For this reason towards the end of the 19 th century governments came to accept

For this reason towards the end of the 19 th century

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For this reason, towards the end of the 19 th century, governments came to accept that there were problems with the classical theory of contract and statute started to play a much more important role in the formation and enforcement of contracts. This was particularly so in areas such as consumer contracts (with statutes such as the Sale of Goods Act giving consumers some very basic rights which could be implied into their contracts even in the absence of specific express provision. This movement continued into the 20 th and 21 st centuries with emphasis in a number of areas where the parties did not have equal bargaining power (such as in the employment and anti-discrimination areas). Consequently, while we still consider that one of the underlying principles of contract law is “freedom of contract”, it is now more limited than it was in the 19 th century and there is a much greater awareness of different power relationships and the role of government in ensuring a better social outcome. 3.1.3 The economic significance of contract law While contracts can occur in both commercial and non-commercial settings the law of contract is particularly important in a commercial context. Every enforceable commercial undertaking involves a contract. Every sale, every employment agreement, every service arrangement, every lease — every dealing — involves the parties entering into a contract under which each has enforceable rights, duties and liabilities. Without some means of forming and enforcing binding contracts business could not operate in any society. The law of contract allows society as we know it to function. 3.1.4 Nature of contracts What is a contract? Essentially, a contract is a legally enforceable agreement . That is, all contracts involve an underlying agreement but not all agreements are contractual. Agreements will only be contractual if the parties intended them to involve legally enforceable obligations. Social agreements, such as agreements to have a drink or go for a walk with friends after work, are good examples of agreements that are not contracts — they are not contracts because the parties never intended them to be legally enforceable. There is no standard formula and no standard format that must be followed before an agreement becomes contractually enforceable. That is, the law does not lay down any comprehensive list of rights, duties and liabilities that have to be incorporated into all contracts. Instead, the common law, in particular, merely lays down general parameters within which the parties are permitted to agree. Once agreement has been reached (within the confines of those parameters) the law enforces that agreement. Consequently, in contract, as in no other area of the law, the parties can often effectively ‘make their own rules’ and the law will then assist them by ensuring that their agreement can be enforced.
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