Exploring t he Interfaces betwe en Contract Law and Prope rty Law
13 MJ 4 (2006) 405
body of legal p ersons, or, erga omnes.6 us, the ‘contract’ and ‘property’ branches of
private law may be depicted as polariz ed to the extent that they represent manifestations
of the opposite extremes of coherency and prag matism.7 e v alue of coherent principles
in the law of property can b e substantially undermined by a doctrine which permits
parties to achieve, by ag reement, any result they wish, untram melled by any constraints.
Conversely, the merits of enabling parties to order their a airs by agreement can be
frustrated by a system of property law whose de ning characteristic is an excessive
rigidity of principle.
e deviations between approaches of contract and property law ca n be seen most
clearly in those tr ansactions which rest upon the interface of these branches of law.
In this article, points of contact between rights in personam and rights in rem will be
analyzed w ith reference to two important and speci c transactions: (1) the sale and
purchase of property; and (2) the creation and constitution of rights in security over
property. e legal implications of cla ssifying a juridica l relationship as one of contr act
(i.e. rights in personam) or property (i.e. rights in rem) wil l be considered in the context
of these ‘border’ tra nsactions.
e aforementioned two transact ions will be ana lyzed through t he looking-glass
of the English and S cots legal systems, which a re cited as providing examples of t he
two extreme approaches of pragmati sm and coherency and the comparative di erences
between them. Engl ish law is perceived as a system which openly espouses the abilit y of
parties to order their a a i r s by c o nt r a c t w i t h o ut f ea r o f be i n g c ut d ow n b y s t r i c t ma n d a to r y
rules of law. Matters such as the coherence of lega l principles must be sacri ced upon
the altar of practical expediency.8 Meanwhile , Scots law, which is a mixed system both
Merrill a nd Smith, ‘ e Propert y/Contract Interf ace’, 786–787, and K.G.C Reid, ‘Obligations a nd
Property: E xploring the Border’, Acta Jur idica 225 (1997), 226.
6 Or ‘the rest of the world’, as per Ba ron Hume, Lectures (1786–1822), (Vol II, Stair Socie ty Edinburgh
volume 13, 1949, ed. GCH Paton), 3.
7 See G.L. Gretton, ‘Rec eption Without Integ ration? Floating Ch arges and Mix ed Systems’, 78 Tul an e L aw
Review 307 (2003), 308, and S . Bartels and M. Mi lo, ‘Contents of Real Right s: Personal or Proprietar y.
A Principled His tory’, and J.H.M Van Erp, ‘Posit ive Duties in the Grey A rea between Contra ct and
Property Law’ in S. Bartels and M. Milo (eds.), Contents of Real Rights, (Wolf Legal Publishers, 200 4),
1–2, 149 –150.
8 Good examples are prov ided in the eld of comme rcial law and pract ice. For example, when dis cussing
the practice of ‘cha rge-backs’ as a mea ns of creditors obtain ing securit y, Roy Goode expresses the
following vie w:
... the writer [prev iously] argued that t he giving of secu rity over receivables nec essarily involved t hree
parties ... a nd that it was conceptually impossible for the d ebtor to be given a security i nterest over his
own obligation to hi s creditor, eg for a bank to ta ke security over its ow n customer’s credit bala nce
... But the force of busines s practice can not be denied. ... e prov ision of cash collater al to banks
and brokers is commonplac e. Accordingly conceptual proble ms such as the blurring of the dis tinction
between proper ty and obligation ... must y ield to business p ractice ... [writer’s emphasis]
e Legal Problems of Credit and Security, (Sweet & Ma xwell, 3rd ed. 2003), 93–94. See a lso S. Van Erp,
‘Civil and Com mon Property Law: Caveat Compa rator – e Value of Legal Histor ical-Comparative
Analysis’, 3 European Review of Private Law 394 (2003), 404 . However, note Professor Clive ’s observation
(‘Access to Civil Law: Sc ottish-Dutch Lega l Event’, University of Leiden, 8 O ctober, 2004; unpubli shed)