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Legal formalism is both a descriptive and normative theory of how judges should decide cases. [1] In its descriptive sense, formalists maintain that judges reach their decisions by applying uncontroversial principles to the facts; formalists believe that there is an underlying logic to the many legal principles that may be applied in different cases.
Under the formalist theory of contract, every contract must have six elements: offer, acceptance, consideration, meeting of the minds, capacity and legality. Many other contracts, but not all types of contracts, also must be in writing and be signed by the responsible party, in an element called form .
Contract theory in economics began with 1991 Nobel Laureate Ronald H. Coase's 1937 article "The Nature of the Firm". Coase notes that "the longer the duration of a contract regarding the supply of goods or services due to the difficulty of forecasting, then the less likely and less appropriate it is for the buyer to specify what the other party should do."
The move to a contextual, or purposive approach to construing contracts is a recent feature of English contract law. For instance in 1911, in Lovell & Christmas Ltd v Wall Lord Cozens-Hardy MR stated, [3] it is the duty of the court… to construe the document according to the ordinary grammatical meaning of the words used therein.
Macneil's theory posits that the traditional approach of doctrinal contract law in the common law countries, which he calls "classical" and "neoclassical", which concentrates on "the deal" at its time of making, and treats individual contracts as discrete entities, is an inadequate and inaccurate tool for the study of contracts. [7]
Relational contract theory was originally developed in the United States by the legal scholars Ian Roderick Macneil and Stewart Macaulay. According to Macneil, the theory offered a response to the so-called "The Death of Contract" school’s nihilistic argument that a contract was not a fit subject for study as a whole; each different type of contract (e.g., sales, employment, negotiable ...
As a matter of contract English law takes the approach that a gratuitous promise, as a matter of contract law, is not legally binding. While a gift that is delivered will transfer property irrevocably, and while someone may always bind themselves to a promise without anything in return to deliver a thing in future if they sign a deed that is ...
The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law. The law governing transactions involving the sale of goods has become highly standardized nationwide through widespread adoption of the Uniform Commercial Code .