Having explained who can make contracts, we are now ready to take
another step. Besides having parties, there must be a CONSIDERATION
for every contract. This is rather a long word, but no shorter can be
found to put in its place. What do we mean by this term? We mean that
there must be some actual gain or loss to one or both parties to a
contract, otherwise it is not valid. If, for example, A should say to
B, "I will give you $100 to-morrow," B, perhaps, might go away very
happy, thinking that with this money he could buy a bicycle or some
other fine thing; indeed, it was just the sum for which he was
longing; so on the morrow he goes to A for his money. He promptly
appears, but A says to him: "I have changed my mind, and will not give
you the $100." B asks: "Did you not promise to give me this money?"
"Certainly." "Well, why will you not fulfil your promise?" A replies:
"I was a fool when I made that promise; you are not going to give me
anything for it, so I am unwilling to give the money to you." Suppose
B in his sorrow should go to a lawyer, thinking, perhaps, that he
could compel A by some legal proceeding to pay over the money. What
would the lawyer tell him? Why, he would say: "Did you promise to give
A anything for the $100?" "No, sir." "Then the law will not help you
out. You cannot get the money from him by any legal method. Perhaps
you can get $100 worth of fun in licking him for not giving you the
money, but you cannot get the cash. But, mind, perhaps you had better
not try to get your fun in that way, for this is contrary to law, and
he might get much more than $100 out of you in the way of damages for
licking him."
In every case, therefore, there must be _something for something_. Now
this something may be a thousand things. It may be money or
merchandise or work. In short, there is no end of the things that may
serve as a consideration of a contract. An example may be given to
explain what is meant by this. A man had been speculating in stocks,
and one of the rules of the stock board is that a margin or sum of
money that is to be paid for stock must be paid in every case. It may
be that an additional margin or sum must be paid under some
circumstances. The speculator in this particular case was unwilling to
pay this margin, and he said to the broker: "If you will do as I wish,
and not put up this margin, I will save you from any loss that may
result from such conduct." It was contrary to the rules of that stock
exchange for the broker not to put up the margin, and the consequence
was that he was put off the floor; in other words, the board would not
permit him to act as a member. Of course, as he could not buy and sell
any more stock, he lost money; and he went to his customer, the
speculator, and told him that he was losing money in consequence of
carrying out his order about the margin. The speculator said he was
sorry, but he could not help it. The broker then insisted that the
speculator must make good his daily loss in consequence of doing as he
had promised. This the speculator would not do. The broker then sued
him for the amount of his loss. The speculator defended on the ground
that there was no consideration for the agreement he had made with
the broker about the margin. The court said that the loss which the
broker had suffered in consequence of carrying out his contract with
the speculator was a good consideration for the contract and must be
made good.
_When a contract is sealed the law implies that there is
consideration_, and there need not be an actual one consisting of
money, labour, or any other thing. This seems like an exception to the
rule requiring a consideration in all cases, but the reason is this:
When a sealed contract is made, the law supposes or assumes that each
party made it, clearly knowing its nature--made it carefully, slowly,
and, consequently, that either a consideration had been or would be
given. If, therefore, one of the parties should refuse to fulfil it
the other could sue him in a court of law. The person who sought to
have it carried out would not be obliged to show that he had given any
consideration on his part for the undertaking, because the seal
appended to his name would imply that a consideration had been given.
A deed for a piece of land is a good illustration of a sealed
instrument. The law assumes whenever such a deed is given that the
seller received a consideration for his land. The money paid was a
consideration received by the seller, and the land was the
consideration received by the buyer. Each gives a consideration of
some kind for the consideration received from the other; and this is
true in all cases.