REPORT #PCT08: THE SANCTITY OF CONTRACT

Introduction
Agreements form the basic essence of interactions among human beings. Contracts are agreements in formalized or enforceable format.

You have a moral and legal right to enter into agreements with others. Bureaucrats don't always recognize this moral and legal right. Fortunately, in the United States and perhaps some other common-law-based countries such as Canada, Great Britain, Australia, and New Zealand, you have many rights grounded in common law. Use of the word "grounded" actually is quite literal here, for common law is the "law of the land" (as opposed to "law of the sea" or "law of commerce" or "law of corporations").

In the United States (unlike some common-law-based countries such as Great Britain), there's a Constitution. Individual rights which originate in you - because you exist as an individual - are further recognized by the law of the land, or common law. Even further recognition follows from a Constitution, such as the U.S. Constitution.

Even though you have these rights from the outset because you are a sovereign individual, it does often help to have the additional recognition and protection offered by common law and the U.S. Constitution. The U.S. Constitution recognizes and protects the sanctity of your right to contract. Article I, Section 10 states: "No state shall pass any law impairing the obligation of contracts." Moreover, in the famous case Hale v. Henkel, the U.S. Supreme Court says: "The individual may stand upon his constitutional rights as a citizen. He is entitled to carry on his private business in his own way. His power to contract is unlimited." [emphasis added]

You have no obligation to enter into contracts to be regulated by statutes or legislatures. You may make such agreements, either explicitly or by default (failing to object). When dealing with bureaucrats, any such objection should take whatever format will maximize the chances of success in the assertion of your already existing individual rights. Doing so usually involves a great deal of advance preparation. Study hard, and study smart. Get the right information from the right people and go to it!

Privacy of Contracts
Part of the Sanctity of Contract is the natural right to privacy therein. You absolutely have a right to privacy in your agreements with others. You may waive this right to privacy, and your right to do so is absolute as well.

But consider this: If you do waive your right to privacy, don't you want to do so knowingly? In the time, place, and manner of your choosing?

Some agreements in your life you probably don't care too much whether lots of other people (not involved in the agreement) know about them. You may not care much whether neighbors know that you often agree to have pizza delivered to your home on short notice. However, you may care a lot about whether all your neighbors know your salary. Do you care whether the IRS knows your salary?

No one but the parties to a contract have the right to know the terms of the contract, unless permission is given by the parties to the contract. Do you think it's a good idea to give permission to your bureaucratic enemies to know the terms of the contracts and agreements you have in your life?

If you agree to be regulated, then you should not object when regulatory bureaucrats try to regulate you. This includes disclosure of information and other invasions of your privacy. Maybe you should take steps to take away your permission to be regulated.

Maybe you should consider private agreements such as the Pure Contract Trust in which you keep your private agreements private. "He owes nothing to the public so long as he does not trespass upon their rights." Hale v. Henkel, 201 U.S. 43 at 47 (1905).

Even if you need help in resolving a dispute, there's no need to allow regulatory bureaucrats into your life! You can resolve private disputes privately. Keep your privacy! Avoid regulatory bureaucrats and their 5-year wait, traffic-jammed court system. Here is a sample of some of the Pure Contract Trust language, which keeps the bureaucrats out of your contracts, agreements, and affairs:

"The Trustee(s) shall attempt to resolve any dispute between an aggrieved party and the Pure Contract Trust Organization through mediation. Should such negotiation fail, the next resort would be mediation.

Any aggrieved party may request that the Trustee(s) appoint a mediator acceptable to all parties concerned to resolve a dispute with the Pure Contract Trust Organization through mediation. How the cost of mediation will be shared by the parties concerned shall be determined as part of the mediation procedure. Should mediation fail, arbitration would be the next resort.

Any aggrieved party may request in writing that the Trustee(s) convene a Board of Arbitration to resolve any dispute between the aggrieved party and the Pure Contract Trust Organization. Unless otherwise specified by a prior contract between the aggrieved party and the Pure Contract Trust Organization, the Board of Arbitration shall consist of three (3) persons, independent of the Pure Contract Trust Organization: one selected by the aggrieved party, one selected by the Trustee(s), and the third selected jointly by the two selected arbitrators. The Board of Arbitration shall, after meeting, investigation, and majority agreement, give judgment which shall be binding on all parties. Such judgment shall include the sharing of costs incurred as a result of the arbitration process."

The Right to Privacy of Contracts and Agreements is a fundamental individual right. Assert this Right for yourself! If, in your contracts you say nothing about private dispute resolution, or you say something like, "disputes will be resolved according to the laws of California," then the bureaucrats can claim that you made them a party to the contract, that you've granted them jurisdiction, and therefore they can interfere with the contract.

Some Precedent!
- The Famous Dartmouth College Case
Dartmouth College v. Woodward, 17 U.S. 518 (1819)

This famous U.S. Supreme Court case, referred to as the "celebrated Dartmouth College Case," is a leading case in the interpretation of the contract obligation clause of the U.S. Constitution, namely, Article I, Section 10, which states that "no state shall pass any law impairing the obligation of contracts."

In 1769, before the American revolution, the British crown granted to the trustees of Dartmouth College in the province of New Hampshire, in New England, America, a charter, for the establishment of a college for the education of Indian and English youth in the province.

After the revolution, starting in 1816, the legislature of the state of New Hampshire passed a series of three acts to reorganize and convert Dartmouth College from an institution according to the will of the founders, to an institution that would be controlled by the will of the government. The trustees of Dartmouth College brought an action against a William Woodward for the return of property, such as books of records and corporate seal, belonging to the trustees that had been seized from them.

The State Court issued a conditional verdict, finding for the defendant, Woodward, if the acts of the legislature to reorganize the college were valid and not repugnant to the U.S. Constitution. Otherwise, it found for the plaintiff trustees. The court requested a ruling by the U. S. Supreme Court to clarify this issue. The opinion of the Supreme Court was delivered by John Marshall, Chief Justice:

"It requires no argument to prove that the circumstances of this case constitute a contract. An application is made to the British crown for a charter to create a college. The application states that large contributions of property will be conferred on the college on the condition that the charter is granted. This transaction carries every ingredient of a complete and legitimate contract.

The points for consideration are:

1. Is this contract protected by the Constitution of the United States?
2. Is this contract impaired by the acts of the New Hampshire legislature under which the defendant is holding property belonging to the trustees of the college?

1. If the granting of the charter by the British crown was in any way, politically or publicly connected to government, then the legislature of New Hampshire may act according to its own judgment in the administration of the college, unrestrained by any limitation imposed by the Constitution of the United States."

But, if this is a private, charitable institution, which receives private property unrelated to government, whose funds are donated by individuals who have faith in the charter, where the donors have specified the disposition and management of their funds, then they have a right to insist that those arrangements shall be carried out.

Dartmouth College is a charity school, not a civil institution participating in the administration of government. Its trustees were originally named by the founders, and invested with the power of perpetuating themselves; the trustees are not public officers.

The Constitution is concerned and extends its protection to contracts, where the parties have a vested beneficial interest. This charter is a contract made of a valuable consideration. It is a contract for the security and disposition of property. It is a contract, on the faith of which real and personal estate has been conveyed to the college. It is, then, a contract within the letter of the Constitution, and also, within the spirit of the Constitution. The opinion of the court, after serious deliberation, is that this is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States.

2. It is clear that all contracts, and right, respecting property, remained unchanged by the revolution. The obligations and the powers that were created by the charter to Dartmouth College, were the same in the new government as well as in the old. After the revolution, the Constitution of the United States has imposed this additional limitation, that the legislature of a state shall pass no act "impairing the obligation of contracts."

The founders of the college contracted for the perpetual application of the funds which they gave. They contracted for a system which would forever retain the form of institution of learning which they had formed and in the hands of persons approved by themselves.

However, now the legislature of New Hampshire has totally changed the system, and the original charter of 1769 exists no longer. It has been reorganized by the legislature in such a manner as to convert a literary institution into a machinery entirely subservient to the will of government.

It results from this opinion, that the acts of the legislature of New Hampshire are repugnant to the Constitution of the United States, and that the judgment on this special verdict ought to have been for the plaintiffs, the trustees of Dartmouth College, and not for the defendant, Woodward. The judgment of the State Court must therefore be reversed."

Notes on the Dartmouth Case
Although the Dartmouth College case was an important constitutional check on state legislation during the early years of America, the contract clause was less widely used after the adoption of the Fourteenth Amendment in 1868.

You may be interested in a boxscore comparison of the number of citations between Hale v. Henkel and the Dartmouth College cases. Keep in mind that Hale v. Henkel was decided in 1905 and Dartmouth College in 1819. This is how they compare:

                          Supreme     Federal &
                           Court     State Court
                         Citations    Citations

Dartmouth College (1819):   105         2365
   Hale v. Henkel (1905):   144         1600

However, since the 1930s the U.S. Supreme Court and lower courts have generally ruled as if the contract clause had been repealed.

How Franklin Roosevelt Stacked the Supreme Court to Try to "Eat Out the Substance" of the Law of the Land (Common Law)
Franklin D. Roosevelt (FDR), US President during much of the 1930s and 1940s, did vast damage in convincing large numbers of Americans that the Law of the Land (Common Law) no longer applied.

As part of the sell-out to private monopoly bankers, he convinced Congress to pass statutes saying that Americans must trust the promises of politicians and other bureaucrats about the honesty of their money. How? By having the statutes declare that most Americans couldn't own gold.

FDR lied with the typical vile lying skill of a politician by saying that "uncooperative" Americans were "slackers." Go read major mainstream magazine articles from about 1932 or 1933 (such as Time magazine). The psychological manipulation thrust upon Americans was a highly skilled act of treason: make individuals who did not trust bureaucrats with the substance of their money (gold) feel like social outcasts and criminals, by branding them "slackers." How clever! And how evil.

At that time (early 1930s), standard language in most contracts included what was commonly called the "Gold Clause." This short number of paragraphs of typical contractual language allowed for monetary amounts to include an equivalent in both dollars and gold. This was a protection most private parties to contracts at the time insisted upon because they did not entrust the substance, or honest value, of their money to bureaucrats who wanted (and still want) money to be dishonest because it's backed by nothing but the lies of politicians and bureaucrats.

FDR and his lackeys then said that the "Gold Clause" in most contracts was "illegal" because it was against "public policy." Is there any mention of "public policy" in the Constitution? Does the Law of the Land (Common Law) contain anything about "public policy." No, and no.

Many brave Americans challenged FDR in his bureaucratic grab for the power of the substance of money. The Supreme Court at that time saw through the charade and struck down FDR's unconstitutional statutes as being totally against Article I, Section 10 of the Constitution: "No state shall pass any law impairing the obligation of contracts." FDR lost - at first.

FDR, being the skilled manipulator that he was, then appointed to the Supreme Court new Justices sympathetic to his grab for power. He "packed the Supreme Court." In fact, his treason went so far as to increase the number of Justices from 7 to 9 so he could be sure to quickly get enough appointees for a majority vote. Then, a couple of years later (mid 1930s) when challenges to FDR's intrusions into the obligation of contracts were challenged in the conventional court system, the voiding of the private "Gold Clause" was upheld (unconstitutionally impaired) by FDR's stacked court. Good, moral Justices remaining from before FDR such as Justice VanDeventer wrote sharp dissenting opinions in several cases warning about the precedent being set for further assaults on the Constitution. (For a detailed history and analysis of FDR's war on gold and on the rights of contracts, we highly recommend The War on Gold by Anthony Sutton, published hard cover approximately 1976 by '76 Press of Seal Beach, California.)

Court Jurisdiction and the Liability of Judges
The Pure Contract Trust is based on:

1. The U.S. Constitution being the law of the land;
2. The obligation of contracts clause being in full force and effect;
3. An amendment to the U.S. Constitution being required to change it;
4. All statutes, regulations, and court decisions contrary to the obligation of contracts clause being null and void;
5. All judges having sworn an oath to uphold the U.S. Constitution - including the obligation of contracts clause;
6. Any judges ruling contrary to the obligation of contracts clause are not only violating their oaths of office, but also acting beyond their jurisdiction - and should be prosecuted to the full extent of the law.

• "It is never to be forgotten that in the construction of the language of the Constitution, we are to place ourselves as nearly as possible in the condition of the men who framed that instrument." Ex Parte Bain, 12 U. S. 1. 7 S. Ct. 781.
• "We are bound to interpret the Constitution in the light of the law as it existed at the time it was adopted." Mattos vs. U.S., 156 U.S. 237 at 243.
• "It must be interpreted in the light of Common Law, the principles and history of which were familiarly known to the framers of the Constitution. The language of the Constitution could not be understood without reference to the Common Law." U.S. vs. Wong Kim Ark., 169 U.S. 649, 18 S. Ct. 456.
• "Law of the Land" means the "Common Law." Taylor vs. Porter, 4 Hill 140, 146 (1843); State vs. Simon, 2 Spears 761, 767 (1884); .
• "Neither the Legislative, Executive nor the Judicial departments of the Federal Government can lawfully exercise any authority beyond the limits marked out by the Constitution." Dred Scott vs. Sanford, 19 How, 393.
• "The United States is entirely a creature of the Federal Constitution, its power and authority has no other source and it can only act in accordance with all the limitations imposed by the Constitution."

"The rights and liberties of the citizens of the United States are not protected by custom and tradition alone, they are preserved from the encroachments of government by express/enumerated provisions of the Federal Constitution."

"The prohibitions of the Federal Constitution are designed to apply to all branches of the national government and cannot be nullified by the executive or by the executive and the senate combined." Reid vs. Covert, 354 U.S. 1, 1 L. Ed. 2nd 1148 (1957).

• "Where rights are secured by Constitution are involved, there can be no rule making or legislation that will abrogate them." Miranda vs. Ariz., 384 U.S. 436 at 491 (1966).
• "A Justice's Court is an inferior court, and its jurisdiction must be shown affirmatively by a party relying upon, or claiming any right under, its judgments." Jolley v. Foltz (1867), C. 321.
• "A judgment is absolutely void if it appears that there was a want of jurisdiction in the court rendering it either of the subject matter or the person of the defendant." Hahn v. Morse (1868), C. 391.
• "An officer who acts in violation of the Constitution ceases to represent the government." Brookfield Const. Co. v. Stewart, 284 F.Supp. 94.
• "Judges not only can be sued over their official acts, but could be held liable for injunctive and declaratory relief and attorney's fees." Lezama v. Justice Court, A025829.
• "There is no common law judicial immunity." Pulliam v. Allen, 104 S.Ct. 1970; cited in Lezama v. Justice Court, A025829.
• "Judge acted in the face of clearly valid statutes or case law expressly depriving him of (personal) jurisdiction would be liable." Dykes v. Hosemann, 743 F.2d 1488 (1984).
• "In such case the judge has lost his judicial function, has become a mere private person, and is liable as a trespasser for damages resulting from his unauthorized acts."

"Judge's honesty of purpose and sincere belief that he was acting in discharge of his official duty was not available as defense in action."

"Where there is no jurisdiction there is no judge; the proceeding is as nothing. Such has been the law from the days of the Marshall, 10 Coke 68; also Bradley v. Fisher, 13 Wall 335,351." Manning v. Ketcham, 58 F.2d 948.

• "A distinction must be here observed between excess of jurisdiction and the clear absence of all jurisdiction over the subject-matter. Any authority exercised is a usurped authority and for the exercise of such authority, when the want of jurisdiction is known to the judge, no excuse is permissible." Bradley v. Fisher, 13 Wall 335, 351, 352.
• "The immunity of judges for acts within their judicial role is beyond cavil." Pierson v. Ray, 386 U.S. 547 (1957).
• "It is one of the fundamental maxims of the common law that ignorance of the law excuses no one." Daniels v. Dean (1905), 2 C.A. 421, 84 P. 332.
• "Ignorance of the law does not excuse misconduct in anyone, least of all in a sworn officer of the law." In re McCowan (1917), 177 C. 93, 170 P. 1100.
• "All are presumed to know the law." San Francisco Gas Co. v. Brickwedel (1882), 62 C. 641; Dore v. Southern Pacific Co. (1912), 163 C. 182, 124 P. 817; People v. Flanagan (1924), 65 C.A. 268, 223 P. 1014; Lincoln v. Superior Court (1928), 95 C.A. 35, 271 P. 1107; San Francisco Realty Co. v. Linnard (1929), 98 C.A. 33, 276 P. 368.

The Nature of Contracts
The law of contracts forms the oldest branch of the law relating to transactions. In one form or another, it has existed from the beginning of organized and primitive societies. Just as the safety of persons and/or property depends upon the rule of criminal law, so the security and stability of the business world are dependent upon the law of contracts.

With our philosophy of personal liberty, the law of contracts is one of the main structural supports with the right to acquire and dispose of property. A contract in the modern sense has been defined as "an agreement containing a promise enforceable in law."

Contracts are classified according to the following characteristics:

1. Formal or simple.
2. Executed or executory.
3. Express or implied (in law or in fact).
4. Bilateral or unilateral.
5. Valid, voidable, or unenforceable.

Formal or Simple: Early English law enforced only those promises that were written, signed and sealed. A formal contract, which is a promise enforceable in law, is a contract that is written, signed and sealed. Those contracts that do not require a seal are designed "simple" or "informal" contracts. The simple or informal contracts, are designated as "parol" contracts. "Parol" means "oral or verbal." When we speak of formal versus simple contracts, we are speaking of a contract that is written, signed and sealed versus a contract that is oral.

Executed and Executory Contracts: An executed contract is one that has been fully carried out by the contracting parties. An executory contract is one that is yet to be performed. An agreement may be executed on the part of one party and executory on the part of the other.

Is the Pure Contract Trust an executed or executory contract? It is an executed contract, because the creator and exchangor have carried out the terms of the contract: (1) by exchanging Trust certificates for real and/or personal property, (2) by creating the Pure Contract Trust Organization and appointing the Board of Trustees, and (3) by conveying the real and/or personal property to the Board of Trustees. Since all the terms of the contract have been fully carried out by the contracting parties, it is an executed contract. There is nothing further to be performed as in an executory contract.

Express or Implied: A contract may result from an agreement in which all of the detailed terms are clearly set forth either in writing or orally at the time of making, in which event, it is said to be an express contract. The Pure Contract Trust is an express contract. On the other hand, a contract may be entirely implied from facts such as acts of the parties, the acts being such that a contract may be inferred from them. In other instances, the contract may be, and often is, partially expressed and partially implied.

There is a distinction between law and fact: In a sense, the rules of law that govern the relations of men are "facts." The law is a body of rules attaching consequences to conduct or to states of fact. The defendant did certain things under certain surrounding circumstances. These are the "facts."

There are important differences between fact and law. "Fact" is sometimes used in opposition to "law." U.S. courts generally operate on the basis that questions of fact are for the jury to decide, while questions of law are for the court to rule on. [However, in terms of the U.S. Constitution, trial by jury means that the jury has the right and duty to judge both the fact and the law.]

Fact is an event; law is a principle.
Fact is actual; law is conceived.
Fact is that which has been according to or in contravention of the rule; law is a rule of duty.

Quasi Contract: A quasi contract (sometimes also called a "hidden" or "adhesion" contract) is an obligation to do something imposed upon someone by law but bearing the force of a contract. What does "quasi" mean? Quasi means "as if," "almost as if it were," and "analogous to." Therefore, one could define a quasi contract as an "obligation as if it were a contract," or an "obligation analogous to a contract." A quasi contract does not have all the ingredients of a contract, but is treated by law as a contract (such as the Social Security Act). It's a common law principle that for a contract to be valid it needs to be entered into knowingly, willingly, and intentionally. Individuals who stand on their common law rights reject the validity of all such quasi contracts. As you'll see below, these quasi contracts don't satisfy the definition of a contract.

Bilateral and Unilateral Contracts: A bilateral contract is one that is to be performed on each side at some future time. A bilateral contract involves two promises, one made by each of the parties to the agreement. A unilateral contract consists of a promise for an act, the acceptance consisting of the performance of the act requested rather than the promise to perform it.

Is the Pure Contract Trust a bilateral or unilateral contract? It's a bilateral contract. For example, a lost and found ad for a lost pet is a unilateral contract, because the acceptance consists of the performance of the act, rather than the promise to perform it.

Voidable Contract: A voidable contract is one that, for some reason of the court, may be set aside at the request of the parties. It differs from a contract that is void in that it cannot be enforced by either party.

Definition of a Contract
A contract is an agreement between two or more competent persons, having for its purpose a legal object, where each of the persons acts in a certain manner or promises to act or to refrain from acting in such a manner. There are four component parts to a valid contract:

1. Agreement, offer, and acceptance.
2. Mutuality, consideration.
3. Competent parties.
4. Legal object (or purpose).

1. Agreement, offer, and acceptance. One of the first steps in the formation of any contract lies in arriving at an agreement between the contracting parties. This agreement is spoken of as "a meeting of the minds," but it's better known as offer and acceptance. No offer becomes effective until it has been communicated to the offeree. The motives that induce parties to make a contract are not material as long as they intend to make a binding agreement.

A person accepting an offer is charged with knowledge of the terms of the offer, and cannot set up his ignorance of them if reasonable means were adopted by the offeror to bring them to his attention. The offer must be 1) communicated, and 2) it must be definite as to its terms.

2. Mutuality and consideration. Mutuality means reciprocation, or an acting by each of two parties. Consideration means something of value received or given at the request of the promisor in reliance upon and in return for his promise. It should not be confused with motive. Consideration is defined in various ways, and knowing the various ways in which it is defined will help in obtaining a better understanding of the term.

Consideration is the price for which the promisor bargains in exchange for his promise. Whenever a right has been surrendered or a promise to surrender a right has been made at the request of another, the promise then becomes enforceable. Consideration is the inducement to a contract. It's an act, or the forbearance of an act, which is offered by one party and accepted by the other as an inducement to that other's act or promise.

3. Competent parties. Two classes of natural persons are limited in their capacity to make a contract. These are: (1) those not possessing mental capacity, and (2) those possessing mental capacity but lacking legal capacity, such as infants or minors. The contract provides that the agreement must be entered between competent parties, meaning that all persons are presumably competent to contract without restriction, except as mentioned above.

The power of a corporation to contract is limited by its charter. Although under traditional common law, women had few contractual powers, today through legislation most women are accorded the same right to contact that is granted to anyone else.

4. Legal Object. Clearly, an agreement that has for its object the commission of a crime is illegal. Obvious examples are agreements to commit murder, robbery, arson, burglary, and assault and battery. Such agreements are treated in law as void.

One further remark concerns the specification of time. If no time is specified for the performance of an act, then, a reasonable time is allowed. The reasonable time may be longer than one of the parties contemplates. For this reason, it may sometimes be prudent to specify the time allowed for completion in a "time is of the essence" contract.

Social Contract
The political and bureaucratic tyrants in America operate on the basis that the a "Social Contract" under public policy is in full force and effect. In political philosophy, the "social contract" is a crucial theory that lawyers and judges are trained by. The old philosophers dating back to the 1600s agreed that in the pre-social state, man was unwarlike and timid. Therefore, "modern man" requires a "social contract" consisting of laws for mutual protection and a surrender of individual freedom.

The social contract is not a pledge of the ruled to obey the ruler, but is supposed to be an agreement of individuals to subordinate their judgment, rights, and powers to the needs of their community as a whole. The sovereign power doesn't lie in the ruler, but in the general will of the community. Each person supposedly enters into such a contract by accepting the protection of the communal laws, such as different types of business licenses. In other words, just by being a member of society, one has surrendered his natural rights and is under specific performance to pay his fair share of taxes, etc.

There's nothing in the U.S. Constitution about any "social contract." Individuals who stand on their common law and constitutional rights, regard the very notion of "social contract" as an absurd fraud.

Any individual who, by trickery, fraud and deceit, has been induced into a contractual relation that has resulted in a loss of liberty may seek for redress and grievance as it applies to his case. The common law of contracts provides us with remedies to arrest or review a judgment when there is fraud, misconduct, lack of service of process, undue influence, mistake, inadvertence or impossibility. These points of law are called "Affirmative Defenses," and the burden of proof is on the one who affirms.

When an apparent consent, not real or free, is obtained, there are five remedies that exist within the common law of contracts. The remedies are:

1. Duress;
2. Menace;
3. Fraud;
4. Undue influence;
5. Mistake.

1. Duress: Duress consists in the unlawful confinement of the person, such as husband, wife or child. Duress consists of the unlawful detention of the property of any such person. Duress consists of the confinement of such a person, lawful in form but fraudulently obtained or fraudulently made through unjust harassment or oppression.

The essence of duress is the inability to freely exercise one's will at the time of the formation of an agreement because of fear, which is usually the result of misconduct by the other party. Such fear may result from a threat of bodily injury, or it may be induced by a threat of criminal prosecution. In either case, it robs the person of the free exercise of his will and gives him the right to void the agreement.

Every agreement presupposes that the parties thereto are free to enter into the agreement or not, as their best judgment dictates. Therefore, if the will of one of the parties is coerced through fear of the other, the contract is not a voluntary one and may be avoided by the injured party. The essence of duress is the inability freely to exercise one's will at the time of the formation of an agreement because of fear, usually the result of misconduct on the party of the other party.

Such fear may result from a threat of bodily injury, or it may be induced by a threat of criminal prosecution of the contracting party or some close relative. The guilt or innocence of the party charged with the crime has no bearing on the rescission unless the person guilty of the crime is seeking the rescission. A contract made by him for the purpose of adjusting the effect of his crime is enforceable even though induced by threat, but if the contract is made by some close relative who had no part in the crime, it is voidable. Threat of a civil suit, one to recover a debt or property or for some injury, has never been held to constitute duress.

Unlawful retention of, a threat to retain wrongfully, or a threat to destroy the property of another, if used to compel the owner's consent to the terms of an unfavorable contract, is duress. Such pressure robs the owner of the property of the free exercise of his will and gives him the right to avoid the agreement.

Duress - Case Law:

• "Duress is ordinarily a matter of affirmative defense." Nishikawa v. Dulles, 356 U.S. 289, 86 L.Ed.2d 659.
• "Moral compulsion, produced by threats to take life or to inflict great bodily harm, is sufficient to constitute duress." French v. Shoemaker, 14 Wall. 314, 20 L.Ed. 852.
• "The election to disaffirm an act induced by duress must be exercised promptly where it has operated to alter legal rights by transferring them to another." Barnette v. Wells Fargo Nevada Bank, 270 U.S. 438, 70 L.Ed. 669.

2. Menace: Menace consists of a threat, a declaration or showing of a disposition or determination to inflict an evil or injury upon another.

Menace - Case Law:

• "A declaration of an intention or determination to injure another by the commission of some unlawful act. If the act intended to be done is not unlawful, the declaration is not a threat in law, and the effect thereof is not intimidation in a legal sense." Payment v. R. Co., 13 L.Tenn. 507, 49 Am.Rep. 666.
• "The meaning of the word implies that it is a menace of some kind, which in some manner comes to the knowledge of the one sought to be affected." State v. Brownless, 84 Iowa 473, 51 N.W. 25.

3. Fraud: Fraud is either actual or constructive. Actual fraud consists in any of the following acts committed by a party to the contract with intent to deceive or to induce another to enter into the contract:
(a) Fraud is the suggestion as a fact of that which is not true by one who does not believe it to be true; (b) Fraud is a promise made without any intention of performing it; and (c) Fraud is any other act meant to deceive.

Constructive fraud consists of any breach of duty by one, without an actual fraudulent intent, gains an advantage by misleading another to cause injury or harm upon the other. In summation, fraud is an intentional misstatement concerning an existing material fact that induces another to act thereon to his damage. The chief elements of fraud are: intention to mislead, misstatement, material fact, reliance upon the statement, and injury to the defrauded party.

Fraud - Case Law:

• "A contract admittedly valid on its face cannot be avoided by a party thereto on the ground of fraud, except by allegation and proof of facts showing that he was misled, to his prejudice." Lindsay v. Kroger, 95 P. 839 (PacRep. 1909).
• "Negligence or laches [undue delay in asserting a legal right or privilege] on the part of a party in signing a contract, without informing himself as to its contents, does not stop him from questioning its validity, where his signature was procured by trickery and fraud on the party of the other party." Loveland v. Jenkins Co., 95 P. 490, 49 Wash. 369.
• "A defendant, induced to sign a contract by misrepresentations of plaintiff, is not barred from relief by the fact that he failed to read the contract or have it read to him before attaching his signature." St. Louis Jewelry Co. v. Bennet, 90 P. 246, 75 Kan. 743.
• "Where a party desires to rescind a contract upon the ground of mistake or fraud, he must upon the discovery of the fact, at once announce his purpose and adhere to it." Grymes v. Sanders, 93 U.D. 55, 23 L.Ed. 798.
• "A contract induced by fraud may rescind in equity." U.S. v. Fitzgerald, 15 Pet. 407, 10 L.Ed. 75.

4. Undue Influence: Undue influence consists of: (a) The use by one in whom a confidence is given by another, or who holds an authority over the other, for the purpose of obtaining an unfair advantage over him, or (b) The taking of a grossly oppressive and unfair advantage of another's necessities or distress.

Undue Influence - Case Law:

• "To constrain him to do that which he would not have done without the exercise of such control." Bennett v. Bennett, 50 N.J. Eq. 439, 26 Atl. 573.
• "That which compels the testator to do something against his will, from fear, the desire of peace or some feeling that he is unable to resist." Sheppey v. Stevens, 185 Fed. 147.

5. Mistake: A Mistake may be either of fact or law. Mistake of fact is a mistake not caused by the neglect of a legal duty on the part of the person making the mistake and consisting of: (a) An unconscious ignorance or forgetfulness of a fact, past or present, material to the contract; or (b) A belief in the present existence of a thing material to the contract which does not exist or in the past existence of such a thing which has not existed.

Mistake of law constitutes a mistake when it arises from: (a) A misapprehension of the law by all parties, all supposing that they knew and understood it and all making substantially the same mistake as to the law; or (b) a misapprehension of the law by one party of which the others are aware of at the time of contracting but which they do not rectify.

A contract entered into because of some mistake or error on the part of one of the contracting parties usually affords no basis for relief. The majority of such mistakes result from carelessness or lack of diligence on the part of the injured party, and should not, therefore affect the rights of the other party who, without any misconduct, entered into the agreement.

Mistake - Case Law:

• "A mistake or ignorance of the law forms no ground of relief from contracts fairly entered into, with a full knowledge of the facts." Bank of United States v. Daniel, 12 Pet. 32, 9 L.Ed. 989.
• "A contract may be rescinded on account of a mistake on one side, on the ground that the parties never met." Miffed H. Co. v. Rochester, 178 U.S. 373, 44 L.Ed. 1108.

Statute of Frauds
At an early date in English history, in order to prevent fraud by those who attempted to establish a valuable contract by the false testimony of their friends, there was enacted what is known as the Statute of Frauds. This statute provided that certain contracts could not be enforced unless they were reduced in writing and signed by the parties sought to be bound thereby.

Although it's possible for an oral contract to be made in good faith, the Statute of Frauds is best used as a defense when the oral contract itself or its major terms are in dispute.

Any time a contract, whether it be written, oral or implied, is entered into, e.g., a license, permit or tax, a fraud may have been committed, and the plaintiff in this type of case should familiarize himself with all the arguments that make a contract valid, void or voidable. He should then choose which one best fits his case. Only one reason is necessary in order to prevail.

Conclusion
The main lesson to be learned here is that if you give up your Individual Sovereignty protected by the Law of the Land (Common Law), you then submit to be regulated by statutes such as those of FDR. But those Rights originate from you as an individual, not from any legislature or bureaucrat. They are protected by the Law of the Land (Common Law) and by the U.S. Constitution. You should consider conducting many of your affairs outside the jurisdiction of the regulatory bureaucrats. Rely on your Sovereign Rights of Privacy and Contract, which are protected by the plain, clear, and concise language of the U.S. Constitution: "No state shall pass any law impairing the obligation of contracts." And by Hale v. Henkel, which has never been overruled for those individuals subject only to the Law of the Land (Common Law).

You do not challenge the right of the legislature to regulate those who agree by (default) contract to be regulated. But you can conduct many of your own affairs privately under the Sanctity of Contract, because you do not accept any contract to be regulated!

Reports in this series:
#PCT01 - #PCT01A - #PCT02 - #PCT03 - #PCT04 - #PCT05 - #PCT06 - #PCT07 - #PCT07A - #PCT08 - #PCT09 - PCT-User Manual

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