One normally associates the phrase ‘common law’ with English common law. But common laws, in the sense of laws other than those particular to a specific jurisdiction, largely in the form of legislation, are not peculiar to England and English-speaking former colonies. Numerous forms of common law have existed, and endure, in several European legal systems, including France, Italy, Germany, and Spain. They developed from Roman roots and achieved their commonality by indigenous reception instead of imposition. In England, however, the judge-driven common law tended to be defined in jurisdictional and remedial terms.
But though the common laws of Europe (Germany, France) seem to have transmogrified into national laws, they are not dead. Despite the advent of codification and the doctrine of precedent these – non-English – common laws, though battered and bruised, still survive. And they circulate tirelessly through the veins of various legal systems.
In respect of the common law of England – and those many countries to which it has been exported – previous decisions of courts (judicial precedents) are a fundamental source of law.
The doctrine of precedent stipulates that the reasoning deployed by courts in earlier cases is normally binding on courts who subsequently hear similar cases. The idea is based on the principle ‘stare decisis’ (‘let the decision stand’). It is, of course, designed to promote the stability and predictability of the law, as well as ensuring that like cases are, as far as possible, treated alike.
Every common law jurisdiction has its distinctive hierarchy of courts, and the doctrine of precedent requires courts to follow the decisions of courts higher up the totem pole. In doing so, however, the lower court need follow only the reasoning employed by the higher tribunal in reaching its decision – the so-called ratio decidendi. Any other statements made by the judges are not binding: they are ‘things said by the way’ (obiter dicta). For example, a judge may give his opinion on the case, which is not relevant to the material facts. Or she may pontificate on the social context in which the case arose. In neither case need a subsequent judge regard these utterances as anything more than persuasive.
Discerning the ratio decidendi of a case is not infrequently an arduous journey through an impenetrable thicket. Judgments may be long and convoluted. Where the court consists of several judges, each may adduce different reasons to arrive at the same conclusion. Though judges and academics have supplied various road maps, there is no easy route. No simple formula is available to uncover the binding chunk of the judgment. As with much in life, it requires practice and experience.
The notion that previous decisions (often ancient) should determine the outcome of contemporary cases is occasionally ridiculed. Most famously, Jeremy Bentham stigmatized the doctrine of precedent as ‘dog law’:
Whenever your dog does anything you want to break him of, you wait till he does it, and then beat him for it. This is the way you make laws for your dog: and this is the way the judges make law for you and me. … [T]he more antique the precedent – that is to say, the more barbarous, inexperienced, and prejudice-led the race of men, by and among whom the precedent was set – the more unlike that the same past state of things … is the present state of things.
It is frequently assumed that continental systems of law do not employ an equivalent doctrine of precedent under which judges are bound to follow decisions of a higher court. This is mistaken.
In practice, a judgment of the French Cour de Cassation or the German Bundesgerichtshof (Federal Court of Justice) will be followed by lower courts no less than the judgment of a common law court of appeal.
In a perfect world the law would be clear, certain, and comprehensible. The reality is some way from this Utopian vision. Law in all jurisdictions is a dynamic organism subject to the vicissitudes of social, political, and moral values. One influential foundation of moral ideas has already been mentioned: natural law, the ancient philosophy that continues to shape the teachings of the Roman Catholic Church. As we saw, it proceeds from the assumption that there are principles that exist in the natural world that we, as rational beings, are capable of discovering by the exercise of reason. For instance, abortion is regarded as immoral on the ground that it offends natural law’s respect for life.
In spite of the caricature of law, lawyers, and courts existing in an artificial, hermetically sealed bubble, judges do reach out into the real world and take account of public opinion. Indeed, on occasion courts respond with unseemly alacrity, such as when the media laments the alleged leniency of judges in a certain case or in respect of a particularly egregious offence. Judges may react rashly (dare one say injudiciously?) by flexing their sentencing muscles apparently to placate perceived public opinion.
More prudently, perhaps, courts, much to the gratification of academic lawyers, increasingly cite their scholarly colleagues’ views as expressed in textbooks and learned journals. To be quoted in a judgment is recognition, not only that one’s works are actually read, but also that they carry some weight.
In the absence of direct authority on a point of law, courts may even permit lawyers to refer to ‘common sense’ to support an argument. This might include widely accepted notions of right and wrong, generalizations about social practices, fairness, perceptions of the law, and other common conceptions that cynics occasionally represent as foreign to the legal process Law’s branches. The abundant branches of the law perpetually proliferate. As social life is transformed, the law is rarely far behind – to invent and define new concepts and rules, and to resolve the disputes that inevitably arise. Thus our brave new legal world continues to usher in novel subjects: space law, sports law, sex law. At the core of most legal systems, however, are the fundamental disciplines that hark back to the roots of law: the law of contract, tort, criminal law, and the law of property. To that nucleus must be added a horde of disciplines, including constitutional and administrative law, family law, public and private international law, environmental law, company law, commercial law, the law of evidence, succession, insurance law, labour law, intellectual property law, tax law, securities law, banking law, maritime law, welfare law, human rights law. To facilitate criminal and civil trials and other practical matters (such as the conveyance of land, the drafting of wills), complex rules of procedure have developed, spawning their own subcategories.
Public and private law
The distinction between public and private law is fundamental, especially to the civil law systems of Continental Europe and its former colonies. Though there is no general agreement as to precisely how or where the line should be drawn, it is fair to say that public law governs the relationship between citizen and state, while private law concerns that between individuals or groups in society. Thus, constitutional and administrative law is the archetypal example of public law, while the law of contract is one of many limbs of private law. Criminal law, since it largely involves prosecutions by the state against offenders, belongs also under the umbrella of public law. As the state intrudes more and more into our lives, however, the boundary between public and private law grows ever fuzzier.
Agreements are an indispensable element of social life. When you agree to meet me for a drink, borrow a book, or give me a lift to work, we have entered into an agreement. But the law will not compel you to turn up at the bar, return my book, or pick me up in your car. These social arrangements, while their breach may cause considerable inconvenience, distress, and even expense, fall short of a contract as understood by most legal systems. One of the hallmarks of a free society is the autonomy it affords its members to strike the bargains of their choice, provided they do not harm others. Freedom of contract may be defended also on utilitarian grounds: by enforcing contracts in accordance with the value placed on things by the market, resources – goods and services – may be bought by those who place the highest value upon them. It is sometimes claimed that this yields a just distribution of scarce resources.
Those who champion the free market consider individuals to be the best judges of their welfare. In the 19th century – especially in England – the law of contract, as the facilitator of the optimum relations of exchange, was developed to a high degree of sophistication (some would say mystification) in pursuit of this cardinal value of commercial and industrial life. It is certainly true that business is unimaginable without rules of contract, but there is an inevitable inequality of bargaining power in any society. In theory, my contract with the electricity company that supplies power to my home regards both parties as being on an equal footing. But this is simply not the case. I am hardly in a position to haggle over the terms of the agreement which is inexorably a standard form contract. A featherweight is engaged in a contest with a squad of heavyweights. The law therefore tempers the hardship of so-called ‘unfair’ terms by consumer legislation and other institutional means that attempt to redress the balance by, for instance, empowering courts to disallow unconscionable clauses and permitting them to enforce only ‘reasonable’ terms.
In order to constitute a binding contract, the law normally requires that the parties to the agreement actually intend to create legal relations. Breaking a promise is almost always regarded as immoral, yet it results in legal consequences only where certain requirements are satisfied, though in certain civil law countries (such as France, Germany, and Holland) a person may be held liable – even before his offer is accepted – for failing to negotiate in good faith.
The common law notionally dissects agreement into an offer by one party and an acceptance of that offer by the other. By making an offer the ‘offer or’ expresses – by word, speech, fax, email, or even by conduct – his readiness to be bound in contract when it is accepted by the person to whom the offer is addressed, the ‘offeree’. Thus Adam advertises his car for sale for $1,000. Eve offers him $600. Adam replies that he will accept $700. This is a counter-offer, which Eve is obviously free to accept or reject.
Should she accept, there is agreement and, provided the other legal requirements are satisfied, a binding contract. This analysis is a helpful method by which to determine whether agreement has actually taken place, but it is rather artificial; it is often difficult to say who the offeror is and who the offeree is. For example, final agreement may be preceded by protracted negotiations involving numerous proposals and counter-proposals by the parties. To describe the process as constituting offer and acceptance is something of a fiction.
Hundreds of cases have grappled with factual situations that do not fit neatly into an offer-and-acceptance paradigm. There is also the recurring difficulty of the extent to which, if at all, an offeror should be bound by his offer. The common law stipulates that until you accept my offer I am at liberty to withdraw it. German, Swiss, Greek, Austrian, and Portuguese law, on the other hand, provide that I am bound by my offer; I cannot simply revoke it with impunity. A purported withdrawal has no legal effect. French and Italian law adopts an intermediate position. The Italian Civil Code provides that an offer may not be revoked before the expiry of a specified period. If no period is specified in the offer, it may be withdrawn until acceptance. But if the offeree has relied on the offer in good faith, he may claim damages for his loss in preparing to perform his side of the bargain.
The common law requires evidence not only of a serious intention to be legally bound, but also what is known as ‘consideration’, a concept absent from civil law systems. Consideration is the bargain element of the agreement: each party stands to gain something from the agreement – otherwise they would not have entered into it. These elements are illustrated by the classic case of Carlill v Carbolic Smoke Ball Company in 1892. The Carbolic Smoke Ball Company advertised its product – a smoke ball that it claimed would protect the user from contracting influenza. It undertook to pay £100 to anyone who, after using the apparatus, caught the ’flu. The advertisement included the following statement: £100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter. Mrs Carlill, relying on this promise, purchased a ball and used it according to the instructions. She nevertheless contracted influenza. The company claimed that there was no enforceable contract between it and Mrs Carlill since their offer had not been accepted – she had not informed the company that she had accepted its offer. Nor, they argued, was there any consideration because the company had not received any benefit from a purchaser’s use of the smoke ball once it had been sold. Both arguments were rejected by the court. It held that the advertisement constituted an offer of a unilateral contract between the company and anyone who, having seen the advertisement, acted on it. (Normally, contracts are bilateral: they involve an exchange of promises between two parties.) In this case, however, since Mrs Carlill had satisfied the conditions, she was entitled to enforcement of the contract. Informing the company that she had used the ball formed part of the acceptance.
Moreover, by depositing £1000 in the bank to ‘show their sincerity in the matter’ the company was plainly making a serious offer. In respect of consideration, the court ruled that Mrs Carlill’s conduct constituted consideration for the promise to pay her the £100 reward.
Thus I agree to sell you my car; I stand to gain the purchase price and you, the ownership of the vehicle. If I ignore my agreement with you and sell my car to someone else, you may invoke the law to obtain a remedy – because you relied on my keeping my promise. This is known as breach of contract, which is discussed later.
In their general approach to contracts, there is unquestionably a divergence between the major systems of law. The common law is normally regarded as pragmatic and business-oriented, while the civil law tends to be more moralistic. It is nevertheless possible to postulate a number of general principles that are accepted, to a greater or lesser extent, by both legal systems.
It is usually the case that social agreements are not binding. As described above, our agreement to meet for a drink lacks the necessary intention to be bound in law. Nor will a court allow me to recover the expenses I incurred travelling to the bar where you promised you would be waiting for me. The common law, as we saw, requires also that, in return for a promise, the promise must give ‘consideration’. This may lead to absurd or unjust consequences. For example, in a famous English case, two sailors jumped ship. The captain was unable to replace them so he promised the rest of the crew more money, but reneged on his undertaking. The sailors lost their claim for the extra wages because they were already bound by their contract to assume extra duties on board. They had given no new consideration in return for the captain’s promise to increase their pay. Various technical means have been devised by courts, especially in the United States, to avoid this sort of injustice.
The parties must have the capacity to enter into a contract. Though they differ in detail, all legal systems control the extent to which their members have the competence to enter into contractual relations. In particular, the young (minors) or those afflicted by mental or other impairments of their rational faculties are generally regarded as incapable of binding themselves contractually.
Contrary to the popular myth, a contract does not generally need to be in writing. Apart from certain contracts (the sale of land is the most conspicuous example), no formality is required to bind the parties. An oral agreement is generally no less binding than a written one, though, as we have seen, the common law requires evidence of consideration in return for a promise.
Increasing government paternalism – in the name of consumer protection – has, however, generated a rise in the number of formalities, including written, or more usually, printed contracts required by legislation.
Certain ‘contracts’ are void because they offend ‘public policy’. The concept of freedom of contract notwithstanding, the law will not countenance agreements that seek to use the law to achieve immoral or unlawful objectives. They are likely to be struck down by courts as void. But social mores rarely stand still; what was considered immoral a century ago appears tame in today’s permissive circumstances. For example, German courts would once routinely negate a lease of premises for use as a brothel. Mistake, misrepresentation, or duress may render a contract voidable. This is because there is, in effect, no genuine agreement.
Under certain circumstances, therefore, the law may allow me to void the contract where there has been a mistake, misrepresentation, duress, or undue influence. For example, if I am mistaken as to the subject of the contract (I thought I was buying a Ferrari, you were, in fact, selling a Ford), or you have misrepresented the Ford as a Ferrari, or you forced me into the sale, I have defences to your claim that I should perform my side of the agreement, and if I can show that there has been, say, fraudulent misrepresentation, the contract may be vitiated.
A court may award damages for breach of contract. Should I fail to perform my obligations under a contract, you may sue me to recover compensation or, in a limited number of cases, compel me to carry out my side of the bargain. If, however, I can show that circumstances have rendered performance impossible or that the purpose of the contract has been frustrated, I may escape liability for breach of contract. Suppose I agree to rent you my villa for a week. You arrive at the door and I refuse to allow you to enter.
I appear to have breached our contract and you may want to obtain compensation. But how much? Should the law attempt to place you in the position you were in before you entered into the contract with me? Or should it seek to restore you to the position you would have been in if the contract had been carried out? Or should I simply be required to return the deposit I took from you in order to secure your booking? What if I refused you access to the villa because a storm had rendered the electricity supply unsafe? Would it make a difference if the storm occurred a month ago or only yesterday?
These thorny questions have spawned a plethora of intricate judicial analysis in all the major legal systems. The solutions differ, occasionally significantly, but typically where a party’s breach is completely outside of his control – natural disasters offer the best example - he may be released from his contractual obligations.