IV. THE CONSIDERATION IN CONTRACTS
Having explained who can make contracts, we are now ready to take another step. Besides having parties, there must be a CONSIDERATION for every contract. This is rather a long word, but no shorter can be found to put in its place. What do we mean by this term? We mean that there must be some actual gain or loss to one or both parties to a contract, otherwise it is not valid. If, for example, A should say to B, "I will give you $100 to-morrow," B, perhaps, might go away very happy, thinking that with this money he could buy a bicycle or some other fine thing; indeed, it was just the sum for which he was longing; so on the morrow he goes to A for his money. He promptly appears, but A says to him: "I have changed my mind, and will not give you the $100." B asks: "Did you not promise to give me this money?"
"Certainly." "Well, why will you not fulfil your promise?" A replies: "I was a fool when I made that promise; you are not going to give me anything for it, so I am unwilling to give the money to you." Suppose B in his sorrow should go to a lawyer, thinking, perhaps, that he could compel A by some legal proceeding to pay over the money. What would the lawyer tell him? Why, he would say: "Did you promise to give A anything for the $100?" "No, sir." "Then the law will not help you out. You cannot get the money from him by any legal method. Perhaps you can get $100 worth of fun in licking him for not giving you the money, but you cannot get the cash. But, mind, perhaps you had better not try to get your fun in that way, for this is contrary to law, and he might get much more than $100 out of you in the way of damages for licking him."
In every case, therefore, there must be _something for something_. Now this something may be a thousand things. It may be money or merchandise or work. In short, there is no end of the things that may serve as a consideration of a contract. An example may be given to explain what is meant by this. A man had been speculating in stocks, and one of the rules of the stock board is that a margin or sum of money that is to be paid for stock must be paid in every case. It may be that an additional margin or sum must be paid under some circumstances. The speculator in this particular case was unwilling to pay this margin, and he said to the broker: "If you will do as I wish, and not put up this margin, I will save you from any loss that may result from such conduct." It was contrary to the rules of that stock exchange for the broker not to put up the margin, and the consequence was that he was put off the floor; in other words, the board would not permit him to act as a member. Of course, as he could not buy and sell any more stock, he lost money; and he went to his customer, the speculator, and told him that he was losing money in consequence of carrying out his order about the margin. The speculator said he was sorry, but he could not help it. The broker then insisted that the speculator must make good his daily loss in consequence of doing as he had promised. This the speculator would not do. The broker then sued him for the amount of his loss. The speculator defended on the ground that there was no consideration for the agreement he had made with the broker about the margin. The court said that the loss which the broker had suffered in consequence of carrying out his contract with the speculator was a good consideration for the contract and must be made good.
_When a contract is sealed the law implies that there is consideration_, and there need not be an actual one consisting of money, labour, or any other thing. This seems like an exception to the rule requiring a consideration in all cases, but the reason is this: When a sealed contract is made, the law supposes or assumes that each party made it, clearly knowing its nature--made it carefully, slowly, and, consequently, that either a consideration had been or would be given. If, therefore, one of the parties should refuse to fulfil it the other could sue him in a court of law. The person who sought to have it carried out would not be obliged to show that he had given any consideration on his part for the undertaking, because the seal appended to his name would imply that a consideration had been given.
A deed for a piece of land is a good illustration of a sealed instrument. The law assumes whenever such a deed is given that the seller received a consideration for his land. The money paid was a consideration received by the seller, and the land was the consideration received by the buyer. Each gives a consideration of some kind for the consideration received from the other; and this is true in all cases.
V. THE ESSENTIALS OF A CONTRACT
In our last paper we told our readers that there must be a _consideration in every contract_. Sometimes this is _illegal_, and when it is the effect is the same as would be the giving of _no consideration_.
Suppose a robber having stolen money from a bank should afterward offer to return a certain portion if he is assured that he will not be arrested and compelled to change the style of his clothing and his place of residence for a season. He cannot endure the thought of missing a game of football; and as for striped clothes, though very comfortable, perhaps, he is sure they would not be becoming. Suppose this agreement to return a part should be put in writing, and after fulfilling it he should be sued by the bank for the remainder, and also prosecuted by the State for committing the theft. Very naturally he would present the writing in court to show that he had been discharged from the crime and also from the payment of any more money.
But this writing would not clear him either from prosecution for the criminal offence or from liability to return the rest of the money.
The bank would say that although he had returned a part, this was not a proper consideration for its agreement not to sue him; it had no right to make such an agreement, and consequently it could sue the robber for the remainder of the money just as though no agreement had ever been made.
Another illustration may be given. Suppose a person having made a bet and lost is unable to pay the money and gives his note for the amount.
When the note becomes due the holder or owner sues him for the money.
He defends, as he is unwilling to pay, by saying there was no legal consideration for the note. The money he promised to pay was only a wager, which the law regards as illegal. And this would be a good defence.
If the consideration is partly legal and partly illegal and can be divided then there can be a _recovery of the legal part_. Suppose a man owed another $1000 for borrowed money and also a wager for the same amount, and had given his note for $2000. When it became due if the owner sued him he could recover only the $1000 of borrowed money; this much and no more, for the reason that the consideration could be divided, the legal part from the illegal part. If no separation was possible then the note would be void and the owner could get nothing.
A person cannot recover for a _voluntary service_ that he has rendered to another. A man would be very mean indeed who refused to pay another for any service rendered to him that was truly valuable; yet if he would not do so the man rendering the service could get nothing through the law. Suppose that a person when walking along a road should see some cattle astray in a corn-field having a good time with a farmer's corn. He knows they are in the field for business and in a short time, unless driven out, will get the best of nature and down her efforts in corn-raising. In the kindness of his heart he jumps over the fence and succeeds in driving them away. Suppose there happens to be among the number an unruly animal which is unwilling to leave such a tempting field of plunder and turns on him and gores him, and he is taken to a hospital. The farmer finds out who drove out the animals, and of his injury, but declines to give him any reward whatever. Can the man recover anything? The law says not, because the service is purely voluntary.
The question has often been asked whether a person who has made a contract to work for another and has broken it can recover for the worth of his service during the period he was employed. Some courts have said that a person thus breaking his contract cannot afterward recover anything, because he does not come into court with clean hands. Other courts have said that though he can recover nothing on the contract he has broken, he can nevertheless recover on a contract which the law implies in such a case for the worth of his service during the period of his employment. On the other hand, the employer can set off against his claim any injury that he may have sustained.
Suppose he could show that the service was of no worth to him; that he was injured rather than benefited by what he did; then the employe could get nothing. The courts have been inclined of late years to uphold an employe in recovering whatever his service was worth--not, however, as done by virtue of an express or actual contract with the employer. He cannot sue on that; in other words, he cannot take advantage of his own wrong to recover anything from his employer, but he may recover on the contract which the law implies, as we have explained, as much as his service was worth to his employer, and no more.
Another element in a contract is the meeting of minds of both parties.
_Both must understand the matter in the same sense._ For example, a person offered to sell another "good barley" for a stated price, and the other offered to buy "fine barley" at the price mentioned. There was no contract between these persons, because it was shown that "good barley" and "fine barley" were different things in the trade. This, therefore, is one of the essential elements of a contract--the meeting of the minds of the contracting parties. Whether they have assented or not is a question of fact, to be found out like any other question of fact.
Sometimes offers are made on time, and when they are several interesting questions may arise. Suppose A and B are negotiating for the sale and purchase of a piece of land. A says to B: "I will give you a week to think the matter over." Soon after parting A meets C, to whom he mentions his offer to B. C says: "I will give you a great deal more for the land and pay you now." "Very well," says A; "the land is yours." And he at once writes a letter to B saying that he has withdrawn his offer, as another person has offered him more for the land and that he has sold it to him. Now B might be very much surprised by this letter. Very likely he would think A was a hard man and perhaps a dishonest one. Perhaps he would go to a lawyer and ask him if he could compel A to sell the land to him if he accepted his offer within the time mentioned and paid to him the money. The lawyer would tell him--if he understood his business--that A had a perfect right to withdraw his offer, even though it was made on time. This would probably be brand-new knowledge to B, but he would know what to do on the next occasion.
Is this true in all cases? It certainly is of all offers made in that manner. How, then, can a person who makes an offer to another on time be compelled to regard it? The way is simple enough. The person to whom the offer is made should give something--a consideration--to A, who makes the offer, for the delay. Then he would be bound by it. But the courts would say to B, if nothing were given: "Why should A's offer bind him so long as he is to get no compensation or consideration for it?" And we shall see again and again in these papers _this element of consideration is ever present, and must be to make transactions legal_. So with respect to an offer on time--if the person to whom it is made is really desirous of having it continue, in order to find out whether he can raise the money to pay, or for some reason, he can make the offer binding by giving to the offerer a consideration for the specified time, whatever that may be.
VI. CONTRACTS BY CORRESPONDENCE
_A great many contracts are made by correspondence._ A person writes a letter to another offering to sell him merchandise at a stated price.
The other replies saying that he will accept the offer. Is a contract made at the time of writing his letter and putting it into the post-office, or not until it is received by the person who made the offer? The law in this country is that a contract is made between two persons in that way as soon as the answer is written and put into the post-office beyond the reach of the acceptor.
The post-office usually is the agent of the person who uses it, but when a person sends an offer to another by mail the post-office is regarded a little differently. It is the agent of the person who sends the offer and also his agent in bringing back the reply. Consequently, when this is put into the hands of the agent the law regards the offerer as bound by his offer. In like manner, if a creditor should send a letter to his debtor asking him to send a cheque for his debt and he should comply, the post-office would be the agent of the creditor in carrying that cheque, because he requested his debtor to use this means in sending his cheque to him. But when a request is not made and a debtor sends a cheque on his own account, the post-office is his agent for carrying it to his creditor.
A person making an offer by letter can of course withdraw it through the telephone or telegraph if he likes at any time before the letter has been received by the other party. Suppose the price of things is rising and A, finding that his goods are also advancing, should, after making an offer of some of them by letter, send a telegram stating what he had written and withdrawing his offer. This would be a proper thing for him to do. If, on the other hand, A's offer had been received by B before his withdrawal and accepted, then A would be bound by it.
Can B, after mailing his letter of acceptance and before it has been received by A, withdraw his acceptance? No, he cannot--for the reason above given, that the post-office is the agent of A, in carrying both his offer and B's reply. If this were not so, if the post-office were the agent of B in sending his reply, then of course it could be revoked or withdrawn at any time before it reached A.
Suppose A should send an offer and afterward a withdrawal and the withdrawal should be received first. Notwithstanding this, however, if the person to whom the offer was sent should accept the offer, could he not bind A? One can readily see that all the proof would be in the possession of B, the acceptor. If he were a man without regard for his honour and insisted that he received the offer first, A might be unable to offer any proof to the contrary and fail to win his case should B sue him. But the principle of law is plain enough; the only difficulty is in its application. Doubtless cases of this kind constantly happen in which the acceptor has taken advantage of the other to assent to an offer actually received after its withdrawal.
Suppose B should in fact receive A's offer first in consequence of the neglect of the telegraph company to deliver A's message of withdrawal promptly, which if delivered as it should have been would have reached B before the letter containing the offer, what then? A doubtless would be bound by his offer, but perhaps he could look to the telegraph company for any loss growing out of the affair. If he could show that he had been injured by fulfilling the contract the telegraph company might be obliged to pay this.
Let us carry the inquiry a little further. Suppose the messenger on receiving the telegram took it to B's office and it was closed and he made diligent inquiry concerning B's whereabouts and was unable to find him. Suppose he had gone off to a horse race or to a football game, would it be the duty of the messenger boy to hunt him up at one of these places? By no means. If B was not at his place of business when he ought to have been, the company would not be bound to deliver the message to him elsewhere, except at his house, unless he had left a special direction with the company concerning its delivery.
Generally a telegraph company states very clearly its mode of delivering messages and the time when it will do so, the place, etc., to which it will take them, and it is not obliged to hunt all over creation to find the person to whom a message is addressed. That would be a very unreasonable rule to apply. Therefore, if the company did its duty A could not recover anything from it. Would A, then, it may be asked, be obliged to fulfil his contract with B? He has sent his withdrawal, which if delivered in time would have been received by B before the letter containing the offer. B, however, is away from his place of business, and perhaps is where he ought not to be--perhaps he is playing poker or doing something worse--ought A under such circumstances to be held by his offer? This is a closer question and one that we will leave our readers to think over. Surely A would have a strong reason for claiming that he ought not to be held under such conditions.
A person who makes an offer cannot turn it into an acceptance. An old uncle offered by letter to buy his nephew's horse for $100, adding: "If I hear no more about the matter I consider the horse as mine." The uncle, not hearing from the nephew, proceeded to take the horse. At this stage of the proceedings, however, the nephew was not inclined to suffer his good old uncle to make the contract entirely himself, and refused to give up the horse. The court said that one person could not do all the contracting himself, and this is what he virtually undertook to do. If a person could, by correspondence or otherwise, make a contract in this manner, one can readily see the dangers that might follow. Some positive act must be put forth by the other party showing or indicating his assent before it will be regarded as given.
A person, in truth, is not obliged to pay any attention to an offer of this kind.
Rewards are often made. They are found almost every day among the newspaper advertisements. These are binding under various conditions.
An interesting question has been raised in the case of a runaway horse whose owner has made an offer to any finder who returns him. Suppose a person at the time of catching the animal did not know of the reward but does know of it when returning the beast to his owner; can he claim the reward? This question has somewhat puzzled the judges, but the more recent opinion is that the catcher can claim the reward like a person who knew at the time of stopping the pleasure of the runaway.
Of course, there is no question concerning these rewards when they are known at the time of acting on them.
In one of the cases tried not long since, an old farmer offered a reward of $15 to any one who would find the person who had stolen his harness and also $100 to the man who would prosecute the thief. The harness, in truth, was worth not even this small sum and the thief still less. Yet he was caught and prosecuted, and then the prosecutor and finder claimed the rewards. The farmer's excitement had cooled off by this time and he was not so loud and liberal as he was at the time of finding out his loss. He refused to pay, saying that he did not really mean to offer these sums as rewards, and the court decided in his favour, declaring that his offer of reward could not be regarded strictly as one, but rather "as an explosion of wrath." In another case a man's house was burning up and his wife was inside, and he offered any one $5000 who would go in and bring her out--"dead or alive." A brave fellow went in and rescued her. Then he claimed the reward. Was the man who made the offer obliged to pay, and could he not have escaped by insisting that this was simply "an explosion of affection" and not strictly an offer or promise of reward? He tried to hold on to his money, but the court held that this was an offer he must pay. Possibly after the recovery of his wife his valuation of her had changed somewhat from what it was while his house was burning up.
One or two more cases may be given. Some persons who prepared "carbolic-smoke balls" offered to pay 100 to any person who contracted influenza after having used one of the balls in the manner clearly set forth and for a stated period. This offer was in the form of a newspaper advertisement. A person bought one of them and followed carefully all the directions about its use. The influenza, though, did not disappear as advertised, so he sued to recover the offer; and, having proved clearly that he had complied faithfully with the directions and had not been cured, the court said that the owners must pay up and compelled them to give him the 100 offered.
Another case may be briefly mentioned. A offered to sell B his farm for $1000. B offered $950, which offer was declined. Then B offered to pay $1000. By that time A had changed his mind and declined to accept B's offer. Then B sued to get the farm, offering to pay the money; but the court held that B had declined A's offer and consequently that, as A had not made any other offer, there was no contract.
Finally, it may be added that the phrase "by return mail" does not always mean by the next mail, although the person to whom the offer is made cannot delay his answer long. On the other hand, the person to whom such a letter may be addressed can bind the other by an acceptance very quickly after the receipt of the offer, although not literally by the first mail going out.
VII. WHAT CONTRACTS MUST BE IN WRITING
_Some contracts must be in writing to be valid_; for instance, contracts relating to the sale and leasing of lands. This writing must be signed by the person who is charged with having made it. Suppose that A has sold his farm to B for an agreed sum and refuses to give him a deed on his payment of the amount or offer to pay, and B wishes to compel A to carry out or execute his agreement. B must show a writing signed by A to that effect, otherwise the court will not pay any attention to the matter. On the other hand, if A claims that such an agreement has been made with B, who is unwilling to pay the money and receive the deed, he must show in court a writing signed by B that he has agreed to purchase the farm at a stated price and to receive a deed of the same. If such a writing is not forthcoming when required, he cannot recover anything from him. This is the meaning of the phrase, therefore, that a writing must be signed by the party charged with having made the agreement.
_The writing need not be very formal._ It need not specify the amount that is to be paid; in other words, it need not specify the consideration. Some courts say, however, that it must contain this fact or statement. It may be in pencil. I presume it would be sufficient if written on a blackboard with chalk. But it must be a writing of some kind signed by the party to be charged; that is the essential thing. The courts have also said that this writing need not be on a single piece of paper. If the two parties have made an agreement by a series of letters, an offer on the one side and an acceptance on the other, and the agreement can be fully shown from the series of letters, this is sufficient writing.
If a man buys a farm and pays a part of the price and goes away saying that he will pay the remainder within a week, expecting then to do so and receive a deed, the seller, if he chooses, can escape giving that deed and parting with his farm. The payment of a part of the money does not bind the bargain, nor will the courts, though knowing this, compel the seller to give such a deed. The reader may ask, if this is the law, cannot the farmer practise a fraud on the buyer by receiving his money and keeping it and the farm too? He cannot do both things.
If he refuses to give the deed he must, on the other hand, return the money; if he refuses to do this the buyer can compel him by a proper legal proceeding to refund the amount. In this way the buyer gets his money back again, but not the farm that he bought.
It is said that this statute is as often used as a shield to protect men in doing wrong as in preventing frauds. In numberless cases persons, just like the farmer imagined, have used this statute as a means to protect them in not carrying out their agreements. This happens every day.
This statute also relates to other matters. One clause says that an executor or administrator cannot be required to pay anything at all out of his own pocket on any promise that he has made unless it be in writing. Every one knows about the duties of an executor or administrator. An executor is one who settles the estate of a person who has died leaving a will directing what shall be done with his wealth. An administrator is a person who settles the estate of a deceased person leaving no will. He is appointed by the law, which fully states his duties. Let us suppose that an executor is employed to settle an estate, and that he employs a carpenter to make some repairs on a house belonging to the estate. The contract is fairly enough made between the carpenter and the executor. Let us also suppose that he has no lien on the house for the work that he has done, or that he has lost his lien by reason of not having filed it in time, as the law requires. Afterward he goes to the executor and demands payment for the repairs that he has made. Let us suppose that the estate is insolvent and cannot pay all of its debts in full. At the time of making this contract neither party supposed this would happen. But, unhappily, debts have come to light so large and numerous that there is not property enough to pay all the creditors everything that is due them. The executor says to the carpenter: "There is not property enough to pay all of the creditors and you, unfortunately, must fare like all of the rest, and you cannot be paid a larger percentage on your share than the others." To the carpenter this would be unwelcome news, and he would doubtless say to the executor: "I made this contract with you expecting that you would pay me, and if the property of the estate is not sufficient you ought to pay me this. I am a poor man and cannot afford to lose any of my hard-earned money."
The executor might say to him: "I am as poor as you and I cannot afford to pay you out of my own pocket, and in law you cannot compel me to do this." And, in truth, the carpenter could not do this unless the executor had made a contract in writing, agreeing in any event to pay whether there was money enough belonging to the estate or not.
Another clause says that _a person cannot be required to pay the debt of another unless the agreement is in writing_. If A went into a store to buy goods and B should be a little afraid to trust him, and C, a friend of A's, should happen to be present and say to the merchant, "Let A have these goods and if he does not pay you I will," this would be the promise to pay the debt of another; and if A should not pay it C could shield himself behind this statute and escape without paying anything.
There is another clause relating to the sale of ordinary merchandise.
The law says that _contracts for ordinary merchandise must be in writing if the amount is over_ $50. In some States the amount is $35.
Long ago it was decided that this statute did not relate to contracts for work, and they therefore must be carried out or fulfilled in the same manner as though no statute existed, _for work is not merchandise_.
VIII. CONTRACTS FOR THE SALE OF MERCHANDISE
To make a contract of sale there must be, as we have seen, two or more parties, and a consideration must also be given. The sale is complete when the _property_, or _title_, or _ownership_ in the thing bought passes from the seller to the buyer. It is not necessary in order to make a valid sale to deliver the thing bought. If the _title_ or _ownership_ in the thing is not transferred, the sale still remains incomplete.
The law supposes or assumes that a person will always pay for a thing purchased. If I should go into a store, inquire the price of a book, and, after learning the price, should say to the salesman, "I will take the book," and he should wrap it up and give it to me and I should then walk out with the book under my arm, he doubtless would come to me and say in his politest manner: "Why, sir, you have forgotten to pay me for it." Suppose I should say: "Oh, yes; but I will come in to-morrow and pay." But if I happened to be a stranger, and especially if there was a suspicious look about me, and he should say they did not give credit in that store, and I was still inclined to walk out with my book, he could insist that there had been no sale and that I must give the book to him. The law would protect him in taking it from me if he did not use undue force. The law assumes, unless some different rule exists, that the buyer will always pay for the thing purchased, yet in law there is no sale unless the purchase money is actually paid.
Of course, credit may be given in a store--that may be the practice; and if it is understood between buyer and seller that credit is to be given, then a sale is complete as soon as the bargain is struck.