Hegel's Philosophy of Right
Contract brings into existence the property whose external side, its side as an existent, is no longer a mere 'thing' but contains the moment of a will (and consequently the will of a second person also). Contract is the process in which there is revealed and mediated the contradiction that I am and remain the independent owner of something from which I exclude the will of another only in so far as in identifying my will with the will of another I cease to be an owner.
I have power to alienate a property as an external thing (see § 65); but more than this, the concept compels me to alienate it qua property in order that thereby my will may become objective to me as determinately existent. In this situation, however, my will as alienated is at the same time another's will. Consequently this situation wherein this compulsion of the concept is realised is the unity of different wills and so a unity in which both surrender their difference and their own special character. Yet this identity of their wills implies also (at this stage) that each will still is and remains not identical with the other but retains from its own point of view a special character of its own.
This contractual relationship, therefore, is the means whereby one identical will can persist within the absolute difference between independent property owners. It implies that each, in accordance with the common will of both, ceases to be an owner and yet is and remains one. It is the mediation of the will to give up a property, a single property, and the will to take up another, i.e. another belonging to someone else; and this mediation takes place when the two wills are associated in an identity in the sense that one of them comes to its decision only in the presence of the other.
The two contracting parties are related to each other as immediate self-subsistent persons. Therefore [a] contract arises from the arbitrary will. [b] The identical will which is brought into existence by the contract is only one posited by the parties, and so is only a will shared in common and not an absolutely universal will. [c] The object about which a contract is made is a single external thing, since it is only things of that kind which the parties' purely arbitrary will has it in its power to alienate (see §§ 65 ff.)
Remark: To subsume marriage under the concept of contract is thus quite impossible; this subsumption — though shameful is the only word for it is propounded in Kant's Philosophy of Law. It is equally far from the truth to ground the nature of the state on the contractual relation, whether the state is supposed to be a contract of all with all, or of all with the monarch and the government.
The intrusion of this contractual relation, and relationships concerning private property generally, into the relation between the individual and the state has been productive of the greatest confusion in both constitutional law and public life. Just as at one time political rights and duties were considered and maintained to be an unqualified private property of particular individuals, something contrasted with the right of the monarch and the state, so also in more recent times the rights of the monarch and the state have been regarded as the subjects of a contract and is grounded in contract, as something embodying merely a common will and resulting from the arbitrariness of parties united into a state. However different these two points of view may be, they have this in common, that they have transferred the characteristics of private property into a sphere of a quite different and higher nature. (See below, Ethical Life and the State.)
Addition: It has recently become very fashionable to regard the state as a contract of all with all. Everyone makes a contract with the monarch, so the argument runs, and he again with his subjects. This point of view arises from thinking superficially of a mere unity of different wills. In contract, however, there are two identical wills who are both persons and wish to remain property-owners. Thus contract springs from a person's arbitrary will, an origin which marriage too has in common with contract. But the case is quite different with the state; it does not lie with an individual's arbitrary will to separate himself from the state, because we are already citizens of the state by birth. The rational end of man is life in the state, and if there is no state there, reason at once demands that one be founded. Permission to enter a state or leave it must be given by the state; this then is not a matter which depends on an individual's arbitrary will and therefore the state does not rest on contract, for contract presupposes arbitrariness. It is false to maintain that the foundation of the state is something at the option of all its members. It is nearer the truth to say that it is absolutely necessary for every individual to be a citizen. The great advance of the state in modern times is that nowadays all the citizens have one and the same end, an absolute and permanent end; it is no longer open to individuals, as it was in the Middle Ages, to make private stipulations in connection with it.
Contract is formal when the double consent whereby the common will is brought into existence is apportioned between the two contracting parties so that one of them has the negative moment — the alienation of a thing — and the other the positive moment — the appropriation of the thing. Such a contract is gift. But contract may be called real when each of the two contracting wills is the sum of these mediating moments and therefore in such a contract becomes a property owner and remains so. This is a contract of exchange.
Addition: Contract implies two consenting parties and two things. That is to say, in a contract my purpose is both to acquire property and to surrender it. Contract is real when the action of both parties is complete, i.e. when both surrender and both acquire property, and when both remain property owners even in the act of surrender. Contract is formal where only one of the parties acquires property or surrenders it.
Since in real contract each party retains the same property with which he enters the contract and which at the same time he. surrenders, what thus remains identical throughout as the property implicit in the contract is distinct from the external things whose owners alter when the exchange is made. What remains identical is the value, in respect of which the subjects of the contract are equal to one another whatever the qualitative external differences of the things exchanged. Value is the universal in which the subjects of the contract participate (see § 63)
Remark: The legal provision that laesio enormis annuls the obligation arising out of the making of a contract has its source, therefore, in the concept of contract, particularly in this moment of it, that the contracting party by alienating his property still remains a property owner and, more precisely, an owner of the quantitative equivalent of what he alienates. But a laesio is not merely enormis (as it is taken to be if it exceeds one-half of the value) but infinite, if someone has entered on a contract or made a stipulation of any sort for the alienation of inalienable goods (see § 66).
A stipulation, moreover, differs from a contract, first, in its content, because it signifies only some single part or moment of the whole contract, and secondly, because it is the form in which the contract is settled (a point on which more will be said later). So far as its content is concerned, it comprises only the formal character of contract, i.e. the willingness of one party to give something and the willingness of the other to accept it; for this reason, the stipulation has been enumerated amongst so-called 'unilateral' contracts. The distinction between unilateral and bilateral contracts, and distinctions in Roman law between other types of contract, are sometimes superficial juxtapositions made from an isolated and often external point of view such as that of the different types of contractual forms; or sometimes they confuse characteristics intrinsic to contract itself with others which only arise later in connection with the administration of justice (actiones) and. the legal processes giving effect to positive laws, and which are often derived from quite external circumstances and contravene the concept of right.
The distinction between property and possession, the substantive and external aspects of ownership (see § 45), appears in the sphere of contract as the distinction between a common will and its actualisation, or between a covenant and its performance Once made, a covenant taken by itself in distinction from its performance is something held before the mind, something therefore to which a particular determinate existence must be given in accordance with the appropriate mode of giving determinate existence to ideas by symbolising them. This is done, therefore, by expressing the stipulation in formalities such as gestures and other symbolic actions, particularly by declaring it with precision in language, the most worthy medium for the expression of our mental ideas.
Remark: The stipulation accordingly is the form given to the content of a contract, i.e. to what is agreed in it, and thereby this content, previously only an idea, attains its determinate existence. But the idea which we have of the content is itself only a form which the content takes; to have an idea of the content does not mean that the content is still something subjective, a desire or a wish for so and so. On the contrary, the content is the will's ultimate decision on such subjective wishes.
Addition: Just as in the theory of property we had the distinction between ownership and possession, between the substance of the matter and its purely external side, so here in contract we have the difference between a common will - covenant - and a particular will - performance. It lies in the nature of contract that it should be an expression of both the common and the particular will of the parties, because in it will is related to will. The covenant, made manifest in a symbol, and its performance are quite distinct from each other amongst civilised peoples, though amongst savages they may coincide. In the forests of Ceylon there is a tribe of traders who put down their property and wait quietly until others come to put theirs down opposite. Here there is no difference between the dumb declaration of will and the performance of what is willed.
In contract it is the will, and therefore the substance of what is right in contract, that the stipulation enshrines. In contrast with this substance, the possession which is still being retained while the contract remains unfulfilled is in itself only something external, dependent for its character as a possession on the will alone. By making the stipulation, I have given up a property and withdrawn my particular arbitrary will from it, and it has eo ipso become the property of another. If then I agree to stipulated terms, I am by rights at once bound to carry them out.
Remark: The difference between a mere promise and a contract lies in the fact that a promise is a statement that I will give or do or perform something in the future, and a promise still remains a subjective volition which because it is subjective I can still alter. A stipulation in a contract, on the other hand, is itself already the embodiment of the will's decision in the sense that by making the stipulation I have alienated my property, it has now ceased to be mine, and I already recognise it as the property of another. The distinction in Roman law between pactum and contractus is one of a false type.
Fichte at one time maintained that my obligation to keep a contract begins only when the other party starts fulfilling his side of it; his reason was that up to that point I am uncertain whether the other party's declarations are seriously meant. In that case it would follow that the obligation to keep a contract before it was carried out would only be a moral one, not an obligation by rights. - But the expression of the stipulation is not simply a declaration of a general character; it embodies a common will which has been brought into existence and which has superseded the arbitrary and alterable dispositions of the parties. The question therefore is not whether the other party could have had different private intentions when the contract was made or afterwards, but whether he had any right to have them. Even if the other party begins to fulfil his side of the contract, it is equally open to me to do wrong if I like. The nullity of Fichte's view is also shown by the fact that it would base contractual rights on the false infinite, i.e. on the progress ad infinitum involved in the infinite divisibility of time, things, action, &C. The embodiment of the will in formal gestures or in explicit and precise language is already the complete embodiment of the will as an intelligent entity, and the performance of the covenant so embodied is only the mechanical consequence.
It is true that in positive law there are so-called 'real' contracts as distinguished from 'consensual' contracts, in the sense that the former are looked upon as fully valid only when the actual performance (res, traditio rei) of the undertaking supervenes upon willingness to perform it; but this has nothing to do with the thing at issue. For one thing, these 'real' contracts cover particular cases where it is only this delivery by the other arty which puts me in a position to fulfil my side of the bargain, and where my obligation to do my part relates only to the thing after it has come into my hands, as happens for instance in loans, pawning, or deposits. (The same may also be the case in other contracts.) But this is a matter which concerns not the nature of the relation of the stipulation to performance but only the manner of performance. - For another thing, it is always open to the parties at their discretion to stipulate in any contract that the obligation of one party to perform his side shall not lie in the making of the contract itself as such, but shall arise only from the performance by the other party of his side.
The classification of contracts and an intelligent treatment of their various species once classified is not here to be derived from external circumstances but from distinctions lying in the very nature of contract. These distinctions are those between formal and real contracts, between ownership and possession and use, between value and specific thing, and they yield contracts of the following sorts:
1. Gift of a thing - gift properly so called.
2. Loan of a thing - i.e. the gift of a portion of it or of restricted use and enjoyment of it; here the lender remains the owner of the thing (mutuum and commodatum without interest). Here the thing lent is either a specific thing or else, even if it be such, it may none the less be looked on as universal, or it may be a thing which counts (like money) as a thing universal in itself.
3. Gift of service of any sort, e.g. the mere safe-keeping of a property (depositum). The gift of a thing on the special condition that its recipient shall not become its owner until the date of the donor's death, i.e. the date at which he ceases in any case to be an owner of property, is testamentary disposition; this is not contained in the concept of contract but presupposes civil society and positive legislation.
1. Exchange as such:
[a] exchange of a thing pure and simple, i.e. exchange of one specific thing for another of the same kind.
[b] purchase or sale (emtio, venditio); exchange of a specific thing for one characterised as universal, one which counts as value alone and which lacks the other specific character, utility - i.e. for 'money'.
2. Letting (location conductio); alienation of the temporary use of a property in return for rent:
[a] letting of a specific thing - letting strictly so called, or
[b] letting of a universal thing, so that the lessor remains only the owner of this universal, or in other words of the value - loan (mutuum, or even commodatum, if interest is charged). The additional empirical characteristics of the thing (which may be, e.g., a flat, furniture, a house, res fungibilis or non fungibilis, &c.) entail (as in A. 2 above) other particular though unimportant subdivisions.
3. Contract for wages (locatio operae) - alienation of my productive capacity or my services so far, that is, as these are alienable, the alienation being restricted in time or in some other way (see § 67).
Remark: Counsel's acceptance of a brief is akin to this, and so are other contracts whose fulfilment depends on character, good faith, or superior gifts, and where an incommensurability arises between the service rendered and a value in terms of cash. (In such cases the cash payment is called not 'wages' but 'honorarium'.)
In the contracts whereby I part with the use of a thing, I am no longer in possession of the thing though I am still its owner, as for example when I let a house. Further, in gifts or contracts for exchange or purchase, I may have become the owner of a thing without as yet being in possession of it, and the same cleavage between ownership and possession arises in respect of the implementing of any undertaking which is not simply a cash or barter transaction. Now what the pledge effects is that in the one case I remain, and in the other case I am put, in actual possession of the value as that which is still or has already become my Property, without in either case being in possession of the specific thing which I am renouncing or which is to be mine. The pledge is a specific thing but one which is my property only to the extent of the value of the property which I have renounced into another's possession or which is due to me; its specific character as a thing and any excess value it may have still belong to the person who gave the pledge. Giving a pledge, is not itself a contract but only a stipulation (see Remark to sect; 77), i.e. it is the moment which brings a contract to completion so far as the possession of the property is concerned. Mortgage and surety are particular forms of pledge.
Addition: In contract we drew the distinction between the covenant or stipulation (which made the property mine though it did not give me possession) and performance (which first gave me possession). Now if I am already the out-and-out owner of the property, the object of the pledge is to put me simultaneously in possession of the value of the property and thereby to guarantee the covenant's performance at the very time the covenant is made. Surety is a particular kind of pledge whereby someone gives his promise or pledges his credit as a guarantee for another's performance. Here a person fulfils the function which is fulfilled by a mere thing in the case of a pledge proper.
In the bare relation of immediate persons to one another, their wills while implicitly identical, and in contract posited by them as common, are yet particular. Because they are immediate persons, it is a matter of chance whether or not their particular wills actually correspond with the implicit will, although it is only through the former that the latter has its real existence. If the particular will is explicitly at variance with the universal, it assumes a way of looking at things and a volition which are capricious and fortuitous and comes on the scene in opposition to the principle of rightness. This is wrong.
Remark: The transition to wrong is made by the logical higher necessity that the moments of the concept — here the principle of rightness or the will as universal, and right in its real existence, which is just the particularity of the will — should be posited as explicitly different, and this happens when the concept is realised abstractly. But this particularity of the will, taken by itself, is arbitrariness and contingency, and in contract I have surrendered these only as arbitrariness in the case of a single thing and not as the arbitrariness and contingency of the will itself.
Addition: In contract we had the relation of two wills as a common will. But this identical will is only relatively universal, posited as universal, and so is still opposed to the particular will. In contract, to be sure, making a covenant entails the right to require its performance. But this performance is dependent again on the particular will which qua particular may act in contravention of the principle of rightness. At this point then the negation, which was implicitly present in the principle of the will at the start, comes into view, and this negation is just what wrong is. In general terms, the course of events is that the will is freed from its immediacy and thus there is evoked out of the common will the particularity which then comes on the scene as opposed to the common will. In contract the parties still retain their particular wills; contract therefore is not yet beyond the stage of arbitrariness, with the result that it remains at the mercy of wrong.
Wrong (next section)
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