right from which a new right arises when the first is violated, entitling him to damages. The right of B is said to be a right in rem, that is, against the world at large. Such rights are to be found in the law of torts.

Contractual obligations arise between the parties by means of their acts. They depend on no rights that the parties have had. Thus, when A and B enter into a contract, new rights and duties are created by A and B which did not previously exist. This right is one in personam, that is, against determinate persons.

The determination of the rights and duties created by contract furnish the scope of this article.

2. Contract defined.-A contract is an agreement between two parties, resulting in an obligation or legal tie, by reason of which one party is entitled to have certain stipulated acts performed or forborne by the other. There are many definitions of a contract. Blackstone states that "A contract is an agreement, upon sufficient consideration, to do a particular thing." In Sturges v. Crowninshield it is said that "A contract is an agreement in which a party undertakes to do, or not to do, a particular thing." A contract is also said to be an agreement enforcible at law, made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others. According to the etymology of the word,

3

12 Blackstone, Commentaries, p. 446.

2 Marshall, C. J., in 4 Wheat. 122 (U. S.). 8 Anson, Contracts (English ed.), p. 9.

from contraho, a contract is a drawing together of the minds of the parties until they meet in agreement.*

3. Essentials of the definition.-There are four things which are necessary to make a contract: (1) the offer and acceptance, called the agreement; (2) the form or the consideration; (3) the parties; (4) the subject matter.5

Briefly, (1) the agreement, consisting of the offer and acceptance, is the assent given by each party to the other with reference to the subject matter, the parties being of the same mind and intention concerning the matter agreed upon. (2) The form is that which the law requires to give the agreement legal recognition. Thus, a deed must be under seal, and the court will not enforce it unless it is. Or, if a contract is not under seal, it must have a consideration. Consideration means a forbearance, or a detriment, or a giving up of something one is not bound to give. Thus, to make a promise one is not bound to make is a consideration for another promise. Furthermore, to enforce a promise, a writing may be necessary. (3) The parties must consist of two or more persons, for no one can make a contract. with himself. Finally, (4) the subject matter is the thing concerning which the contract is made. It may be as varied as the necessities of human life. The only limitations on what may be the subject matter of contracts are impossible subjects and those disallowed for reasons to be mentioned.

4 McNulty v. Prentice, 25 Barb. 204 (N. Y.).

5 Fuller v. Kemp, 138 N. Y. 231.

6 See Chap. III.

7 Faulkner v. Lowe, 2 Ex. 595 (Eng.).

M.A.L.-7

6

Suppose A promises to enter B's service for one year, and B promises to pay A $1,000 for his work. The agreement consists of the meeting of minds of A and B as to the terms of the contract. The consideration consists of the mutual promises. The parties, of course, are A and B, and the subject matter consists of the services to be rendered.

4. Use of term "contract."-The term "contract" is used to designate every description of agreement or obligation, whether verbal or written, with or without seal, by which one party is bound to another to perform or omit to perform a stipulated act. It denotes that one person is bound to another to do or render something, and that a duty is imposed as well as a right conferred, though "obligation," "agreement," "covenant," and "promise" are sometimes used in the same sense. In the Roman civil law, "obligation" was the term used to designate all the rights and liabilities which are termed "rights in personam," or the rights which one person has to acts or forbearances from others.

When one inquires whether it is the agreement that constitutes the contract, or the obligation resulting from the contract, at once one finds that the word "contract" is used in various senses. Sometimes it denotes the fact of agreement, and sometimes the nature of agreement. Again, it may refer to the written instrument which contains the agreement. Sometimes it denotes the obligation resulting from the agreement. The terms "void contracts" and "illegal contracts" have been adopted although there is no obligation whatever in such situations.

1

The contractual obligations which the common law recognized were enforced, and are still enforced, not because those obligations are the result of agreement, but because certain procedure afforded remedies for certain wrongs.

5. Classification of contracts.-The subject of contracts has been variously classified. With respect to form, contracts are: (1) Formal contracts; (2) Quasi-formal contracts; and (3) Simple contracts.

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(1) Formal contracts. These obligations are dependent for their validity upon their form, and may be divided into contracts of record and contracts under seal. An example of a contract of record is a judgment of a court, or a recognizance. These are not true contracts, however, for the obligation is imposed by law, and not by the agreement of the parties.

A contract under seal, also called a specialty, is a written promise or obligation which derives its validity, at common law, from its form alone, to-wit, the presence of a seal.

Thus where A executes an instrument by which he agrees to work for B for a year, and the word "Seal" appears after his signature, the contract is a specialty.

(2) Quasi-formal. Quasi-formal contracts are those which are partly dependent on form and partly on consideration. They are more commonly included under the term simple contracts. An example is a bill of exchange.

(3) Simple contracts. All other contracts are simple contracts, whether they be oral or in writing.

8 See § 6.

There is no distinction as to validity, whether a contract be unwritten or in writing, unless the Statute of Frauds applies. See Chap. VI.

Other terms applied to this class are informal contracts, and parol contracts.

Thus where A orally agrees to sell B his horse for $100, the contract is simple. Similarly, if he agrees in writing to sell the horse, it is a simple contract, provided there is no seal.

6. Same subject-Express, implied, and quasicontracts.-Contracts are further divided into express and implied contracts. The latter class often is made to include what are more properly termed quasi-contracts.10

Express contracts are so stated, either by word or in writing, that the terms and the promises are fully known to each of the contracting parties. Where A agrees to sell B a horse for $100, and B agrees to buy the horse for that sum, the terms of the contract are fully expressed.

An implied contract arises where the parties have not so fully stated the terms, but have actually made a contract. In such cases the terms of the contract are determined by the conduct of the parties and the inferences properly deducible from the attending circumstances. In short, the parties are actually contracting but not expressly and fully. This idea is important, because it distinguishes such implied contracts from another class, sometimes called implied contracts, or contracts implied in law, but in modern jurisprudence termed quasi-contracts.11

If A works for B under such circumstances that no reasonable man would conclude that A meant to 10 Highway Commissioners v. Bloomington, 253 Ill. 164, LEADING ILLUSTRATIVE CASES.

11 Harris v. Smith, 79 Mich. 54, LEADING ILLUSTRATIVE CASES.