Introduction to the terminology
of contracts (part 3)
Anne Brunon-Ernst
Lecturer in Legal English
Paris 2 University
Outline of the lecture
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Introductory note
Classification of contracts (I)
Doctrine of privity of contracts (II)
Statutory contractual provisions (III)
Introductory note
A contract is :
- a promise (Eng Law)
- e.g. see contract =/= estoppel
- an agreement (US Law)
Terminology:
Estoppel = a promise which is enforceable because
it has been relied upon by the promisee
(I) Classification of contracts
(I) Why classify contracts?
• Not for the mere sake of defining and classifying
– Defining a concept allows a bird’s-eye view of the
whole subject
– Introduction to the terminology =/= substance
• 6 different ways of classifying contracts:
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According to formation (A)
According to performance (B)
According to the nature of the contract (C)
Specific to English law (D)
According to its effects (E)
Other contracts (F)
I-A/Classification according to
formation/mode of creation
(A)Contract
(1)
Expressed
(2) Implied
(3)
Quasi
I-A-1/Express contract
A contract expressed in oral or written words
Note:
Contracts, no matter how important, may be made
without any writing (i.e. word of mouth)
Two exceptions (see caselaw):
- Contract can be made orally or by conduct, but canot
be inforced by the courts, unless written evidence of it
- Contract is required to be made in writing
I-A-2/Implied contract
Definition:
A contract which is is inferred from the acts or conducts
of the parties or course of dealings between them
Distinction implied/express:
- Intention of the parties expressed =/= intention
inferred from conduct
- No significant difference at law
- But different method by which contract proved
E.g:
Coins inserted in slot machine
I-A-3/Quasi-Contract
Definition:
These contracts do not arise by the virtue of any agreement,
expressed or implied between the parties but the law infers
or recognizes a contract under certain special circumstances
Aim:
A person should not obtain a benefit or an unjust enrichement
as against another because there is no obligation in contract
Remedy:
The courts imply a fictitious promise to account for the benefit.
The promise forms the basis of an action in quasi-contract
e.g.: A painter painting the wrong house, with the knowledge of
the owner of the house.
Terminology:
In the past also referred to as implied-in-law contract =/=
implied-in-fact contract (= genuine contracts)
Quasi-Contract vs Implied Contract
• Belong to different legal category
• Nothing in common with contracts
• for lack of a better option, the same procedure is used for
actions in contract and actions in quasi-contracts
• Now considered as new branch of the law, independent
from contract law, part of the law of restitution
• Legal obligations do not arise from promise
Terminology:
The law of restitution covers cases where one person is held
obliged to restore or pay for some benefit received from
another (or at the expense of another) in order that he
should not be unjustly enriched. If he has promised or
agreed to pay for the benefit, his liability is contractual, but
if he has not done so, his liability is restitutionary
I-B/Classification according to
performance/extent of execution
(B)Contract
(1)Executed
(2)Executory
I-B-1/Executed contract
Definition:
A contract that is fully performed on both sides
e.g.:
. If they do so immediately, the possession of
the good and the right to the good are
transferred together and the contract is
executed
 Chose in possession
I-B-2/Executory contract
Definition:
A contract that is not fully performed by one or both parties
e.g.:
A and B agree to exchange A’s pen for B’s notebook. If they do
so the following day, the right to the good is transferred but
not the possession and the contract is executory
Chose in action
Terminology:
To carry out an obligation = to do what the contract requires
Rules and exceptions
• Classical contract law: contractual obligations
arise out of promises
– Makes no difference if contract is partly executed
or wholly executory
• Signs of change
– Now an executory contract is more likely to be
held void for uncertainty than a contract which is
part performed
I-C/Classification according to the
nature of the contract
(C)
Contract
(1)
(2)
Unilateral
Bilateral
I-C-1/Bilateral contract
As a result of the court’s inference of the
intention of the parties (generally):
a promise for a promise
= > both parties are bound by the performance
of their promises
Courts have tended to construe transactions as
bilateral
I-C-3/Unilateral
contract
A promise for an act
= > only one party (promisor) is bound by the
performance of his promise
e.g.: estate agency case
I-D/Classification of contracts in
English law
(D)Contract
(1) Formal
(2)Informal
I-D-1/Formal contract
A contract that requires a special form or
method of creation
I-D-2/Informal contract
A contract that requires no special form or mode
of creation
I-D-1/Formal contract
(1)
Formal contract
(a) Contracts of
records
(b) Contracts
under seal
I-D-1(a)/Contracts of records
A contract of record is either a judgment of court or
Recognizance
Contracts of records derive their binding force from
the authority of the court. They lack the essential
element consensus. They are enforced by court
Note: Recognizance is a written acknowledgement
of debt due to the Crown. It is usually met with in
connection with criminal proceedings
I-D-1(b)/Contracts under seal
It derives its binding force from its form alone. It is in writing
and is signed, sealed and delivered by the parties
Contracts which must be made under seal , includes:
• Contracts made without consideration
• Contract made by corporations
• See Companies Act 1985
• Conveyance in legal estate of land or any interest in land
(lease more than 3 yrs)
• See Law of Property (Miscellaneous Provisions) Act 1989
Terminology:
Contract under seal = deed = convenant = speciality contract
Conveyance = transfer of property = agreement by the vendor
of land to convey his title or ownership and the agreement
of the purchaser to take it
I-D-1(b)/Seal vs attestation
• When the deed is entrered into by an individual
– No requirement for sealing
– Signature of individual witnessed and attested
• When the deed is entered into by a company
– The company may execute documents by putting its
common seal on it
– Any document signed by the director and the
secretary and said to be executed by the company will
be regarded as if the seal had been put on it
• Terminology:
To attest = to make a statement that the deed has been signed in the presence of a
witness and make clear that the document intended to be a deed (e.g. ‘signed as a
deed by A in the presence of B’)
A seal = originally recognised wax seals. By the 20th century a small circle of red
tape affixed to the document (contract for the sale of land), although the
courts also held that a circle containing the letters "L.S." was adequate
I-D-1(b)/deed vs simple contract
A deed is a superior document to a contract
e.g.
mergers
I-D-3/Simple contracts
Simple
contracts
Written
Oral
I-D-3/Simple contracts
• All contracts which are not made under seal
are simple contracts
• Simple contracts may be made orally or in
writing
• Needs valid offer, valid acceptance and needs
to be supported by consideration
Terminology:
Simple contract = parol contract
I-D/Classification of contract according to
effects
1.
Valid contract – A contract that meets all of the essential
elements to establish a contract
2. Void contract – No contract exists
3. Voidable contract – One or both of the parties has the
option of voiding or enforcing the contract
4. Unenforceable contract – A contract that cannot be
enforced in court, but can be used as a defence
5. Illegal contract – contravenes the criminal law, but not
necessarily (contrary to the public interest) => often void
Terminology:
To void a contract = to set it aside
To enforce a contract = to carry out one’s obligations under it
I-F/Other Contracts
• An offeree can prevent the offeror from
revoking his or her offer by paying the offeror
compensation to keep the offer open for an
agreed-upon period of time
• This payment is called an option contract
• The offeror agrees not to sell the property to
anyone but the offeree during the option
period
Questions
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Define a contract
Is a contract a promise or an agreement?
What do you mean by a void contract?
What is an illegal contract?
What is an unenforceable contract?
What is an implied contract?
What are quasi-contracts?
Wat is an executory contract?
What do you mean by an unilateral contract?
What do you mean by a bilateral contract?
Distinguish between void contracts and voidable contracts
State whether all void agreements are illegal
Distinguish between executed and executory contract
Distinguish between express and implied contract
Essay question: Discuss the following statement: ‘An agreement
enforceable by law is a contract’.
(II) Privity of contract
• Origins
• Problems
• Contracts (Rights of Third Parties) Act 1999
• Definition:
Relationship between the parties to a contract,
which makes the contract enforceable as
between them.
A third party cannot sue under the contract
Other form of action: in the tort of negligence
(see Donoghue v Stevenson)
The doctrine: where does it come
from?
The doctrine of consideration and the doctrine
of privity
You must have given consideration for a promise
in order to be able to enforce it
– Crompton J in Tweddle v Atkinson: ‘It would be a
monstruous proposition to say that a person was
a party to the contract for the purpose of suing
upon it for his own advantage, and not a party to
it for the purpose of being sued’
The doctrine: problems (1)
How to evade the doctrine of privity
(a) Beswick v Beswick
• widow was not entitled to sue in her own name
because she was not a party to the agreement
• Was entitled to sue in her capacity of administratrix
because she was suing on behalf of her late husband’s
estate
The doctrine: problems (2)
(b) Collateral contracts: i.e. the courts act as if there were
two related contracts
Shanklin Pier Ltd v Detel Products Ltd
Facts: SP owned a pier and wanted to get it painted. DP were
paint manufacurers and told SP that if their paint was used
to paint the pier, the paint would last 7 yrs. SP told the
contractors who were to paint the pier to buy the paint
from DP. The contractors did so, but the paint only lasted 3
mths
Decision: the court decided there was a collateral
contract btw SP and DP. It was related to the main
contract btw DP and the contractors for the sale of the
paint
The doctrine: problems (3)
Contractors
Contract of sale
Painting contract
Detel
products
Shalklin
Pier
Collateral contract
The doctrine: problems (4)
• But for DP’s assurance that their paint would
last seven years, SP would not have told the
painting contractors to buy it
• Artificial approach to analysing the situation
Contracts (Rights of Third Parties) Act
1999
• Under s. 1, a third party may enforce a term of
the contract in his own right if he is expressly
identified in the contract by name, as a member
of a class or answering a particular description
• Under s. 1(3) the third party does not have to be
in existence at the time the contract is made
• The Act affects the contracting parties’ rights to
vary or cancel the contract if reliance on the term
by the third party
• s. 5 protects the promissor from double liability
(III) Statutory provisions
• Sale of Goods Act 1979
• Supply of Goods and Services Act 1982
Sale of Goods Act (1979)
• Sale of goods by description
=> e.g. when buying a good in a mail order
catalogue
• Sale of goods by sample
=> e.g. a washing machine from a shop
Sale of Goods Act (1979)
The Statute implies terms into contracts for sale
of goods
• S14(2): Goods are of satisfactory quality
• S14(3):Goods are fit for the purpose
Note: Amended by the Sale and Supply of Goods
and Consumer Regulations 2002 (SI 2002 No.
3045)
Sale of Goods Act (1979)
• Other relevant provisions:
– S. 8: the buyer must pay a reasonable price
– S. 13: implied term that the goods will correspond the
description given
– S. 14 (see above)
– S. 15A: when the breach is so slight, if the buyer does not
deal as consumer, the breach is not to be treated as a
breach of condition but may be treated as a breach of
warranty.
– S. 48A: if goods do not conform with the contract within 6
months, rebuttable presumption of non-conformity
– S. 48B: replace or repair within reasonable time and free
of charge
– S. 48C: appropriate price reduction
Supply of Goods and Services Act 1982
Applies when provides you with a service (i.e.
someone works for you in the course of
business)
Applies when someone provides you with goods
and does work for you in the course of their
business under the same contract
Supply of Goods and Services Act 1982
• S.13: implies that service should be provided
with reasonable skill and care
• S.4: implies that goods have to be of a
satisfactory quality and reasonably fit for
purpose
• Note: Amended by the Sale and Supply of
Goods and Consumer Regulations 2002
Supply of Goods and Services Act 1982
Other relevant provisions:
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s. 2: implies a term about title
s. 3: the goods correspond to the description
s. 4(2): the goods will be of satisfactory quality
s. 4(5): the goods are fit for any particular purpose which
the buyer makes known
- s. 13: reasonable skill and care
- s. 14: implied term that the service will be carried out
within a reasonable time and for a reasonable charge
(When they are not fixed by the contracts, left to be
fixed in a manner agreed by the contract or
determined by parties)
Bibliography
• P. S. ATIYAH, An Introduction to the Law of Contract,
5th edn, Oxford, OUP, 1995.
• Adrian Chandler & Ian Brown, Law of Contract, 7th
edn, Oxford, OUP, 2009.
• Dictionary of Law, 3rd edn, London, Peter Collin
Publishing, 2000.
• Denis Keenan, Smith & Keenan’s English Law, 14th edn,
Harlow, Longman, 2004.
• C. Draycott, W. Laws, H. Revenko, A. Smith, Law:
agreements, rights & responsibilities, 2nd edn, Oxford:
OUP, 2007.
• JS Smith, Smith & Thomas: A Casebook on Contract,
11th edn, London, Sweet & Maxwell, 2000.