Caveat Emptor: The Consumer's Badge of Authority

Any discussion of the doctrine of caveat emptor necessarily involves a discussion of the free market. and although it has been clearly demonstrated that the free market is the most efficient allocator of scarce resources mankind has yet discovered, it is not a popular concept. Its lack of popularity is probably due to a misunderstanding of the manner in which it works. In any event, those who have benefited most from its operation are often among its severest critics, and even those who are particularly vocal in declaring their support of the market are frequently in disarray as to its meaning.

Early in 1973, the present writer happened to attend a public meeting where substantially all persons present considered themselves devotees of free market principles. On that occasion the speaker made an approving reference to the doctrine of caveat emptor. A number of eyebrows were raised; and when the time for questions and comments arrived, at least one person raised an objection to the implied approval of what the objector evidently considered as being something less than the best of morality. He specifically admonished his fellow listeners to beware of showing too little regard for the moral order. His clear implication was that approval of caveat emptor demonstrated a moral weakness. There was little discussion of the point, but such as there was tended to indicate that the objector had as many adherents as the principal speaker. And even the speaker withdrew a bit from his initial position by admitting that he might have overstated his case.

That incident appears to demonstrate a failure of free market advocates, or people who think they are free market advocates, to understand the tools of their trade. At least it raises questions as to what these particular supporters of the free market, if they were actually in that category, meant when they used the term caveat emptor on that occasion. It seems strange that anyone, and especially one who claims to be a supporter of the free market can find anything immoral about a doctrine that does nothing more than limit contractual liability to the terms of the contract. Caveat emptor extends no further.

Let the Buyer Beware

Literally translated, the expression means, “Let the buyer beware.” To this bare translation of the Latin phrase, Webster adds the explanatory note, “that is, let him [the buyer] examine the article he is buying, and act on his own judgment….”‘ That interpretation by Webster is an accurate rendition of what caveat emptor means as it is applied in English and American law.’ Let the prospective buyer who is contemplating the purchase of an article examine the article, and then let him decide for himself the terms on which he is willing to purchase or decline to purchase the article. Let the rights and duties of both buyer and seller be governed by the terms upon which they mutually agree, nothing more and nothing less. When viewed in that light, what moral or ethical principle is violated by the doctrine of caveat emptor? The clear answer should be, none at all.

The notion that there is something that is at least slightly immoral or improper about the doctrine of caveat emptor apparently rests upon the mistaken belief that its application relieves the seller from his contractual obligations to the buyer. This is a gross distortion of what the phrase actually means. The expression caveat emptor is merely an effort to describe the broader doctrine of freedom of contract as it applies to the vendor-purchaser relationship. The doctrine has nothing to do with the liability of the seller for the promises he makes concerning the product he sells. He is liable for his express promises and guarantees, and in certain circumstances that liability is extended to additional promises and guarantees that may reasonably be implied from the nature of the particular transaction.³

Precisely what promises or “warranties” will be implied depends upon the intention of the parties as revealed by the circumstances surrounding the transaction.

Where the circumstances justify the implication, the implication will be made; and when it is made, the implied promises are given the same legal effect as the express promises. The chief difference between the two kinds of promises is a difference in the evidence by which they are proved. But once they are proved, they are both treated as promises actually made, and both are equally enforceable against the seller.

The Growth of the Doctrine of Implied Warranties

The doctrine of implied warranties is not new in the law. The content of such warranties, however, does change from time to time as adaptations are made to changing business practices. And the current trend is toward expanding rather than curtailing the areas where such implication will be made. At a very early date in the English law it was held that a seller of personal property (as distinguished from real property) impliedly warranted that he had title to the product sold and that he had a right to sell the same. Likewise there also arose the concept of implied warranties of wholesomeness or fitness for human consumption in the case of a sale of food, and conformity to sample where a bulk of goods was sold by sample.⁴ Similar doctrines were incorporated into American law, and, with appropriate refinements and extensions into new areas to coincide with changes in trade customs, have prevailed to this day.⁵

Traditionally the doctrine of implied warranties has not been extended to sales of real estate.⁶ Various reasons have been assigned to explain this distinction between real and personal property. All of them have something to do with what is believed to be the intention of the parties. The buyer usually makes a careful examination of the real estate he buys and relies upon his own judgment, or else he relies upon the advice of a trusted consultant. The seller did not manufacture the land and usually did not erect the buildings upon it; therefore, he is not in a position to have the same kind of special knowledge of its quality and fitness as could be expected from the grower or manufacturer of a product such as a bushel of potatoes or a suit of clothes. Furthermore, there is a lack of uniform specifications concerning land or buildings; and it is not unusual for a buyer, especially one who is young or of limited financial means, to deliberately look for a somewhat dilapidated house which is within his price range and which he can improve with his own hands to the point where it is both more useful to him and capable of bringing a better price when he is ready to sell.

But it is in the buying and selling of real estate that the law frequently shows its capacity to grow and to adapt itself to the changing customs of the market. An illustration of such an adaptation is currently in process in the real estate market. There was a time when the housing consumer in search of a new home was likely to buy a lot and employ a contractor to build a house. In that instance the consumer dealt directly with the contractor and the contractor was liable to the consumer for a workmanlike performance of his contract to build. In present-day society it is becoming more likely that the building of the house will be accomplished by a real estate developer who buys a large tract of land, divides it into lots, and builds houses on the various lots without having particular buyers in mind. He then offers the completed houses for sale. The housing consumer buys his house from the developer and has little or no connection with the actual building process. The builder and the seller are one and the same. Even in that situation, traditional real estate law would seem to dictate that the developer would be liable to the consumer for any express promises or guarantees he might make concerning the quality or fitness of the house sold but that no such promises would be implied.

Recent Change

But within the last decade there has developed a trend toward recognition that the nature of the transaction between buyer and seller has so changed that the law must adapt itself to cope with the change. The developer has placed himself more in the position of a manufacturer offering a product of his own making for sale. Under these circumstances, it is more likely that the developer, by his very acts, manifests an intent to create an impression in the buyer that the house being sold was built in a workmanlike manner and that it is reasonably fit for the purpose for which it is intended, namely, human habitation. It is also likely that the buyer purchased in reliance upon that implied representation. The situation has become an appropriate one for the implication of certain warranties by the seller, and a number of courts have so held.’

Such judicial recognition of implied warranties in this area where there were no implied warranties before does not affect nor is it affected by the doctrine of caveat emptor. Rather it is an adaptation of an old principle to a new business condition. It is a recognition that as modern vendors of housing move into a market where they are becoming manufacturers, they are tending to place themselves in the same legal position as the manufacturers of other consumer goods. By their acts, they are now making certain kinds of implied promises which housing vendors had not made before, either expressly or by implication. But they are promises actually made and resting upon the actual intent of the parties to the particular transaction.

Buyer’s Choice

Enforcement of such promises is unrelated to the doctrine of caveat emptor which is nothing more than a doctrine that the seller will not be held liable for promises he did not make or purport to make in any manner whatever. He is not required, as a matter of law, to guarantee the goods sold. Neither does the doctrine apply in any instance where the intent to guarantee can be shown either by the words used or by the acts done. If the intention cannot be shown by either of these methods, then caveat emptor; that is to say, let the prospective buyer who is contemplating a purchase of an article examine it, make his own judgment as to its suitability for his purposes, and then let him decide for himself the terms on which he is willing to buy or decline to buy the article.

And if the buyer is not permitted to exercise his own judgment as to the suitability of a product for his purposes, who is to make that judgment for him? That is the critical question too often ignored by those who would deprive the consumer of his dominant role in the market place. And the consumer does play the dominant role in the market place as long as he is permitted to exercise his own judgment as to what goods he will buy. The interventionists who prefer having some form of government agency in control of the market offer numerous reasons why the consumer cannot be trusted to play that role. But when their various reasons are examined, it will be found that they can all be summarized in just two points. First, the consumer is not in a position to make wise decisions. Second, even if the consumer could make such decisions, he would have no way of getting the producer to listen.

Pity the Consumer

The interventionist’s lament over the consumer’s lack of qualification for making his own decisions is without end. A few years ago consumers were competing with each other to see which one could have the highest fins on his automobile. If a producer expected to sell automobiles, he had to put fins on them. This was interpreted in some circles as an unscrupulous effort by the producers to trick consumers into paying for frills that failed to add anything to the functional qualities of the automobile. Some even suggested that there ought to be a law prohibiting producers from manufacturing and selling automobiles with fins; that is to say, a law to prevent producers from offering the consumer what the consumer wanted.

The ridiculousness of the whole issue was that no one could be found who ever believed or claimed that fins added anything to the functional qualities of the automobile in the first place. The customer wanted fins. That was all there was to it. He didn’t have to have reasons. And if the consumer wanted fins, the producer was ready to supply fins. Whether or not there should be a law on the subject was a question of whether the consumer or some third party should decide what would best satisfy the consumer. If the consumer was to be allowed to make his own choice, no law was needed. His willingness or unwillingness to purchase spoke for itself, and it spoke in language the producer could understand. If the choice was to be in the hands of a third party who was necessarily a stranger to the transaction, a law accompanied by a whole body of enforcement machinery would be needed.

The high fins gradually disappeared from automobiles without their ever being prohibited by law. But worse things than the passage of an anti-fin law have happened since. A whole swarm of consumer protectionists have entered the field. Each one insists that he knows better than the consumer how to make decisions for the consumer. And laws are being passed. The most unfortunate victim of all this is the American housewife. At least she is being maligned more than anybody else. It has become fashionable for interventionists, bureaucrats, and academic theoreticians to demean her as being one of the most stupid creatures who ever entered a supermarket.

Bewildered Housewives?

According to some of these self-proclaimed protectors of the American consumer, the bewildered housewife never has any idea what she wants when she enters a grocery store, nor is she at all adequate to the task of making her own selections when she gets there. The idea of permitting an ordinary, uninstructed housewife to examine an article she is buying and act on her own judgment is totally repulsive to the interventionist. He will assure you that such a wife doesn’t know how to compare prices or how to evaluate her own needs.

It is doubtful if the American housewives are quite as incompetent as the interventionists seem to believe. It is also a bit surprising that some kind of retaliatory measures have not been taken by the American Housewives Association, or some similar body if no organization under that name exists. At least it would appear that the ladies should be given an opportunity to offer evidence that they do know the difference between pounds and ounces and that they are almost as proficient at comparative shopping and price calculation as some of the interventionists who worry so much about them.

Even after the shopper has made her careful calculations of price, with or without the help of the ever-present officeholder, is there any assurance that her needs will be met by the box of detergent or the bottle of real lemon juice that gives her the absolutely lowest per unit price of merchandise? Is it possible that she might choose to pay a little more in order to get the size that is more convenient for her? Not all kitchen cabinets are of uniform size or design. And even if the lady doing the buying has no reason whatever for selecting a particular package except that she prefers the looks of the containers of that particular size or shape, why should some intervening government official be appointed to frustrate her choice? The selection is being made to satisfy a particular customer, and who can possibly know more about what will satisfy that particular customer than the customer herself?

Freedom to Err

Needless to say, if the customer is left free to make his or her own selections, many of the selections made will be unwise, or even stupid, when measured by the standards of different people who have different tastes or desires. The real question is whether or not a person of mature years should be free to make mistakes. Should he be free to select an unsafe automobile, or at least one without seat belts, if that is what he wants? If his vehicle is more likely to create a special hazard to others who are legitimately using the highway, that is one reason for denying him the privilege of being on the road. But suppose the only danger is a danger to the customer himself. Should he be compelled to protect himself from that danger even though he would prefer to assume the risk? The interventionist would answer, and has answered, that question in the affirmative.

The interventionist would tell all customers that they should not be permitted to pay a higher price for a product in order to get it into a package of a unique or colorful size or shape. The interventionist is opposed to letting the consumer examine the article and act on his own judgment. The consumer must not be allowed a freedom of choice. For if he is allowed such freedom, he might hurt himself. And to allow him to hurt himself, that is, to allow the doctrine of caveat emptor to operate, would be immoral.

Unwittingly, the interventionist is striving toward a rather drab society where the introduction of new products will be delayed or prevented, and the variety of articles being offered will tend to decline. When he is pressed on that point, he is likely to shift his emphasis to the second part of his argument. He will tell you that even if the consumer does make right choices, the consumer will have no way of imposing his will upon the producer or even informing the producer of his choice. An intervening government agency is required for that.

Market Effectiveness

It is the contention of the present writer that if the consumer is allowed the freedom of a caveat emptor, open market system, his control of the productive process will be far more effective than that of any government agency can possibly be. That point will be disputed by the interventionists, and it must be admitted that the overwhelming majority of the American people are interventionists. But majorities can be mistaken even when their claims are most persuasive.

In this instance the interventionists are eager to point out that the manufacturer of an automobile, a box of cereal, or a pair of shoes is likely to be large and powerful while the consumer is likely to be of small means and lacking in influence. They will then tell you that the big and powerful producer is prepared to offer a finished product to the consumer on a take-it-or-leave-it basis, and that the choice of the individual consumer cannot influence the producer.

That line of reasoning seems to ignore the marketing and production processes. The fact is that it is the free choices of individual consumers that force the producer to constantly search for ways to improve the old products and develop new ones. One might begin by inquiring how the big and powerful producer became big and powerful in the first place. He was not always that way. The truth is that there are very few corporate enterprises in the United States that have had a very long run. Most of them are quite young. And with the exception of those few that might have become rich because the government granted them a partial monopoly by using the powers of government to exclude competitors, there was only one way for them to have become strong and powerful. That way was by producing the articles individual consumers wanted and for which individual consumers were willing to pay. This is not to say that the articles being produced have always been good for the consumer in any objective sense. It is to say that the articles were what the consumer wanted.

How the Giants Began

This point can be illustrated by a simple inquiry into how the Ford Motor Company, General Motors Corporation, International Business Machines, American Telephone and Telegraph Company, Atlantic and Pacific Tea Company, or any one of the corporate giants of present-day American industry arrived at its current economic position. Each one had to begin by offering a product or a service that the consumer had been doing without up to that point. In no instance did the new producer have any power to exercise over even one consumer, to say nothing of the whole body of consumers who have since become customers. The only thing any of these beginning producers could offer was the quality or attractiveness of his product. He had to meet the subjective approval, not only of one consumer, but of large numbers of consumers or else be out of business very shortly.

Suppose circumstances had been different. Suppose it had been the approval of a consumer protection agency rather than the approval of a nameless mass of individual consumers that had been required. Would the enterprise winning approval have been different? What standards would the consumer protection agency have applied? How well could the agency have understood individual consumer desires? Where consumers differed as to their respective wishes, how would the agency have decided which consumer to favor? Would the possibility of bribery or fraud have entered the field? The answers to such questions as these can never be known with certainty. But what is known is that the route to approval would have been different. Control would have been removed from the consumer and would have been placed in some part of the political machinery.

No Way to Tell

And if the power to decide what product is to be produced is placed under political control, it is impossible to know which products will best satisfy the consumer. This is true even if every official involved in the process is motivated by the very best of good will; and every possibility of bribery, fraud, or other improper conduct is removed. It is true because the public official is necessarily a third party. He is neither the producer nor the user of the product involved. Whether he is guided by his concern for the protection of the environment, the health or safety of the consumer, or some other such worthy purpose, it is still impossible for him to know what the consumer really wants. The consumer’s power to make his wants known by his acts in the market place has been removed.

And once the political decision is made, there is no longer any measuring rod for determining whether the consumer is satisfied. The producer is not called upon to meet the rigorous test of satisfying consumer demand in order to stay in business. The political authority has said that this type of seat belt, this size container, or this kind of shoes, and this only will be offered for sale in this jurisdiction. The producer of the approved product is thereby shielded from the competitor who might be ready to offer a different product tailored more to the consumer’s wishes. The approved producer can relax. He has won bureaucratic approval; the wishes of the consumer are no longer important. The consumer is still free to buy or not buy, but he is not in a position to reward a competing producer who might offer an unapproved product. The consumer’s power of choice, and therefore his power to control, has been taken from him.

To Buy or Not to Buy

Under the free market, caveat emptor system, the consumer’s control of production is absolute. And he has only one way to express his approval or disapproval. That way is by buying or rejecting the products or services being offered to him. If the market is free, his rejection of a product is an invitation to a possible competitor to offer him an alternative which will more closely conform to his personal wishes. And every time the consumer makes a purchase in the free market system, he is casting his ballot for one product and against another. Since the consumer is the best possible judge of what brings satisfaction to him, he is likely to be both better informed and less corruptible when exercising his choices in the market place than he can reasonably be expected to be when he is at the polls casting his vote for a new director of consumer protection.⁸

As for the producer, the only way he can get into the business in the first place is to risk his capital, labor, and abilities in the production of a new item without any assurance that it will ever be accepted. If it is accepted, he might be on his way to a fortune; but if it is not accepted, his substance as well as his hopes are shattered. His hopes are shattered because he made an erroneous judgment of consumer demand. There is no political agency here to back up the producer’s choice or to compensate him for his losses when he has misjudged the consumer. He is left to the mercies of the free market; and as long as consumers are left free, they are a tough lot. They will not reward a producer for having exhausted his substance on a product the consumer doesn’t want. If the would-be producer who has made the wrong estimate of consumer demand is to remain an entrepreneur of any kind, he is forced by the market processes to change his plans, make a new evaluation of consumer wishes, and try again. The significant thing is that it is the consumer himself, not a political commissar, that must be satisfied.

Consumer Control or Political?

The choice between a caveat emptor, free market system and a consumer protection system is a matter of deciding whether the productive processes should be under consumer control or political control. If the goal is to satisfy the consumer, the answer in favor of consumer control is clear-cut. And that means the choice is in favor of the free market. Under that system, no product can find favor in the market place without consumer approval. Neither can any product be denied favor if it has consumer approval. And the only law needed to create an atmosphere in which the free market will operate is a law to enforce contracts between willing buyers and willing sellers.

Thus far, emphasis has been on getting a new enterprise launched. Admittedly it will not be a success in the market place unless it meets with consumer approval. But what about the producer who is already a success, the large corporation that has already become a major producer in the industry? Is an enterprise of that magnitude subject to consumer control even after it has arrived? In this instance the producer places his product on the market at a particular price and the consumer must buy it as it is and at the price offered or else do without the article. The buyer would like to have a slightly different size, one that has either more or less power, or one of a different color or style. How can the individual buyer persuade the producer to give him what he really wants? What influence can the buyer have in getting desired alterations or improvements in the article? Or how can he bring about a reduction of the price when it becomes too high?

Consumer Power

The answer to each of these questions and many similar ones that could be asked is that the consumer has the same quiet, but deadly effective, control over the established producer that he is capable of exercising over the newcomer. In this particular arena of human action, the lowest paid wage earner is by no means helpless even in the land of the giants so long as he is free to make his own decisions as to what goods he will buy or refrain from buying.

When the comparatively small individual consumer decides to buy his automobile from X Company, his clothing from Y Company, or his groceries from Z Company, he does so because he has learned from experience that he can depend upon these particular firms to deliver what he wants. Of course he is not qualified to make an informed inspection or evaluation of the engineering qualities of the automobile any more than he is able to determine the purity or the nutritional qualities of the groceries being offered. Therefore, he buys from a company whose products have always worked and whose promises are always kept. But suppose that company fails to meet its usual standards in just a few instances. Consumer confidence is shattered. The rest of the story is then determined. There is always an alternative source. And the more highly industrialized the economy becomes, the more certain it is that that alternative is readily available.

But suppose Y Company, a well established firm, never makes a mistake. It always delivers what is promised, its merchandise is of impeccable quality, and it always goes the extra mile to satisfy the demands of every customer. Its prices are high but customers are satisfied. Is it possible for any competitor to enter the market under these circumstances? Why should any customer ever leave a company that is performing so well and buy from an untried newcomer?

Attracting Competitors

The answer is easy. If the performance of the established firm is so nearly perfect as what is here described, you can be sure that it has or soon will have a favorable profit margin. The more favorable that profit margin becomes, the more likely it is that would-be competitors will be watching for an opportunity to enter the field. That opportunity will not occur until some prospective competitor is able to offer a comparable product at a reduced price or an improved product without substantially increasing the price.

As the profit margin improves, the efforts of prospective competitors will increase both in numbers and in diligence of effort. The competition becomes a race among giants to see which one can bring the greatest satisfaction to the individual, low-income wage earner at the lowest price. It is the kind of race that is impossible except in a free market. It is also the kind of race that is inevitable in the free market. It is a race to see who can be first with a solution to the problem of giving the consumer better service at a lower cost. Under the kind of pressure such a race is certain to generate, somebody is sure to find a solution if a solution exists. And as soon as it is found, the fickleness of customers is such that many of them will abandon their first love and flock to the new.

That is the way consumer demand expresses itself in the caveat emptor, free market system. It is the process by which individual consumers have kept a constant stream of new products flowing to the American market for almost 200 years. If there is any way consumers can exercise such absolute pressure in the consumer protection system, that way has not yet been discovered. It is high time that the consumer protection system be recognized for what it is. In its essence, it is a producer protection system designed to protect the producer from the rigors of competition faced in the free market. So long as the market is free, the consumer pressure for improved products is intense. No producer can remain in the market without keeping constantly alert to consumer demand. And that consumer demand is so constantly and so urgently inviting competitors to enter the field that no producer, however well established, can afford to relax in his efforts to improve.

A Change of Preference

As recently as the 1920′s the Ford Motor Company held such a dominant position in the automobile industry that the possibility of effective competition from any source seemed remote. Ford had arrived at that position by producing the kind of vehicle the customer wanted at a price the customer was willing to pay. Having arrived at that zenith, Ford continued to produce the same kind of automobile. He continued to make the same product that made him famous. He reduced price without any decline in quality. But the consumer was ready for something new. Chevrolet introduced innovations and frills at a slightly increased price. Consumers examined what they saw, exercised their own judgment, and began to buy the competing product. And look who is ahead now!

Even more recently an article known as the ball point pen came on the market. Although it sold for considerably more than the price of the old fountain pen, the consumer examined the new article, acted on his own judgment, and decided to buy. So successful were the initial offerings that fantastic financial rewards for producers seemed a near certainty. This brought more producers into the field with each one trying to attract consumer attention. The result was that the old fountain pen virtually disappeared from the market. The ball point pen was so improved and its price pushed so steadily downward that, even after all the intervening inflation, nineteen cents will buy a better ball point today than could be had for fifteen dollars in the years immediately following its initial appearance in the market place.

A Miracle in Process

What happened to the automobile and the ball point pen is illustrative of what has happened throughout American industry. The speed with which comparatively new products have disappeared from the market to make way for still newer ones has been fabulous if not miraculous. In fact, the word miracle might not be too strong. It is the miracle of a market where consumers are free to call the shots, where they are free to inspect every product offered to them and to act on their own judgment. It is a market where it is not considered immoral for consumers to act on their own judgment. In short, it is a market that is free.

In such a market, the consumer has every producer and would-be producer in the world striving to give him more of the things he wants and at the lowest prices possible. They are not striving toward that end because of any special love they might have for the consumer. They are striving to please the consumer because that is their only route to their own economic survival. It is the producer’s search for newer and better ways of satisfying the consumer that keeps the flow of newer and better products pouring into the market, thereby assuring a wide variety of goods available for almost every purpose.

Every time the consumer buys a toothbrush, a loaf of bread, or a ticket to the theater, he is using the market to send a signal to the producer about what he wants or does not want. The producer either responds to that signal or goes out of business to make room for a producer who will. And every time the government intervenes to prop up a failing business or to restrain the operation of a successful one, the government is using the consumer’s hard-earned tax dollars to veto the consumer’s wishes that have already been registered in the market place. Government intervention sends wrong signals to the producer. The wrong signals bring to the market more products the consumer does not want and fewer of the ones he does want.

The Best Government Lets the Consumer Choose

The greatest contribution the government can make toward protecting the consumer is to quit trying to make his decisions for him and leave him free to make decisions for himself. Let him examine each article he is contemplating buying and act on his own judgment. Consumer choices will then be accurately reflected in the market place. In that kind of a market, only those producers who accurately respond to consumer demand and who operate with efficiency will survive. Those who are inefficient or who misjudge the market signals will fail. And from the consumer’s viewpoint, it is as important that some businesses be allowed to fail as it is that others be allowed to prosper. The important thing is that in the caveat emptor, free market system, the authority to control which ones fail and which ones survive is determined by the consumer rather than the politician. Caveat emptor then becomes the consumer’s true badge of authority. With that badge the consumer can dictate what goods will be produced, in what quantities, and at what prices.

• FOOTNOTES •

¹ WEBSTER’S NEW INTERNATIONAL DICTIONARY (Merriam-Webster, Unabridged 2d ed. 1947).

² Barnard v. Kellogg, 77 U.S. (10 Wall) 383 (1870); State ex. rel. Jones Store Co. v. Shain, 352 Mo. 630, 179 S.W.2d 19 (1944).

³ Drumar Mining Co. v. Morris Ravine Mining Co., 33 Cal. App.2d 492, 92 P.2d 424 (1939): McConnell v. Jones, 228 N.C. 218, 44 S.E.2d 876 (1947).

⁴ 3 BLACKSTONE, COMMENTARIES ON THE LAWS OF ENGLAND 165, especially note 24 (Chitty’s ed. 1832).

⁵ WHITE AND SUMMERS, HANDBOOK OF THE LAW UNDER THE UNIFORM COMMERCIAL CODE 271-305 (1972).

⁶ 7 WILLISTON, CONTRACTS sec. 926 (3d ed. 1963).

⁷ Hanavan v. Dye, 4 App.3d 576, 281 N.E.2d 398 (1972); Theis v. Heuer, 280 N.E.2d 300 ( Ind. 1972); Elderkin v. Gaster, 447 Pa. 118, 288 A.2d 771 (1972); Gay v. Cornwall , 6 Wash. App.595, 494 P.2d 1371 (1972).

⁸ See LUDWIG VON MISES, SOCIALISM 21 (J. Kahane Transl. 1951).