Contract: Definition, Parties Involved And Breach Procedure

In this essay, I hope to give an unbiased view of some of the precedential cases and statutes that have shaped contract law up to now. I will go over (1) what a contract is and why they are used, (2) what it means to be fair in the eyes of contract law, (3) the parties involved within a contract - their individual and mutual rights a (4) Procedure when contracts are broken and situations where a breach of contract may not be obvious at first glance.

To understand contract law, allow me first to reduce it to the most basic level: A contract is an agreement between 2 or more people that is legally binding, between parties of which there is an offer and an acceptance of that offer; with an infinite variety of terms. However, these terms can be implied or expressed, which can lead to a grey area when complications or disagreements occur between parties and may require a ruling to sort and issues that may arise.

Such as with the case of Carlill v Carbolic Smokeball Company (1893), where CSB advertised a device to prevent Influenza, offering 100£ if the subject contracted the virus after specific use, opening a bank account with a balance of 1000£ for claims. Carlill bought the device, thereby accepting their offer and entering a contract. After a time, Carlill contracted the flu and made a claim for the 100£. However, when the time came to pay up, CSB decided there was no legal claim as an offer had not been directly made to Carlill, therefore she did not deserve any compensation. Displeased, Carlill went to the court of appeal and the Lord Justices ruled that the 1000£ showed intent from CSB to payout, should any claims occur. This case set a precedent that an offer can be made to the world, not just to an individual. This precedent was used again in the case of Bloom v American Swiss Watch Co (1915). Offers may be terminated by revocation, the lapse of time, death, or rejection, but if the offer is accepted, there is an unconditional agreement by the offeree; and the contract may not be changed unless there is a mutual agreement.

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The main goal of a contract is to be an agreement of consideration. If a contract isn’t fair, problems will arise as time passes. Statutes that try to maintain a fair agreement are the Unfair Contracts Terms Act (1977) which prevents unenforceable clauses such as exclusions of liability from personal injury or death. All business to business contracts and exemptions must comply. Mental Capacity Act (2005) tries to ensure that any party that enters into a contract has the capacity to understand terms of a contract and aren’t at risk of exploitation such as the elderly or disabled. In the case of TH and TR (assigned solicitor acting as an agent to TH) v Sheffield Teaching Hospitals NHS Foundation Trust (2014), Justice Hayden ruled that TH, a 52-year-old man, in a delirious state could not reject treatment, so medical care was to be carried out by a healthcare professional, without consent. The care contract was signed by a solicitor representing TH.

With an intent to create legal relations, there is often a power dynamic, therefore a risk of asymmetric information, making some contracts voidable. Parties may sign a contract they don’t understand or are pressured into signing something that infringes their rights as an individual. The Consumer Rights Act (2015) aims to mitigate this effect. All goods bought by a consumer must be fit for purpose and be how advertised. Otherwise, misrepresentation like a false statement of fact which coerced the other party into an agreement makes a contract voidable - Misrepresentation Act (1967). Other voidable contract reasons include Duress and Undue influence as excessive persuasion or threat of violence will jade the view of a party. Such as with the case of Barton v Armstrong (1976). What went from a distaste for one another, turned into a threat from Armstrong, trying to strong-arm Barton into buying his company shares, by threatening him with “the city is not as safe as you may think between the office and home” and “you will be killed” over the telephone. Barton signed but later went to court claiming Duress and the court agreed. The judge ruled that the same breach of contract rules of misrepresentation applied here and so set the precedent making Duress a reason for a void contract.

Breach of contract is when a party or party’s performance is not fulfilled under contract and therefore needs to be amended. Remedies for breach are more often than not, Damages or Quantum Merit where work has only partly been carried out, damages may be awarded for only the work completed. A Judge may rule for an injunction or frustration, preventing a party from refusing to carry out their obligations under the contract or the inability to do so. Taylor v Caldwell (1863) is a landmark case where Taylor wanted to rent a concert hall, but an unexpected fire burned the building down so the concerts were unable to take place. Taylor tried to sue Caldwell for breach of contract but failed as Justice Blackburn ruled there was no breach, and frustration was the cause for the contract being impossible to carry out. Despite great expense and effort from Taylor to arrange everything in organising the concerts, he walked away with no compensation.

Due to the complexity of Contract law, it is and will remain an ever-evolving body of law that has foundations dating back to the medieval period, with the Lex Mercatoria, involving a few European merchants, to today where multi-million dollar business contracts are set out in many forms; where the individual rights of the parties involved are evermore present. This has created a level of complexity and detail that requires a lot of regulation and use of different bodies of law, to ensure equality of fairness for both parties whenever a contract is signed.