Free, conditional permission/service: contract or not?

Question

This can be seen as another "is a free licence a contract?" question (inspired by this and this), but it focuses on the very basics of the underlying relation between parties.

Alice and Bob do not know each other but sit on adjacent seats on a plane flying internationally. The flight attendant hands over immigration/customs cards. Alice digs out her pen and fills in her form. Bob carries on with his meal in not so tidy way: his hands clearly become fat smeared.

Alice finishes with her form, and Bob finishes with his meal. Now Bob wants to fill in his form but he hasn't got a pen. He asks Alice to borrow hers.

Alice doesn't want her pen to be held by Bob's fatty hands but she doesn't want to appear rude either. She says that she will let him use her pen provided that he first goes to the lavatory and washes his hands with soap.

Setting aside the apparent absence of intention to create legal relations, and the obvious de minimis, does this situation otherwise satisfy the legal requirements for a contract? Is the act that Bob washes his hands valid consideration on his side?

If the answer to the above is Yes, is there any line dividing contract and mere permission to use things subject to certain conditions?

Answers for any jurisdictions are welcome, though mostly interested in common law ones.

Answer 1

Consideration

Consideration is essential on both sides of every simple common law contract (civil law is different). It is the quid pro quo or "something for something" that is the essence of a contract - it's what turns an unenforcable agreement into a contract.

A formal contract supported by a deed does not need consideration.

The rules of consideration are that it:

1. must move from the promisee, but need not move to the promissor. For example, you promising me to wash someone else's car is good consideration.

2. may be 'executed' (something for something now) or 'executory' (something for something in the future) but it cannot be 'past' (something that has already occurred before the contract came into existence - noting that that exact moment might be somewhat nebulous).

3. need not be adequate. If I agree to sell you my home for $1 this is clearly not adequate (in most circumstances) but the $1 is good consideration.

4. must be sufficient. This is not the same as adequate. Insufficient consideration falls under the following headings

   • performance of a duty imposed by law
   • performance of a duty already imposed by another contract
   • moral obligations
   • uncertain or indefinite promises.

5. Possible to perform - both legally and practically.

What is promised does not need to have intrinsic value and can be a promise to do something or to refrain from doing something.

Condition

"Condition" has several meanings in contract law.

Condition of a Contract

A condition in a contract is an essential term the breach of which entitles the innocent party to either:

1. affirm the contract and sue for damages, or
2. treat itself as no longer under an obligation to perform the contract - but rights which had accrued up until that time continue.

A term that is not a condition is a warranty. Breach of a warranty allows suing for damages but does not allow the innocent party to escape their obligations.

Whether a term is a condition or a warranty depends on how essential it is - if it was so essential that the innocent party would not have entered the contract without it, it's a condition. The egregiousness of the breach can affect this as well - a term requiring payment on the 1st of each month is likely to be a warranty if payments are consistently made on the 3rd but a condition if they are constantly 2 months late.

Condition Precedent

A condition precedent is one which must be satisfied before a contract becomes binding.

1. A condition precedent to the formation or existence of a contract. There are no enforcable rights on either party until the condition is fulfilled. Usually, this condition depends on a third-party. For example, an offer to buy real estate "subject to finance" is not a contract if the finance is not forthcoming.

2. A condition which is precedent (a pre-requisite) to the obligation of a party to perform its part of the contract. For example, a requirement that delivery must be before 9.00 am on Wednesday or there is no binding contract. This can alternatively be thought of as the parties providing within the contract a mechanism for its discharge.

Condition Subsequent

Is a condition terminating the contract (either automatically or on the election of one of the parties) when it occurs. For example, a contract for the supply of iron ore while the price is above $X/ton - if the price drops lower the contract ends.

Other uses

Outside of contract law, the word "condition" is used a lot; most usually in its common English construction of "If [condition] then [consequence]". For example, "if I put the basketball through the hoop, my team gets 2 (or 3 or 1) points" - that's a condition of getting the points but it's not a contractual obligation.

Bob and Alice

Bob washing his hands

1. It moves from Bob - that is, Bob has to do something. It doesn't move to Alice (apart from her not having to sensorily experience Bob's greasy fat-smeared hands anymore).
2. It is executory - Bob may have washed his hands in the past (we can hope) but this particular contract requires him to wash them in the future.
3. It doesn't have to be adequate although in the context of this contract it probably is anyway.
4. It is sufficient - Bob is under no legal or moral obligation to wash his hands.
5. It's possible to perform - it is neither illegal nor physically impossible for Bob to wash his hands.

Alice lending the pen

1. It moves from Alice and it this case, to Bob.
2. It is executory - Alice will lend the pen in the future.
3. It doesn't have to be adequate although in the context of this contract it probably is anyway.
4. It is sufficient - Alice is under no legal or moral obligation to lend Bob her pen.
5. It's possible to perform - it is neither illegal nor physically impossible for Alice to lend the pen.

Bob washing his hands is also a condition of the contract - if Bob does not wash his hands, Alice can either affirm the contract and sue for (admittedly small) damages or terminate the contract and keep whatever benefits she has accrued (none).

And, it's a condition subsequent, until Bob washes his hands, Alice has no obligations under the contract.

Answer 2

Let's go through the checklist.

Assume for the purpose of discussion that Alice is a woman and Bob is a man, so that the pronouns are unambiguous.

1. Intention to create legal relations is excused by definition in the question, without this there cannot be a contract.

2. Agreement can be clear from both conduct and from speech. Alice in making the offer verbally and holding out the pen physically would demonstrate her agreement. Bob in replying affirmatively and shortly afterwards actually going to wash his hands would demonstrate his agreement.

3. Consideration is clear. Alice provides the quantity of ink needed for the text and the pen for the process of applying; Bob completes a specified act. It may not seem like a fair trade e.g. if the pen is extremely expensive or if washing hands takes a long time and is difficult to do on the plane. But that's irrelevant, contracts don't need to be fair.

4. Legal Capacity is presumed as these are independent adults, without any other reason to doubt sufficient capacity to understand what they are doing or expected to do.

5. Genuine Consent is also presumed, although may be invalidated if e.g. Bob has been hassling Alice throughout the flight and she feels threatened by his insistence ("sure, if you go wash your hands first" could equally be a means of making Bob go away so she can call an attendant for assistance)(this goes to the intent to create legal relations point).

6. Legality of Objects is also presumed, as it is not normally illegal to wash hands, write with a pen, or lend personal possessions to others. But there may be some fact in the situation that does make it illegal (was this pen stolen by Alice in the first place? is Bob required by civil aviation regulations to remain seated?).

Overall, the answer is clear: Alice and Bob would have a contract otherwise.

Answer 3

Licenses and contracts (lwn.net)

It seems like it depends on jurisdiction and type of license:

In short, under US law, with the possible exception of the Fair License, all the licenses under consideration are likely to be regarded as contracts.

On that basis, he was minded to say that English law would hold that the Fair License, Apache, and BSD licenses were just licenses, while the GPL might be held to be a contract.

Her conclusion was that all four licenses would be interpreted as contracts in civil law jurisdictions. In more than one case, German courts have held that the GPL is enforceable as a contract.