« PreviousContinue »
by the plaintiff, is upheld, as a wrong would be done if the promise were not enforced." Professor Williston objects to the doctrine of “moral consideration,” advanced by Lord Mansfield, the other great relaxation of the bargain test, chiefly because of the great vagueness of moral consideration. But if the doctrine of moral obligation, as a basis or ground for the enforcement of a promise, be extended only to cases of moral obligation arising from unjust enrichment by the receipt of material or financial benefit, as where one promises to repay another who has paid his indebtedness without authority, or for improvements placed on his property by mistake, such “moral obligation ” would seem to be sufficiently tangible and definite to be a just and desirable relaxation of the strict requirement of consideration, and it is certainly coming to be recognized by a very respectable number of American authorities." The truth is, the doctrine of consideration is not irrational, but the old definitions and tests are not wide enough to cover all cases of just obligation arising from a promise, and have to be strained to cover such cases as a change of position in reliance on a promise to make a gift; and fail to reach moral obligations of justice and common honesty founded on value received, almost sufficient to raise a quasicontract, which, when recognized by a promise, ought to become binding in law. It is submitted that there should be recognized at the present day, three distinct forms of consideration, or grounds why it is unjust to break, a promise and why a promise should be binding: (1) the usual one, the reciprocity of bargain or exchange; (2) cases of quasiestoppel or justifiable reliance on a gratuitous promise; and (3) an existing obligation, legal, equitable, and also moral if based on value received, and coextensive with the promise. The conception of consideration as a test of the intrinsic nature of the transaction, as based on an exchange present or future, rationalizes and illuminates the whole doctrine and furnishes the key to the maze of conflicting views as to the element of consideration in bilateral contracts, and gives it a logical, rational and scientific basis.
* See also Wald's Pollock on Contracts (3rd ed.) 215, n. 24 : Harriman on Contracts (2nd ed.) $ 120, 150. 640
* See exhaustive note to Muir v. Kane (1910). 26 L. R. A. (N. S.) 552; see also the writer in 7 Borchardt's Commercial Laws of the World, S4, S7.
“What logical justification is there,” asked Sir Frederick Pollock, “for holding mutual promises good consideration for each other? None, it is submitted.” That is true if we assume the premise that the consideration in a bilateral contract must be found in a present detriment imposed by promise at the instant the contract is made; for neither promise before it is known to be binding is in itself any detriment to the promisor. From the year 1588 Courts have designated the promise as consideration for the counter-promise in bilateral contracts.” Lawyers and learned writers have religiously repeated the formula: “It is the counter-promise and not the performance that makes the consideration.” But no one has satisfactorily analyzed this ancient formula to shew how it is that reciprocal promises can support each other, like two men mutually holding each other above the ground. Attempts at analysis have most frequently been made in connection with the question whether a promise to do a thing will or may be a consideration, where the actual doing of it would not be; e.g., where one promises to do a thing which he has already contracted with a third person to do. The solution of this question tests to the uttermost one's theory of consideration, and “if it cannot be applied here it is not good for much anyhow.” Langdell, Pollock, and Beale contend that the second promise, being the incurring of a new detriment or burden, is sufficient consideration, though each promise be to do the same thing and though the doing of the thing would not be consideration.” Professor Williston thinks that from a rational standpoint it is an odd distinction to hold that an assurance of future performance is a better consideration than actual present performance, or that a bird in the hand is worth less than a bird in the bush.” To solve this puzzle whether a promise to do something one is already under contract to do may be consideration, one must ascertain just what is the element or mature of consideration in the case of bilateral contracts. It is contended by Professor Ames that the consideration is found in the act of promising, that the mere making of a promise, on request, animo contrahendi, is sufficient consideration; and that any promise whatever, not in violation of public policy, is sufficient consideration to support a counter-promise.” So Pollock lays it down that it is the promise, and not the obligation thereby created, that is the consideration, although he admits that the value of the promise does not consist in the act of promising but in the obligation.” But it seems fanciful to suggest that mere words, movements of the lips, vibrations of the vocal chords, the act of signing one's name, are the consideration requested.” Professor Langdell explains the element of consideration on the ground that the Courts early perceived that “the 'making a binding promise was the giving or doing something of value, and hence such promises were entitled to be admitted into the category of sufficient considerations.” He proceeds to say: “So the rule that both the mutual promises must be binding, or neither will be, is only an application of the rule that a consideration must have some value in the eye of the law; for if one of the promises for any reason is invalid, of course the other has no consideration, and so they both fall.” Prof. Ashley, who is a disciple of Langdell, contends that “promise ’’ in the consideration formula must be understood to indicate an obligation.” It would also seem to be the view of the Courts that in bilateral contracts it is the counter legal obligation which furnishes the consideration. Thus Holt, C.J., says: “Either all is nudum pactum or else the one promise is as good as the other.”
* 2S Law Quar. Rev. 101, Jan. 1912: Pollock on Contracts (8th Eng. Ed.) 191; compare note by Williston to 3rd Am. Ed. 201, N. 4
• Strangeborough v. Warner (15SS), 4 Leon. 3: Wichals V. o). Cro. Eliz. 703; Bettisworth v. Campion (1608), Yolv. 134.
* Hobart in Lampleigh v. Braith wraite (1616), 1 Sm. L. C. 155: Langdell, Summary $ 81; Wald's Pollock on Contracts, 3rd ed. 1S6; Harriman on Contracts, 2nd ed., § 194; Vickrey v. Maier (Cal. 1913). 129 Pac. 274.
* Langdell, Summary, $ S4: 14 Harv. I. Rev. 496; Wald's Pollock § Contracts, 3rd ed. 209, n. 19; Beale, 17 Harv. L. Rev. 71, S1, S2.
* Note to Wald's Pollock on Contracts (3rd ed.) 210 : see also Harriman on Contracts, 2nd ed. § 123: Ashley on Contracts, 103; Ames, 13 Harv. L. Rev. 30: 2 Street, Foundations of Legal Liability, 118, 119.
** Ames. 13 Harv. T. Rev. 20, 32.
* Wald's Pollock on Contracts, 202.
* See Beale, 17 Harv. L. Rev. 77.
* Langdell, Summary, § 81.
* Langdell, Summary. § 82.
*16 Harv. L. Rev. 319; Ashley on Contracts 90, 92.
vol. xxxHII. C.L.T.—27
There are at least three serious objections against the soundness of this generally accepted theory that obligation 1s consideration for obligation: (1) In many cases where there is no real obligation and no “legal detriment” resulting from the promise on the one side, there is still held to be no lack of consideration to support the counterpromise on the other; (2) In certain cases, where the promise, if binding, would impose a “legal detriment” there is held by the authorities to be no consideration; (3) As an attempted application of the detriment test of consideration, it involves the fallacy of question-begging or arguing in a circle, for legal obligation cannot be the source of consideration, and consideration at the same time the source of legal obligation.
If it is the binding promise or legal obligation of each party which forms the consideration for the promise of the other, how are you to explain the variety of cases in which one party is liable on the contract but not the other?
As a general rule, it is true that bilateral contracts do not bind either party unless both are bound, as in the case of a contract with a married woman. This is so, however, not necessarily for the reason that the promise of the Inarried woman, being void in law, cannot serve as a consideration, or that there is no consideration present in the bargain, as has been somewhat hastily assumed. Invalidity of a contract for Jack of mutuality of obligation does travel on the principle of lack of consideration, where by the terms of the bargain the plaintiff does not assume any definite undertaking, or where the promisee by his mere acceptance has really promised nothing in return.” But where one promise is unenforceable, and the lack of mutuality of obligation is due to some fact outside the content of the bargain, such as incapacity of one of the parties, the Statute of Frauds, fraud, duress, or the like, there seems to be no trouble about lack of consideration, though there is no mutuality of obligation.*
* Harrison v. Cage (160S), 5 Mod. 411.
Thus Sanborn, J., says in a leading case, “A promise is a good consideration for a promise. But no promise constitutes a consideration which is not obligatory upon the party promising. It must bind the promisor so that the promise may maintain an action for its breach, or it is without legal effect and void.” Coldblast Transportation Co. v. Kan. City Bolt & Nut Co., 114 Fed. 77, 52. C. C. A. 25, 57 L. R. A. 696.
So the Supreme Court of Georgia lays it down : “A promise, however, is not good consideration for a promise unless there is an absolute mutuality of engagement, * * * and in case of mutual promises, where, the promise of one party is relied on as consideration for the other, the promises must be concurrent and obligatory upon each at the same time in order to render either binding." Morrow v. Southern Erpress Co., 101 Ga. 910, 2S S. E. 998; see also Vogel v. Pekoc, 157 Ill. 339.
In any system of law, whether the peculiar doctrine of consideration is recognized or not, if the law refuses to impose an obligation on one party to a two-sided bargain, as in the case of a married woman (at common law, this might in and of itself furnish a reason why neither party should be bound, and why the Abargain should fail altogether. Invalidity for lack of mutuality of obligation is not in all cases, therefore, to be attributed to lack of consideration.”
In Justice v. Lang,” the distinction between lack of consideration and want of mutuality of obligation is brought out, and it is held that although the plaintiff may not be liable to an action on the contract because of the Statute of Frauds, that does not destroy the consideration or let off the party who has signed a memorandum of the contract. In other words, there need not be mutuality of obligation in all cases to make a contract binding. Professor Ames enumerates various instances of this, such as contracts procured by fraud, for example, an engagement to marry between a man already married and a woman who believed him to be single.” Similarly, an infant plaintiff may sue on a contract, though his infancy would be a defence to an action against him.” So by the weight of American authority, “a contract made by one who is drunk or of unsound mind, so as to be incapable of understanding the nature of his act, is generally held not void, but voidable at his option.” There would seem to be no such mutuality of obligation in all these cases as is said to be
E * Burgess Fibre Co. v. Broomfield, 180 Mass. 2S3, 62 N. * Cf. I Page on Contracts 451. 460. *But compare Harriman on Contracts, 2nd ed., § 103. * 42 N. Y. 493. 521; contra Wilkinson v. Heaven rich, 58 Micn. 577; 1 Am. Rep. 57. * Ames, 13 Harv. I. Rev. 33. 34. * Holt v. Ward, 2 Str. 937; Willard v. Stone, 7 Cowen (N. Y.) 22, 17 Am. Dec. 497. * Wald's Pollock on Contracts, 3rd ed., 100 n. 52.