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Updated: May 17, 2023

Historical Development of Contract Law

In the course of development, the English legal system developed, as did the need for people to get involved or have a legal justification for going to the court to ensure they met their obligations. Initially, only specific debts were legal in courts; however, claims that a person promised to perform an obligation became legally binding in an assumpsit (he said he would) over time. In 1602 (Slade's Case (1602) 4 Co Rep 92a), an assumpsit claim became the most common claim. From this, we can see the beginnings of the modern law of contract.

The law of contracts had established a general framework by the end of the 18th century. The courts of the 19th century used this framework to create many of the laws we use today. You shouldn't think that the principles of contract law in the 20th century grew out of a clear plan. Instead, they grew out of the needs of society and business. Contract law expanded most swiftly during the industrial revolution and the rise of Great Britain as a commercial powerhouse. Laissez-faire contracting was a hallmark of this time:

'That contract, when freely and voluntarily entered into, shall be considered holy and enforced by the Courts of Justice.' Printing & Numerical Registering Co v Sampson (1875), LR 19 Eq 462.

Many of the concepts we encounter in our current contract law are founded on this liberty of contract. However, there was an attempt towards a more interventionist or paternalistic way of negotiating contracts in some areas. The courts are concerned that one of the parties to an agreement may not be able to bargain as the opposing.

A Simple Contract

A contract is created by two or more parties who agree or are thought to have agreed, and the law recognises the rights and responsibilities that come from that agreement. Most contracts are simple and distinct from speciality contracts, i.e., sealed contracts (read topic 1.10 within the next section). Any study of general contract law is mainly concerned with simple contracts.

It is important to note that we're dealing with classical contractual principles. However, certain contractual arrangements are subject to specific regulations, e.g., consumer and employment contracts. Even though each of these areas could be studied on its own in a separate course, you'll find that the basic ideas we'll go over in this programme apply to all contracts.

Fundamental Parts

A simple contract consists of three important parts, which are listed below:

  1. The Agreement: Two or more parties achieve or be obeyed to have arrived at an agreement. Typically, it is defined by recognising a particular offer or deal from the offeror (a party who made an offer) that has been entirely accepted by the offeree (the receiver).

  2. Intention and capacities: The parties must intend or be presumed to have planned to establish legal relationships and have the capacity to create the contract.

  3. The consideration: In accordance with the conditions of the agreement, certain advantages are transferred from one of the parties to one another. The exchange of benefits between both parties is at the heart of the bargain. Any benefit or advantage transferred between two parties is referred to as consideration.

There is not a contract in any transaction in which one or more of the elements listed above is not present.

Manner of Agreement

If the parties are in contact and in good standing, an agreement can be made in any manner. An agreement may be reached using all of mentioned methods:

1. In writing form

2. Through the words from the mouth

3. Based on interface drawn from the behaviour of parties and case circumstances

4. Using any mixed primary modalities mentioned above.

The Test for the Agreements

The proper tests are required to allow the court to make decisions that involve disagreements:

  • Whether or if an agreement was reached; or

  • in reference to the stipulations of the agreement, also known as the conditions of the contract.

In both cases, the parties' intent is the most essential factor. Contract law is crucial to establish guidelines that can be applied to settle disputes. It is crucial to realize that the question of the contract's terms will not be raised until and unless it's confirmed that an agreement was reached.

Intention of Parties and Agreement

The agreement's particular terms allow the parties' intentions to be deduced from those terms. In addition, if it is necessary, the parties' conduct is considered because a lot can be deduced from the conduct of the parties. The court does not have to be concerned with the parties' intention but with the things that a reasonable person might conclude was the motive of the parties, taking into account the entire situation. Therefore, it could be claimed that the law uses an objective test for intent: Smith v Hughes (1871), LR 6, QB 597.

In addition, when it is necessary to confer on the contract business effect, the court may infuse conditions that affect the parties' presumptive intention. The presumed intent may differ from being identical to the actual intent. Therefore, when we talk about "agreement" in a contract, we are referring to the national agreement that the parties could be considered to have signed.

Offer and Acceptance

Negotiations are typically analysed in terms of offer and acceptance to determine whether an agreement was achieved between the parties. Some negotiations are too intricate for a simple investigation of this type. However, courts will seek to determine the point where the other party is deemed to have accepted the other's offer. These kinds of contracts are the traditional bilateral types of contracts.

Sometimes, an analysis may reveal the unilateral nature of the contact. In this scenario, one person presents or makes a proposal that requires one or more parties to act. This is not an agreement between parties - only one party takes on an obligation to perform the act, and the offer could be accepted by the countless number of people who are offered. One example is offering a cash reward to the person who finds the lost item.

Rights and Obligations

If parties sign the terms of a legally binding contract in which they establish legal rights and obligations to themselves. A contract's rights and obligations are inextricably linked; for instance, X agrees to sell his vehicle to Y at £500. In this instance, certain rights and obligations are established:

1. X is under a legal responsibility to hand up to his vehicle to Y, and Y is within their legal rights to take possession of the vehicle.

2. Y is required to hand over £500 to X, and X is entitled to receive the same sum of money.

Violation of Contract

An infraction to a contract might occur if one party to a contract was unable or unwilling to honour the conditions of the agreement. A breach of contract on the side of one party might provide the other party the right to bring an action against the breaching party. The most typical form of compensation for losses suffered as a result of a breach of contract is the payment of monetary compensation to the aggrieved party to place the victim in the same position that he would have been in had the contract not been broken. In light of the ruling made by the court, the individual who breached the contract is entitled to obtain the whole amount of money.

The court could specifically require the breached party of the contract to perform his contract under specific conditions. The equitable remedy for particular performance is another name for this. "Specific performance is not granted if penalties are not sufficient.


There is not a specific requirement for form in English law, i.e., a contract is only valid in compliance with certain legal formalities when drafting a legally binding contract. In some places, like Scotland, a form is needed to decide if a promise should be legal and binding, while in other places, like the United States, an examination is used. But it doesn't mean that it doesn't have a purpose to play in English law.

In contract law, certain types of contracts must be written, or, in some instances, they must be substantiated by writing. It is less probable that a disagreement will arise if the parties have established an agreement in writing on the contract conditions. A written contract can also be beneficial if one party wishes to pursue the other in case of violation. In addition, an agreement form may be needed to protect the position of a vulnerable person, like the hiring party in a hire-purchase agreement.

  1. Seals on contracts: English law said that the only formal contract was one that was signed under a seal. Contracts that are signed and sealed are their specialty. Simple contracts are any contracts that are not executed under seal. Most contracts, whether written or not, are simple contracts.

  2. Every provision of law that required a seal for the effective operation of a document as a deed by a person was repealed by the Property act (Miscellaneous Provisions) Act of 1989 in section 1(1) b. The Companies Act 1989, s.130(1) has been removed as a seal necessity to seal deeds by corporations that have been incorporated under the Companies Act. Companies that are not recognised under this Act continue to be subject to the lawful requirement of seal to perform an act.

  3. Contracts are written to be valid. A written contract is required by law in some instances. Section 2 of the property act (Miscellaneous Provisions) Act of 1989 is applicable for promissory notes and other types of notes (Bills of Exchange Act, 1882). Agreements for the purchase of hire (Consumer Credit Act, 1974) and any sale or transfer of property or another transfer, transfer, or disposition of ownership interest on land.

  4. Agreements that must be written down or have their paperwork written out: Specific contracts were not enforceable unless the claimant demonstrated that the contract was written or had adequate evidence of the proof of the contract's validity, as stated in section 4 of the Statute of Frauds (1677), which was enacted in 1677. The difference is that Section 4 now only applies to guarantees.


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