§2. With regard, then, to both kinds of agreements, it may be laid down as a general rule that legal validity should be given to all exchanges of utility (1) made between persons possessing at the time mature reason, if they have been made without (2) coercion, or (3) wilful or careless misrepresentation on either side; and (4) if the effects they were designed to produce involve no violation of law or damage to third parties or to the community at large This rule is based on a general presumption that to carry into effect agreements made under these conditions will promote the interests of the parties agreeing, without causing mischief to others; this presumption being an immediate deduction from the individualistic principle that a sane adult can on the whole be trusted to provide for his own happiness if secured from interference. But if any of these conditions is not fulfilled, the presumption so far fails, and there is a prima facie ground for interfering to prevent or modify the agreement, or allowing it to be invalidated in whole or in part; so far as this can be done without disappointing the legitimate expectations of persons other than those who made the agreement. Let us examine more closely the different kinds of conditions.
The first condition, that the agreeing parties should be at the time in possession of mature reason, excludes---or at least sets aside for further consideration---the agreements of the three following classes of persons: (1) those who have not yet come to the full use of reason; (2) those who have lost it for an indefinite period through disease; and (3) those who have transiently lost it through intoxication, or some similar cause. It does not follow that all such agreements should be incapable of being legally enforced:---e.g. there is a manifest expediency in the regulation that minors should be legally capable of making contracts of a kind clearly beneficial to them. But there is in all these cases prima facie need of some limitation of the general rule of enforcing agreements: since the intellectual condition of one of the parties concerned precludes any general presumption that the agreement will be for the advantage of both.
Our second condition was that exchanges of utility, to be valid, should be made without coercion. Here the term ``coercion'' requires careful definition. So far as it merely means illegal coercion---i.e. actual or threatened violation by one party of the other's legal rights-the condition presents no difficulty: it is manifestly inexpedient, generally speaking, that the law should supply inducements to illegal conduct by securing advantages to the law-breaker. But suppose that A induces B to enter into an agreement by threatening some act or omission which is not illegal or in itself immoral, but which will as a matter of fact be seriously annoying to B; while it is not conducive to A's interests otherwise than by enabling him to obtain B's consent to the agreement, and certainly would not have taken place except for A's desire to obtain this;---is there an adequate reason for invalidating such agreements, or interfering to discourage them? It is not easy to give a decided general answer to this question: on the one hand, it is obviously desirable to prevent pressure of this kind, so far as this can be done without causing mischief in other ways; on the other hand, it seems difficult to prevent it in any complete way, without seriously interfering with the freedom of persons to declare intentions in themselves innocent.
It is another question whether the law should interfere to prevent or discourage a contract in which A gains by the distress of B, even though A is in no way responsible for the distress nor legally bound to relieve it. Such a contract, in popular political discussion, is sometimes said not to be free; but it seems clear that, on the individualistic principle, there is no ground whatever for interfering to prevent it, if it be granted that we have the ordinary reasons for assuming that it places B in a better position than he would have been apart from the contract. If A is not legally bound to help B merely because he is in distress, and if he is free to contract or not as he likes, the law cannot consistently oblige him to make an exchange of utilities---if he makes one at all---more favourable to B than he would make without legal interference: at any rate this cannot be defended on the ground that B is ``not really free'', in the sense in which individualistic legislation aims generally at securing his freedom. How far any limit should be placed on B's power to bind his future actions under these circumstances, is again a different question which we shall consider later.
[Back to:] [Elempol, Chapter 6, Section 1]