Contract law

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Within the law of contract, one can find evidence of conflicting and contradictory theories. Indeed an observer may argue that ‘the law of contract is riven by contradiction, since it embodies emphasis on both selfish individualism and an altruistic concern for the interests of the other contracting party’. These contradictions can be understood in terms of a tension between traditional orthodoxtheories and ideas of welfarism. Both appear to have found a place in the law of contract, which consequently leads the interpretation of contractual terms in varying directions. An example of this tension can be seen in the classification of conditions, warranties and innominate terms. In order to examine the apparent anomaly, I will briefly examine the conflicting theories, and move to anexample of the conflict, namely the classification of implied terms. Following this, I will conclude with a suggestion to curb or downgrade the tension created by this conflict. As such, I will now turn to the traditional approach.

The traditional orthodox approach of will theory has strongly influenced the law of contract. This body of thought functions under the guise of non-interventionism,insofar as it attempts to preserve the freedom and autonym of contracting parties.# Individuals are not prevented from entering contracts, and so the theory argues, courts should respect the outcome of their efforts. Within the will theory of contract, there exists a strong belief that the courts should not attempt to change or manipulate contracts made by free parties, but rather, should work to holdcontracting parties to their commitments.# This is especially true when a party seeks to abandon an agreement that has turned out to be a bad bargain.# The non-interventionist approach fits well with an individualist-market orientation as it adheres to the principles of freedom and sanctity of contracts.# With a laissez-faire approach to adjudication, parties are allowed to bargain freely, to seekterms that will maximize their own positions.

More recently, the law of contract has refocused some of its goals by placing a heavier emphasis on the pursuit of justice. The growing support for a consumer-welfarist approach employs reliance upon society’s standards of fairness and reasonableness.# In an effort to prevent unjust or unfair judgements, this body of thought adopts a morepaternalistic approach to interpretation.# Here, one can uncover a dependence upon the reliance theory’s emphasis on socially accepted standards of justice. With an increased willingness to intervene, the ideas of equality and welfarism begin to influence judgements that are passed down. In this orientation, it is argued that the courts have become far more involved in the interpretations of contract, tothe point of interventionism in the pursuit of justice. Moreover, it becomes more important to instil justice rather than secure individual freedom.# In light of these theories, contradictions in the law of contract can be easily identified.

A clear example of a tension between these theories can be seen in the classification of conditions, warranties and innominate terms. The traditionalnon-interventionist approach adheres to the orthodox system of conditions and warranties. In a contract, terms classified as conditions are those that have been outlined by statues (for instance employer-employee agreements), those that have been specifically defined to be by the contracting parties, or those defined by judicial classification. In the market-individualist approach, the courts can implya condition if it speaks to the root of the contract as was established in Couchman v. Hill [1947] KB 554. This occurs when an element of the contract encompasses the very essence of the agreement. This approach also appeals to the commercial significance of the terms.# Additionally, the courts will define a term as a condition when it is bound by higher authorities, which functions to establish...
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