Construction Law



Page 129

Freedom of contract

3.01 Underlying the law of contract is the notion that legal persons, possessed of their faculties, ought generally to be free to enter into contracts of whatever terms they decide appropriate, and that the courts must uphold their agreement, even if they think the terms to be imprudent or unfair. Various statements can be found, particularly in nineteenth century cases, espousing this right. Two examples will suffice: “Every man is the master of the contract he may choose to make”;1 and “Between men of full age and competent understanding ought there to be any limit to the freedom of contract but that imposed by positive law or dictated by considerations of morality or public policy?”.2 Over time there has, however, been a retreat from the “high Victorian age in which freedom of contract was regarded with a special awe”,3 potentially so as to subvert the terms agreed by contracting parties to the paramount will of the legislature.4 Nevertheless, the notion that able persons should be able to enter into contracts on terms of their choosing remains strong in the common law. The natural consequence of persons being free to contract on their own terms is that they will be bound by those terms, even if they turn out to be unfavourable to a contracting party, and bring disaster on it. By way of illustration, in Bottoms v York Corporation,5 Lord Esher MR said of a contractor who had entered into a particularly disadvantageous contract:

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