1 INTRODUCTION, AIMS AND GENERAL PRINCIPLES
CHAPTER 1
INTRODUCTION, AIMS AND GENERAL PRINCIPLES
What does looking at contract in perspective mean? Whose perspective is being referred to and why does it matter? In my view, the first perspective we should start with is yours. By the time you finish reading this book you will probably have made tens, if not hundreds, of contracts. Each time you buy a pair of jeans or a CD, go to a nightclub, get on a bus, rent a DVD, order a book from Amazon or register for your latest course, you are entering into a contract. Few people in a modern society could survive without exchanging their labour for money, and their money for goods and services. Moreover, each exchange you make is probably only possible because of earlier exchanges between, for instance, the music store and the distributor, the distributor and the record company, the record company and the artist, and the artist and his or her manager. It should soon become clear to you that the law of contract is not a remote and archaic body of rules but a living area of law with which you engage on a daily basis.
The second perspective from which you are encouraged to look at the law of contract from is that of the business community. A number of historians have highlighted the fact that it was this community that the law of contract was developed to serve during the industrial revolution. But in the twenty-first century we are still debating the extent to which the needs of the business community are served by the law of contract. A host of empirical studies now inform our understanding of how law works in practice and its relevance to those who use it on a regular basis. At one level, the message of these studies is depressing. We have had to accept that the law of contract is frequently ignored and that it is often seen as irrelevant within the commercial sector. It would seem that contract law is in serious danger of becoming irrelevant or lacking in legitimacy if it continues to focus on the ‘paper deal’ at the expense of the ‘real deal’. This raises important issues for students of contract law. Should the law reflect the practice and needs of the business community or should it impose standards which lawyers think are appropriate regardless of whether these are of practical use? In the course of considering this very issue Lord Wilberforce has argued:
If I am faced with the alternative of forcing commercial circles to fall in with a legal doctrine which has nothing but precedent to commend it or altering the doctrine so as to conform with what commercial experience has worked out, I know where my choice lies. The law should be responsive as well as, at times, enunciatory, and good doctrine can seldom be divorced from sound practice. Miliangos v George Frank at para. 3
The lawyer’s view of contract tends to focus on the legal implications of contractual breakdown, on rights, obligations and the consequences of litigation, but the lawyer’s preoccupations by no means occupy the forefront of the businessperson’s mind. For someone in business the contract is primarily a facilitative device within an economic cycle, which turns on such processes as the acquisition of materials, the production of finished goods, marketing and sales, finance and payment. Business people and economists are most often concerned with the cost of contracting. For example, standard form contracts are less expensive to produce than ‘tailor-made’ documents. It is often the case that, for them, insistence on precise contractual performance is expensive in terms of both money and business relationships. It becomes clear that the lawyer, who only knows the law of contract, and little or nothing of the rest of contract, has only a small, incomplete, view of the commercial sector.
A final set of perspectives from which to view contracts are those provided by disciplines other than law. It is naïve to think that contracts are only of interest to lawyers. Contractual relationships are also of relevance to sociologist, anthropologists and economists interested in what fuels co-operation between individuals in society, the norms which emerge from the voluntarily imposed agreements that become contracts and how contracting parties can be given incentives to maximise their own gain and that of the broader economy. Viewed in this way, contract is not an end in itself but is a tool of social order. It is also an intensely political subject. Treatments of contract law that present the subject as a series of neutral rules and doctrines often fail to emphasise this point. Contractual doctrines reflect particular ideologies about how and whether contractual relationships should be governed, and are often hotly contested by those from the left and right of the political spectrum.
The main aim of this book is to present a broader view of the basic features of contract law than that found in the traditional ‘black letter’ treatments of the subject. The idea of understanding law in context is not new but the aim of looking at and beyond legal rules has been pursued more vigorously in some areas than in others. Most expositions of contract law do not venture beyond the rules. They tell us little or nothing of the social or economic significance of doctrines, or how they relate to the practices of the business community. The result is an unhealthy division between the study of formal law and an evaluation of the needs of the wider community it should be designed to serve. At a level suitable for student readers, this books attempts to remedy those defects.