Contracts/Intention to Bind

Intention to Bind is Essential

Agreement consists in two or more persons being of the same mind and intention concerning the subject matter.^[1] As it is frequently put by the courts the minds of the parties must meet.^[2]

This common intention can not be present where there is doubt or difference on either side. Thus if A offers B to sell him his horse and B replies, "I might purchase it at the price you asked," there is no agreement.^[3] Neither is there where A says, "I will sell you my horse for one hundred dollars," and B replies, "I will give you seventy-five for it."^[4]

A person's state of mind or intention can be ascertained only by outward expressions, such as words or acts. Therefore the law excludes all questions of intention unexpressed, and imputes to a person a state of mind or intention corresponding to the rational and honest meaning of his words and acts. Whatever a man's real intention may be, if he so conducts himself that a reasonable man would believe that he was assenting to what he proposed, and the latter on the faith of this contracts with him, the man so conducting himself is as much bound as if he had actually intended to agree to the other party's terms.^[5]

"If a man intends to buy, and says so to the intended seller, and he intends to sell, and says so to the intended buyer, there is a contract of sale; and so there would be if neither had the intention."^[6]

If . a man writes a letter to another and its language shows an offer to contract, he will not be allowed to say, "I did not intend to make an offer in writing that letter.^[7] A person can not set up that he was merely jesting when his conduct and words would warrant a reasonable person in believing that he intended a real agreement.^[8]

And it does not matter how formal or informal the words used may be. A says to B, "I want you to send your wagon for my goods tomorrow to take them to the station." B replies, All right." This is an agreement.^[9]

Promissory Expressions

The intention to bind oneself must appear, for all promissory expressions do not by acceptance constitute an agreement.^[10] They may have the form of an offer and yet not be such as the law will enforce. The case of a mere jest is clear.^[11] If A, for example, is riding a broken down horse and B in a spirit of badinage calls out, "I say, will you take $1,000 for your horse?" B's reply, "I will," could by no possibility be considered as the conclusion of a contract to sell the horse for $1,000. But suppose a man, who believes his life in danger from a disease or an injury, says to his physician, "O doctor, I will give all I have if you will save my life," and the physician says, "I'll try," and does, by his surgical skill, save his patient's life. Is this a contract?

The reports do not give much light; the few adjudicated cases are hard to reconcile. In a Tennessee case,^[12] where defendant and his family were in deep affliction over the mur­der of his son; he himself was laboring under the effect of severe wounds received from the person who had killed the son and when his arrest was spoken of, he said he would give two hundred dollars to have him arrested. Plaintiff, who was present, made the arrest and claimed the reward. But the Court held that there was no offer.

"What is called an offered reward was nothing but a strong expression of his feelings of anxiety for the arrest of those who had so severely injured him, and this greatly increased by the distracted state of his own mind, and that of his family; as we frequently hear persons exclaim, 'Oh! I would give a thousand dollars if such an event were to happen,' or vice versa. No contract can be made out of such expressions; they are evidence of strong excitement, but not of a contracting intention."

So in an old case where A told B that he would give $100 to anyone who married his daughter with his consent and B did so and sued for the $100, it was ruled not to be reasonable that a man should be bound by general words spoken to excite suitors.^[13] On the other hand, in a Wisconsin case, where a man standing in front of a burning building shouted to the crowd, "I will give $5,000 to any person who will bring the body of my wife out of that building dead or alive," this was held to be a binding agreement with one of the firemen who entered the house and brought out the woman;^[14] and in Illinois, where at a public meeting, during the war, a man declared that he would give $400 to get his sons relieved from the draft, this was held a binding promise · to pay that amount to anyone who should accomplish that object.^[15]

"If I have valuable property in imminent danger and I make proclamation that I will give $50 to save it and a stranger undertakes the labor and does save it, on what principle of law or justice is it that I should not pay. So here the defendant declared he would give $400 to save his sons from the draft and put the declaration in writing. The plaintiff incurred the expense and trouble necessary to save his sons and did save them, why th en should he not be paid the amount promised."

In an English case the defendants, the proprietors of a medical preparation called The Carbolic Smoke Ball, issued an advertisement in which they promised to pay £100 to any person who contracted influenza after having used one of their smoke balls in a certain specified manner and for a certain specified period. The plaintiff sued for £100 alleging that on the faith of the advertisement she purchased one of the smoke balls, used it in the manner and for the time specified, but nevertheless contracted the influenza. It was contended by the defendants that this was not an offer at all or at least not one that any any sensible person would take to be a bona fide offer. But all the judges of the Court of Appeals pointed out that the advertisement contained this clause: "£1,000 is deposited in the Alliance Bank, Regent street, showing our sincerity in the matter," and that this must have been for the very purpose of leading those who read the advertisement to believe that the defendants were serious in their proposal and intended to fulfill their promise.

"It may be, that of the many readers of the advertisement very few sensible ones would have entertained expectations that in the event of the smoke balls failing to act as a preventive against the disease the defendants had any intention to fulfill their attractive and alluring promise; but it must be remembered that such advertisements do not appeal so much to the wise and thoughtful as to the credulous and weak portions of the community; and if the vendor of an article, whether it be medicine smoke or anything else, with a view to increase its sale or use, thinks fit publicly to promise to all who buy or use it, that to those who shall not find it as efficacious as it is represented by him to be, he will pay a substantial sum of money, he must not be surprised if occasionally he is held to his promise."^[16]

It is not easy to state any definite rule by which such cases should be governed, but it may be said broadly that the question is whether the terms of the offer and the circumstances under which it is made are such as to give a person a right to act upon it as a real and intentional offer.

Statements of Intention

Of a similar character are mere statements of intention, though they be accepted or acted upon by the party to whom they are made.^[17] Where a father writing to a man who was going to marry his daughter said, "She will have a share of what I leave after the death of her mother," this was held not a promise.^[18] So where another parent, in answer to a suitor for his daughter, wrote, "I shall allow her the interest on £2,000, whether she remains single or marries. If the latter, I may bind myself to do it, and pay the principal at my death to her and her heirs," this was held not to create a contract, because it did not import an intention to make a binding promise.^[19] So there was no contract where a person to whom a proposal was made replied, "I am prepared to make the arrangements with you on the terms you name."^[20]

Here, as before, it is a question of fact whether what was said was a mere statement of intention or was intended as a definite offer or acceptance.^[21] Where A, on opening a number of bids, said to B, one of the bidders, "I guess it is up to you, yours is the lowest bid," it was held that this was acceptance of B's bid.^[22]

An advertisement of a sale by auction is not an offer, so as to bind the advertiser, to persons attending the sale, to sell the property or to sell it on the terms advertised.^[23] An announcement that an examination for a scholarship will be held does not imply a condition that the scholarship will be given to the competitor obtaining most marks; and consequently there is no contract.^[24]

Invitations to Deal

Main Article: Invitation to deal

A mere invitation to deal is not such an offer as may be turned into an agreement by acceptance. Thus in Moulton v. Kershaw,^[25] A wrote to B: "We are authorized to offer Michigan fine salt in full carload lots of 80 to 95 barrels delivered in your city at 85 cents per barrel." B telegraphed: "Your letter of yesterday received and noted. You may ship me 2,000 barrels of Michigan fine salt as offered in your letter." This was held not a binding contract, A's letter was only a notice to those dealing in salt that he was in a position to supply that article for the prices named, and requesting offers from the person or persons addressed.

Where defendants sent out a circular: "We are instructed to offer to the wholesale trade for sale by tender the stock in trade of A", amounting to so-and-so, "and which will be sold at a discount in one lot. Payment to he made in cash," it was held that this did not amount to a contract or promise to sell to the person who made the highest tender, but was, "a mere proclamation that the defendants are ready to chaffer for the sale of the goods and to recieive offers for the purchase of them."^[26]

Business circulars sent by mail or distributed by hand and advertisements in newspapers of goods for sale, fall under this head. They are merely invitations to trade; they go no further than what occurs when anyone asks another what he will give or take for certain goods. Such inquiries may lead to agreements, but do not make them.^[27]

"A bookseller's catalogue, with prices stated against the names of the books, would seem to contain a number of offers. But if the bookseller receives by the same post five or six letters asking for a particular book at the price named, to whom is he bound? To the man who first posted his letter of acceptance? How is this to be ascertained? The catalogue is clearly an invitation to do business, and not an offer."^[28]

So where a person or a corporation advertises for bidders for property to be sold or for work to be done, the advertisement is simply an invitation to make offers and the advertiser is not bound to accept the highest, the lowest or any of the bids.^[29]

The mere statement of the lowest price at which a vendor will sell is not an offer to sell at that price to the person making the inquiry. A telegraphed, "Will you sell us B. H. P.? Telegraph lowest cash price." B telegraphed in reply, "Lowest price for B. H. P. 900l." and then A telegraphed, "We agree to buy B. H. P. for 900l. asked by you. Please send us your title-deed in order that we may get early possession," but received no reply. Here there was no contract, as the final telegram was not the acceptance of an offer to sell, for none had been made, but was itself an offer to buy, the acceptance of which must be expressed.^[30]

Exposing goods in the window of a store, with a price attached is generally merely an invitation to trade, while the displaying them on a stand in the street where the passerby may pick one up--as for example a fruit stand--would seem to be an offer.

If the proposal can be construed as a definite offer, then a communicated acceptance makes the contract. If A had written, "We will sell you all the Michigan salt you may order at the price named," the contract would have been complete upon B notifying him of the quantity he desired, as in a California case,^[31] where defendant had a crop of growing grapes and he offered to pick from the vines and deliver to plaintiff, at his vineyard, so many grapes then growing in said vineyard, as plaintiff should wish to take during the present year at ten cents per pound. When plaintiff, while the offer was in force, named the quantity, the contract was held to be complete and both parties bound as to the quantity named.

An invitation to deal is not an offer, but an indication of a person's willingness to negotiate a contract. It's a pre-offer communication. In the UK case Harvey v. Facey,^[32] an indication by the owner of property that he or she might be interested in selling at a certain price, for example, has been regarded as an invitation to treat. Similarly in the English case Gibson v Manchester City Council^[33] the words "may be prepared to sell" were held to be a notification of price and therefore not a distinct offer, though in another case concerning the same change of policy (Manchester City Council underwent a change of political control and stopped the sale of council houses to their tenants) Storer v. Manchester City Council,^[34] the court held that an agreement was completed by the tenant's signing and returning the agreement to purchase, as the language of the agreement had been sufficiently explicit and the signature on behalf of the council a mere formality to be completed. Statements of invitation are only intended to solicit offers from people and are not intended to result in any immediate binding obligation. The courts have tended to take a consistent approach to the identification of invitations to treat, as compared with offer and acceptance, in common transactions. The display of goods for sale, whether in a shop window or on the shelves of a self-service store, is ordinarily treated as an invitation to treat and not an offer.

The holding of a public auction will also usually be regarded as an invitation to treat. Auctions are, however, a special case generally. The rule is that the bidder is making an offer to buy and the auctioneer accepts this in whatever manner is customary, usually the fall of the hammer.^[35][36] A bidder may withdraw his or her bid at any time before the fall of the hammer, but any bid in any event lapses as an offer on the making of a higher bid, so that if a higher bid is made, then withdrawn before the fall of the hammer, the auctioneer cannot then purport to accept the previous highest bid. If an auction is without reserve then, whilst there is no contract of sale between the owner of the goods and the highest bidder (because the placing of goods in the auction is an invitation to treat), there is a collateral contract between the auctioneer and the highest bidder that the auction will be held without reserve (i.e., that the highest bid, however low, will be accepted).^[37] The U.S. Uniform Commercial Code provides that in an auction without reserve the goods may not be withdrawn once they have been put up.^[38]

Intention Must Refer to Legal Relations

The intention of the parties must refer to legal relations; it must have reference to the assumption of legal rights and duties. One may accept a proposal to dine with another or to take a walk or go to a baseball match with him, and may even incur trouble and expense in keeping the engagement, yet no action will lie for the breach of the mere social engagement.^[39] The reason in all these cases is that the promise was neither intended nor understood to create between the parties rights and duties enforceable by law. "If, at a ball a young lady promises a gentleman to dance with him, say the sixth dance on the program, and afterwards dances it with someone else, no one would suppose that he could sue her for breach of contract. So if A agrees to join B tomorrow at a certain hour to take a bicycle ride together, this is not a promise creating a contract. So if in the playing of a charade a man and a woman go through the form of a betrothal there is no promise creating a contract so as to furnish the foundation for an action of breach of promise of marriage. . . . It is only those promises which as between the parties to them create or alter rights and duties, which the law treats as of binding obligation, that constitute contracts."^[40]

Intention Must Be Serious

An offer cannot be the foundation of an agreement where it is made or accepted, not with the intention to contract, but as a mere jest or joke.^[41] Where one gave a three-hundred dollar check for a fifteen-dollar watch by way of mere frolic and banter, not expecting to buy the watch and the other not expecting to sell it, it was held that there was no contract;^[42] and where two young people went through the marriage ceremony before a person authorized to celebrate marriages without really intending to marry, it was held that there was no marriage.^[43] But one is not permitted to say that he was jesting if his conduct and words would warrant a reasonable person in believing that he was serious.^[44] Thus in an Australian case:

"The question is raised whether there was any evidence upon which the judge might reasonably act that the defendant did at that time really, and not by way of banter only, request the plaintiff not to sell his shares or place them on the market. We are of opinion that there was such evidence. The defendant's answer to the plaintiff's claim was that having been asked by a friend of the plaintiff who was anxious and distressed by the falling state of the market to comfort him, he gave him an unreal and false promise without intending to perform it. The defendant admits that the plaintiff did not seem to take his words of comfort as a joke. Now the judge has found upon evidence amply sufficient that this defense is untrue."^[45]

Preliminary Negotiations

Where parties a re negotiating as to the terms of an agreement to be entered into between them, there is no meeting of minds while such agreement is incomplete. Where they intend that their verbal negotiations shall be reduced to writing and signed by them as the evidence of the terms of their agreement, there is nothing binding on them until the writing is executed.^[46] On the other hand if the parties intend that their oral agreement shall be put in writing simply as a memorial of it, the contract is binding, although it is never written out.^[47] An agreement is very often made by correspondence, but care must be taken not to construe as an agreement letters which the parties intended only as a preliminary negotiation. The question in such cases always is, did they mean to contract by their correspondence, or were they only settling the terms of an agreement into which they proposed to enter after all its particulars were adjusted, which was then to be formally drawn up and by which alone they designed to be bound.^[48]

The principle is well expressed in a .Maine case.^[49]

"From these expressions of courts and jurists it is quite clear that after all the question is one of intention. If the party sought to be charged intended to close a contract prior to the formal signing of a written draft or if he signifies such an intention to to other party he will be bound by the contract actually made, though the signing of the written draft be omitted. If on the other hand such party neither had nor signified such an intention to close the contract until it was fully expresed in a written instrument and attested by signatures then he will not be bound until the signatures are affixed. The expression of the idea may be attempted in other words: if the written draft is viewed by the parties merely as a convenient memorial or record of their previous contract its absence does not affect the binding force of the contract; if however it is viewed as the consummation of the negotiation there Is no contract until the written draft is finally signed."

Certainty Required

The promise must be certain in its terms, and not so indefinite and illusory as to make it impossible to say just what was promised.^[50] Therefore, where A bought a horse from B, promising that "if the horse was lucky to him, he would give $25 more for the buying of another horse," it was held that this was too loose and vague to be considered in a court of law.^[51]

"In another case A promised B to give up his business 'so far as the law allows'; it was held that parties must fix the limits of their agreement and not leave it to be fixed by the courts;^[52] in another B promised C that if satisfied with him as a customer, he 'would favorably consider' an application to renew the contract; this was ruled to create no legal obligation;^[53] in another where the parties attempting to make an agreement by a telegraphic code had, by using too few words, made it so ambiguous as to be unintelligible even to them,^[54] the Court said that it was for the plaintiff, in an action for breach of contract, to show that his construction was the true one, and to prove that his proposal was so clear and unambiguous that the defendant could not be heard to say that he misunderstood it."

So where A promised B that if she, a single woman, would live with him until her marriage, he would give her one hundred acres of land, without any reference to locality or value, it was held void for uncertainty.^[55] Where an employer engages a servant, promising to give him such remuneration as he, the employer, shall think right, there is no legal liability to pay anything.^[56] A promise by a school trustee to a teacher to pay "good wages" was held too indefinite to found an action upon,^[57] as was one to give a child a "good share" of property^[58] and a stipulation in a contract that it might be canceled by either party for "good cause"^[59] and one giving the "use" of land for a certain purpose.^[60]

Persons must make their own agreements and not leave it to the courts to make them for them from the language they have used.

If an agreement is uncertain, it is because the offer was so, because the acceptance must be identical with the offer or there is no meeting of minds. If the offeree sees the uncertainty and proposes a change that will make the agreement certain, this is a new offer which puts an end to the other.^[61]

An agreement, however, will not be considered uncertain if the court can see what the parties intended. Absolute certainty is not required, for that is certain which may be rendered certain, according to the maxim id certum est quod certum reddi potest.^[62] Thus a contract is not uncertain because it is silent as to the damages for its breach.^[63] An ambiguous contract is not necessarily uncertain.^[64]

Intention Must Be Communicated

The intention of the parties must be communicated, for one's intention can be ascertained by another only by means of outward expressions, as words and acts.^[65] "It is a trite law," said an old judge, "that the thought of man is not triable, for even the devil does not know what the thought of man is."^[66]

Telling an intention to a third person is of no more effect than noting it in one's memorandum book, which is no more than though it existed solely in one's mind.^[67] The communication is absolutely essential and is not sufficient that two minds coincide at the same moment.^[68]

But if the intention is communicated the mode is immaterial. It may be by mail, by telegraph, by special messenger or the like, as well as by words written or spoken or the acts or conduct of the one who makes it.^[69]

Thus where two letters, each containing an offer identical in terms, cross each other, there can be no contract.^[70]

Representation on Which Another Acts--Estoppel

A representation concerning a matter of fact may be made to another, without any expressed or intended warranty of the truth, yet with the intention of inducing him to act upon it; and if the latter acts upon it, and suffers loss by reason of it not being true, the party making the representation may be held responsible in law for the consequences; or he may be estopped from denying the truth of the representation.

"Where a person makes to another the representation, 'I take upon myself to say such and such things do exist,' and the other man does really act upon that basis, it seems to me that it is of the very essence of justice that between these two parties their rights should be regulated, not by the real state of facts, but by that conventional state of facts which the two parties agree to make the basis of their action."^[71]

Estoppel in contract law may be described as a rule of evidence which will not permit a person to deny an inference that a reasonable man would necessarily draw from his words and conduct.

Agreement Results from Offer and Acceptance

Every agreement necessarily results from an offer on one side and an acceptance on the other.^[72] Sometimes they are by words, sometimes by acts, sometimes by both words and acts.^[73]

To illustrate:

(a) At a sale by auction each bid is an offer of a price for the article put up for sale, which bids are successively. made until one is accepted by the fall of the hammer, when the agreement is complete.^[74]

(b) The time-tables published by a railroad company are an offer made to all persons who apply for carriage that the trains will run as advertised.^[75]

(c) The publication of an advertisement of a reward for information, respecting a loss or a crime, or an oral announcement to the same effect, is an offer to any person who is able to give the information asked, and on its acceptance by giving the information the agreement is complete.^[76]

(d) The sending of an order to a merchant or manufacturer is an offer to purchase and the sending of the goods is an acceptance of the offer and creates a contract of sale.^[77]

(e) An agreement by B to sell A his farm for $5,000, must be the result of an offer by B to sell it for that price and an acceptance by A or an offer by A to give that sum for it and an acceptance by B.

(f) The purchase of a book or a basket of fruit or other article displayed for sale i'! the result of the displaying his wares by the seller, who impliedly says, "Will you buy my goods at my price T" and the customer, taking up the article with his cognizance, says, "I will."

(g) The presence of a running street car is a constant offer by the company to perform a service upon its usual terms, and one who enters the car accepts the offer and agrees to pay the usual fare for the service.

(h) A person who takes a seat at the dining table of a hotel offers to take a meal for the usual price charged to guests, and the proprietor accepts the proposal by furnishing the meal.

(i) A man with the full knowledge of another does work for him, the latter knowing that he expects to be paid for it; the doing the work is a proposal and the receiving the service without dissent is the acceptance.^[78]

(j) A offers B to pay him a certain sum of money on a future day if B will promise to perform certain services for him before that day. When B makes the promise asked for he accepts the promise offered, and both parties are bound, the one to do the work, the other to allow him to do it and to make the payment.

(k) A sends goods to B's house and B accepts or uses the goods; B is liable on an implied contract to pay what the goods are worth. The offer is made by sending the goods, the acceptance by their use or consumption, which is in fact a promise to pay their price.

(l) A requests B to work for him for hire. On B going to work as requested, the offer is accepted unless A had prescribed in his offer some particular form of acceptance. Or A writes to B offering to reimburse him if he will pay the taxes on certain land. B pays the taxes. This is a sufficient acceptance of the offer.^[79]

(m) Whether the manager of a theater who advertises that at a certain time a particular piece will be performed, stating the price of admission, contracts with one who comes to the theater door that he will be admitted on payment of the price, and that the piece advertised will be performed, is a question on which there is no judicial authority.^[80]

From these examples it will be seen that a proposal may assume two forms, the offer of a promise and the offer of an act, and that acceptance may assume two forms also, the giving of a promise or the doing of an act. And that therefore an agreement may arise in three ways, being:

1. In the offer of an act for a promise, as in illustrations (f), (g), (i), (k).
2. In the offer of a promise for an act, as in illustrations (c), (d), (h), (l).
3. In the offer of a promise for a promise, as in illustrations (a), (b), (e), (j).

The unusual case of an offer of an act for an act, may be seen in the continuing offer made by the proprietor of an automatic machine distributing candy, chewing gum, postage stamps, and other articles, to persons who put in a coin to obtain something contained in the machine.

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