The scope of the law of contract in relation to its enforcement capability of voluntarily created civil obligation

The scope of the law of contract in relation to its enforcement capability of voluntarily created civil obligation-illiterate

INTRODUCTION

The Law of contract is founded on the principle expressed in the Latin phrase “pacta sunt servanda” which implies that “pacts must be kept”. Contract is an agreement between two parties who enters into it voluntarily within the binds of law. The Law of contract emphasizes primarily on the enforcement of bargains. However, its range stretches from the standard contract between individuals to contract between firms and consumers and commercial contracts between business firms.

It is such a broad concept that there is no descriptive theory present that evaluates this law of contract. The Normative theories focus on one aspect only, autonomy or efficiency. According to Schwartz et al (2003), the theory positively claims that the law of contract enables the contracting parties to maximize their gains through the contract. On the other hand the drawback of this law is that, the contract law is restricted to only performing the above mentioned function. They further illustrate that, the Pluralists theories on the other hand attempts to solve the problem of unitary normative theories by advocating and pursuing the court to pursue efficiency, protection of individual autonomy, fairness and good faith.

The objective of this paper is to illustrate the fact that “the law of contract confines itself to the enforcement of voluntarily created civil obligations”. We have to reflect upon the situation under which a voluntary contract will be valid and examine its relationship with civil obligations.

VOLUNTARY NATURE OF CONTRACT LAW

Contract Law (CL) and theory are voluntary in nature in its core. A contract consists of essential elements which form the basis of the contract. The very first step contains offer and acceptance or mutual assent. Mutual Assent is established through an offer made by one party to enter into the contract and acceptance of the other party to enter the agreement. The next step is consideration which is a benefit or something which is of value to both the parties, mentioned in the offer, to avail which both parties would come into the agreement.The consideration must be publicly and legally acceptable. For instance, it cannot be of any criminal activity.[1]The parties must be voluntarily being willing to enter into a legal relation. The Legality element illustrates that the purpose of the contract must be legal in order to be enforced in the court.

The capacity element illustrates that the parties must meet certain requirements to enter into a contract, such as minimum age requirements, sanity of the parties and so on. This brings us to the concept of “free consent” which illustrates that an agreement must be valid only if both parties agree to it willingly and not under any duress. If any of the elements are not obliged, the contract is void. The analysis of the elements of a contract tells us that a contract is indeed voluntary and without its voluntary component, it would not be valid. Therefore, it can be deduced that one of the fundamental element that CL must enforce is its voluntary nature.

CIVIL OBLIGATION

Civil obligation (CO) is civil law, which binds in law (vinculum juris) and it is enforceable in the court of justice.[2] It is considered as a bond which can inflict a penalty if certain conditions such as payment of money, performance as promised in the contract are not met. In this, one party bind themselves under a penalty to perform a certain promise.

Civil Obligation has many different forms, expressed and implied, pure and conditional, absolute and alternative and many more. Expressed or conventional obligations are those in which an obligor voluntarily binds themselves in detailed terms to perform their obligation. An implied obligation on the other hand arises through the operation of the law.

For instance, if Mr. X mistakenly provided services to Mr. Y and Mr. Y willingly accepts it, then Mr. Y becomes obliged to pay Mr. X the value of his services.

When talking about voluntary obligations, the contract theorists typically emphasize on promises. Promises are one kind of voluntary obligation. Usually the voluntary obligations arise due to agreements when people agree about their purpose. These voluntary obligations support the agreement analysis of contract instead of the promissory arguments Promises creates a future[3] whereas the contracts serve as a legal role which cannot be fulfilled by promises.[4] Voluntary obligation enables people to prepare certain arrangements and carry on their relations which they could not otherwise have performed.

CONTRACT LAW ENFORCING CIVIL OBLIGATION

In this section I will be attempting to create a link between CO and CL based on the earlier discussions. The very basic definition of civil obligation says that it is a deed or contract which a person voluntarily agrees upon, with a view to achieve a reward; with the complete knowledge about the consequences of failure to meet the contract.

Now, if we analyze the essential elements of the contract law, we will find that the basic common link with CO is the voluntary nature. Let us examine the mutual assent element. If the offer of one party does not satisfy the interest of another party, then there would be no CO and hence CL is enforced.

Then the intention to enter into a legal relation element is equally important in the formation of a civil obligation. For instance, if the contracting parties do not want to enter into legal relations, then there would be no voluntary obligation. Therefore, the contract law again falls into the criteria of protecting civil obligation. Free consent element of the CL which explains the need for the contract to be voluntarily accepted, not under any sort of duress also matches the basic principle of civil obligation.

The element of consideration is also important in the sense that a party will only enter into a voluntary civil obligation with another party only when there is an issue of self interest. Therefore, we can see again that in order for a CO to established, it must be under the umbrella of the Contract Law.

According to renowned legal, moral and political philosopher Joseph Raz, the business of contract law is to protect the voluntary obligations of all kinds, as in his words, the contract law is supposed to protect the “practice of undertaking voluntary obligation of value”

OPINION

However, if we base our judgment based on the above mentioned function of contract law only, then the conclusion would be incomplete. Penner (1996) argues that the law of contract can be rightfully regarded in its role to enforce in the preparation if bargain agreements. This is because he argues that the law itself distinguished bargains from other voluntary obligations through elements such as consideration and “intention to create legal relations” The question arises because the law of contract also deals with “relational contracts”. Examples include the contract of employment, long term supply contracts between two businesses.

The difference between this relational contracts and classical contract is that, the classical contract puts more emphasis on the “discreetness of individual contractual transactions and the certainty of contractual obligations” The classical contracts plan to prepare contracts so that their economic future is certain as much as possible.

On the contrary, the relational analysis of the contract law shows that the planning economic future with certainty becomes impossible as in the case of supplier and business contracts. Therefore the practice of good faith and fairness comes into the foray which is outside the elements of law of contract.

Another argument is that, the law of contract’s role is not just confined to enforce voluntary obligation but it also has an additional role of “serves to extend such practices” which means that the law of contract also permits and encourage normative innovation such as interaction and transaction between two stranger parties; who previously had never dealt with each other and thus there is no relation of trust existent. Since, contract law expects and facilitates such uses, contract law can also be termed as a legal power.[5]

CONCLUSION

We have seen throughout the paper that in order to create a voluntary civil obligation, the elements of law of contract must be fulfilled. We have seen how the elements of free consent, consideration, mutual assent, intention to enter into legal relations plays a crucial role in providing us with the impression that it is the duty of law of contract to enforce the civil obligations.

However, as we have seen later, that the law of contract’s scope is just not just confined to governing all voluntary agreements only, it is a broader concept and it encompasses varying types of voluntary obligations. In the introduction section the pluralists’ view of the enforcement of contract law was mentioned, which basically meant that the rules must differ according to types of agreements involved. This view must be attained if the contract law’s dimensions are to be widened.

REFERENCES

Web References:

Capacity (2013) Retrieved from Cornell University Law School, Legal Information Institute website: http://www.law.cornell.edu/wex/capacity

Civil obligation, 2013. In Webster-dictionary.com. Retrieved February 17th, 2013, from http://www.webster-dictionary.org/definition/Civil%20obligation

Consideration (2013). Retrieved from Cornell University Law School, Legal Information Institute website: http://www.law.cornell.edu/wex/consideration

Legality (2013). Retrieved from Cornell University Law School, Legal Information Institute website: http://www.law.cornell.edu/wex/legality

Mutual Assents (2013). Retrieved from Cornell University Law School, Legal Information Institute website: http://www.law.cornell.edu/wex/mutual_assent

Obligation, 2013. In Webster-dictionary.com. Retrieved February 17th, 2013, from http://www.webster-dictionary.org/definition/OBLIGATION

Obligation (n.d.). Retrieved from: http://www.lectlaw.com/def2/o001.htm

Books and Article

Balfour v. Balfour and the Enforceability of informal Agreements, 5 Oxford Legal Studies.391 (1985)

Bagchi,A. (n.d.) Voluntariness and Contact Interpretation. Unpublished manuscript.

Hans Wehberg, Pacta Sunt Servanda, The American Journal of International Law, Vol. 53, No. 4 (Oct., 1959), p.775.; Trans-Lex.org Principle of Sanctity of contracts

Jody Kraus, Legal Theory and Contract Law: Groundwork for the Reconciliation of Autonomy and Efficiency in Legal and Political Philosophy,385,395-410

Klass, G.(2008).Three Pictures of Contract: Duty, Power and Compound Rule. Georgetown Law Faculty Publications. Retrieved from: http://scholarship.law.georgetown.edu/facpub/411/

Macneil I.R., Contracts: Adjustment of Long term Economic Relations under Classical, Neo Classical and Relational Contract Law, 72 Nw. U. L. Rev. 854 (1978)

Michael Trebilcock, The Limits of Freedom of contract (1993)

Penner J.E. (1996),Voluntary Obligations and Scope of Law of Contract, Legal Theory-2, pp325-57,Cambridge University Press.

Raz, J, . Harvard Law Review, supra note 1 at 211, 933-38

Schwartz, Alan and Scott, Robert E., ”Contract Theory and the Limits of Contract Law” (2003). Faculty Scholarship Series. paper 308. http://digitalcommons.law.yale.edu/fss_papers/308

[1]See Consideration (2013). Retrieved from Cornell University Law school, Legal Information Institute website: http://www.law.cornell.edu/wex/consideration

[2] Civil obligation, 2013. In Webster-dictionary.com. Retrieved February 17th, 2013, from http://www.webster-dictionary.org/definition/Civil%20obligation

[3] See Raz, J, . Harvard Law Review, supra note 1 at 211, cited in Penner J.E. (1996),Voluntary Obligations and Scope of Law of Contract, Legal Theory-2, pp325-57,Cambridge University Press.

[4] See Penner J.E. (1996),Voluntary Obligations and Scope of Law of Contract, Legal Theory-2, pp325-57,Cambridge University Press.

[5] Klass, G.(2008).Three Pictures of Contract: Duty, Power and Compound Rule. Georgetown Law Faculty Publications. Retrieved from: http://scholarship.law.georgetown.edu/facpub/411/

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