Contract Law

Contract Law
A Comparison of Civil Law and
Common Law Jurisdictions

Claire-Michelle Smyth and Marcus Gatto

Contract Law: A Comparison of Civil Law and Common Law Jurisdictions

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 Abstract
This text serves as an accessible introduction to the law of contract. The
headings chosen for examination track the main points in the lifetime
of a contract—from its formation, drafting, and onward to its eventual
dissolution, whether this occurs due to the terms of the contract, the
will of the parties, or because of a breach of the agreed terms. It also pro-
vides studies of other notable areas within the subject, such as third-party
rights, damages, and equitable remedies. In distinction to other guides to
contract law, this text provides a comparative analysis of the area, incor-
porating sources drawn from both the civil law tradition, characteristic of
several nations within Continental Europe, as well as the Anglo-American
common law tradition, with cases and legislation drawn from England
and the United States of America. It also explores contract law in the
unique context of so-called hybrid jurisdictions—those which incorpo-
rate elements of both the common law and civilian traditions; chosen for
study here are exemplary jurisdictions represented by the American state
of Louisiana and Scotland in the United Kingdom. As business assumes a
global dimension, knowledge of the operation of contract law across var-
ious legal traditions and national contexts is increasingly at a premium.
This text enables the student to gain a coherent vision of contract law
across a wide range of legal and theoretical frameworks, as well as to speak
confidently when discussing the intricacies of the subject. It is at once an
introductory text, as well as a reference text, which students and profes-
sionals alike can consult in the course of their studies and future careers.

Keywords
American law, civil law, civil tradition, comparative law, contract law,
contracts, English law, Europe, European law, French law, German law,
legal families, legal systems, private law
 Contents
Acknowledgments�����������������������������������������������������������������������������������ix

Chapter 1 Introduction to Contract Law����������������������������������������1

Chapter 2 General Principles of Common Law and Civil Law
Jurisdictions�����������������������������������������������������������������15
Chapter 3 Contract Formation�����������������������������������������������������27
Chapter 4 Terms of a Contract������������������������������������������������������63
Chapter 5 Defeating Contractual Liability������������������������������������85
Chapter 6 Discharge of Contracts�����������������������������������������������109
Chapter 7 Damages���������������������������������������������������������������������131
Chapter 8 Equitable Remedies����������������������������������������������������143
Chapter 9 Third Party Rights������������������������������������������������������161
Chapter 10 Hybrid Jurisdictions of the Common Law and
Civilian Traditions������������������������������������������������������175

About the Authors�������������������������������������������������������������������������������185

Index�������������������������������������������������������������������������������������������������187
 Acknowledgments
Claire-Michelle and Marcus would collectively like to thank their respec-
tive institutions, the University of Brighton and Griffith College Dublin,
for their support and encouragement throughout this project.
Individually, Marcus would like to thank his parents, Elaine and
Charles, who have helped him immensely over the years. In particular, he
would like to thank his sister, Corinne, and her husband, Nils, who have
always been a great support. To his friends, and other family, p
­ articularly
Moira and Gareth for the meals and occasions to decamp and de-stress.
He would also like to note his love and affection for the next generation,
including his lovely new niece, Astrid, darling Clara and little Henry.
Finally, he would like to thank Edward, without whose patience and
­support he would not have been able to complete book, for the good and
valuable “consideration” he has provided over the years.
Individually, Claire-Michelle would like to thank her family and
friends for their support, encouragement, and wisdom. Her contributions
in this book are dedicated to her son Glen.
 CHAPTER 1

Introduction to Contract
Law
Contracts are agreements between two or more parties which can be
enforced in a court of law and impose binding obligations. The word
“contract” often suggests a very formal or technical document drawn up
by lawyers, and while this may be true of many complex commercial
contracts, and, indeed, though certain contracts (such as those for the
sale of land) must be written, an arduous negotiation and drafting process
and formalities are not always a necessity to have a legally binding con-
tract. Indeed, contracts may be settled orally, without any specific legal
terminology. The law of contract determines which agreements are legally
binding and enforceable at law and which are not; not all obligations can
be enforced in court. How the law of contracts approaches such issues
differs between jurisdictions and these differences form the subject matter
of this and subsequent chapters.
Contracts may be entered into by any legal person that is: any
individual or commercial entity with legal personhood. Thus, con-
tracts might be personal or commercial in nature. The obligations in
a contract are freely assumed. In other words, you agree the terms and
obligations in the contract to which you will be bound; the law does
not impose these on you. Distinguish this from, for example, the law
of tort, which places a general duty on us that we do not injure oth-
ers through our careless actions, whether we expressly consent or not.
While the law may impose certain terms in a contract (see Chapter 4),
there is no general requirement for you to enter into the agreement in
the first place.
2 Contract Law

Freedom of contract is an essential, common doctrine underpinning

the legal regimes examined here.1 Under this theory, parties freely nego-
tiate agreements and bargain as equals and, as such, the law should only
intervene to uphold the agreed terms of the contract. This theory is pre-
mised on the belief that every person negotiating a contract has equal
bargaining power and fails to account for the fact that, in some views,
contracts have historically served to enforce exploitative dynamics in soci-
ety. The case of Lochner v. New York illustrates a liberal enforcement of
the doctrine.2 The State of New York enacted legislation restricting the
amount of hours that bakers could work, based on evidence that hours in
excess of 60 per week would be detrimental to the health of the employee.
Lochner was prosecuted twice for flouting this legislation and on his sec-
ond conviction appealed. Here, the United States Supreme Court struck
down the legislation as offensive to the doctrine. The court held that the
employer and employee could negotiate hours of work and the role of the
law should be to enforce those mutually agreed terms and not to intervene
unnecessarily to restrict the parties.3 The reality of this and similar cases,
however, is that the two parties are rarely on an equal footing; employ-
ers, for example, often have the upper hand. If the employee does not
agree, he may be dismissed, and another will take his place.4 Accordingly,
the freedom of contract is tempered in practical terms by the concept of
inequality of bargaining power. In more modern times, the law began to
recognize this and moved to intervene and level the field.5 Legislation was

1
  See for example, art. 1102 French Civil Code (general provisions); Vertragsfrei-
heit (contractual freedom) as well as freedom as to form (Formfreiheit) and content
(Inhaltsfreiheit) of contracts is secured under German Law, see, generally, Pieck,
M.P. 1996. “A Study of the Significant Aspects of German Contract Law,” Annual
Survey of International & Comparative Law 3, no. 1, pp. 111–76, 111–12; Youngs,
R. 2014. English, French & German Law, 543–47, 3rd ed. ­London: Routledge.
2
  198 US 45 (1905).
3
  It should be noted that this case was subsequently overruled in West Coast Hotel
Co v. Parrish 300 US 379 (1937).
4
  For further discussion of this case see Sunstein, C.R. 1987. “Lochner’s Legacy”
Columbia Law Review 87, no. 5, pp. 873–919; Bernstein, D.E. 2003. “Lochner’s
Legacy’s Legacy.” Texas Law Review 82, no. 1, pp. 1–64.
5
 Tettenborn, A. 2002. “From Chaos to Cosmos—or is it Confusion.” Web
­Journal of Current Legal Issues 2, pp. 1–13.
 Introduction to Contract Law 3

enacted in order to protect the weaker party in situations where it was

recognized that there was an inherent inequality, such as consumer and
employment contracts.6

Contracts in the Common Law and Civilian Tradition

The creation of contractual relationships is examined here through the
prism of two dominant legal paradigms across Europe and the Americas:
those of the civilian and common law traditions. The English common
law system began in the 1100’s and 1200’s and its propagation across
continents traces the spread of British rule itself.7 The civilian tradition,
by contrast, traces its origins to Roman law and represents the domi-
nant legal tradition in Continental Europe, Central and Latin America,
as well as some nations on the African continent; this influence was like-
wise extended as colonizers imposed their legal traditions on overseas
holdings.8 Within the civilian tradition, the Germanic9 and Napoleonic
(French) codes10 are selected here as representing the modern develop-
ment of the civilian tradition in Europe. Accordingly, our discussion will

6
  Zweigert, K., and H. Kötz. 1998. Introduction to Comparative Law, 331–33,
3rd ed. Oxford: Clarendon Press.
7
  David, R., and J.E.C. Brierly. 1985. Major Legal Systems of the World Today,
308–32, 3rd ed. London: Stevens & Sons.
8
  David, R., and J.E.C. Brierly. 1985. Major Legal Systems of the World Today,
35–79, 3rd ed. London: Stevens & Sons.
9
  Hereafter, all references to the “German Civil Code” should be taken to refer
to the BGB [German: Bürgerliches Gesetzbuch]. All references in this book are
taken from the updated, online version available at: https://gesetze-im-internet.
de/bgb/index.html. All relevant English translations are taken from the official
translation, the index of which is available at: https://gesetze-im-internet.de/eng-
lisch_bgb/index.html
10
  Hereafter, all references to the French Civil Code [French: Code civil fran-
çais], unless otherwise designated, should be understood to reference the most
recent official version of the code in French, available at: https://legifrance.gouv.
fr. This version of the code, consolidated in January 2018, incorporates the most
recent amendments to the code through the date of publication for this text. The
translations provided in this text are unofficial and undertaken by the co-author,
Marcus Gatto.
4 Contract Law

focus most heavily on the concepts identified in each chapter and how
these have been defined and interpreted in either tradition.
In the common law system, there is no formal definition of a con-
tract, nor has there been a sustained effort to codify (draft into one code)
those rules applicable to the formation of contracts. Textbooks have pro-
vided various definitions such as “the law of contract may be provisionally
described as that branch of the law which determines the circumstances
in which a promise will be legally binding on the person making it”11 or
“A contract is an agreement giving rise to obligations which are enforced
or recognized by law.”12 The lack of a specific definition of the law of con-
tract results from the evolution of this area of law in common law. It did
not develop from overarching theory of a contract but rather a form of
primordial action in the common law—known as “the action of assump-
sit”—whereby success was tied to the form of a claim asserted to a greater
extent than the factual scenario giving rise to the claim.13 While there is
no universally accepted definition of contract in common law today, the
basic principles of contract law can be defined with sufficient certainty.
The factor which distinguishes contractual from other legal obligations is
that they are based on the agreement of the contracting parties.14 In the
civilian tradition, provisions within private law codes distinguish con-
tracts from other types of obligations also based on the assent of the par-
ties. However, they further contain cataloguing of the types of contracts
which can be made, and what elements must be present to render them
legally binding.15

11
  Beatson, J., A. Burrows, and J. Cartwright. 2010. Ansons Law of Contract, 29th
ed. London: Oxford University Press.
12
  Peal, E. 2011. Treitel on the Law of Contract, 13th ed. London: Sweet and
Maxwell.
13
  Furmston, M. 2013. Cheshire, Fifoot and Furmston’s Law of Contract, 5-8, 16th
ed. Oxford: Oxford University Press.
14
  Peal, E. 2011. Treitel on the Law of Contract, 13th ed. London: Sweet and
Maxwell.
15
  Zweigert, K., and H. Kötz (Translated by T. Weir). 1998. Introduction to Com-
parative Law, 366–73. 3rd ed. Oxford: Clarendon Press.
 Introduction to Contract Law 5

Contract Law in the Modern European Union

There is no pan-European code of contract law, and those seeking to
enforce a contract must generally frame their arguments in terms of
national laws or codes on the subject. The EU does have limited com-
petence in legislating to provide the form and enforcement of contracts
regarding, for example, consumer protection.16 That said, the area of con-
tract law is still very much one of national legal regimes. Additionally,
the EU has competence in relation to private international law, which
concerns the agreed procedural mechanisms for enforcement of contrac-
tual obligations, for example, where to litigate a claim, in circumstances
of trans-national commerce and related matters heavily associated with
the freedoms of the EU, for example, freedom of movement of people,
­services, and capital. Harmonization projects aimed a standardizing the
substantive aspects contract law among EU member states have not gained
the momentum necessary to supplant the role of national legislatures and
courts in the development and enforcement of contract law across the
jurisdictions which form part of the EU.17 This is not to pretend that no
efforts have been made in this regard, with the notable example of the
Principles of European Contract Law (hereinafter PECL), produced by
the Commission on European Contract Law, headed predominantly by
Ole Lando and Hugh Beale, which provides a general account of those
principles of contract law which are considered common to European
member states.18 These Principles are not legally binding per se, but may
be incorporated by explicit reference into a contract, or used to evidence
general principles for the interpretation of contracts. Efforts aimed at

16
 See for example, Consumer Sales Directive 1999/44/EC; Unfair Contract
Terms Directive 93/13/EEC.
17
  Kötz, H. 2017. European Contract Law, 1–16, 2nd ed. Oxford: Clarendon
Press.
18
  Lando, O., and H. Beale (eds.). 2000. Principles of European Contract Law
Parts I and II; Lando, O., C.E. Prüm, and R. Zimmerman. 2003. Principles of
European Contract Law Part III.
6 Contract Law

creating a binding, general European law of contracts have not, to date,

been successful.19

International Contract Law

As well, at the international level, there are restatements of common prin-
ciples of contract law, such as the Principles of International Commer-
cial Contracts produced by International Institute for the Unification of
­Private Law (UNIDROIT),20 and international agreements which govern
the terms of certain contracts of an international character, such as con-
tracts for the sale of goods, governed by the United Nations Convention
on Contracts for the International Sale of Goods (CISG)21 and overseen
more generally at the international level by United Nations Commission
on International Trade Law (UNCITRAL). These international efforts
to codify the law applicable to certain contracts often mix elements from
both the common law and civilian traditions.

Contract Law in the United States of America

Turning finally to the American jurisdiction, there is no single law of con-
tract, as the laws relating to contracts are unique to each state, as adopted
by their respective legislatures. In narrow instances, contract terms and
enforcement may be regulated at the federal level in limited areas.22 Over
the years, efforts have been made to provide general or “model” laws
to standardize the law in certain areas.23 One of these, the Restatement

19
  Kötz, H. 2017. European Contract Law, 9–11. 2nd ed. Oxford: Clarendon
Press.
20
 International Institute for the Unification of Private Law (UNIDROIT).
2010. Principles of International Commercial Contracts.
21
 United Nations Commission on International Trade Law (UNCITRAL).
1980. United Nations Convention on Contracts for the International Sale of Goods
[CISG].
22
  See for example, Consumer Credit Protection Act 15 U.S.C. ch. 41 §1601 et
seq.
23
  Mehren, T., and L. Murray. 2007. Law in the United States, 20–23. New York,
NY: Cambridge University Press.
 Introduction to Contract Law 7

(­ Second) of Contract Law (hereinafter, Restatement),24 is a general treatise

on contract law in the United States, and consolidates general principles
of contract law. However, the most influential effort at a model law of
contract has been the Uniform Commercial Code,25 a uniform act govern-
ing commercial transactions (contracts for goods) the provisions of which
have been enacted, in varying in whole or in part by certain articles, by
all 50 states.26 We will concern ourselves primarily with Article II of the
UCC which governs sales of goods as this Article is most relevant to our
purposes; the other Articles are more specific to particular types of trans-
actions or legal instruments. States have modified certain articles, which
were not patent with their own legal terminologies or custom, but, in the
main, these are largely confined to the formalities used in the reproduced
articles rather than their substance.27

Legal Theory and Structure of Common Law and

Civil Legal Systems
This text is intended to provide the reader with an accessible introduction
to the subject of contract law and, toward this, our discussion is com-
prised of legislation, case law, examples and commentary which present
the subject in a straightforward manner—before it is obscured by complex
considerations or abstract terminology. Our discussion also incorporates

24
  The Restatement and Restatement (Second) of Contracts were drafted by the
American Law Institute in 1932 and 1981, respectively. All references to the
“Restatement” in the text are referent to: Institute, American Law. 1981. Restate-
ment of the law, Second: Contracts 2d., St. Paul: American Law Institute.
25
  The Uniform Commercial Code (UCC) is a model law drafted by the A ­ merican
Law Institute (ALI) in Conjunction with the National Conference of Commis-
sioners on Uniform State Laws (NCCUSL); hereinafter all references to specific
provisions of the UCC are referent to the Code as adopted under Delaware Code
(as a representative law), see Del. Code Ann. tit. 6.
26
 States like Louisiana would be outliers in this regard; while most states
adopted the UCC in whole, others have not, see for example, White, J.J., and
R. ­Summers. 2000. Uniform Commercial Code, 1–5, 313–23. 5th ed. New York,
NY: West Group.
27
  Though there are examples of extensive variations, see for example, Stuckey,
J.A. 2002. “Louisiana’s Non-Uniform Variations in U.C.C. Chapter 9” Louisiana
Law Review 62, no. 3, pp. 663–84.
8 Contract Law

an added dimension of analysis, which emphasizes the differences in the

law governing contracts that exist between the Anglo-American (English
and American) common law and civilian traditions (European). It will
also examine legal systems that incorporate elements of both traditions,
so-called hybrid jurisdictions.

Civilian and Common Law Legal Theory

As a preliminary matter, it may be helpful to note the ways in which these

traditions vary before we narrow our inquiry to the subject of contracts.
In the common law tradition, judges sitting in court generally apply rules
found in legislation or established in previous cases to the facts at issue
in order to craft their decisions;28 moreover, lower courts (such as trial
courts) are bound by the decisions made by higher courts (such as a court
of appeal) by the doctrine of stare decisis.29 This doctrine holds that, when
faced with identical or near-identical factual scenarios, judges apply uni-
form rules, which have been identified and articulated by judges in previ-
ous cases (precedents) in order not only to bring a resolution to the case
before them, but also to ensure consistency in the legal system as a whole.
In this manner, previous cases have bearing on the development of law
and the resolution of future cases; this has led one legal commentator to
describe the operation of precedent in the common law system as a sort of
“chain novel,”30 whereby judges author their decisions by continuing the
work of their predecessors. In contrast, judges are not bound by previous
decisions in the civilian tradition;31 rather, the rules applicable to a given
case are found in a codified body of laws, a civil code, which law profes-
sionals study extensively during their education: “[s]o the Common law
comes from the court, Continental law comes from the study; the great

28
  David, R., and J.E.C. Brierly. 1985. Major Legal Systems of the World Today,
366–67. 3rd ed. London: Stevens & Sons.
29
  David, R., and J.E.C. Brierly. 1985. Major Legal Systems of the World Today,
376–82. 3rd ed. London: Stevens & Sons.
30
  Dworkin, R. 2006. Law’s Empire. 228–232. Oxford: Hart Publishing.
31
  Glenn, H.P. 2010. Legal Traditions of the World, 145. New York, NY: Oxford
University Press.
 Introduction to Contract Law 9

jurists of England were judges, on the Continent professors.”32 The task of

the judge in the case is to apply relevant provisions drawn from the code
to the case before her or him. In the civil law tradition, there does exist
a doctrine similar in some respects to stare decisis known as jurisprudence
constante (French, consistent jurisprudence), which arises from a consis-
tent interpretation of a legal provision, rather than from rules established
in a previous case—or precedents—in the common law system.33 The
differences are discussed further in Chapters 2 and 10.
Another point of contrast between the civilian and common law tradi-
tions centers on sources of law. In the common law tradition, law consists
of primary (i.e., constitutions, statutes) and secondary (i.e., regulations
or rules promulgated by designated institutions) legislation as well as case
law (precedent) which establishes legal precedents applicable to future
cases. By contrast, the civil tradition accentuates the primacy of the civil
code as a source of law. Where the code is silent on a matter, individu-
als and judges may have recourse to other sources of law also identified
in those codes, such as general principles of law not found in the code,
custom, usage, equitable considerations or the opinions of legal experts.
Indeed, in the civilian tradition, the civil code is meant to provide a gen-
eral and s­ystematic examination of subjects in law and to conduct legal
professionals toward a sound legal conclusion when applied faithfully and
analytically to a certain factual scenario.34 To put a finer point on this
proposition, as one scholar maintains, legal provisions in the civilian tra-
dition are drafted to be “concise,” as they are meant to encompass the wide
range of factual scenarios to be governed by a principle, whereas common
law statutes are intended to be “precise,” as they are only intended to gov-
ern a specific range of facts or scenarios, not to be of general applicability.35

32
 Zweigert, K., and H. Kötz (Translated by T. Weir). 1998. Introduction to
­Comparative Law, 69. 3rd ed. Oxford: Clarendon Press.
33
  Algero, M.G. 2005. The Sources of Law and the Value of Precedent: A Com-
parative and Empirical Study of a Civil Law State in a Common Law Nation.
Louisiana Law Review 65. no. 2, pp. 775–22.
34
 Zweigert, K., and H. Kötz (Translated by T Weir). 1998. Introduction to
­Comparative Law, 69–71. 3rd ed. Oxford: Clarendon Press.
35
  Tetley, W. 2000. “Mixed Jurisdictions: Common Law v. Civil Law (Codified
and Uncodified)” Louisiana Law Review 60, pp. 677–704.
10 Contract Law

For example, Statutes of Frauds36 represent such precise legislation in

the English and American common law systems; these require that a cer-
tain narrow range of contracts must be in writing in order to be valid,
such as contracts concerning an interest in land. Whereas, in the civilian
tradition, the codes seek to define general headings of contracts, their nec-
essary elements, and the formalities required for each methodically. For
example, the French Civil Code sets out types of contract that can be con-
cluded,37 how they are formed,38 their interpretation, and other applicable
rules. 39 Whereas doctrines and concepts such as mistake or consideration
have been jurisprudentially developed through major decisions of courts
over time in the common law system, civil codes specifically identify and
define their nature and effect in a composite code. This is because civil
codes are drafted to serve as the sole and exclusive source of law and to
resolve all questions as to how the law should treat a given contract. This
distinction is relevant in practice as well. For example, when a lawyer in
a common law system analyzes whether her client is liable for a contract
which he mistakenly entered, she will turn to past cases or specific legisla-
tion in order to frame her argument; a civilian lawyer, faced with the same
scenario, would turn to relevant provisions of the civil code to frame hers.

Structure of this Text

In order to provide a faithful and comprehensive portrait of the law of
contract in the civilian and common law traditions, our discussion will
draw on a myriad of examples. To represent the common law tradition,
cases and materials have been drawn from the United Kingdom and the
United States of America, as these jurisdictions are representative of the
common law system, and display many common approaches to the law
of contract. Moreover, the decisions reached in these jurisdictions tend
to have extraterritorial influence, which bear upon the development of
this area of law in other common law nations; in the case of the United

36
  See for example, Statute of Frauds Act 1677 c. 3.
37
  See for example, Arts 1101-1111-1 French civil code.
38
  Arts 1112-1127-4 French civil code.
39
  Art 1188-1192 French civil code.
 Introduction to Contract Law 11

Kingdom, this influence is particularly robust in the case of Common-

wealth and former-Commonwealth nations, due to their shared legal her-
itage and court systems. In the case of the civilian tradition, examples
are drawn primarily from the Germanic and Napoleonic (French) tradi-
tions, which have been selected both for their influence in the context of
­Continental European legal systems, as well as in the development of civil
law systems in the Americas and elsewhere. Moreover, the principles and
provisions of these codes have remained relatively stable in modern times
and provide informative studies as to the development of contract law
in civilian legal systems. Finally, our discussion will also touch upon the
phenomenon of “hybrid” or “mixed” jurisdictions. These legal systems do
not fit comfortably in either the civilian or common law paradigm, and
rather display attributes of both systems. Examples of such “hybrid” juris-
dictions include Québec, the American state of Louisiana, and Scotland.
Turning now to the format of our discussion, the subsequent chapters
are divided in a logical fashion to examine the critical points of contract
formation, drafting, and termination, as well as the issues that can frus-
trate the intentions of the parties and the execution of a contract. Our
discussion aims not only to examine the principal aspects of contract law,
but also, critically, to throw into sharp relief the differences that exist
between the common law and civilian traditions. The methodologies
deployed throughout range from doctrinal (a study of major concepts
in the law), social–historical, to comparative analysis between different
jurisdictions, with a view to providing an accurate and representative sur-
vey of contract law as it stands in the jurisdictions selected for study.
Each section is arranged to provide the reader with a brief introduction
to the subject matter, a description of the concept at issue followed with
complementary analysis from these legal traditions, with examples drawn
from case law (primarily for the common law tradition) or from code pro-
visions and scholarly commentary (for the civilian tradition), concluding
with general observations. The emphasis on case law for the common law
aspects of our discussions is merited by the instrumental purpose individ-
ual cases serve in this tradition. As described earlier, case law in common
law systems serves to define the contours of the law applicable to con-
tracts; the fact-intensive inquiries conducted by courts, which are in turn
marshalled to reach conclusions in individual cases, serve as well a more
12 Contract Law

expansive purpose of developing over time the law applicable to contracts.

Case law, by contrast, does not fulfill the same function within the civil-
ian tradition and, accordingly, examples will be draw from specific code
provisions as well as commentaries on interpretations of provisions.

Chapter Outline
The purpose of this book is to provide the student with an overview of
the basic principles of contract law in both common law and civil law
jurisdictions. Businesses, and individuals, enter into agreements on a
daily basis and it is important to understand which of those agreements
will be legally binding and what remedies may be available should the
other party breach those agreements. As corporate entities expand and the
forms through which transactions take place evolve to incorporate tech-
nological advances, it is increasingly the case that contracts have acquired
a greater international character, corresponding to the greater freedom
of movement citizens enjoy generally in the contemporary p ­olitical
order; therefore, knowledge of both systems in theory and practice is a
valued expertise.
First, Chapter 2 gives an overview of the general principles of law
guiding the common law and civil law jurisdictions. Chapter 3 of this
book examines the elements required in both common and civil law
jurisdictions to form a legally binding contract. These elements trans-
form a promise into a binding agreement enforceable in a court. In
common law systems there are five elements, all of which must be pres-
ent—an offer, acceptance, consideration, the intention to create legal
relations, and capacity. The civilian tradition shares the requirements of
offer and acceptance, though their legal effectiveness will be equally mea-
sured against distinct criteria. Moreover, we will explore those aspects
of formation which are unique to the civilian tradition such as “object”
and “cause.” Once we have established that a contract has been formed,
Chapter 4 then e­ xamines the terms of that contract. There are three types
of terms relevant in the common law system. Express terms are those
that have been agreed upon between the parties. They might include
for example delivery dates, prices, hours of work, or ways in which
work must be ­carried out. Implied terms are those not expressly agreed
 Introduction to Contract Law 13

between the parties but are implied into every contract either by fact
or by law. For example, every time we buy an item in a shop we are
not given a written contract that expressly sets out our rights. However,
consumer legislation supplies terms to each transaction as it is implied
into every consumer contract. Finally, we look at exclusion clauses, which
seek to exclude ­liability where one party suffers loss or damage because
of a breach of contract. The courts have developed strict rules to deter-
mine whether these clauses will be upheld due to their inherently unfair
nature. In the civilian tradition, terms may be supplied by the parties,
the code itself, or, as a last resort, a judge in order to give effect to the
intentions of the p ­ arties. Certain terms are either prohibited or may be
ineffective in certain circumstances, such as terms which are contrary to
law or public policy.
As we have seen earlier, one of the original key theories of contract
law was the freedom to contract, whereby contracts are presumed to be
enforceable statements of freely agreed terms. However, individuals do not
always freely enter into contracts with full and perfect knowledge; here,
courts have shown themselves willing to intervene and set aside or modify
contracts to prevent injustice. Chapter 5 identifies the circumstances in
which the court allows individuals to avoid their ­obligations under the
contracts they have entered. In common law, where there is a mistake,
misrepresentation, or duress it cannot be said that there was a meeting of
the minds or that the parties freely entered into the ­contract. Similarly, in
the civilian tradition, mistake, duress, and fraud may vitiate consent to a
contract, and render the obligations thereunder void or voidable.
Chapter 6 then examines the ways in which a contract can come to an
end. Three main ways of terminating a contract are examined in common
law jurisdictions. A contract can end by agreement of the parties. The
contract can also come to an end when it has been performed. Where a
contract is for a specific action or duration it will naturally come to an end
once its obligations have been fulfilled. Finally, the issue of frustration
of purpose for the contract is examined. The civilian discussion com-
mences with a nuanced examination of where nonperformance amounts
to breach of contract and what steps must be taken by the parties in
respect of either. It also discusses common ways in which a contract may
terminate and the consequences specific to these.
14 Contract Law

Chapter 7 will examine in what circumstances parties to a contract

have a claim for damages where the other party has not fulfilled their
contractual obligations, as well as what liability parties have in the pre-­
formation, or negotiation, periods.
In Chapters 8, the equitable remedies of injunctive relief, rescis-
sion, and rectification are considered in the common law tradition. This
­chapter also incorporates an examination of the remedies available in the
civilian tradition, which would seem to privilege specific performance
over damages where a contract has been not been performed.
Historically, only the parties to the contract itself could enforce the
contract and claim a remedy for breach. Often, this created an unjust
situation where a third party suffered a loss as a result of breach but was
unable to obtain a remedy. Chapter 9 looks at the rights given to third
parties and the circumstances in which they can conclude, enforce, be
liable for a contract they themselves did not settle.
Finally, Chapter 10 examines hybrid jurisdictions. These are juris-
dictions, which display a mixture of both common law and civil law
elements. Indeed, these jurisdictions incorporate concepts from both tra-
ditions, the traces of which can be seen in the substance of their laws, the
approaches to adjudication, and the framing of legal arguments.
 Index
acceptable terms, civilian tradition, 80
acceptance
in American law, 47–48
in civil law tradition, 55–58
in English law, 32–34
Adams v. Lindsell, 33–34
adversarial system, 21–23
advertisements in English law, 29–30
agency, 161
in Anglo-American Tradition,
169–170
civil law tradition, 172
AG of Belize v. Belize Telecom Ltd, 66
Alfred Marks Realty Co. v. “Churchills,”
125
America, contract law in, 6–7
American law
contract formation (see contract
formation)
contractual terms (see contractual
terms)
discharge of contract (see discharge
of contract)
equitable remedies (see equitable
remedies)
Anglo-American tradition, 22–23
United States, 169–170
assignment
civil law tradition, 172–173
English law, 165–167
United States, 168–169
Balfour v. Balfour, 41
The Bank of Credit and Commerce
International v. Aboody, 149
Bannerman v. White, 64
Barber v. NWS Bank Ltd, 68
Battle of the Forms, 49
Bell v. Lever Bros, 92
bilateral (synallagmatic) contract, 35,
54
bilateral offer, 28
breach
American law, 123–124
of contract, damages for, 131, 138
English law, 111–115
failure of performance, 114–115
impossibility, 113–114
renunciation, 112–113
Brogden v. Metropolitan Railway
Company, 32–33
Canada Steamship Lines Ltd v. R, 72
capacity
in American law, 52–53
in civil law tradition, 59–60
in English law, 42–43
Carbolic Smoke Ball Company, 46
Carlill v. Carbolic Smoke Ball
Company, 29, 33
cas fortuit (fortuitous occurrence), 129
cause and object in civil law tradition,
60–62
Chappell v. Nestle, 36–37
civil law tradition, 8–10
adversarial system, 21–23
Code, 19–20
contract formation (see contract
formation)
contracts in, 3–4
contractual terms (see contractual
terms)
damages (see damages)
discharge of contract (see discharge
of contract)
equitable remedies (see equitable
remedies)
inquisitorial system, 21–23
legal professionals in, 20–21
privity of contract (see privity of
contract)
civil legal system, 7–10
codes, 19–20, 23
Collins v. Godefroy, 39
188 Index
common law system, 4
contracts in, 3–4
judges in, 15–16
theory and structure of, 7–10
common law tradition, 8–10
common mistake
civilian tradition, 105–106
English law, 92–94
consensus ad idem, 78
consideration
in American law, 50–52
in civil law tradition, 58
in English law, 34–40
The Consumer Rights Act, 66, 111,
150
contract, 1–3. See also discharge of
contract; privity of contract
in civil law tradition, 53–55
common law and civilian tradition,
3–4
discharge of (see discharge of
contract)
freedom of, 2
obligations in, 1
and outsider, 162–163
relationship, 3
contract formation
in American law, 43
acceptance, 47–48
capacity, 52–53
consideration, 50–52
exception, 48–49
extinguishing an offer, 46–47
intentionality, 44–45
offer, 45–46
option contracts and firm offer,
47
in civil law tradition, 53
capacity, 59–60
cause and object, 60–62
consideration, 58
definition of contract, 53–55
illegal/immoral contracts, 62
offer and acceptance, 55–58
in English law, 27
acceptance, 32–34
advertisements, 29–30
capacity, 42–43
consideration, 34–40
goods displayed for sale, 30–31
legal relations, creating, 40–42
offer, 27–28
offer/invitation to treat, 28–29
termination of offer, 31–32
contract law
in American jurisdiction, 6–7
in EU, 5–6
international level, 6
Contracts (Third Party Rights) Act
1999, 163–165
Contracts for the International Sale of
Goods (CISG), 6
contractual liability
in the civilian tradition, 101–102
common mistake, 105–106
duress, 106–107
fraud, 106
inexcusable mistake, 105
mistake, 102–104
risky/uncertain bargains,
104–105
in English law
common mistake, 92–94
duress, 96
fraudulent misrepresentation,
95–96
legislation, 96
legitimacy, 97
misrepresentation, 94–95
mistake, 85–86
negligent misstatement, 96
reasonable alternative, lack of, 97
unilateral mistake, 86–92
in the United States
duress and undue influence,
100–101
misrepresentation, 99–100
mistake, 97–99
contractual terms
in American law, 73
exemption clauses, interpretation
of terms, 77
integrated agreements, 73–75
omission and the interpretation
of terms, 75–76
omitted/unexpressed terms, 76
 Index 189
terms regulated/supplied in laws,
78
in the civilian tradition, 78–79
acceptable terms, 80
exemption clauses, omitted terms
and protective rules, 82–84
interpretation, 80–82
mandatory and supplementary
terms, 79–80
prohibited terms, 80
types of contracts, 80
in English law
classification, 67–68
express and implied terms,
63–66
incorporation, 69–71
interpretation, 71–73
contra proferentem rule, 71–72, 77
convention of the parties/terms,
civilian tradition, 126–127
Corpus Iuris Civilis, 19–20
Court of Chancery, 144–147
Couturier v Hastie, 92
covenants (promises), 166
CTN Cash and Carry Ltd v. Gallaher,
97
culpa in contrahendo, civilian
tradition, 137
Cundy v. Lindsay, 88
Curtis v. Chemical Cleaning and
Dyeing Co Ltd, 69
Cutter v. Powell, 110
damages
for breach of contract, 131
in the civilian tradition
breach of contract, 138
culpa in contrahendo, 137
demand for performance,
138–140
limitations, 142
nature, 140–142
in English law
demonstration, 135
headings, 131–132
limitations, 132–134
pre-agreed, 134
in the United States
limitations, 136–137
types of interest, 136
Davis Contractors Ltd v. Fareham
UDC, 118
De Cicco v. Schweizer, 167
delegation, United States, 168–169
demand for performance, civilian
tradition, 138–140
Derry v. Peek (Herschell), 95–96
Dick Bentley Productions Ltd v. Harold
Smith (Motors) Ltd, 65
discharge of contract
in American law, 120
breach of a condition, 123–124
faith, 126
frustration, 125
impracticability/impossibility,
125
material breach, 124
non-occurrence, 125
performance, 121–123
in the civilian tradition
convention of the parties/terms,
126–127
German and French law,
circumstances in, 130
impossibility, 129
non-fruition, 128
nonperformance vs. breach,
127–128
in English law
breach, 111–115
frustration, 115–120
performance, 109–111
doctrine of jurisprudence constante,
23–25
doctrine of precedent (stare decisis),
8–9, 16
doctrine of substantial performance,
121
duress, 159–160
civilian tradition, 106–107
English law, 96
and undue influence, United States,
100–101
The Earl of Oxford’s Case, 144
E-Commerce Regulations, 31
Edwinton Commercial Corporation v.
Tsavliris Russ Ltd, 119
190 Index
efficient breach, civil law tradition,
158–159
England, equitable remedies. See
equitable remedies
English common law system, 3,
17–18
English law
contract formation (see contract
formation)
contractual liability (see contractual
liability)
contractual terms (see contractual
terms)
damages (see damages)
discharge of contract (see discharge
of contract)
privity of contract (see privity of
contract)
English statutory law in the United
States, 18–19
Enimont Overseas AG v. Rojugotanker
Zadar, 96
Entores Ltd v. Miles Far East
Corporation (Denning), 33
equitable remedies
in American law
reformation/rescission, 155–156
specific performance, 153–155
undue influence, 156
in civil law tradition
efficient breach, 158–159
resolution, 157–158
specific performance, 157,
158–159
undue influence, 159–160
in England
misrepresentation, 148–149
mistake, 148
rectification, 150–151
rescission, 148
unconscionable transaction,
149–150
undue influence, 149
equity, 143–147
specific performance, 151–153
equity, 143–147
European Union (EU), contract law
in, 5–6
exception in American law, 48–49
exclusion clauses
English law, 68–69
incorporation, 69–71
interpretation, 71–73
exemption clauses
American system, interpretation of
terms, 77
civilian tradition, omitted terms
and protective rules, 82–84
expectation interest, 136
express condition, 123
express terms, 63–65
failure of performance, breach,
114–115
faith, American law, 126
Farley v. Skinner (No. 2), 135
FA Tamplin Steamship Co Ltd v. Anglo-
Mexican Petroleum Products
Co Ltd, 117
firm offer in American law, 47
force majeure (overwhelming force),
129
fraud, civilian tradition, 106
fraudulent misrepresentation, English
law, 95–96
Frederick E Rose (London) Ltd v
William H Pim Junior & Co
Ltd, 151
freedom of contract, 2
Freeth v. Burr, 112–113
French Civil Code, 10, 19–20
French code, 54, 55, 81, 83
French law, 57
civilian tradition, 130
French tradition, 56
frustration
American law, 125
English law, 115–120
Gallie v. Lee, 93–94
German civil code, 80
German code, 54, 55, 82–83
German law, 57, 127, 130
Gibson v. Manchester City Council,
28–29
Glasbrook Brothers Ltd v. Glamorgan
County Council, 39
 Index 191
goods displayed for sale, English law,
30–31
G Percy Trentham Ltd v. Archital
Luxfer Ltd (Steyn), 27–28
Grainger and Son v. Gough (Surveyor of
Taxes), 29
Great Peace Shipping Ltd v. Tsavliris
Salvage (International) Ltd,
92, 148
Hadley v. Baxendale, 133
Hamer v. Sidway, 50
Harmonization projects, 5
headings of damages, 131–132
Herne Bay Steam Boat Co v. Hutton.,
116–117
Hochster v. De La Tour, 113
Hong Kong Fir Shipping Co v.
Kawasaki Kisen Kaisha, 67
honor clauses, 42
hybrid/mixed jurisdictions, 8, 11, 176
of Scotland, 176–179
State of Louisiana, 179–183
illegal/immoral contracts in civil law
tradition, 62
implied condition, 123
implied terms, 65–66
impossibility
breach, 113–114
civilian tradition, 129
impracticability/impossibility,
American law, 125
incorporation, English law, 69–71
inexcusable mistake, civilian tradition,
105
Ingram v. Little, 90
inquisitorial system, 21–23
integrated agreements, American
system, 73–75
intentionality in American law, 44–45
interest, United States, 136
International Institute for the
Unification of Private Law
(UNIDROIT), 6
international level, contract law, 6
interpretation, 16
American system, 75–76, 77
civilian tradition, 80–82
English law, 71–73
Jackson v. Union Marine Insurance Co
Ltd, 118–119
Johnson v. Atkins, 125
Jones v. Padavatton, 41
J Spurling Ltd v. Bradshaw, 71
jurisdiction, 15
jurisprudence constante, 9, 23–25,
181–182
Kendall v. Lillico, 71
Kings Norton Metal Co v. Edridge, 89
Krell v. Henry, 116
Labour Relations (Consolidation) Act
1992, 152
Lach v. Cahill, 126
Laemthong International Lines
Company Ltd v. Artis, 164
Lampleigh v. Brathwait, 38
Law Reform (Frustrated Contracts)
Act, 110
Lawrence v. Fox, 167
Lefkowitz v. Great Minneapolis Supply
Store, 45–46
legal professionals in the civilian
tradition, 20–21
legal relations, English law, 40–42
legal system. See civil legal system
legislation, English law, 96
legitimacy, English law, 97
Leonard v. Pepsico, 44–45
L’Estrange v. Graucob Ltd, 69
Lewis v. Averay, 90
liability, English law, 165–167. See
also contractual liability
limitations on damages
civilian tradition, 142
English law, 132–134
in the United States, 136–137
Lochner v. New York, 2
Lord Strathcona Steamship Co Ltd v.
Dominion Coal Co Ltd, 166
Louisiana Civil Code, 20, 180
Lovelock v. Franklyn, 114
Lucy v. Zehmer, 44
192 Index
mailbox rule, 16
mandatory terms, civilian tradition,
79
material breach, American law, 124
Mills v. Wyman, 51
misrepresentation
England, 148–149
English law, 94–95
United States, 99–100
Misrepresentation Act, 148–149
mistake
civilian tradition, 102–104,
105–106
England, 148
English law, 85–94
United States, 97–99
Mitchell v. Lath, 74
Morton’s Trustees v. Aged Christian
Friend Society of Scotland, 178
Moschi v. Lep Air Services Ltd, 112
National Carriers Ltd v. Panalpina
(Northern) Ltd, 117–118
negligent misstatement, English law,
96
non-fruition, civilian tradition, 128
non-occurrence, American law, 125
nonperformance vs. breach, civilian
tradition, 127–128
Notts Patent Brick and Tile Co v.
Butler, 94
Ocean Tramp Tankers Corp v. V/O
Sofracht, 119
Odorizzi v. Bloomfield School Dist, 100
offer
in American law, 45–47
in civil law tradition, 55–58
in English law, 27–29, 31–32
Olley v. Marlborough Court Ltd, 70
omitted terms
American system, 75–76
civilian tradition, 82–84
option contracts in American law, 47
Oscar Chess Ltd v. Williams
(Denning), 64, 65
outsider, 162–163
Pao on v. Lau Yiu Long, 97
Paradine v. Jane, 115
Parker v. Clarke, 41–42
Parker v. South Eastern Railway Co, 70
Partridge v. Crittenden, 29
penalty clauses, 134
“perfect tender” rule, 121, 122
performance
American law, 121–123
English law, 109–111
persuasive authority, 17
Pharmaceutical Society of Great Britain
v. Boots Cash Chemists, 30
Phillips v. Brooks Ltd, 89–90
Pitt v. Holt, 151
Port Line Ltd v. Ben Line Steamers Ltd,
166
pre-agreed damages, 134
precedent condition, 123
precedent, vitality of, 16–17
precise legislation, 10
Price v. Easton, 162
Principles of European Contract Law
(PECL), 5
private law, 176, 177
privity of contract
in civil law tradition
agency, 172
assignment, 172–173
third party benefit, 170–171
in English law, 162–163
Contracts (Third Party Rights)
Act 1999, 163–165
liability and assignment,
165–167
in the United States
anglo-american tradition, agency
in, 169–170
assignment and delegation,
168–169
Proform Sports Management Ltd v.
Proactive Sports Management
Ltd, 43
prohibited terms, civilian tradition, 80
promesse de porte-fort, 56
protective rules, civilian tradition,
82–84
 Index 193
Raffles v. Wichelhaus, 91
Ramsgate Victoria Hotel Co v.
Montefiore, 31–32
reasonable alternative, English law, 97
rectification, England, 150–151
reformation/rescission, American
system, 155–156
reliance interest, 136
renunciation, breach, 112–113
rescission, England, 148
resolution, civil law tradition,
157–158
restitution interest, 136
risky/uncertain bargains, civilian
tradition, 104–105
A Roberts and Co Ltd v. Leicestershire
CC, 151
Robinson v. Davison, 117
Royal British Bank v. Turquand, 169
R v. Clarke, 35
R v. Warwickshire CC Ex Parte
Johnson, 30–31
Saunders v. Anglia Building Society,
93–94
Schawel v. Read, 65
Schuler AG v. Wickman Machine Tool
Sales Ltd, 68
Scotland, hybrid/mixed jurisdictions,
176–179
Scots private law, 176, 177
Sherwood v. Walker, 98
Shogun Finance Ltd v. Hudson, 91
Singla v. Bashir, 150
Smith v. Hughes (Blackburn), 87
societies, vitality of precedent, 16
specific performance
American system, 153–155
civil law tradition, 157, 158–159
equitable remedies, 151–153
Stambovsky v. Ackley, 99
stare decisis (doctrine of precedent),
8–9, 16
State of Louisiana, hybrid/mixed
jurisdictions, 179–183
Statute of Frauds, The, 10, 18–19
Storer v. Manchester City Council, 29
Stubbs v. Holywell Railway Co, 117
subjective interpretation, 81–82
subsequent condition, 123
“substantial performance” doctrine,
121
Sumpter v. Hedges, 111
supplementary terms, civilian
tradition, 79–80
Taylor v. Caldwell, 115–116
termination of offer (English law),
31–32
terms of a contract. See contractual
terms
terms regulated/supplied in laws,
American system, 78
Thake v. Maurice, 64
third-party. See also privity of contract
beneficiaries, 161–162
benefit, 170–171
liability and assignment, 165–167
liability to, 168
Thomas v. Thomas, 36
Thompson v. London, Midland Scottish
Railway Co, 70–71
Thornton v. Shoe Lane Parking, 71
Tilden Rent A Car Co v. Clendenning,
69
Tsakiroglou & Co Ltd v. Noblee Thorl
GmbH, 118
Tulk v. Moxhay, 166
Tweddle v. Atkinson, 162
types of interest, United States, 136
Tyra v. Cheney, 99
uncertainty, 124
unconscionable transaction, England,
149–150
undue influence
American system, 156
civil law tradition, 159–160
England, 149
unexpressed terms. See omitted terms
Unfair Contract Terms Act 1977
(UCTA), 72, 150
Unfair Terms in Consumer Contracts
Regulation 1999, 72
194 Index
Uniform Commercial Code (UCC),
7, 19, 48–49, 75, 76, 137,
154, 168
unilateral mistake, English law, 86–92
unilateral offer, 28
United Nations Commission on
International Trade Law
(UNCITRAL), 6
United States
contract law in, 6–7
contractual liability (see contractual
liability)
damages (see damages)
privity of contract (see privity of
contract)
Universe Tankships Inc of Monrovia v.
International Transport Workers
Federation and Laughton, 97
Van Ness v. Placard, 17–18
Victoria Laundry, 134
Watts v. Morrow, 135
Weathersby v. Gore, 154–155
Webb v. McGowin, 51–52
We the People Paralegal Serv. v. Watley,
182–183
Wigmore, John, 22
Williams v. Rafferty Bros and Nicholls
(Contractors) Ltd, 39
Williams v. Walker-Thomas Furniture
Co., 155–156
With v. O’Flanagan, 95
Wood v. Boynton, 98
Yearworth v. North Bristol NHS Trust,
135