From chaos to cosmos - or is it confusion?
Bracton Professor of Law, University of Exeter
In this article I look at attempts which have been, and are being, made to
synthesise certain aspects of the English law of obligations or even to codify
them. I point out that while some of these attempts have been successful, a
number of others have created serious problems of their own. The conclusion
is that before one tries to encapsulate the rules of English (or even European)
law into ever more abstract propositions, these difficulties should be borne
in mind and a degree of scepticism employed.
This paper concerns a vital theme in judge-made and other law: the creation
of order from legal chaos. I have discussed the matter in one particular context
– the law of obligations. My theme is that, while many efforts at synthesis
have been brilliantly successful, others – perhaps more than might appear
at first sight – have not. It may be that generalisation simply creates
unclarity. The supposed underlying principle may be too widely or too narrowly
stated. Or there may simply be no coherent principle to find in the first place.
Starting off a discussion of this sort is hardly difficult. In any legal
system worth the name, legal principles have always developed inductively, and
by a process of increasing abstraction. If Result X applies in Cases A and B,
why – lawyers and their clients have always asked – should it not
also obtain in case C, where the relevant facts are (more or less) similar?
General propositions, after all, are always neater, more convincing and easier
to deal with than a congeries of random rules created haphazard by experience
and the accidents of litigation. In addition, of course, they are easier to
defend from the point of view of abstract justice. Like cases, after all, ought
(all other things equal) to be decided alike: and the more abstract the proposition,
the easier it is to defend from critics. No wonder, therefore, that jurists,
or at least the more thoughtful ones, have always preferred cosmos to chaos
and set themselves to thinking out and assembling general rules from disparate
and at times unpromising single instances. Historical examples abound. The praetor
, who developed a ius naturale
of contract from the specific
forms reserved for Roman citizens, is a clear classical example. More recently
there were Portalis and his collaborators who, faced with the mess of Roman
sources and droit coûtumier
that passed for law in eighteenth-century
, formed the touching idea
that all this could be distilled into a collection of elegant if abstract principles
of contract, delict and so on, so as to allow the notional citizen, armed merely
with his slim Code Civil
, to know precisely where he stood (2)
And, of course, at the other end of the scale stand the Pandectists and others
whose scholarship created the massive intellectual abstractions that go to make
up the Obligations section of the Bürgerliches Gesetzbuch
Exactly the same thing goes for the common law. Think of the great cases
which gathered together large numbers of previous authorities, processed them
and effectively prevented us having to think about them again: cases, in other
words, that came to provide the clear starting-point of any discussion. All
involve, to a greater or lesser degree, a process of synthesis and rationalisation.
Slade’s case (1602) 4 Co Rep 91a is an obvious early instance,
producing something like a recognisable law of contract out of the dry bones
of assumpsit. Again, take the economic torts. Filching other peoples’
servants or workmen (e.g., Hart v Aldridge (1774) 1 Cowp 54; Blake
v Lanyon (1795) 6 T.R. 221) and one or two other cases of interfering in
someone else’s business (for example, by shooting his customers, as in
Tarleton v McGawley (1793) 1 Peake 270) had always been recognised as
wrongful, but simply as isolated instances of delictual liability. In 1851
Lumley v Gye (1853) 2 E. & B. 216 took these materials and others like
them, and used them as the foundation for an entirely abstract tort: knowingly
inducing any breach of contract without good reason became a wrong in itself.
Some time later, the year 1868 saw with Rylands v Fletcher (1868) L.R.
3 H.L. 330 the synthesis of a curiously mixed bunch of strict liability rules
into something like a workable principle of social risk (albeit one which still
at times defies close analysis and was arguably inappropriate even at the time).
During the First World War, a slightly skewed collection of House of Lords cases
starting with Horlock v Beal  A.C. 486 hammered out a modern doctrine
of frustration from a long series of rather disparate decisions from the previous
century (we will have more to say about this below). The list goes on: Bell
v Lever Bros  A.C. 161 and Solle v Butcher  1 K.B. 671
on how error affects contractual liability; Donoghue v Stevenson 
A.C. 562 on general negligence liability; Hedley Byrne& Co Ltd v Heller
& Partners Ltd  A.C. 465 on careless advice; Hong Kong FirShipping
Co Ltd v Kawasaki Kisen Kaisha Ltd  2 Q.B. 26 on material breach of
contract; Lipkin Gorman v Karpnale Ltd  2 A.C. 548 on a wide-ranging
defence of change of position in restitution; and so on.
Nor can we forget the synthesising power of statute. Compare the tangle of
rules on causation, “last clear chance” and so on with the simple-sounding
comparative fault regime of the Law Reform (Contributory Negligence) Act 1945:
or the rules on invitees and licensees and the varying duties owed to each with
the concept of the common duty in the Occupiers’ Liability Act 1957. Similarly,
the Unfair Contract Terms 1977 was able to set the doubts of the common law
at rest by introducing, where
consumer protection needed it, the general idea of “inequality of bargaining
In all these cases the process has been one of simplification; of generalisation;
and, to some degree, of abstraction. And, very often, the attempt at improvement
has been spectacularly successful. No sane restitution lawyer wants to restore
the anomaly and uncertainty bedevilling the defence of change of position before
Lipkin Gorman; and you would have to be a very keen pettifogger indeed
to hanker after the last opportunity doctrine in contributory negligence, or
the impenetrable legal thicket that predated the Occupiers’ Liability
Yet, on further thought, doubts still nag. We memorialise our successes and
forget our failures; and actually the record of such generalisation is much
patchier than it looks. For every success story which makes its way into the
law teacher’s canon, there is a surprising number of other attempts at
synthesis that have failed outright, or have gone off at half-cock, or have
simply been quietly abandoned, leaving little more than troubled lawyers and
a few litigants impoverished in direct proportion to their advocates’
gain. Now, these unsuccessful attempts to bring order to chaos can, if anything,
be more interesting than the successful ones. Apart from anything else, they
may help us to see where attempts to rationalise the law are likely to succeed.
Over-generalisation and under-specificity
I have taken four examples to support my argument. The first, since transmuted
into a historical footnote (in England, at least), is Lloyds Bank v Bundy
 Q.B. 326. In case anyone needs reminding what happened, a ne’er-do-well
customer of the bank had run out of credit to prop up his ailing business.
The bank leant heavily on his elderly father, and in due course the latter
without further advice mortgaged his farm to cover his son’s further
outgoings. Things went from bad to worse, the bank sought to cash in on its
security, and the father sought relief. Lord Denning M.R., like the rest of
the court, had no difficulty in saying that orthodox undue influence doctrine
prevented the bank from holding the mortgage, and he was clearly right. But,
having done so, he went on to deprecate the idea of maintaining the existing
learning on duress, undue influence, unconscionable bargains and similar doctrines
as separate ideas. On the contrary: “I think”, he said, “the
time has come when we should seek to find a principle to unite them.”
And he then went on to suggest that
all these instances there runs a single thread. They rest on ‘inequality
of bargaining power’. By virtue of it, the English law gives relief to
anyone who, without independent advice, enters into a contract on terms which
are very unfair or transfers property for a consideration which is grossly inadequate,
when his bargaining power is grievously impaired by reason of his own needs
or desires, or by his own ignorance or infirmity, coupled with undue influences
or pressures brought to bear on him by or for the benefit of the other.”
The rationalisation has an attractive ring to it. One can almost see the
potential provision in a would-be English Civil Code on the European model:
“Contracts are binding on the parties, save in the case of manifest unfairness,
or of unconscionable advantage taken of one party’s weakness, etc...”
, and so on. No doubt this is why
the idea received a considerable welcome from the academics (5)
besides being echoed in a series of later cases dealing with personal injury
, and indeed extended
to cover restraint of trade as well (7)
Nevertheless, the whole thing turned out to be a nine-years’ wonder. In
1984 it fell to Lord Scarman to administer the coup de grâce
National WestminsterBank plc v Morgan
 A.C. 696. There was no reason
to abandon the separate treatment of undue influence: any general principle
of inequality of bargaining power was otiose; the matter called for the precision
of legislation rather than the broad brush of legal decision (see pp.707-708).
What went wrong? I suggest two things: over-generalisation, and under-specificity.
As to the first, it is easy to forget that contracts, and the position in which
contractors might find themselves, vary far more than legal theorists and academic
commentators care to admit(8)
importantly, so do the moral and other values lying behind particular exceptions
to freedom of contract. A very real difficulty with Bundy
was that it
tried to conflate rules with widely differing purposes. The rules of economic
duress are aimed at upholding commercial morality; unconscionability and coercion
à la Williams v Bayley
(1866) L.R. 1 H.L. 200 at preventing
undue exploitation of human frailty; and undue influence at suppressing the
misuse of opportunities to control others’ actions. These aims may no
doubt have some very vague principle in common: but they remain substantially
different. With such varied material, it is hardly surprising that a uniform
solution should be hard to make stick.
The other problem, under-specificity, is not simply another word for uncertainty.
It is rather that whereas undue influence, duress, and so on have relatively
precise meanings, inequality of bargaining power (or unconscionability) on its
own is a concept which, like a number of others used by lawyers, does not (9)
If a litigant argues that unfair advantage has been taken of her inexperience
in financial matters, it is clear what she is alleging. True, there is obviously
no “bright line” between what amounts to unfair advantage and what
does not. Nevertheless, it is clear what enquiries the tribunal has to make.
Alleging unconscionability or “inequality of bargaining power”,
by contrast, merely invites further definition. Faced with such an allegation,
in practice all one can do is to ask “What kind of unconscionability is
being alleged?” – which, of course, takes one straight back to the
individual concepts from which the original generalisation was derived.
’s case is a very good example of the difficulties of over-generalisation
and insufficient specificity. There are, of course, others. Anns v Merton
.  A.C. 728, extending Donoghue v Stevenson
562 to cover negligent licensing of building work, was one. The case involved
a claimant who deserved some sympathy. She was a consumer (or at least acting
in a private capacity). She was left with a dangerous house and the ruinous
expense of making it habitable. So the decision was understandable. But the
principle invoked in that case was entirely inappropriate where consumer protection
and safety considerations of this sort were absent: which was largely why a
dozen or so years later the principle had to be discountenanced by the House
of Lords in Murphy v Brentwood D.C.
 1 A.C. 398 (10)
As for under-specificity, an interesting example comes in the idea, often proposed
but not yet acted on in English law, that there should be an obligation of “good
faith” in contract (see, e.g., Beatson 1995, Chs. 1, 9; Collins 1994).
In abstracto, such an idea seems admirable. But, once again, it is worryingly
indeterminate. Asked to define it, one is thrown back on more specific instances,
such as the idea that certain contractual rights should have to be exercised
reasonably; that one should not be allowed to take advantage of a contract when
one has knowingly concealed relevant information from the other party; and so
Mistaken identification of a general principle
My second example concerns a rather more straightforward difficulty inherent
in attempts to reduce chaos to order. Before assuming that a series of disparate
authorities can be reduced to a simple expression, it is as well to think
whether the reasons behind those authorities actually support a generalisation
of this sort. The instance I have chosen to illustrate this may surprise some
people. It is Hedley Byrne  A.C. 465, and the subsequent cases
based on it that have extended the tort of negligence to cover professional
liability. At first sight this seems an unpromising subject for attack. Who
could argue with the idea that there ought to be a potential liability for
negligent misstatement, even where the claimant cannot show a contract or
alternatively some relationship cognisable in equity – particularly
in view of the very constricted nature of the English law of contract? Who
indeed ... but this misses the point. The difficulty, as I see it, does not
lie in the bald proposition that such a liability should exist. Where
a person gives advice to another on the basis that that other can rely on
it and hold the giver responsible if it is negligent, clearly the law must
provide a remedy. Thus I have no quarrel with the decision itself. The problem
lies rather in the failure of courts to articulate precisely why the
liability should exist. Since Hedley Byrne, we have a veritable jungle
of cases concerning the duty of care as it affects the professional liability
of accountants, solicitors and others. Yet even after all that, including
nearly half-a-dozen cases in the House of Lords
(11), advising as to whether a
duty of care is owed has become at times well-nigh impossible. Although judicial
reasoning almost invariably starts with Hedley Byrne, the guidance
offered by that case in determining the duty of care question.
The difficulty, of course, is this. From a reading of Hedley Byrne
itself, and its sequels such as Caparo v Dickman
 2 A.C. 605, White
 2 A.C. 207 and Smith v Eric S. Bush
 1 A.C.
831, what comes across clearly is that the courts regard the Hedley Byrne
principle as just an extension of ordinary tort liability, albeit one calling
for careful treatment. Talk of “voluntary assumption of responsibility”,
“special relationships” or the purposes for which advice is given
sounds well in abstracto
. Nevertheless, what we have in effect is liability
based on a high degree of foreseeability, subject to a let-out in the case of
off-the-cuff remarks, explicitly unwarranted advice, and situations likely to
spawn practical problems such as open-ended or over-expansive liability. Witness,
in particular, the repeated citation of Denning L.J.’s judgment in Candler
v Crane Christmas
 2 K.B. 164, which had put liability on precisely
this basis, and the repeated emphasis on the need for some kind of safety-catch
to be fitted to notional floodgates. But all this, it is submitted, is simply
misconceived. It forgets that in the Hedley Byrne
context, tort is doing
not one job but two, and different rules ought to apply to each. One function
parallels the rest of the ordinary law of “social responsibility”
negligence. Subject to practical or other limits, we must pay for the damage
we culpably do, and it should make no difference that the medium is words not
actions, or (at least to some extent) that the only damage is to someone else’s
bank balance rather than to their person or tangible property. Minister of
Housing v Sharp
 2 Q.B. 223, the case where a Land Registry blunder
annihilated the Ministry’s cast-iron claim against a householder, is a
perfect example. Here, by all means base liability on (modified) foreseeability
of the claimant, his loss, etc., with one eye on preventing tort law from getting
out of hand. The issue is really the same as in Donoghue v Stevenson
even though it may need more sensitive handling. But remember that in practice
this is a rather rare scenario. Read any book on professional negligence, and
you will realise that most Hedley Byrne
claims are not “social
responsibility” actions at all, but rather complaints about quality of
. They concern not dangerous
services but bad ones; to take the analogy of the distribution of goods, they
parallel not so much Donoghue v Stevenson
but ss.13-14 of the Sale of
Goods Act 1979. The only reason they fall within the law of tort is that often
services are in substance rendered to someone who for whatever reason (privity,
consideration, etc) does not have a contract with the person providing them,
and that some means has to be found to allow that person to take the benefit
of a guarantee of proper execution – if that is the intention of the provider.
Now, in the case of sale of goods it has always been acceptable for a supplier
to say “Yes, we admit the goods were defective. We also admit that it
was our fault, and that we should have known you would suffer loss if you relied
on them. But you still shouldn’t be able to sue us, because we didn’t
supply them to you.
” That is the point of decisions like Simaan
v Pilkington (No 2)
 Q.B. 758, the case of the discoloured glass that
– as a building company found to its cost – would not quite do for
the Sheikh’s new palace in Abu Dhabi. In exactly the same way, I would
suggest, the practice (if not the theory) of Hedley Byrne
moving in a similar direction. The question is not really foreseeability in
any guise, but “to whom were the services rendered?”(13)
Take Caparo v Dickman
 2 A.C. 605 and ask an obvious question.
Why was Swraj Paul not allowed to dip into Price Waterhouse’s pocket to
make good his losses when he found, on taking over Fidelity plc, that he had
bought a pup? It wasn't that he was unforeseeable as a plaintiff (the defendants
knew perfectly well about the possibility of a bid); nor was there an insuperable
problem of open-ended liability (the Court of Appeal had dealt with that by
confining the right to sue to existing shareholders – see  Q.B.
653). The House of Lords decided the issue by reference to the intentions and
purposes of auditors’ reports: reasoning that may sound convincing, but,
if one may say so, fails really to answer the question. Whose intention (or
purpose) mattered? The defendants’? The claimants’? Parliament’s?
What sort of intention are we talking about? Actual? Implied? Imputed? And so
on. But strip away the verbiage, and there is a straightforward answer to the
problem. The auditors had provided a service, but they had provided it to Fidelity
and not to Caparo. Save that the case concerned services and not goods, Caparo
were in exactly the same position as the Simaan Engineering Co had been in Simaan
 Q.B. 758. They had relied on something supplied to a
third party; they had been disappointed; and they failed for (it is suggested)
the same reason.
For another example, take the position of a sub-agent. Normally he will not
be under any duty as regards quality of service vis-à-vis the
ultimate principal. He works for, and answers to, the person appointing him
alone (see, e.g., Pangood Ltd v Barclay Brown & Co Ltd  P.N.L.R.
678, holding that an insurance sub-broker owes no duty of care to the ultimate
client). Even though he may know that the ultimate principal stands to benefit
from his efforts, the latter cannot sue because they were not provided to
him. But exceptionally the case may be different. Suppose a Lloyds agent
is employed to look after the account of a particular Name, but technically
he acts as a sub-agent. Here, whatever the legal form, he is in substance acting
directly for the Name: from which it is hardly surprising that the House of
Lords has held in Henderson v Merrett Syndicates Ltd  2 A.C. 145
that he owes a direct duty of care.
Failure to understand the underlying principle
The next reason for failure which I would like to highlight is less forgivable.
It is difficult not to believe that at times our judges, in trying to craft
general principles from of a confusing congeries of conflicting case-law,
have simply failed adequately to understand it or the principles behind it.
This is a hard charge, but I think it can be made to stick. An instance, it
is submitted, is the contractual doctrine of frustration.
It is a common misconception that frustration as we know it originated with
Taylor v Caldwell
(1863) 3 B. & S. 826, the case of the impresario
and the burnt-down theatre, and the abandonment from then on of the old “hell
and high water” doctrine of Paradine v Jane
(1647) Aleyn 26. The
reality, if one looks at it closely, is less tidy. There were actually quite
a number of scattered nineteenth-century and older authorities, of which Taylor
was just one, allowing a contractor to escape liability on the
basis of supervening impossibility(14)
There were in addition other cases which said, understandably, that where one
party failed to perform his side of a contract through no fault of his own,
the other party was himself excused (15)
The real origin of frustration as a separate doctrine lay in a series of decisions
in the First World War which collected these older cases about excuses for non-performance,
“rationalised” them and transmuted them into the modern idea that
a frustrating event displaced the contract itself. For example, a series of
venerable decisions said that an employee had no claim on his employer if he
was prevented by no fault of his own from doing his job for an appreciable time
and was sacked as a result (16)
There was no difficulty about this, since it reflected ordinary contract doctrine:
if unable, albeit blamelessly, to provide his side of the bargain, the employee
could not make the employer perform his (17)
There was little, if any, suggestion that the dissolution of the whole contract
was in issue (18)
. Horlock v
 A.C. 486, a 1916 case in the House of Lords, raised exactly
this point – could sailors claim wages for time spent languishing in German
internment camps after their ships had been seized, or had their employers effectively
ended their right to be paid by discharging them? The House duly held they had
no claim from the moment of internment: what is interesting, however, is Lord
Loreburn’s opinion in this case. He read the older cases as embodying
the proposition that prolonged inability of one or other side to perform had
the effect of ending, not simply the other side's duty to accept performance,
but the contract as a whole; and this, he said, was the reason for the sailors’
inability to sue (see p.***). Now, this was a major change: it quietly shifted
frustration from “excuses for non-performance” where it belonged,
to “discharge of contracts” where it did not. In Horlock v Beal
the change actually made no difference: even if the contract had not been terminated,
the seamen had no claim under it anyway. But in later decisions it mattered.
Take, for example, Tamplin v James
 2 A.C. 397. A tanker was requisitioned
as a troopship for a substantial chunk of a five-year charter. Since compensation
from the Crown was generous in those days, and went to whoever had the use of
the ship at the time, the charterers naturally claimed that they had the right
to the money. On the basis of Horlock v Beal
, it was accepted by the
House of Lords that the charterers’ right depended on whether there had
been a frustrating event: if there had not they would win, but if there had,
then the contract would be at an end and the right to the ship would have reverted
to the owner. But on the basis of the old impossibility cases this seems very
odd. If I am prepared to pay you for the right to use a ship despite the fact
that you cannot provide it because the Government has taken it, why should I
not be allowed to do so? Since the Tamplin
case, the theory of termination
by frustration has continued to show its baneful influence: in the idea that
a contract can be discharged despite the belief that both parties think it continues
in force (19)
: in the idea that
the doctrine of impossibility must be confined narrowly because if it does apply
the drastic consequence follows that the whole contract collapses; and in the
problems where one party to a contract has attempted to use his own wrongdoing
to argue that the contract cannot be frustrated because the alleged event is
Frustration is not, of course, the only instance of woolly thinking leading
to inappropriate generalisation. The doctrine of deviation in carriage of goods
by sea is another obvious one. The straightforward and absolutely comprehensible
cases holding that a bailee became an insurer if he did as he should not with
the goods (21)
was shoehorned into
the law of termination of contracts for breach of condition (22)
with predictably shambolic results (23)
In another instance, the rule that anyone could sue for conversion of goods
if he had an immediate right to possess them at common law was extended without
thinking to mere equitable owners, again with massive destabilising potential
; and there are others.
Abstraction for abstraction's sake
The fourth problem as often as not goes entirely unnoticed. At times, the
desire to create a logical whole has, as it were, taken over and as a result
simply glided over important and valuable doctrinal distinctions: abstraction
has been pursued for abstraction's sake. A nice example of this comes from hornbook
contract law, and in particular the rule that one could not enforce a contract
if one was not a party or (until 1999) had not given consideration. It never
seemed to worry students or others that a number of the stock authorities here
did not involve attempts to enforce a contract at all, but rather either purported
waiver of an existing contractual right (for example, release of a debt and
the rule in Foakes v Beer
(1884) 9 App. Cas. 605), or alternatively an
attempt to take advantage of an exception clause in a contract (the problem
in Scruttons Ltd v Midland Silicones Ltd
 A.C. 446). In both these
situations, it had simply been assumed without discussion that the requirements
for creating binding contractual rights should equally apply to their cancellation
or modification, and to the question whether they could be relied on defensively
when incorporated in an exception clause. But however satisfying the abstract
proposition (contract requires consideration: no-one can rely on a contract
if he has not given consideration) a moment’s thought shows that the point
is by no means obvious. The arguments for demanding formalities or other prerequisites
to create contractual relations where none existed before are strong. Contractual
obligation, especially gratuitous contractual obligation, should not be lightly
inferred. But the case is far weaker where what is claimed is a mere variation
of a contract, or reduction of a sum already owing (as other systems of law
accept). The same goes for third-party reliance on exception clauses: at least
where the clause is known to and relied on by the beneficiary, there is a strong
argument for the application of volenti non fit injuria
, or some similar
, whatever the status
of the beneficiary as regards the contract as a whole.
What lessons can be drawn from all this? In a way, the answer is obvious.
Despite its attraction to law students and academics alike, legal generalisation
should be approached with some caution. Like marriage, it is not something to
be undertaken “lightly, wantonly or inadvisedly”. Before attempting
to draw together a collection of single instances and create some all-encompassing
rule out of them, it is as well to consider (a) whether one has actually understood
the materials concerned; (b) whether there is sufficient commonality between
them, so as to avoid the risk of obliterating important distinctions; (c) whether
the existing rules in fact serve a common purpose; and (d) whether one is not
simply substituting some amorphous and uninformative principle for structured
and reasoned argument.
There is, however, a further point. The idea of codifying and thereby simplifying
the principles of private law we live under has always been an active one, and
is becoming increasingly so with the growing influence of the European Union.
The ongoing proposal for a European Contract Code (European Commission 2001)
is just one example. Another, slightly less far-reaching and more on the line
of the American Restatement, is the academic project for a statement of General
Principles of European Contract Law. But even the great codes of France and
Germany, with all their carefully thought out distillations of principle, have
by no means produced a perfect solution: there are plenty of examples of provisions
which are either so general as to tell us very little, or have had to be artificially
cut down to avoid unfortunate results. There may equally well be dangers lurking
in the current proposals. In the European Contract Law proposals, for example,
the wide-ranging provision for unfair contract terms (§ 4.110) is based
on the wording of the European Directive on Unfair Terms in Consumer Contracts
but oddly is not even limited to consumer contracts. There is room for a fair
number of difficulties here of the type described above. Again, there is an
awkward proposal (to be found in § 9.303(4)) which seems to perpetuate
the idea that certain frustrating events put an end to the whole contract willy-nilly;
this will certainly raise some scepticism in anyone who has seen the mess this
idea has already caused in English law.
In short, anyone who is thinking of taking parts of English law down the
same road should stop to think about such matters, and consider whether the
result may not be a great deal of well-meaning effort expended for surprisingly
Beatson, J (ed) (1995), Good Faith in Contract (OUP, Oxford, 1995).
Carr, C (1975), Inequality of Bargaining Power (1975) 38 M.L.R. 466.
Cheshire, G & Fifoot, C (1972), The Law of Contract, 8th ed (Butterworths,
Collins, H (1994), Good Faith in English Contract Law (1994) 14 O.J.L.S.
Halpérin, J-L (1992), L’impossible Code Civil (Presses
Universitaires de France, Paris, 1992).
McGregor, H (1993), Contract Code (prepared for the Law Commission
and published by Sweet & Maxwell in 1993).
Schwartz, B (1956), The Code Napoleon and the Common Law World (New
York UP, New York, 1956, republished by Greenwood Press, Westport, Conn, 1977).
Sealy, L.S (1975), Undue Influence and Inequality of Bargaining
Power  C.L.J. 21.
Trebilcock, M (1976), Inequality of Bargaining Power (1976) 26 U.Tor.L.J.
Waddams, S (1975), Unconscionability in Contracts (1976) 39 M.L.R.
Weir, J.A (1976), Contract – The Buyer’s Right to Reject Defective
Goods  C.L.J. 33.
As Voltaire succinctly put
it, “Un homme qui voyage dans ce pays change de lois presque autant de
fois qu’il change de chevaux de poste” – Dictionnaire Philosophique
Cf Schwartz 1956, Chs. 2, 4;
Halpérin 1992, Ch.9.
Largely introduced by Lord
Denning: e.g. Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd
 Q.B. 400, 416; Re Brocklehurst, dec’d
 Ch 14, 31.
. McGregor 1993. In
this proposed English Contract Code (prepared for the Law Commission and published
by Sweet & Maxwell in 1993), he provided in § 564: “Improper
economic advantage is taken of a contracting party when a person knows that
he is under such pressure of circumstances to enter into the contract and takes
unfair advantage of that pressure to obtain manifestly unfair terms.”
Fifoot, 1972, pp.282-283; Carr 1975; Waddams 1976; Trebilcock 1976. To be fair,
some commentators were less carried away: e.g.
(6) Arrale v Costain
1 Lloyds Rep 98; see too Horry v Tate & Lyle Refineries Ltd
2 Lloyd’s Rep. 416. Both were agreed by plaintiffs as a result of advice
provided obligingly by the defendant’s liability insurers.
(7) A. Schroeder v Macauley
 1 W.L.R. 1308; Clifford Davis Management v WEA Records Ltd
1 All E.R. 237
As Weir 1976 at p.34 pungently
put it: “Different transactions call for different rules, even if they
are all contracts ... it is not a merit of the common law to fail to distinguish
what a child can tell apart, who knows better than to offer ‘rent’
to the bus-conductor or a ‘premium’ to his barber”.
As American lawyers have found
when trying to apply a similar provision, § 2-302 of the U.C.C. Another
example is the “good faith” provision in § 242 of the German
Civil Code: for all its apparent simplicity, German lawyers have had to go to
astonishing lengths to unravel its meaning, and to delineate those practices
which count as lack of good faith.
Interestingly enough, some
Australian courts have been prepared to develop the common law in a more focused
manner, and to accept Anns
’ case while limiting it effectively
to private buyers of dwelling-houses. A most instructive example is Fangrove
Pty Ltd v Tod Group Pty Ltd
 2 Qd.R. 236.
(11) Smith v Eric S. Bush
 1 A.C. 831; Caparo Industries plc v Dickman & Ors
A.C. 605; Marc Rich & Co AG v Bishop Rock Marine
 1 W.L.R.
1071; Henderson v Merrett Syndicates Ltd
 2 A.C. 145; White
 2 A.C. 207.
Indeed, this is true of
every one of the House of Lords cases referred to in the previous note.
In rare cases this is made
clear. See, for example, Kapfunde v Abbey Life
 Lloyd’s Rep.
Med. 48, where a company doctor examining a prospective employee for signs of
illness was held to owe no duty to the employee. The main reason given was that
the latter was not the doctor’s patient, i.e., not the person to whom
the services were being rendered.
E.g. Brewster v Kitchell
(1697) 1 Salk 198; Avery v Bowden
(1855) 5 E. & B. 714; Baily
v de Crespigny
(1869) L.R. 4 Q.B. 180.
(15) E.g. Tarrabolchia
(1856) 1 H. & N. 183 and Jackson v Union Marine
L.R. 10 C.P. 125 (both charterparty cases); Melville v de Wolf
4 E. & B. 844 (mariner’s wages not payable during time when mariner
prevented from serving).
(16) E.g. Melville
v de Wolf
(1855) 4 E. & B. 844, above.
(17) E.g. Poussard
(1876) 1 Q.B.D. 410.
Save possibly in the case
of trading with the enemy: e.g. Esposito v Bowden
(1857) 7 E. & B.
763. But this was always a special case: witness Ertel Bieber v Rio Tinto
 A.C. 260, holding that even express stipulation could not override the
dissolutive effect. Stoljar argues (History of Contract at Common Law
(Canberra 1974)) that the “dissolution” theory appeared in Geipel
(1872) L.R. 7 Q.B. 404, where a shipowner prevented from loading
for six months did not have to load thereafter: but this case seems better explained
on the basis of a reasonable interpretation of the obligation undertaken.
Thus neutralising an arbitration
agreement, for example: Hirji Mulji v Chong Yue SS Co
 A.C. 497.
This impeccably logical piece of nonsense eventually had to be put right by
statute: Arbitration Act 1996, s.7.
In particular, Hare v
Murphy Bros Ltd
 ICR 603 and F. C. Shepherd Ltd v Jerrom
Q.B. 301, where workers imprisoned for misconduct tried to argue – with
logic but no merit – that their contracts of employment must have continued
in force to allow them to sue for unfair dismissal, since any alleged frustration
had been self-induced (by themselves).
For example, Davis v
(1830) 6 Bing. 716. The principle can be traced back at least to
dicta in Coggs v Bernard
(1703) 2 Ld. Ray. 909, 913.
Especially Joseph Thorley
v Orchis Shipping Co Ltd
 1 K.B. 660 and Hain SS Co v Tate &
(1936) 41 Com.Cas. 350.
For example, the odd idea
that a deviating shipowner who delivered the cargo safe and sound could not
claim the contract freight, the contract having disappeared – Hain
SS Co v Tate & Lyle
(1936) 41 Com.Cas. 350, 368-369 (Lord Wright) –
or that terms protecting him from liability could not apply even after the ship
had arrived at its destination (Joseph Thorley v Orchis Shipping Co Ltd
 1 K.B. 660).
The history of this heresy
is nicely exposed in MCC Realisations Ltd v Lehman Bros
 4 All
As Lord Denning, to his
credit, pointed out when dissenting in Midland Silicones
:  A.C.
446, 488 et seq