Contract

As an independent and substantive body of law, contract scarcely existed in colonial America. American lawyers read Blackstone, and he confirmed what they knew by experience: the law of contract was subordinated to the law of property. The preindustrial colonial economy operated on a modest level; business transactions tended to be executed instantaneously, rather than on a future basis. Thus, contract was an instrument for exchanging title to property rather than for securing some future money payment. This title theory of exchange meant that the remedy for a broken agreement would be the actual property bargained for, rather than payment for damages. Under

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these circumstances, colonial Americans worried less about expectation damages (damages given in money if the contract failed in execution), and more about specific performance, the passing of title of the particular good.

Colonial contract law lagged behind that in England. The English as early as the sixteenth century recognized that mutuality of promises could be sufficient consideration to sue for a broken contract, although not all contracts were treated as bilateral promises in the modern sense. This notion indeed took greater hold in the mother country in the eighteenth century. As A. W. Brian Simpson has observed, "the award of expectation damages was the norm" by the end of the century. ³⁴

In the colonies this development was substantially retarded. True enough, by the mid-eighteenth century, colonial Americans had entered into trading and commercial arrangements that joined center with periphery, town with farm, and provinces with larger world. But the first American instance of any consequence in which a court applied expectation damages occurred in Lewis v. Carradan, a Pennsylvania case decided in 1786.

The immature state of the American legal profession in the eighteenth century contributed to this lag. Juries exercised important influence in contract cases, interjecting their own evaluation of the substantive fairness of contractual dealings rather than heeding closely reasoned legal arguments. In the Massachusetts case of Pynchon v. Brewster ( 1766), a jury returned a verdict in which it diminished damages because it thought the plaintiff had already partially benefited by the contract. Jury intervention added equity to the decision but it contributed significant uncertainty to the expanding marketplace of prerevolutionary America. Modern notions of commercial contract law awaited full development in the nineteenth century, when the pace of economic activity dramatically quickened.

Date: 2015-01-29; view: 964