VI. Relation to Each Other (1. Several 2. Joint 3. Joint and Several 19. Introductory. In the preceding chapter it was stated that one of the law-given rights of the individual was the right to make contracts. Without this right the transaction of present day business would be impossible. The right to make contracts is the basis of even the most minute of the individual's commercial activities. When he pays a nickel on entering a street car, when he orders groceries sent to his home, even when he buys a contracts. newspaper on the street, he is exercising this right to make The contract is the instrument, the medium, by which modern business is transacted, and by its use one person may acquire a special control over the acts and property of others. 20. A Contract is an agreement between two or more competent parties, based upon a sufficient consideration, to do or not to do some lawful, possible thing. This definition contains four important essentials, or conditions necessary to create a contract, which are discussed in detail. These conditions are: 1. Competent parties, 2. Mutual agreement, 3. Consideration,* and, 4. Legal subject-matter. For the present it will be necessary to consider a contract only from the standpoint of offer and acceptance, which together make up the mutual agreement. Every offer which is accepted does not become a contract, because the other conditions of the contract relation listed above may not be present. But every contract does consist in its essential parts of these two thingsoffer and acceptance. When Ames offers to sell his horse to Bates for $100, if Bates says, "I accept," then there comes into being a contract. Thereafter if Ames refuses to deliver the horse, Bates may sue him for the refusal; or if Ames has delivered the horse and Bates refuses to pay, then Ames may sue for the agreed price. At the outset we must conceive of every contract as consisting of these two elements. EXAMPLES 1. Smith says to Jones, “If you will agree to dig my well, I will pay you fifty dollars for your work." Brown, who overhears this statement, says, "I will accept that offer." This does not create a contract, because Smith made no offer to Brown. 2. Baldwin says to Rogers, "I think I would sell my house for $1500." Rogers says, "I accept that offer." This does not create a contract because Baldwin's statement is not an offer. 3. Murphy says to Hawley, "I will pay you seventy-five dollars to paint my house." Hawley replies, "I will accept for ninety dollars." This does not * Consideration is the thing of value which is transferred from one party to the other at the time of making the contract. It may be money, a thing, or a promise. Subject matter is that about which the agreement is made. create a contract, because Hawley has not accepted Murphy's offer. He has changed the terms of the offer and has in reality himself made a new offer an offer to paint the house for a larger sum. EXERCISE Illustration. Ames meets Bates on the street and offers Bates his watch for $10.00. Bates takes the watch and pays Ames the $10.00. In this case Ames and Bates are the parties; the agreement is for the exchange of property, and is mutual; the consideration is $10.00; and the subject matter is Ames' watch. Analyze the following examples of common forms of the contract relation, and select in each example the four necessary elements parties, mutual agreement, consideration, and legal subject-matter. 1. Mrs. Brown goes to the Acme Company and purchases a sewing machine for twenty dollars. 2. Black has contracted to build a house for Simpson for the sum of $3000. 3. Mellen purchases a ticket from the local agent of the C. B. & Q. Railroad Company from Chicago to Minneapolis, paying the sum of $10.22. The detailed rules governing offer and acceptance are discussed in a later chapter. For the present we shall continue to view a contract as an offer by one party which has been accepted by the party to whom it was made. We shall now examine some of the features common to all contracts. 21. Further Classification. Even though we recognize an accepted offer, which creates a contract, we may still know little about a contract unless we determine its 1. Validity, 2. Solemnity, or manner of execution, 3. Mode of expression, 4. Time of performance, 5. Relation to each other of parties on the same side. These will be discussed in order. 22. Validity of the Contract. Frequently persons try and intend to make a valid contract and fail in their attempt because they have neglected to comply with some rule which they should have observed. In that event their contract may be void, voidable, or unenforceable. If void, it has no standing whatever in the eyes of the law, and is without effect of any kind from the beginning. The parties to it have wholly failed to create any new rights, but stand in precisely the same position as if they had never attempted to make a contract. If voidable, it may be set aside at the pleasure of one of the parties who exercises a right which the other party does not have. A voidable contract may be carried out if the injured party desires to do so; but it is not a valid contract, in the proper sense of the term, because one of the parties may legally refuse to carry out the agreement. If he does refuse, the other party is without power to compel him to perform. If unenforceable, it will not be enforced by the courts if either party objects. An accepted offer may possess all the elements of a valid contract, and yet there may be some statute applicable to this particular case which the makers have failed to observe, and because of this failure neither party can compel the other party to perform his part of the agreement. EXAMPLES Void Contracts. 1. Poole, a dealer in lard, formed a scheme to "corner the market" by securing control of the supply of lard and raising the price. He employed Leonard to carry out the details of the scheme. When Leonard sued Poole for his wages, the court refused to allow him to recover. Such contracts are designed to restrain trade, and are illegal and void. Leonard vs. Poole, 114 N. Y. 371. Voidable Contracts. Smith, aged seventeen, offers to buy a horse from Morgan for $200. Morgan accepts the offer. If Smith thereafter refuses to take the horse and pay the money, Morgan can do nothing. This is because Smith was not twenty-one years old when he made the contract, and it is a rule of law that persons under that age, who are called minors, cannot be bound by contracts against their will. The contract in this case is not void, but voidable. If Smith desires to do so he can perform the contract. Unenforceable Contracts. Johnson offers to sell his farm to Mahoney for $5000. Mahoney says, "I accept," but the parties do nothing further. Contracts to sell real estate are not enforceable by action unless some memorandum is made in writing signed by the parties. If either party refuses to perform his part of the contract, the other party cannot go into court and recover anything the contract is unenforceable. 23. Solemnity. When persons desire to make a contract, they must first decide whether to make (1) a contract under seal, or, (2) a parol, or simple contract. A contract under seal exists when the parties have written their agreement and placed opposite their signatures a seal. The presence of this seal gives to the contract a formality which it would not otherwise possess. This is because the courts decided at an early time that if the parties to a contract chose to perform this extra act, they showed a deliberation and an intent that the contract should be enforced if possible. It was therefore said that such contracts under seal would be enforced regardless of the presence or absence of any consideration. The contract under seal derived its validity from the presence of this seal alone and not from the presence of a consideration. WS SHAKESPEARE'S SEAL Seals are of ancient origin; they are mentioned often in the Bible.* When few people were able to write even so much as their own names, a seal was used instead of a signature. The body of the contract was written for them by a public writer, and a drop of molten wax or a thin plate of wax, called a wafer, was placed at the end, and the imprint of the maker's seal was made upon it. In order to have the seal always with him, ready for instant use, the owner of it often had it engraved upon a ring. Seals are often indicated by a scroll inside of which the word "Seal" is written or typewritten. The necessity for seals has long ceased to exist, yet when called upon to determine the rights of parties to a contract the courts of most states will recognize a difference if the contract be under seal. This difference will be more particularly noted under our later discussion of Consideration. in Contracts. For the present it is sufficient to say that a contract under seal is the only formal, or solemn kind of contract known to the law, and that its use at present is confined almost exclusively to contracts for the sale and transfer of land. In such cases the seals usually appear in one of the following forms: Name of party to be written here or SEAL Name of party to be written here LS *I Kings, Chap. 21. Daniel, Chap. 6. Esther, Chap. 8. Jeremiah, Chap. 32. |