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The Law Of Contracts Vol3| by William Herbert Page



Operation And Effect. Discharge. Remedial Rights Arising On Discharge. Place Of Contract In Law.

TitleThe Law Of Contracts Vol3
AuthorWilliam Herbert Page
PublisherThe W. H. Anderson Company
Year1919
Copyright1919, The W. H. Anderson Company
AmazonCommercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises
-Sec. 1255. Definition And Nature Of Assignment
Assignment of a contract is the transfer by one of the parties thereto to another person not a party thereto of his interest therein. Assignment is properly used only of non-negotiable instruments.1...
-Sec. 1256. Assignment At Common Law
At Common Law, assignment of contractual rights made by act of the parties was of no effect if the adversary party to the contract thus assigned did not consent thereto.1 The reason generally assigned...
-Sec. 1257. Assignment In Equity
In equity rights arising under a contract can be assigned, and the assignee may enforce his rights by a suit in equity in his own name.1 After assignment the assignor could not dismiss the action.2 Th...
-Sec. 1258. Assignment At Modern Law
At Modern Law in most jurisdictions a contract may be assigned as well at Common Law as in equity.1 The qualifications and exceptions to this general rule will be discussed subsequently.2 This change ...
-Sec. 1259. What Contracts Can Be Assigned At Modern Law
Contracts other than personal contracts, or contracts containing a provision against assignment, or contracts forbidden to be assigned by statute, may be assigned at Modern Law.1 Thus a contract of gu...
-Sec. 1260. Assignment Of Contract Rights Not Yet Acquired
The fact that the benefits assigned have not vet accrued, and that the assignor has not performed the contract on his part when he makes the assignment does not prevent the assignment from being valid...
-Sec. 1261. Assignment Of Quasi-Contractual Rights
The right to recover money paid under an unenforceable contract can be assigned if it is not purely personal. Thus the right to recover money paid by mistake,1 or to recover money paid at an erroneous...
-Sec. 1262. Personal Contracts
If A makes a contract with B by which he contracts for B's personal skill or labor, or reposes special trust in B, B cannot assign such contract without A's consent as long as it is executory on his p...
-Sec. 1263. Specific Provision Against Assignment
A contract which would otherwise be assignable may be non-assignable without the consent of the adversary party by inserting a clause providing that it shall not be assigned.1 But under a statute auth...
-Sec. 1264. Statutory Prohibition Of Assignment
In some jurisdictions certain contracts are specifically forbidden to be assigned either at all, or for certain specified purposes. A Federal Statute provides that claims against the United States can...
-Sec. 1265. Partial Assignment
A creditor cannot at law assign a part of his claim against his debtor to a third person so as to subject such debtor to two or more actions instead of one, without the consent of such debtor.1 This r...
-Sec. 1266. Assignment Does Not Discharge Assignor
The assignor cannot by assigning the benefits of his contract relieve himself from his liability thereon.1 Hence the mere fact of assignment cannot be treated as a breach by the assignor.2 Thus if an ...
-Sec. 1267. Assignment May Impose Personal Liability On Assignee
The assignee may incur a personal liability to the adversary party to the contract by expressly agreeing in the contract of assignment to perform terms of the contract for which his assignor was origi...
-Sec. 1268. Assignment Passes All Assignor's Rights
The assignee acquires all the rights of his assignor under the contract assigned to him.1 This rule applies even when the assignee would not have acquired the rights which his assignor has acquired ha...
-Assignment Passes All Assignor's Rights. Continued
2 Floete v. Brown. 104 Ia. 154; 65 Am. St. .Rep. 434; 73 N. W. 483. 3 Batesville Institute v. Kauffman, 18 Wall. (U. S.) 151; Hurt v. Wilson, 38 Cal. 263; Miller v. Larned, 103 I11. 562; Connecticut ...
-Sec. 1269. Assignment Passes Only Assignor's Rights Against Debtor
The assignee of a contract takes no interest under the assigned contract greater than that which the original party whose interest he takes had therein, at the time when the adversary party to the con...
-Sec. 1270. Assignment Of Property Rights
It may be here briefly noted that a different rule obtains if the contract under which have arisen rights which are sought to be assigned has been so far performed as to pass property rights. Thus if ...
-Sec. 1271. Equities Of Third Persons
Whether in case of successive assignments each by a prior assignee to his assignee, the last assignee takes subject to equities existing between some prior assignor and his assignee is a question upon...
-Sec. 1272. Necessity Of Notice Of Assignment
The necessity of giving notice of the assignment to the debtor to protect the rights of the assignee depends upon the relation of the parties between whom the question of the validity of the assignmen...
-Sec. 1273. Contents Of Notice
The notice of assignment given to the debtor must be such as to apprise him of the fact of assignment.1 If it is vague and uncertain2 or if it is in a language unknown to the debtor, and it is taken a...
-Sec. 1274. To Whom Notice Should Be Given
Notice may be given to the agent through whom his principal has been accustomed to receive notice,1 even if in the particular case he omits to forward such notice to his principal. Notice to a firm is...
-Sec. 1275. Effect Of Notice
After notice of an assignment the debtor is liable to the assignee.1 Subsequent payment to the assignor,2 or to subsequent attaching creditors,3 or a subsequent contract with the assignor,4 or a settl...
-Sec. 1276. Effect Of Assignment For Sole Purpose Of Collection
Whether an assignee who takes the legal title to the contract for the purpose of enforcing it, but does not take the beneficial interest and is to account to his assignor for what he receives thereund...
-Sec. 1277. Elements Of Assignment
No particular form of words is necessary to assign a contract unless some statute provides therefor. Any language or conduct which shows the intention of the assignor to transfer his interest in the c...
-Sec. 1278. Orders As Assignments
An order by a creditor to a debtor to pay to a designated third person a specified fund owing by such debtor to such creditor operates as an assignment, of such fund.1 To effect an assignment, however...
-Sec. 1279. Drafts As Assignments
In accordance with the principles which apply to orders, a draft does not amount to an assignment of a debt owing by the drawer to the drawee as long as it is not accepted, since it does not purport t...
-Sec. 1280. Checks As Assignments
The same principles that apply to bills of exchange apply to bank checks. By the weight of authority an unaccepted check is not an assignment of the fund in the hands of the drawee.1 Hence if the bank...
-Sec. 1281. Form Of Assignment
Since no particular form of assignment is necessary, a contract may be assigned without a deed, even if it is for the sale of an interest in realty.1 So interest under sealed contract may be assigned ...
-Sec. 1282. Necessity Of Consideration
If an assignment is executed and passes legal title, then as between the assignor and the assignee no consideration is neces-sary. Such assignment is valid even though gratuitous.1 If the assignment i...
-Sec. 1283. Necessity Of Acceptance By Debtor
It is not necessary that the debtor assent to the assignment to make it valid.1 Hence an assignment is valid if notice is given to the proper officer, though it is accepted by him without authority.2 ...
-Sec. 1284. Effect Of Acceptance
Acceptance of the assignment by the debtor and his assent thereto constitute a new contract between himself and the assignee.1 Under such new contract the rights of the assignee may be greater than th...
-Sec. 1285. Covenants Running With The Land. - Freehold Estates. -Covenants Conferring Right Upon Grantee
Even at Common Law, although contract rights as a general rule could not be assigned, contracts which were intended by the parties to operate between them solely because of their respective estates in...
-Sec. 1286. Covenants Imposing Burden Upon Grantee
At Common Law covenants for the benefit of the realty could run with the land. Covenants imposing burdens thereon could not run with the land unless they created some recognized legal estate or intere...
-Sec. 1287. Effect Of Breach Of Covenant Running With The Land
Even at Common Law the proper plaintiff in an action for the breach of a covenant running with the land is the holder of the title thereto at the time of breach, though he may not be the original gran...
-Sec. 1288. Leasehold Estates. - Covenants Passing To Assignee Of Lease
Covenants which were intended to affect the property leased and which were contained in leases creating estates less than freehold were said at Common Law to run with the land and not with the reversi...
-Sec. 1289. Covenants Passing To Assignee Of Reversion
A right of re-entry for breach of condition subsequent in a lease cannot be assigned before breach. While covenants to pay rent could pass with the reversion under the act 32 Hen. VIII. 34, the assign...
-Sec. 1290. Nature Of Negotiability
Negotiable contracts were an exception to the Common-Law rule that contract rights could not be assigned.1 If a negotiable contract were assigned in a proper manner, the holder could maintain an actio...
-Sec. 1291. What Contracts Are Negotiable. - Bills And Notes
Applying the principles already given, bills of exchange have always been held to be negotiable ;J and cashiers' checks, being a form of bill, are also negotiable.2 Whether promissory notes were negot...
-Sec. 1292. Symbols Of Property
Bills of lading1 and warehouse receipts,2 call for property other than money. They are accordingly not negotiable in the full sense of the word. Bills of lading are symbols of the property therein des...
-Sec. 1293. Effect Of Negotiability On Rights Of Parties. - When In Hands Of Original Party
Between the immediate parties to a negotiable contract the fact of negotiability is for most purposes immaterial. Any defense may be set up against the adversary party that could have been made in a n...
-Sec. 1294. When In Hands Of Transferee Not A Bona Fide Holder
If a negotiable instrument has been transferred to one who is not a bona fide holder for value, his rights are those and only those, of the person who transferred the instrument to him. Any defense wh...
-Sec. 1295. When In Hands Of Bona Fide Holder
The chief peculiarity of a negotiable contract, therefore, is its effect in the hands of a bona fide holder, who may enforce the negotiable instrument free from all defenses which could have been made...
-Sec. 1296. Defenses Available Against A Bona Fide Holder. - Want Of Capacity
There are certain defenses, however, which may be made even against a bona fide holder for value. Any defense which goes to the capacity of the party against whom the liability is sought to be enforce...
-Sec. 1297. Want Of Execution
Any defense which goes to the execution of the instrument, and shows that no instrument was ever in fact executed, may be made.1 Thus if the instrument is never delivered, and passes into the possessi...
-Sec. 1298. Alteration
The defense that the instrument was materially altered after the delivery, may be set up against a bona fide holder for value, where it is not the negligence of the maker that has made such alteration...
-Sec. 1299. Defenses Permitted By Statute
Any defense which is allowed, either expressly or by statute, or by the necessary effect of a statute, may be made. So under a statute allowing immoral and illegal considerations to be interposed ...
-Sec. 1300. Holder Not Bona Fide Acquires Rights Of Assignor
If A holds a negotiable instrument under circumstances which make him a bona fide holder, and he transfers it regularly to B, who takes with notice, B takes all the rights of A,1 unless B has held the...
-Sec. 1301. Who Is A Bona Fide Holder. - Taking Without Notice
The important question in negotiable contracts is, therefore, whether it is in the hands of a bona fide holder. The holder must take without notice of the defense sought to be interposed, to constitut...
-Who Is A Bona Fide Holder. - Taking Without Notice. Continued
2 Sawyer v. Wiswell, 9 All. (Mass.) 39; Hoye v. Kalashian, 22 R. I. 101; 46 Atl. 271; Andrews v. Robertson, 111 Wis. 334; 87 Am. St. Rep. 870; 54 L. R. A. 673; 87 N. W. 190. 3 Bank of Sonoma County ...
-Sec. 1302. Delivery Or Indorsement
A holder, to be a bona fide holder, must take in accordance with the nature of the instrument. If it is payable to the payee or bearer, delivery alone is sufficient.1 If it is payable to payee or orde...
-Sec. 1303. Taking For Value
The holder must take for value. If the holder does not give value for the note he is not a bona fide holder. Thus a receiver,1 as the receiver of an insolvent bank,2 or an assignee for the benefit of ...
-Sec. 1304. Taking Before Maturity
A holder, to be a bona fide holder, must take the instrument before maturity. If he takes after maturity he gets no better title than that of his indorser as against defenses which the maker may inter...
-Sec. 1305. Presumption As To Bona Fides Of Holder
One who is in possession of a negotiable instrument which has been delivered to him if payable to bearer or which has been indorsed to him, or which is indorsed generally, is presumed to be a bona fid...
-Sec. 1306. Contracts For Benefit Of Third Person. - English Rule
If A makes a promise to B to do some act which will benefit C, can C enforce this promise against A ? The early English cases held that if the promise v?as supported by a valuable consideration, if ...
-Sec. 1307. Majority American Rule
American courts are divided upon this question. The earlier American cases followed the early English rule and allowed recovery if C was closely related to B.1 The weight of modern authority holds tha...
-Sec. 1308. General Principles Of Contract Affecting This Type
Principles of the law of ordinary contracts often find a special and peculiar application in contracts of this type. There must be an agreement of some sort between A and B, whereby A is to do some ac...
-Sec. 1309. Consideration In Contracts Of This Type
Consideration is as essential in contracts of this type as in others,1 and as in others it may be either a benefit to the promisor or a detriment to the promisee. Carrying this principle farther and a...
-Sec. 1310. Promisor Cannot Deny Validity Of Obligation
The grantee cannot deny the validity of a specific existing debt which he has assumed and agreed to pay as part of the purchase price of the property conveyed to him.1 Thus he cannot set up usury as a...
-Sec. 1311. From Whom Consideration Must Move
A question on which there is conflict of authority in the jurisdictions which recognize the right of a third party to sue on a contract for his benefit, is whether it is necessary that the promisee be...
-Sec. 1312. Intention Necessary To Benefit Third Person Directly
The courts in which C is allowed to enforce the promise against A do so only when A's promise is primarily intended to benefit C. If the benefit to C is merely incidental, C cannot maintain an action ...
-Sec. 1313. Contracts Conferring Incidental Benefit
Among examples of contracts which may give incidental benefit to a third person, but which are not intended by the parties to benefit him primarily are the following: A contract whereby the prospectiv...
-Sec. 1314. Contracts Intended To Confer Benefit. - Assumption Of Debts On Consideration Of Conveyance
In discussing the practical application of the foregoing principles to particular states of fact, we find that the most usual type of this contract exists where B has conveyed property to A and in con...
-Sec. 1315. Doctrine Not Limited To Assumption Of Debts On Consideration Of Conveyance
The next serious question is this: is the doctrine that a third party may sue, confined to cases like the foregoing, where the promisee transfers property to the promisor to induce him to make such pr...
-Sec. 1316. Contracts Of Indemnity
A contract whereby A agrees to indemnify B against loss is usually held not to give any right of action against A to parties holding claims whereby B will be subjected to loss for which he may have in...
-Sec. 1317. Minority American Rule
A minority of American courts have held that a contract between two persons for the benefit of a third confers no right of action upon such third person as against the promisor.1 In states which enfor...
-Sec. 1318. Eight Of Third Person To Enforce Contract In Equity
The right of a third person to enforce a contract made for his benefit was recognized in equity at an early date,1 and has been constantly enforced in most jurisdictions.2 It may be here observed that...
-Sec. 1319. Right Of Third Person To Sue On Bonds
The principles discussed in the preceding sections with reference to the necessity of an intention to benefit the third person directly have been applied to actions upon bonds. If a contractor who is ...
-Sec. 1320. Bonds Controlled By Special Statute
A different question arises where a bond is given in compliance with a statute which names the obligee and prescribes who may sue thereon. Under statutes allowing suit by the party aggrieved, such par...
-Sec. 1321. Right Of Third Person To Enforce Sealed Instrument
Whether a contract under seal, if intended for the benefit of a third party, may be enforced by him is a question upon which there is a divergence of opinion in jurisdictions where a third person can ...
-Sec. 1322. Eight Of Promisee To Enforce Contract
Whether the promisee may bring an action on a contract made by him for the benefit of another, is a question on which there is some difference of opinion. In some jurisdictions the original promisee m...
-Sec. 1323. Doctrine Of Interference With Contract Rights
We have thus far discussed the effect of a contract as between the parties to the contract, and the nature of the rights which it may confer upon third parties. There remains for consideration the que...
-Sec. 1324. Contract Need Not Be For Definite Time
Intermediate between ordinary cases of interference with an existing contract, and cases of the prevention of future contracts are cases of existing contracts which can be terminated at the option of ...
-Sec. 1325. Interference Not Tortious Unless Wrongful
It is axiomatic that an act does not amount to a tort unless it is at least wrongful. One who without negligence does an act which he has a right to do, does not thereby incur liability as a wrong-doe...
-Sec. 1326. Interference With Existing Contract. - Doctrine Of Lfcm-Ley V. Gye
In considering the question of the liability of an individual who induces one person to break his contract with another we are met at the outset by a hopeless difference of authority as to the general...
-Sec. 1327. Contract Of Employment As Servant
If the contract is one of employment as a servant it is generally conceded that one who induces the servant to break the contract is liable in tort.1 Cases of this sort are rare at Modern Law. The tor...
-Sec. 1328. Contract Of Employment Other Than As Servant
If the contract is one of employment but not as servant in the strict sense of the term, we find a divergence of authority corresponding to that in Lumley v. Gye. The weight of modern authority is tha...
-Sec. 1329. Contract Other Than Employment
In contracts other than those of employment we find a divergence even greater than in that class of cases. Some authorities hold that interference with any contract amounts to a tort.1 This principle ...
-Sec. 1330. Wrongfully Preventing Performance
In jurisdictions in which a party who induces another to break a contract is liable to the adversary party, his liability is still clearer if instead of inducing the breach, he does some wrongful act ...
-Sec. 1331. Interference With Formation Of Future Contract
If no contract is in existence between A and B, and X interferes to prevent A from making contracts with B, some courts hold that B may recover from X for the damage thus caused. In the common class o...
-Sec. 1332. Combination On Different Footing From Individual
If a combination of persons, acting in conspiracy, attempts to compel one person to break a contract with another, a question is presented which in some respects is different from that in which one pe...
-Sec. 1333. Whether Combination Necessarily Illegal
It seems to have been held originally that a combination between workmen for the purpose of raising their wages, was necessarily illegal, no matter what means might be employed.1 It was also held that...
-Sec. 1334. Rights Of Employe Whose Discharge Is Caused By Combination
The nature and extent of the liability of striking workmen, or others who have entered into a combination to compel a given course of action on the part of another, depends in part upon the relation t...
-Sec. 1335. Injunction To Prevent Injury To Business
The action may be brought by the employer whose business is threatened. The threatened strike, or boycott, mav be intended to compel him to acquiesce in certain arrangements for remuneration, hours of...
-Sec. 1336. Other Forms Of Relief
The doctrine that relief of some sort will be given against a combination seeking to cause the breach of a contract, or interfere with a trade or business, is not limited to cases where relief is soug...
-Sec. 1337. Interference By Voluntary Association
So-called voluntary associations are often found, the members of which agree not to deal with those who are not members of their association; or, in some cases, of an allied association. Such associat...
-Sec. 1338. Blacklisting
Questions which are the converse of those presented in strikes exist where employers combine to prevent certain workmen from obtaining employment. This often takes the form known as the blacklist. I...
-Sec. 1339. New Contract As Discharge
An executory contract may be discharged by a new contract entered into for that purpose between the parties thereto.1 Thus if the parties to a building contract enter into a new contract whereby the o...
-Sec. 1340. To What Extent New Contract Operates As Discharge
A question frequently presented for decision is to what extent does the later contract abrogate the earlier contract. If the later contract expressly abrogates the earlier contract, it abrogates it in...
-Sec. 1341. New Contract Must Be Enforceable. - Mutual Assent Necessary
The proposition that a prior contract may be modified or abrogated by a subsequent contract implies that such subsequent contract must have the elements necessary to the formation of a valid original ...
-Sec. 1342. Recognition Of Breach Not New Contract
The recognition of the fact of a breach by the adversary party followed by conduct consistent with the fact of such breach, which looks to the mitigation of damages arising there- from does not amoun...
-Sec. 1343. Effect Of Invalidity Of New Contract
A later contract which is invalid and unenforceable does not abrogate an earlier contract though it was intended so to do. If the second contract is voidable as by reason of duress,1 and the second co...
-Sec. 1344. New Contract Must Have Consideration
In order to operate as a discharge in whole or in part of an earlier contract, the later contract must be supported by a valuable consideration. If the original contract is still executory on both sid...
-Sec. 1345. Formalities Necessary To Execution Of New Contract. -Original Contract Under Seal
The formality with which a new contract modifying or abrogating an earlier contract must be executed, or the kind of evidence by which it must be proved, depends in part upon the formality with which ...
-Sec. 1346. Original Contract Required By Law To Be In Writing
If the contract is in writing, but not under seal, the question of the formality with which a subsequent contract must be executed, or the means whereby it must be proved, depends upon which of the cl...
-Sec. 1347. Original Contract Required By Law To Be Proved By Writing
If the original contract is one which is required by law to be proved by writing, some courts hold that such a contract can not be modified by a subsequent oral executory contract.1 In other jurisdict...
-Sec. 1348. Original Contract Merely In Writing
If the contract is one which is in writing, but is not required by law to be in writing, or to be proved by writing, such contract may be modified by a subsequent oral agreement, if such agreement con...
-Sec. 1349. Effect Of Express Prohibition Of Oral Modification
If the written contract contains an express provision that no change or modification thereof can be made, except by writing to be signed by one or both parties, the parties to such contract may, never...
-Sec. 1350. Statutory Rule
In some states it is provided by statute that a written contract can be modified only by a contract in writing, or by an executed oral agreement. Under such statute, an executory oral agreement, even ...
-Sec. 1351. Novation
If B is indebted to A and C is indebted to B, and by mutual agreement between A, B and C, C agrees to pay his indebtedness to A, B agrees to discharge his obligation to C and A agrees to discharge his...
-Sec. 1352. Nature Of Merger
It was a well settled doctrine of Common Law that a contract between two parties was merged in a subsequent contract between the same parties, covering the same subject-matter whenever the second cont...
-Sec. 1353. Merger In Contract Of Record
A judgment rendered in an action based on a prior judgment merges such judgment for most purposes.1 A personal judgment rendered on a note merges the note and a former judgment rendered thereon, even ...
-Sec. 1354. Merger Of Simple Contract In Specialty
A simple contract is merged in a contract under seal.1 Under the doctrine of merger, delivery of a specialty executed by the debtor extinguishes a simple contract debt. Thus a simple contract for the...
-Sec. 1355. Elements Necessary To Merger
In order to have the doctrine of merger operate, the subsequent specialty must bear the following relation to the prior written contract. (1) The specialty must be between the same parties as the prio...
-Sec. 1356. Merger Of Oral Contract In Written Contract
The enforcement of the parol evidence rule, which was originally adopted by the courts in analogy to the rule of merger, whereby a sealed instrument merged a prior simple contract, leads to the doctri...
-Sec. 1357. Merger Of Fraudulent Representations
Fraudulent representations as to incumbrances1 are not merged in a subsequent deed, containing no covenants of warranty. Fraudulent representations as to title are not merged in a subsequent executory...
-Sec. 1358. Validity Of Contract Conditioned On Existence Of Fact
The validity of a contract may be made conditional upon the existence of certain facts. If such facts do not exist the contract is of course unenforceable.1 Thus the validity of a contract may be made...
-Sec. 1359. Contract Discharged By Happening Of Express Condition
A contract may provide in express terms that upon the happening of a specified condition subsequent the contract shall thereby be discharged. In such cases the happening of the condition discharges th...
-Sec. 1360. Option To One Party To Discharge
A contract may contain an express provision that one or either party may terminate such contract at his option. Full effect is given to such provisions and the exercise of such option operates as a di...
-Sec. 1361. Implied Option To Discharge Contract Of Indefinite Duration
If no time is fixed by the contract for its duration, and the contract from its nature is one which might last indefinitely, either party may at his option terminate such contract.1 Thus a contract of...
-Sec. 1362. Effect Of Impossibility Upon Obligation Not Expressly Assumed
Whether impossibility arising without the fault of the promisor, after a contract has been entered into, discharges the promisor from liability for failure to perforin, depends, in the first instance,...
-Sec. 1363. Effect Of Impossibility Upon Liability Expressly Assumed
If the liability of the promisor is created by an express promise, subsequent impossibility does not, as a general rule, excuse performance.1 Thus where an insured became insane, and by reason of that...
-Sec. 1364. Impossibility In Contracts For Personal Services.- Death
A contract whereby the promisor is to perform certain services of a personal nature, and such as cannot be performed by his assignee, or his successors, is discharged by the death, of either party,1 w...
-Sec. 1365. Sickness
A contract for services personal in their nature which, cannot be performed by deputy within the meaning of the contract is discharged by such sickness on the part of the person by whom such services ...
-Sec. 1366. Arrest
A contract for services involving personal skill and ability, is discharged by the arrest of the employe, and his detention for a considerable period of time.1 The employer may relieve himself from li...
-Sec. 1367. Death Of Party To Contract Not For Personal Services
A contract for services .which are not personal in their nature, but which may be performed by the assignee or the successors of the promisor, is not discharged by the death of either party.1 Thus, a ...
-Sec. 1368. Dissolution Of Corporation As Discharge
Courts differ as to whether the dissolution of a corporation discharges its contracts. A contract whereby A guarantees to B that a given corporation will pay dividends upon its corporate stock at a ce...
-Sec. 1369. Marriage As Discharge
The intermarriage of the parties to a contract discharged the contract at Common Law.1 The reason for this rule is to be found in the result of marriage at Common Law. The husband could if he wished m...
-Sec. 1370. Destruction Of Specific Subject-Matter As Discharge
Under a contract which by the intent of the parties requires for its performance the continued existence of a specific subject-matter, the destruction of such subject-matter is an event not within the...
-Sec. 1371. Partial Destruction Of Subject-Matter May Be Waived
If the party prejudiced by the destruction of part of the subject-matter is willing to perform regardless of the fact of such destruction the party not prejudiced thereby cannot invoke such fact as a ...
-Sec. 1372. Destruction Of Property Not Specific Subject-Matter Not Discharge
If the contract is not to deliver specific property, but to deliver property of a given kind and quality, which may be performed by the vendor's delivering any property of that kind and quality which ...
-Sec. 1373. Impossibility By Subsequent Act Of Law
An impossibility of performance, which is created by a subsequent valid act of law, operates as a discharge of a contract.1 Subsequent legislation which impairs the obligation of a contract is ordinar...
-Sec. 1374. Writ Obtained By Private Litigant Not Act Of Law
If A enters into a contract with B wmich is valid when made, the fact that X by proceedings in injunction prevents A from performing such contract does not discharge A from liability to B for breach.1...
-Sec. 1375. Event Which Could Have Been Anticipated Not Impossibility. - Climatic Conditions
An event which should have been foreseen by the promisor as a reasonable man cannot be relied upon by him as a subsequent impossibility amounting to a discharge. Thus the fact that floods in western s...
-Sec. 1376. Epidemics
A contract whereby a teacher is employed is not discharged hy the act of the board in closing the schools on account of an epidemic of smallpox,1 or diphtheria,2 so as to prevent the teacher from reco...
-Sec. 1377. Difficulty Of Performance Not Impossibility
Mere difficulty of performance is not such impossibility as operates as discharge of a contract.1 Thus a provision in a policy of fire insurance requiring proof of loss in sixty days, and action to be...
-Sec. 1378. Expense Of Performance Not Impossibility
The fact that performance proves to be more expensive than was anticipated does not constitute impossibility so as to avoid the contract.1 So the fact that the contract has proved to be unprofitable ....
-Sec. 1379. Insolvency Not Discharge
Insolvency of a party to a contract does not operate as a discharge of the insolvent1 nor of the adversary party.2 Insolvency proceedings against a trust company do not discharge a contract where it h...
-Sec. 1380. Impossibility Of One Of Several Methods Of Performance Not Discharge
One who agrees to do a specific act which can, without violating the terms of the contract, be performed in one of two ways, is not discharged from his contract because one of the two methods of perfo...
-Sec. 1381. Positive Contract To Do Certain Act Or Pay Damages. -Impossibility Of Doing Act Not Discharge
If a party to a contract enters into a positive and absolute undertaking to do certain things, in which, by express terms or necessary implication, he binds himself to pay damages in the event that he...
-Sec. 1382. Nature Of Performance
Performance of a contract consists in doing the thing agreed to be done. A contract may he performed by both parties thereto; in which case it is said to be fully executed. The use of this word is ina...
-Sec. 1383. Effects Of Performance
Performance by one party, has two results: (1) It discharges the party so performing from further liability under the contract.1 Thus a common carrier who contracts only to deliver to the next carrier...
-Sec. 1384. Performance Not Dependent On Benefit To Adversary Party
The right to enforce the contract against the party who hag not performed is not affected by the fact that performance has not benefited him as much as he had expected.1 The question in such cases is ...
-Sec. 1385. Substantial Performance Sufficient
The original Common-Law rule required a strict and literal performance as a condition precedent to recovery. The modern rule permits recovery without a strict and literal performance if there has been...
-Sec. 1386. Substantial Performance If Breach Immaterial
A technical breach which does not result in damage is, of course, consistent with substantial performance.1 Thus a contract by which A agrees to construct a level to drain B's mine in consideration of...
-Sec. 1387. Substantial Performance Of Building Contracts
If one who has agreed to construct a building performs the contract substantially and makes a bona fide effort to comply with its terms, slight defects in his work and slight deviations from the contr...
-Sec. 1388. Substantial Performance Of Other Contracts
The doctrine of substantial performance is by no means limited to building contracts. If any contract is performed substantially, recovery can be had thereon subject to recoupment of damages, if any.1...
-Substantial Performance Of Other Contracts. Continued
14 Los Angeles Traction Co. v. Wilshire, 135 Cal. 654; 67 Pac. 1086. 15 Stevens v. Ambler, 39 Fla. 575; 23 So. 10. 16 Northup v. Standifer (Ky.),23 S. W. 348; Northup v. Ward (Ky.), 15 S. W. 247. 1...
-Sec. 1389. Examples Of Attempted Performance Not Substantial Performance
If performance of the contract has not been waived by the adversary party no recovery upon the contract can be had when the contract has not been at least substantially performed.1 The question as to ...
-Sec. 1390. Contract To Be Performed To Satisfaction Of Adversary Party
A contract in which one party agrees to perform his part to the satisfaction of the adversary party presents important questions as to what constitutes satisfaction. Such contracts are enforceable ...
-Contract To Be Performed To Satisfaction Of Adversary Party. Continued
37 Sherman v. Connor, 88 Tex. 35; 29 S. W. 1053. 38 Edison, etc., Electric Co. v. Navigation Co., 8 Wash. 370; 40 Am. St. Rep. 910; 24 L. R. A. 315; 36 Pac. 260. 39 Edison, etc., Electric Co. v. Nav...
-Sec. 1391. Contracts For Alternative Performance
Under a contract to do one or the other of two things, the right of choice as to which of such things shall be done in order to perform the contract, is with the promisor up to the time of the breach....
-Sec. 1392. Contracts Payable In Something Other Than Money At Promisor's Election
Special questions arise under contracts to pay in goods or in labor, debts which are measured at a money value. The first question is whether, under such contracts, there is any right of election at a...
-Sec. 1393. Nature Of Payment
Payment in contract law is that form of performance which consists in the delivery by the promisor and receipt by the promisee of money or something delivered and accepted as the equivalent thereof in...
-Sec. 1394. By Whom Payment May Be Made
Payment by -one not a party to the contract, if accepted in satisfaction of the obligation of the contract operates as a discharge,1 even if there is no privity between the party making the payment an...
-Sec. 1395. To Whom Payment May Be Made
The question, who is authorized to receive payment so as to discharge the obligation, usually turns on questions of ownership and agency, and is related to contract only collaterally. Payment to the o...
-Sec. 1396. Payment In Something Other Than Money. - Effect Of Express Agreement
Payment is presumed to be made in money unless an intent to the contrary is shown.1 If something other than money is delivered by the debtor to the creditor it is possible that it may be delivered as ...
-Sec. 1397. Presumption As To Effect Of Assignment Of Non-Negotiable Right
The greatest difficulty involved in this topic is to determine what presumption arises when the debtor delivers a thing of value to his creditor. Upon this question there is the greatest divergence of...
-Sec. 1398. Presumption As To Transfer Of Negotiable Instrument. - Absolute Payment Not Presumed
Delivery of a promissory note,1 whether executed by the that they were not taken in absolute payment will not be disturbed.5 Delivery of a note and chattel mortgage has been held not prima facie payme...
-Presumption As To Transfer Of Negotiable Instrument. - Absolute Payment Not Presumed. Continued
2 Caldwell v. Hall, 49 Ark. 508; 4 Am. St. Rep. 64; 1 S. W. 62; Merrill v. Kenyon, 48 Conn. 314; 40 Am. Rep. 174; Topeka Capital Co. v. Merriam, 60 Kan. 397; 56 Pac. 757; Bradley v. Harwi, 43 Kan. 314...
-Sec. 1399. Payment Presumed
In other jurisdictions a promissory note,1 executed by the debtor or by another person,2 as at a higher rate of interest than the original indebtedness,3 has been held to be prima facie payment of an ...
-Sec. 1400. Payment In Genuine But Worthless Bank-Notes
If the debtor makes payment to his creditor in genuine banknotes which are, however, worthless, usually because of the insolvency of the bank issuing them, where neither debtor nor creditor know of th...
-Sec. 1401. Payment In Counterfeit Money
Payment in counterfeit money is no payment in law and the debtor is not thereby discharged from his indebtedness though he pays it in good faith.1 The same principle applies to payment in cancelled Un...
-Sec. 1402. Voluntary Payments. - Appropriation By Debtor
If a debtor is indebted to his creditor upon two or more distinct debts, and a payment is made by the debtor or upon his behalf to the creditor, it often is important to determine upon which of such d...
-Sec. 1403. When Debtor Can Make Appropriation
The debtor's right to make application of the payment is lost if he makes the payment without directing the application,1 or at any rate if the creditor makes application before the debtor does ;2 or ...
-Sec. 1404. Appropriation By Creditor.- Common Law Rule
When the debtor loses his right to make application of payments, the creditor acquires a right thereto. Upon the question of the extent of his right there is a conflict of authority. The Common Law ru...
-Sec. 1405. CIVIL Law Rule
In other states the Civil Law rule, that the creditor must apply payments so as to discharge that debt which it is most for the debtor's interest to have discharged, is followed.1 ...
-Sec. 1406. When Creditor Can Make Appropriation
As to the time at which the creditor may exercise his right of making application of payments there is a divergence of authority. The Common Law ruje allows the creditor to make such application at an...
-Sec. 1407. Appropriation By Law. - Presumed Mutual Intention Of Parties Followed
If no affirmative intention to make an application appears, the court will apply such payments as justice dictates and as the parties would probably have intended.1 So vague a rule is of little practi...
-Sec. 1408. Appropriation By Law. - Common Law Rule
When the interests of the debtor require one application and those of the creditor require another, we have again a conflict between the Common Law rule and the Civil Law rule.1 The Common Law rule re...
-Sec. 1409. CIVIL Law Rule
The Civil Law rule requires the law to apply payments foi the benefit of the debtor in accordance with his presumed intention.1 Where this rule is followed, the law applies a payment to the debt which...
-Sec. 1410. Interest Of Third Persons In Fund Used For Payment
Other questions may arise where third persons are interested in one of two funds, either as principal or surety. In such cases the rights of third persons may override even the right of the debtor and...
-Sec. 1411. Appropriation When Immaterial
In the absence of facts differentiating debts, it has been held that the law will apply payments pro rata.1 If no practical difference exists in legal effect between an appropriation made without lega...
-Sec. 1412. Involuntary Payments
The general rules as to the application of payments have no effect in case of involuntary payments, coerced by the law. Neither debtor1 nor creditor2 can direct the application of involuntary payments...
-Sec. 1413. Nature Of Tender
Tender is a proffer of performance. When tender is made the creditor has a reasonable time in which to decide whether he will accept it or not,1 unless he rejects the tender without taking such reason...
-Sec. 1414. Elements Of Tender. - Who Can Make Tender
If the creditor stands upon his rights and waives none of them he may insist upon the debtor's strict compliance with the elements of tender. Only the debtor, or his legal representative,1 can made a ...
-Sec. 1415. To Whom Tender Can Be Made
Tender can be made only to the creditor,1 or to one of two or more joint creditors,2 his duly authorized agent,3 or his personal representatives. Tender of a debt due to a building and loan associatio...
-Sec. 1416. What Can Be Tendered
If the contract calls for a payment in money, tender must be made in such money as is legal tender. Coin which is legal tender is not deprived of that quality by being worn as long as it retains the a...
-Sec. 1417. Actual Production Of Money
The money must be actually produced and offered to the creditor unless this requirement is waived.1 What amounts to waiver is discussed elsewhere.2 Some statutes make a written offer to pay money equi...
-Sec. 1418. Tender Of Less Amount Than Due
The amount tendered must be equal to the amount of the indebtedness. Tender of less than the amount due is ineffective.1 So if tender is made after interest has begun to run, it must include interest,...
-Sec. 1419. Tender Of Greater Amount Than Due
If an amount greater than the amount of the indebtedness is tendered, it is sufficient if the surplus is to belong to the creditor,1 or if change is already made, so that he can select the exact amoun...
-Sec. 1420. Place Of Making Tender
If the contract provides for the place of payment, tender may be made there even if the creditor is absent.1 If no place of payment is fixed by the contract, tender must be made to the creditor in ord...
-Sec. 1421. Conditions Imposed By Party Making Tender. - Conditions Already Imposed By Law
The debtor may attach a condition to the tender requiring the creditor to perform some act which he would be in any event legally bound to do without affecting the sufficiency of the tender.1 Thus he ...
-Sec. 1422. Conditions Not Imposed By Law
If, however, the debtor attempts to impose any conditions not required by law,1 such as demanding that the tender be accepted as full performance,2 or that a discharge3 or a release in full4 be given,...
-Sec. 1423. Demand For Surrender Of Note When Paid
There is some conflict of authority as to whether a tender of the full amount of a negotiable instrument is insufficient when coupled with a demand for the surrender thereof. The better rule is that a...
-Sec. 1424. Tender In Equity
In equity an offer of payment made in the pleadings is a sufficient tender as far as performance of a covenant to pay is concerned, or as far as such payment is a condition of equitable relief.1 ...
-Sec. 1425. Waiver Of Elements Of Tender. - Waiver Of Actual Production
The creditor may, however, waive certain of these requisites of a valid tender. If the debtor is ready and willing to pay the money, the actual production of it may be waived by. the absolute refusal ...
-Sec. 1426. Refusal On Specific Ground A Waiver Of Other Grounds
Refusal of tender based on a specific ground of objection,1 such as the insufficiency of the amount tendered2 or on the ground that the contract has already been discharged by an alleged breach,3 waiv...
-Sec. 1427. Keeping Tender Good
After tender is duly made it must, to preserve its legal effect, be kept good ;1 that is, the person making the tender must keep enough money on hand after the date of the tender to make the payment i...
-Sec. 1428. Effect Of Tender
If tender is refused, the question whether the contract is discharged or not depends on whether the contract requires payment in money or other performance. If the contract provides for performance ot...
-Sec. 1429. Tender Conclusive As To Debtor's Liability
Tender followed by payment into court establishes the debtor's liability to that amount,1 and the money so paid in becomes the property of the creditor.2 It is therefore error on overruling plaintiff'...
-Sec. 1430. Effect Of Tender On Collateral Security
Since performance cannot be tendered before maturity tender before the day for payment does not discharge the lien of the mortgage.1 Tender of the amount of a debt secured by mortgage discharges the m...
-Sec. 1431. Nature Of Breach
Breach of contract may be made in either of two ways. (1) One party to the contract may by word or act indicate that the contract is no longer binding upon him, and the adversary party may elect to tr...
-Sec. 1432. Effect Of Breach
Until breach no cause of action arises on a contract.1 Upon breach a cause of action arises in favor of the party not in default, and against the party in default.2 Breach of contract may have three d...
-Sec. 1433. Treatment Of Topic Of Breach
Strict adherence to logical arrangement would probably require a discussion; first, of what facts amount to breach, and, second, of the effect of breach. This arrangement will be followed as far as ec...
-Sec. 1434. Breach Gives Right Of Election To Party Not In Default
Breach even of the sort that may discharge the adversary party does not necessarily have that effect. Breach by one party gives the adversary party an election in so far as his exercise of the right o...
-Sec. 1435. Election Of Party Not In Default Cannot Increase Damages
A breach which goes to the entire performance may relieve the party in default from further liability under the contract except to pay damages occasioned by such breach.1 If the adversary party has al...
-Sec. 1436. Renunciation Before Performance Is Due Excuses Adversary From Tendering Performance
While a contract is still executory on both sides, the renunciation of it by one of the parties thereto before the time for performance has arrived has, or may have, important legal consequences. What...
-Sec. 1437. Right Of Action Before Performance Is Due
Whether renunciation by one party before performance is due is a breach which gives the adversary party a right to sue in damages before the time for such performance has arrived is a question upon wh...
-Sec. 1438. Adversary Has Right Of Election
In jurisdictions where renunciation before performance is due is considered as a breach, it is a breach and discharge only if the adversary party elects to treat it so.1 The adversary party has the el...
-Sec. 1439. What Constitutes Renunciation
Where the doctrine of breach by renunciation is recognized by the courts, the question of what amounts to renunciation is material. A specific refusal to perforin or to have anything more to do with t...
-Sec. 1440. Attempted Modification By One Party Is Breach
As has already been stated, a prior valid contract cannot be abrogated or modified by an alleged new contract unless both parties assent thereto.1 If one party manifests his intention in unequivocal l...
-Sec. 1441. Damages In Case Of Breach By Renunciation
If a contract is broken by renunciation before performance is due, the adversary party may recover damages occasioned by such breach, but he cannot without performance recover upon the contract as if ...
-Sec. 1442. Renunciation When Performance Is Due
If a party to a contract repudiates liability under it when the time for performance on his part has arrived or while the other party is performing his part of the contract a breach exists.1 Repudiati...
-Sec. 1443. Voluntary Disability To Perform
One of the parties to a contract may voluntarily disable himself from performing, so that performance on his part becomes impossible. Such conduct amounts to breach of the contract.1 If A agrees to mi...
-Sec. 1444. Prevention Of Performance By Adversary Party
One party to a contract may make it impossible for the other party to perform the contract or may delay the performance of it. The party who thus makes performance impossible on the part of the other,...
-Sec. 1445. Illustration Of Building Contracts
A common illustration of the doctrine, that one who makes performance by the other impossible, or delays it, thereby discharges the contract, or excuses delay, is found in building contracts. If the o...
-Sec. 1446. Rights Of Party Prevented From Further Performance
The party prevented from performing further may recover for what he has done without performing fully.1 A sold a monument to B, upon which were to be inscribed four lines of verse to be furnished by B...
-Sec. 1447. Non-Performance As Breach
In the types of breach thus far discussed, the party who breaks the contract has manifested his intention by word or deed to disregard the obligation of the contract, and no longer to recognize it as ...
-Sec. 1448. Breach Need Not Be Wilful
The existence and fact of breach are not in any way dependent upon the intention or wish of the party in default to violate the contract, or upon the amount of care and faith used by the contractor,1 ...
-Sec. 1449. Belief In Future Breach Not Discharge
The fact that A has reasonable cause to believe, and does believe, that B will be unable to perform his part of the contract, does not of itself dscharge A from performng his part.1 Thus a contract to...
-Sec. 1450. Breach Of Covenant Not A Vital Term Of Contract
It is not the breach of every covenant of a contract that may operate as a discharge of the adversary party. To have this effect the covenant broken must be a vital term of the contract, breach of whi...
-Sec. 1451. Contract Not To Compete
A contract not to compete in business, if valid, is broken by engaging in such business at such place ;1 or by his manufacturing the medical preparation in which he has agreed not to compete, under an...
-Sec. 1452. Relation Of Covenants
Whether breach discharges the adversary party from further performance, depends upon the relation between the stipulations entered into and not performed by the other party who breaks the contract, an...
-Sec. 1453. Intention Of Parties Paramount
The question whether a covenant is independent or dependent turns entirely upon the intention of the parties as shown in the entire contract, and the tests hereinafter suggested, while of great help, ...
-Sec. 1454. Non-Performance Of Precedent Covenants
No recovery can be had upon a contract by a party who has not performed the conditions precedent on his part to be performed.1 The party in default in performance of a condition precedent cannot recov...
-Sec. 1455. Illustrations Of Precedent Covenants
A covenant is precedent when by the terms of the contract it is to be performed before a covenant is to be performed by the adversary party. A contract to pay a certain amount when a certain tract is ...
-Sec. 1456. Contracts With Common Carriers
A clause in a railway ticket providing that it must be stamped by the agent of the company at the terminal point to be good for the round trip, imposes a condition which must be complied with before s...
-Sec. 1457. Insurance Contracts
Failure to take an inventory,1 or to make proof of loss,2 or to have appraisers make a finding as to the amount of the loss,3 as required by the terms of the policy as a condition precedent to recover...
-Sec. 1458. Discharge Of Liens
A provision in a building contract, that final payment shall be made upon satisfactory proof that all liens against the building have been discharged, makes payment of such liens a condition precedent...
-Sec. 1459. Contracts For Work And Labor
Under a contract by which the owner of land agrees to pay to the promoter of a railroad five thousand dollars when he shall extend his railroad southerly to a certain section of land, and ten thousand...
-Sec. 1460. Contracts Of Sale
Under an agreement by a vendee of property, to pay part of the purchase price in advance, payment is a condition precedent to his enforcing delivery of the property sold.1 A provision requiring notice...
-Sec. 1462. Provisions For Arbitration
The extent to which provisions for arbitration are valid has already been discussed.1 Under a contract for submitting disputes as to value to arbitration, such submission is a condition precedent to r...
-Sec. 1463. Approval Of Architect Or Engineer As Condition Precedent
Examples of conditions precedent, the non-performance of which suspends the right of action until such conditions are performed, are often found in building and construction contracts. Under a provisi...
-Sec. 1464. Who Can Determine Performance As Condition Precedent
An architect or engineer cannot delegate his authority to decide questions of fact,1 unless the parties to the building contract acquiesce in the selection of the person whom he designates.2 The deter...
-Sec. 1465. Power Of Architect
The power of the architect or engineer to bind the employer, depends upon the power conferred upon him by such employer,either in the building contract with the contractor or in the contract of employ...
-Sec. 1466. Form Of Architect's Certificate
A provision that work is to be done to the satisfaction of a superintendent1 does not require such satisfaction to be expressed in the form of a written certificate unless so stated. On the other hand...
-Sec. 1467. Excuses For Not Obtaining Approval. - Fraudulent And Arbitrary Action
The contractor may, in some cases, excuse his failure to obtain the certificate of the architect. If he can show that the certificate was refused by the architect fraudulently, and in bad faith, he ma...
-Sec. 1468. Waiver By Owner
The owner may waive a provision of the contract providing for a certificate by the architect or engineer.1 Thus the conduct of the owner in inspecting and approving material about to be used by the co...
-Sec. 1469. Evident Mistake
Relief will be given if the architect issues his certificate under a clear mistake of fact,1 or in clear violation of an express provision of the contract.2 Thus a certificate that a building contract...
-Sec. 1470. Concurrent Covenants
Concurrent covenants are those which by the terms of the contract are to be performed at the same time by each of the parties bound to perform them.1 Either party must be ready to perform to put the o...
-Sec. 1471. Independent Covenants
Independent covenants are those in which the obligation of one party to perform is not conditioned upon either prior or contemporaneous performance by the adversary party of the covenants on his part ...
-Sec. 1472. Failure Of Consideration
If A, a party to a contract which is executory on his side, does not receive what he was promised by B in consideration for his promise, the question is presented whether A can use such facts as disch...
-Sec. 1473. Failure Of Consideration Imports Breach
The very term failure of consideration imports that the party to whom the consideration moved has not received under the contract what it was agreed that he should receive. If he receives exactly w...
-Sec. 1474. Total Failure A Discharge
In other cases the question primarily presented is one of the effect of non-performance of precedent concurrent or subsequent covenants. From this standpoint this topic must be divided into total and ...
-Sec. 1475. Total Failure Gives Right To Recover Payments
If money has been advanced, or property delivered for a consideration which has failed, the injured party may recover what he had paid under the contract.1 Payment made in advance for support,2 for ir...
-Sec. 1476. Recovery Of Payments On Partial Failure Of Consideration
If partial failure of consideration exists, the right of the party not in default to recover what he has paid under the contract depends in the first instance on whether the consideration is by the te...
-Sec. 1477. Partial Failure. - Full Compensation In Damages
Partial failure of consideration is analogous to breach of an independent covenant. A partial failure of consideration does not discharge the entire contract if compensation therefor, can be made in d...
-Sec. 1478. Partial Failure. - Vital Term
Where such compensation cannot be made, the effect of partial failure as discharge depends in part upon whether it goes to a vital term of the contract or not. If the failure of consideration affects ...
-Sec. 1479. Failure Of Consideration For Executed Conveyance Of Realty
Failure of consideration for an executed conveyance of realty gives the grantor no right at law to avoid his conveyance.1 Whether a conveyance of realty can be rescinded in equity for failure of consi...
-Sec. 1480. Failure Of Title. - Executory Contract To Convey Realty
If a contract for the sale of realty is executory on both sides, failure of title is failure of consideration. The vendee may rescind and recover what he has paid on such contract1 on surrendering pos...
-Sec. 1481. Failure Of Title. - Executed Conveyance Of Realty
Upon the question whether a failure of title to realty which has been conveyed to the promisor is such a failure of consideration as to discharge a promise in consideration thereof there is a divergen...
-Sec. 1482. Failure Of Consideration In Sales Of Personalty
A sale of a chattel in possession of the vendor implies a warranty of title in the absence of a specific agreement to the contrary. In case of total failure of title to a chattel which is the subject-...
-Sec. 1483. Entire And Severable Contracts. - Importance Of Distinction
The effect of a breach of one of a number of covenants in a contract, as discharge of the whole contract, depends upon whether such covenants in effect make one entire contract or a number of distinct...
-Sec. 1484. Intention Of Parties Paramount
In determining whether a contract is entire or severable, the intention of the parties is paramount,1 and, if this intention is Huyett, clearly expressed, no question can arise as to which class of co...
-Sec. 1485. Construction As To Performance
If the question involved is one of performance, the courts approach the problem without any desire, either to treat it as entire or severable. If the covenants are contained in different instruments, ...
-Sec. 1486. Apportionment Of Consideration
In determining questions of performance the fact that several covenants are each supported by a distinct consideration, which consideration is thus separately apportioned, is often enough to show that...
-Sec. 1487. Breach Of Employment Contracts
A contract of employment for a fixed term, the compensation to be paid in installments at certain intervals during the term of employment, is usually held to be entire, so that in case of breach by th...
-Sec. 1488. Contract To Furnish Support
A contract to furnish support is broken by a refusal or omission to furnish such support.1 It has been held that it is broken by refusal to furnish support at any reasonable place selected by the obli...
-Sec. 1489. Installment Contracts
Contracts are often made which require delivery, or payment, or both, in installments. Whether such contracts are entire, and whether a breach as to one installment is a discharge as to the remaining ...
-Sec. 1490. Failure Of Vendee To Pay Installment Due
If a contract is entered into whereby A is to sell1 or lease2 property to B, or to do certain work for B,3 the performance whereof is to extend over a considerable space of time, and B is to pay in in...
-Sec. 1491. Failure Of Vendor To Deliver Installment When Due
If the vendor does not deliver an installment at the time agreed upon, this is not a breach of the entire contract which excuses the vendee from taking and paying for subsequent installments delivered...
-Sec. 1492. Delivery Of Defective Installment
If the vendor delivers the amount agreed upon for each installment as it comes due, the fact that the goods delivered in certain installments are not up to the standard fixed by the contract, is not s...
-Sec. 1493. Other Questions Under Installment Contracts
A contract to pay for building a house in installments as the work progresses is entire.1 So, if the contract gives the builder the right to stop work at a certain stage and take a certain sum therefo...
-Sec. 1494. Waiver Of Breach As Ground Of Discharge
Waiver is a necessary correlative of election. Election is the choice between two inconsistent rights. Election of one of such rights is a waiver of the other. Accordingly if the party not in default ...
-Sec. 1495. Knowledge Of Breach Essential
In order that the promisee may be held to waive a breach of the contract, he must know of the fact which constitutes such breach.1 So the act of an insured in waiving one ground of forfeiture, does no...
-Sec. 1496. Intention To Waive Breach Essential
To operate as a waiver the conduct of the party not in default must be such as to show affirmatively his intention to treat the contract as still in effect.1 This intention may either actually exist o...
-Sec. 1497. Free Choice Of Party Not In Default Essential
In order that acceptance by the promisee may constitute waiver of breach, the promisee must have a choice between accepting and rejecting the work done. If rejection is for any reason impossible, his ...
-Sec. 1498. Express Approval Of Performance Tendered
Express acquiescence in performance as tendered, thereby-inducing the adversary party to believe that such performance is accepted as complete performance amounts to a waiver. If the owner of a buildi...
-Sec. 1499. Acceptance Of Defective Performance
If the promisee with full knowledge of the facts, voluntarily accepts less than full performance of the contract, the promisee thereby waives such breach of contract as a ground of discharge.1 Thus a ...
-Sec. 1500. Acceptance Of Property Delivered As Performance
If the promisee, with the knowledge of the breach, voluntarily retains property delivered to him in performance of the contract, which property it is possible for him to return to the promisor, such r...
-Sec. 1501. Acceptance Of Property Not Intended As Waiver
Since intention to waive breach is essential the mere fact of possession of the property tendered by the adversary party in performance of the contract, is not conclusively an acceptance so as to waiv...
-Sec. 1502. Waiver Of Provisions As To Time Of Performance
If the promisor has made default in performance with respect to the time thereof, and the promisee subsequently permits or urges him to continue performance,1 or accepts performance thereafter,2 or ac...
-Sec. 1503. Waiver Of Provisions As To Payment
Acceptance of methods of payment other than those provided for by the contract waives the covenants of such contract with regard to such payment.1 Thus an agreement to accept a draft unconditionally i...
-Sec. 1504. Arbitrary Refusal As Waiver
If one party to the contract refuses to accept performance of any kind, and thereby leads the adversary party to refrain from tendering performance, such refusal waives such failure to perfor...
-Sec. 1505. Waiver Conclusive As To Third Persons
Acceptance by the promisee is usually conclusive as to third persons. A contract by a stepson to assist his stepfather,1 or by a child to live with a man and his wife as their child,2 or a 6 Avery v....
-Sec. 1506. Waiver Of Damages By Contract
If a consideration exists for waiving damages, an express or implied agreement to that effect is valid. Breach as a ground of action for damages may be waived by the party not in default. The same pri...
-Sec. 1507. Waiver Of Damages By Estoppel
If the party not in default leads the other to believe that he will not insist upon strict performance, or if he requests such breach,1 or if he makes strict performance impossible,2 he cannot subsequ...
-Sec. 1508. Knowledge Of Breach Necessary
In order to constitute waiver of breach a waiver of it as ground of action for damages, the party not in default must know of the facts which constitute such breach, or must have the means of knowing ...
-Sec. 1509. Waiver Of Breach As Discharge Not Waiver Of Damages
If no consideration for waiving damages exists and the defective performance has not been induced by the previous acts or representations of the party not in default, the question remains whether the ...
-Sec. 1510. Acceptance Under Practical Compulsion
The justice of the rule that acceptance after breach, even though a waiver of the right to treat such breach as discharge,1 is not a waiver of a right of action for damages is apparent when it is cons...
-Sec. 1511. Nature Of Alteration
Alteration as the term is generally used in Contract Law is a change in the language of a written instrument after execution, made intentionally by one of the parties thereto without the consent of th...
-Sec. 1512. Alteration Distinguished From Modification Before Execu-Tion
(1) A written instrument has no legal effect until execution, and therefore until it is executed its language may be changed at the pleasure of the party drafting it, subject, of course, to the qualif...
-Sec. 1513. Alteration Distinguished From Modification After Execution By Mutual Consent
(2) A change in the language of a written instrument after execution with the assent of all the parties thereto, operates as a discharge of the original contract and the substitution of a new contract...
-Sec. 1514. Alteration Distinguished From Spoliation
(3) A change in the language of a written instrument by one not a party thereto and not acting with authority of a party thereto constitutes spoliation. It must be considered separately from alteratio...
-Sec. 1515. Effect Of Spoliation
The original English rule was that even spoliation by a stranger to the contract avoided it.1 The rule in the United States is that spoliation by a stranger to the contract does not avoid it and has n...
-Sec. 1516. Correction Of Mistake As Alteration
To constitute alteration the contract must be so changed as to express an intention different from the real agreement of the parties. The effect of alteration of a contract containing mistake in expre...
-Sec. 1517. Unintentional Change Not Alteration
To constitute an alteration the change in the language of the written instrument must have been made intentionally. If not intentional, it is not an alteration.1 Placing internal revenue stamps on the...
-Sec. 1518. Classes Of Alterations. - Material Alterations
Alterations are to be classified upon two different bases. They may as to their effect upon the instrument, be material or immaterial; and as to the purpose with which they are made they may be fraudu...
-Sec. 1519. Change In Parties
A change in the parties to the instrument is generally a material alteration.1 A change in the name of the promisor is a material alteration.2 Thus adding & Co. to the maker's signature is a materia...
-Sec. 1520. Addition Of New Party
The addition of a party to an instrument as co-obligor is generally held to be a material alteration which discharges prior makers who have not assented to such addition.1 While it is not necessary to...
-Sec. 1521. Change In Subject-Matter
A change in the amount of the note increasing it,1 or decreasing it,2 changing a recital in a note that it was given for the purchase price of buildings on lot one so as to read, and lot one;3 a...
-Sec. 1522. Change In Rate Of Interest
A change in the rate of interest,1 increasing2 or diminishing3 the rate; or inserting the rate of interest which had been left blank, if the rate inserted is different from the legal rate;4 or adding ...
-Sec. 1523. Change In Date
Changes in the date of the instrument,1 either antedating2 or post-dating3 it; or a change in the period of maturity, making maturity come earlier4or later5 than that fixed by the original contract; c...
-Sec. 1524. Change In Attesting Witnesses
Adding the names of attesting witnesses, where such addition may in any way change the legal effect of the instrument,1 as where execution may be proved by such witness or by proof of his signature if...
-Sec. 1525. Change In Negotiability
Adding the words or order1 or the words bearer2 (U. S.) 80; Newman v. King, 54 O. S. 273; 56 Am. St. Rep. 705; 35 L. R. A. 471; 43 N. E. 683. 4 Hartley v. Corboy, 150 Pa. St. 23; 24 Atl. 295; Cr...
-Sec. 1526. Change In Place Of Performance
A change in the place of performance,1 such as making a note payable at a certain bank,2 or adding a provision that delivery of goods sold should be made to a common carrier,3 is a material alteration...
-Sec. 1527. Change In Memoranda On Instrument
A question sometimes presented for adjudication is whether an alteration of a memorandum in writing on the same piece of paper as the written contract, but not in the body thereof is a material altera...
-Sec. 1528. Other Changes In Written Contracts
Other changes in written contracts which modify the legal effect thereof may be material alterations. Thus a waiver of exemptions written over a blank indorsement,1 adding protest waived to an indo...
-Sec. 1529. Effect Of Material Alteration On Liability On Contract
A material alteration avoids the written contract.1 Thus a material alteration of a contract,2 though with the consent of the other parties thereto,3 releases a surety thereon. It is, however, error t...
-Sec. 1530. Immaterial Alterations
An immaterial alteration is one which does not change the legal effect of the written instrument.1 Thus the addition of a provision fixing the rate of interest at the legal rate where no rate had been...
-Sec. 1531. Addition Of Memoranda
A memorandum made upon the same piece of paper as a written contract but not intended as a part thereof, is not a material alteration ;x such as a pencil memorandum which on its face does not purport ...
-Sec. 1532. Effect Of Immaterial Alteration On Liability On Contract
An immaterial alteration does not avoid a written contract.1 This is true whether the alteration was made innocently or fraudulently.2 In some authorities it has been said that even 5 State Solicitor...
-Sec. 1533. Right Of Recovery Upon Original Consideration. - Innocent Material Alteration
In cases of material alteration, where the written contract is discharged, the question then arises as to whether recovery can be had on the original consideration for which the instrument was given. ...
-Sec. 1534. Fraudulent Material Alteration
If the alteration is made fraudulently no recovery can be had upon the original consideration.1 It seems to be held in cannot be the subject of judicial in-vestigation their motives cannot be inquired...
-Sec. 1535. Effect Of Alteration Of Collateral Instrument
Whether the alteration of one contract affects another contract or instrument in some way connected with the former instrument is a question sometimes presented for consideration. A material alteratio...
-Sec. 1536. Who Can Take Advantage Of Alteration As Discharge
Only the party who is apparently liable on the contract as altered can complain of the alteration. The party who makes the alteration cannot treat the contract as discharged if the adversary party see...
-Sec. 1537. Ratification Of Alteration
The party who did not make the alteration may, if he choose, ratify it.1 This principle has been applied to negotiable instruments such as promissory notes2 and to leases.3 If the party against whom l...
-Sec. 1538. Effect Of Subsequent Restoration Of Contract To Original Form
If a material alteration has once been made, and the written contract thereby discharged, if the adversary party wishes to take advantage thereof, the subsequent erasure of such alteration should not ...
-Sec. 1539. Questions Of Law And Fact
Whether an alleged alteration has been made or not,1 when it was made if at all,2 and whether the adversary party consented to such alteration or not,3 are all questions of fact. Whether an alteration...
-Sec. 1540. Presumption As To Date Of Alteration
The alteration of a contract without the consent of the adversary is a wrongful act, at least when not the correction of a mistake in expression, and it is often a criminal act. Since criminal or wron...
-Sec. 1541. Presumption As To Whether Alteration Is Fraudulent
If the alteration is material, the question next presented is whether it is presumed to be fraudulent or not. A material alteration, not clearly beneficial to the obligor, is prima facie fraudulent.1 ...
-Sec. 1542. Effect Of Negligence Of Obligor, Making Alteration Possible
If the maker of a negotiable instrument has executed it in such form as to make it easy to alter it so that the alteration cannot be detected by a transferee, some courts hold that in such cases the m...
-Sec. 1543. Modification Of Contract Discharging Surety
The effect of a material modification of a contract agreed upon between the two adversary principals thereto without the consent of the sureties of one of such principals, is in some respects analogou...
-Sec. 1544. Federal Bankrupt Acts
The Constitution of the United States1 gives to Congress the power to establish uniform laws on the subject of bankruptcies throughout the United States. Under this grant of power Congress has enact...
-Sec. 1545. State Bankrupt Acts
Various state bankrupt laws have been enacted which provide for granting discharges. These state bankrupt acts lack efficiency for several reasons. (1) The discharges granted by a state bankrupt court...
-Sec. 1546. Statutory Provisions Concerning Discharge
The effect of a discharge in bankruptcy upon pre-existing contract liabilities depends of course upon the provisions which the legislature has seen fit to enact. The bankrupt law of 1898 provides in S...
-Sec. 1547. Provable Debts
To be affected by a discharge in bankruptcy, the debt in question mut be: (1) a debt provable in bankruptcy; and (2) not within any of the statutory exceptions. It is, therefore, necessary to d...
-Sec. 1548. Claims In Nature Of Tort
A claim in tort or in the nature of tort, which has not been reduced to judgment and is not liquidated is not a provable debt and is therefore not barred by a discharge in bankruptcy.1 1 Hapgood v. B...
-Sec. 1549. When Debt Must Exist
To constitute a provable debt, the debt in question must have been in existence when the proceedings in bankruptcy were instituted. A debt which comes into existence after a petition in bankruptcy is ...
-Sec. 1550. Liability For Contribution And Exoneration
If a bankrupt receives a discharge, this is not, as will be seen,1 a bar which can be invoked by those who are liable with him, whether primarily, or secondarily. If such persons are compelled to pay ...
-Sec. 1551. Continuing Contracts
A continuing contract is not affected by a discharge in bankruptcy as to amounts which fall due thereunder after bankruptcy proceedings are instituted unless there is some special provision therefor i...
-Sec. 1552. Contingent Liabilities
The question whether a contingent liability is barred by a discharge in bankruptcy depends on the question whether it is a provable debt. If the contingent debt is provable1 it is barred by the discha...
-Sec. 1553. Liability To Support Wife And Children
The liability of one for the support of his wife and children is not a debt and is certainly not provable.1 Accordingly, the an order of court requiring payment for the support of minor children ;8 no...
-Sec. 1554. Judgments For Wilful And Malicious Injuries To Person Or Property
Certain classes of debts are specifically excepted by the bankrupt acts from the operation of a discharge in bankruptcy. These classes must, therefore, be considered separately. The bankrupt act of 18...
-Sec. 1555. Judgments For Fraud
The bankrupt act of 1898 excepts from the operation of the discharge judgments in actions for fraud or obtaining property by false pretenses or false representations.1 To constitute a judgment for fra...
-Sec. 1556. Debt Created By Fraud
The act of 1898 made provision in section 17, clause 2, excepting judgments in action for fraud from the operation of a discharge; and in clause 4, excepting debts which were created by the bankrup...
-Sec. 1557. General Nature Of Fraud
The nature of fraud whether the basis of a judgment, as under the act of 1898, or whether a claim not in judgment as under other bankrupt acts, must next be considered. The term fraud means positi...
-Sec. 1558. Debts Created In Fiduciary Capacity
The Bankrupt Act of 1898 also excepts provable debts created by the fraud, embezzlement, misappropriation or defalcation of the debtor while acting as an officer or in any fiduciary capacity. Similar ...
-Sec. 1559. Debts Omitted From Schedule
The earlier Federal bankrupt laws contained no provision concerning the omission of debts from the schedule. It was accordingly held that, under the clause of the statute providing that the discharge ...
-Sec. 1560. Debts Due To United States And State
Under the bankrupt act of 1867, a discharge barred all debts, with certain exceptions. It was held that this statute did not include debts due to the United States, even if such debts were not expr...
-Sec. 1561. General Effect Of Discharge
The effect of a discharge in bankruptcy is that the bankrupt may, if he wishes, and if he pleads his discharge properly, use such discharge as a defense in an action based on a debt which was provable...
-Sec. 1562. Discharge As Affecting Liens
Discharge in bankruptcy is merely a bar to an action upon the debts of the bankrupt affected thereby. It does not amount to a discharge on the debt itself. Accordingly, if a creditor has obtained a va...
-Sec. 1563. Effect On Liability Of Co-Debtor
The bankrupt act of 1898 provides: The liability of a person who is co-debtor with, or guarantor or in any manner a surety for a bankrupt shall not be altered by the discharge of such bankrupt.1 Thi...
-Sec. 1564. Partnership And Individual Debts
A bankrupt may be discharged from his liability to the creditors of a partnership of which he is a member by a discharge given in bankruptcy proceedings affecting himself alone if due notice is given ...
-Sec. 1565. Method Of Taking Advantage Of Discharge In Bankruptcy
A discharge in bankruptcy merely gives to the debtor an affirmative defense which he may waive, or of which he may avail himself at his election. The bankrupt himself may of course use his discharge a...
-Sec. 1566. New Promise
A discharge in bankruptcy does not discharge the debt itself but merely creates a bar to enforcing it, which the debtor may take advantage of, if he wishes. There is so great a difference between the ...
-Sec. 1567. Nature Of Liability Created By New Promise
Whether the new promise creates a new liability supported by the original liability as a consideration, or whether the new promise merely waives the bar of the discharge and leaves the original liabil...
-Sec. 1568. Part Payment
Since a new promise to pay a debt barred by bankruptcy, must, to be enforceable against the debtor, be clear and unequivocal, a part payment of a debt is not of itself sufficient to waive the bar of b...
-Sec. 1569. Election Of Remedies
A brief discussion of the remedies available in case of breach, is necessary to a complete understanding of the effects and consequences of certain of the forms of discharge. In case of breach amounti...
-Sec. 1570. Theory Of Damages
Whether or not a breach of a contract amounts to a discharge of the executory covenants of the party not in default,1 it gives to such party a right of action at law for damages. As is said elsewhere,...
-Sec. 1571. Classes Of Damages. - Nominal Damages
In actions in tort damages are of three general classes: nominal, compensatory and punitive. In contract the general rule is that damages must be compensatory. The exceptions to this general rule, and...
-Sec. 1572. Punitive Damages
The general rule is that damages for breach of contract must be compensatory only, and not punitive.1 There are, however, certain classes of cases in which punitive damages are sometimes given. These ...
-Sec. 1573. Intention Of Party In Default As Affecting Damages
The intention of the party in default is, however, ordinarily immaterial. Hence, if there is an unintentional breach of the contract, compensatory damages and not nominal damages must be given.1 On th...
-Sec. 1574. Compensatory Damages
Apart from the few instances referred to in the preceding sections, in which either nominal or punitive damages may be allowed, the general rule of the law of damages, namely, that compensation is to ...
-Sec. 1575. Certainty
As with other questions of fact, damages must be proved with at least reasonable certainty. They cannot be ascertained by mere speculation and conjecture.1 Accordingly, if there are no data for comput...
-Sec. 1576. Remote Damages
As a necessary deduction from the rule that damages are recoverable only if they flow from the breach in the natural course of events or are within the contemplation of the parties, it follows that da...
-Sec. 1577. Profits
There is no arbitrary rule forbidding the recovery of profits as such. If they follow naturally from the breach, are not too remote and can be proved with sufficient certainty, there is no reason why ...
-Sec. 1579. Effect Of Provision In Contract For Special Course Of Things
If by the terms of their contract the parties provide for a special course of things, damages which follow a breach and arise out of such special course of things are as much the natural result of suc...
-Sec. 1580. Rule Where Party In Default Ignorant Of Special Circumstances
If the party in default is not advised of a special course of circumstances, he is not liable for the damages which follow breach by reason of such special course.1 If greater damages than would be in...
-Sec. 1581. Special Course Of Things Merely Probable
If the party in default knows that a certain course of circumstances is probable, but does not know that such course of circumstances will positively follow he is not liable, if such course of ...
-Sec. 1582. Mental Anguish
The general rule applicable to contracts is that no recovery can be had for mental anguish caused by breach.1 Wherever the breach is not such as would naturally cause mental anguish, and the special f...
-Sec. 1583. Duty Of Injured Party To Mitigate Damages
It is the duty of the party not in default to use such means as a reasonable and prudent man would use to mitigate damages.1 On the one hand, the party not in default cannot recover ows v. Telegraph C...
-Sec. 1584. To What Date Damages May Be Recovered
The question of the date to which damages are to be computed is often material. If the breach sued for is such as to discharge the entire contract, all damages caused by such breach, including those w...
-Sec. 1585. Contract Of Employment
If a contract for services is broken by the employer the measure of damages depends upon the terms of the compensation. If a certain rate of compensation is to be paid by the day, month or year, the m...
-Sec. 1586. Contract Not To Compete
For breach of a contract not to compete in business the measure of damages is the amount of profits which the party not in default has lost by reason of such breach,1 and not the amount of profits mad...
-Sec. 1587. Building Contract
If a contract to construct a building is broken by reason of the contractor's failure to complete it, the measure of damages is the cost of completing it less the contract price.1 If the owner prevent...
-Sec. 1588. Contract For Sale Of Realty
If an executory contract for the sale of realty is broken by the vendor, the measure of damages is the actual value of the realty, less the contract price.1 It has been said, however, that if the brea...
-Sec. 1589. Executory Contract For Sale Of Personalty. - Breach By Vendor
If a contract for the sale of personalty, executory on the part of the vendor, is broken by the vendor, the measure of damages is the market price of such property less the contract price.1 The market...
-Sec. 1590. Breach By Vendee
If such a contract is broken by the vendee, the measure of damages is the contract price less the market price.1 Thus in case of a breach of a contract to buy cattle the vendor cannot keep them for si...
-Sec. 1591. Contract To Manufacture
If a contract to manufacture and deliver goods is broken by the manufacturer, the measure of damages is the market price of such goods, minus the contract price.1 If such a contract is broken by the v...
-Sec. 1592. Executed Contract For Sale Of Personalty
If a contract of sale has been performed by the vendor, and title has passed to the vendee, and the vendee refuses to pay, the measure of damages is the contract price.1 If the title has passed and th...
-Sec. 1593. Contract To Pay Money
If a contract to pay money is broken, the measure of damages is the interest upon such amount due and payable.1 For breach of a contract to send money by telegraph, the measure of damages is the inter...
-Sec. 1594. Contract Concerning Securities
If a contract to collect1 or deliver a note,2 or procure an assignment of stock3 is broken, the measure of damages is prima facie the par value of such note or security. ...
-Sec. 1595. Other Illustrations Of Measure Of Damages
For breach of a contract to make an improvement which will increase the value of certain realty, such improvement not being made upon the realty, the measure of damages is said by some courts to be a ...
-Sec. 1596. Nature And Theory Of Right
The right of a party to a contract to recover a reasonable compensation for what he has done in performance of a contract remains for investigation. The theory underlying this right of recovery is not...
-Sec. 1597. Right Of Party Performing Fully To Recover
In determining whether the right to ignore the contract and to sue for a reasonable compensation for services rendered under the contract exists, the first question to determine is whether the party w...
-Sec. 1598. Right Of Party Excused From Complete Performance To Recover. - Rescission By Consent
If a party who seeks to recover has not performed a contract fully upon his part to be performed, the question then arises whether he is not discharged or excused in any way from complete performance....
-Sec. 1599. Breach By Adversary Amounting To Discharge
If the adversary party commits such a breach of the contract as amounts to a discharge, the party not in default may treat the contract as ended and may recover for work done thereunder without perfor...
-Sec. 1600. Right Of Recovery In Case Of Discharge By Subsequent Impossibility
Recovery can be had in quantum meruit where complete performance is prevented by subsequent impossibility.1 If a contract for personal services is discharged by the sickness or death of the party who ...
-Sec. 1601. Eight Of Party Not Excused From Complete Performance To Recover. - No Benefit To Adversary
The next case to consider is that of a party who has not fully performed and has not been discharged from the contract or excused from further performance. His right to ignore the contract and recover...
-Sec. 1602. Recovery In Case Of Breach Not Excused But Not Wilful
Some authorities recognize a class of cases intermediate between those in which a legal excuse for non-performance exists and those in which a wilful breach exists; namely, a class of cases in which t...
-Sec. 1603. Benefit To Adversary. - Theory Of No Recovery In Case Of Wilful Breach
Where partial performance has resulted in benefit to the adversary party, though not the benefit contracted for by him, there is a divergence of authorities, both as to the general theories determinin...
-Sec. 1604. Theory Of Recovery Even In Case Of Wilful Breach
Other authorities have held that even under a wilful and unjustifiable abandonment of a contract, recovery should be had for the reasonable value of benefits accepted and retained by the party against...
-Sec. 1605. Right Of Recovery For Benefits Received Or Retained With Knowledge Of Breach
If a party to a contract receives benefits thereunder, with knowledge of breach by the adversary party,1 or if, after knowledge of such breach, he retains such benefits,2 he should account at least fo...
-Sec. 1606. History Df Doctrine Of Specific Performance
The theory underlying the remedy given by the Common Law in recent times for breach of contract is compensation in the form of money damages. This was not the original theory of the king's courts even...
-Sec. 1607. Contract Must Be Enforceable Generally
In order to entitle the plaintiff to the relief of specific performance the contract sought to be enforced must as a general rule have at least all the elements that make a contract enforceable at law...
-Sec. 1608. Want Of Offer And Acceptance
Thus if no offer and acceptance exist,1 as where the parties have never even in outward form come to an agreement,2 as for example where there is no acceptance,3 or no acceptance is made until after t...
-Sec. 1609. Certainty
To be enforceable either at law or in equity a contract must be definite.1 This requisite is especially insisted upon when specific performance is sought,2 and specific performance may 71 be refused e...
-Sec. 1610. Want Of Consideration
If no consideration for the promise exists there is no contract and specific performance is of course refused.1 An agreement to accept shares of stock on which nothing has ever been paid, and relieve ...
-Sec. 1611. Illegal And Void Contracts
If the subject-matter is such as to make the contract void or illegal at law, equity will not grant specific performance.1 Thus where an institution owning land which it could not alienate by the term...
-Sec. 1612. Defendant Of Abnormal Status
Specific performance cannot be given against a party as to whom the contract is void or voidable. Thus specific performance cannot be given against a married woman.1 So a contract of sale made by trus...
-Sec. 1613. Contracts Enforceable In Equity But Not At Law
There are, however, certain exceptions to the general rule that in order to have specific performance in equity the contract to be enforced must be enforceable at law. The rule that certain kinds of p...
-Sec. 1614. Breach And Performance
The ordinary rules that apply to breach and performance at law apply with especial force in equity. To obtain specific performance, there must have been some breach which causes actual damage. Thus sp...
-Sec. 1615. Want Of Mutuality
In many cases, and in varying forms, the courts have said that specific performance will be denied in contracts where mutuality is lacking.1 The term mutuality, however, is a vague term, of more tha...
-Sec. 1616. Mutuality Involving Offer And Acceptance
In considering first the types of so called contract, in which mutuality of obligation is lacking, it is evident that if an offer has not been accepted there is really no contract, and hence no remedy...
-Sec. 1617. Mutuality Involving Want Of Consideration
A promise not under seal is unenforceable unless supported by a valuable consideration.1 No remedy for such promise is given, either at law or equity, and accordingly specific promise is denied.' If a...
-Sec. 1618. Mutuality Involving Abnormal Status Of Plaintiff
One party to a contract may, by reason of abnormal status, have the right of avoiding the contract, if he sees fit so to do. At law, as we have seen,1 this is a privilege personal to the party of abno...
-Sec. 1619. Mutuality Where Performance Optional
If performance of a contract by one party is not compulsory, but is only to be rendered in case of his election so to do, specific performance cannot be enforced against him as long as he has not made...
-Sec. 1620. Mutuality Involving The Statute Of Frauds
By the statute of frauds the contract or memorandum is to be signed by the party to be charged therewith. Xothing is said about signature by both parties. Accordingly, in many cases it has been held t...
-Sec. 1621. Mutuality Of Remedy. - Where Requisite
The original rule seems to have been that to allow specific performance there must be mutuality both of obligation and of remedy, as long as the contract was executory on both sides.1 This rule is oft...
-Sec. 1622. Mutuality Of Remedy. - Where Not Requisite
In many states the doctrine that the remedy of specific performance must be mutual has been abandoned. Where this view is taken the fact that the contract could not have been enforced specifically aga...
-Sec. 1623. Mutuality Of Remedy After Performance By Plaintiff
Even in jurisdictions in which lack of mutuality of remedy is treated as a ground for refusing specific performance of a contract, executory on both sides, this rule has no application to contracts in...
-Sec. 1624. Discretionary Nature Of Specific Performance
The fact that the contract for which specific performance was sought was enforceable at law was not of itself sufficient to warrant specific performance.1 Specific performance is said to be discretion...
-Sec. 1625. Specific Performance Denied If Causing Great Hardship
The discretionary power of the chancellor in granting or denying specific performance is illustrated by the principle that if specific performance will work great hardship to the party against whom su...
-Sec. 1626. Want Of Adequate Remedy At Law
The original test for the power of equity to grant relief in any class of cases was the absence of a plain, adequate and complete remedy at law. This principle applies with especial force to suits for...
-Sec. 1627. Contracts For Conveyance Of Realty
Every tract 'of realty is in a way unique. No amount of money will enable one to acquire a given tract for a private purpose without the consent of the owner thereof. It follows that a contract to con...
-Sec. 1628. Contract To Make Will
A contract to make a will cannot be enforced in any way during the promisor's life if be bas not repudiated the contract since be has the whole of his life in which to perform.1 If the promisor repudi...
-Sec. 1629. Contracts For Sale Of Interest In Personalty
Contracts for the sale of personal property which has a market value, which is bought and sold in open market, and which has no special or unique value, are generally such as can be compensated adequa...
-Sec. 1630. Contracts For Sale Of Corporate Stock
Contracts for the sale of corporate stock are controlled by the same principles as those applying to sales of other personal property in general. If the stock is one which is regularly bought and sold...
-Sec. 1631. Contracts For Personalty Connected With Realty
Contracts to sell personalty may be so closely connected with a contract concerning some interest in realty that the entire contract may be enforceable specifically, although by themselves the provisi...
-Sec. 1632. Specific Performance Denied If Decree Unenforceable
Specific performance will not be decreed where such performance is in fact impossible and such decree cannot be enforced. Thus if the property contracted for was never owned by the vendor1 or is not i...
-Sec. 1633. Contract For Continuous Duties
A common illustration of the denial of specific performance in cases where, though the remaining facts are sufficient to justify such equitable relief, the decree cannot be enforced is found in the ca...
-Sec. 1634. Contracts To Convey Realty In Consideration Of Support
Whether specific performance of a contract to convey property in consideration of a contract by the grantee to support the grantor can be given at the instance of the grantee is a question upon which ...
-Sec. 1635. Contracts Of Partnership
A contract to form a partnership is one the breach of which cannot ordinarily be compensated for by money damages, and the damages arising from which are ordinarily difficult to estimate. From these p...
-Sec. 1636. Compensation In Equity
If the relief sought is essentially money damages for invasion of a legal contractual right, equity has of course no jurisdiction, since the case is one for which there is a plain, adequate and comple...
-Sec. 1637. Conditional Specific Performance
Since specific performance is discretionary and may be refused in case great hardship will result to the party against whom the relief is sought, the court may give such relief upon such terms and con...
-Sec. 1639. By Whom And Against Whom Specific Performance May Be Had
In a proper case for specific performance the remedy will be given against the promisor, or, to the extent of their interests in the property contracted for, against any claiming under him, such as he...
-Sec. 1640. Injunction As Negative Specific Performance
We pass from a consideration of the equitable remedy of specific performance of affirmative covenants to the remedy of in junction, given to restrain a breach of negative covenants. To enjoin a party ...
-Sec. 1641. Negative Covenants Only Remaining Executory. - Realty
If all the covenants of a contract have been performed except the negative covenants, injunction may be given if the proper circumstances for the exercise of equitable relief are present.1 Thus a nega...
-Sec. 1642. Covenants Not Concerning Realty
Covenants concerning the use of realty may be looked upon as giving the adversary party some interest in such realty which may be protected by injunction. The doctrine of relief by injunction is, howe...
-Sec. 1643. Affirmative Executory Covenants Enforceable Specifically
If the affirmative executory covenants are such as can be enforced by a decree of specific performance, injunction will generally be granted to restrain breach of the negative covenants.1 Thus where p...
-Sec. 1644. Affirmative Executory Covenants Not Enforceable Specifically
If the executory covenants are in part affirmative ones which cannot be enforced by specific performance and in part negative ones, the question whether equity will grant relief against breach of the ...
-Sec. 1645. Mutuality
As in specific performance, injunction will be given only if the contract is mutually binding in obligation upon both parties.1 Thus if one party has the option under the contract to terminate it, he ...
-Sec. 1646. History Of Doctrine Of Limitations
At Common Law lapse of time might give rise to title by prescription or adverse possession in the case of realty. It might give rise to a presumption of payment in the case of debts. Apart from these ...
-Sec. 1647. Statute Is One Of Repose
One of the first questions to determine in ascertaining the effect of the statute of limitations was whether the statute was one of repose - i. e., whether the mere fact of the lapse of the required t...
-Sec. 1648. General Effect Of Statute
The statute of limitations operates as a bar to any action upon the contract; but the contract is not thereby discharged nor is the contract debt extinguished.1 The remedy alone is affected.2 Thus aft...
-Sec. 1649. Limitations Runs From Breach Of Contract
The statute of limitations begins to run upon a contract at the breach thereof, as soon as a right of action accrues.1 The important question then to determine in this connection is, when is a contrac...
-Sec. 1650. Contract To Be Performed At Future Time Or Event
If a future definite time is fixed for the performance of the contract, limitations does not begin to run until such future time is reached.1 Thus under a contract to pay money at a definite time in t...
-Sec. 1651. Necessity Of Demand
Whether demand is necessary to start the statute to running is a question presenting considerable difficulty. If the demand is an essential part of the cause of action limitations does not run until s...
-Sec. 1652. Deposits, Certificates Of Deposit And Checks
Limitations does not run against the right of a general depositor to recover from a bank until demand upon the bank has been made ;1 nor does it run against a similar deposit in the hands of an indivi...
-Sec. 1653. Contract To Be Performed "On Demand."
Limitations runs against an ordinary note payable on demand from the date of the note and not from the date of the demand.1 The same rule applies to a note to be paid when called for,2 or to one pa...
-Sec. 1654. Payment In Installments
If a debt is payable in installments the statute of limitations begins to run as to each separate installment from its maturity.1 N. Y. 61; 27 N. E. 285. County warrant. Crudup v. Ramsey, 54 Ark. 168...
-Sec. 1655. Accounts And Continuing Contracts
If an account is a unit, by the mutual dealings of the parties thereto, it is not barred until the last item thereof is barred.1 8 San Antonio, etc., Association v. Stewart, 94 Tex. 441; 86 Am. St. R...
-Sec. 1656. Debt Payable Out Of Specific Fund
The statute does not begin to run against a claim against a public corporation or quasi-corporation,1 such as a city,2 or county,3 or township,4 which is enforceable only out of a particular fund, and...
-Sec. 1657. Official Bonds
Limitations begins to run on the bond of an administrator when the court renders a decree showing the balance due based upon the administrator's report.1 Until his account is filed and acted upon limi...
-Sec. 1658. Trust Funds
If a fund is received under an express trust, the possession of the trustee is rightful, and no cause of action exists against him until he renounces the trust. The statute of limitations begins to ru...
-Sec. 1659. Quasi-Contract
The statute of limitations runs against the right to recover money paid by mistake when such payment is made, and not from the time that demand is made.1 Thus if a forged check is paid by mistake, lim...
-Sec. 1660. Exceptions To Statute Must Be Statutory
Since the rule, that no action can be brought upon certain specified causes of action after specified times is a statutory rule, it follows that any exceptions thereto on account of the disability of ...
-Sec. 1661. Invincible Necessity
There is one important class of exceptions to the general rule that exceptions to the statute of limitations must of themselves be statutory. This class of exceptions is said by some courts to be thos...
-Sec. 1662. Disability Of Plaintiff. - Infancy And Insanity
The exact language of the exceptions to the statute of limitations created by the statute itself, depends of course upon the wording of the particular statute laying down such rule of limitations and ...
-Sec. 1663. Coverture
When the Common Law theory of the relation between husband and wife, and the effect of marriage upon the status of the wife existed, the statutes generally contained a specific provision that limitati...
-Sec. 1664. Imprisonment Of Plaintiff
If the plaintiff is imprisoned when the cause of action accrues in his favor, it is provided in most statutes that limitations shall not run against him during such imprisonment.1 ...
-Sec. 1665. Absence Of Plaintiff
Some of the earlier statutes provided that if when the cause of action accrued in his favor the plaintiff was beyond the seas, an expression which in the United States has been held to mean without th...
-Sec. 1666. Disability Of Plaintiff Must Exist When Cause Of Action Accrues
The disabilities of the plaintiff enumerated by statute must, in the absence of specific statutory provision, exist when the cause of action accrues. If when the cause of action accrues the plaintiff ...
-Sec. 1667. Death Of Party
The death of a party after a right of action has once accrued,1 whether plaintiff2 or defendant,3 does not suspend the running of the statute of limitations. In case the plaintiff dies, it is the duty...
-Sec. 1668. Conduct Of Defendant. - Absence From State
The conduct of the defendant, which is generally selected by statute as that which prevents limitations from running in his favor is his absence from the state. If he is absent from the state at the t...
-Sec. 1669. Fraudulent Concealment By Defendant
Cases not infrequently arise where the cause of action was created by the fraud of the defendant, and fraud consists of such concealment of the truth that the plaintiff did not at the time of the tran...
-Sec. 1670. Disabilities Limited To Party Specified
If the above disabilities are by statute made exceptions to the statute of limitations in cases where they are suffered by the plaintiff, the courts cannot by construction extend them to apply to case...
-Sec. 1671. Dismissal Of Action Not On Merits
Statutes specially provide in effect in most jurisdictions that if an action is brought before limitations has expired, and is dismissed without a hearing on the merits and without the plaintiff's vol...
-Sec. 1672. Commencement Of Action Stops Limitations
Under the statutes of limitation as ordinarily worded, actions can be brought only within certain specified periods. From this phraseology, it follows that the statute of limitations ceases to run aga...
-Sec. 1673. Effect Of New Promise
The statute of limitations does not operate as a discharge of the debt, but as a bar to any action thereon. The original debt, while not enforceable in a direct action, has still some effect in law. T...
-Sec. 1674. Identification Of Debt
In order to revive a barred debt, the new promise must refer to it in such a way as to identify it.1 Such reference must be plain and unmistakable.2 If there are several different claims existing betw...
-Sec. 1675. Promise Must Show Intention To Pay Debt
The language used by the debtor must be such as to show his intention to pay the debt referred to.1 If the debtor says that he is unable or unwilling to pay a debt, the fact that he does not deny the ...
-Sec. 1676. Giving New Note Or New Collateral
If a creditor furnishes new collateral,1 or gives a mortgage,2 to secure a barred debt, or gives an order on a third person to secure such debt,3 the barred debt is thereby revived. The new period of ...
-Sec. 1677. To Whom Promise May Be Made
In order to operate as a waiver of the bar of the statute of limitations, the new promise may be made to the creditor himself, or to his agent.1 A promise made to a stranger to the contract has no leg...
-Sec. 1678. By Whom Promise May Be Made
The new promise may be made by the debtor himself, or by his agent thereunto duly authorized.1 One whom the debtor has requested to convey his promise to the creditor, is the agent, of the debtor with...
-Sec. 1679. Doctrine Of Acknowledgment
When the statute of limitations was treated as a rule of presumption merely, any form of acknowledgment which conceded the fact that the claim was unpaid, was sufficient to rebut the presumption of pa...
-Sec. 1680. Mere Recognition Of Existence Of Debt Insufficient
The mere acknowledgment of the existence of the debt which does not treat it as a present subsisting liability is insufficient.1 It is not sufficient that the reference to the debt should be consisten...
-Sec. 1681. Negotiations For Settlement Insufficient
The fact that the debtor entered into negotiations with the creditor to ascertain the terms on which the debt in question could be settled,1 or that he offers a compromise,2 as by attempting to buy th...
-Sec. 1682. Identification Of Debt
In order to waive the bar of the statute, the acknowledgment must clearly identify the debt to which it relates.1 An acknowledgment which leaves it uncertain to what debt the debtor referred, is insuf...
-Sec. 1683. Prima Facie Effect Of Recognition As Subsisting Liability
A distinct and unqualified admission of a debt as a present subsisting liability, without anything further to rebut the presumption that the debtor promises to pay it, is a sufficient waiver of the ba...
-Sec. 1684. Effect Of Express Refusal To Pay Debt
An admission of the existence of the debt, coupled with a refusal to pay it,1 whether such refusal is based upon the ground of poverty of the debtor,2 or on the fact that he is angry because he has be...
-Sec. 1685. By Whom Acknowledgment Can Be Made
Acknowledgment can affect the interests only of the party making the acknowledgment, either in person or by his duly authorized agent. Thus acknowledgment by one joint debtor1 does not waive the bar o...
-Sec. 1686. To Whom Acknowledgment Can Be Made
The acknowledgment, in order to operate as a waiver of the bar of the statute, must be made to the creditor, or to his authorized agent. A letter addressed individually to one member of the creditor f...
-Sec. 1687. General Nature And Effect Of Part Payment
If the debtor voluntarily makes a payment which he intends to be applied upon a debt owing by him, ir partial satisfaction thereof, leaving a balance due, such payment is the clearest form of acknowle...
-Sec. 1688. What May Constitute Payment
Part payment is usually made in money. This is not, however, necessary. Anything which is given by the debtor as partial satisfaction of the debt, and which is so received by the creditor, amounts to ...
-Sec. 1689. Payment Must Be Voluntary
In order to operate as a waiver of the bar of the statute of limitations the payment made must be a voluntary one.1 A payment made by a debtor to redeem property sold on execution does not revive the ...
-Sec. 1690. Effect Of Application Of Payment By Debtor
If the debtor directs the application of the payments, the effect of such payment upon the bar of the statute depends on whether such payment is to be applied in whole or in part to the debt in questi...
-Sec. 1691. Effect Of Application Of Payments By Creditor
We have seen elsewhere that if a debtor owes two or more debts to the same creditor, and makes a payment to the creditor without indicating upon which debt such payment is to be applied, the creditor ...
-Sec. 1692. By Whom Part Payment May Be Made
Since part payment extends the period of limitations only when it amounts to an admission by the debtor that more is due, it follows that a payment cannot have this effect unless it is in some way aut...
-Sec. 1693. Payment By Partnership
Before dissolution a payment made by a partner upon a partnership debt starts limitations to running afresh.1 This doctrine is qualified in some jurisdictions by the rule that if such payment is made ...
-Sec. 1694. Payment By Co-Debtor
A payment by one of two or more co-debtors is not, according to the weight of authority, a waiver of the bar as to the other debtors ;x nor will such a payment if made before the statute has run preve...
-Sec. 1695. Payment By Principal Debtor
A part payment upon a debt made by the principal debtor does not, according to the weight of authority, prevent the running of the statute in favor of a surety ;1 nor does it waive the bar of the stat...
-Sec. 1696. Payment By Mortgagor Or Grantee Of Mortgaged Realty
If A buys mortgaged realty from the mortgagor B, payments made by A upon the mortgage debt will prevent limitations from operating as a bar to the foreclosure of the mortgage,1 whether A has2 or has n...
-Sec. 1697. Payment By Other Persons
Payment made by an administrator after decedent's death has been held to waive the bar of the statute of limitations,1 at least where the widow and heirs acquiesce in such payments upon a debt, secure...
-Sec. 1698. Effect Of Indorsement Of Part Payment
If an indorsement of a payment upon a debt is made by the debtor,1 or by his agent,2 or by the creditor with the consent of the debtor,3 such indorsement is clearly sufficient to show that such paymen...
-Sec. 1699. To Whom Payment May Be Made
If the debtor makes a payment to the assignee of the debt, after the assignment, and with knowledge of it, such payment waives the bar of the statute.1 If, however, the debtor makes a payment after th...
-Sec. 1700. General Effect
At Common Law there were no specific requirements as to the outward form of a new promise or acknowledgment. If the new promise or acknowledgment possessed the requisite essential elements, it was suf...
-Sec. 1701. Form Requisite By Statute
If the statute requires the new promise or acknowledgment to be in writing and signed by the party to be charged therewith, a signature is sufficient if made by the debtor himself or by his authorized...
-Sec. 1702. Effect Of Statute Upon Part Payment
Lord Tenterden's act, and the American statutes which follow it most closely, do not include part payment, but refer solely to a new promise and to a new acknowledgment. Accordingly part payment may b...
-Sec. 1703. Who Can Invoke Limitations As A Defense
The defense of limitations is usually treated as one personal to the debtor.1 Since it is personal to him, he may waive it if he sees fit to do so.2 His waiver of such defense by a new promise, acknow...
-Sec. 1704. Presumption Of Payment
At Common Law, independently of statute, a presumption arose after twenty years from the time that a right of action upon a debt accrued that such debt had been paid.1 In Tennessee sixteen years is ta...
-Sec. 1705. Limitations In Equity
If the statute of limitations is so worded as to apply to actions at law, it does not uniformly restrict the power of the courts of equity to administer equitable relief,1 and such relief may in prope...
-Sec. 1706. Nature And Theory Of Laches
Independent of the statutes of limitations and in cases to which for the most part such statutes could not apply, equity has developed the doctrine of laches as a bar to a suit in equity.1 The theory ...
-Sec. 1707. Elements Of Laches. - Lapse Of Time
The elements which constitute laches are (1) unexplained delay for an unreasonable time; and (2) prejudice to the adversary party or to third parties which will be occasioned by such delay if equitabl...
-Sec. 1708 Prejudice Resulting From Lapse Of Time
Prejudice resulting to the adversary party or to a third party from lapse of time is an essential element of laches, without which mere delay does not amount to laches.1 If such prejudice results from...
-Sec. 1709. Excuses For Delay. - Disability
Delay is an element of laches only when unexcused. The existence of facts which excuse delay prevent it, therefore, from amounting to laches. Among the facts which amount in equity to an excuse for de...
-Sec. 1710. Ignorance Of Rights
Knowledge of one's rights or a reasonable opportunity of acquiring it, is an essential element of unexcusable delay.1 The fact, therefore, that one is ignorant of his rights, his ignorance not being d...
-Sec. 1711. Delay Caused By Defendant
Delay on the part of the plaintiff which has been intentionally caused by the defendant,1 as where the defendant induces delay by recognizing plaintiff's rights,2 or by inducing plaintiff to believe t...
-Sec. 1712. Statutes Of Non-Claim
A group of statutes analogous in some respects to statutes of limitation may be briefly noted. These are the statutes which provide that in administering the estates of decedents, insolvents and the l...
-Sec. 1713. Exceptions To Statute Of Non-Claim Must Be Statutory
Unless a special exception is made by the terms of the statute, no exception thereto exists in favor of persons under disabilities.1 Without specific exception such a statute applies to non-resident c...
-Sec. 1714. When Statute Begins To Run
Under such statutes time does not by the terms thereof begin to run until an executor is appointed,1 or as most statutes provide, when notice of his appointment is given.2 ...
-Sec. 1715. To What Claims Statute Applies
Such statutes do not apply to claims which are contingent and unliquidated at decedent's death,1 as a stockholder's liability on which no assessment has been made,2 or which have not then accrued, as ...
-Sec. 1716. General Nature Of Doctrine
In the discussion of contracts up to this point, it has been assumed that the question of the law which controls the contract is immaterial. This question may, however, become most em' inently materia...
-Sec. 1717. What Constitutes Place Of Performance
In determining what system of law controls, it may become necessary to determine in what jurisdiction a contract is to be performed. If no place of performance is fixed by the contract the presumption...
-Sec. 1718. What Constitutes Place Of Making Contract
In determining what system of law controls, it may become necessary to determine in what jurisdiction a contract is entered into. If the contract is an oral one, made by the parties in person, no diff...
-Sec. 1719. Express Agreement As To Law Controlling
If the parties to a contract have expressly agreed upon the system of law whereby their contract is to be controlled, such provision is ordinarily obligatory, and no room remains for the application o...
-Sec. 1720. Presumption As To Foreign Law
If there is no evidence as to the law of the state which controls the contract, the question of what that law will be presumed to be is one on which there is some conflict of authority. It has been sa...
-Sec. 1721. Attempted Generalizations Of Rule
The attempt has repeatedly been made to state the rules involved in the subject of conflict of laws in a simple form, substituting a broad generalization for a detailed statement. The original form of...
-Sec. 1722. Law Controlling As To Offer And Acceptance
Questions of offer and acceptance rarely are involved in the conflict of laws. Possibly this is so because the laws of the different states are more in accord upon this subject than on most. Questions...
-Sec. 1723. Form Of Contract Not Relating To Realty
The form in which a contract must be executed to be valid is controlled by the law of the place where it is made if the contract does not relate to realty.1 Thus a statute requiring every insurance po...
-Sec. 1724. Form Of Contract Relating To Realty
The form of a contract which relates to realty is controlled by the law of the place where the realty is situated.1 This is in analogy to the principle that the validity of conveyances of realty, suc...
-Sec. 1725. Law Controlling As To Validity Of Subject-Matter
Whether the subject-matter of a contract is such as to make it valid, or void, or illegal, is a question often presented to the courts for decision. The general rule is that questions of illegality ar...
-Sec. 1726. Special Illustrations. - Contract Relieving Carrier From Liability
The validity of a contract with a common carrier relieving him from his Common-Law liability has been held to be controlled by the law of the state where the property was to be delivered.1 In other ju...
-Sec. 1727. Usurious Contracts
Usurious contracts are declared to be so by positive statute, which generally makes specific provision for the extent to which the money loaned can be recovered. Such a contract, if valid where made, ...
-Sec. 1728. Sales Of Intoxicating Liquors
Cases concerning the sale of intoxicating liquors often involve the topic of the conflict of laws. In discussing this topic an important distinction is to be noted. There are cases involving the sale ...
-Sec. 1729. Contract In Violation Of Policy Of Law Of Forum Not Enforced
One important qualification to the general doctrine that the place of performance controls as to the validity of the subject-matter is found where the contract is sought to be enforced in a forum to t...
-Sec. 1730. Capacity Of Parties. - Married Women
Questions of the capacity of the parties to a contract are said by many courts to be determined by the law of the place where the contract is made.1 Under this subject by far the most numerous class o...
-Capacity Of Parties. - Married Women. Continued
10 Am. St. Rep. 648; 2 L. R. A. 703; 10 S. W. 305; Palmer v. Palmer, 26 Utah 31; 61 L. R. A. 641; 72 Pac. 3; Bartlett v. Collins, 109 Wis. 477; 83 Am. St. Rep. 928; 85 N. W. 703. 2 Parker v. Moore, 1...
-Sec. 1731. Effect Of Contract. - Assignability
The effect of an assignment, if valid, is controlled by the law of the place where it is made.1 Thus the question whether a wife acquires an absolute interest in an insurance policy on her husband's l...
-Sec. 1732. Negotiability
Questions of the negotiability of a contract are determined by the law of the place where the contract is made if there to be performed.1 If to be performed in a different jurisdiction from that where...
-Sec. 1733. Construction
Questions of construction are generally controlled by the law of the place of performance.1 Thus an insurance policy payable in England is governed by English law as to the meaning of the term in co...
-Sec. 1734. Remedies In General
Questions of the remedy to be given in an action on a contract are controlled by the law of the forum.1 The reason which underlies this rule is that while comity may require the courts of one jurisdic...
-Sec. 1735. Evidence
The law of the forum controls as to questions of the evidence by which the truth of the facts in issue may be proved or disproved.1 Thus while questions of the notice necessary to hold parties seconda...
-Sec. 1736. Parol Evidence Rule
The parol evidence rule is not, properly speaking, a rule of evidence but a rule of substantive law. It deals with what the terms of a contract in law are, and not merely with the evidence by which it...
-Sec. 1737. Statutes Of Limitation
The statute of limitations is generally held to affect the remedy.1 The law of the place where the suit is brought controls, therefore,2 as to the question of the application of such statute.3 Thus th...
-Sec. 1738. Federal And State Law. - Written Law
Analogous to the subject of conflict of laws is the question of the law which controls when a cause of action on a contract arises within a state of the union, and the action is brought before a Feder...
-Sec. 1739. Constitutionality Of State Statutes
Decisions of a state court as to whether a state statute is in conformity to the state constitution are very generally followed by the federal courts.1 One well-recognized exception to the general rul...
-Sec. 1740. Unwritten Law
If the rights of the parties are controlled by the un-written or Common Law, we find that the courts often repeat that there is no Common Law of the United States in the sense of a national customar...
-Sec. 1741. Impairment Of Obligation Of Contract
No state shall pass any law impairing the obligation of contracts.1 This provision was inserted in the Constitution with but little debate, and undoubtedly for the purpose of preventing the states f...
-Sec. 1742. To What Governments This Clause Applies
By its terms this clause of the Constitution provides that no state shall pass the laws in question. It does not, therefore, restrict the power of the United States government.1 If in the exercise ...
-Sec. 1743. To What Laws This Clause Applies
By its terms, this clause of the Constitution forbids any law of the kind specified. Law ': as used in this sense undoubtedly includes written laws of every class, such as state constitutions,1 st...
-Sec. 1744. Change Of Judicial Decision
Whether a change of judicial decision, making invalid a contract which under prior decisions was valid, amounts to a law within the meaning of this clause of the statute, is a question which cannot be...
-Change Of Judicial Decision. Part 2
5 Palmer v. Tingle, 55 O. S. 423; 45 N. E. 313. See Sec. 1782. 6 Great Southern, etc., Co. v. Jones. 193 U. S. 532; affirming 116 Fed. 793; 54 C. C. A. 165. 7 National, etc., Association v. Brahan. ...
-Change Of Judicial Decision. Part 3
18 Central Land Co. v. Laidley, 159 U. S. 103; Wood v. Brady, 150 U. S. 18; Lehigh Water Co. v. Easton, 121 U. S. 388; Knox v. Exchange Bank, 12 Wall. (U. S.) 379; Law-ler v. Walker, 14 How. (U. S.) 1...
-Sec. 1745. Who Can Object To Constitutionality Of Statute
The objection that a statute impairs the obligation of contracts can be made only by one who is prejudiced thereby. Parties whose rights are only incidentally affected cannot object.1 Thus an act of t...
-Sec. 1746. What Is Meant By " Contracts."
The term contracts shows that the protection of this clause is limited to those created by agreement. Rights arising by positive law, not contractual in their nature are not protected by this clau...
-Sec. 1747. Judgments
It is often held by modern courts that a judgment is not a contract within the protection of this clause.1 Thus a judgment restraining the collection of an inheritances tax may, on appeal, be reversed...
-Sec. 1748. Taxes And Appropriations
Liability to pay taxes and assessments may be quasi-contract, but is not genuine contract. This clause does not therefore make invalid statutes which tax pre-existing contract rights.1 So a statute re...
-Sec. 1749. Marriage
Marriage is a status and not a contract within the meaning of this clause.1 Hence a pre-existing marriage may be dissolved by a legislative divorce where valid otherwise,2 or by a divorce rendered und...
-Sec. 1750. Public Offices
A public officer has no property right to future tenure of his office, and does not hold it by contract with the state. Accordingly a statute which abolishes an office or reduces its term does not imp...
-Sec. 1751. Invalid Contracts
An invalid contract is not protected by this clause.1 Thus a contract which is illegal,2 or without consideration,3 or indefinite,4 or ultra vires,5 or where conditions precedent have not been complie...
-Sec. 1752. Statutes Validating Invalid Contracts
The right to avoid a contract under which the party avoiding it has received a valuable consideration is not a contract right; and therefore a subsequent statute which destroys this right to avoid the...
-Sec. 1753. Executory And Executed Contracts
This clause is more generally invoked to protect executory contracts,1 but it. may apply as well to executed contracts.2 12 Ewell v. Daggs, 108 U. S. 143; Petterson v. Berry, 125 Fed. 902; 60 C. C. A...
-Sec. 1754. Corporate Charters
An extension of the doctrine that executed contracts, including conveyances, were protected by this clause, led to the doctrine that the charter of a corporation might contain a contract between the c...
-Sec. 1755. Rights And Liabilities Of Stockholders
The rights of stockholders in the corporation of which they are members, are contract rights, the obligation of which cannot be impaired by subsequent legislation. Thus the right of stockholders to vo...
-Sec. 1756. Grant Of Franchises
A grant of public franchises may be in such form that when duly accepted it constitutes a contract within the protection of this clause of the constitution.1 Thus a grant of franchises, such as a righ...
-Sec. 1757. Reservation Of Power Over Corporate Charters And Over Contracts
Many states by constitutional provision or by general statute reserve the right to alter and amend certain legislative grants which would otherwise be contracts protected by this constitutional provis...
-Sec. 1758. Police Power
The Police Power extends to the protection of the lives, limbs, health, comfort and quiet of all persons and the protection of all property within the state.1 An exact definition, though often atte...
-Sec. 1759. Impairment Of Obligation. - Subsequent And Prior Contracts
A law in force when a contract is made is part thereof.1 Whatever objections may be made to the validity of such law, it does not impair the obligation of such contracts.2 To be invalid as impairing t...
-Sec. 1760. Relative Priority Of Statute And Contract
In this sense the contract comes into existence at the moment that it becomes enforceable between the parties, even though further acts are to be clone in performance thereof.1 Thus when a certificate...
-Sec. 1761. Illustrations Of Impairment Of Obligation Of Contracts
As is natural, the earlier cases illustrate more frequently than the later ones, undisguised attempts to impair the obligation of contracts, while the later cases are more likely to illustrate attempt...
-Sec. 1762. Partial Impairment. - Change In Interest
A statute which leaves part of the contract in force but modifies certain of its terms or changes its legal effect is invalid.1 Thus the legislature cannot restrict the assignability or negotiability ...
-Sec. 1763. Exemption From Taxation
If no contract exempting property from taxation exists, a subsequent statute increasing the burden of taxation or assessment is valid.1 Thus an assessment may be imposed in addition to the former taxa...
-Sec. 1764. Impairment Of Obligation Of Contract By Limiting Power Of Taxation
The legislature cannot, while leaving a municipality in existence, deprive it of the power to levy taxes sufficient to pay its pre-existing debts if such power was possessed when such debts were incur...
-Sec. 1765. Change Of Remedy
A remedy given by the law is no part of the obligation of a contract.1 Neither party has such a vested right therein that the legislature cannot alter it.2 On the other hand, the existence of some suf...
-Sec. 1766. Examples Of Change Of Remedy
A statute which gives an additional remedy,1 as where a municipal corporation is allowed to enforce certain contracts by mandamus,2 or where forfeiture of the corporate charter is made a remedy for br...
-Sec. 1767. Change In Statutes Of Limitation
A statute of limitations which restricts the time for bringing an action on pre-existing contract rights does not impair the obligation of such contracts if it gives a reasonable time after it is prom...
-Sec. 1768. Ancillary And Provisional Remedies
Ancillary and provisional remedies are not a part of the obligation of a contract, and may be altered if adequate remedies are left. A statute which strikes out a prior ground of attachment,1 is held ...
-Sec. 1769. Change In Right To Acquire A Lien
The right to acquire a lien is most frequently illustrated at Modern Law by mechanic's liens, though it is of course not limited to liens of this class. Whether the right to acquire a mechanic's lien ...
-Sec. 1770. Change In Priority Of Vested Liens
A lien which has attached to property,1 such as a mechanic's lien,2 or a judgment lien,3 or a lien on logs obtained by a laborer,4 or the lien of a mortgage,5 or the lien of a corporation on the share...
-Sec. 1771. Change In The Law Of Evidence
It is generally said that no person has a vested right in rules of evidence.1 Hence the law concerning the competency of witnesses in force at the time of the trial, and not that in force when the con...
-Sec. 1772. Damages
The amount of damages given by the law in case of breach is looked upon as an element of the contract itself, so that a change in the measure of damages impairs the obligation of prior contracts.1 Whi...
-Sec. 1773. Delay Of Judgment And Execution
Statutes which provide that debts of certain classes or due from certain persons cannot be recovered upon for certain periods have been held valid.1 This holding is undoubtedly due in part to the fact...
-Sec. 1774. Change In Appraisement Laws
A change in statute providing for an appraisement if none was required before, the property not to be sold for less than a certain per cent of the appraised value,1 impairs the obligation of prior con...
-Sec. 1775. Change In Exemption Laws
Statutes which exempt from levy and sale on execution, property which was not exempt when the contract was entered into are held by the majority of our courts to be invalid as impairing the obligation...
-Sec. 1776. Change In Law Of Notice
A statute providing for notice where there was none before,1 or lengthening the period for which notice must be given, affects the remedy only and hence may apply to prior contracts. Thus a statute pa...
-Sec. 1777. Change In Redemption Laws
A statute which authorizes the redemption of property, sold on execution or foreclosure in satisfaction of a former contract, where such right of redemption did not exist before,1 or which extends the...
-Sec. 1778. Constitutional Right To Contract
The clause of the Constitution protecting the obligation of contracts from impairment does not apply to contracts made after the passage of the law affecting them.1 Other provisions of the Constitutio...
-Sec. 1779. Statutes Restricting Hours Of Labor
Statutes restricting the number of hours per day or per week for which persons may contract to work are not uncommon. The validity of such statutes depends in the first instance on whether the contrac...
-Sec. 1780. Statutes Concerning Rate And Method Of Payment Of Wages
Statutes regulating the method in which employes are to be paid, providing that they must be paid in money,1 or if paid in scrip or in orders on stores for goods, that such orders must be redeemed in ...
-Sec. 1781. Statutes Proteoting Union Labor
Statutes forbidding the discharge or non-employment of an employe because he is a member of a union are invalid.1 Statutes requiring goods made in penal institutions to be marked with a convict labe...
-Sec. 1782. Statutes Concerning Liens
Statutes providing that mechanic's liens shall have priority over mortgages prior in time, are generally held valid as to mortgages executed after the passage of such act.1 Subcontractors' liens are o...
-1783. Statutes Concerning Common Carriers
The legislature may fix rates for transportation by rail,1 or for grain elevators,2 if reasonable. A commission fixing railroad rates must, however, give a hearing to such railroad company before fixi...
-Sec. 1784. Statutes Concerning Sales
Statutes forbidding the sale of railroad tickets by any except duly authorized agents of the railroad are generally held valid,1 and so are statutes or ordinances forbidding the sale of transfers issu...
-Sec. 1785. Statutes Concerning Insurance
Statutes requiring a copy of the application to be attached to the insurance policy,1 or providing that in case of a total loss in fire insurance, the entire amount stipulated in the policy shall be p...
-Sec. 1786. Statutes Concerning Assumption Of Liability For Negligence
Statutes which forbid an employe to agree to assume certain risks which the law places upon the employer are valid.1 1 Oonsidine v. Ins. Co., 165 Mass. 462: 43 N. E. 201. 2 Orient Ins. Co. v. Daggs,...
-Sec. 1787. Statutes Restricting Right To Engage In Business
Statutes forbidding persons to act as insurance brokers,1 as for foreign insurers,2 or as itinerant vendors,3 without a license, have been held valid. On the other hand, statutes forbidding persons to...
-Sec. 1788. Statutes Making Breach Of Contract A Crime
Statutes making it a crime to break a contract to farm on shares or perform labor after supplies have been advanced thereunder,1 or to sell personalty subject to a landlord's lien,2 or t refuse...
-Sec. 1789. Other Statutory Restrictions
Statutes which forbid the transaction of certain kinds of business on Sunday are valid.1 Statutes limiting the rate of interest which may be contracted for are valid,2 and accordingly a statute limiti...
-Sec. 1790. Effect On Theory Of Illegality Of Doctrines Discussed In This Chapter
The principles discussed in this chapter are of the utmost importance as affecting the doctrine of illegality. A contract to perform an act forbidden by statute is illegal.1 This implies, however, tha...









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