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a depot at a certain point, or run its track in a certain direction, is good, if the condition be complied with.
The release of any valuable right, such as a quit claim to real estate, release of a mortgage or right of dower, the right to arrest one in a civil action for fraud, any interest in personal property or a demand, is a sufficient consideration for a promise.
Insuficient consideration. In order to give a more definite idea of what constitutes a consideration, a few of the things which the law deems insufficient as a consideration are here mentioned.
The performance of a duty imposed by law is not a valid consideration. Thus, an agreement to pay a husband for supporting his wife is void. An agreement to pay an officer for making an arrest which the law obliges him to make, or a promise to pay a fireman employed by a city for putting out a fire is void. The doing of an act which one is already bound by contract to perform is not a consideration which will support a promise to pay for it, nor is the payment of a debt which is due and undisputed a consideration for a promise on the part of the one to whom payment is made. It would be otherwise if the money were paid by agreement before maturity, or were paid by a third party. Permission to do what one has a legal right to do is not a consideration for a promise.
A consideration which is impossible is void. A promise to do an act absolutely impossible will not support a consideration. The fact that it is difficult of performance, however, will make no difference. Thus, a contract to transport freight from Wisconsin to California in twenty-four hours would be void and could not support a consideration, while a contract to do so within five days, while difficult of performance, would be valid.
An illegal consideration will not support a contract. Thus, an agreement to deliver property in consideration of counterfeit money is void. If the consideration is partly illegal, the whole contract will become void.
A moral consideration is not sufficient. For instance, if an adult son were to be taken sick among strangers and should receive care at their hands, the subsequent promise of the father to pay for the care would be without consideration. A moral consideration, preceded by a once valid legal
obligation, is, however, sufficient. Thus, a minor on becoming of age may ratify a liability incurred in infancy, and agree to pay it.
Past or executed consideration.-When a consideration has already been the foundation for a promise, it cannot thereafter become the consideration of a subsequent promise. A promise made in consideration of a service already rendered, or promise already received, for which there is no express or implied promise to pay at the time, is not a consideration which will support a contract. Thus, a promise to furnish security for a note made after the note was given, is upon a past consideration, and void. A warranty of a horse, after a completed sale, without a new consideration, is void. A promise to pay another's debt, after it is incurred, is void without a new consideration.
Evidence of consideration.-Contracts in writing usually express the consideration, but they are valid if they do not, if there is a consideration, except when the consideration is required to be stated by the Statute of Frauds. The consideration stated in a written contract is generally open to explanation. For example, it is competent to prove that a written contract in which a consideration is expressed was really without consideration, or that it has failed, or was different from that expressed. If the testimony, however, tends to show a change in the written contract, and not of the consideration, it will not be received by the courts. The true consideration in a deed may also be shown if different from that expressed. While the consideration in a deed can always be shown, still the party executing the deed is estopped from claiming that it was executed without any consideration whatever. For every other purpose it may be varied or explained. The consideration clause in a deed or other contract is practically like a receipt – always open to explanation.
Failure of consideration. Failure of consideration takes place when by the non-performance of a contract nothing of value really passes between the parties, on the part of one or all of them. So long as a party receives what he contracts for, if it is something of value, there can be no failure of consideration, although it does not come up to expectations. If a man attempt to sell personal property which does not belong to him, nothing would pass by the
sale, and there would be no consideration for another's promise to pay for the property; or, if an invention were sold which is declared by the courts not to be patentable, there would be failure of consideration. A failure to deliver an article, or to perform services bargained for, would result in failure of consideration. Sometimes the subject matter of the contract is destroyed, or services contracted for cannot be rendered by reason of death or sickness; in such cases there is failure of consideration. Failure of consideration may be total or partial.
The effect of failure of consideration will depend on whether it is total or partial. A total failure will make the contract void. When it is partial, the contract will be void so far as the consideration fails, or rather, will entitle the party as to whom it fails to set the fact up as a matter of defense in an action on the contract. This frequently arises in actions on notes. A party to a contract, however, does not need to accept a part performance. He may refuse to accept anything short of full performance, except in those cases where the law excuses full performance. If goods purchased are not according to agreement, the purchaser may refuse to accept them, or, if he does accept them, he may plead a partial failure of consideration in an action for the price, and obtain a reduction. Money paid on a contract for which the consideration fails may be recovered.
Gifts, when fully executed, are valid and need no consideration. A gift is not a contract. A promise to make a gift is without consideration and therefore void. The gift of the note or check of the giver, being a promise to pay money in the future, is void.
THE SUBJECT MATTER OF CONTRACTS.
The subject matter of a contract is what the parties have agreed shall be done or omitted. Strictly speaking, the consideration passing from one party to another, and the agreement which is sustained by it, together constitute the subject matter of a contract, but as it is usual to speak of the subject matter as the thing to be done or omitted, it is considered here in that way.
Generally speaking, parties may contract to do or omit
anything which is not impossible or illegal. There must be a subject matter which has existence, or which is capable of being called into existence, or an act or omission which is capable of performance. When it appears that the subject matter of a contract is believed to be in existence by the contracting parties at the time of making a contract, but is really not, there is no contract. Thus, if persons make a contract for the sale of a horse, believing it to be alive, when it turns out afterwards that it was dead at the time of sale, there is no contract. In case of the sale of property on board of a ship which had been destroyed, believed to be in existence by the parties at the time of contracting, there would be no contract.
It should not be understood that the subject matter must be in existence at the time of making a contract. It is sufficient if it exists potentially, that is, if it is within the power of a party to produce it. Thus, a person may contract to make and deliver a manufactured article, or the crop of wool from his sheep for the ensuing year, or to deliver grain which he would have to buy elsewhere.
Construction. The agreement must be entered into by the parties so that the subject matter can be ascertained. Courts will not make a contract for parties, nor enforce one whose terms cannot be ascertained. Thus, in a late Wisconsin case it was decided that no action could be maintained for breach of an alleged contract for the sale of binding twine, where the evidence showed that neither quantity, quality nor price of the twine was ever definitely agreed upon.
In suits on contracts which are not plain in meaning, it becomes the duty of courts to construe them, if possible. This is done by applying well known rules of interpretation. The cardinal rule of interpretation is that contracts shall be so construed as to give effect to the intention of the parties, and all other rules of interpretation are but subsidiary to this principal rule, and their oject is to effectuate its purpose. When the terms of a contract have been ascertained, its construction is a matter of law for the court. What the terms of a contract are, when not in writing, is a question of fact.
It is a general rule of law that no oral testimony will be received by courts to vary the effect of written instruments. When their is ambiguity in such an instrument, evidence will be received within certain limits, to remove it. An ambiguity may be either patent or latent.
A patent ambiguity is one which appears on the face of the instrument. Oral evidence cannot be offered to vary the effect of the contract, or explain its terms, but proof of the situation of the parties, and surrounding circumstances at the time of making the contract will be received, if the contract can be construed with the aid of such proof. The object of admitting such proof is to place the court in the same position as the contracting parties, so that it may see the facts and understand the terms of the contract in the sense they did, if that is possible after such proof has been admitted. Thus, in a Wisconsin case a contract provided that one party would furnish the other "what paper (same as has been furnished during the last twelve months)” at agreed prices “to be taken as ordered." The court says: “That the expression is ambiguous and requires explanation is of course, obvious. .
; hence extrinsic evidence was admissible to aid the court in its interpretation, such evidence being confined, however, within certain restrictions ....... As to this class of evidence or parol evidence of acts, conduct, or conversations, preceding the execution of a formal contract ..... the lines of demarcation are reasonably certain. While it is not permissible to offer extrinsic evidence of the terms of the agreement – of what one party or the other promised – to vary, defeat or add any term in a written contract, it is permissible in case of ambiguity to introduce evidence to ascertain the subject matter with reference to which the parties proceeded to negotiate a contract, and their situation and surrounding circumstances, so that the court may stand substantially in the same light in reading the words of the contract as did the parties when adopting those words ...... The authorities refute the contention that in no case can be admissible any communications between the parties at or prior to the execution of the written contract. So far as the communications, verbal or written, serve merely to establish the situation or surroundings, they differ not at all from other evidence of the same facts. So far, however, as they relate to the terms of agreement between the parties, they cannot be received. The writing must be taken as their final expression.” The court decided, by the aid of such extrinsic evidence, that the contract provided that the seller should furnish at the prices specified such paper of a certain kind as the buyer should need in his business during the contract year, and that the buyer agreed to buy the same.