2.) Equity (Contract) Law

    This page is continued from the “3 Modes of Jurisprudence- Common, Admiralty, & Equity Law under the Intro to Law” section.

Definition of EX CONTRACTU:

[Latin ‘from a contract] (17c.) Arising from a contract <action ex contractu>.”[1]

     Equity Law is law which compels performance.  It compels you to perform to the exact letter of any contract that you are under.  So, if you have compelled performance, there must be a contract somewhere, & you are being compelled to perform under the obligation of the contract.  Now this can only be a civil action – not criminal.  In Equity Jurisdiction, you cannot be tried criminally, but you can be compelled to perform to the letter of a contract.  If you then refuse to perform as directed by the court, you can be charged with contempt of court, which is a criminal action.  

    If a contract is violated, a Civil Action could be filed in order to compel performance via a Writ of Replevin or via a type of Vicontiel Writ called a Writ of Justice.

CONTRACTS MUST BE VOLUNTARY

     Under the Common Law, every contract must be entered into knowingly, voluntarily, & intentionally by both parties or it is void & unenforceable.  These are characteristic- it must be based on substance.  For example, contracts used to read, “For one dollar & other valuable considerations, I will paint your house, etc.”  That was a valid contract.  A contract must be based on substance.[2]

History Worth Remembering:

     Arguably the most powerful passages on the purpose of the contract come from the works of John Locke, whose writings inspired the American, English, and French Revolutions.  Locke was the most quoted authority on government in the 1760-1776 period prior to American independence.  Thomas Jefferson was accused of plagiarizing Locke in certain sections of the Declaration of Independence by fellow Virginian delegate Richard Henry Lee.[3]  Here are excerpts from Two Treatises of Civil Government:

On Civil Government – Ch. I:

§ 1.

     Slavery is so vile & miserable an estate of man, & so directly opposite to the generous temper & courage of our nation, that it is hardly to be conceived, that an Englishman, much less a gentleman, should plead for it….

Second Treatise of Civil Government – Ch. IV “Of Slavery”:

§ 22.

    THE natural liberty of man is to be free from any superior power on earth, & not to be under the will or legislative authority of man, but to have only the law of nature for his rule. The liberty of man, in society, is to be under no other legislative power, but that established, by consent, in the commonwealth; nor under the dominion of any will, or restraint of any law, but what that legislative shall enact, according to the trust put in it.  Freedom then is not what Sir Robert Filmer tells us… ‘a liberty for every one to do what he lists, to live as he pleases, & not to be tied by any laws’: but freedom of men under government is, to have a standing rule to live by, common to every one of that society, & made by the legislative power erected in it; a liberty to follow my own will in all things… & not to be subject to the inconstant, uncertain, unknown, arbitrary will of another man…

§ 23.

    This freedom from absolute, arbitrary power, is so necessary to, & closely joined with a man’s preservation, that he cannot part with it… for a man, not having the power of his own life, cannot, by compact (“compact” is an Old English term for “Contract” or “Agreement”), or his own consent, enslave himself to any one, nor put himself under the absolute, arbitrary power of another, to take away his life, when he pleases… for, whenever he finds the hardship of his slavery outweigh the value of his life, it is in his power, by resisting the will of his master, to draw on himself the death he desires.

§ 24.

  … [T]he perfect condition of slavery, which is nothing else, but the state of war… between a lawful conqueror & a captive… Once compact (contract) enter between them, & make an agreement for a limited power on the one side, & obedience on the other, the state of war & slavery ceases, as long as the compact endures: for, as has been said, no man can, by agreement, pass over to another that which he hath not in himself, a power over his own life.

    … we find among the Jews, as well as other nations, that men did sell themselves; but, it is plain, this was only to drudgery, not to slavery: for, it is evident, the person sold was not under an absolute, arbitrary, despotical power: for the master could not have power to kill him, at any time, whom, at a certain time, he was obliged to let go free out of his service; & the master of such a servant was so far from having an arbitrary power over his life, that he could not, at pleasure, so much as maim him, but the loss of an eye, or tooth, set him free, Exod. Xxi.

Six Elements of a Legal Contract:

1. Offer – The offer is the very first part of creating a contract.  It is the proposal a person or entity gives to another with the intention of entering into a valid contract.  For example, Martha offers Karen fifty dollars a week in exchange for Karen to come in and clean her house.

2. Acceptance – A contract cannot legally exist without the offeree giving acceptance to the proposed offer.  Without mutual consent from both parties however, there is no valid contract.  Karen accepting Martha’s offer of fifty dollars for her services, & both Karen and Martha agreeing to go through with the exchange, is acceptance and mutual consent.

3. Consideration – The object, event, service, payment, etc. that the contract is created for is called the consideration of the contract, but both parties must give something of value.  In this scenario, Karen will receive fifty dollars per week, and Martha’s house will be cleaned every week.

4. Legality of subject matter – Legality of subject matter refers to the fact that in order for a contract to be valid, it must be formed for a legal
purpose and has to follow any statutory regulations with respect to the contract created. It is legal for Martha to hire Karen to clean her house, but not to rob a bank.

5. Contractual capacity – A person has the contractual capacity to enter into a contract as long as they have the legal ability to. So if Karen
was a ten-year-old child, she would need her parent’s consent and signature in order to sign the contract, since Karen’s age & lack of experience overall makes her incapable contractually.

6. Contractual intent – Even with all of the above elements, a contract will not exist if the two parties did not subjectively want to enter
into a contract. On paper, Karen has signed the contract to clean Martha’s home weekly, and receives a weekly payment of fifty dollars.  However, what if the only reason Karen signed the contract was because Martha threatened to show fabricated proof to Karen’s boss that she was stealing money from the company she works for?

    Because of this situation, Karen did not demonstrate contractual intent to enter this relationship with Martha.  Regardless of the type of contract created, all of these elements are crucial to a legally binding contract.  Valid contracts are important to all businesses, & all facets of a business, whether the relationship is between the
company & a customer, vendor, partner, etc.  It is important to understand what a legal contract can adhere a person or business to, & understanding the basics can certainly clear up some of the confusion.[4]

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References:

[1]: All definitions from: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black & Editor in Chief Bryan A. Garner. ISBN: 978-0-314-62130-6

[2]: “The U.C.C. Connection” by Howard Freeman: www.freedom-school.com/the-ucc-connection.html

[3]: John Quincy Adams, The Jubilee of the Constitution. A Discourse Delivered at the Request of the New York Historical Society, in the City of New York, on Tuesday, the 30th of April, 1839; Being the Fiftieth Anniversary of the Inauguration of George Washington as President of the United States, on Thursday, the 30th of April, 1789 (New York: Samuel Colman, 1839), p. 40.

[4]: Citizen’s Action Network, “Six Elements of a Legal Contract”: www.citizensactionnetworks.com/index.php/en/2015-03-24-01-45-16/six-elements/six-elements-of-contracts

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