Page:The New International Encyclopædia 1st ed. v. 05.djvu/410

* CONTRACT. 350 CONTRACT. clasifled as unilateral and bilateral. A uni- lateral contract is one in which one partj- to the contract makes a promise in exchange for the other party's giving something or doing some act. A bilateral contract is one in which each of the two parties gives his promise in exchange for the promise of the other, the promise of each being a consideration for the promise of the other. Contracts are also said to be executory or exe- cuted. An executory contract is one which has not been fully performed. As the performance of a contract terminates its existence as a legal obligation, it will be observed that the expression 'executed contract' is a contradiction of terms. A present sale of personal property is sometimes said to te an executed contract, but the expres- sion is imiiroper. as the sale may be efl'eeted by a mere meeting of the minds without any promise, and, licnce, without contract. See Sale.s. Performance. — In the case of all true contracts, whether by specialty or simple contracts, the obligations of a party to perform may not arise until the happening of a condition. _ or the jDcr- formance of liis promise by the other jiarty. as expresslj' or impliedly provided in the contract by its terras. If there be no such provision in the contract, by certain settled rules of construction (known as the law of conditions) implied in law, the performance of one party may be deemed a condition precedent to the performance of the other, or the performance of each of the parties may be a concurrent condition to the performance by the other; that is, eaeli party must tender his performance before he can recover damages for the breach of contract by the other. In general, impossibility of performance is no defense to an action brought to recover damages for breach of contract. If, however, the contract contemplates the continued existence of the parties or the sub- ject-matter of the contract, the death of a party of failure of subject-matter is a defense. Thus, in contracts for personal service, death of the employer or employee terminates the contract, and a contract for the use of a particular build- ing or other property is terminated bv' the de- struction of the jirojierty. .S'ln/s vpon Contracts. — Owing to the rule of pleading in actions upon contract at common law, the plaintiff must show that he has given con- sideration for the defendant's promise. A third person for whose benefit the contract was made, hut who was not a party to it, could not sue upon it. This is still the rule in most jurisdic- tions, although not in all: and in a few, notably New York, in the single case when A gives money or property to B upon his agreement to pay money to C, C may sue upon the contract upon the theory that a debt has been created in his favor. Equity exercises jurisdiction to compel specific performance of a contract when legal damages would be inadequate. It also exercises its powers "to rescind or reform w-ritten contracts affected ■with fraud or mistake. Fraud is also a defense at law to an action founded on contract, it having been early adopted by the courts of law. although it is a defense equitable in character. Contracts which contravene rules of public policy or statu- tory enactment are illegal and void'. See II- ij;gality. Contracts in the Civil Law. — In the Roman law contract (contractus) signified an agreement which created an actionable obligation. The original roots of eontractional obligations were apparently pledge and vow. In the first case, the debtor gave the creditor a pledge, which the creditor held until the debtor had fulfilled his promise. If a debtor had nothing else to pledge, he pledgeil his own person in the form of a sale. This transaction the Romans called nexum. It created something analogous to a judgment debt; and as the debtor was in default, the creditor levied on liis body {maniis inieclio}. At the time of Gains this contract was antiquated. A vow to the gods to do something for or pay something to the third person enabled the priest to inter- vene and insist upon i)erformance — from this root sprang the sacral contract of the priestly law, the sponsio, and out of the sponsio grew the sacral contract of stipulatio. At the time of Gains (early Empire) five classes of contracts were recognized: (a) The rerbal contract, stipulatio, which was actionable because a certain form of words (question and answer) had been observed. It was usual to draw up a written statement (cautio) reciting the terms of the agreement, hut the validity of the contract rested on the exchange of the spoken words. (b) The literal contract (from Uteres, writing) . This was actionable because a formal entry had been made in the creditor's ledger ( ex- I'cnsilatio) . In thecase of the verbal and the literal contract it was neither the agreement alone nor the form alone which created obligation, but the two together, (c) The real contract. This was actionable because something (res) had passed from the creditor to the debtor, and the return of the thing or an equivalent had been promised. To this class belonged the bailments known as mutuum, commodatum, deposit um, pignus. (See Bailment. ) Besides these there were many other real contracts without special names. Ultimately it was recognized that any agreement for recipro- cal performances would become a binding con- tract as soon as one party had pertormed. (d) The consensual contract. This was actionable by virtue of the agreement (consensus) between the jiarties, although no form had been observed and nothing had jiassed. There were only four con- tracts of this class: emptio venditio, sale; loea- tio-conduciio, hiring,- soeietas, partnership; and mandatum, commission of agency. Agreements that fell in none of these four classes were simple pacts (pacta), not contracts, and were not actionable. Such pacts might, how- ever, be available for defense, e.g. when a credi- tor had given his debtor an informal release or an extension of time, and pacts made immediately after the conclusion of a contract (pacta adiecta) were treated as part of the contract. In order that a contract should be valid it was necessary that the parties should be of such age as to be capable of binding themselves, and of sound mind, and that the object to be attained should be neither impossible, illegal, nor immoral. ^Mistake (error) was regularly fatal to the valid- ity of a contract, jirovided the mistake w'as ex- cusable and essential. A mistaken reason or motive for contracting was not regarded as essen- tial. Where, however, the mistake as caused or utilized by the other party, these limitations disappeared and the contracts were voidable for fraud (dnhis). Duress (metus) also made a con- tract invalid. In modern Europpan codes, all agreements ex- cept those lookina to impossible or immoral ends ore valid and action.able, unless a special form is