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CONTRACT LAW 513
FUNDAMENTAL CONTRACT LAW*
Cost of Litigation.— It should be and usually is the policy of every
servant corporation to avoid litigation so far as possible. Lawsuits
arc very costly, not only in attorneys' fees, the taking of evidence,
the court proceedings, the loss of time of salaried employees and
officials, but also in the loss of "good-will," which alone amounts to
more than the gain through litigation, if the cost incident to litigation
is ignored.
As it is very rarely necessary to resort to litigation, or to make
concessions or render credits to avoid litigation, if the original con-
tract is properly drawn and having been so drawn is executed or
carried out in a spirit of fairness and a business-like manner, it is
highly important that the sales engineer, who must draft such con-
tracts, understands the enormous cost of litigation and the funda-
mentals of contract law to guide him in avoiding resort to the courts.
The law of contracts is as simple and as readily understood as any
department of the law. Nevertheless, the average engineer is usually
unable to avoid complications and weaknesses in the preparation of
specifications and other documents pertaining to contracts. The im-
portance of understanding and knowing the contents of the following
paragraphs of this chapter can not, therefore, be exaggerated, and
the sales engineer can do well to make them the basis of much
thought and study.
Kinds of Contracts.—A contract is a promise to do or refrain
from doing some act or series of acts that law will enforce. There
are, in general, two kinds of contracts:
(1) Sealed contracts, or specialties.
(2) Parol contracts.
A sealed contract, or specialty, is a contract made under seal; while
a parol contract is a simple oral or written agreement not made
under seal.
A sealed contract may be described in greater detail as a written
agreement signed by the parties with a seal appended to the signa-
tures. Formerly a seal consisted of "an impression on wax, or
paper, or some other tenacious substance capable of being impressed."
Now, however, an impression of a seal on the paper itself is con-
strued as a proper seal, and in many states by statute a scroll en-
closing the word seal made opposite the name of the signer is quite
sufficient. Engineering contracts are now very rarely executed under
seal; although the bond which holds the sureties for the faithful
performance of the work by the contractor must be under seal, be-
* Chapters on "Fundamental Contract Law" and "Engineering Contracts,'
printed by permission from Sales Engineering, by P. Edwin Thomas.