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Contract Law Revision Hub - Cases, Key Principles and Revision Guides
Updated: Aug 14
Contract law forms the foundation of many legal relationships, governing how agreements are created, interpreted, performed, and enforced. Whether you are studying for university exams, the SQE, or simply seeking to understand English contract law, this guide brings together all the core principles, cases, and revision resources in one place.
Use this page as your starting point to navigate every major topic in contract law.
Table of Contents
What is Contract Law?
Contract law is a foundational subject of legal studies, providing the framework for understanding how agreements are formed, enforced, and interpreted. In essence, contract law governs how the 'game' of contracts should be played.
For a legally binding contract to arise, several key elements need to be present. The precise requirements depend on the circumstances and the type of contract. However, generally, there are five elements of a contract:
Offer and acceptance (these are sometimes dealt with separately and considered separate elements to a contract)
Consideration
Intention to create legal relations
Certainty of terms
Capacity
Not every agreement will satisfy all of these requirements, and certain types of contracts are subject to additional legal requirements.
Sources of Contract Law
The sources of contract law are common law and legislation:
Common law: Broadly, this means judge-made law. This is what has evolved from pragmatic case-by-case analysis and decisions over time. This also includes 'equity', which are essentially principles of fairness and good conscience that are used to soften legal rules.
Legislation: These are the statutes and regulations made by Parliament.
How Far Does Contract Law Reach?
Contract law can reach most areas of our lives but there are factors that can limit its reach:
Family and social arrangements: Contract law is reluctant to get involved in non-market transactions (e.g. 'If you cook, I'll wash up'). In these types of circumstances, there is no intention to create legal relations.
Specific contracts: Specific contracts and certain areas of law limit the reach of contract law. For example, insurance contracts are generally impacted by general contract law but are primarily governed by the Insurance Act 2015, which creates special rules governing them.
Offer and Acceptance
An offer is:
A clear expression of willingness to contract on specified terms, made with the intention that it will become binding upon acceptance
The offer must:
Be communicated: An offer must be communicated to the other party by words or by conduct.
Contain complete and certain terms: An offer must contain enough detail about the terms of the proposed contract (which are sufficiently certain) to enable a contract to be formed if the other party accepts the offer.
Show an intention to be bound: The communication must be such that a reasonable person receiving it would have understood that the offeror intended to be bound by the terms proposed.
An acceptance is:
Final and unqualified assent to the terms an offer.
The acceptance must match the offer exactly. This is sometimes known as the 'mirror principle'. Any attempt to alter the offer will amount to a rejection of the original offer and a new offer being made (known as a 'counter offer').
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Consideration
Consideration is the price paid for a promise, meaning that each party must give or promise something of value in exchange for the other party’s promise. A simple contract will generally only be legally enforceable if each party provides valid consideration.
Consideration may be executed or executory, depending on when the consideration is provided:
Executed consideration occurs where one party performs an act in response to the other party’s promise. Once the act has been completed, the consideration is executed.
Executory consideration occurs where both parties exchange promises to perform their obligations at a future date. The consideration consists of the promises themselves, even though performance has not yet taken place.
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Intention to Create Legal Relations
An agreement will only be legally enforceable if the parties intended to create legal relations. The courts apply an objective test by considering what a reasonable person would have understood from the parties’ words and conduct.
In domestic situations, the general rule is that agreements are presumed not to create legal relations because they are usually based on mutual trust rather than legal obligation.
In commercial situations, the general rule is that agreements are presumed to create legal relations.
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Certainty of Terms
A term is a promise or provision forming part of a legally binding contract. Breach of a term gives rise to remedies. Certainty of those terms is a fundamental requirement for the formation of a valid contract. If the essential terms of an agreement are not sufficiently clear and complete for the parties' obligations to be ascertainable, the agreement may be void for uncertainty.
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Capacity
Capacity refers to a person’s legal ability to enter into a contract. As a general rule, adults have full contractual capacity. However, the law provides protection for certain individuals whose ability to understand or appreciate the consequences of a contract may be limited.
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Breaches and Remedies
A breach of contract occurs where a party fails to perform their contractual obligations without lawful excuse. The breach may arise from non-performance, defective performance or late performance.
A breach may occur where a party:
Fails to perform the contract.
Performs the contract defectively.
Performs the contract late.
Indicates before performance is due that they will not perform (anticipatory breach).
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Common Contract Law Questions
Do Contracts Need to be in Writing?
Not necessarily. Depending on the circumstances and type of agreement, a contract may be formed orally or through conduct. However, some contracts are subject to specific legal requirements concerning their form. For example, contracts for the sale of land must be in writing to be legally binding.
Can a Contract Be Changed After it Has Been Signed?
Potentially. The parties would need to agree a variation (also known as an 'amendment'), but the original contract may also contain specific requirements governing how changes must be made. The variation itself must contain the five elements of a contract in order to be legally binding. It should be noted that there may be exceptions to this (such as using a deed of avoid the need for consideration).
How Long Can a Claim be Brought After Breach?
The Limitation Act 1980 provides that a contract claim can be brought 6 years from the date of breach.
Contract Law Key Takeaways
Contract law determines when agreements are legally enforceable and what rights and obligations arise from them.
The key areas to consider include:
Formation – whether a legally binding contract was created.
Terms – what the parties agreed and what those terms mean.
Performance – whether each party has complied with its contractual obligations.
Breach – whether one party has failed to perform its obligations.
Remedies – what relief may be available following a breach.
Termination – whether and how the contractual relationship can be brought to an end.
Disputes – how disagreements can be resolved.
Explore the detailed guides above to revise the specific areas of contract law.
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