With over a quarter-century of practice in English contract law, I have seen how a solid grasp of fundamental principles empowers both clients and lawyers. This practice note provides an authoritative overview of key facets of English contract law: the sources from which it derives, the definition of a contract, the various classifications of contracts, and the special case of contracts made by deed. Written in clear terms under English law, it is meant to inform clients and professionals alike.
Sources of English Contract Law
English contract law is not contained in a single statute or code; rather, its rules emerge from several sources. The primary source is the common law, meaning the decisions of judges in court cases over decades and centuries. Foundational doctrines – such as how contracts are formed (offer and acceptance), the requirement of consideration, and remedies for breach – have largely been developed through judicial precedents. Notably, many landmark cases arose in commercial contexts like shipping and insurance during the Industrial Revolution, shaping principles that still govern contracts today. The common law’s dominance and adaptability are hallmarks of English contract law. In fact, this judge-made nature is often seen as a strength: the flexibility of common law allows novel situations to be resolved by analogy to established principles, and it has enabled English law to accommodate modern innovations (for example, the Law Commission has confirmed that even smart legal contracts – agreements recorded in computer code – can be upheld using existing legal principles without new legislation).
Statute law is the second major source. Although English contract law has no all-encompassing code (unlike civil law jurisdictions), Parliament has intervened with statutes to reform or clarify specific areas of contract law. Over the past few decades, there has been a growing body of legislation, especially to protect consumers and regulate fairness in contracts. For example, the Unfair Contract Terms Act 1977 and more recently the Consumer Rights Act 2015 impose legal limits on exclusion clauses and unfair terms. Another significant statute is the Contracts (Rights of Third Parties) Act 1999, which altered the traditional privity rule by allowing certain third parties to enforce contract terms. Many of these statutes were influenced by European Union directives, particularly in consumer protection. However, it’s important to note that the general law of contract (e.g. rules of formation, validity, etc.) remained largely untouched by EU law, aside from those consumer-focused regulations. Even after Brexit, the core principles of contract law in England and Wales persist unchanged, as they were never heavily dependent on EU legislation. EU-inspired consumer laws that were already implemented (such as the consumer rights provisions) have mostly been retained in domestic law, maintaining continuity for businesses and consumers.
Equity is a further source that complements the common law. The courts of Equity historically developed doctrines to mitigate the strictness of common law and to enforce fairness. In contract disputes, equitable principles still play a role in certain areas – for instance, the doctrine of promissory estoppel (which can prevent a party from going back on a promise, even without consideration, in specific circumstances) is an equitable invention that softens the harsh rule of consideration. Equity also provides particular remedies for breach of contract beyond simple damages, such as specific performance (an order to actually perform the contract) or injunctions, in situations where damages would be inadequate. These equitable aspects are now administered by the same courts alongside common law, and they operate only where they do not conflict with statutory rules.
Finally, international and scholarly influences deserve a brief mention. While international conventions (like the UN Convention on Contracts for the International Sale of Goods) do not formally apply in England (the UK has not adopted the CISG), international trade practices and lex mercatoria have historically influenced the development of English commercial contract principles. Academic commentary, such as restatements or principles of European contract law, can be persuasive but are not binding. Overall, English contract law remains primarily a product of domestic case law and targeted statutes – an uncodified system that has evolved pragmatically. This uncodified nature has been the subject of debate, but many practitioners value the flexibility it affords. English law’s pragmatic blending of case law and legislation is often cited as a reason it remains a preferred choice of law in international commerce.
Definitions of Contract
What exactly is a “contract”? In everyday language, a contract is often thought of as any legally binding agreement. This is a good starting point. A classic definition frequently quoted in English law is that a contract is “a promise or set of promises which the law will enforce.” In other words, it is an agreement that gives rise to obligations recognized by law. Professor Treitel succinctly described a contract as “an agreement giving rise to obligations which are enforced or recognised by law.” Both formulations capture the essence: a contract is not just a promise, but a legally enforceable promise.
Several key elements distinguish a contract from a mere informal promise or social arrangement. First, there must be an agreement – usually one party makes an offer and the other accepts. The agreement must be sufficiently certain in its terms and indicate an intention for it to be binding. Second, the parties must have an intention to create legal relations, meaning they meant their agreement to entail legal consequences (for example, agreements in a business context are presumed intended to be legally binding, whereas family or social agreements might not be, unless clearly intended). Third, in English law (except for contracts made by deed), a contract requires consideration – this means each party must give or promise something of value in exchange for the promise of the other. This doctrine of consideration is a hallmark of English contract law: a gratuitous promise (not in a deed) is generally not enforceable because it lacks this exchange of value. Finally, the contract must comply with any required formalities. Most contracts can be made informally (even verbally), but certain types (like contracts for the sale of land, or guarantees) must be in writing and signed due to statute. And if the contract is made as a deed, additional formalities apply (discussed below).
To illustrate, if Alice says to Bob, “I will sell you my car for £5,000” and Bob agrees, all the essential elements can be identified: an offer, an acceptance, intention to be legally bound (likely, since it’s a commercial transaction), and consideration (the exchange of the car for £5,000). A contract has been formed, and if either party fails to uphold their promise (e.g. Alice doesn’t deliver the car or Bob doesn’t pay), the other can seek a legal remedy. In contrast, if a parent promises their child a holiday trip as a reward for good grades, that’s likely not a contract – not because there isn’t an agreement, but because typically in a family context there is no intention for legal enforcement (and possibly no consideration from the child’s side). Thus, not every promise is a contract; it must meet the legal criteria so that the law will recognize and enforce it. When those criteria are met, a contract forms a binding obligation – meaning the law provides remedies if one side breaches (such as damages, or sometimes specific performance to compel fulfillment of the promise).
Classifications of Contracts
Contracts in English law can be classified in various ways, depending on their formation, formality, or legal effect. These classifications help in understanding how different types of agreements are treated under the law. Below are some of the most important classifications, each explained with practical examples:
- Express vs. Implied Contracts: An express contract is one where the terms of the agreement are stated clearly by the parties, either in writing or orally. For example, a written employment agreement or a verbal agreement to paint a house for £500 are express contracts – the key terms are expressly agreed. An implied contract, on the other hand, is one where the agreement is not explicitly stated in words but inferred from the parties’ conduct or the surrounding circumstances. Suppose you step into a taxi and tell the driver your destination – even without saying a word about payment, there is an implied contract that you will pay the reasonable fare for the ride. Similarly, if a customer walks into a shop, picks up an item and pays at the counter, an implied contract for sale has arisen through conduct. The law may also imply terms into contracts (by statute or common law) even if the parties haven’t spelled them out – for instance, the Sale of Goods Act 1979 implies a term that goods sold must be of satisfactory quality in many sales contracts. Implied contracts (in fact) and implied terms operate to fill gaps where needed to give effect to the parties’ apparent bargain.
- Bilateral vs. Unilateral Contracts: Most contracts are bilateral, meaning both parties exchange promises to perform. Each side assumes an obligation – for example, a standard contract of sale: one party promises to deliver goods, and the other promises to pay money for them. The exchange of promises itself creates the binding contract. By contrast, a unilateral contract involves one party making a promise that the other can accept only by performing an act, rather than by making a return promise. A classic example is a reward contract: X issues a notice offering £100 to anyone who finds and returns his lost dog. X is the only party making a promise (to pay £100); no one is obliged to go looking for the dog, but if Y does find and return the dog (thus performing the requested act), X’s promise becomes enforceable and Y is entitled to the reward. Until performance, there is no obligation on anyone – it’s only upon the act’s completion that a contract is formed. Unilateral contracts are less common but important in certain scenarios (another example is an insurance policy: the insured pays premiums (an act) in exchange for the insurer’s promise to pay out on a covered risk – actually insurance is often analyzed as unilateral once the premium is paid). The distinction matters because it affects when obligations arise; in a unilateral contract the offeror cannot demand acceptance until the act is done, and they typically can’t revoke the offer once the offeree has started to perform in good faith.
- Executed vs. Executory Contracts: An executed contract is one that has been fully performed at the time it is made, whereas an executory contract is one where some or all obligations are to be performed in the future. For instance, if you buy a newspaper at a shop for cash, the contract is executed immediately – you have paid and the shop has handed over the paper, nothing further remains to be done. On the other hand, if you sign a one-year lease for a flat, at the moment of signing (and perhaps paying a deposit) the contract is executory – both you and the landlord have ongoing obligations (paying monthly rent, providing possession of the property, etc.) that will be fulfilled over the lease term. Most long-term contracts (construction agreements, service contracts, etc.) are executory in nature when formed, as they contemplate future performance. The law sometimes applies different rules depending on this status; for example, certain contract defenses like frustration (where an unforeseen event makes performance impossible) might discharge an executory contract, whereas an executed contract leaves only potential claims if problems later emerge.
- Valid, Void, Voidable, and Unenforceable Contracts: These classifications concern a contract’s legal enforceability. A valid contract is one that meets all the essential requirements and is fully enforceable by law. The vast majority of everyday contracts – when properly formed – are valid contracts. A void contract is not a contract at all in the eyes of the law; it has no legal effect, usually because it’s missing an essential element or involves something unlawful. For example, an “agreement” to commit an illegal act (like a contract between two parties for an illegal price-fixing cartel) is void and cannot be enforced. Likewise, a supposed contract lacking consideration (and not made as a deed) is void for want of consideration. A voidable contract is a contract that one party can choose to set aside due to the circumstances in which it was formed, though until it is avoided it remains effective. Common examples are contracts induced by misrepresentation, or contracts with a minor – such a contract is binding unless and until the misled party (or the minor upon reaching majority) takes action to rescind it. If they do, the contract is treated as void from the beginning and the parties are restored, as much as possible, to their pre-contract positions. Finally, an unenforceable contract is one that isn’t void (the agreement itself is valid) but cannot be enforced through the courts for some technical reason. A classic instance is a contract that by law must be in writing and signed, but was made only orally. For example, a guarantee (a promise to answer for someone else’s debt) is required by the Statute of Frauds 1677 to be in writing; if not, the contract is not actually void, but the courts will simply refuse to enforce it – hence it’s unenforceable. In an unenforceable contract, if the parties perform voluntarily, that performance is effective, but if one party refuses to perform, the other has no legal remedy. It’s worth noting that since the advent of the Limitation Act 1980, even a perfectly valid contract can become unenforceable after the limitation period expires (generally 6 years for ordinary contracts), because the law bars the remedy.
- Specialty (Deed) vs. Simple Contracts: Another fundamental classification is between contracts made by deed (also called contracts under seal or *specialty contracts) and simple contracts (all other contracts, whether made in writing or orally). A deed is a formal legal instrument that, once executed with the required formalities, is enforceable even if it lacks consideration. Deeds are used for certain types of agreements that either need extra solemnity or where parties wish to be bound without consideration. For instance, if someone wants to make a binding promise to gift an asset to another (with no payment in return), doing it by deed will make it enforceable. In contrast, a simple contract (which is any non-deed contract) must have consideration to be binding – except for limited exceptions like promissory estoppel, the courts won’t enforce a one-sided promise in a simple contract. Simple contracts can be made in any form (written, oral, or implied by conduct), whereas deeds must be made in writing and follow specific execution steps. The distinction also carries a significant practical difference: the limitation period for actions on a simple contract is 6 years, but for contracts executed as deeds it is 12 years. We will explore deeds more in the next section.
Each of these classifications is not mutually exclusive – a given contract can fall into several categories. For example, a signed lease of property for rent could be described as an express, bilateral, executory, valid contract, and if it is executed as a deed (which property leases often are), it’s also a specialty contract. These labels help pinpoint the legal characteristics of an agreement and determine what rules apply. In practice, recognizing the type of contract one is dealing with allows lawyers to identify potential issues (such as the need for consideration, the correct method of execution, or the relevant limitation period) and advise clients accordingly.
Contracts Contained in Deeds
In earlier times, deeds were sealed documents; modern deeds no longer require wax seals, but they still must be executed with particular formalities to be valid.
A deed is a special form of contract that is intended to be extremely solemn and binding, even in the absence of consideration. In English law, certain transactions have traditionally been carried out by deed, and doing so carries distinct legal implications. A contract made by deed is often referred to as a “specialty”. The use of deeds dates back to when affixing a seal to a document was the way to signify an intention to be bound. Indeed, the historical term “contract under seal” reflects that origin. Today, physical seals are no longer required – the Law of Property (Miscellaneous Provisions) Act 1989 reformed deed execution, so sealing in the old sense was abolished in favor of a signed instrument. However, deeds still require greater formality than a simple contract.
Formalities for a valid deed: Under modern law, for an instrument to qualify as a deed it must satisfy a few requirements. (1) It must be in writing. (2) It must be clear on its face that it is intended to be a deed – usually by the document stating words like “This Deed” or “executed as a deed” or “delivered as a deed”. This is sometimes called the “face value requirement” – the document should express that it is a deed. (3) It must be executed (signed) validly as a deed by the person or persons making it. For an individual, this means signing the document in the presence of a witness who also signs (attests) the deed. (The witness should be an independent adult who is not a party to the deed.) If a document isn’t signed and witnessed in this way, it will generally not take effect as a deed when made by an individual. For corporations, the law provides alternative methods: a company can execute a deed by the signature of two authorised signatories (typically two directors, or a director and the company secretary) or by a single director’s signature witnessed by another person. In the past, companies often used a common seal impressed on the document, but nowadays using two signatories or one with a witness is more common, and the Companies Act 2006 allows either method in lieu of a seal. (4) Finally, the deed must be “delivered”. In the context of deeds, delivery does not necessarily mean physical handing over of a document; it means the person executing it must by words or conduct demonstrate an intention that the document be effective as a deed. In practice, most deeds include a statement to the effect that they are executed and delivered on the date stated, which covers this requirement. Once these formalities are satisfied, the instrument takes effect as a deed.
Because of the above formalities, deeds are used when the law requires them or when parties desire the unique benefits of a deed. One key benefit is that a deed does not require consideration. This is explicitly why, for example, gratuitous promises are often put in deed form – such as a deed of gift, or a deed of guarantee (where one party assures another’s debt performance without direct compensation). The deed’s formality is taken as a substitute for the bargain element; essentially, the law says the solemn act of executing a deed signals serious intent, so enforcement is justified even without an exchange of value. By contrast, if the same promise were made informally (say, in a letter not witnessed or just orally), it would not be enforceable due to lack of consideration.
Another feature of deeds is the extended limitation period. As noted, you generally have 12 years to bring a claim for breach of an obligation in a deed, as opposed to 6 years for a normal contract. This is one reason why in commercial practice, important agreements like loan instruments or security documents are sometimes executed as deeds – it gives the party more time to sue if the obligation is not honoured. It also explains why virtually all real estate transactions in England are done by deed (transfers of land must be by deed by law, and it aligns with the fact that such obligations may need the longer period due to their long-term nature).
Examples of contracts contained in deeds: Many common transactions use deeds. Whenever you buy or sell land or property, the transfer document (conveyance or transfer deed) is a deed – the law (Section 52 of the Law of Property Act 1925) requires it for legal estates in land. Leases or mortgages over land are typically executed as deeds as well. A power of attorney (authorising someone to act on your behalf) must be made by deed. In business, deeds of indemnity or guarantee are often used to ensure enforceability even if no direct benefit flows to the guarantor. A deed of variation might be used to alter an earlier contract without fresh consideration. Even settlements of legal claims can be formalised by deed (often called a deed of settlement) to ensure finality. These examples underscore that whenever the utmost binding force is needed – either because the law mandates a deed or the parties want the extra security – the deed is the vehicle of choice.
It’s worth noting that execution of deeds has modernised in recent years. Traditionally, deeds were on paper and signed in wet ink with a witness physically present. Now, electronic signatures are common in commerce, and the Law Commission has confirmed that electronic signing is generally capable of validly executing documents (including deeds) provided the same core requirements are met – for instance, an electronic signature can count as a valid signing, and an electronic witness can attest, though at present the witness generally still needs to be physically present when watching the electronic act of signing. There are industry working groups considering whether remote witnessing (via video link) should be permissible to further adapt deed execution to the digital age. As of today, however, if a deed is being executed by an individual, the safest course is still to have a real-time witness. Companies have largely smooth processes for e-signing deeds by two officers. In practice, law firms often organise “virtual closings” where signatures on deeds are done electronically, with documents dated and formally delivered once all parties have signed.
In summary, a contract contained in a deed is the strongest type of contract in English law – it signals an unequivocal commitment, dispenses with the need for consideration, and binds the parties for a longer period. Deeds occupy a special place in contract law, representing the intersection of contract and formal instrument. As a solicitor, I often advise clients: if you want a promise to be unquestionably binding – even if the other side isn’t giving value in return – use a deed. The formality may seem onerous, but it carries real legal weight. Whether one is executing a deed or entering a simple contract, understanding the differences is crucial. English contract law provides this spectrum – from informal handshake deals to sealed deeds – allowing parties to choose the level of formality and enforcement appropriate to their situation. By appreciating the sources of our contract law rules, knowing what makes a contract in the eyes of the law, classifying the type of agreement at hand, and recognising when a deed is needed, practitioners and clients can navigate contractual relationships with confidence and clarity.