This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Since man in the early period of his legal development is able to comprehend the concrete better than the abstract, and since his religion and his law are undifferentiated, the early contracts are likely to be those which on the one hand arise when one party has performed, leaving an outstanding obligation on the part of the other party, or on the other hand those which take the form of a promissory oath enforced by a religious sanction. It is quite probable that we have not a sufficient range of information to enable us to make generalizations about primitive law from our present knowledge. Much of our information is drawn from our knowledge of early Roman law and early Germanic law; and occasionally with reference to early Semitic law or the law of Babylon. From our present means of information it seems likely that contract has its origin in two different sources. One of these is the formal promise which is usually at the outset religious in character. It is a promissory oath which is enforced by religious sanctions. After the secular element in society begins to supersede the religious element, and the power of the state is relied upon as a means of enforcing performance instead of the sanction of religion, this contract tends to turn into a formal contract of a secular type. There is no uniformity in the different systems of law as to the forms that will be adopted as a means of making the contract binding; but there is great uniformity in the general theory that the use of the proper form will make the contract binding, often without any regard to the actual intention of the parties to the transaction. Another source of contract in early law is to be found in cases in which one side has performed in full and has a right to immediate performance, and credit is to be given to the adversary party who is bound to perform. When a blood feud was compounded it seems to have been customary to allow time for the payment of the composition. Credit would be given occasionally in other transactions such as sales. It is likely that originally some kind of pledge or surety for the payment of this obligation was given. When such pledge was finally restricted against the debtor himself, the contract became one which was fully performed by one side when it was made, leaving an outstanding liability on the other side.1
Contracts whose sanction is religious may be enforced by religious penalties, the most serious of which is excommunication or something analogous thereto. Where religious ideas of this type are generally entertained, excommunication is a weapon of enormous power, and it has proved itself adequate not only to enforce private agreements but to drive kings and emperors into abject submission. At a time in which the state is not strong enough to enforce executory promises directly by coercing the promisor, it can compel performance undoubtedly by withdrawing from a defaulting promisor the protection of the laws generally and by putting the promisee practically outside of the law. Outlawry is in its original form a very effective weapon. When private war can, at best, be kept down by the help of the state with great difficulty, the removal of the protection of the state leaves the debtor helpless to all his enemies. As the power of the state increases and its means of enforcing compliance with its commands become more powerful, the terrors of outlawry diminish. The wrongdoer is not put completely outside of the protection of the law; but only certain rights, such as for example bringing actions, are denied to him. Eventually with the increasing power of the state outlawry passes into a mere form and finally becomes obsolete.
11ndeed, it seems to have been assumed that a demand for prompt payment was intended to compel all who were present in court and who wished to stifle the fend to contribute to such payment, even if not liable therefor: Njals Saga, 122; Evolution of Law Series, Vol. I, pp. 165, 166.
Promises are frequently enforced by voluntary association, usually of merchants. Credit is the life of trade and there has always been a strong tendency on the part of merchants to form associations which would compel the defaulting promisor to comply with his contract and to meet his obligations. The medieval consular courts and the courts of the trading towns are examples of this tendency although in each case the court has to some extent the sanction and support of the state. A survival of this tendency is found in the organizations of Chinese merchants and other persons engaged in a trade or other business, which compel their members to perform their contracts, which perform such contracts for their own defaulting members in case of persistent refusal, and which use very drastic measures to compel exoneration after such performance.