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Obligations and Contract Law I
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Obligations and Contract law I notes from class AND notes from the readings (chapters 1-14 are all included!). (Global law course)
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A brief overview of the most important aspects of contract law (Week 1)
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Week 1Chapter 1
● Contracts can be based on:
○ The parties involved
○ The main characteristics of the contract
○ The reason why parties want to be bound
● Types of contracts:
○ Commercial contracts - Business to business (B2B)
○ Consumer contracts - Business to Consumer (B2C)
○ Two individuals - Consumer to Consumer (C2C)
● Type of performance:
○ Specific/nominate - sale/service/rental agreement contract
○ Innominate
● Reason for performance:
○ Bilateral contracts - each party assumes an obligation towards the other party
(ex. Person A sells his bike and person B buys it with money, one party’s
obligation is giving the bike, and the other’s is the money)
○ Unilateral contracts - you don’t expect anything in return (ex. A donation, or ex.
Your parents gift you an apartment for free, they don’t expect anything in return)
● Contract law is governed by 4 principles:
○ Freedom of contract - laissez-faire liberal politics, gives legal application to the
idea that each individual should be allowed the autonomy to make the choices
they desire, so parties make their own contracts, therefore, it presumes that a
party will not choose contract terms that are unfavourable to it. But, it does not
only give a person the freedom to choose whatever terms it deems fit (choice of
contents), but also to conclude a contract whenever it desires (freedom to
contract at all) and with whomever it chooses (freedom to choose the other
party).
■ Freedom to contract at all
■ Choice of contents
■ Freedom to choose the other party
○ Binding force - each party has an obligation to perform, and if it fails to do so,
the court can intervene at the request of the other party. (pacta sunt servanda)
○ The absence of formalities - a contract does not require any particular form, it
can be sufficient to ‘intend’ to be bound to it, no need to put the contract into
writing.
○ Contractual fairness - if an individual is in a better position than anyone else,
aka judge, to decide what is in his own best interest, and he concludes a contract
conscious of its consequences, then it’s fair to hold this individual to what he
agreed upon.
, ■ Substantive fairness - there is a reasonable duty between the parties,
fair bargaining (whether the OUTCOME appears fair)
■ Procedural fairness - makes sure that contract came into being with the
parties actually having the opportunity to put their desired features of the
contract on the table and be able to decide freely whether to enter into
that contract or not (whether the PROCESS coming about was fair from
both sides)
Chapter 2
● 3 types of rules relevant to contract law:
○ Rules that are made by the contracting parties themselves (the party
agreement)
○ Rules that emerge from the official national, European and supranational
sources (official sources)
○ Informal rules that are made by others than the official institutions, incl non-state
organisations and academics (informal rules)
■ Soft law: guidelines, codes of conduct, resolutions, action plans,
principles, model rules
■ Principles → PICC, PECL, DCFR
■ Case law
■ Custom
■ Scholarship
Chapter 4 - Intention to create legal relations
● 3 requirements that need to be met before a contract is validly concluded: (= the
FORMATION of a contract)
○ Agreement of the parties
○ An intention to create legal relations
○ Legal capacity of the parties
● This chapter is about the requirement of ‘intention’^
● A contract needs not only the intention of both parties to create legal relations between
them, but also an agreement of the parties consisting of an offer & a corresponding
acceptance. This means that not only do the parties need to agree on the same thing
(consensus ad idem/ meeting of minds) but also need to agree that what they are
agreeing upon is binding in law, meaning that each of them can go to court and enforce
the agreement if necessary.
● Putting this^ into words in different legal systems:
○ PECL - ‘if the parties intend to be legally bound’ and ‘ reach a sufficient
agreement’ (art 2:101 (1))
○ NL - ‘a juridical act requires an intention to create legal relations, which intention
becomes manifest in a declaration’ (art 3:33 BW)
○ English - ‘intention of creating legal relations’ (The Law of Contract)
, ○ German - ‘intention to create a legal commitment’ (Bundesgerichtshof)
○ French - ‘meeting of intentions’ (rencontre des volontés)
● Dissensus can happen too (unclear about intentions contract)
●
○ Subjective approach: the party’s subjective intention
○ Objective approach: how a reasonable person would interpret a party’s intention
from his conduct in all circumstances
○ Slip of pen example^
● Fault of the buyer - culpa in contrahendo
● Often there are certain factors that decide whether someone’s intention was clear or not.
If the person could have known bc of X, then it is assumed that he did indeed know.
●
● Reason for objectivity:
○ Accessibility
○ Avoidance of fraud
○ Certainty & protection of reasonable expectations
, ●
● Intention: objective factors^
●
● Basis of contractual liability^
○ Will - what a person intends
○ Expression - what we actually MENTION in the contract
○ Reliance - combines both
● IF no meeting of mind:
●
○ Eng & FR: no meeting of minds = no contract
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