Historical developments in other jurisdictions

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The Code of Hammurabi, promulgated in about 1792 BC, contained a total of 282 articles, out of which 150 (representing more than 53%) provided for contractual relationships, including sales, leases, adoption and marriage. The Code of Hammurabi adopted the principle of fault liability, with a wide scope of application, through the implementation of strict formalism and a harsh enforcement mechanism.

Supplementary Information

Code of Hammurabi

The Code of Hammurabi is one of the earliest written laws in human history. The Code was carved in black basalt columns, 2.25 meters in height, illustrating the exquisite scene of Apollo granting royalty to Hammurabi in the upper part and the Code carved in cuneiform writing in the lower part. At the beginning of the Code, Hammurabi cited his own merits, such as the construction of cities, palaces, canals, Temple land, pasture, offerings, and so on. Hammurabi also claimed in the preamble that enactment of the Code was to bring about the rule of righteousness in the land, to destroy the wicked and the evil-doers. The main body of code comes after the preamble.

Contract law was well developed in Roman Law. In Ludwig Feuerbach and the End of German Classical Philosophy, written in 1886, Frederick Engels commented that, Roman Law, the first world law of a commodity-producing society, with its unsurpassably fine elaboration of all the essential legal relations of simple commodity owners (of buyers and sellers, debtors and creditors, contracts, obligations, etc.), can be taken as the foundation.

Roman law for the first time distinguished breaches of contract from tortious acts. Prior to that, as in ancient Greece, non-performance was simply regarded as infringement. Various provisions of the Roman law have become the origin of modern contract law in Continental Europe, based on which the French Civil Code (Code Civil des Franςais 1804) and the German Civil Code (Bürgerliches Gesetzbuch) were drafted. The French Civil Code established for the first time the principle of freedom of contract, which has become the core principle of modern contract law.

In England, the principles of modern contract law were well developed in common law courts in the early 19th century. The first important treatise expounding the English law of contract was arguably John Powell’s Essay upon the Law of Contracts and Agreements. The concept of freedom of contract, originating in the work of Adam Smith, was well summed up in the words of a judge in 1875 in the case of Printing and Numerical Registering Co. v. Sampson (1875) LR 19 Eq 462:

Legal recognition of the parties’ freewill marked a significant milestone in the development of modern contract law. In the Middle Ages, the validity of a contract was premised on the notion of ‘fair price,’ meaning that the parties were required to enter into a contract at a ‘reasonable price’ as consideration, failing which the contract would be void. In the 19th century, the doctrine of freedom of contract was firmly established, and the courts no longer looked into the adequacy of the consideration when adjudicating the validity of a contract.

Contract law in the 19th century was developed against the backdrop of the rise of the free economy, while the contemporary trend is the emergence of the welfare state. Freedom of contract is now regulated for various reasons, such as the pursuit of social welfare, consumer safety and environmental protection. The interplay of these social factors and contractual freedom is unavoidably the subject of political and jurisprudential controversy.

Another contemporary trend is the internationalisation of contract law. As early as 1930, the International Institute for Unification of Private Law (UNIDROIT) embarked on the work of unifying the laws regarding the international sale of goods. In 1964, at the Hague Conference, the Uniform Law on International Sale of Goods and the Uniform Law on the Formation of Contract for International Sale of Goods were adopted. However, since these two conventions failed to achieve the objective of establishing a unified code on the international sale of goods, the United Nations International Trade Law Committee (UNCITRAL), on the basis of these two conventions, formulated in 1978 the United Nations Convention on Contract for the International Sale of Goods (CISG), adopted in 1980 and effective from 1 January 1988. In May 1994, the Governing Council of the International Institute for the Unification of Private Law (UNIDROIT) gave its imprimatur to the publication of the Principles of International Commercial Contracts (hereinafter the UNIDROIT Principles). Meanwhile, the European Union has been actively formulating the uniform principles of European contract law. The Commission on European Contract Law made up of legal experts and academics from European Union member states has developed the Principles of European Contract Law (PECL).