1. Definition. Agreement is the formation of a distinct common intention to do or not to do a particular thing. This agreement may be either express or implied. It is express where the terms are fully understood and consented to by both parties; implied where from the acts or relationship of the parties the law presumes a contract has been made and supplies the lacking element in order to properly adjust and protect their rights and liabilities. The law, however, does not establish a contract where the partial agreement relates wholly to an executory agreement. A benefit or detriment must have been sustained.

The agreement may be resolved into two elements; viz., offer and acceptance. They frequently take the form of question and answer; as, “Will you give me $100 for this horse?" "I will.” This is an express agreement.

2. Offer. The offer is the first step toward making a contract, and is simply a proposition or a question; as, "I wish to buy," "I wish to sell," or "Will you buy?" Since it affects but one party, it may be withdrawn at any time before acceptance by the other party.

3. Acceptance. Acceptance is the step taken by the second. party to the contract relation whereby the offer of the first party is assented to. Unlike a proposition, it cannot be withdrawn. It completes the contract, and affects the legal relations of both parties. There must be a communication of the mutual intentions of the parties in order that an agreement may result. A secret, unexpressed intention to accept cannot in any way affect the relations of either party.

Illustration. "I will sell you this horse for $100," is a proposition. The following would be an acceptance: “I will pay you $100 for that horse." "All right, I will take the horse at that price," or "It is a bargain." The acceptance might also be made by a nod of the head or a sign. These would not be acceptances: "I will pay you $100 for the horse to-morrow"; "I will pay you $95"; or even "I will pay you $105 for the horse"; or "I will take the horse at the sum named, but you must take your pay in goods from my store." These replies constitute counterpropositions. After such a proposition has been made, the parties cannot then accept the first proposition. A counter-proposition is a refusal of a proposition and the substitution of a new one.

The acceptance to be binding must not change the offer in any particular. It must be absolute; no conditions may be added. A conditional acceptance is no acceptance. It is equivalent to saying, "I am not satisfied with your proposition, but I will take it and make certain changes in it and submit it to you as an offer of my own for your acceptance." The original offer hereby loses its vitality, being, so to speak, passed by in the course of the negotiation so as to be no longer pending between the parties, and it becomes an open offer again only when renewed by the party who first made it. If the proposition is made to a particular person, it cannot be accepted by another. A man has a right to select those with whom he will contract. The acceptance may be implied from the acts of the parties, no set form being required. The law imputes to a person an intention corresponding to the reasonable and honest meaning of his acts as well as his words. These two elements (offer and acceptance) may be given orally, in writing, or one may be spoken and the other put in writing, and the result will be a contractual relationship.

Exception. The Statute of Frauds specifies that certain contracts must be in writing and signed. (See Chapter VII.)

4. Time. Time is an element of agreement in the relationship of offer and acceptance. Where the parties are together, nothing being said as to time of acceptance, it is understood to be immediate, and if the acceptance does not promptly follow the proposition, no agreement, or contract, will result.

When the parties are separated by some distance and the mails. are resorted to, some time must be allowed; as in the following illustrations: A, of Chicago, writes B, of New Orleans, that he will sell him 500 barrels superfine flour at $7.50 per barrel, mailing the letter September 1st. Flour advances in price and A concludes to withdraw his offer, so he writes and mails B a withdrawal of the proposition on September 2d. B receives A's first letter on September 3d and immediately mails his acceptance. The contract is complete and binding because B had no way of knowing that a letter of withdrawal had been mailed, and therefore was guided by the letter already at hand.

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A letter withdrawing a proposition is not operative until de- TRUE livered. A letter of acceptance is binding as soon as it is mailed. [FO The same rule would hold true in regard to telegraphic communications. The acceptor must be guided by the proposition as to the means of communication to be adopted in each case. If the proposition is in form of a letter and says, "Answer by mail,” or is silent on the point, a letter in answer is sufficient. If a telegraphic offer is received, an answer of like kind should be given. If directions are given in the proposition, they must be complied with. Any other method is simply a counterproposition and may be rejected by the one making the proposition. An acceptance forwarded by some other means than that contained or intimated in the proposition, is not binding until a proper delivery has been made. Such an acceptance is at the risk of the sender. The weight of authority is that it is optional as to whether the proposer need recognize such an acceptance.

54. Options. In the course of forming a contract, the proposer may give the other party a certain time to consider the matter. This is giving an option or refusal. If the one to whom the option is given pays something of value to the proposer, it is binding, and the proposer has no right to withdraw his proposition, which may be accepted at any time before the expiration of the stated interval. If, however, no consideration is given, the proposition may be withdrawn at any time. The weight of opinion seems, however, to require a notice of withdrawal to be effective. This notice need not be formal or direct.

55. Apparent Consent. Apparent consent to a contract may arise from several causes, the main ones of which are, mistake, misrepresentation, fraud, undue influence, duress.

1. Mistake. It is a well-settled principle of law that a man. is bound by all his agreements that are entered into with full understanding, but if the agreement entered into is the result of a mutual mistake, it is voidable. Where each of the parties knows with whom he is dealing, where both mean the same thing and have formed correct conclusions as to the subject matter,

there can be no mistake. A mistake in reference to the nature of the transaction is rarely met. There may be a mistake as to the person, but most mistakes relate to the subject matter. Mistake of subject matter may arise as to its existence, its identity, its essential nature or qualities, its quantity, or its price. Mistake of person exists where A, of Chicago, supposes he is contracting with B in San Francisco, whereas in fact it is not B but B junior, who has succeeded to his father's business. Such mistakes may also arise where there is an undisclosed principal.

(a) Effect. Where there is any effect from this, the result is to render the contract voidable. If executory, the contract may be repudiated. If executed in whole or in part, what has been paid may be recovered. In equity, suit for specific performance may be resisted, or suit may be brought to declare the contract void. If the mistake is merely in drawing, the contract may be re-formed. The relief must be sought within a reasonable time after knowledge of the mistake.

2. Misrepresentation. Misrepresentation is very closely related to fraud. Generally the former is an innocent misstatement, or the non-disclosure of a fact which should be disclosed, while the latter consists in making a false statement knowingly, or making a statement in reckless disregard of its truth or falsity with the intention that the person to whom it is made shall act upon it. Mere expressions of opinion or commendatory statements are not misrepresentations.

(a) Effect. The contract is voidable. Mere misrepresentation has no effect except in contracts said to be of the "highest faith," in which, from their nature and peculiar circumstances, one party must rely on the other for his knowledge of the facts and the other is held to the utmost good faith. Such contracts include those between persons occupying confidential relations, as guardian and ward, trustee and beneficiary, principal and agent, attorney and client; contracts of life, fire, and marine insurance; and to a certain extent contracts for sale of land.

3. Fraud. Fraud may be defined as "every kind of artifice knowingly employed by one person for the purpose of deceiving another to his injury." In order that fraud may exist, there must be a false representation of a material fact, knowingly or recklessly made with the intention that the other party shall act upon it, who, in fact, does rely upon it to his injury. Fraud makes a contract voidable.

(a) Classes of Fraud. (1) To defraud each other. (2) To defraud third persons.

There is little difficulty in understanding the conditions in the first. In the second, however, we find some of the most difficult questions for settlement. Many examples of this kind of fraud are found in the case of failures. It will frequently be found that the one failing in business has transferred a considerable amount of property to some friend, and, as a result of this, creditors may not be able to obtain satisfaction for their claims. Such transfers are fraudulent and therefore voidable. Such transfers, so far as the creditors are concerned, may be set aside and sufficient property received to satisfy the creditors' demands. If, however, the failing party is able to show that at the time he sold or gave away the property he had a sufficient amount to pay all debts and claims then existing, the transfer cannot be set aside. If the transfer is to a creditor in satisfaction of a debt, it is valid, as a debtor may show preference in the payment of debts. Bankruptcy laws, however, generally require ratable. payment of claims. (See page 76.)

(b) Effect of Fraud. The defrauded party may keep the goods and claim damages, or he may rescind the contract and demand the return of anything delivered. He is not obliged to return the goods, but if he wishes not to be bound he must not receive any benefit under the contract or he will be held to have affirmed it. He must also rescind and notify within a reasonable time after knowledge of the fraud. Aside from the contract, the defrauded party may have an action for the deceit, sue to recover what he has parted with, or resist an action at law on