HARVARD LAW REVIEW VOL. XXVIII DECEMBER, 1914 No. 2 THE MUTUALITY AND CONSIDERATION I HE underlying principle of consideration would seem to be negative, — a denial that ordinarily there is sufficient reason why gratuitous promises should be enforced. From a nude pact no obligation arises. The courts have not felt impelled to extend a remedy to one who seeks to get something for nothing. English law accordingly will not usually enforce a promise unless it is given for value, or the promise of value, i. e., something which the law must assume to be of some value to the promisor and which the parties make the subject of bargain or exchange.1 Some classes of gratuitous promises, however, may properly be deemed binding as having other good grounds of enforcement than consideration in the sense of value received. Such are formal promises under seal. So promises of gifts which induce action in reliance thereon, although born naked into the world, may become swaddled after birth in what may be termed a quasi-estoppel.2 1 2 Pollock and Maitland, History of English Law, pp. 211, 212. In the early Roman law a gratuitous promise was only enforceable if made under all the solemnities of a formal contract. Girard, Droit Romain, p. 608. In modern German law a similar requirement exists, and an agreement by which a future gift is promised is invalid unless made by a public act. Schuster, German Civil Law, §§ 97, 200. Thus the underlying principles of other legal systems are more similar to our own than is usually admitted. 2 Recognized by many courts, for example, where steps are taken and expenditures are incurred on the faith of a charitable subscription. 11 Mich. L. Rev. 425; 7 Com So promises based on moral obligations of a not too diaphanous sort are coming more and more to be regarded as having a decent vestment. Except in these classes of cases, however, the common law modestly declines to enforce a promise unless made by way of bargain in return for value present or future. The traditional theory (or superstition), with which I venture to differ, insists on a finding of present value actually received in bilateral as well as unilateral contracts. May we not more satisfactorily explain the consideration element of bilateral contracts as residing in mutuality or reciprocity of engagement, and the nature of the transaction as non-gratuitous? In other words, should we not frankly recognize that promises may be bought upon credit as well as for cash or value received? In a recent article, supplementary to his noteworthy article of twenty years before, Professor Williston has surveyed anew the theory of consideration in bilateral contracts and has advanced a renovated definition of such consideration. Coming from so authoritative a source his carefully elaborated formula deserves, and will no doubt receive, wide attention. The result of Professor Williston's argument, supported by a learned array of authorities, is "that no briefer definition of sufficient consideration in a bilateral contract can be given than this: Mutual promises each of which assures some act or forbearance that will be, or apparently may be, detrimental to the promisor or beneficial to the promisee, and neither of which is rendered void by any rule of law other than that relating to consideration, are sufficient consideration for one another.” As a great admirer of Professor Williston, both personally and as a teacher and writer, I regret to find myself in disagreement with him in any particular. I am indeed in substantial agreement with him as to the authorities and the practical results. I feel mercial Laws of the World, p. 81; Brokaw v. McElroy, 143 N. W. 1087 (Iowa, 1913); Y. M. C. A. v. Estill, 140 Ga. 291, 78 S. E. 1075 (1913); see note, 48 L. R. A. N. s. 783. Recognized by some courts when based on moral obligation arising from unjust enrichment by the receipt of a material benefit, or arising from the infliction of a material loss, being an extension of the principles of quasi-contract, where a tangible moral duty is recognized by express promise. 7 Commercial Laws of the World, p. 85; note to Muir v. Kane, 26 L. R. A. N. S. 519, 532. 27 HARV. L. REV. 503; cf. 8 HARV. L. REV. 27. called upon, however, to dissent from his explanation and theory of those results, especially as he has inadvertently, in a passing reference to an article by me," stated in a somewhat misleading way my theory of the element of consideration in bilateral contracts, and by a knock-down argument demolished a man of straw. As I view it, the doctrine of consideration is an attempt to generalize and reduce to a rule or formula that mutuality or reciprocity which must exist in an agreement to make it non-gratuitous and so worthy of enforcement. It is a test to distinguish gratuitous promises from those in which there is found mutuality of concession or benefit flowing to each party. Any degree of reciprocity will suffice to keep a pact from being nude or gratuitous. Wherein, then, is this reciprocity to be found in bilateral contracts? Professor Williston, in effect, insists upon mutuality of obligation as part of his test, although he objects vigorously to this terminology. The proposition is indeed usually stated as being absolutely axiomatic, that unless both parties are bound, neither will be bound; yet I make bold to deny that mutuality of obligation is an essential element of a contract or of consideration, and find the element of reciprocity in the mutuality of engagement or undertaking by each party, regardless of the legal effect of the promise. This is more in line with Professor Williston's former mode of statement that the test is whether each side has promised something the performance of which will be or may be a detriment. It seems also more in accordance with the definitions quoted and relied on by him in his present article." To Professor Williston belongs the credit of having pointed out the question-begging fallacy in Langdell's theory. Langdell started with the premise that we must find in bilateral contracts a present detriment incurred on each side at the instant the con 5 27 HARV. L. REV. 504, note referring to 11 Mich. L. Rev. 423. 27 HARV. L. REV. 525. 78 HARV, L. REV. 27, 35. Leake on Contracts, 1 ed., p. 314; 2 ed., pp. 612, 613: "Whatever matter, if executed, is sufficient to form a good executed consideration; if promised, is sufficient to form a good executory consideration." So in the 6 ed., p. 435: "The consideration is the matter accepted or agreed upon as the equivalent for which the promise is made." So, according to Lord Blackburn, executory consideration exists "if what the plaintiff has agreed to do is either for the benefit of the defendant or to the trouble or prejudice of the plaintiff." Bolton v. Madden, L. R. 9 Q. B. 55, 56 (1873). Currie v. Misa, L. R. 10 Exch. 153 (1875), cited 27 HARV. L. REV. 520, n. 41. tract is made, applying the same test of consideration to bilateral contracts as to the older unilateral contracts. He argues that the consideration of a promise must always be strictly contemporaneous with the promise itself. In bilateral contracts the only thing contemporaneous with either promise is the counter promise. The promise is all that the promisor gets in exchange and all that the promisee parts with. Unless a promise is binding and imposes an obligation, it cannot be considered a detriment; and the reason that a promise is a sufficient consideration is that it is binding and so creates a detrimental obligation.8 Langdell thus argues that each promise in a bilateral contract imposes a detriment because it is an obligation, and it becomes an obligation because it imposes a detriment. This seems to be counting one's chickens before they are hatched, and to be relying on the results of a rule to furnish its cause. Professor Williston admits that there is no logical justification for holding mutual promises good consideration for each other, if the value of such consideration must always be found in a present detriment, imposed at the instant the promise is made. He avoids the question-begging assumption of Langdell by admitting that the requirements of consideration in bilateral contracts do not include a present detriment incurred when the contract is made, such as must be found in a unilateral contract. The needless assumption of such a requirement is the source of the logical difficulties in the reasoning of Langdell, Pollock, and Ashley, and leads Sir Frederick Pollock to characterize the doctrine as "one of the secret paradoxes of the Common Law." 9 According to Professor Williston (who in this agrees with Ames) it is the promises in fact which are exchanged, not the obligations resulting therefrom. The promise in fact is of sufficient potential value if it gives assurance of something of possible value, and is a promise that may become binding, i. e., is not rendered void by 8 Langdell, Summary of Contracts, §§ 81, 84. 'See Williston, 27 HARV. L. REV. 508, 518; see also article by the writer, 11 Mich. L. Rev. 430; 30 L. Quart. Rev. 129; Pollock, Contracts, 8 ed., p. 191: "In fact there is no conclusive reason other than the convenience of so holding, for the rule that promise and counter promise will make one another binding; for neither of them before it is known to be binding in law, is in itself any benefit to the promisee or burden to the promisor." incapacity or any rule of law other than that relating to consideration. To put it in somewhat different terms: where the law operating on the promises can produce mutuality of obligation, it will so operate, otherwise it will not operate upon either; and therefore promises on which it can operate are of value. Professor Williston avoids the absurdity, into which the premises of Langdell and Pollock lead them (of holding that a promise to perform what one is already under contract with another to do, may be a more valuable consideration than actual performance itself), by adding the requirement that the thing promised as well as the promise be something of value. While he thus gives up present detriment as the test of consideration in bilateral contracts, and judges of its sufficiency by the character of the things promised, he nevertheless still adheres to the view that consideration necessarily involves some kind of present value received, and declines to think of consideration as being executory, i. e., future value to be received. The promise in fact furnishes present potential value in exchange, because it will have actual value when it becomes binding. But what I conceive to be the mistaken starting point in this theory, as in that of present detriment, is the needless assumption that (in the words of Professor Williston) a promise has no consideration "wherever the thing in consideration for which the promise is offered was not actually given." The quid pro quo of an action of debt must be something actually given or done. When the action of assumpsit was first introduced in the sixteenth century, the only consideration recognized was an executed consideration, value actually given or detriment incurred.1o To extend the action to bilateral contracts without appearance of change, it was said that "mutual promises are consideration for each other," and this became the language of pleading and of the courts. But the courts have never stopped to analyze what they meant by "promise." They simply meant that executory consideration was sufficient. It is therefore not necessary to take this loose and uncritical language of the judges and pleaders literally. Professor Williston apparently attributes to me the position that consideration is to be found in the exchange of actual performances, and that it is the actual performances which are considera 10 W. S. Holdsworth, 11 Mich. L. Rev. 347. |