Introduction
The law of contracts is largely based on three set areas of law. The most ancient of these, and arguably the founding principles are based on common law. The second and the more specific governing laws are found on statutory provisions which may be different from one jurisdiction to another. The third area of law that offers substantial amount of fairness in the United States is the Uniform Commercial Code. Finally, with global commercial transactions becoming a key determinant on the general global economy, there are the more general laws of contact put forward by the United Nations called the United Nations Convention on Contracts for the International Sale of Goods.
Owing to their origin and applicability, these bodies of law are distinct on their basic elements, though by and large they are mostly in conformity and the general principles governing them can be said to be similar. For the purpose of this comparison, only three general bodies of contract law will be considered; Common law, Uniform Commercial Code Article 2-Sales, and the Convention on Contract for the International Sale of Goods. Some of the defining elements that may bring about distinctions surround the principles in each body of law as regarding contract formation, breach of contract, contact performance and the possible remedies that exist within each and every body. Further, there are also some distinctions when it comes to the application of the sub-rules such as consideration, offer and acceptance, just to mention a few. There are also issues to do with applicability and jurisdictional considerations. Common law in its novel form is generally about the ancient practices of the English, which have been widely accepted in many jurisdictions that use the adversarial system of law. Some of the principles espoused in common law have been adopted and codified thereby giving them a statutory face within jurisdictions.
Basic Elements of the three bodies of contract law
Common law in contract
The law of contract in England has a long history which dates back to the thirteenth and the fourteenth century. Common law as it reflects on contract now is largely influenced by the decisions and customs of the English. It can also be said to be any legal precedent made by the individual judges of the early English jurisprudence whose applicability would later be acceptable generally. Some of the general elements of contract in common law include:
Consideration: After the evolution from forms of action based on covenants and debt, the trajectory towards the modern law of contact would be improved in the seventeenth century when the open-ended scope of assumpsit was brought into control by the development of the doctrine of consideration. This doctrine means that a promise may be regarded as a statement of will but will only have legal effect when it is supported by a motive for the exercise of that will.
The Privity of Contract: This concept answers the question as to whether a person has the legal standing to sue another and the responsibility of that person who is being sued. This concept states that rights to sue cannot be extended to a third party and that contractual obligations will only be fulfilled by the parties therein.
Intention to create legal relations: for an agreement to be enforceable in law, the parties must demonstrate an intention to create a relationship that can be legally enforced. This intention can be shown through writing or some action that can be inferred to mean an intention.
Offer and acceptance: common law dictates that for a contract to be valid, one party must make an offer that has to be accepted by the other party unequivocally. The rules are that an offer can be made to one person or to several people; it must be communicated to the offeree; all terms must be laid bare to the offeree; an offer may be withdrawn any time before acceptance; and that an offer will lapse under certain conditions. Equally, acceptance will occur when the party to whom the offer was made agrees to the proposal espoused in the offer. Communication of acceptance is however not necessary as it was stated in Carlill v Carbolic Smoke Ball Co. [1893] 1QB 256
Promissory Estoppel: this is a common law rule of evidence that precludes a person from denying the truth of some promise made by him about the existence of some facts which could be existing or that which he has led the other party to believe in. This doctrine in some cases negates the requirement of consideration in some simple contracts.
Capacity: prima facie the law assumes that every person is able to contract, except for a specific class of persons whose capacity will never be definite. They include: mentally disordered persons; minors; corporations, and persons laboring from intoxication.
Contracts Illegal at Common Law: these are generally contracts whose practice and enforcement go against public policy. This would mean the general welfare and safety of the people as a whole. Examples include agreements to commit a crime or a civil wrong, agreements contrary to moral good, agreements that affects the freedom of marriage.
Uniform Commercial Code
These are general principles as reflected in the uniform acts that are aimed at harmonizing the law of sales in the United States. More importantly, the UCC creates more leverage in contracts between merchants which is strictly controlled at Common law. The general contract rules include:
Form of Contract: article 2 provides a specific requirement for the writing of a sale contract. This rule is known as the Statute of Frauds. Beyond the rules as to when a contract must be in writing, Article 2 of the UCC contains provisions as to what the contract entails or must contain to be legally enforceable. It also goes further in providing some basic rules for when parol evidence may be deemed relevant.
Formation of Contract: at Common law, a contract will only be formed when an offer is matched by acceptance. Article 2 outlines some general rules about offer and acceptance. These modifications at Common law are intended to facilitate contract formation. According to this Article, there is no general moment to categorically state that an agreement has been made and is henceforth binding. A contract will not be invalid if there are some missing terms. Most significantly, this Article lays down rules about “form offer” which has been inadequately handled by common law.
Modification of Contracts: more often, parties may be required to modify their contract in order that it serves their interests better. In Article 2, there are some basic rules as to how this can be done. One of the significant rules here is that such a modification will not require additional consideration to achieve efficacy.
Contractual Obligation: article 2 covers many rules regarding obligation of the contracting parties. The allocation of risks between seller and buyer, that a valid contract need not include a price term, rules as to how goods ought to be delivered in several lots, and rules regarding warranties.
United Nations Convention on Contracts for the International Sale of Goods
This document encompasses numerous principles about contracting and the law regarding international sale of goods. The main issues that it seeks to address are obligations between the buyer and seller, the remedies that may be available in cases of breach. However, it may fail to address the validity of the contract neither will it have any effect on the property that is in issue. Such incapacitation notwithstanding, the purpose of the CISG is to provide a modern and fair regime for contracts for the international sale of goods. By its general principles, CISG ensures certainty in commercial exchanges whilst decreasing the cost of such transactions.
Application of CISG: Its application is basically for international contracts of sale of goods between private businesses, and it excludes sales to consumers, sale of services, and sale of certain exempt type of goods. Essentially, this convention applies to contract of sale of goods between parties whose places of business are situated in different contracting states. Moreover, its application may also be called by the parties themselves. Formation of a Contract: in a traditional fashion, the basic rules of agreement are offer followed by an acceptance
Obligations of the Parties: the seller is obligated to deliver the goods in conformity with the quality and quantity stipulated in the contract and transferring the property in the goods to the buyer. The buyer on the other hand has to pay the agreed price and should take delivery of the goods. There are also rules regarding the available remedies for breach. Other rules revolve around the passing of risk, anticipatory breach of contract, damages, and the exemptions from the performance of the contract.
There are some glaring distinctions between these bodies of law of contract. Common law generally governs contractual transactions in real estate, insurance, services, employment and other forms of intangible assets. UCC on the other hand come into play mostly in contractual transactions in goods and tangible assets such as a car. A look at the rules acceptance at common law and at UCC shows that the mirror image threshold required at common law may not be applicable at UCC. A change to an offer when the transaction is done under UCC may still lead to a binding contract after consideration of the supervening circumstances of the transaction. At common law, any modification of the contract will need to be accompanied by a new consideration, a position that will not be required under UCC. Further, the terms of a contract done under common law must be very specific as to the price, time of performance, and nature of work or service or goods. Contracts done under UCC will on the contrary call for few terms, mostly quantity of the goods.
Transactions governed by CISG are mostly between parties whose area of business fall within jurisdictions whose laws may lead to a conflict. Common law and by extension UCC are Laws that are aimed at serving the needs of the transactions among parties whose laws are in agreement to a large extent.
There are also some similarities notably that the basic rules of offer and acceptance is observed in all these three bodies of law. There are also remedies that may be sought when a party breaches a contract. The requirement that the goods exchanged are of a merchantable condition is also common within these three bodies of law.
References
August, R., Mayer, D., & Bixby, M. (2012). International Business Law: Text, Cases, and Readings. New York: Pearson Education, Limited.
MacKendrick, E. (2012). Contract Law: Text, Cases, and Materials. Cambridge: Oxford University Press.
Stone, R. (2013). The Modern Law of Contract. London: Routledge.
Young , M. (2009). Understanding Contract Law. Cambrigde: Routledge.
