Same - Various Senses Of The Terms And Their Effect

It will be observed 62 that in the opinion above quoted "condition" is used in two senses - as meaning a statement that a thing is, and a promise that a thing shall be. In either case the statement or promise is of so important a nature that the untruth of the one, or the breach of the other, discharges the contract. "Warranty" also is used in several senses. It is first made a convertible term with a condition. It is then used "in the narrower sense of the word," in which sense it means (1) a subsidiary promise in the contract, the breach of which could under no circumstances do more than give rise to an action for damages, and (2) a condition, the breach of which might have discharged the contract had it not been so far acquiesced in as to lose its effect for that purpose, though it may give rise to an action for damages.

The various senses of the terms we have been discussing, and their effect, may be summed up as follows: (1) "Representations," not fraudulent, made at the time of entering into the contract, but not forming a part of it, may affect its validity in certain special cases, but are otherwise inoperative. When they do operate, their falsehood vitiates the formation of the contract and makes it voidable. (2) "Conditions" are either statements or promises which form the basis of the contract. Whether or not a term in the contract amounts to a condition must be a question of construction, to be answered by ascertaining the intention of the parties from the wording of the contract and the circumstances under which it was made. But when a term in the contract is ascertained to be a condition, then, whether it be a statement or a promise, the untruth or the breach of it will entitle the party to whom it is made to be discharged from his liabilities under the contract. (3) "Warranties,"

62 See Anson, Cont. (8th Ed.) 149.

used in "the narrower sense," are independent subsidiary promises, the breach of which does not discharge the contract, but gives to the injured party a right of action for such damage as he has sustained by the failure of the other to fulfill his promise. (4) A condition may be broken, and the injured party may not avail himself of his right to be discharged, but continue to take benefit under the contract, or, at any rate, to act as though it were still in operation. In such a case the condition sinks to the level of a warranty, and the breach of it, being waived as a discharge, can only give a right of action for the damage sustained.68 This is sometimes called a "warranty ex post facto."

A strong illustration of the tendency of the courts to bring a statement material enough to affect consent into the terms of the contract is offered by an English case arising out of a sale of hops by the plaintiff to the defendant. It appeared that, before commencing to deal, the defendant asked the plaintiff if any sulphur had been used in the treatment of that year's crop. The plaintiff said, "No." The defendant said that he would not even ask the price if any sulphur had been used. After this the parties discussed the price, and the defendant agreed to purchase the crop of that year. He afterwards repudiated the contract on the ground that sulphur had been used, and the plaintiff sued for the price. It was shown that the plaintiff had used sulphur over 5 acres, the entire growth consisting of 300 acres. He had used it for the purpose of trying a new machine, had afterwards mixed the whole growth together, and had either forgotten the matter or thought it unimportant. The jury found that the representation made by the plaintiff as to the use of sulphur was not willfully false, and they further found that "the affirmation that no sulphur had been used was intended by the parties to be a part of the contract of sale, and a warranty by the plaintiff." The court had to consider the effect of this finding, and came to the conclusion that the representation of the plaintiff was a part of the contract, and a preliminary condition, the breach of which entitled the defendant to be discharged from liability. Erle, C. J., said: "We avoid the term 'warranty' because it is used in two senses, and the term 'condition' because the question is whether that term is applicable. Then the effect is that the defendants required, and that the plaintiff gave, his undertaking that no sulphur had been used. This undertaking was a preliminary " stipulation; and, if it had not been given, the defendants would not have gone on with the treaty which resulted in the sale. In this sense it was the condition upon which the defendants contracted, and it would be contrary to the intention expressed by this stipulation that the contract should remain valid if sulphur had been used. The intention of the parties governs in the making and in the construction of all contracts. If the parties so intend, the sale may be absolute, with a warranty superadded; or the sale may be conditional, to be null if the warranty is broken. And, upon this statement of facts, we think that the intention appears that the contract should be null if sulphur had been used; and upon this ground we agree that the rule should be discharged." 64

63 Avery v. Willson, 81 N. T. 341, 37 Am. Rep. 503; post, p. 584. See "Sales," Dec. Dig. (Key-No.) §§ 248-251; Cent. Dig. §§ 707-710.