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460

Promises and Contract Law

of the PECL or DCFR to which South African law might contribute. In Louisiana, there is pressure from some quarters for the legal sys­ tem to become more Common law in nature, but this has not thus far been reflected in changes to the legal system.5

(8)Lastly, mention must be made of the doctrine of good faith. The growth of good faith jurisprudence in recent years has been some­ thing of a mixed blessing for promise. On the one hand, some might argue that good faith mandates adherence to one’s word and thus to promises seriously made, whether bilateral or unilateral, gratuitous or onerous. On this view, as Aristotelian virtues and the canon law supported the keeping of promises in earlier times, good faith can be argued to be a modern equivalent of such older structural underpin­ nings of the duty to keep promises. On such a view, the rise of good faith jurisprudence is an opportunity for promise, rather than a threat. This view can, however, be said too readily to equate promising with trustworthiness. It was suggested in Chapter 6 that trust, while it may accompany the making of many promises, is not a necessary component of a promise. As such, the operation of objective good faith, as applied by the courts, in order to moderate the promises strictly made by parties and to impose community values of justice and fairness represents a challenge to the possible re-­establishment of promise as a central idea in the law. The challenge for a future law where both promise and good faith are required to coexist ought not to be underestimated.

(b)  The Common law

The granting of a more prominent role to promise in the Common law of obligations, and more particularly in contract law, faces the theoret­ ical problems of the related doctrines of consideration and privity. The obstacle these doctrines present has been the subject of discussion earl­ ier in this work: to recap, gratuitous contracts, promises made in favour of non-contracting parties, and unaccepted but seriously made prom­ ises (unilateral promises), are all theoretically denied enforcement in the Common law, unless some exceptional means can be found to enforce certain instances of them.

5For instance, Louisiana continues to refuse to implement section 2 of the Uniform Commercial Code (the section relating to sales of goods).

Future of Promise in Contract Law

461

Both doctrines have been subject to much discussion by academics and judges, and there are various theories of the roles which consider­ ation and privity are said to play in the law.6 At various times, it has been suggested that English law should abandon the requirement of mutual consideration for a valid contract.7 One critic suggested that such a move should form part of ‘legislation … to validate all contracts where there is genuine agreement and also to provide for various types of essentially unilateral promises such as gifts, promises relating to the performance of services and offers inviting the performance of certain acts’.8 Such argu­ ments have, in English law at least, not been acted upon. Whilst calls for the complete abandonment of the doctrine of privity have not been made, and are not likely to be for the very good reason that privity performs the useful function of preventing the imposition of duties upon third parties, the sensible abandonment of the rule against the conferral of enforceable third party benefits under contract has now been effected in most of the major Common law jurisdictions.9 A further logical step, given this exist­ ing reform, would be to recognise that unaccepted but seriously made unilateral promises should also be accorded validity. Any perceived risks inherent in enforcing such unilateral promises are no greater than those inherent in allowing third party beneficiaries to enforce benefits con­ ceived in their favour.

Although the general recognition of third party rights would at one time have been unthinkable in the Common law, the radical reform which achieved recognition of such rights surely suggests that reform of the doctrine of consideration might now also be within contemplation. The results of abolition of the doctrine would include, inter alia, both rec­ ognition of the validity of gratuitous contracts10 as well as the placing of greater stress upon the already existing contractual requirement of an intention to undertake legally binding obligations. Both of these features are visible in civilian and mixed legal systems, and create no practical difficulties for distinguishing seriously intended obligations from extralegal arrangements. The opening up of the doctrine of privity by recognis­ ing not just third party rights but also unilateral promises would bring

6

7

8

9

10

For the various policies said to underlie the doctrine of consideration, see, for instance, Eisenberg, ‘The Principles of Consideration’; in respect of the policies and functions of privity, see Palmer, The Paths to Privity, Ch. 2.

See, for citation of advocates of this approach, Ch. 4, n. 341, of this work. Chloros, ‘The Doctrine of Consideration’, 165.

See earlier discussion at p. 297.

See Anson, Principles of the Law of Contract (28th edn), p. 125.

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Promises and Contract Law

the benefits discussed in earlier chapters of this work, and need not entail any conceptual or practical difficulties. Such a development would greatly reduce, if not remove, the need for a doctrine of promissory estoppel, an equitable stop-gap which has been required to address the problems cre­ ated by legal refusal to recognise the validity of unilateral promises. The recognition of the legal and not merely equitable status of such promises seems a natural step to take: if a promise is worthy of enforcement, why not recognise that at the level of a legal rule rather than at that of an equit­ able remedial entitlement?

The Common law has a great history of adaptability. This is seen in many ways, such as in the forging of the very field of contract law out of the diverse medieval actions, in the fusion of legal and equitable jurisdic­ tions, in varied developments of the requirement of consideration, and in the development of doctrines such as equitable estoppel to remedy per­ ceived flaws in the pre-existing hard edges of contract law. It would be regrettable if the great adaptability of the Common law were to have been lost in the present age, and for lawyers to feel that, if continued adher­ ence to certain doctrines deprived the law of adaptability, this situation could not be amended merely because such doctrines were perceived to have a long tradition. Statutory reform has already given third parties a long overdue entitlement at law; if such reform is also needed in relation to consideration, then it should be undertaken. The problems caused by the requirement of consideration and the refusal to recognise unaccepted promises may have given rise to practical avoidance techniques, but a coherent legal system deserves more than such makeshifts.

(c)  The mixed legal systems

It will be evident from all that has been said in earlier chapters of this work that, though the mixed systems share a similar Roman-Common law heritage, how that heritage has translated into specific contractual rules, and especially the treatment of promises, differs. Scots law most explicitly values the unilateral promise, in giving it separate taxonomic status in the class of obligations; South Africa and Louisiana do not go so far, but do recognise the validity of gratuitous contracts. Even Scotland, however, restricts enforcement of unilateral promises by imposing a requirement of form11 for the validity of non-business promises (itself a less serious

11Before statutory reform of the law in 1995, the requirement of form was instead an evi­ dentiary requirement of proof, all seriously intended unilateral promises being valid but requiring proof by the writ (subscribed written document) or the oath of the promisor.

Future of Promise in Contract Law

463

hurdle than the previous rule requiring proof by writ or oath). The ration­ ale for this restriction is questionable, though there is no evident desire for its amendment at the present time. In South Africa and Louisiana, though the recognition of gratuitous contracts allows such contracts to be the vehicle for certain transactions (such as promises of reward, and gratuit­ ous options to contract) which are only with greater conceptual difficulty accommodated in the Common law, the absence of a general recognition of the unilateral promise is still felt to some extent. This has been the sub­ ject of academic comment from a South African perspective in relation to firm offers.12 Louisiana has avoided that particular problem by virtue of a codal provision enforcing firm offers,13 though there is no explanation in the Code of the basis of this provision, with the result that it has an awkwardness in terms of its obligatory classification. It has already also been noted how Louisiana’s provision on public offers, though framed in offer terms, is in effect unilaterally promissory in nature. It will come as no surprise, given the general thrust of this work, that it is suggested that such provisions would be better recognised and styled as unilateral prom­ ises, such a development allowing a clearer appreciation of why the rele­ vant party is considered bound at law. Any such development would, of course, require either codal or other legislative reform or, in South Africa, adventurous judicial development of the law.

(d)  German law

German law does not know a doctrine of consideration, recognising in consequence gratuitous contracts; it places great stress upon perform­ ance remedies; and it has a developed and clear obligational terminology, allowing a logical classification of obligations and a precise analysis of their nature. Features such as these allow German law to give greater prominence to the idea of promise (widely defined). Earlier discussion in this work has, however, indicated how the early prospect of a rela­ tively general recognition of unilateral promises in the BGB was thwarted before publication of the final text of the Code in 1900. The result was a relegation of the unilateral promise to a few recognised exceptional instances,14 and the impermissibility of allowing it to be applied to new circumstances for which it might otherwise have been the ideal legal characterisation. Whilst the German courts have on occasions developed

12See Hogg and Lubbe, ‘Formation of Contract’, p. 64.

13CC Art. 1928. See earlier discussion of this issue in Ch. 4, p. 226.

14See the discussion of such exceptional circumstances at p. 152.