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.
Whether it is the making of the new contract or the performance thereof that operates as a discharge of the original contract, is a question that depends on the intent of the parties. In the absence of any affirmative evidence of intention either way, and in cases involving contracts other than those for the payment of money,1 it is generally held that the making of the new contract operates as a discharge, in whole or in part, of the original contract;2 and that, accordingly, if the second contract is not performed, the right of the party who is not in default is based upon the second contract, and that he can not go back to the first contract and maintain an action thereon.3 If a building subcontract is rescinded by mutual agreement, and it is agreed that the contract for that part of the work which is not performed shall be awarded to the lowest bidder, the fact that after receiving bids, one of which was lower than that of the original subcontractor, the principal contractor completed the contract himself, does not give to the subcontractor the right to maintain an action upon the original contract.4
9 United States. Mt. Holly, etc., C. v. Caraleigh. etc., Works, 72 Fed. 244. 18 C. C. A. 535.
Georgia. Beasley v. Phoenix Ins. Co., 140 Ga. 126, 78 S. E. 722; People's Bank v. Insurance Co., 146 Ga. 514, L. R. A. 1917D, 86S, 91 S. E. 684.
Massachusetts. Fletcher v. New York Central & H. R. R. Co., 229 Mas*. 258, 118 N. E. 294.
Michigan. Campau v. Detroit, 106 Mich. 414, 64 N. W. 336.
Ohio. Baltimore & O. R. Co. v. Jolly, 71 Ohio 92, 72 N. E. 888.
Virginia. Rowland Lumber Co. v. Ross, 100 Va. 275, 40 S. E. 922.
Wisconsin. Skobis v. Ferge, 102 Wis. 122, 78 X. W. 426.
10Beasley v. Phoenix Ins. Co.. 140 Ga. 126, 78 S. E. 722; People's Bank v. Insurance Co., 146 Ga. 514, L. R. A. 1917D, 868, 91 S. E. 684.
11 Fletcher v. New York Central &
H. R. R. Co., 229 Mass. 258, 118 N. E. 294.
12See ch. XX et seq,
13Britt v. Aylett, 11 Ark. 475, 52 Am. Dec. 282; McCurdy v. Dillon, 135 Mich. 678. 98 N. W. 746; McCoy v. Flynn, 169 Ia. 622, L. R. A. 1915D. 1064. 151 N. W. 465; Cain v. Bonner, 106 Tex. 399, 3 A. L. R. 874, 194 S. W. 1098.
14 McCoy v. Flynn, 169 Ia. 622. L. R. A. 1915D, 1064, 151 N. W. 465 (obiter, as action was on new contract).
15 Harvey v. Morey, 22 Colo. 412, 45 Pac. 383.
1 For inferences arising out of a new contract when the original contract is one for the payment of money, see ch. LXXXI.
2 Hughes v. Brennan Construction Co., 24 D. C. App. 90; Sioux City Stock-Yards Co. v. Sioux City Packing Co.. 110 la. 396, 81 N. W. 712; St. Croi-
Co. v. Seaooast Canning Co., 114 Me. 521, 96 Atl. 1059; Napa Valley Wine Co. v. Daubner. 03 Minn. 112, 65 N. W. 143.
This rule seems to be at variance with the rule that treats a new contract for the payment of money as prima facie conditional payment or collateral security.5 It also seems at variance with the rule which permits the party who is not in default, to ignore the contract in case of breach by the adversary party, and to recover on the theory of quasi-contract.6