E. Contracts as a Work in Progress: Modern Trends

Author:John D. McCamus
Profession:Professor of Law. Osgoode Hall Law School, York University

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In the following chapters, an attempt is made to trace modern developments in various aspects of the law of contracts. By way of introduction to which follows, however, it may be helpful to portray what appear to be the main features of this evolving work in progress. The following and necessarily impressionistic account is best viewed by the reader as an hypothesis that may be tested in the context of the more specific analysis of particular doctrines and problems in the chapters that follow.

Although, as intimated above, the continuities of contract law are such that important themes and doctrines in modern contract law can

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be traced to their medieval origins,56the main fault lines of modern Anglo-Canadian contract law were established in the jurisprudence of the English courts in the nineteenth century. This modernization of contract law took place under a greater degree of civilian influence than is often appreciated57and established a framework of analysis that is recognizable in its essentials to the modern student of contract law. Often now referred to as the classical model or classical period of contract law, the modern doctrine appears to have been established around the paradigm case of a bargain or exchange entered into by autonomous and self-interested parties who were, through the medium of exchange, building the new economic order. The appropriate rule for the courts and the law of contracts, it seemed, was to refrain from interfering with the dynamic forces of economic growth and to permit the parties to give effect to their freely negotiated bargains.58The dominance of the freely negotiated bargain or exchange as the paradigm case around which the doctrine of contract law was ordered is manifested in the doctrine of consideration, recognizing that the promises will be enforceable only where included in a bargain. The rules on offer and acceptance were designed with a view to identifying the mutual expression of wills or consensus ad idem as the indispensable threshold for formation of the binding agreement. The common law, no doubt ameliorated to some extent by equitable doctrines, did not appear excessively concerned with the unfairness that might result from the inability of vulnerable people to protect themselves in a bargaining context. Thus, for example, the common law doctrine of duress was narrowly conceived. A bargain was enforceable whether or not the consideration received in return was in some sense adequate or fair.59The rules of contract law were often

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applied in a rigid and formalistic fashion even if they achieved results that, to the modern eye at least, appear indefensible.60

If nineteenth-century contract law can be viewed as a somewhat spartan and spare reflection of the laissez-faire attitudes accompanying the growth of modern capitalism and the accompanying industrialization in England, a number of ameliorating trends are apparent in twentieth-century developments. Perhaps the most dominant trend is the growth of greater exposure to liability for breach of contract. Indeed, the growth of private law doctrine generally through the twentieth century appears to move in the direction of imposing a greater range of liability on parties who have caused loss or benefited at another party’s expense. With respect to the awarding of damages for breach of contract, twentieth-century contract law may be characterized by a reduction in the plaintiff’s favour of the threshold test for liability for compensatory damages,61by the granting of compensation for injuries in the form of mental anxiety or distress62and, in Canada at least, by the availability of punitive damages for breach of contract.63The possible recognition of liability in the form of an accounting of profits secured by breach is only the most recent development of this kind.64Expansion of potential liability has also been achieved through the growth of exceptions to the doctrine of privity of contract,65and the imposition of a greater range of liability for misconduct through the implication of contract terms.66The recognition in the late-twentieth century of tort liability for negligent misstatements inducing agreements67has also substantially expanded the scope of potential liability. Movement in the direction of a more expansive approach to liability in the twentieth century has thus been quite pronounced.68Other important trends can, how-

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ever, be detected. Thus, the harshness of the bargain theory has been ameliorated by the greater recognition of the importance of...

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