Freedom of Contract Theory

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RESEARCH QUESTION Tracing back the history of the freedom of contract theory, is the freedom to enter into contract(s) truly free? HYPOTHESIS With the codification of contract law, parameters have been set for people who can and who cannot enter into contracts i.e. all persons cannot be parties to contracts or enter into contractual relations. It has also been specified about the types of contract one can enter into. Hence, there are restrictions on persons. 1. INTRODUCTION In the beginning of the formation of state and the laws getting codified, the legal system as such did not recognize contracts as legal as legal entity or something in which the state will poke its nose into. They were not considered illegal, but private- between two parties in which the government will not concern itself with. This is where the concept of freedom of contract theory slowly emerged from. That meant that if one lost money or goods because the other party did not fulfil their side of the deal, there was no legal redress for such wrongs. The finite legal redress that was available was not because of the breach of contract but other factors, which used to range from an action of debt to trespass. But with the industrial revolution, laws relating to contracts slowly came into being into existence and started getting codified. The concept of Freedom of Contract is based primarily on the “will theory” of contract, which gave it a philosophical justification, along with the economic concept of laissez faire. It gives freedom to a reasonable individual to choose the person he wants to form contract with and create a legal relationship and also set the parameters of the said contract. The government neither plays any role in this nor was it expe... ... middle of paper ... ...by any state which would be aimed at regulating business practices. The most famous of such cases in Lochner v. New York, 48 US 45 (1905), in which the SC decided that laws trying to regulate labours and their working hours were unnecessary, unreasonable and prevented a person from entering into valid contracts. Thanuja Rodrigo, ‘Theoretical justifications for restraining “unconscionable” demands under on-demand guarantees’2012) 40 ABLR 5 accessed on 3rd February 2014 Id. J. Beatson, Anson’s Law of Contract, (28th edn, Oxford, 2008) 4 George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd, [1983] 2 AC 803 George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd, [1983] QB 284 Beatson, Id.[14], 5 Beatson, Id [14], 7

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