The Common Law [121]
the nature of the contract, the words used could be said to embody the representation as a term by construction. For instance, it might be said that the true and well-understood purport of a contract of insurance is not, as the words seem to say, to take the risk of any loss by fire or perils of the sea, however great the risk may be, but to take a risk of a certain magnitude, and no other, which risk has been calculated mathematically from the statements of the party insured. The extent of the risk taken is not specified in the policy, because the old forms and established usage are otherwise, but the meaning is perfectly understood.
If this reasoning were adopted, there would be an equal repugnancy in the terms of the contract, whether the nature of the risk were written in the policy or fixed by previous description. But, subject to possible exceptions of this kind, it would seem that a contract would be made, and that the most that could be claimed would be a right to rescind. Where parties having power to bind themselves do acts and use words which are fit to create an obligation, I take it that an obligation arises. If there is a mistake as to a fact not mentioned in the contract, it goes only to the motives for making the contract. But a [315] contract is not prevented from being made by the mere fact that one party would not have made it if he had known the truth. In what cases a mistake affecting motives is a ground for avoidance, does not concern this discussion, because the subject now under consideration is when a contract is made, and the question of avoiding or rescinding it presupposes that it has been made.
I think that it may now be assumed that, when fraud, misrepresentation, or mistake is said to make a contract void, there is no new principle which comes in to set aside an otherwise perfect obligation, but that in every such case there is wanting one or more of the first elements which were explained in the foregoing Lecture. Either there is no second party, or the two parties say different things, or essential terms seemingly consistent are really inconsistent as used.
When a contract is said to be voidable, it is assumed that a contract has been made, but that it is subject to being unmade at the election of one party. This must be because of the breach of some condition attached to its existence either expressly or by implication.
If a condition is attached to the contract's coming into being, there is as yet no contract. Either party may withdraw, at will, until the condition is determined. There is no obligation, although there may be an offer or a promise, and hence there is no relation between the parties which requires discussion here. But some conditions seemingly arising out of a contract already made are conditions of this sort. Such is always the case if the condition of a promise lies within the control of the promisor's own will. For instance, a promise to pay for clothes if made to the customer's satisfaction, has been held in Massachusetts to [316] make the promisor his own final judge. /1/ So interpreted, it appears to me to be no contract at all, until the promisor's satisfaction is expressed. His promise is only to pay if he sees fit, and such a promise cannot be made a contract because it cannot impose any obligation. /2/ If the promise were construed to mean that the clothes should be paid for provided they were such as ought to satisfy the promisor, /3/ and thus to make the jury the arbiter, there would be a contract, because the promisor gives up control over the event, but it would be subject to a condition in the sense of the present analysis.
The conditions which a contract may contain have been divided by theorists into conditions precedent and conditions subsequent. The distinction has even been pronounced of great importance. It must be admitted that, if the course of pleading be taken as a test, it is so. In some cases, the plaintiff has to state that a condition has been performed in order to put the defendant to his answer; in others, it is left to the defendant
If this reasoning were adopted, there would be an equal repugnancy in the terms of the contract, whether the nature of the risk were written in the policy or fixed by previous description. But, subject to possible exceptions of this kind, it would seem that a contract would be made, and that the most that could be claimed would be a right to rescind. Where parties having power to bind themselves do acts and use words which are fit to create an obligation, I take it that an obligation arises. If there is a mistake as to a fact not mentioned in the contract, it goes only to the motives for making the contract. But a [315] contract is not prevented from being made by the mere fact that one party would not have made it if he had known the truth. In what cases a mistake affecting motives is a ground for avoidance, does not concern this discussion, because the subject now under consideration is when a contract is made, and the question of avoiding or rescinding it presupposes that it has been made.
I think that it may now be assumed that, when fraud, misrepresentation, or mistake is said to make a contract void, there is no new principle which comes in to set aside an otherwise perfect obligation, but that in every such case there is wanting one or more of the first elements which were explained in the foregoing Lecture. Either there is no second party, or the two parties say different things, or essential terms seemingly consistent are really inconsistent as used.
When a contract is said to be voidable, it is assumed that a contract has been made, but that it is subject to being unmade at the election of one party. This must be because of the breach of some condition attached to its existence either expressly or by implication.
If a condition is attached to the contract's coming into being, there is as yet no contract. Either party may withdraw, at will, until the condition is determined. There is no obligation, although there may be an offer or a promise, and hence there is no relation between the parties which requires discussion here. But some conditions seemingly arising out of a contract already made are conditions of this sort. Such is always the case if the condition of a promise lies within the control of the promisor's own will. For instance, a promise to pay for clothes if made to the customer's satisfaction, has been held in Massachusetts to [316] make the promisor his own final judge. /1/ So interpreted, it appears to me to be no contract at all, until the promisor's satisfaction is expressed. His promise is only to pay if he sees fit, and such a promise cannot be made a contract because it cannot impose any obligation. /2/ If the promise were construed to mean that the clothes should be paid for provided they were such as ought to satisfy the promisor, /3/ and thus to make the jury the arbiter, there would be a contract, because the promisor gives up control over the event, but it would be subject to a condition in the sense of the present analysis.
The conditions which a contract may contain have been divided by theorists into conditions precedent and conditions subsequent. The distinction has even been pronounced of great importance. It must be admitted that, if the course of pleading be taken as a test, it is so. In some cases, the plaintiff has to state that a condition has been performed in order to put the defendant to his answer; in others, it is left to the defendant