If the parties to a bilateral contract contemplate that performance on one side is the exchange or price for the performance on the other, and, if the discharge of one party's contractual duty by the other party's breach, actual or prospective, depends on the principle of failure of consideration, it would seem that the exchange of performances is the real bargain, and not the exchange of promises. To put the subject of consideration on this reasonable footing, therefore, goes far to clear up the doctrine of implied conditions in bilateral contracts as being based on failure of consideration.36 Professor Williston approaches very closely to this view of the nature of consideration in bilateral contracts, "seeking the detriment necessary to support a counter-promise in the thing promised and not in the promise itself." As he points out, however the Judges may define consideration, it is the sufficiency of the thing to be done which they consider,—the performance, not the fact that there is or is not an obligation to perform. Dean Ashley, too, would determine whether a promise is an obligation by the nature of the contemplated performance.38 The conception of consideration herein advocated is largely drawn from Professor Williston, under whom the writer first studied the law of contracts. At the same time Professor Williston does not entirely discard the ancient formula that promise. is consideration for promise, although this is the conclusion to which his reasoning would seem to lead. If a promise is consideration only when that which is promised would be so regarded, does this not prove that it is not the promise which is the consideration? And although Professor Williston escapes from the absurdity of rating a promise higher than performance, does he entirely escape from the old question-begging fallacy which he himself exposed, when he speaks of the reciprocal promises covered by his test as furnishing the element of consideration for each other ?39 It remains to say a word as to the secondary aspect of the consideration test as applied to the sufficiency of com 36 See Wald's Pollock on Contracts. 323, n. 8;-Harv. L. Rev. 398. 378 Harv. L. Rev. 35. 36. 38 26 Harv. L. Rev. 433, n. 11: Ashley on Contracts. 92, 93. 39 Williston, Sales, 958; see also Wald's Pollock on Contracts (3rd ed.) 201. n. 14; 203, n. 15; 323, n. 8; Ames, 13 Harv. L. Rev. 31. pleting or promising to complete a contract as consideration. for a promise of additional compensation by the other party or by a third party. There is an exchange in fact here, there is a bargain; and the question turns on the second branch of the consideration formula, whether what is offered in exchange is a "legal detriment" having any possibility of value in the eye of the law, sufficient to be the foundation of a bargain. Looking at the question broadly, the real issue in such cases would seem to be not the theoretical or metaphysical possibility of finding a microscopic "legal detriment" in some imaginary rescission or in a waiver of a supposed right to break the contract and pay damages, but whether good faith and business policy permit a contractor to exact additional compensation for completion under the circumstances. 40 In some cases of untoward difficulties supervening, either unknown or unforeseen when the contract was made, (which, if our law were more liberal and just, would excuse performance), the contractor may be equitably or morally justified in a demand for more pay for the additional burden not contemplated by the parties, and a contract to that effect should be enforced.41 On the other hand the Court should refuse its aid to a contractor who takes unjustifiable advantage of the necessities of the other party to coerce a promise to pay increased compensation, where there is no honest or equitable reason for abandoning performance of the contract.42 Such an abstention from breach of contract is no more a sufficient basis for an honest claim than abstention from a crime, tort or breach of official duty. This distinction, suggested by the Minnesota case, convinces the sense of justice of many Courts in the face of technical difficulties.43 Although one is already under contract with another to do a certain thing, if this contract was made in contemplation of the contracting party getting further compensation from others, it would not be a violation of his duty to earn more pay by making contracts with third parties for the 40 Compare Shriner v. Craft (Ala.) 28 L. R. A. (N. S.) 450. with Evans v. Ore. & Wash. Rd. Co. (Wash.), 28 L. R. A. (N. S.) 455. King v. Duluth, etc. Ry. Co., 61 Minn. 482; Linz v. Schuck, 106 Md. 230, 11 L. R. A. (N. S.) 789. note. 42 Alaska Packers' Association v. Domenico, 117 Fed. 99. same performance. So if a contract with a third party for the same performance were made in ignorance of the prior contract and is not extorted by a threat of breach of contract, and the consideration is doing the thing rather than a promise to refrain from violating one's obligation, it would seem to serve no purpose of justice or utility to strike down such a contract for the reason that it does not satisfy the techincal test of legal detriment. 45 The conflict of authority on this secondary aspect of consideration shews that "legal detriment," as a universal rule of thumb which may be applied blindly and mechanically to test the sufficiency or value of consideration, has broken down; and we are driven back to the test of public policy, which was suggested by Dean Ames, to exclude contracts founded on wrong or bad faith practised by one contracting party on the other. When the law of consideration is broadened so as to recognize not only bargain, but also all other just grounds for the enforcement of a promise, and gives up the foolish attempt to measure the sufficiency of what is promised in exchange by a mechanical formula, . then there will be no occasion for its abolition by the Courts or by the Legislature. HENRY WINTHROP BALLANTINE. University of Montana. "See Beale, 17 Harv. L. Rev. 71. 45 12 Harv. L. Rev. 529, n.; 13 Harv. L. Rev. 36, 42. IMPORTANT POINTS OF LAW. INDEMNITY OF A JOINT TORT-FEASOR.-More than a century ago it was decided in Niron v. Merryweather that an implied indemnity does not arise as between joint tortfeasors simply by reason of the payment by one of the whole liability; and though the rule has more than once been adversely criticized, it is now too late, said Lord Herschell, to question the decision in this country. Yet if a person can lawfully employ another to fulfil a duty which the law casts on him, there seems to be no ground of public policy which prevents him from stipulating for an indemnity by the latter against claims arising from the non-fulfilment of the duty. Neither Merryweather v. Nixon nor any of the later authorities declares such an agreement to be unlawful, and there are dicta which support its validity. Newcombe v. Yewen and the Croydon Rural District Council (which came before Mr. Justice Darling last week) was an action under Lord Campbell's Act against the Board and a contractor, whom they had employed to do some work involving the excavation of a deep pit adjoining a highway, under an indemnity from him against liability to third parties for his negligence. A verdict having been obtained by the widow and daughter of a person who had met his death by falling into the pit, which they said was insufficiently fenced and not properly lit, the learned Judge held that the Board were entitled to be indemnified by the contractor. His decision will help to cure an erroneous belief in the universality of the rule that a joint tort-feasor has no right to contribution or indemnity. DIRECTORS' CONTRACTS WITH COMPANIES.-There is a wholesome rule that in general a director of a company shall vacate his office if he is concerned in the profits of any contract with the company. The general principle is that a company is entitled to the aggregate wisdom and experience of its directors, and if all or any of the directors are interested in a contract, the company loses the benefit of their unbiased judgment. This principle is recognised in Table A., clause 77, under the Companies (Consolidation) Act, 1908, which provides that the office of director shall be vacated if the director is concerned or participates in the profits of any contract with the company. There is an exception where the director is a member of another company which enters into contracts with the company of which he is a director, but he must not vote in respect of any such contract or work. The rule was exemplified and applied in the Star Steam Laundry Co., Ltd. v. Dukas, decided recently by Lord Justice Farwell sitting as an additional Judge of the Chancery Division. In that case there was a clause in the articles, of course superseding Table A, which provided for the vacating of the office of any director who should be concerned in or participate in the profits of any contract with the company. I was unsuccessfully contended that, as no profits had arisen from the contract, the office was not vacated, since the clause should be read as meaning "concerned in or participating in profits" and not as "concerned in any contract or participate in any profits." The learned Lord Justice was, however, driven to the conclusion that if the director was concerned in any contract he was bound to vacate, and that it was beside the mark to say that profits had not resulted. The general rule is clear, but it is to be remembered that it is possible in these cases, as it were, to contract out. One often sees in elaborately drawn articles provisions giving to a director full power in respect of contracts in which he may possibly have an interest, and, however undesirable this may be in principle, there is nothing against it in the statute, as there is, for instance, in the Municipal Corporations Act, 1882, which creates for the members of a corporation an abolute disqualification. ANNUITY A CHARGE UPON CORPUS.-The question whether an annuity is a charge upon corpus has again arisen in the recent case of Re Young; Brown v. Hodgson (107 L. T. Rep. 380; (1912), 2 Ch. 479). The only distinction between that case and Re Howarth; Howarth v. Makinson (100 L. T. Rep. 865; (1909), 2 Ch. 19), noticed in this journal of the 21st Jan. 1911, p. 286, is that in Re Young there was a trust for the accumulation during the infancy of a child of the residue of the income after paying the annuities. In both cases there was a direction to pay the annuities out of income with an ultimate gift "subject to the said annuities," and the learned Judge decided (following Re Howarth) that, notwithstanding the direction to accumulate the residue |