09 - 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):
The Lecture nine of the Common Law by Oliver Wendell
Holmes Junior. This recording is in the public domain. Contract
three void and voidable. The elements of fact necessary to
call a contract into existence, and the legal consequences of

(00:20):
a contract when formed have been discussed. It remains to consider,
successively the cases in which a contract is said to
be void and those in which it is said to
be voidable, in which, that is, a contract fails to
be made when it seems to have been, or having
been made, can be rescinded by one side or the other,

(00:42):
and treated as if it had never been. I take
up the former class of cases first. When a contract
fails to be made although the usual forms have been
gone through with, the ground of failure is commonly said
to be mistake, misrepresentation, or fod. But I shall try
to show that these are meling dramatic circumstances, and that

(01:05):
the true ground is the absence of one or more
of the primary elements which have been shown or are
seen at once to be necessary to be existence of
a contract. If a man goes through the form of
making a contract with A through B as a's agent,
and B is not in fact, the agent of A

(01:25):
there is no contract because there is only one party,
the promise offered to A has not been accepted by him,
and no consideration has moved from him. In such a case,
although there is generally mistake on one side and ford
on the other, it is very clear that no special
doctrine need be resorted to because the primary elements of

(01:48):
a contract explained in the last lecture are not yet present.
Take next a different case. The defendant agreed to buy
and the plaintiff agreed to sell a cargo of cotton
to arrive ex peerless from Bombay. There were two such
vessels sailing from Bombay, one in October, the other in December.

(02:11):
The plaintiff meant the latter, the defendant the former. It
was held that the defendant was not bound to accept
the cotton. It is commonly said that such a contract
is void because of mutual mistake as to the subject matter,
and because therefore the parties did not consent to the
same thing. But this way of putting it seems to

(02:34):
me misleading. The law has nothing to do with the
actual state of the party's minds in contract, as elsewhere,
it must go by externals and judge parties by their conduct.
If there had been but one peerless, and the defendant
has said peerless by mistake, meaning perry, he would have
been bound. The true ground of the decision was not

(02:57):
that each party meant a different thing for the other,
as is implied by the explanation which has been mentioned,
but that each said a different thing. The plaintiff offered
one thing, the defendant expressed his assent to another. A
proper name, when used in business or when pleading, means
one individual thing and the other, as every one knows,

(03:20):
and therefore one to whom such a name is used
must find out at his pell what the object designated is.
If there are no circumstances which make the use deceptive
on either side, each is entitled to insist on the
meaning favorable to him for the word as used by him,
and neither is entitled to insist on that meaning for

(03:42):
the word as used by the other. So far from
mistake having been the ground of decision as mistake, its
only bearing, as it seems to me, was to establish
that neither party knew that he was understood by the
other to use the word peerless in the sense which
the latter gave to it. In that event, there would

(04:03):
perhaps have been a binding contract, because if a man
uses a word to which he knows the other party
attaches and understands him to attach a certain meaning, he
may be held to that meaning and not be allowed
to give it any other. Next, suppose a case in
which the offer and acceptance do not differ, and in

(04:24):
which both parties have used the same words in the
same sense. Suppose that A agreed to buy and B
agree to sell these bowels of Macon, and that the
bowels in question turn out to contain song. There is
mutual mistake as to the contents of the bowels, and
no forg on either side, I suppose the contract would

(04:47):
be voided. It is commonly said that the failure of
the contract in such a case is due to the
fact of a difference in kind between the actual subject
matter and that to which the intention of the parties
was directed. It is perhaps more instructive to say that
the terms of the supposed contract, although seemingly consistent, were

(05:08):
contradictory in matters that went to the root of the bargain.
For by one of the essential terms, the subject matter
of the agreement was the contents of certain bowels and
nothing else, and by another equally important it was mackerel
and nothing else, while as a matter of fact it
could not be both, because the contents of the bowels

(05:30):
were sought, as neither term could be left out without
forcing on the parties a contract which they did not make.
It follows that A cannot be required to accept nor
b to deliver either these bowels of salt or other
vowels of macrel, and without omitting one term, the promise

(05:50):
is meaningless. If there had been flowed on the celler's part,
or if he had known of the vowels really contained,
the buyer might have had a right to insist on
delivery of the inferior article. Fraud would perhaps have made
the contract valid at his option. Because when a man
qualifies sensible words with others which he knows on a

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secret grounds are insensible. Whence so applied, he may fairly
be taken to authorize his promisee to insist on the
possible part of his promise being performed, if the promisee
is willing to forego the rest. Take one more illustration,
Like the last case, a policy of insurance is issued

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on a certain building described in the policy as a
machine shop. In fact the building is not a machine
shop but an organ factory, which is a greater risk.
The contract is void not because of any misrepresentation, but,
as before, because two of its essential terms are repugnant

(06:53):
and their union is insensible. Of course, the principle of
repugnancy last explained might be stretched to apply to any
inconsistency between the different terms of a contract. It might
be said, for instance, that if a piece of gold
is sold as eighteen carrot gold, and it is in
fact not so pure. Where a cow is sold as

(07:16):
yielding an average of twelve quarts of milk a day,
and in fact she yields only six quarts, there is
no logical difference, according to the explanation which has just
been offered, between those cases and that of the bowel
of salt sold for mackerel. Yet those bargains would not
be void at the most, they would only be voidable

(07:37):
if the buyer chose to throw them up. The distinctions
of the law are founded on experience, not on logic.
If therefore does not make the dealings of men dependent
on a mathematical accuracy. Whatever is promised a man has
a right to be paid for if it is not given.
But it does not follow that the absence of some

(07:58):
insignificant detail will authorize him to throw up the contract,
still less that it will prevent the formation of a contract,
which is a matter now under consideration. The repugnant terms
must booth be very important, so important that the court
thinks that if either is omitted, the contract would be

(08:19):
different in substance from that which the words of the
parties seem to express. A term which refers directly to
an identification by the senses has always this degree of importance.
If a promise is made to sell this cow or
this macrel to this man, whatever else may be stricken

(08:39):
from the contract, it can never be enforced except touching
this object and by this man. If this bowel of
salt is fordinately sold for a vowel of macrel, the
buyer may perhaps elect to take this bowel of salt
if he chooses, But he cannot elect to take another
bowel of macrel. If the seller is introduced by the

(09:00):
name Be, and the buyer supposes him to be another
person of the same name, and under that impression delivers
his written promise to buy of being the b to
whom the writing is delivered is the contract team, if
anyone is. And notwithstanding what has been said of the
use of proper names, I should suppose a contract would

(09:21):
be made. But it is further to be said that
so far as by one of the terms of a
contract the thing promised or the promise see is identified
by sight and hearing, that term so far preponderates over
all others, that it is very rare for the failure
of any other element of description to prevent the making

(09:43):
of a contract. The most obvious of seeming exceptions is
where the object not in fact so identified, but only
its covering or rapper. Of course, the performance of a
promise may be made conditional on all the terms stipulated
from the other side being complied with. But conditions attaching

(10:03):
to performance can never come into consideration until a contract
has been made. And so far the question has been
touching the existence of a contract in the first instance.
A different case may be suggested from any yet considered.
Instead of a repugnancy between offer and assent which prevents
an agreement, or between the terms of an agreement which

(10:26):
makes it insensible on its fact, there may be a
like repugnancy between a term of the contract and a
previous representation of fact which is not expressly made a
part of the contract. The representation may have been the
chief inducement and very foundation of the bargain. It may
be more important than any of the expressed terms, and

(10:48):
yet the contract may have been reduced to writing in
words which cannot fairly be construed to include it. A
vendor may have stated that vowels filled with salt contain mackerel,
but the contract may be only for the bowels and
their contents. An applicant for insurance may have misstated facts
essential to the risk, yet the policy may simply ensure

(11:11):
a certain building or a certain life. It may be
asked whether these contracts are not void. Also, there might
conceivably be cases in which, taking into account the nature
of the contract, the words used could be said to
embody the representation as a term by construction. For instance,

(11:31):
it might be said that the true and well understood
purport of a contract of insurance is not, as the
words seem to say, to take the risk of any
loss by fire or pells of the sea, however great
the risk may be. But to take a risk of
a certain magnitude and no other which risk has been
calculated mathematically from the statements of the party ensured. The

(11:56):
extent of the risk taken is not specified in the
policy because the old forms and established usage are otherwise,
but the meaning is perfectly understood. If this reasoning were adopted,
there would be an equal repugnancy in the terms of
the contract, whether the nature of the risk were written
in the policy or fixed by previous description. But subject

(12:20):
to possible exceptions of this kind, it would seem that
a contract would be made, and that the most that
could be claimed would be right to ascend. Where parties
having power to bind themselves to acts and use words
which are fit to create an obligation, I take it
that an obligation arises if there is a mistake as

(12:41):
to a fact not mentioned in the contract. It goes
only to the motives for making the contract. But a
contract is not prevented from being made by the mere
fact that one party would not have made it if
he had known the truth. In what cases a mistake
affecting motives is a ground for avoidance does not concern

(13:01):
this discussion, because the subject now under consideration is when
a contract is made, and the question of avoiding or
assending it presupposes that it has been made. I think
that it may now be assumed that when fraud, misrepresentation,
or mistake is said to make a contract void, there
is no new principle which comes into set aside an

(13:24):
otherwise perfect obligation, but that in every such case there
is wanting one or more of the first elements which
were explained in the foregoing lecture. Either there is no
second party, or the two parties say different things, or
essential terms seemingly consistent are really inconsistent. As used, when

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a contract is said to be voidable, it is assumed
that a contract has been made, but that it is
subject to being unmade at the election of one party.
This must be because of the breach of some condition
attached to its existence, either expressly or by implication. If
a condition is attached to the contracts coming into being,

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there is is yet no contract. Either party may withdraw
at will until the condition is determined. There is no obligation,
although there may be an offer or a promise, and
hence there is no relation between the parties which requires
discussion here. But some conditions seemingly arising out of a
contract already made are conditions of this sort. Such is

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always the case if the condition of a promise lies
within the control of the promise's own will. For instance,
a promise to pay for clothes, if made to the
customer's satisfaction, has been held in Massachusetts to make the
promiser his own final judge. So interpreted, it appears to
me to be no contract at all. Until the promise's

(14:55):
satisfaction is expressed. His promise is only to pay if
he sees, and such a promise cannot be made a
contract because it cannot impose any obligation. If the promise
were construed to mean that the clothes should be paid for,
provided they were such as ort to satisfy the promiser
and thus to make the jury of the arbiter, there

(15:16):
would be a contract, because the promiser gives up control
over the event, but it would be subject to a condition.
In the sense of the present analysis. The conditions which
a contract may contain have been divided by theorists into
conditions precedent and conditions subsequent. The distinction has even been

(15:37):
pronounced of great importance. It must be admitted that if
the course of pleading be taken as a test. It
is so. In some cases the plaintiff has to state
that a condition has been performed in order to put
the defendant to his answer. In others, it is left
to the defendant to set up that a condition has
been broken. In one sense, all conditions are subsequent. In another,

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all our precedent. All are subsequent to the first stage
of the obligation. Take, for instance, the case of a
promise to pay for work. If done to the satisfaction
of an architect, the condition is a clear case of
what is called a condition precedent. There can be no
duty to pay until the architect is satisfied, but there

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can be a contract before that moment, because the determination
whether the promises shall pay or not is no longer
within his control. Hence, the condition is subsequent to the
existence of the obligation. On the other hand, every condition
subsequent is precedent to the incidents of the burden of
the law. If we look at the law as it

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would be regarded by one who had no scruples against
doing anything which he could do without incurring legal consequences,
it is obvious that the main consequence attached by the
law to a contract is a greater or less possibility
of having to pay money. The only question from the
purely legal point of view is whether the promiser will

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be compelled to pay, and the important moment is that
at which the point is settled. All conditions are precedent
to that. But all conditions are precedent not only in
this extreme sense, but also to the existence of the
plaintiff's cause of action. As strong a case as can
be put is that of a policy of insurance cautioned

(17:28):
to be void if not sued upon within one year
from a failure to pay is agreed. The condition does
not come into play until a loss has occurred, the
duty to pay has been neglected, and a cause of
action has arisen. Nevertheless, it is precedent to the plaintiff's
cause of action. When a man assues, the question is

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not whether he has had a cause of action in
the past, but whether he has won. Then he has
not one, then unless the year is still if it
were left for the defendant to set up the lapse
of the year, that would be due to the circumstance
that the order of pleading does not require a plaintiff

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to meet all possible defenses and to set out a
case unanswerable except by denial. The point at which the
law calls on the defendant for an answer varies in
different cases. Sometimes it would seem to be governed simply
by convenience of proof, requiring the party who has the
affirmative to plead and prove it. Sometimes there seems to

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be a reference to the usual course of events, and
matters belong to the defense because they are only exceptionally true.
The most logical distinction would be between conditions which must
be satisfied before a promise can be broken, and those which,
like the last, discharge the liability after breach has occurred.

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But this is of the slightest possible importance, and it
may be doubted whether another case like the last could
be found. It is much more important to mark the
distinction between a stipulation which only has the effect of
confining a promise to certain cases, and a condition, probably
so called every condition it is true, has this effect

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upon the promise to which it is attached, so that
whatever the rule of cleading may be, a promise is
as truly kept and performed by doing nothing where the
condition of the stipulated act has been broken, as it
would have been by doing the act if the condition
had been fulfilled. But if this were all, every clause
in a contract which showed what the promiseur did not

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promise would be a condition, and the word would be
worse than useless. The characteristic feature is quite different. A condition,
probably so called, is an event, the happening of which
alsoises the person in whose favor the condition is reserved
to treat the contract as if it had not been made,
to avoid it as if commonly said, that is, to

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insist on both parties being restored to the position in
which they stood before the contract was made. When a
contract operates as such, it lets in an outside force
to destoy the existing state of things. For though its
existence is due to consent of parties, its operation depends
on the choice of one of them. When a condition

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is broken, the person entitled to insist on it may
do so if he chooses, but he may if he prefers,
elect to keep the contract on foot. He gets his
right to avoid it from the agreement, but the avoidance
comes from him. Hence, it is important to distinguish those
stipulations which have this extreme effect from those which only

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interpret the extent of a promise or define the events
to which it applies. And as it has just been
shown that a condition need not be insisted on as such,
we must further distinguish between its operation by way of avoidance,
which is peculiar to it, and its incidental working by
way of interpretation and definition. In common with other clauses

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not conditions. This is best illustrated by taking a bilateral
contract between A and B, where A's undertaking is conditional
on b's doing what he promises to do, and where
after A has got a certain distance in his task,
B breaks his half of the bargain. For instance, A

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is employed as a clerk by B and is wrongfully
dismissed in the middle of a quarter in favor of A.
The contract is conditional on B's keeping his agreement to
employ him. Whether A insists on the condition or not,
he is not bound to do any more. So far
the condition works simply by way of definition. It establishes

(21:53):
that A has not promised to act in the case
which has happened. But besides this, for which it can
condition was not necessary, A may take his choice between
two courses. In the first place, he may elect to
avoid the contract. In that case, the party stand as
if no contract had been made, and A, having done

(22:14):
work for B which was understood not to be gratuitous
and for which no rate of compensation has been fixed,
can recover what the jury think his services were reasonably worth.
The contract no longer determines the quid pro quo, but
as an alternative course, A may stand by the contract
if he prefers to do so and soon B for

(22:35):
breaking it. In that case, he can recover as part
of his damages pay at the contract rate for what
he had done, as well as compensation for his loss
of opportunity to finish it. But the points which are
material for the present discussion are that these two remedies
are mutually exclusive, one supposing the contract to be relied

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on the other that it is set aside that A's
stopping work and doing no more after B's breach is
equally consistent with either choice, and has in fact nothing
to do with the matter. One word should be added
to avoid misapprehension. When it is said that A has
done all that he promised to do in the case

(23:18):
which has happened, it is not meant that he is
necessarily entitled to the same compensation as if he had
done the larger amount of work. B's promise in the
case supposed was to pay so much a quarter for services.
And although the consideration of the promise was the promise
by A to perform them, the scope of it was
limited to the case of their being performed. In fact,

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hence A could not simply wait till the end of
his turn and then recover the full amount which he
would have added if the employment had continued, nor is
he any more entitled to do so from the fact
that it was B's fault that the services were not rendered.
B's answer to any such claim is perfect. He is
only liable upon a promise, and he, in his turn,

(24:05):
only promised to pay in a case which has not happened.
He did promise to employ, however, and for not doing
that he is liable in damages. One or two more
illustrations will be useful. A promises to deliver and B
promises to accept and pay for certain goods at a
certain time and place. When the time comes, neither party

(24:28):
is on hand, neither would be liable to an action,
and according to what has been said, each has done
all that he promised to do in the event which
has happened to wit nothing. It might be objected that
if A has done all that he is bound to do,
he ought to be able to sue B, since performance
or readiness to perform was all that was necessary to

(24:51):
give him that right, And conversely the same might be
said of B. On the other hand, considering either B
or A as defendant the same thing acts would be
a complete defense. The puzzle is largely one of words
A and B have. It is true each performed all
that they promised to do at the present stage, because

(25:12):
they each only promised to act in the event of
the other being ready and willing to act at the
same time. But the readiness and willingness, although not necessary
to the performance of either promise, and therefore not a duty,
was necessary in order to present a case to which
the promise of action on the other side would apply. Hence,

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although A and B have each performed their own promise,
they have not performed the condition to their right of
demanding more from the other side. The performance of that
condition is purely optional until one side has bought it
within the scope of the others undertaking by performing it himself.
But it is performance in the latter sense, that is,

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the satisfying of all conditions, as well as the keeping
of his own promises, which is necessary to give A
or b the right of action. Conditions may be created
by the vay words of a contract. Of such cases
there is nothing to be said for parties may agree
to what they choose, but they may also be held

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to rise by construction where no provision is made in
terms for ascending or avoiding the contract. In any case,
the nature of the conditions which the law thus reads
in means explanation. It may be said in a general
way that they are directed to the existence of the
manifest grounds for making the bargain on the side of

(26:37):
the ascending party, or the accomplishment of its manifest objects.
But that is not enough. Generally speaking, the disappointment must
be caused by the wrongdoing of the person on the
other side, and the most obvious cases of such wrongdoing
are frawd and misrepresentation or failure to perform is own

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part of the contract, and misrepresentation thus need to be
considered once more. In this connection. I take the latter first.
In dealing with it. The first question which arises is
whether the representation is or is not part of the contract.
If the contract is in writing and the representation is

(27:18):
set out on the face of the paper, it may
be material or immaterial, but the effect of its untruth
will be determined on much the same principles as govern
the failure to perform a promise. On the same side,
if the contract is made by word of mouth, there
may be a large latitude in connecting words of representation

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with the later words of promise, but when they are
determined to be a part of the contract, the same
principles apply as if the whole were in writing. The
question now before us is the effect of a misrepresentation
which leads to but is not part of the contract.
Suppose that the contract is in writing not contain it.

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Does such a previous misrepresentation authorize recision in any case?
And if so, does it in any case except where
it goes to the height of frauk. The promiser might say,
it does not matter to me whether you knew that
your representation was false or not. The only thing I
am concerned with is its truth. If it is untrue,

(28:24):
I suffer equally whether you knew it to be so
or not. But it has been shown in an earlier
lecture that the law does not go on the principle
that a man is answerable for all the consequences of
all his acts. An act is indifferent in itself. It
receives its character from the concomitant facts known to the

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actor at the time. If a man states a thing reasonably,
believing that he is speaking from knowledge, it is contrary
to the analogies of the law to throw the peril
of the truth upon him unless he agrees to assume
that perll, and he did not do so in the
case supposed as a representation was not made part of
the contract. It is very different when there is fraud.

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Ford may as well lead to the making of a
contract by a statement outside the contract as by one
contained in it. But the law would hold the contract
not less conditional on good faith in one case than
in the other. To illustrate, we may take a somewhat
extreme case. A says to B, I have not opened

(29:30):
these vowels myself, but they contain number one mackel. I
paid so much for them to sew, and so, naming
a well known dealer. Afterwards, A writes, B, I will
sell the bowels which you saw, and their contents for
so much, and B accepts the bowels turn out to

(29:50):
contain salt. I suppose the contract would be binding if
the statements touching the contents were honest, and voidable if
they were fraudulant. Pordlant. Representations outside a contract can never
it would seem, go to anything except the motives for
making it. If outside the contract, they cannot often affect

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its interpretation. A promise, in certain words, has a definite
meaning which the promissor is presumed to understand. If A
says to B, I promise you to buy this bowel
and its contents, his words designate a person and a
thing identified by the senses, and they signify nothing more.

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There is no repugnancy. And if that person is ready
to deliver that thing, the purchaser cannot say that any
term the contract itself is not complied with. He may
have been fordlantly induced to believe that B was another
B and that the bowel contained mat corel. But however
much his belief on those points may have effected his

(30:53):
willingness to make the promise, it would be somewhat extravagant
to give his words a different meaning. On that account,
U means the person before the speaker, whatever his name
and contents, applies to Salt as well as to mackerel.
It is no doubt, only by reason of a condition
construed into the contract, that fraud is a ground of acision.

(31:16):
Parties could agree if they chose that a contract should
be binding without regard to truth or falsehood outside of
it on either part. But as has been said before
in these lectures, although the law starts from their distinctions
and uses the language of morality, it necessarily ends in
external standards, not dependent on the actual consciousness of the individual.

(31:41):
So it has happened with fraud. If a man makes
a representation knowing facts which, by the average standard of
the community are sufficient to give him warning that it
is probably untrue, and it is untrue, he is guilty
of fraud in theory of law, whether he believes his
stings or not. The courts of Massachusetts at least go

(32:04):
much further. They seem to hold that any material statement
made by a man as of his own knowledge, or
in such a way as fairly to be understood as
made of his own knowledge, is fordland if untrue, irrespective
of the reasons he may have had for believing it,
and for believing that he knew it. It is clear, therefore,

(32:26):
that a representation may be morally innocent and yet fraudulant
in the theory of law. Indeed, the Massachusetts rule seems
to stop little short of the principle laid down by
the English courts of equity, which has been criticized in
an earlier lecture. Since most positive affirmations of facts would

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at least want a jury in finding that they were
reasonably understood to be made as of the party's own knowledge,
and might therefore warrant a decision if they turned out
to be untrue, the moral phraseology has seized to be apposite,
and an external standard of responsibility has been reached. But
the starting point is nevertheless fraud. And except on the

(33:09):
ground of fraud as defined by law, I do not
think that misrepresentations before the contract affect its validity, although
they lead directly to its making. But neither the contract
nor the implied condition calls for the existence of the
facts as to which the false representations were made. They

(33:30):
call only for the absence of certain false representations. The
condition is not that the promiseee shall be a certain
other b or that the contents of the bowel shall
be macul But that the promisee has not lied to
him about material facts, then the question arises, how do
you determine what facts are material? As the facts are

(33:54):
not required by the contract, the only way in which
they can be material is that a belief in their
being true is likely to have led to the making
of the contract. It is not then true, as it
is sometimes said that the law does not concern itself
with the motives for making contracts. On the contrary, the

(34:14):
horoscope of fraud outside the contract is the creation of
false motives and the removal of true ones, And this
consideration will afford a reasonable test of the cases in
which fraud will want decision. It is said that a
fraudulant representation must be material to have that effect, But

(34:34):
how are we to decide whether it is material or not?
If the above argument is correct, it must be by
an appeal to an ordinary experience to decide whether a
belief that the fact was as represented would naturally have
led to or a contrary belief would naturally have prevented
the making of the contract. If the belief would not

(34:56):
naturally have had such an effect, either in general, or
under the known circumstances of the particular case. The fraud
is immaterial if a man is induced to contract with
another by a fraudulant representation of the latter that he
is a great grandson of Thomas Jefferson. I do not
suppose that the contract would be voidable unless the contract

(35:18):
he knew that for special reasons his lie would tend
to bring the contract about. The conditions or grounds for
avoiding a contract which have been dealt with thus far
are conditions concerning the conduct of the parties outside of
the contract itself. Still confining myself to conditions arising by
construction of law, that is to say, not directly and

(35:41):
in terms attached to a promise by the literal meaning
of the words in which it is expressed, I now
come to those which concern facts to which the contract
does in some way refer. Such conditions may be found
in contracts where the promise is only on one side.
Has been said that where the contract is unilateral, and

(36:03):
its language therefore is all that of the promisor causes
in his favor, or be construed as conditions more readily
than the same words in a bilateral contract. Indeed, that
they must be so construed, because if they do not
create a condition, they do him no good, since X hypotheside,

(36:24):
they're not promises by the other party. How far this
ingenious suggestion has had a practical effect on doctrine may
perhaps be doubted. But it will be enough for the
purposes of this general survey to deal with bilateral contracts
where there are undertakings on both sides, and where the
condition implied in favor of one party is that the

(36:47):
other shall make good what he, on his part has undertaken.
The undertakings of a contract may be for the existence
of a fact in the present or in the future.
They can be us only in the latter case, but
in the former they be equally essential terms in the bargain.
Here again we come on the law of representations, but

(37:10):
in a new phase. Being a part of the contract,
it is always possible that their truce should make a
condition of the contract wholly, irrespective of any question of ford,
and it often is so. In fact. It is not, however,
every representation embodied in the words used on one side,
which will make a condition in favor of the other party.

(37:33):
Suppose a agrees to sell and b agrees to buy
a's seven year old sole horse Eclipse, now in the
possession of B on trial, and in fact the horse
is chestnut colored, not soul. I do not suppose that
B could refuse to pay for the horse on that ground.
If the law were so foolish as to aim at

(37:56):
merely formal consistency, it might indeed be said that the
there was as absolute or repugnancy between the different terms
of this contract as in the ease of an agreement
to sell a certain vowels of mackerel, where the vowels
turned out to contain salt. If this view were adopted,
there would not be a contract subject to a condition.

(38:17):
There would be no contract at all. But in truth
there is a contract, and there is not even a condition.
As has been said already, it is not every repugnancy
that makes a contract void, and it is not every
failure in the terms of the counter undertaking that makes
it avoidable. Here it plainly appears that the buyer knows

(38:38):
exactly what he is going to get, and therefore that
the mistake of color has no bearing on the bargain. If,
on the other hand, a contract contained a representation which
was fraudulent and which misled the party to whom it
was made, the contract would be voidable on the same
principles as if the representation had been made before hand.

(39:00):
But words of description in a contract are very frequently
held to amount to what is sometimes called iranty, irrespective
of fraud. Whether they do so or not is a
question to be determined by the court on grounds of
common sense, looking to the meaning of the words, the
importance in the transaction of the facts which the words convey,

(39:23):
and so force. But when words of description are determined
to be iranty, the meaning of the decision is not
merely that the party using them binds himself to answer
for their truth, but that their truth is a condition
of the contract. For instance, in a leading case, the
agreement was that the plaintiff's ship, then in the port

(39:43):
of Amsterdam, should that all possible dispatch proceed direct to Newport, England,
and there load a cargo of calls for Hong Kong.
At the date of the charter party, the vessel was
not in Amsterdam, but she arrived there four days later.
The plaintiff had noticed that the defendant considered time important.

(40:05):
It was held that the presence of the vessel in
the port of Amsterdam at the date of the contract
was a condition, the breach of which entitled the defendant
to refuse to load and to ascend the contract. If
the view were adopted that a condition must be a
future event, and that a promise purporting to be conditional

(40:25):
on a past or present event is either absolute or
no promise at all, it would follow that in this
case the defendant had never made a promise. He had
only promised if circumstances existed, which did not exist. I
have already stated my objections to this way of looking
at such cases, and will only add that the courts,

(40:48):
so far as I am aware, do not sanction it,
and certainly did not in this instance. There is another
ground for holding the charter party void and no contract,
instead of regarding it as only avoidable, which is equally
against authority, which, nevertheless, I have never been able to
answer wholly to my satisfaction. In the case put the

(41:11):
representation of the lessel of the vessel concerned the vessel itself,
and therefore entered into the description of the thing the
less ee agreed to take. I do not quite see
why there is not as fatal a repugnancy between the
different terms of this contract, as was found in that
for the sale of the bowels of salt described as

(41:33):
containing mackerel. Why is a repugnancy between the two terms,
first that the thing sold is the contents of these bowels,
and second that it is macrel fatal to the existence
of a contract. It is because each of those terms
goes to the very root and essence of the contract.

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Because to compel the buyer to take something answering to
one but not to the other requirement would be holding
him to do a substantially different thing from what he promised.
And because a promise to take one and the same
thing answering to both requirements is therefore contradictory. In a
substantial matter. It has been seen that the law does

(42:17):
not go on any merely logical ground, and does not
hold that every slight repugnancy will make a contract even avoidable.
But on the other hand, when the repugnancy is between
terms which are both essential, it is fatal to the
very existence of the contract. How then, do we decide
whether a given term is essential? Surely the best way

(42:41):
of finding out is by seeing how the parties have
dealt with it for want of any expression on their part.
We may refer to the speech and dealings of every
day and say that if its absence would make the
subject matter a different thing, its presence is essential to
the existence of the agreement. But the parties may agree

(43:03):
that anything, however trifling, shall be essential, as well as
that anything however important, shall not be. And if that
essential is part of the contract description of a specific thing,
which is also identified by reference to the senses, how
can there be a contract in its absence any more
than if the thing is, in popular speech different in

(43:25):
kind from its description. The qualities that make sameness or
difference of kind for the purposes of a contract are
not determined by Adasses or Darwin, or by the public
at large, but by the will of the parties, which
decides that for their purposes the characteristics insisted on are
such and such. Now, if this be true, what evidence

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can there be that a certain requirement is essential, that
without it the subject matter will be different in kind
from the description better than that one party has required
and the other given warranty of its presence. Yet, the
contract description of the specific vessels now in the port
of Amsterdam although how to be an implied warranty does

(44:10):
not seem to have been regarded as making the contract
repugnant and voiant, but only as giving the defendant the
option of avoiding it. Even an express warranty of quality
and sales does not have this effect, and in England,
indeed it does not allow the purchaser to ascend in
case of breach. On this last point, the law of

(44:31):
Massachusetts is different. The explanation has been offered of the
English doctrine with a guard to sales, that when the
title has passed, the purchaser has already had some benefit
from the contract, and therefore cannot wholly replace the seller
in statute quo, as must be done when a contract
is rescinded. This reasoning seems doubtful even to show that

(44:55):
the contract is not voidable, but has no bearing on
the argument that is void, for if the contract is void,
the title does not pass. It might be said that
there is no pugnancy in the charter's promise, because he
only promises to load a certain ship, and that the
words now in the Port of Amsterdam are merely matter

(45:16):
of history when the time for loading comes, and no
part of the description of the vessel which he promised
to load. But the moment those words are decided to
be essential, they become part of the description, and the
promise is to load a certain vessel which is named
the martyrban and which was in the port of Amsterdam
at the date of the contract. So interpreted, it is repugnant.

(45:41):
Probably the true solution is to be found in practical considerations.
At any rate, the fact is that the law has
established three degrees in the effects of repugnancy. If one
of the repugnant terms is wholly insignificant, it is simply disregarded,
or at most will only found a claim for damages.

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The law would be loose to hold a contract void
for pugnancy in present terms, when if the same terms
were only promised, a failure of one of them would
not want a refusal to perform on the other side, If,
on the other hand, boosts are of the extremest importance,
so that to enforce the rest of the promise or

(46:22):
bargain without one of them would not merely deprive one
party of a stipulated incident, but would force a substantially
different bargain on him, the promise will be void. There
is an intermediate class of cases, where it is left
to the disappointed party to decide. But as the lines
between the three are of this vague kind, it is

(46:44):
not surprising that they have been differently drawn in different jurisdictions.
The examples which have been given of undertakings for a
present state of facts have been confined to those touching
the present condition of the subject matter of the contract.
Of course, there is no such limit to the scope
of their employment. A contract may want the existence of

(47:07):
other facts as well, and examples of this kind probably
might be found or imagined where it would be clear
that the only effect of the warranty was to attach
a condition to the contract in favor of the other side,
and where the question would be avoided whether there was
not something more than a condition, a repugnancy which prevented

(47:28):
the formation of any contract at all. But the preceding
illustrations are enough for the present purpose. We may now
pass from undertakings that certain facts are true at the
time of making the contract to undertakings that certain facts
should be true at similated time, that is to promises
properly so called. The question is when performance of the

(47:52):
promise on one side is a condition to the obligation of
the contract on the other. In practice, this question is
apt to be treated as identical with another, which, as
has been shown earlier, is a distinct point, namely, when
performance on one side is a condition of the right
to call for performance on the other. It is of

(48:13):
course conceivable that a promise should be limited to the
case of performance of the scenes promised on the other side,
and yet that a failure of the latter should not
want a decision of the contract. Wherever one party has
already received a substantial benefit under a contract of a
kind which cannot be restored, it is too late to ascend.

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However important. A breach may be committed later by the
other side, yet he may be excused from going farther.
Suppose a contract is made for a month's labor ten
dollars to be paid down, not to be recovered except
in case of a decision the labour's fault, and thirty dollars
at the end of the month. If the laborer should

(48:55):
wrongfully stop work at the end of a fortnight, I
do not suppose that the contract could be rescinded, and
that the ten dollars could be recovered as money had
and received. But on the other hand, the employer would
not be bound to pay the thirty dollars, and of
course he could sue for damages on the contract. But
for the most part, a breach of promise which discharges

(49:17):
the promisee from further performance on his side would also
on to decision, so that no great harm is done
by the popular confusion of the two questions. Where the
promise to perform on one side is limited to the
case of performance on the other, the contract is generally
conditioned on it. Also, in what follows, I should take

(49:38):
up the cases which I wished to notice without stopping
to consider whether the contract was in a strict sense
conditioned on performance of the promise on one side, or
whether the true construction was merely that the promise on
the other side was limited to that event. Now, how
do we settle whether such a condition exists? It is

(50:00):
easy to err by seeking too eagerly for simplicity, and
by striving too hard to reduce all cases to artificial
presumptions which are less obvious than the decisions which they
are supposed to explain. The foundation of the whole matter is,
after all, good sense as the courts have often said,
the law means to carry out the intention of the parties,

(50:23):
and so far as they have not provided for the
event which has happened, it has to say what they
naturally would have intended if their minds had been turned
to the point it will be found the decisions based
on the direct implications of the language used, and others
based upon a remoter influence of what the parties must
have meant or would have said if they had spoken

(50:45):
shade into each other by imperceptible degrees. Mister Langell has
called attention to a very important principle, and one which
no doubt throws light on many decisions. This is that
where you have a bilateral contract, while the consideration of
each promise is the counter promise, yet by me facie,

(51:07):
the payment for performance of one is performance of the other.
The performance of the other party is what each means
to have in return for his own. If A promises
about the flower to B, and B promises him ten
dollars for it, A means to have the ten dollars
for his flower, and B means to have the flower

(51:28):
for his ten dollars. If no time is set for
either act either can call on the other to perform
without being ready at the same time himself. But this
principle of equivalency is not the only principle to be
drawn even from the form of contracts without considering their
subject matter, and of course it is not offered as

(51:50):
such in mister Langdore's work. Another very clear one is
found in contracts for the sale or lease of a
thing and the like. Re the qualities or characteristics which
the owner promises that the thing furnished shall possess grow
to describe the thing which the buyer promises to accept.

(52:10):
If any of the promised traits are wanting in the
thing tended, the buyer may refuse to accept, not merely
on the grounds that he has not been offered the
equivalent for keeping his promise, but also on the ground
that he never promised to accept what has offered him.
It has been seen that, but the contract contains a
statement touching the condition of the thing at an earlier

(52:33):
time than the moment for its acceptance, the past condition
may not always be held to enter into the description
of the thing to be accepted, but no such escape
is possible here. Nevertheless, there are limits to the right
of refusal, even in the present class of cases, if
the thing promised is specific, the preponderance of that part

(52:55):
of the description which identifies the object by reference to
the senses is sometimes strikingly illustrated. One case has gone
so far as to hold that performance of an executory
contract to purchase a specific thing cannot be refused because
it fails to come up to the warranted quality. Another

(53:16):
principle of dependency, to be drawn from the form of
the contract itself is that performance of the promise on
one side may be manifestly intended to furnish the means
for performing the promise on the other. If a tenant
should promise to make repairs and the landlord should promise
to furnish him with for the purpose, it is believed

(53:36):
that at the present day, whatever may have been the
old decisions, the tenant's duty to repair would be dependent
upon the landlord's furnishing a material when required. Another case
of a somewhat exceptional kind is where a party to
a buy that or contract agrees to do certain things
and to give security for his performance. Here it is

(53:59):
manifest good sin to hold giving the security a condition
of performance on the other side, if it be possible
for the requirement of security, shows that the party requiring
it was not content to rely on the simple promise
of the other side, which he would be compelled to
do if he had to perform before the security was given,

(54:19):
and thus the very object of acquiring it would be defeated.
This last case suggests what is very forcibly impressed on
anyone who studies the cases, that, after all, the most
important element of decision is not any technical or even
any general principle of contracts, but a consideration of the
nature of the particular transaction. As a practical matter, A

(54:44):
promises B to do a day's work for two dollars,
and B promises A to pay two dollars for a
day's work. There the two promises cannot be performed at
the same time. The work will take all day, the
payment half a minute. How are you to decide which
is to be done first, that is to say, which

(55:05):
promise is dependent upon performance on the other side, It
is only by reference to the habits of the community
and the convenience. It is not enough to say that
on the principle of equivalency, a man is not presumed
to intend to pay for a thing until he has it.
The work is payment for the money as much as
the money for the work, and one must be paid

(55:27):
in advance. The question is why, if one man is
not presumed to intend to pay money until he has
money's work, the other is presumed to intend to give
money's work before he has money. An answer cannot be
obtained from any general theory, the fact that employers as

(55:48):
a class can be trusted for wages more safely than
the employed for their labor, that the employers have had
the power and have been the law makers, or other considerations.
It matters not what it is determined that the work
is to be done first, but the grounds of decision
are purely practical and can never be elicited from grammar

(56:08):
or from logic. A reference to practical considerations will be
found to run all through the subject. Take another instance,
the plaintiff declared, on a mutual agreement between himself and
the defendant, that he would sell and the defendant would
buy certain nonskoy wool to be shipped by the plaintiff
at Odessa and delivered in England. Among the stipulations of

(56:32):
the contract was one that the names of the vessels
should be declared as soon as the walls were shipped.
The defense was that the world was bought with the
knowledge of both parties, for the purpose of reselling it
in the course of the defendant's business, that it was
an article of fluctuating value and not saleable until the

(56:53):
names of the vessels in which it was shipped should
be declared according to the contract, but that the plaintiff
did not declare the names of the vessels as agreed.
The decision of the court was given by one of
the greatest technical lawyers that ever lived, Baron Park. Yet
he did not dream of giving any technical or mere

(57:13):
logical reason for the decision. But after stating in the
above words the facts which were deemed material to the
question whether declaring the names of the vessels was a
condition to the duty to accept, stated the ground of
the decision. Thus, looking at the nature of the contract
and the great importance of it to the object with

(57:34):
which the contract was entered into that the knowledge of
both parties, we think it was a condition precedent end
of Electure nine