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In civil law, a contract is defined as the union of several persons in a coincident expression of will by which their legal relations are determined. This "co-incident expression" consists of an agreement and promise enforceable in law, and "on the face of the matter capable of having legal effects", "an act in the law" "whereby two or more persons capable of contracting", "of doing acts in the law", "declare their consent as to any act or thing to be done or forborne by some or one of those persons for the use of the others or other of them" (Pollock, "Principles of Contract", 3rd Amer. ed., New York, 1906, 58, 1, 2, 3), the intention implied by the consent being that from the agreement and promise shall arise "duties and rights which can be dealt with by a court of justice" (ibid.). Thus, while every contract is an agreement, not every agreement is a contract. A mutual consent of two persons to walk out together, or to dine together, would be an agreement, and yet not what in jurisprudence is known as a contract. For such consent contemplates the producing of no legal right, or of any duty which is a legal obligation. Subject only to these or similar explanations may be properly adopted the time-honoured definition of contract as understood in English law, a definition commended by Chancellor Kent ("Commentaries on American Law", II, 449, note b) for its "neatness and precision", namely, "an agreement of two or more persons upon sufficient consideration to do or not to do a particular thing".

Kinds of Contract

The Roman civil law defined contracts as real (re), verbal (verbis), literal (litteris), or consensual (consensu). A real contract was one, such as loan or pledge, which was not perfected until something had passed from one of the parties to the other. A verbal contract (verborum obligatio), or stipulation, was perfected by a spoken formula. This formula consisted of a question by one of the parties and an exactly corresponding answer by the other. Thus: Quinque aureos mihi dare spondes? Spondeo, or Promittis? Promitto, i.e. "Do you agree (or promise) to give me five pieces of gold?" "I agree," or "I promise." The similarity may be noted of this to the modern form for administering an affidavit or for taking the acknowledgment of a written legal instrument. A literal contract was perfected by a written acknowledgment of debt and was used chiefly in the instance of a loan of money. Consensual contracts were those of which sale would be an example, which might be perfected by consent, and to which no particular form was essential. In the English law the principal division of contracts is into those by writing under seal (called specialties), and those known as simple contracts; and there are also "contracts by matter of record", such as a recognizance or judgment by confession, contracts in court, which need no further description. Simple contracts include all contracts written, but not under seal or of record, and all verbal contracts.

A person may contract in person or by an agent. "The tendency of modern times", remarks Holland (op. cit., 118), "is towards the fullest recognition of the principles proclaimed in the canon law, potest quis per alium quod potest facere per se ipsum, qui facit per alium est perinde ac si faciat per se ipsum," i.e. one may do through another whatever one is free to do by himself, or an act done through another is equivalent to an act done by oneself.

Requisites of Contract

According to Roman law, such a contract as that of sale required a justa causa, namely, a good legal reason. According to English law, simple contracts require a valuable consideration, in like manner as by Roman law there was needed a justa causa. By that law, informal contracts which had no justa causa were ineffectual (Poste, op. cit., 334). Stipulations irregular in form were termed nuda pacta, i. e. mere agreements, to which the ancient law attached no obligation. The Roman jurisprudence let some engagements rest on the mere integrity of the parties who contracted them, thinking it more conducive to the cultivation of virtue to leave some things to the good faith and probity of mankind than to subject everything to the compulsory authority of the law.

As the civil-law jurist admitted the moral obligation of good faith and probity, so an eminent English judge concedes that "by the law of nature" every man ought to fulfil his engagements. But it is equally true", he continues, "that the law of this country supplies no means nor affords any remedy to compel the performance of any agreement made without sufficient consideration." "Such agreement", he adds, "is nudum pactum ex quo non oritur actio", a mere agreement giving rise to no action at law, the learned judge conceding that this understanding of the maxim may (as it certainly does) differ from its sense in the Roman law. A moral consideration has been said to be "nothing in law." The moral obligation of a contract is of "an imperfect kind", to quote an eminent American jurist, "addressed to the conscience of the parties under the solemn admonitions of accountability to the Supreme Being" (Story, "Commentaries on the Constitution of the United States", 5th ed., Boston, 1891, Section 1380), but not to an earthly court of justice. With these doctrines of the Roman and of the English law we may compare the Scottish law, according to which no consideration is essential to a legal obligation, "an obligation undertaken deliberately though gratuitously being binding". "This", adds Mackenzie (op. cit., 233) "is in conformity with the canon law by which every paction produceth action et omne verbum de ore fideli cadit in debitum", i.e. every word of a faithful man is equivalent to a debt.

In the Roman law, fulfilment of the legal solemnities of the verbal contract was deemed to indicate such an intention of contracting a valid and effectual obligation, as to dispense with proof of any justa causa. In the English law it is not any verbal formality, but the solemnity of writing and sealing which dispenses with proof of that valuable consideration in modern English law analogous to the old Roman justa causa, and, as a general proposition, essential to the validity of simple contracts, although in the exceptional instance of negotiable paper always presumed, and in favour of certain holders conclusively. This consideration is described generally as the matter accepted or agreed upon as the equivalent for which the promise is made. And one promise would be a legal consideration for another. But the English law infers what a man chooses to bargain for to be of some value to him, and therefore does not allow the adequacy of the consideration to be inquired into. The consideration must, however, "be of some value in contemplation of law". A promise, for instance, to abstain from doing what the promisor has no right to do, is a promise of no value, and therefore no consideration for a contract. No obligation can by English law result from an agreement "immoral in a legal sense". By this is meant not only that it is morally wrong, but that according to the common understanding of reasonable men it would be a scandal for a court of justice to treat it as lawful or indifferent, though it may not come within any positive prohibition or penalty. The civil-law authority, Pothier, instances a promise by an officer to pay a soldier for fighting "a soldier of another regiment". If the officer pay, he has no legal claim for recovery of this consideration given and received for a wrongful act, and, on the other hand, the soldier, if he fight before receiving the agreed consideration, acquires no legal claim for it against the officer (Pothier, op. cit., 23). No one is under a legal duty to fulfil a promise to do an act opposed to the policy of the law. But there are not wanting instances of contracts opposed to the policy of the law which yet conflict with no moral law.

A contract induced by what in law is deemed to be fraud may be rescinded at the election of the party defrauded. But "general fraudulent conduct", or "general dishonesty of purpose", or mere "intention and design to deceive" is not sufficient unless these evil acts and qualities have been connected with a particular transaction, were the ground on which it took place, and gave rise to the contract. In the instance of a sale, the seller was, by the Roman civil law, held to an implied warranty that the thing sold was "free from such defects as made it unfit for the use for which it was intended" (Mackenzie, op. cit., 236). By the English law there is, if the thing be sold for a fair price and be at the time of sale in the possession of the seller, an implied warranty of title, but of quality there is no implied warranty, except as to food sold for domestic use. "The writers of the moral law," observes Chancellor Kent, "hold it to be the duty of the seller to disclose the defects which are within his knowledge. But the common law is not quite so strict. If the defects in the article sold be open equally to the observation of both parties, the law does not require the vendor to aid and assist the observation of the vendee" (Kent, op. cit., II, 484).

Respecting what may be termed generally "motives and inducements" (ibid., 487) of a contract, the same authority cites Pothier as in accord with the doctrine of English law, "that though misrepresentation or fraud will invalidate the contract of sale, the mere concealment of material knowledge which the one party has touching the thing sold and which the other does not possess, may affect the conscience, but will not destroy the contract, for that would unduly restrict the freedom of commerce; and parties must at their own risk inform themselves of the commodities they deal in" (op. cit., 491). As fraud, so coercion, termed in English law duress, or the threat of it, constitutes a valid defense to fulfilment of a contract.

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