social interest in the security of transactions, is well secured. The
traditional requirement of a _causa ciuilis_, a civil, i.e., legal,
reason for enforcing a pact, gave way before natural-law ideas in the
eighteenth century. Pothier gave over the contract categories of the
Roman law as being "very remote from simplicity." Then came the rise
of the will theory of legal transactions in the nineteenth century.
French law made intention of gratuitously benefiting another a
_causa_. The Austrian code of 1811 presumed a _causa_, requiring a
promisor to prove there was none. And this means that he must prove
the promise was not a legal transaction--that there was no intention
to enter into a binding undertaking. In the result, abstract promises,
as the civilian calls them, came to be enforced equally with those
which came under some formal Roman category and with those having a
substantial presupposition. Modern Continental law, apart from certain
requirements of proof, resting on the same policy as our Statute of
Frauds, asks only, Did the promisor intend to create a binding duty?
Likewise in civil-law countries the enforcing machinery is modern and
adequate. The oldest method of enforcement in Roman law was seizure of
the person, to coerce satisfaction or hold the promisor in bondage
until his kinsmen performed the judgment. Later there was a pecuniary
condemnation or, as we should say, a money judgment in all cases,
enforced in the classical law by universal execution or, as we should
say, by involuntary bankruptcy. But along with this remedy specific
relief grew up in the _actio arbitraria_, a clumsy device of specific
performance on the alternative of a heavy money condemnation, which
repeated itself in Pennsylvania before equity powers were given the
courts, and is substantially repeating in our federal courts in their
attempts to apply equitable relief to torts committed in foreign
jurisdictions. The civil law developed, or perhaps the canon law
developed and the civil law took over, an _actio ad implendum_ or
action to require performance, with natural execution, that is a doing
by the court or its officers at the expense of the defendant, of that
to which he is bound as ascertained by the judgment. In general in
civil-law countries today what we call specific performance is the
rule. A money reparation for breach of contract is the exceptional
remedy. It is only when for some reason specific relief is
impracticable or inequitable, as in contracts of personal service,
that money relief is resorted to.
In countries governed by the common law we do not secure this interest
so completely nor so effectively. For one thing we do not recognize as
legally enforceable all intentional promises intended to be binding
upon the promisor. Many technical rules as to consideration, rules
having chiefly a historical basis, stand in the way. Many
jurisdictions have abolished private seals and have made no provision
for formal gratuitous or abstract promises. Moreover, we do not give
specific relief ordinarily but only exceptionally where pecuniary
relief is considered inadequate. Hence in the great majority of cases
the promisee cannot compel performance in specie.
If we look into the reasons for this wide and effective enforcement
of promises in the one system and narrower and less effective
enforcement in the other, we come in both cases upon a mixture of
historical background and philosophical reasoning, each influencing
the other and neither governing the subject completely. Philosophical
theories have arisen to explain existing rules and have been the basis
of new rules and of remaking of old ones. But they have been the means
also, at times, of intrenching the rules they sought to explain and of
fastening on the law doctrines of which it were better rid. Nowhere is
the reciprocal action of legal rules and philosophical theories more
strikingly manifest than in our law of contractual liability.
Law did not concern itself at first with agreements or breaches of
agreements. Its function was to keep the peace by regulating or
preventing private war and this only required it to deal with personal
violence and with disputes over the possession of property. I may
remind you of the proposition of Hippodamus in the fifth century B. C.
that there were but three subjects of lawsuits, namely, insult,
injury and homicide. If a dispute over breach of an agreement led to
an assault and a breach of the peace, tribunals might be called on to
act. But it was the assault not the breach of agreement with which
they were concerned. Controversy as to possession of property was a
fertile source of disturbance of the peace and tribunals would
entertain an action to recover possession. Agreements to compound for
a wrong are perhaps the earliest type. But the law had its eye upon
the need of composition, not upon the agreement. No basis for a law of
contracts was to be found in the power of the tribunals with respect
to injuries although our law did make assumpsit out of trespass on the
case. On the other hand recovery of property could be used for this
purpose. Hence the first legal, as distinguished from religious,
contract was worked out on the analogy of a real transaction. Before
this, however, another possibility had developed in the religiously
sanctioned promise.
Religion, the internal discipline of the organized kindred, and the
law of the state were three co-ordinate agencies of social control in
ancient society. Nor was law for a long time the chief of these nor
the one which covered the widest field. If the gods had been called to
witness or good faith had a religious sanction, the duty to keep a
promise was a matter for religion. Otherwise the mere pact or
agreement not within the cognizance of the priests was but a matter
for self-help. Hindu law shows the idea of religious duty to keep
faith in full vigor. In the Hindu system the relation between the
parties to a debt is not legal but religious and now that a law has
grown up under English influence it is said that there is a legal
obligation because there is a religious obligation. A man is bound in
law because and to the extent that he is bound in religion and not
otherwise and no more. To the Hindu lawyer a debt is not an obligation
merely. It is a sin the consequences whereof follow the debtor into
another world. Vrihaspati says: "He who, having received a sum lent or
the like does not return it to the owner, will be born hereafter in
his creditor's house a slave, a servant, a woman or a quadruped."
Narada says that when one dies without having paid his debt, "the
whole merit of his devotions or of his perpetual fire belongs to his
creditors." In short the debtor is looked on as one who wrongfully
withholds from the creditor the latter's property and hence as in some
sort a thief. The legal idea, so far as there is one, is not one of
obligation but of a property right in the creditor. One may suspect
that religious obligation arising from the detention of property is a
legal way of putting it in a polity in which social control is
primarily religious and religious precepts are turning into legal
precepts. At any rate the Hindus carry the idea of religious
obligation so far that a descendant is bound to pay the debts of his
ancestor in many cases whether he receives any assets of the ancestor
or not. The liability of the son to pay the father's debt is held to
arise from the moral and religious duty of rescuing the father from
the penalties attaching in a future state to non-payment of debts.
Accordingly if the debt is of such a kind that no penalties would so
attach, there is no religious duty and hence no obligation imposed
upon the descendant.
Roman law in its earliest stage was not unlike this. Agreements of
themselves were not cognizable by the tribunals. It was no ground for
summoning a defendant before the magistrate that he had made a promise
and had broken it. Agreements were matters for religion or for kin or
guild discipline. If one had called on the gods to witness his promise
or sworn to fulfil it, he was liable to pontifical discipline. The
presence of an impious oath breaker was a social danger and he might
be devoted to the infernal gods. As law replaced religion as the
controlling regulative agency, the old religiously sanctioned promise
becomes a formal legal contract. Thus in the strict law we get formal
contracts with their historical origin in religious duty, and formal
contracts with their historical origin in a legal duty created by a
real transaction of suretyship or conveyance, perhaps by calling the
people to witness so that there is an affront to the state if they
are called upon in vain.
When contact with Greek philosophers set the Roman jurists to thinking
about the basis of obligation, there were two sorts of promises: (1)
Formal promises, (a) by stipulation, using the sacramental word
_spondeo_ and thus assuming the pouring out of a libation that the
gods might take notice of the promise, (b) by public ceremony
apparently symbolizing a real transaction before the whole people, (c)
entered upon the household books of account, and (2) mere informal
promises not recognized by law. The latter depended wholly on the good
faith of the maker since the law had put down self-help which formerly
had been available to the promisee. Accordingly Roman jurists
distinguished civil obligations and natural obligations--those
recognized and secured legally and those which primarily had only a
moral efficacy. A _nudum pactum_ or mere agreement or mere promise,
not clothed with legal efficacy because it did not come within any of
the categories of legal transactions sanctioned by the _ius ciuile_,
created only a natural obligation. It was right and just to adhere to
such a pact, but only contracts, undertakings recognized by law
because of their form or nature, were enforceable.
With increasing pressure of the social interest in the security of
transactions through economic development and commercial expansion,
the natural-law philosophy slowly affected this simple scheme of
formal undertakings legally recognized and enforceable and informal
undertakings of only moral efficacy, and brought about the complicated
system of enforceable undertakings in the maturity of Roman law with
which you are familiar. Four features of this movement are noteworthy.
In the first place it led to a juristic theory of formal contract
which has affected our ideas ever since. In the strict law the source
of obligation was in the form itself. For in primitive thinking forms
have an intrinsic efficacy. It has often been pointed out that the
faith in legal forms belongs to the same order of thought as faith in
forms of incantation and that legal forms are frequently symbols to
be classed psychologically with the symbols of magic. The stage of
equity and natural law, relying on reason rather than on form,
governed by philosophy instead of by naive faith, looked for the
substance and found it in a pact preceding and presupposed by the
formal ceremony. Thus a formal contract was a pact with the addition
of legal form. The pact was the substance of the transaction. The form
was a _causa ciuilis_ or legal reason for enforcing the pact. But if
the form was only a legal reason for enforcing something that got its
natural efficacy in another way, it followed that there might well be
other legal reasons for enforcement besides form. Consequently new
categories of contract were added to the old formal contracts and it
is significant that while the latter were transactions _stricti iuris_
the former were considered transactions _bonae fidei_ involving
liability to what good faith demanded in view of what had been done.
In the scope of their obligation these contracts responded exactly to
the postulate of civilized society that those with whom we deal will
act in good faith and will carry out their undertakings according to
the expectations of the community. On the other hand the old formal
contracts responded thereto in part only since their obligation was
one to do exactly what the terms of the form called for, no more and
no less. When one makes _nexum_, said the Twelve Tables, as he says
orally so be the law. New categories were added in successive strata,
as it were, and juristic science sought afterward to reduce them to
system and logical consistency. Thus real contracts, consensual
contracts and innominate contracts were added. But it is evident that
many of these are juristic rationalizings of what had been done for a
long time through formal transactions. Thus the consensual contract of
sale with its implied warranties rationalizes transfer by _traditio_
with stipulations for the price and for warranties. The real contract
of _depositum_ rationalizes _fiducia cum amico_. The real contract of
_mutuum_ rationalizes _pecunia credita_. But the latter was so
thoroughly established as a formal transaction that the case of a
loan of money, analytically a real contract, preserved the incidents
of the strict law. Moreover certain pacts, _pacta adiecta_, _pacta
praetoria_, became actionable which do not fit into the analytical
scheme of the Institutes. For example, a _causa_ or reason for
enforcing these pacts was found in their being incidental to something
else or in a pre-existing natural obligation which they undertook to
satisfy. There still remained natural obligations which had not been
given legal efficacy as the basis of actions. The mere will of the
person who undertook or the claim of the promisee was not a reason for
enforcing. Yet in reason they were morally binding and the legal and
moral should coincide. Hence they might be used defensively or as the
basis of a set-off. Meanwhile the forms of stipulation and of literal
contract had been reduced to their lowest terms by conceiving them in
terms of substance, and taking orally expressed agreement to be the
substance of the one and writing to be the substance of the other. The
results have defied analysis although the best that juristic
ingenuity could do has been expended upon them for centuries.
In the Middle Ages primitive ideas came back for a time through
Germanic law. General security in its lowest terms of peace and order
was the pressing social interest. There was little commercial
activity. The civilization of the time did not involve the corollaries
of our jural postulate. Religiously sanctioned undertakings by
promissory oath and real transactions of pledge of person or property
and of exchange gave rise to a simple system of formal undertakings.
Out of these came a theory of _causa debendi_, or reason for owing the
promised performance, which has had a profound influence upon
subsequent thinking. The Roman _causa ciuilis_ was a legal reason for
enforcing a pact. Under the influence of the Germanic idea _causa_
becomes a reason for making the pact, the good reason for making it
furnishing a sufficient reason for enforcing it. For a time it seemed
that the church might succeed in establishing a jurisdiction over
promises. Oaths and vows involved religious duties and might well be
claimed as the province of the spiritual. But the moral obligation of
pacts, binding the conscience of a Christian, might also be cognizable
by a zealous corrector of the conduct of the faithful for their soul's
welfare. Had not the power of the canon law broken down and the law of
the state developed rapidly in respect of the security of transactions
after the sixteenth century, the law of contracts might have grown
along religious instead of along philosophical lines, and perhaps not
to its advantage. As it is, one need but read Doctor and Student with
the title _de pactis_ of the _Corpus Iuris Canonici_ and casuist
writings as to the moral efficacy of promises before him, to see that
religion paved the way for much that was done presently in the name of
philosophy.
To the jurists of the seventeenth and eighteenth centuries no
distinction between natural obligations and civil obligations was
maintainable since all natural rights or obligations must for the very
reason that they were natural be legal also. If it was morally
obligatory that one adhere to a pact, then it must be treated as a
contract. However much systematized analytically, the Roman categories
of contract did not deal with undertakings from this standpoint. What
the jurists desired was not analytical categories but a principle upon
which men were to be held or not to be held upon their promises. Thus
the philosophy of contract, the principles underlying the binding
force of promises and agreements, became the chief problem of
philosophical jurisprudence of the seventeenth century, as interests
of personality were the chief subject of discussion in the eighteenth
century, and interests of substance, the philosophy of the law of
property, the chief subject of discussion in the nineteenth century.
The decisive element in seventeenth-century thought as to contract was
the idea of natural law; the idea of deduction from the nature of man
as a moral creature and of legal rules and legal institutions which
expressed this ideal of human nature. But the idea was put to work
upon existing materials and the result was a reciprocal influence of
the conception of enforcing promises as such because morally binding,
on the one hand, shaped to some extent by canon law and casuist
discussions of what promises were binding in conscience and when, and
the ideas of _nudum pactum_ and _causa debendi_ on the other hand.
Roman law was assumed to be embodied reason. As D'Aguesseau put it,
Rome was ruling by her reason, having ceased to rule by her authority.
Hence all consideration of the subject starts with the assumption that
there are morally naked agreements which for that reason are to be
naked legally. Where there was an exchange of promises there was the
authority of Justinian for enforcement (_synallagma_) and it was easy
to find a reason in the analogy of exchange of property. Where
something was exchanged for a promise, that something was a _causa
debendi_. But suppose there was no exchange of promises nor was
anything exchanged for the promise. There was nothing but a promise
assented to. In Roman law this would have to take the form of a
stipulation. In the Germanic law it would have required an oath or
the form of a real transaction of pledge or exchange. At common law it
required delivery of a sealed instrument. Clearly there was no moral
efficacy inherent in these forms. Why should these "abstract" promises
be enforced and not others? Should every such promise be enforced or
should none be enforced without something in the way of exchange, or
should such promises be classified for the purpose of enforcement, and
if so, how?
Two theories arose in the seventeenth century. One may be called the
theory of an equivalent. This theory is obviously a rationalization of
the Germanic _causa debendi_ influenced by canon law and casuist
writings. According to this theory an abstract promise, no equivalent
having been given for it, is not naturally and hence is not legally
binding. Three reasons have been given for this which have figured in
juristic discussion of the subject ever since. It was said that one
who trusts another who makes a promise for no equivalent does so
rashly. He cannot ask to be secured in such an unfounded expectation.
This is too much in the spirit of the strict law. It denies any
interest except where the law secures it. It says that if the law does
not secure the interest, one is a fool to rely on the promise and so
has no interest. In like manner the strict law said that if one gave
his formal undertaking through fraud or mistake or coercion, he was a
fool or a coward and was not to be helped. But we cannot prove the
interest by the law. We must measure the law with reference to the
interest. Again it was said that if one promises without equivalent he
does so more from "ostentation" than from real intention and so an
equivalent shows that he acted from calculation and deliberately. It
is only deliberate promises that are morally binding, for only such
promises are relied upon by the prudent, upright man in his
intercourse with his neighbors. If this reason is sound, equivalent is
only a mode of proving deliberation and the real point should be that
the promise was made deliberately as something by which the maker
expected to be bound, not that the deliberation was evidenced in a
particular way by an equivalent. A third reason was that one who
parted with an equivalent in exchange for or in reliance on a promise
is injured in his substance if the promise is not kept. But if this is
the reason, the law should simply require restitution in case of
non-performance. If the interest involved is the deduction from
substance through rendering the equivalent, the obligation should be
_quasi ex contractu_ rather than _ex contractu_.
Our Anglo-American law of contracts was much influenced by this theory
of equivalents. In the seventeenth century four types of promise were
legally enforceable at common law: (1) A formal acknowledgment of
indebtedness by bond under seal, often conditioned upon performance of
a promise for which it was a security, (2) a covenant or undertaking
under seal, (3) the real contract of debt, and (4) a simple promise
upon consideration, that is, in exchange for an act or for another
promise. The first conclusively acknowledged an equivalent, in the
second it could be said that the seal presupposed or implied one, in
the third the obligation arose from the detention of something by him
to whom it had been delivered, and in the fourth the act or
counter-promise was the motive or consideration for the promise and as
a cause of or reason for making it was the equivalent for which the
promisor chose to assume the undertaking. With some aid from a
dogmatic fiction in the case of covenants, the common law could be
adjusted to this theory reasonably well. Accordingly as far back as
Bacon we find consideration treated from this standpoint in the
English books. But it was never a satisfactory explanation. If the
theory was sound it ought not to matter whether the equivalent was
rendered before the promise or after it or simultaneously with it.
Indeed, English equity in the nineteenth century took subsequent
action in reliance upon a promise of a gift to be a common-law
consideration on the basis whereof the promise was specifically
enforceable. Equity never wholly adopted this or any other theory. At
least after the middle of the eighteenth century equity was supposed
to follow the law as to what was a contract. But the common law was
not settled till the nineteenth century and we find the chancellors
using consideration frequently to mean not equivalent but any reason
for making the promise and thus making it synonymous with the
civilian's _causa_. The so-called meritorious consideration,
consideration of blood and of love and affection, and the cases of
promises sustained by moral obligation of a debtor to secure his
creditor, of a husband to settle property on his wife and of a parent
to provide for a child, show the idea of _causa_ at work in equity. It
is significant that Doctor and Student was often cited in these
connections. The most thoroughgoing attempt to apply the equivalent
theory to be found in the books is Langdell's working out of a system
of the so-called conditions implied in law or dependent promises on
that basis. As an example of vigorous legal analysis it rivals Austin.
But it did not succeed in shaping the law.
On the Continent the second theory, the theory of the inherent moral
force of a promise made as such, came to prevail. This was the theory
of Grotius. It was generally adopted by Continental writers of the
eighteenth century and, as has been seen, it broke down the Roman
categories and led to the rule that a promise as such, intending a
legal transaction, created legal obligation. At the end of the
eighteenth century Lord Mansfield came very near establishing it in
our law by his doctrine that no promise made as a business transaction
could be _nudum pactum_. But he was too late. Growth stopped for a
season and the nineteenth century set itself to systematize and
harmonize what it had received rather than to carry the development
further.