Definition and requisites of a simple contract. Of the assent LET us now consider, somewhat more at large, what are the requisites of a contract not under seal, or simple contract. A simple contract may be defined to be-an engagement entered into between two or more persons, whereby, in consideration of something done or to be done by the party or parties on one side, the party or parties on the other promise to do or omit to do some act (a). And from this definition it appears that, to constitute such an agreement, there must be 1st, the reciprocal or mutual assent of two or more persons ;-2ndly, a good and valid consideration; and, 3rdly, something to be done or omitted, which is the object of the contract: whilst in these requisites there are involved the two following conditions, viz., 1st, that the assenting parties. should be competent to contract; and, 2ndly, that the object of the contract should be in itself legal (b). SECT. 1.-The Assent of the Parties. In order that a simple contract may be binding, there must of the parties. first, be the mutual assent of two or more persons, so that, if there be an error in the person with whom a man supposes himself to be contracting, and the consideration (a) Com. Dig. Agreement, (A. 1); Code (b) "It is of the essence of obligations that there should be, 1st, a cause from which the obligation proceeds; 2ndly, persons between whom it is contracted; and, 3rdly, something which is the object of it." 1 Pothier on Obl. part 1, ch. 1. "Quatre conditions sont of the person forms an ingredient essentielles pour la validité d'une conven- in the agreement, this annuls the contract, though if the contract- CH. II. s. 1. ing party would equally have made the contract with any other person, the contract will be valid (c). other Requisites of Simple Contract (Assent). No contract discourse. Again there cannot be a binding simple contract, unless there be a definite promise by the party charged, accepted by the person by mere affirclaiming the benefit of such promise (d). Accordingly, no contract mation in is raised by a mere ex parte affirmation in discourse, or by a mere overture or offer to enter into an agreement, not definitively and expressly assented to by both parties (e). Thus-" If there be a communication between the father of A., and B., respecting a marriage between A. and the daughter of B., and B. then affirms and declares to the father of A., that he will give to him who marries his daughter with his consent 100l., and afterwards A. marries the daughter of B. with his consent: yet this declaration of B. does not raise a promise upon which assumpsit lies, because these words do not include a promise." This is laid down in Rolle's Abridgment (ƒ); and the Court are reported to have said :-" The action doth not lie, for asseruit et publicavit do not make words that include a promise. It is not averred nor declared to whom the words were spoken, and it is not reason that the defendant should be bound by such general words, spoken to excite suitors: "—from which it would seem that, in this case, the Court proceeded upon the principle, that there was not a final promise by the defendant to pay the money to the plaintiff, accepted by the latter, and considered by both parties at the time to be binding on the defendant. 66 And there are many modern decisions to the same effect. Thus, Mere propowhere the defendant wrote a paper, containing assurances to the (c) See Smith v. Wheatcroft (1878), 9 Ch. D. 223, 230; Boulton v. Jones (1857), 2 H. & N. 564; British Waggon Co. v. Lea (1880), 5 Q. B. D. 149. (d) See Raffles v. Wichelhaus (1801), 2 H. & C. 906; Stanley v. Dowdeswell (1874), L. R., 10 C. P. 102. (e) See per Tindal, C.J., Jackson v. Galloway (1838), 6 Scott, 786, 792. "A contract," says Pothier, "includes a concurrence of intention in two parties, one of whom promises something to the other, who, on his part, accepts such promise. A pollicitation is a promise not yet accepted by the person to whom it is made. Pollicitatio est solius offerentis promissum. A pollicitation, according to the rules of mere natural law, does not produce what can be properly called an obligation; and the person who has made the promise may retract it at any time before it is accepted; for there cannot be any obligation without a right being acquired by the person in whose favour it is con- (f) Trin. Term, 3 Jac. B. R., per sitions. CH. II. s. 1. of Simple Contract (Assent). Offer, with time to consider it. Cooke v. Oxley. Answer to proposal must be a simple acceptance of offer. of new term. plaintiff that a third person was worthy to be trusted to a certain amount, and adding that he, the defendant, had no objection to guarantee the plaintiff against any loss which might accrue from giving the third person credit upon an order he had sent to the plaintiff; it was held, that the paper did not amount to a guarantee, there having been no notice by the plaintiff that he accepted it as such; nor any consent by the defendant to convert it into a conclusive guarantee (g). It is also laid down that a party who gives time to another to accept or reject a proposal is not bound to wait till the time expires, but may withdraw the proposal at any time before acceptance, inasmuch as the giving of time is all on one side (h), although the party so giving time is bound until he has communicated his revocation of the proposal to the other side (i). Again on the principle that mutual assent is necessary in order to there being a binding contract, it is held that, where an agreement is sought to be established by means of letters the Court must take into consideration the whole of the correspondence which has passed between the parties; and that the letters will not constitute an agreement, unless they show a simple acceptance by the one party, of the proposal made by the other, without the introIntroduction duction of any new term (k). Thus, where the correspondence between two parties, with reference to the sale of a mare, showed that the defendant agreed to give twenty guineas for her if there were a warranty of her being sound and quiet in harness; but the plaintiff wrote in reply, warranting her to be sound and quiet in double harness only: it was held, that there was no complete contract in writing between the parties (). And so, where the plaintiff applied to the provisional committee of a railway company for sixty shares, undertaking by a letter in the form prescribed in the prospectus, to accept the same subject to the regulations of the company, and to pay, when required, the deposit thereon; and the committee, by letter, informed the plaintiff that they had allotted him sixty shares, upon condition that the deposit was to be paid on or before a certain day, in default of which the allotment will be forfeited:-it was held, that the allotment did not constitute a valid contract, not being a simple acceptance of the proposal (m). (g) M'Iver v. Richardson (1813), 1 M. & S. 557; see also Mozley v. Tinkler (1835), 1 Cr. M. & R. 692; Grant v. Hill (1815), 1 Stark. 10. (h) Cooke v. Oxley (1790), 3 T. R. 653; 1 R. R. 783, Ex. Ch., as explained by Lush, J., in Stevenson v. McLean (1880), 5 Q. B. D. 346. (i) Stevenson v. McLean (1880), 5 Q. B. D. 346, per Lush, J. (k) See Hussey v. Horne Payne (1879), 4 App. Cas. 311; Jones v. Daniel, [1894] 2 Ch. 332. (1) Jordan v. Norton (1838), 4 M. & W. 155. (m) Wontner v. Shairp (1847), 4 C. B. 404, 441. It is also essential to a contract resulting from the acceptance of an offer, that the acceptance should be communicated to the party offering; the mere mental assent of the acceptor, uncommunicated to the offerer, is not enough (n). CH. II. s. 1. of Contract Communica ance. agreement. If, by the terms of the proposal, it is stipulated that the tion of acceptacceptance is to be in a particular manner,-e.g., in writing, all Mode of acceptance in any other manner will not form a binding contract (o). acceptance. So, if the terms in which the proposal is accepted, show that the Acceptance parties intended that a formal instrument should be prepared and preparation of subject to the agreed upon between them, and that, until that be done, no con- a formal tract should arise: they will not be bound, until such formal instrument has been agreed upon (p). But where certain terms Hussey v. Horne Payne. have been mutually assented to, the mere fact that the parties have expressly stipulated that a formal instrument shall be prepared, embodying those terms, does not, by itself, show that they have not come to a final agreement (9), nor does the fact that the acceptance contains a statement that the acceptor has instructed his solicitor to prepare the necessary documents (r); and the better opinion seems to be that if a contract to buy land is made subject to the title being approved by the purchaser's solicitor, the intending purchaser will be bound unless his solicitor reasonably disapprove of the title (s). Where a draft has been prepared and Draft. agreed upon, as the basis of a deed or contract between the parties, and they, without waiting for the execution of the more formal instrument, proceed to act upon the draft, and treat it as binding. upon them, both parties will be bound by it (t). a contract of insurance. A "slip" initialled by underwriters at Lloyd's in England has Slip, whether been held to form a complete and binding contract of goods in New Zealand against fire, and not to be subject to an implied condition that a policy should be put forward for signature within a reasonable time (u). (a) Brogden v. Metropolitan R. Co. (1877), 2 App. Cas. at p. 692, per Lord Blackburn. (0) Kingston-upon-Hull (Governors, d) v. Petch (1854), 10 Exch. 610. (p) See Rossiter v. Miller (1878), 3 Anp. Ca. 1124, 1139, 1151; Chinnock v. Marchioness of Ely (1865), 4 D. J. & S. 6, 645, 646, App.; Winn v. Bull 177), 7 Ch. D. 29, per Jessel, M. R.; Harrey v. Barnard's Inn (1881), 50 L. J., 1750; May v. Thomson (1882), 20 D. 705, C. A.; Hawkesworth v. Cheffey (1886), 55 L. J., Ch. 335; Gray 1. Smith (1889), 43 Ch. D. 208. See Rossiter v. Miller, supra; Bonwell v. Jenkins (1878), 8 Ch. D. 70, CA.; Lewis v. Brass (1877), 3 Q. B. D. 607, C. A. (r) Bolton Partners v. Lambert (1888), 41 Ch. D. 295, C. A. (s) See per Lord Cairns, C., in Hussey v. Horne Payne (1879), 4 App. Cas. 311; Clack v. Wood (1882), 9 Q. B. D. 276, C. A.; Chipperfield v. Carter, (1895) 72 L. T. 487, where an offer to take a lease "to be approved in the customary way by my solicitor" was said by Wright, J., to mean that the solicitor was to see that nothing irregular or unusual was inserted in the formal lease which was to carry out the agreement. (t) Per Lord Blackburn. Brogden v. Metropolitan Rail. Co. (1877), 2 App. Cas. 666, 693. (u) Thompson v. Adams (1889), 23 Q. B. D. 361, per Mathew, J. See further, ch. xx. s. 3, "Contracts of Insurance," CH. II. s. 1. Negotiations and correspondence must be looked at as a whole to see whether the parties to them have concluded a binding contract or not (x). Even letters subsequent to letters which, if they had not been followed by such subsequent letters, would of themselves A correspon constitute a contract, may be referred to for this purpose (y); but of course, if the original letters are so unambiguous as to form a complete contract not capable of or requiring further explanation, further negotiations between the parties cannot, without the consent of both, get rid of such contract (z). dence must be looked at as whole, to see if there is a contract. Waiver of stipulation for formal contract. a Right of either party to retract. Death. Ratification, after with drawal, of Where a vendor by a memorandum expressed his willingness to sell a lease "subject to the preparation by his solicitor and completion of a formal contract," which memorandum the purchaser signed as "accepted," but afterwards repudiated the contract, it was held that the vendor could not waive the stipulation for a formal contract as being intended for his benefit alone, so as to constitute the rest of the memorandum a final contract enforceable against the purchaser by decree for specific performance (a). Until both parties are agreed, each has a right to withdraw from the negotiation; so that a party is not only not bound by a mere offer not accepted, but, before it is accepted, he may retract his offer, by giving notice to that effect to the person to whom the offer was made (b). Thus, in Routledge v. Grant (c), where the defendant offered, in writing, to purchase of the plaintiff the lease of a house, provided possession were given on the 25th July, and a definitive answer within six weeks; and the plaintiff, in answer, offered to give possession on the 1st August; whereupon the defendant, before the six weeks had expired, retracted his offer :it was held there was no contract, the defendant's offer having been withdrawn before it was accepted by the plaintiff (d). A proposal is extinguished by the death of the proposer (dd). It is a rule of law that ratification of an agent's unauthorised acts relates back to the act ratified. Therefore, where an agent agent's accept without authority accepted an offer, which the party offering afterwards withdrew before ratification by the principal, it was held that the ratification by the principal related back to the acceptance so as to bind the party offering notwithstanding his withdrawal (e). ance. where the effect of Mackenzie v. Coulson (y) Bristol, &c., Bread Co. v. Maggs (z) Bellamy v. Debenham (1890), 45 Ch. D. 481, per North, J.; and see post, ch. xiii. s. 2. (a) Lloyd v. Nowell, [1895] 2 Ch. 744, per Kekewich, J., distinguishing the very special Hawksley v. Outram, [1892] |