Almost all the nineteenth-century writers on contract law took, as their conceptual point of departure, the idea of agreement, or mutual assent. This idea, often dignified by the Latin phrase consensus ad idem (agreement to the same thing), was usually called a principle. But even a cursory examination of English law, as it actually worked in practice, shows that proof of mutual assent, in the ordinary sense of those words, was not a requirement for the imposition of contractual obligation. One eminent legal historian has gone so far, indeed, as to suggest that the ‘mysterious phenomenon of agreement’ was an ‘organizing myth’ that encouraged ‘the suspension of disbelief’.

The words ‘principle’ and ‘policy’ have been very common in legal discourse but their meaning is far from self-evident. Principle, in relation to judicial decision-making, has been, almost invariably, a term of approbation; policy has sometimes been used with approval in this context, but has sometimes been contrasted with principle and has carried the implication that policy should be excluded from judicial consideration. Abstract debate conducted in terms of ‘what is the true nature of contract law?’ has often seemed to run into an impasse, with, on the one side, insistence on rigorous exclusion of all considerations of utility, convenience or policy, and assertion, on the other side, that such are the only relevant considerations. A historical perspective suggests that the dichotomy thereby implied is over-simplified. Principle and policy have not been contradictory, in the sense that one must be chosen to the exclusion of the other. On the contrary, they have been mutually interdependent. A proposition has rarely been accorded the name ‘principle’ unless it has been perceived to lead to a just result in the particular case under consideration, and to be likely to produce results in the future judged to be acceptable: the concept of principle, at the point in time when it has been invoked, has implicitly looked not only to the past, but also to the present and the future, incorporating residual considerations of justice in the individual case as well as what may broadly be called prudential considerations. On the other side, the influence of policy has been very frequent in contract law, but has generally been found appropriate only where a governing proposition can be formulated that is perceived as stable, workable in practice, appropriate for judicial application, that explains past decisions thought to have been rightly decided and that supplies an appropriate guide for the disposition of future instances. When such propositions have been formulated they have been called principles, but they are not thereby emptied of policy. A consequence of this interrelationship is that, from a historical perspective, contract law cannot be reduced to any single explanatory principle, internal or external.

The challenge to third party rights in contract

Any legal system which takes promises seriously would be expected to allow such promises to be enforced even if made by a contracting party to a non-contracting party, so long as the promise was seriously intended to confer enforceable rights upon that third party. After all, if a promise can be enforced outside the context of a contract (as happens when a unilateral promise is enforced), why should it not be possible for A to contract with B and, within the context of that contract, also make a promise to C. This, however, is to presuppose that the right of a third party to enforce a right given to it under a contract (a stipulatio alteri or jus quaesitum tertio as it is sometimes called) should be cast in promissory terms. As will be seen below, however, other characterisations of a directly enforceable third party right are conceivable.

Preface

It is the thesis of this work that promise has played an important role in the contract law not only of those jurisdictions whose legal culture derives directly and unashamedly from Roman law and the medieval ius commune but also in those systems forming part of the Common law world, systems which are somewhat more reticent in acknowledging a debt to Roman or medieval European legal influences. The importance of promise in contract law derives from a mixture of sources: from the natural law tradition of Aristotle, Aquinas, and the late scholastics; from Roman law itself; from the canon law; and from the emphasis placed in later centuries upon the will, of which the promise is one specific manifestation. It is argued that, while promise was the paradigm voluntary obligation in medieval and early modern law, its primacy was largely supplanted by a model of agreement with the contract as its concrete expression, one in which promise was relegated largely to a description of the nature of agreement (as an exchange of promises) and of some unusual transactions which could not easily be accommodated within an agreement model, such as the promise of reward. Promise survived, however, as a discrete obligation in one European system, that of Scotland, and the functions which it is capable of performing in that system offer some inspiration for a possible rediscovery of the value of promise in other systems. Many transactions analysed in this work are only with difficulty fitted into a contractual model, whereas, it will be argued, it would be more honest to recognise that the unreciprocated or unilateral promise provides a neater and more apposite explanation for the basis of liability. It will also be suggested that the promise in the wider sense of a contractual promise is a concept which still illuminates much of the substantive content of contract law, despite attacks which have been made against promise by the reliance theory of obligational liability and other non-promissory theories.

Having considered in the last chapter the idea of a promise as an obligation, as well as competing theories for the moral force of promissory obligations, in this chapter an historical analysis will be offered of the role which promise has played in the legal enforcement of voluntary obligations. As this analysis will disclose, after showing early signs of performing a likely major role in obligational theory and practice, promise dwindled in importance from the seventeenth century. Such a development might have surprised earlier generations of jurists: promissory actions played a central role in both Roman law (in the stipulatio) and the Common law (in the action of assumpsit), and promise was a core idea in the scheme of voluntary obligations of the scholastics, late scholastics, and canonists. Rather, however, than continuing to occupy this central role, promise pollinated contract, enriching it with the idea of the universal enforceability of contracts (expressed in the maxim pacta sunt servanda), and provided an analytical tool for explaining the nature of contract formation as an exchange of conditional promises. Having performed these roles, promise was eclipsed by the flowering of the very obligation of contract which it had enriched. What was left of promise at the end of this process was a continued independent existence in only one major Western legal system, and an explanatory and supplementary function in the others. It will be suggested in this chapter that the eclipsing of promise was a great loss to Western legal systems: many transactions are best analysed in promissory terms, contract providing a second best and not wholly apt analysis.

The field of remedies provides fertile ground for analysing whether legal systems have a high regard for the promises made by parties to a contract, or indeed the promises made by a unilateral promisor (the same remedies generally being available for such promises), or whether instead what is sought is the achievement of goals other than promissory ones.

One would expect a high regard for promise in any legal system to be reflected both in a ready availability of remedies designed to secure actual enforcement of what has been promised (whether the performance promised was an act or forbearance from an act) as well as in substitutionary remedies which reflect, so far as is possible in substitutionary form, the so-called ‘performance interest’ of the parties (as defined below). If, however, enforcement of performance is an exceptional remedy, or if substitutionary remedies do not achieve the equivalent of enforcement but protect instead some other interest of the promisee, doubts must be raised as to whether a high regard for the value of promise is a hallmark of the system in question.

The restricted role of promise in the modern law

In Part 1 of this book, a study was made of the nature of promise and of the uses to which it has historically been put by Western moral and legal systems. It was explained how promise originally had a central normative role in the law, deriving partly from a stress upon the virtuous practice of keeping promises inherited from Greek thought, partly from promissory form and language inherited from Roman law, and partly from later canonical (and biblical) stress upon the duty of faithfulness to one’s word. This latter canonical stress upon promise keeping was extended from the realm of the simple promise to that of contract law. Embodied in the maxim pacta sunt servanda, it resulted in generalised contractual enforcement rather than the particular enforcement of the old Roman numerus clausus of contracts. Promissory ideas thus breathed new life into contract, allowing it to replace the promise as the paradigm voluntary obligational undertaking. Promissory language was largely relegated to the role of explaining the nature of contract as an exchange of promises, though the bare or simple promise remained as an exceptionally recognised undertaking in most systems, and in one system (Scotland) as a discrete, generally enforceable undertaking (subject to requirements of proof and subsequently form).

Introduction: promise as a type of obligation

A promise is considered as a type of obligation, both in morality and law, but what does it mean to call promise an obligation? Having explored that question at the beginning of this chapter, the source of the obligatory nature of promise will be considered. The focus of the study of that second question will, in this chapter, be on promise within morally obligatory systems; the question of the binding force of an obligation in legal systems is largely considered in the next chapter. However, the question of the moral and legal force of an obligation such as promise cannot be wholly separated, as many theories of law and morality see the two systems as inextricably linked. Thus, a dominant theory of law posits that the force of contract derives from the fact that a contract is a promise, and that contracts should therefore be kept because promises should be kept. Such a theory evidently necessitates that one asks why promises ought to be kept. That fundamental, and essentially moral, question requires an exploration of the various theories concerning why promises ought to be kept, an exploration of which comprises the bulk of the discussion in this chapter.

In this chapter, various circumstances surrounding the formation of contract will be considered from a promissory viewpoint.

Traditionally, the Common law and mixed legal systems have been against the idea that any liability of a promissory type might exist between negotiating parties before formation of contract, though that has not precluded duties arising between the parties based upon tort. By contrast, as will be seen, German law has a developed notion of culpa in contrahendo, a type of liability which appears to lie in the interstice between contract and tort. Increasingly however, even the Common law is recognising that some situations (such as breach of conditions of tender) merit liability, and promise can provide a rationale for such liability. The making of a so-called ‘firm offer’ is another circumstance where some systems consider that duties ought to arise, though this view is not shared by English law or South African law; in those systems where liability does arise, promise can again be used to explain the origin of the duties. Promises of reward and options are also considered: again, where these are legally enforced, promise provides an attractive solution to explain their basis in law. Letters of intent and the question of error in the formation of contract are trickier: the simple idea of promise does not provide an obvious solution to the problems that each raises, and some consideration is given as to how best therefore to characterise the results in cases raising those issues.