page 12 University of London International Programmes
of a car worth £200 which I tell you is the only car I own. The law would, in words
usually attributed to Charles Dickens, be an ‘ass’ if on these facts you had entered
a contract to buy the old wreck for £10k; fortunately it is not and you have not. The
contractual offer I will be held in law to have made is not the one that I secretly intend
(i.e. to sell the car round the corner), but rather is the offer that a reasonable individual
would think I was making (i.e. to sell the car which I was sitting on at that time).
1.4.6 Law and equity
At one time in England and Wales, there were two separate court systems which dealt
with contract cases: courts of equity and courts of common law. In the latter part of
the 19th century, these two courts were amalgamated and one court dealt with both
law and equity. Equity had developed its own principles, considerations and remedies
to contractual problems. Equity is said to supplement the common law where it
is deficient. In the course of studying contract law you will see many equitable
principles in place (see, for example, estoppel, undue influence and the remedy
of ‘specific performance’, the courts’ order that the promisor perform the actual
obligation undertaken). Equitable intervention in a contractual problem is based on
the conscience of the parties; accordingly, equitable relief is discretionary and may
be more flexible. Some legacies of this old distinction remain (e.g. with respect to the
remedies available for breach of contract). The primary remedy, an award of damages,
which originated in the common law courts, is said to be available as of right. In
contrast, specific performance, which originated in the courts of equity, is said to be
available at the court’s discretion. The availability of equitable relief is bound by a
distinct series of considerations sometimes referred to as a maxim. One such maxim
is that ‘he who comes to equity must come with clean hands’; that is to say, he who
seeks equitable relief must himself not be guilty of some form of misconduct or sharp
practice. You will see the particular restrictions placed upon the granting of equitable
relief as you proceed through the module guide (see, for example, rescission for
misrepresentation).
1.4.7 Human rights and contract law
From October 2000 the Human Rights Act 1998 (HRA), which incorporates into English
Law the European Convention on Human Rights, has had legal effect. The HRA creates
Convention Rights (CRs) which are enforceable under domestic law. The main rights
are: protection of property; right to life; prohibition of torture, inhuman or degrading
treatment; prohibition of slavery or forced labour; the right to liberty/security; right
to a fair trial and hearing, and no punishment without lawful authority; respect for
private/family life, home and correspondence; freedom of thought, conscience and
religion; freedom of expression; freedom of assembly/association; freedom to marry;
and prohibition of discrimination in enjoyment of CRs.
The wide ranging freedoms which are guaranteed by the HRA might have a
considerable impact upon the law of contract depending on their so called ‘horizontal’
effect. HRA s.6(1) provides that it is ‘unlawful for a public authority to act in a way that
is incompatible with a Convention Right’ and so clearly applies to the relationship,
including a contractual one, between a public body and an individual. The extent to
which the HRA will have impacted upon the law of contract is related to the extent
that the HRA has a horizontal effect (i.e. to the extent that it affects relationships,
including contractual ones between individuals, including companies). It has so far
been recognised that CRs have some horizontal effect (e.g. the House of Lords has
recognised that the Article 3 right to respect for private and family life required that
legislation regarding the succession to rented property must be applied in the same
way to same sex relationships as it is to heterosexual relationships). The precise extent
of the horizontal effect of the HRA is a contentious issue. Further development of the
extent of horizontal effect will, if it occurs, increase the importance of human rights
protection upon the law of contract.
An example of how the HRA’s protection of CRs has affected contracting activity
is provided by the Court of Appeal’s recent decision in Dept of Energy and Climate