CHAPTER II

FORM

§ 18. Classes of Contracts as to Form. Offer and acceptance create the agreement or meeting of the minds necessary as the basis of every true contract, but the law in some instances requires that the agreement of the parties be evidenced in a certain form before it will be enforced. Or when evidenced in a certain form, the law will sometimes give a contract additional effectiveness.

Viewed from the standpoint of form, contracts may be divided into two general classes: (1) contracts under seal, called deeds or specialties; (2) contracts not under seal, called simple, or parol contracts. The latter class may be divided into two sub-classes: (a) simple contracts required to be in writing, and (b) simple contracts for which no form is required. The validity of all simple or parol contracts depends upon the existence of what is called "consideration", whether such simple contract be required to be in writing or not.

Judgments and recognizances are sometimes classified as contracts under the name of "contracts of record", but are so different in their nature from true contracts, that their consideration properly comes under other subjects.

§ 19. Contracts Under Seal. A contract under seal is a true formal contract, for its validity is based solely upon the form in which it is expressed. Its requisites as to execution are that it must be in writing or printed, on paper or parchment, and must be signed, sealed, and delivered. Signing was not required at common law, but is now universally essential. A seal impressed upon wax, wafer, or other tenacious substance, was necessary at common law. In many States a scrawl with the pen or a printed seal is

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now sufficient, and in other States the necessity of a seal has been abolished.

Delivery is necessary to give validity to any contract in writing, whether under seal or a simple contract, and is effected by actually handing the deed to the other party, or to a third person for his benefit, or by words indicating an intention that it should become operative though retained in the possession of the party who executed it. Sometimes a deed is delivered to a third person with an agreement that it shall not be delivered to the one to whom it ultimately belongs until the happening of a certain contingency.1 During this period it is termed an escrow.

Characteristics Of. Recitals and other statements in contracts under seal are absolutely conclusive upon the parties thereto, while statements in simple contracts are only strong evidence and not conclusive against the parties. This is called estoppel by deed.

A simple contract will be merged in an identical agreement subsequently made between the same parties in the form of a contract under seal. This is called merger. Consideration is not necessary to the validity of a contract under seal. Thus, a gratuitous promise, if made by a deed, is binding. But in many States statutes have been enacted providing that want of consideration may be shown in defense to an action on a sealed instrument. In other States, however, the rule still remains that the presence of a seal on a mere gratuitous bond or promise, dispenses with the necessity of consideration.2

When Essential. The necessity of a gratuitous promise being made in the form of a deed in order to be enforcible, has been discussed already. At common law corporations could only be bound by contracts under the seal of the corporation, but this is no longer true. The formality of a deed is generally required by statute in the United States to convey the legal title to real estate.

§ 20. Simple Contracts. In the absence of statutory 1 Harkreader v. Clayton, 56 Miss. 383, 31 Am. Rep. 369.

2 Chicago Co. v. Haven, 195 Ill. 474, 63 N. E. 158.

requirement, simple contracts need not be in writing. Bills of exchange and promissory notes are the only exceptions to this rule. Lawmakers have generally decided, however, that certain kinds of contracts should be evidenced in writing. The most important statute of this kind affecting the form of simple contracts, is the Statute of Frauds, enacted by the British Parliament in 1677, two sections of which, the fourth and the seventeenth, have been subsequently re-enacted in most of the United States. The purpose of this statute was to prevent fraud and enable the courts to determine the truth more certainly in certain instances where the plaintiff relied on an oral contract which the defendant denied having made.

§ 21.

Statute of Frauds. Fourth Section-ContractsCovered By. The fourth section of the Statute of Frauds provided that upon certain agreements "no action shall be brought unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith or some other person thereunto by him lawfully authorized."

Five kinds of contracts are specified by the fourth section as coming within its provisions. Each is covered more fully under other subjects and, therefore, is treated only briefly here. They are as follows:

(1) Any special promise by any executor or administrator to answer damages out of his own estate. An executor or administrator may be sued for the debts or liabilities of the deceased, but can only be required to pay out of the assets of the estate. If he promises to pay out of his own pocket, the promise must be in writing or it will not be enforcible.

(2) Any special promise to answer for the debt, default, or miscarriage of another person. This means that a person's promise to pay a debt for which another is primarily liable and which such other person in justice ought to pay, is not enforcible if not in writing. This situation arises where one guarantees the pay

ment of another person's debt. Contracts of guaranty must be in writing to be enforcible. This is an important and difficult subject, which properly comes elsewhere under the subject of Surety ship and Guaranty.3 (3) Any agreement made in consideration of marriage. This does not apply to a promise to marry, the consideration for which is the promise of the other party, but refers to promises in consideration of or conditional upon a marriage taking place, such as promises to pay money or to settle property.

(4) Any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them. The term "lands", "tenements", and "hereditaments", have a precise meaning in the law and are used to denote the subjects of real property, as distinguished from personal property, that is, goods and chattels. We all know what "land" is. "Tenements" include every species of real property which may be held by a tenant, while "hereditaments" is employed in conveyances after "lands" and "tenements" to include everything in the nature of realty which they may not

cover.

Arrangements preliminary to the acquisition of an interest in land are not within the statute, such as an agreement to borrow money to use in the purchase of land, or an agreement with an attorney to examine the title to the land. Crops produced by the power of nature alone without human assistance, called fructus naturales, such as growing grass, timber, ores in the ground, fruit on the trees, are an interest in land within the meaning of the statute.5 Crops of wheat, corn, and other things produced by labor and cultivation, called fructus industriales, are regarded as chattel interests and not within the statute.

8 See article on Guaranty and Suretyship.

4 Short v. Stotts, 58 Ind. 29.

5 Hirth v. Graham, 50 Oh. St. 57, 33 N. E. 90, 19 L. R. A. 721, 40 Am. St. Rep. 641.

(5) Any agreement that is not to be performed within the space of one year from the making thereof. In order that an agreement may fall within this clause of the statute, it is necessary that it be incapable on its face of being performed within one year from the time it was entered into. Thus, an agreement for services for one year, to commence at a future day, is within the statute and, therefore, unenforcible.

But an agreement to be performed upon the happening of a contingency-such as the return of a ship or the death of a person-which may occur within a year, is not within the statute. Nor are agreements for the continuous performance of acts until the happening of a contingency which may possibly happen within a year, within the statute. Thus, an agreement to support a person until his death, need not be in writing. An agreement never to engage in a certain line of business in a certain locality would not be within the stat-ute, because of the possibility of complete performance within a year by the death of the promisor. Contracts which may be completely performed on one side within a year, and agreements where everything to be done under them-except the payment of money -will be done within a year, are not within the statute.

Form Required by Statute. The agreement is not void but merely unenforcible because not evidenced in writing as required by the statute. Since the agreement exists all of the time, it follows that the note or memorandum necessary to make it legally enforcible may be made at any time between the making of the agreement and the commencement of the action.

The note or memorandum need not be addressed to the other contracting party, but may be contained in a letter addressed to a third person or in book entries of the party to be bound. It has been held that a letter stating the terms of an oral contract, and written by one party to the 6 Warner v. Railway Co., 164 U. S. 418, 41 L. ed. 495.