Atiyah suggests that 1854 9 ex 341 at 354 277 the

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Unformatted text preview: was reported regarding the limitations on recovery of damages, disclosing the appeal of Alderson B. to 'expediency' as motivation for the court's decision, reflecting an appeal to an overriding, undefined application of a publ policy perspective.24 Deficiencies in the reporting of early cases render a search for internal coherence in this area of the common law difficult or impossible. Although the common law had been an institution recognised since at least the late 13 century, coherency in the English common law is a relatively new feature. It wasn't until about 1790 that the first 'text' on contract was published by John Joseph Powell. At the same time the English judiciary may have relied upon European continental courts and writers for ideas which they could incorporate into their judgments. Atiyah suggests that [1854] 9 Ex. 341 at 354. 277 the Court in Hadley b orrowed from the continental writer Pothier's Law of Obligations?5 first published in 1732 in French. Gordley asserts there was no theory in contract law until the nineteenth century26 and Washington plainly implies that the common law principles were developed for hundreds of years before the courts worked out how to deal with contracts in a systematic fashion.27 In light of this, it should come as no surprise that the damage award limitations set by the courts in modern contract law may not have a sound theoretical foundation. As late as 1840, the legal education in England was, according to Holdsworth, in a "disgraceful state",28 adding disorder to reform attempts, which had started in 1832. Although tort law has a traceable lineage going back to the earliest writs with respect to land in the 12th century, it too was subject to the th to instill principles which gripped the common law from about the turn of the 19th century. Thus, the development of a coherent legal doctrine of damages in tort has undergone fundamental changes concurrent with those in contract. The covert use of public policy in the courts, mostly hidden by inadequate case reporting, has masked the underlying reality for many centuries that judges have made law, and made it quite prolifically, while still adhering to an official doctrine that they do not make law at all. This chapter will show how judge-made law, distinguished from precedent in its narrow sense of simply following analogically similar previous decisions, has affected the common law in Australia by erecting obstacles against critical scrutiny and evaluation of certain economic principles. Of particular concern to this thesis is the 23 Atiyah, 1979, p. 432. Gordley, J , 1991, The Philosophical Origins of Modern Contract Doctrine, Oxford, Clarendon Press, . 231. 27 Washington, G. T., 1975, "Innovation in Nineteenth Century Contract Law" [1975] 91 Law Quarterly Review 247 at 250-1. 28 Holdsworth, 1923, vol. 15, p. 231. Holdsworth points out that starting in 1833, lectures were held for law students, and in 1836 examination criteria was set, but that this examination criteria only became mandatory after statutory support was given in 1843. 26 278 courts' attitude toward the consideration of time. Since opportunity cost in economics normally imports an assumption of the effluxion of time, i.e., time value, the economic phenomena which are affected by time have also suffered from the same curial resistance, hindering critical evaluation and acceptance of these economic models in the courts. This chapter focuses upon court decisions affecting consideration of inflation,29 whereby the real value of money declines over time, and argues that the same considerations apply to the courts' consideration of opportunity costs in a wider sense. Indeed, it may be argued that inflation is an opportunity cost in its purest sense, for it is a cost attached the time money is held without an increase in its nominate value to maintain purchasing power parity with that of a prior period. Through the examination of case judgments showing how the issue of inflation is considered by the courts, impediments to recovery of opportunity cost which relate to public policy principles are then brought to light. The three major recurrent principles examined in the case literature which concern issues of time and the three factors named above (inflation, discount rates, and interest rates) manifest past judicial resistance, where judges have clearly made law which ostracized consideration of economic principles. Although judges have made law for centuries, prior to the 1980's in Australia judicial opinion still supported the declaratory role of t bench. 29 The logical corollaries to inflation, i.e., interest rates and discount rates are also covered in this chapter by cogent inference rather than by focussed examination. It is taken as obvious that where inflation impacts a damages award and the curial tool to offset inflation is an interest rate on past losses, then of course interest rates must be included by necessary inference. The same argument applies to discount rates on future asp...
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