same intention. If any one of these conditions is lacking, there is a mistake of fact,* which will enable one, or both, to avoid the resulting contract. Such a mistake must be as to some material matter, and not merely as to a trifling detail, and may arise in one of three ways: (1) From the nature of the transaction; (2) concerning the person with whom the contract is made; or (3) concerning the subject matter of the transaction. EXAMPLES 1. McGinn and Tobey intended to enter into a contract, the terms of which they had discussed. McGinn then wrote out the terms to which they had agreed, and also wrote out and sent to Tobey at the same time a second paper containing different terms, as an alternative proposition. Tobey signed both these papers, believing that they were duplicate copies of the agreement. No contract was created by the second paper, because there was a mistake as to the nature of the transaction. McGinn vs. Tobey, 62 Mich. 252. 2. Gordon, who had a bad reputation, advertised under the name of "Addison" that he had money to lend. Street read the advertisement and agreed by letter with "Addison" to borrow a sum of money and to pay "Addison" a commission for lending it to him. He would not have made any agreement with Gordon, on account of his bad reputation. On discovering his mistake, the court allowed Street to avoid the agreement, and he did not have to borrow the money or pay Gordon the commission for lending it to him. This was because there was a mistake as to the identity of the parties. Gordon vs. Street, 2 Q. B. (Eng. 1899) 641. 3. A agreed to buy, and B agreed to sell, at a specified price, certain cotton which the parties described as "cotton to be delivered ex Peerless from Bombay," referring to the steamship on which it was to be transported. There were, however, two ships named "Peerless," the buyer referring to one and the seller to the other. No contract resulted from this agreement, because there was a mistake as to the subject matter of the transaction. Raffles vs. Wichelhaus, 2 H. & C. (Eng.) 906. 4. Ames agrees to buy a house from Bates, which Bates agrees to sell. The house, however, has burned down before the making of the contract, without the knowledge of either party. This avoids the contract, because the *A mistake of fact is to be distinguished from a mistake of law. A mistake of law occurs when a party misunderstands the legal effect of his word or acts. He cannot escape from a contract on this ground. Such a mistake occurred when A and B agreed to buy and sell, respectively, a house which the parties described as "being in first class condition.' A, the buyer, thereafter refused to complete the bargain, claiming that he had always understood that the law would require B to repaint the house, and that he was mistaken. This did not excuse him, as a party to a contract is judged by his acts, and not what he believes to be the legal consequences of his acts. "Ignorance of the law excuses no one." subject matter has ceased to exist. At the time of making the agreement both Ames and Bates believe the house to be in existence, and if it has been destroyed there is a mutual mistake as to the subject matter. 53. The second kind of unreal mutual assent arises by the wrongful act of one of the parties, which permits the other party to avoid the agreement. This wrongful act may be (1) fraud, (2) duress, or (3) undue influence. The presence of any of these elements makes the contract voidable (see Sect. 22), and the innocent party may refuse to carry out the contract. Fraud is the wilful misrepresentation of a material fact. Mere exaggeration of the good qualities of the thing sold, or of the advantages of the proposed contract, does not constitute fraud. The other party must be on his guard against such exaggeration and must form his own conclusions of the merits of the proposition. If fraud be proved, it must be shown that there was a misstatement as to some actual fact, not merely an expression of biased opinion. EXAMPLES 1. A and B were doing business together, and in order to get C to buy an interest in the business, they made false statements as to the profits which they had made during the preceding year. C relied on these statements and agreed to buy an interest in the business. Thereafter he discovered that the statements were false, and the court allowed him to refuse to buy or pay for the interest which he had agreed to take. Bower vs. Fenn, 90 Pa. St. 359. Note. If, in the preceding example, A and B had merely told C of the profits they expected to make in the future, and C had promised to buy into the business, the contract would not be voidable, because a statement concerning what may happen in the future is not a fact but an opinion, and there would have been no wilful misrepresentation of a material fact. Duress is that which induces a person to perform an act, not of his own will, but because of the threats, or acts of violence, of some other person. Duress may be brought about by imprisoning, or threatening to imprison, a person wrongfully, or from an improper motive, or by threatening him with bodily injury, in order to compel him to enter into a contract. The threat or force must be sufficient to deprive a person of his free will, and sufficient to impress a person of average firmness of mind. A owed B for some groceries. B wrote out a notice which stated that unless A gave him his horse and a sum of money, A would be put in prison for a long time. A became frightened and delivered his horse to B. He was allowed to recover the horse, because he delivered it only because of the threat of B. Seiber vs. Price, 26 Mich. 518. Other examples of duress are: Holding a gun at a man's head and compelling him to sign a contract; threatening to "beat you within an inch of your life unless you agree to this;" locking a person in a room until he accepts an offer made to him. Contracts resulting from such acts are voidable. Undue influence exists when a person who occupies a position of confidence, or trust, toward another, takes an unfair advantage of his position, and thereby induces a contract. An attorney occupies such a relation toward persons who consult him; as also does a physician toward his patient. If such a person induces another to do some act, by means of statements of such a character that it is clear that the act is not voluntary, but is really the act of the person making the statements and not of the person performing the act, the contract resulting is said to have been induced by undue influence, and is voidable. EXAMPLES A young lady who had just become twenty-one years old consulted her uncle about all her business affairs. He induced her to sign an agreement that if a bank would lend him money, she would pay it if he did not. The uncle ran away with a large amount of money which he secured from the bank. The court said that the bank could not recover this money from the young lady, because her uncle had secured this agreement by means of undue influence and the bank, knowing the relation of trust existing, should have been on its guard. Rider vs. Kelso, 53 Iowa 367. - Note. All contracts made between such persons are not voidable, howIf they are fair and just, they will be enforced, because in that event no one can say that they were induced by undue influence. ever. REVIEW QUESTIONS 1. Perry in Rhode Island wrote a letter to an iron company in Boston, offering to sell five tons of boiler plate at a certain price. The iron company telegraphed to Perry, "We accept your offer; ship the boiler plate." This telegram was received by Perry. Did these acts create a contract? Why? Who was the offeror? the offeree? 2. A promised to teach B dressmaking if B would promise to work for her for six months. How may this offer become a contract? 3. The governor of Mississippi received the following telegram: "There are many cases of yellow fever at Cooper's Well; send out a physician this afternoon. Signed, I. Williams." The governor posted the telegram on a bulletin board, and Dr. Brickell, who saw it, went to Cooper's Wells, where he spent four days aiding the sick. He then sent a bill to Williams for $250 for his services. Was this proper? Was a contract created? Who was the offeror? the offeree? 4. A Chicago street car company posted the following notice: "$5000.00 June 24, 1895. "The above reward will be paid for the arrest and conviction of the murderer of C. B. Birch, who was fatally shot while in the discharge of his duties, on the morning of June 23d, at the car-barn. Signed, Charles T. Yerkes, Pres. W. Chicago Street R. R. Co." Before the notice was posted an employee of the Company had given the police.information which subsequently led to the arrest and conviction of the murderer. Did the employee have a right to secure the reward?, Why? Was there an offeror in the above example? an offeree? 5. Henthorn called on Fraser in Liverpool and asked for an offer on some houses. Fraser handed him a written offer and Henthorn returned to his home in Birkenhead. The next day at one o'clock Fraser mailed a letter at Liverpool to Henthorn, withdrawing the offer. This letter did not reach Henthorn until five o'clock, and he at three o'clock had deposited a letter in the postoffice at Birkenhead accepting Fraser's offer of the day before. Was a contract created? Why? Who was the offeror? the offeree? PRACTICAL SUGGESTIONS To Offerors If you wish to limit the time in which an offer may be accepted, be sure to specify this limitation in your offer, because if you fail to do this the offer can be accepted within any reasonable time. In making an offer, say exactly what you mean, because the offer may be accepted before you have an opportunity to explain. Then it will be too late. Don't make an offer and then forget about it, because it may be unexpectedly accepted. Don't wait until tomorrow to withdraw an offer if you have changed your mind, because the other party may make it a contract in the meantime. To Offerees Don't change the terms of the offer by your acceptance, because no contract will result. Accept an offer at once if the bargain is a good one, because the offer may be withdrawn. Remember to stamp and properly address your letter of acceptance, if you mail it, because it may never be delivered and the fault will be yours. In accepting an offer, use the designated medium of communication, if any; if not, use the same means of communication that the offeror used. In General Don't fail to be clear in your language, preventing all chance of mistake, because your contract may be declared invalid on account of mistake. Don't make verbal contracts when you could as well make written ones. There is less opportunity for dispute later. I. Simple CHAPTER VI CONSIDERATION a. Benefit to 1. Sufficient b. Detriment to Promisee c. Mutual Promises a. Impossible b. Moral Obligation Only 2. Not usually c. Past Considera sufficient tion d. Previous Obligation e. Illegal II. Formal Contracts 54. Consideration is a benefit given to the party promising to do an act (who is called the promisor), or a loss or detriment suffered by the party to whom the promise is made (called the promisee). It is something given or done by one party to a contract, on account of which the other party agrees to perform his share of the obligation. The consideration for a contract, which must be present if the contract is valid, may exist in three different forms. These are, 1. A benefit received by the person making the promise, or someone in his behalf. 2. A loss or detriment suffered by the person to whom the promise is made, or someone in his behalf, or 3. The exchange of mutual promises between the parties. Note. The word consideration may mean the whole consideration, or a part of the consideration, however small. If anything be paid or done, it binds the bargain, whether more remains to be paid or done, or not. 55. Benefit received. If at the time of the making of the contract, the party who has made a promise to another receives |