19 Sources of contract law
Although as students of law we may often find out many of the rules of
contract law by reading them in textbooks, these are not where the law was
first formulated and are really the textbook writer’s opinion of what they
believe the law to be. These books are not, then, original or primary sources
of law. So what do we mean by original sources?
Case law
Much of our modern law of contract is based on decisions in cases which
have been heard in court, and these recorded decisions, the speeches of
judges, form an important primary source of contract law. You may have
encountered cases from contract law when studying judicial precedent, such
as Merritt v Merritt, or the lines of cases involving attempts to avoid the
doctrine of privity. For example, in Port Line Ltd v Ben Line Steamers Ltd
the rules of precedent allowed the court to say that the decision in
Strathcona Steamship Co v Dominion Coal Cowas wrong (and statute law
now covers the problem which arose). This idea of building up a body of law
through decided cases is a practical one, founded in English common law.
It provides solutions to problems when issues arise as society develops and
changes, and these solutions can be tailored to the circumstances and to the
situations of the parties. However, while there are great advantages to case
law, there are drawbacks too, one of them being that the law can only change
in this way if a suitable case is taken to an appropriate level of court.
Statute law
A second source of contract law which is being used increasingly in the
area of contract law is that of statutes. A statute, or Act of Parliament, is a
decree from those running the country, and partly elected by the people of
the country, as to how we should behave. The great advantage of a statute
is that it can be planned, views and reports can be taken into account in
forming it, and it can be considered and debated by a number of experts to
form a comprehensive assessment of an area of law. This will then apply
universally across the country from a date stated within the statute.