At the outset the various kinds of contracts should be explained so that the principles which apply to them may be better understood. One of the divisions is into simple contracts and specialties. A simple contract may be verbal or it may be in writing, but no seal is appended to the signatures of the parties. A specialty is in writing and a seal is added to the signature. A written contract may be a duplicate of another with a seal, yet the two belong to different classes and different rules of law apply to them as we shall learn.

Another classification is into executed and executory contracts. An executed contract, as the name implies, is completed, an executory contract is to be executed or completed. An unpaid promissory note is an executory contract, when paid it becomes an executed one.

Another classification is into express or implied contracts. An express contract is one actually made between two or more persons or parties; an implied contract is one that the law makes for the parties. Suppose a man worked a day for another at his request, and nothing was said about payment, the law would require him to pay a reasonable sum for his day’s work. Another kind of contract technically called quasi contract differs somewhat from an implied contract and will be explained in another place.

To every contract there must be two or more parties, who have the legal right to make it. Not every person therefore who wishes to make a contract can legally do so. Of those whose ability to contract are limited are minors or infants. The period of infancy is fixed by law, and is therefore a conventional, yet needful regulation. In most states infancy ends at the age of twenty-one, though some states fix a younger period, eighteen for women. A person becomes of age at the beginning of the day before his twenty-first birthday. The reason for this rule is, the law does not divide a day into a shorter period or time except when this is required in judicial proceedings. Another class of incapable contractors are married women. Their disability however has been largely removed by statutes in all the states, as we shall learn in another place.

Insane and drunken persons also are under disability to make contracts. By the old law a drunken man who made a contract was still liable, and required to fulfill as a penalty for his conduct. A more humane rule now prevails and he can be relieved, though like a minor, if he wishes to avoid a contract, he must return the thing purchased, in other words he can take no advantage of his act to the injury of the other contracting party. If however he has given a negotiable note that has passed into the possession of an innocent third person, who did not know of his drunkenness at the time of making it, he can be held for its payment. It is not quite so easy to state rules that apply to insane persons because their conditions vary so greatly. A person may be insane in some directions and yet his insanity may not be of a kind affecting his capacity to make at least some kind of contracts. Again, he may have lucid intervals during which he is quite as capable of contracting as other persons. And again when an insane man has made a contract, the relief to which he is entitled depends on circumstances. In some cases he may repudiate it, a partial fulfillment only may be required.

The law has much to say about the consideration that is an element in every contract; in other words, there must be a cause, something to be gained by the parties in every contract to sustain it. If A should promise to give to B a house next week, and on the day fixed for transferring it A should change his mind, he could not be compelled to transfer it, for the promise would be without any consideration or thing coming from B. But if the house had been transferred, A could not afterwards repent of his act and demand its return. An executed gift therefore, free from all fraudulent surroundings, is valid: the donor of an executory gift is free to withhold its execution.

A consideration need bear no relation or adequacy to the other thing that is to be received. Nothing is more frequent than a one-sided contract, in which one party has gained far more than the other. If the law attempted to adjust these cases, many more courts would be needed than now exist.

We will briefly note the need of consideration in some classes of cases. First, a voluntary undertaking to work for another without compensation cannot be enforced. Under this head is the promise to pay the debt of another. Why should one do such a thing? Let us remember that should one make such a promise and keep it, the money could not be recovered back, that is quite another thing. Again, if A owed B a debt and delayed payment, and B should say to him, “if you will pay me half of it next week I will give up the rest,” B would not be bound by his promise. Suppose that B learning that A had ample means to pay, should sue him, A could not relieve himself from liability by offering to pay the amount A promised to take in settlement of the debt. But should B accept one half, in fulfillment of his promise, that would be the end of the matter.

Again should a bank defaulter make good the amount taken, and the directors, in consideration thereof, promise to take no steps towards his prosecution by the government, there would be no valid consideration to sustain the promise. The state would be just as free to prosecute him as before. Very often such criminals are not prosecuted after returning all or a part of their unlawfully taken money, nevertheless no settlement of this kind stands in the way of prosecution.

Suppose A agreed to work for B for a month and, after working a week, should leave him without good reason, can he recover for his week’s work? If he can get anything, he cannot claim it under his contract for he has broken it and therefore a court could not enforce it. If he can recover anything it is on the implied contract which the law makes, the worth of his work after deducting the loss to his employer. Suppose the employer should prove that he had lost more by A’s going away when he did than he had gained by his week’s work, he could recover of B, for the rule works both ways. In some states he cannot recover anything, for, having broken his contract, he has no standing in court.

Suppose one signs his name to a subscription paper, calling for the payment of money, to build a church, for example, and the designated amount has been subscribed, can a subscriber refuse to pay? He cannot. Suppose he withdraws before the subscriptions have been completed, what then? He can refuse. If a subscription has not been completed, death operates as a revocation and the subscriber’s estate is not held for the amount. Sometimes a moral obligation to pay money is a good consideration for a promising to pay it. Thus if one owes another for a bill of goods, and the debt has ceased to be binding by lapse of time, yet he should afterwards promise to pay, he could be held on his promise because there was a good consideration for the debt. Lastly a contract may be modified by mutual agreement without another consideration.

Another element in a contract is mutuality, a meeting of minds in the same sense. In every contract there is an offer made by one party and an acceptance or refusal by the other. When an acceptance occurs, there is a meeting of minds, or an assent. Very often the parties do not understand each other, they acted hastily, ignorantly perhaps, their minds did not really meet in the same sense. In such cases there is no contract.

Generally the acceptance must be at the time of receiving the offer. If it is not, there is no meeting of minds, no assent. A person however may make an offer on time, this is common enough. When this is done the other party must furnish some kind of consideration to make the offer good for anything, otherwise the offerer can withdraw his offer whenever he pleases. Many an offeree has been disappointed by the action of the other party in withdrawing his offer, yet the offerer has been clearly within his rights in doing so when he has received no consideration for giving the other party time to think over his offer.

An eminent jurist has said “that an offer without more is an offer in the present to be accepted or refused when made. There is no time which a jury may consider reasonable or otherwise for the other party to consider it, except by the agreement or concession of the party making it. Until it is accepted it may be withdrawn, though that be at the next instant after it is made, and a subsequent acceptance will be of no avail.”

If no time is given, or no consideration for the time given, an offer therefore may be withdrawn as soon as made if not accepted. A person may suddenly think of something which leads him to withdraw his offer as soon as it is out of his mouth, and in doing so is within his rights, but if he does not, how long does his offer last? A reasonable time. What this is depends on many things, one of the questions like so many others in the law to which no definite answer can be given. An offer to sell some real estate was accepted five days afterward, this was held to be within a reasonable time. One can readily imagine cases in which five days would not be thus regarded, or even five hours.

When does assent occur in contracts made by correspondence? The rule is in nearly every state (Massachusetts being the chief exception) where an offeree has received an offer by letter and has put his acceptance in the postoffice, the minds of the parties have met and made a contract. The post-office is the agency of the offerer both to carry his offer and bring back the return. If the offeree should use a different agency, the telegraph for instance, to convey his acceptance, it would not be binding until the offerer had received and accepted it. Of course, an offerer by letter may withdraw his offer at any time. Suppose he should receive an acceptance by letter or telegraph but deny it, and insist that no contract had been made. Then the controversy would turn on the proof. If the acceptance had been by letter, and the offeree could prove that the offeree had written and mailed it, the offeree’s proof would be complete. If the offeree sent a telegram, then he would be obliged to prove the delivery of the dispatch. Suppose one should mail a letter of acceptance, but before its receipt by the offerer, should send a telegram declining the offer which was received before the letter of acceptance? The acceptance would stand, for as there had been a meeting of minds when the letter was put into the postoffice, the offeree could not afterwards withdraw his offer. A person who makes an offer cannot turn it into an acceptance. An old uncle wrote to his nephew that he would give thirty dollars for his horse and added, “If I hear no more about the matter, I consider the horse is mine.” The game did not work, for no man can both make and accept an offer at the same time, and that is what the foxy uncle tried to do.

Offers and rewards are often made through the newspapers. Thus the owner of a carbolic smoke ball offered to pay a specified sum to any one who suffered from influenza after using one of his smoke balls in accordance with directions if he was not cured. A person who failed to receive the benefit advertised recovered the reward. Two other cases may be mentioned that illustrate the uncertainty of the law. An excited farmer offered the following reward, “Harness stolen! Owner offers $100 to any one who will find the thief, and another $100 to prosecute him!” The farmer cooled off and declined to pay after the thief was caught and the court relieved him, declaring that his advertisement was not an offer to pay a reward, but simply an explosion of wrath. In another case a man’s house was burning, and he offered $5,000 to any one who would bring down his wife dead or alive. A brave fireman accomplished the feat. This offerer too cooled off and declined to pay, but he did not escape on the ground that this was only an explosion of affection, and was obliged to pay.

Lastly a contract dates from the time of acceptance, and is construed or interpreted by the law of the place where it was made. If it is to be performed in another place, then the parties must be governed by the law of that place in performing it.

A contract having been made, next follows its execution. When a contract is not executed, or not executed properly, the party injured usually may recover his loss. Sometimes the contract states what the offending or wrongful party must pay should he fail to execute it. Many questions have arisen from such agreements. Suppose a contractor agrees to build a home for another and to finish it within a fixed time, and, failing to do so, shall forfeit or pay to the other $5,000 as a penalty for his failure. One would think that if he failed to execute it the other party could demand the $5,000. But the courts have a way of their own in looking at things. Suppose the contractor’s failure did not in fact result in any loss whatever to the other party? The courts in such a case are very reluctant to enforce the agreement. If there had been a loss, something like that amount, then the courts would compel him to pay. In other words, the most general rule is, notwithstanding such a clearly written agreement, the courts seek to do justice between the parties. Whenever the parties do not attempt to fix the damages themselves, should their contract not be fulfilled, then the amount that may be recovered depends on a great variety of circumstances. Suppose a woman should go to a store to buy a piece of silk. She asks if the piece shown to her by the saleswoman is all silk, who makes an affirmative reply. The buyer knows much more about it than the saleswoman, which is often the case in buying things, and knows it is half cotton, can the buyer recover anything? Surely she has not been deceived. The seller may have tried to fool her but did not, and having failed, the buyer has no legal ground for an action. On the other hand, if the buyer was ignorant, knew nothing about silk and had been deceived by the seller, then she would have a clear case. This is one of the fundamentals in that large class of cases growing out of deceit. The party seeking redress, must have been deceived, and also injured by the deceit in order to recover. The remedies that may be employed whenever contracting parties have failed, or partly failed to fulfill their agreements or promises will be considered under other heads.