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"So silent was the development of the doctrine as to the universal need of consideration for contracts not under seal, and so marked was the absence of any express authority for the rule in its broad and simple application, that Lord Mansfield, in 1765, raised the question whether, in the case of commercial contracts made in writing, there was any necessity for consideration to support the promise." 1
This doctrine, however, was afterwards disclaimed.
Chief Justice O. W. Holmes suggests another theory of consideration. He points out that one way of proving a debt in early times was by the oath of sufficient men, and he says:—
"The rule that witnesses could only swear to facts within their knowledge, coupled with the accident that these witnesses were not used in transactions which might create a debt, except for a particular fact, viz., the delivery of property, together with the further accident that this delivery was quid pro quo, was equivalent to the rule that when a debt was proved by witnesses there must be quid pro quo. But these debts proved by witnesses instead of by deed are what we call simple contract debts, and thus, beginning with debt, and subsequently extending itself to other contracts, is established our peculiar and most important doctrine that every simple contract must have a consideration. This was never the law as to debts or contracts proved in the usual way by the defendant's seal, and the fact that it applied only to obligations which were formerly established by a procedure of limited use, goes far to show that the connection with procedure was not accidental."
Whatever may have been its origin, the need of consideration has been firmly established by the judicial decisions of the last two hundred years, and it is only necessary to notice one or two points that have given rise to some discussion.
1 Pillans v. Van Mierop, 3 Burrow's Reports (English), p. 1663.
2 Rann v. Hughes, 7 Term Reports (English), p. 350.
3 Common Law, pp. 253 et seq.
Thus, there was at one time a tendency in some courts to hold that a mere moral obligation is sufficient consideration to support a promise.1 But this doctrine never obtained much weight, and the contrary is now settled.
Again, part payment in satisfaction of a debt has always been, and still is, held not to be a bar to a subsequent suit by the creditor for the residue.
"This rule is well established, but it has been much criticised, and is subject to exceptions real and apparent." 2
The feeling seems to be growing that it is only a somewhat irrational adherence to a meaningless technicality that preserves this rule, and many courts are anxious to evade it whenever it is possible, by finding some consideration to support the transaction. Thus, if there be some difference, no matter how slight, in the method or manner of payment, such as the giving of a note of smaller amount for a money debt, or some chattel of less value, the transaction will be upheld. And it has been held that a creditor may, on receiving part of his debt, make a gift of the residue to the debtor.3
Next, as to Parties.
As regards the contracts of infants, the law seems to have settled down to the general principle that such contracts are not void, but voidable. The exceptions to this are contracts for necessaries, and contracts arising out of some legal obligation devolving upon the infant. These, together with contracts for enlistment in the military and naval services, are binding upon an infant.
The latter half of the nineteenth century has witnessed great changes in the legal position of married women. Under the common law, which remained practically unaltered until
1 Clark on Contracts, p. 180, Sec. 84, and cases cited.
2 Clark on Contracts, p. 190; Chicago, Milwaukee & St. Paul R. R. Co. v Clark, 178 United States Reports, 353.
3 Clark on Contracts, p. 190, and cases cited in note 133.
the before-mentioned period, the married woman, as regards contracts, had no legal existence apart from her husband. But the total legal disability of the married woman is now a thing of the past.
"An example of the enlargement of the freedom of contract is found in the case of married women. . . . At common law, the wife's personalty came to the husband, who, by the marriage, acquired an estate in her lands, and husband and wife were held one person, to wit, the husband. In nearly all the States, full power of contract has now been given to married women, and a vast mass of learning upon the subject has become obsolete." 1
It is unnecessary to go into the details of the statutes. passed in the different States for the amelioration of the legal position of married women. But it may be stated, generally, that they are given power to retain all property acquired by them, either by their own exertions or by inheritance, free from the husband's control, and may contract with reference to it. Very generally, also, this privilege is extended to property owned by them at the time of marriage.
As a result of the great advances made in facilities of communication, some important questions relating to the formation of contracts by correspondence have engaged the attention of the courts. These questions, briefly stated, are as follows. If a man make an offer to another by mail and then revoke it, and the revocation do not reach the acceptor until after the latter has mailed his acceptance, although the revocation was despatched before that time, is there a contract? Or, if the acceptor accept and subsequently revoke his acceptance, the acceptance and revocation arriving together, is there a contract? Again, the acceptor mails his acceptance and it is lost in the post; is the proposer bound? The weight of authority in the United States seems to be that a proposal or revocation is a nullity until actually received by the person to whom it is addressed, while the
1 Police Powers of the State, by Alfred Russell, LL.D., p. 72
acceptance takes effect from the time it was despatched." The contract becomes obligatory from the moment the minds of the parties meet, even though a knowledge of this concurrence has not been brought home to them.2 The acceptance therefore, to bind the contract, does not depend upon the delivery of the answer to the proposer. After acceptance, it is too late for the maker of the proposal to withdraw it. The withdrawal, to avail, must reach the offeree before acceptance. If a letter of acceptance and a subsequent letter of withdrawal are received simultaneously, there is no contract. Of course, the death of either party, if it occur before acceptance of the offer, prevents the formation of a
While the foregoing rules seem to be established by authority, there appears to be a feeling that the acceptance should not be effectual until actually communicated to the proposer."
Under the heading of Subject Matter, it is interesting to note that the period under consideration has witnessed the development of mercantile law in general, and, especially, has seen the custom of merchants with regard to Negotiable Instruments fully recognized by courts of law and made part of the law of the land. Negotiable instruments were originally used by merchants only, and the rights and liabilities under them were established by the custom of merchants and not by judicial decision. Consequently, in a suit involving the rights and liabilities of parties to negotiable instruments, it was necessary to prove to the court, as matters of fact, the customs of merchants
1 Wald's Pollock on Contracts, p. 36, note, and cases cited.
2 Mactier v. Frith, 6 Wendell (New York) Reports, p. 103; 21 American Deci sions, 262.
3 Tayloe v. Merchants' Insurance Co., 9 Howard's (United States) Reports,
4 Tayloe v. Merchants' Insurance Co., supra.
5 Dunmore v. Alexander, 9 Shaw & Dunlop's (English) Reports, p. 190.
See Professor Langdell in the seventh volume of the American Law Review, p. 433.
pertaining to the case, and unless the parties were merchants, they could not claim the benefit of these customs in a court of law. But about the middle of the seventeenth century the courts laid it down that "the law of merchants is the law of the land, and the custom is good enough for any man, without naming him merchant." While there does not seem to have been any difficulty in allowing to bills of exchange the quality of negotiability, the courts of common law, at least in the time of Lord Holt, showed a disposition to deny it to promissory notes. To set the matter beyond doubt, the Statute of Anne was passed in 1705 (3 & 4 Anne, c. 9) which established the negotiability of promissory notes. This statute has been adopted substantially in the United States. Though we, at the present day, take it as a matter of course that the rules of negotiability are rules of law, it is submitted that their adoption by the courts from the custom of merchants is one of the most striking instances of the adaptability and common-sense character of the common law. We may, perhaps, smile at Lord Holt's sturdy opposition to the negotiability of promissory notes, but we must bear in mind how great a departure from the rules of the common law is involved in negotiability. To permit a chose in action to be assigned in such a way that the assignee may sue the promisor in his own name for the face value of the instrument, without regard to equities existing between the original parties, without notice to the promisor, and without proof of consideration given by the assignee, must have been a severe trial to the legal mirds of two centuries ago. To recognize a custom, and to give it weight in a particular case between two parties, both belonging to a special class, was one thing; to admit it as a general principle, to be followed in all cases by courts of law, was distinctly another. However, once admitted, the general utility and convenience were too clearly manifested to allow of any doubt as to its expediency, and although it may have been considered for some time afterwards that negotiability should be limited to the two cases of bills of exchange and promissory notes,