PART I.

Agreement.

Evidence of agreement.

Motive.

Agreement as source of contract.

to the mode of formation: namely, simple contracts formed by agreement, and simple contracts arising independently of agreement or contracts implied in law.

Agreement may be defined generally as consisting in two persons being of the same intention concerning the matter agreed upon. The intention of a person can be ascertained by another only by means of outward expressions, as words and acts; and for the purpose of agreement there must be a communication of intention between them by means of such expressions. Accordingly, the law judges of the intention of a person by outward expressions only; and it judges of an agreement between two persons exclusively from those expressions of their intentions which are communicated between them (b). Consequently an intention not expressed or not communicated, or withdrawn before communicated, or communicated only to a third person, is, in general, inoperative and immaterial to the question of agreement (c).

The law imputes to a person an intention corresponding to the reasonable meaning of his words and actions. Where acts are inconsistent with words, the former are accepted as more reliable evidence of intention than the latter; and acts may in some cases prove the intention even in opposition to words, according to the maxim, "non quod dictum, sed quod factum est inspicitur" (d). The law also imputes presumptively a rightful intention to words and acts. And where a man does an act that may be rightfully performed, he cannot say that that act was intentionally and in fact done wrongfully; according to the maxim, "allegans suam turpitudinem non est audiendus " (e).-The motive of a person in expressing an intention is in general immaterial to the question of agreement, and cannot be inquired into (ƒ).

An agreement as the source of a legal contract imports that the one party shall be bound to some performance, which the latter

(b) Blackburn, J., Smith v. Hughes, L. R. 6 Q. B. 607; 40 L. J. Q. B. 227; and see Cornish v. Abington, 4 H. & N. 549; 28 L. J. Ex. 262.

(c) Cox v. Troy, 5 B. & Ald. 474; Re East of England Bank, L. R. 4 Ch. 14; 38 L. J. C. 121.

(d) Co. Lit. 36 a; see Croft v. Lumley, 6 H. L. C. 672; 27 L. J. Q. B. 321; 10

E. R. 1459; Davenport v. Reg., 3 Ap.
Ca. 131; 47 L. J. P. C. 8.

(e) Re Hallett's Estate, 13 C. D. 696; 49 L. J. C. 428.

(f) Eldon, L. C., Downshire v. Sandys, 6 Ves. 114; per cur. Vernon v. Keys, 12 East, 637; S. C., 4 Taunt. 488; Williams v. Carwardine, 4 B. & Ad. 621; Denny v. Hancock, L. R. 6 Ch. 1; 40 L. J. C. 193.

CH. I.

SECT. I.

shall have a legal right to enforce. And the intention of the one party as to the performance, expressed to, and accepted by the other, for the purpose of creating the right, constitutes a promise. Promises. Promissory expressions reserving an option as to the performance do not create a contract: as in cases of employment upon the terms of such remuneration as the employer thinks right to give (g); or upon the terms of being remunerated by a legacy (h); expressions of intention respecting settlements on marriage (i).

Representations made by a person to another require further to Representabe distinguished: as being representations of future acts, which, if tion of fact. intended to be binding, constitute promises strictly so called; and representations of matters of fact. "There is a clear difference between a representation of fact, and a representation that something will be done in the future. A representation that something will be done in the future cannot either be true or false at the moment it is made; and although you may call it a representation, if it is anything, it is a contract or promise" (k).—A repre- Warranty sentation of a matter of fact may be intended and expressed to bind the person making it to its truth, or rather for the consequences of it not being true; as in the case of a warranty of the soundness of a horse; or of the quality of goods; or of the seaworthiness of a ship; or of the genuineness of a picture. A representation or undertaking of this kind is commonly known as a warranty; and it is equivalent to a promise in producing a con

of fact.

tract or legal obligation (1).—A representation of fact may also Liability for be made to another without a warranty of the truth, but with the tion acted intention of inducing him to act upon it; and if the latter in fact upon. acts upon it and suffers loss by reason of it not being true, the party making the representation may become responsible in law for the consequences. Although the rules of law regulating contracts by agreement do not apply, the party may incur legal responsibility for such representations without the formalities or requirements of that kind of contract (m). The rule as to representations of fact has been thus stated: "Where one by his words or conduct

(g) Taylor v. Brewer, 1 M. & S. 290; Roberts v. Smith, 4 H. & N. 315; 28 L. J. Ex. 164.

(h) Osborn v. Guy's Hospital, 2 Str. 728; Maddison v. Alderson, 8 Ap. Ca. 467 52 L. J. C. 737.

(i) Maunsell v. White, 4 H. L. C. 1039; 10 E.R.769; Jorden v. Money, 5 H. L. C.

185; 23 L. J. C. 865; 10 E. R. 868.

(k) Mellish, L. J., Beattie v. Ebury, L. R. 7 Ch. 804; 41 L. J. C. 808.

(1) See post, Pt. I. Chap. VI. Sect. II. § 2. (m) Eldon, L. C., Evans v. Bicknell, 6 Ves. 182; Grant, M. R., Burrowes v. Lock, 10 Ves. 475; Low v. Bouverie, (1891) 3 Ch. 82; 60 L. J. C. 594.

PART I.

Representations not intended as binding.

wilfully causes another to believe in the existence of a certain state of things, and induces him to act on that belief or to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time" ("). And "by the term 'wilfully' in that rule, we must understand, if not that the party represents that to be true which he knows to be untrue, at least that he means his representation to be acted upon, and that it is acted upon accordingly; and if, whatever a man's real intention may be, he so conducts himself that a reasonable man would take the representation to be true, and believe that it was meant that he should act upon it, and did act upon it, as true, the party making the representation would be equally precluded from contesting its truth" (o). But "that doctrine does not apply to a case where the representation is not of a fact, but a statement of something which the party intends or does not intend to do,— in respect of which he may be sued, if it is put into a valid form, but not otherwise." In the latter case "there is no reason for the application of the rule, because the parties have only to enter into a contract, and then all difficulty is removed" (p).

Again, the representation may be made, not only without any warranty, but also without any intention that it should be acted upon without further inquiry (9); that is to say, as a mere opinion given with the understanding that it should not be obligatory: as in the case of commendatory representations of the quality and value of goods made by the seller in offering them for sale, and which are made and accepted without any sense of responsibility attaching; according to the maxim of the civil law, “simplex commendatio non obligat" (r). And it is stated as "the rule to be derived from all the cases, that where, upon the sale of goods, the purchaser is satisfied without requiring a warranty, he cannot recover upon a mere representation of the quality by the seller, unless he can show that the representation was bottomed in fraud” (s).

(n) Pickard v. Sears, 6 A. & E. 469; Dashwood v. Jermyn, 12 C. D. 781; Roe v. Mutual Loan Fund, 19 Q. B. D. 347; 56 L. J. Q. B. 541; Balkis Co. v. Tomkinson, (1893) A. C. 396; 63 L. J. C. 134.

(0) Freeman v. Cooke, 2 Ex. 654; Carr v. L. & N. W. Ry., L. R. 10 C. P. 307; 44 L. J. C. P. 109; Seton v. Lafone, 19 Q. B. D. 68; 56 L. J. Q. B. 415.

(r) Chandelor v. Lopus, Cro. Jac. 2; 2 Sm. L. C. 52.

(s) Per cur. Ormrod v. Huth, 14 M. & W. 661; 14 L. J. Ex. 366.

CH. I.

SECT. I.

tion.

It is further necessary that an agreement, in order to create a legal contract, should include in the matter agreed upon, besides a promise, what is called a consideration for the promise; which may Considerabe described generally as some matter accepted or agreed upon as a return or equivalent for the promise made. The fact of bargaining for and giving an equivalent for the promise serves to show that the parties act with deliberation, and with the intention that the transaction shall be binding; and for this purpose a nominal consideration stated in an agreement operates as an expression of intention and is presumptively sufficient. A promise merely voluntary, that is, made without a consideration, if it rests in agreement only, is not binding in law (t).—Voluntary promises, Voluntary which are thus incapable of becoming contracts by mere agreement, promises. may be made legally binding by using the solemnities of a deed, which are prescribed for the same purpose as the consideration of an agreement, namely, that of securing a deliberate obligatory intention (u). Writing alone is not a sufficient solemnity to render a promise legally binding without a sufficient consideration to support it. Thus, with negotiable instruments, as bills of exchange and promissory notes, though by the custom of merchants a consideration is presumed to exist, in the absence of proof to the contrary, yet as regards parties between whom they are proved to pass without any consideration in fact, they are void of binding effect at law and in equity (x).

executory

The consideration of a promise may be executed or executory. An Executed and executed consideration is some act performed or some value given consideraat the time of making the promise and in return for the promise tions. then made as where goods are delivered, or services rendered, upon credit, that is, upon a promise to pay for them at a future time; or where money is paid in advance for a promise given.— An executory consideration is a promise to do or give something in return for the promise then made: as upon an interchange of promises to marry; or upon an interchange of promises, on the one part to serve and on the other part to employ, in some work or business. The contract with an executory consideration thus com- Mutual prises two promises, commonly described as mutual promises; the promises. one promise forming the consideration for the other, and conversely.

(1) Cooke v. Oxley, 3 T. R. 653; Knight-Bruce, V.-C., Kekewich v. Manning, 1 D. M. & G. 176; 21 L. J. C. 581.

(u) See post, Pt. I., Chap. II.

(x) Rann v. Hughes, 7 T. R. 350, n.; 7 Bro. P. C. 550; 3 E. R. 18; per cur. Easton v. Pratchett, 1 C. M. & R. 808; Tweddle v. Atkinson, 1 B. & S. 393; 30 L. J. Q. B. 265.

PART I.

Past consideration.

Consequently, contracts of this kind must be binding on both parties, otherwise the consideration for one of the promises fails, and the contract is then described as being void for want of mutuality; as in agreements for services where there is a promise to serve on the one side, but no sufficient promise to employ on the other (y). "The necessity of mutuality in contracts must be confined to those cases where the want of mutuality would leave one party without a valid or available consideration for his promise"(). Accordingly, where one party has received the benefit of the stipulations for which he contracted, or the other party has per

formed all the obligations on his part, whichever way it may be put, a defence based upon want of mutuality will not, in general, be a defence (a). Upon this principle a formal contract signed by one party only may amount to a mere offer until accepted by the other (b).

It appears from the nature of a consideration above described that the consideration must necessarily be something done or given, or promised to be done or given, at the time of the making of the promise, in return for it; and that any matter already done, given, or promised, before the making of the promise, cannot constitute a valid consideration. A promise made in respect of such past matter, though induced by the moral obligation of gratitude, or any other motive of compensation, is purely gratuitous and voluntary; and, therefore, it will not create a contract, unless made in an independently valid form, as by an instrument under seal (c). For example, where it was alleged in the declaration of the plaintiff that "in consideration that the plaintiff had then promised the defendant" to perform certain things, "the defendant then promised the plaintiff " to perform, etc.; it was construed that "then" referred to the same period of time with both promises, and that they were in effect simultaneous and mutual, and therefore valid (d). But, "if a man disburse money about the affairs of another without request, and then the latter promise that, in consideration of

(y) Lees v. Whitcomb, 5 Bing. 34; Sykes v. Dixon, 9 A. & E. 693; 8 L. J. Q. B. 102; Hartley v. Cummings, 5 C. B. 247; Westhead v. Sproson, 6 H. & N. 728; 30 L. J. Ex. 265.

(2) Per cur. Arnold v. Mayor of Poole, 4 Man. & G. 896; 11 L. J. C. P. 97.

(a) Fishmongers' Co. v. Robertson, 5 Man. & G. 131; 12 L. J. C. P. 185; Kidderminster v. Hardwicke, L. R. 9 Ex. 13; 43 L. J. Ex. 9; Ex p. Waters,

L. R. 8 Ch. 562; Tindal, C. J., Laythoarp v. Bryant, 2 Bing. N. C. 740; G. N. Ry. v. Witham, L. R. 9 C. P. 16; 43 L. J. C. P. 1.

(b) Dickinson v. Dodds, 2 C. D. 463; 45 L. J. C. 777.

(c) Lampleigh v. Brathwait, Hob. 105; 1 Sm. L. C. 136.

(d) Thornton v. Jenyns, 1 Man. & G. 166; Hall v. Betty, 4 Man. & G. 410; 11 L. J. C. P. 256.