taxation have not any implied power to issue negotiable securities which will be indisputable in the hands of a bona fide holder for value (a), and also (but not without dissent) that municipal corporations have no such power; "they are not trading corporations and ought not to become such" (b). It seems however that in American courts a power to borrow money is held to confer without more the power of issuing negotiable securities (a). to cor The common law doctrine of estoppel (c), and the kindred Estoppel and part equitable doctrine of part performance (d), apply to corporations performas well as to natural persons. Even when the corporate seal ance apply has been improperly affixed to a document by a person who has porations. the custody of the seal for other purposes, the corporation may be bound by conduct on the part of its governing body which amounts to an estoppel or ratification, but it will not be bound by anything less (e). The principles applied in such cases are in truth independent of contract, and therefore no difficulty arises from the want of a contract under the corporate seal, or non-compliance with statutory forms. But it is conceived that no sort of estoppel, part performance, or ratification, can bind a corporation to a transaction which the legislature has in substance forbidden it to undertake. (a) Police Jury v. Britton, 15 Wallace 566, 572. (b) The Mayor v. Ray, 19 Wallace 469. (c) Webb v. Herne Bay Commissioners, L. R. 5 Q. B. 642. (d) Wilson v. West Hartlepool Ry. Co. 2 D. J. S. 475, 493, per Turner, L. J.; Crook v. Corporation of Seaford, 6 Ch. 551. (e) Bank of Ireland v. Evans' Charities, 5 H, L. C. 389. 116 ancient and tions of CHAPTER III. FORM OF CONTRACT. Contrast of ACCORDING to the modern conception of contract, all agreemodern ments which satisfy certain conditions of a general kind are concep- valid contracts and may be sued upon, in the absence of any contracts special legislation forbidding particular contracts to be made or as giving denying validity to them unless made with particular forms. rights of This theory finds a concise and complete expression in s. 10 of action. the Indian Contract Act: "All agreements are contracts [i.e., enforceable by law, s. 2, sub.-s. h.] if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void" (then follows a clause saving all formalities required in particular cases by the law of British India). So thoroughly has this conception established itself in recent times that, having made the presence of a consideration one of the general conditions of a valid contract, we are now accustomed to bring contracts under seal within the terms of the condition by saying that where a contract is under seal the consideration is presumed. Historically speaking, this is a transparent fiction. The doctrine of Consideration in its present general form is of comparatively modern origin even if we look to the history of English law alone. If we roughly put it halfway between ourselves and Bracton we shall probably be allowing it as much antiquity as it can fairly claim. The ancient reason why a deed could be sued upon lay not in a consideration in our present sense of the word being presumed from the solemnity of the transaction, but in the solemnity itself. The forms of scaling and delivery come down to us from a time 1 law re gards only contracts. when the general theory of the law started from a different or even opposite point to our own. The fundamental assumption Ancient of ancient law (when it has got so far as to recognize contract at all) is that the validity of a contract depends not upon the sub- formal stance of the transaction but upon its form. The rule is that formal contracts only can be sued upon the want of any part of the formalities is fatal, the fulfilment of them is conclusive (a). Not that we find this as an existing state of things at any traceable period of Roman or English law: considerable classes of informal contracts are excepted on various grounds which are practically reducible to "convenience amounting almost to necessity": a phrase which we here introduce by anticipation from the modern learning as to the informal contracts of corporations. When we come to that subject in a later part of this chapter, the reader will find that the law relating to the form of corporate contracts is still going through a process of struggling development not altogether unlike that which took place in earlier times with regard to the contracts of natural persons. Both in the Roman law as presented to us in the Digest and Informal Institutes, and in the English law of the thirteenth, and even actionable down to the latter part of the fifteenth century, the primitive only as exdoctrine that formal contracts alone give rise to actions is at the ceptions in base of the whole learning of contracts. It is overlaid no doubt and old with a series of exceptions-which in the English system, so far English as one can now judge, are decidedly narrower in statement and less important in practice than in the Roman-but the exceptions are not as yet connected by any recognized general principle. In England we find this theory expressed by Bracton in almost purely Roman language (b) which is substantially repeated in Fleta. How far the theory was directly borrowed, or how far it already existed as a genuine parallel development of English legal ideas with which the authorities of the civil law were found in great measure to coincide, may perhaps be doubtful (c). At any rate the correspondence is so close that some statement of (a) Maine, Ancient Law 313 sqq. (4th ed.) (b) In Britton the substantial correspondence remains, but the details are much more modified to suit the real facts of English practice, e.g. the verbal Stipulation all but (c) See Güterbock, Henr. de contracts Roman law. The Reman doctrine. Nadun patimand Causa. the Roman doctrine in its general effect is almost necessary to make its English counterpart intelligible (a). Formal contracts (legitimae conventiones) gave a right of action irrespective of their subject-matter. In Justinian's time the only kind of formal contract in use was the Stipulation (b), or verbal contract by question and answer, the question being put by the creditor and answered by the debtor (as Dari spondes spondeo: Promittis promitto: Facies? faciam). Originally the question and answer had been accompanied by the symbolic transaction of Nexum, and there is reason to think that the Stipulation was at first confined to loans of money (c). But the nexum was abolished, and the Stipulation (possibly after going through a stage in which there was a fictitious loan) remained as a formal contract capable of being applied to any kind of subject-matter at the pleasure of the parties (d). Its application was in course of time extended by the following steps. 1. The question and answer were not required to be in Latin (e). 2. An exact verbal correspondence between them was not necessary (f). 3. (which for our present purpose is the most important) an instrument in writing purporting to be the record of a Stipulation was treated as strong evidence of the Stipulation having actually taken place (g). (The notion sometimes met with that if a contract by verbal question and answer was good, a contract in writing must be good a fortiori, is of course a mere modern invention). Informal agreements (pacta) did not give any right of action. without the presence of something more than the mere fact of () What follows is mostly in his chapter on the Early History (b) The literarum obligatio (Gai. (d) In a modern English book which has gone through several editions we find the astonishing statement that the Stipulation "was entered into before a magistrate or public officer through the medium of interrogateries and answers (sic) calculated to explain the nature and extent of the undertaking." The identification of a deed with literarum obligatio (Co. Lit. 1716) is nothing to this. (e) Gai. 3. 93, I. 3. 15. de v.o. § 1. (f) C. 8. 38. de cont. et comm. stipul. 10. (g) C. 8. 38. de cont. et comm. stipul. 14, I. 3. 19. de inut, stipul. § 12. Practi con the agreement. This something more was called causa. The further application of this metaphor by speaking of the causa when it exists as the clothing or vesture of the agreement is without classical authority but very common it is adopted to the full extent by our own early writers (). The metaphor is in itself natural enough, and not confined to legal usage: in the late Sir H. Holland's posthumous essays we read of " naked inference now clothed with a positive cause" by the discoveries of spectrum analysis. "a The term nulum pactum is sometimes used, however, with a special and rather different meaning, to express the rule of the civil law that a contract without delivery will not pass property (c). formal The privileged informal contracts were the following: (a) What inReal contracts, where the causa consisted in the delivery of contracts money or goods: namely mutui datio, commodatum, depositum, enforcepignus: corresponding to our bailments. This class was expanded able. within historical times to cover the so-called innominate contracts denoted by the formula Do ut des, &c. (1), so that there was an enforceable obligation re contracta wherever, as we should say, there was a consideration executed: yet the procedure (a) They gave rise however to imperfect or "natural" obligations which had other legal effects. (b) "Obligatio quatuor species habet quibus contrahitur et plura vestimenta," Bracton, 99a. "Obligacioun deit estre vestue de v. maneres de garnisementz," Britton 1. 156. Austin (2. 1016, 3rd ed.) speaks per incuriam of the right of action itself, instead of that which gives the right, as being the "clothing." (c) Austin, 2. 1002, Traditioni bus et usucapionibus dominia rerum, non nudis pactis, transferuntur. Cod. 2. 3. de pactis, 20. But the context is not preserved, and the particular pactum in question may perhaps have been nudum in the general sense too. (d) Aut enim do tibi ut des, aut do ut facias, aut facio ut des, aut facio ut facias; in quibus quaeritur quae obligatio nascatur. D. 19. 5. de praescr. verbis, 5 pr. and see Vangerow, Pand. § 599 (3. 234, 7th ed.) |