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The Law Of Contracts Vol4| by William Herbert Page



Construction And Interpretation. Operation. Discharge

TitleThe Law Of Contracts Vol4
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
-Part V. Construction And Interpretation. Chapter LXIII General Principles Of Construction
Sec. 2020. Nature of construction. Sec. 2021. Object of construction. Sec. 2022. Construction as fact or law. Sec. 2023. Intention deduced primarily from words employed. Sec. 2024. Ordinary meanin...
-Sec. 2020. Nature Of Construction
If a question of construction becomes material, this necessarily implies that the contract is in every respect valid and enforceable, at least under one of the constructions contended for. Questions a...
-Sec. 2021. Object Of Construction
The primary object of construction in contract law is to discover the intention of the parties,1 as it existed at the time that the contract was made.2 The courts should give to a contract such constr...
-Sec. 2022. Construction As Fact Or Law
The intention of the parties, which it is the primary object of construction to discover, is a fact. It is frequently said that if the contract is in writing and if the meaning of the parties does not...
-Sec. 2023. Intention Deduced Primarily From Words Employed
The intention of the parties in express contracts is, in the first instance, embodied in the words which the parties have used and is to be deduced therefrom.1 If the contract is in writing, the inten...
-Sec. 2024. Ordinary Meaning Of Word Prima Facie Correct
The ordinary meaning of a word is prima facie that employed,1 and will be used in construction unless the context,2 or admissible evidence,3 shows that another meaning was intended, even if it may not...
-Sec. 2025. Context And Subject-Matter Control Meaning Of Word
The context and subject-matter may affect the meaning to be given to the words of a contract,1 especially if in connection with the subject-matter the ordinary meaning of the term would give an absurd...
-Sec. 2026. General And Specific Words - Noscitur A Sociis
If general words are used in connection with specific words, the specific words generally follow the intention of the party with greater exactness, and accordingly the general terms thus used are to b...
-Sec. 2027. Technical Meaning
Words of technical meaning will be given that meaning,1 unless the context shows that the ordinary meaning was intended.2 Thus horsepower in a contract for the sale of waterpower has been held to m...
-Sec. 2028. Meaning Of Word Controlled By Usage
Usages,1 such as those of a trade,2 may be resorted to, to show the special meanings of words. Evidence of a local usage as to the meaning of the word 22 Louisville, etc., Ry. v. Ry., 174 111. 448, 5...
-Sec. 2029. Cipher
If a contract consists in part or all of cipher, extrinsic evidence is admissible to show the meaning of the terms written in cipher contracts by telegraph.1 Thus the meaning of Buy three May, may b...
-Sec. 2030. Abbreviations
If abbreviations are used in a written contract, extrinsic evidence is admissible to show that they have a meaning in the trade or business to which the subject of the contract relates which is genera...
-Sec. 2031. Grammatical Accuracy And Punctuation
Unless a contrary intention appears upon the face of the contract, it will be presumed that the contract is drawn grammatically and punctuated properly and that the intention of the parties is to be d...
-Sec. 2032. Omissions, Errors And Surplusage
Words which are omitted by inadvertance from a written contract may be supplied by construction at law, without resort to reformation if the context shows what words are omitted.1 Thus the omission of...
-Sec. 2033. Intention Of Parties Direct As Affecting Meaning Of Term
If the parties have used words which have an ordinary meaning free from ambiguity, and no technical meaning is shown, extrinsic evidence is inadmissible to show that the parties used such terms in a s...
-Intention Of Parties Direct As Affecting Meaning Of Term. Continued
The term market value can not be modified by extrinsic evidence. Bockian v. United Candy Co., 91 N. J. L. S14, 102 Atl. 393. A contract which provides for discount for cash if paid at a certain tim...
-Sec. 2034. Practical Construction By Parties
If a contract is ambiguous in meaning, the practical construction put upon it by the parties thereto is of great weight, even though the contract is in writing,1 and, ordinarily, is controlling,1 stru...
-Practical Construction By Parties. Part 2
New Jersey. Ryer v. Turkel, 75 N. J. L. 677, 70 Atl. 68. New York. Sattler v. Hallock, 160 N. Y. 291, 73 Am. St. Rep. 686, 46 L. R. A. 679, 54 N. E. 667; New York v. New York Ry. Co., 193 N. Y. 543, ...
-Practical Construction By Parties. Part 3
West Virginia. Myers v. Carnahan, 61 W. Va. 414, 57 S. E. 134. Wisconsin. Hosmer v. McDonald, 80 Wis. 54, 49 N. W. 112. Wyoming. J. W. Denio Milling Co. v. Malin, 25 Wyom. 143, 165 Pac. 1113. There...
-Sec. 2035. Practical Construction Distinguished From New Contract
In some of the cases in which the practical construction of the parties has been considered, the words and the conduct of the parties suggest a new contract almost as much as they suggest a constructi...
-Sec. 2036. Actual Intention As Affecting Construction
Whether the intention of the parties which the courts are to ascertain is the intention which the particular parties to the contract actually entertained as a matter of fact or whether it is the stand...
-Sec. 2037. Priority Of Clauses
A rule sometimes laid down, though rarely observed, is that in case of conflict between two clauses that first in place is to control,1 at least if the first clause is in harmony with the rest of the ...
-Sec. 2038. Contract Construed As A Whole
As the object of construction is to ascertain the intention of the parties, the contract must be considered as an entirety. The problem is not what the separate parts of the contract mean, but what th...
-Sec. 2039 General Paramount Intent Controls Special Intent
The contract being construed as a whole, it follows that one part of it may affect the construction of a different part.1 An illustration of this is found where the contract as a whole shows a given i...
-Sec. 2040. Every Part Of Contract Given Effect If Practicable
The parties have inserted each provision in the contract, and accordingly, if possible, a contract should be so construed as to give effect to each provision inserted therein.1 A part of a contract wi...
-Sec. 2041. Headings And Marginal Annotations As Part Of Contract
Whether a printed letterhead or billhead is to be regarded as a part of the contract which is written underneath so as to modify the meaning and effect thereof, is a question upon which there has bee...
-Sec. 2042. Covenant Implied From Writing Equivalent To Written Promise
Since a contract is to be construed as a whole, terms which can be inferred from a consideration of the entire instrument are as much a part of the contract as if expressly set forth therein.1 Thus a ...
-Sec. 2043. Written And Printed Provisions
If the contract is written in part and printed in part, as where it has been filled in upon a printed form, the parties usually pay much more attention to the written parts than to the printed parts. ...
-Sec. 2044. Incorporation Of Writing By Reference
Since a contract must be construed as a whole, effect must be given to writings incorporated in the contract by reference.1 An instrument which is in the form of a promissory note but which states tha...
-Sec. 2045. Reference For Specific Purpose
If a reference is made to another instrument for a specific purpose, such reference incorporates such instrument for that purpose only.1 A reference in a contract between the principal contractor and ...
-Sec. 2046. Different Writings Construed Together
To have two or more writings construed together it is not necessary that one of them should refer to the other in express terms. If two or more writings are executed at the same time, between the same...
-Different Writings Construed Together. Continued
7 Young v. Borzone, 26 Wash. 4, 23, 66 Pac. 135, 421. 1 United States. Joy v. St. Louis, 138 U. S. 1, 34 L. ed. 843. Alabama. Prichard v. Miller, 86 Ala. 500, 5 So. 784. California. Flinn v. Mowry,...
-Sec. 2047. Extrinsic Matters As Terms Of Contract
When we pass from consideration of the words of the contract to the question of what else may be regarded as a term of such contract, we are met with a practical difficulty which admits of only a rath...
-Sec. 2048. Law As Term Of Contract
It is impracticable and impossible to set forth in writing all the different stipulations and provisions which, by the operation of law, are terms of the contract. The difficulty, exists, not because ...
-Sec. 2049. Nature Of Law As Affecting Contract
Certain provisions of law are of such a character that the parties can not prevent the application of such legal principles by any contractual provisions.1 Other provisions of law are binding upon the...
-Sec. 2050. Contract To Be Upheld By Construction If Possible
As between two constructions, each reasonable, one of which will make the contract enforceable, and the other of which will make it unenforceable, that construction which makes the contract enforceabl...
-Sec. 2051. Legal Construction Preferred To Illegal Construction
If one of two possible constructions will make a contract legal and another will make it illegal, the former is to be preferred.1 So a construction which will accord with public policy is to be prefer...
-Sec. 2052. Construction To Protect Public Interest
If the interest of the public is affected by a contract, it should be construed so as to protect such interest.1 A contract for exemption from taxation is to be construed strictly.2 Such a contract fo...
-Sec. 2053. Contract Construed To Be Fair And Reasonable
As between two constructions, each probable, one of which makes the contract fair and reasonable and the other of which makes it unfair and unreasonable, the former should always be preferred.1 1 Joy...
-Sec. 2054. The Rule Contra Proferentem
If terms of a contract appear on their face to be inserted for the benefit of one of the parties, he will be considered as having inserted such terms and as having chosen the language thereof. Any amb...
-The Rule Contra Proferentem. Continued
A contract of suretyship is construed strictly in favor of the surety, if he does not receive value for becoming surety.13 This rule, however, does not require the contract to be construed unfairly as...
-Sec. 2055. Rules And By-Laws
Rules of a voluntary association are a part of a contract for membership in such association entered into between the association and a member thereof.1 A pastor of a church whose rule provides the pa...
-Sec. 2056. Usages And Customs As Terms Of Contract
In many kinds of business, however, a great number of usages and customs have gradually been built up. These customs are rarely carried in express terms into contracts made with reference to such kind...
-Sec. 2057. Elements Of Usage Or Custom
The terms usage and custom with reference to trade are practically synonymous. It has been suggested that a usage is a method of doing business which the parties may be presumed to intend as part ...
-Sec. 2058. Usage Or Custom Contrary To Express Terms Of Con-Tract
It is perfectly possible for parties to make contracts which are not controlled by given usages. This may be done by expressly providing against them; but it is done more frequently by making express ...
-Usage Or Custom Contrary To Express Terms Of Con-Tract. Part 2
Kentucky. Shaw v. Ingram-Day Lumber Co., 152 Ky. 329, L. R. A. 1915D, 145, 153 S. W. 431. Hew York. Fuller v. Robinson, 86 N. Y. 306, 40 Am. Rep. 540. Tennessee. Pennsylvania Ry. v. Naive, 112 Tenn....
-Usage Or Custom Contrary To Express Terms Of Con-Tract. Part 3
Colorado. Union Pacific Ry. v. Anderson, 11 Colo 293, 18 Pac. 24; True v. Rocky Ford Canal, Reservoir & Land Co., 36 Colo. 43, 85 Pac. 842; Fearnley v Fearnley, 44 Colo. 417, 98 Pac. 819. Connecticut...
-Usage Or Custom Contrary To Express Terms Of Con-Tract. Part 4
5 United States. Rockefeller v. Mer-ritt, 76 Fed. 909, 35 L. R. A. 633, 22 C. C. A. 608; Kauffman v. Raeder, 108 Fed. 171, 54 L. R. A. 247. 47 C. C. A. 278; Merrill-Ruckgaber Co. v. United States, 49 ...
-Sec. 2061. Function Of Court And Jury In Construction - Terms And Extrinsic Fact Not In Dispute
The construction of a contract is a question for the court if the terms of the contract and the extrinsic facts which may affect construction are free from dispute.1 1 United States. Titus v. Whitesi...
-Sec. 2062. Single Inference Possible
If the contract is ambiguous so that explanatory evidence is admissible and such evidence establishes certain facts without dispute so that only one inference can be drawn therefrom, the construction ...
-Sec. 2063. Terms In Dispute
If, on the other hand, the terms of the contract are in dispute,1 or if it is possible to draw more than one inference from the surrounding circumstances which are established by the evidence, or from...
-Sec. 2064. Extrinsic Facts In Dispute Or Inferences Doubtful
The rule that questions as to the terms of the contract must be submitted to the jury, applies in written contracts where the admissible extrinsic evidence is conflicting or admits of different infere...
-Sec. 2065. Construction Can Not Extend To Reformation
Under cover of construction a court can not reform a written contract to make it express the real intention of the parties, which by mistake is not expressed in the words thereof.1 This principle is s...
-Chapter LXIV. Joint And Several Liability
Sec. 2066. Nature of liability of two or more promisors. Sec. 2067. Intention controls - Words importing joint liability. Sec. 2068. Words importing several liability. Sec. 2060. Words importing jo...
-Sec. 2066. Nature Of Liability Of Two Or More Promisors
If two or more persons constitute one party to a contract, the question as to the nature of their rights and liabilities presents itself. If two or more persons are promisors in a contract, their liab...
-Sec. 2067. Intention Controls - Words Importing Joint Liability
Whether the liability of the promisors is joint, or several, or joint and several, depends upon the intention of the parties as ascertained from the contract by the ordinary rules of construction.1 In...
-Sec. 2068. Words Importing Several Liability
Language which shows an intention on the part of each promisor to assume only a part of the entire liability imports a several contract.1 Thus such language as .we promise each to pay a certain prop...
-Sec. 2069. Words Importing Joint And Several Liability
If the language used show's an intention to assume a liability, either joint or several in its nature, at the option of the promisee, this imports a joint and several obligation.1 Thus the use of such...
-Sec. 2070. Liability Of Sole Promisor
While the intention of the parties is paramount in determining the nature of the liability of two or more promisors, it is impossible, no matter how clear the intention of the parties, to impose a joi...
-Sec. 2071. Effect Of Joint Liability - Parties To Actions
The adjective law is so closely connected with the substantive law that a statement of the effect of these different types of contract is in outward form almost exclusively a matter of procedure, thou...
-Sec. 2072. Death Of Joint Promisor
At common law, the death of a joint promisor discharged his estate and left the survivors liable for the entire amount of the debt.1 The promisee could not join the administrator of the deceased joint...
-Sec. 2073. Judgment Against One Joint Promisor
A judgment rendered against one joint promisor in an action in which the remaining joint promisors could have been made parties is a bar to a subsequent action against such other joint promisors.1 A j...
-Sec. 2074. Release Of Joint Promisor
At common law a technical release under seal which was given to one joint promisor enured to the benefit of all.1 In some of the cases in which a release of a joint promisor was held to discharge all,...
-Sec. 2075. Effect Of Several Contract
If the promisors are severally liable, the promisee must sue each for his proportion of the indebtedness. He can not, in the absence of statute, join two or more several promisors in an action upon th...
-Sec. 2076. Effect Of Joint And Several Contract
A joint and several promise amounts in legal effect to a joint promise by all and to a several promise by each.1 Accordingly, the party for whose benefit such bond is given may bring an action thereon...
-Sec. 2077. Words Importing Joint Or Several Rights
If two or more persons are promisees, their rights arising under the contract may be either joint or several. Whether their rights are joint or several depends upon the nature of the interest, togethe...
-Sec. 2078. Joint And Several Rights
In the absence of statute the interest of the promisees can not be made joint and several at the same time by any form of words.1 Such a contract creates a joint interest in the promisees,2 and not a ...
-Sec. 2079. Effect Of Joint Interest - Promisees Must Join In Action
The joint promisees must all, if living, join in the action.1 10 Curry v. Kansas & Colorado Pacific Ry. Co., 58 Kan. 6, 48 Pac. 579. 1 Keightley v. Watson, 3 Exch. 716; Slingnby's Case, Coke, Part V...
-Sec. 2080. Death Of Joint Promisee
At common law on the death of a joint promisee his interest passed to the surviving promisees.1 If by the death of the other joint promisees the interest has vested in the survivor, he may assign it.2...
-Sec. 2081. Release By Joint Promisee
At law a release given by a joint promisee discharged the debt as to all the promisees.1 Thus a release given by one partner binds his co-partners2 It has been held that a release by one of two or mor...
-Sec. 2082. Effect Of Several Interests
A promise to two or more promisees severally gives to each a right to demand performance,1 and each may bring an action upon the contract.2 A contract by which A employs B and C as his counsel, which ...
-Chapter LXV. Entire And Severable Contracts
Sec. 2083. Definition and nature of entire and severable contracts. Sec. 2084. Practical importance of distinction. Sec. 2085. Intention of parties controlling. Sec. 2086. Methods of ascertaining i...
-Sec. 2083. Definition And Nature Of Entire And Severable Contracts
If a contract contains two or more covenants on either side, the question arises as to whether it is entire or severable. An entire contract is one the covenants of which have not been separated by th...
-Sec. 2084. Practical Importance Of Distinction
An abstract definition of an entire contract or of a severable contract is difficult; and this difficulty extends to the rules for ascertaining the intention of the parties and the legal effect of any...
-Sec. 2085. Intention Of Parties
controlling. Whether a contract is entire or severable depends primarily upon the intention of the parties,1 as determined by the ordinary rules of construction.2 The language used by the parties and ...
-Sec. 2086. Methods Of Ascertaining Intention - Form Of Contract
The form in which the contract is made or the number of instruments in which its terms are to be sought, is not conclusive of the question of its entire or severable character. A contract which is fou...
-Sec. 2087. Character Of Subject-Matter
If the subject-matter of the contract is indivisible, the contract must necessarily be entire.1 A contract to dredge a channel to a certain depth and to dredge the harbor to a different depth is an en...
-Sec. 2088. Apportionment Of Consideration
One of the most certain of the single tests for determining the intention of the parties is whether the consideration on the one side is apportioned to each of the different covenants on the other, or...
-Apportionment Of Consideration. Continued
15 Mattison v. Connerly, 46 Mont. 103, 126 Pac. 851. 16Carr v. Hahn, 133 Ark. 401, 202 S. W. 685; Sauser v. Kearney, 147 Ia. 335, 126 N. W. 322; Elliott Supply Co. v. Green, 35 N. D. 641, 160 N. W. 1...
-Sec. 2089. Application Of General Principles To Specific Types Of Contract
While the courts generally repeat the formula that the intention of the parties is decisive as to the entire or severable character of the contract, and while apportionment of consideration is general...
-Application Of General Principles To Specific Types Of Contract. Part 2
Nebraska. Lindsey v. Heaton, 27 Neb, 662, 43 N. W. 420; Lyman v. Lincoln, 38 Neb. 794, 57 N. W. 531; Doll v. Crume, 41 Neb. 655, 59 N. W. 806; Boughn v. Smith, 58 Neb. 500, 79 N. W. 160; Patrick v. Ba...
-Application Of General Principles To Specific Types Of Contract. Part 3
955; Ridgway v. Wetterhold, 96 Kan. 736, 153 Pac. 490. Kentucky. Kimbrough v. Lane, 74 Ky. (11 Bush.) 556; McLane's Administrator v. Dixon (Ky.), 99 S. W. 601; Clemons v. Meadows, 123 Ky. 178, 6 L. ...
-Sec. 2090. Specific Illustrations
A contract by which A is to perform services for B in his law office, for a specified time, in consideration of a certain portion of the fees received, is an entire contract,1 and A can not recover if...
-Chapter LXVI. Nature Of Liability Assumed
Sec. 2091. Nature of liability assumed. Sec. 2092. Signature by one person with addition of personal description. Sec. 2093. Signature by two or more persons with addition of personal description. ...
-Sec. 2091. Nature Of Liability Assumed
The nature of the liability created by signing a written instrument is a question of construction. The general rule undoubtedly is that the entire contract must be taken into consideration and from th...
-Sec. 2092. Signature By One Person With Addition Of Personal Description
As in other questions of construction,1 the object of the courts in determining the nature of the liability which is assumed by a party who executes a contract is to ascertain the intention of the par...
-Sec. 2093. Signature By Two Or More Persona With Addition Of Personal Description
If two or more persons sign, and the question of the existence of personal liability is presented, there is as much of a conflict as where one only signs, but the states are divided on different lines...
-Sec. 2094. Signature By Names Of Principal And Agent
If the note is signed by the name of the principal, with the name of the agent subscribed below that of the principal, without the use of the word by to show agency, a question is presented on which...
-Sec. 2095. Nature Of Liability As Affected By Words Of Instrument
Since the contract is to be construed as a whole,1 the words of the instrument by which a promise is made must be considered in connection with the form of the signature as determining the nature of t...
-Sec. 2096. Liability Assumed By Public Officers
An important difference between contracts of public agents and contracts of private agents is in the construction of liability intended to be assumed. We have seen that in contracts of private agents ...
-Chapter LXVII. Time
Sec. 2097. Construction of terms concerning time of performance. Sec. 2098. Reasonable time intended if time not fixed. Sec. 2099. Reasonable time - Whether question of law or fact. Sec. 2100. Time...
-Sec. 2097. Construction Of Terms Concerning Time Of Performance
The time at which a contract is to be performed depends upon the intention of the parties as ascertained from the language which they have used as interpreted by the ordinary rules of construction tog...
-Construction Of Terms Concerning Time Of Performance. Continued
11 Houston, etc., Ry. v. Keller, 90 Tex. 214, 37 S. W. 1062. 12 Te Poel v. Shutt, 57 Neb. 592, 78 N. W. 288. 13 Oconto Co. v. Lundquist, 119 Mich. 264, 77 N. W. 950. 14 The Harbinger, 50 Fed. 941; ...
-Sec. 2098. Reasonable Time Intended If Time Not Fixed
If the contract does not fix a time for performance and the obligation is something other than the payment of money which is due and owing when the contract is entered into, the presumption is that a ...
-Reasonable Time Intended If Time Not Fixed. Continued
West Virginia. Poling v. Lumber Co., 55 W. Va. 529, 47 S. E. 279. 2 Poling v. Condon-Lane Boom & Lumber Co., 55 W. Va. 529, 47 S. E. 279. 3 See Sec. 2103 et seq. 4 Puls v. Casey, 18 Okla. 142, 92 P...
-Sec. 2099. Reasonable Time - Whether Question Of Law Or Fact
What is a reasonable time for performance is a question of fact to be determined as a fact, in view of the circumstances of the case.1 Accordingly, if an action is brought on an agreement to accept a ...
-Sec. 2100. Time Of Performance With Reference To Extrinsic Fact
The time of performance is sometimes made to depend upon the doing of some specified act other than that which the parties to the contract agree to do or it is made to depend upon the happening of som...
-Sec. 2101. Performance Not Due Till End Of Stipulated Time
If a certain time is fixed within which performance may be made, the party owing performance has the entire time thus fixed, within which to perform. Thus under an option to be exercised within a cert...
-Sec. 2102. Premature Tender
If the contract fixes a certain time for performance, the party from whom performance is due has no right to perform before that time. Hence, premature tender is ineffectual.1 It does not discharge a ...
-Sec. 2103. Time Of Essence Of Contract - Meaning Of Term
When it is said that time is of the essence of a contract, it means that the provision in the contract which fixes the time of performance is to be regarded as a vital term of the contract, the breach...
-Sec. 2104. Time Of Essence At Law
At law the general rule is that time is of the essence of the contract unless a contrary intent appears from the face of the contract.1 A contract for the sale of chattels, especially those of fluctua...
-Sec. 2105. Time Not Of Essence In Equity
In equity, on the other hand, the general rule may be said to be that time is not of the essence of the contract.1 It must affirmatively appear that the parties regarded time or place as an essential...
-Sec. 2106. Tendency Of Modern Law To Regard Time As Not Of Essence
The tendency of modern law is to hold that the question whether or not time is of the essence of the contract, is to be regarded as a question of construction,1 and to assume that in the absence of an...
-Sec. 2107. Express Provision Making Time Of Essence
If there is an express provision making time of the essence of the contract, full effect must be given to it.1 Effect will be given to such a provision in equity as well as in law.2 Thus a provision a...
-Sec. 2108. Implied Provision Making Time Of Essence
Although there is no express provision in a contract which makes time of the essence, the contract taken as a whole and construed in connection with the surrounding facts and circumstances, may show t...
-Sec. 2109. Nature Of Property Contracted For
The nature of the property concerning which the contract is made may show that time was of the essence of the contract. If the property is one of fluctuating values, time is ordinarily looked upon as ...
-Sec. 2110. Time Of Subsidiary Provision Not Of Essence
Time is not regarded as of the essence of a contract where it concerns a provision, a breach of which does not constitute a total failure of consideration.1 Thus where the two upper stories were lease...
-Sec. 2111. Time Of Essence In Subscriptions
Contracts of subscription, whereby the promisor agrees to pay money if a certain work is completed by a specified time, such as a subscription to aid a railway;1 or an agreement to grant a right of wa...
-Sec. 2112. Time Of Essence In Options
The contract has thus far been considered in determining whether time is of the essence or not. When we turn from contracts to options, we find that both at law and equity an option which is in the na...
-Chapter LXVIII. Penalties And Liquidated Damages
Sec. 2113. Nature of penalty and liquidated damages. Sec. 2114. Alternative contracts - General nature. Sec. 2115. Effect of alternative covenant. Sec. 2116. Penalty in form of alternative covenant...
-Sec. 2113. Nature Of Penalty And Liquidated Damages
A contract for a penalty is an agreement to pay a stipulated sum in case of default, intended to coerce performance, to punish default, or to secure payment of the actual damages.1 A contract for liqu...
-Sec. 2114. Alternative Contracts - General Nature
An alternative contract is one which gives to one of the parties the choice of doing one of two or more different acts as performance of the contract.1 If one of the alternatives is the payment of mon...
-Sec. 2115. Effect Of Alternative Covenant
If the contract is in the alternative, an action can not be brought for breach of one of the covenants if the promisor is ready and willing to perform the alternative covenant,1 or if performance ther...
-Sec. 2116. Penalty In Form Of Alternative Covenant
The outward form of the contract is not, of course, decisive of the question. If it were, an easy method of evading the rules as to penalties would be presented. If the whole contract shows that the s...
-Sec. 2117. History Of Penalty In Contract Law
At common law, a contract to pay a specified sum of money upon the happening of a certain event, was enforced according to its terms. The fact that the sum of money designated was agreed upon to punis...
-Sec. 2118. Legal Effect Of Each Compared - Penally
The importance of the distinction between liquidated damages and penalty consists in the effect which the courts give to the two kinds of stipulation. At modern law a contract for a penalty in favor o...
-Sec. 2119. Liquidated Damages
If a stipulation is one for liquidated damages, the amount contracted for may be recovered.1 Proof of actual damage is unnecessary,2 since the object of such a provision is to prevent controversy over...
-Sec. 2120. Effect Of Name Employed
The use of the term penalty, or liquidated damages, is not conclusive.1 On the one hand, a provision for liquidated damages may appear from the context of the contract to be really a provision f...
-Sec. 2121. Intention Of Parties Controls
The intention of the parties is said to be paramount and controlling.1 The fact that the provision for so-called liquidated damages was inserted by the purchaser after the contract was prepared for ex...
-Sec. 2122. "Artificial Rules" For Determining Question
To lay down a general test, or set of tests, for determining whether a stipulation is for a penalty or liquidated damages, is even more difficult than the general attempt to lay down an arbitrary rule...
-Sec. 2123. Difficulty Of Proving Actual Damages
One test which has been suggested is whether it is easy or difficult to prove the actual damages. Where this test is recognized it is held that if the actual damages can be proved with reasonable cert...
-Difficulty Of Proving Actual Damages. Continued
Arkansas. Scott v. McCraw, Perkins & Webber Co., 119 Ark. 133, 177 S. W. 901. Colorado. Bilz v. Powell, 50 Colo. 482, 38 L. R. A. (N.S.) 847, 117 Pac. 344. New Jersey. Summit v. Morris County Tracti...
-Sec. 2124. Relation Of Stipulated Amount To Actual Damage
Another test which has been suggested is whether the amount stipulated for is greatly in excess of the actual damages or not. Where this test is applied, it is held that if the amount stipulated for i...
-Sec. 2125. One Penalty For Breaches Of Different Covenants
Another test which has met with general favor is the following: If provision is made for breach of several different covenants of a contract, and a gross sum is fixed which is to be paid in case of th...
-Sec. 2126. Breach Of Single Covenant
If the amount fixed is to be paid in case of breach of a single covenant, it is, if fair and reasonable, to be treated prima facie as a covenant for liquidated damages.1 Where payment is conditioned ...
-Sec. 2127. Forfeiture Of Deposits And Part Payments
Agreements are frequently made that one or both parties to a contract shall deposit a certain sum of money which is to be the property of the other if the contract is not performed. Such agreements ar...
-Sec. 2128. Default In Payment Of Money - Larger Sum Due
If the default which is to make a specified sum due and payable is itself the non-payment of a smaller sum of money, the question whether the contract is for a penalty or for liquidated damages depend...
-Sec. 2129. Increase In Rate Of Interest
A contract that if default is made in paying a debt when due, the debt shall bear a higher rate of interest after maturity than it did before, is not a stipulation for a penalty if the higher rate doe...
-Sec. 2130. Other Provisions
A provision that default in payment of one installment of interest will make the whole debt due and payable is held in some jurisdictions to be a penalty,1 though by the great weight of authority such...
-Sec. 2131. Application Of General Principles - Building Contracts
Provisions in a building or construction contract, that the con-tractor shall pay a certain sum per day if the building or other work is not completed by the time agreed upon, are generally held to be...
-Sec. 2132. Sale Of Personalty
In a contract for the sale of personal property, a provision for the payment of a reasonable sum in case of breach, has been held to be liquidated damages.1 A provision for paying a reasonable sum per...
-Sec. 2133. Sale Of Good Will - Reasonable Restraint Of Trade
Contracts for the sale of good will, which contain a covenant in reasonable restraint of trade, often provide for the amount of damage to be paid in case of the breach of such covenant. Such damages a...
-Sec. 2134. Sale Of Realty
Under a contract for the sale of realty, a provision for the payment of a certain sum in case of breach, is held in some jurisdictions to be a provision for liquidated damages.1 Thus an agreement wher...
-Sec. 2135. Lease Of Realty Or Personalty
An agreement to pay a certain sum of money in case of the violation of a covenant of a lease, is held to be a provision for liquidated damages if apportioned to the separate covenants, and not unreaso...
-Sec. 2136. Contracts For Royalties
Provisions fixing the amount of royalty to be paid for the use of another's mine, patent, and the like, are usually held not to be penalties. A provision in a mining contract for the payment of a mini...
-Chapter LXIX. The Parol Evidence Rule
I. SCOPE OF RULE Sec. 2137. Statement of rule. Sec. 2138. Application of parol evidence rule at law and in equity. Sec. 2139. Place of rule in law. Sec. 2140. Waiver of parol evidence rule by fail...
-Sec. 2137. Statement Of Rule
If the parties to a contract have reduced it to writing, and if such written contract is clear and unambiguous,1 and if it appears upon its face to be complete and to embody all the terms upon which t...
-Sec. 2138. Application Of Parol Evidence Rule At Law And In Equity
The parol evidence rule applies to actions at law, whether they are brought upon the contract to enforce it or whether the contract is used as a means of defense.1 Even if the actual contract between ...
-Application Of Parol Evidence Rule At Law And In Equity. Continued
3Maxson v. Ashland Iron Works, 85 Or. 345, 166 Pac. 37. 4 See Sec. 112211 et seq. 5Jilek v. Zahl, 162 Wis. 157, 155 N. W 900. 6 Connecticut F. Ins. Co. v. Buchanan, 141 Fed. 877, 73 C. C. A. 111, 4...
-Sec. 2139. Place Of Rule In Law
The question of the application of the rule is generally raised by objection to the admission of oral evidence to show the intention of the parties. The parol evidence rule was in its origin applied t...
-Sec. 2140. Waiver Of Parol Evidence Rule By Failure To Interpose Objection To Evidence
If the parol evidence rule is a rule of substantive law and the evidence of prior or contemporaneous negotiations is inadmissible, and not because of any defect in the evidence itself, but because suc...
-Waiver Of Parol Evidence Rule By Failure To Interpose Objection To Evidence. Continued
2 In re Winzenreid's Estate, 165 Wis. 63, 160 N. W. 1064. evidence, and, hence, that it should be disregarded, he impliedly consented that it should be considered and acted upon by the referee, who, ...
-Sec. 2141. Oral Terms As Part Of Contract For Purpose Of Consideration
In at least another respect there is some authority for saying that the parol evidence rule is merely a rule of evidence. If A and B have agreed upon certain terms orally and subsequently they reduce ...
-Sec. 2142. Relation Of Parol Evidence Rule To Rules Requiring Writing Or Written Evidence
As far as the parol evidence rule itself is concerned, it makes no difference what the subject-matter of the contract is, with what formalities the contract has in fact been executed, or with what for...
-Sec. 2143. What Is "Written Contract" In Parol Evidence Role
The parol evidence rule applies to contracts in which the parties have attempted to reduce all the terms to writing in one instrument which they have then executed as a written contract.1 Accordingly,...
-What Is "Written Contract" In Parol Evidence Role. Continued
Kansas. First National Bank v. Staab, 102 Kan. 369, 171 Pac. 3. Michigan. Northern Assurance Co. v. Meyer, 194 Mich. 371, 160 N. W. 617. Worth Carolina. Pierce v. Cobb, 161 N. Car. 300, 44 L. R. A. ...
-Sec. 2144. Written Contract Merges Prior Negotiations
In an action on an unambiguous written contract, which is complete in itself, and the validity of which is conceded, the parties are not permitted to show that their prior or contemporaneous oral agre...
-Sec. 2145. Evidence Inadmissible To Contradict Written Contract
Extrinsic evidence is inadmissible to contradict the intention of the parties as expressed in a written contract by showing a prior or contemporaneous oral agreement contrary to the written agreement....
-Evidence Inadmissible To Contradict Written Contract. Part 2
17 Rector v. Deposit Co., 100 111. 380, 60 N. E. 528. 18Gilbert v. Stockman, 76 Wis. 62. 20 Am. St. Rep. 23, 44 N. W. 845, and see Garwood v. Wheaton, 128 Cal. 399, 60 Pac. 961. 19 Stanisics v. McMu...
-Evidence Inadmissible To Contradict Written Contract. Part 3
15 Oliver v. Brown, 102 Ga. 157, 29 S. E. 159; Jacob Tome Institution v. Davis, 87 Md. 591, 41 Atl. 166. 16 Anderson v. Ins. Co., 112 Ga. 532, 37 S. E. 766. 17Daly v. Kingston, 177 Mass. 312. 58 N. ...
-Evidence Inadmissible To Contradict Written Contract. Part 4
67 Grand Isle v. Kinney, 70 Vt. 381, 41 Atl. 130. 68Russell v. Smith, 115 Ia. 261, 88 N. W. 361. 69Norman v. Norman, 11 Ind. 288; Brook v. Latimer, 44 Kan. 431, 21 Am. St. Rep. 202, 11 L. R. A. 805,...
-Sec. 2146. Evidence Of Intention Direct Inadmissible
Extrinsic evidence is inadmissible in an action on an unambiguous written contract, to show the understanding of the meaning and effect of such contract entertained by one or both the parties thereto ...
-Sec. 2147. Evidence Of Intention Direct Inadmissible To Vary Written Contract
Extrinsic evidence of prior or contemporaneous oral agreements between parties is inadmissible to vary the terms of the written contract which they have entered into,1 and this is true of prior writte...
-Sec. 2148. Legal Effect Of Contract Can Not Be Contradicted
The rale that prior or contemporaneous negotiations can not be used to contradict, add to, or otherwise vary, a written contract applies not merely to the letter of the written contract, but also to i...
-Legal Effect Of Contract Can Not Be Contradicted. Continued
4 Cocker v. Mfg. Co., 3 Sumn. (U. S.) 530; Coates v. Sangston. 5 Md. 121. 5 Harmon v. Michigan United Traction Co.. - Mich. - , 168 N. W. 521. The duration of a contract may be shown by oral evidenc...
-Sec. 2149. Prima Facie Inferences Subject To Contradiction
Some of the inferences as to the legal effect and operation of a contract, which are drawn from the terms which are in writing, are merely prima facie. Such inferences may be rebutted by the actual ag...
-Sec. 2150. Limitations Of The Rule
From the statement of the parol evidence rule, it evidently can apply only under a combination of certain facts. The rule applies: (1) where there is a complete written contract; (2) in an action betw...
-Sec. 2151. Incomplete Contracts
The parol evidence rule has but a limited application to contracts and memoranda which show upon their face that they are incomplete and which are not required by law to be in writing or to be proved ...
-Incomplete Contracts. Continued
A written order for goods which does not purport to set forth the terms of the contract, may be shown to be an order given in pursuance of a prior oral contract by which such goods were consigned to t...
-Sec. 2152. Express Provision Negativing Extrinsic Agreement
A written contract frequently contains an express provision to the effect that all the terms of the contract between the parties are set forth in such writing. Such a term could not prevent a contract...
-Sec. 2153. What Contracts Are Incomplete
In order that a written contract may be treated as incomplete, so as to make extrinsic evidence of other terms admissible, it must show upon its face that it is incomplete.1 A written contract, such a...
-What Contracts Are Incomplete. Continued
It has been said that if a contract is bilateral and on its face purports to set out the mutual undertakings of the parties, the presumption that it sets out the entire agreement, and that they had ab...
-Sec. 2154. Purpose Of Instrument
If the instrument does not show on its face what its purpose was, extrinsic evidence is admissible to show what that purpose was, if such evidence does not contradict the terms of the contract.1 A mor...
-Purpose Of Instrument. Continued
36 Clark v. Townsend, 96 Kan. 650, 153 Pac. 555 [rehearing denied, Clark v. Townsend, 97 Kan. 161, 154 Pac 1009]. 37 Emery v. Hanna (Neb.), 94 N. W. 973. 38Aultman v. Clifford, 55 Minn. 159, 43 Am. ...
-Sec. 2155. Written Evidence
Since the parol evidence rule applies solely to written contracts, in actions brought to enforce them, it does not forbid the use of extrinsic evidence to contradict written evidence, as long as the w...
-Sec. 2156. Recital Of Facts - Receipts
A receipt, if free from contractual terms, is a mere recital of the fact of the payment of money or delivery of property. The parol evidence rule does not apply to such receipts, and they may be contr...
-Sec. 2157. Receipts And Releasee Containing Contractual Terms
An instrument which is in part a receipt may also contain contractual terms. In such case, while the part of it which is a receipt may be contradicted by extrinsic evidence, the contractual terms are ...
-Sec. 2158. Consideration Recited As Fact
If the consideration is not recited in the written contract, or if recited appears only as a recital of fact and not as a contractual term, extrinsic evidence is admissible to show what the real consi...
-Sec. 2159. Receipts In Full
Whether an instrument which acknowledges a receipt in full of obligations is to be regarded as contractual in its character, so that extrinsic evidence can not be used to show the amount paid or the c...
-Sec. 2160. Extrinsic Evidence As To Consideration Contradicting Legal Effect Of Instrument
If the extrinsic evidence which is offered for the purpose of showing the true consideration is inconsistent with the contractual provisions of the instrument or with its legal effect, such extrinsic ...
-Sec. 2161. Recital Of Consideration In Deeds And In Contracts For Deeds
The purpose of a deed is primarily to convey title to realty,1 and under the ordinary form of a deed the consideration is recited as a fact and is not stated as a contractual term. Accordingly, the re...
-Sec. 2162. Recital Of Consideration In Mortgages
If the mortgage recites the consideration, such recital does not prevent the parties from showing the true consideration.1 The recital of a consideration in a mortgage does not preclude extrinsic evid...
-Sec. 2163. Recital Of Consideration In Leases
In the same way the recital of a consideration in a lease is presumed to be a recital of the true consideration, but extrinsic evidence may be offered to show the true consideration,1 and it is not ne...
-Sec. 2164. Recital Of Consideration Contradicted To Render Transaction Inoperative Or Defeat Legal Effect
It is often said that the rule which permits the introduction of extrinsic evidence to contradict the recital of a consideration is limited to cases in which such contradiction of such recitals will n...
-Recital Of Consideration Contradicted To Render Transaction Inoperative Or Defeat Legal Effect. Part 2
6Lindlay v. Raydure, 239 Fed. 928. Probably at modern law a deed needs no expressed consideration, although most courts avoid deciding this question wherever it is possible. In any event, all that is...
-Recital Of Consideration Contradicted To Render Transaction Inoperative/Defeat Legal Effect. Part 3
The language in reference to the consideration in the policy in question is not contractual, but merely by way of recit- This principle has been enacted in some jurisdictions in statutory form with ...
-Recital Of Consideration Contradicted To Render Transaction Inoperative and Defeat Legal Effect. Part 4
24 Colorado. Rude v. Levy, 43 Colo. 482, 24 L. R. A. (N.S.) 91, 96 Pac. 560. Kansas. Rice v. Rice, 101 Kan. 20, 165 Pac. 799; Moon v. Moon, 103 Kan. 179, 173 Pac. 9. Kentucky. Farmers' Bank v. Birk,...
-Sec. 2165. Oral Contract As Inducement
The principle that the consideration may be shown has been extended to cases where an oral contract has been proved as a consideration for the written contract, or as the courts sometimes put it, as a...
-Sec. 2166. Consideration As Contractual Term
If the consideration appears in the written contract as a contractual term thereof, an oral agreement whereby an additional or other consideration is provided for violates the parol evidence rule and ...
-Sec. 2167. Rule Does Not Apply To Actions Between Parties To Contract, But Not Involving Contract
In the cases which have been discussed in the preceding sections, the question of the scope and extent of the parol evidence rule has risen in actions upon the contracts in question between the partie...
-Sec. 2168. Rule Does Not Apply To Strangers To Contract
The parol evidence rule applies only between the parties to the contract and those claiming under them, and is limited to actions upon the contract.1 In many cases where the rule is not applied, as be...
-Rule Does Not Apply To Strangers To Contract. Continued
L. R. A. (N.S.) 226, 117 N. W. 1118; Lanz v. Schumann, 175 Ia. 542, 154 N. W. 911; Moore v. St. Paul Fire &. Marine Insurance Co., 176 Ia. 549, 156 N. W. 676; Dilenbeck v. Herrold, - Ia. - , 164 N. W....
-Sec. 2169. Who Are Strangers To Contract
The fact that the person who attempts to contradict the written contract was not a party thereto, when such contract was entered into, is not sufficient of itself to show that he is such a stranger to...
-Sec. 2170. Application Of Foregoing Principles To Releasee And Covenants Not To Sue
If a release which is not under seal has been given to one of two joint wrongdoers, the other wrongdoer is a stranger thereto, within the meaning of the parol evidence rule, though the effect of such ...
-Sec. 2171. Parol Evidence Rule Does Not Apply Where Existence Or Validity Of Contract Is In Issue
The parol evidence rule presupposes an action based on a valid contract, and between the parties thereto or those claiming under them or those claiming under such contract as beneficiaries. If the iss...
-Sec. 2172. Facts Of Execution In General
A written contract can not prove itself. The genuineness of the signatures and the execution and delivery of the contract, which are essential to its validity,1 must be proved by extrinsic evidence, a...
-Sec. 2173. Genuineness Of Signature And Intent Of Signer
Extrinsic evidence is admissible to show the genuineness of the signature and the intent with which such signature was affixed. Evidence is admissible to show that one who is alleged to have signed an...
-Sec. 2174. Contents Of Written Instrument
If the issue is in part as to the words of the instrument at the time of execution, extrinsic evidence is not only admissible but necessary to show such fact.1 Extrinsic evidence on the part of the gr...
-Sec. 2175. Extrinsic Evidence As To Date
If the instrument is not dated, extrinsic evidence is admissible to show the true date.1 If the date of the contract is the question at issue, evidence of prior written negotiations is admissible to s...
-Sec. 2176. Extrinsic Evidence That Contract Never Was To Take Effect
Whether extrinsic evidence is admissible to show that a written contract which on its face appears to be a valid obligation was intended as between certain or all of the parties thereto to be a mere f...
-Sec. 2177. Extrinsic Evidence That Party To Instrument Was Not To Be Liable
An attempt is sometimes made to show an extrinsic agreement by which a party to a negotiable instrument which was delivered for value is not to be held liable upon such instrument or by which he is no...
-Sec. 2178. Extrinsic Evidence To Annex Condition Precedent
If the party against whom relief is sought on a written contract concedes that the contract was placed in the possession of the adversary party, but claims that it was taken with the understanding tha...
-Extrinsic Evidence To Annex Condition Precedent. Part 2
1 England. Pym v. Campbell, 6 El. & Bl. 370; Wallis v. Littell, 11 C. B. N. S. 369. United States. Ware v. Allen, 128 U. S. 590, 32 L. ed. 563; Burke v. Dulaney, 153 U. S. 228, 38 L. ed. 698; Tug Riv...
-Extrinsic Evidence To Annex Condition Precedent. Part 3
22 Ware v. Allen, 128 U. S. 590, 32 L. ed. 563. 23Pym v. Campbell, 6 El. & B. 370. 24 American Sales Book Co. v. Whit-aker, 100 Ark. 360, 37 L. R. A. (N.S.) 91, 140 S. W. 132. 25Burke v. Dulaney, 1...
-Sec. 2179. Extrinsic Evidence To Annex Condition Subsequent
If the party against whom relief is sought concedes that the contract has taken effect, but seeks to add a condition thereto by extrinsic evidence, he is seeking to add to a written contract by extrin...
-Sec. 2180. Want Of Consideration, Mistake And Fraud
Even if the written instrument has been delivered, either party has the right to show any facts which prevent the writing from constituting a valid contract.1 The fact that a written contract which is...
-Sec. 2181. Extrinsic Evidence Of Mistake
Mistake as to an essential element of a contract such as to the existence of the party, the subject-matter or the consideration, or the identity of the subjectmatter or the identity of the parties whe...
-Sec. 2182. Extrinsic Evidence Of Fraud
Certain types of fraud, such as fraud as to an essential element of the contract,1 prevents the transaction from amounting to a contract in spite of its outward form. Other types of fraud, such as fra...
-Extrinsic Evidence Of Fraud. Continued
Washington. Griffith v. Strand, 19 Wash. 686, 54 Pac. 613; Union Machinery & Supply Co v. Darnell, 89 Wash. 226, 154 Pac. 183; Ennis v. New World Life Insurance Co., 97 Wash. 122, 165 Pac. 1091. West...
-Sec. 2183. Illegality
Illegal contracts are unenforceable, not because of any desire on the part of the courts to aid either party thereto, but because public interests require that they be not enforced. If the parties the...
-Sec. 2184. Non-Compliance With Statute Of Frauds
If the contract is one which falls within the terms of the Statute of Frauds, a memorandum in writing is necessary if the contract is one which falls within the fourth section of the original statute,...
-Sec. 2185. Breach And Performance
Performance and breach of a contract are questions which necessarily arise after the contract has been entered into. Accordingly, the parol evidence rule does not prevent a party to a contract from sh...
-Sec. 2186. Estoppel As Evasion Of Parol Evidence Rule
An attempt is frequently made to avoid the application of the parol evidence rule by invoking the doctrine of estoppel, and to claim that the party who has made the oral promises upon which the advers...
-Sec. 2187. Secondary Evidence
While the contents of a written instrument should be proved by the introduction of the instrument itself in evidence, if the party against whom such evidence is offered insists upon such evidence, thi...
-Sec. 2188. Identification Of Parties
If the written contract shows that some particular parties were intended, but does not show with sufficient accuracy who such parties are, extrinsic evidence is admissible to identify such parties,1 a...
-Sec. 2189. Identification Of Subject-Matter
If the written contract is ambiguous in indicating the subject-matter of the contract, extrinsic evidence is admissible to identify it.1 Extrinsic evidence is admissible to show what is included by th...
-Identification Of Subject-Matter. Continued
Idaho. Allen v. Kitchen, 16 Ida. 133, L. R. A. 1917A, 563, 100 Pac. 1052. Illinois. Barrett v. Stow, 15 111. 423. Indiana. Baldwin v. Boyce, 152 Ind. 46, 51 N. E. 334. Kentucky. Dotson v. Fletcher,...
-Sec. 2190. Identification Can Not Be Made Means Of Contradiction
Under a claim of identifying subject-matter, the parties to a contract can not show by extrinsic evidence that they intended to contract for other and different property from that described in their c...
-Sec. 2191. Collateral Consistent Contracts
The rule that a written contract merges all prior and contemporaneous oral negotiations, applies only to such oral negotiations as concern the subject-matter embraced in the written contract.1 Accordi...
-Sec. 2192. What Contracts Are Collateral To Enforce The Oral Contract, Even If Not Inconsistent, It Must Be Collateral To The Written Contract And Not Merely A Term Thereof
The difficulty lies in the application of this rule. Under cover of enforcing collateral consistent contracts the attempt is often made to add oral terms to a complete written contract. Courts which r...
-What Contracts Are Collateral To Enforce The Oral Contract, Even If Not Inconsistent, It Must Be Collateral To The Written Contract And Not Merely A Term Thereof. Continued
The admitted evidence tends to prove that at the time of the making of the final agreement of sale a further agreement was made that the car would be just as good as new, all the worn places thorough...
-Sec. 2193. Examples Of Contracts Held Not To Be Collateral
Illustrations of oral contracts offered in evidence as collateral to a written contract, but held unenforceable as being really terms of the written contract, are by no means uncommon. Thus an oral co...
-Sec. 2194. Collateral Inconsistent Contracts
If the collateral contract is inconsistent with the written contract, it can not be enforced even if it is really collateral, and if it would have been enforceable had it been consistent with the writ...
-Sec. 2195. Method Of Performance
It is sometimes said in very general language that extrinsic evidence is always admissible to show contemporaneous oral agreements as to the method of performing a written contract, as long as the evi...
-Sec. 2196. Agreement As To Performance Contradicting Written Contract
An oral contemporaneous contract which changes the time of performance from that fixed by a complete written contract, can not be enforced.1 The fact that the written contract contains a promise to p...
-Sec. 2197. Warranties
A warranty is not a contract which is separate and distinct from a contract of sale, but on the contrary, it is one of the terms of the contract of sale.1 Accordingly, a written contract of sale which...
-Sec. 2198. Surety
A surety who signs as a maker may show his relation to the instrument in an action thereon between himself and the payee,1 whether he has signed such note in the usual place as maker,2 or whether he h...
-Sec. 2199. Drawer
The drawer of a bill of exchange is not protected by a contemporaneous oral agreement with the payee, exonerating him from liability if the drawee does not honor the draft.1 But where the original dra...
-Sec. 2200. Indorsement - Regular Indorsement Held To Be Complete Contract
. Whether a contract of indorsement can be varied by contemporaneous parol agreement depends on whether it is looked upon as a complete contract. A regular indorsement, that is, an indorsement by one ...
-Sec. 2201. Regular Indorsement Held To Be Incomplete
In other jurisdictions a regular indorsement is treated as an incomplete contract, or as some courts express it, only evidence that some contract has been entered into. Where such view obtains extrins...
-Sec. 2202. Indorsement Without Recourse
An indorsement without recourse has been held not to be a complete contract.1 Hence, an oral contract relieving the indorser for liability even for forgery is enforceable.2 In other jurisdictions an i...
-Sec. 2203. Irregular Indorsers
An irregular indorsement, that is, an indorsement by one not in the chain of title, may be explained by parol in many jurisdictions.1 Such indorser may be shown to be a joint maker,2 or the real debto...
-Sec. 2204. Purpose Of Indorsement
As in the case of other assignments of title, the purpose for which the indorsement is given may be shown, as long as the legal effect of the indorsement is not contradicted.1 Thus an indorsement in b...
-Sec. 2205. Contract Signed By Agent - Evidence To Relieve Agent From Liability
If a written contract with B, executed by A on behalf of X, is signed by A in such form as to bind him personally, the question of the right of the parties to the contract to show that A was the agent...
-Sec. 2206. Addition Of Word "Agent" Held Not To Make Contract Ambiguous
If a contract is signed by A, with the addition to his signature of the word agent or some other word importing agency, but the language of the contract is such as to bind A personally, A is held pe...
-Sec. 2207. Addition Of Word "Agent" Held To Make Contract Ambiguous
In other jurisdictions the addition of agent or some similar word to the signature is held to make it ambiguous, whether personal liability is intended or not, and to make extrinsic evidence of the ...
-Sec. 2208. Extrinsic Evidence To Enable Principal To Sue
If the real principal, X, wishes to sue upon the contract, the parol evidence rule does not prevent him from showing that A was his agent and that X is the real party adversary to B.1 Such evidence is...
-Sec. 2209. Extrinsic Evidence To Impose Liability On Principal
If A signs a written contract made with B on behalf of A's principal, X, and affixes his own name thereto without apt words to show that he is acting only as agent, B may undoubtedly hold A on such co...
-Sec. 2210. Effect Of Knowledge Of Identity Of Principal
In many of the cases some emphasis is laid on the fact that the principal was not disclosed when the agent entered into the contract with the adversary party. The importance of this fact is the same i...
-Chapter LXX. Reformation
Sec. 2211. Relation of reformation to the parol evidence rule. Sec. 2212. Discretionary power to grant reformation. Sec. 2213. Adequacy of legal remedy. Sec. 2214. Mutuality of mistake in reformati...
-Sec. 2211. Relation Of Reformation To The Parol Evidence Rule
From the foregoing discussion of the parol evidence rule,1 it appears that common law regards a simple, written contract, if valid, complete and unambiguous, as having in some respects the character o...
-Sec. 2212. Discretionary Power To Grant Reformation
The fact that the original transaction was valid and enforceable at law does not of itself oblige a court of equity to grant reformation in every case in which the written instrument does not conform ...
-Sec. 2213. Adequacy Of Legal Remedy
While equity denies relief where the remedy at law is full, adequate and complete, it does not necessarily follow that the existence of a defense at law will prevent equity from granting relief to one...
-Sec. 2214. Mutuality Of Mistake In Reformation
It is generally said that reformation is given either (a) when the mistake is mutual, or (b) when there is mistake on the one side and fraud or unfair dealing on the other. By mutual mistake is meant ...
-Sec. 2215. Mutuality Of Mistake As Involving Genuine Offer And Acceptance
In order to obtain reformation there must have been a genuine valid oral contract back of the written contract to which the written contract may be reformed.1 The ordinary principles of offer and acce...
-Mutuality Of Mistake As Involving Genuine Offer And Acceptance. Continued
Tennessee. Pittsburg Lumber Co. v Shell, 136 Tenn. 466, 189 S. W. 879. Washington. Phillips v. Port Town-send Lodge, 8 Wash. 529, 36 Pac. 476; Anderson v. Freeman, 88 Wash. 608, 153 Pac. 307. West V...
-Sec. 2216. Mistake In The Inducement As Basis For Reformation
Where the parties have, through mistake as to some collateral fact, entered into a valid contract, the terms of which are reduced correctly to writing, equity can not reform such contract so as to exp...
-Sec. 2217. Mutuality Of Mistake As Involving Consideration
A simple executory contract is enforceable only if it is supported by a valuable consideration.1 If reformation is sought as against the promisor or the grantor where the original transaction is gratu...
-Sec. 2218. Mistake On One Side - Inequitable Conduct On The Other
Where A is entering into a written contract under mistake as to its contents, and the circumstances are such that if B, too, were mistaken, reformation would be given on A's application, a still clear...
-Sec. 2219. Effect Of Negligence
In a number of cases language is used which seems to imply that a party can not have reformation if the mistake for which he seeks relief has been due in any part to his negligence.1 Failure on the pa...
-Sec. 2220. Mistake In Expression - Mistake As To Words Used
The typical form of mistake in expression is found where the parties have agreed orally upon the terms of a contract, have then attempted to express these terms in writing, and have, through inadverte...
-Sec. 2221. Mistake As To Legal Effect Of Words Used
A form of mistake, which involves different principles from the form already discussed, exists where the parties to a written contract know the very words which they insert in the contract, but do not...
-Mistake As To Legal Effect Of Words Used. Continued
Utah. Deseret National Bank v. Din-woodey, 17 Utah 43, 53 Pac. 215. parties execute an irrevocable power of attorney, thinking it will operate as a mortgage;2 or a bill of sale, thinking that it will...
-Sec. 2222. Intentional Omission Or Insertion Of Term
If the parties purposely omitted a part of their oral agreement from their written contract, no mistake exists except possibly in their belief that they can prove the oral contract and enforce it as w...
-Sec. 2223. Controlling Effect Of Paramount Intent
In reformation as in construction,1 the question is sometimes presented as to the effect of a contract containing inconsistent provisions, where the predominant general intent is apparently contradict...
-Sec. 2224. Illustrations Of Mistake In Expression - Property Conveyed
Among the many forms of mistake in expression of the type referred to, the following are given as illustrations: Where the parties have agreed for the sale, lease or mortgage of a specific tract of re...
-Sec. 2225. Mistake As To Grantee
Where by mistake an estate which by agreement should have passed to A alone is conveyed to A and B,1 or one which should have passed to A and B, is conveyed to A alone,2 or where property was to be se...
-Sec. 2226. Mistake As To Estate
If, by mistake, words are omitted or inserted, creating a greater,1 or less,2 estate than that agreed upon, reformation may be given. So where words creating a fee,3 such as and their heirs forever,...
-Sec. 2227. Mistake As To Effect Of Signature
If A, not meaning to bind himself personally, signs the contract in such a way as to bind himself, the question of his right to reformation depends on substantially the same principles as those govern...
-Sec. 2228. Other Examples Of Mistake
A mistake in the date;1 in the rate of interest;2 or in the amount on which interest is to be computed;3 or the mistaken addition,4 or omission5 of a clause whereby the grantee assumes a mortgage; the...
-Sec. 2229. What Instruments May Be Reformed - Inoperative Instruments
Reformation will not be given when the instrument as reformed would not be operative.1 If the instrument is a nullity,2 or if it can not operate by reason of the special circumstances of the case,3 re...
-Sec. 2230. Contracts Within The Statute Of Frauds Or Required To Be In Writing
If the contract is one which is required by statute to be proved by writing, the attempt to reform such a contract in equity by the use of oral evidence presents a close and interesting question, on w...
-Contracts Within The Statute Of Frauds Or Required To Be In Writing. Continued
An attempt has been made to distinguish between cases in which extrinsic evidence is used for the purpose of adding to the legal effect of the written memorandum or, as it is sometimes used, for the p...
-Sec. 2231. Reformation Of Mistake Which May Be Corrected By Construction
If the ordinary rules of construction or of admissibility of extrinsic evidence can correct the mistake, reformation is not necessary.1 If the boundaries of realty are given correctly, reformation is ...
-Sec. 2232. Who May Have Reformation
Reformation may be had at the suit of those who succeed to the interest of the original party against whose interest such mistake operates.1 Accordingly, reformation may be granted to heirs who take b...
-Sec. 2233. Effect Of Rights Of Third Parties On Reformation
If third persons not purchasers for value,8 especially if not prejudiced by the mistake,9 will not prevent reformation. 19 Miller v. Morris, 123 Ala. 164, 27 So. 401. 20 Mlnazek v. Libera, 78 Minn. ...
-Sec. 2234. Evidence Necessary For Reformation
The so-called parol evidence rule has no application in actions to reform a written contract,1 and extrinsic evidence is always admissible. The burden on the issue of the existence of the mistake and...
-Part VI. Operation. Chapter LXXI. Assignment
Sec. 2235. Definition and nature of assignment. Sec. 2236. Assignment at common law - Original theory. Sec. 2237. Exceptions recognizing assignment. Sec. 2238. Effect of attempted assignment at com...
-Sec. 2235. Definition And Nature Of Assignment
If A has a contract with B, and A wishes to secure the benefits arising from the performance of such contract to C, he may obtain this result in a number of different ways. A may enter into a contract...
-Sec. 2236. Assignment At Common Law - Original Theory
The general rule at common law was that assignment of contractual rights, made by the voluntary act of the parties, was of no effect if the adversary party to the contract thus assigned did not consen...
-Sec. 2237. Exceptions Recognizing Assignment
Even at common law there were certain well-recognized exceptions to this rule. Negotiable contracts could be transferred to others than the original parties.1 This exception may be explained by saying...
-Sec. 2238. Effect Of Attempted Assignment At Common Law
Apart from these exceptions, the common law at the outset denied legal effect to the assignment. It was not a valuable consideration which would support a promise by the assignee to the assignor,1 unl...
-Sec. 2239. Assignment In Equity
In equity from an early period, contracts except those in which the personality of the adversary party was material, were regarded as forms of property rather than as purely personal relations; and, a...
-Sec. 2240. Ultimate Theory Of Assignment At Common Law
Under the influence of the doctrines of equity,1 the common-law rule forbidding assignment gradually broke down and finally degenerated into a mere rule of pleading. Contracts which were assignable in...
-Sec. 2241. 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 assignee may bring an action in his own name against the debtor.2 In some jurisdictions the ac...
-Sec. 2242. Equitable Assignment At Modern Law
The opportunity to effect a complete fusion of law and equity upon the question of assignment has been lost in many states: in part by the fact that the statutes have been drawn in rather narrow terms...
-Sec. 2243. Contracts Assignable At Modern Law
Contracts others 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 It has been suggeste...
-Sec. 2244. Illustrations Of Assignable Contracts
A contract of guaranty;1 or an indemnity bond,2 such as the right of a surety company under an indemnity bond;3 or a right of action on a bond given by a public contractor to protect materialmen;4 the...
-Sec. 2245. Assignment Of Contract Rights Not Yet Acquired
The fact that the benefits which are assigned have not yet accrued, and that the assignor has not performed the contract on his part when he makes the assignment, does not prevent the assignment from ...
-Assignment Of Contract Rights Not Yet Acquired. Continued
Rhode Island. Dolan v. Hughes, 20 R. I. 513, 40 L. R. A. 735, 40 Atl. 344. Vermont. Thayer v. Kelley, 28 Vt. 19, 65 Am. Dec. 220. Wisconsin. Porte v. Chicago & N. W. Ry. Co., 162 Wis. 446, 156 N. W....
-Sec. 2246. Assignment Of Quasi-Contractual Rights
Quasi-contract-ual rights are usually not personal and such as are not personal may be assigned,1 including quasi-contractual rights which arise out of tort where the injured party may waive the tort ...
-Sec. 2247. Assignment Of Personal Rights
Certain rights, though analogous to quasi-contractual rights, are regarded as personal in their nature and are not assignable.1 A mere personal right can not be assigned, as a right under federal stat...
-Sec. 2248. Personal Contracts
If A makes a contract with B, in which B's personality is material, such as a contract by which he contracts for B's personal skill or labor, or reposes special trust in B, such contract can not be as...
-Sec. 2249. Personality Must Be Element Of Contract
Since the intention of the parties must be deduced from the terms of the contract when considered in the light of the surrounding circumstances, and since the unexpressed intention of one party which ...
-Sec. 2250. Assignment Of Contracts Personal As To Performance - General Nature
If the nature of the subject-matter is such that it shows when taken in connection with the language of the contract that personal performance by the adversary party is a material element of the contr...
-Sec. 2251. Contracts For Professional Or Expert Services
A contract to render professional services is personal and non-assignable.1 An attorney can not assign an executory contract whereby he agrees to render professional services,2 nor can an abstracter a...
-Sec. 2252. Contracts For Manufacture Or Production Of Articles
A contract by which A agrees to manufacture articles for B, can not be assigned by A to C so that C may perform against B's objection, if B had relied upon A's personal control of the performance of t...
-Sec. 2253. Building And Construction Contracts
A contract for the construction of a building has been held to be personal in character so that it can not be assigned to one who is to perform such contract.1 As a matter of fact the personality of t...
-Sec. 2254. Contracts For Supplying Needs Or Requirements Of Business
B may enter into a contract with A, by which he agrees to furnish A with such amount of goods as A may need or may require in his business. Such contracts are sufficiently definite,1 and A's promise t...
-Sec. 2255. Assignment Of Performance By Person For Whose Benefit Personal Element Required
While most of the questions of assignment of personal contracts arise in cases in which the party who was to render the personal service has attempted to assign the contract,1 the principle which unde...
-Sec. 2256. Assignment Of Contracts Personal As To Credit
If the subject-matter of the contract is such that performance might be rendered by any one, but by the terms of the contract credit is to be given by one party to the other, it is ordinarily said tha...
-Sec. 2257. Assignment On Elimination Of Personal Element By Performance Or Breach
B may assign to C the right to receive compensation from A on performance of the contract between A and B, even if under such contract B's personality is material,1 if such compensation does not itsel...
-Sec. 2258. Assent To Assignment Of Personal Contract
If the person who contracts for the skill, personal labor or credit of another consents to the attempted assignment of such contract by such other, he can not subsequently object that the contract cou...
-Sec. 2259. Specific Provision Against Assignment
In the absence of statutory provisions to the contrary, a contract which would otherwise be assignable may be non-assignable without the consent of the adversary party by inserting a clause providing ...
-Sec. 2260. 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 contracts with the United States can...
-Sec. 2261. Partial Assignment
A creditor can not 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 The c...
-Partial Assignment. Continued
Equitable relief is not given, however, if the sole ground therefor is that a partial assignment of a legal claim has been made.18 This view is sometimes entertained on the theory that the legal remed...
-Sec. 2262. Assignment Does Not Discharge Assignor
The assignor can not, by assigning the benefits of his contract, relieve himself from his liability thereon.1 Hence, the mere fact of assignment can not be treated as a breach by the assignor.2 Thus i...
-Sec. 2263. 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. 2264. Assignment Passes All Assignor's Rights - General Principles
If the assignment purports to pass all of the rights of the assignor, the assignee acquires all the rights of his assignor under the contract assigned to him.1 After a total assignment, the assignor h...
-Sec. 2265. Assignment As Passing Incidents And Remedies
An assignment of a laborer's wages due from a corporation gives the assignee the same right as the assignor to recover from the stockholders.1 So an assignee of a note may avail himself of a power of ...
-Sec. 2266. Assignment As Passing Securities
The assignment of a debt carries with it every security held by the assignor for the protection of such debt.1 Assignment of a note carries the security of a mortgage on realty,2 and the security of a...
-Sec. 2267. Assignment As Passing Lien
Since a common-law lien is a right to keep possession of personal property until a claim due from the owner to a person so keeping possession is satisfied, some authorities hold that such a lien is a ...
-Sec. 2268. Assignment Of Judgment As Passing Cause Of Action
An assignment of a judgment does not carry with it the cause of action on which it is rendered. Hence, if it is vacated by appeal,1 or if the claim is settled before judgment is rendered,2 the assigne...
-Sec. 2269. Assignment Passes Only Assignor's Rights Against Debtor - General Principles
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. 2270. Discharge, Etc
If before assignment the assignor has waived or modified his contract rights, his assignee is bound thereby.1 An assignee is bound by a contract of compromise and settlement made between the assignor ...
-Sec. 2271. Set-Off
Any right of set-off or counter-claim growing out of' that transaction existing in favor of the adversary party when he receives notice of the assignment can be made against the assignee.1 Thus where ...
-Sec. 2272. 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. 2273. 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 up...
-Sec. 2274. Theories As To Necessity Of Notice To Debtor
Whether notice of the assignment must be given to the debtor in order to protect the rights of the assignee, is a question the answer to which is determined largely by the theory of the purpose for wh...
-Sec. 2275. Origin Of Doctrine Of Necessity Of Notice In England
The leading case in England, in which it was held that as between two successive assignees each claiming under a total assignment and each taking for value and without notice, priority should be given...
-Origin Of Doctrine Of Necessity Of Notice In England. Continued
These two cases were regarded as determining the law in England; and in the following cases it was assumed that priority of notice, and not priority of time, fixed the rights of the bona fide assignee...
-Sec. 2276. Necessity Of Notice As Against Claimants Other Than Bona Fide Purchasers - Assignee And Assignor
The practical application of the principles with reference to the necessity of notice by an assignee to the debtor to protect his rights against third persons, depends in part upon the theory of the n...
-Sec. 2277. Assignee And Debtor
As between the debtor and the assignee, notice is not necessary to enable the assignee to enforce the contract against the debtor, if the debtor has not suffered a detriment by reason of the assignee'...
-Sec. 2278. Assignee And Claimant Other Than Attaching Creditor
A like principle applies as between the assignee and those who succeed to the title of the assignor, but who are not purchasers for value, such as receivers,1 or trustees in bankruptcy.2 It may be not...
-Sec. 2279. Assignee And Attaching Creditor
If the contest arises between an assignee who has failed to give notice to the debtor and a subsequent creditor of the assignor who seeks to attach the debt in the hands of the original debtor in an a...
-Sec. 2280. Necessity Of Notice As Against Subsequent Bona Fide Purchaser
If the assignor has assigned the same claim at different times to different assignees, each of whom has paid value, and the second of whom has taken without notice, the difference in the application o...
-Necessity Of Notice As Against Subsequent Bona Fide Purchaser. Continued
The plaintiff took his assignment by an instrument separate and apart from the policy itself. He allowed the possession of the policy to remain unaltered. It is true that he did this on the false rep...
-Sec. 2281. Contents And Service Of Notice
The notice of assignment given to the debtor must be such as to apprise him of the fact of assignment.1 Apart from this, no special form is necessary.2 If the notice is sufficiently clear, it is not n...
-Sec. 2282. To Whom Notice Should Be Given
Notice should be given to the debtor or to his duty authorized agent.1 Notice may be given to the agent through whom his principal has been accustomed to receive notice,2 even if in the particular cas...
-Sec. 2283. 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. 2285. Elements Of Assignment - General Nature
An assignment which is affected by the voluntary act of the assignor and the assignee, is controlled by the ordinary rules of law which control other contracts.1 The general question of the capacity o...
-Sec. 2286. Intent To Reserve Control To Assignor
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. 2287. Intent To Transfer Control To Assignee
On the other hand, a transaction whereby one party transfers to another ownership and control of a chose in action, amounts to an assignment.1 v. Wyandotte Construction Co., - Mo. - , 201 S. W. 554; H...
-Sec. 2288. Transfer Of Control - Orders As Assignments
An order by a creditor to a debtor to pay to a designated third person a specified fund which such debtor owes to such creditor, operates as an assignment of such fund if it purports to transfer owner...
-Sec. 2289. Drafts As Assignments
In accordance with the principles which apply to orders, a draft which is not payable out of any specific fund does not amount to an assignment of a debt owing by the drawer to the drawee, as long as ...
-Sec. 2290. Checks As Assignments
The same principles that apply to orders and to bills of exchange apply in most jurisdictions to bank checks. The relation between a bank and a depositor is that of debtor and creditor, and not that o...
-Checks As Assignments. Continued
Michigan. Lonier v. State Savings Bank, 149 Mich. 483, 112 N. W. 1119. New Jersey. Creveling v. Bank, 46 N. J. L. 255, 50 Am. Rep. 417; National Bank v. Berrall, 70 N. J. L. 757, 103 Am. St. Rep. 821...
-Sec. 2291. Form Of Assignment
In the absence of statute no special form of assignment is necessary.1 While it has been said that it is uniformly holden that an assignment of an instrument under seal must be by deed - in other wo...
-Form Of Assignment. Continued
Contra, American Exchange National Bank v. Federal National Bank, 226 Pa. St. 483, 134 Am. St. Rep. 1071, 27 L; R. A. (N.S.) 666, 18 Am. & Eng. Ann. Cas. 444, 75 Atl. 683. 15 United States. Leonard v...
-Sec. 2292. Statutory Formalities
Some statutes prescribe formalities for assigning certain kinds of contracts.1 Where such statutes are exclusive, and make other forms of assignment invalid, effect must be given to such provisions. T...
-Sec. 2293. Necessity Of Consideration
If an assignment is executed and passes legal title, then as between the assignor and the assignee no consideration is necessary. Such assignment is valid even though gratuitous.1 If the assignment is...
-Sec. 2294. What Constitutes Acceptance By Debtor
Where an acceptance by the debtor is material, such acceptance can be made only by such words or conduct on his part as to show his willingness to accept.1 If the debtor has paid a check upon a forged...
-Sec. 2295. 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. 2296. Effect Of Acceptance
Acceptance of the assignment by the debtor and his assent thereto, constitute a new contract between himself and the assignee.1 On acceptance of a note payable at a bank in which the maker has funds s...
-Sec. 2297. Covenants Running With The Land - Freehold Estates-Covenants Conferring Right Upon Grantee
At common law, at a time at which assignment of contract rights was not given any recognition, contracts which were intended by the parties thereto to operate between them by reason of their ownership...
-Covenants Running With The Land - Freehold Estates-Covenants Conferring Right Upon Grantee. Continued
11 Illinois. Purvis v. Shuman, 273 111. 286, L. R. A. 1917A, 121, 112 N. E. 679; Midland Ry. v. Fisher, 125 Ind. 19, 21 Am. St. Rep. 189, 8 L. R. A. 604, 24 N. E. 756. Ohio. Pittsburgh, etc., Ry. v. ...
-Sec. 2298. 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 inter...
-Sec. 2299. 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. 2300. 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 revers...
-Sec. 2301. Covenants Passing To Assignee Of Reversion
A right of re-entry for breach of condition subsequent in a lease can not be assigned before breach. While covenants to pay rent could pass with the reversion under Act 32, Henry VIII. 34, the assigne...
-Sec. 2302. Assignment By Operation Of Law
The classes of assignment which we have been considering are those in which an interest in a contract is conferred by the voluntary act of one in whom such interest originally vested. There are many f...
-Chapter LXXII. Negotiability
I. DEVELOPMENT OF IDEA OF NEGOTIABILITY Sec. 2303. Origin of negotiability - The law-merchant. Sec. 2304. Development of law-merchant - The negotiable instruments law. II. ELEMENTS OF NEGOTIABLE IN...
-Sec. 2303. Origin Of Negotiability - The Law-Merchant
Certain types of contracts remained outside of the common-law rule which forbade assignment,1 as they remain outside of the modern-law rule that the assignee acquires only the rights of the assignor.2...
-Sec. 2304. Development Of Law-Merchant - The Negotiable Instruments Law
The law-merchant has long since ceased to be the law of a class,1 and its international character survives only in the fact that there is a greater resemblance as to mercantile transactions between th...
-Sec. 2305. Elements Of Negotiable Contracts - Writing
In order to be negotiable a contract must possess certain elements.1 It must be in writing. If in writing, a lead pencil is sufficient though not to be commended.2 Writing in this sense includes print...
-Sec. 2306. Provision In Mortgage As Affecting Note
A provision in a mortgage given to secure a note does not render the note non-negotiable if the note does not incorporate the provision of the mortgage.1 The fact that a statute provides specifically ...
-Sec. 2307. Date
In the absence of specific statutory provisions it is not necessary that a negotiable instrument should be dated.1 If a negotiable instrument is dated, the fact that it was dated either before or afte...
-Sec. 2308. Signing - Necessity
The requisites of a valid execution of a contract which by law must be in writing, are in some respects like those of ordinary written contracts and in some respects quite different. A contract which ...
-Sec. 2309. Signing - Form
No special form of signature is required. On this point the law of the negotiable contract seems to be the same as that of the ordinary written contract.1 It seems that a signature by mark,2 or by ini...
-Sec. 2310. Delivery
Execution includes delivery.1 Delivery is essential to the validity of a negotiable instrument.2 Delivery requires the intent of the party,3 as well as the appropriate outward act.4 Surrender of the ...
-Sec. 2311. Definite Parties - Payee
The parties to the contract must be clearly described therein.1 The payee must be indicated clearly.2 Thus a promise to an alternative payee is not negotiable.3 However, if the alternative payees are ...
-Sec. 2312. Adding Party To Negotiable Instrument By Extrinsic Evidence To Impose Liability
A contract may be signed by A with his own name, but entered into by him on behalf of his real principal, X, with the adversary party, B. If the contract is one which the law requires to be in writing...
-Sec. 2313. Discharging Party To Negotiable Instrument By Extrinsic Evidence
If a party to a negotiable instrument who has signed in such a way as to assume a personal liability, attempts to show that the oral understanding of the parties was that he was signing merely as agen...
-Sec. 2314. Promise Or Order
The contract must be either a promise to pay or an order commanding another to pay.1 The former is a promissory note or bond; the latter a bill of exchange 2 or check. A promise by A to B to accept an...
-Sec. 2315. For Money Only
The contract must be one for the payment of money only.1 Accordingly, a promise to pay in work,2 as a railroad ticket,3 or in property other than money,4 even if such other property is itself negotiab...
-Sec. 2316. For A Sum Certain
The promise or order must be for a sum certain. If the amount to be paid can not be determined from the face of the contract itself the contract is not negotiable.1 This rule is not affected by the Ne...
-Sec. 2317. Provision For Payment Of Exchange
A contract to pay a certain amount with exchange is non-negotiable by the weight of authority.1 The reason generally given for this rule is that it is impossible to determine in advance what the rat...
-Sec. 2318. Provision For Payment Of Taxes
A promise to pay a certain sum and all taxes assessed against the realty mortgaged to secure such debt,1 or to pay interest and taxes on the note itself,2 is not negotiable. A provision in a note to t...
-Sec. 2319. Provision For Payment Before Maturity
A clause giving the payee bank the right to appropriate to the payment of the note, before or after maturity, the amount on deposit by the makers or either of them, does not make the amount due uncert...
-Sec. 2320. Provision For Discount
If an instrument for the payment of money contains a provision to the effect that a discount will be given in case such instrument is paid before maturity, or in case it is paid promptly, the weight o...
-Sec. 2321. Provision For Modification Of Rate Of Interest In Case Of Default
Contracts for the payment of money with interest frequently contain provisions to the effect that if the instrument is not paid at maturity it shall bear a higher rate after maturity than before matur...
-Sec. 2322. Provision For Payment Of Attorney Fees And Costs Of Collection
A promise to pay attorney's fees,1 either a certain per cent. of the amount of the note,2 or to pay reasonable attorney's fees3 does not make the instrument non-negotiable. One reason for this is that...
-Sec. 2323 Unconditional Payment
In order to be negotiable it is generally said that the instrument must provide only for unconditional payment. If some event which may or may not happen is a condition precedent to the payment, the c...
-Sec. 2324. Statement Of Consideration Or Transaction
The recital of a consideration does not operate as notice to the indorsee of failure of consideration, or as notice of other defense which might arise thereon against the payee, and, accordingly, it d...
-Sec. 2325. Provision Concerning Security, Demand, Etc
There are a number of provisions which are intended to facilitate the payment and collection of the instrument, such as powers of attorney to confess judgment, provisions for collateral security, and ...
-Sec. 2326. Time Of Payment - Event Bound To Happen
Closely connected with the rule that payment must be unconditional, is the rule that a certain time of payment must be fixed. This does not mean that the exact date of payment is ascertainable from th...
-Sec. 2327. Event Not Bound To Happen
An instrument which is payable at the happening of an event which is not morally bound to occur, is not negotiable.1 The provision for payment in such a case is really conditioned upon the happening o...
-Sec. 2328. Acceleration Of Maturity At Option Of Holder
An instrument may, by its terms, be payable at a fixed time, but a provision may be made for accelerating the payment of such instrument either at the option of the holder, or at the option of the mak...
-Sec. 2329. Acceleration Of Maturity At Option Of Debtor
A provision which authorizes the maker of the instrument to declare it to be due and payable within a certain specified time, does not make such instrument non-negotiable.1 A note due on or before a c...
-Sec. 2330. Acceleration In Case Of Default
A provision to the effect that payment should be accelerated on default either in payment of interest, or in payment of an installment of the principal, has been held in many jurisdictions not to rend...
-Sec. 2331. Provision For Extension Of Time
A clause providing for an extension of time for a definite period at the option of the maker does not make the contract non-negotiable.1 A provision in a note, by which the sureties agree to be bound ...
-Sec. 2332. Place Of Payment
In the absence of specific statutory provisions, an instrument otherwise negotiable was not rendered non-negotiable by the fact that it did not fix the place at which it was payable.1 In some states, ...
-Sec. 2333. Words Of Negotiability
A negotiable contract must contain words of negotiability.1 The customary words of negotiability are or order, or or bearer,2 but other words, such as or assigns,3 which show a similar intent, h...
-Sec. 2334. Recital Of Consideration Unnecessary
It is customary for a negotiable instrument containing a recital of a consideration, as by the use of the words, for value received. This, however, is not essential.1 Thus a check is negotiable with...
-Sec. 2335. Examples Of Negotiable Instruments - Money
Money possesses the quality of negotiability to the highest degree.1 Even if money is stolen it can not be recovered from one who has taken it for value in good faith,2 even if it is taken in payment ...
-Sec. 2336. Bills And Notes
Bills of exchange have always been held to be negotiable;1 and cashiers' checks, being a form of bill, are also negotiable.2 Whether promissory notes were negotiable at common law is a difficult ques...
-Sec. 2337. Checks, Certificates Of Deposit, And Savings Bank-Books
At modern law, checks payable to bearer or to order,1 even if postdated,2 and certificates of deposit, at least if containing a promise to pay,3 are negotiable. 7 United States. Murphy v. Improvement...
-Sec. 2338. Contracts Under Seal
The law of negotiable instruments is derived from the law-merchant. The seal is derived from the common law. Accordingly, at common law a sealed instrument could not be negotiable.1 Thus if two guaran...
-Sec. 2339. Bonds, Warrants, Etc
At modern law, bonds payable to bearer or to order,1 and coupons on bonds,2 are negotiable. Warrants drawn by public officials are negotiable if payable absolutely and consisting of an order or a pro...
-Sec. 2340. Mortgages
A mortgage was a common-law form of security, and it was not controlled by the principles of the law-merchant. There is, accordingly, a conflict of authority as to whether a mortgage given to secure a...
-Sec. 2341. Symbols Of Property - Bills Of Lading And Warehouse Receipts
Bills of lading1 and warehouse receipts2 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 desc...
-Sec. 2342. Stock Certificates
A certificate of stock possesses a qualified negotiability in that its transfer passes the title to the stock, free from latent equities between prior vendor and vendee.1 14 Hanover National Bank v. ...
-Sec. 2343. 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. 2344. Effect Of Negotiability On Rights Of Parties - When In Hands Of Original Party
Except in the cases in which the payee is himself a bona fide holder,1 the fact of negotiability is for most purposes immaterial as between the immediate parties to a negotiable contract. Any defense ...
-Sec. 2345. 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.1 Any defense ...
-Sec. 2346. When In Hands Of Bona Fide Holder - General Principles
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. 2347. Defenses Not Available Against Bona Fide Holder
Fraud in the inducement,1 constructive fraud,2 duress,3 ultra vires, where the contract might under some facts be within the power of the corporation, but under the facts of the particular case is not...
-Sec. 2348. 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. 2349. 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 Forgery is a defense which may be interposed against a bona fide holder...
-Sec. 2350. Alteration
At common law, a material alteration renders the contract void.1 In negotiable instruments, before the Negotiable Instruments Law, the defense that the instrument was materially altered after the deli...
-Sec. 2351. Defenses Permitted By Statute
Any defense may be made against a bona fide holder, which is allowed by the express terms of a statute or by its necessary effect.1 Under a statute allowing immoral and illegal considerations to be ...
-Sec. 2352. Effect Of Negotiable Instruments Law On Statutory Defenses
The enactment of the Negotiable Instruments Law has raised the question as to the repeal or abrogation of such legislation, with reference to defenses against bona fide holders. It has been urged that...
-Sec. 2353. 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. 2354. The Bona Fide Holder Or The Holder In Due Course-General Principles
Before the Negotiable Instruments Law was enacted, a person who held a negotiable instrument free from defenses which might be made as against the original payee, was generally known as the bona fide ...
-Sec. 2355. Taking Without Notice - Actual Knowledge
Both common law, as derived from law-merchant, and the Negotiable Instruments Act agree1 that the holder must take without notice of the defense sought to be interposed, in order to be a bona fide hol...
-Sec. 2356. Contents Of Instrument As Notice
The holder is charged with notice of everything that appears from the contents of the instrument,1 or on its face.2 A provision that on default in payment of one note, all shall become due, operates a...
-Sec. 2357. Indorsement As Notice
Indorsement for collection is notice that the holder is not the beneficial owner,1 even if such indorsement has been erased, as long as it is still legible.2 Indorsement for account of indorsers h...
-Sec. 2358. Recital Or Notice Of Consideration As Notice Of Defect
The fact that the consideration is recited on the face of the note,1 or on the back thereof,2 or is known to the holder,3 especially if the maker of the notes tells the purchaser that they are valid o...
-Sec. 2359. Bill Of Lading As Notice Of Defect In Bill Of Exchange To Which It Is Collateral
Analogous to this last question is one often presented in slightly differing forms under modern methods of business. A consigns goods, takes a bill of lading, and attaches it to a draft. The draft is ...
-Sec. 2360. Taking Under Circumstances Of Suspicion
Whether one who takes a negotiable instrument with knowledge of facts and circumstances which suggests suspicion and which would lead a reasonably prudent man to make inquiries, as a result of which h...
-Sec. 2361. Circumstantial Evidence Of Bad Faith
Direct evidence of bad faith is not necessary however. The fact that the holder takes under circumstances which should arouse suspicion, or is guilty of gross negligence, is a circumstance to be consi...
-Sec. 2362. To Whom Notice May Be Given - Constructive Notice
Notice to an agent of the holder of defenses,1 such as want of consideration,2 is notice to the principal if within the scope of the agent's authority. Thus if a mortgagor sells the mortgaged property...
-Sec. 2363. When Notice Must Be Given
The time at which notice must be given to the holder, in order to be operative, depends on the time at which the holder has paid value for the instrument, in whole or in part.1 One who holds a note as...
-Sec. 2364. Payee As Bona Fide Holder
Before the Negotiable Instruments Law was enacted, it was held that the payee of an instrument might be a bona fide holder, if he took for value without notice before maturity, and in the usual course...
-Sec. 2365. Delivery Or Indorsement
Necessity, 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 Without delivery, a p...
-Sec. 2366. What Constitutes Indorsement
A note which is payable to either of two persons in the alternative, may be indorsed by one of them so that the indorsee is a holder in due course.1 The paper on which the indorser writes his name mus...
-Sec. 2367. Value
In order to be a bona fide holder, the holder must take for value. If the holder does not give value for the note he is not a bona fide holder.1 Value means valuable consideration.2 A receiver,3 as ...
-Sec. 2368. Payment As Value
Payment of a pre-existing debt constitutes value.1 One who takes a note as collateral and subsequently surrenders the note which evidences the principal debt in consideration of such collateral note...
-Sec. 2369. Giving Note, Check, Etc., As Value
If A buys a note from B, and gives to B A's own note therefor, A is holder for value of the note transferred by B,1 even if B was the agent of the real owner of the note without authority to sell, if ...
-Sec. 2370. Giving Credit On Account As Value
If A credits B on his account, with the value of a negotiable instrument which B has transferred to A, and B checks out such deposit before A has notice of defects in such instrument, A is holder for ...
-Sec. 2371. Collateral Security As Value
Transfer of a negotiable instrument as collateral security for a contemporaneous debt, is a transfer for value.1 One who takes a note as collateral security remains a holder for value, although he has...
-Sec. 2372. 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...
-Taking Before Maturity. Continued
The rule is the same under the express provisions of the Negotiable Instruments Law. Ohio Valley Banking & Trust Co. v. Great Southern Fire Insurance Co., 176 Ky. 694, 197 S. W. 399; Union Investment ...
-Sec. 2373. 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 fi...
-Chapter LXXIII. Contracts For The Benefit Of A Third Person
Sec. 2374. Contracts for benefit of third person - General nature of problem. Sec. 2375. Rights of beneficiary at early English law - Action of account. Sec. 2376. Action of debt. Sec. 2377. Action...
-Sec. 2374. Contracts For Benefit Of Third Person - General Nature Of Problem
The great difficulty in the development of contract consists in the inability of law in its early stages to conceive of a binding promise unless it is made in some set and rigid form, or unless it is ...
-Sec. 2375. Bights Of Beneficiary At Early English Law - Action Of Account
The most common cases in which the rights of the beneficiary are involved are cases in which B has placed money or other property in A's hands, out of which A agrees to pay money to C.1 B's motive for...
-Sec. 2376. Action Of Debt
As between the person who deposits his own money with one who is thus bound to account to him, and the person with whom such money is deposited, it became settled that if the person with whom such mon...
-Sec. 2377. Action Of Assumpsit
With the development of indebitatus assumpsit,1 the theory was adopted that wherever debt would lie, indebitatus assumpsit would lie;2 and accordingly it was held that if B placed money or property in...
-Sec. 2378. Rights Of Promisee And Beneficiary Respectively
The relation between the rights of B and the rights of C growing out of A's promise, caused trouble then as they cause it now, in jurisdictions in which the beneficiary is held to have a right of acti...
-Sec. 2379. Classes Of Cases In Which Beneficiary Could Bring Action
As in modern case, B's motive for furnishing the value for A's promise usually was either to provide for a near relation by blood or marriage, or to secure the payment of his own debt. If A made a pro...
-Sec. 2380. Transition To Theory That Beneficiary Can Not Sue
In spite of the ease with which the courts in some of these cases disposed of the objection that the plaintiff was a stranger to the promise, and to the consideration, other judges continue to be trou...
-Sec. 2381. Minority American Rmle - Beneficiary Denied Right Of Action
The American courts have divided on this question. A minority of them have adopted the final result reached by the English courts, and they have held that a contract between two persons for the benefi...
-Sec. 2382. The Rule In Georgia
The vacillation of some of the courts has led to peculiar results in the development of this doctrine in some of these jurisdictions. Under the statute of Georgia, C may sue in equity,1 or he may bri...
-Sec. 2383. The Rule In Massachusetts
In Massachusetts the beneficiary was actually allowed to sue, in several of the earlier cases,1 and language was used which indicated that C should be permitted to sue whenever A and B intended A's pr...
-Sec. 2384. The Rule In Michigan
In Michigan it is said that the beneficiary can sue only upon marriage settlements which involve trusts for the children of the marriage.1 If a contract is made between a board of commerce and a manuf...
-Sec. 2385. The Rule In Pennsylvania
In Pennsylvania the general rule seems to be that the beneficiary can not maintain an action upon a contract for his benefit.1 Such rule is, however, subject to a number of exceptions, the chief of wh...
-Sec. 2386. The Rule In Virginia And West Virginia
In Virginia the rule which was laid down originally was unfavorable to the right of the beneficiary to enforce the contract.1 This was subsequently modified by a statute which provided that a benefici...
-Sec. 2387. Majority American Rule - Right Of Beneficiary Recognized
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 that C may recover from A if the promise is upon co...
-Sec. 2388. Privity
The fact that there is, in reality, no privity between the promisor and the beneficiary, still causes trouble and confusion in some jurisdictions. The cases in which it is insisted that privity is nec...
-Sec. 2389. Statutory Provision Permitting Real Party In Interest To Bring Action
The right of the beneficiary to maintain an action upon the contract to which he is not a party is sometimes referred to the statute which provides that an action may be maintained in the name of the ...
-Sec. 2390. General Principles Of Contract Affecting This Type-Formation Of Contract
The principles which control contracts for the benefit of the promisee often find especial and peculiar application in contracts for the benefit of a third person. In order that the beneficiary may en...
-Sec. 2391. Designation Of Beneficiary
In jurisdictions in which the right of a third person to enforce a contract made for his benefit is not regarded with favor, it is held that a third person can not enforce a contract for his benefit u...
-Sec. 2392. Acceptance By Beneficiary
It is not necessary that the beneficiary should know that the contract was made for his benefit at the time at which it is entered into between the promisor and the promisee.1 A contract by which a ba...
-Sec. 2393. Beneficiary's Rights Dependent On Validity Of Original Contract, And On Terms -Thereof
If the beneficiary accepts the bene-fits of the contract, he takes subject to its validity as between the original parties thereto, and subject to the terms and conditions of the original contract. Th...
-Sec. 2394. Rescission By Mutual Assent Of Original Parties
The promisor and the promisee may rescind the contract without the consent of the third person at any time before he has assented to it or acted on it.1 If the promisor agrees to pay something to a th...
-Sec. 2395. Consideration Between Promisor And Promisee
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 further and...
-Consideration Between Promisor And Promisee. Continued
2 Kansas. Morris v. Mix, 4 Kan App. 654, 46 Pac. 58. Minnesota. Union Railway Storage Co. v. McDermott, 53 Miivn. 407, 55 N. W. 600; Jefferson v. Asch, 53 Minn. 446, 39 Am. St. Rep. 618, 25 L. R. A. ...
-Sec. 2398. Promisor's Right To Attack Validity Of Obligation Be-Tween Promisee And Beneficiary
If A makes a promise to B, to discharge an obligation which B owes to C, in consideration of property or some other thing of value, which B furnishes to A, the question of A's right in an action broug...
-Sec. 2399. Intention To Benefit Third Person Directly Necessary
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 can not maintain an actio...
-Sec. 2400. Sole And Concurrent Benefits
The rule that the beneficiary can enforce the contract only if it is intended primarily for his benefit, is sometimes stated in the form that if the contract between A and B is intended for the sole b...
-Sec. 2401. Specific Illustrations Of 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 prospecti...
-Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 2
13Gulla v. Barton, 149 N. Y. S. 952, 164 App. Div. 293. The union was formed for the benefit and protection of its members, and especially for the purpose of securing to them a reduction in the hours...
-Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 3
64 N. J. L. 27, 44 Atl. 354; Stephenson v. Cone. 24 S. D. 460, 26 L. R. A. (N.S.) 1207, 124 N. W. 439; Dickie v. Abstract Co., 89 Tenn. 431, 24 Am. St. Rep. 616, 14 S. W. 896. 20 Anderson v. Sprieste...
-Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 4
26 Much might be urged pro and con as to the proper ground upon which to place non-liability, but we have no desire to enter upon that field of disputation. It suffices for all practical purposes of ...
-Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 5
It may also be true that no citizen is a party to such a contract, and has no contractual or other right to recover for the failure of the company to act, but if the company proceeds under its contrac...
-Sec. 2402. 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...
-Contracts Intended To Confer Benefit - Assumption Of Debts On Consideration Of Conveyance. Continued
This rule is not confined to mortgages. If a grantee assumes and agrees to pay other debts of his grantor's, which are liens on the property conveyed, such as vendor's liens,4 judgment liens.5 or lega...
-Sec. 2403. Doctrine Not Limited To Assumption Of Debts On Consideration Of Conveyance
A serious question which arises in jurisdictions in which the beneficiary is recognized as having a right to enforce a contract for his benefit is whether the doctrine that a third party may sue is co...
-Doctrine Not Limited To Assumption Of Debts On Consideration Of Conveyance. Continued
10 D. Ghirardelli Co. v. Hunsicker, 164 Cal. 335, 128 Pac. 1041. 11 Whitney v. Ins. Co. (Cal.), 56 Pac. 50; Bartlett v. Ins. Co., 77 Ia. 155, 41 N. W. 601; Barnes v. Ins. Co., 56 Minn. 38, 45 Am. St....
-Sec. 2404. 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. 2405. Bight 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 tha...
-Sec. 2406. 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. 2407. Bands Controlled By Special Statute
A different question arises where a bond is given in compliance with a statute which names the obligee and prescribes for whose benefit such bond is given and who may sue thereon. Under statutes allow...
-Sec. 2408. Bonds To Protect Laborers And Materialmen On Public Improvements
In a number of jurisdictions, statutes have been passed which provide that public contractors must furnish bond to secure payment to persons who furnish them with labor, materials, and the like. The f...
-Bonds To Protect Laborers And Materialmen On Public Improvements. Continued
2 For Federal legislation concerning the construction of public buildings in the District of Columbia, see 30 Stats, at L., p. 906, c. 218 (Act of February 28, 1899). 3 Guaranty Co. v. Pressed Brick ...
-Sec. 2409. 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. 2410. Bight 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...
-Chapter LXXIV. Duties Of Third Persons With Reference To Contract
I. CONTRACTUAL OBLIGATIONS Sec. 2411. Contractual obligations imposed on third persons. II. INTERFERENCE WITH CONTRACT Sec. 2412. Interference with contract - General nature of problem. Sec. 2413....
-Sec. 2411. Contractual Obligations Imposed On Third Persons
The bulk of contract law deals with the relations between the parties to the contract. We have considered the question of the power of one party to a contract to transfer his rights to a third person ...
-Contractual Obligations Imposed On Third Persons. Continued
17 See ch. LXXIII. The only serious conflict of authority which has arisen upon this question is found in cases in which A and B have become jointly indebted to X as principal debtors, and subsequent...
-Sec. 2412. Interference With Contract - General Nature Of Problem
Whether the fact that two persons have made a contract imposes upon third persons the duty to refrain from interfering with it, is a question which is entirely different from the question whether the ...
-Sec. 2413. Wrongful Nature Of Interference
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 wrongdoer...
-Sec. 2414. Malice As Element Of Wrong
Whether interference with contract is actionable whenever it is wrongful, or whether it is actionable only when it is malicious, is a question upon which there is some conflict in obiter. It is often ...
-Sec. 2415. Justification For Interference With Contract
Interference with the contractual relations of another is said to be an actionable wrong unless there is adequate justification therefor.1 While such a statement of the law may be correct, it is so va...
-Sec. 2416. Interference By Act Which In Itself Is Tort
If X has committed a tort against A, the result of which is B's breach of contract with A, A may recover damages from X for such breach of contract in an action to recover for such tort1 If X has made...
-Sec. 2417. Propriety Of Purpose - Competition
If the interference with the formation of future contracts is the result of legitimate competition, and consists in offering lower rates, better facilities, a higher grade product, and the like, no wr...
-Sec. 2418. Prior Illegal Conduct Of Injured Party
The fact that the party who is injured by the wrongful act of an association was at one time a member thereof, does not prevent him from maintaining an action against the association to recover damage...
-Sec. 2419. Knowledge Of Existence Of Contract
No liability exists if the party who interferes with the performance of a contract between two others did not know of the existence thereof.1 If, however, such person, while he does not know of the ex...
-Sec. 2420. Connection Between Wrongful Act And Breach
No action lies against X unless it can be shown that he induced B to break his contract with A. If B's breach of contract was not due to any wrongful act on the part of X, X is not liable to A.1 If X ...
-Sec. 2421. Enforceable Character Of Contract
In order to sustain an action for interference with contract, it has been said that it must appear that there is a valid and enforceable contract, which has not been discharged, for interference with ...
-Sec. 2422. Contract For Indefinite 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. 2423. Interference With Existing Contract - Subject-Matter Of Contract - Doctrine Of Lumley 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 genera...
-Sec. 2424. 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 to...
-Sec. 2425. 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 th...
-Sec. 2426. Contract Other Than Employment - Interference Held Actionable
In contracts other than those of employment we find a divergence even greater than in that class of cases. The weight of modern authority holds that interference with any contract amounts to a tort.1 ...
-Sec. 2427. Contract Other Than Employment - Interference Held Not Actionable
In other jurisdictions liability in tort for inducing a breach of contract is held not to exist in contracts outside of contracts of employment if no wrongful act exists other than inducing such breac...
-Sec. 2428. 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. 2429. Interference With Formation Of Future Contract
If there is no contract 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.1 In the common ...
-Sec. 2430. 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. 2431. 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 tha...
-Sec. 2432. Discharge Of Employe 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 o...
-Sec. 2433. Interference By Voluntary Association Of Dealers, Manufacturers, Etc
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. 2434. Blacklisting By Association Of Employers
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. 2435. Peaceful Interference With Business
Whether an injunction can be given against a systematic attempt to induce other persons to refrain from future business relations with the party seeking relief, as long as no violence is used, is a qu...
-Sec. 2436. Strikes
It is very generally held that workmen may combine for the purpose of stopping work, at least as long as they do not break any existing contracts, and that they may refuse to resume work until their d...
-Sec. 2437. Sympathetic Strikes
An actual or threatened strike against one with whom the employes or labor unions have no dispute because he does business with another with whom they have a dispute, in order to induce the employer a...
-Sec. 2438. Closed Shop
Analogous to the sympathetic strike, is the strike for the so-called closed shop; that is, as the term is frequently used, for the employment of all employes from certain organizations or associatio...
-Sec. 2439. Boycotts
A boycott may be defined to be a combination of several persons to cause a loss to a third person by causing others against their will to withdraw from him their beneficial business intercourse throu...
-Sec. 2440. Unfair Lists
Whether placing an individual upon an unfair list is actionable or not, depends in part upon the meaning which usually attaches to the term unfair. If, as a matter of fact, the term generally impo...
-Sec. 2441. Picketing
A method often employed by strikers is what is known as picketing, which consists in stationing persons to meet at points where they can intercept the new workmen of the employers, and observe who c...
-Picketing. Continued
A picket, in its very nature, tends to accomplish, and is designed to accomplish, these very things: It tends to, and is designed by physical intimidation to, deter other men from seeking employment ...
-Sec. 2442. Slander, Fraud, Etc
The use of slander and the like would seem to be no more justifiable in trade disputes than in other cases. Accordingly, it is generally held that an action to recover damages will lie for slander in ...
-Sec. 2443. Violence And Coercion
If violence or coercion exist or are threatened, different principles apply from those which apply in cases of peaceful persuasion. The use of coercion is very generally held to be illegal, and relief...
-Sec. 2444. Injunction To Prevent Injury To Business
The action or suit may be brought by the employer whose business is threatened. The threatened strike, or boycott, may be intended to compel him to acquiesce in certain arrangements for remuneration, ...
-Sec. 2445. Damages
An employer whose employes are induced to leave his employment by the wrongful interference of an organization or association, may recover damages against the person who thus induces them to leave the...
-Chapter LXXV. Discharge By Voluntary Agreement
I. GENERAL NATURE OF DISCHARGE Sec. 2446. General nature of discharge. II. RELEASES AND COVENANTS NOT TO SUE Sec. 2447. Definition and nature of release. Sec. 2448. Definition and nature of covenan...
-Sec. 2446. General Nature Of Discharge
In its wider meaning the term discharge. with reference to contract law. implies that as a result of certain acts which have taken place after the contract was made, a contract which was once a vali...
-Sec. 2447. Definition And Nature Of Release
The term release, at common law, was used to denote a sealed instrument by which one who had a right or claim of some sort against another discharged such other from liability thereon. It was freque...
-Sec. 2448. Definition And Nature Of Covenant Not To Sue
The covenant not to sue, which is an agreement by one party not to bring an action against the other party, either for a limited period of time, or not to bring it at all,1 has legal effects which in ...
-Sec. 2449. History Of Release
In most systems of law, a contract, even of the most formal type, may be terminated by a contract of equally formal type. This was probably true of the early English law, although much of the original...
-Sec. 2450. Elements Of Release
At common law the elements of the release were the same as those of any other sealed instrument.1 It was necessary that it should be under seal,2 and that it should be delivered.3 It was probably not ...
-Sec. 2451. Construction - General Principles
In construing the release, the courts frequently repeat the general formula that the intention of the parties as determined by the ordinary rules of construction, is to be ascertained, and when ascert...
-Sec. 2452. Construction - Scope Of Subject-Matter
As in the case of contracts generally.1 the general words of a release are frequently limited by specific words in the same instrument; and the release is to be construed as applying only to the claim...
-Sec. 2453. Construction As Between Release And Covenant Not To Sue
An instrument frequently contains language which shows that the parties intend it to operate as a release, but that at the same time they intend it to have consequences which the law would not attach ...
-Sec. 2454. Effect Of Release As Discharge
Apparently a sealed release was at one time inoperative as a discharge of a judgment or other so-called contract of record.1 This arose out of the fact that a contract of record was regarded as of a h...
-Sec. 2455. Release Upon Condition
A release, like any other con-tract,1 may be granted to take effect upon the happening of some condition precedent.2 Until the happening of such condition, the release is inoperative; and upon the hap...
-Sec. 2456. Releases And Covenants Not To Sue As Between Joint Or Joint And Several Parties
At common law, the release of one of two or more joint promisors or joint and several promisors operated as a release of all.1 For this reason, in jurisdictions in which a contract of partnership was ...
-Sec. 2457. New Contract As Discharge - General Nature
An executory contract may be discharged by a new contract which is entered into for that purpose between the parties thereto.1 A provision in a written contract that no one can change its provisions, ...
-Sec. 2458. New Contract Must Be Enforceable - Mutual Assent Of Parties
The proposition that a prior contract may be modified or rescinded by a subsequent contract, implies that such subsequent contract must have the elements necessary to the formation of a valid original...
-New Contract Must Be Enforceable - Mutual Assent Of Parties. Continued
6 B. F. Sturtevant Co. v. Cumberland, 106 Md. 587, 68 Atl. 351. 7B. F. Sturtevant Co. v. Cumberland, 106 Md. 587, 68 Atl. 351. 8 Ferber v. Cona, 91 N. J. L. 688, 103 Atl. 471. 9 Smoot v. United Sta...
-Sec. 2459. 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 therefrom, does not amount...
-Sec. 2460. Assent Of Beneficiary
An agreement between A, B and C can not be modified to C's prejudice by a subsequent agreement between A and B.1 It has been held that a modification by A and B, which does not increase C's liability,...
-Sec. 2461. Consideration For New Contract
While the principles which apply in cases of new contracts are the same that apply in questions of consideration generally, there are some special peculiarities in the application of these principles,...
-Sec. 2462. No New Or Additional Consideration - Contract Executory On Both Sides - Mutual Discharge
If the original contract is still executory on both sides, either in whole or in part, and the parties in forming the new contract waive or release any liability created by the original contract, such...
-Sec. 2463. Discharge Or Increase In Liability Of One Party
If an executory contract between A and B is modified by imposing a new liability upon A without releasing him from any liability, and without imposing any additional liability upon B, such promise doe...
-Sec. 2464. Contract Performed On One Side
If a contract has been performed on one side in full, a modification of the executory part of such contract whereby the original liability of the party who is still to perform remains unmodified, but ...
-Sec. 2465. Theory That Consideration Not Necessary
In some jurisdictions it is said that the consideration for the original contract is imported into the new contract, and that accordingly the new contract does not need any consideration.1 In many of ...
-Sec. 2466. Waiver Of Right To Avoid Original Contract
If the original contract is invalid,1 as because of mistake,2 as where a contract for excavation is made under a mistake as to the character of the ground to be excavated,3 or because of fraud,4 a sub...
-Sec. 2467. New And Additional Consideration
The assumption of personal liability where none before existed,1 or a waiver of a right of a subcontractor to complete the contract himself or to hire someone other than the chief contractor to comple...
-Sec. 2468. New Contract On Condition Precedent
If, by the terms thereof, the new contract has not taken effect,1 as where it is to take effect when it is reduced to writing, and signed and approved by all the parties thereto, and some of the parti...
-Sec. 2469. New Contract Invalid On Other Grounds
Although the later contract may be made by a sufficient offer and acceptance,1 and although it is supported by sufficient consideration,2 it may be invalid and unenforceable for some other reason. If ...
-Sec. 2470. Effect Of Breach Of New Contract On Rights Arising Out Of Prior Contract
Whether it is the making of the new contract or the performance thereof that operates as a discharge of the original contract, is a question that depends on the intent of the parties. In the absence o...
-Sec. 2471. Form Of New Contract - In General
Except for certain peculiarities due to the fact that the original contract was under seal, or that it was required to be in writing or to be proved by writing,1 the general rule is that the new contr...
-Sec. 2472. Formalities Necessary To Execution Of New Contract - Original Contract Of Record
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. 2473. Original Contract Under Seal - At Common Law
The effect of a new unsealed contract upon liabilities arising out of a sealed contract depends in part on the stage in the historical development of the law at which the effect is to be determined, i...
-Sec. 2474. In Equity - Adoption Of Equitable Theory By Common Law
In equity a contract under seal might be discharged or modified by a subsequent oral contract not under seal.1 The place of performance,2 or the time for performance, of a contract under seal, may be ...
-Sec. 2475. 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. 2476. Original Contract Required By Law To Be Proved In Writing - New Contract Executory And Within Statute Of Frauds
If the original contract is one which is required by law to be proved by writing, the effect of a subsequent oral modification or discharge of such contract depends in part upon the theory of the effe...
-Sec. 2477. Modification Of Consideration
In some jurisdictions the consideration is said not to be any part of the contract,1 and accordingly an oral modification of the consideration is enforceable if such oral modification does not affect ...
-Sec. 2478. Modification Of Performance
In some jurisdictions the courts hold that the Statute of Frauds affects the original contract, but that it does not affect the performance thereof.1 Under this theory, accordingly, it is held that an...
-Sec. 2479. Effect Of Acts Of Reliance On New Contract
The fact that one of the parties to an oral contract within the terms of the Statute of Frauds, has acted in reliance thereon, is ordinarily held not to affect the enforceability of the contract as lo...
-Sec. 2480. Performance Or Part Performance Of New Contract
Complete performance is held to withdraw the contract from the operation of the statute,1 and accordingly a complete performance of an oral modification of a contract within the Statute of Frauds is h...
-Sec. 2481. Oral Rescission Of Original Contract
The oral agreement sometimes provides for terminating the original contract without substituting any executory provisions in its place. According to the weight of authority, such an oral agreement is ...
-Sec. 2482. New Contract Containing No Provisions Within The Statute Of Frauds
The new contract may so modify the original contract that the provisions in the original contract which brought it within the operation of the Statute of Frauds are entirely eliminated. In such cases,...
-Sec. 2483. 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. 2484. Effect Of Parol-Evidence Rule
The parol-evidence rule which forbids the introduction of evidence of prior or contemporaneous oral negotiations to vary or contradict the terms of a written contract, has no application to cases in w...
-Sec. 2485. Express Covenant Against 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, neve...
-Sec. 2486. Express Covenant As Affecting Authority Of Agent
While the principal may enter into an oral modification of a written contract in spite of a covenant in such contract against oral modification,1 such covenant may operate as a restriction upon the po...
-Sec. 2487. Statutory Rule As To Oral Modification
In some states it is provided expressly by statute that a written contract can be only modified by a subsequent written contract or by an executed oral agreement.1 Under such a statute an executory or...
-Sec. 2488. Evidence Of New Contract
If a dispute of fact arises as to the existence of a new contract, which modifies or abrogates a prior contract, the burden of proof is upon the party who alleges such modification.1 In most jurisdict...
-Sec. 2489. Effect Of New Contract - Total Or Partial Discharge By New Contract
The new contract may amount to a modification of the prior contract leaving some of its terms in force and continuing the original liability with such modifications, or it may operate as a termination...
-Sec. 2490. Express Provision As To Effect Of New Contract On Original Contract
If the new contract abrogates the earlier contract by express terms, no question of the intention of the parties can usually arise.1 In such case it abrogates it in toto unless some restriction is mad...
-Sec. 2491. No Express Provision As To Effect - New Contract Consistent With Original Contract
If the new contract does not provide either for abrogating the original contract or for retaining it in force, the question of the effect of the second contract upon the first turns on the question wh...
-Sec. 2492. No Express Provision As To Effect - New Contract Entirely Inconsistent With Original Contract
A subsequent contract which does not by express terms abrogate an earlier contract, will, nevertheless. operate as a discharge thereof if it is inconsistent with such earlier contract.1 If the later c...
-Sec. 2493. New Contract Partially Inconsistent With Prior Contract
If the new contract covers a subject-matter which is only in part the same as that covered by the old contract, the hew contract abrogates the old only in so far as it is inconsistent therewith.1 ...
-Sec. 2494. Effect Of New Contract Upon Subsequent Rights Arising Out Of Original Contract
If the parties have made a new contract which is intended to supersede the original contract, the rights of the parties to the transaction are necessarily based upon the second contract.1 If a new con...
-Sec. 2495. Effect Of New Contract Upon Prior Rights Arising Tinder Original Contract
Whether a new contract discharges all right which have arisen under the original contract, or whether such new contract is intended to leave intact the rights which had already vested under the prior ...
-Sec. 2496. Provision In Contract For Subsequent Modification
Provision is frequently made in contracts for subsequent modification thereof. Modifications which are made pursuant to such provisions are ordinarily regarded as not intended to affect the existence ...
-Sec. 2497. Novation - Nature And Meaning
Novation is a term derived from novatio of the Roman law, but its use in common law is in some respects different from the corresponding term at Roman law. At Roman law a novatio was the transmutation...
-Sec. 2498. Elements Of Novation In Narrower Sense
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 h...
-Sec. 2499. Effect Of Novation In Narrower Sense
As a result of such contract, C is discharged from his liability to B, and B is discharged from his liability to A,1 A may maintain an action against C,2 and may enforce the obligation against C, even...
-Sec. 2500. Novation In Wider Sense
The term novation is also used to indicate a contract between the same parties as a prior contract, intended as a discharge of such prior contract and as a substitution therefor.1 In this sense the te...
-Sec. 2501. Definition And Nature
The definitions of accord and satisfaction are of two different types. In the earlier definition the emphasis is laid upon the satisfaction alone, rather than upon the accord and satisfaction as two d...
-Sec. 2502. History Of Accord And Satisfaction
Accord and satisfaction appears in English law long before simple executory contracts are recognized at common law,1 as a means by which a liability in tort could be discharged.2 In the reign of Edwar...
-Sec. 2503. Elements Of Accord And Satisfaction - The Accord-Offer And Acceptance
The accord is ordinarily a simple executory contract which possesses the same elements as those of the simple executory contract which has already been discussed.1 In order to establish the existence...
-Sec. 2504. Check As Offer
If the offer which is claimed to be the basis of an accord is made by sending a check and the like, which is marked in full, and the acceptance which is relied upon consists in accepting and cashing...
-Check As Offer. Continued
Arkansas. Barham v. Bank, 94 Ark. 158, 27 L. R. A. (N.S.) 439, 126 S. W. 394; Barham v. Kizzia, 100 Ark. 251, 140 S. W. 6. Colorado. Colorado Tent & Awning Co. v. Denver Country Club, - Colo. - , 176...
-Sec. 2505. Receipts In Full
The principles which control the effect of a receipt in full are substantially those which control where checks are sent in full. If no dispute has arisen,1 as where the receipt in full is given for a...
-Sec. 2506. Consideration - General Principles
As in the case of contracts generally,1 a valuable consideration is an essential element of a valid accord and satisfaction.2 11 Day v. McLea, 22 Q. B. Div. 610 (probably a case of want of considerat...
-Sec. 2507. Claim Liquidated And Not In Dispute
No additional consideration, If the claim, on the one side, is undisputed and is for a liquidated sum of money, it is held in most jurisdictions that accord and satisfaction can not exist if the debto...
-Sec. 2508. Additional Consideration
The courts that enforce this rule show in their attempts to find some technical consideration in the transaction which would support the accord and satisfaction, that they regard the rule itself as a ...
-Sec. 2509. Satisfaction Of Nature Different From Original Claim
If the thing which is given in satisfaction of the debt is of a different nature from the original liability, questions of adequacy of consideration do not exist.1 Accordingly, if the original claim i...
-Sec. 2510. Unliquidated Or Disputed Claim
If the original claim is unliquidated or in dispute, a different principle applies. Under the ordinary rules as to compromise of disputed claims,1 the courts have been obliged to choose between the ru...
-Sec. 2511. Accord And Satisfaction By Stranger To Original Liability
As in the case of contracts generally,1 an accord and satisfaction has no legal effect if it is made by one who has no authority to bind the party to such accord and satisfaction, whom he attempts to ...
-Accord And Satisfaction By Stranger To Original Liability. Continued
Some doubt has arisen upon the point of satisfaction by a stranger, from the case of Grymes v. Blofield. (Reported in Cro. Eliz. 541, and in Rolle's Abridgment, 471, translated, 5 Vin. Abr. 296. Cond...
-Sec. 2512. Fraud, Conditions, Etc
As in the case of contracts generally,1 a contract of accord and satisfaction may be avoided for fraud.2 Whether it is necessary that the party who seeks to avoid such contract should restore the cons...
-Sec. 2513. Accord And Satisfaction As Discharge Of Contract Of Record
Prom an early period the English law regarded the formal contract as of an entirely different class and rank from the simple contract.1 This distinction was regarded as essential and vital, and it was...
-Sec. 2514. Accord And Satisfaction As Discharge Of Contract Under Seal
Similar problems arose in connection with the obligation under seal. In England the original rule at common law was that before breach a sealed obligation could not be discharged by parol accord and s...
-Sec. 2515. Satisfaction
Accord and satisfaction was recognized as a bar to an action in tort at a period when the simple executory contract was unenforceable in the king's courts.1 At this time, therefore, an executory accor...
-Part VII. Discharge
At the same time, it will not be presumed that the creditor intended to substitute one cause of action for another, unless it appears to have been the intention of the parties to accept the promise of...
-Sec. 2516. Effect Of Accord And Satisfaction
After a valid accord and satisfaction the original liability is discharged.1 This is sometimes spoken of as merger, 2 but this can net mean merger in the technical sense,3 since accord and satisfact...
-Sec. 2517. Definition And Nature
An account stated is frequently defined as an agreement between parties who have had previous transactions of a monetary character creating the relation of debtor and creditor, by which agreement they...
-Sec. 2518. Elements Of Account Stated - Nature Of Account
It is said that a statement of an account consists in the mutual examination of the claims of each other as between the parties and a mutual agreement between them as to the correctness or the disallo...
-Sec. 2519. Antecedent Debt
The liability which is the basis of an account stated must be a debt.1 A liability in tort,2 such as liability for negligence.3 can not be the basis of an account stated. A promise by a prospective bu...
-Sec. 2520. Rendition Of Account
In analogy to the ordinary principles of offer and acceptance, which require the communication of an offer,1 an account stated can not exist unless the account in question has been rendered by one par...
-Sec. 2521. Assent To Account As Rendered
In analogy to the ordinary principles of offer and acceptance, which require the acceptance of the offer to convert the offer into a contract,1 an account is not stated unless the party to whom the ac...
-Sec. 2522. Communication Of Assent
The express approval of an account on the part of the debtor amounts to an account stated.1 It is not necessary that the assent of the debtor should be shown by express words however. Any circumstance...
-Sec. 2523. Silence As Assent
A debtor to whom an account is presented has at least a reasonable time for investigation and examination,1 and if he objects to the account within a reasonable time, and at the first available opport...
-Sec. 2524. Effect Of Account Stated
An account stated becomes a new contract,1 or an admission of an existing liability,2 according to the emphasis placed on one or the other of these characteristics. Unless some recognized ground for a...
-Sec. 2525. Definition And Nature, An Arbitration Is Another Form Of A Discharge Of Liability By The Voluntary Agreement Of The Parties
It differs from discharge by new contract, by account stated. by accord and satisfaction and by release, in that the amount to be paid in satisfaction for the liability in question is not agreed upon ...
-Sec. 2526. History Of Arbitration
Like accord and satisfaction,1 the method of settling controversies and disputes by means of arbitration seems to be one of immemorial antiquity in English law as indeed it is in practically every sys...
-Sec. 2527. Validity Of Covenant For Arbitration
A general provision in advance for arbitration is inoperative and it does not oust the jurisdiction of the courts.1 Notwithstanding such provision, either party may bring an action upon the contract w...
-Sec. 2528. Elements Of Arbitration - Submission
From the nature of arbitration, a submission, which is the voluntary agreement of the parties to the original controversy to refer the matter in dispute to arbitrators, is necessary.1 Under our consti...
-Sec. 2529. Subject-Matter Of Arbitration - Existing Dispute
It has been said that there can be no submission unless it deals with some existing dispute between the parties.1 This, however, has been denied and it has been said that a submission may exist, altho...
-Sec. 2530. Subject-Matter Of Arbitration - -Entire Dispute
It has been said that arbitration can not exist in the true sense of the term unless the entire dispute is submitted,1 and that a reference to appraisers or arbitrators for the purpose of determining ...
-Sec. 2531. Illegal Subject-Matter
Since an illegal covenant renders invalid the remaining covenants of an entire contract,1 and since an illegal contract or transaction can not be a consideration for a new promise, based thereon, it i...
-Sec. 2532. Form Of Submission
In the absence of statute no particular form of submission is necessary if no particular form would have been necessary to any other contract dealing with the subject-matter in question.1 If an oral c...
-Sec. 2533. Construction Of Submission
While the dislike for covenants for arbitration in advance at one time extended to all contracts for arbitration, and required strict construction of the submission,1 a submission is now construed fai...
-Sec. 2534. Appointment Of Arbitrators
In the absence of statute, the arbitrators must be appointed by the parties to the submission either in the submission itself or by their subsequent agreement.1 No formal method of appointment is nece...
-Sec. 2535. Qualifications Of Arbitrators
Unless the parties have waived objection to an arbitrator on the ground of bias, prejudice, and the like, each party has a right to insist that the arbitrators, including the one appointed by the adve...
-Sec. 2536. Notice Of Hearing
Unless the time and place of the hearing are fixed by the submission, or the parties are otherwise informed thereof, the arbitrators must give notice to both parties of the time and place of their hea...
-Sec. 2537. Hearing
The parties to the submission have a right to be present at the hearings of the arbitrators at which evidence is offered which may affect the award.1 At the same time an award otherwise valid can not ...
-Sec. 2538. Evidence
As a general rule. the admission by the arbitrators, at the hearing of evidence which would have been inadmissible in an action at law or a suit in equity as immaterial or incompetent, does not of its...
-Sec. 2539. Method Of Action Of Arbitrators
Unless the agreement of the parties shows a contrary intent or the statute which controls provides otherwise, the arbitrators must all act in person.1 They can not delegate their authority either to a...
-Sec. 2540. Unanimity Of Action
In the absence of a provision in the submission or in the controlling statute to the contrary, the action of the arbitrators must be unanimous if the arbitration involves a matter of private interest....
-Sec. 2541. Award - General Nature
The award has been spoken of as if it were a contract between the parties, entered into by their authorized agents, the arbitrators.1 It is true that the parties enter into arbitration through the con...
-Sec. 2542. Award - Conformity To Submission
The submission is the charter of authority for the arbitrators,1 and the award must conform to the submission.2 8 Moseley v. Simpson, L. R. 16 Eq. 226; Washburn v. White, 197 Mass. 640, 84 N. E. 106;...
-Sec. 2543. Completeness And Finality Of Award
The purpose of the parties in submitting their controversy to arbitration, is to terminate such controversy; and an award which leaves any material part of the controversy for future arbitration or fo...
-Sec. 2544. Certainty Of Award
The intention of the parties in submitting to an award, is to end the controversy between them which they thus agree to submit. The award, accordingly, must be so definite and certain that it will con...
-Sec. 2545. Form And Signature Of Award
An award need not be made in any specific form; and it may even be made orally,1 unless the terms of submission require a written award,2 or the statute which controls specifically requires a written ...
-Sec. 2546. Effect Of Submission As Bar To Action
While the early authors seem to indicate that a submission was a bar to the original action even before award,1 the opposite rule became so at a comparatively early period of the classic common law; a...
-Sec. 2547. Effect Of Submission As Basis For Recovering Damages
If the covenant for arbitration is not invalid as being a covenant for ousting the jurisdiction of the courts in advance,1 it is a valid contract between the parties if it possesses the sufficient ele...
-Sec. 2548. Effect Of Award
After an award has been made, and announced, the submission and award cease to be revocable at the arbitrary will of either of the parties thereto;1 and this rule has been extended to cases in which t...
-Sec. 2549. Enforcement Of Award
At common law, award which was not made a rule of court could be enforced by an action at law on the award or by an action on the bond, if a bond to secure performance of the award had been given.1 Ev...
-Sec. 2550. Grounds For Attacking Award
The submission ordinarily provides either expressly or by fair implication that the proceedings before the arbitrators shall be such as to give to each party a fair opportunity for presenting his clai...
-Sec. 2551. Methods Of Attacking Award
The common law has always regarded the form rather than the substance; and, accordingly, in actions upon awards, the general rule was that if the proceedings were regular upon their face. the common ...
-Sec. 2552. Waiver
While the refusal of the arbitrators to consider competent evidence,1 or irregularities in procedure which prevent a fair and impartial hearing,2 may be ground for attacking an award, such defects may...
-Sec. 2553. Liability Of Arbitrators
An arbitrator acts in a quasi-judicial capacity, and accordingly he is not liable for lack of skill, lack of due care, and the like, although an agent would be liable under similar circumstances. In E...
-Chapter LXXVI. Merger
Sec. 2554. Nature of merger. Sec. 2555. Merger in contract of record - In general. Sec. 2566. Merger of contract of record in contract of record. Sec. 2557. Merger of specialty in contract of recor...
-Sec. 2554. Nature Of Merger
In most systems of law which have advanced so far that they recognize different degrees in the formality of valid transactions, it is generally assumed that the more formal transaction will operate so...
-Sec. 2555. Merger In Contract Of Record
In general In every system of law enormous importance is usually attached to legal proceedings, and the more primitive the system of law, the greater the importance which is usually attached to the fo...
-Sec. 2556. Merger Of Contract Of Record In Contract Of Record
Whether a judgment or other contract of record is merged in a subsequent judgment or other contract of record upon the same cause of action, seems to depend, in most jurisdictions, on the question whe...
-Sec. 2557. Merger Of Specialty In Contract Of Record
At common law, an instrument under seal was not discharged, even by performance, unless the instrument itself was canceled; that is, unless the seal was torn off or the instrument was mutilated in som...
-Sec. 2558. Merger Of Simple Contract In Contract Of Record
Apart from the difficulties which have arisen where the original right was founded upon a record, such as a judgment,1 or where it was embodied in a sealed instrument,2 it is an established rule of la...
-Sec. 2559. Elements Of Merger In Contract Of Record - Identity Of Parties
In order to operate as a merger, the judgment must be rendered in an action between the parties to the contract or their legal representatives; and it will operate as a merger only as against those wh...
-Sec. 2560. Identity Of Causes Of Action
In order to operate as a merger, the judgment which is rendered in the first action must be based upon the same cause of action as that which is set forth in the second action.1 If the causes of actio...
-Sec. 2561. Causes Of Action Arising Out Of Same Contract
Even though the two causes of action may arise out of the same contract, a judgment in the first action does not operate as a merger of the second cause of action, if the two causes are in fact distin...
-Sec. 2562. Splitting Cause Of Action
Whether a judgment rendered upon a contract necessarily operates as a merger of all subsequent causes of action thereon, or whether separate judgments may be rendered upon the different causes of acti...
-Sec. 2563. Merger Of Subsequent Causes Of Action
In a number of jurisdictions, the condition of affairs at the time that the action is begun, and not the condition of affairs at the time that the judgment is rendered, is to be considered in determin...
-Sec. 2564. Merger As Affecting Counterclaim And Set-Off
The defendant is ordinarily not obliged to plead a counterclaim or set-off, but he may elect whether he will make use of a right of action in his favor against the plaintiff as a counterclaim or set-o...
-Sec. 2565. Nature Of Judgment
In order that a judgment may operate as a merger, it must be rendered by a court which has jurisdiction of the subject-matter, and of the parties.1 If a judgment is void for want of jurisdiction, it d...
-Sec. 2566. Effect Of Judgment As Merger
If the elements of merger which have already been described, are shown to exist,1 a judgment merges the original cause of action so that no action can thereafter be brought on the original cause of ac...
-Sec. 2567. 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,2 extinguishes a simple contract debt. A simple contract for the sal...
-Sec. 2568. 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. 2569. 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. 2570. Merger Of Fraudulent Representations
Fraudulent representations as to incumbrances 1 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. 2571. Merger By Union Of Inconsistent Rights In Same Party-Marriage Of Debtor And Creditor
A party can not make a promise to himself,1 and he can not be indebted to himself or under any obligation to himself which the law will recognize and enforce. Accordingly, if a valid obligation has be...
-Sec. 2572. Appointment Of Debtor As Executor
At common law an executor was regarded as the owner of the personalty of the testator, subject to his duty to account for the proceeds of the estate. Accordingly, the appointment by a creditor testato...
-Sec. 2573. Sale Or Bequest Of Debt To Debtor
If a debtor attempts to purchase his debt, the transaction is regarded as a merger or extinction of the original debt, rather than as a purchase.1 However, a contract to sell the debt to the debtor be...









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