221. Rules as to Time.
222-223. Rules as to Penalties and Liquidated Damages.
We have next to consider the mode in which the courts deal with a contract when it comes before them in litigation, or the interpretation of contracts. In considering this question we have to learn how the existence and the terms of a contract are proved; how far, when proved to exist in writing, they can be modified by evidence extrinsic to that which is written; and what rules have been adopted for construing the meaning of the terms when fully before the court. The subject, therefore, divides itself into (1) rules relating to evidence, and (2) rules relating to construction. Under the first head we have to consider the sources to which we may go for the purpose of ascertaining the expression by the parties of their common intention. Under the second we have to consider the rules which exist for construing that intention from expressions ascertained to have been used.1
209. The circumstances under which an alleged contract by word of mouth was made, what was said and done by the parties, and their intention to contract, are questions of fact for the jury. Whether what was said and done amounts to a contract, and its effect, are questions of law for the court.
210. Where a man is proved to have made a contract by word of mouth upon certain terms, he cannot say he did not mean what he said.
211. A contract, or portion thereof, reduced to writing, cannot be altered by parol evidence. '
1 Anson, Cont. (4th Ed.) 237.
2 Following substantially Anson, Cont (4th Ed.) 233-240.
212. If a contract is under seal, the instrument itself is the contract, and its proof proves the contract.
213. A writing not under seal, whether required by the statute of frauds or not, is not itself the contract, but only evidence of the contract, so that a simple contract may have to be proved by writing, or by proof of words or acts, or partly by one and partly by the other.
If a dispute arises as to the terms of a contract made by word of mouth or by acts, or partly by both, it is necessary, in the first instance, to ascertain what was said or done, and the circumstances under which the supposed contract was formed. These are questions of fact to be determined by the jury from the evidence adduced before them. When a jury has found, as a matter of fact, what the parties said and did, and that they intended to enter into a contract, it is for the court to say whether what they have said or done amounts to a contract, and what is its effect.
When a person is proved to have made a contract by word of mouth upon certain terms, he cannot be heard to say that he did not mean what he said. The law imputes to a person a state of mind or intention corresponding to the rational and honest meaning of his words; and not only of his words, but of his actions as well; and where the conduct of a person towards another, judged by a reasonable standard, manifests an intention to agree in regard to some matter, that agreement is established in law as a fact by proof of that conduct, whatever may be the real but unexpressed state of his mind on the matter.
The principle above stated applies also to contracts made in writing. Where parties have put into writing any portion of the terms of their agreement, they cannot alter by parol evidence that which is written; and, where the writing purports to be the whole of the agreement, it can neither be added to nor varied by parol evidence of their unexpressed intention.
It is not necessary for us to discuss the rules of evidence as regards purely oral contracts, for proof of a contract made by word of mouth is a part of the general law of evidence. Our consideration of the rules of evidence will therefore be confined to their effect upon written contracts and contracts under seal.
Admissible evidence extrinsic to such contracts falls under three heads: (1) Evidence as to the fact that there is a document purporting to be a contract, or part of a contract. (2) Evidence that the professed contract is in fact what it professes to be. It may lack some element necessary to the formation of contract, or be subject to some parol condition upon which its existence as a contract depends. (3) Evidence as to the terms of the contract. These may require illustration which necessitates some extrinsic evidence; or they may be ambiguous, and then may be in like manner explained; or they may comprise, unexpressed, a custom or usage the nature and effect of which have to be proved.