Overview of Contract Law

1. Introduction: What Is a Contract?

A contract is a legally enforceable agreement between two or more parties. The law does not enforce every promise — only those that satisfy the criteria developed by the common law and refined by statute. English contract law identifies those criteria, regulates the content of the bargain, and specifies what happens when the agreement breaks down. Understanding them is the gateway to every SQE1 FLK1 Contract question.

Two features distinguish a contract from a mere promise or social arrangement. First, a contract is bargained for: each party gives something of value in return for what it receives (the doctrine of consideration, explored in Chapter 3). Secondly, the parties intend the agreement to be legally binding (intention to create legal relations, Chapter 4). Without both features, the law treats the arrangement as a social or domestic understanding enforced by conscience rather than by the courts.

English law recognises two routes to creating a binding obligation: a simple contract (supported by consideration) and a deed (enforceable without consideration, provided the formalities of s.1 of the Law of Property (Miscellaneous Provisions) Act 1989 are observed). This book is concerned with simple contracts, which account for almost all commercial and consumer transactions and form the basis of the SQE1 FLK1 syllabus.

2. The Essentials of a Valid Simple Contract

The SRA FLK1 specification groups the ingredients of contract formation under five headings, each examined in detail later in the book. They can be summarised as follows — commit them to memory at the outset.

1.2.1 Offer and Acceptance (Chapter 2)

A contract is formed when one party (the offeror) communicates a clear proposal on which it is willing to be bound, and the other party (the offeree) accepts that proposal on its terms. Acceptance must ordinarily mirror the offer (the 'mirror-image' rule) and be communicated to the offeror. This area is rich in scenario-based rules — invitation to treat, battle of the forms, postal rule, revocation, counter-offer, lapse, and the distinction between unilateral and bilateral contracts.

1.2.2 Consideration (Chapter 3)

Consideration is what each party gives, or promises to give, in return for what it receives. It must move from the promisee, it must be sufficient in the eye of the law (although it need not be adequate), and it must not be past. The doctrine of promissory estoppel is a limited equitable qualification on the rule that a promise to accept part-payment of a debt is not enforceable.

1.2.3 Intention to Create Legal Relations (Chapter 4)

The courts presume that commercial agreements are intended to be legally binding, and that domestic or social agreements are not; each presumption is rebuttable by evidence of the parties' intention. This doctrine prevents the courts from being drawn into the enforcement of family arrangements and honour clauses, and it protects parties who genuinely did not intend a legal bargain.

1.2.4 Certainty of Terms (Chapter 5)

A contract must be sufficiently certain and complete for a court to give effect to it. Agreements to agree, vague terms, and open price clauses can defeat enforceability — although the courts will strive to save a commercial bargain wherever the parties clearly intended to be bound (Wells v Devani [2019] UKSC 4). Certainty links closely to formation: an acceptance of an insufficiently certain offer produces no contract at all.

1.2.5 Capacity (Chapter 5)

Parties must have the legal capacity to bind themselves. The law imposes limits on minors, persons lacking mental capacity, and the intoxicated; it also regulates the capacity of companies and unincorporated bodies. A contract made by a party without capacity may be void, voidable at that party's option, or enforceable only to the extent of necessaries.

3. Sources of English Contract Law

English contract law is principally a common-law subject: its rules have been developed case by case by the senior courts over several centuries. Four sources interact — common law, equity, statute, and assimilated (retained) EU law.

1.3.1 Common Law

The foundational doctrines of offer and acceptance, consideration, misrepresentation, remoteness of damage and frustration were created by judges. Those doctrines remain the backbone of the subject and are applied to modern fact-patterns by analogy. Every key case you meet in this book is a common-law decision of the senior courts, with the Supreme Court (or, pre-2009, the House of Lords) at the apex.

1.3.2 Equity

Equity supplements the common law where the common law would produce injustice. Equitable doctrines relevant to contract include promissory estoppel (Chapter 3), specific performance and injunctions (Chapter 11), rescission for misrepresentation or undue influence (Chapter 8), and rectification for mistake (Chapter 8). Equitable remedies are always discretionary.

1.3.3 Statute

Parliament has intervened in contract law selectively, often to protect weaker parties. The principal statutes you must know are: the Misrepresentation Act 1967; the Unfair Contract Terms Act 1977 ('UCTA'); the Sale of Goods Act 1979 ('SGA'); the Supply of Goods and Services Act 1982 ('SGSA'); the Law Reform (Frustrated Contracts) Act 1943 ('LR(FC)A'); the Contracts (Rights of Third Parties) Act 1999; and the Consumer Rights Act 2015 ('CRA'). The CRA consolidates the protection of consumers into a single statute and, for business-to-consumer (B2C) contracts, displaces the SGA, SGSA and much of UCTA.

1.3.4 Assimilated (Retained) EU Law

Before the end of the Brexit transition period on 31 December 2020, EU-derived consumer directives shaped parts of English contract law (notably what is now the CRA 2015). Since that date, the European Union (Withdrawal) Act 2018 (as amended by the Retained EU Law (Revocation and Reform) Act 2023) has converted pre-exit EU-derived legislation into 'assimilated law'. For SQE1 purposes, candidates need not know EU law directly; they must simply recognise that the CRA 2015 and certain other statutory protections originated in EU directives and continue in force as domestic law.

4. Classifications of Contracts

Four classifications recur throughout the book and should be committed to memory at the outset: bilateral v unilateral, executed v executory, void / voidable / unenforceable, and consumer v B2B.

5. The Life-Cycle of a Contract

Every Contract Law question the SQE asks is, in substance, a question about one of five stages. Being able to identify the stage is half the battle — once you know where the facts sit in the life-cycle, the applicable rules fall out naturally.

A well-drafted SQE1 problem often combines two or three stages — for instance, a scenario in which a party entered a contract induced by misrepresentation (vitiation), then purported to terminate after learning the truth (discharge), and now seeks damages for wasted expenditure (remedies). Once you know where the facts sit in the life-cycle, the applicable rules fall out naturally.

6. The SQE1 FLK1 Assessment

This section sets out the format, question style and technique for the SQE1 FLK1 assessment, together with practical guidance on how to use this book.

1.6.1 Format

FLK1 is a computer-based examination of 180 single-best-answer multiple-choice questions, sat in two sittings of 2 hours 33 minutes each (90 questions per sitting). The assessment covers five subjects: Business Law and Practice; Dispute Resolution; Contract Law; Tort; and the Legal System of England and Wales (including Constitutional and Administrative Law, Legal Services, and the Ethics component). Contract Law questions may be combined with any other subject — for example, a single scenario may raise a contract-formation point and a tort-negligence point.

1.6.2 Style of Question

Every question takes the form: (a) a short scenario, (b) a role indicator (often 'You act for…' or 'A client seeks your advice…'), and (c) a single question asking which ONE of five options is correct, is the best advice, or BEST describes the legal position. The five options (A–E) are always close substitutes; the examiner tests your ability to discriminate between legally correct and partly-correct answers.

1.6.3 Technique

1. Classify against the life-cycle (§1.5) before reading the options — is this a formation, parties/contents, vitiation, discharge or remedies question?

2. Identify the parties' status (consumer or business) and the relevant statutory regime (CRA 2015 for consumer; UCTA 1977 / SGA 1979 for B2B).

3. Eliminate options that are legally inaccurate on any part — a partly-correct answer is wrong. If two options survive, ask which one most directly answers the question posed.

How to use this book — Each chapter opens with an SQE Assessment Advice box mapping the topic to the FLK1 syllabus, develops the law in numbered sections with Key Term and SQE Exam Tip boxes, and closes with a Key Notes table, five Revision Notes (model-answer Q&A) and five Self-Assessment MCQs with a detailed Answer Key. Read once for understanding; work the Revision Notes from memory; attempt the MCQs under timed conditions (90 seconds per question, simulating SQE pacing of 1 minute 42 seconds); and revisit the Key Notes table in the week before the assessment.

7. Key Notes (Chapter Summary)

The following summary table consolidates every concept examined in this chapter. Treat it as a revision checklist — you should be able to define each row from memory and give one example or reference.

8. Revision Notes

Work through each focused revision prompt below. Attempt to answer from memory first — the model answer underneath explains the point and why it matters for the SQE1.

Q1. Define a contract and identify the five essential ingredients of a valid simple contract.

A contract is a legally enforceable agreement between two or more parties, under which each party assumes obligations the courts will enforce. The five essential ingredients are: (i) Offer and acceptance — a clear proposal on which the offeror is willing to be bound, accepted on the same terms and communicated to the offeror; (ii) Consideration — each party must give, or promise, something of value; it must move from the promisee, be sufficient (though need not be adequate) and not past; (iii) Intention to create legal relations — presumed in commercial agreements, presumed not in domestic/social ones, each rebuttable; (iv) Certainty — the agreement must be sufficiently certain and complete (Wells v Devani [2019] UKSC 4); (v) Capacity — the parties must have legal power to bind themselves (minors, mental incapacity, intoxication, companies, unincorporated bodies). Simple contracts need no particular formality; deeds (which need no consideration) must satisfy s.1 LP(MP)A 1989.

Q2. Distinguish a simple contract from a deed — formalities, consequences and limitation periods.

A simple contract is formed by offer, acceptance, consideration and intention, whether oral or in writing. A deed is a formal written instrument complying with s.1 LP(MP)A 1989: it must be in writing, make clear on its face that it is intended to be a deed, be signed in the presence of a witness who attests the signature, and be delivered. A deed is enforceable without consideration — the formal execution substitutes for the bargain. Practical consequences: (1) a gratuitous promise is enforceable only if made by deed (hence voluntary guarantees, deeds of covenant, gifts of land); (2) limitation differs — six years for a simple contract (s.5 LA 1980), twelve years for a deed/'specialty' (s.8 LA 1980); (3) certain transactions must be by deed — e.g. a conveyance of a legal estate in land (s.52 LPA 1925).

Q3. Explain (i) bilateral v unilateral, (ii) executed v executory, (iii) void, voidable and unenforceable.

(i) Bilateral v unilateral. A bilateral contract is an exchange of mutual promises (almost all commercial contracts). A unilateral contract is a promise for an act, accepted by performance rather than communicated promise — Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 (£100 to anyone who caught influenza after using the smoke ball as directed; accepted by Mrs Carlill's performance); communication of acceptance is not required. (ii) Executed v executory. Consideration is executed where already performed at formation (£5 paid at the counter for a promise of future delivery); executory where it consists of exchanged promises still to be performed (a January contract for March delivery and payment). The distinction matters for past consideration (Chapter 3). (iii) Void, voidable, unenforceable. A void contract is treated as never having existed — common mistake (Bell v Lever Brothers) or illegality. A voidable contract is valid until the innocent party rescinds — misrepresentation, duress, undue influence, minority. An unenforceable contract is valid but cannot be enforced by action unless a formality is met — the classic example is a guarantee, unenforceable unless evidenced in writing under s.4 of the Statute of Frauds 1677.

Q4. Summarise the four principal sources of English contract law with an example of each.

(i) Common law — judge-made foundational doctrines: offer and acceptance (Adams v Lindsell (1818) — postal rule), consideration (Currie v Misa (1875) — classic definition), remoteness (Hadley v Baxendale (1854)), frustration (Taylor v Caldwell (1863)). (ii) Equity — remedial doctrines supplementing the common law where its outcome would be unjust: promissory estoppel (Central London Property Trust v High Trees House [1947] KB 130), specific performance, injunctions, rescission, rectification; all discretionary and subject to equitable defences (laches, 'clean hands'). (iii) Statute — selective intervention to protect weaker parties or codify: Misrepresentation Act 1967 (s.2(1) damages), UCTA 1977 (reasonableness control on B2B exemption clauses), SGA 1979 (implied terms in B2B sales), LR(FC)A 1943 (recovery on frustration), Contracts (Rights of Third Parties) Act 1999 (privity), CRA 2015 (consumer protection). (iv) Assimilated EU law — under EU(W)A 2018 (as amended by the REUL Act 2023), pre-exit EU-derived legislation remains in force; the CRA 2015 is the principal contract-law example. Candidates need only recognise this background and are not tested on EU law directly.

Q5. Describe the structure, timing and question style of FLK1, and how to approach a contract question.

Structure and timing. FLK1 is a computer-based exam of 180 single-best-answer MCQs in two sittings of 2 hours 33 minutes (90 per sitting), covering Business Law and Practice; Dispute Resolution; Contract Law; Tort; and the Legal System of England and Wales. FLK1 and FLK2 together test functioning legal knowledge; candidates must pass both, with SQE2, to qualify. Question style. Each question gives (a) a short scenario, (b) a role indicator, and (c) a single-best-answer lead-line, followed by five close-substitute options (A–E); the examiner rewards the option a competent newly-qualified solicitor would give as first-line advice. Approach (four steps). ① Classify by the life-cycle (§1.5); ② identify the parties' status (consumer → CRA 2015; business → UCTA 1977 / SGA 1979); ③ eliminate any option inaccurate on any part (partly correct is wrong); ④ if two remain, pick the one that answers the question posed. Pacing: about 1 minute 42 seconds per question.

9. MCQ Practice — Five SQE-Style Questions

Each of the following five questions mirrors the style, length and difficulty of the SQE1 FLK1 single best answer questions. Attempt each one closed-book, write down your answer, then turn to the answer key. The answer key explains why each option is correct or incorrect — read every explanation in full.

A. The agreement is enforceable as a simple contract because it is in writing and signed.

B. The agreement is enforceable as a deed because the friend intended to make a binding promise.

C. The agreement is unenforceable because it is not supported by consideration from the client and has not been executed as a deed under s.1 of the Law of Property (Miscellaneous Provisions) Act 1989.

D. The agreement is enforceable because the court will imply consideration where a written agreement is clearly intended to create legal relations.

E. The agreement is unenforceable because English law does not recognise gratuitous promises of any kind.

A. The Consumer Rights Act 2015 applies because the buyer is a natural person.

B. The Sale of Goods Act 1979 applies because the buyer purchased the chairs for purposes wholly or mainly connected with a trade, craft, business or profession.

C. The Supply of Goods and Services Act 1982 applies because the contract is for services provided from a home address.

D. The Unfair Contract Terms Act 1977 applies because the buyer is a business.

E. No statutory regime applies; the terms of the contract are determined exclusively by the common law.

A. Formation of the contract.

B. Contents of the contract.

C. Vitiation of the contract.

D. Discharge of the contract by frustration.

E. Remoteness of damage.

A. The guarantee is void because oral guarantees are of no legal effect.

B. The guarantee is voidable at the client's option because of the absence of writing.

C. The guarantee is valid and unenforceable by action because s.4 of the Statute of Frauds 1677 requires a guarantee to be evidenced in writing and signed by the guarantor or his authorised agent.

D. The guarantee is enforceable as a deed.

E. The guarantee is enforceable as a simple oral contract in all circumstances.

A. The Sale of Goods Act 1979.

B. The Supply of Goods and Services Act 1982.

C. The Unfair Contract Terms Act 1977.

D. The Consumer Rights Act 2015.

E. The Misrepresentation Act 1967.