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Contract: Rules and Theory of Contract Law

The impact of judicial decisions and legislation on contract

  • 3 things to know
  • Components 2 and 3

Overview

How the courts and Parliament have each changed contract law, from the Contracts (Rights of Third Parties) Act 1999 to the Unfair Contract Terms Act 1977, and what withdrawal from the European Union did to the directives underneath consumer law.

What you need to know

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Process

How do judicial decisions change the law relating to contract formation?

Numbers

Give one example of legislation reforming the law on discharge of contract.

Numbers

Which statute reformed the doctrine of privity, and on whose recommendation?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    How do judicial decisions change the law relating to contract formation?

    Model answer

    Judicial decisions on formation bind later courts through precedent and adapt old rules to new dealings. Judges extended the rules on communication of acceptance to telex and then to electronic messages.

  2. 2

    Give one example of legislation reforming the law on discharge of contract.

    Model answer

    The Law Reform (Frustrated Contracts) Act 1943 reformed the consequences of a frustrated contract. The Act allowed money paid to be recovered and expenses to be allowed.

  3. 3

    Which statute reformed the doctrine of privity, and on whose recommendation?

    Model answer

    The Contracts (Rights of Third Parties) Act 1999 reformed privity of contract. The Law Commission recommended the reform in its 1996 report on contracts for the benefit of third parties.

  4. 4

    Why is Parliament sometimes better placed than the courts to reform contract law?

    Model answer

    Parliament can consult widely and change a whole area at once. A court can decide only the dispute before it and must wait for a suitable case.

  5. 5

    Why are the courts sometimes better placed than Parliament to develop contract law?

    Model answer

    A court can respond immediately to a new commercial practice without waiting for legislative time. Case-by-case development also allows a rule to be tested against real facts.

  6. 6

    Give one criticism of judicial law making in contract.

    Model answer

    A judicial change applies to a contract made before anyone could know of the change. Retrospective effect of that kind is a recognised criticism of judge-made rules.

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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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