The reasons are two in number. Agreement is in the first place evidential of right, and in the second place constitutive of it. There is in general no better evidence of the justice of an arrangement than the fact that all persons whose interests are affected by it have freely and with full knowledge consented to it. Men are commonly good judges of their own interests, and in the words of Hobbes “there is not ordinarily a greater sign of the equal distribution of anything, than that every man is contented with his share.” When, therefore, all interests are satisfied, and every man is content, the law may safely presume that justice has been done, and that each has received his own. The determination of the law is needed only in default of the agreement of the parties. Hence it is, that he who agrees with another in any declaration of their respective rights and duties will not be suffered to go back from his word, and will not be heard to dispute the truth of his declaration. The exceptions to this rule are themselves defined by equally rigid rules; and he who would disclaim a duty which he has thus imposed upon himself, or reclaim a right which he has thus transferred or abandoned, must bring himself within one of those predetermined exceptions. Otherwise he will be held bound by his own words.
This conclusive presumption of the truth of consensual declarations of right is, however, only one of the foundations of the law of agreement. Consent is in many cases truly constitutive of right, instead of merely evidential of it. It is one of the leading principles of justice to guarantee to men the fulfilment of their reasonable expectations. In all matters that are otherwise indifferent, expectation is of predominant influence in the determination of the rule of right, and of all the grounds of rational expectation there is none of such general importance as mutual consent. “The human will,” says Aquinas, “is able by way of consent to make a thing just; provided that the thing is not in itself repugnant to natural justice.”[[311]]
There is an obvious analogy between agreement and legislation—the former being the private and the latter the public declaration and establishment of rights and duties. By way of legislation the state does for its subjects that which in other cases it allows them to do for themselves by way of agreement. As to the respective spheres of these two operations, the leading maxim is Modus et conventio vincunt legem. Save when the interests of the public at large demand a different rule, the autonomy of consenting parties prevails over the legislative will of the state. So far as may be, the state leaves the rule of right to be declared and constituted by the agreement of those concerned with it. So far as possible, it contents itself with executing the rules which its subjects have made for themselves. And in so doing it acts wisely. For in the first place, the administration of justice is enabled in this manner to escape in a degree not otherwise attainable the disadvantages inherent in the recognition of rigid principles of law. Such principles we must have; but if they are established pro re nata by the parties themselves, they will possess a measure of adaptability to individual cases which is unattainable by the more general legislation of the state itself. Amid the infinite diversities and complexities of human affairs the state wisely despairs of truly formulating the rules of justice. So far as possible, it leaves the task to those who by their nearness to the facts are better qualified for it. It says to its subjects: Agree among yourselves as to what is just in your individual concerns, and I shall enforce your agreement as the rule of right.
In the second place, men are commonly better content to bear the burdens which they themselves have taken up, than those placed upon them by the will of a superior. They acquiesce easily in duties of their own imposition, and are well pleased with rights of their own creation. The law or the justice which best commends itself to them is that which they themselves have made or declared. Wherefore, instead of binding its subjects, the state does well in allowing them to bind themselves.
§ 123. The Classes of Agreements.
Agreements are divisible into three classes, for they either create rights, or transfer them, or extinguish them. Those which create rights are themselves divisible into two subclasses, distinguishable as contracts and grants. A contract is an agreement which creates an obligation or right in personam between the parties to it. A grant is an agreement which creates a right of any other description; examples being grants of leases, easements, charges, patents, franchises, powers, licences, and so forth. An agreement which transfers a right may be termed generically an assignment. One which extinguishes a right is a release, discharge, or surrender.
As already indicated, a contract is an agreement intended to create a right in personam between the contracting parties. No agreement is a contract unless its effect is to bind the parties to each other by the vinculum juris of a newly created personal right. It commonly takes the form of a promise or set of promises. That is to say, a declaration of the consenting wills of two persons that one of them shall henceforth be under an obligation to the other naturally assumes the form of an undertaking by the one with the other to fulfil the obligation so created. Not every promise, however, amounts to a contract. To constitute a contract there must be not merely a promise to do a certain act, but a promise, express or implied, to do this act as a legal duty. When I accept an invitation to dine at another man’s house, I make him a promise, but enter into no contract with him. The reason is that our wills, though consenting, are not directed to the creation of any legal right or to any alteration of our legal relations towards each other. The essential form of a contract is not: I promise this to you; but: I agree with you that henceforth you shall have a legal right to demand and receive this from me. Promises that are not reducible to this from are not contracts. Therefore the consent that is requisite for the creation of rights by way of contract is essentially the same as that required for their transfer or extinction. The essential element in each case is the express or tacit reference to the legal relations of the consenting parties.
Taking into account the two divisions of the consensual creation of rights, there are, therefore, four distinct kinds of agreements:—
1. Contracts—creating rights in personam.
2. Grants—creating rights of any other kind.