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CHAPTER IX: Of Contracts in General. - Francis Hutcheson, Philosophiae moralis institutio compendiaria with a Short Introduction to Moral Philosophy [1747]

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Philosophiae moralis institutio compendiaria with a Short Introduction to Moral Philosophy, edited and with an Introduction by Luigi Turco (Indianapolis: Liberty Fund, 2007).

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Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


CHAPTER IX

Of Contracts in General.

I. Since a perpetual commerce and mutual aids are absolutely necessary for the subsistence of mankind, not to speak of the conveniencies of life, <the goodness of> God has indued men not only with reason but the powers of speech <and language>; by which we can make known to others our sentiments [opinions], desires, affections, designs, and purposes. For the right use of this faculty we have also a sublime <and ruling> sense implanted, naturally strengthened by our keen desires of knowledge, by which we naturally approve veracity, sincerity, and fidelity; and hate falshood, dissimulation, and deceit. Veracity and faith in our engagements, beside their own immediate beauty thus approved, recommend themselves to the approbation and choice of every wise and honest man by their manifest necessity for the common interest and safety; as lies and falshood [frauds] <not only displease us by their ugliness, but> are also manifestly destructive in society.

In an intercourse of services, in commerce, and in joint labour, our sentiments, inclinations and designs must be mutually made known: and “when we affirm to others that we will pay or perform any thing, with that professed view, that another shall pay or perform something on his part” then we are said to {promise or} contract. A covenant or contract is the “consent of two or more to certain terms, with a view to constitute or abolish some obligation.”1 Nor does the law of nature distinguish between{* } contracts and pactions.

Contracts are of absolute necessity in life, and so is the maintaining of faith in them. The most wealthy must need the goods and labours of the poor, nor ought they to expect them gratuitously. There must be conferences and bargains about them, that the parties may agree about their mutual performances. Suppose all men as just and good as one could desire, nay ready for all kind offices: yet without contracts no man can depend upon the assistance of others. For when I need the aid of a neighbour, he may be engaged in some more important services to a third person, or in some services to those who can give him a recompense more requisite in his affairs.

The sacred obligation of faith in contracts appears, not only from our immediate sense of its beauty, {and of the deformity of the contrary,} but from the mischiefs which must ensue upon violating it. ’Tis plainly more contrary to {the social} nature, and frequently a <more serious and> baser injury, to break our faith, than in other equal circumstances to have omitted or declined a duty we owe another way. By violating our faith we may quite defeat the designs of such as trusted to our integrity, and might have otherwise obtained the aid they wanted: and, from the necessity of commerce, it must appear, that the rights founded on <pactions and> contracts are of the perfect sort, to be pursued even by force. The perfidious for his part breaks of all social commerce among men.

II. And further; tho’ a good man would not take any advantage of another’s weakness or ignorance in his dealings, nay would frequently free another from a bargain which proved highly inconvenient to him, and not very necessary to himself, provided any loss he sustained were made good; yet there’s such a manifest necessity of maintaining faith in commerce, and of excluding the cavils which might be made from some smaller inconveniences to one or other of the parties, that in the proper matters of commerce, the administration of which the law of nature commits to human prudence <and power>, our covenants tho’ rashly made must be valid, and constitute at least such external rights to others, as must for the common utility be maintained, tho’ perhaps a good man would not insist on them. But if the person who claims them persists in his claim to the utmost, we can have no right to oppose him violently; but ought to observe our covenants; according to an old rule, that “what ought not to have been done, yet in many cases when done is obligatory.”2

The proper matters of commerce are our labours and goods, or in general, all such things as must be frequently interchanged among men for the interest of society; and by a commerce in which we neither directly violate that pious reverence due to God, nor the perfect right of another; and about which no special law {of God} deprives us of the right of transacting.

III. We must distinguish from contracts the bare declarations of our future intentions; which neither transfer any right to others nor bind us to continue in the same purpose. What come nearer to contracts are {these} imperfect promises,3 in which from <received words or> custom ’tis understood, that we convey no right to others to oblige us to performance, but only bind ourselves in honour and veracity; and that too only upon condition, that the person to whom we make such promises so behave as to be worthy of the favour designed him, and don’t by his bad conduct give us just cause of altering our intentions: and in this point the promiser reserves to himself the right of judging; nor does he bring himself under an higher perfect obligation, than that of compensating any loss the other may sustain, even tho’ he should without cause alter his purpose.

IV. The circumstances to be considered in explaining the nature of contracts and the just exceptions against their obligation, <are three and> relate either to the understanding, or the will, the two internal principles of action, or the matter about which they are made.

As to the understanding; the common interest, as well as humanity, requires, that no person should sustain any damage on account of any ignorance in his own affairs which is no way faulty. And hence the contracts of minors <unwary and> unacquainted with the nature of the business, are not obligatory; nor of those seized with madness or dotage, nor of ideots, nor even of men quite disordered by drunkenness so as to have lost the use of their reason.4 And altho’ there may be a great crime in drunkenness which may justly be punished; yet this is no reason why the fraudulent and covetous should be allowed to make a prey of them. The case is very different as to crimes or injuries done by men intoxicated. For tho’ we are not bound with respect to others to preserve ourselves always in a condition fit for transacting of business, yet we are bound to preserve ourselves innocent continually, and to avoid doing injuries. If one of the parties was not aware that the other was intoxicated; this later will be bound to make good any loss the other sustained by his nonperformance of the contract. But there are many degrees of intoxication, some of which tho’ they may abate our caution and prudence, yet don’t deprive us of the necessary use of reason. If all these degrees also made contracts void, there could be no sure transactions among men. Questions concerning these degrees, must be decided in the several cases by the judgment of prudent arbitrators.

The same might be said concerning the imprudence of youth, previous to civil laws: since the degree of prudence requisite for commerce appears in different persons at very different ages. That therefor commerce may be ascertained, and such endless evasions prevented, ’tis absolutely necessary that in every society some certain age be agreed upon, to which whosoever attains must be deemed his own master, and capable of managing his own business. This age must be determined with this view, that as few as possible of ripe judgment be excluded from the administration of their own affairs, and yet as few as possible admitted before the maturity of judgment. The medium fixed by the Roman law is as good as any; that minors, <also called wards,> before fourteen years of age in males, and twelve in females, should have no management of their affairs, but be under the natural guardianship of their parents; or, if they are dead, under that of the guardians their parents or the law has appointed: and after these years, till twenty-one, or as it was in their earlier times, till twenty-five, they should be so subjected to curators, that no deed of theirs intended to bind themselves or their fortunes, should be deemed valid without the consent of their curators.

’Tis on one hand unjust that minors should sustain losses in contracts; but ’tis on the other hand unjust that they should be enriched at the expence of others. If therefor any contract has been made with them, and something paid or performed by the other party, if it is not detrimental to them to confirm the contract, they ought to do it when they come to maturity: if it be found detrimental, they should restore or compensate what was received on that account, or as far as they were profited. Minors before the legal years often have sufficient judgment in certain matters; and when it is so, nor was there any thing fraudulent or faulty on the the other side, they are bound before God and their own consciences by their contracts, even as the adult.

When parents or curators are at hand, one can scarce without a gross fault enter into any important contracts with a minor without their consent. As generally the passions of the young are impetuous and incautious; they are rash in promising, keen in their desires, improvident, liberal, full of hopes and void of all suspicion.

V. He who was engaged into a contract by any mistake or error about the very nature of the object or goods, or these qualities which are chiefly regarded in them, is not bound: and<, when the mistake is discovered,> whatever he has paid on that account should be restored. But no man has this plea who was engaged only by a secret expectation of such qualities as he did not openly insist on, or of such as are not commonly expected in such goods. If the mistake was about some different matter or event, which moved him to the bargain; when the mistake is discovered, humanity may require it of the other party to set him free, especially if he is ready to compensate any damage occasioned by his mistake. But this is not a matter of perfect obligation, unless the person in the mistake made it an express condition of the bargain.

The nature of the goods, and the qualitys upon which their value depends, and the defects of such qualitys, are, as they speak, essential points in contracts. Where one of the parties has been in a mistake about them he is not bound. Where the mistake has been only about the current price; the person deceived {and sustaining the loss} has a perfect right to have the price reduced to equality; which if the other party refuses the bargain may be made void.5

Whoever by any fault or rashness of his caused the mistake of the other party, or fell into a mistake himself, is bound to compensate any loss the other thereby sustains: but he that dealt fraudulently, is bound further to make good any profit the other could have made, had the bargain been executed with integrity.{* } Any promises or contracts obtained from us by the fraud of the person with whom we contracted, are plainly void; because through his fraud we wanted the due knowledge requisite in contracting, and he is bound to compensate our damage occasioned by his fraud{, which is easiest done by making the bargain void}.

Where the fraud of a third person has moved us to a contract without any collusion with the other party; the bargain is valid. But we have a right of demanding compensation of any loss from that third person who deceived us.6

VI. We always deem that all such voluntarily consent who voluntarily use such signs of consenting as by custom import it. Nor could there be any faith maintained, if we allowed exceptions from a secret dissent contrary to our expressions.

Words and writing are the fittest methods of declaring consent: but any other sign agreed upon by the parties, or received by common custom is sufficient. Nay some actions in certain circumstances are justly deemed to declare consent, when they are such as no man of common sense or equity would do, unless he also consented to certain terms. From such actions therefor we justly conclude a person’s consent, unless he timously premonish all concerned of the contrary. Covenants or contracts founded on consent thus declared are called tacit: which are distinguished from another set of obligations, to be presently explained, said to arise{* } after the manner of contracts, by this, that in tacit contracts the obligation is prevented by an express declaration to the contrary; but not in the others.

Beside the principal expressed articles in contracts, there are frequently others plainly understood as adjected from the very nature of the transaction, or from the prevailing custom among all who are engaged in such business.

The consent of both parties, of the receiver as well as the giver, is necessary in all translation either of property or any other rights, whether gratuitous or not. For from one’s intention of bestowing any thing on a friend, we cannot conclude any design of throwing it away in case he don’t accept, or of forcing it upon him. But a lower sort of evidence will serve to prove a consent to accept any thing valuable; and we may always presume upon it, if the thing was previously requested; provided the offer answer the request.

But as in full property there’s included a right of disposing under any lawful conditions, or upon any contingency; and of giving in trust to a friend, till some future event happens: inheritances and legacies may thus be left with trustees, till it be found whether the heirs designed, or the legatees are willing to accept. Nay goods may thus be kept in favours of persons not yet existing; as it is unjust to hinder the proprietor to appoint his goods thus to be reserved for the offspring of his <kinsmen or> friends if they shall happen to have any: and ’tis injurious toward such offspring to have defeated or intercepted any benefits destined for them by their deceased parents, kinsmen, or friends. And yet no heir or legatee can be forced to be proprietor of any thing thus left to him without his own consent. Mankind however, and each one as he has opportunity, when no special trustee is appointed, ought to take this care of infants, or persons unborn, to preserve such inheritances or legacies for their behoof{, till they can accept them}.

VII. As the obligation of contracts plainly depends on the consent of the parties{, and without it is void}; so when it was only given under certain conditions, if they don’t exist, there’s no obligation. But such conditions must be known as such on both sides, otherways there could be no faith in our transactions. These conditions therefor alone are {of such force as that their non-existence makes the transaction void} <valid>, which were either expresly made conditions by one or other of the parties, or which the person who insists on them did in conscience believe the other party understood as adjected from the nature of the affair; and not every one which one of the parties might secretly expect would exist, tho’ the like is not ordinarily expected in such transactions. Whatever indeed one party has undertaken for to the other, or positively affirmed to him to engage him to the bargain, that the other party may justly be deemed to have made a condition of his consenting.

In the known division of contracts into absolute and conditional, by a condition is understood “some event yet uncertain to one or both the parties, distinct from the prestations covenanted, upon the existence of which the validity of the contract depends.”7 A condition known to be naturally impossible, shews that there’s no engagement. We shall presently speak of another sort of impossibility <sometime called morally impossible> from the prohibition of law, or moral turpitude. But a vitious action of any third person, to be done without any aid of the parties contracting, may be a just condition; provided nothing in the contract give any invitation to such actions.

Conditions in the power of either party are called voluntary; others are involuntary; and some are of a mixed nature. But neither side is understood to be obliged to make these conditions called voluntary or mixed to exist,{* } {for then they would be absolute covenants of the bargain}.

VIII. The due freedom of consent may be taken away by fear.8 But of this there are two sorts, one denoting a suspicion that when one party has fulfilled his part of the bargain, the other party won’t fulfil his: the other denotes a terror occasioned by some great evil threatened. As to the former sort these observations seem just: 1. He that voluntarily contracts with openly unjust and impious men, whose characters he previously knew, is plainly obliged by his contract{, as he must have tacitly renounced any exception from their character, which was previously known}. But 2ly. If he only comes to the knowledge of their characters after the contract, ’tis not indeed void; but he may justly delay performing on his part, till they give such security for the performance of theirs as a wise arbiter judges sufficient. To maintain that all contracts entered into with the unjust, or heretical or impious, are void, would destroy all faith among men; since there are no such obvious characteristicks to distinguish the good from the bad as all will agree in: and considering the weaknesses of mankind, they have always had the most opposite opinions about the moral and religious characters of men around them{; as in all ages there have been the greatest diversities and contrarieties of opinions}.

As to the second sort of fear; when I have been forced into a contract by fear of evil threatened; there are two cases, according as the evil is unjustly threatened either by him I contract with, or by a third person {without any collusion with the person I contract with}. In the later case when by contract I obtain the aid of an innocent man against dangers threatened by another, no doubt I am bound; unless there be something very exorbitant in the terms. For the giving aid in such perils is no doubt a most useful service well deserving compensation.

If indeed I am threatened unjustly with some great evil by any man unless I enter into a certain bargain, or make a promise, to a third person, who is in no collusion with him who threatens me, while yet I am forced to conceal from him the terror I am under; the bargain or promise is void, because by this terror I am deprived of that liberty which is necessary in commerce. But any damage this innocent person sustains by the disappointment, I am bound to make it good, as it was occasioned by me for my own safety. The same holds, when through my cowardice I have been excessively afraid without cause.

Any contracts entered into from fear of a just magistrate, {or the sentence of a judge,} are plainly valid, since we are deemed subjected to such civil power.

IX. But when I am forced to contract through fear of evils unjustly threatened by the very party I contract with, we must distinguish whether these evils are threatened under some such plausible shew of right as might possibly impose upon an honest man, or on the other hand, by openly avowed injustice, without any such shadow of right. In the former case, tho’ the author of such violence acquires no right by it, which he can use with a good conscience; yet on account of some more distant interests of mankind, he may have a sort of external right{, with which the other party may be bound to comply}. Nothing is more incident to mankind than to mistake about their rights; and hence arise wars too frequently, while yet neither side is sensible of the injustice of their cause. These wars must either be composed by treaties and contracts, or must end with the ruin of one side. Now ’tis highly eligible that they should be ended rather by some treaty: and treaties could be of no use if they still lay open to this exception of unjust force, which either side might plead {whensoever they inclined to renew the old controversy}. This exception therefor must not be allowed against treaties of peace, when there were any plausible pretences on both sides for the preceeding war.9 If indeed the terms of peace are manifestly iniquitous and oppressive, contrary to all humanity, making life quite miserable and slavish to the less fortunate side; such treaties have no plausible shews of justice, and lay open to the exception.{* }

But where violence is used or threatened, without any pretence of right, to extort promises or contracts, they cannot be obligatory. By such violence the author of it plainly abdicates or forfeits all the rights of men; all the benefits to be claimed from the law of nature, or the humanity of his fellows; as he openly professes himself a common enemy to all, free from any social tye. The common safety therefor requires that such monsters should be cut off by any means. Suppose that such {extorted} promises were valid, yet whatever upon such a promise is due to the author of the violence, he is always indebted at least as much to the person thus compelled, upon account of damage done him unjustly: these two claims therefor extinguish each other by compensation. Nor can one here allege that by the act of promising under this terror the promiser tacitly renounces this exception of unjust force previously known; for this forced renounciation alleged is one part of the damage: and what pretence is there of alleging an obligation by tacit compact, to one who in such a cause is incapable of acquiring a right by the most express contract, and who in this very affair abdicates or forfeits all human rights?

But, however that no regard is to be had to such persons in thus trampling upon all the rights of mankind, yet when they sufficiently appear to be returning to a soberer mind, asking pardon of what’s past, offering to quit their fastnesses, to deliver their arms, and to give security for their future conduct; and when such {confederacies} cannot be otherways destroyed without shedding much innocent blood of our citizens; the common interest may sometimes require to enter into such treaties with them, and to observe them faithfully <in order to avoid greater evils>: and as to any of our citizens who by this means are excluded from prosecuting them for reparation of damages, they ought to obtain it from the community.

X. Contracts or promises cannot be of force unless the matter of them be possible to the parties: and therefore no man can be obliged to{* } what he cannot accomplish tho’ he seriously desired it. If one has promised any thing, which by some subsequent accident without his fault becomes impossible, he is only obliged to restore or compensate the value of any thing he received in consideration of it. Where the fraud or other gross fault of one party either made the matter impossible, or concealed the impossibility, he is obliged to make good{* } the profit which would otherways have arisen to the other.

The matter of contracts must also be lawful: that is, our contracts or promises should be only about the natural matters of commerce, which can be alienated, the administration of which is committed to human prudence, and not prohibited by any special law. No obligation therefor can arise from any promise, to violate directly the reverence due to God, or the perfect rights of others, or to do what any special law prohibits, or what is not committed to our power.

1. If therefor both parties know the unlawfulness of the terms of any contract, or ought to have known it; the contract is void. The one who employed another to commit a crime, may redemand what he gave to the person hired, before he has committed the crime. And if the crime be previously committed, the executor ought not to have the hire; nor if he previously received it, can the person who hired him redemand it. Both equally deserve the highest punishments; {nor should either hold any advantage by such engagements}.

If after the contract the iniquity of it appears to either side, which they had not formerly considered; before execution either of them may free himself from it: and any reward given should be restored. Nor after execution can the person employed claim his reward, unless the moral turpitude affect only the hirer and not himself [if the moral turpitude affects himself as well as the person who hired him];10 {or} unless his ignorance was no way culpable. But where the turpitude only affects the person who employed him, then he may justly claim his hire. ’Tis the general interest of mankind that there should be no allurements to such crimes, nor dependence upon such contracts.11

But if the vice in any performance of covenant only consist in this, that a man has managed imprudently and contrary to the duty of a discreet cautious man, in these matters which naturally fall under commerce; ’tis of such importance to maintain the faith of commerce, that in this case, too “our transactions and covenants are obligatory, tho’ we were faulty in entering into them.”

Covenants about the goods or actions of others which are not subjected to our power, are in the same case with those about impossibilities. Whoever has acted fraudulently in such covenants is lyable to make good all the profit would have accrued from the faithful performance of them: and he who has deceived others by any culpable negligence is obliged to compensate the damages.

XI. Every sort of contracts about one’s goods or labours does not immediately divest him of all moral power of transacting about them in a different manner with others. This is the case only in such as convey the intire property at once, or a real right; or such as give another the whole right to one’s labours for a certain time, or during life, so as to preclude his contracting with others about the same. But when one has only made a contract constituting a personal right against himself, he may thereafter convey a valid real right, to such as knew nothing about the former contract, which will take place of the personal right tho’ prior.12 Where indeed this new grantee has acted fraudulently, being apprized of the former contract; the subsequent one should be void. For the law of nature can never confirm frauds, or any* contracts plainly contrived and designed to elude any obligations of humanity, when this design must be known to both parties in the contract. But in other cases, “of two covenants entered into with the same person, the later derogates from the former.” But of contracts entered into about the same thing with different persons, “such as convey a real right take place of those which only convey a personal”; provided there has been no fraud on his part to whom the real right is transferred. And lastly in contracts of the same nature entered into with different persons, “the prior takes place of the posterior.”13

XII. We may contract by factors or agents, or persons commissioned for that purpose, as well as in our own persons. Where full powers are given, and no special instructions to be shewn to all he deals with, expressing the extent of our agent’s commission, and how far we subject our rights to his transactions; we are deemed to be obliged to ratify what he does in our name, unless we can make proof that he acted fraudulently, or was bribed by the other party; or the manifest iniquity of his deeds satisfy a prudent arbiter that he must have been corrupted. As to any smaller injuries we sustain, we must impute them to our agent, while we ratify what he has done with others.

But when the powers of the agent are specially declared to all concerned, what he transacts beyond these bounds does not oblige his constituent.

[1. ]See System 2.9.[1], vol. II, p. 1. In his definition Hutcheson seems to join Ulpian’s definition of agreement (pactum; Justinianus, Digestum II.14.1.2) and Titius’s definition in his Observationes in [...] Pufendorf [...] De officio quoted by G. Carmichael, in his Supplements and Observations upon Pufendorf’s De officio (cf. Notes on Puf., p. 80)

[* ]{The difference between contractus and pactum is found in any Civil-law-dictionary.} [According to the jurists contracts are those agreements that allow people to take legal action. In De iure nat., 5.2.2–3, Pufendorf argues against this distinction and in paragraph 4 says that contracts are agreements which “deal with things and actions of commercial significance.” Carmichael says that Pufendorf’s “distinction is not of much use itself” and Hutcheson follows him. Cf. Notes on Puf., pp. 106–8.]

[2. ]See System 2.9.2, vol. II, p. 4.

[3. ]The translator mixes up the “bare declaration of our future intentions” and the “imperfect promise.” Here Hutcheson draws this distinction from Grotius, De iure belli, 2.11.2–4, as is clear in the correspondent section of System 2.9.3, vol. II, pp. 5–6. See also Pufendorf, De officio 1.9.4–7.

[4. ]In System, Sections 6 and 5 of Chapter 9 correspond to this section. See also Pufendorf, De officio 1.9.10–11.

[5. ]Compare the first two paragraphs of Section 5 with System 2.9.9, pp. 14–15, and Pufendorf, De officio 1.9.12.

[* ]{The Civilians thus distinguish between pensare damnum, and praestare quod interest: obliging those who wrong others through negligence or inadvertence to the former only, but in case of fraud or more gross negligence obliging always to the later.} [Cf. System 2.9.12, vol. II, p. 23 and notes.]

[6. ]Cf. Pufendorf, De officio 1.9.13, points 1 and 2.

[* ]{Chap. xiv.} [The distinction between contracts, tacit conventions and obligations quasi ex contractu is better explained, with examples, in System 2.9.4, vol. II, pp. 6–8.]

[7. ]See System 2.9.8, p. 13.

[* ]{A voluntary condition is of this sort: “If I shall retire to live in the country, I agree to set my city-house at such a rent.” By this I don’t bind myself to live in the country. “I promise, if I incline to sell certain lands, that such a man shall have them at a certain price.”} [This distinction between conditions potestativae, fortuitae and mixed was in the Justinian’s code and is discussed by Pufendorf, De iure nat. 3.8.4.]

[8. ]This and the following section are very similar to Sections 10 and 11, Chapter 9, of System, pp. 16–23. See also Pufendorf, De officio 1.9.13 and 14.

[9. ]The idea that the “exception of unjust force” should not be allowed against treaties of peace is shared by Carmichael. See Notes on Puf., pp. 85–86 and note 11.

[* ]{See Book II. Ch. xv. 8. and Book III. Ch. vii. 8. 9.}

[* ]{Book II. Ch. iii. 2.}

[* ]{Praestare quod interest.}

[10. ]This is a mistake by the translator.

[11. ]This paragraph is not very clear, nor is the conclusion. A more coherent account is in System 2.9.12, vol. II, pp. 25–26.

[12. ]See above 2.7.4, p. 169.

[* ]Matth. xv. 5. Mark vii. 11. [Hutcheson refers to the two passages where Jesus blames the Pharisees for refusing to relieve their old parents by declaring sacred to God their own goods.]

[13. ]See Pufendorf, De officio 1.9.19 and 1.9.21 for the next section.