Freedom
of Contract

Freedom of Contract

The freedom and sanctity of contract principles was expressed by Sir George Jessel in Printing and Numerical Registering Co v Sampson (1875):

“... if there is one thing more than another that public policy requires, it is that men of full age and competent understanding shall have the utmost liberty in contracting, and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by Courts of Justice.”

This expression simply means that any competent and reasonable person has complete choice and mastery over how they enter and conclude their contracts. However, towards the end of the nineteenth century and throughout the twentieth century, there were an increasing number of Acts of Parliament that addressed the principle of freedom of contract. This was because it was increasingly recognised during this period that pure laissez-faire (do it yourself) application of the principle of freedom of contract often led to injustice. As a result of gross inequality of bargaining power between large companies on the one hand, and either consumers or employees on the other, freedom of contract could be abused; for example, in standard form contracts (template agreements) or through the wide use of exemption clauses (a term in a contract that seeks to restrict the rights of the parties to the contract). Have a look at our free notes.

The current position

A contract is an agreement that is binding and legally enforceable. This kind of agreement is the most frequently used kind of legal dealing and happens in nearly every case where something is sold or purchased, from selling a multi-million pound yacht to buying a lunchtime snack from your local supermarket.  Some other examples of contracts include contracts for the sale of goods, sale of land, contracts of employment, contracts of hire, and contracts for the provision of services. Contracts can be made in writing, may be oral (spoken), or may be identified by someone’s actions. Most contracts have two parties, but there can be more. However, not every agreement will amount to a contract that can be enforced by law. Some social arrangements between people or contracts that offend public decency (i.e. I will pay you to expose yourself in Lincoln’s Inn) and public policy, or those that involve criminal acts, are all examples of contracts that a court would not be willing to consider binding, and are therefore unenforceable.

Modern Contract Law

With the development of a free market in a globalised world based on the division of work, this capitalistic 21st century society required a flexible legal method of protecting the exchange of goods and services. Many legal practitioners decided to respond to this pressing social need from the beginning of the 20th Century. They transformed "Contract Law" from the unwieldy and complicated system it was since the sixteenth century into an instrument of virtually unlimited usefulness and applicability. Contract, therefore, became the crucial tool of the modern businessman, allowing him to go about his business in a rational way. Rational behaviour within the setting of modern society is only possible if agreements can be respected. The contract is, however, a tool that everyone can and does use in their everyday lives. For instance, when you buy a mobile phone, you are often receiving it for seemingly nothing on the condition that you pay a specific fee for your chosen telephone service for a certain period of time. In doing this, you are both exercising your own right to freedom of contract, in that you pick which tariff you use, and the sanctity doctrine, in that you expect that service to be maintained for a certain period in exchange for the money you provide the service provider in return.

Law Books

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