Things A Contract Should Include
( Originally Published 1918 )
Consideration.—A contract without consideration, if not under seal, is void at the option of the party against whom it is sought to be enforced. There is one exception to this rule. It does not apply to innocent indorsers and bona fide holders of negotiable papers. A promise is a good consideration fora promise.
It is not always necessary that the consideration be expressed in the contract; it is sometimes implied. Thus, when a contract is deliberately made, without fraud and with a full knowledge of the circumstances, any damage, suspension, or forbearance of a right, will be sufficient consideration. It is not necessary that the consideration should exist at the time of the promise, if it arise afterward in consequence of the promise.
Seals.--A seal after the signature of a party to a contract implies a consideration, whether a consideration be specified in the body of the con-tract or not. But in the bare sense of a consideration it may be called in question, and the party made to show what the consideration-actually was, if any.
In former times the seal was used on documents as the written signature is now used. Usually it was an impression on wax of the arms or signet of the person signing, made, from an intaglio reproduction of the same, worn as a ring. Its place was indicated by the initials L. S., which stand for the Latin words locus signalis, meaning "the place of the seal. It is an inherited symbol, but still is employed in documents of importance as importing solemnity of obligation.
Thus, a sealed instrument has a somewhat stronger quality than the same instrument would have if not sealed. In governmental affairs, national, state or other, the seal is requisite to complete the execution of documents, in addition to the official signatures. And all corporate con-tracts are made under the corporation' seal.
In common practice, the bracketed initials L. S. are accepted as a sufficient seal. They may be written with a pen, surrounded by a scroll. But the proper way to seal is to affix a colored wafer to the paper, immediately at the right of the written signature. The set phrase "signed, sealed and delivered" with its usual context, should appear at the conclusion of all sealed con-tracts.
Formality.—All contracts are either express or implied. Express contracts are where the terms are openly stated at the time of making.
Implied are such as reason and justice dictate, and which the law presumes every man under-takes to perform. For instance, if there is no stipulation as to the price, when one sells goods, or performs labor for another at his request, the law implies a promise to pay for such goods, or labor, so much as they are reasonably worth. It is also an implied condition of work and labor, that it be done in a suitable and workmanlike manner. But the law will never imply a promise against a party's declaration at the time.
Time of Performance.—There must be a time, either expressed or implied, in which a contract is to be performed. Otherwise one party could postpone the execution of his contract indefinitely. Where no time is expressed, a reasonable time will be understood.
Reasonable Time must be construed with regard to the conditions in each case. It has no absolute definition in law. But the parties to a contract may determine it beforehand by stating that "time is the essence of this contract." The courts would enforce it then within the time specified. Or if this has not been done, the party for whom the service was to be performed may demand that the other party fulfill his part of the contract within a certain time, or he will consider it broken. If this time be not unreasonably short, he will have a right to bring action if the service agreed upon has not been performed within it. In any event a party is allowed the utmost limit of the time set to perform, and the day on which the contract was dated or the demand was made will not count as part of the time ; the time would not expire until midnight of the last day.
Mutual Assent.—No contract is valid in law unless the parties agree to the same thing in the same sense. Where a person orders a certain quantity of goods, for instance, at a certain credit, and the merchant sends a less quantity at a shorter credit, and the party refuses to take them, the merchant cannot recover the price of them; for there was no agreement on the terms, and hence no contract.
Mistake.—A contract made under a mutual mistake of fact is not binding; for instance, if A. sells to B. a horse, which both A and B suppose to be in A's stable, and at the, time of the con-tract the horse is dead, the sale is void. But a mistake of law is binding, for every one is presumed to know what the law is, though in some states there are exceptions to this rule.