Law of Obligations

Origin of Contract

Contract as now exists is a combination of common law, equity and some legislation.  The basic rules originated at common law.  Equity supplied particular remedies and doctrines.  For example, specific performance and injunctions may be granted as relief in the case of mistake and misrepresentation.  Occasional statutes regulated particular areas such as the Statute of Frauds, Infants Reliefs Act and the Sale of Goods Act.

In the early common law period, contract type agreements were enforced only subject to particular conditions.  There is no general principle of recognising and enforcing contracts.

In these early times, trade and exchange had yet to develop.  The Kings Courts did not generally concern themselves with the private matters and agreements.

Wager of Law

Wager of reference was a character reference by kin and later neighbours often 11 to 12 men.  It is a method of given credibility to the defendant’s oath.

Initially wager of law, dating back to Saxon and feudal times, was a contemporaneous appeal to God to prove fact by trial by battle or trial by ordeal.  A variation was for the defendant to give gages, or sureties, in an action of debt that on a certain day he would take an oath in lawful court that he did not owe the debt, and at the same time bring 11 neighbours who would avow by their oaths that they believed in their conscience, hat he spoke the truth.

In time, wager of law was replaced by jury.  This was confirmed by Magna Carta.  It continued to be practised until the 16th century in criminal matters and 19th century in some civil matters.

Early Contract Type Rules

Prior to the Norman invasion of England, an agreement in the nature of the contract could be entered in a handful of cases.  One party might promise another and give that other or a third-party a wed or article as security.

A wed was later referred to as gage after the Norman invasion.  The expression was used in the context of marriage but also to bind persons to attend court. It is the linguistic origin of the word wedding.

After the Norman conquest, the Church exercised control over agreements entered on the basis of an oath, which was religious in nature.  Agreements known as fides facta were enforced by the church courts with the sanction of severe penance.

The common law courts sought to end this jurisdiction and it eventually was eroded. The church courts dealt with breaches of faith in itself. In contrast the courts would not enforce bare promises without consideration or under seal.

By the 13th century, the common law courts provided writs and types of action which could be used to enforce contractual type agreements.

Detinue which is an action to recoup or cover an article wrongly held, could apply to a claim for money.  Money was formerly considered an article in itself.  The action was of very limited use.  It could not compel the performance of an agreement.

Debt

The writ of debt allowed enforcement of certain types of contractual agreements.  A judgement debt could be enforced by writ.  This could be a means of collecting penalties or sum due by reason of breach of law.  This was a debt on the record.  A debt on an obligation is a debt arising on a deed signed and sealed.

A contract on a debt writ was available where money was lent, or goods were sold.  A benefit must be conferred on the defendant a result of which the defendant was obliged to pay.  There must be a quid pro quo.  A quid pro quo generally meant that the action was limited to an executed contract.By the 15th century, the seller of goods might sue for debt or breach of agreement before the goods were actually delivered.

The older legal actions for debt were burdensome and technical.  Slight errors in the writ could void the proceedings. An action of debt is only available for a fixed sum. A wager of law was available other than in cases of documents under seal.  A wager of law involved defendant denying the guilt or indebtedness charged or claimed and presenting a group of usually eleven compurgators who swore that they believed the defendant’s statement was true

The writ for covenant originated in early 13th century.  It could be used to recover unquantified damages for breach of an agreement to perform an act.  An agreement under seal was sufficient.   The agreement is not available where there was an agreement under seal.  If a definite sum was involved an action for debt and not covenant must be used.

Writ of Account

A writ of account was used against persons who had received money for the use or effectively on trust for another.  It was used against guardians and others acting in a quasi-fiduciary capacity.  It was extended over time so that monies could be recovered from persons who had been paid money for performance of an obligation which had not been completed.  It was extended to recover money paid in error.

The action was technical and complicated.  Parties were examined by auditors in relation to the payments of monies, transfers and transactions.  If a judgement was not paid, the matter would have to proceed by way of a writ of debt.  Wager of law was possible.

In broad terms, common Law remedies for the enforcement of agreements were slow inflexible and out of step with the growing market economy for trading goods.  There was no remedy for restitution.  There was no remedy to claim for goods delivered unless a price had been agreed.

Equity and Agreements

The courts of equity developed a number of petitions to mitigate the inflexibility and harshness of contract type arrangements at common law.  Executory agreements were enforced.

Agreements for the sale of land were enforced even in the absence of being under seal.  Parties were heard on oath.

Action on the Case

The common law courts responded to the competing equity jurisdiction by developing a remedy for breach of contract.  The so-called action on the case was developed. The action on the case allowed for a judgement of damages because of loss caused by the conduct of the others where persons who contracted to provide services did so negligently.

This was an action on the case for misfeasance.  A remedy was allowed although there was no covenant.

An action on case could only be brought for a misfeasance and not for nonfeasance.  Accordingly, if a particular task was not carried out at all, there was no remedy, absent a covenant.

In the 16th century, there were a number of developments.  The courts developed the position that a failure to fulfil covenants could themselves be the subject of action on the case.

Assumpsit

The distinction between nonfeasance and misfeasance eroded and a form of action known as assumpsit developed. This reflects Latin expression for having a human obligation to do something.

The action was available where one party promised another to do something, and it had not been carried out at all or had been carried out badly.  Assumpsit came to be a remedy for breach of agreement.

Assumpsit did not involve wager of law.  It eventually replaced the claim for debt or breach of agreement.

In the famous Slade case 1602 considered by all the Common Law judges and presented by Coke on one side, and Bacon on the other, it was held that in debt, debitis assumpsit where the plaintiff declares that the defendant was already indebted and had undertaken to pay a sum, was an alternative to debt.

The very existence of the debt sufficed for the court to presume an undertaking to pay it.  Every executory contract imported an assumpsit.

The effect of the above was that case was not an alternative to debt.  It provided for the assumption of implied contract and laid the ground for modern restitution.

In a claim where a person had done something at another’s request, such as making goods without an express agreement on price, there was no claim in debt or in the above special assumpsit in the absence of an expressed provision. Assumpsit was used in the 17th century to read in an undertaking to pay for services performed.  This was on the basis of implied contract.

Assumpsit was employed where there was no contract, or it could be implied it was not the obligation arose out of a quasi-contract as if there was a contract.

Consideration

Consideration was not a feature of the early law of contract.  Consideration is something valuable given in return.  It is the counterpart of the person’s promise and represents the element bargain in an agreement.

It appears that consideration first developed in the context of equity.  It appears to have been derived from the Roman concept of “because” which is still found in continental civil law.  It may have an origin in the quid pro quo concept above.

By the 16th century, the courts would not allow a case in assumpsit to enforce a gratuitous promise. By the end of the 16th century, it was confirmed that a promise against a promise was good consideration.  Accordingly, a wholly executory contract was fully enforceable.

Consideration Questioned

In the 18th century, the due doctrine of consideration was challenged, a written undertaking was enforced in the absence of consideration by defence, Lord Mansfield.  Consideration was said to be an evidential matter.

In matters between business persons, want of consideration was no objection.  It was presumed in those cases, that there was an intention to be bound. This view was overruled in the late 18th century.

Lord Mansfield attempted to establish that a moral obligation could be sufficient consideration.  Where a person is under a legal or equitable duty to pay, the law implies a promise even the fund was not made.

Common Law Courts overturned Lord Mansfield in the mid-early 19th century in the case of Eastwood and Kenyon a moral obligation would not be enough to fund contractual obligation.

It is established in the 19th century that consideration must have a monetary value. promises were not of concern to court unless there was some element  fraud to duress or unconscionable dealing.In the 19th century it was established that the past consideration was not good consideration.