This section is from the book "American Commercial Law Series ", by Alfred W. Bays. Also available from Amazon: American commercial law series.
We have considered the ingredients that must enter in the formation of contracts, without which a contract cannot exist; confining ourselves to a consideration of those elements essential to all contracts, and disregarding elements which may be additionally required in the formation of particular types of contracts, and until this time also ignoring the fact that in the contract under seal, or only true type of formal contract, consideration, though usually present, is not an essential element, the seal replacing it as completing the quota of essential elements. Such contract under seal will be considered at this point as one of the subheadings of this chapter.
Let us now consider the form which the contract may take in its formation; and also what sort of evidence the law may require for its proof.
A. The Formal Contract or Contract Under Seal.
A contract is under seal when the impression or mark is affixed which constitutes in law the seal. This by the common law was an impression on wax affixed to the instrument. It may now consist in a scrawl. A contract under seal is called a formal contract or specialty.
In order for us to have a general understanding of contract law it becomes necessary for us to consider the contract under seal, to inquire what contracts must be under seal, and to notice the effect of putting any contract under seal. Perhaps the reader in signing some document has noticed the word "Seal" at the end of the line on which he has signed, and has wondered just what was the exact purpose and effect of that word. Let us note first, that the great majority of contracts into which men enter day by day are not under seal, except when they concern real estate or consist in penal bonds, although any other contract may be under seal. We may say further that it seems to be the tendency of legislatures and courts to minimize the importance of the seal, although it is still in the majority of the states of much importance. But even where it still maintains its ancient meaning or any part thereof its importance to the layman may be greatly lessened by these three facts:
First, in executing instruments which must be under seal (as deeds, mortgages, etc.), either printed forms are used upon which the seal is printed, or the instrument is executed under the advice of an attorney at law who sees to it that the seal is attached.
Second, the vast majority of contracts entered into for commercial purposes are not under seal, and it is, therefore, the law of unsealed contracts which is of chief concern to the layman.
Third, though we shall find that a promise is binding when under seal though it lacks consideration and not binding when not under seal if so lacking, yet it is a rare instance when a contract under seal does not have some consideration, and its importance for that purpose becomes greatly minimized.
Yet, when all is said, it is of importance for the layman to know something of this form which has been of vast importance in the history of contract law, and which still in many states today determines the fate of important litigation.
A seal by the old common law was an impressed wax or wafer affixed to the instrument to indicate an assent thereto and a deliberate intention to be bound. The instrument with which the impression was made was also called a seal. To say that a contract was under seal meant that an impressionable substance had been attached to it and impressed with the obligor's seal or mark. This was taken to indicate that the party sealing the instrument thereby asserted in a solemn and deliberate way that he intended to be bound according to the covenants therein contained. Usually a recital was made in the contract that it was under seal, thus, "Given under my hand and seal," or "Witness my hand and seal," but this was not essential.
By modern legislation it is no longer necessary to use an impressed wax or wafer to put an instrument under seal. Ordinarily one simply writes after his signature the word "(Seal)" or "L. S." (Locus Sigilli, place of the seal).
By the common law a seal makes a promise binding though without consideration.
By the common law, as we have seen, consideration was necessary, as it is now, to make effectual any promise which was not under seal, but if it was under seal it was not necessary. It was considered that when a party deliberately entered into a promise by affixing his seal thereto, there was no reason why he should not be bound thereupon, even though such promise did not contemplate that anything should be given or promised in return.123
123. Walker v. Walker, 13 Ired. (N. C.) 335.
Accordingly we may say that the common law divided contracts into two great classes, those which, whether oral, implied or written, were not under seal, and those which were under seal. The first were known as simple contracts: the second, as formal contracts, contracts under seal or specialties. It was the presumption of the law, which once may have accorded with the fact, that promises which were under seal were made with great solemnity and deliberation, whereas promises not under seal (and therefore, in the old days, probably not even signed or written) were apt to be made lightly with insufficient deliberation, and therefore it was said that in such a case the promise should not be considered as contractual unless it contemplated that something should be promised or given in reliance on it and such thing was in fact promised or given as contemplated.
It is no doubt true that at one time putting a seal to a contract indicated greater deliberation, but it does not do so now. When the seal was first used, the ability by the average man to write was an uncommon, and indeed, a despised thing. To make his signature, as illiterate men do in these days by a cross, each man had his seal with its highly distinctive impression. He needed only to use it in those non-commercial days, upon rare and important occasions, and consequently might well be presumed to do so only upon full deliberation, and with a solemnity of circumstance which made his promise binding.
This is an old habit fallen into disuse. That the seal still has importance is explained only by a reference to its history.