‘If it ain’t broke then don’t fix it’

This post has been contributed by Professor Roger Halson, Module Convenor for Contract law.

In the past, these contract law blogs have focussed upon recent developments in the law of contract: new problems, cases and statutes. However, sometimes, what does not happen is as important as what does occur and so it is the importance of what has not happened in contract law that will be the focus of this particular blog.

The basic principles that govern the negotiation, formation, modification and termination of contracts are rarely thrown out and completely recast. In this, the law of contract may be contrasted with a close neighbour in the law of obligations, the law of tort. In the law of tort, subjects such as liability for negligently inflicted nervous shock or the liability in negligence of public bodies are more frequently reformulated and statutory change is also more frequent. In this way, contract law is perhaps more similar to the law of property where change tends to be evolutionary rather than revolutionary.

The past year corroborates this picture of contractual calm when only 2 cases out of the 52 heard by the Supreme Court involved the law of contract: Barton v Morris (examining one aspect of unilateral contract formation) and Sara & Hossein v Blacks (on the interpretation of service charge provisions in a lease). Perhaps this lack of activity is the result of the overhaul over the past decade of a few areas of contract principles which needed updating such as: the implication in fact of contract terms (Marks & Spencer v BNP Paribus – 2015), illegality, thankfully no longer a part of our syllabus (Patel v Mirza – 2016), contract interpretation (Wood v Capita – 2017) and penalty clauses and liquidated damages (Cavendish v Makdessi – 2015). The latter case nicely emphasises the slow evolution of contract principles as it followed almost a century after the last restatement of that area of law by our highest appellate court (Dunlop v New Garage – 1915).

The slow evolution of contract law results in the certainty and predictability which is highly valued by contractors. In this respect, the common law system of contract with its origins in the decisions of courts in England and Wales may be contrasted with so called ‘civilian’ i.e. continental systems of contract law based upon codes and tracing their origins back to Roman Law. The common law system of contract is closely associated with international trade and commerce. Civil law systems govern 34% and common law systems only 28% of the worlds land mass. However, this situation is reversed when population and economic activity are considered. Common Law jurisdictions account for 28% of the world’s population and most significantly 35% of economic activity. The corresponding figures for the civil law are respectively 23% and again 23%. This close association between the common law and economic activity was reinforced in the World Bank survey which examined the ‘ease of doing business’ in over 180 countries in the world. The countries ranked first, second, third, sixth and eighth (the UK) for ease of doing business were all common law jurisdictions.

The conclusion is that the common law of contract is judged by international contractors to be the system of law that best suits their needs and as they say ‘if it ain’t broke, then don’t fix it’!