The Obligation of Contracts

The obligation of contract is based on the reasonable expectation from a promise.

A promise:

• is a declaration that requires your performance
• is different from a mere declaration of intention
• produces an obligation
  • Its breach is an injury

If I say that I want to do something for you, but I do not do it, then I am not guilty of a breach of promise.

A breach of contract is naturally the slightest of all injuries because we naturally depend more on what we have, than what others have. A man robbed of £5 thinks himself much more injured than if he had lost £5 by a contract.

Accordingly in rude ages, all crimes are slightly punished, except those that disturb the public peace. Society must be advanced before a contract can be force an obligation or its breach can be redressed. This was caused by=

• the little importance of contracts in those times, and
• the uncertainty of language.

The first contracts that forced an obligation were those=

• where the damage done was very great.
• where there the person surely intended to the contract to be fulfilled.

Accordingly among the ancients, promises were entered into with great solemnity.

• No stipulation could be made unless the contractors were personally present.
• No promissory note in writing was binding.
• No promises by the Roman law sustained action without a stipulation.

By the English law, a cause for the promise was first needed to make it obligatory. It was thought contrary to good manners to insist on a promise. If a man promised a certain sum to his daughter, there is a cause. Therefore, he was obliged to perform it.

But if he promised it with any other man’s daughter, it was sine causa. Unless she was a relation, he could not force an obligation. If I made you a promise, it was not binding. But if I again promised not to forget my former promise=

• the latter promise was binding, and
• the former was the cause that made it so1.

By the civil law, the first binding promises were those entered into in presence of a court. This made the intention clear. Accordingly, recognizance of every promise was taken before some court. A recognizance is when a debtor comes before a court with the creditor, and acknowledges that he owes him a certain sum.

• A copy of this acknowledgment was given to the creditor.
• Another copy is given to the clerk.

Whenever the creditor showed his copy, if it was found to correspond to the other copy, he could pursue for his money. Afterwards, a recognizance before the magistrate of a staple town served the purpose.

The next contracts that sustained action were the contractus reales. These were entered into by the delivery of a thing to be returned itself, in species, or in value. These are of four kinds=

1. Mutuum= when I lend anything to be returned in value, as money.

This soon became binding. By default, the mutuum does not infer interest. In a bond, it will carry none unless the interest is specified.

2. Commodatum= When the thing is to be returned, like a borrowed horse.

3. Depositum= When a thing is committed to another’s care but not to his use.

4. Pignus= a security for debt.

All these were binding before the four consensual contracts=

1. Buying and selling,

If the contract is not fulfilled, you lose your earnest money.

2. Letting and hiring

This once comprehended leases, day’s wages, building, and almost everything with regard to society. If a small price be paid for borrowing something, it becomes letting and hiring.

3. Partnership

4. Commission

If this was performed gratuitously, it could not at first sustain any action. But if a reward was given, it was nearly the same with the commodatum.

The Roman law also had a pactum nudum. This is a bare promise without any consideration. It created an exception or defence against the pursuer’s action.

Contracts deprive men of that liberty. A very small defence would set them free. Originally, only ecclesiastic contracts were sued before any court. But they came gradually to civil courts. The canon law judged from principles of honour and virtue. It obliged men to perform even those promises that were made gratuitously.

This was imitated by the civil law. By English law, if a promise is clearly proven, he who promises must perform it. In general, the law gave only action for damages until the court of chancery was introduced. A court naturally redresses injuries.

Accordingly, if a person refused to perform his contract, he was only obliged to pay the loss which the other had sustained. But the court of chancery forced the person to a perform the obligation.

The present and ancient state of contracts are most different. Execrations and the most solemn ceremonies were sufficient to secure the performance of a contract.

Ceremonies to impress the mind were invented=

• drinking blood mixed with water
• bleeding one another
• promising before the altar
• breaking a straw, etc

At present, almost anything will make a contract obligatory. There are some questions concerning contracts much agitated by lawyers, especially one when the coin becomes debased.

If I borrow £100 when the coin has 4 ounces of metal per pound, and it is debased to 2 ounces, should I pay £100 of the new coin or £200?

A government alters the coin out of some urgent necessity. In 1705, the crown of France had a demand for 10 million, but it could raise only 5 million. They debased the coin and paid the ten with five. The injury is not great because the government made the coin as legal tender.