It is in the decisions of courts of equity that expressions are most frequently found favoring the subjective theory. But though in a few cases promises are unquestionably enforced by equity which are not regarded as contracts in courts of law,9 it cannot be admitted that equity has a different fundamental theory of the elements of contract from that obtaining in courts of law. Equity professes to accept the legal conception of a contract; and indeed with the administration of legal and equitable remedies confided to the same hands, as is now common, it would be as difficult as it is objectionable to have two definitions; and if attention is fixed not so much on what courts of equity have said as on what they have done, it is clear that they, like courts of law, have adopted an objective standpoint. This is proved by the following circumstances:
5 Supra, Sec.Sec. 20, 94, 96, 606.
6 Which, however, in recent times often tend strongly to the objective side. "Assent in the sense of the law is a matter of overt acts, not of inward unanimity in motives, design, or the interpretation of words." Holmes, J., in O'Donnell v. Clinton, 146 Mass. 461, 463, 14 N. E. 747.
7 See supra, Sec. 94.
8 See supra, Sec. 631.
(1) If the subjective theory were adopted, it would follow that in any case involving misunderstanding, that is a variance between the mental images of the proposed transaction formed by the two parties:
(a) There would be no occasion for the jurisdiction of equity The agreement would be as invalid at law as in equity. The parol evidence rule does not forbid any proof which tends to show that no contract ever arose between the parties. It is true that the jurisdiction of equity to guard against a possible misuse of an apparent contract or conveyance might sustain occasional applications to a court of chancery on the principles of quia timet, but the bulk of decisions cannot be explained in this way.
(b) Any mistake, whether small or great, would have the effect of preventing a contract. An offer and acceptance must agree not simply in the most important matters but in every particular. If the court is seeking mental assent it must find that assent in all details.
(c) The fact that a mistake was favorable to the party making it would be immaterial.
(e) Restoration by the plaintiff of the status quo could not be a condition of relief. The existence or non-existence of a contract cannot depend upon that. If no contract exists the appropriate remedy for such restoration would be a cross action by the defendant based on quasi-contractual principles.
9 For example, promisee to give real estate where a promisee has entered and made improvements. (See supra, Sec. 139.) Promises within the Statute of Frauds enforced by equity because of part performance (see supra, Sec.494) do not fall in the same category since even at law a contract within the Statute of Frauds is recognised as a contract though unenforceable.
2. There would be no propriety in the requirement by equity of unusually clear proof to justify relief by way of reformation. If the intent of the parties not expressed in the writing forms the contract, a preponderance of evidence should be sufficient for proof of the contract, as for proof of any other right.
3. Finally, the parol evidence rule is applicable in equity as well as at law. Where a case of fraud is alleged or such mistake as equity deems a basis for relief or a defence to a suit for specific performance is made out, the parol evidence rule is disregarded because equity will not allow it to work injustice.10 But aside from such cases, the memorials of the parties which they have agreed upon as the external expression of their will, establish the terms of the contract as conclusively in equity as at law.11
If the fundamental nature of equity procedure is clearly kept in mind there will be little difficulty in harmonizing the apparent conflict of the statements by courts of law and courts of equity. When a court of equity says that one who has not the legal title to land is nevertheless the owner in equity, it is not denying rules established by courts of law or perhaps by statute for the transfer of real estate; it is saying that one who is confessedly not the formal owner should be given an owner's rights as against a certain person or persons.12 So in dealing with contracts and conveyances made under a mistake, equity frequently denies one who has a legal contract or conveyance the right to enforce it (rescission) and subjects one who has made no legal contract or conveyance, to the same obligations as if he had (reformation); or unites the two forms of relief.
The practical importance of the distinction between this explanation of the action of a court of equity and that which is here criticised, is two-fold.
10 Tabor v. Cilley, 63 Vt. 487.
11 See supra, Sec. 631.
12 See supra, Sec. 446a.
could be found, e. g., where the conveyance made under a mistake is not recorded or seen by the purchaser.
2. Not only in case of conveyances, but even if the transaction in question is an executory contract, under which an assignee could get no greater legal rights than his assignor, a court of equity is enabled to consider all the circumstances making it equitable or not to afford relief. If the question turned simply on what was the contract between the parties, only facts bearing on that issue would be pertinent. Negligence, lack of consideration for a sealed contract, lack of injury from the mistake, effect on the rights of third parties, would be of no consequence.
The theoretical importance of the distinction in question is equally great. It furnishes a key to decisions at law and in equity which at first sight may be thought antagonistic, and combines them as parts of a harmonious system.