Intervention in particular cases.

A glance back over the chapters in this part of the book will reveal that the

modern law is littered with examples of the principle of sanctity of contract in

operation. We first encountered its non-interventionist philosophy in Lord

Wilberforce’s powerful dissent in Schuler v Wickman and, not surprisingly, the

same philosophy underpins his speech (and those of the other members of the

House) in Photo Production. However, the principle goes beyond particular

judgments. It is the foundation for such landmarks, as the doctrine that the

courts will not review the adequacy of consideration; the principle that the

basis of implied terms is necessity, not reasonableness (see Liverpool City

Council v Irwin); the hard line towards unilateral collateral mistake (see, for

example, Smith v Hughes); common mistake (see Bell v Lever Brothers Ltd) and

frustration (see Davis v Fareham); the cautious reception of economic duress;

the anxiety to limit the doctrine of inequality of bargaining power; the

resistance to the citation of relatively unimportant uncertainty as a ground for

release from a contract (see, for example, Foley v Classique Coaches Ltd); and the

reluctance to succumb to arguments of economic waste or unreasonableness as

a basis for release from a bargain (see, for example, White & Carter). The

principle of sanctity of contract is a thread which runs through contract from

beginning to end, enjoining the courts to be ever-vigilant in ensuring that

established or new doctrines do not become an easy exit from bad bargains.

(Of course, we are not suggesting that such bargains are necessarily products

in the first place of free bargaining in the literal sense. Especially in those cases

where standard forms are involved they are a product of some rather artificial

rules of incorporation (see, especially, L’Estrange v Graucob). But courts in this

century have tended to regard the contracts resulting from the application of

such rules as exercises in term-freedom.15

Finally, there is a consumer-welfarist approach which adopts an

interventionist stance, particularly with a view to the protection of weaker

parties and the promotion of justice and fairness in contractual dealings.

Consumer-welfarists are likely to be attracted by notions of good faith and fair

dealing and, if a particular rule does not fit with this ideology, a way round it

must be found. Adams and Brownsword conclude as follows:

If the 19th century is usually viewed as the classical period for the doctrines

associated with market-individualism, so the 20th century is for consumerwelfarism

(particularly from 1945 onwards). The recent burgeoning of

consumer-welfarism is, of course, hardly surprising. A policy of consumer

15 Adams and Brownsword, 2000, pp 172–77.

11

Chapter 1: Sourcebook on Contract Law

protection would have to await the development of a consumer society and a

policy of welfarism could be expected to grow as it became accepted that

government had a responsibility to maintain a welfare programme.

Although the consumer-welfarist ideology clearly stands for a policy of

consumer protection and for principles of fairness and reasonableness in

contract, it lacks the unity and coherence of market-individualism. It does not

start with the market-individualist premise that all contracts should be

minimally regulated. Rather, it presupposes that consumer contracts are to be

closely regulated and that commercial contracts, although still ordinarily to be