Chapter II: Part I: Law in General (1)

=1. Rights.= Men are endowed with certain individual rights. These rights are principally of two classes, personal and property. Men have the right to live in peace and quietude. In so far as it does not interfere with the same privilege on the part of others they have the right to be unmolested in the pursuit of happiness. They have the right to defend themselves against the attacks of others, to satisfy bodily hunger and thirst, and to preserve their bodies in health and strength.

Besides these personal rights, men have the right to acquire and keep property. This right is also subject to the limitation of not interfering with the same privilege on the part of others. Men have the right to acquire property, both chattel and real. For the purpose of rendering their existence and enjoyment secure, they have the right to keep the title and possession of this property in themselves.

In primitive times, property rights were few. Personal rights were recognized and enforced by might. As the requirements of civilized life became more complex, property rights were needed and recognized. Rules of conduct and rules for the holding and transfer of property were recognized and enforced. Might ceased to be the principal method of enforcing rights. Rules began to be recognized and enforced with regard to persons and property. These rules are known as laws.

=2. Law.= Law may be defined to be a rule of human conduct. It may be said to embrace all rules of human conduct recognized by courts of law. Laws are necessary to enable men to enforce and enjoy their rights, both personal and property. Customs of men become rules by which human affairs are regulated. Men may disagree as to what their rights are, or as to their exact scope or limitations. In this event, rules of conduct or laws must determine their scope and limitations. Disputes among men arise about their personal or property rights. The rules recognized by the courts in settling these disputes are laws. These rules or laws relate both to persons and property. A law which prohibits murder is a rule by which the state protects the lives of its citizens; a law which prohibits theft is a rule for the protection of property.

=3. Sources of Law.= Law is derived from the customs of the people and from the written declarations or agreements of the people or their representatives. The customs of the people, constituting a large part of our law, are found principally in the decisions of courts. Each state of this country prints and keeps a permanent record of at least the most important decisions of its court of last resort. Many decisions of lower courts are printed and preserved. Every law library of importance has the printed reports of the supreme court of each state of this country; as well as the reports of the higher courts of most of the countries where the English language is spoken or officially recognized. The reports of the higher courts of England, Ireland, Canada, Australia, and of many of the island possessions of this country and of England, are found in most law libraries. The second source of law is the written declaration of the people or their representatives. These declarations consist of legislative acts, treaties and constitutions. In this country, legislative acts may be either national or state. Many statutes are nothing more than recognized customs enacted into written laws. Other statutes are variations or restrictions of recognized customs. National legislative acts are numbered consecutively, printed and bound into volumes known as the _Federal Statutes_. Each state numbers its statutes consecutively and prints and binds them into volumes known as the _State Statutes_.

=4. Divisions of the Law.= There are two great divisions of the law, _written_ and _unwritten_. The greater portion of the law consists of the customs of the people, as evidenced and preserved by the written decisions of the courts. These customs, to be recognized as law, need not be found in written decisions, but the most important ones have become embodied therein. New customs are necessary and are recognized to meet new and changing conditions. These new customs are continually adding to our unwritten law. While this great portion of the law is called unwritten law, the greater portion of it actually is in writing, and is preserved in permanent form by our court reports, both national and state.

The second division of law is known as written law. It consists of treaties, constitutions, and legislative acts. _Treaties_ are international compacts. _Legislative acts_ are the laws passed by the people or their representatives. In this country they consist of the laws passed by the United States Congress, and by the representative bodies of each state. _Constitutions_, in this country, consist of the State Constitutions and the United States Constitution. In England the constitution is not written, but is a part of the unwritten law of the land.

=5. Classification of Law.= A number of useful classifications of the law are recognized. Any classification is more or less arbitrary, and no classification has been recognized universally.

Law may be classified as _public_, _administrative_, and _private_. Public law embraces the law of nations, called _international law_; the laws regulating the enforcement and recognition of constitutional provisions, called _constitutional law_; and the laws protecting citizens against the actions of dangerous characters, called _criminal laws_.

The public as a unit is said to be interested in public law. Public laws are recognized and enforced in theory, at least, for the benefit of the public and not for any particular individual. For example, if a murder is committed, the state through its officers prosecutes and punishes the criminal on the theory that a wrong has been done the state. The heirs or representatives of the person murdered can sue and recover money compensation, called _damages_, from the murderer, but the state punishes the criminal. This work does not treat of public law.

_Administrative law_, sometimes called _Law of Procedure_, embraces the rules and regulations relating to the enforcement of personal and property rights. The laws relating to courts, the method and manner of starting legal actions, the trial of cases, and the rendering and enforcement of judgments are common examples of Administrative Law. _Private law_ embraces the _law of contracts_ and of _torts_.

Contracts consist of agreements of every nature. The great majority of dealings of men are carried out by means of contracts. This is the most important, as well as the most extensive subject known to the law.

Torts embrace all private wrongs not arising out of contracts. Any injury inflicted by one person upon the person or property of another, which is not a breach of contract, is a tort. Tort is the French word for private wrong. If _A_ carelessly drives his automobile into _B_'s wagon, he commits a tort. If _A_ carelessly drives his horse over _B_'s field, he commits a tort. If _A_ wrongfully strikes _B_, he commits a tort. Torts and crimes frequently over-lap. The same act may constitute a tort and a crime. If _A_ drives his automobile faster than the laws of the state or city permit, and while so doing runs over and injures _B_, he commits both a tort and a crime. He is liable to the state for imprisonment or fine for the crime, and he is liable to _B_ in money for damages for the tort.

The same act may constitute a crime, a breach of contract, and a tort. If _A_, engaged as a chauffeur to operate an automobile carefully and skillfully, violates the speed law, and in so doing runs over and injures _B_, he commits a crime and is liable to the state for punishment or fine. He is also liable in damages to _B_ for the tort committed, and is liable in damages to his employer for breach of contract. This work has largely to do with the law of contracts and torts.

The term _Commercial Law_, applied to this work, is a term used arbitrarily to embrace the laws relating to commercial affairs. It has no distinct place in the general classification of law.

CONTRACTS

=6. Contract, Defined and Discussed.= A contract has been defined to be an agreement between two or more competent parties, enforceable in a court of law, and based upon a sufficient consideration, to do or not to do a particular thing.

The law relating to contracts is the most important, as well as the most extensive, branch of commercial law. It touches, directly or indirectly, most of the dealings of men. It is the legal basis of all business transactions.

In the daily routine of their life, most families make many contracts. By reading the morning paper left at his door, a person impliedly agrees to pay the publisher the customary price. By ordering the daily supply of groceries by telephone, the housewife impliedly contracts to pay for their value, upon delivery, or at the customary time of payment. By purchasing a number of car tickets from the street car conductor, a person makes a contract. By ordering a lunch, a person impliedly agrees to pay the customary price. In the more important business transactions, formal contracts are written out and signed. In these transactions the parties endeavor to define their duties and obligations clearly and expressly, in order that they may understand each other and in order that neither can dishonestly claim that the contract contains a certain provision or condition. Contracts are legal or illegal, void or voidable, depending upon their form and nature. An understanding of the necessary elements of valid contract is the foundation, to the understanding of commercial law.

=7. Offer, Acceptance and Agreement.= To constitute a transaction a valid contract, there must be an offer on the one hand, and an acceptance on the other. This necessitates at least two parties to every contract. One must make a proposition, the other must accept it. The acceptance must be of the exact terms of the offer, to constitute a legal acceptance. If the attempted acceptance is not made in the precise terms of the offer, it constitutes a counter offer, which, to constitute a contract must, in turn, be accepted by the original offeror.

If _A_ offers _B_ one hundred dollars for _B's_ horse, and _B_ in turn agrees to take one hundred dollars, the transaction constitutes a valid contract. If _A_ offers _B_ one hundred dollars for _B's_ horse, and _B_ in turn offers to sell the horse for one hundred and twenty dollars, the transaction does not constitute a contract, for the reason that _A's_ offer has not been accepted. _B_, however, makes a counter offer, which if not assented to by _A_, constitutes no contract. If, however, _A_ agrees to accept _B's_ offer to sell the horse for one hundred and twenty dollars, this constitutes a valid contract, in which _B_ is the offeror and _A_ the acceptor. These counter offers in response to offers may go on indefinitely without constituting contracts. So long as the response to the offer varies the terms of the offer, it constitutes a counter offer, and not an acceptance. To constitute an acceptance, the exact terms of the offer must be agreed to.

Courts lay down the principle that there must be a meeting of the minds of the contracting parties, to constitute the transaction a valid contract. This means that the offer must be accepted in its precise terms. The minds of the contracting parties cannot meet, unless the acceptance is of the exact terms of the offer. This principle is sometimes called _mutuality_. An acceptance must be communicated to the offeror. A mere mental operation, or an attempted acceptance, not communicated to the offeror, does not constitute a legal acceptance.

The offer, or acceptance, may be in the form of an act as well as by verbal or written communication. If a person orders a barrel of flour of his grocer, the order constitutes the offer, and the delivery of the flour and the receipt of same by the purchaser, constitutes the acceptance. The purchaser is bound to pay the market price for the flour, regardless of the fact that the price has not been mentioned.

An offer can be recalled at any time before acceptance. To recall an offer, the offeror must communicate his intention so to do, to the acceptor before acceptance. Agreements to hold offers open for a stipulated time are recognized. These options are, in themselves contracts, and to be binding must contain all the essential elements of a contract.

An offer which has been accepted constitutes an _agreement_. An agreement, as the word suggests, means a meeting of the minds of two or more parties. The word is frequently used as synonymous with contract, but it is merely an element of a contract. While there must be an agreement in every contract, an agreement of itself does not constitute a contract. There may be an agreement between persons under legal age, but this agreement does not constitute a contract.

Besides an agreement, or meeting of the minds, a contract must have competent parties, a legal valuable consideration, and a lawful object. These are often called the elements of a contract.

=8. Parties to a Contract.= A contract must have at least two competent parties. Each party to a contract may consist of one or more persons.

To be competent to make a contract, a party must be of legal age. Legal age is twenty-one years for males, and ordinarily, eighteen for females. Legal age is fixed by statutes of the different states. These statutes differ somewhat as to the legal age of females. Some fix it at twenty-one, others at eighteen, and some even younger than eighteen, in case of marriage. Intoxicated persons, insane persons and idiots are not competent to make contracts. Artificial persons or corporations can make contracts within the scope of the powers given them by the state.

A person who does not voluntarily consent to the terms of a contract is not a party to it. Where fraud or duress is used in obtaining a party's consent to a contract, the contract is at least voidable. It is not enforceable if the defrauded party objects on that ground.

=9. Consideration.= Consideration may be _good_ or _valuable_. Good consideration consists of love and affection existing between near relations. Good consideration is a sufficient consideration to support a deed given by one relative to another. But this is the only kind of contract supported by a good consideration.

Valuable consideration has been defined to consist of some right, interest, profit or benefit, accruing to the promisor, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the party, to whom the promise is given. In short it is a benefit to the promisor, or a detriment to the promisee. All contracts, with the exception of sealed instruments, must be supported by a valuable consideration. Sealed instruments, except where abrogated by statute, import a consideration.

_A_ promises to sell his watch to _B_ for ten dollars. _B_ accepts the offer by offering to pay _A_ ten dollars. There is a valuable consideration, consisting of _B's_ promise to pay _A_ ten dollars.

_A_ promises _B_ two dollars if _B_ will guard _A's_ house for two hours. There may be no actual benefit resulting to _A_, since it may have been unnecessary to have the house guarded. But if _B_ guards the house for two hours, _A_ is legally bound to pay him the contract price of two dollars. The valuable consideration is the detriment or responsibility of _B_ in guarding the house for two hours.

Mutual promises constitute a valuable consideration. If _A_ promises _B_ two dollars if _B_ will work for him next Thursday, and _B_ promises _A_ to work for him next Thursday, the contract is mutual, and is supported by a valuable consideration. The consideration consists of the promise on the part of each of the contracting parties.

A past consideration will not support a contract. By a past consideration, is meant a benefit received in the past, for which no legal liability was incurred or exists. _A_ gives _B_, his son, five hundred dollars. One year later, in consideration of the past gift, _B_ promises to construct a dam for _A_. The consideration is past and does not support the attempted contract.

A consideration, to be valuable and sufficient to support a contract, need not be adequate. A mutual promise, no matter how slight or trivial, or the payment of anything valuable to the promisor, is sufficient. Sometimes the inadequacy of the consideration tends to prove fraud in the making of the contract. When it is sought to avoid a contract on the ground of fraud, the inadequacy of the consideration may be considered in connection with the question of fraud. When fraud does not enter into the question, adequacy of the consideration is not questioned.

_A_ sells _B_ one hundred acres of land. The deed recites a consideration of one dollar. The deed of transfer is good and the smallness of the sum named does not affect the contract.

A promise to do something which one is already legally bound to do does not constitute a valuable consideration to a contract. _A_ owes _B_ one hundred dollars upon a promissory note. The note is past due and _A_ fails to pay it. _A_ promises to pay the note within ten days, on condition that _B_ promise to give _A_ a barrel of apples. _B_ agrees. _A_ cannot compel _B_ to deliver the barrel of apples, nor has _A_ any defense to the payment of the promissory note, since his promise to pay the note was a promise to do something he was already bound to do.

An illegal consideration does not support a contract. Any consideration contrary to established law is illegal. _A_ promising to pay _B_ one thousand dollars if _B_ will burn _C's_ barn is an example of illegal consideration.

=10. Express and Implied Contracts.= Some contracts expressly set forth the exact terms and conditions to be performed by both the contracting parties. For example, _A_ makes a contract with _B_, by the terms of which, _B_ is to construct a house for _A_. The contract is carefully prepared in writing, _B_ is to receive five thousand dollars ($5,000.00) when the house is completed, and the contract contains provisions as to the details of the work and materials. Such a contract is called an _express contract_ by reason of the terms having been expressly agreed upon by the parties. A contract need not be in writing to be express. The parties may enter into an express contract orally as well. Few contracts are made, however, in which some things are not implied. For example, in the contract for the building of a house it is practically impossible, or at least, is impracticable, to set forth in exact detail all the duties of the builder. For example, it would be unnecessary to give the size of the nails and number or quantity of same to be used. The contract impliedly requires the builders to use the proper size and quantity. A contract, however, in which the parties endeavor to set forth the principal things to be done, is known as an express contract.

An _implied contract_ is one in which the parties do not expressly agree upon some of the important terms. _A_, a contractor, orders of _B_ one thousand feet (1,000 ft.) of No. 1 white pine ship lap siding. The price is not mentioned. _B_ delivers the lumber and _A_ by implication is obliged to pay _B_ the reasonable value thereof. The greater portion of business contracts are implied. An implied contract should not be confused with uncertain contracts. Uncertain contracts are void by reason of their uncertainty. _A_ offers _B_ one thousand dollars for five acres of land. _B_ accepts the offer. In case the parties had no particular five acres of land in mind, the contract is void by reason of this uncertainty. The parties' minds did not meet on the question of what particular piece of land was to be transferred. In most implied contracts the article to be delivered is a part of a large quantity, and the particular part does not matter. Articles ordered from stock, such as groceries, shingles, slate, cement and lumber are common examples of this principal.

=11. Unilateral and Bilateral, Executory and Executed Contracts.= The mutuality or meeting of the minds, constituting one of the essential elements of the contract, may result from an express promise for a promise, or from an act performed in response to a promise. _A_ promises to sell his automobile to _B_ on the following day for five thousand dollars ($5,000.00). _B_ promises to pay _A_ five thousand dollars ($5,000.00) the following day. The mutuality consists of the mutual promises of _A_ and _B_. Such contracts are known in law as _bilateral_ contracts.

_A_ promises to pay _B_ one thousand dollars ($1,000.00) if _B_ will move his house to the rear of _A's_ lot. _B_, without promising to do so, moves the house. This act on the part of _B_ constitutes the acceptance of the contract and completes the mutuality. Such contracts are known in law as _unilateral_ contracts.

A contract to be performed in the future is known as an _executory_ contract. _A_ promises to pay _B_ seventy-five dollars, if he will work on _A's_ farm during the month of August of the following year. _B_ accepts _A's_ offer and promises to work for _A_ as proposed. The contract is to be performed at a subsequent date, and constitutes an executory contract.

An _executed_ contract is one which is performed. _A_ promises to sell his bicycle to _B_ for fifty dollars ($50.00); _B_ pays the fifty dollars ($50.00) to _A_ and receives the bicycle. This contract is executed.

A contract may be executed as to one party and executory as to the other. If _A_ agrees to sell and deliver his team of horses to _B_ for five hundred dollars ($500.00) and _B_ pays _A_ five hundred dollars ($500.00) but _A_ does not deliver the team to _B_, the contract is executed as to _B_ and executory as to _A_.

=12. Contracts of Infants.= A person under legal age is known in law as an infant. The legal age is fixed by statute in the different states. In most states this age is twenty-one for males and eighteen for females. In some states the legal age for females is under eighteen in case of marriage.

An infant's contracts are voidable. Voidable does not mean that the contract is illegal. It is not contrary to law for an infant to make contracts. He may lawfully make them. The law will not compel him to carry them out. He may carry them out voluntarily if he chooses.

A competent party, contracting with an infant cannot avoid the contract on the general ground of the infancy of the other party to the contract. The infant, however, may avoid the contract by reason thereof.

An infant may ratify his contract after becoming of legal age. This ratification is effected by the infant's accepting benefits under the contract after attaining his majority. Ratification may also be effected by an infant after he has reached his majority by promising to carry out the contract. To have such a promise amount to a ratification the infant must make the promise with knowledge that he may avoid the contract if he chooses.

An infant is liable on his contracts for necessaries. _Necessaries_ is a variable term, depending upon the social position of the infant. Those articles essential to the health and sometimes to the comfort of the infant are considered necessaries. Food and clothing are the most common examples. A person selling an infant necessaries, cannot recover in excess of their reasonable value regardless of the contract price, and cannot recover at all, if the infant is already supplied. Most courts hold that a party selling necessaries to an infant must determine at his peril that the infant is not supplied. Articles which would be luxuries for one infant, might be necessaries for an infant accustomed to wealth.

An infant is not entitled to his wages unless he has been emancipated. The father or guardian is entitled to the wages. Emancipation may be by written declaration to that effect, on the part of the father. It may also be implied from the refusal or failure on the part of the father to treat the infant as his child.

=13. Novation and Contracts for the Benefit of Third Persons.= If _A_ owes _B_ one hundred dollars ($100.00) and _B_ owes _C_ one hundred dollars ($100.00), the three parties may agree that _A_ may pay _C_ one hundred dollars ($100.00), discharging the indebtedness of both _A_ and _B_. This contract is valid in law, and is called _novation_.

Much of our common or unwritten law was taken from the common law of England. The common law of England did not permit a third party, for whose benefit a contract was made, to enforce the contract. For example, if _A_ and _B_ enter into a contract by which _A_ is to pay _C_ some money, _C_ cannot enforce the contract. This kind of a contract is commonly known as a contract for the benefit of a third person. With a few exceptions, the states of this country refuse to follow the English doctrine. The general American doctrine is that a third party may enforce a contract made for his benefit. For example, _A_, a furniture dealer was indebted to _B_ for a bill of goods; _C_ purchased _A's_ business, and in a formal written contract, as part of the consideration, agreed to pay _B_ the amount of _A's_ bill. After the transfer of the business, _A_ became insolvent and _B_, learning of the contract between _A_ and _C_, sued _C_ thereon and was permitted to recover. The general American doctrine will not permit two parties, making a contract for the benefit of a third, to rescind or avoid the contract after the third party has been notified of it, and has assented thereto. Of course, two parties cannot bind a third party to perform any condition of a contract without his consent. This would violate some of the fundamental principles of contracts. There would be no consent, no meeting of the minds, and sometimes no consideration.

=14. Contracts of Insane Persons, Idiots, and Drunkards.= An insane person, or one that does not understand the nature of the contract in question, is not bound by his contracts. He may avoid them. Like an infant, he may ratify them when he becomes sane, if he chooses. Statutes of all the states provide for the determination of insanity by judicial decree. Such a judicial determination is presumed to give notice to all. An idiot's contracts are the same as an insane person's.

A drunkard can avoid a contract made while he was intoxicated, and if the drunkenness amounts to insanity, it is regarded in law as such. Contracts made by a drunkard when not drunk, or by a lunatic during a lucid interval are valid and binding.

=15. Contracts of Married Women.= At common law, upon marriage, the wife lost her legal identity in her husband. Her estate became his, her personal property became his, and she could not thereafter enter into any legal obligation. The statutes of the states generally at the present time permit a married woman to contract as independently as a man, relative to her separate estate. In some states there are a few limitations, such as contracting directly with her husband or as surety for her husband.

=16. Custom and Usage as Part of a Contract.= Parties may enter into any contracts they choose, so long as the terms are legal. If parties expressly agree, either orally or verbally, on the precise terms of a contract, these terms cannot be varied by usage or custom. Usage and custom may be used, however, to explain the intent of the parties. Merchants and traders recognize various trade customs, without which it would be impossible to interpret their contracts. For example, _A_ ordered five thousand barrels of cement of _B_, at eighty-five cents a barrel, to be delivered in sacks F. O. B. Mill. In a suit for the purchase price, the court permitted _B_ to show that there was a well-known custom in the cement trade to add to the invoices forty cents per barrel for sacks, making the invoice selling price of the cement and sacks one dollar and twenty-five cents ($1.25) per barrel.

To constitute a part of the contract, usage and custom must be of such a general nature as to be considered within the contemplation of the parties.

=17. Contracts in Writing.= Parties may make contracts verbally, as well as in writing. A contract is not illegal because it is verbal. It is good business policy to make important contracts in writing. Their terms are easily proven. There is not the temptation to attempt to vary the terms. Parties cannot claim they did not understand each other. It may be laid down as a general rule that oral contracts are as legal as written ones. By the term, _legal_ is meant that the law does not prohibit them. Parties may lawfully make oral contracts, and carry them out if they choose. Some contracts, however, are not enforceable at law unless in writing. These contracts are legal. Parties may lawfully make them and voluntarily carry them out, but they cannot invoke the aid of the law in enforcing their terms.

=18. Statute of Frauds.= The class of contracts, required by law to be in writing in order that they be enforceable, is said to be within the Statute of Frauds.

The Statute of Frauds originated in England in 1677. It was passed for the purpose of preventing frauds and perjuries. It required that certain important contracts must be made in writing, in order to be enforceable at law. The purpose of the statute was to remove the temptation of fraud and perjury in connection with the making and enforcing of certain contracts. Two sections of the English statute apply especially to contracts; the fourth and the seventeenth. The fourth section is as follows:

"No action shall be brought whereby to charge any executor or administrator, upon any special promise to answer damages out of his own estate; or whereby to charge the defendant upon any special promise, to answer for the debt, default, or miscarriage of another person; or to charge any person upon any agreement made upon consideration of marriage; or any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them; or upon any agreement that is not to be performed within the space of one year from the making thereof; unless the agreement upon which such action shall be brought, or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized."

The seventeenth section of the English Statute of Frauds is as follows:

"No contract for the sale of any goods, wares, or merchandise for the price of ten pounds sterling or upwards, shall be allowed to be good except the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the bargain, or in part payment, or some note or memorandum in writing of the said bargain, be made and signed by the parties to be charged by such contract or their agents thereunto lawfully authorized."

The English Statute of Frauds has been enacted in substance in all the states. Reduced to single propositions the statute provides:

1. That an executor or administrator shall not be bound by contract to pay damages out of his own estate, unless the contract be in writing.

For example, _A_ is executor of _B's_ estate. _C_ is a creditor of _B_. _A_ orally promises _C_ to pay _B's_ debt. This contract is not enforceable because not in writing.

2. A party promising to answer for the debt, default or miscarriage of another, shall not be bound unless the contract is in writing.

For example, if _A_ owes _B_ $100 and _C_ promises _B_ to pay _A's_ debt, the contract is not enforceable if not in writing. This clause of the statute is discussed more at length in the chapter on suretyship.

3. A contract made in consideration of marriage is not enforceable unless made in writing.

For example, _A_ orally promised _B_ that if he would marry her, she would convey to him her farm. _B_ married _A_, but could not enforce the contract. A promise to marry is not within this section of the statute.

4. Any contract or sale of lands must be in writing to be enforceable.

For example, _A_ orally promises _B_ to sell his house and lot for ten thousand dollars ($10,000.00). The contract is not enforceable. Most of the states do not require that leases of less than a year's duration be in writing, to be enforceable.

5. An agreement, not to be performed within the space of one year, must be in writing to be enforceable.

For example, _A_ orally promises to work for _B_ as sales agent for three years. This contract is not enforceable.

6. No contract for the sale of goods the price of which exceeds fifty dollars ($50.00) shall be enforceable unless made in writing.

This provision of the English Statute has not been reÎnacted by all the states. About half the states do not require that contracts for the sale of personal property shall be in writing, regardless of the price involved. Some of the states fix the price as high as two hundred dollars ($200.00) and others, as low as thirty dollars ($30.00).

The details of the entire contract need not be in writing to satisfy the provisions of the statute. A memorandum embodying the substance of the agreement, showing the consideration, and signed by the party to be bound, or by his authorized agent, is sufficient.

Contracts called _specialties_, have to be in writing, regardless of the Statute of Frauds. The most common examples are bills and notes, drafts and checks. These special contracts are made to circulate as money, and must be reduced to writing to be enforceable. There can be no such thing as an oral check, or draft, or promissory note. The oral contract for which they are given may be enforced, if not within the provisions of the Statute of Frauds.

=19. Contracts by Correspondence and Telegraph.= Parties need not meet personally to enter into contracts. They may legally make them by telegraph or by letter.

It is well settled by the courts that a party may make an offer by letter, and that in so doing he impliedly gives the party addressed, the right to accept by letter. In law, the contract is complete the moment the letter of acceptance is mailed, regardless of its ever being received.

The offeror may stipulate in his offer by letter, that the contract shall not be made until he is in receipt of a reply. In this event, the acceptor's letter must actually be received by the offerer, before the contract is complete. But if no such stipulation is made, the contract is complete when the letter of acceptance is mailed.

If no time for acceptance is stipulated in the offerer's letter, the acceptor has a reasonable time in which to accept. What is a reasonable time, depends upon the nature of the transaction, and the circumstances surrounding it. If the offeror stipulates in his letter that the offer must be accepted by any stipulated time, the offer, of itself, lapses at the expiration of that time. If _A_ mails a letter to _B_, offering to sell one hundred bushels of wheat for one hundred dollars ($100.00), and the following day _B_ mails a letter, properly addressed, postage prepaid, to _A_, accepting the offer, and the letter is lost, the contract is complete and _B_ may recover from _A_ thereon.

If _A_, by letter offers to sell _B_ one hundred bushels of wheat for one hundred dollars ($100.00), the offer to remain open until Thursday, and _B_ mails his letter of acceptance Wednesday, and the letter is lost, the contract is binding and _A_ is liable thereon. If _A_ by letter offers to sell _B_ one hundred bushels of wheat for one hundred dollars ($100.00), the offer to be accepted upon receipt of _B's_ reply, and _B's_ reply is lost in the mails, there is no contract.

=20. Revocation.= It is a well recognized principle of contracts that an offer may be revoked, or withdrawn, at any time before acceptance. In case of revocation by mail, however, the letter of revocation must be received by the acceptor, before he has mailed his letter of acceptance. For example, _A_ mails _B_ a letter offering to sell _B_ one hundred bushels of wheat for one hundred dollars ($100.00). _B_ mails his letter of acceptance. By the next mail _B_ receives a letter of revocation. The contract is valid since the letter of revocation was not received, until after the letter of acceptance was mailed.

The only offers that cannot be withdrawn at any time before acceptance, are what are known in law as _options_. Options are contracts to keep an offer open for a stipulated length of time. They require a consideration, an agreement and all the elements of an ordinary contract. They are contracts. _A_ agrees by letter to sell _B_ one hundred bushels of wheat, and to keep the offer open three days. On the second day, and before _B_ has mailed his acceptance, _B_ receives a letter from _A_, by which _A_ withdraws his offer. _B_ cannot now accept _A's_ offer, since there was no consideration for _A's_ promise to keep the offer open three days.

_A_ writes _B_, offering to sell him one hundred bushels of wheat for one hundred dollars ($100.00), and to keep the offer open for ten days. _B_ writes _A_ that he will give him $2.00 if he will keep the offer open ten days. _A_ accepts the offer. On the sixth day _B_ receives a letter from _A_ revoking the offer to sell, and on the following day _B_ mails his letter of acceptance. There is a valid contract in this case, since _B_ had a contract with _A_ based on a valuable consideration to keep the offer open ten days.

Contracts by telegraph are analogous in principle to contracts by letter. An offer by telegraph impliedly authorizes the receiver to accept by telegraph and the offer is accepted when the reply message is deposited with the operator. If lost, or not sent, the contract is not affected in the least.

=21. Contracts under Seal.= Formerly, at common law, contracts under seal were frequent. At the present time few contracts are made under seal. Originally a seal was an impression made in wax placed on a written document. Sealed instruments differ from other written instruments in that they import a consideration. At common law, no consideration need be proven to a sealed instrument. Formerly, private seals were in common use. Later, a scroll made with the pen or a line or any mark designated as a seal was sufficient.

Private seals have been abolished by statute in many of the states, so that their use is now limited. The modern tendency is not to use sealed instruments, or when used, to regard them as different in no respect from other contracts.

=22. Sunday Contracts.= All the states of this country have statutes prohibiting the transaction of business on Sunday. These statutes are based on "the Lord's Day Act" of England. The English statute provides that persons shall not do or exercise any worldly labor, business or work of their ordinary callings, upon the Lord's Day, or any part thereof, works of necessity and charity only excepted.

While the statutes of the different states differ in details, they are based upon the English statutes. Under the English statute, it is difficult to determine in many cases what constitute "works of necessity and charity." The duties of clergymen, physicians and of nurses clearly are covered. It is sometimes stated that a person cannot make contracts, within the ordinary scope of his customary business, on Sunday. This is true, if it does not relate to charity or necessity. Deeds, notes and ordinary contracts, made and delivered on Sunday are void. Subscriptions for church funds may legally be made on Sunday.

=23. Illegal Contracts.= A contract prohibited by law, or made for the purpose of doing something prohibited by law, is illegal, and void. If _A_ promises _B_ one hundred dollars ($100.00) if _B_ will poison _C's_ horse, the contract is contrary to law and illegal. If _B_ poisons _C's_ horse, he cannot recover the one hundred dollars ($100.00) from _A_.

Contracts which are against public policy are illegal and void. Public policy means the public welfare. Marriage brokerage contracts and contracts in restraint of trade come within this provision. Lobbying contracts, contracts to influence votes, and for railroad rebates are against public policy and void.

=24. Wagering or Gambling Contracts.= In England, at common law, wagering or gambling contracts were valid. Gambling contracts were recognized as legal by some of the states at one time. At the present time, by statute the states declare gambling contracts illegal and void.

A contract for the sale of goods, to be delivered in the future, even though the seller does not have possession of the goods at the time the contract of sale is made, but expects to purchase them from a third person, is not regarded as a gambling contract, and is valid.

Contracts for the purchase of stocks or goods in which there is no expectation to deliver, but simply an agreement to pay the difference in price at a certain date according to the state of the market, are gambling contracts, and void.

=25. Fraud and Duress.= Fraud may be said to be misrepresentation of a material fact, known by the party making the misrepresentation to be false, and made for the purpose of influencing the other party to the contract, and acted upon by the other party to his detriment.

For example, _A_ offers to sell _B_ a horse for two hundred and fifty dollars ($250.00). He tells _B_ the horse is sound, knowing that the horse has a disease which renders him worthless. He makes the representation of soundness for the purpose of inducing _B_ to buy. _B_ relies upon the representation, purchases the horse, and afterwards discovers the worthless condition of the horse. _B_ can return the horse and recover the purchase price. This is known as rescinding a contract on the ground of fraud.

A fraudulent contract is not void, but voidable. The defrauded party may avoid the contract if he chooses, but the contract itself, is not without effect, simply by reason of the fraud.

A mere failure to disclose facts or conditions, if not accompanied by active measures to distract the defrauded party's attention from the thing to be concealed, ordinarily does not amount to fraud.

If one party by means of threatened or actual violence compels another to enter into a contract, or to part with something of value, the contract is said to have been obtained by duress. Such contracts may be avoided by the injured party, who may recover what he has lost.

_A_, a police officer, wrongfully arrests and imprisons _B_ and releases him only after _B_ has signed a promissory note for one hundred dollars ($100.00). _A_ cannot recover on the note.

_A_, who is superior in physical strength to _B_, by threats of personal violence, compels _B_ to admit that he is indebted to _A_ for one hundred dollars ($100.00), which _B_ pays _A_. _B_ may recover the money from _A_. The contract is voidable on account of duress.

=26. Mistake.= One of the essential elements of a contract is that there must be a meeting of the minds of the contracting parties. If there is a mutual mistake on the part of the contracting parties, their minds do not meet and no contract results. _A_ offers to sell _B_ his farm for five thousand dollars ($5,000.00). _A_ has two farms. _A_ has one in mind, and _B_ the other. Their minds do not meet and there is no contract.

A mistake as to the legal effect of a contract does not avoid it. This is known as a mistake of law.

A mistake on the part of one of the parties only, ordinarily does not avoid the contract.

=27. Impossible Contracts.= Parties may enter into any kind of a contract they choose, so long as the provisions and conditions are legal. As a general rule, a party is liable in damages to the other party, for failure to observe and carry out the terms of his contract. There is, however, a class of contracts, known in law as impossible contracts. Many contracts are made upon the assumption that the persons making the contract, or the particular thing under consideration will continue to exist until the contract is performed.

_A_ agrees to paint a picture for _B_, for one thousand dollars ($1,000). _A_ fails in health or dies. _A_ or his estate, is not responsible in damages to _B_, since the contract contemplated _A's_ remaining in health and life.

_A_ agrees to make _B_ a chair out of a particular piece of walnut lumber. The lumber is destroyed by fire through no fault of _A_. _A_ is not liable in damages, since the parties contemplated the continued existence of the lumber. If, however, _A_ contracts to build _B_ a walnut chair within ten days for fifty dollars ($50.00) and his factory and walnut lumber are destroyed by fire, _A_ is answerable to _B_ in damages, for failure to deliver the chair. He has entered into a lawful contract, and has not excepted liability on account of fire.

A contract for personal services is rendered of no effect by the failure of health, or by death of the party, who is to perform the services. Where, however, the contract provides for the doing of a certain specific thing, not to be performed by a certain person, and not depending upon the continued existence of a certain thing, the parties are bound to perform, regardless of accident.

Floods, earthquakes or lightning do not excuse performance. These accidents are known in law as _Acts of God_. (See _Acts of God_ chapter on Carriers.) Acts of God do not excuse performance unless expressly provided against in the contract.

A law changed after the contract is made, making it unlawful to perform the contract, excuses performance.

Strikes do not render it impossible to perform contracts, within contemplation of the law. If a party desires to become exempt from performance by reason of strikes, he must put such a provision in his contract.

If the party to the contract, to whom the performance is due, renders performance impossible for the other party, the latter is excused on the ground of impossibility. For example, _A_ contracts to do the wood finishing on _B's_ house within six months, _B_ to construct the masonry work. _B_ fails to construct the masonry work; this exempts _A_ from liability.

=28. Conflict of Laws.= The laws of different states differ in some particulars. Where this difference affects the interpretation or enforcement of a contract, the doctrine of conflict of law applies. If a contract is valid in the state where made, it is usually valid everywhere. This rule is subject to the limitation that a state will not enforce a contract clearly against the policy of its own laws. If a contract is made in one state, to be performed in another, the laws of the latter apply. Otherwise, the laws of the state where the contract is made apply. The laws relating merely to the court procedure or the method of enforcing a contract, belong to the state called upon to enforce the contract, and, even though the laws of the state where the contract was made differ, the former will apply.

The laws of New York permit an express company to limit its liability for loss of goods to fifty dollars ($50.00), if so stipulated in the bill of lading, in case no valuation is fixed by the shipper. The laws of Ohio do not permit an express company to limit its liability in this way. _A_, in New York, shipped goods valued at four hundred dollars ($400.00) to _B_, in Cleveland. _A_ placed no valuation on the goods and accepted a receipt limiting the liability of the express company for loss of the goods, to fifty dollars ($50.00). The goods were lost. _B_ sued the express company in Ohio for the value of the goods. The court held that the law of Ohio held, since, by the terms of the contract, the goods were to be delivered in Ohio.

=29. Assignments of Contracts.= By assignment of a contract, is meant the transfer of one's property rights in the contract. One cannot assign his duties under a contract. For example, _A_ contracts with _B_ to have the latter build him a house, for five thousand dollars ($5,000.00). _B_ cannot transfer to another, the obligation on his part to construct the house. _B_, may, however, transfer to another, his right to recover the money for the house. _A_ may also transfer to another, his right to have the house constructed.

Contracts for personal service such as the painting of a picture, or the writing of a book, cannot be assigned. In such cases the personal work of a particular person is contracted for and cannot be transferred.

An assignment of a contract is a contract for the sale of a property benefit of a contract. The assignment must contain all the elements of a simple contract. The assignor of a contract can transfer only such property rights as he possesses. The other party to the contract retains any defense against the assignee, which he had against the assignor. _A_ agrees to build a house for _B_, for five thousand dollars ($5,000.00), according to certain plans. _A_ constructs the house with variations, subjecting him to a reduction in price of five hundred dollars ($500.00). _A_ assigns his rights in the contract to _C_ and _C_ can compel _A_ to pay him only four thousand five hundred dollars ($4,500.00). The defense of _B_ against _A_ is good against _A's_ assignee, _C_.

Upon assigning a contract, the assignor or assignee must notify the other party to the contract, of the assignment, else payment to the assignor will discharge the other party. For example, _A_ owes _B_ one hundred dollars ($100.00). _B_ assigns the claim to _C_. _C_ does not notify _A_ of the assignment and _A_ pays _B_. _B_ is insolvent and _C_ cannot recover from him. _C_ cannot recover from _A_, since _A_ has received no notice of the assignment.

The following is a recognized legal form of assignment.

For valuable consideration, I hereby assign all my right, title and interest in the annexed (account, contract, or whatever the instrument may be) to______

_____________________
Signature of assignor.

Date_____________

=30. Joint and Several Liability in Contracts.= If _A_ makes a contract with _B_, only two parties are bound by the contract and are liable for its breach. If _A_ and _B_ contract with _C_ and _D_, four parties are bound and are liable. _A_ and _B_ may be liable as one party to _C_ and _D_, or they may be liable as two parties to _C_ and _D_. If the contract shows by its terms that _A_ and _B_ contract as a unit, and not as separate individuals, their contract is said to be _joint_. If the terms of the contract show that _A_ and _B_ intend to contract as individuals, as well as a unit, their contract is said to be _joint_ and _several_. If the terms of the contract show that _A_ and _B_ intend to contract as individuals only, and not as a unit, their liability is said to be _several_.

The importance of this distinction is that in case of a joint obligation, all the joint obligors must be joined when sued, else the case may be dismissed if objection is made; while in case of a joint and several obligation, or of a several obligation, individual obligors may be sued separately.

A promissory note reads, "We promise to pay" and is signed by _A_ and _B_. This is a joint obligation, and in a suit thereon _A_ and _B_ must be joined, or the one sued may have the case dismissed, by reason thereof. If, however, judgment is rendered against both, and they hold no joint property, the creditor may enforce his judgment against either. This is known in law as, _liability in solido_. A promissory note reads, "We or either of us jointly and severally promise to pay," and is signed by _A_ and _B_. _A_ and _B_ are severally, as well as jointly liable, and may be sued separately.