Lecture notes
LAWS10078 Contract Notes for Seminar 2 Week 2- Contract Theory.
- Module
- LAWS10078
- Institution
- The University Of Edinburgh (ED)
LAWS10078 Contract Notes for Seminar 2 Week 2- Contract Theory.
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Perspectives on Contract Theory from a Mixed Legal System;Contract Theory in a Mixed Legal System
Abstract—In this article it is argued that Scottish contract theory retains
distinctive features which are not shared with the Common Law. The
origins of this theory lie in the 'mixed' nature of its contract law, a mixture
established principally through the writings of Stair. That mix is not merely
the traditional mix of Roman and Common Law typical of mixed legal
systems, but a mix also of natural law ideas with a respect for the rational
and free choices of the parties. Respect for free will is seen not just in
certain contractual rules such as the absence of a requirement of
consideration, but in the existence of a separate obligation of unilateral
promise. It is argued that the nature of Scottish contract theory lends
itself more easily to defence of the will theory, and that there has been an
absence of enthusiasm for the adoption of competing theories of contract
in Scotland. It is suggested by way of conclusion that some of the benefits
provided by the Scottish structure could be of use to future development
of the Common Law, albeit that the Common Law has typically shown
itself averse to legal borrowings from its nearest neighbour.
The Nature and Development of Contract Theory
An obligation is seen in Scots Law, (similar to that of Roman Law), as a
legal tie by which a party or parties are bound to a certain performance.
Rather than the three obligations which the Common Lawyer is used to
recognising, five obligations are recognised in Scots private law, namely
contract, promise (sometimes called unilateral promise), delict (the
Common Law's tort), unjustified enrichment, and negotiorum gestio (the
unauthorised management of another's affairs, or benevolent intervention
as it is sometimes called).
English Law does permit a contract lacking mutual consideration to be
made under seal, Scots Law gives a much more favoured position to the
unreciprocated undertaking. This is self-evidently so by virtue of the
separate obligation of promise, but in addition certain features of contract
law (such as the enforceability of gratuitous contracts) reinforce this.
Analytically, in Scots Law the distinct, albeit related, categories of
obligation are each able to be described by reference to a general
principle explaining liability within the obligation: for contract, pacta sunt
servanda (agreements are to be enforced), an analogous notion operating
in respect of promise (promises ought to be kept); for delict, reparation
ought to be made for loss caused by wrongful conduct (damnum injuria
datum); for unjustified enrichment, enrichments retained without
, justification must be disgorged;12 and for negotiorum gestio, the
reasonable expenses of unauthorised administration must be met
Stair's preference for the will over external considerations of justice is
explicable in part by his characterisation of the duty to fulfil voluntary
engagements (such as contract) as one of the 'first principles' of
equity.28 Stair's three principles of equity—the obedience of man to God,
the freedom of man to dispose of himself in so far as not restrained by
this obedience, and the ability of man to restrict his freedom by binding
himself to voluntary engagements—are used to set out the major, non-
Romanistic, division made by him between obediential and consensual
obligations, or, as they are more usually called in the modern law,
involuntary and voluntary obligations. The obedience man owes to God
explains the basis, in Stair's view, of obediential obligations, for they arise
'not by [man's] own consent or engagement, nor by the will of man, but
by the will of God'.29 Obediential obligations include those of reparation (or
in modern Scots terms, delict) and of restitution and recompense, and
remuneration (in modern terms, unjustified enrichment and negotiorum
gestio). On the other hand, the freedom of man, though it is often abused
by him,30 is the origin of consensual obligations, 31 among them contract
and the separate obligation of promise. He stresses that contract is an
exercise of the will. Conventional obligations are stated as arising 'from
the will of man, whereby our own will tieth us in that, wherein God hath
left us free',35 and a little later as arising 'from our will and consent'.
Conventional obligations are stated as arising 'from the will of man,
whereby our own will tieth us in that, wherein God hath left us free', 35 and
a little later as arising 'from our will and consent'. They originate from our
freely made choices, but they bind by virtue of their being an expression
of the equitable principle of Man's obedience to God, even if they are not
obediential obligations so-called. This makes sense if we remember Stair's
three principles of equity. Stair continues his discussion of human will by
making a point which has been much repeated and applied by courts
down the centuries: that not every act of human will binds the actor to a
legal duty. On the contrary, Stair identifies three acts or stages of the will,
namely desire, resolution and engagement (offer, ITT and acceptance-
consensus in idem). Desire, resolution and engagement thus easily match
what we know from our own experience about many common contracts. It
remains the case that something more than merely willing to contract is
required: the will must be manifested externally by some act of
engagement. Gratuitous contracts makes perfect sense in a system in
which the validity of the unilateral promise is also
recognised. Agreement is of the essence of contract in Stair's view, the
42
bare pact (nudum pactum) being thus enforceable in Scots Law even
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