English and american contract law.

Introduction : General considerations on contract law

1. British legal system
• America, in its federal law and through state law, have been influenced by british contract law (former
british colony) through the common law.
• The british legal system considered as a source of contract law in the english speaking world, is the fruit of
a long maturation which mainly commenced with King William Ist after the conquest of England and the
victory of Hastings in 1066. Before that, England was not unified as a country. It was subject to invasions
from the Norwegians, etc on the north east coast. Therefore, the anglo saxon kings ’s authorities was
constantly threatened by vikings threats. As a consequence, their authority was not firmly asserted and the
law was constantly violated.
• In 1066, became the cornerstone of the raise of law in England. As a matter of fact, the ruling of En-
gland and wales by the norman king and then by the Plantagenet king favored the flourishing of a rich le-
gal system, based upon the doctrine of the precedent, which is at the core of common law.
• Constitutionally speaking : Breton king; then Anglo Saxon kings; and invasion of 1066 = Norman kings;
House of Anjou=angevin Kings; Tudor Dynasty; Stuart Dynasty from Scotland; Hanoverian Kings;
Present. The structuration of law really began with the norman king and then Anjou.
• Before norman conquest, justice was administrated in manorial courts.
• Under King William 3rd = creation of a centralized system = the royal courts. Over approximatively 3
centuries, the norman contributed to unify local customs while creating a new body of law common to all =
the common law.
• At the Northampton Assises in 1176, was ordered the practice of the pledging of an oath to the king by
all free mens = avoid rebellion in the application of law (uniformity of application of the law, which
mainly consisted in jurisprudence).
• In 1215, was decided the regularity of the justices tool? = they went from villages to villages to render jus -
tice. The judicial system was principally based on the jurisprudence of case law : this point is really impor-
tant to understand today’s legal visage of England and Wales contract law.
• The british legal system is also based upon the idea of equity = being a remedy when common law pro-
duces an insufficient or an inappropriate solution to a case.
Difference between 2 grounding (two main ways of legal actions) :

- equity : reveals the british mentality which combines pragmatism with a vindication for morality.
- common law
• In 1215, under one of the Plantagenet kings of the house of Poitiers, there came a major rebellion. The
king was captured by barons (son of former french queen Alienor of Aquitaine, king John). They constrai-
ned the king to accept a charter : ‘The Magna Carta’. King John was a ‘week man’ but clever, and was
despised.
• Magna Carta : reveals the mentality of the time, and at the same time, brings forth new rules, trying to im -
plement law = public contract between the british people and the king (even if made under contraint so not
valid).
• The charter contained 63 clauses :

- Article 17 : deals with the place of rule of law??? = ordinary law suit shall not follow the royal
court around but shall be held in a fixed place = insure a safety in the possibility to claim.

- Article 21 : set principle of proportionality between offenses and fines. Under french law, there
were fines if committed an offence, it was not a death penalty = tried to implement the same sys -
tem.

- Article 24 : no sheriff, constable, colonels, or other royal official are to hold law suit that should
be held by the royal justices.

- Article 40 : sets a principle of no corruption, no denial of justice, no delay to render justice.

• Freedom in contracting is also an important principle, there is a taste of freedom in the british eyes and it
is reflected under the english law. Therefore, the rules governing english contract law, express a despise
and rejection of formalities. To illustrate this :
• there is a conflict in Britain between a constant will of the people to be as free as possible, and at the
same time, a central bureaucracy that grow with the state
• this hate toward bureaucracy and the restrain of freedom, is one of the point that drove the english
people out of Europe.

Recently, prime minister ask for permission to the queen to suspend parliament. The supreme court was cea-
sed in order to rule out this decision as unconstitutional. The court judged it as a political decision and the -
refore, it may hit on certain aspects the british sense of liberty.

Section A : Common law & contract law

• English & american contract law are derived from decided cases.
• To a very large extent, commercial parties enjoy complete freedom of contract.
• Common law : is the law made by justices as they rule upon cases brought before them in court. It is also
referred to as ‘case law’ or as ‘judge made law’ or what is named by scholars as jurisprudence. The body
of the judges decisions consist in case law i.e. legal decisions that interpret prior decisions, statutes (law
made by the parliament), or other legal texts. These decisions are systematically collected and assembled
into volume of reported cases that are ‘Law reports’ = probably the most important source of law for
contract law.
• Contract law may be defined as a branch of civil law, which deals with agreement between individuals,
companies.
• The only remedy of contract law consists in damages, that is the payment of a certain amount of money as
a compensation for a civil wrong.
• Contract law rest upon the ancient principle of common law, which is = stare decisis and not quieta mo-
vere => to stand by the previous decisions and not disturb the settled points. In doing do, the judges
give consistency to the law. This principle of ruling is of importance in contract law, on the occasion of a
dispute that comes to court.
Section B : Equity and contract law
The payment of a certain amount of money as compensation proves being inappropriate in certain situations.
A number of suitors (plaidants) incapable in gaining satisfaction at common law addressed directly com-
plaints to the king, who is considered as ‘Fountain of justice’. Gradually, the king delegated some of these
matters to these Chancellors, the chancellors would hear petitioners and examine the case on the basis of
conscience and fairness. A new set of rule based upon equity emerged that way to remedy to the deficiency
of common law that appeal the court of chancery, practicing equity as a principle of justice
Means in equity :
1. Injonction
Injection is an order of the court preventing a defendant from performing an act. In the case Warner brothers
v. Nelson, 1937 : the american actress Betty Davis, agreed to act for Warner Bross and not for another com -
pany. During a certain period of time. However, she did contract to act with an english company. Warner
Brother were outraged, becoming plaintiffs, they asks for an injonction which was granted by court, restrai-
ning Betty Davis for entering into this contract.

2. The decree of specific performance

Définition : means an order of the court to compel a person to perform his or her obligation. We may find a
famous exemple in the case : Tamplin v. James, 1980 : during an auction, the plaintiffs offered to sell an inn,
the plants were displayed during the auction. But the defendant wrongly thought that there were some garden
included, he paid a deposit and the refused to complete it on the ground that he mistakenly believed that the
gardens were part of the property = invoked an excusable mistake. His claim was rebutted on the motives
that there was o excuse for his mistake. So a decree of specific performance was granted.

3. Rescission of contract
This remedy is only available when there have been a mistake. The court has an equitable jurisdiction to can -
cel a contract, although it would be appealed at Common law. «Salle v. Butcher in 1950. Butcher rented a
flat recently restored to Solle. Both parties are unaware that the flat is subject to the control of rent restriction
(law taken after WW2). After two years of rental, the tenant realised that the flat renting price excesses the
legal price, and initiated an action. It went to the court of appeal and they held the common mistake of fact,
and entitle the landlord to rescission of the lease.

4. Rectification
when contractdoes not accurately express the agreement reached by the parties. Craddock Brothers v. Hunt,
1923 : craddock agreed to sale a house exclusive of the adjoining garden. By mistake, the agreement was ex-
pressed in writing and the deed of conveyance (= acte notarié de vente), included the yard. The mistake was
common to both parties, as a consequence the court granted rectification to correspond with the oral agree -
ment.

5. Conflict between common law and equity

Earl of Oxford’s case 1650 : murten college, in oxford, has been granted a lease of covered garden, but sold
it to the earl of oxford, and retook it for free, on the ground of a statute law, which prevents the sale of col -
lege lands. The common judges rejected the claim of the earl of oxford, because of the statute law, the earl
filled a bill in equity, which was granted, stating that the claim of murton college was against good
conscience. That conflict between common law and equity was resolved by the king himself James the 1st :
he ruled that ‘were common and equity are in conflict, equity should prevail’. This principle, of the suprema-
cy of equity over common law, was confirmed in 1981, under section 49 of the supreme court act (1981)
‘general provisions law and equity subject to the previsions of this or any other act ever record exercising
jurisdiction in england or wales, in any civil cause or matter, shall continue to administer law and equity, on
the basis that - wherever the is any conflict or variance between the rules of equity and the rules of the com -
mon law, with reference to the same matter, the rules of equity wall prevail’.

Section C : Freedom of contract

This principle exists in France, but is also abroad in england and wales ??

1. Application of contractual formalities under english law

Contractual formalities are virtually non existent = contract can in virtually all cases performed perfectly
well orally, or via emails, for almost all commercial contracts there are no requirements for contracts to be in
writing, or to be sale?? unless it is a specific contract, exemple : one relating to land.
Contract do not have to be written in english, nor are there any registration requirement. Naturally, contracts
which are not set out in a single, formal, side agreement, create some evidential difficulties in case of pro-
blème.

2. Contracting with overseas companies and liability of parent companies.

There are no requirement to contract through english subsidiaries. A contract with an overseas company is
perfectly valid and may be welcomed if the overseas company is a parent of substance, and not an empty
nutshell.

3. Privaty of contract
English law reflect principle of privaty of contract (effet relatif des contrats). Parents companies or other
companies, would not be liable for a contract, unless made a party to the contract. ???????
Unless there is a clause to the contrary. Or unless one of these companies has been given its garantie to the
first company. This company would be able to trigger the liability of the other companies if there is an other
base of liability : negligence or misrepresentation (but on a non contractual basis).

CHAPTER 1 : THE FORMATION OF THE CONTRACT

Contract law is complex, but is well defined under british or american law. In england and wales, the law ap-
plies uniformaly. At the present time there is still a significant proportion of former legislation that is derived
from EC directives, which were implemented into english law, with a reservation : the future of these legisla -
tion is quite uncertain.

I. The formation of the contract

Two main steps :

- 1st question : has the offeror made an offer ?

- If yes, then => was the offer accepted ?
- If yes => then, there is a binding contract, as soon as it is accepted, by the offoree.
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