The Law Of Contracts Vol4| by William Herbert Page

Construction And Interpretation. Operation. Discharge

Title	The Law Of Contracts Vol4
Author	William Herbert Page
Publisher	The W. H. Anderson Company
Year	1919
Copyright	1919, The W. H. Anderson Company
Amazon	Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises

Part V. Construction And Interpretation. Chapter LXIII General Principles Of Construction: Sec. 2020. Nature of construction. Sec. 2021. Object of construction. Sec. 2022. Construction as fact or law. Sec. 2023. Intention deduced primarily from words ...

Sec. 2020. Nature Of Construction: If a question of construction becomes material, this necessarily implies that the contract is in every respect valid and enforceable, at least under one of the ...

Sec. 2021. Object Of Construction: The primary object of construction in contract law is to discover the intention of the parties,1 as it existed at the time that the contract was made.2 The ...

Sec. 2022. Construction As Fact Or Law: The intention of the parties, which it is the primary object of construction to discover, is a fact. It is frequently said that if the contract is in writing ...

Sec. 2023. Intention Deduced Primarily From Words Employed: The intention of the parties in express contracts is, in the first instance, embodied in the words which the parties have used and is to be deduced therefrom.1 ...

Sec. 2024. Ordinary Meaning Of Word Prima Facie Correct: The ordinary meaning of a word is prima facie that employed,1 and will be used in construction unless the context,2 or admissible evidence,3 shows that another ...

Sec. 2025. Context And Subject-Matter Control Meaning Of Word: The context and subject-matter may affect the meaning to be given to the words of a contract,1 especially if in connection with the subject-matter the ordinary ...

Sec. 2026. General And Specific Words - Noscitur A Sociis: If general words are used in connection with specific words, the specific words generally follow the intention of the party with greater exactness, and ...

Sec. 2027. Technical Meaning: Words of technical meaning will be given that meaning,1 unless the context shows that the ordinary meaning was intended.2 Thus horsepower in a contract for the ...

Sec. 2028. Meaning Of Word Controlled By Usage: Usages,1 such as those of a trade,2 may be resorted to, to show the special meanings of words. Evidence of a local usage as to the meaning of the word 22 ...

Sec. 2029. Cipher: If a contract consists in part or all of cipher, extrinsic evidence is admissible to show the meaning of the terms written in cipher contracts by telegraph.1 ...

Sec. 2030. Abbreviations: If abbreviations are used in a written contract, extrinsic evidence is admissible to show that they have a meaning in the trade or business to which the ...

Sec. 2031. Grammatical Accuracy And Punctuation: Unless a contrary intention appears upon the face of the contract, it will be presumed that the contract is drawn grammatically and punctuated properly and ...

Sec. 2032. Omissions, Errors And Surplusage: Words which are omitted by inadvertance from a written contract may be supplied by construction at law, without resort to reformation if the context shows what ...

Sec. 2033. Intention Of Parties Direct As Affecting Meaning Of Term: If the parties have used words which have an ordinary meaning free from ambiguity, and no technical meaning is shown, extrinsic evidence is inadmissible to ...

Intention Of Parties Direct As Affecting Meaning Of Term. Continued: The term market value can not be modified by extrinsic evidence. Bockian v. United Candy Co., 91 N. J. L. S14, 102 Atl. 393. A contract which provides for ...

Sec. 2034. Practical Construction By Parties: If a contract is ambiguous in meaning, the practical construction put upon it by the parties thereto is of great weight, even though the contract is in writing, ...

Practical Construction By Parties. Part 2: New Jersey. Ryer v. Turkel, 75 N. J. L. 677, 70 Atl. 68. New York. Sattler v. Hallock, 160 N. Y. 291, 73 Am. St. Rep. 686, 46 L. R. A. 679, 54 N. E. 667; New ...

Practical Construction By Parties. Part 3: West Virginia. Myers v. Carnahan, 61 W. Va. 414, 57 S. E. 134. Wisconsin. Hosmer v. McDonald, 80 Wis. 54, 49 N. W. 112. Wyoming. J. W. Denio Milling Co. v.

Sec. 2035. Practical Construction Distinguished From New Contract: In some of the cases in which the practical construction of the parties has been considered, the words and the conduct of the parties suggest a new contract ...

Sec. 2036. Actual Intention As Affecting Construction: Whether the intention of the parties which the courts are to ascertain is the intention which the particular parties to the contract actually entertained as a ...

Sec. 2037. Priority Of Clauses: A rule sometimes laid down, though rarely observed, is that in case of conflict between two clauses that first in place is to control,1 at least if the first ...

Sec. 2038. Contract Construed As A Whole: As the object of construction is to ascertain the intention of the parties, the contract must be considered as an entirety. The problem is not what the ...

Sec. 2039 General Paramount Intent Controls Special Intent: The contract being construed as a whole, it follows that one part of it may affect the construction of a different part.1 An illustration of this is found ...

Sec. 2040. Every Part Of Contract Given Effect If Practicable: The parties have inserted each provision in the contract, and accordingly, if possible, a contract should be so construed as to give effect to each provision ...

Sec. 2041. Headings And Marginal Annotations As Part Of Contract: Whether a printed letterhead or billhead is to be regarded as a part of the contract which is written underneath so as to modify the meaning and effect thereof, ...

Sec. 2042. Covenant Implied From Writing Equivalent To Written Promise: Since a contract is to be construed as a whole, terms which can be inferred from a consideration of the entire instrument are as much a part of the contract as ...

Sec. 2043. Written And Printed Provisions: If the contract is written in part and printed in part, as where it has been filled in upon a printed form, the parties usually pay much more attention to the ...

Sec. 2044. Incorporation Of Writing By Reference: Since a contract must be construed as a whole, effect must be given to writings incorporated in the contract by reference.1 An instrument which is in the form ...

Sec. 2045. Reference For Specific Purpose: If a reference is made to another instrument for a specific purpose, such reference incorporates such instrument for that purpose only.1 A reference in a ...

Sec. 2046. Different Writings Construed Together: To have two or more writings construed together it is not necessary that one of them should refer to the other in express terms. If two or more writings are ...

Different Writings Construed Together. Continued: 7 Young v. Borzone, 26 Wash. 4, 23, 66 Pac. 135, 421. 1 United States. Joy v. St. Louis, 138 U. S. 1, 34 L. ed. 843. Alabama. Prichard v. Miller, 86 Ala. 500, ...

Sec. 2047. Extrinsic Matters As Terms Of Contract: When we pass from consideration of the words of the contract to the question of what else may be regarded as a term of such contract, we are met with a ...

Sec. 2048. Law As Term Of Contract: It is impracticable and impossible to set forth in writing all the different stipulations and provisions which, by the operation of law, are terms of the ...

Sec. 2049. Nature Of Law As Affecting Contract: Certain provisions of law are of such a character that the parties can not prevent the application of such legal principles by any contractual provisions.1 ...

Sec. 2050. Contract To Be Upheld By Construction If Possible: As between two constructions, each reasonable, one of which will make the contract enforceable, and the other of which will make it unenforceable, that ...

Sec. 2051. Legal Construction Preferred To Illegal Construction: If one of two possible constructions will make a contract legal and another will make it illegal, the former is to be preferred.1 So a construction which will ...

Sec. 2052. Construction To Protect Public Interest: If the interest of the public is affected by a contract, it should be construed so as to protect such interest.1 A contract for exemption from taxation is to ...

Sec. 2053. Contract Construed To Be Fair And Reasonable: As between two constructions, each probable, one of which makes the contract fair and reasonable and the other of which makes it unfair and unreasonable, the ...

Sec. 2054. The Rule Contra Proferentem: If terms of a contract appear on their face to be inserted for the benefit of one of the parties, he will be considered as having inserted such terms and as ...

The Rule Contra Proferentem. Continued: A contract of suretyship is construed strictly in favor of the surety, if he does not receive value for becoming surety.13 This rule, however, does not require ...

Sec. 2055. Rules And By-Laws: Rules of a voluntary association are a part of a contract for membership in such association entered into between the association and a member thereof.1 A ...

Sec. 2056. Usages And Customs As Terms Of Contract: In many kinds of business, however, a great number of usages and customs have gradually been built up. These customs are rarely carried in express terms into ...

Sec. 2057. Elements Of Usage Or Custom: The terms usage and custom with reference to trade are practically synonymous. It has been suggested that a usage is a method of doing business which the ...

Sec. 2058. Usage Or Custom Contrary To Express Terms Of Con-Tract: It is perfectly possible for parties to make contracts which are not controlled by given usages. This may be done by expressly providing against them; but it ...

Usage Or Custom Contrary To Express Terms Of Con-Tract. Part 2: Kentucky. Shaw v. Ingram-Day Lumber Co., 152 Ky. 329, L. R. A. 1915D, 145, 153 S. W. 431. Hew York. Fuller v. Robinson, 86 N. Y. 306, 40 Am. Rep. 540.

Usage Or Custom Contrary To Express Terms Of Con-Tract. Part 3: Colorado. Union Pacific Ry. v. Anderson, 11 Colo 293, 18 Pac. 24; True v. Rocky Ford Canal, Reservoir & Land Co., 36 Colo. 43, 85 Pac. 842; Fearnley v Fearnley, ...

Usage Or Custom Contrary To Express Terms Of Con-Tract. Part 4: 5 United States. Rockefeller v. Mer-ritt, 76 Fed. 909, 35 L. R. A. 633, 22 C. C. A. 608; Kauffman v. Raeder, 108 Fed. 171, 54 L. R. A. 247. 47 C. C. A. 278; ...

Sec. 2061. Function Of Court And Jury In Construction - Terms And Extrinsic Fact Not In Dispute: The construction of a contract is a question for the court if the terms of the contract and the extrinsic facts which may affect construction are free from ...

Sec. 2062. Single Inference Possible: If the contract is ambiguous so that explanatory evidence is admissible and such evidence establishes certain facts without dispute so that only one inference ...

Sec. 2063. Terms In Dispute: If, on the other hand, the terms of the contract are in dispute,1 or if it is possible to draw more than one inference from the surrounding circumstances which ...

Sec. 2064. Extrinsic Facts In Dispute Or Inferences Doubtful: The rule that questions as to the terms of the contract must be submitted to the jury, applies in written contracts where the admissible extrinsic evidence is ...

Sec. 2065. Construction Can Not Extend To Reformation: Under cover of construction a court can not reform a written contract to make it express the real intention of the parties, which by mistake is not expressed ...

Chapter LXIV. Joint And Several Liability: Sec. 2066. Nature of liability of two or more promisors. Sec. 2067. Intention controls - Words importing joint liability. Sec. 2068. Words importing several ...

Sec. 2066. Nature Of Liability Of Two Or More Promisors: If two or more persons constitute one party to a contract, the question as to the nature of their rights and liabilities presents itself. If two or more ...

Sec. 2067. Intention Controls - Words Importing Joint Liability: Whether the liability of the promisors is joint, or several, or joint and several, depends upon the intention of the parties as ascertained from the contract ...

Sec. 2068. Words Importing Several Liability: Language which shows an intention on the part of each promisor to assume only a part of the entire liability imports a several contract.1 Thus such language as ...

Sec. 2069. Words Importing Joint And Several Liability: If the language used show's an intention to assume a liability, either joint or several in its nature, at the option of the promisee, this imports a joint and ...

Sec. 2070. Liability Of Sole Promisor: While the intention of the parties is paramount in determining the nature of the liability of two or more promisors, it is impossible, no matter how clear the ...

Sec. 2071. Effect Of Joint Liability - Parties To Actions: The adjective law is so closely connected with the substantive law that a statement of the effect of these different types of contract is in outward form ...

Sec. 2072. Death Of Joint Promisor: At common law, the death of a joint promisor discharged his estate and left the survivors liable for the entire amount of the debt.1 The promisee could not ...

Sec. 2073. Judgment Against One Joint Promisor: A judgment rendered against one joint promisor in an action in which the remaining joint promisors could have been made parties is a bar to a subsequent action ...

Sec. 2074. Release Of Joint Promisor: At common law a technical release under seal which was given to one joint promisor enured to the benefit of all.1 In some of the cases in which a release of a ...

Sec. 2075. Effect Of Several Contract: If the promisors are severally liable, the promisee must sue each for his proportion of the indebtedness. He can not, in the absence of statute, join two or ...

Sec. 2076. Effect Of Joint And Several Contract: A joint and several promise amounts in legal effect to a joint promise by all and to a several promise by each.1 Accordingly, the party for whose benefit such ...

Sec. 2077. Words Importing Joint Or Several Rights: If two or more persons are promisees, their rights arising under the contract may be either joint or several. Whether their rights are joint or several depends ...

Sec. 2078. Joint And Several Rights: In the absence of statute the interest of the promisees can not be made joint and several at the same time by any form of words.1 Such a contract creates a ...

Sec. 2079. Effect Of Joint Interest - Promisees Must Join In Action: The joint promisees must all, if living, join in the action.1 10 Curry v. Kansas & Colorado Pacific Ry. Co., 58 Kan. 6, 48 Pac. 579. 1 Keightley v. Watson, 3 ...

Sec. 2080. Death Of Joint Promisee: At common law on the death of a joint promisee his interest passed to the surviving promisees.1 If by the death of the other joint promisees the interest has ...

Sec. 2081. Release By Joint Promisee: At law a release given by a joint promisee discharged the debt as to all the promisees.1 Thus a release given by one partner binds his co-partners2 It has been ...

Sec. 2082. Effect Of Several Interests: A promise to two or more promisees severally gives to each a right to demand performance,1 and each may bring an action upon the contract.2 A contract by which ...

Chapter LXV. Entire And Severable Contracts: Sec. 2083. Definition and nature of entire and severable contracts. Sec. 2084. Practical importance of distinction. Sec. 2085. Intention of parties controlling.

Sec. 2083. Definition And Nature Of Entire And Severable Contracts: If a contract contains two or more covenants on either side, the question arises as to whether it is entire or severable. An entire contract is one the ...

Sec. 2084. Practical Importance Of Distinction: An abstract definition of an entire contract or of a severable contract is difficult; and this difficulty extends to the rules for ascertaining the intention ...

Sec. 2085. Intention Of Parties: controlling. Whether a contract is entire or severable depends primarily upon the intention of the parties,1 as determined by the ordinary rules of ...

Sec. 2086. Methods Of Ascertaining Intention - Form Of Contract: The form in which the contract is made or the number of instruments in which its terms are to be sought, is not conclusive of the question of its entire or ...

Sec. 2087. Character Of Subject-Matter: If the subject-matter of the contract is indivisible, the contract must necessarily be entire.1 A contract to dredge a channel to a certain depth and to dredge ...

Sec. 2088. Apportionment Of Consideration: One of the most certain of the single tests for determining the intention of the parties is whether the consideration on the one side is apportioned to each of ...

Apportionment Of Consideration. Continued: 15 Mattison v. Connerly, 46 Mont. 103, 126 Pac. 851. 16Carr v. Hahn, 133 Ark. 401, 202 S. W. 685; Sauser v. Kearney, 147 Ia. 335, 126 N. W. 322; Elliott Supply ...

Sec. 2089. Application Of General Principles To Specific Types Of Contract: While the courts generally repeat the formula that the intention of the parties is decisive as to the entire or severable character of the contract, and while ...

Application Of General Principles To Specific Types Of Contract. Part 2: Nebraska. Lindsey v. Heaton, 27 Neb, 662, 43 N. W. 420; Lyman v. Lincoln, 38 Neb. 794, 57 N. W. 531; Doll v. Crume, 41 Neb. 655, 59 N. W. 806; Boughn v. Smith, ...

Application Of General Principles To Specific Types Of Contract. Part 3: 955; Ridgway v. Wetterhold, 96 Kan. 736, 153 Pac. 490. Kentucky. Kimbrough v. Lane, 74 Ky. (11 Bush.) 556; McLane's Administrator v. Dixon (Ky.), 99 S. W. 601; ...

Sec. 2090. Specific Illustrations: A contract by which A is to perform services for B in his law office, for a specified time, in consideration of a certain portion of the fees received, is an ...

Chapter LXVI. Nature Of Liability Assumed: Sec. 2091. Nature of liability assumed. Sec. 2092. Signature by one person with addition of personal description. Sec. 2093. Signature by two or more persons ...

Sec. 2091. Nature Of Liability Assumed: The nature of the liability created by signing a written instrument is a question of construction. The general rule undoubtedly is that the entire contract ...

Sec. 2092. Signature By One Person With Addition Of Personal Description: As in other questions of construction,1 the object of the courts in determining the nature of the liability which is assumed by a party who executes a contract ...

Sec. 2093. Signature By Two Or More Persona With Addition Of Personal Description: If two or more persons sign, and the question of the existence of personal liability is presented, there is as much of a conflict as where one only signs, but ...

Sec. 2094. Signature By Names Of Principal And Agent: If the note is signed by the name of the principal, with the name of the agent subscribed below that of the principal, without the use of the word by to show ...

Sec. 2095. Nature Of Liability As Affected By Words Of Instrument: Since the contract is to be construed as a whole,1 the words of the instrument by which a promise is made must be considered in connection with the form of the ...

Sec. 2096. Liability Assumed By Public Officers: An important difference between contracts of public agents and contracts of private agents is in the construction of liability intended to be assumed. We have ...

Chapter LXVII. Time: Sec. 2097. Construction of terms concerning time of performance. Sec. 2098. Reasonable time intended if time not fixed. Sec. 2099. Reasonable time - Whether ...

Sec. 2097. Construction Of Terms Concerning Time Of Performance: The time at which a contract is to be performed depends upon the intention of the parties as ascertained from the language which they have used as interpreted ...

Construction Of Terms Concerning Time Of Performance. Continued: 11 Houston, etc., Ry. v. Keller, 90 Tex. 214, 37 S. W. 1062. 12 Te Poel v. Shutt, 57 Neb. 592, 78 N. W. 288. 13 Oconto Co. v. Lundquist, 119 Mich. 264, 77 N. W.

Sec. 2098. Reasonable Time Intended If Time Not Fixed: If the contract does not fix a time for performance and the obligation is something other than the payment of money which is due and owing when the contract is ...

Reasonable Time Intended If Time Not Fixed. Continued: West Virginia. Poling v. Lumber Co., 55 W. Va. 529, 47 S. E. 279. 2 Poling v. Condon-Lane Boom & Lumber Co., 55 W. Va. 529, 47 S. E. 279. 3 See Sec. 2103 et ...

Sec. 2099. Reasonable Time - Whether Question Of Law Or Fact: What is a reasonable time for performance is a question of fact to be determined as a fact, in view of the circumstances of the case.1 Accordingly, if an ...

Sec. 2100. Time Of Performance With Reference To Extrinsic Fact: The time of performance is sometimes made to depend upon the doing of some specified act other than that which the parties to the contract agree to do or it is ...

Sec. 2101. Performance Not Due Till End Of Stipulated Time: If a certain time is fixed within which performance may be made, the party owing performance has the entire time thus fixed, within which to perform. Thus ...

Sec. 2102. Premature Tender: If the contract fixes a certain time for performance, the party from whom performance is due has no right to perform before that time. Hence, premature tender ...

Sec. 2103. Time Of Essence Of Contract - Meaning Of Term: When it is said that time is of the essence of a contract, it means that the provision in the contract which fixes the time of performance is to be regarded as ...

Sec. 2104. Time Of Essence At Law: At law the general rule is that time is of the essence of the contract unless a contrary intent appears from the face of the contract.1 A contract for the sale ...

Sec. 2105. Time Not Of Essence In Equity: In equity, on the other hand, the general rule may be said to be that time is not of the essence of the contract.1 It must affirmatively appear that the ...

Sec. 2106. Tendency Of Modern Law To Regard Time As Not Of Essence: The tendency of modern law is to hold that the question whether or not time is of the essence of the contract, is to be regarded as a question of construction, ...

Sec. 2107. Express Provision Making Time Of Essence: If there is an express provision making time of the essence of the contract, full effect must be given to it.1 Effect will be given to such a provision in ...

Sec. 2108. Implied Provision Making Time Of Essence: Although there is no express provision in a contract which makes time of the essence, the contract taken as a whole and construed in connection with the ...

Sec. 2109. Nature Of Property Contracted For: The nature of the property concerning which the contract is made may show that time was of the essence of the contract. If the property is one of fluctuating ...

Sec. 2110. Time Of Subsidiary Provision Not Of Essence: Time is not regarded as of the essence of a contract where it concerns a provision, a breach of which does not constitute a total failure of consideration.1 ...

Sec. 2111. Time Of Essence In Subscriptions: Contracts of subscription, whereby the promisor agrees to pay money if a certain work is completed by a specified time, such as a subscription to aid a railway; ...

Sec. 2112. Time Of Essence In Options: The contract has thus far been considered in determining whether time is of the essence or not. When we turn from contracts to options, we find that both at ...

Chapter LXVIII. Penalties And Liquidated Damages: Sec. 2113. Nature of penalty and liquidated damages. Sec. 2114. Alternative contracts - General nature. Sec. 2115. Effect of alternative covenant. Sec. 2116.

Sec. 2113. Nature Of Penalty And Liquidated Damages: A contract for a penalty is an agreement to pay a stipulated sum in case of default, intended to coerce performance, to punish default, or to secure payment of ...

Sec. 2114. Alternative Contracts - General Nature: An alternative contract is one which gives to one of the parties the choice of doing one of two or more different acts as performance of the contract.1 If one ...

Sec. 2115. Effect Of Alternative Covenant: If the contract is in the alternative, an action can not be brought for breach of one of the covenants if the promisor is ready and willing to perform the ...

Sec. 2116. Penalty In Form Of Alternative Covenant: The outward form of the contract is not, of course, decisive of the question. If it were, an easy method of evading the rules as to penalties would be ...

Sec. 2117. History Of Penalty In Contract Law: At common law, a contract to pay a specified sum of money upon the happening of a certain event, was enforced according to its terms. The fact that the sum of ...

Sec. 2118. Legal Effect Of Each Compared - Penally: The importance of the distinction between liquidated damages and penalty consists in the effect which the courts give to the two kinds of stipulation. At ...

Sec. 2119. Liquidated Damages: If a stipulation is one for liquidated damages, the amount contracted for may be recovered.1 Proof of actual damage is unnecessary,2 since the object of such a ...

Sec. 2120. Effect Of Name Employed: The use of the term penalty, or liquidated damages, is not conclusive.1 On the one hand, a provision for liquidated damages may appear from the context of the ...

Sec. 2121. Intention Of Parties Controls: The intention of the parties is said to be paramount and controlling.1 The fact that the provision for so-called liquidated damages was inserted by the ...

Sec. 2122. "Artificial Rules" For Determining Question: To lay down a general test, or set of tests, for determining whether a stipulation is for a penalty or liquidated damages, is even more difficult than the ...

Sec. 2123. Difficulty Of Proving Actual Damages: One test which has been suggested is whether it is easy or difficult to prove the actual damages. Where this test is recognized it is held that if the actual ...

Difficulty Of Proving Actual Damages. Continued: Arkansas. Scott v. McCraw, Perkins & Webber Co., 119 Ark. 133, 177 S. W. 901. Colorado. Bilz v. Powell, 50 Colo. 482, 38 L. R. A. (N.S.) 847, 117 Pac. 344. New ...

Sec. 2124. Relation Of Stipulated Amount To Actual Damage: Another test which has been suggested is whether the amount stipulated for is greatly in excess of the actual damages or not. Where this test is applied, it is ...

Sec. 2125. One Penalty For Breaches Of Different Covenants: Another test which has met with general favor is the following: If provision is made for breach of several different covenants of a contract, and a gross sum ...

Sec. 2126. Breach Of Single Covenant: If the amount fixed is to be paid in case of breach of a single covenant, it is, if fair and reasonable, to be treated prima facie as a covenant for liquidated ...

Sec. 2127. Forfeiture Of Deposits And Part Payments: Agreements are frequently made that one or both parties to a contract shall deposit a certain sum of money which is to be the property of the other if the ...

Sec. 2128. Default In Payment Of Money - Larger Sum Due: If the default which is to make a specified sum due and payable is itself the non-payment of a smaller sum of money, the question whether the contract is for a ...

Sec. 2129. Increase In Rate Of Interest: A contract that if default is made in paying a debt when due, the debt shall bear a higher rate of interest after maturity than it did before, is not a ...

Sec. 2130. Other Provisions: A provision that default in payment of one installment of interest will make the whole debt due and payable is held in some jurisdictions to be a penalty,1 ...

Sec. 2131. Application Of General Principles - Building Contracts: Provisions in a building or construction contract, that the con-tractor shall pay a certain sum per day if the building or other work is not completed by the ...

Sec. 2132. Sale Of Personalty: In a contract for the sale of personal property, a provision for the payment of a reasonable sum in case of breach, has been held to be liquidated damages.1 A ...

Sec. 2133. Sale Of Good Will - Reasonable Restraint Of Trade: Contracts for the sale of good will, which contain a covenant in reasonable restraint of trade, often provide for the amount of damage to be paid in case of ...

Sec. 2134. Sale Of Realty: Under a contract for the sale of realty, a provision for the payment of a certain sum in case of breach, is held in some jurisdictions to be a provision for ...

Sec. 2135. Lease Of Realty Or Personalty: An agreement to pay a certain sum of money in case of the violation of a covenant of a lease, is held to be a provision for liquidated damages if apportioned ...

Sec. 2136. Contracts For Royalties: Provisions fixing the amount of royalty to be paid for the use of another's mine, patent, and the like, are usually held not to be penalties. A provision in a ...

Chapter LXIX. The Parol Evidence Rule: I. SCOPE OF RULE Sec. 2137. Statement of rule. Sec. 2138. Application of parol evidence rule at law and in equity. Sec. 2139. Place of rule in law. Sec. 2140.

Sec. 2137. Statement Of Rule: If the parties to a contract have reduced it to writing, and if such written contract is clear and unambiguous,1 and if it appears upon its face to be complete ...

Sec. 2138. Application Of Parol Evidence Rule At Law And In Equity: The parol evidence rule applies to actions at law, whether they are brought upon the contract to enforce it or whether the contract is used as a means of ...

Application Of Parol Evidence Rule At Law And In Equity. Continued: 3Maxson v. Ashland Iron Works, 85 Or. 345, 166 Pac. 37. 4 See Sec. 112211 et seq. 5Jilek v. Zahl, 162 Wis. 157, 155 N. W 900. 6 Connecticut F. Ins. Co. v.

Sec. 2139. Place Of Rule In Law: The question of the application of the rule is generally raised by objection to the admission of oral evidence to show the intention of the parties. The parol ...

Sec. 2140. Waiver Of Parol Evidence Rule By Failure To Interpose Objection To Evidence: If the parol evidence rule is a rule of substantive law and the evidence of prior or contemporaneous negotiations is inadmissible, and not because of any ...

Waiver Of Parol Evidence Rule By Failure To Interpose Objection To Evidence. Continued: 2 In re Winzenreid's Estate, 165 Wis. 63, 160 N. W. 1064. evidence, and, hence, that it should be disregarded, he impliedly consented that it should be ...

Sec. 2141. Oral Terms As Part Of Contract For Purpose Of Consideration: In at least another respect there is some authority for saying that the parol evidence rule is merely a rule of evidence. If A and B have agreed upon certain ...

Sec. 2142. Relation Of Parol Evidence Rule To Rules Requiring Writing Or Written Evidence: As far as the parol evidence rule itself is concerned, it makes no difference what the subject-matter of the contract is, with what formalities the contract ...

Sec. 2143. What Is "Written Contract" In Parol Evidence Role: The parol evidence rule applies to contracts in which the parties have attempted to reduce all the terms to writing in one instrument which they have then ...

What Is "Written Contract" In Parol Evidence Role. Continued: Kansas. First National Bank v. Staab, 102 Kan. 369, 171 Pac. 3. Michigan. Northern Assurance Co. v. Meyer, 194 Mich. 371, 160 N. W. 617. Worth Carolina. Pierce ...

Sec. 2144. Written Contract Merges Prior Negotiations: In an action on an unambiguous written contract, which is complete in itself, and the validity of which is conceded, the parties are not permitted to show that ...

Sec. 2145. Evidence Inadmissible To Contradict Written Contract: Extrinsic evidence is inadmissible to contradict the intention of the parties as expressed in a written contract by showing a prior or contemporaneous oral ...

Evidence Inadmissible To Contradict Written Contract. Part 2: 17 Rector v. Deposit Co., 100 111. 380, 60 N. E. 528. 18Gilbert v. Stockman, 76 Wis. 62. 20 Am. St. Rep. 23, 44 N. W. 845, and see Garwood v. Wheaton, 128 Cal.

Evidence Inadmissible To Contradict Written Contract. Part 3: 15 Oliver v. Brown, 102 Ga. 157, 29 S. E. 159; Jacob Tome Institution v. Davis, 87 Md. 591, 41 Atl. 166. 16 Anderson v. Ins. Co., 112 Ga. 532, 37 S. E. 766.

Evidence Inadmissible To Contradict Written Contract. Part 4: 67 Grand Isle v. Kinney, 70 Vt. 381, 41 Atl. 130. 68Russell v. Smith, 115 Ia. 261, 88 N. W. 361. 69Norman v. Norman, 11 Ind. 288; Brook v. Latimer, 44 Kan. 431, ...

Sec. 2146. Evidence Of Intention Direct Inadmissible: Extrinsic evidence is inadmissible in an action on an unambiguous written contract, to show the understanding of the meaning and effect of such contract ...

Sec. 2147. Evidence Of Intention Direct Inadmissible To Vary Written Contract: Extrinsic evidence of prior or contemporaneous oral agreements between parties is inadmissible to vary the terms of the written contract which they have ...

Sec. 2148. Legal Effect Of Contract Can Not Be Contradicted: The rale that prior or contemporaneous negotiations can not be used to contradict, add to, or otherwise vary, a written contract applies not merely to the ...

Legal Effect Of Contract Can Not Be Contradicted. Continued: 4 Cocker v. Mfg. Co., 3 Sumn. (U. S.) 530; Coates v. Sangston. 5 Md. 121. 5 Harmon v. Michigan United Traction Co.. - Mich. - , 168 N. W. 521. The duration of ...

Sec. 2149. Prima Facie Inferences Subject To Contradiction: Some of the inferences as to the legal effect and operation of a contract, which are drawn from the terms which are in writing, are merely prima facie. Such ...

Sec. 2150. Limitations Of The Rule: From the statement of the parol evidence rule, it evidently can apply only under a combination of certain facts. The rule applies: (1) where there is a ...

Sec. 2151. Incomplete Contracts: The parol evidence rule has but a limited application to contracts and memoranda which show upon their face that they are incomplete and which are not required ...

Incomplete Contracts. Continued: A written order for goods which does not purport to set forth the terms of the contract, may be shown to be an order given in pursuance of a prior oral ...

Sec. 2152. Express Provision Negativing Extrinsic Agreement: A written contract frequently contains an express provision to the effect that all the terms of the contract between the parties are set forth in such writing.

Sec. 2153. What Contracts Are Incomplete: In order that a written contract may be treated as incomplete, so as to make extrinsic evidence of other terms admissible, it must show upon its face that it ...

What Contracts Are Incomplete. Continued: It has been said that if a contract is bilateral and on its face purports to set out the mutual undertakings of the parties, the presumption that it sets out ...

Sec. 2154. Purpose Of Instrument: If the instrument does not show on its face what its purpose was, extrinsic evidence is admissible to show what that purpose was, if such evidence does not ...

Purpose Of Instrument. Continued: 36 Clark v. Townsend, 96 Kan. 650, 153 Pac. 555 [rehearing denied, Clark v. Townsend, 97 Kan. 161, 154 Pac 1009]. 37 Emery v. Hanna (Neb.), 94 N. W. 973.

Sec. 2155. Written Evidence: Since the parol evidence rule applies solely to written contracts, in actions brought to enforce them, it does not forbid the use of extrinsic evidence to ...

Sec. 2156. Recital Of Facts - Receipts: A receipt, if free from contractual terms, is a mere recital of the fact of the payment of money or delivery of property. The parol evidence rule does not ...

Sec. 2157. Receipts And Releasee Containing Contractual Terms: An instrument which is in part a receipt may also contain contractual terms. In such case, while the part of it which is a receipt may be contradicted by ...

Sec. 2158. Consideration Recited As Fact: If the consideration is not recited in the written contract, or if recited appears only as a recital of fact and not as a contractual term, extrinsic evidence ...

Sec. 2159. Receipts In Full: Whether an instrument which acknowledges a receipt in full of obligations is to be regarded as contractual in its character, so that extrinsic evidence can not ...

Sec. 2160. Extrinsic Evidence As To Consideration Contradicting Legal Effect Of Instrument: If the extrinsic evidence which is offered for the purpose of showing the true consideration is inconsistent with the contractual provisions of the instrument ...

Sec. 2161. Recital Of Consideration In Deeds And In Contracts For Deeds: The purpose of a deed is primarily to convey title to realty,1 and under the ordinary form of a deed the consideration is recited as a fact and is not stated ...

Sec. 2162. Recital Of Consideration In Mortgages: If the mortgage recites the consideration, such recital does not prevent the parties from showing the true consideration.1 The recital of a consideration in a ...

Sec. 2163. Recital Of Consideration In Leases: In the same way the recital of a consideration in a lease is presumed to be a recital of the true consideration, but extrinsic evidence may be offered to show ...

Sec. 2164. Recital Of Consideration Contradicted To Render Transaction Inoperative Or Defeat Legal Effect: It is often said that the rule which permits the introduction of extrinsic evidence to contradict the recital of a consideration is limited to cases in which ...

Recital Of Consideration Contradicted To Render Transaction Inoperative Or Defeat Legal Effect. Part 2: 6Lindlay v. Raydure, 239 Fed. 928. Probably at modern law a deed needs no expressed consideration, although most courts avoid deciding this question wherever ...

Recital Of Consideration Contradicted To Render Transaction Inoperative/Defeat Legal Effect. Part 3: The language in reference to the consideration in the policy in question is not contractual, but merely by way of recit- This principle has been enacted in ...

Recital Of Consideration Contradicted To Render Transaction Inoperative and Defeat Legal Effect. Part 4: 24 Colorado. Rude v. Levy, 43 Colo. 482, 24 L. R. A. (N.S.) 91, 96 Pac. 560. Kansas. Rice v. Rice, 101 Kan. 20, 165 Pac. 799; Moon v. Moon, 103 Kan. 179, 173 ...

Sec. 2165. Oral Contract As Inducement: The principle that the consideration may be shown has been extended to cases where an oral contract has been proved as a consideration for the written contract, ...

Sec. 2166. Consideration As Contractual Term: If the consideration appears in the written contract as a contractual term thereof, an oral agreement whereby an additional or other consideration is provided ...

Sec. 2167. Rule Does Not Apply To Actions Between Parties To Contract, But Not Involving Contract: In the cases which have been discussed in the preceding sections, the question of the scope and extent of the parol evidence rule has risen in actions upon the ...

Sec. 2168. Rule Does Not Apply To Strangers To Contract: The parol evidence rule applies only between the parties to the contract and those claiming under them, and is limited to actions upon the contract.1 In many ...

Rule Does Not Apply To Strangers To Contract. Continued: L. R. A. (N.S.) 226, 117 N. W. 1118; Lanz v. Schumann, 175 Ia. 542, 154 N. W. 911; Moore v. St. Paul Fire &. Marine Insurance Co., 176 Ia. 549, 156 N. W. 676; ...

Sec. 2169. Who Are Strangers To Contract: The fact that the person who attempts to contradict the written contract was not a party thereto, when such contract was entered into, is not sufficient of ...

Sec. 2170. Application Of Foregoing Principles To Releasee And Covenants Not To Sue: If a release which is not under seal has been given to one of two joint wrongdoers, the other wrongdoer is a stranger thereto, within the meaning of the parol ...

Sec. 2171. Parol Evidence Rule Does Not Apply Where Existence Or Validity Of Contract Is In Issue: The parol evidence rule presupposes an action based on a valid contract, and between the parties thereto or those claiming under them or those claiming under ...

Sec. 2172. Facts Of Execution In General: A written contract can not prove itself. The genuineness of the signatures and the execution and delivery of the contract, which are essential to its validity, ...

Sec. 2173. Genuineness Of Signature And Intent Of Signer: Extrinsic evidence is admissible to show the genuineness of the signature and the intent with which such signature was affixed. Evidence is admissible to show ...

Sec. 2174. Contents Of Written Instrument: If the issue is in part as to the words of the instrument at the time of execution, extrinsic evidence is not only admissible but necessary to show such fact.1 ...

Sec. 2175. Extrinsic Evidence As To Date: If the instrument is not dated, extrinsic evidence is admissible to show the true date.1 If the date of the contract is the question at issue, evidence of ...

Sec. 2176. Extrinsic Evidence That Contract Never Was To Take Effect: Whether extrinsic evidence is admissible to show that a written contract which on its face appears to be a valid obligation was intended as between certain or ...

Sec. 2177. Extrinsic Evidence That Party To Instrument Was Not To Be Liable: An attempt is sometimes made to show an extrinsic agreement by which a party to a negotiable instrument which was delivered for value is not to be held liable ...

Sec. 2178. Extrinsic Evidence To Annex Condition Precedent: If the party against whom relief is sought on a written contract concedes that the contract was placed in the possession of the adversary party, but claims ...

Extrinsic Evidence To Annex Condition Precedent. Part 2: 1 England. Pym v. Campbell, 6 El. & Bl. 370; Wallis v. Littell, 11 C. B. N. S. 369. United States. Ware v. Allen, 128 U. S. 590, 32 L. ed. 563; Burke v.

Extrinsic Evidence To Annex Condition Precedent. Part 3: 22 Ware v. Allen, 128 U. S. 590, 32 L. ed. 563. 23Pym v. Campbell, 6 El. & B. 370. 24 American Sales Book Co. v. Whit-aker, 100 Ark. 360, 37 L. R. A. (N.S.) 91, ...

Sec. 2179. Extrinsic Evidence To Annex Condition Subsequent: If the party against whom relief is sought concedes that the contract has taken effect, but seeks to add a condition thereto by extrinsic evidence, he is ...

Sec. 2180. Want Of Consideration, Mistake And Fraud: Even if the written instrument has been delivered, either party has the right to show any facts which prevent the writing from constituting a valid contract.1 ...

Sec. 2181. Extrinsic Evidence Of Mistake: Mistake as to an essential element of a contract such as to the existence of the party, the subject-matter or the consideration, or the identity of the ...

Sec. 2182. Extrinsic Evidence Of Fraud: Certain types of fraud, such as fraud as to an essential element of the contract,1 prevents the transaction from amounting to a contract in spite of its ...

Extrinsic Evidence Of Fraud. Continued: Washington. Griffith v. Strand, 19 Wash. 686, 54 Pac. 613; Union Machinery & Supply Co v. Darnell, 89 Wash. 226, 154 Pac. 183; Ennis v. New World Life ...

Sec. 2183. Illegality: Illegal contracts are unenforceable, not because of any desire on the part of the courts to aid either party thereto, but because public interests require that ...

Sec. 2184. Non-Compliance With Statute Of Frauds: If the contract is one which falls within the terms of the Statute of Frauds, a memorandum in writing is necessary if the contract is one which falls within ...

Sec. 2185. Breach And Performance: Performance and breach of a contract are questions which necessarily arise after the contract has been entered into. Accordingly, the parol evidence rule does ...

Sec. 2186. Estoppel As Evasion Of Parol Evidence Rule: An attempt is frequently made to avoid the application of the parol evidence rule by invoking the doctrine of estoppel, and to claim that the party who has ...

Sec. 2187. Secondary Evidence: While the contents of a written instrument should be proved by the introduction of the instrument itself in evidence, if the party against whom such evidence ...

Sec. 2188. Identification Of Parties: If the written contract shows that some particular parties were intended, but does not show with sufficient accuracy who such parties are, extrinsic evidence ...

Sec. 2189. Identification Of Subject-Matter: If the written contract is ambiguous in indicating the subject-matter of the contract, extrinsic evidence is admissible to identify it.1 Extrinsic evidence is ...

Identification Of Subject-Matter. Continued: Idaho. Allen v. Kitchen, 16 Ida. 133, L. R. A. 1917A, 563, 100 Pac. 1052. Illinois. Barrett v. Stow, 15 111. 423. Indiana. Baldwin v. Boyce, 152 Ind. 46, 51 N.

Sec. 2190. Identification Can Not Be Made Means Of Contradiction: Under a claim of identifying subject-matter, the parties to a contract can not show by extrinsic evidence that they intended to contract for other and ...

Sec. 2191. Collateral Consistent Contracts: The rule that a written contract merges all prior and contemporaneous oral negotiations, applies only to such oral negotiations as concern the subject-matter ...

Sec. 2192. What Contracts Are Collateral To Enforce The Oral Contract, Even If Not Inconsistent, It Must Be Collateral To The Written Contract And Not Merely A Term Thereof: The difficulty lies in the application of this rule. Under cover of enforcing collateral consistent contracts the attempt is often made to add oral terms to a ...

What Contracts Are Collateral To Enforce The Oral Contract, Even If Not Inconsistent, It Must Be Collateral To The Written Contract And Not Merely A Term Thereof. Continued: The admitted evidence tends to prove that at the time of the making of the final agreement of sale a further agreement was made that the car would be just as ...

Sec. 2193. Examples Of Contracts Held Not To Be Collateral: Illustrations of oral contracts offered in evidence as collateral to a written contract, but held unenforceable as being really terms of the written contract, ...

Sec. 2194. Collateral Inconsistent Contracts: If the collateral contract is inconsistent with the written contract, it can not be enforced even if it is really collateral, and if it would have been ...

Sec. 2195. Method Of Performance: It is sometimes said in very general language that extrinsic evidence is always admissible to show contemporaneous oral agreements as to the method of ...

Sec. 2196. Agreement As To Performance Contradicting Written Contract: An oral contemporaneous contract which changes the time of performance from that fixed by a complete written contract, can not be enforced.1 The fact that the ...

Sec. 2197. Warranties: A warranty is not a contract which is separate and distinct from a contract of sale, but on the contrary, it is one of the terms of the contract of sale.1 ...

Sec. 2198. Surety: A surety who signs as a maker may show his relation to the instrument in an action thereon between himself and the payee,1 whether he has signed such note in ...

Sec. 2199. Drawer: The drawer of a bill of exchange is not protected by a contemporaneous oral agreement with the payee, exonerating him from liability if the drawee does not ...

Sec. 2200. Indorsement - Regular Indorsement Held To Be Complete Contract: . Whether a contract of indorsement can be varied by contemporaneous parol agreement depends on whether it is looked upon as a complete contract. A regular ...

Sec. 2201. Regular Indorsement Held To Be Incomplete: In other jurisdictions a regular indorsement is treated as an incomplete contract, or as some courts express it, only evidence that some contract has been ...

Sec. 2202. Indorsement Without Recourse: An indorsement without recourse has been held not to be a complete contract.1 Hence, an oral contract relieving the indorser for liability even for forgery is ...

Sec. 2203. Irregular Indorsers: An irregular indorsement, that is, an indorsement by one not in the chain of title, may be explained by parol in many jurisdictions.1 Such indorser may be ...

Sec. 2204. Purpose Of Indorsement: As in the case of other assignments of title, the purpose for which the indorsement is given may be shown, as long as the legal effect of the indorsement is ...

Sec. 2205. Contract Signed By Agent - Evidence To Relieve Agent From Liability: If a written contract with B, executed by A on behalf of X, is signed by A in such form as to bind him personally, the question of the right of the parties to ...

Sec. 2206. Addition Of Word "Agent" Held Not To Make Contract Ambiguous: If a contract is signed by A, with the addition to his signature of the word agent or some other word importing agency, but the language of the contract is ...

Sec. 2207. Addition Of Word "Agent" Held To Make Contract Ambiguous: In other jurisdictions the addition of agent or some similar word to the signature is held to make it ambiguous, whether personal liability is intended or not, ...

Sec. 2208. Extrinsic Evidence To Enable Principal To Sue: If the real principal, X, wishes to sue upon the contract, the parol evidence rule does not prevent him from showing that A was his agent and that X is the ...

Sec. 2209. Extrinsic Evidence To Impose Liability On Principal: If A signs a written contract made with B on behalf of A's principal, X, and affixes his own name thereto without apt words to show that he is acting only as ...

Sec. 2210. Effect Of Knowledge Of Identity Of Principal: In many of the cases some emphasis is laid on the fact that the principal was not disclosed when the agent entered into the contract with the adversary party.

Chapter LXX. Reformation: Sec. 2211. Relation of reformation to the parol evidence rule. Sec. 2212. Discretionary power to grant reformation. Sec. 2213. Adequacy of legal remedy. Sec.

Sec. 2211. Relation Of Reformation To The Parol Evidence Rule: From the foregoing discussion of the parol evidence rule,1 it appears that common law regards a simple, written contract, if valid, complete and unambiguous, ...

Sec. 2212. Discretionary Power To Grant Reformation: The fact that the original transaction was valid and enforceable at law does not of itself oblige a court of equity to grant reformation in every case in which ...

Sec. 2213. Adequacy Of Legal Remedy: While equity denies relief where the remedy at law is full, adequate and complete, it does not necessarily follow that the existence of a defense at law will ...

Sec. 2214. Mutuality Of Mistake In Reformation: It is generally said that reformation is given either (a) when the mistake is mutual, or (b) when there is mistake on the one side and fraud or unfair dealing ...

Sec. 2215. Mutuality Of Mistake As Involving Genuine Offer And Acceptance: In order to obtain reformation there must have been a genuine valid oral contract back of the written contract to which the written contract may be reformed.1 ...

Mutuality Of Mistake As Involving Genuine Offer And Acceptance. Continued: Tennessee. Pittsburg Lumber Co. v Shell, 136 Tenn. 466, 189 S. W. 879. Washington. Phillips v. Port Town-send Lodge, 8 Wash. 529, 36 Pac. 476; Anderson v.

Sec. 2216. Mistake In The Inducement As Basis For Reformation: Where the parties have, through mistake as to some collateral fact, entered into a valid contract, the terms of which are reduced correctly to writing, equity ...

Sec. 2217. Mutuality Of Mistake As Involving Consideration: A simple executory contract is enforceable only if it is supported by a valuable consideration.1 If reformation is sought as against the promisor or the ...

Sec. 2218. Mistake On One Side - Inequitable Conduct On The Other: Where A is entering into a written contract under mistake as to its contents, and the circumstances are such that if B, too, were mistaken, reformation would ...

Sec. 2219. Effect Of Negligence: In a number of cases language is used which seems to imply that a party can not have reformation if the mistake for which he seeks relief has been due in any ...

Sec. 2220. Mistake In Expression - Mistake As To Words Used: The typical form of mistake in expression is found where the parties have agreed orally upon the terms of a contract, have then attempted to express these ...

Sec. 2221. Mistake As To Legal Effect Of Words Used: A form of mistake, which involves different principles from the form already discussed, exists where the parties to a written contract know the very words ...

Mistake As To Legal Effect Of Words Used. Continued: Utah. Deseret National Bank v. Din-woodey, 17 Utah 43, 53 Pac. 215. parties execute an irrevocable power of attorney, thinking it will operate as a mortgage;2 ...

Sec. 2222. Intentional Omission Or Insertion Of Term: If the parties purposely omitted a part of their oral agreement from their written contract, no mistake exists except possibly in their belief that they can ...

Sec. 2223. Controlling Effect Of Paramount Intent: In reformation as in construction,1 the question is sometimes presented as to the effect of a contract containing inconsistent provisions, where the ...

Sec. 2224. Illustrations Of Mistake In Expression - Property Conveyed: Among the many forms of mistake in expression of the type referred to, the following are given as illustrations: Where the parties have agreed for the sale, ...

Sec. 2225. Mistake As To Grantee: Where by mistake an estate which by agreement should have passed to A alone is conveyed to A and B,1 or one which should have passed to A and B, is conveyed to ...

Sec. 2226. Mistake As To Estate: If, by mistake, words are omitted or inserted, creating a greater,1 or less,2 estate than that agreed upon, reformation may be given. So where words creating a ...

Sec. 2227. Mistake As To Effect Of Signature: If A, not meaning to bind himself personally, signs the contract in such a way as to bind himself, the question of his right to reformation depends on ...

Sec. 2228. Other Examples Of Mistake: A mistake in the date;1 in the rate of interest;2 or in the amount on which interest is to be computed;3 or the mistaken addition,4 or omission5 of a clause ...

Sec. 2229. What Instruments May Be Reformed - Inoperative Instruments: Reformation will not be given when the instrument as reformed would not be operative.1 If the instrument is a nullity,2 or if it can not operate by reason of ...

Sec. 2230. Contracts Within The Statute Of Frauds Or Required To Be In Writing: If the contract is one which is required by statute to be proved by writing, the attempt to reform such a contract in equity by the use of oral evidence ...

Contracts Within The Statute Of Frauds Or Required To Be In Writing. Continued: An attempt has been made to distinguish between cases in which extrinsic evidence is used for the purpose of adding to the legal effect of the written ...

Sec. 2231. Reformation Of Mistake Which May Be Corrected By Construction: If the ordinary rules of construction or of admissibility of extrinsic evidence can correct the mistake, reformation is not necessary.1 If the boundaries of ...

Sec. 2232. Who May Have Reformation: Reformation may be had at the suit of those who succeed to the interest of the original party against whose interest such mistake operates.1 Accordingly, ...

Sec. 2233. Effect Of Rights Of Third Parties On Reformation: If third persons not purchasers for value,8 especially if not prejudiced by the mistake,9 will not prevent reformation. 19 Miller v. Morris, 123 Ala. 164, 27 ...

Sec. 2234. Evidence Necessary For Reformation: The so-called parol evidence rule has no application in actions to reform a written contract,1 and extrinsic evidence is always admissible. The burden on the ...

Part VI. Operation. Chapter LXXI. Assignment: Sec. 2235. Definition and nature of assignment. Sec. 2236. Assignment at common law - Original theory. Sec. 2237. Exceptions recognizing assignment. Sec. 2238.

Sec. 2235. Definition And Nature Of Assignment: If A has a contract with B, and A wishes to secure the benefits arising from the performance of such contract to C, he may obtain this result in a number of ...

Sec. 2236. Assignment At Common Law - Original Theory: The general rule at common law was that assignment of contractual rights, made by the voluntary act of the parties, was of no effect if the adversary party to ...

Sec. 2237. Exceptions Recognizing Assignment: Even at common law there were certain well-recognized exceptions to this rule. Negotiable contracts could be transferred to others than the original parties.1 ...

Sec. 2238. Effect Of Attempted Assignment At Common Law: Apart from these exceptions, the common law at the outset denied legal effect to the assignment. It was not a valuable consideration which would support a ...

Sec. 2239. Assignment In Equity: In equity from an early period, contracts except those in which the personality of the adversary party was material, were regarded as forms of property rather ...

Sec. 2240. Ultimate Theory Of Assignment At Common Law: Under the influence of the doctrines of equity,1 the common-law rule forbidding assignment gradually broke down and finally degenerated into a mere rule of ...

Sec. 2241. Assignment At Modern Law: At modern law, in most jurisdictions, a contract may be assigned as well at common law as in equity.1 The assignee may bring an action in his own name against ...

Sec. 2242. Equitable Assignment At Modern Law: The opportunity to effect a complete fusion of law and equity upon the question of assignment has been lost in many states: in part by the fact that the ...

Sec. 2243. Contracts Assignable At Modern Law: Contracts others than personal contracts, or contracts containing a provision against assignment, or contracts forbidden to be assigned by statute, may be ...

Sec. 2244. Illustrations Of Assignable Contracts: A contract of guaranty;1 or an indemnity bond,2 such as the right of a surety company under an indemnity bond;3 or a right of action on a bond given by a ...

Sec. 2245. Assignment Of Contract Rights Not Yet Acquired: The fact that the benefits which are assigned have not yet accrued, and that the assignor has not performed the contract on his part when he makes the ...

Assignment Of Contract Rights Not Yet Acquired. Continued: Rhode Island. Dolan v. Hughes, 20 R. I. 513, 40 L. R. A. 735, 40 Atl. 344. Vermont. Thayer v. Kelley, 28 Vt. 19, 65 Am. Dec. 220. Wisconsin. Porte v. Chicago & ...

Sec. 2246. Assignment Of Quasi-Contractual Rights: Quasi-contract-ual rights are usually not personal and such as are not personal may be assigned,1 including quasi-contractual rights which arise out of tort ...

Sec. 2247. Assignment Of Personal Rights: Certain rights, though analogous to quasi-contractual rights, are regarded as personal in their nature and are not assignable.1 A mere personal right can not ...

Sec. 2248. Personal Contracts: If A makes a contract with B, in which B's personality is material, such as a contract by which he contracts for B's personal skill or labor, or reposes ...

Sec. 2249. Personality Must Be Element Of Contract: Since the intention of the parties must be deduced from the terms of the contract when considered in the light of the surrounding circumstances, and since the ...

Sec. 2250. Assignment Of Contracts Personal As To Performance - General Nature: If the nature of the subject-matter is such that it shows when taken in connection with the language of the contract that personal performance by the adversary ...

Sec. 2251. Contracts For Professional Or Expert Services: A contract to render professional services is personal and non-assignable.1 An attorney can not assign an executory contract whereby he agrees to render ...

Sec. 2252. Contracts For Manufacture Or Production Of Articles: A contract by which A agrees to manufacture articles for B, can not be assigned by A to C so that C may perform against B's objection, if B had relied upon A's ...

Sec. 2253. Building And Construction Contracts: A contract for the construction of a building has been held to be personal in character so that it can not be assigned to one who is to perform such contract.1 ...

Sec. 2254. Contracts For Supplying Needs Or Requirements Of Business: B may enter into a contract with A, by which he agrees to furnish A with such amount of goods as A may need or may require in his business. Such contracts are ...

Sec. 2255. Assignment Of Performance By Person For Whose Benefit Personal Element Required: While most of the questions of assignment of personal contracts arise in cases in which the party who was to render the personal service has attempted to ...

Sec. 2256. Assignment Of Contracts Personal As To Credit: If the subject-matter of the contract is such that performance might be rendered by any one, but by the terms of the contract credit is to be given by one ...

Sec. 2257. Assignment On Elimination Of Personal Element By Performance Or Breach: B may assign to C the right to receive compensation from A on performance of the contract between A and B, even if under such contract B's personality is ...

Sec. 2258. Assent To Assignment Of Personal Contract: If the person who contracts for the skill, personal labor or credit of another consents to the attempted assignment of such contract by such other, he can not ...

Sec. 2259. Specific Provision Against Assignment: In the absence of statutory provisions to the contrary, a contract which would otherwise be assignable may be non-assignable without the consent of the ...

Sec. 2260. Statutory Prohibition Of Assignment: In some jurisdictions certain contracts are specifically forbidden to be assigned either at all, or for certain specified purposes. A federal statute provides ...

Sec. 2261. Partial Assignment: A creditor can not at law assign a part of his claim against his debtor to a third person so as to subject such debtor to two or more actions instead of one, ...

Partial Assignment. Continued: Equitable relief is not given, however, if the sole ground therefor is that a partial assignment of a legal claim has been made.18 This view is sometimes ...

Sec. 2262. Assignment Does Not Discharge Assignor: The assignor can not, by assigning the benefits of his contract, relieve himself from his liability thereon.1 Hence, the mere fact of assignment can not be ...

Sec. 2263. Assignment May Impose Personal Liability On Assignee: The assignee may incur a personal liability to the adversary party to the contract by expressly agreeing in the contract of assignment to perform terms of the ...

Sec. 2264. Assignment Passes All Assignor's Rights - General Principles: If the assignment purports to pass all of the rights of the assignor, the assignee acquires all the rights of his assignor under the contract assigned to him.1 ...

Sec. 2265. Assignment As Passing Incidents And Remedies: An assignment of a laborer's wages due from a corporation gives the assignee the same right as the assignor to recover from the stockholders.1 So an assignee ...

Sec. 2266. Assignment As Passing Securities: The assignment of a debt carries with it every security held by the assignor for the protection of such debt.1 Assignment of a note carries the security of a ...

Sec. 2267. Assignment As Passing Lien: Since a common-law lien is a right to keep possession of personal property until a claim due from the owner to a person so keeping possession is satisfied, ...

Sec. 2268. Assignment Of Judgment As Passing Cause Of Action: An assignment of a judgment does not carry with it the cause of action on which it is rendered. Hence, if it is vacated by appeal,1 or if the claim is settled ...

Sec. 2269. Assignment Passes Only Assignor's Rights Against Debtor - General Principles: The assignee of a contract takes no interest under the assigned contract greater than that which the original party whose interest he takes had therein, at the ...

Sec. 2270. Discharge, Etc: If before assignment the assignor has waived or modified his contract rights, his assignee is bound thereby.1 An assignee is bound by a contract of compromise ...

Sec. 2271. Set-Off: Any right of set-off or counter-claim growing out of' that transaction existing in favor of the adversary party when he receives notice of the assignment can ...

Sec. 2272. Assignment Of Property Rights: It may be here briefly noted that a different rule obtains if the contract under which have arisen rights which are sought to be assigned has been so far ...

Sec. 2273. Equities Of Third Persons: Whether in case of successive assignments, each by a prior assignee to his assignee, the last assignee takes subject to equities existing between some prior ...

Sec. 2274. Theories As To Necessity Of Notice To Debtor: Whether notice of the assignment must be given to the debtor in order to protect the rights of the assignee, is a question the answer to which is determined ...

Sec. 2275. Origin Of Doctrine Of Necessity Of Notice In England: The leading case in England, in which it was held that as between two successive assignees each claiming under a total assignment and each taking for value and ...

Origin Of Doctrine Of Necessity Of Notice In England. Continued: These two cases were regarded as determining the law in England; and in the following cases it was assumed that priority of notice, and not priority of time, ...

Sec. 2276. Necessity Of Notice As Against Claimants Other Than Bona Fide Purchasers - Assignee And Assignor: The practical application of the principles with reference to the necessity of notice by an assignee to the debtor to protect his rights against third persons, ...

Sec. 2277. Assignee And Debtor: As between the debtor and the assignee, notice is not necessary to enable the assignee to enforce the contract against the debtor, if the debtor has not ...

Sec. 2278. Assignee And Claimant Other Than Attaching Creditor: A like principle applies as between the assignee and those who succeed to the title of the assignor, but who are not purchasers for value, such as receivers,1 ...

Sec. 2279. Assignee And Attaching Creditor: If the contest arises between an assignee who has failed to give notice to the debtor and a subsequent creditor of the assignor who seeks to attach the debt in ...

Sec. 2280. Necessity Of Notice As Against Subsequent Bona Fide Purchaser: If the assignor has assigned the same claim at different times to different assignees, each of whom has paid value, and the second of whom has taken without ...

Necessity Of Notice As Against Subsequent Bona Fide Purchaser. Continued: The plaintiff took his assignment by an instrument separate and apart from the policy itself. He allowed the possession of the policy to remain unaltered. It ...

Sec. 2281. Contents And Service Of Notice: The notice of assignment given to the debtor must be such as to apprise him of the fact of assignment.1 Apart from this, no special form is necessary.2 If the ...

Sec. 2282. To Whom Notice Should Be Given: Notice should be given to the debtor or to his duty authorized agent.1 Notice may be given to the agent through whom his principal has been accustomed to ...

Sec. 2283. Effect Of Notice: After notice of an assignment the debtor is liable to the assignee.1 Subsequent payment to the assignor,2 or to subsequent attaching creditors,3 or a ...

Sec. 2285. Elements Of Assignment - General Nature: An assignment which is affected by the voluntary act of the assignor and the assignee, is controlled by the ordinary rules of law which control other contracts.

Sec. 2286. Intent To Reserve Control To Assignor: No particular form of words is necessary to assign a contract unless some statute provides therefor. Any language or conduct which shows the intention of the ...

Sec. 2287. Intent To Transfer Control To Assignee: On the other hand, a transaction whereby one party transfers to another ownership and control of a chose in action, amounts to an assignment.1 v. Wyandotte ...

Sec. 2288. Transfer Of Control - Orders As Assignments: An order by a creditor to a debtor to pay to a designated third person a specified fund which such debtor owes to such creditor, operates as an assignment of ...

Sec. 2289. Drafts As Assignments: In accordance with the principles which apply to orders, a draft which is not payable out of any specific fund does not amount to an assignment of a debt owing ...

Sec. 2290. Checks As Assignments: The same principles that apply to orders and to bills of exchange apply in most jurisdictions to bank checks. The relation between a bank and a depositor is ...

Checks As Assignments. Continued: Michigan. Lonier v. State Savings Bank, 149 Mich. 483, 112 N. W. 1119. New Jersey. Creveling v. Bank, 46 N. J. L. 255, 50 Am. Rep. 417; National Bank v.

Sec. 2291. Form Of Assignment: In the absence of statute no special form of assignment is necessary.1 While it has been said that it is uniformly holden that an assignment of an instrument ...

Form Of Assignment. Continued: Contra, American Exchange National Bank v. Federal National Bank, 226 Pa. St. 483, 134 Am. St. Rep. 1071, 27 L; R. A. (N.S.) 666, 18 Am. & Eng. Ann. Cas. 444, ...

Sec. 2292. Statutory Formalities: Some statutes prescribe formalities for assigning certain kinds of contracts.1 Where such statutes are exclusive, and make other forms of assignment invalid, ...

Sec. 2293. Necessity Of Consideration: If an assignment is executed and passes legal title, then as between the assignor and the assignee no consideration is necessary. Such assignment is valid even ...

Sec. 2294. What Constitutes Acceptance By Debtor: Where an acceptance by the debtor is material, such acceptance can be made only by such words or conduct on his part as to show his willingness to accept.1 If ...

Sec. 2295. Necessity Of Acceptance By Debtor: It is not necessary that the debtor assent to the assignment to make it valid.1 Hence, an assignment is valid if notice is given to the proper officer, though ...

Sec. 2296. Effect Of Acceptance: Acceptance of the assignment by the debtor and his assent thereto, constitute a new contract between himself and the assignee.1 On acceptance of a note payable ...

Sec. 2297. Covenants Running With The Land - Freehold Estates-Covenants Conferring Right Upon Grantee: At common law, at a time at which assignment of contract rights was not given any recognition, contracts which were intended by the parties thereto to operate ...

Covenants Running With The Land - Freehold Estates-Covenants Conferring Right Upon Grantee. Continued: 11 Illinois. Purvis v. Shuman, 273 111. 286, L. R. A. 1917A, 121, 112 N. E. 679; Midland Ry. v. Fisher, 125 Ind. 19, 21 Am. St. Rep. 189, 8 L. R. A. 604, 24 N.

Sec. 2298. Covenants Imposing Burden Upon Grantee: At common law, covenants for the benefit of the realty could run with the land. Covenants imposing burdens thereon could not run with the land unless they ...

Sec. 2299. Effect Of Breach Of Covenant Running With The Land: Even at common law the proper plaintiff in an action for the breach of a covenant running with the land is the holder of the title thereto at the time of ...

Sec. 2300. Leasehold Estates - Covenants Passing To Assignee Of Lease: Covenants which were intended to affect the property leased and which were contained in leases creating estates less than freehold, were said at common law to ...

Sec. 2301. Covenants Passing To Assignee Of Reversion: A right of re-entry for breach of condition subsequent in a lease can not be assigned before breach. While covenants to pay rent could pass with the reversion ...

Sec. 2302. Assignment By Operation Of Law: The classes of assignment which we have been considering are those in which an interest in a contract is conferred by the voluntary act of one in whom such ...

Chapter LXXII. Negotiability: I. DEVELOPMENT OF IDEA OF NEGOTIABILITY Sec. 2303. Origin of negotiability - The law-merchant. Sec. 2304. Development of law-merchant - The negotiable ...

Sec. 2303. Origin Of Negotiability - The Law-Merchant: Certain types of contracts remained outside of the common-law rule which forbade assignment,1 as they remain outside of the modern-law rule that the assignee ...

Sec. 2304. Development Of Law-Merchant - The Negotiable Instruments Law: The law-merchant has long since ceased to be the law of a class,1 and its international character survives only in the fact that there is a greater resemblance ...

Sec. 2305. Elements Of Negotiable Contracts - Writing: In order to be negotiable a contract must possess certain elements.1 It must be in writing. If in writing, a lead pencil is sufficient though not to be ...

Sec. 2306. Provision In Mortgage As Affecting Note: A provision in a mortgage given to secure a note does not render the note non-negotiable if the note does not incorporate the provision of the mortgage.1 The ...

Sec. 2307. Date: In the absence of specific statutory provisions it is not necessary that a negotiable instrument should be dated.1 If a negotiable instrument is dated, the ...

Sec. 2308. Signing - Necessity: The requisites of a valid execution of a contract which by law must be in writing, are in some respects like those of ordinary written contracts and in some ...

Sec. 2309. Signing - Form: No special form of signature is required. On this point the law of the negotiable contract seems to be the same as that of the ordinary written contract.1 It ...

Sec. 2310. Delivery: Execution includes delivery.1 Delivery is essential to the validity of a negotiable instrument.2 Delivery requires the intent of the party,3 as well as the ...

Sec. 2311. Definite Parties - Payee: The parties to the contract must be clearly described therein.1 The payee must be indicated clearly.2 Thus a promise to an alternative payee is not negotiable.

Sec. 2312. Adding Party To Negotiable Instrument By Extrinsic Evidence To Impose Liability: A contract may be signed by A with his own name, but entered into by him on behalf of his real principal, X, with the adversary party, B. If the contract is ...

Sec. 2313. Discharging Party To Negotiable Instrument By Extrinsic Evidence: If a party to a negotiable instrument who has signed in such a way as to assume a personal liability, attempts to show that the oral understanding of the ...

Sec. 2314. Promise Or Order: The contract must be either a promise to pay or an order commanding another to pay.1 The former is a promissory note or bond; the latter a bill of exchange 2 ...

Sec. 2315. For Money Only: The contract must be one for the payment of money only.1 Accordingly, a promise to pay in work,2 as a railroad ticket,3 or in property other than money,4 even ...

Sec. 2316. For A Sum Certain: The promise or order must be for a sum certain. If the amount to be paid can not be determined from the face of the contract itself the contract is not ...

Sec. 2317. Provision For Payment Of Exchange: A contract to pay a certain amount with exchange is non-negotiable by the weight of authority.1 The reason generally given for this rule is that it is ...

Sec. 2318. Provision For Payment Of Taxes: A promise to pay a certain sum and all taxes assessed against the realty mortgaged to secure such debt,1 or to pay interest and taxes on the note itself,2 is ...

Sec. 2319. Provision For Payment Before Maturity: A clause giving the payee bank the right to appropriate to the payment of the note, before or after maturity, the amount on deposit by the makers or either of ...

Sec. 2320. Provision For Discount: If an instrument for the payment of money contains a provision to the effect that a discount will be given in case such instrument is paid before maturity, or ...

Sec. 2321. Provision For Modification Of Rate Of Interest In Case Of Default: Contracts for the payment of money with interest frequently contain provisions to the effect that if the instrument is not paid at maturity it shall bear a ...

Sec. 2322. Provision For Payment Of Attorney Fees And Costs Of Collection: A promise to pay attorney's fees,1 either a certain per cent. of the amount of the note,2 or to pay reasonable attorney's fees3 does not make the instrument ...

Sec. 2323 Unconditional Payment: In order to be negotiable it is generally said that the instrument must provide only for unconditional payment. If some event which may or may not happen is a ...

Sec. 2324. Statement Of Consideration Or Transaction: The recital of a consideration does not operate as notice to the indorsee of failure of consideration, or as notice of other defense which might arise thereon ...

Sec. 2325. Provision Concerning Security, Demand, Etc: There are a number of provisions which are intended to facilitate the payment and collection of the instrument, such as powers of attorney to confess judgment, ...

Sec. 2326. Time Of Payment - Event Bound To Happen: Closely connected with the rule that payment must be unconditional, is the rule that a certain time of payment must be fixed. This does not mean that the exact ...

Sec. 2327. Event Not Bound To Happen: An instrument which is payable at the happening of an event which is not morally bound to occur, is not negotiable.1 The provision for payment in such a case ...

Sec. 2328. Acceleration Of Maturity At Option Of Holder: An instrument may, by its terms, be payable at a fixed time, but a provision may be made for accelerating the payment of such instrument either at the option ...

Sec. 2329. Acceleration Of Maturity At Option Of Debtor: A provision which authorizes the maker of the instrument to declare it to be due and payable within a certain specified time, does not make such instrument non- ...

Sec. 2330. Acceleration In Case Of Default: A provision to the effect that payment should be accelerated on default either in payment of interest, or in payment of an installment of the principal, has ...

Sec. 2331. Provision For Extension Of Time: A clause providing for an extension of time for a definite period at the option of the maker does not make the contract non-negotiable.1 A provision in a note, ...

Sec. 2332. Place Of Payment: In the absence of specific statutory provisions, an instrument otherwise negotiable was not rendered non-negotiable by the fact that it did not fix the place ...

Sec. 2333. Words Of Negotiability: A negotiable contract must contain words of negotiability.1 The customary words of negotiability are or order, or or bearer, 2 but other words, such as or ...

Sec. 2334. Recital Of Consideration Unnecessary: It is customary for a negotiable instrument containing a recital of a consideration, as by the use of the words, for value received. This, however, is not ...

Sec. 2335. Examples Of Negotiable Instruments - Money: Money possesses the quality of negotiability to the highest degree.1 Even if money is stolen it can not be recovered from one who has taken it for value in ...

Sec. 2336. Bills And Notes: Bills of exchange have always been held to be negotiable;1 and cashiers' checks, being a form of bill, are also negotiable.2 Whether promissory notes were ...

Sec. 2337. Checks, Certificates Of Deposit, And Savings Bank-Books: At modern law, checks payable to bearer or to order,1 even if postdated,2 and certificates of deposit, at least if containing a promise to pay,3 are negotiable.

Sec. 2338. Contracts Under Seal: The law of negotiable instruments is derived from the law-merchant. The seal is derived from the common law. Accordingly, at common law a sealed instrument ...

Sec. 2339. Bonds, Warrants, Etc: At modern law, bonds payable to bearer or to order,1 and coupons on bonds,2 are negotiable. Warrants drawn by public officials are negotiable if payable ...

Sec. 2340. Mortgages: A mortgage was a common-law form of security, and it was not controlled by the principles of the law-merchant. There is, accordingly, a conflict of authority ...

Sec. 2341. Symbols Of Property - Bills Of Lading And Warehouse Receipts: Bills of lading1 and warehouse receipts2 call for property other than money. They are accordingly not negotiable in the full sense of the word. Bills of lading ...

Sec. 2342. Stock Certificates: A certificate of stock possesses a qualified negotiability in that its transfer passes the title to the stock, free from latent equities between prior vendor ...

Sec. 2343. Nature Of Negotiability: Negotiable contracts were an exception to the common-law rule that contract rights could not be assigned.1 If a negotiable contract were assigned in a proper ...

Sec. 2344. Effect Of Negotiability On Rights Of Parties - When In Hands Of Original Party: Except in the cases in which the payee is himself a bona fide holder,1 the fact of negotiability is for most purposes immaterial as between the immediate ...

Sec. 2345. When In Hands Of Transferee Not A Bona Fide Holder: If a negotiable instrument has been transferred to one who is not a bona fide holder for value, his rights are those, and only those, of the person who ...

Sec. 2346. When In Hands Of Bona Fide Holder - General Principles: The chief peculiarity of a negotiable contract, therefore, is its effect in the hands of a bona fide holder, who may enforce the negotiable instrument free ...

Sec. 2347. Defenses Not Available Against Bona Fide Holder: Fraud in the inducement,1 constructive fraud,2 duress,3 ultra vires, where the contract might under some facts be within the power of the corporation, but ...

Sec. 2348. Defenses Available Against A Bona Fide Holder - Want Of Capacity: There are certain defenses, however, which may be made even against a bona fide holder for value. Any defense which goes to the capacity of the party against ...

Sec. 2349. Want Of Execution: Any defense which goes to the execution of the instrument, and shows that no instrument was ever in fact executed, may be made.1 Forgery is a defense which may ...

Sec. 2350. Alteration: At common law, a material alteration renders the contract void.1 In negotiable instruments, before the Negotiable Instruments Law, the defense that the ...

Sec. 2351. Defenses Permitted By Statute: Any defense may be made against a bona fide holder, which is allowed by the express terms of a statute or by its necessary effect.1 Under a statute allowing ...

Sec. 2352. Effect Of Negotiable Instruments Law On Statutory Defenses: The enactment of the Negotiable Instruments Law has raised the question as to the repeal or abrogation of such legislation, with reference to defenses against ...

Sec. 2353. Holder Not Bona Fide Acquires Rights Of Assignor: If A holds a negotiable instrument under circumstances which make him a bona fide holder, and he transfers it regularly to B, who takes with notice, B takes ...

Sec. 2354. The Bona Fide Holder Or The Holder In Due Course-General Principles: Before the Negotiable Instruments Law was enacted, a person who held a negotiable instrument free from defenses which might be made as against the original ...

Sec. 2355. Taking Without Notice - Actual Knowledge: Both common law, as derived from law-merchant, and the Negotiable Instruments Act agree1 that the holder must take without notice of the defense sought to be ...

Sec. 2356. Contents Of Instrument As Notice: The holder is charged with notice of everything that appears from the contents of the instrument,1 or on its face.2 A provision that on default in payment of ...

Sec. 2357. Indorsement As Notice: Indorsement for collection is notice that the holder is not the beneficial owner,1 even if such indorsement has been erased, as long as it is still legible.2 ...

Sec. 2358. Recital Or Notice Of Consideration As Notice Of Defect: The fact that the consideration is recited on the face of the note,1 or on the back thereof,2 or is known to the holder,3 especially if the maker of the notes ...

Sec. 2359. Bill Of Lading As Notice Of Defect In Bill Of Exchange To Which It Is Collateral: Analogous to this last question is one often presented in slightly differing forms under modern methods of business. A consigns goods, takes a bill of lading, ...

Sec. 2360. Taking Under Circumstances Of Suspicion: Whether one who takes a negotiable instrument with knowledge of facts and circumstances which suggests suspicion and which would lead a reasonably prudent man ...

Sec. 2361. Circumstantial Evidence Of Bad Faith: Direct evidence of bad faith is not necessary however. The fact that the holder takes under circumstances which should arouse suspicion, or is guilty of gross ...

Sec. 2362. To Whom Notice May Be Given - Constructive Notice: Notice to an agent of the holder of defenses,1 such as want of consideration,2 is notice to the principal if within the scope of the agent's authority. Thus if ...

Sec. 2363. When Notice Must Be Given: The time at which notice must be given to the holder, in order to be operative, depends on the time at which the holder has paid value for the instrument, in ...

Sec. 2364. Payee As Bona Fide Holder: Before the Negotiable Instruments Law was enacted, it was held that the payee of an instrument might be a bona fide holder, if he took for value without notice ...

Sec. 2365. Delivery Or Indorsement: Necessity, A holder, to be a bona fide holder, must take in accordance with the nature of the instrument. If it is payable to the payee or bearer, delivery ...

Sec. 2366. What Constitutes Indorsement: A note which is payable to either of two persons in the alternative, may be indorsed by one of them so that the indorsee is a holder in due course.1 The paper ...

Sec. 2367. Value: In order to be a bona fide holder, the holder must take for value. If the holder does not give value for the note he is not a bona fide holder.1 Value means ...

Sec. 2368. Payment As Value: Payment of a pre-existing debt constitutes value. 1 One who takes a note as collateral and subsequently surrenders the note which evidences the principal debt ...

Sec. 2369. Giving Note, Check, Etc., As Value: If A buys a note from B, and gives to B A's own note therefor, A is holder for value of the note transferred by B,1 even if B was the agent of the real owner ...

Sec. 2370. Giving Credit On Account As Value: If A credits B on his account, with the value of a negotiable instrument which B has transferred to A, and B checks out such deposit before A has notice of ...

Sec. 2371. Collateral Security As Value: Transfer of a negotiable instrument as collateral security for a contemporaneous debt, is a transfer for value.1 One who takes a note as collateral security ...

Sec. 2372. Taking Before Maturity: A holder, to be a bona fide holder, must take the instrument before maturity. If he takes after maturity he gets no better title than that of his indorser as ...

Taking Before Maturity. Continued: The rule is the same under the express provisions of the Negotiable Instruments Law. Ohio Valley Banking & Trust Co. v. Great Southern Fire Insurance Co., 176 ...

Sec. 2373. Presumption As To Bona Fides Of Holder: One who is in possession of a negotiable instrument which has been delivered to him if payable to bearer, or which has been indorsed to him, or which is ...

Chapter LXXIII. Contracts For The Benefit Of A Third Person: Sec. 2374. Contracts for benefit of third person - General nature of problem. Sec. 2375. Rights of beneficiary at early English law - Action of account. Sec.

Sec. 2374. Contracts For Benefit Of Third Person - General Nature Of Problem: The great difficulty in the development of contract consists in the inability of law in its early stages to conceive of a binding promise unless it is made in ...

Sec. 2375. Bights Of Beneficiary At Early English Law - Action Of Account: The most common cases in which the rights of the beneficiary are involved are cases in which B has placed money or other property in A's hands, out of which A ...

Sec. 2376. Action Of Debt: As between the person who deposits his own money with one who is thus bound to account to him, and the person with whom such money is deposited, it became ...

Sec. 2377. Action Of Assumpsit: With the development of indebitatus assumpsit,1 the theory was adopted that wherever debt would lie, indebitatus assumpsit would lie;2 and accordingly it was ...

Sec. 2378. Rights Of Promisee And Beneficiary Respectively: The relation between the rights of B and the rights of C growing out of A's promise, caused trouble then as they cause it now, in jurisdictions in which the ...

Sec. 2379. Classes Of Cases In Which Beneficiary Could Bring Action: As in modern case, B's motive for furnishing the value for A's promise usually was either to provide for a near relation by blood or marriage, or to secure the ...

Sec. 2380. Transition To Theory That Beneficiary Can Not Sue: In spite of the ease with which the courts in some of these cases disposed of the objection that the plaintiff was a stranger to the promise, and to the ...

Sec. 2381. Minority American Rmle - Beneficiary Denied Right Of Action: The American courts have divided on this question. A minority of them have adopted the final result reached by the English courts, and they have held that a ...

Sec. 2382. The Rule In Georgia: The vacillation of some of the courts has led to peculiar results in the development of this doctrine in some of these jurisdictions. Under the statute of ...

Sec. 2383. The Rule In Massachusetts: In Massachusetts the beneficiary was actually allowed to sue, in several of the earlier cases,1 and language was used which indicated that C should be ...

Sec. 2384. The Rule In Michigan: In Michigan it is said that the beneficiary can sue only upon marriage settlements which involve trusts for the children of the marriage.1 If a contract is ...

Sec. 2385. The Rule In Pennsylvania: In Pennsylvania the general rule seems to be that the beneficiary can not maintain an action upon a contract for his benefit.1 Such rule is, however, subject ...

Sec. 2386. The Rule In Virginia And West Virginia: In Virginia the rule which was laid down originally was unfavorable to the right of the beneficiary to enforce the contract.1 This was subsequently modified by ...

Sec. 2387. Majority American Rule - Right Of Beneficiary Recognized: The earlier American cases followed the early English rule and allowed recovery if C was closely related to B.1 The weight of modern authority holds that C may ...

Sec. 2388. Privity: The fact that there is, in reality, no privity between the promisor and the beneficiary, still causes trouble and confusion in some jurisdictions. The cases in ...

Sec. 2389. Statutory Provision Permitting Real Party In Interest To Bring Action: The right of the beneficiary to maintain an action upon the contract to which he is not a party is sometimes referred to the statute which provides that an ...

Sec. 2390. General Principles Of Contract Affecting This Type-Formation Of Contract: The principles which control contracts for the benefit of the promisee often find especial and peculiar application in contracts for the benefit of a third ...

Sec. 2391. Designation Of Beneficiary: In jurisdictions in which the right of a third person to enforce a contract made for his benefit is not regarded with favor, it is held that a third person can ...

Sec. 2392. Acceptance By Beneficiary: It is not necessary that the beneficiary should know that the contract was made for his benefit at the time at which it is entered into between the promisor ...

Sec. 2393. Beneficiary's Rights Dependent On Validity Of Original Contract, And On Terms -Thereof: If the beneficiary accepts the bene-fits of the contract, he takes subject to its validity as between the original parties thereto, and subject to the terms ...

Sec. 2394. Rescission By Mutual Assent Of Original Parties: The promisor and the promisee may rescind the contract without the consent of the third person at any time before he has assented to it or acted on it.1 If the ...

Sec. 2395. Consideration Between Promisor And Promisee: Consideration is as essential in contracts of this type as in others,1 and. as in others, it may be either a benefit to the promisor or a detriment to the ...

Consideration Between Promisor And Promisee. Continued: 2 Kansas. Morris v. Mix, 4 Kan App. 654, 46 Pac. 58. Minnesota. Union Railway Storage Co. v. McDermott, 53 Miivn. 407, 55 N. W. 600; Jefferson v. Asch, 53 Minn.

Sec. 2398. Promisor's Right To Attack Validity Of Obligation Be-Tween Promisee And Beneficiary: If A makes a promise to B, to discharge an obligation which B owes to C, in consideration of property or some other thing of value, which B furnishes to A, the ...

Sec. 2399. Intention To Benefit Third Person Directly Necessary: The courts in which C is allowed to enforce the promise against A, do so only when A's promise is primarily intended to benefit C. If the benefit to C is ...

Sec. 2400. Sole And Concurrent Benefits: The rule that the beneficiary can enforce the contract only if it is intended primarily for his benefit, is sometimes stated in the form that if the contract ...

Sec. 2401. Specific Illustrations Of Contracts Conferring Incidental Benefit: Among examples of contracts which may give incidental benefit to a third person, but which are not intended by the parties to benefit him primarily, are the ...

Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 2: 13Gulla v. Barton, 149 N. Y. S. 952, 164 App. Div. 293. The union was formed for the benefit and protection of its members, and especially for the purpose of ...

Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 3: 64 N. J. L. 27, 44 Atl. 354; Stephenson v. Cone. 24 S. D. 460, 26 L. R. A. (N.S.) 1207, 124 N. W. 439; Dickie v. Abstract Co., 89 Tenn. 431, 24 Am. St. Rep.

Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 4: 26 Much might be urged pro and con as to the proper ground upon which to place non-liability, but we have no desire to enter upon that field of disputation. It ...

Specific Illustrations Of Contracts Conferring Incidental Benefit. Part 5: It may also be true that no citizen is a party to such a contract, and has no contractual or other right to recover for the failure of the company to act, but ...

Sec. 2402. Contracts Intended To Confer Benefit - Assumption Of Debts On Consideration Of Conveyance: In discussing the practical application of the foregoing principles to particular states of fact, we find that the most usual type of this contract exists ...

Contracts Intended To Confer Benefit - Assumption Of Debts On Consideration Of Conveyance. Continued: This rule is not confined to mortgages. If a grantee assumes and agrees to pay other debts of his grantor's, which are liens on the property conveyed, such as ...

Sec. 2403. Doctrine Not Limited To Assumption Of Debts On Consideration Of Conveyance: A serious question which arises in jurisdictions in which the beneficiary is recognized as having a right to enforce a contract for his benefit is whether the ...

Doctrine Not Limited To Assumption Of Debts On Consideration Of Conveyance. Continued: 10 D. Ghirardelli Co. v. Hunsicker, 164 Cal. 335, 128 Pac. 1041. 11 Whitney v. Ins. Co. (Cal.), 56 Pac. 50; Bartlett v. Ins. Co., 77 Ia. 155, 41 N. W. 601; ...

Sec. 2404. Contracts Of Indemnity: A contract whereby A agrees to indemnify B against loss is usually held not to give any right of action against A to parties holding claims whereby B will be ...

Sec. 2405. Bight Of Third Person To Enforce Contract In Equity: The right of a third person to enforce a contract made for his benefit, was recognized in equity at an early date,1 and has been constantly enforced in most ...

Sec. 2406. Right Of Third Person To Sue On Bonds: The principles discussed in the preceding sections with reference to the necessity of an intention to benefit the third person directly have been applied to ...

Sec. 2407. Bands Controlled By Special Statute: A different question arises where a bond is given in compliance with a statute which names the obligee and prescribes for whose benefit such bond is given and ...

Sec. 2408. Bonds To Protect Laborers And Materialmen On Public Improvements: In a number of jurisdictions, statutes have been passed which provide that public contractors must furnish bond to secure payment to persons who furnish them ...

Bonds To Protect Laborers And Materialmen On Public Improvements. Continued: 2 For Federal legislation concerning the construction of public buildings in the District of Columbia, see 30 Stats, at L., p. 906, c. 218 (Act of February 28, ...

Sec. 2409. Right Of Third Person To Enforce Sealed Instrument: Whether a contract under seal, if intended for the benefit of a third party, may be enforced by him, is a question upon which there is a divergence of opinion ...

Sec. 2410. Bight Of Promisee To Enforce Contract: Whether the promisee may bring an action on a contract made by him for the benefit of another, is a question on which there is some difference of opinion. In ...

Chapter LXXIV. Duties Of Third Persons With Reference To Contract: I. CONTRACTUAL OBLIGATIONS Sec. 2411. Contractual obligations imposed on third persons. II. INTERFERENCE WITH CONTRACT Sec. 2412. Interference with contract - ...

Sec. 2411. Contractual Obligations Imposed On Third Persons: The bulk of contract law deals with the relations between the parties to the contract. We have considered the question of the power of one party to a contract ...

Contractual Obligations Imposed On Third Persons. Continued: 17 See ch. LXXIII. The only serious conflict of authority which has arisen upon this question is found in cases in which A and B have become jointly indebted ...

Sec. 2412. Interference With Contract - General Nature Of Problem: Whether the fact that two persons have made a contract imposes upon third persons the duty to refrain from interfering with it, is a question which is entirely ...

Sec. 2413. Wrongful Nature Of Interference: It is axiomatic that an act does not amount to a tort unless it is at least wrongful. One who without negligence does an act which he has a right to do, does ...

Sec. 2414. Malice As Element Of Wrong: Whether interference with contract is actionable whenever it is wrongful, or whether it is actionable only when it is malicious, is a question upon which there ...

Sec. 2415. Justification For Interference With Contract: Interference with the contractual relations of another is said to be an actionable wrong unless there is adequate justification therefor.1 While such a ...

Sec. 2416. Interference By Act Which In Itself Is Tort: If X has committed a tort against A, the result of which is B's breach of contract with A, A may recover damages from X for such breach of contract in an ...

Sec. 2417. Propriety Of Purpose - Competition: If the interference with the formation of future contracts is the result of legitimate competition, and consists in offering lower rates, better facilities, a ...

Sec. 2418. Prior Illegal Conduct Of Injured Party: The fact that the party who is injured by the wrongful act of an association was at one time a member thereof, does not prevent him from maintaining an action ...

Sec. 2419. Knowledge Of Existence Of Contract: No liability exists if the party who interferes with the performance of a contract between two others did not know of the existence thereof.1 If, however, such ...

Sec. 2420. Connection Between Wrongful Act And Breach: No action lies against X unless it can be shown that he induced B to break his contract with A. If B's breach of contract was not due to any wrongful act on ...

Sec. 2421. Enforceable Character Of Contract: In order to sustain an action for interference with contract, it has been said that it must appear that there is a valid and enforceable contract, which has ...

Sec. 2422. Contract For Indefinite Time: Intermediate between ordinary cases of interference with an existing contract, and cases of the prevention of future contracts, are cases of existing contracts ...

Sec. 2423. Interference With Existing Contract - Subject-Matter Of Contract - Doctrine Of Lumley V.Gye: In considering the question of the liability of an individual who induces one person to break his contract with another, we are met at the outset by a hopeless ...

Sec. 2424. Contract Of Employment As Servant: If the contract is one of employment as a servant, it is generally conceded that one who induces the servant to break the contract is liable in tort.1 Cases of ...

Sec. 2425. Contract Of Employment Other Than As Servant: If the contract is one of employment, but not as servant in the strict sense of the term, we find a divergence of authority corresponding to that in Lumley v.

Sec. 2426. Contract Other Than Employment - Interference Held Actionable: In contracts other than those of employment we find a divergence even greater than in that class of cases. The weight of modern authority holds that ...

Sec. 2427. Contract Other Than Employment - Interference Held Not Actionable: In other jurisdictions liability in tort for inducing a breach of contract is held not to exist in contracts outside of contracts of employment if no wrongful ...

Sec. 2428. Wrongfully Preventing Performance: In jurisdictions in which a party who induces another to break a contract is liable to the adversary party, his liability is still clearer if instead of ...

Sec. 2429. Interference With Formation Of Future Contract: If there is no contract in existence between A and B, and X interferes to prevent A from making contracts with B, some courts hold that B may recover from X ...

Sec. 2430. Combination On Different Footing From Individual: If a combination of persons, acting in conspiracy, attempts to compel one person to break a contract with another, a question is presented which in some ...

Sec. 2431. Whether Combination Necessarily Illegal: It seems to have been held originally that a combination between workmen, for the purpose of raising their wages, was necessarily illegal, no matter what means ...

Sec. 2432. Discharge Of Employe Caused By Combination: The nature and extent of the liability of striking workmen, or others who have entered into a combination to compel a given course of action on the part of ...

Sec. 2433. Interference By Voluntary Association Of Dealers, Manufacturers, Etc: So-called voluntary associations are often found, the members of which agree not to deal with those who are not members of their association, or, in some cases, ...

Sec. 2434. Blacklisting By Association Of Employers: Questions which are the converse of those presented in strikes exist where employers combine to prevent certain workmen from obtaining employment. This often ...

Sec. 2435. Peaceful Interference With Business: Whether an injunction can be given against a systematic attempt to induce other persons to refrain from future business relations with the party seeking relief, ...

Sec. 2436. Strikes: It is very generally held that workmen may combine for the purpose of stopping work, at least as long as they do not break any existing contracts, and that ...

Sec. 2437. Sympathetic Strikes: An actual or threatened strike against one with whom the employes or labor unions have no dispute because he does business with another with whom they have a ...

Sec. 2438. Closed Shop: Analogous to the sympathetic strike, is the strike for the so-called closed shop ; that is, as the term is frequently used, for the employment of all employes ...

Sec. 2439. Boycotts: A boycott may be defined to be a combination of several persons to cause a loss to a third person by causing others against their will to withdraw from him ...

Sec. 2440. Unfair Lists: Whether placing an individual upon an unfair list is actionable or not, depends in part upon the meaning which usually attaches to the term unfair. If, as a ...

Sec. 2441. Picketing: A method often employed by strikers is what is known as picketing, which consists in stationing persons to meet at points where they can intercept the new ...

Picketing. Continued: A picket, in its very nature, tends to accomplish, and is designed to accomplish, these very things: It tends to, and is designed by physical intimidation to, ...

Sec. 2442. Slander, Fraud, Etc: The use of slander and the like would seem to be no more justifiable in trade disputes than in other cases. Accordingly, it is generally held that an action to ...

Sec. 2443. Violence And Coercion: If violence or coercion exist or are threatened, different principles apply from those which apply in cases of peaceful persuasion. The use of coercion is very ...

Sec. 2444. Injunction To Prevent Injury To Business: The action or suit may be brought by the employer whose business is threatened. The threatened strike, or boycott, may be intended to compel him to acquiesce ...

Sec. 2445. Damages: An employer whose employes are induced to leave his employment by the wrongful interference of an organization or association, may recover damages against the ...

Chapter LXXV. Discharge By Voluntary Agreement: I. GENERAL NATURE OF DISCHARGE Sec. 2446. General nature of discharge. II. RELEASES AND COVENANTS NOT TO SUE Sec. 2447. Definition and nature of release. Sec.

Sec. 2446. General Nature Of Discharge: In its wider meaning the term discharge. with reference to contract law. implies that as a result of certain acts which have taken place after the contract was ...

Sec. 2447. Definition And Nature Of Release: The term release, at common law, was used to denote a sealed instrument by which one who had a right or claim of some sort against another discharged such ...

Sec. 2448. Definition And Nature Of Covenant Not To Sue: The covenant not to sue, which is an agreement by one party not to bring an action against the other party, either for a limited period of time, or not to ...

Sec. 2449. History Of Release: In most systems of law, a contract, even of the most formal type, may be terminated by a contract of equally formal type. This was probably true of the early ...

Sec. 2450. Elements Of Release: At common law the elements of the release were the same as those of any other sealed instrument.1 It was necessary that it should be under seal,2 and that it ...

Sec. 2451. Construction - General Principles: In construing the release, the courts frequently repeat the general formula that the intention of the parties as determined by the ordinary rules of ...

Sec. 2452. Construction - Scope Of Subject-Matter: As in the case of contracts generally.1 the general words of a release are frequently limited by specific words in the same instrument; and the release is to ...

Sec. 2453. Construction As Between Release And Covenant Not To Sue: An instrument frequently contains language which shows that the parties intend it to operate as a release, but that at the same time they intend it to have ...

Sec. 2454. Effect Of Release As Discharge: Apparently a sealed release was at one time inoperative as a discharge of a judgment or other so-called contract of record.1 This arose out of the fact that a ...

Sec. 2455. Release Upon Condition: A release, like any other con-tract,1 may be granted to take effect upon the happening of some condition precedent.2 Until the happening of such condition, the ...

Sec. 2456. Releases And Covenants Not To Sue As Between Joint Or Joint And Several Parties: At common law, the release of one of two or more joint promisors or joint and several promisors operated as a release of all.1 For this reason, in ...

Sec. 2457. New Contract As Discharge - General Nature: An executory contract may be discharged by a new contract which is entered into for that purpose between the parties thereto.1 A provision in a written ...

Sec. 2458. New Contract Must Be Enforceable - Mutual Assent Of Parties: The proposition that a prior contract may be modified or rescinded by a subsequent contract, implies that such subsequent contract must have the elements ...

New Contract Must Be Enforceable - Mutual Assent Of Parties. Continued: 6 B. F. Sturtevant Co. v. Cumberland, 106 Md. 587, 68 Atl. 351. 7B. F. Sturtevant Co. v. Cumberland, 106 Md. 587, 68 Atl. 351. 8 Ferber v. Cona, 91 N. J. L.

Sec. 2459. Recognition Of Breach Not New Contract: The recognition of the fact of a breach by the adversary party, followed by conduct consistent with the fact of such breach, which looks to the mitigation of ...

Sec. 2460. Assent Of Beneficiary: An agreement between A, B and C can not be modified to C's prejudice by a subsequent agreement between A and B.1 It has been held that a modification by A and ...

Sec. 2461. Consideration For New Contract: While the principles which apply in cases of new contracts are the same that apply in questions of consideration generally, there are some special ...

Sec. 2462. No New Or Additional Consideration - Contract Executory On Both Sides - Mutual Discharge: If the original contract is still executory on both sides, either in whole or in part, and the parties in forming the new contract waive or release any ...

Sec. 2463. Discharge Or Increase In Liability Of One Party: If an executory contract between A and B is modified by imposing a new liability upon A without releasing him from any liability, and without imposing any ...

Sec. 2464. Contract Performed On One Side: If a contract has been performed on one side in full, a modification of the executory part of such contract whereby the original liability of the party who is ...

Sec. 2465. Theory That Consideration Not Necessary: In some jurisdictions it is said that the consideration for the original contract is imported into the new contract, and that accordingly the new contract does ...

Sec. 2466. Waiver Of Right To Avoid Original Contract: If the original contract is invalid,1 as because of mistake,2 as where a contract for excavation is made under a mistake as to the character of the ground to ...

Sec. 2467. New And Additional Consideration: The assumption of personal liability where none before existed,1 or a waiver of a right of a subcontractor to complete the contract himself or to hire someone ...

Sec. 2468. New Contract On Condition Precedent: If, by the terms thereof, the new contract has not taken effect,1 as where it is to take effect when it is reduced to writing, and signed and approved by all ...

Sec. 2469. New Contract Invalid On Other Grounds: Although the later contract may be made by a sufficient offer and acceptance,1 and although it is supported by sufficient consideration,2 it may be invalid and ...

Sec. 2470. Effect Of Breach Of New Contract On Rights Arising Out Of Prior Contract: 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 ...

Sec. 2471. Form Of New Contract - In General: Except for certain peculiarities due to the fact that the original contract was under seal, or that it was required to be in writing or to be proved by writing, ...

Sec. 2472. Formalities Necessary To Execution Of New Contract - Original Contract Of Record: The formality with which a new contract modifying or abrogating an earlier contract must be executed, or the kind of evidence by which it must be proved, ...

Sec. 2473. Original Contract Under Seal - At Common Law: The effect of a new unsealed contract upon liabilities arising out of a sealed contract depends in part on the stage in the historical development of the law ...

Sec. 2474. In Equity - Adoption Of Equitable Theory By Common Law: In equity a contract under seal might be discharged or modified by a subsequent oral contract not under seal.1 The place of performance,2 or the time for ...

Sec. 2475. Original Contract Required By Law To Be In Writing: If the contract is in writing, but not under seal, the question of the formality with which a subsequent contract must be executed, or the means whereby it ...

Sec. 2476. Original Contract Required By Law To Be Proved In Writing - New Contract Executory And Within Statute Of Frauds: If the original contract is one which is required by law to be proved by writing, the effect of a subsequent oral modification or discharge of such contract ...

Sec. 2477. Modification Of Consideration: In some jurisdictions the consideration is said not to be any part of the contract,1 and accordingly an oral modification of the consideration is enforceable ...

Sec. 2478. Modification Of Performance: In some jurisdictions the courts hold that the Statute of Frauds affects the original contract, but that it does not affect the performance thereof.1 Under ...

Sec. 2479. Effect Of Acts Of Reliance On New Contract: The fact that one of the parties to an oral contract within the terms of the Statute of Frauds, has acted in reliance thereon, is ordinarily held not to affect ...

Sec. 2480. Performance Or Part Performance Of New Contract: Complete performance is held to withdraw the contract from the operation of the statute,1 and accordingly a complete performance of an oral modification of a ...

Sec. 2481. Oral Rescission Of Original Contract: The oral agreement sometimes provides for terminating the original contract without substituting any executory provisions in its place. According to the weight ...

Sec. 2482. New Contract Containing No Provisions Within The Statute Of Frauds: The new contract may so modify the original contract that the provisions in the original contract which brought it within the operation of the Statute of ...

Sec. 2483. Original Contract Merely In Writing: If the contract is one which is in writing, but is not required by law to be in writing, or to be proved by writing, such contract may be modified by a ...

Sec. 2484. Effect Of Parol-Evidence Rule: The parol-evidence rule which forbids the introduction of evidence of prior or contemporaneous oral negotiations to vary or contradict the terms of a written ...

Sec. 2485. Express Covenant Against Oral Modification: If the written contract contains an express provision that no change or modification thereof can be made, except by writing, to be signed by one or both ...

Sec. 2486. Express Covenant As Affecting Authority Of Agent: While the principal may enter into an oral modification of a written contract in spite of a covenant in such contract against oral modification,1 such covenant ...

Sec. 2487. Statutory Rule As To Oral Modification: In some states it is provided expressly by statute that a written contract can be only modified by a subsequent written contract or by an executed oral ...

Sec. 2488. Evidence Of New Contract: If a dispute of fact arises as to the existence of a new contract, which modifies or abrogates a prior contract, the burden of proof is upon the party who ...

Sec. 2489. Effect Of New Contract - Total Or Partial Discharge By New Contract: The new contract may amount to a modification of the prior contract leaving some of its terms in force and continuing the original liability with such ...

Sec. 2490. Express Provision As To Effect Of New Contract On Original Contract: If the new contract abrogates the earlier contract by express terms, no question of the intention of the parties can usually arise.1 In such case it abrogates ...

Sec. 2491. No Express Provision As To Effect - New Contract Consistent With Original Contract: If the new contract does not provide either for abrogating the original contract or for retaining it in force, the question of the effect of the second ...

Sec. 2492. No Express Provision As To Effect - New Contract Entirely Inconsistent With Original Contract: A subsequent contract which does not by express terms abrogate an earlier contract, will, nevertheless. operate as a discharge thereof if it is inconsistent ...

Sec. 2493. New Contract Partially Inconsistent With Prior Contract: If the new contract covers a subject-matter which is only in part the same as that covered by the old contract, the hew contract abrogates the old only in so ...

Sec. 2494. Effect Of New Contract Upon Subsequent Rights Arising Out Of Original Contract: If the parties have made a new contract which is intended to supersede the original contract, the rights of the parties to the transaction are necessarily ...

Sec. 2495. Effect Of New Contract Upon Prior Rights Arising Tinder Original Contract: Whether a new contract discharges all right which have arisen under the original contract, or whether such new contract is intended to leave intact the rights ...

Sec. 2496. Provision In Contract For Subsequent Modification: Provision is frequently made in contracts for subsequent modification thereof. Modifications which are made pursuant to such provisions are ordinarily regarded ...

Sec. 2497. Novation - Nature And Meaning: Novation is a term derived from novatio of the Roman law, but its use in common law is in some respects different from the corresponding term at Roman law. At ...

Sec. 2498. Elements Of Novation In Narrower Sense: If B is indebted to A, and C is indebted to B, and by mutual agreement between A, B and C, C agrees to pay his indebtedness to A, B agrees to discharge his ...

Sec. 2499. Effect Of Novation In Narrower Sense: As a result of such contract, C is discharged from his liability to B, and B is discharged from his liability to A,1 A may maintain an action against C,2 and ...

Sec. 2500. Novation In Wider Sense: The term novation is also used to indicate a contract between the same parties as a prior contract, intended as a discharge of such prior contract and as a ...

Sec. 2501. Definition And Nature: The definitions of accord and satisfaction are of two different types. In the earlier definition the emphasis is laid upon the satisfaction alone, rather than ...

Sec. 2502. History Of Accord And Satisfaction: Accord and satisfaction appears in English law long before simple executory contracts are recognized at common law,1 as a means by which a liability in tort ...

Sec. 2503. Elements Of Accord And Satisfaction - The Accord-Offer And Acceptance: The accord is ordinarily a simple executory contract which possesses the same elements as those of the simple executory contract which has already been ...

Sec. 2504. Check As Offer: If the offer which is claimed to be the basis of an accord is made by sending a check and the like, which is marked in full, and the acceptance which is relied ...

Check As Offer. Continued: Arkansas. Barham v. Bank, 94 Ark. 158, 27 L. R. A. (N.S.) 439, 126 S. W. 394; Barham v. Kizzia, 100 Ark. 251, 140 S. W. 6. Colorado. Colorado Tent & Awning Co.

Sec. 2505. Receipts In Full: The principles which control the effect of a receipt in full are substantially those which control where checks are sent in full. If no dispute has arisen,1 as ...

Sec. 2506. Consideration - General Principles: As in the case of contracts generally,1 a valuable consideration is an essential element of a valid accord and satisfaction.2 11 Day v. McLea, 22 Q. B. Div.

Sec. 2507. Claim Liquidated And Not In Dispute: No additional consideration, If the claim, on the one side, is undisputed and is for a liquidated sum of money, it is held in most jurisdictions that accord ...

Sec. 2508. Additional Consideration: The courts that enforce this rule show in their attempts to find some technical consideration in the transaction which would support the accord and ...

Sec. 2509. Satisfaction Of Nature Different From Original Claim: If the thing which is given in satisfaction of the debt is of a different nature from the original liability, questions of adequacy of consideration do not ...

Sec. 2510. Unliquidated Or Disputed Claim: If the original claim is unliquidated or in dispute, a different principle applies. Under the ordinary rules as to compromise of disputed claims,1 the courts ...

Sec. 2511. Accord And Satisfaction By Stranger To Original Liability: As in the case of contracts generally,1 an accord and satisfaction has no legal effect if it is made by one who has no authority to bind the party to such ...

Accord And Satisfaction By Stranger To Original Liability. Continued: Some doubt has arisen upon the point of satisfaction by a stranger, from the case of Grymes v. Blofield. (Reported in Cro. Eliz. 541, and in Rolle's Abridgment, ...

Sec. 2512. Fraud, Conditions, Etc: As in the case of contracts generally,1 a contract of accord and satisfaction may be avoided for fraud.2 Whether it is necessary that the party who seeks to ...

Sec. 2513. Accord And Satisfaction As Discharge Of Contract Of Record: Prom an early period the English law regarded the formal contract as of an entirely different class and rank from the simple contract.1 This distinction was ...

Sec. 2514. Accord And Satisfaction As Discharge Of Contract Under Seal: Similar problems arose in connection with the obligation under seal. In England the original rule at common law was that before breach a sealed obligation ...

Sec. 2515. Satisfaction: Accord and satisfaction was recognized as a bar to an action in tort at a period when the simple executory contract was unenforceable in the king's courts.1 At ...

Part VII. Discharge: At the same time, it will not be presumed that the creditor intended to substitute one cause of action for another, unless it appears to have been the ...

Sec. 2516. Effect Of Accord And Satisfaction: After a valid accord and satisfaction the original liability is discharged.1 This is sometimes spoken of as merger, 2 but this can net mean merger in the ...

Sec. 2517. Definition And Nature: An account stated is frequently defined as an agreement between parties who have had previous transactions of a monetary character creating the relation of ...

Sec. 2518. Elements Of Account Stated - Nature Of Account: It is said that a statement of an account consists in the mutual examination of the claims of each other as between the parties and a mutual agreement between ...

Sec. 2519. Antecedent Debt: The liability which is the basis of an account stated must be a debt.1 A liability in tort,2 such as liability for negligence.3 can not be the basis of an ...

Sec. 2520. Rendition Of Account: In analogy to the ordinary principles of offer and acceptance, which require the communication of an offer,1 an account stated can not exist unless the account ...

Sec. 2521. Assent To Account As Rendered: In analogy to the ordinary principles of offer and acceptance, which require the acceptance of the offer to convert the offer into a contract,1 an account is ...

Sec. 2522. Communication Of Assent: The express approval of an account on the part of the debtor amounts to an account stated.1 It is not necessary that the assent of the debtor should be shown ...

Sec. 2523. Silence As Assent: A debtor to whom an account is presented has at least a reasonable time for investigation and examination,1 and if he objects to the account within a ...

Sec. 2524. Effect Of Account Stated: An account stated becomes a new contract,1 or an admission of an existing liability,2 according to the emphasis placed on one or the other of these ...

Sec. 2525. Definition And Nature, An Arbitration Is Another Form Of A Discharge Of Liability By The Voluntary Agreement Of The Parties: It differs from discharge by new contract, by account stated. by accord and satisfaction and by release, in that the amount to be paid in satisfaction for the ...

Sec. 2526. History Of Arbitration: Like accord and satisfaction,1 the method of settling controversies and disputes by means of arbitration seems to be one of immemorial antiquity in English law ...

Sec. 2527. Validity Of Covenant For Arbitration: A general provision in advance for arbitration is inoperative and it does not oust the jurisdiction of the courts.1 Notwithstanding such provision, either ...

Sec. 2528. Elements Of Arbitration - Submission: From the nature of arbitration, a submission, which is the voluntary agreement of the parties to the original controversy to refer the matter in dispute to ...

Sec. 2529. Subject-Matter Of Arbitration - Existing Dispute: It has been said that there can be no submission unless it deals with some existing dispute between the parties.1 This, however, has been denied and it has ...

Sec. 2530. Subject-Matter Of Arbitration - -Entire Dispute: It has been said that arbitration can not exist in the true sense of the term unless the entire dispute is submitted,1 and that a reference to appraisers or ...

Sec. 2531. Illegal Subject-Matter: Since an illegal covenant renders invalid the remaining covenants of an entire contract,1 and since an illegal contract or transaction can not be a ...

Sec. 2532. Form Of Submission: In the absence of statute no particular form of submission is necessary if no particular form would have been necessary to any other contract dealing with the ...

Sec. 2533. Construction Of Submission: While the dislike for covenants for arbitration in advance at one time extended to all contracts for arbitration, and required strict construction of the ...

Sec. 2534. Appointment Of Arbitrators: In the absence of statute, the arbitrators must be appointed by the parties to the submission either in the submission itself or by their subsequent agreement.

Sec. 2535. Qualifications Of Arbitrators: Unless the parties have waived objection to an arbitrator on the ground of bias, prejudice, and the like, each party has a right to insist that the arbitrators, ...

Sec. 2536. Notice Of Hearing: Unless the time and place of the hearing are fixed by the submission, or the parties are otherwise informed thereof, the arbitrators must give notice to both ...

Sec. 2537. Hearing: The parties to the submission have a right to be present at the hearings of the arbitrators at which evidence is offered which may affect the award.1 At the ...

Sec. 2538. Evidence: As a general rule. the admission by the arbitrators, at the hearing of evidence which would have been inadmissible in an action at law or a suit in equity as ...

Sec. 2539. Method Of Action Of Arbitrators: Unless the agreement of the parties shows a contrary intent or the statute which controls provides otherwise, the arbitrators must all act in person.1 They can ...

Sec. 2540. Unanimity Of Action: In the absence of a provision in the submission or in the controlling statute to the contrary, the action of the arbitrators must be unanimous if the ...

Sec. 2541. Award - General Nature: The award has been spoken of as if it were a contract between the parties, entered into by their authorized agents, the arbitrators.1 It is true that the ...

Sec. 2542. Award - Conformity To Submission: The submission is the charter of authority for the arbitrators,1 and the award must conform to the submission.2 8 Moseley v. Simpson, L. R. 16 Eq. 226; ...

Sec. 2543. Completeness And Finality Of Award: The purpose of the parties in submitting their controversy to arbitration, is to terminate such controversy; and an award which leaves any material part of the ...

Sec. 2544. Certainty Of Award: The intention of the parties in submitting to an award, is to end the controversy between them which they thus agree to submit. The award, accordingly, must be ...

Sec. 2545. Form And Signature Of Award: An award need not be made in any specific form; and it may even be made orally,1 unless the terms of submission require a written award,2 or the statute which ...

Sec. 2546. Effect Of Submission As Bar To Action: While the early authors seem to indicate that a submission was a bar to the original action even before award,1 the opposite rule became so at a comparatively ...

Sec. 2547. Effect Of Submission As Basis For Recovering Damages: If the covenant for arbitration is not invalid as being a covenant for ousting the jurisdiction of the courts in advance,1 it is a valid contract between the ...

Sec. 2548. Effect Of Award: After an award has been made, and announced, the submission and award cease to be revocable at the arbitrary will of either of the parties thereto;1 and this ...

Sec. 2549. Enforcement Of Award: At common law, award which was not made a rule of court could be enforced by an action at law on the award or by an action on the bond, if a bond to secure ...

Sec. 2550. Grounds For Attacking Award: The submission ordinarily provides either expressly or by fair implication that the proceedings before the arbitrators shall be such as to give to each party a ...

Sec. 2551. Methods Of Attacking Award: The common law has always regarded the form rather than the substance; and, accordingly, in actions upon awards, the general rule was that if the proceedings ...

Sec. 2552. Waiver: While the refusal of the arbitrators to consider competent evidence,1 or irregularities in procedure which prevent a fair and impartial hearing,2 may be ground ...

Sec. 2553. Liability Of Arbitrators: An arbitrator acts in a quasi-judicial capacity, and accordingly he is not liable for lack of skill, lack of due care, and the like, although an agent would be ...

Chapter LXXVI. Merger: Sec. 2554. Nature of merger. Sec. 2555. Merger in contract of record - In general. Sec. 2566. Merger of contract of record in contract of record. Sec. 2557.

Sec. 2554. Nature Of Merger: In most systems of law which have advanced so far that they recognize different degrees in the formality of valid transactions, it is generally assumed that ...

Sec. 2555. Merger In Contract Of Record: In general In every system of law enormous importance is usually attached to legal proceedings, and the more primitive the system of law, the greater the ...

Sec. 2556. Merger Of Contract Of Record In Contract Of Record: Whether a judgment or other contract of record is merged in a subsequent judgment or other contract of record upon the same cause of action, seems to depend, ...

Sec. 2557. Merger Of Specialty In Contract Of Record: At common law, an instrument under seal was not discharged, even by performance, unless the instrument itself was canceled; that is, unless the seal was torn ...

Sec. 2558. Merger Of Simple Contract In Contract Of Record: Apart from the difficulties which have arisen where the original right was founded upon a record, such as a judgment,1 or where it was embodied in a sealed ...

Sec. 2559. Elements Of Merger In Contract Of Record - Identity Of Parties: In order to operate as a merger, the judgment must be rendered in an action between the parties to the contract or their legal representatives; and it will ...

Sec. 2560. Identity Of Causes Of Action: In order to operate as a merger, the judgment which is rendered in the first action must be based upon the same cause of action as that which is set forth in ...

Sec. 2561. Causes Of Action Arising Out Of Same Contract: Even though the two causes of action may arise out of the same contract, a judgment in the first action does not operate as a merger of the second cause of ...

Sec. 2562. Splitting Cause Of Action: Whether a judgment rendered upon a contract necessarily operates as a merger of all subsequent causes of action thereon, or whether separate judgments may be ...

Sec. 2563. Merger Of Subsequent Causes Of Action: In a number of jurisdictions, the condition of affairs at the time that the action is begun, and not the condition of affairs at the time that the judgment is ...

Sec. 2564. Merger As Affecting Counterclaim And Set-Off: The defendant is ordinarily not obliged to plead a counterclaim or set-off, but he may elect whether he will make use of a right of action in his favor against ...

Sec. 2565. Nature Of Judgment: In order that a judgment may operate as a merger, it must be rendered by a court which has jurisdiction of the subject-matter, and of the parties.1 If a ...

Sec. 2566. Effect Of Judgment As Merger: If the elements of merger which have already been described, are shown to exist,1 a judgment merges the original cause of action so that no action can ...

Sec. 2567. Merger Of Simple Contract In Specialty: A simple contract is merged in a contract under seal.1 Under the doctrine of merger, delivery of a specialty executed by the debtor,2 extinguishes a simple ...

Sec. 2568. Elements Necessary To Merger: In order to have the doctrine of merger operate, the subsequent specialty must bear the following relation to the prior written contract: (1) The specialty ...

Sec. 2569. Merger Of Oral Contract In Written Contract: The enforcement of the parol evidence rule, which was originally adopted by the courts in analogy to the rule of merger, whereby a sealed instrument merged a ...

Sec. 2570. Merger Of Fraudulent Representations: Fraudulent representations as to incumbrances 1 are not merged in a subsequent deed containing no covenants of warranty. Fraudulent representations as to title ...

Sec. 2571. Merger By Union Of Inconsistent Rights In Same Party-Marriage Of Debtor And Creditor: A party can not make a promise to himself,1 and he can not be indebted to himself or under any obligation to himself which the law will recognize and enforce.

Sec. 2572. Appointment Of Debtor As Executor: At common law an executor was regarded as the owner of the personalty of the testator, subject to his duty to account for the proceeds of the estate.

Sec. 2573. Sale Or Bequest Of Debt To Debtor: If a debtor attempts to purchase his debt, the transaction is regarded as a merger or extinction of the original debt, rather than as a purchase.1 However, a ...

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