Freedom of Contract in English Law

Topics: Contract, Common law, Tort Pages: 6 (2235 words) Published: November 27, 2012
In earlier days, agreement was built on a very classic and simple basis: it is concluded at the moment that the acceptance of an offer takes place and that is all. In consequence, equal parties were non-existent and stronger parties had the possibility to impose unfair and domineering conditions upon those who were weak and vulnerable. It is in this context that both legislations and courts agreed that State action was indispensable to ensure fairness among individual parties, in an era where the exercise of law of freedom were extremely restricted. In today’s English law, freedom of contract is one the foundation of contract law. The existence of freedom of contract requires three main considerations: the freedom to contract or not to contract, the freedom to choose with whom to contract, and the freedom to decide the terms of the contract. Thus parties are totally free to engage or not to engage in agreements. However, freedom of contract can fail to have the desired or expected effect in contracts where power relations are not equal. The stronger party can impose its "will" to the weaker party. In order to deal with any potential conflict that can arise from this matter, English legal systems has set up rules ensuring the effective and fair exercise of freedom of contract.

This essay will discuss and examine those rules in question, established by the English law in order to effectively balance freedom of contract and fairness between the contracting parties as well as fair contractual terms. And also on the other hand limits of freedom of contract will be exposed.

Freedom of contract, as its appellation suggests, has a strong relationship with contract. In order to identify this relationship, it is important to understand what is meant by “contract” and the rules governing it. In English law, a contract is a legally binding agreement reached on a set of promises (or obligations) and specific terms. The validity of any contract requires 4 main features: an offer, acceptance, consideration and intention to create legal relations. Thus, when one party (the offeror) makes an offer which the other (offeree) accepts, then agreement is concluded. However, the mere fact of an agreement is insufficient for a contract to be completely valid. This implies that a party must promise to give or do something for the other. This idea of exchanging promises is known as "consideration" and is an essential requisite of any valid contract. In Currie v Misa(1875) it (consideration) was held to constitute a benefit to one party or a detriment to the other. For instance, when a bottle of wine is bought from a shop, the benefit received is the bottle of wine, and the detriment is the money paid to the shop.

Yet it is important to take into concern the rules governing consideration. First of all, consideration must not be in the past(as mentioned in the a. This rule suggests that if one party willingly performs an act, and the other party then makes a promise the consideration said to be in the past. Therefore past consideration is regarded as no consideration at all. For instance, a pregnant woman named Julie, knowing that her neighbour, Lucy, is concerned about her health, offers to do the housework for her. This takes Lucy tremendous amount of time to do, and Julie is so content with the result that she promises to pay Lucy £30 for her effort. If Julie fails to pay, Lucy will not have the possibility to sue for breach of contract as Julie's promise to pay was after the completion of the work. The fact of this case is supported by the case of Re McArdle(1951,CA) in which it was held that no valid contract existed since the home improvements were past consideration; they had been carried out before any promise to pay had been made. Another rule is that consideration must move from the promisee which is very similar to the concept of law of privity. So for instance if A makes a promises to B, the promise...
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