CHAP. XII. in which this view may be traced may be said to commence with that of Pickard v. Sears, decided in 18381, and the principle which they involve was thus stated by Chief Baron Pollock in 1859: 'If any person, by a course of conduct or by actual expressions, so conducts himself that another may reasonably infer the existence of an agreement or licence, whether the party intends that he should do so or not, it has the effect that the party using that language, or who has so conducted himself, cannot afterwards gainsay the reasonable inference to be drawn from his words or conduct?? Still clearer was the language held in 1871 in the case of Smith v. Hughes3, when Mr. Justice Blackburn said: 'If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe he was assenting to the terms proposed by the other party, and that the other party on that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms'.' The newer theory In other words: the legal meaning of such acts on the part of one man as induce another to enter into a contract with him, is not what the former really intended, nor what the latter really supposed the former to intend, but what a 'reasonable man,' i. e. a judge or jury, would put upon such acts. This luminous principle at 1 6 A. & E. 475; cf. Freeman v. Cooke, 2 Ex. 654. L. R. 6Q. B. 607. Cf. Carr v. London and N. W. Ry. Co., L. R. 10C. P. 317. In Scott v. Littledale, 8 E. & D. 815, the contract was held good, although the vendor had by mistake shown a wrong sample. See also Leake, Contract, p. 12. Dr. E. Schuster, in a very able article 'Der Vertragsschluss nach englischem Rechte,' in the Archiv für Handels- u. Wechselrecht, xlv. p. 324, seems to think that according to these cases it is necessary that the expression of will should be accompanied with an intention that it should induce the other party to act, and that the other party should, with a knowledge of this intention, undertake so to act. 5 'It may well be in contracts that a man may be bound to a meaning once sweeps away the ingenious speculations of several CHAP. XII. generations of moralists', while it renders needless long lists of subtle distinctions which have been drawn from decided cases 2. to correspondence agency The truth and practical importance of what may be is supported by called the objective theory of contract are confirmed by rules as the generally received rules as to contracts made by post; where the question, whether or no the contract is made, and turns, as we shall see, not on the coincidence of the wills of the parties, but on the fact of their having exchanged expressions of intention: and by the law of Agency; since the liability of a principal continues not merely so long as he continues mentally to empower his agent to act for him, but also so long as he has not, to the knowledge of third parties, revoked the agent's authority. sistent mistake. Nor is there any inconsistency between this view and and is conthe well-established effect of what is known as 'essential with the error' in preventing a contract from coming into existence. doctrine of When such error is present, it is no doubt true to say 'non videntur qui errant consentire". All liability under the apparent agreement may be repudiated, and any payments made in pursuance of it may be recovered back. But we shall find that even here the failure of the contract is due not to the psychological fact of mistaken belief, which, as has been well observed, is a mere 'dramatic which demonstrably was not his.' Leonhard, i. p. 119. Cf. Lord Selborne's statement that 'the doctrine of reputed ownership does not require any investigation into the actual state of knowledge or belief' of creditors, or of the outside world, 'as to the position of particular goods. It is enough for the doctrine if those goods are in such a situation as to convey to the minds of those who know their situation the reputation of ownership.' Ex parte Watkins, L. R. 8 Ch. Ap. 528. Cf. Turner v. Webster, 24 Kansas, 38. 1 E. g. Grotius, De I. B. et P. iii. 23. 4; Paley, Moral Phil. vol. i. c. 5; Austin, ii. p. 123. 2 See, e. g. Anson, Contract, ed. x. p. 251. 3 Infra, p. 261. See Drew v. Nunn, 4 Q. B. D. 668, and cf. infra, p. 266. 5 Dig. 1. 16. 116; xliv. 55, 57. Cf. supra, p. 113. CHAP. XII. circumstance', but to other causes, which may be reduced to two. (1) The language employed is such as under the circumstances is meaningless, either from referring to an object not in existence, as in the case of the sale of a cargo of corn, supposed to be on its homeward voyage, while in reality it had become so heated that it had been unloaded and sold2; or from ambiguity, as in the case of the sale of a cargo of cotton 'to arrive ex Peerless from Bombay,' whereas there were two ships, either of which would have answered the description. (2) The true meaning of the mistaken party is, or might be, known to the other party. This will cover the cases of 'error in persona,' 'in corpore,' 'in negotio,' &c., as, for instance, the case where a customer sent an order for goods to a tradesman with whom he had been accustomed to deal, but who had disposed of his business to a successor, who, having supplied the goods without any notification of the change, was not allowed to recover their price*. The question in these cases should always be: was the expression of one party such as should fairly have induced the other to act upon it? If so, but not otherwise, it is in the interest of society that the loss should fall upon the former. Elements of a contract. We shall therefore treat of the constituent elements of 1 Holmes, Common Law, p. 308. 2 Couturier v. Hastie, 5 H. L. 673. 'Domum emi cum eam et ego et venditor combustam ignoraremus. Nerva, Sabinus, Cassius, nihil venisse, quamvis area maneat, pecuniamque solutam condici posse aiunt.' Dig. xviii. 1. 57. Cf. Nec emptio nec venditio sine re quae veneat potest intelligi.' Ib. 8 pr. Raffles v. Wichelhaus, 2 H. & C. 906. The judgment in this case merely supports the plea, which sets out the facts and avers a difference of intention between the parties. Cf. 'si Stichum stipulatus de alio sentiam, tu de alio, nihil actum erit.' Dig. xlv. 1. 83. 1. Boulton v. Jones, 2 H. & N. 564; Boston Ice Co. v. Potter, 123 Mass. 28. In such cases, as Leonhard says, 'the essentiality of error depends entirely on the question whether the absence of error is made a cognisable condition of the transaction.' Irrthum, ii. p. 586. a contract as being: i. several parties; ii. a two-sided act CHAP. XII. by which they express their agreement; iii. a matter agreed upon which is both possible and legal; iv. is of a nature to produce a legally binding result; v. and such a result as affects the relations of the parties one to another; also, vi. very generally, either a solemn form, or some fact which affords a motive for the agreement. i. The very idea of a contract demands for its formation Parties. at least two parties, a 'promisor' and a 'promisee,' who in Roman law are described as 'debitor' and 'creditor'; which terms have however a more general application. So it has been held that where one and the same company had two departments, one for insurance and one for annuities, an insurance effected by the latter department with the former was a nullity'. The promisee must not be an 'incerta persona,' e. g. 'the secretary for the time being,' but the offer may be, in the first instance, made to an unascertained member of a class, e. g. to the finder of a lost purse, whoever he may be2. tractors. There may be more parties than one to either side of Joint cona contract, plures rei,' 'joint contractors'; and these are, according to the position which they occupy, either 'correi credendi,' 'joint creditors,' or 'correi debendi,' 'joint debtors 3. This Offer and ii. The two-sided act, expressive of agreement. consists of an offer, 'pollicitatio", on one side, and an accept 1 Grey v. Ellison, 1 Giff. 438. For a discussion über die Theorie des Selbstcontrahierens' (i. e. the case of an agent contracting with himself as a stranger), see Umberto Pranzataro, in the Transactions of Int. Vereinigung für vergl. Rechtswissenschaft, &c., 1902, No. 6. Such a proposal is called in German 'Auslobung.' The same principle applies to the offer of a prize, to announcements in railway time-tables, and to sales by auction. 3 On the vexed question of the true nature of a correal obligation, see Savigny, Obligationenrecht, § 23; Moyle, Institutes of Justinian, excursus vii; Sohm, Institutionen (Transl.), § 61; Hunter's Roman Law, p. 590. 46 'Pollicitatio est solius offerentis promissum.' Dig. 2. 12. 3 pr. ance. CHAP. XII. acceptance on the other. One party expresses his readiness to be bound to a performance, and the other side expresses his acceptance of this readiness. An unaccepted offer creates no liabilities. The rules upon this subject are as follows: : Accept ance. Unconditional. Contemporaneous. Tacit revocation of offer. 1. The acceptance must unconditionally correspond to the offer. An expression of readiness to buy a horse for fifty pounds is no acceptance of an offer to sell the horse for sixty pounds 3. 2. The acceptance must be contemporaneous with the offer, which may therefore be withdrawn at any time before it has been accepted. So it has been held that a bidder at an auction is not bound till the hammer has fallen. An auction is not inaptly called a locus poenitentiae. Every bidding is nothing more than an offer on one side, which is not binding on the other side till it is assented to ".' Several subordinate questions arise with reference to this rule, some of them giving rise to very fine distinctions. (a) How long does an offer which has not been expressly revoked remain open? It is in accordance with common sense, and has been so held, that an offer is intended to remain open only for a reasonable time. The German Commercial Code keeps an offer made to a party at a 1 An offer, 'Antrag,' may sometimes be confused with an enquiry about an offer, 'Aufforderung zu einem Antrage.' Vang. Pand. § 603. So an 'offer to be bound' with an 'offer to negotiate'; see Bowen, L. J. in the Smoke-ball case, u. s. 2 'Ex nuda pollicitatione nulla actio nascitur.' Paul R. S. v. 12. 9. But some curious exceptions to this rule were recognised in Roman law. Dig. 1. 12. As to the effect of an unaccepted offer by deed in English law, see infra, p. 272. A reply to this effect would amount to a rejection of the offer and the making of a counter-offer. Hyde v. Wrench, 3 Beav. 334. So the new Civil Code for Germany, 150. Payne v. Cave, 3 T. R. 148. Meynell v. Surtees, 1 Jur. N. S. 737; cf. Ramsgate Hotel Co. v. Montefiore, L. R. 1 Ex. 109. |