If a transaction is carried out on an Exchange as outlined in the preceding section, it seems difficult to see why an agreement between the broker and customer that the latter should only be required to settle differences, should make the transaction any more objectionable. The broker in no event can make or lose anything except the amount of his commisions, and interest, unless his customer becomes insolvent with insufficient margin and these opportunities of gain or loss are the same whether or not he makes the agreement suggested with his customer. Likewise the speculative risks of the customer are in no way affected by such an agreement with his broker, for even though no such agreement is made it is always possible by entering into new transactions on the Exchange to close his account by paying differences, and in any event he must get the gain or suffer the loss which advance or depreciation of what has been bought or sold for his account involves.

In England it seems that assuming the intention of the broker and customer to effect real transactions of purchase or sale, and that such transactions were entered into, it would probably be conclusive of the validity of the contract.38 Perhaps this is also true in New York; 39 but in Illinois,40 Massachusetts,41 and doubtless most other States,42 the agreement between the customer and broker may be held invalid though the transactions contemplated on the Exchange were valid.

38 20 Law Quar. Rev. 59, discussing Thacker v. Hardy, 4 Q. B. D. 686; Forget v. Ostigny, [1895] A. C. 318, and other cases.

39 See Clews v. Jamieson, 182 U. S. 461, 45 L. Ed. 1183, 21 Sup. Ct. 845;

Hurd v. Taylor, 181 N. Y. 231, 233, 73 N. E. 977; Springs v. James, 137 N. Y. App. D. 110, 121 N. Y. S. 1054.

40 Jamieson v. Wallace, 167 III. 388, 47 N. E. 762, 59 Am. St. Rep. 302.