Contract as a set of rules for freely made agreements

Overview

Classical theory of contract as a set of enabling rules, freedom of contract and sanctity of contract.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Explain the classical theory of contract as a set of enabling rules.

   Model answer

   Classical theory treats contract law as a framework that lets persons make agreements on their own terms. The rules enable private bargains rather than dictate their content.

2. 2

   What is meant by freedom of contract?

   Model answer

   Freedom of contract means the parties may choose whether to contract, with whom, and on what terms. Courts enforce the bargain the parties made rather than a fair bargain.

3. 3

   Which case contains the classic judicial statement of freedom of contract?

   Model answer

   The classic statement of freedom of contract comes from Printing and Numerical Registering Co v Sampson (1875). Sir George Jessel said that contracts freely made by competent adults should be held sacred.

4. 4

   What is meant by sanctity of contract?

   Model answer

   Sanctity of contract is the principle that a bargain once made should be kept. Judges therefore hesitate to release a party merely because the deal turned out badly.

5. 5

   Why is the objective approach used when deciding what the parties agreed?

   Model answer

   The objective approach asks what a reasonable person would understand from the words and conduct. Private unexpressed intentions would make agreement impossible to prove.

6. 6

   Explain the will theory of contract.

   Model answer

   The will theory grounds contractual obligation in the agreed intentions of the parties. Critics answer that few people read the standard terms they are said to have willed.

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