Relational vs Discrete Contracts

In this video I introduce the subject of contract law by exploring relational vs discrete contracts.

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Specific Performance

This video is about the equitable contractual remedy of specific performance. Specific reference to lease covenants are made.

Cases used: Rainbow Estates v Tokenhold 1998, Beswick v Beswick 1967, Co-operative v Argyll Stores 1998

Although, I used cases regarding leases they are still good demonstrations of when specific performance will be utilised in any contract.

 

Law, History & Equity

This post will explore a bit about equity…
 

First the definition of ‘Equity’ is this: a source of law based on principles of fairness and natural justice.


Historically, the King of England would oversee and resolve disputes. You could only take a dispute to the King if you purchased a writ and over time these writs become fixed and inflexible and only parliament could supply them. It was the Provisions of Oxford 1258 that restricted the availability of writs. This rigidity and lack of remedies (for example only  damages were the outcome of going to court) forced people to petition to the King for natural justice. The petitions were given to the Chancellor to manage as it was the chancellor who was believed to be the conscience of the King. The petitions usually had one of the four allegations: (i) common-law is defective; (ii) the remedy of the court, damages, was not satisfactory and inadequate; (iii) the defendant was too powerful, unequal bargaining power existed and; (iv) court lack jurisdiction where non-domestic people where involved like foreign traders.Given the mass of petitions that were received, the chancellor created a court, Court of Chancery, to resolve these issues by applying flexible customary rules.

At first the chancery court was very unpredictable as it didn’t follow any basis of law, just merely the chancellor’s judgement and eventually these did form a precedent but anyway between 1673-1828 guidelines were prescribed and these were known as equitable maxims. Examples of equitable maxims include: (i) He who comes to equity must come with clean hands i.e.should not be trying to use equity for unfair and unjust reasons e.g. D&C Builders v Rees [1966] 2 QB 617; (ii) Equity looks at intention not the form i.e. equity will look at what intention has the person come here with not what they have done or history etc; and (iii) He who seeks equity must do equity i.e. equity must apply both ways its a kind of negotiation e.g. Chappell v Times Newspapers [1975] 1 WLR 482.


Examples of equitable remedies include: (i) specific performance so to compel a party to fulfill their contractual obligation e.g. Beswick v Beswick [1967] 2 All ER 1197; (ii) rescission so a resolution that brings the parties as far away as possible from original contractual position e.g. Redgrave v Hurd (1881) LR 20 ChD 1; and (iii) injunction so to cease a party from doing certain acts e.g. Lumley v Wagner [1843-60] All ER 814.


The Chancery court was successful in fulfilling its purpose of dispute settlement. However, there were conflicts with the regular Common law courts, outcomes were unpredictable and it suddenly had also had president over where common law and equity clashed. The King clearly stated the president of equity in the Earl of Oxford’s case (1615) 1 REP Ch 1 where the chancery court found the common law courts to have committed fraud and they put an injunction on the common law court. This dissatisfaction caused by the Chancery Court can be seen in comments such as ‘equity varies with the length of the chancellor’s foot’ (John Seldon, jurist). So Parliament put an end to this in 1873-1875 by creating the Judicature Act which stated that it the common law courts’ responsibility both to practice equity as well as common law reasoning. This tension between two sets of laws even in the one court has given scope for judicial creativity for making law.

It is important to note that equity itself is not a self-sufficient system, as Maitland says it is a ‘gloss’ on the common-law system, bettering the defects of common law. It is also important for studying precedent because it shows the value and need of precedent. Precedent which is a form of equity has been created to rectify some of issues and hardships associated with a common law system.