Mass consumer online agreements lack many of the features of traditional contracts. Their unique characteristics compound the problems that are generally raised by contracts of adhesion. Online agreements are usually presented to the consumer in a way that obscures their legally binding nature. This chapter argues that courts should recognize the differences between online and offline contracts by considering a contract’s form and manner of presentation in adjudicating contract disputes. The design of a contract shapes, expresses and reveals the parties’ intent. “Clickwrap” and “browsewrap” agreements have the power to affect consumer behaviour, not through their terms (which most consumers do not read), but through their presentation and design.

The chapter concludes that courts should recognize contracting realities, such as consumer behaviour and contract design, in applying the standard of reasonableness in contract disputes.

In 1986, the Council of Ministers of the European Union enacted Directive 86/653 on self-employed commercial agents. The Directive was implemented in English law by the Commercial Agents (Council Directive) Regulations 1993 (thereafter the Agency Regulations) which came into effect on 1 January 1994. The Directive and the Agency Regulations have been held to be in the nature of mandatory law so that they apply where a commercial agent acted in the UK for a Californian principal under a contract governed by Californian law (Ingmar GB Ltd v. Eaton Leonard Inc.).

The Directive is based on the civil law assumption that commercial agents are in need of protection (France and Germany), which is in direct contrast with the traditional English common law position that principals are the ones who deserve protection. When the Agency Regulations came into force, confusion arose because they introduced a level of protection for commercial agents on termination, by way of the civil law concepts of “compensation” and “indemnity”, which are alien to traditional English common law. In implementing the Directive, the UK, alone amongst EU Member States, chose not to opt for one remedy – either “compensation” or “indemnity” – but provided for both to be available and the choice between the two to be made by the parties. When applying the “compensation” option, the UK courts have shown a remarkably methodological approach emphasising the need to conceptualise the notion of “loss” before quantifying it (Lonsdale v. Howard and Hallam Ltd). This is in contrast with France, where the implementation and interpretation of the Directive is consistent with the French legal tradition. The result has been an implementation that appears inconsistent and (perhaps) unduly harsh on the principal.

The aim of this chapter is to study the impact of the differences in implementation among France, Germany and the UK and propose a solution to reconcile such differences. This chapter will first consider the nature and rationale of such remedies to see how they differ from common law concepts. The chapter then critically considers the French system and compare it with the common law courts which appear to have applied such concepts with a, perhaps, unexpected ease. The author offers a solution to unify the damage-related nature of “compensation” and the restitutionary nature of “indemnity” – by viewing the principal-agent relationship as a quasi-joint venture. Using a “reverse un-equitable enrichment approach,” it is possible to argue that the aim of both termination payments under the Directive is to compensate or indemnify the commercial agent for his loss.

This chapter endeavours to integrate the two principal remedies for misrepresentation, namely rescission and damages. Its principal thesis is that legal certainty requires a reasonably clear delineation of the losses to be remedied by rescission and those by damages. Discretionary remedialism is to be deplored as is any tendency to treat rescission as a holistic remedy for misrepresentation. A contract is rescinded for misrepresentation because it would not have been entered into but for the misrepresentation. This justifies only the cutting away of the contract itself and the restoration of the parties to the position they were in before contract so far as the contract is concerned.

Consequential losses should be remedied by damages, but under contract law that requires an independent justification. That justification may be found in the law of torts through the actions of deceit and negligent misstatement. The chapter contends that the Misrepresentation Act 1967 does not provide a sound basis for the award of damages for misrepresentation and should in the main be repealed. The power to declare a contract subsisting under section 2(2) where rescission would be excessive should be retained but there should be no damages awarded in lieu. The treatment of misrepresentation in other common law jurisdictions, particularly in the United States, will be considered, especially in the context of remedies for losses lying beyond rescission.

A coherent system of remedies should clearly delineate the job each remedy is to do. So rescission should be confined to ‘cutting away’ the vitiated contract and should not be fashioned into a holistic remedy for misrepresentation. Rescission should thus be combined with damages by allowing it in cases where the claimant wants specific (as opposed to monetary) relief. Damages should only be awarded in a case of misrepresentation where there has been a tort, i.e. where the defendant has been dishonest (the tort of deceit) or is in breach of a duty of care (the tort of negligent misstatement). This is broadly the position in the United States and in Australia. The Misrepresentation Act 1967 and the Misrepresentation Act (NI) 1967 should be repealed so far as they provide for a damages remedy beyond the torts of deceit and negligent misstatement. These more extensive damages remedies lack moral and policy based justification and provide for more extensive relief than is available for breach of contract.

The theoretical bases of contract generally are dependent on either deontological or consequentialist normative commitments, or some combination of the two. Contract doctrine should instantiate (or at least not frustrate) the operation of the normative calculus. The chapter assesses whether contract doctrine is deficient in forwarding such normative commitments. At the least, the normative inquiry is opaque as it relates to contract doctrine. The chapter describes the normative impotence of contract by focusing on the two foundations of consensual liability: allocation of risk and formation of agreement. The material on mistake, impracticability, and the modification of contract doctrine depicts how risks are allocated. The chapter draws from the most recent United States Supreme Court arbitration decisions to illustrate the failure of the agreement principle.

The chapter suggests that contract law doctrine can only make sense if we take account of the fundamental bases of the normative considerations we actually bring to the resolution of a contract controversy. Those bases are best revealed in recent neuroethical and evolutionary inquiries into the constitution of the human agent’s normative commitments.

Finally, the chapter describes the apposite contract doctrine and surveys, summarily, the commentary that reveals the normative quandaries. It engages primarily apposite consequentialist theory but also suggests the limits of a deontological perspective that is subject to the same deficiencies as utilitarian analyses. From those premises apposite neuroscience findings are considered to see what, if anything, a more sophisticated sense of human agency can do to refine either the formation or application of doctrine. Ultimately, the chapter concludes that contract doctrine fails, at least in crucial ways and at crucial junctures, in relation to the preceding normative commitments.

The law of England and Wales, in respect of contracts, recognizes no general doctrine of good faith, such as exists in other jurisdictions. Nevertheless, various doctrines and techniques in the law, for instance misrepresentation, mistake, duress, and implied terms, are frequently seen as playing specialized roles in securing at least a minimum level of good faith. This chapter considers implied terms from this perspective and argues that they certainly have been used in this way but that, as a technique, implication of terms is neutral, in no small part because of the double-edged nature of the rules (term can be/must not be implied in given circumstances). Decisions which decline to imply a term are as telling about the technique’s tendency to secure good faith outcomes as those in which a term is actually implied.

This chapter opens by noting the bewildering array of contract theories that appear to exist in Anglo-American law, contrasting this with the essentially uniform contract theory of the mixed legal system of Scotland. The question posed is whether there is any way through the jungle of competing theories, and whether any consensus is emerging as to the way forward. In answering those questions, the chapter proceeds by considering three major issues: (1) Do any one of the competing theories of contract law describe the law as it is actually formed and applied? Any of those that fail to do so should not be given significant scholarly attention. (2) Do what seem like competing theories actually possess various degrees of commonality? (3) In terms of the recognition of underlying commonalities, is there an emerging consensus as to how an ideal, harmonised, cross-national contract law might take shape? This undertaking will rely heavily on provisions of both the American Restatement (Second) of Contracts and the Draft Common Frame of Reference (DCFR).

The competing major contract theories of contract that will be considered include (1) contract as an exchange of promises; (2) contract as an agreement in fact; (3) contract as based upon the reasonable expectations or reliance of the parties (consequentialism); (4) contract as based upon the assumption by the parties of legally binding obligations; (5) contract as based upon the relationship or status of the parties, such as in an agency or trust relationship; and (6) contract as based upon a transfer of rights between the parties. Each theory will be reviewed for their strengths and weaknesses. The author asserts that only the first two have engendered any widespread adherence by courts, and thus are the only two that can seriously claim to reflect a broad-based understanding of the basis for contract law. The others, while attracting occasional support from courts, have largely been the preserve of academic scholarship. The one exception is the impact of reliance theory on certain areas of contract law.

The chapter also analyses the competing theories of contract in reference to the poles of will/autonomy and consequence/effect. However, such a metric does not properly explain transfer theories of contract law. Such theories are best understood by referencing a third pole, characterised by the content and rights of the contract relationship. The chapter suggests that some theories can be grouped as different views of the same rationale. For example, will theory (promise), agreement, and assumption of obligation should be merged through a revitalised will theory. This new will theory would be based upon the idea that contract is an expression of the parties’ will by which they assume, through the medium of agreements or promises, obligations having their source in the normative power of the state.

The final part of the chapter suggests that a consensus is merging in Europe as to the proper characterisation of contract law, as an emanation of the parties’ wills in terms of agreement plus intention to be bound as found in the DCFR and the Principles of European Contract Law (PECL). In contrast, such a consensus has not been firmly established in US common law. The doctrine of consideration and the current American view of privity present obstacles for a purely intention-based theory of the common law. Projects like the DCFR present opportunities to reconsider the reach of the doctrine of consideration and third party rights (privity).

This chapter argues that the current harmonisation of European contract law will eventually fail. Supporters of the harmonisation suggest that the divergence in national contract laws not only generates unnecessary costs for cross-border trade, but also undermines fair competition in the European market. Thus, legal harmonisation is the necessary solution. Unfortunately, the harmonisation movement has failed to understand the crucial distinction between default and mandatory rules. The current and proposed harmonisation measures have focused on the development of sets of default rules. In fact, divergence in national contract laws is mainly due to differences in their mandatory rules.

This harmonisation effort suffers from two major defects. Firstly, it assumes that the national default rules are in need of harmonisation in order to facilitate trans-border transactions. In fact, there is no conclusive empirical evidence that differences in national default rules have retarded European trade. Conversely, several existing studies have indicated the opposite: that harmonisation of default rules at the regional level actually increases the complexity of contract law and trans-border trading. Secondly, even if a regional harmonised contract law were produced, it would not provide the certainty needed to warrant the effort due to problems of multi-jurisdictional interpretations. The chapter concludes that a European contract law regime, at this time and in its current form, will lead to an unnecessary layer of legal complexity to European trade.