08 - Common Law by Oliver Wendell Holmes, Jr.

Dive into the rich history and intricate details of common law in the United States, exploring its evolution and significance through compelling narratives. (summary by TB27)

Episode Transcript

Speaker 1 (00:00):
Lecture eight of the Common Law by Oliver Wendell Holmes Junior.
This recording is in the public domain Contract two elements.
The general method to be pursued in the analysis of
contract is the same as that already explained with a

(00:20):
guard to possession. Wherever the law gives special rights to
one or imposes special burdens on another, it does so
on the ground that certain special facts are true of
those individuals. In all such cases, therefore, there is a
twofold task, first to determine what are the facts to

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which the special consequences are attached, second to ascertain the consequences.
The first is the main field of legal argument with
regard to contracts. The facts are not always the same.
They may be that a certain person has signed, sealed,
and delivered a writing of a certain report. They may

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be that he has made an all promise, and that
the promisee has furnished him a consideration. The common element
of all contracts might be said to be a promise,
although even a promise was not necessary to a liability
in debt is formally understood. But as it will not

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be possible to discuss covenants further, and as consideration formed
the main topic of the last lecture, I will take
up that first. Furthermore, as there is an historical difference
between consideration in debt and in a sum sit, I
shall confine myself to the latter, which is the later

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and more philosophical form. It is said that any benefit
conferred by the promisee on the promissor, or any detriment
incurred by the promisee, may be a consideration. It is
all so thought that every consideration may be reduced to
a case of the latter. Song using the word detriment

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in a somewhat browed sense to illustrate the general doctrine.
Suppose that a man is desirous of having a cask
of brandy carried from Boston to Cambridge, and that a truckman,
either out of kindness or from some other motive, says
that he will carry it, and it is delivered to
him Accordingly. If he carelessly stays in the cask, there

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would perhaps be no need to allege that he undertook
to carry it. And on principle, and according to the
older cases, if an undertaking was alleged, no consideration for
the assumpsit need be stated the ground of complaint in
that case would be a wrong irrespective of contract. But

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if the complaint was that he did not carry it
as agreed, the plaintiff's difficulty would be that the truckman
was not bound to do so unless there was a
consideration for his promise. Suppose, therefore, that it was alleged
that he promised to do so in consideration of the
delivery to him. Would this be a sufficient consideration? The

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oldest cases going on the notion of benefit to the promissor,
said that it could not be that it was a
trouble not a benefit. Then take it from the side
of detriment. The delivery is a necessary condition to the
promisers during the kindness, and if he does it, the delivery,
so far from being a detriment to the promisee, is

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a clear benefit to him. But this argument is a fallacy. Clearly,
the delivery would be sufficient consideration to enable the owner
to declare in assumpsit for the breach of those duties
which erodes irrespective of contract, from the defendants having undertaken
to deal with the sink. It would be a sufficient

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consideration for any not involving a dealing with the thing
for its performance for instance, to pay one thousand dollars,
and the law has not pronounced the consideration good or
bad according to the nature of the promise founded upon it.
The delivery is a sufficient consideration for any promise. The argument,

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on the other side, leaves out of sight the point
of time at which the sufficiency of the consideration is
to be determined. This is the moment when the consideration
is furnished. At that moment, the delivery of the cask
is a detriment in the strictest sense. The owner of
the cask has given up a present control over it,

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which he has a right to keep, and he has
got in return, not a performance for which a delivery
was necessary, but a mere promise of performance. The performance
is still future, but it will be seen that although
the delivery may be a consideration, it will not necessar
necessarily be one. A promise to carry might be made

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and accepted on the understanding that it was a mere
matter of favor, without consideration and not legally binding. In
that case, the detriment of delivery would be incurred by
the promise see as before, But obviously it would be
incurred for the sole purpose of enabling the promise all
to carry as agreed. It appears to me that it

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has not always been sufficiently borne. In mind that the
same thing may be a consideration or not, as it
is dealt, whether by the parties. The popular explanation of
coggsvy Bernard is that the delivery was a consideration for
a promise to carry the casks safely. I have given
what I believe to be the true explanation, and that

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which I think Lord Holt had in view in the
fifth lecture. But whether that which I have offered be
true or not? A serious objection to the one which
is commonly accepted is that the declaration does not allege
that the delivery was the consideration. The same caution should

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be observed in constraining the terms of an agreement. It
is hard to see the propriety of erecting any detriment
which an instrument may disclose or provide for into a
consideration unless the parties have dealt with it on that footing.
In many cases, a promisee may incur a detriment without

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thereby furnishing a consideration. The dutchment may be nothing but
a conditioned president to performance of the promise, as where
a man promises another to pay him five hundred dollars
if he breaks his leg. The courts, however, have gone
far towards obliterating this distinction. Acts which by a fair

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interpretation of language would seem to have been contemplated as
only the compliance with a condition, have been treated as
the consideration of the promise, and so have counter promises
in an agreement which expressly stated other matters as the consideration.
So it should be mentioned subject to the question whether

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there may not be a special explanation for the doctrine
that it is said that an assignment of a leasehold
cannot be voluntary under the Statute of twenty seven Elizabeths
Seeing Form, because the assigning comes into the obligations of
the tenant. Yet the assignees incurring this jetchment may not

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be contemplated as the inducement of the assignment, and in
many cases only amounts to a deduction from the benefit
conferred as a right of way would be especially if
the only obligation is to pay rent, which issues out
of the land in a theory of law. But although
the courts may have sometimes gone a little far in

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their anxiety to sustain agreements, there can be no doubt
of the principle which I have laid down, that the
same thing may be a consideration or not, as it
is dealt with by the parties. This praises the question
how a thing must be dealt with in order to
make it a consideration. It is said that consideration must

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not be confounded with motives. It is true that it
must not be confounded with what may be the prevailing
or chief motive. In actual fact, a man may promise
to paint a picture for five hundred dollars, while his
chief motive may be a desire for fame. A consideration
may be given and accepted in fact, solely for the

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purpose of making a promise binding. But nevertheless, it is
the essence of a consideration that, by the terms of
the agreement, it is given and accepted as the motive
or inducement of the promise. Conversely, the promise must be
made and accepted it as the conventional motive or inducement

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for furnishing the consideration. The root of the whole matter
is the relation of reciprocal conventional inducement each for the other,
between consideration and promise. A good example of the former
branch of the proposition is to be found in a
Massachusetts case, the plaintiff refused to let certain wood be

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removed from his land by one who had made an
all bargain and given his note for it unless he
received additional security. The purchaser and the plaintiff accordingly went
to the defendant, and the defendant put his name upon
the note. The plaintiff thereupon let the purchaser carry off
the wood. But according to the testimony, the defendant signed

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without knowing that the plaintiff was to alter his position
in any way on the face of the signature, and
it was held that if that story was believed, there
was no consideration. An illustration of the other half of
the rule is to be found in those cases where
a reward is offered for doing something which is afterwards

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done by a person acting in ignorance of the offer.
In such a case, the reward cannot be claimed because
the alleged consideration has not been furnished on the faith
of the offer. The tendered promise has not induced the
furnishing of the consideration. The promise cannot be set up

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as a conventional motive when it was not known until
after the alleged consideration was performed. Both sides of the
relation between consideration and promise, and the conventional nature of
that relation may be illustrated by the case of the cask.
Suppose that the truckman is willing to carry the cask

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and the owner to let him carry it without any bargain,
and that each knows the other's state of mind, but
that the truckman, seeing his own advantage in the matter,
says to the owner, in consideration of your delivering me
the cask and letting me carry it, I promised to
carry it, and that the owner thereupon delivers it. I

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suppose that the promise would be binding. The promise is
offered in terms as the inducement for the delivery, and
the delivery is made in terms as the inducement for
the promise. It may be very probable that the delivery
would have been made without a promise, and that the
promise would have been made in a gratuitous form if

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it had not been accepted upon consideration. But this is
only a guess. After all, the delivery need not have
been made unless the owner chose, and having been made
as the term of a bargain, the promiser cannot set
up what might have happened to destroy the effect of
what did happen. It would seem, therefore, that the same

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track transaction in substance and spirit, might be voluntary or obligatory,
according to the form of words which the parties chose
to employ for the purpose of affecting the legal consequences.
If the foregoing principles be accepted, they will be seen
to explain a doctrine which has given the court some

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trouble to establish. I mean the doctrine that an executed
consideration will not sustain a subsequent promise. It has been
said to be sure that such a consideration was sufficient
if preceded by a quest. But the objections to the
view are plain. If the quest was of such a nature,

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and so put as reasonably to imply that the other
person was to have a reward, there was an express promise,
although not put in words, and that promise was made
at the same time the consideration was given, and not afterwards. If,
on the other hand, the word words did not want
the understanding that the service was to be paid for,

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the service was a gift, and a past gift can
no more be a consideration than any other act of
the promisee not induced by the promise. The source of
the error can be traced partially, at least in history.
Some suggestions touching the matter were made in the last lecture.
A few words should be added here. In the old

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cases of debt, where there was some question whether the
plaintiff had showed enough to maintain his action, a contract
precedent was spoken of several times as raising the duty. Thus,
where a man had granted that he would be bound
in one hundred shillings to pay his servant on a
certain day for his services, and for payments made by

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the servant on his account, it was argued that there
is no contract precedent, and that by parole the party
is not obliged. And further that so far as a peared,
the payments were made by the servant out of his
own head and at no request, from which no duty
could commence. So, when dead was brought on a deed

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to pay the plaintiff ten marks if he would take
the defendant's daughter to wife, and it was objected that
the action should have been covenant, it was answered that
the plaintiff had a contract president which gave him debt.
The first case in as sumsit only meant to adopt
this long familiar thought. A man went bail for his

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friend's servant, who had been arrested. Afterwards, the master promised
to indemnify the bail and on his failure to do so,
was sued by him. In as sum sit, it was
held that there was no consideration wherefore the defendant should
be charged unless the master had first promised to indemnify
the plaintiff before the servant was bailed for. The master

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did never make request to the plaintiff for his servant
to do so much, but he did it of his
own head. This is perfectly plain sailing, and means no
more than the case in the year books. The report, however,
also states a case in which it was held that
a subsequent promise in consideration that the plaintiff at their

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special instance of the defendant had married the defendant's cousin
was binding, and that the marriage was good cause because
it ensued the request of the defendant. Whether this was
intended to establish a general principle or was decided with
reference to the peculiar consideration of marriage, it was soon

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interpreted in the broader sense, as was shown in the
last lecture. It was several times adjudged that a past
and executed matter was a sufficient consideration for a promise
at a later day, if only the matter relied on
had been done or furnished at the request of the
promise or It is now time to analyze the nature

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of a promise, which is the second and most conspicuous
element in a simple contract. The Indian Contract Act eighteen
seventy two, Section two says A, when one person signifies
to another his willingness to do or to abstain from
doing anything with a view to obtaining the assent of

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that other to such act or abstinence, he is said
to make a proposal. B. When the person to whom
the proposal is made signifies his assent, there too, the
proposal is said to be accepted. A proposal, when accepted,
becomes a promise. According to this definition, the scope of

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promises is confined to conduct on the part of the promise. Saw.
If this only meant that the promisor alone must bear
the legal burden which his promise may create, it would
be true. But this is not the meaning. For the
definition is of a promise, not of a legally binding promise.
We are not seeking for the legal effects of a contract,

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but for the possible contents of a promise, which the
law may or may not informs. We must therefore only
consider the question what can possibly be promised in a
legal sense, not what will be the secondary consequence of
a promise binding but not performed. An assurance that it
shall rain tomorrow, or that assurd person shall paint a

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picture may as well be a promise as one that
the promiseee shall receive from some source on a hundred
bills of cotton, or that the promissor will pay the
promiseee one hundred dollars. What is the difference in the cases?
It is only in the degree of power possessed by
the promissor over the event he has none. In the

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first case, he has equally little legal authority to make
a man paint a picture. Although he may have a
large a minus means of persuasion, he probably will be
able to make sure that the promisee has the cotton.
Being a rich man, he is certain to be able
to pay the one hundred dollars, except in the event

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of some most improbable accident. But the Lord does not
inquire as a general thing, how far the accomplishment of
an assurance touching the future is within the power of
the promissor. In the moral world, it may be that
the obligation of a promise is confined to what lies
within reach of the will of the promissor, except so

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far as the limit is known on one side and
misrepresented on the other. But unless some consideration of public
policy intervenes. I take it that a man may bind
himself at law that any future event shall happen. He
can therefore promise it. In a legal sense. It may
be said that when a man covenance that it shall

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reign tomorrow, or that a shall paint a picture, he
only says in a short form, I will pay if
it does not reign, or if a does not paint
a picture. But that is not necessarily so. A promise
could easily be framed which would be broken by the
happening of fair weather or by a not painting. A promise, then,

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is simply an accepted assurance that a certain event or
state of things should come to pass. But if this
be true, it is more important bearings than simply to
enlarge the definition of the word promise. It concerns the
theory of contract. The consequences of a binding promise at
common law are not affected by the degree of power

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which the promise or possesses over the promised event. If
the promised event does not come to pass, the plaintiff's
property is sold to satisfy the damages within certain limits
which the promisee has suffered by the failure. Consequences are
the same in kind, whether the promise is that it
shall rerain, or that another match should paint a picture,

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or that the promissor will deliver a bell of cotton.
If the legal consequence is the same in all cases,
it seems proper that all contracts should be considered from
the same legal point of view. In the case of
a binding promise that it shall reign tomorrow, the immediate
legal effect of what the promisor does is that he

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takes the risk of the event within certain defined limits
is between himself and the promise. See he does no
more when he promises to deliver a belle of cotton.
If it be proper to state the common law meaning
of promise and contract in this way, it has the
advantage of freeing the subject from the superfluous theory that

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contract is a qualified subjection of one will to another,
a kind of limited slavery. It might be so regarded
if the law compelled men to perform their contracts, or
if it allowed promises to exercise such compulsion. If when
a man promised to labor for another the law made

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him do it, his relation to his promisee might be
called a servitude ad hoc with some truce. But that
is what the law never does. It never interferes until
a promise has been broken and therefore cannot possibly be
performed according to its tenor. It is true that in

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some instances equity does what is called compelling specific performance.
But in the first place I am speaking of the
common law, and in the next this only means that
equity compels the performance of certain elements of the total promise,
which is still capable of performance. For instance, take a

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promise to convey land within a certain time. A court
of equity is not in the habit of interfering until
the time has gone by, so that the promise cannot
be performed as made. But if the conveyance is more
important than the time and the promise, he prefers to
have it late rather than never, The law may compel

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the performance of that not literally compel even in that case, however,
but put the promisor in prison unless he will convey.
This remedy is an exceptional one. The only universal consequence
of a legally binding promise is that the law makes
the promisor pay damages if the promised event does not

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come to pass. In every case, it leaves him free
from interference until the time for fulfillment has gone by,
and therefore free to break his contract if he chooses.
A more practical advantage in looking at a contract as
the taking of a risk, is to be found in
the light which it throws upon the measure of damages.

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If a breach of contract were regarded in the same
light as a taunt, it would seem that if in
the course of performance of the contract, the promissor should
be notified of any particular consequence which would result from
its not being performed, it should be held liable for
that consequence in the event of non performance. Such a

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suggestion has been made, but it has not been accepted
as the law. On the contrary, according to the opinion
of a very able judge, which seems to be generally followed, notice,
even at the time of making the contract. Of special
circumstances out of which special damages would arise in case

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of breach is not sufficient unless the assumption of that
risk is to be taken as having fairly entered into
the contract. If a carrier should undertake to carry the
machinery of a sawmill from Liverpool to Vancouver's Island, and
should fail to do so so, he probably would not
be held liable for the rate of hire of such

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machinery during the necessary delay, although he might know that
it could not be replaced without sending to England, unless
he was fairly understood to accept the contract with the
special condition attached to it. It is true that when
people make contracts they usually contemplate the performance rather than

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the breach. The express language used does not generally go
further than to define what will happen if the contract
is fulfilled. A statutory requirement of a memorandum in writing
would be satisfied by a written statement of the promise
as made, because to acquire more would be to run
counter to the ordinary habits of mankind, as well as

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because the statement that the effect of a contract is
the assumption of the risk of a future event does
not mean that there is a second subsidiary promise to
his sis assume that risk, but that the assumption follows
as a consequence directly enforced by the law without the
promissan's cooperation. So perule evidence would be admissible, no doubt,

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to enlarge or diminish the extent of the liability assumed
for non performance, where it would be inadmissible to affect
the scope of the promise. But these concessions do not
affect the view here taken. As the relation of contractor
and contractee is voluntary, the consequences attaching to the relation

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must be voluntary. What the event contemplated by the promise is,
or in other words, what will amount to a breach
of contract, is a matter of interpretation and construction. What
consequences of the breach are assumed is more remotely in
like manner a matter of construction have in regard to
the circumstances under which the contract is made. Knowledge of

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what is dependent upon performance is one of those circumstances.
It is not necessarily conclusive, but it may have the
effect of enlarging the risk assumed. The very office of
construction is to work out from what is expressly said
and done what would have been said a guard to
events not definitely before the minds of the parties if

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those events had been considered. The price paid in mercantile
contracts generally excludes the construction that exceptional risks when tended
to be assumed. The foregoing analysis is believed to show
that the result which has been reached by the courts
on grounds of practical good sense, falls in with the

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true theory of contract under the common law. The discussion
of the nature of a promise has led me to
analyze contract and the consequences of contract somewhat in advance
of their place. I must say a word more concerning
the facts which constitute a promise. It is laid down

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with theoretical truth that besides the assurance or offer on
the one side, there must be an acceptance on the other.
But I find it hard to think of a case
where simple contract fails to be made which could not
be accounted for on other grounds, generally by the want
of relation between assurance or offer and consideration as reciprocal

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inducements each of the other. Acceptance of an offer usually
follows by mere implication from the furnishing of the consideration,
and inasmuch as by our law, an accepted offer or
promise until the consideration is furnished, stands on no different
footing from an offer not yet accepted, each being subject

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to ravocation until that time, and each continuing until then
unless it has expired or has been revoked. The question
of acceptance is rarely of practical importance. Assuming that the
generals nature of consideration and promise is understood, some questions
peculiar to buy that or contracts remain to be considered.

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These concern the sufficiency of the consideration and the moment
when the contract is made. A promise may be a
consideration for a promise, although not every promise for every other.
It may be doubted whether a promise to make a
gift of one hundred dollars would be supported by a
promise to accept it. But in a case of mutual promises,

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respectively to transfer and to accept unpaid shares in a
railway company, it has been held that a binding contract
was made. Here one party agrees to part with something
which may prove valuable, and the other to assume a
liability which may prove onerous. But now suppose that there
is no element of uncertainty except in the minds of

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the parties. Take, for instance, a wager on a past
horse race. It has been thought that this would amount
to an absolute promise on one side and no promise
at all on the other. But this does not seem
to be sound. Contracts the dealings between men by which
they make arrangements for the future. In making such arrangements,

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the important thing is not what is objectively true, but
what the parties know. Any present fact which is unknown
to the parties is just as uncertain for the purposes
of making an arrangement at this moment as any future fact.
It is therefore a detchment to undertake to be ready
to pay if the event turns out not to have

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been as expected. This seems to be the true explanation
why forbears to sue upon a claim believed by the
plaintiff to be good is a sufficient consideration although the
claim was bad in fact and known by the defendant
to be bad. Were this view unsound, it is hard
to see how wages on any future event except a miracle,

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could be sustained, for if the happening or not happening
of the event is subject to the law of causation.
The only uncertainty about it is in our foresight, not
in its happening. The question when a contract is made
arises for the most part with regard to bilateral contracts
by letter, the doubt being whether the contract is complete

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at the moment when the return promise is put into
the post, or at the moment when it is received.
If convenience preponderates in favor of either view, that is
a sufficient reason for its adoption. So far as merely
logical grounds go. The most ingenious argument in favor of
the later movement is Professor Langdal's. According to him, the

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conclusion follows from the fact that the consideration which makes
the offer binding is itself a promise. Every promise, he says,
is an offer before it is a promise, and the
essence of an offer is that it should be communicated.
But this reasoning seems unsound when, as in the case supposed,
the consideration for the return promise has been put into

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the power of the offer ree, and the return promise
is being accepted in advance, but is not an instant,
either in time or logic. When the return promise is
an offer, it is a promise, and a term of
a binding contract as soon as it is anything. An
offer is a revocable and unaccepted communication of willingness to promise.

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When an offer of a certain bilateral contract has been made,
the same contract cannot be offered by the other side.
The so called offer would neither be revocable nor unaccepted.
It would complete the contract as soon as made. If
it be said that it is of the essence of
a promise to be communicated, whether it goes through the

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stage of offer or not, meaning by communicated brought to
the actual knowledge of the promise, see, the law is
believed to be otherwise. A covenant is binding when it
is delivered and accepted, whether it is read or not.
On the same principle, it is believed that whenever the
obligation is to be entered into by a tangible sign,

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as in the case supposed by letter containing the return promise,
and the consideration for and assent to the promise are
already given, the only question is when the tangible sign
is sufficiently put into the power of the promise. See.
I cannot believe that if the letter had been delivered
to the promisee and was then snatched from his hands

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before he had read it, there would be no contract.
If I am right. It appears of little importance whether
the post office be regarded as agent or bailey to
the offerer, or as a mere box to which he
has access. The offery, when he drops the letter containing
the counter promise into the letter box, does an overt act, which,

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by general understanding renounces control over the letter and puts
it into a third hand to the benefit of the offerer,
with liberty to the latter at any moment thereafter to
take it. The principles governing where vocation are wholly different.
Wonder whom an offer is made has a right to
assume that it remains open according to its terms until

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he has actual notice to the contrary. The effect of
the communication must be destroyed by a counter communication. But
the making of a contract does not depend on the
state of the party's minds. It depends on their overt acts.
When the sign of the counter promise is a tangible object,
the contract is completed when the dominion over that object changes.

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End of Lecture eight.