Why English Law Is Used to Make Contracts

English contract law is not affected by EU law as a whole, as it derives from the common law. English contract law is flexible enough to be adapted if there are specific provisions in contracts relating to EU law. Queen Elizabeth I used royal decrees and funds to establish transactions on behalf of English merchants and to form the first joint-stock company consisting of investors owning shares in the company. Shareholders receive percentages of the company`s profits, or dividends, based on the number of shares they hold. Facts matter, and Brexit should make no difference to the law and the seat of arbitrator you choose in your contracts. English law remains as solid and reasonable a choice as ever. We will be happy to discuss this in more detail if it will help you. The Commercial Court hears commercial, professional and commercial disputes, including contracts and commercial documents; the purchase, sale and transportation of goods; insurance issues; banking and financial services; Commercial Agencies and Arbitration Requests. In an ordinary contract under English law, no person may bring an action more than six years after the cause of action arose. Under Texas law, the statute of limitations for civil actions varies, but generally speaking, the time limit for most breaches of a construction contract is four years after the cause of action arises,[7] while under New York law, the statute of limitations is six years. However, under English law, the limitation period for contracts performed as an act is 12 years.

Whether enforced by arbitration or litigation, it seems clear that Brexit is unlikely to affect the prevalence of English law for major international treaties. In specific contracts, for example for the sale of goods, between landlord and tenant or in the employment relationship, the courts involve standardised contractual clauses (or “legally implied clauses”). These terms set out a menu of “standard rules” that generally apply unless a genuine agreement to the contrary is reached. In a partial codification case, the Sale of Goods Act 1893 consolidated all standard contractual clauses into typical common law commercial purchase contracts. This is now updated in the Sale of Goods Act 1979, and unless people generally agree otherwise, its terms apply. For example, according to articles 12 to 14, every contract for the sale of goods contains the implied clause that the seller has legal title, that it conforms to the foregoing descriptions and that it is of satisfactory quality and fit for purpose. Similarly, section 13 of the Supply of Goods and Services Act 1982 provides that services shall be provided with reasonable care and skill. At common law, the test is which conditions constitute a “necessary incident” for the type of contract in question. This test stems from Liverpool City Council v Irwin,[185] in which the House of Lords held that, although a landlord is satisfied on the facts, he or she has a duty on tenants of an apartment building to maintain the common elements in a reasonable condition.

In employment contracts, there are also several implicit clauses standardised even before the law comes into play, for example: providing workers with adequate information to assess how to use their pension rights. [186] The main standard employment clause is that employers and employees owe each other a commitment of “mutual trust.” Mutual trust can be undermined in many ways, especially if an employer`s repugnant behavior means that an employee may treat themselves as dismissed in a disguised manner. [187] In Mahmud and Malik v. Bank of Credit and Commerce International SA,[188] the House of Lords found that the employer running the business had breached this obligation to cover up numerous illegal activities. The House of Lords reaffirmed that the clause can always be excluded, but this has been challenged because, unlike a contract for goods or services between commercial parties, an employment relationship is characterised by unequal bargaining power between employer and employee. In Johnstone v. Bloomsbury Health Authority,[189] the Court of Appeal held that a young physician could not be forced to work an average of 88 hours per week, even if it was an express provision of his contract if it was harmful to his health. However, one judge said that the result resulted from the application of the Unfair Contract Terms Act 1977, one judge said that this was because at common law express terms could be interpreted in light of implied terms, and one judge said that implied terms could prevail over express terms. [190] Even in labour or consumer matters, English courts still disagree on the extent to which they should depart from the fundamental paradigm of freedom of contract, i.e. in the absence of legislation.

There are many sectors dominated by English law. These include international commercial contracts, banking and financial services, maritime and maritime transport, mergers and acquisitions, dispute settlement and international arbitration. In a certain set of contracts, the parties to the negotiation must behave in good faith (or “uberrima fides”) by disclosing to each other all essential facts. In one of the first cases, Carter v. Boehm,[274] M. Carter purchased an insurance policy for losses suffered at a British East India Company naval fort in Sumatra, but did not inform his insurer Boehm that the fort had been built solely to withstand attacks by locals and that the French were likely to invade. Lord Mansfield considered this policy invalid. Given that insurance is a contract based on speculation and that the particular facts “are usually known only to the insured,” good faith has ruled out Mr. Carter “hiding what he knows in private.” The same policy has been extended to the sale of shares in a company. In Erlanger v. New Sombrero Phosphate Co,[275] the developer and future director of a guano mining company failed to disclose that he had paid half as much for mineral rights on Sombrero Island as he had subsequently assessed the company. The House of Lords held that the purchasers of the shares were entitled to their money despite a delay in making a claim.

Lord Blackburn also considered that it was not an obstacle to emergence that guano could not be put back into the ground. Counter-restitution (i.e. both parties return what they had received) if it could essentially be made in its monetary equivalent, was sufficient. However, apart from insurance, partnerships, sureties, fiduciary relationships, corporate shares, a limited range of regulated securities[276] and consumer credit agreements,[277] the obligation of the parties to the negotiations to disclose material facts does not extend to most contracts. While there is an obligation to correct prior misrepresentation,[278] Smith v. Hughes decided that the general obligation is simply not to make active misrepresentation. Once an offer has been made, the general rule is that the addressee must notify its acceptance in order to obtain a binding agreement. [53] The declaration of acceptance must indeed reach a point where the bidder can reasonably be expected to know about it, although if the addressee is at fault, for example by not putting enough ink in his fax machine to print a message arriving during business hours, the addressee is always bound. [54] This applies to all means of communication, whether oral, telephone, telex, facsimile or electronic mail,[55] with the exception of mail. Acceptance by letter takes place when the letter is thrown into the mailbox. The postal exception is a product of history[56] and does not exist in most countries. [57] It exists in English law only as long as it is reasonable to use the post office for a reply (e.g., not replying to an email) and its operation would not cause obvious inconvenience and absurdity (e.g., the letter disappears).

[58] In all cases, it is possible for the negotiating parties to determine a prescribed method of adoption. [59] It is not possible for a supplier to compel the target recipient to reject the offer without its consent. [60] However, it is clear that people can accept through silence, first by showing by their behaviour that they accept. In Brogden/Metropolitan Railway Company,[61] although the Metropolitan Railway Company never returned a letter from Mr. Brogden formalizing a long-term supply agreement for Mr. Brogden`s coal, it had behaved for two years as if it were in force and Mr. Brogden was bound.