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PROMISE OR BARGAIN?
RosCOE POUNDt
While the progress of the law had been more and more toward
what had been taken to be the moral position that promises, as
such, ought to be kept, and while until recently the law throughout
the world had seemed to come almost (one might all but say sub-
stantially) to that position, there has begun a noticeable relaxation
of the strict moral doctrine as to the obligation of an intentional
and advised promise. From antiquity the moral obligation to keep
a promise had been a cardinal tenet of ethical philosophers, pub-
licists, and philosophical jurists. Thus, Plato quotes a saying of
Simonides that justice is speaking the truth and the Platonists
later spoke of justice as truthfulness. Demosthenes argued that
the laws should be obeyed because men, as citizens, had agreed to
do so. Cicero, in a treatise on duties had put stress on the prisca
fides, good faith keeping of promises, by the old Romans. Faithful
keeping of a promise was a tenet of Christian morals pronounced
by a council of the early church incorporated in the corpus of the
canon law. The seventeenth-century jurists of the law-of-nature
school repeated it as a proposition of natural law. Strykius put it
in extreme form, saying that we knew from Scripture that God
held himself bound by a promise and that the devil and the Prince
were bound by promises also. The Declaration of Independence
laid down that government derived its just powers from the con-
sent of the governed who contracted to be bound. A textbook that
was taken as gospel by the profession when I came to the bar told
us that all social life presumed and rested upon the performance
of promises or undertakings ,declared or understood.
Today, what we were taking to be the last step in bringing the
law of contracts into complete accord with the precept of morals
has been, at least for the time being, arrested and we are told that
the supposed moral foundation is illusory. Men are not to be bound
by promises. They are only to be held to bargains. The Marxian
economic interpretation, the rise of the service state, and the hu-
manitarian theory of liability, in different ways and in varying
degrees, have seemed to be leading to a radically different view
of the significance of a promise. But whether or not we think in
terms of promise or of bargain do we not get down ultimately to
the expectations of men involved in life in civilized society, or, as
it has been put, the jural postulates or presuppositions as to what
is just and right in civilized society?
One such postulate is, I submit, that in civilized society men
tDean Emeritus of the Harvard Law School.
 TULANE LAW REVIEW [Vol. XXXIII

must be able to assume that those with whom they deal in the gen-
eral intercourse of the society will act in good faith, and as a
corollary must be able to assume that those with whom they so
deal will carry out their undertakings according to the expecta-
tions which the moral sentiment of the community attaches thereto.
In consequence in a commercial and industrial society a claim or
want or demand that promises be kept and that undertakings be
carried out in good faith, a social interest in the stability of
promises as a social and economic institution, becomes of the first
importance. I have been calling it the social interest in the security
of transactions. It requires that we secure the individual interest
of the promisee, that is, his claim or demand to be assured in the
expectation created which has become part of his substance.
No doubt what I have just said may be affected by the rise of
the social service state, where there has been a shift to a state-
directed economy. Two phenomena of the contemporary law of
contracts are now much discussed by French writers. One is what
Josserand calls "contractual dirigism," i.e., a regime of state-
making of contracts for people instead of leaving contracts to be
made by people themselves. The other is a humanitarian idea of
rendering a service to debtors or promises by the state lifting or
shifting burdens or losses, and hence the burden of promises, so as
to put them upon those better able to bear them.
As to the state-directed economy, Planiol puts it thus: "If the
state undertakes to direct the economy itself it cannot admit the
maintenance of contract relations contrary to those it envisages.
Contracts of long duration become impossible where in all cases
they are exposed to revision of their clauses. Legal reglementation
is substituted for contractual reglementation. The contract is no
more than submission of the parties to an obligatory regime."
Things have not gone so far with us. But they have been
moving in the same direction. We have been developing not a little
"contractual dirigism." Standard contracts, standard obligatory
clauses in contracts, statutory and administrative prescribing of
contract provisions, and administrative control over making, per-
forming and enforcing of contracts are becoming everyday matters.
Friedman, looking at the matter from a functional standpoint,
considers that state-prescribing rather than mere state-enforcing
of contracts is called for by the bigness of things in the economy
of today, .which precludes the equality of the parties that the
regime of free contract presupposed and throws us back upon the
service state to insure fulfillment of reasonable expectations which
are increasingly beyond the reach of the ordinary man.
19591 PROMISE OR BARGAIN?

As to the humanitarian idea, what the French writers have

noted has been going on also in American law and has been gaining
impetus for two generations. There is a notable tendency every-
where to insist, not as was done in the nineteenth century that the
debtor keep faith in all cases even though it ruin him and his
family, but that the creditor must take a risk either along with, or
in some cases instead of, the debtor.
How far the humanitarian doctrine of favor to debtors may
take us is illustrated by a theory of contract now taught by some
teachers of law. It is called the prediction theory. A contract is a
prediction of ability and willingness to do something at some time
in the future. The bonds and notes of municipalities, public utilities
and industrial corporations under recent legislation as to reorgani-
zation come to something very like this.

There is close relation between contractual dirigism and the

humanitarian favor to debtors. The old prisca fides moral aspect
of contract is relaxed or disappears. When contracts are made for
people by the state they do not feel any strong moral duty to per-
form them. If the state makes the contract let the state perform
it or compensate the disappointed promisee. Ripert speaks ironi-
cally of what he calls "the right not to pay debts."
But there is still a great field of every day human business and
general economic activity untouched by the service state. And this
throws us back to the moral aspect of conduct in these activities,
and to the question whether reasonable expectations are created by
promises and so are to be given legal effect or flow only from bar-
gains in which promises may be an element.

I. Is THERE A MORAL DUTY OF KEEPING A PROMISE?

Without tying the discussion to the method of the eighteenth-

century law of nature jurist and assuming that the actual positive
law of the time and place must inevitably and completely reflect
an eternal and universal system of moral rules, we may properly
begin with the question whether there is a moral duty to keep a
promise deliberately made and intended to be taken as such by
the promisee, or is a promise, unless made in legally appointed
form and so given force by an express rule of law, only morally,
and so only properly made legally binding, if it is made as part of a
bargain? In another way of putting it, is there a jural postulate
of the civilization of our time and place that men must be able to
assume that others will act in good faith, and as a corollary will
make good the reasonable expectations which their promises or
other conduct reasonably create?
 TULANE LAW REVIEW [Vol. XXXIII

That American lawyers and law teachers so believe is attested

by the definition of contract in the Restatement of the Law of
Contracts by the American Law Institute: "A contract is a promise
or set of promises for which the law gives a remedy or the per-
formance of which the law in some way recognizes as a duty." It
is true that definition suggests that there may be promises for
which the law gives no remedy or the performance of which the law
does not regard as a duty. More than one theory has been advanced
to meet this question.
Until recently the dominant view was the will theory of obliga-
tion: The law should give effect to the will of the individual to be
bound. But the development and application of that theory was
embarrassed by a notion of the need of external evidence of the
reality of the intention. Lord Wright, thinking in terms of the
will theory, said that a priorithe test should be "whether there is a
serious and deliberate intention to enter into obligations enforce-
able at law; if there are no complicating circumstances, such as
incapacity or illegality or impossibility the law ought, it might
seem, to hold that the intent of the parties should be given effect.
Pacta sunt servanda. The lawful intention of the parties should be
sufficient."' "Logically," he tells us, "two theories can properly
be applied to ascertain the test of contractual intention: One theory
is that there must be something outside of contractual intention
to give it, as it were, support and substance; the other that the
deliberateness of the contractual intention is in itself the sole and
sufficient test."2 Nothing intermediate seems logically possible.
The common law has insisted that there must be something which
is outside of the promise or agreement itself. The common law has
insisted that there must be something more. But it is significant
that it has never been settled just what this is. After all, as he
says, "Why is such test needed? Why is not the contractual inten-
tibn, if it is properly established, enough in itselfT ' s

Why was it thought necessary to add to the will theory a second

theory of the need of an external guaranty of the reality of the
intention? I submit it was because of a felt need of rationalizing
the gradual rise and extension of enforcement of promises in the
transition from a policing legal order, securing peace and prop-
erty, to an increasingly commercial society calling for enforcement
of -promises. Something like this happened in the civil law in the
controversies over cusa which waged from the time of Domat in
the treatises but have left no permanent mark on the law. Lord
.. 'Wright, Ought the Doctrine of Consideration To Be Abolished from the
Common
2 Law?, 49 Harv. L. Rev. 1225 (1936).
3
Wright, supra, note 1, at 1226.
Wright, supra, note 1, at 1227.
19591 PROMISE OR BARGAIN? 459

Wright says justly: "Neither consideration, nor causa, nor writing

is to be regarded as the substance of the promise: all such matters
are extrinsic and evidentiary matters which go to establish and
corroborate the contractual intention." 4
A third theory which has been urged is that breach of a promise
is an injury creating a moral and so legal duty to repair it. This
delictal theory obviously grew out of the historical priority of tort
over contract in the development of the common law. It has a place
in contemporary American thinking in an injurious reliance doc-
trine.5
A fourth theory, much urged a generation ago, was that to be
morally and so in natural-law thinking legally binding, a promise
must have been made for an equivalent, which, however, need not
be an exact equivalent, but like the causal debendi of Germanic
law, something which the one had or obtained or was to have in
exchange for the promise. This took form in the proposition that
consideration was a benefit conferred or a detriment suffered in
respect of or in return for the promise.-
An attempt to put the Roman doctrine as to nuda pacta in terms
of natural law was made by Conannus in the sixteenth century 7
in a discussion taken up and answered by Grotius8 which has been
repeated ever since without adding much to it. He argued that one
who trusts another who has made a promise for no equivalent does
so rashly. His expectation is unfounded and he cannot reasonably
expect to be secured in it. This assumes that if the law does not
secure the interest, one is a fool to rely on the expectation and as
the law does not help the foolish he has no interest to be secured.
Fifth, there is the intuitionist's theory, "that promises are
sacred per se, that there is something inherently despicable about
not keeping a promise, and that a properly organized society should
not tolerate this. This may be said to be the common man's theory.9
Jurists of the law-of-nature school in the seventeenth and eight-
eenth centuries rested rights upon a social contract presupposing
this inherently binding force of a promise.
Sixth, there is the theory that the end of the legal order is
securing the presuppositions of life in civilized society, one of
which is that in such a society men must be able to assume that
those with whom they deal in the general intercourse of the society
4
Wright, supra note 1, at 1252.
5
See Restatement, Contracts § 90 (1932).
OAnson, English Law of Contracts 85 (20th ed. 1952).
71 Commentarii luris Civilis 21 (1724 ed.).
SGrotius,
9
De lure belli et pacis ii, 11, 2-4 (1625).
Cohen, The Basis of Contract, 46 Harv. L. Rev. 553, 571 (1933).
 TULANE LAW REVIEW [Vol. XXXIII

will act in good faith and as corollary must be able to assume that
those with whom they so deal will carry out their undertakings
according to the expectations which the moral sentiment of the
community attaches thereto. In other words, it is a theory of legal
security of social and individual interests in promised advantages.
It goes back to the social interest in the general security. The social
order rests upon stability and predictability of conduct of which
keeping promises is a large item. Maintaining this stability and
predictability is a task of the legal order. 10
To these we must now add a seventh, a theory not of why but
of how the common law gives effect to promises: the bargain
theory, that except in case of a particular type of formal promise,
namely, one made in a sealed instrument, the law will enforce a
promise which is part of a bargain, but not otherwise." The main
controversy is over why the law should coerce performance of
promises. The common law has, however, declared a doctrine of
enforcing informal promises only when made upon a consideration.
But just what is meant by "consideration" has been a perennial
source of controversy. It has been thought of as an equivalent, as
a moral ground of obligation, as detriment to the promisee, as
benefit to the promisor (whether past or present debated) and now
in its latest form as being a component of a bargain between
promisor and promisee, with allowance for exceptions as to
promises for the benefit of third persons, not parties to the bar-
gain. No wonder that Ames spoke of the "mystery of considera-
tion."
However, for the student the bargain theory has one recom-
mendation. It requires no philosophical, ethical, or economic rea-
sons. It is simply the law. It lex scripta est. But of this later.
In measuring the Anglo-American law of contract by the jural
postulate we must note carefully just what it is that is postulated.
Reasonable expectations created by promises or other conduct are
to be secured. What Conannus called promises "proceeding from
ostentation," not to be treated seriously, do not create reasonable
expectations and do not call for securing. But what are the objec-
tions urged against the postulate? The fullest exposition is in
Professor Morris Cohen's discussion of the "right to change one's
mind."'12
He directs his argument against the intuitionist theory, over-
looking the limitations of the jural postulate. Admitting a basis
'OSee Pound, Individual Interests of Substance-Promised Advantages, 59
Harv. L. Rev. 1 (1945).
"Cheshire and Fifoot, Contract 52-91 (4th ed. 1956).
12 Cohen, supra note 9, at 553.
19591 PROMISE OR BARGAIN?

of truth in the intuitionist theory he says that it is "clearly in-

adequate." "No legal system does or can attempt to enforce all
promises. Not even the Canon Law held all promises to be sacred.
And when one comes to draw a distinction between promises which
should be and those which should not be enforced, the intuitionist
theory that all promises should be kept gives us no light or guiding
principle."'13
Whatever may be said of the intuitionist theory, and I doubt
if it is ever put as crudely as he assumes, the jural postulate calls
only for enforcement to secure reasonable expectations created by
a promise. As to the canon law, that law, as is true of any system
of legal enforcing of promises, must and did allow what in the
common law we call equitable defences- duress, mistake, fraud,
breach of condition and failure of presupposition. But those equi-
table defences are governed by clear and well understood principles
and allowing them does not derogate from recognition of the gen-
eral moral binding force of intentional promises. Certainly on the
will theory or the justifiable reliance theory or the reasonable ex-
pectations theory they yield results entirely compatible with a
general doctrine of the binding force of a promise.
But, says Cohen, "there are many people-not necessarily diplo-
mats- who prefer a world in which they and others occasionally
depart from the truth and go back on some promise. It is, indeed,
very doubtful whether there are many who would prefer to live
in an entirely rigid world in which one would be obliged to keep
all one's promises instead of the present more viable system in
which a vaguely fair proportion is sufficient .... Certaintly some
freedom to change one's mind is necessary to free intercourse
1 4
between those who lack omniscience."'
Philosophical discussion has been largely influenced by the con-
dition of the law as determined by history, and hence has been
directed more to the justification for falling short of what the
jural postulate calls for or what a weighing of the interest in
promised advantages with reference to competing or overlapping
interests demands.
The Roman law has a contractual theory of delicts. The penalty
imposed on a delict and payable to the person injured led to a
debtor-creditor relation (obligation) ex delicto enforceable in the
action to recover a fixed sum of money which developed into one
for recovery of a contract debt. In the common law we have a
delictal theory of contract because we came to enforce contracts

13 Cohen, supra note 9, at 573.

4
U Cohen, supra note 9, at 573.
 TULANE LAW REVIEW [Vol. XXXIII

in actions which were in form ex delicto. Hence we speak of re-

covering damages even in case of a liquidated debt. Obviously
damages are not what is really recovered. Historically the action
of debt lay on a theory analogous to one of property in a specific
thing. Actually the debt is recovered -the Romanist would say
vindicated -rather than damages assessed for the injury caused
by failure to pay the debt. Our theory of damages in an action of
debt arose out of the practice in actions of debt on penal bonds
and equitable restriction of recovery to the debt secured or the
damages, and of recovery of simple contract debts, that is, of debts
not proved by a sealed instrument, in an action on the case (as-
sumpsit) to avoid wager of law. Accordingly our law grew up to
no philosophical theory and has not been easily adapted to one.
For a time in continental Europe there was a difference be-
tween the civil and the canon law as to contracts. The civilians
held themselves bound to adhere to the Roman maxim that no
action arose from a bare pact, that is an agreement not in one
of the historical Roman categories of contract, and sought to show
that it was in accord with reason. On the other hand the canonists
regarded a promise as binding upon the conscience and so held it
must be given effect upon grounds of religion, natural law, and the
practice of civilized peoples. In the end direction was given to
modern thinking by Grotius who treated the subject from the
standpoint of natural law, proceeding on the inherent binding force
of a promise made with intent to be bound. As a matter of natural
law if the promise was morally binding it must therefore be legally
binding.
But natural law has had a tendency to become a positive rather
than a natural natural law-to find the ideal law in an ideal of the
law of the time and place instead of shaping the actual law of
the time and place to the ideal. Philosophical jurisprudence in
the nineteenth century tended to find the ideal in the law rather
than test the law by the ideal. Even in the days of the law-of-
nature school Grotius was cautious about pacts, and Rutherforth,
commenting upon him, had to qualify a statement that the mind
had a natural power to change one's design by adding "unless it is
under an obligation to continue in the same design."'15
What Professor Cahn speaks of as pressure of the "sense of
injustice"'0 has steadily operated to modify the common law re-
luctance to give general legal effect to other than formal sealed
instruments. The civil law has come to the full measure of the
postulate. The common law had been moving toward it when the
151 Rutherforth, Institutes of Natural Law 160 (2d ed. 1779).
16Cahn, The Sense of Injustice (1949).
19591 PROMISE OR BARGAIN?

bargain theory was announced to save what was left of the mori-
bund requirement of consideration. We are now asked to cease
urging the ethical question of the moral force or the economic
question of promised advantages as part of wealth, and turn, within
a decade, to an asserted settled English legal tradition of enforcing
only bargains. But here, as in the endeavor to maintain the re-
quirement of consideration, it is necessary to admit important ex-
ceptions both statutory and judicially established.

II. THE ECONOMIC APPROACH

Is there not a sound economic basis for legal enforcement of

the moral duty to perform promised undertakings? It has been
argued that the individual interest in promised advantages is one
of substance and therefore only one who has parted with an
equivalent given in exchange for the promise is injured in his
substance if the promise is not kept. But if this is well taken, when
the equivalent has been parted with the law should simply require
restitution. It treats the interest as one in the deduction from the
promisee's substance through loss of the equivalent if that for
which it was given is not performed. But is not the promise carry-
ing with it reasonable expectation of performance part of the
promisee's substance calling for legal securing?
In a commercial society and even more in one both industrial
and commercial a large proportion of wealth is in the form of
promises. An important part of one's substance consists of ad-
vantages which others have promised to provide for or render to
him. Accordingly the individual has a reasonable expectation of
economic advantage which he claims against the promisor, in which
he expects to be secured. If the legal order does not secure this
claim, or does not fully secure it, friction and waste are the result.
Unless some countervailing interest has to be considered, which
will be impaired or sacrificed in affording the required security,
it is submitted that the legal order, giving the support of politically
organized society to the economic order, should secure the indi-
vidual interest in promised advantages to the full extent of what
has been freely and fairly assured him by the deliberate promise
of another. In a commercial and industrial society the expectation
that promises be kept and undertakings be carried out in good faith
constitutes a social interest of high importance. Assurance of good
faith in abiding promises and carrying out undertakings becomes
a fundamental social institution.
This was brought out strikingly during the World War I when
large-scale manufacturing operations in international trade called
 TULANE LAW REVIEW [Vol. XXXIII

for use of letters of credit for which American law had made no
clear and adequate provision.' 7 In the absence of assured legal se-
curity the New York bankers, in order to maintain credit, had to
agree among themselves to raise no question in the courts as to
liability upon the letters of credit which they had issued.
Jhering puts "security of the satisfaction of human wants"' s at
the basis of the social order. Credit is a prime factor in the proc-
ess of satisfaction of wants and so security of credit is security of
that process. One of the functions of law is to afford that security.
Trade and commerce, by which the satisfaction is promoted have
ever called for development of legal institutions. From the begin-
ning of civilization they have made for a legal order through which
their effective operation is possible.
But agriculture was the controlling occupation in the formative
period of the common law and even more so in the formative era
in America. The tradition of the strict law was too strong in Eng-
land for the enlightened attempt of Lord Mansfield to work out a
modern law of contract, and it became necessary in America to
resort to uniform state legislation, dealing with separate items of
commercial law piece by piece in order to put the law governing
business relations more in touch with the needs of today. For ex-
ample, the category of negotiable instruments began with bills of
exchange, adopted from the custom of merchants. It was grudging-
ly extended to promissory notes. In the nineteenth century it was
extended to bank checks. In the present century uniform state
legislation in America has extended it to warehouse receipts, bills
of lading, certificates of stock, and by the Uniform Commercial
Code is proposed to be extended to investment securities. Thus we
get three categories: specialties, what Ames aptly called mercantile
specialties, and simple contract, with different rules as to what is
requisite in the way of form to give them legal effect.
Common law thinking has only slowly and grudgingly admitted
novelties developed by the experience of business. It took a long
struggle to gain recognition for the written instrument of the law
merchant. Lord Holt objected strenuously to recognition of prom-
issory notes as more than simple contract. 19 Liberal development
of the law merchant and free development of it as a part of the
common law stopped for a time in the eighteenth century, and in
the nineteenth century, after the passing of the constructive judges
of our formative era in America, we sought to cast all mercantile
transactions into hard and fast historical molds. Only in the latter
17Hershey, Letters of Credit, 32 Harv. L. Rev. 1 (1918).
181 Der Sweek in Recht 75 (4th ed. 1904).
19Butler v. Crips, 6 Mod. 29, 87 Eng. Rep. 793 (1704).
19591 PROMISE OR BARGAIN?

part of the nineteenth century have we begun to heed the demands

of commercial world-wide development. A notable instance is the
difficulty in getting legal recognition of the clearing house. 20 The
21
letter of credit had like difficulties.

III. WHY THE LAG?

The first problems of the legal order were police problems of a
small town with a rural, agricultural economy. The policeman
speaks of himself as "the law" and the ordinary man thinks of the
law as a system of policing. The analogy of the magistrate inter-
vening in a fight between two contending claimants in the street,
symbolized by the dramatic mode of beginning an action of the
strict law in the beginnings of Roman law, governed legal pro-
cedure down to our own time and we are still struggling to get
away from some remnants of the formal rules and narrowly fixed
concepts which grew therefrom. Maintaining peace and order was
the first task. Maintaining credit pressed much later.

Historically we begin with a proprietary idea - one of owner-

ship rather than obligation. Debt was a relation of property not
of duty of performance. The debtor held something that belonged
to another. Creating a debt was not differentiated from a real
transaction - one creating a proprietary right. Recovery of a
slave or of a tract of land or of an unpaid fixed compensation for an
injury for which the debtor was responsible seemed varying forms
of vindication of property. With the rise of trade and commerce a
distinction between property and obligation, between owning so
many cows and holding another's promise to deliver so many cows
became apparent. But ownership, proprietary right, furnished the
analogy in development of securing of a promise.

Canon law and the theory of a law of nature turned the civil
law on the Continent away from this. It is significant that the civil
law had juristic development. It was taught in the universities and
practiced by academically trained lawyers before academically
trained judges, or advisers of judges. On the other hand, the com-
mon law had a judicial development and a practical development
by advocates, rather than academic teachers in professional so-
cieties - in the Inns of Court, not in the universities. The one law-
training stressed ethics and philosophy. The other stressed the
problems of proof and procedure. A seal, on the analogy of a con-
veyance, which established a title and enabled trial by charter, was
2
Holmes v. Roe, 62 Mich. 190, 204 (1880); cf. Edmiston v. Herpolsheimer,
66 Neb.
21 92 (1902).
1n re Agra & Masterman's Bank, L.R. 2 Ch. 391, 395 (1867); Bank of
Seneca v. First Natl Bank, 105 Mo. App. 722, 726 (1904).
 TULANE LAW REVIEW [Vol. XXXIII

convincing. A promise not under seal needed some guarantee of

intention to be bound and this was developed by a doctrine of con-
sideration, which, however, has never been fully and consistently
worked out. It met a supposed need of assurance of the reality of
the promise such as was taken to be afforded by the seal.
Just what consideration is has been since the eighteenth cen-
tury a subject of debate.

An idea that an ideal of Roman law as somehow declaratory of

natural law, which had much currency in the seventeenth and
eighteenth centuries, was furthered in America by the general ac-
ceptance of Blackstone in the formative era of our law. It took
form in continental Europe in acceptance of the Roman maxim
nuda. pactio obligctionen non parit22 and was expressed in the ob-
scure requirement of ccusa urged by Domat 23 and accepted doubt-
fully by Pothier,24 but now substantially abandoned. 25 In truth,
there was very little left of it in the maturity of Roman law. 26 Be-
ginning with the formal cbntracts of the strict law, there were
added successively the four real contracts, the four consensual con-
tracts, and finally the category of actionable pacts - pacta adjecta,
pacts added to contracts supplementary to them, pacta praetoria,
pacts not supplementary to contracts but given effect on equitable
grounds, and finally pact legitim, statutory pacts. Significantly
the gratuitous promise of a gift was made legally effective by
27
Justinian
Ames 28 and Holdsworth 29 have given full and sufficient ac-
counts of the origin and history of the idea of consideration. With-
out going into the unsystematic development in the cases which
they have described, it will be enough to see what the textwriters
who have sought to put the matter in the order of reason have had
to say.
Blackstone thought that the common law and the civil law, by
which he meant the Roman, not the modern Roman law of conti-
nental Europe of today, acted on the Roman maxim that an action
did not lie upon a pact.30 Assuming this to be a general proposition
of universal law, he lays down that "a consideration of some sort
22
D. 2. 14. 7. 4.
231 Domat, Les lois civiles dans leur ordre naturel § 1, at 1 (1639).
241 Pothier, Traitd des obligations 1-2 (1762).
252 Planiol et Ripert, Trait6 61mentaire 1037, 1039, 1047 (11th ed. 1928-
30) ; Schuster, Principles of German Civil Law § 149 (1907); Swiss Code of
Obligations
2 § 15.
27
6Buckland, A Text-Book of Roman Law 529 (2d ed. 1932).
Inst. 2. 7. 2.
28Ames, Lectures on Legal History 112-28, 323-53 (1913).
29
loldsworth, 8 History of English Law 1-48 (2d ed. 1937).
30C. 2. 3. 10 and 5. 14. 1.
19591 PROMISE OR BARGAIN? 467

or other is so absolutely necessary to the forming of a contract,

that a nudum pactum or an agreement to do or pay something on
one side, without any compensation on the other, is totally void in
law and a man cannot be compelled to perform it."' 1 The two pages
devoted to consideration 32 are so hopelessly unsatisfactory that one
can understand why Parsons, commenting on Blackstone's defini-
tion of contract as "an agreement on sufficient consideration to do
or not to do a particular thing," decides that consideration is not,
of itself, an essential part of contract. 33 But he lays down that "if
a contract be not founded upon a consideration, it shall not be en-
forced unless ratified in such a way as to show that it was delib-
'3 4
erate, intentional, and distinctly understood by both parties.
Later the texts become more specific, calling for benefit to the
promisor or detriment to the promisee done or suffered in exchange
for the promise.3 5 However, that began to be felt inadequate, and
the American Law Institute considered there were two questions:
Whether there is consideration for a promise and whether a
consideration is sufficient. 36 Sir Frederick Pollock came to think
of consideration as the price for which a promise is bought.37 But
on any theory exceptions multiplied, especially in America. 38

It is noteworthy that the seventeenth-century jurists rested

rights upon contract (the social contract). The eighteenth century
until Kant rested contract on the moral significance of a promise.
On the other hand, the nineteenth century, following Kant, making
the philosophy of property the starting point, rested contract on
property. Kant held it impossible to prove that one ought to keep
his promise, considered only as a promise. He deduced contract
from property as a form of alienation of one's substance inherent
in the very idea of individual rights. It was, he held, a form of
alienation of one's substance which was called for by the very idea
of individual freedom. Hegel also regarded contract as a disposi-
tion of property. Otherwise a promise, merely as such, was a sub-
jective qualifying of the will which one was at liberty to change.
But this does not help the bargain theory. The promise in the bar-
gain is still a promise. Fichte held that the moral duty of perform-
ing an agreement (N.B. therefore a promise as part of an agree-
ment) arises when one of the parties to the agreement begins to
act under it. This is not a theory of the law as it is or ever has
312 Blackstone, Commentaries *445 (1766).
321d. at 444-46.
331
3
Parsons, Contracts 6 (1853).
3541d.at 354.
This is pretty much what the matter had come to by the end of the last
century.
36
Anson, op. cit. supra note 6, at 85.
37Restatement, Contracts § 15, comment b (1932).
Pollock, Contract 177 (9th ed. 1921).
3
8See full discussion in Pound, supra note 10, at 33-38.
 TULANE LAW REVIEW [Vol. XXXIII

been. He saw that the law did not go so far as the moral sentiment
of civilized society, and was trying to frame a rational explanation
of why it fell short. His way of doing it was to show why a prom-
ise may be regarded as part of one's substance and why one's claim
to performance may be regarded as property. His doctrine and
Hegel's speak from the reaction from natural law which at the
same time operated in England to overrule the liberal doctrine of
Lord Mansfield.
Hence contract, as conveyance, called, in the metaphysical juris-
prudence of the nineteenth century, for the safeguards of convey-
ance of property.
But the informality of pioneer America made a farce of the
seal, and the proposed uniform state law as to formal contracts
practically fell flat. Thus in most of the United States there seemed
no way of making a binding gratuitous promise. But the courts
have for a long time been finding a way out by discovering some
seventeen exceptions to the rule requiring consideration, most of
which are now pretty well established.
I have set forth these exceptions in detail elsewhere and need
not repeat them.39 Suffice it to say that they fall into four main
heads: I, Promissory estoppel, including subscription contracts and
gratuitous promises of single individuals afterward acted upon. II,
So-called moral consideration, i.e., a reason in morals for making a
promise treated as a reason for enforcing it. Here we may classify
promises because of moral obligation arising from receipt of some
material benefit wthout any original legal liability; new promises
where a debt has been barred by limitation or discharge in bank-
ruptcy - often referred to as waiver, which, however, may refer
to contract as a type of contract itself requiring consideration and
so requiring consideration or seal; defective execution of an inten-
tion to secure a creditor, settle property on a wife or provide for a
child - a doctrine of equity; defective execution of a conveyance
reformed in equity so as to amount to specific performance on the
theory of a prior benefit received; and promise by a parent to a
child that the child shall have his earnings free of the parent's
claims. III, Pacta donationis- promises of a gift - cases in which
a court of equity tortures gifts into contracts although the rule is
supposed to be that equity will not aid a "volunteer," i.e., one whose
claim does not have a foundation in a common-law consideration;
oral gratuitous declarations of trust as to a chattel. IV, Intention
to be bound in a business transaction. Here what Lord Mansfield
held enough to make a promise binding has been held enough in a
39Ibid.
19591 PROMISE OR BARGAIN? 469

number of situations; options under seal without consideration

are specifically enforced in equity although courts of equity are ac-
customed to say they will not grant specific performance of a con-
tract under seal without a common-law consideration; waiver of a
claim or defense where there is no moral duty involved, treating a
promise to waive as an independent legal transaction, well settled
although objected to often by those who consider the matter one of
contract, not an independent type of legal transaction; in some
states release by mere acknowledgment of performance, without
actual performance, seal or consideration; stipulations- promises
of parties to a controversy or their attorneys or counsel with re-
spect to conduct of or proceedings in the course of litigation; man-
date where there is no res but some courts allow an action although
there is no bargain and no act in reliance; letters of credit not
under seal and not upon consideration, when acted upon; composi-
tion agreements. To these the American Law Institute adds a gen-
eral category of promises reasonably inducing definite and sub-
40
stantial action, without seal, consideration, or bargain.
Thus the history of the law of contract throughout the world
shows a gradual but steady progress to the moral and economic ap-
proach, and recognizing the interest, both individual and social in
the performance of promises, deliberately made, merely as such. It
has been largely a history of development of the element of secur-
ing promised advantages at the expense of the older ideas upon
which only a few types of promises were given legal efficacy.
Morris Cohen's statement that no legal order anywhere has en-
forced all promises 41 is very misleading. No system of law denies
equitable defences which distinguish the form from the substance
of promises, and the supposed requirement of causa, supposed like
the common law requirement of consideration, to be a limitation
of enforcement of deliberately intended promises, has lost all prac-
42
tical importance and the term is left out in recent codes.
In the present generation we have been coming toward the same
point of view in Anglo-American law. After a critical historical
review, Sir William Holdsworth said that the doctrine of consid-
eration was "something of an anachronism." He goes on: "The
substantive law has long ago broken away from the leading strings
of the forms of action .... But our theory of contract is still gov-
erned by a doctrine which is historically developed, with great log-
ical precision, from the procedural requirements of the form of
action by which simple contracts were enforced .... There is, it
4
41
ORestatement, Contracts § 80 (1932).
42
Cohen, supra note 9, at 353, 372-73.
See note 24 supra.
 TULANE LAW REVIEW (Vol. XXXIII

seems to me, good sense in Lord Mansfield's view43 that considera-

tion should be treated, not as the sole test of the validity of a sim-
ple contract, but simply as a piece of evidence which proves its con-
clusion." 44 Professor Llewellyn, after review of the historical,
economic, and philosophical discussions, said: "All in all as a test
for normal enforcement the consideration requirement must be
regarded as not yet wholly just to modern needs. ' 45 Lord Wright,
in 1933, gave the doctrine up entirely. 46 The English Law Revision
Committee in 193747 recommended what amounted to statutory
adoption of the rule laid down by Lord Mansfield. That part of the
report was not enacted by Parliament, which, as Ilbert happily put
it, is not interested in "lawyer's law." 48 But it is significant that
juristic attempt to salvage consideration has produced a new idea
of the nature of contract and an addition to the theories which led
'49
Ames to write of the "mystery of consideration.

IV. THE BARGAIN THEORY

Fifty years ago, Ames,50 who to a strong ethical sense added
mastery of historical method, felt the need of reconstruction of our
law of contracts in the form which it had taken in nineteenth-cen-
tury America and proposed for simple contracts substituting for
the requirement of consideration the idea of enforcing bargains. 51
Thus our law of contract might have been laid out as covering con-
tracts under seal, negotiable instruments, barg4ins, contracts for
the benefit of third persons, by this time well recognized on this
side of the water, promises upon which the promisee has relied to
his injury, and certain promises enforced specifically in equity.
Such a scheme, although it obviously could call urgently for Oc-
cam's razor, would have been a step forward and is about what the
American Law Institute laid out in 1932. But to English law teach-
ers, who object to enforcement of promises by third-person bene-
ficiaries not parties thereto, 52 even when the promise of benefit to
the third person is part of a bargain, now urge not that the bargain
theory is one of a substitute for requirement of consideration, but
that bargain is the reality of consideration for which we have been
43
Pillans v. Van Mierop, 3 Burr. 1663, 97 Eng. Rep. 1035 (K.B. 1765).
448
4
Holdsworth, op. cit. supra note 29, at 47.
5LIewellyn, Contract-Institutional Aspects, 4 Encyc. Soc. Sci. 323, 337
(1931).
46
47Wright, supr&note 1, at 1253.
Law Revision Committee Sixth Interim Report [Cmd. 5449] 1117-40, 50
(1937).
48
49
Ilbert, Legislative Methods and Forms ch. 10 (1901).
Ames, op. cit. supra note 28, at 129.
5OSee
51
Ames, Law and Morals, 22 Harv. L. Rev. 97 (1908).
Ames, Two Theories of Consideration,in Lectures on Legal History, 353
(1913), reprinted with manuscript additions by the author from an article in
52 1-2) 12 Harv. L. Rev. 515, 13 Harv. L .Rev. 29 (1899).
(pts.
Cheshire and Fifoot, op. cit. supra note 11, at 364.
1959] PROMISE OR BARGAIN?

groping since the sixteenth century. The term, consideration, "is

' 53
but the sign and symbol of bargain.
At bottom the proposition is that English courts will not en-
force a mere promise but only a bargain. 54 This is held to be a
fundamental and characteristically English institution. The pro-
posal in the Report of the Law Revision Committee is "incom-
patible with that insistence upon bargain which lies at the very
heart of consideration and which can be abandoned only by chang-
ing the whole character of English law." 55 While "consideration"
is a word "well rooted in language of English law" the real point is
that it "denotes its fundamental attitude to contract."5 6 "If," we
are told, "a new code had to be drafted for Utopia, its law of con-
tract might rest on one of two possibilities. The defendant might
be held liable just because he had made a serious promise, or the
plaintiff might be required to prove that this promise was part of a
transaction to which he himself had contributed a material share.
... Most foreign systems adopt the first: for four hundred years
English law has chosen the second.15 7 Finally, it seems, "when in
the sixteenth century the common-law lawyers evolved a general
law of contract they based it unhesitatingly upon the idea of bar-
gain."5 8
But they did not discover that the significant idea which dif-
ferentiated English from foreign law of contract was that of bar-
gain till about the middle of the twentieth century. If one com-
pares section 2 of chapter 3 of Cheshire and Fifoot, Law of Con-
tract, Ist ed. 1945, with the same section in 4th ed. 1956, it is re-
vealed that the common law had not discovered what had been for
over four hundred years its fundamental idea until after 1950.
I hold no brief for the will theory of legal transactions. On the
contrary, I should argue for a theory of enforcing the realization
of created reasonable expectations in order to maintain the general
security, and should contend that it meets the requirements of the
law of contracts better than the seventeenth-century doctrine of
the inherent moral force of a promise or the nineteenth-century
doctrine of giving effect to the declared will to be bound. But on
any of the three theories the requirement of consideration to give
binding force to a promise is not helped by substituting bargain
for promise and finding consideration where the transaction takes
the form of a bargain.
53
Cheshire and Fifoot, op. cit. supra note 11, at 58.
54Cheshire and Fifoot, op. cit. supra note 11, at 89.
5
55 Cheshire and Fifoot, op. cit. supra note 11, at 91.
6Cheshire
57 and Fifoot, op. cit. supra note 11, at 53.
Cheshire and Fifoot, op. cit. supra note 11, at 58.
58
Cheshire and Fifoot, op. cit. supra note 11, at 58.
472 TULANE LAW REVIEW [Vol. XXXIII

In a developed economic order the claim to promised advantages

is one of the most important of the individual interests that press
for recognition. If it is a task of the legal order to secure reason-
able individual expectations, so far as they may be harmonized
with the least friction and waste, in an economic order those aris-
ing from promises have a chief place. Credit is a principal form
of wealth. Even the exponents of the bargain theory do not restrict
security of credit to bargains. They concede a place for formal
promises which are independent of bargain and for the negotiable
instruments of the law merchant and recent additions to that cate-
gory. I submit that it is too late in the development of law to make
credit depend upon form -form of a seal, form of use of words
of negotiability, form of a bargain. As Holmes put it, "considera-
tion is a form as much as a seal." 59 Indeed, in the case of the seal
of a corporation the form of sealing became so inconvenient that in'
the busy world of today we had to give up the idea that a corpora-
tion could only bind itself by its seal. 0
But the "fundamental" idea of bargain seems now to be invoked
in order to differentiate English law from the "foreign" law of the
rest of the modern world. Dickens has given us a useful word in
this connection - "Podsnapery." When Mr. Podsnap was con-
fronted with anything out of the course of his business he was
wont to wave it behind him with a magnificent backward sweep of
his hand and dismiss it with the conclusive judgment "not Eng-
lish." It is very well for "foreign law" to dispense with the rem-
nants of procedural shaping of legal institutions of the economic
order. Such things are not for our common law.
What is peculiar to English law and differentiates it from the
law of obligations in the modern world generally is not a native
English reliance on the idea of bargain but an obstinate English
reluctance to give up the hesitation of a slowly developing legal
order to get away from the analogy of intentional aggression and
the nominate torts, both in the field of torts and of contracts.
American codes of procedure have not merely allowed but have
required actions to be brought by the real party in interest. Like-
wise, American courts long ago settled that the third party bene-
ficiary could enforce a promise to which he was not a party. We
require no juristic Podsnapery to uphold the requirement of consid-
eration in the face of these settled innovations. The English Law
Revision Committee was right. It is time that we gave up "mas-
sive resistance" to the march of the law.
59
Holmes, Common Law 275 (1882).
6OBank of Columbia v. Patterson's Adm'r, 11 U.S. (7 Cranch) 299, 306
(1813).