COMMON LAW

Common Law

Common Law

Part 1

Existence of a contract

A contract comes into existence when three conditions are met. Firstly, both parties (e.g. buyer and seller) must be capable of making a contract, and must intend to make a contract. (For example, business negotiations may be conducted 'subject to contract' specifically to avoid forming a contract before all the main terms have been agreed. Secondly, an offer must be made and accepted. For example, you could offer a product for sale, and the purchaser could agree to buy it. Equally, a customer could make an offer to purchase your product, and you could accept their offer. Finally, something of value must be exchanged: for example, the seller's product for the customer's money. One might have thought that contract law would have become fixed and certain after such a long time of human bargaining. Contract law is generally at home in business houses for, although contract is also based upon the moral importance of keeping one's promises, it will rarely be the subject of legal dispute between friends and family.

Even this is no longer true as we become more litigious and occasionally children sue parents and friends fall out over syndicates supposed to share their lottery winnings. Marriage is a kind of contract and the arrangements when this breaks down are certainly contractual, albeit of a special sort. Whilst 'honesty is the best policy' (and the term 'policy' should be looked at carefully in that phrase as a pragmatic, even Machiavellian, term, rather than a moral, let alone religious, imperative) the convenience of businessmen acting both selfishly and simultaneously for the greater good is what drives contract law. Like all areas of law, an element of 'public policy' enters the decisions of the courts and it is not surprising that the changes and developments facing the business community will tend to drive the law of contract. It may be that students will find cases on horse-dealing being applied to wider issues about the ingredients necessary for agreement. Later, those deals concern motor cars.

In fact, however, the law of contract is not just about high finance and sophisticated negotiations involving cutting edge economic philosophy and the cleverest minds trying to catch each other out by slippery language and sophisticated interpretations. There is plenty of time before students of the general principles of contract have to leave the delightfully peaceful groves of academic speculation for the well-paid but terrifying drudgery of practical contract drafting and disputation where the enormous salaries offered in journals like The Lawyer are purchased at the price of mental a trophy and physical exhaustion in the bellicose circumstances which would be macho if legal practice were really in 'Dodge' City and the Wild West End. Contract problems are more often about very ordinary people going to the district judge in the county court to decide some dispute which others might think of as trivial, but which has ignited one or both of the parties into an argument about fairness and what ...