This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
An executory contract may be discharged by a new contract entered into for that purpose between the parties thereto.1 Thus if the parties to a building contract enter into a new contract whereby the original contract is modified, the contractor can recover more than the original contract price if he has done more work than was originally contracted for.2 So if the builder under instructions from the architect departs from the plans, the owner of the building cannot on that account make a deduction from the contract price.3 No action can in such cases be maintained on the original contract.4 Thus if a written contract is modified by subsequent oral agreement, an action must be brought upon the contract as modified.5 An action can not be brought upon the original contract,6 even if the new contract is broken,7 still less if it is performed.8 The new contract may abrogate the earlier contract either expressly or by implication. The modification may be implied from the conduct of the parties.9 Thus A agreed to buy a share in certain property to be purchased. Before completing the purchase he gave notice that he withdrew, and the adversary party secured another subscriber for A's share. This was held to amount to an implied rescission of A's contract by consent.10 If an insurance company issues a policy containing certain grounds of forfeiture when it knows of the existence of one of such grounds, such clause of forfeiture is thereby waived.11 Thus a course of dealing with the agent of an insurance company may waive a provision requiring payment of premiums as a condition precedent to liability.12 A provision in a policy requiring proof of loss to be submitted in a certain time is waived by the act of the insurance company in agreeing to pay such loss, thereby causing the insured to delay submitting such proofs.13 The question of waiver of provisions in insurance policies is often complicated with questions of the authority of the agent by whom such alleged waiver is made. If he has no authority to waive such provision the insurance company is not bound by his acts.14 Thus under a provision that concurrent insurance should avoid a policy unless the agent indorsed such permission thereon in writing only, the knowledge of such agent that other insurance exists does not waive such provision of the policy.15 If the new contract abrogates the earlier contract by express terms, no question of the intention of the parties can usually arise.16 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.17 To operate as a discharge in the absence of an express agreement to that effect, the new contract must be clearly inconsistent with the continued existence of the original contract. A sold a blacksmith shop to B, and agreed, as a part of the consideration, not to engage in that business in that town. The fact that A and B subsequently formed a partnership in such business, did not as a matter of law discharge such contract absolutely. Accordingly, if, after the termination of such partnership, A continues such business, he is liable upon his covenant.18 A subsequent agreement between a contractor and a sub-contractor, whereby the contractor finishes the work for the sub-contractor, and agrees to pay him any balance over and above the cost of completing such work, does not operate as a complete discharge by
1 Smith v. Salt Lake City, 83 Fed. 784; Mylin v. King, 139 Ala. 319; 35 So. 998; Stewart, etc., Co. v. Krambs, 139 Cal. 313; 73 Pac. 854; Hutchinson v. Coonley, 209 111. 437; 70 N. E. 686; Chicago, etc., Ry. v. Moran, 187 111. 316; 58 N. E. 335; Smith v. Trust Co., 97 la. 117; 66 N. W. 84; Brunswig v. Chemical Co., 110 La. 214; 34 So. 417; Youngberg v. Lamberton, - Minn. - ; 97 N. W. 571; McCreery v. Day, 119 N. Y. 1 : 16 Am. St.' Rep. 793; 6 L. R. A. 503; 23 N. E. 198; Good v. Smith, - Or. - ; 76 Pac. 354; Murphy v. Bank. 184 Pa. St. 208; 39 Atl. 143: Flegel v. Hoover. 156 Pa. St. 276; 27 Atl. 162; Fitzgerald v.
Walsh, 107 Wis. 92; 81 Am. St. Rep. 824; 82 N. W. 717.
2 Smith v. Salt Lake City, 83 Fed. 784; Chicago, etc., Ry. v. Moran, 187 111. 316; 58 N. E. 335; Murphy v. Bank, 184 Pa. St. 208; 39 Atl. 143; Fitzgerald v. Walsh, 107 Wis. 92; 81 Am. St. Rep. 824; 82 N. W. 717.
3 Smith v. Trust Co., 97 la. 117; 66 N. W. 84.
4 Hayes v. Orr, 47 Fed. 286; Pittsburgh, etc., R. R. v. Smith, 26 O. S. 124.
5 Iroquois Furnace Co. v. Hardware Co., 201 111. 297; 66 N. E. 237.
6 Herreshoff v. Misch, 21 R. I. 524; 45 Atl. 145.
7 Sioux City Stock Yards Co. v. Packing Co., 110 la. 396; 81 N. W. 712; Napa Valley Wine Co. v. Daub-ner, 63 Minn. 112; 65 N. W. 143.
8 Lost Lake Lumber Co. v. Smitb. 29 Wash. 713; 70 Pac. 134.
9 Sutton v. Griebel, 118 la. 78; 91 N. W. 825; Evans v. Jacobitz, 67 Kan. 249; 72 Pac. 848.
10 Sutton v. Griebel, 118 la. 78;
91 N. W. 825.
11 Continental Life Ins. Co. v. Chamberlain. 132 U. S. 304; German Mutual Ins. Co. v. Niewedde. 11 Ind. App. 624; 39 N. E. 534; Baldwin v. Ins. Co.. 107 Ky. 356;
92 Am. St. Pep. 362; 54 S. W. 13;
Wright v. Fire Insurance Co.. 12 Mont. 474; 19 L. R. A. 211; 31 Pac. 87; German Ins. Co. v. Sha-der, 1 Neb. Unofficial 704; 60 L. R. A. 918; 96 N. W. 604; Hanover Ins. Co. v. Bohn, 48 Neb. 743; 58 Am. St. Rep. 719; 67 N. W. 774; Arthur v. Ins. Co.. 35 Or. 27; 76 Am. St. Rep. 450: 57 Pac. 62; Aetna Ins. Co. v. Holeomb. 89 Tex. 404; 34 S. W. 915; McQuillan v. Life Association, 112 Wis. 665; 88 Am. St. Rep. 986: 56 L. R. A. 233; 87 N. W. 1069; 88 N. W. 925.
12 Baldwin v. Ins. Co., 107 Ky. 356; 92 Am. St. Rep.. 362; 54 S. W. 13.
13 Kenton Ins. Co. v. Wigginton. 89 Ky. 330; 7 L. R. A. 81; 12 S. W.
668. So Thompson v. Ins. Co., 136 U. S. 287.
14 Northern Assurance Co. v. Building Association, 183 U. S. 308.
15 Northern Assurance Co. v. Building Association, 183 U. S. 308.
16 Green v. By., 92 Fed. 873; 35 C. C. A. 68; Sheats v. Scott, 133 Ala. 642; 32 So. 573; Arnold v. Pawtucket, 21 B. I. 15; 41 Atl. 576.
17Fox v. Tyler, 109 Fed. 258; 48 C. C. A. 356; Cleveland City By. Co. v. Cleveland, 94 Fed. 385; Kirk-lin v. Loan Association, 107 Ga. 313; 33 S. E. 83; Holt v. Silver,
169 Mass. 435; 48 N. E. 837; Bob-inson v. By., 84 Mich. 658; 48 N. W. 205; Fitzhugh v. Harrison, 75 Minn. 481; 78 N. W. 95; Frank v. Cobban, 20 Mont. 168; 50 Pac. 423; Nebraska National Bank v. Clark, 58 Neb. 183; 78 N. W. 527; Hall v. Eccles, 46 Neb. 880; 65 N. W. 1058; Wood v. Whitehead Bros. Co., 165 N. Y. 545; 59 N. E. 357; Green v. Paul, 155 Pa. St. 126; 25 Atl. 867; Sherman v. Sweeny, 29 Wash. 321; 69 Pac. 1117; Hogan v. Peterson, 8 Wyom. 49; 59 Pac. 162.
18 Drown v. Forrest, 63 Vt. 557; 14 L. B, A. 80; 22 Atl. 612.
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. 50 ki consistent with. his rights under such contract.2 An option to buy the fee is not as a matter of law, however, surrendered by taking a lease upon such realty.4 A agreed with B, a street railway company,to construct iron work and appliances for certain curves, at a certain rate per foot. Subsequently, by mutual agreement, the parties changed the weight of the iron to be used, and modified the specifications so as to make one curve where there had before been three. The distance was thus lengthened. It was held that in the absence of an express agreement to the effect that the same price per foot was to be paid, that such contract abrogated the original contract as to the rate per foot which A was to receive.5 A contract between a municipal corporation and a street railway company by which a certain rate of fare to be charged by a railway company is agreed upon, and the railway company assumes a liability for paving a certain place along its tracks, for which it was not before liable, and agrees to charge but one fare for transportation over its whole line, whereas, before it was entitled to charge in some cases more than one fare, abrogates the original contract between such railway company and city, fixing the rate of fare and reserving to the right to make subsequent changes in such rate.6 A contract for the sale of a certain number of tons of cotton seed at a certain price, is abrogated by a new c tract between the parties for the sale of a less number of tons at an increased price.7 If a new contract is entered into between the parties,upon the the same subject-matter, as an alleged prior contract, it has been held that the protest of one of the parties, claiming rights under such alleged prior contract, does not prevent the new contract from abrogating the earlier one.8 So if a contract is rescinded when abandonment of the original contract.19 Discharge by a new contract does not affect the liabilities of either party to the contract to third parties. If A enters into a contract with B, whereby B agrees to construct certain buildings, or do certain work for A, and A and B subsequently discharge such contract by mutual agreement, A does not thereby incur any liability to persons having sub-contracts with B.20
3 Harmon v. Harmon. 51 Fed. 113; linger v. linger, 85 0. S. 495; 63 X. E. 87.
4 Wade v. Oil Co. 45 W. Va. 880; 32 S. E. 169.
5 Marshall, etc. Co, v. Traction Co., 188 Pa, St. 268; 28 ,Atl 88
6 Cleveland City Ry. v. Cleveland, 94 Fed.385.
7 Consumers' Cottan-Oil Co.v.
Asaburn. 81 Fed. 331(The new contract was made after the vendor had repudiated his original contract to sell at a lower price.)
8 United States v Lamont, 155U. S.303.