (Private Law) CRIMINAL LAW (Public Law)
Private regulations Private regulations State regulations
Contractual liability Extra-contractual liability Criminal liability
Person better-off by enforcement of Protects what a party already has State punishes wrongful conduct
promise
Plaintiff v Defendant Plaintiff v Defendant The State v The Offender
Obligations fixed by parties to the Obligations fixed by law Crimes defined by the State
contract
Successful claim = remedy for Successful claim = remedy for Successful trial = punishment
plaintiff plaintiff
▪ Fundamental Principles of Contract Law
Main principles
1. Freedom of contracts: everyone should be allowed the autonomy to make the choice they desire.
- Freedom regarding content: whatever terms
- Freedom (not) to contract: whenever it desires
- Freedom to choose the other party: with whomever
2. Binding force: binding upon the parties
Binding = consequence if contract is breached
i.e. each party must perform the obligations it took upon itself and if it fails to do so, the Court can intervene at the
request of the other party.
