What is Meant by a Contract - The Binding Effect of a Contract - Covenant Under Seal - Marriage a "Valuable Consideration" - Sale v. Barter - Moral Consideration - Clubs and their Legal Liabili' ties - Liabilities of Committees for Temporary Purposes - Offer and Acceptance, when Binding

A contract is an agreement made between two or more persons which is intended to be enforceable at law, and is constituted by the acceptance by one party of an offer made to him by the other party to do or to abstain from doing some act. The intention of the parties must be clear, otherwise there is no contract enforceable at law; for example, the services rendered by a barrister in his professional capacity are of a purely honorary character, and the payment of his fees is a matter of honour, not of legal obligation.

The offer and acceptance may either be express or inferred from the conduct of the parties.


An offer, when accepted, is called a promise, and the term "contract " denotes the legal obligation which is created, on the one part, to perform the promise, and, on the other, to accept performance of it. In the case of mutual promises there is an obligation on each party to perform his own promise and to accept performance of the other's promise.

A promise made by several persons jointly is called a joint promise. Where a promise is intended to be made by several persons jointly, if anyone of them fails to execute the agreement there is no contract. Thus, an agreement executed by seven members of a syndicate of eight persons is not binding on any of them. This rule, however, does not apply to a contract made with a firm, for every partner has authority to enter into contracts on behalf of the firm.

Contracts Under Seal

As a general rule, a contract may be made in any form the parties think desirable, but in certain cases it can only be made in the form of a deed; it then becomes what is called a contract under seal. A promise made under seal is called a covenant, hence the covenants of a deed are neither more nor less than the agreements and mutual promises of the parties put into writing. A contract under seal is binding even without consideration, whereas simple contracts, whether verbal or in writing, are invalided unless there is a valuable consideration for the promise.

Valuable Consideration

But to decide whether the contract is based upon a valuable consideration is not so simple as it sounds - in fact, the word "valuable" is decidedly misleading, as the courts are satisfied with the existence of a consideration, and do not trouble themselves about its adequacy. The surrender of the possession of a worthless document, the compromise of a disputed claim, although unsuccessful, and marriage, are all instances of valuable consideration. And, with regard to the last-named example, the leading case on the subject will bear quotation.

An old gentleman wrote to his nephew as follows :

"My dear L. "I am glad to hear of your intended marriage with Ellen N., and as I promised to assist you at starting, I am happy to tell you that I will pay you 150 during my life, and until your annual income, derived from your profession of a Chancery barrister, shall amount to 600 guineas, of which your own admission will be the only evidence I shall receive or require.

"Your ever affectionate uncle,

"C. S." In an action brought by the nephew against his uncle's executors for arrears of the annuity, which became due during his lifetime, it was held by one of the judges that the letter was a mere letter of kindness, and created no legal obligation; but, fortunately for the nephew, the Lord Chief Justice and another judge took the view that the letter amounted to a request to L. to marry Ellen N., and formed a valuable consideration.

Contract Of Sale

In order for there to be a contract of sale the consideration must consist wholly or in part of money paid or promised. If goods be given in exchange for goods, it is a barter. Goods may be given in consideration of work done, or for rent, or for board and lodging, or any valuable consideration other than money, but they are not sales.

In the case of bills of exchange and promissory notes, a consideration is presumed until the contrary is shown.

Failure Of Consideration

Money paid away can sometimes be recovered back on the ground of failure of consideration, as, for instance, when money is paid for the services of another which are performed so badly as to be quite useless to the employer. But unless the consideration be severable and the price apportionable accordingly, the failure must be total and not merely partial. Thus, in a case where a man apprenticed his son to a watchmaker and paid a heavy premium, and within a year's time the watchmaker died, it was held that none of the premium, was returnable, because the boy had got a year's teaching out of the deceased, and therefore the failure of consideration was only partial.

This was followed by a later case, in which a young man was articled to a solicitor and paid a premium of 150, articled clerks being bound for five years. Three years afterwards the solicitor died, leaving no partner to continue his clerk's legal education during the remaining two years; but in an action brought by the clerk's father against the solicitor's executors, it was held that the estate was not liable for the return of any part of the premium.

Upon the dissolution of a partnership the Court may apportion a premium paid upon admission, and order repayment of a part; and in the articles of clerks to solicitors, the Court may apportion the premium and order a return of a part.

Past Consideration

For a past consideration to support a promise it must be moved by a previous request. A man who had committed a murder requested his friend L. to take certain journeys and use all his influence with a view to a pardon. After the journeys had been taken and the services performed, he promised as a mark of his gratitude to give L. 100, and it was held that the promise was binding, although it had been made in consideration of services already rendered.