TITLES.
§ 120. =Vestitive Facts.=
We have seen in a former chapter that every right involves a title or
source from which it is derived. The title is the _de facto_ antecedent,
of which the right is the _de jure_ consequent. If the law confers a
right upon one man which it does not confer upon another, the reason is
that certain facts are true of him which are not true of the other, and
these facts are the title of the right. Whether a right is inborn or
acquired, a title is equally requisite. The title to a debt consists in
a contract, or a judgment, or other such transaction; but the title to
life, liberty, or reputation consists in nothing more than in being born
with the nature of a human being. Some rights the law gives to a man on
his first appearance in the world; the others he must acquire for
himself, for the most part not without labour and difficulty. But
neither in the one case nor in the other can there be any right without
a basis of fact in which it has its root and from which it proceeds.
Titles are of two kinds, being either _original_ or _derivative_. The
former are those which create a right _de novo_; the latter are those
which transfer an already existing right to a new owner. The catching of
fish is an original title of the right of ownership, whereas the
purchase of them is a derivative title. The right acquired by the
fisherman is newly created; it did not formerly exist in any one. But
that which is acquired by the purchaser is in legal theory identical
with that which is lost by the vendor. It is an old right transferred,
not a new one created. Yet in each case the fact which vests the right
is equally a title, in the sense already explained. For the essence of a
title is not that it determines the creation of rights _de novo_, but
that it determines the acquisition of rights new or old.
As the facts confer rights, so they take them away. All rights are
perishable and transient. Some are of feeble vitality, and easily killed
by any adverse influence, the bond between them and their owners being
fragile and easily severed. Others are vigorous and hardy, capable of
enduring and surviving much. But there is not one of them that is exempt
from possible extinction and loss. The first and greatest of all is that
which a man has in his own life; yet even this the law will deny to him
who has himself denied it to others.
The facts which thus cause the loss of rights may be called, after
Bentham, _divestitive facts_. This term, indeed, has never been received
into the accepted nomenclature of the law, but there seems no better
substitute available. The facts which confer rights received from
Bentham the corresponding name of _investitive facts_. The term already
used by us, namely title, is commonly more convenient, however, and has
the merit of being well established in the law.[302] As a generic term
to include both investitive and divestitive facts the expression
_vestitive fact_ may be permissible.[303] Such a fact is one which
determines, positively or negatively, the _vesting_ of a right in its
owner.
We have seen that titles are of two kinds, being either original or
derivative. In like manner divestitive facts are either _extinctive_ or
_alienative_. The former are those which divest a right by destroying
it. The latter divest a right by transferring it to some other owner.
The receipt of payment is divestitive of the right of the creditor; so
also is the act of the creditor in selling the debt to a third person;
but in the former case the divestitive fact is extinctive, while in the
latter it is alienative.
It is plain that derivative titles and alienative facts are not two
different classes of facts, but are merely the same facts looked at from
two different points of view.[304] The transfer of a right is an event
which has a double aspect. It is the acquisition of a right by the
transferee, and the loss of it by the transferor. The vestitive fact, if
considered with reference to the transferee, is a derivative title,
while from the point of view of the transferor it is an alienative fact.
Purchase is a derivative title, but sale is an alienative fact; yet they
are merely two different sides of the same event.
These distinctions and divisions are exhibited in the following Table:
{ Investitive Facts { Original Titles. Creation of
{ or Titles. Rights.
Vestitive Facts { Derivative Titles. } Transfer of
{ Divestitive Facts. { Alienative Facts. } Rights.
{ Extinctive Facts. Destruction of
Rights.
These different classes of vestitive facts correspond to the three chief
events in the life history of a right, namely, its creation, its
extinction, and its transfer. By an original title a right comes first
into existence, being created _ex nihilo_; by an extinctive fact it is
wholly destroyed; by derivative titles and alienative facts, on the
other hand—these being, as we have seen, the same facts viewed from
different sides—the existence of the right is in no way affected. The
transfer of a right does not in legal theory affect its personal
identity; it is the same right as before, though it has now a different
owner.[305]
§ 121. =Acts in the Law.=
Vestitive facts—whether they create, transfer, or extinguish rights—are
divisible into two fundamentally distinct classes, according as they
operate in pursuance of the will of the persons concerned, or
independently of it. That is to say, the creation, transfer, and
extinction of rights are either voluntary or involuntary. In innumerable
cases the law allows a man to acquire or lose his rights by a
manifestation or declaration of his will and intent directed to that
end. In other cases it confers rights upon him, or takes them away
without regard to any purpose or consent of his at all. If he dies
intestate, the law itself will dispose of his estate as it thinks fit;
but if he leaves a duly executed will in which he expresses his desires
in the matter, the law will act accordingly. So if he sells his
property, it passes from him in accordance with his declared intent,
which the law adopts as its own; but if his goods are taken in execution
by a creditor, or vested in a trustee on his bankruptcy, the transfer is
an involuntary one, effected in pursuance of the law’s purposes, and not
of his at all.
The distinction between these two classes of vestitive facts may be
variously expressed. We may make use, for example, of the contrasted
expressions _act of the party_ and _act of the law_. An act of the party
is any expression of the will or intention of the person concerned,
directed to the creation, transfer, or extinction of a right, and
effective in law for that purpose; such as a contract or a deed of
conveyance. An act of the law, on the other hand, is the creation,
extinction, or transfer of a right by the operation of the law itself,
independent of any consent thereto on the part of him concerned. The
expression act of the party is one of some awkwardness, however, and it
is more convenient in general to substitute for it the technical term
_act in the law_, as contrasted with those acts _of_ the law which we
have already defined.[306]
Acts in the law are of two kinds, which may be distinguished as
_unilateral_ and _bilateral_. A unilateral act is one in which there is
only one party whose will is operative; as in the case of testamentary
disposition, the exercise of a power of appointment, the revocation of a
settlement, the avoidance of a voidable contract, or the forfeiture of a
lease for breach of covenant. A bilateral act, on the other hand, is one
which involves the consenting wills of two or more distinct parties; as,
for example, a contract, a conveyance, a mortgage, or a lease. Bilateral
acts in the law are called _agreements_ in the wide and generic sense of
that term. There is, indeed, a narrow and specific use, in which
agreement is synonymous with _contract_, that is to say, the creation of
rights _in personam_ by way of consent. The poverty of our legal
nomenclature is such, however, that we cannot afford thus to use these
two terms as synonymous. We shall therefore habitually use agreement in
the wide sense, to include all bilateral acts in the law, whether they
are directed to the creation, or to the transfer, or to the extinction
of rights. In this sense conveyances, mortgages, leases, or releases are
agreements no less than contracts are.[307]
Unilateral acts in the law are divisible into two kinds in respect of
their relation to the other party concerned. For in some instances they
are adverse to him; that is to say, they take effect not only without
his _consent_, but notwithstanding his _dissent_. His will is wholly
inoperative and powerless in the matter. This is so, for example, in the
case of a re-entry by a landlord upon a tenant for breach of covenant;
or the exercise of a power of appointment, as against the persons
entitled in default of appointment; or the avoidance of a voidable
contract; or the exercise by a mortgagee of his power of sale. In other
cases it is not so; the operation of the unilateral act is subject to
the dissent of the other party affected by it, though it does not
require his consent. In the meantime, pending the expression of his
will, the act has merely a provisional and contingent operation. A will,
for example, involves nothing save the unilateral intent and assent of
the testator. The beneficiaries need know nothing of it; they need not
yet be in existence. But if they subsequently dissent, and reject the
rights so transferred to them, the testament will fail of its effect.
If, on the other hand, they accept the provisions made on their behalf,
the operation of the will forthwith ceases to be provisional and becomes
absolute. Similarly a settlement of property upon trust need not be
known or consented to _ab initio_ by the beneficiaries. It may be a
purely unilateral act, subject however to repudiation and avoidance by
the persons intended to be benefited by it. So I may effectually grant a
mortgage or other security to a creditor who knows nothing of it.[308]
Where there are more than two parties concerned in any act in the law,
it may be bilateral in respect of some of them and unilateral in respect
of others. Thus a conveyance of property by A. to B. in trust for C. may
be bilateral as to A. and B. _inter se_—operating by the mutual consent
of these two—while it may at the same time be unilateral as between A.
and B. on the one side and C. on the other—C. having no knowledge of the
transaction. So the exercise of a mortgagee’s power of sale is bilateral
as between mortgagee and purchaser, but unilateral so far as regards the
mortgagor.[309]
§ 122. =Agreements.=
Of all vestitive facts, acts in the law are the most important; and
among acts in the law, agreements are entitled to the chief place.
Unilateral acts are comparatively infrequent and unimportant. The
residue of this chapter will therefore be devoted to the consideration
of the grounds, modes, and conditions of the operation of agreement as
an instrument of the creation, transfer, and extinction of rights. A
considerable portion of what is to be said in this connection will,
however, be applicable _mutatis mutandis_ to unilateral acts also.
The importance of agreement as a vestitive fact lies in the universality
of its operation. There are few rights which cannot be acquired through
the assent of the persons upon whom the correlative duties are to be
imposed. There are few rights which cannot be transferred to another by
the will of him in whom they are presently vested. There are few which
are not extinguished when their owner no longer desires to retain them.
Of that great multitude of rights and duties of which the adult member
of a civilised community stands possessed, the great majority have their
origin in agreements made by him with other men. By agreements of
contrary intent he may strip himself almost as destitute of rights and
duties, as when in the scantiest of juridical vesture he made his first
appearance before the law. _Invito beneficium non datur_,[310] said the
Romans.
By what reasons, then, is the law induced to allow this far-reaching
operation to the fact of agreement? Why should the mere consent of the
parties be permitted in this manner to stand for a title of right? Are
not rights the subject-matter of justice, and is justice a mere matter
of convention varying with the wills of men?
The reasons are two in number. Agreement is in the first place
evidential of right, and in the second place constitutive of it. There
is in general no better evidence of the justice of an arrangement than
the fact that all persons whose interests are affected by it have freely
and with full knowledge consented to it. Men are commonly good judges of
their own interests, and in the words of Hobbes “there is not ordinarily
a greater sign of the equal distribution of anything, than that every
man is contented with his share.” When, therefore, all interests are
satisfied, and every man is content, the law may safely presume that
justice has been done, and that each has received his own. The
determination of the law is needed only in default of the agreement of
the parties. Hence it is, that he who agrees with another in any
declaration of their respective rights and duties will not be suffered
to go back from his word, and will not be heard to dispute the truth of
his declaration. The exceptions to this rule are themselves defined by
equally rigid rules; and he who would disclaim a duty which he has thus
imposed upon himself, or reclaim a right which he has thus transferred
or abandoned, must bring himself within one of those predetermined
exceptions. Otherwise he will be held bound by his own words.
This conclusive presumption of the truth of consensual declarations of
right is, however, only one of the foundations of the law of agreement.
Consent is in many cases truly constitutive of right, instead of merely
evidential of it. It is one of the leading principles of justice to
guarantee to men the fulfilment of their reasonable expectations. In all
matters that are otherwise indifferent, expectation is of predominant
influence in the determination of the rule of right, and of all the
grounds of rational expectation there is none of such general importance
as mutual consent. “The human will,” says Aquinas, “is able by way of
consent to make a thing just; provided that the thing is not in itself
repugnant to natural justice.”[311]
There is an obvious analogy between agreement and legislation—the former
being the private and the latter the public declaration and
establishment of rights and duties. By way of legislation the state does
for its subjects that which in other cases it allows them to do for
themselves by way of agreement. As to the respective spheres of these
two operations, the leading maxim is _Modus et conventio vincunt legem_.
Save when the interests of the public at large demand a different rule,
the autonomy of consenting parties prevails over the legislative will of
the state. So far as may be, the state leaves the rule of right to be
declared and constituted by the agreement of those concerned with it. So
far as possible, it contents itself with executing the rules which its
subjects have made for themselves. And in so doing it acts wisely. For
in the first place, the administration of justice is enabled in this
manner to escape in a degree not otherwise attainable the disadvantages
inherent in the recognition of rigid principles of law. Such principles
we must have; but if they are established _pro re nata_ by the parties
themselves, they will possess a measure of adaptability to individual
cases which is unattainable by the more general legislation of the state
itself. Amid the infinite diversities and complexities of human affairs
the state wisely despairs of truly formulating the rules of justice. So
far as possible, it leaves the task to those who by their nearness to
the facts are better qualified for it. It says to its subjects: Agree
among yourselves as to what is just in your individual concerns, and I
shall enforce your agreement as the rule of right.
In the second place, men are commonly better content to bear the burdens
which they themselves have taken up, than those placed upon them by the
will of a superior. They acquiesce easily in duties of their own
imposition, and are well pleased with rights of their own creation. The
law or the justice which best commends itself to them is that which they
themselves have made or declared. Wherefore, instead of binding its
subjects, the state does well in allowing them to bind themselves.
§ 123. =The Classes of Agreements.=
Agreements are divisible into three classes, for they either create
rights, or transfer them, or extinguish them. Those which create rights
are themselves divisible into two subclasses, distinguishable as
_contracts_ and _grants_. A contract is an agreement which creates an
obligation or right _in personam_ between the parties to it. A grant is
an agreement which creates a right of any other description; examples
being grants of leases, easements, charges, patents, franchises, powers,
licences, and so forth. An agreement which transfers a right may be
termed generically an _assignment_. One which extinguishes a right is a
_release_, _discharge_, or _surrender_.
As already indicated, a contract is an agreement intended to create a
right _in personam_ between the contracting parties. No agreement is a
contract unless its effect is to bind the parties to each other by the
_vinculum juris_ of a newly created personal right. It commonly takes
the form of a promise or set of promises. That is to say, a declaration
of the consenting wills of two persons that one of them shall henceforth
be under an obligation to the other naturally assumes the form of an
undertaking by the one with the other to fulfil the obligation so
created. Not every promise, however, amounts to a contract. To
constitute a contract there must be not merely a promise to do a certain
act, but a promise, express or implied, to do this act as a legal duty.
When I accept an invitation to dine at another man’s house, I make him a
promise, but enter into no contract with him. The reason is that our
wills, though consenting, are not directed to the creation of any legal
right or to any alteration of our legal relations towards each other.
The essential form of a contract is not: I promise this to you; but: I
agree with you that henceforth you shall have a legal right to demand
and receive this from me. Promises that are not reducible to this from
are not contracts. Therefore the consent that is requisite for the
creation of rights by way of contract is essentially the same as that
required for their transfer or extinction. The essential element in each
case is the express or tacit reference to the legal relations of the
consenting parties.
Taking into account the two divisions of the consensual creation of
rights, there are, therefore, four distinct kinds of agreements:—
1. Contracts—creating rights _in personam_.
2. Grants—creating rights of any other kind.
3. Assignments—transferring rights.
4. Releases—extinguishing rights.
It often happens that an agreement is of a mixed nature, and so falls
within two or more of these classes at the same time. Thus the sale of
a specific chattel is both a contract and an assignment, for it
transfers the ownership of the chattel and at the same time creates an
obligation to pay the price. So a lease is both a grant and a
contract, for it creates real and personal rights at the same time. In
all such cases the agreement must be classed in accordance with its
chief or essential operation, its other effects being deemed
subsidiary and incidental.
A frequent result of the difference between law and equity, and
between legal and equitable rights and ownership, is that the same
agreement has one effect in law and another in equity. In law it may
be a mere contract, and in equity an assignment or a grant. Thus a
written agreement for the sale of land is in law nothing more than a
contract, imposing upon the seller a personal obligation to execute a
conveyance under seal, but not in itself amounting to a transfer of
the ownership of the land. In equity, on the other hand, such an
agreement amounts to an assignment. The equitable ownership of the
land passes under it to the purchaser forthwith, and the vendor holds
the legal ownership in trust for him. Similarly a contract to grant a
_legal_ lease or mortgage or servitude is itself the actual grant of
an _equitable_ lease, mortgage, or servitude. For it is a maxim of
Chancery that equity regards that as already done which ought to be
done.
§ 124. =Void and Voidable Agreements.=
In respect of their legal efficacy agreements are of three kinds, being
either _valid_, _void_, or _voidable_. A valid agreement is one which is
fully operative in accordance with the intent of the parties. A void
agreement is one which entirely fails to receive legal recognition or
sanction, the declared will of the parties being wholly destitute of
legal efficacy. A voidable agreement stands midway between these two
cases. It is not a nullity, but its operation is conditional and not
absolute. By reason of some defect in its origin it is liable to be
destroyed or cancelled at the option of one of the parties to it. On the
exercise of this power the agreement not only ceases to have any
efficacy, but is deemed to have been void _ab initio_. The avoidance of
it relates back to the making of it. The hypothetical or contingent
efficacy which has hitherto been attributed to it wholly disappears, as
if it had never existed. In other words, a voidable agreement is one
which is void or valid at the election of one of the parties to it. A
lease determinable on notice or on re-entry for breach of covenant is
not for that reason voidable; because, when determined, it is not
destroyed _ab initio_, but merely from then onwards.[312]
Void and voidable agreements may be classed together as _invalid_. The
most important causes of invalidity are six in number, namely, (1)
incapacity, (2) informality, (3) illegality, (4) error, (5) coercion,
and (C) want of consideration.
1. _Incapacity._ Certain classes of persons are wholly or partially
destitute of the power of determining their rights and liabilities by
way of consent. They cannot, at least to the same extent as other
persons, supersede or supplement the common law by subjecting themselves
to conventional law of their own making. In the case of minors,
lunatics, and convicts, for example, the common law is peremptory, and
not to be derogated from or added to by their agreement. So the
agreements of an incorporated company may be invalid because _ultra
vires_, or beyond the capacity conferred upon it by law.
2. _Informality._ Agreements are of two kinds, which may be
distinguished as _simple_ and _formal_. A simple agreement is one in
which nothing is required for its effective operation beyond the
manifestation, in whatever fashion, of the consenting wills of the
parties. A formal agreement, on the other hand, is one in which the law
requires not merely that consent shall exist, but that it shall be
manifested in some particular form, in default of which it is held of no
account. Thus the intent of the parties may be held effective only if
expressed in writing signed by them, or in writing authenticated by the
more solemn form of sealing; or it must be embodied in some appointed
form of words; or it must be acknowledged in the presence of witnesses,
or recorded by some form of public registration; or it must be
accompanied by some formal act, such as the delivery of the
subject-matter of the agreement.
The leading purpose of all such forms is twofold. They are, in the first
place, designed as pre-appointed evidence of the fact of consent and of
its terms, to the intent that this method of determining rights and
liabilities may be provided with the safeguards of permanence,
certainty, and publicity. In the second place their purpose is that all
agreements may by their help be the outcome of adequate reflection. Any
necessary formality has the effect of drawing a sharp line between the
preliminary negotiations and the actual agreement, and so prevents the
parties from drifting by inadvertence into unconsidered consent.
3. _Illegality._ In the third place an agreement may be invalid by
reason of the purposes with which it is made. To a very large extent men
are free to agree together upon any matter as they please; but this
autonomous liberty is not absolute. Limitations are imposed upon it,
partly in the interests of the parties themselves, and partly on behalf
of the public. There is much of the common law which will not suffer
itself to be derogated from by any private agreement; and there are many
rules which, though they in no way infringe upon the common law, cannot
be added to it as supplementary. That is to say, there are many matters
in which the common law will admit of no abatement, and many in which it
will admit of no addition, by way of conventional law. It is true in
great part that _Modus et conventio vincunt legem_; but over against
this principle we must set the qualification, _Privatorum conventio juri
publico non derogat_. By _jus publicum_ is here meant that part of the
law which concerns the public interest, and which for this reason the
agreements of private persons cannot be allowed to infringe upon.[313]
Agreements which in this way overpass the limits allowed by the law are
said in a wide sense to be illegal, or to be void for illegality. They
may or may not be illegal in a narrower sense, as amounting in their
making or in their performance to a criminal or civil wrong.
4. _Error or mistake._ Error or mistake, as a ground of invalidity, is
of two kinds, which are distinguishable as _essential_ and
_unessential_. Essential error is that which is of such a nature as to
prevent the existence of any real consent and therefore of any real
agreement. The parties have not in reality meant the _same_ thing, and
therefore have not in reality agreed to _any_ thing. Their agreement
exists in appearance only, and not in reality. This is the case if A.
makes an offer to B. which is accepted in mistake by C.; or if A. agrees
to sell land to B., but A. is thinking of one piece of land, and B. is
thinking of another. The effect of error of this kind is to make the
agreement wholly void, inasmuch as there is in truth no agreement at
all, but only the external semblance and form of one.[314]
There is, however, an exception to this rule when the error is due to
the negligence of one of the parties and is unknown to the other. For in
such a case he who is in fault will be estopped by his own carelessness
from raising the defence of essential error, and will be held bound by
the agreement in the sense in which the other party understood it.[315]
Unessential error, on the other hand, is that which does not relate to
the nature or contents of the agreement, but only to some external
circumstance, serving as one of the inducements which led to the making
of it; as when A. agrees to buy B.’s horse because he believes it to be
sound, whereas it is in reality unsound. This is not essential error,
for there is a true _consensus ad idem_. The parties have agreed to the
same thing in the same sense, though one of them would not have made the
agreement had he not been under a mistake. The general rule is that
unessential error has no effect on the validity of an agreement. Neither
party is in any way concerned in law with the reasons which induced the
other to give his consent. That which men consent to they must abide by,
whether their reasons are good or had. And this is so even though one
party is well aware of the error of the other.[316]
This rule, however, is subject to an important exception, for even
unessential error will in general make an agreement voidable at the
option of the mistaken party, if it has been caused by the
misrepresentation of the other party. He who is merely mistaken is none
the less bound by his agreement; but he who is misled has a right to
rescind the agreement so procured.[317]
5. _Coercion._ In order that consent may be justly allowed as a title of
right, it must be free. It must not be the product of any form of
compulsion or undue influence; otherwise the basis of its legal
operation fails. Freedom, however, is a matter of degree, and it is no
easy task to define the boundary line that must be recognised by a
rational system of law. We can only say generally, that there must be
such liberty of choice as to create a reasonable presumption that the
party exercising it has chosen that which he desires, and not merely
submitted to that which he cannot avoid. We cannot usefully enter here
into any examination of the actual results that have been worked out in
this matter by English law.
6. _Want of consideration._ A further condition very commonly required
by English law for the existence of fully efficacious consent is that
which is known by the technical name of _consideration_. This
requirement is, however, almost wholly confined to the law of contract,
other forms of agreement being generally exempt from it.
A consideration in its widest sense is the reason, motive, or
inducement, by which a man is moved to bind himself by an agreement. It
is not for nothing that he consents to impose an obligation upon
himself, or to abandon or transfer a right. It is in _consideration_ of
such and such a fact that he agrees to bear new burdens or to forego the
benefits which the law already allows him. If he sells his house, the
consideration of his agreement is the receipt or promise of the purchase
money. If he makes a settlement upon his wife and children, it is in
consideration of the natural love and affection which he has for them.
If he promises to pay a debt incurred by him before his bankruptcy, the
consideration of his promise is the moral obligation which survives his
legal indebtedness to his creditors. Using the term in this wide sense,
it is plain that no agreement made with knowledge and freedom by a
rational man can be destitute of some species of consideration. All
consent must proceed from some efficient cause. What, then, is meant by
saying that the law requires a consideration as a condition of the
validity of an agreement? The answer is that the consideration required
by the law is a consideration of a kind which the law itself regards as
sufficient. It is not enough that it should be deemed sufficient by the
parties, for the law has itself authoritatively declared what facts
amount to a valid and sufficient consideration for consent, and what
facts do not. If men are moved to agreement by considerations which the
law refuses to recognise as good, so much the worse for the agreement.
_Ex nudo pacto non oritur actio._ To bare consent, proceeding from no
lawfully sanctioned source, the law allows no operation.
What considerations, then, does the law select and approve as sufficient
to support a contract? Speaking generally, we may say that none are good
for this purpose save those which are _valuable_. By a valuable
consideration is meant something of value given by one party in exchange
for the promise of the other. By English law no promise (unless under
seal or of record) is binding unless the promisor receives a _quid pro
quo_ from the promisee. Contracts which are purely unilateral, all the
obligation being on one side, and nothing either given or promised on
the other, are destitute of legal operation. Every valid contract[318]
is reducible to the form of a bargain that if I do something for you,
you will do something for me.
The thing thus given by way of consideration must be of some _value_.
That is to say, it must be material to the interests of one or other or
both of the parties. It must either involve some gain or benefit to the
promisor by way of recompense for the burden of his promise, or it must
involve some loss or disadvantage to the promisee for which the benefit
of the promise is a recompense. Commonly it possesses both of these
qualities at once, but either of them is sufficient by itself. Thus if I
promise gratuitously to take care of property which the owner deposits
with me, I am bound by that promise, although I receive no benefit in
recompense for it, because there is a sufficient consideration for it in
the detriment incurred by the promisee in entrusting his property to my
guardianship. But if the thing given by way of consideration is of no
value at all, being completely indifferent to both parties, it is
insufficient, and the contract is invalid; as, for example, the doing of
something which one is already bound to the other party to do, or the
surrender of a claim which is known to be unfounded.
In certain exceptional cases, however, considerations which are not
valuable are nevertheless accepted as good and sufficient by the law.
Thus the existence of a legal obligation may be a sufficient
consideration for a promise to fulfil it; as in the case of a promissory
note or other negotiable instrument given for the amount of an existing
debt. At one time it was supposed to be the law that a merely moral
obligation was in the same manner a sufficient basis for a promise of
performance, and though this is no longer true as a general proposition,
certain particular applications of the principle still survive, while
others have but recently been abolished by statute. Thus a promise made
by a discharged bankrupt to pay a creditor in full was until recently a
binding contract, because made in consideration of the moral obligation
which survives the legal indebtedness of an insolvent. For the same
reason, a promise made after majority to pay debts incurred during
infancy was binding, until the law was altered in this respect by recent
legislation. Similarly a promise to pay a debt barred by prescription is
legally valid even yet, the consideration being the moral (and imperfect
legal) obligation which survives the period of prescription.
With respect to the rational basis of this doctrine, it is to be noticed
that the requirement of consideration is not absolute, but conditional
on the absence of a certain formality, namely that of a sealed writing.
Form and consideration are two alternative conditions of the validity of
contracts and of certain other kinds of agreements. It may be surmised,
therefore, that they are founded on the same reasons and fulfil the same
functions. They are intended as a precaution against the risk of giving
legal efficacy to unconsidered promises and to the levities of speech.
The law selects certain reasons and inducements, which are normally
sufficient for reasoned and deliberate consent, and holds valid all
agreements made on these grounds, even though informal. In all other
cases it demands the guarantee of solemn form. There can be little
doubt, however, that our law has shown itself too scrupulous in this
matter; in other legal systems no such precaution is known, and its
absence seems to lead to no ill results.
Although the doctrine of consideration, in the form received by
English law, is unknown elsewhere, it is simply a modification of a
doctrine known to the civil law and to several modern systems, more
especially to that of France. Article 1131 of the French Civil Code
provides that: “L’obligation sans cause, ou sur une fausse cause, ou
sur une cause illicite, ne peut avoir aucun effet.”[319] This _cause_
or _causa_ is a synonym for consideration, and we find the terms used
interchangeably in the earlier English authorities.[320] There is,
however, an essential difference between the English and the
Continental principle. Unlike the former, the latter never rejects any
cause or consideration as _insufficient_. Whatever motive or
inducement is enough to satisfy the contracting parties is enough to
satisfy the law, even though it is nothing more than the _causa
liberalitatis_ of a voluntary gift. By an obligation _sans cause_, or
contract without consideration, French law does not mean a contract
made without any motive or inducement (for there are none such), nor a
contract made from an inadequate motive or inducement (for the law
makes no such distinctions), but a contract made for a consideration
which has failed—_causa non secuta_, as the Romans called it. The
second ground of invalidity mentioned in the Article cited is the
_falsity_ of the consideration (_falsa causa_). A consideration may be
based on a mistake, so that it is imaginary and not real; as when I
agree to buy a horse which, unknown to me, is already dead, or a ship
which has been already wrecked, or give a promissory note for a debt
which is not truly owing. Finally a _causa turpis_, or illegal
consideration, is as fatal to a contract in French and Roman law as in
English.
In English law the failure of consideration (_causa non secuta_) and
its unreality due to error (_causa falsa_) are grounds of invalidity,
only when the absence of such failure or error is expressly or
impliedly made a condition of the contract. In a contract for the sale
of a chattel, for example, the present existence of the chattel is an
implied condition of the validity of the sale.[321]
SUMMARY
{ Original Titles. Creation of
{ Investitive Facts { Rights.
{ or Titles. { Derivative Titles. }
Vestitive Facts { } Transfer of
{ { Alienative Facts. } Rights.
{ Divestitive Facts. {
{ Extinctive Facts. Destruction of
Rights.
{ Acts of the law.
Vestitive Facts { { Unilateral.
{ Acts in the law. {
{ Bilateral, or Agreements.
{ 1. Contracts—creating rights _in personam_.
Agreements. { 2. Grants—creating rights of other descriptions.
{ 3. Assignments—transferring rights.
{ 4. Releases—extinguishing rights.
Grounds of the operation of agreements.
Comparison of agreement and legislation
{ Valid.
Agreements. { { Void.
{ Invalid. {
{ Voidable.
The causes of invalidity.
{ 1. Incapacity.
{ 2. Informality.
{ 3. Illegality.
{ 4. Error.
{ 5. Coercion.
{ 6. Want of consideration.