The government class book / Designed for the instruction of youth in the principles of constitutional government and the rights and duties of citizens.

by Andrew W. Young

Chapter LIV.

Contracts in General.

§1. A contract is an agreement between two or more persons, by which the parties agree to do, or not to do, a particular thing. Contracts are executory, when the stipulations remain to be executed, or when one party agrees to sell and deliver, at a future time, for a stipulated price, and the other agrees to accept and pay. Contracts are express, when the parties contract in express words, or by writing; implied, when an act has been done which shows that the parties must have intended to contract; as, when a person employs another to do some service, it is presumed that the party employing intended to pay for the labor performed.

§2. Contracts are also distinguished as specialties and simple contracts. A specialty is a contract under seal; as a deed, or a bond. But we shall here consider chiefly that common class of contracts called simple contracts, or contracts by parol. Parol signifies by word of mouth. Applied to contracts, however, it not only means verbal contracts, but includes written contracts not under seal. Both are simple contracts; the distinction between them is in the mode of proof. The mutual understanding of the parties to a verbal contract may be proved by parol evidence. But as the real intention of parties is more likely to be expressed in a written contract, the rule of law is, that parol evidence may not be admitted to contradict or vary the terms of a written instrument. It may however be admitted to explain what is doubtful, or to supply some deficiency.

§3. To make a valid contract, the parties must be capable of contracting. They must be of sound mind. Hence idiots and lunatics are generally incompetent to make contracts. Contracts by lunatics and idiots are not necessarily void, but only voidable; the validity or invalidity depending upon facts to be proved. To avoid a contract on the ground of mental imbecility, it must be proved that the party contracting was at the time incompetent. But if a general derangement is once established or conceded, the person is presumed to be incompetent; and the party seeking to enforce the contract must prove the other to have been sane. The general rule in the case of idiots is, that if the party is incapable of acting in the ordinary affairs of life, or in the particular contract, his idiocy will annul the contract.

§4. Drunkards also are incompetent to contract while in a state of intoxication, provided the drunkenness is such as to deprive them of reason for a time, and create impotence of mind. But for absolute necessaries, if the drunkard consumes them during his drunkenness, or keeps them after becoming sober, he is liable. Intoxication only renders a contract voidable, not void, as the party intoxicated may adopt it on recovering his understanding.

§5. Another requisition to a valid contract, is the mutual assent of the parties. A mere offer by one party not assented to or accepted by the other, constitutes no contract. Assent must also be given freely. A contract entered into under duress, or compulsion, is not binding; as where assent is extorted by threats of personal injury. Assent must also be given with a knowledge of facts. A contract made under an injurious mistake, or ignorance of a material fact, may be avoided, even though the fact is not fraudulently concealed. But a mistake made through ignorance of the law, will not render a contract void.

§6. A valuable consideration also is necessary to a valid contract. A consideration is what is given or done, or to be given or done, as the cause or reason for which a person enters into an agreement. Thus, the money given or offered, for which a man agrees to perform certain labor, is the consideration of the agreement. So the money or other thing for which a promissory note is given, is the consideration. A valuable consideration is any thing that is either a benefit to the party promising, or some trouble or injury to the party to whom the promise is made.

§7. Mutual promises are sufficient considerations to make a contract binding; but they must be made at the same time. Such promises support each other. The promise of one party constitutes a sufficient consideration for a promise by the other party. In case the parties are distant from each other, if the proposition is made in writing and sent by mail, and a letter of acceptance is written and put in the mail, the contract is complete, unless, before mailing the letter of acceptance, a second letter has been received containing a retraction of the proposal.

§8. Promises which are wholly gratuitous are void; because, being neither a benefit to the promiser, nor an injury to the promisee, they are not regarded in law as a valuable consideration. Hence, subscriptions to public works and charitable, literary, and religious institutions, if they are merely gratuitous, can not be collected, unless they have operated to induce others to advance money, make engagements, or do other acts to their own injury.

§9. As gratuitous promises are void for want of consideration, so merely gratuitous services, as voluntarily assisting to save property from fire, or securing beasts found straying, or paying another's debts without request, afford no consideration upon which payment for their value can be lawfully claimed; there being no promise of compensation. But if a person knowingly permits another to do certain work, as plowing his field, or hoeing his corn, although the work may have been commenced without his order or request, his consent will be regarded in law as an implied promise to pay for the value of the labor, unless the circumstances of the case are such as to forbid the presumption.

§10. A consideration must also be possible, and in accordance with law, sound policy, and good morals. A contract founded upon an impossible consideration is void. No man can be lawfully bound to do what is not in the power of man to do. But it is otherwise, if the thing to be done is only at the time impossible in fact, but not impossible in its nature. Hence, inability from sickness to fulfill an agreement, or the impossibility of procuring an article of a certain kind or quality which a person has agreed to deliver, would not exempt him from liability in damages for the non-performance of his contract.

§11. A contract, the consideration of which is illegal or immoral, may be avoided by either party. A man can not be held to an agreement to do acts forbidden by the law of God or by the laws of the state. But if an illegal contract has been executed; in other words, if the wrong has been done, the party in the wrong can not renounce the contract; for the general rule is, that no man can take advantage of his own wrong; and the innocent party alone has the privilege of avoiding the contract. If both parties are guilty, neither can, in ordinary cases, obtain relief on a contract that has been executed.

§12. The rule that a consideration is necessary to a valid contract applies to all contracts and engagements not under seal, except bills of exchange and negotiable notes after they have passed into the hands of an innocent indorsee. (See Promissory Notes.) In contracts under seal, a consideration is necessarily implied in the solemnity of the instrument.

§13. It is declared by the English statute of frauds, which prevails generally in the United States, that an agreement which is not to be performed within one year from the time of making it, shall not be valid, unless such agreement, or some memorandum or note thereof, is in writing, and signed by the party to be charged. The statutes of some of the states have adopted this provision of the English statute, and require further, that a special promise to answer for the debt, default, or misdoing of another person, and an agreement or promise upon consideration of marriage, (except mutual promises to marry,) shall likewise be void without such writing, in which the consideration shall be expressed.