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Contractual form

Previous: Introduction

Generally, a contract can be made in any way. It is a common misconception that contracts have to be written down. In fact, they do not event require a handshake: they can be agreed on the phone or in a meeting, for example. What is important is that there is an intention to create legal relations between the two parties (and some consideration). As such, domestic contracts, such as an agreement to do the school run, and mere puffs, such as in Leonard v Pepsico [1999] are not enforceable.

The only exceptions to this rule of ‘no form requirements’ are deeds, guarantees, and agreements over interests in land. These must all be evidenced in writing. This is for evidential certainty; the protection of weaker parties and as a cautionary measure to prevent parties rushing into such contracts. There is some discussion as to whether contracts should have form requirements or not. The case of Actionstrength Ltd v International Glass Engineering [2003] illustrates this. Here, an oral guarantee was ruled unenforceable.

Once a contract has been formed, it may be void, voidable or breached.

Void and voidable contracts

If there has been no objective intention to create legal relations, no consideration or no acceptance, a contract is void: it never legally came into existence. Meanwhile, if these elements are all present, a contract may still be voidable. That is, the contract may be ignored if one of the parties can prove one of the following:

  • Incapacity – if one party was not of a sound state of mind
  • Duress
  • Undue influence
  • Misrepresentation – a material fact was incorrect and one party later finds out
  • Mistake
  • Illegality – you cannot make a legally binding contract to carry out an illegal act

Breaching contracts

The intention of the court in contract law is to put the parties in the positions in which they would have been had the contract been carried out. This is different to tort law, which seeks to restore the parties to their position had the wrong not occurred. If a legally binding contract is breached, there are several remedies which a court may order:

  • Damages – the most common remedy
  • Specific performance – to enforce the contract
  • An injunction – to prevent an action – unusual in contract law
  • Termination – ignore the contract

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