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Independent promises and the rescission of contracts

Published online by Cambridge University Press:  02 January 2018

Oliver Black
Oliver Black*
Affiliation:
King's College London; Consultant on Competition and Regulation, Linklaters, London
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Abstract

A rule of English law is that, where a contract comprises promises that are independent of each other, neither party is entitled to rescind the contract for failure by the other to perform. This paper illuminates the rule by examining various versions of the independent/dependent distinction. On one account, it concerns the reason why someone gives a promise; on others, it concerns the conditionality of a promise. The account in terms of reasons conflicts with the doctrines of offer and acceptance and of consideration. All the conditional accounts provide a justification for the rule, but certain of them — in terms of external conditionality — unduly limit the availability of rescission. The others — in terms of internal conditionality — are therefore proposed. Assuming that an agreement is likewise modelled in terms of internal conditionality, one promise's being independent of another, where ‘independent’ is defined as proposed, is inconsistent with their constituting an agreement. The rule on rescission presupposes, however, that some independent promises constitute a contract. So this is a new reason to hold that, just as not all agreements are contracts, so not all contracts are agreements.

Type
Research Article
Information
Legal Studies , Volume 23 , Issue 4 , November 2003 , pp. 555 - 565
Copyright
Copyright © Society of Legal Scholars 2003

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References

1 The use of ‘rescind’ in this context has been criticised see Chitty, J Chitty on Contracts vol 1 (London: Sweet & Maxwell, 28th edn, 1999 Google Scholar) para 25–046 and G Treitel The Law of Contract (London: Sweet & Maxwell, 9th edn, 1995) pp 674–676), but is a common and convenient shorthand for those remedies that, broadly, absolve the injured party from performance of obligations under the contract that have not accrued: see the cases at n 22 below.

2 Fearon v Earl Of Aylesford (1884) 14 QBD 792 at 800 (action on a separation deed); Taylor v Webb [1937] 2 KB 283 (tenant's covenant to pay rent) (compare Regis Property Co Ltd v Dudley [1959] AC 370; Johnstone v Milling (1886) 16 QBD 460 at 468; Tito v Waddell (No 2) [1977] Ch 106 at 290; Yorbrook Investments Ltd v Batten (1986) P & CR 51); Winstone v Linn (1823) 1 B&C 460 (covenants of master and apprentice) (compare Ellen v Topp (1851) 6 Exch 424).

3 Chitty, n 1 above, paras 25-036-25-045; Treitel, n 1 above, pp 681–739.

4 (1836) 3 Bing NC 355 at 368. Other authorities on the distinction are Pordage v Cole (1669) 1 W ms Saund 3 19; Ritchie v Atkinson (1808) 10 East 295 at 306: Huntoon Co v Kolynos [1930] 1 Ch 528 at 558–559; Guy-Pell v Foster [1930] 2 Ch 169.

5 Treitel, n 1 above, pp 677–681.

6 In Chitty, n 1 above, para 25–034; cited with approval in Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699 at 733.

7 Compare the criticism, in O Black’ Agreements, Undertakings and Practical Reason’ (forthcoming), of Gilbert's claim that an agreement’ directly generates' performance obligations: M Gilbert ‘Is an Agreement an Exchange of Promises?’ (1993) 90 The Journal of Philosophy 629–630. On the connection between promises and obligations, see 01 and 02 below.

8 Black, n 7 above.

9 In O Black The Infinite Regress of Justification (PhD thesis, University of London, 1987) pp 104 – 110, and O Black ‘Infinite Regresses of Justification’ (1988) 28 International Philosophical Quarterly 429, this relation is used to explicate the notion of one belief's being based on another.Google Scholar

10 See Peacocke, C Holistic Explanation (Oxford: Clarendon Press, 1979)Google Scholar ch 2.

11 DR could be modified to say that Y's doing Ay, rather than Y's giving Py, is X's reason for giving Px; but that would be an implausible definition.

12 This distinction is drawn in Gilbert, n 7 above, pp 632–633, and Black, n 7 above. Similar distinctions relating to questions, commands and bets are drawn in Dummett, M Frege: Philosophy of Language (London: Duckworth, 1973) pp 338–343 Google Scholar; to intentions, in R Tuomela The Importance of Us (Stanford: Stanford University Press, 1995) pp 122–123; and to beliefs, in Black, n 7 above.

13 See Castaneda, H The Phenomeno-Logic of the I (Bloomington: Indiana University Press, 1999 Google Scholar) esp chs 1 and 2.

14 Mackie, J The Cement of the Universe (Oxford: Oxford University Press, 1974) p 62 Google Scholar.

15 O Black ‘Joint Action, Reliance and the Law’ (2003) 14 King's College Law Journal 65; O Black ‘Reliance and Obligation’ (forthcoming) Ratio Juris.

16 ‘[I]t is necessary to discover the relation to one another of the promises which form the contract. They may be either independent or dependent … In the exceptional case of independent mutual promises, … neither party can claim to be discharged from liability on the contract by reason of the failure of the other to perform his part’: Chitty, n 1 above, paras 25-034-25-035.

17 Lark v Outhwaite [1991] 2 Lloyd's Rep 132 at 140; Chitty, n 1 above, para 2–039. This principle is hard to square with the principle that a party may accept an offer of which he is ignorant: Gibbons v Proctor (1891) 64 LT 594, 55 JP 616; compare Neville v Kelly (1862) 12 CB (NS) 740 and see Chitty, paras 2-038-2-039. But the authority for the latter principle is doubtful. The authority is clear – eg in the posting rule – for the converse principle that a contract may arise where the offeror is ignorant of the acceptance: see Chitty, paras 2-043-2-057 and, for other situations in which the offeror's ignorance does not preclude the creation of a contract, para 2–042A.

18 On the limited legal effects of promises without consideration, see Chitty, n 1 above, para 3–012.

19 Thomas v Thomas (1842) 2 QB 851, as interpreted in Chitty, n 1 above, para 3–009. Cases of nominal or invented consideration are exceptions.

20 Treitel, n 1 above, p 68 1.

21 01 and 02 below are similar to principles in Black, n 7 above. Different views may be taken as to the ground of the obligations they specify. On one view, it is the fact that a promise causes, or is intended or can be foreseen to cause, reliance: see Atiyah, P The Rise and Fall of Freedom of Contract (Oxford: Clarendon Press, 1979 Google Scholar) esp chs 1,6 and 22; P Atiyah Promises, Morals, and Law (Oxford: Clarendon Press, 1981) esp chs 3 and 7; Atiyah, P Essays on Contract (Oxford: Clarendon Press, 1986 Google Scholar); J Demarco and R Fox’ Putting Pressure on Promises' (1992) 30 The Southern Journal of Philosophy 48; R Fogelin ‘Richard Price on Promising: A Limited Defence’ (1983) 21 Journal of the History of Philosophy 289; C Knapp ‘The Promise of the Future – and Vice Versa: Some Reflections on the Metamorphosis of Contract Law’ (1984) 82 Mich LR 932; MacCormick, N Voluntary Obligations and Normative Powers (I)’ (1972) 46 Proceedings of the Aristotelian Society, suppl vol 59 Google Scholar; C McMahon ‘Promising and Coordination’ (1989) 26 American Philosophical Quarterly 239; T Scanlon ‘Promises and Practices’ (1990) 19 Philosophy and Public Affairs 199; Scanlon, T What We Owe to Each Other (Cambridge MA: Belknap Press, 1998 Google Scholar) ch 7; T Scanlon ‘Promises and Contracts’ in P Benson (ed) The Theory of Contract Law: New Essays (Cambridge: Cambridge University Press, 2001) p 86. For criticism, see J Altham ‘Wicked Promises’ in I Hacking (ed) Exercises in Analysis (Cambridge: Cambridge University Press, 1985) p 1; P Ardal ‘Promises and Reliance’ (1976) 15 Dialogue 54; R Downie ‘Three Accounts of Promising’ (1985) 35 The Philosophical Quarterly 259; R Fox and J Demarco ‘The Immorality of Promising’ (1993) 27 The Journal of Value Inquiry 81; C Fried Contract as Promise (Cambridge, MA: Harvard University Press, 1981) chs 1–2; C Morris ‘Some Notes on “Reliance”’ (1991) 75 Minn LR 815; D Patterson ‘The Value of a Promise’ (1992) 1 1 Law and Philosophy 385; Raz, J Voluntary Obligations and Normative Powers (11)’ (1972) 46 Proceedings of the Aristotelian Society, supp vol 79 Google Scholar; J Raz ‘Promises and Obligations’ in P Hacker and J Raz (eds) Law, Morality, and Society (Oxford: Clarendon Press, 1977) p 210; G Warnock The Object of Morality (London: Methuen, 1971) ch 7; A Woozley ‘Promises, Promises’ (1981) 90 Mind 289. On the relations between reliance and obligation generally, see O Black ‘The Relation Between Reliance and Obligation’ in P Kampits et al (eds) Applied Ethics (Kirchberg am Wechsel: Austrian Ludwig Wittgenstein Society, 1998) and O Black (forthcoming), n 15 above.

22 Heymans v Darwins Ltd [1943] AC 356 at 399; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849. See also Moschi v Lep Air Services Ltd [1973] AC 331 at 345, 350–351; Thompson v Corroon(1993) 42 WIR 157 at 172–173.

23 The question whether an obligation is conditional or unconditional is distinct from the question whether or not the obligation motivates. The distinction is blurred in Gilbert, n 7 above, pp 634, 645.

24 See the cases in n 22 above.

25 Compare the principle 04 in Black, n 7 above.

26 The argument for this claim is in Black, n 7 above.

27 By clause (iii), Y's undertaking stands to X's in the relation in which, according to DR, X's promise stands to Y's.

28 Established reasons are stated in Chitty, n 1 above, paras 1-003-1-006. Contrast Treitel's definition of a contract as ‘an agreement giving rise to obligations which are enforced or recognised by law’ (n 1 above, p 1) and De Moor's assertion that ‘an agreement’ adds little to the meaning of ‘a contract’: J De Moor ‘Are Contracts Promises?’ in J Eekelaar and J Bell (eds) Oxford Essays in Jurisprudence (Oxford: Oxford University Press, 1987) p 115. On the expansion of contract law to protect detrimental reliance in the absence of an agreement, other than in an unusually broad sense, see Atiyah (1979), n 21 above, and G Gilmore The Death of Contract (Columbus: Ohio State University Press, 1995), both passim, and Cooke, P and Oughton, D The Common Law of Obligations (London: Butterworths, 1993) p 47 Google Scholar.