3. Illegality. In the third place an agreement may be invalid by reason of the purposes with which it is made. To a very large extent men are free to agree together upon any matter as they please; but this autonomous liberty is not absolute. Limitations are imposed upon it, partly in the interests of the parties themselves, and partly on behalf of the public. There is much of the common law which will not suffer itself to be derogated from by any private agreement; and there are many rules which, though they in no way infringe upon the common law, cannot be added to it as supplementary. That is to say, there are many matters in which the common law will admit of no abatement, and many in which it will admit of no addition, by way of conventional law. It is true in great part that Modus et conventio vincunt legem; but over against this principle we must set the qualification, Privatorum conventio juri publico non derogat. By jus publicum is here meant that part of the law which concerns the public interest, and which for this reason the agreements of private persons cannot be allowed to infringe upon.[[313]] Agreements which in this way overpass the limits allowed by the law are said in a wide sense to be illegal, or to be void for illegality. They may or may not be illegal in a narrower sense, as amounting in their making or in their performance to a criminal or civil wrong.
4. Error or mistake. Error or mistake, as a ground of invalidity, is of two kinds, which are distinguishable as essential and unessential. Essential error is that which is of such a nature as to prevent the existence of any real consent and therefore of any real agreement. The parties have not in reality meant the same thing, and therefore have not in reality agreed to any thing. Their agreement exists in appearance only, and not in reality. This is the case if A. makes an offer to B. which is accepted in mistake by C.; or if A. agrees to sell land to B., but A. is thinking of one piece of land, and B. is thinking of another. The effect of error of this kind is to make the agreement wholly void, inasmuch as there is in truth no agreement at all, but only the external semblance and form of one.[[314]]
There is, however, an exception to this rule when the error is due to the negligence of one of the parties and is unknown to the other. For in such a case he who is in fault will be estopped by his own carelessness from raising the defence of essential error, and will be held bound by the agreement in the sense in which the other party understood it.[[315]]
Unessential error, on the other hand, is that which does not relate to the nature or contents of the agreement, but only to some external circumstance, serving as one of the inducements which led to the making of it; as when A. agrees to buy B.’s horse because he believes it to be sound, whereas it is in reality unsound. This is not essential error, for there is a true consensus ad idem. The parties have agreed to the same thing in the same sense, though one of them would not have made the agreement had he not been under a mistake. The general rule is that unessential error has no effect on the validity of an agreement. Neither party is in any way concerned in law with the reasons which induced the other to give his consent. That which men consent to they must abide by, whether their reasons are good or had. And this is so even though one party is well aware of the error of the other.[[316]]
This rule, however, is subject to an important exception, for even unessential error will in general make an agreement voidable at the option of the mistaken party, if it has been caused by the misrepresentation of the other party. He who is merely mistaken is none the less bound by his agreement; but he who is misled has a right to rescind the agreement so procured.[[317]]
5. Coercion. In order that consent may be justly allowed as a title of right, it must be free. It must not be the product of any form of compulsion or undue influence; otherwise the basis of its legal operation fails. Freedom, however, is a matter of degree, and it is no easy task to define the boundary line that must be recognised by a rational system of law. We can only say generally, that there must be such liberty of choice as to create a reasonable presumption that the party exercising it has chosen that which he desires, and not merely submitted to that which he cannot avoid. We cannot usefully enter here into any examination of the actual results that have been worked out in this matter by English law.
6. Want of consideration. A further condition very commonly required by English law for the existence of fully efficacious consent is that which is known by the technical name of consideration. This requirement is, however, almost wholly confined to the law of contract, other forms of agreement being generally exempt from it.
A consideration in its widest sense is the reason, motive, or inducement, by which a man is moved to bind himself by an agreement. It is not for nothing that he consents to impose an obligation upon himself, or to abandon or transfer a right. It is in consideration of such and such a fact that he agrees to bear new burdens or to forego the benefits which the law already allows him. If he sells his house, the consideration of his agreement is the receipt or promise of the purchase money. If he makes a settlement upon his wife and children, it is in consideration of the natural love and affection which he has for them. If he promises to pay a debt incurred by him before his bankruptcy, the consideration of his promise is the moral obligation which survives his legal indebtedness to his creditors. Using the term in this wide sense, it is plain that no agreement made with knowledge and freedom by a rational man can be destitute of some species of consideration. All consent must proceed from some efficient cause. What, then, is meant by saying that the law requires a consideration as a condition of the validity of an agreement? The answer is that the consideration required by the law is a consideration of a kind which the law itself regards as sufficient. It is not enough that it should be deemed sufficient by the parties, for the law has itself authoritatively declared what facts amount to a valid and sufficient consideration for consent, and what facts do not. If men are moved to agreement by considerations which the law refuses to recognise as good, so much the worse for the agreement. Ex nudo pacto non oritur actio. To bare consent, proceeding from no lawfully sanctioned source, the law allows no operation.
What considerations, then, does the law select and approve as sufficient to support a contract? Speaking generally, we may say that none are good for this purpose save those which are valuable. By a valuable consideration is meant something of value given by one party in exchange for the promise of the other. By English law no promise (unless under seal or of record) is binding unless the promisor receives a quid pro quo from the promisee. Contracts which are purely unilateral, all the obligation being on one side, and nothing either given or promised on the other, are destitute of legal operation. Every valid contract[[318]] is reducible to the form of a bargain that if I do something for you, you will do something for me.
The thing thus given by way of consideration must be of some value. That is to say, it must be material to the interests of one or other or both of the parties. It must either involve some gain or benefit to the promisor by way of recompense for the burden of his promise, or it must involve some loss or disadvantage to the promisee for which the benefit of the promise is a recompense. Commonly it possesses both of these qualities at once, but either of them is sufficient by itself. Thus if I promise gratuitously to take care of property which the owner deposits with me, I am bound by that promise, although I receive no benefit in recompense for it, because there is a sufficient consideration for it in the detriment incurred by the promisee in entrusting his property to my guardianship. But if the thing given by way of consideration is of no value at all, being completely indifferent to both parties, it is insufficient, and the contract is invalid; as, for example, the doing of something which one is already bound to the other party to do, or the surrender of a claim which is known to be unfounded.