It may also be mentioned here that where a private corpora. Lion is a party to a contract, a question may arise whether the mak ing of a contract is within the powers of the corporation. To determine what these powers are, reference must be had to the charter or articles of incorporation, and perhaps to the statute law of the state which created the corporation. If a corporation was formed for the purpose of building and operating a railroad, there would he no doubt of its power to build a station. If on the other hand a corporation formed to carry on a drug business should pro pose to build a grain elevator, legal questions would arise.
In dealing with public or municipal corporations also, ques tions of the extent of powers may be raised. Questions of this sort are extremely varied. and may be either very simple or very difficult of solution. Where a corporation makes a contract beyond its powers, the contract may-, so long as it remains unperformed on both sides. be rescinded by either. Yet if a person has entered into a contract with a corporation which is in fact beyond its powers, but has had no reason to suppose the contract outside such powers, and has in part performed the contract, his rights are gen erally protected by the law. This does not, however, make such a situation anything but a very undesirable one, and care should therefore be used to obtain reasonable assurance that a contract is within the powers of a contracting corporation. Common knowl edge of the standing and nature of the corporation may give such assurance; on the other hand, the matter may be so close to the line that nothing but an opinion of competent counsel would be suflicien t.
Assuming that the parties concerned are capable of contract ing, there are two elements essential to the validity of the ordinary contract which will be considered here; one is m utual consent, and the other, col,xide1 (,tioi.
Consent. In order to have a valid contract, the parties must have, and must communicate, a common intention. Their minds must meet in expressed agreement. If this element is absent, there can be no binding contract. For instance, in an English case the plaintiff agreed to sell and the defendants to buy a certain quality of Surat cotton to arrive by the ship "Peerless" from Bombay. The plaintiff offered cotton from a ship named '•Peerless" from Bombay, the defendants refused to accept it. and the plaintiff sued for damages for this alleged breach of contract. It was admitted that the defendants in using the terns Peerless" meant a different ship from that which the plaintiff had in mind, and in which the cotton actually arrived; it therefore appeared that there was no mutual consent to the same matter. Judgment was accordingly given for the defendants. On the other hand, the law looks to the expressions of the parties, and when their expressions necessarily indicate agreement, does not permit them to say that they were not agreed.
Consent is manifested by offer and acceptance. It follows from what has been said that both the offer and the acceptance must be communicated, but each may be communicated by conduct as well as by words. Thus if A asks S to work for him for certain wages, Z in simply doing the work may accept the offer, unless some other form of acceptance was prescribed. It is also clear that the acceptance must be absolute, and in exact accordance with the terms of the offer. If .1 makes one offer, and 1 answers that he will do something a little different from what A suggested, there is no contract. X's reply may amount to a new offer, which A may subsequently accept. This principle will later be seen to be important in connection with an architect's submitting plans in response to a request for plans in competition.
An offer may by its terms remain open for a certain length of time; as for two weeks or until the return mail; if no duration is specified it can be accepted only within a reasonable time. What is a reasonable time depends upon the circumstances of each ease. In an action of 'law, the question would be determined by the jury. An offer may be revoked at any time before ance. The revocation, however, must be communicated to the offerce. If A offers to furnish Z with a cornice for a certain amount, A may, at any time before X has accepted the offer, ively withdraw it by declaring to 1 his intention so to do. At the moment when a valid acceptance is made, the contract, if good in other respects, is complete, and both parties are bound. ance is therefore irrevocable without the consent of both parties. As to the important question when acceptance becomes ing—it is stated as a general rule that the acceptance is made when the acceptor has done all he can to communicate his inten tion. Thus the mailing of a letter of acceptance properly stamped and addressed marks the making of a contract, and is irrevocable. Under this rule the delay or loss of the letter in the mail cannot delay or prevent the binding effect of the contract, so that it may happen that a person making an offer becomes bound without his knowledge. For this reason it is prudent to make it part of an offer that acceptance shall be only by letter delivered within a stated time at the office or into the hand of the person making the offer. Upon this point of acceptance by mail there has been some doubt about the law, and there are old decisions in one or two juris dictions that there is no contract until the letter of acceptance is received. The rule about acceptance by telegram would probably be the same as that governing acceptance by letter. If, on the other hand, an acceptance were sent by an agent of the offeree, it would have to be delivered to be effective.