The History of Contract in Early English Equity

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The History of Contract in Early English Equity CHAPTER III THE DOCTRINE OF CONSIDERATION THE history of parol contracts raises two distinct problems: (1) How did parol contracts become actionable at all? (2) How did consideration become the test of the enforceability of such contracts P Before it is possible to classify agreements and determine what are enforceable and what are not, it must be first settled that a contract will support an action. Any classification or generalization is a matter for later considera tion. In consequence, nothing but confusion will result if we fail to observe the historical sequence of these two problems. Now the answer to the first question is to be found in the history of Assumpsit. Starting as an action on the case, it was extended after the struggle of a century from cases of misfeasance to cases of non-feasance. Throughout this struggle there appears no theory of contract, nor was it apparent even that the judges considered the promise as the basis of the action. The delictual origin of the action overshadowed its development. The result is that at the beginning of the sixteenth century Assumpsit has in fact become an action to enforce parol contract, but such an achievement is not realized by contemporary lawyers. The reason is to be found in the principle upon which the action was allowed. A detriment to the plaintiff was an essential condition to its use; or, stated differently, a breach of promise supported an action when, and only when, it could be regarded as a deceit to the plaintiff. There was still a very strong element of tort in the theory of the action. Some time in the sixteenth century another principle ob tained a foothold. Men begin to speak of consideration, of promises as made in consideration of some act or forbearance. The early history of this doctrine is wrapped in obscurity. We 6o CONTRACT IN COMMON LAW [PART I do not know how or when it made its first appearance, and there is much dispute as to its source. But we do know that the first use of the word at common law was in the action of Assumpsit, and that ultimately it became settled that no promise was enforceable unless it were made upon a valid consideration. To-day in the interests of logic it is deemed advisable to resolve every consideration into a detriment to the promisee. Such a definition, however, does not meet the situation in the sixteenth century. The word was then of wider use than it is to-day; for when we now speak of consideration, only a valuable consideration is meant. Historically, consideration seems to have meant any motive or inducement which was sufficient to support a promise." It included such diverse species as (1) a benefit to the promisor, (2) detriment to the promisee, (3) a moral obligation, (4) natural love and affection. All of these are not found in Assumpsit, but it would be a mistake to confine the doctrine to that action. The quid pro quo which was essential to Debt became ultimately absorbed by the wider idea. Now in a certain phase, namely as a detriment to the promisee, consideration bears a striking resemblance to the original limitation in Assumpsit, the detriment to the plaintiff. But the question remains, Is this more than an analogy? Is there any historical connexion between the detriment to the plaintiff in Assumpsit, and the detriment to the promisee into which consideration was ultimately resolved? This is the crux of the matter. We may therefore notice three principal theories of the origin of consideration. I. ‘The requirement of consideration in all parol contracts is simply a modified generalization of the requirement of quid pro quo to raise a debt by parol.’” This is the theory advanced by Mr. Justice Holmes. But there are great difficulties in the way of its acceptance. * Salmond, Anglo-Am., iii. 331. * L. Q. R., i. 171. And see Holmes, Common Law, 258ff. Mr. Justice Holmes endeavours to connect the requirement of guid pro quo in Debt with the secta, and transaction witnesses. For a criticism of this see P. & M., ii. 214, n. 4. CH. III] THE DOCTRINE OF CONSIDERATION 61 (1). It assumes that the doctrine started from a narrow basis and became widened. Originally a benefit to the promisor, consideration came to embrace the notion of detri ment to the promisee. But there is no evidence that this is what happened. Consideration as a rule of contract made its first appearance in the action of Assumpsit, and not in Debt. If this theory be correct, then the basis of one action must in some way have become the basis of the other. From the sharp line which was always drawn between Debt and As sumpsit, it seems in the highest degree improbable. (2) The consideration in indebitatus assumpsit was not a modification of quid pro quo, but identical with it." (3) The idea of consideration as a detriment to the promisee never appeared in Debt; though repeated efforts were made to extend quid pro quo to cover detriment.” For these reasons we must reject this theory. It fails to take recognition of the wide idea embraced in the word consideration; it requires a transformation of quid pro quo which was never effected. II. Another theory is put forward by Professor Ames in a brilliant series of articles in the Harvard Law Review.” He there identifies consideration with the detriment to the plaintiff upon which the action of Assumpsit was founded. This theory has a certain decided advantage. It shows a regular and consistent development in Assumpsit culminating in the evolution of the principle of consideration from within the action itself. So far as the Year Book cases are themselves concerned it seems impossible of refutation. But the theory is open to the following objections: (1) It assumes that consideration is identical with the detriment to the plaintiff. As we have already pointed out, there is a strong analogy between consideration when resolved into a detriment to the promisee and the limitation fixed in the action of Assumpsit. But this analogy does not mean that the principles are identical. It is submitted that Professor Ames has not demonstrated this identity beyond peradventure. * Ames, L. R., ii. H. 18. * Salmond, Essays, 222. ii, * H. L. R., pp. 1 and 53. See also H. L. R., viii. 252–64. 62 CONTRACT IN COMMON LAW [PART I The principles may be extremely close to one another, and yet have no historical connexion. (2) It does not account for all the species of consideration, such as moral obligation, for example. A moral obligation is no longer a consideration, but it was once. Moreover, a precedent debt was recognized as a valid consideration in indebitatus assumpsit. It is difficult to see how a precedent debt can by any contortion be twisted into a detriment to the plaintiff. (3) This theory rests upon the assumption that the principle of consideration was a creation of the common law pure and simple. So keen is Professor Ames to emphasize this point that he is led to make certain unwarranted assertions with regard to equity. Not only does he contend that ‘in equity . a remediable breach of a parol promise was originally conceived of as a deceit’, but he goes on to say that ‘chancery gave relief upon parol agreements only upon the ground of compelling reparation for what was regarded as a tort to the plaintiff or upon the principle of preventing the unjust enrichment of the defendant’.” We shall take pains to examine both of these statements later on ; it is believed that neither of them is correct. If, on the other hand, the Chan cellor did exercise a general jurisdiction over parol contracts in if in the fifteenth century, fact he did evolve a principle upon promises it is which were held binding, surely fatuous to suggest that he borrowed this principle from the common law, which did not possess a general contractual action" till the century. if sixteenth Furthermore, parol contracts were so recognized in equity, that alone throws considerable doubt upon the correctness of this theory. It be noticed, finally, (4) should that all the early cases in Assumpsit a involve specific undertaking. There is no recog of or a nition agreement bargain as such. Indeed, it was found necessary in Slade's case to resolve that every contract executory an imported Assumpsit. That is to say, the fact of agreement of did not itself “raise’ any undertaking. In * L. R., ii. H. 15. * H. L. R., viii. 257. is, * That an action applicable to parol contracts generally. CH. III] THE DOCTRINE OF CONSIDERATION 63 consequence we are forced to the position that originally every enforceable contract took the highly technical form of an undertaking. But does this seem a natural way in which a contract should arise? Men make informal agreements or “accordes' without troubling to incorporate them into a par ticular form. I venture to suggest that there were many such agreements which fell without the scope of undertakings; that, in fact, the theory which relies upon the ‘undertaker’ fails to take account of many formless agreements which were the common experience of everyday life. For these reasons we may question the theory advanced by Professor Ames. We can, however, state our objections with more effect after examining contract in equity. III. Still another theory is advanced by Mr. Salmond." He refuses to admit that the doctrine of consideration was identical with the detriment to the plaintiff in Assumpsit. Rather does he think that it was not ‘a logical development from within the action at all, but was a ready-made principle imported ab extra'.” Now if we go back to the first cases in which Assumpsit lay for non-feasance, we find that the detriment to the plaintiff assumed one particular form.
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