Section 4

The contract, when once entered into, will not without an express stipulation to that effect be avoided by the death, bankruptcy or lunacy (r) of both or either of the parties.

Rights of vendor and purchaser, inter se.

(o) Crockford v. Alexander, (1808) 15 Ves. 138.

(p) See Humphreys v. Harrison, (1820) 1 J. & W. 561; Hippeslely v. Spencer, (1820) 5 Mad. 422; King v. Smith, (1843) 2 Ha. 239; 7 Jur. 694.

(q) See Monro v. Taylor, (1850) 8 Ha. at p. 60; (1852) 21 L. J. Ch. 525; Clare Hall v. Harding, (1848) 6 Ha. 273, 296; 17 L. J. Ch. 301. But see Phillips v. Silvester, (1872) 8 Ch. 173; 42 L. J. Ch. 225; Golden Bread Co. v. Hemmings, 1922, 1 Ch. 162; and see inf. ch. xii. s. 4.

(r) Winged v. Lefebury, (1724) 2 Eq. Ca. Ab. 32; Orlebar v. Fletcher, (1721) 1 P. W. 737; 2 Eq. Ca. Ab. 108, pl. 2; Owen v. Davies, (1748) 1 Ves. sen. 82; Brooke v. Hewitt, (1796) 3 Ves. 255; Whitworth v. Davis, (1813) 1 V. & B. 545; Valpy v. Oakeley, (1851) 16 Q. B. 941; 20 L. J. Q. B. 380; Sug. 14th ed. 170, 220..

S. 45 of the Bankruptcy Act, 1914, provides that (subject as therein mentioned) nothing in the Act is to invalidate, in the case of a bankruptcy - (1) any payment to the bankrupt, (2) any conveyance by the bankrupt for valuable consideration, (3) "any contract, dealing, or transaction by or with the bankrupt for valuable consideration," provided that the payment, conveyance, contract, dealing, or transaction, takes place before the receiving order, and the person dealing with the debtor has no notice at the time of an available act of bankruptcy (s). If a transaction comes within this . enactment it is protected, though it constitute an act of bankruptcy (t). Where a purchaser received notice of an act of bankruptcy by the vendor prior to completion, it was held that he was entitled to repudiate the contract and recover the deposit, upon the ground that although the contract was protected by, s. 49 of the Act of 1883 (u), the consequential acts of paying the purchase-money to the vendor and obtaining from him a conveyance of the property would not be within the protection (x). In this case no bankruptcy proceedings were in fact taken; but if there had been an adjudication before the purchaser's repudiation, the trustee might, presumably, have insisted on the contract (y).

Protection to purchaser without notice of bankruptcy.

S. 54 of the Bankruptcy Act, 1914, however, provides (z) that where any part of the bankrupt's property consists of unprofitable contracts or of other property that is unsaleable or not readily saleable, the trustee, notwithstanding that he has endeavoured to sell or has taken possession of the property, may (subject to the provisions of the section) by writing signed by him within the period therein stated disclaim the property; and such disclaimer will operate to determine, as from its date, the rights, interests and liabilities of the bankrupt and his property in or in respect of the property disclaimed; and will also discharge the trustee from all personal liability in respect of the property disclaimed as from the date when the property vested in him, but will not, except so far as is necessary for the purpose of releasing the bankrupt and his property and the trustee from liability, affect the rights or liabilities of any other person. This section, however, does not enable the trustee to disclaim a contract, merely because it would be more beneficial to the estate that the contract should not be carried out, nor to disclaim the contract apart from the property,(a); nor does his disclaimer take away the equitable interest vested in the purchaser under the contract (b).

Disclaimer by trustee of bankrupt.

(s) See Williams on Bkcy. 13th ed. pp. 318 - 326; The Ruby, (1900) 83 L. T. 438; Re Slobodinsky, 1903, 2 K. B. 517; 72 L. J. K. B. 883.

(t) Shears v. Goddard, 1896, 1 Q. B. 406; 65 L. J. Q. B. 344; and cf. Re Sharp, (1900) 83 L. T. 416; Re Jukes, 1902, 2 K. B. 58; 71 L. J. K. B. 710.

(u) Now replaced by s. 45 of the Bankruptcy Act, 1914.

(x) Powell v. Marshall, Parker & Co., 1899, 1 Q. B. 710; 68 L. J. Q. B. 477.

(y) See Re Bastable, 1901, 2 K. B. 518; 70 L. J. Q. B. 784; Re Taylor, 1910, 1 K. B. 562.

(z) As to the effect of a disclaimer of freehold property of a bankrupt burdened by onerous covenants, see Re Mercer and Moore, (1880) 14 Ch. D. 287; 49 L. J. Ch. .201; Williams on Bkcy. 13th ed. 342.

Where an application in writing has been made to the trustee by a person interested in the property, requiring him to decide whether he will disclaim or not, and the trustee within twenty-eight days or such extended period as the Court may allow does not disclaim, he is deemed to have adopted the contract (c). And the Court may as against the trustee rescind the contract made with the bankrupt on such terms as to payment of damages as to the Court may seem equitable, and such damages may be proved for as a debt under the bankruptcy (d).

By s. 46 of the Bkcy. Act, 1914, it is provided' that a payment of money or delivery of property to a person subsequently adjudged bankrupt, or to a person claiming by assignment from him, shall be a good discharge if the payment or delivery is made before the actual date on which the receiving order is made and without notice of the presentation of a bankruptcy petition, and is either pursuant to the ordinary course of business or otherwise bond fide. A contract entered into in good faith and for value with an undischarged bankrupt for the purchase from him of real or personal property acquired by him subsequently to the adjudication, and as regards which the trustee in bankruptcy has not intervened, is valid, and the conveyance, if executed before the intervention of the trustee, has full effect (ft).

Dealings with bankrupt's after-acquired property.

(a) Re Bastable, 1901, 2 K. B. 518; 70 L. J. K. B. 784.

(b) S. C. (c) S. 54 (4).

(d) S. 54 (5). As to the Court's power to make orders vesting disclaimed property, see sub-s. (6); Williams on Bkcy. 13th ed. pp. 346 - 348; Lea v. Thursby, 1904, 2 Ch. 57; 73 L,. J. Ch. 518.