CHAPTER IV.

LAW OF CONTRACTS. ESSENTIAL ELEMENTS OF A CONTRACT. MUTUAL CONSENT OR MUTUAL ASSENT.

88. There Must be Mutual Understanding. The fourth essential element of a valid and binding contract is a mutual understanding between the parties as to the essential terms of the agreement between the parties; there must be privity, mutual understanding, and no mistake.' Mutual consent must always exist at the moment when the contract is made. An express refusal to abide by an award, made at different times by the parties thereto and without any meeting of their minds, is not a contract that will operate as a discharge of the award."

89. Mutual Consent Must be Shown by Some Overt Act.*-It is impossible to enter into a person's thoughts or ascertain how fully he comprehends what he is doing or what he intends to do, and mutual assent is not therefore in general capable of direct proof; but proof of acts performed that indicate a purpose or intention on the part of the contractor is sufficient proof of consent on his part to the terms of his agreement. As Professor Langdell has said in his Summary: "Mental acts are not the materials out of which promises are made; a physical act on the part of the promisor is indispensable, and when the physical act has been done only a physical act can undo it." If one party has made an offer which has been duly accepted by the other, or if one has made a delivery and the other appropriated the thing delivered, proof of these facts is sufficient proof of the mutual consent of the parties. If such acts cannot be proved, then the contract fails, for whatever may have been in the minds of the parties, or however mutual their unexpressed wishes may have been, they will not suffice to create a contract unless manifested by some overt act. The mental state in itself signifies nothing; it requires manifestation.

If, on the other hand, it can be conclusively proven that mutual consent is lacking, the performance of the acts will amount to nothing toward es

1 Gill Manfg. Co. Hurd, 18 Fed. Rep. 673 [1883]; Pullman Palace Car Co. v. Tex. & Pac. R. Co, 11 Fed. Rep 625 [1882]; Greve v. Gauger, 36 Wis. 369; Shields v. Hickey, 26 Mo. App. 194 [1887].

2 Hynes v. Wright, 62 Conn. 323; but see Sheffield Fur. Co. v. Hull Coal & Coke Co. (Ala ), 14 So. Rep. 672.

Langdell's Summary of Law of Con tracts 1090.

* See Sec. 183, infra.

tablishing a contract. An offer must be a physical and mental act combined, the mental act being embodied in, represented by, and inseparable from the physical act. If the mental act becomes impossible, then the offer comes to an end, as in death or insanity, either of which during the pendency of an offer makes the contract impossible for want of mutuality.'

As an instance, suppose an engineer draws up two contracts for the approval of his company, both of which are signed and sealed, and the company elects to deliver one of the instruments, but by mistake delivers the other instead, then there is no contract. There must be a definite understanding between the parties as to all the elements of the contract.'

90. There Should be No Misunderstanding. A material error as to the kind, quantity, quality (?), or price of the subject-matter may make the agreement void, either because there was never any real consent of the parties or because the things or state of things to which they consented does not exist or cannot be realized. Therefore it was held no contract when a telegraph-operator by mistake made an order for three rifles to read as an order for fifty rifles."

A mistake as to the person with whom the contract is made has been held to invalidate it where it was shown that the contractee never intended to contract with the person who assumed to be the contractor." A mistake as to which of two things was the subject of the sale will render the obligation not binding. Thus in the description of an estate sold, if the description include a piece of land not intended to be included in the sale, then there is no mutual understanding, and therefore no contract. Another instance is afforded where materials were bought to arrive by a certain ship Peerless, which the contractor supposed to be a vessel that sailed from a distant port in October; but there were two ships named the Peerless, the one meant by the seller sailing in December, and it was held that there was no binding contract, because there was a mistake as to the subject of the proposed sale."

A contract will not be enforced when it appears to have been based on the supposed existence of a certain fact which furnished the motive for

1 Langdell's Summary of Contracts. 1091. 2A contract is completed by delivery. There was no contract as to the one delivered, for there was no consent; not as to the other contract. because there was no delivery to evidence the assent. Langdell's Summary 170. [It might be a very difficult matter of proof, however.-ED.]

A contract signed by both parties and left with the engineer or architect for their joint benefit has been held a good delivery. Coey v. Lehman. 79 Ill. 177; Blanchard v. Blackstone, 102 Mass. 348.

Hubbard v. Thompson, 25 Fed. Rep. 188 [1885]; Sibley v. Felton (Mass.), 31

N. E. Rep. 10.

4 Pollock on Contracts 433; Hopkins v. Hinkley, 61 Md. 584; Rogers v. Walsh, 12 Neb. 28; Gibson v. Pelhie, 37 Mich. 380; Lamar Milling & Elevator Co. v. Craddock (Colo. App.), 37 Pac. Rep. 950.

5 Henkle v. Pape, L. R. 6 Ex. 7.

Boulton v. Jones, 2 H. & N. 564; Boston Ice Co. v. Potter, 123 Mass. 28; but see Benjamin on Sales 372.

Čalverly v. Williams, 1 Vesey Jr 210; Pollock on Contracts 430, 431, and cases cited.

8 Raffles. Wichelhaus, Langdell's Select Cases on Contracts 39.

entering into the agreement if it subsequently transpires that the assumption on which the contract was based was erroneous.'

An agreement by the owner of a patent for certain machines to furnish. to another "such a number of machines as he desires for his own use at present or hereafter" was held void for want of mutuality.'

An error as to quality will not suffice to make a transaction void unless it is such that, according to the ordinary course of dealing and use of language, the difference made by the absence of quality wrongly supposed to exist amounts to a difference of kind, and furthermore the mistake must be common to both parties,' or it may be a mistake on one side and fraud on the other. As Mr. Dickson says in his notes to Pollock on Contracts: "The law tolerates a good deal of lying in trade when it is merely in the nature of puffing one's own goods or deprecating those of another, provided the thing bargained for reveals its own qualities and is open to the parties' equal inspection." **

6

It has been held that executed contracts are obligatory without regard to mutuality. The fact that it is left optional with one party whether he will enforce his rights under the contract is not a ground for a defense of want of mutuality by a party who has received the benefit; but an agreement which is void as against public policy does not give one party the right to sue for damages for failure of the other party to perform his part, though the first party has performed his part."

If a misunderstanding as to the price to be paid be proven no obligation. will be created. Thus when a watchman was employed at one dollar and a half per day, and nights the same, and the employer understood him to say and mean one dollar and one-half for every twenty-four hours, while the watchman meant that amount for a day of twelve hours, it was held that there was no contract, because the parties had never assented to the same thing; that the watchman had never consented to work for one dollar and a half per twenty-four hours nor the employer to pay three dollars, but that, the watchman having performed the services, he was entitled to recover what they were reasonably worth."

In another case where shingles were bought at a price agreed upon, but there was a dispute as to whether the shingles were by the "bunch" or by the thousand, it was held that unless both parties had understandingly

United States v. Charles (C. C. A.), 74 Fed. Rep. 142.

Columbia Wire Co. v. Freeman Wire Co. (C. C.), 71 Fed. Rep. 302.

& Pollock on Contracts 436; American cases cited in the Blackstone edition [1888].

Poland v. Brownell, 131 Ma s. 138; Armstrong . Huffstutler, 19 Ala 51; Hill . Bush, 19 Ark. 522; Bell v. Henderson, 6 How. (Miss.) 321.

5 Grove v. Hodges, 5 P. F. Smith 504. Waterman v. Waterman, 27 Fed. Rep.

827.

Kountz v. Flannagen (Sup.), 19 N. Y. Supp 33.

Turner v. Webster, 24 Kan. 38 [1880]; Tucker v. Preston (Vt.), 11 Atl. Rep. 726 [1888]; Vogel v. Pekoe (Ill. Sup.), 42 N. E. Rep. 386.

*See Sec. 277a, infra.

agreed to one of these views as to quantity, then there was no special contract as to price.' There is no contract unless the parties thereto assent, and they must assent to the same thing in the same sense.**

An interesting case is reported in Maine, where a contractor proposed to erect a schoolhouse for $4550, as per plans and specifications, and, being the lowest bidder, the committee awarded the contract to him for $4525 and made it a matter of record, and required a bond for that amount for the completion of the work, also forfeiture for delays, etc. During construction trouble arose as to the erection of the building, and the court held that there had been no contract between the parties.3

In order to have a contract, the minds of the parties must meet and all the terms of the contract must be agreed to. If any part of the contract is not settled by the parties, or a mode agreed upon to settle it, there can be no contract as to that part.*

A memorandum reciting that a company has engaged an employee "for the season 1890-1891 at a salary of $75 per week, subject to the regulations and conditions of a contract to be substituted for the memorandum," is not a contract. There is no meeting of the minds of the parties as to the conditions, restrictions, and regulations mentioned."

91. To Avoid a Contract Mistake or Misunderstanding Must be Shown Conclusively. It may seem to the reader that such rules of law would enable any man to escape the obligation he has assumed, but it is thought not. The misunderstanding, as to the parties, thing, quantity, or price of the property, material, or goods sold or contracted for, must be of such a nature as a reasonably diligent man might fall into in order to relieve him from the performance of his contract, and that he did misunderstand and that there was no mutual consent he must satisfy twelve jurymen."

If a proposal was misunderstood by an acceptor it is for him to show that the misunderstanding was reasonable. A contractor cannot be allowed to evade the performance of his contract by the simple statement that he has made a mistake or did not understand. If the owner or contractor at the time he executes the contract conducts himself so as to lead a reasonable man to believe that he understands and assents to its terms, and the contractor or owner executes and performs his part under that belief,

1 Greene v. Bateman, 2 Woodb. & M.

239.

21 Parsons on Contracts 389; and see Flaherty v. Miner, 123 N. Y. 382, in which case it was claimed that the clause for architect's certificate was inserted by mistake. A strong architectural case. It is submitted that this question of quantity might frequently be determined by the custom or usage of the place.

2 Howard v. School, 78 Me. 230; and see Hughes v. Clyde, 41 Ohio St. 339; also

Verzan v. McGregor, 23 Cal. 339, where the contractor made a mistake in estimating amount and difficulty of work.

Gill Manfg. Co. v. Hurd (Ohio), 18 Fed. Rep. 673 [1883]; see Lyndon Mill Co. v. Lyndon Lit. Inst., 63 Vt. 581, where the owner supposed the contractor was furnishing the materials as a gratuity.

5 Walton v. Mather (City Čt.), 24 N. Y. Supp. 307.

6 Pollock on Contracts 432.

*See Custom and Usage, Secs 604-628, infra.

neither party can assert that he did not understand or assent to its terms.' Where the written draft of a contract is viewed as the consummation of the negotiations there is no contract until it is finally signed." The burden of proof is on one affirming the completion of the contract before the written. draft thereof was signed to show that the signing was not necessary to its completion. A statement by plaintiff in his answer accepting the rate, and saying that he would be down the first of the week and make out a contract, does not prove that he did not suppose that his letter perfected the contract.*

4*

A demand for a sleeping-car berth and a promise to furnish it constitute a contract, the mutual obligations and promises being a valid consideration. The same is true of a verbal application for cars of a railroad agent, who replies "All right," and makes an order for the cars. Such facts proven are sufficient to show that the minds of the parties met and that a contract was made."

The mistake in executing a contract need not always be mutual in order to invalidate it."

If there is a mutual mistake as to the existence of the subject-matter, as in the sale of a farm and buildings the latter of which were burnt, the vendor cannot recover the contract price."

92. Manner of Coming to an Understanding-Offer and Acceptance Make a Contract. The manner and method of parties reaching this mutual understanding are essentially various, but probably the most common way of evidencing a mutual consent to the terms of an agreement is by offer and acceptance; by one party making a statement of the terms by which he will abide in the shape of an offer, and then, while he is in that state of mind, i. e., before he has expressed himself to the contrary or made a revocation of his offer, the other party accepting his offer unconditionally, in the same terms as made. Then is there a meeting of the minds, and from the moment of that acceptance there is a binding contract. Such an agreement is usually introduced by some questions as to whether a thing is for sale or to be performed; or the disposition to contract may be evidenced by a notice or advertisement that a certain sale is to take place or a thing is to be disposed of or that certain work is to be performed, inviting offers, pro

1 Phillip . Gallant, 62 N. Y. 256. Steamship Co. v. Swift, 29 Atl. Rep. 1063, 86 Me. 248; but see Sanders v. Pottslitzer Bros. F. Co. (N. Y. App.), 39 N. E. Rep. 75.

Mississippi & Dominion Steamship Co. e. Swift, 86 Me. 248.

4 Lawrence v. Milwaukee, L. S. & W. R. Co. (Wis.), 54 N. W. Rep. 797. See Sec. 797.

Pullman P. C. Co. v. Booth (Tex.), 28 S. W. Rep. 719..

6 Pittsburgh, etc., Ry. Co. v. Racer (Ind.), 38 N. E. Rep. 186.

Foster v. Mackinnon, L. R. 4 C. P. 704, 711; Pitcher v. Hennessy, 48 N. Y. 415.

8 Wells v. Calman, 107 Mass. 514 [1871], cases cited. But see Harvard Law Professor's doctrine in Harvard Law Review, and an article on the effect of destruction of buildings on contract for sale of the property, 12 Central Law Journal 77, by E. A. Marshall.

*See Sec. 797, infra.