American Contract Law

Author: Chief Editor: Song Jun
Publisher:
Publication Date: 1996-04-01
Features: Excerpt: As we will see in the following text, the contract law of England originated from the early "case of promise" in England. For a long period in history, the rules of English law concerning contracts were formulated to address the breach of promises rather than the breach of contracts. This is the historical and traditional reason why promises hold an important position in Anglo-American contract law. Furthermore, the creation of contract law in Anglo-American legal systems differs from that in civil law systems. The theory of contract law in civil law systems is primarily established and developed by jurists. These jurists study contract law as a part of civil law, thereby discovering a commonality among contractual relationships, tort relationships, unjust enrichment relationships, and agency relationships—all of which are rights and obligations between specific civil subjects. Jurists refer to this relationship as a "debt" to distinguish it from other civil law relationships, such as property rights (which exist between a rights holder and an unspecified obligee). Therefore, in civil law systems, a contract is a type of debt.
The theory of contract law in Anglo-American legal systems is primarily established and developed by judges. During the course of adjudicating cases, judges are primarily concerned with how to provide relief to the parties involved. In a specific case, the breach of a contract is usually by only one party, and what judges directly observe is that this party has breached its own promise rather than the abstract relationship of rights and obligations between the two parties. However, defining a contract as a promise for which the law provides relief is not entirely appropriate. First, a contract should be the result of the consensus of all parties, whereas a promise is merely an expression of one party's intent. Second, from the perspective of the process of entering into a contract, the making of a promise is only the beginning of this process, and it is only when all parties' promises are accepted by the other party that this process is complete. In this sense, a promise is the cause, and a contract is the result. For example, an offer is a broad promise that includes both a commitment to provide benefits to the offeree and a request for the offeree to provide corresponding benefits to the offeror. However, an offer is not a contract itself but only the cause and prerequisite for the formation of a contract.
Moreover, a promise for which the law provides relief is no longer a promise in the usual sense but has already become the contract itself. For instance, an offer is a broad promise that becomes a binding contract between the parties once it is accepted by the offeree. However, a promise only emphasizes the unilateral obligation, i.e., the promisor must not breach its promise. Defining a contract as a promise for which the law provides relief cannot fully capture the essential characteristics of a contract, which is that it imposes equal obligations on all parties involved.
II. A Contract Is an Agreement Between Parties to Establish a Relationship of Rights and Obligations
In contemporary American contract law literature and legal provisions, one can increasingly see contract definitions that resemble the generalizations of civil law jurists. As mentioned earlier, the Restatement (Second) of Contracts provides two definitions of the concept of a contract. The discussion above concerns the traditional definition, and the other is the modern definition. According to the latter definition, a contract is the performance of obligations recognized by law.
The 1979 edition of Black's Law Dictionary defines a contract as "an agreement between two or more persons to create or refrain from doing a specific act." This definition is very similar to that provided by the Uniform Commercial Code (UCC). Section 1—201(11) of the Code states: "‘Contract’ means the total legal obligation arising from a agreement between parties that is created under this article and any other applicable provision of law."
According to these definitions, a contract is an agreement between parties to establish a relationship of rights and obligations, or, more precisely, a contract is an agreement between parties to determine their mutual rights and obligations. The first definition emphasizes that the substance of a contract is a relationship of obligations, while the second emphasizes that the external manifestation of a contract is an agreement. This definition is not very different from the contract definitions in civil law systems.
The question is, is this the definition universally adopted by American legislation and judicial precedents? Is the concept of a contract in Anglo-American law truly indistinguishable from that in civil law? Please continue reading the following discussion.