(a) By waiver, cancellation, or rescission.
(b) By a substituted contract.
(c) By the happening of conditions subsequent, expressed or implied in the contract.
227. Such an agreement must possess all the elements requisite to the formation of any other valid agreement. There are some exceptions as to the necessity for consideration, which will be hereafter noticed.
As it is their agreement which binds the parties, so by their agreement they may be loosed from the contractual tie. It is scarcely necessary to say that to render an agreement effective as a discharge it must be a valid agreement; and, to be so, it must be accompanied by all the elements, such as communication of mutual intention, real consent, parties having capacity, etc.2
228. A contract may be discharged by an express agreement that it shall no longer bind either party. This process is called a waiver, cancellation, or rescission of the contract.3
229. A waiver is a relinquishment of a right under a contract.
230. A rescission is a complete unmaking of the contract and contemplates the restoration of the parties to their original position as if the contract had not been made.*
1 Anson, Cont. (4th Ed.) 257.
2Murray v. Harway, 56 N. Y. 337; Wheeler v. Railroad Co., 115 U. S. 29, 5 Sup. Ct. 1061, 1160, 29 L. Ed. 341; Stix v. Roulston, 88 Ga. 743, 15 S. E. 826; O'Donnell v. Brand, 85 Wis. 97, 55 N. W. 154; Wood v. Moriarty, 16 R. I. 201, 14 Atl. 855; Lauer v. Lee, 42 Pa. 165; Smith v. Watson, 82 Va. 712, 1 S. E. 96. See "Contracts," Dec. Dig. (Key-No.) § 253; Cent. Dig. §§ 1146-1148.
3Anson, Cont (4th Ed.) 258-260.
4 KELLETT v. ROBIE, 99 Wis. 303, 74 N. W. 781, Throckmorton Cas. Con-
231. Cancellation is sometimes used in the sense of rescission, but more properly it signifies the defacing of a written contract with intent to destroy its legal effect.
232. A consideration is necessary to support such an agreement, except:
EXCEPTIONS - (a) Where the agreement is under seal.
(b) A negotiable instrument may be discharged by its mere surrender with an intent to discharge it.
Waiver is to be distinguished from a rescission, in that it is a mere release of, or failure to insist upon, a right; whereas a rescission destroys the entire contract and entitles each party to recover any consideration given by him under it.5 Rights acquired by contract may be relinquished or abandoned, either by agreement or by conduct indicating such a purpose.6 In order, however, that a waiver may be binding upon a party, it must clearly appear that there was an intentional relinquishment of a known right.7
In the absence of a consideration, a promise to forego the right to demand performance of a contract would be nudum pactum and void. It has often been said that "a simple contract may, before breach, be waived or discharged without a deed and without consideration"; but this is inaccurate. A consideration, or a deed dispensing with the necessity for a consideration, is always essential. Where the contract is wholly executory, a mere agreement between the parties, that it shall no longer bind them, is valid, for the discharge of each by the other from his liabilities under the contract is a sufficient consideration for the promise of the other to forego his rights.8 If the agreement is not mutual tracts, 3G3. See "Contracts" Dec. Dig. (Key-No.) § 274 Cent. Dig. §§ 1202-1206.
5 Reiger v. Turley, 151 Iowa, 491, 131 N. W. 866; Lewis v. Gay, 151 N. 0. 168, 65 S. E. 907; J. K. Armsby Co. v. Grays Harbor Commercial Co., 62 Or. 173, 123 Pac. 32. See "Contracts;' Dec. Dig. (Key-No.) §§ 252, 262; Cent. Dig. §§ 111,5, 1181-1183.
6 Burns v. McFarland, 146 N. C. 382, 59 S. E. 1011. See "Contracts," Dec. Dig. (Key-No.) § 256; Cent. Dig. § 1151.
7 Boyden v. Hill, 198 Mass. 477, 85 N. E. 413; Fitzgerald v. Frankel, 109 Va. 603, 64 S. E. 941. See "Contracts," Dec. Dig. (Key-No.) $ 256; Cent. Dig. § 1151.
8 Rollins v. Marsh, 128 Mass. 116; Cutter v. Cochrane, 116 Mass. 408; Blood v. Enos, 12 Vt. 625, 36 Am. Dec. 363; Kelly v. Bliss, 54 Wis. 187, 11 N. W. 488; Blagborne v. Hunger, 101 Mich. 375, 59 N. W. 657; Perkins v. Hoyt, 35 Mich. 506; Flegal v. Hoover, 156 Pa. 276, 27 Atl. 162; Farrar v. Toliver, 88 111. 408; Hobbs v. Brick Co., 157 Mass. 109, 31 N. E. 756; Wind-
- that is, if it is a waiver of his rights by one party only, - there is no consideration, and the agreement is void.9 If a contract has been executed on one side, an agreement that it shall no longer be binding, without more, is void for want of consideration.10 To illustrate these distinctions: If a person agrees to buy goods from another, or to perform services for him, and the other agrees to pay therefor, the contract may be discharged by a simple agreement to that effect, so long as the goods or services have not been delivered or performed, and the money has not been paid. After performance on either side, however, a promise by the party so performing not to require performance by the other would not be binding unless under seal or supported by a consideration.
In England there is an exception to this rule in the case of bills of exchange and promissory notes. The rights of the holder of such instruments may there be waived and discharged without any consideration for their waiver.11 In this country the exception is not recognized. Such instruments, in this respect, stand on the same footing as any other simple contract,12 with this exception, namely, that, if the instrument itself is destroyed or surrendered for the purpose of discharging the debt, it will so operate without any consideration.13 The reason for the exception is that there is a valid executed gift of the instrument.14
ham v. Doles, 59 Ga. 265; Brown v. Lumber Co., 117 N. C. 287, 23 S. E. 253; ante, p. 158. See "Contracts," Dec. Dig. (Key-No.) § 255; Cent. Dig. § 1150.
9 King v. Gillett, 7 Mees. & W. 55. See "Contracts," Dec. Dig. (Key-No.) § 255; Cent. Dig. § 1150.
10 Collyer v. Moulton, 9 R. I. 90, 98 Am. Dec. 370; Crawford v. Mills-paugh, 13 Johns. (N. Y.) 87; Kidder v. Kidder, 33 Pa. 268; Moore v. Locomotive Works, 14 Mich. 266; Maness v. Henry, 96 Ala. 454, 11 South. 410; Landon v. Hutton, 50 N. J. Eq. 500, 25 Atl. 953; Davidson v. Burke, 143 111. 139, 32 N. E. 514, 36 Am. St Rep. 367; ante, p. 16L See "Contracts," Dec. Dig. (Key-No.) § 255; Cent. Dig. § 1150.
11 Foster v. Dawber, 6 Exch. 839. See "Bills and Notes," Dec. Dig. (Key-No.) §§ US, 438; Cent. Dig. §§ 1277, 1278.
12Crawford v. Millspaugh, 13 Johns. (N. Y.) 87; Seymour v. Minturn, 17 Johns. (N. Y.) 169, 8 Am. Dec. 380; Bragg v. Danielson, 141 Mass. 195, 4 N. E. 622; Smith v. Bartholomew, 1 Metc. (Mass.) 276, 25 Am. Dec. 365; In re Campbell's Estate, 7 Pa. 100, 47 Am. Dec. 503. See "Bills and Notes," Dec. Dig. (Key-No.) §§ US, 438; Cent. Dig. §§ 1277, 1278.
13Larkin v. Hardenbrook, 90 N. Y. 333, 43 Am. Rep. 176; Slade v. Mutrie, 156 Mass. 19, 30 N. E. 168; Vanderbeck v. Vanderbeck, 30 N. J. Eq. 265 Paxton v. Wood, 77 N. C. 11; In re Campbell's Estate, 7 Pa. 100, 47 Am. Dec. 503; Albert's Ex'rs v. Ziegler's Ex'rs, 29 Pa. 50; Stewart v. Hidden, 13 Minn. 43 (Gil. 29); Ellsworth v. Fogg, 35 Vt. 355. See "Bills and Notes," Dec. Dig. (Key-No.) §§ l.',3, 438; Cent. Dig. §§ 1277, 1278.
14 Slade v. Mutrie, 156 Mass. 19, 30 N. E. 168. See "Bills and Notes." Deo. Dig. (Key-No.) §§ 143, 438; Cent. Dig. §§ 1277, 1278.
The consent of a party to the rescission of a contract may be shown by evidence of his acts or declarations in the same manner in which the consent of a party to the original contract may be shown by conduct.18