CHAP. XII. interests of commerce.

The newer theory

The class of cases 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 conduct2. 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 4.'

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 5. This luminous principle at once sweeps away the in

1 6 A. and E. 475; cf. Freeman v. Cooke, 2 Ex. 654.

2 Cornish v. Abington, 4 H. and N. 549.

3 L. R. 6 Q. B. 607. Cf. Carr v. London and N. W. Co., L. R. 10 C. P. 317. In Scott v. Littledale, 8 E. and D. 815, the contract was held good, although the vendor had by mistake shown a wrong sample. See also Leake, Contract, p. 12.

Mr. 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.

It may well be in contracts that a man may be bound to a meaning which demonstrably was not his.' Leonhard, i. p. 119.

genious speculations of several generations of moralists1, while CHAP. XII. it renders needless long lists of subtle distinctions which have been drawn from decided cases 2.

to corre

agency

The truth and practical importance of what may be called is supported by the objective theory of contract are confirmed by the generally rules as received rules as to contracts made by post; where the ques- spondence tion, whether or no the contract is made, turns, as we shall and see 3, 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 4.

sistent

mistake.

Nor is there any inconsistency between this view and the and is conwell established effect of what is known as 'essential error' with the in preventing a contract from coming into existence. When doctrine of such error is present, it is no doubt true to say 'non videntur qui errant consentire 5.' 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 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 sold7; or from am

1 E. g. Grotius, De I. B. et P. iii. 23. 4; Paley, Moral Phil. vol. i. c. 5 ; Austin, ii. p. 123.

2 E. g. the rules set forth by Sir W. Anson, Contract, p. 32.

3 Infra, p. 220.

Dig. 1. 16. 116; xliv. 55, 57. Cf. supra, p. 99.

6 Holmes, Common Law, p. 308.

• Infra, p. 224.

7 Couturier v. Hastie, 5 H. L. 673. Domum emi cum eam et ego et venditor

6

CHAP. XII. biguity, 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 description1. (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 2. 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.

Parties.

We shall therefore treat of the constituent elements of a contract as being: i. several parties; ii. a two-sided act 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 effects 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 at least two parties, a 'promisor' and a 'promisee,' who in Roman law are described as 'debitor' and 'creditor'; which

combustam ignoremus. Nerva, Sabinus, Cassius, nihil venisse, quamvis area maneat, pecuniamque solutam condici posse aiunt.' Dig. xviii. 1. 57.

1 Raffles v. Wichelhaus, 2 H. and 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. I.

2 Boulton v. Jones, 2 H. and 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.

terms have however a more general application. So it has CHAP. XII. 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 1. 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 be 2.

tractors.

There may be more parties than one to either side of a Joint concontract, 'plures rei,' 'joint contractors'; and these are, according to the position which they occupy, either 'correi credendi,' 'joint creditors,' or 'correi debendi,' 'joint debtors.'

acceptance.

ii. The two-sided act, expressive of agreement. This consists Offer and of an offer, 'pollicitatio3,' on one side, and an 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 5. AcceptThe rules upon this subject are as follows:

ance.

tional.

1. The acceptance must unconditionally correspond to the Uncondioffer. An agreement to buy a horse for fifty pounds is no acceptance of an offer to sell the horse for sixty pounds.

raneous.

2. The acceptance must be contemporaneous with the Contempooffer, 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

1 Grey v. Ellison, 1 Giff. 438.

2 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.

3Pollicitatio est solius offerentis promissum.' Dig. 2. 12. 3 pr.

An offer, 'Antrag,' may sometimes be confused with an enquiry about an offer, 'Aufforderung zu einem Antrage.' Vang. Pand. § 603.

5 '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. 229, n.

CHAP. XII. auction is not inaptly called a locus poenitentiae.

Tacit revocation of offer.

Revocation by death.

Contracts by corre

open

Every bidding is nothing more than an offer on one side, which is not binding on the other side till it is assented to 1. 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 ? 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. When I offer anything to a person,' said Lord Cranworth, 'what I mean is that I will do that if you choose to assent to it; meaning, although it is not so expressed, if you choose to accept it within a reasonable time 2. The German Commercial Code keeps an offer open only till an answer to it could have been received in due course 3.

(B) Is an offer revoked by the death before it has been accepted of the person who makes it? There is some difference of view as to this result following from the mere fact of death, uncommunicated to the acceptor1.

(7) When the parties are at a distance, is the intention of spondence. either party, or the communication of intention to the other party, to be regarded? This difficulty, which continues to the present day to exercise the ingenuity of the Courts and divide the opinions of jurists, was perceived and discussed by the earliest commentators on the civil law 5. It arises chiefly with reference to acceptance of an offer, but also with

1 Payne v. Cave, 3 T. R. 148.

2

Meynell v. Surtees, 1 Jur. N. S. 737; cf. Ramsgate Hotel Co. v. Montefiore, L. R. 1 Ex. 109.

3 Handelsgesetzbuch, art. 319. For a decision under this article, see Seuffert, Archiv, xxix. No. 60.

The Indian Contract Act requires communication. In English law the mere fact seems to be sufficient. See Dickenson v. Dodds, L. R. 2 Ch. D. 475. Some authorities would deny the existence of a contract, but would indemnify an ignorant acceptor. Windscheid, Pand. § 307.

5 On 1. 1 of the title De Contr. Empt.' (Dig. xviii. 1), Accursius writes: Item quid si antequam literae vel nuntius ad eum perveniant venditor renuntiat? Quidam dicunt non valere contractum. Sed Ald. dicit tenere, quod puto verum,'