CHAPTER II.

LAW OF CONTRACTS. ESSENTIAL ELEMENTS OF A CONTRACT. THE

CONSIDERATION.

THE THING FOR WHICH THE ACT IS DONE. CONTRACTOR CONSENTS TO DO SOME LAWFUL ACT: FOR WHAT?

60. The Consideration.—An undertaking or agreement is not a contract that can be enforced in our courts of law unless it has been made or assumed for a consideration. There must be a clear understanding between the parties, and there must be some consideration for the obligations assumed by both parties, something given in exchange for the obligation, that, in the theory of the law at least, is commensurate with the obligation. undertaken.' The law will not permit a person to assume contract obligations for nothing. There must be something given in exchange, and that something, so far as it is the policy of the law to judge, must be legally equivalent to the obligation assumed.

The consideration of a contract may be described as that which either party suffers, surrenders, gives, does, or refrains from doing, or promises or pledges, for the obligation which he receives in return from the other party. It may be that which is given or promised by one party for that which is received or undertaken or relinquished by the other party. The consideration may consist of some right, profit, interest, or benefit accruing to one party, or it may be some forbearance, detriment, loss, or responsibility endured, suffered, or undertaken by the other party. The thing given. or surrendered may be any material thing of value, as money, an act, a right, or a privilege, or it may be simply a promise or an undertaking for a consideration of value. There must be some undertaking or obligation assumed or there is no contract; a mere exchange of two articles of value is

not a contract.

61. As Regards Consideration. The act undertaken or the promise given may be in consideration of something given, or of a promise to give, to pay, or to do something, or to refrain from doing something. The consideration may be a benefit to the one to whom it moves or is promised, or a detriment to the one who furnishes it. Detriment may be simply the doing of a thing which the party is not bound to do, and does not necessarily

'Langdell's Summary of Contracts 1017.

nean injury. There may be a clear benefit to a promisor, and yet no consideration—for example where the benefit does not come from the promisee. Detriment to the promisee is a universal test of the sufficiency of consideration, and every consideration must possess this quality. If there is detriment to the promisee it does not matter whether there is benefit to the promisor or not. The consideration may inure to the benefit of the promisor or of some third person, or to the benefit of nobody. Consideration therefore means rather that the promisee suffers detriment more than that the promisor is benefited. The detriment must be a detriment from entering into the contract, not from the breach of it. In legal contem plation the promise is always given and received in exchange for the consid eration, and for no other purpose. A promise can never constitute a gift from the promisor to the promisee.

62. Consideration in Case of Subscriptions.--From what has been said a natural conclusion would be that gratuitous subscriptions to promote a common object were not binding. Many engineering and architectural schemes are promoted by the concerted action of public-spirited citizens, whose ardor is less warm when it comes to paying their subscriptions than when they made them. To the contractors and engineers who have under. taken to carry out their plans it is a matter of much moment whether the can collect anything for their time, labor, and materials.*

Where several persons sign a subscription paper, each agreeing to pay. certain amount towards an enterprise in which all are interested, the promise of each may be held a good consideration for the promise of the others. This may be a consideration for a binding contract between the subscribers, but it is not a consideration as between the subscribers and one who is not a subscriber, but who has furnished the means to carry out the enterprise for which the subscriptions were made.

If the subscription is for a designated purpose, and a contractor is invited to carry out the conditions stipulated in the subscription paper, which he has done, or if on the faith of the subscriptions he has expended money or assumed liability, an acceptance of the offer of the subscribers will be implied, and the contractor may collect from the subscribers. In the absence of the above circumstances the subscription is a mere offer and cannot be enforced. If an offer merely it may be revoked at any time Lefore the consideration and conditions have been performed. A gratuitous subscription with only one signature is but an offer which, until accepted by the promisee in express terms or by a performance of the conditions. stipulated therein, is without a consideration, and cannot be enforced against the will of the subscriber. Doubtless, however, the law would imply a contract to reimburse the contractor for the amount he had expended. CerRidgway e. Grace (Com. Pl.), 21 N. Y. Supp. 934.

1 Currie . Misa, L. R. 10 Ex. 162; Langdell's Summary of Contracts 1022.

*See Parties, Secs. 48, 49, supra

tainly it is well settled that when a contractor to whom the subscriptions run has performed his part or has incurred obligations on the faith of such subscriptions, and has complied with the conditions on which they were made, the contract of each and all can be enforced.'

63. Adequacy of Consideration. -The consideration must have some value, and the considerations moving from either party to the other party must be legally equivalent. In the absence of fraud the parties themselves are left to judge of the relative value of the considerations which they furnish or pledge, but if the agreement be such that the consideration cannot possibly be equivalent to the promise the contract will not hold.

The value of most considerations, as well as of most promises, is something which the law cannot measure; it is not merely a matter of fact, but a matter of opinion. If the parties think that the consideration is equal to the promise, or vice versa, and if they are willing to exchange one for the other, the consideration will be equal to the promise if the law can see that it has any value at all. Fifty cents cannot be a consideration to pay $1 unconditionally and on request, i. e., immediately. But $1 is a sufficient consideration for a promise to pay $1000 at some future day or upon the happening of some uncertain event, though the $1 is only a sufficient consideration for a general or unqualified promise to pay $1. The smallest sum of money may be a sufficient consideration for a premise to acknowledge satisfaction of a judgment for the largest sum.' So $1 may be a consideration for a farm whose market value is $5000, or $1000 may be a consideration for so trivial a thing as a canary-bird.

The reasons for these discriminations are that the law has never abandoned the principle that the consideration must be commensurate with the obligation which is given in exchange for it, that though the smallest consideration will in most cases support the largest promise, this is only because the law shuts its eyes to the inequality. Any inequality to which the law cannot shut its eyes is fatal to the validity of the promise.' Yet, though the most trivial thing may answer for a consideration, there must be something, for the court cannot disregard the fact that something and nothing are not equivalent. The inadequacy of the consideration must not be so gross as of itself to prove fraud or imposition. A promise to accept a part of a debt lready due in payment of the whole if paid by a certain day is without consideration and void, for surely "a part cannot be equal to the whole."

64. The Consideration of a Contract Must be Something More Than a Moral Obligation.-A mere moral obligation or duty is not regarded in law

1 Homan Steele, 18 Neb. 652 [1886]; Orman v. Buel (Neb.), 59 N. W. Rep 515; Higert v. University, 53 Ind. 326 [1876]; Brownlee . Lowe (Ind.), 20 N. E Rep. 301 [1889]; Stearns . Corbett. 33 Mich. 458 [1876]; but see 24 Amer. & Eng. Ency. Law 328, et seq.

Langdell's Summary of Cont acts 1017.

3 Langdell's Summary 1017; Emmet Co. v. Allen (Ia.), 41 N. W. Rep 201 [1889]. Judy . Louderman (Ohio), 29 N. E. Rep. 181.

4

5W tis v. Frenche et al., 19 N. J. Eq. 407 [1869].

of sufficient value to support a promise. A debt owing by a woman's dead husband which is barred by limitations is not such a consideration as will support an agreement by her to pay the amount of the debt.'

There are what seem to be exceptions to the statement that a moral obligation will not support a promise. The cases of obligations which are not enforceable because of the infancy or bankruptcy of the promisor or because the right to an action is barred by the statute of limitations are often cited as such exceptions. In these cases the obligation is not regarded as having ceased to exist, but the law has given the party a defense which he may exercise or waive, and a new promise is held to operate as such a waiver. The action in such a case is not brought upon the new promise, but either upon the original obligation or upon one implied by law. A promise to pay a debt which the creditor has by his own act effectually released is without consideration. A promise by a widow to perform a promise made by her while married is not binding without a new consideration in states where married women are under coverture. An obligation enforceable in equity will support an express promise to pay and make it suable at law.* The moral duty of a father to provide for his child has been held a sufficient consideration for a promise to pay money."

65. The Consideration Must Not be Wanting."—If the thing to which the consideration relates has, contrary to the belief of the parties, no existence, the contract obligation will not hold. Thus materials sold that turn out to have been destroyed before the bargain was made is in fact no contract of sale. So if parties contract for a thing which they suppose to exist, but which in point of fact does not exist, the contract is void."

66. The Doing of a Thing by One Party Which He is Already Bound to the Other Party to Do is Not a Consideration for a New Promise or a Contract.A promise to pay a public officer an extra fee or a sum beyond that fixed by law is not binding, even though he renders services and exercises a degree of diligence greater than could have been required of him; but a contract by persons whose property was threatened by a mob to reimburse the sheriff for money expended by him for the wages and subsistence of special deputies is not void as against public policy so long as he exacts nothing for his own services or the services of his regular deputies."

A promise by the owner to pay additional compensation for the performance of a contract which the contractor is already under obligation to the promisor to perform is without consideration.' A promise by the contractor's surety, to whom the money to become due under the contract had been assigned, to pay the claim of a subcontractor if he would do certain work which he was required to do by his contract was held without consideration. A promise by a building-contractor to put another coat of oil on the inside of a house, made after he had fully complied with his contract and without any additional consideration, is a mere gratuity, and his failure to put on the additional coat will not prevent him from recovering the full amount due under his contract. If the promise had been made before he had performed his contract it might have been different. When a construction company had completed work according to contract an agreement to accept less than the contract price was held without consideration and not to release the owner from liability for payment at the original contract rate.* The same was held of an agreement of a subcontractor to sign a release of the contractor from personal liability in consideration that the owner would pay the former a past-due note. A promise to pay at a future time a debt already due, and which draws interest, is not a consideration for the extension of the time of payment when the rate of interest thereon is not changed.*

A promise by an owner to an architect to pay him a commission of 5 per cent. additional as an inducement to resume work upon a job for which he had agreed to furnish plans and to superintend is void, there being no consideration for the promise. The architect in this case had contracted to prepare the plans and to superintend the erection of a large brewery, but upon learning that a certain contract, which he had hoped himself to secure, had been given to another he became angry, took his plans, called off his superintendent, and refused to have anything more to do with the brewery. The facts of the case were that the architect took advantage of the owner's necessities and extorted a promise to pay him 5 per cent. as a balm for his feelings and as a condition for his complying with his contract already entered into. To permit one to recover under such circumstances would be to offer a premium upon bad faith, and invite men to violate their most sacred contracts that they might profit by their own wrongs.'

The principle seems to apply even when the promisee is under obligation to a third person to do the thing in question, for there is a conclusive presumption of law that the act is done in discharge of the previous obligation, Jones v. Risley (Tex. Sup.), 32 S. W. Rep. 1027.

433.

Alley v. Turck (Sup.), 40 N. Y. Supp.

3 Widiman v. Brown (Mich.), 47 N. W. Rep. 231 [1890].

4 Fitzgerald v. Fitzgerald & Mallory Const. Co. (Neb.), 59 N. W. Rep. 838.

5 McNutt v. Loney (Pa. Sup.), 25 Atl. Rep. 1088; and see McCarty v. Hampton Bldg. Assu., 61 Iowa 287, where an additional guaranty w's exacted.

293.

Stickler v. Giles (Wash.), 37 Pac. Rep.

Lingenfelder v. W. Brewery Co. (Mo.), 15 S. W. Rep. 844 [1891].