§2. Place of contract in jurisprudence. 9

land with covenants annexed, a sale of a chattel with a war-

ranty, in which contractual ohligations arise incidentally to

the main purposes of the transaction. Where the contrac-

tual obligation can be easily severed from the bulk of the

rights and duties created by the Agreement it is possible to

regard it as a part of our subject : the warranty or the

covenants may be so dealt with. But in the other cases the

obligation is so involved in the mass of rights and duties

created, and bo entirely incidental to the rest of the trans-

action, that it is better to exclude it from the present dis-

cussion.

lO

FOBMATION OF CONTRACT.

Part II.

PAET IL

THE FORMATION OF CONTRACT.

Elements

necessary

to a valid

contract.

Results of

their ab-

sence.

Having ascertained the particular features of contract as

a juristic conception, the next step is to ascertain how con-

tracts are made. A part of the definition of contract is that

it is an agreement enforceable at law : it follows therefore

that we must try to analyze the elements of a conti*act such

as the law of England will hold to be binding between the

parties to it.

These elements appear to consist : —

1. In a distinct communication by the parties to one

another of their intention ; in other words, in Proposal and

Acceptance.

2. In the possession of one or other of those marks which

the law requires in order that an agreement may affect the

legal relations of the parties. These marks are Form, and

Consideration.

3. In the Capacity of the parties to make a valid contract.

4. In the Genuineness of the consent expressed in Pro-

posal and Acceptance.

5. In the Legality of the objects which the contract

proposes to effect.

Where all these elements co-exist, a valid Contract is the

result : where any one of them is absent, the agreement is in

some cases merely unenforceable, in some voidable at the

option of one of the parties, in some absolutely void.

Chap. I. PBOPOSAL AND ACCEPTANCE. II

CHAPTER L

Proposal and Acceptance*

Every expression of a common intention arrived at by Agreement

two or more parties is ultimately reducible to question and ^a^e in^i^^o-

answer. In speculative matters this would take the form, posal and

^ , acceptance.

' Do you think so and so f * I do/ In practical matters and

for the purpose of creating obligations it may be represented

as, ' Will you do so and so ]' ' I will' If A and X agree that

A. shall purchase from X a property worth £50,000, we can

trace the process to a moment at which X says to A, * Will

you give me £50,000 for my property?' and A replies, *I

will/ If A takes a sixpenny book from X*s book-stall the

process may be represented thus. X in displaying his

wares says in act though not in word, 'Will you buy my

goods at my price ]* and A, taking the book with X's cogni-

zance, virtually says * I will/ And so the law is laid down

by Blackstone : * If I take up wares from a tradesman comm. bk. 2.

without any agreement of price, the law concludes that I

contracted to pay their real value/

In order to create a voluntary obligation there must be a

promise binding the person subject to the obligation ; and in

order to give a binding force to the promise the obligation

must come within the sphere of Agreement. There must be

an acceptance of the promise by the person to whom it is

made, so that by their mutual consent the one is bound to

the other. A Contract then springs from the offer of a

promise and its acceptance. Let us now see what forms this

process may assume.

12

FORMATION OF CONTRACT.

Part II.

How pro-

posal and

acceptance

must be

made in

order to

form a

contract.

Illustra-

tions.

See on this

point Xenos t.

Wickham,

L. R. a H. L.

296.

Townson v.

Tickell, 3 B

& A. 37,

The simple and obvious form just described is applicable in

English law only to such contracts as are made under seal.

For in English law no promise, which is not under seal,

is binding unless the promisor obtains some benefit in return

for his promise, and this benefit is called ** Consideration.'

Bearing this necessity in mind, we may say that proposal

may assume two forms, the offer of a promise, and the offer

of an act. Acceptance may assume three forms, simple

assent, the giving of a promise, or the doing of an act.

And thus a contract may originate in one of four ways.

1. In the offer of a promise and its acceptance by simple

assent : which in English law applies only to contracts

under seal.

2. In the offer of an act for a promise, as if a man offers

services which when accepted bind the acceptor to reward

him for them.

3. In the offer of a promise for an act, as when a man

offers a reward for the doing of a certain thing,, which being

done he is bound to make good his promise to the doer.

4. In the offer of a promise for a promise, in which case

when the offer is accepted hy the giving of the promise, a

contract arises consisting in outstanding obligations on both

sides.

Some simple illustrations will explain these forms of pro-

posal and acceptance.

1. A promises X under seal that he will do a certain act

or pay a certain sum. When X has assented to the proposal

both are bound, and there is a contract. Till he has assented

there is an offer, which, as will be noted presently, is irre-

vocable so far as A is concerned, owing to the particular form

in which it was made, but which cannot bind X until he has

assented to it. For a man cannot be forced to accept a

benefit.

2. A man gets into a public omnibus at one end of Oxford

Street and is carried to the other. The presence of the

Chap. I. PROPOSAL AND ACCEPTANCE. 1 3

omnilraB is a constant offer by its proprietors of snch services

npon certain terms ; they offer an act for a promise ; and

the man who accepts these services promises bj his acceptance

to pay the fare at the end of the jonmey.

3. A man who loses his dog offers by advertisement a

reward of £^ to any one who will bring the dog safe home ;

he offers a promise for an act; and when X brings the

dog safe home the act is done and the promise becomes

binding.

4. A offers X to pay him a certain snm of money on

a fatnre day if X will promise to perform certain services

for him before that day. When X makes the promise asked

for, he accepts the promise offered, and both parties are

bound, the one to do the work, the other to allow him to

do it and to make the payment.

It will be observed that cases 2 and 3 differ from 4 in DiiFerence

an important respect. In 2 and 3 the contract is formed contracts

by one party to it doin&r all that he can be required to do on executed

J r J o ^ T. ^ and execu-

under the contract. It is performance on one side which tory con-

makes obligatory the promise of the other ; the outstanding

obligation is all on one side. In 4 each party is bound to

some act or forbearance which, at the time of entering into

the contract, is future : there is an outstanding obligation

on each side.

Where the benefit, in return for which the promise is

given, is done contemporaneously with the promise ac-

quiring a binding force; where it is the doing of the act

which concludes the contract, then the act so done is called

an executed or present consideration for the promise. Where

a promise is given for a promise, each forming the considera-

tion for the other, such a consideration is said to be executory

or fature.

We may now lay down briefly the rules which govern

Proposal and Acceptance, or the communication of the com-

mon intention to create an obligation.

14

FOBMATION OF CONTRACT.

Part II.

Rule I.

Proposal

must be in-

tended to

affect legal

relations.

Roll. Abr. p. 6.

Guthing V.

Lynn, 2 B &

Ad. 932.

Taylor v.

Brewer, i M.

& S. 890.

§ I. The proposal must he intended to affect^ and capable

of affecting, legal relations,

A proposal to be made biuding by acceptance, must be

made in contemplation of legal consequences ; a mere state-

ment of intention made in the course of conversation will

not constitute a binding promise, though it be acted upon by

the party to whom it was made. Thus in the case of

Week V. Tibold, the defendant told the plaintiff that he would

give j£ioo to him who married his daughter with his con-

sent. Plaintiff married defendant's daughter with his con-

sent, and afterwards claimed the fulfilment of the promise

and brought an action upon it. It was held not to be

reasonable that a man 'should be bound by general words

spoken to excite suitors.*^

And a proposal must be capable of affecting legal relations,

that is to say it must not be so indefinite or illusory as

to make it hard to say what it was that was promised.

Thus where A bought a horse from X and promised that

* if the horse was lucky to him he would give £$ more or the

buying of another horse,*^ it was held that such a promise

was too loose and vague to be considered in a court of

law.

And so where A agreed with X to do certain services

for such remuneration as should be deemed right, it was held

that there was no promise on the part of X which was

sufficiently definite to be capable of enforcement. ' It seems

to me,' said one of the judges, * to be merely an engagement

of honour.*