Audio recording 1.2 transcript

So, this first chapter is a bit unusual in the book,because it outlines some of the key themes that we're going to be looking at. But hopefully, as you go through the book and look at more cases and doctrinethen all of them will become much more familiar.

In this recording I do want to flag up two ideas in particular which I think are important. The first is the idea of seeing contract as a bargain,a bargain between two parties. So, there's a nice line, I think, that an offer is a promise with a price tag. So, if I promise you something, but in general, you've got to do something in return for that promise for there to be a binding contract. So, if I tell you, I'll give you a hundred pounds at the end of the year that's one sort of promise. But if I say to you, I'll give you a hundred pounds at the end of the year if you listen to all these recordings, then that's a different sort of promise. And there's an important difference between the two.Because the first promise is gratuitous, it's the promise of a gift. I'll give you a hundred pounds at the end of the year, that’s a gift. But were I say if you watch all of the recordings and get to the end of the year, then it looks like maybe you could sue me for a hundred pounds, because now we have a contract. In fact we don't, because there is no intention I have to create legal relations with you, there is no objective intention to create legal relations. But in principle, there's an offer with a price tag and so it could be a bargain.

The second major issue I think it is important to flag up now concerns this idea of freedom of contract. So, some of you might have studied tort law already, and tort law is about rights that we have, as a result of the general law. So as soon as I'm born, for example I have a right not to be hit by you or not to be run over by you,so they are rights we all have under the general law. Whereas contract law is different and rests upon the party’s consent. So, we've changed our position, or the contracting parties have changed their position as regards one another.When we enter into a contract we change our positions with regards to one another. And as a result of what we have voluntarily done, we've normatively changed our position as regards one another, and we've bound ourselves by a contract. So importantly, we can't have contracts imposed upon us and we're free to choose what sorts of terms, and what sorts of contracts we will agree to, will agree to be bound by. And one interesting case outlined here, which is not very long, and I think that you can usefully read in full, is the recent decision of the Supreme Court in MWB v Rock which we will return to in chapter 7. It is a difficult case, which involved a contract between two commercial parties and one term said that, any variation of the contract which wasn't in signed writing, would have no effect So effectively a clause saying all oral variations of the contract would be ineffective. And the Supreme Court's decision was that commercial parties can agree to whatever terms they want,and so we should give effect to that clause. So, they were free to agree to that clause and it should be given effect. But it is interesting to think about that outcome because it is different from that reached by the Court of Appeal, and I think that that decision is still controversial, and to some surprising, because it is not clear how far it goes. So, if for example, there is a clause in the contract which said that the parties could never vary their agreement, or they could never enter into new contracts, would those clauses really be enforced? Well you might think that they should be. But it strikes me that that's unlikely, because the parties still have freedom to contract in the future, so freedom to contract after entering into that original agreement.So even though I've made a contract with you, I still have freedom to contract again with you, or with other people. And it seems to me we should have freedom, to vary our contract as we wish under the general rules of contract as well. So perhaps we will find there are pragmatic limits to MWB v Rock related to how these no oral variation clauses work, which are often considered to be commercially useful. But we might think about what limits there are as to how far that extends.