CHAPTER VII THE MAKING OF CONTRACTS INTRODUCTORY: THE ESSENTIAL ELEMENTS OF A CONTRACT $57. From Williston, The Law of Contracts (1920) Vol. 1, p. 17. The requirements for the formation of a simple contract are: (1) Parties of legal capacity; (2) an expression of mutual assent of the parties to a promise or set of promises (3) an agreed valid consideration. The agreement must also not be declared void by statute or common law. The requirement last enumerated has often been too broadly stated; namely, that the agreement must not be illegal. But all illegal contracts are not void. Possibility of performance, which is also stated by some writers as requisite, does not seem essential. Parties may contract to do something which is impossible, if they wish to do so, though, doubtless if they know of the impossibility, it will generally be assumed that they do not. Two other supposed requirements have also been suggested: Genuineness of consent, and intent to contract." $58. The Elements of a Contract.-Professor Williston does not regard genuineness of consent or intent of the parties essential, largely because (1) genuineness of consent is included under the general heading of assent; and (2) because the views of parties as to what are the requirements of a contract are wholly immaterial. Furthermore, these terms suggest a subjective standard, a looking into the minds of the parties, which, of course, is impossible. Nevertheless, it is convenient to reserve a heading under which to deal with the exceptional conditions permitting a prima facie contract to be either set aside or ignored. In addition, to cover the case of particular contracts based on or evidenced by certain forms, "form" may be considered alongside of consideration. Subject to these restrictions, it will serve our purpose to organize the study of the formation of contracts along the traditional lines in the order succinctly stated in Anson on Contracts (Corbin's edition, 1919, p. 14), as follows: 1. A distinct communication by the parties to one another of their intention; in other words, offer and acceptance. 2. The presence of certain evidence, required by law, of the intention of the parties to affect their legal relations. This evidence is either (a) form, or (b) consideration. 3. The capacity of the parties to make a valid contract. 4. The genuineness of the consent expressed in offer and acceptance. 5. The legality of the objects which the contract proposes to effect. A. OFFER AND ACCEPTANCE $59. In General. The legal rghts and liabilities that arise out of the conduct of a business enterprise are predominantly based upon the consent of the parties. It is true of course in business as in all other affairs that an act has legal consequences whenever it constitutes a breach of a general duty imposed by law. Nevertheless, the activities of business, more than any other class of activities, fall within the sphere within which men are permitted to bind each other by their deliberate dealings. In sales of goods, in contracts of all kinds, and in the internal arrangement of business associations, the legal relations of the parties are in large measure the ones stipulated for by agreement. It is but rarely that the parties to any agreement of the kind which results in new legal relations between them, express their assent simultaneously. Nearly always such an agreement is arrived at by a process of offer and acceptance of terms. Ac 'In the creation of the agency relation the constituent elements of. the agreement are spoken of as "appointment," or "authorization," and "acceptance of appointment." cordingly, after a preliminary survey of the fundamental characteristics of all agreements which operate to create new legal relations, this division is devoted to a discussion of the rules relating to offer and acceptance. $60. Fundamental Characteristics of Mutual Assent: Rights and Duties Under an Agreement Arise Only When the Parties Have Expressed Assent as to All Its Essential Terms.-It is not a function of the courts to make agreements for people. It follows that an agreement creates no legal relations between the parties unless there be a complete and definite expression of its terms. If, for example, a seller promises a distributor of his goods that he will deal with the latter in such a way as to "protect his trade," by which the parties understand that the distributor is assured of being able to buy on such terms that he will be able successfully to compete with his trade rivals, the arrangement is plainly too indefinite and too general to be enforceable.1 It is not absolute, but reasonable definiteness in the expression of terms that the law requires in agreements. Accordingly, specific mention of all the terms of a bargain is not essential to the validity of an agreement. For example, if a man be engaged to perform certain services, a binding contract may exist even though there be no stipulation as to the specific amount of his compensation. The law assumes the existence of a common intention that he is to be paid a reasonable remuneration,-an amount which of course depends upon the nature and character of the work, and, to some extent, depends upon the standing of the one employed to do it. The crucial inquiry, therefore, is not, Have the parties made specific mention of every element involved in their agreement; but, Have the parties from the standpoint of reasonable men arrived at a complete understanding? In answering the latter question, a court aims to take into consideration all the circumstances of each particular case and to give to them a reasonable commercial interpretation. Sometimes, for instance, a previous course of dealing may prove to be the deci 'Marble v. Standard Oil Co. (1897), 169 Mass. 553. |