bilaftara1 contract is one in which each of the two parties gives his promise in exchange for the promise of the other, the promise of each being a consideration for the promise of the other.
Contracts are also said to be executory or exe cuted. An executory contract is one which has not been fully performed. As the performance of a contract terminates its existence as a legal obligation, it will be observed that the expression 'executed contract' is a contradiction of terms. A present sale of personal property is sometimes said to he an executed contract, but the expres sion is improper, as the sale may be effected by a mere meeting of the minds without any promise, and. hence, without contract. See SALES.
Performenice.—In the case of all true contracts, whether by specialty or simple contracts, the obligations of a party to perform may not arise until the happening of a condition,, or the per formance of his promise by the other party, as expressly or impliedly provided in the contract by its terms. if there be no such provision in the contract. by certain settled rules of construction (known as the law of conditions) implied in law, the performance of one party may be deemed a condition precedent to the performance of the other, or the performance of each of the parties may be a concurrent condition to the performance by the other; that is, each party most tender his performance before he can recover damages for the breach of contract by the other. In general, impossibility of performance is no defense to all action brought to recover damages for breach of contract. If. however, the contract contemplates the continued existence of the parties or the sub ject-matte• of the contract, the death of a party of failure of subject-matter is a defense. Thus, in contracts for personal service, death of the employer or employee terminates the contract, and a contract for the use of a particular bond ing or other property is terminated by the de struction of the property.
8uits upon Contracts.—Owing to the rule of pleading• in actions upon contract at common law, the plaintiff must show that he has given con sideration for the defendant's promise. A third person for whose benefit the contract was made, but who was not a party to it, could not sue upon it. This is still the rule in most jurisdic tions, although not in all: and in a few, notably New York, in the single case when A gives money or property to B upon his agreement to pay money to C, C may sue upon the contract upon the theory that a debt has been created in his favor. Equity exercises jurisdietion to compel specific performance of a contract when legal damages would be inadequate. It also exercises its powers to rescind or reform written contracts affected with fraud or mistake. Fraud is also a defense
at law to an action founded on contract, it having been early adopted by the courts of law. although it is a defense equitable in character. Contracts which contravene rules of public policy or statu tory enactment are illegal and void. See IL LEGALITY.
Contracts in the Ciril Lare.—In the Roman law contract (ronlractjls) signified an agreement which created an actionable obligation. The original roots of contractional obligations were apparently pledge and vow. In the first case, the debtor gave the creditor a pledge, which the creditor held until the debtor had fulfilled his promise. if a debtor had nothing else to pledge, he pledged his own person in the form of a sale. This transaction the Romans called ut.•nin. tt created something analogous to a judgment debt; and as the debtor was iu default, the creditor levied on his body ( manus inieetio). At the time of Gains this contract was antiquated. A vow to the gods to do something for or pay something to the third person enabled the priest to inter vene and insist upon performance—from this root sprang the sacral contract of the priestly law, the sponsio, and out of the sponsio grew the sacral contract of slipulatio.
At the time of Gains (early Empire) five classes of contracts were recognized : (a) The rerbal contract, stiputat;o, which was actionable because a certain form of words (question and answer) had been observed. It was usual to up a written statement (eolith)) reciting the terms of the agreement, but the validity of the contract rested on the exchange of the spoken words. (b) The literal contract (from /Wm, writing). Tins was actionable because a formal entry had been made in the creditor's ledger (ex pensilatio). In thocase of the verbal and the literal contract it was neither the agreement alone nor the form alone which created obligation, but the two together. (c) The rent contract. This was actionable because something (res) had passed from the creditor to the debtor, and the return of the thing or an equivalent had been promised. To this class belonged the bailments known as mutuum, commodatum, depositum, pignus. (See BAILMENT.) Besides these there were many other real contracts without special names. 'Ultimately it was recognized that any agreement for recipro cal performances would become a binding con tract as soon as one party had performed. (d) The consensual contract. This was actionable by virtue of the agreement (consensus) between the parties, although no form had been observed and nothing had passed. There were only four con tracts of this class: emptio renditio, sale; loea tio-conductio, hiring: societas, partnership; and mandatum, commission of agency.