17. Non-compensatory remedies

This chapter considers a range of non-compensatory remedies that are available at English law in cases of breach. Non-compensatory remedies seek to respond to breach of contract in ways other than compensation. The starting point for non-monetary obligations is that breach is best remedied through the award of damages. Literal enforcement of such an obligation, through an order for specific performance or an injunction, is only awarded in exceptional circumstances. In contrast, obligations involving the payment of a definite sum of money are frequently literally enforced through the remedy of debt. This chapter first examines literal performance as a non-compensatory remedy before discussing debt, gain-based remedies, and restitution interest.

14. Protecting the public interest

This chapter examines how English law deals with contracts against the public interest under the doctrine of illegality. The doctrine of illegality reflects a broader principle that applies across private law, that legal actions cannot be founded on illegal acts. In contract law, its implication is that contracts contrary to law or public policy are void. The chapter first considers the problem of illegal behaviour in contracting before discussing the rule-based approach to illegality and its limits. It then reviews the Supreme Court decision in Patel v Mirza and how it gave rise to the ‘range of factors’ approach to illegality. It also looks at criteria that make a contract illegal, including cases where the illegality consisted of criminal and civil wrongs. The chapter concludes with an overview of other types of illegality, such as the ‘injurious to good government’ ground and restraint of trade.

5. Non-contractual promises

This chapter considers how promissory and proprietary estoppel intersects with the law of contract. Where an agreement is unenforceable at contract law because some legal prerequisite or formality has not been met, that role is played by the law of estoppel. The law of estoppel works by deeming a party to be legally prevented (‘estopped’) from going back on something she has in the past asserted, promised, or accepted. The effect of estoppel is to hold the person to that past assertion or promise, by preventing her from resiling from it. This chapter first examines the context of promissory estoppel before discussing its requirements and its effect, such as suspending rights and extinguishing debts. It then explains the requirements of proprietary estoppel, namely: there must be a promise or encouragement; the promise or encouragement must induce reasonable reliance; reliance must be detrimental; and unconscionability.

2. Bargaining and agreeing

This chapter focuses on agreement between parties as a requirement in the formation of a contract. Agreement is said to be reached when one party (the ‘offeree’) makes an offer to another proposing certain terms by which he intends to be bound, which that other party accepts as made. An agreement will only be taken to have been reached if the acceptance perfectly mirrors the offer. This chapter first examines the relatively straightforward situation of a seller and buyer bargaining over a prospective sale. It explains the distinction between an offer, an invitation to treat, and a counter-offer, as well as the importance of communicating acceptance and applicability of the postal rule to modern forms of communication. It also considers how the principles of offer and acceptance translate to other forms of contracting. The chapter covers the most influential and important cases in the subject area.

18. Privity and third parties

This chapter examines how English law, through a doctrine known as privity of contract, deals with the problem posed by contracts whose performance involves third parties. According to the doctrine of privity, a contract ordinarily only affects persons who are party to it. Third parties are neither bound by the contract nor entitled to claim rights under the contract. However, the courts and Parliament developed a number of exceptions to the strict rule of privity, each of which gives third parties a right to sue under the contract in a certain type of situation. For example, the Contracts (Rights of Third Parties) Act 1999 gives third party beneficiaries a right to enforce contract terms. This chapter first considers the problem of third party rights in contracting before discussing the effects of privity and the provisions of the Contracts (Rights of Third Parties) Act 1999 in more detail.

15. Breach of contract

This chapter examines how English law defines breach of contract and what the immediate effect of breach is on the validity of the contract, along with the obligations of the parties under the contract. It first considers the core principles underlying the law’s approach to defining breach before explaining how the courts assess performance and the consequences of breach, with particular emphasis on cases involving repudiation. It then discusses three types or classes of contractual terms: conditions, warranties, and innominate terms. It also looks at how the law deals with situations of anticipatory breach and concludes with an analysis of the scope and limits of the right of a party to terminate the contract following a repudiatory breach by the other party.

13. Controlling contract terms

This chapter examines how the law regulates contract terms, with particular emphasis on rules that are intended to protect weaker parties. It begins with a discussion of the limits of freedom of contract and proceeds by assessing the role played by formal requirements, such as the requirement that contracts be in writing. It then considers how the law regulates contract terms which seek to alter the liability that one party will have in the event of breach. More specifically, it looks at exclusion clauses in the common law and the statutory regulation of such clauses, along with liquidated damages, contractual remedies, and the rule against penalties. It also explores the extent to which consumer protection law restricts the terms that can be included in consumer contracts, especially when dealing with the problem of unfair terms.

11. Untrue statements

This chapter examines how English law deals with the problem of untrue statements through the doctrines of misrepresentation and unilateral mistake. It begins with an overview of contractual transactions involving at least some measure of information asymmetry and proceeds by considering the basic principles of the law of misrepresentation. It then considers the three elements of false statements: the absence of general duties to disclose relevant facts, an objective approach to construing ambiguous statements, and a distinction between statements of fact and statements of opinion. It also discusses the remedies available to the representee in the case of misrepresentation, along with two types of unilateral mistakes recognized in law: unilateral mistakes as to identity and unilateral mistakes as to terms. The chapter concludes with an analysis of misleading selling practices and statutory remedies which are available to victims of misleading selling practices under the law of unfair commercial practices.

10. Fundamental changes

This chapter examines the doctrines of frustration and common mistake that deal with situations where fundamental changes have occurred. Frustration and common mistake apply to situations where the parties find themselves in uncharted territory. The doctrines ask courts to determine the limits of a contract, the point where the contractual framework runs out and the contract no longer holds. This chapter first considers the impact of ‘unknown unknowns’ on the contract and the distinction between frustration and common mistake before discussing frustrating events and the consequences of frustration. It also describes three types of common mistake that render the contract void: mistakes as to the existence of the subject matter, mistakes as to the possibility of performance, and certain types of mistakes as to the quality of the subject matter. Finally, it looks at the legal consequences of common mistake and remedies for common mistake.

3. Consideration

This chapter discusses consideration as a requirement for an agreement to be treated as a legally binding contract. Consideration is the price one party pays for the other party’s promise or performance. The doctrine of consideration provides, in essence, that a price of some sort must be paid if an agreement is to be enforceable as a contract. This chapter begins with an analysis of the first requirement imposed by the doctrine of consideration: that the act, forbearance, promise, or commodity given in exchange for the promise should be something of value. It then examines the three different conceptual approaches used in the legal understanding of value based on the idea of economic value, benefit and detriment, and practical benefit. It also describes the ingredients of exchange and includes case in depth boxes that cover the most influential and important cases pertaining to consideration.