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This is a detailed treatment of the rules governing the formation of contract. All facets of that process are covered. Modern ;transactions are often formed by electronic negotiation. Accordingly, the postal rule needs to be supplemented by reference to e-mailed offers and acceptances. Other features of formation include: relief when negotiations abort, based on the principle of unjust enrichment; ‘multipartite contracts’, that is, agreements involving more than two parties; the revocation of offers before acceptance; the special nature of acceptance when the contract is unilateral, rather than both parties having obligations; the possibility of acceptance without words, that is, by conduct; the problem of silence on the part of the offeree; and competition between parties to win the so-called battle of the forms.

Assignment is the transfer of the right to sue for a debt or other promised benefit. Assignment has three effects (here, A is the promisor, B is the promisee, and C is the assignee): (i) A, once notified, is obliged to pay C; (ii) C can sue A directly, without joining B as a party to the claim; (iii) A’s obligation to B is discharged if, pursuant to a valid assignment by B to C, A pays C in full. By contrast, if, after B’s assignment of the right to C, A instead pays B, this payment is ineffective to discharge A’s newly transferred obligation towards C. Agency is the process by which an agreement can be formed by X acting on behalf of Y, the latter being the principal. The rules on this topic are complex. This is a succinct account of these rules.

This is a fundamental feature of contract doctrine. In English law breach justifies a party in terminating the contract by reason of the other’s default if: there has been a renunciation; or a serious breach of a repudiatory nature; if a term classified as a condition has been breached; if a term not so classified has been breached so that the result of the default is extremely serious. Breach can occur before the date of expected performance. Anticipatory cancellation does not automatically end the contract. Instead the other party, if able to perform without the other’s cooperation, might decide to keep the contract in operation (that topic is also examined, in the context of debt claims, at [27.36] to [27.49]). The process of terminating and the consequences of termination is also carefully explained in the present chapter.

This is a concise treatment of the rules relating to capacity in the sphere of minors, the mentally disabled, and companies which have yet to be formed. Case law discussion is included.

A requirement in English law is that an agreement must have sufficient commercial certainty. The extensive case law is examined closely, with instances being cited of numerous cases where the courts have either concluded that the certainty requirement has been satisfied, or that the transaction is void for lack of fundamental clarity. An agreement to agree is not valid, nor an agreement to negotiate reasonably or in good faith. These restrictions are examined closely. An interesting exception has emerged, requiring a party to adhere to an undertaking to negotiate in an amicable and constructive way as a preliminary to commencing arbitration.

If the contract has not been formalized as a deed, the agreement will be recognized as legally effective only if the party suing has provided something at the other party’s request as a bargained element. The doctrine continues to apply, but some of its extensions have been either abandoned or diluted. The doctrine of consideration applies not just to initial agreements but to agreements to vary contracts. In the variation context, a notable modern development is that a promise to pay more for performance can be enforced if the court can identify that the promise of extra remuneration is underpinned by a commercial advantage to the person expecting performance. This is the ‘practical benefit’ aspect of variation agreements. Also in the context of variations, the Common Law continues to refuse to recognize a gratuitous promise to extinguish or reduce a debt which has accrued under the contract. It remains controversial whether there is any equitable qualification on this last proposition if the debtor has acted in reliance on the promised and favourable variation made by the creditor.

The rules governing compensatory damages for breach of contract are complicated and at times difficult to apply precisely. This chapter considers those doctrines in detail: including the different `measures’ of compensation, and the defences of causation, remoteness, mitigation, etc. The paradigm measure of compensatory damages for breach of contract is the so-called ‘expectation’ or ‘loss of bargain’ species. Here the aim is to place the innocent party in the position in which he would have been if the contract had been properly performed. That aim cane be achieved notably by recovering the profits he had expected to gain under the contract. But where loss of profit cannot be easily proved, a ‘fall-back’ compensatory measure is reliance loss damages. These restore the innocent party monetarily to the position he enjoyed before the contract was breached, thus enabling him to recover his wasted expenditure.

This Part mostly concerns judicial remedies for breach of contract (the self-help remedy of forfeiture of a deposit is noted at [27.109]). The chapter sequence reflects both the division between Common Law (chapters 27 and 28) and Equity (chapter 29) but, more importantly, the practical importance of the judicial remedies, debt mattering more than damages, and in turn damages more than specific performance or injunctions. And so chapter 27 concerns ‘Debt’ (but agreed damages, ie liquidated damages clauses, are treated in the same chapter because the sum payable is, by definition, fixed or calculable in advance; but technically, agreed damages are damages and not a cause of action sounding in debt). Chapter 28 concerns damages, that is, compensation. Damages is a branch of the law which continues to generate a mass of intricate case law. Finally, chapter 29 concerns the equitable remedies of specific performance, injunctions, account of profits, and declarations. It is a fundamental principle that specific performance can be granted only if the Common Law remedies (debt and damages) are inadequate on the relevant facts. Chapter 27: The predominant claim for contractual default is the action for debt, to compel payment. Statistically this is the front-runner amongst remedies for breach. The availability of interest is also noted in this chapter.

A coerced agreement can be set aside, in accordance with a Common Law doctrine of duress which has acquired generality during the last fifty years (although it remains customary to divide the topic into three sectors, duress as to person, duress as to goods, and economic duress, that is the threat to break a contract). The four elements of duress are: (i) pressure or a threat; (ii) which is (a) unlawful or (b) illegitimate (despite being lawful); (iii) objectively there was enough pressure so that the coerced party’s submission was not an instance of undue fragility; and instead the coerced party had no real or practical choice other than to submit; and (iv) the coerced party was in fact induced by the duress to enter the contract or agree to its variation or termination. The current controversy is when a threat to do something which is lawful can be characterized as ‘illegitimate’.

An exclusion clause might operate in any of the following three ways: (a) as a limitation clause, imposing a financial cap on the compensation to be paid upon breach; or (b) it might provide for total exclusion of liability for breach; or (c) the clause might constitute a time restriction (an agreed time bar), which requires a claim to be made within a specified period of the alleged harm, that period being shorter than the ordinary limitation period prescribed by statute (ordinarily, six years for breach of contract, twelve years if the action is based on a deed). By a combination of judicial doctrine and (predominantly) statutory regulation, exclusion clauses have become more closely controlled since the Second World War. This chapter explains these responses to this problem.

This chapter examines the different types of express term. Terms can be express or implied, and they can be promissory (imposing primary duties) or non-promissory (regulating the contract without imposing primary duties, eg, dispute-resolution clauses, or exclusion clauses).

Force majeure clauses: these exonerate a party whose performance has become impossible in circumstances falling with the scope of the stipulated clause. Such a clause will normally broaden the relevant party’s immunity from liability for default beyond the narrow set of excuses applicable as a result of the Common Law doctrine of frustration.

The main formalities concern the making of deed or covenants in order to give effect to gratuitous promises (the deed is formalized by the covenantor’s signature, and attestation by a witness to the signature, and delivery of the deed to the covenantee, who need not be present at the time the instrument is executed). Contracts concerning land also need to satisfy the formality of a writing. Although the tendency of English law has been to retreat from formality, various statutory exceptions are examined, notably contracts of guarantee. English law has recognized a ‘no oral modification’ clause, which requires any variation to comply with the prescribed written formality.

There is some judicial interest in recognizing a principle of good faith performance in English contract law (the topic was introduced at [2.69]). The idea is gaining, or at least might gain, momentum. But the traditional view, to which the appellate courts in England and Wales have remained loyal, is that there is no general doctrine that contracts must be performed in good faith. In other words, there is no general implied term that a contract must be performed in good faith.

This chapter examines the various heads of illegality, such as agreements contrary to statute or agreements to defraud the tax authorities. Neither party can sue on a contract if the contract is expressly or by necessary implication prohibited by statute or the common purpose was to commit a crime or other civil wrong. Nor can a claimant sue on a contract if the claimant became aware that the contract would involve illegally and then participated in, or was implicated in, that wrongdoing (it is otherwise if claimant was ignorant of, and not implicated in, the defendant’s decision to perform it in an illegal fashion, or the claimant was guilty of only incidental illegality during performance). The court must refuse to give effect to a transaction if its illegal nature emerges during the course of the case. In Patel v Mirza (2016) the Supreme Court radically tilted the law in favour of the restitution of money or property transferred under an illegal contract, unless there is a compelling contrary argument of legal policy.

The fertility of the implied term device in English law explains the traditional absence of a general doctrine of good faith in performance (on that doctrine see chapter 19, and [2.69] ff).

The ‘entire obligation rule’ concerns contingent liabilities, by way of counter-performance. The rule has the salutary self-help protective function that a performing party becomes entitled to payment or other performance by the other side only if the relevant task is completely and properly achieved. Only if the performer ‘crosses this line’ is the other required to pay. For example, a builder who is to be paid on completion of the work cannot demand payment without having finished the relevant job. However, the ‘substantial performance’ doctrine might render the performing party entitled to claim the agreed sum as a debt even if that party’s performance has not been perfect, subject to a deduction in respect of the cost of rectifying defective performance.