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Contract: Rules and Theory of Contract Law

The function of the law of contract

  • 3 things to know
  • Components 2 and 3

Overview

Central function of the law of contract, saying that contract law protects expectations and argument that contract law should intervene as little as possible.

What you need to know

Answer each one before you reveal it.

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Key term

State the central function of the law of contract.

Key term

How does a contract allocate risk between the parties?

Key term

Why does the law of contract matter to commercial certainty?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    State the central function of the law of contract.

    Model answer

    The law of contract gives legal force to agreements the parties intended to be binding. The law of contract also supplies a remedy when a promise is broken.

  2. 2

    How does a contract allocate risk between the parties?

    Model answer

    A contract allocates the risk of future events before those events happen. A force majeure clause places a named risk on one side of the bargain.

  3. 3

    Why does the law of contract matter to commercial certainty?

    Model answer

    Certainty allows a business to predict how a court will read its agreement. Firms can then plan, price and invest without litigating every deal.

  4. 4

    What is meant by saying that contract law protects expectations?

    Model answer

    Contract law protects the expectation a party had of receiving performance. Protection of expectations is what makes a promise worth relying on commercially.

  5. 5

    Explain how the law of contract supports the exchange of goods and services.

    Model answer

    Every sale, employment and supply arrangement rests on an enforceable exchange of promises. The law of contract turns those promises into obligations that a court will uphold.

  6. 6

    Why are contractual duties described as voluntarily undertaken?

    Model answer

    Contractual duties arise because the parties chose to accept them. Duties in other branches of the law are imposed regardless of any agreement.

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Parliamentary and European Law Making
Delegated Legislation
Statutory Interpretation
Judicial Precedent

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The court sits in .
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AAn interim injunction restrains publication before trial.
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A Public Bill changes the general law.
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