What is Modern Contract Law

The English law of contract is a ‘common law’ subject. This means that most of its rules
and principles are derived from case law, and the application of the doctrine of precedent.
There are, however, increasing areas that are affected by statutory provisions, and in
particular regulations in the area of consumer contracts that derive from law emanating
from the European Union.
The rules forming the English law of contract are, subject to the intervention by statute,
applicable to all contracts. The rules of formation, for example, apply to a contract to buy
some vegetables in a supermarket as much as to a million pound deal for the supply of
goods and services between two multinational corporations. This universality can cause
problems where very different types of contracts may have differing requirements, and do
not fit easily into ‘one size fits all’ rules.
Contract law is, as is explained later in this chapter, concerned with the regulation
of agreements, and, in particular, agreements to exchange goods and services for money
or other goods or services (or both). Its obligations are generally voluntarily assumed, and
on that basis it is distinguished able from the law of tort, which is concerned with obligations
that are imposed by the law. If agreements are being analysed, the courts need to have some rules for establishing
when an agreement has been reached. English law does this not by using form al it ies in
most cases, but by looking simply at what the parties said and did and seeing if these
words and actions, viewed objectively, suggest that they had reached an agreement. In
particular, courts will normally look for an offer by one party that has been unequivocally
accepted by the other party.
Problems in this area can arise when the parties are contract ing at a distance, by post
or email. The delay in communications may mean that one party may have had a change
of mind by the time its message is received, and there will be difficult questions relating to
when exactly a commu nic a tion takes effect.Just because the parties have made an agree ment, this does not necessarily mean that it is legally enforceable. English law has a number of methods of decid ing whether an agreement is legally binding, but the most important ones are the concept of ‘consideration’,
and the requirement of an intention to create legal relations.
‘Consideration’ is a complex topic. It involves a requirement that if an agreement is to
be enforced by the courts, it must not be one sided – a contract involves an exchange,
and not a gift. In other words, both parties must be contributing something to the deal for
it to be enforceable. For example, the contract may be for the transfer of goods in exchange
for payment of a sum of money. In this case the payment of the money would be the
‘consideration’ for the transfer of the goods. If the goods were to be handed over without
any payment, this would be a gift, and would fall outside the scope of the law of contract.
The courts have developed extensive rules as to what does and does not constitute valid
consideration, which will make an agreement enforceable.
What are the issues which arisen trying to regulate agreements, and which are there
fore dealt with in more detail in next article.