Until the latter part of the last century it would have been possible to assert confidently that contract law was judge-made law; and, to state the obvious, judges decide cases. So, to a large extent, the job of a lawyer in advising a client once a dispute has arisen is to predict what a judge is likely to decide. But judges' focus is on the cases immediately before them and only peripherally on the wider implications of what their decisions might entail. Moreover, at any level of the judicial hierarchy, short of the Supreme Court, the rules of precedent constrain an individual judge's freedom to decide a case in a way that they would like. The consequence for contract law is that it has evolved piecemeal over the centuries. Incremental changes here and there are capable of producing an unbalanced overall structure and in some cases unprincipled distinctions.
In recent years, however, the Supreme Court has embarked upon a wholesale review of particular areas of contract law. For example, Patel v Mirza [2016] UKSC 42 considered the role of illegality in contract; and Peninsula Securities Ltd. v Dunnes Stores (Bangor) Ltd. [2020] UKSC 36 reassessed the contents of the doctrine of restraint of trade. Both these decisions resulted in major changes to what had been thought to be the law.
Even those cases only deal comprehensively with small areas of the law. It is important, therefore, to have a wide-ranging but manageable and readable overview of the current state of English contract law. This book fills that gap. It tells us not only what the law is; but how it should develop in future.
Professor Andrews begins his magisterial survey by identifying six principles which underpin the whole edifice: freedom of contract, the objective principle, the contractual bond principle, estoppel, the principle of good faith and the compensation principle. He goes on to show how these principles pervade the fabric of contract law. But in addition, he identifies no fewer than 49 topics where he considers whether the law is in a satisfactory state; each of which is critically examined in the course of the book, in sometimes trenchant terms.
His discussion of the question whether legally binding obligations can arise during the process of contract formation by negotiation emphasises that the principle of freedom of contract does not justify the courts straying into the commercial minefield of tough and bullish negotiations; and he warns in emphatic language against the court becoming embroiled in an “impressionistic exercise resembling blindman's buff”. On the other hand, he laments the decision of the Supreme Court (Rock Advertising Ltd. v MWB Business Exchange Centres Ltd. [2018] UKSC 24) in upholding a “no oral modification clause” as being itself inconsistent with that same principle of freedom of contract.
The principle of objectivity reappears in a number of places; notably in the discussion of both the interpretation of the express terms of a contact and also the implication of terms. In the course of that discussion he considers whether it is possible to refer to the deletion of proposed terms in the course of negotiations in order to rebut a suggestion that a term to the same effect should be implied. There are cases that point in either direction. On that question he takes what might be described as a purist point of view, concluding that the only means to unlock the door to the “negotiation evidence archives” is by means of an action for rectification.
The contractual bond principle informs the discussion of the interpretation of contracts and, more importantly, the discussion of frustration. Professor Andrews analyses the various ways in which that doctrine has been formulated, culminating in The Sea Angel [2007] EWCA Civ 547. Professor Andrews is critical of what he describes as the “tick all the boxes” approach; and particularly critical of the final box labelled “justice” which, he says is a “jejeune way of summarising the doctrine's overall effect” (p. 572).
Although estoppel is listed as one of the underlying principles, the discussion of that principle is largely confined to a small self-contained section of a chapter. It is disappointing that the vexed topic of “contractual estoppel” attracts little comment, besides noting that in First Tower Trustees Ltd. v CDS (Superstores International) Ltd. [2018] EWCA Civ 1396 (a decision to which I was a party), the Court of Appeal held that clauses purporting to preclude reliance on a pre-contractual representation had to satisfy the test of reasonableness in the Unfair Contract Terms Act 1977. The reader would have benefitted from Professor Andrews’ view on the subject more broadly.
The principle of good faith is one that has been extensively discussed in recent cases, and Professor Andrews is right to give it a chapter of its own. He is not a supporter of the expansive and “energetic” use of an implied term of good faith; still less a supporter of the Canadian approach that good faith is a general obligation-creating norm applicable across the board in contract law. His ultimate conclusion is that there is a real danger that if a general principle of good faith were established it would be invoked as often to undermine as to support the terms that the parties had actually agreed. Thus far, the implication of such a term has been confined to “relational contracts”; but judges have sometimes struggled to recognise, let alone define, what that expression means. Professor Andrews’ views on that subject would also have been welcome.
The compensation principle is considered extensively, as one would expect, in the chapter on damages for breach of contract. Most of the subject is well-trodden ground; but Professor Andrews offers an interesting discussion of “negotiating damages” in the light of the decision of the Supreme Court in One-Step Support Ltd. v Morris-Garner [2018] UKSC 20.
One of the welcome features of the book is Professor Andrews’ decision to illustrate certain principles of contract law by extended discussion of individual cases. That method of exposition brings to life the practical application of principle in a way in which the distillation of the principle on its own does not. As he himself puts it in the Preface, the analysis works “by drilling into the case law” (p. ix). This technique is particularly successful in exploring when a term will be implied into a contract; the scope and limits of “corrective construction”, and the content of the rule against penalties. Another valuable feature of the book is the extensive reference to scholarly literature.
Even where there is no relevant case law, Professor Andrews tackles such questions as when acceptance of an offer by email is effective, particularly where the email in question ends up in the recipient's junk mail folder. Perhaps a future edition will tackle the problems likely to arise out of smart contracts effected by computer codes. Likewise, he casts a critical eye over statutory intervention, notably the Contracts (Rights of Third Parties) Act 1999. He notes that it is regularly excluded within commercial contracts with the result that it is a statutory tool which “is seldom removed from the toolbox” (p. 176). In contrast, he suggests that the common law ought to evolve by reaching the position that if A promises B to confer a benefit on T, B should be able to sue on T's behalf to obtain the relief promised to T.
Overall, this book is a refreshing overview of the current state of English contract law, frequently enlivened by Professor Andrews’ vivid turn of phrase. It will not, and is not intended to, replace the practitioner's bible in Chitty on Contracts; but it is a valuable addition to the literature.
