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"1 



A ~. 



^^^^.^(UiLe. 




PRINCIPLES OF CONTRACT: 

A TREATISE ON THE 

QENERAL PRINCIPLB3 CONCERNING THE VALIDmr 

OF AGREEMENTS IN THE LAW OF ENGLAND. 



FIFTH EDITION: 
Wbh a H iw Charo. 



Principles of Contract: 



A TREATLSE ON THE 

GENERAL PRINCIPLES CONCERNING THE VALIDITY 

OF AGREEMENTS IN THE LAW OF ENGLAND. 



FIFTH EDITION: 

WITH A NEW CHAPTEB. 

BT 

Sib FREDERICK POLLOCK, Bart., 

or UVOOUl'S IWK, BAltllUTBm-AT-LAW ; 

oamrvB pROFzasoR or jrBiapBui>B»CB ur thb umrBitaiTT or oxford ; pRorBiaom or oo 

LAW IN TRB EHliS OP COURT ; LATB PBIXOW OP TRIIHTr OOLLBOB, CAMBBIDOB ; ARD 
aOROBART DOCTOR OP LAW! IR THB UMITBRMTT OP BDIXBVBaB. 



M TUB iftotkm of OontrMt ii ptrt of men's oommoii stoek trrm ootaifdo tho ll«ld of kgal 
•clonoe, BDd to men of Ibw ao Ikmlllmr end ntemnrj In iU pvtoue mppUoBtlons that we 
might expeet e eettled mnd jtut eppreheulon of It to prairmU eperTwhere. N ATertbelMi 
w* Rt« yet far ehort of tUe."— Satiovt, Syefeem dee heutigen iflmierhem Beohte, 1 140. 



LONDON: 

STEVENS AND SONS, LIMITED, 

119 & 120, CHANCERY LANE, 
1889. 



LONDON: 

W. L BIOHABDSON, PBINTm, 

4 AND 5, OBSA.T QUSBN 8TBBBT, LINOOLN'B INN FIBLDS, W.a 



TO THB RIGHT H0N0I7BABLV 

LORD JUSTICE IINDLEY. 



My deab Lobd Justice, 

Ten years ago I dedicated to you, as my master 
in the law, the first edition of this book, as the first fruits 
of your teaching. The time has come when I may with- 
out presumption take on myself to explain the meaning 
of those words more fnlly than the compass of a formal 
dedication admits. 

In your chambers, and from your example, I leamt 
that root of the matter which too many things in common 
practice conspire to obscure, that the law is neither a trade 
nor a solemn jugglery, but a science. By your help and 
encouragement I was led to acquaint myself with that 
other great historical system which to this day divides, 
broadly speaking, the civilized world with the Common 
Law ; to regard it not as a mere collection of rules and 
maxims accidentally like or unlike our own, but as the 
living growth of similar ideas under different conditions » 
and to perceive that the Boman law deserves the study 
and reverence of English lawyers, not merely as scholars 
and citizens of the world, but inasmuch as both in its 
history and its scientific development it is capable of 
throwing a light beyond price on the dark places of our 
own doctrine. I owe it to you and to my friend Professor 
Bryce that, daring to be deaf to the counsels of shallow 
wisdom that nii«M»Al1« itself practical, I turned from the 



Tl DEDIOATION. 

formless confusion of text-books and the dry bones of 
students' manuals to the immortal work of Savigny ; as- 
suredly the greatest production of this age in the field of 
jurisprudence, nor one easily to be matched in any other 
brancli of learning, if literary form as weJl as scientific 
genius be taken into account. Like one in a Platonic 
fable, 1 passed out of a cave of shadows into clear day- 
light. The vast mass of detail was dominated by ordered 
ideas and luminous exposition. Equally removed from 
the futile struggling of a mere handicraftsman with the 
multitude of particulars, and from the pedantry which 
gains a show of logical symmetry by casting out un- 
welcome facts, the master proved, not by verbal definition, 
but by achievements in act, that the science (if law is 
a true and living one. 

Others have come and may come by other means to the 
same sort of enlightenment. Let every one praise, as in 
private duty bound, the spiritual fathers to whom he owes 
it. Blackstone, I doubt not, opened to his first hearers little 
less than a revelation. But Blackstone, if he were with 
us at this day, would be the first to proclaim the necessity 
of doing his work over again, and doing it thoroughly 
from the beginning. His destined successor is yet to seek ; 
and meanwhile an English teacher of law can have no 
higher ambition than to prepare the way, however par- 
tially, for that successor. Title by title, and chapter by 
chapter, the treasures of the Common Law must be con- 
solidated into rational order before they can be newly 
grasped and recast as a whole. 

Many good and true workers are bearing their part in 
this task in divers forms. Some part has fallen to my 
share ; I have performed and am performing it as best 
I may. To be a fellow-worker with such men as Mr. 
Justice Stephen and Mr. Justice 0. W. Holmes, and in 
ways which they and you think not unworthy of approval, 
is at once a privilege and a responsibility. 



DEDICATION. Til 

No man can be free from errors in design or fitolts in 
execution. But every man can strive to keep his eyes 
open for the best light he knows, his hand trained for the 
best mastery it is capable of; to test and verify his handi- 
work at every step, and, where he has failed to attain 
certainty, frankly to confess his doubt or ignorance. These 
things I have striven to do ; and if any word of mine, 
spoken or written, is of the spirit which helps those who 
come after to do them better, it will be of little account 
whether the letter of it stands or falls. With such skill 
as I have it will still be my endeavour to spread abroad 
the gladsome light of jurisprudence into which you led 
me (to speak with Coke, an author even now read by some 
on both sides of the Atlantic who do not believe that the 
law of England and its history exist for the sake of either 
examinations or practice cases) ; and I think I may guess 
without rashness that there is no kind of return you 
would more willingly accept. 

I remain. 

Your friend and pupil, 

FREDERICK POLLOCK. 

IiiirooLN'8 Ihn, 

JSoMUr, 1885. 



Another edition is called for ; I <iffer it to you in the 
hope that you may find it, as I have tried to make it, 
better than the la^t 

F. P. 

Lihooln's Ihn, 

September, 1889. 



ADVERTISEMENT TO THE FIFTH EDITION. 



This edition has been thoroughly revised, and a new 
chapter on the more general rales of interpretation has 
been added, entitled ''Duties under Contract." Many 
parts of other chapters have been rewritten or materially 
altered. I have not seen my way, however, to a further 
expansion of the original plan which at one time I thought 
of. 

The undertaking to give references to all the current 
reports has been dropped, after a fair trial in the last 
edition, as not being worth the space and labour. On the 
other hand all modem cases are dated, and the references 
to the Law Journal are brought down to the present 
time. 

The Indian Contract Act is now easily accessible to 
English readers in Dr. Whitley Stokes *8 standard edition 
of the Anglo-Indian Codes (Oxford, 1887). It has there- 
fore seemed needless to reprint the extracts which were 
given in former editions of this book. 

I am indebted to my cousin, Mr. Dighton N. Pollock, 
of the Chancery Bar, for his assistance in preparing and 
revising the Index. 

F. P. 

September, 1889. 



TABLE OF CONTENTS. 



CHAPTER I. 

AOREBMXNT, PbOPOSAL, AlTD ACCEPTANOK. 

PAGE 

Natare of Qontnot 1 

DefinitioDB of agreement 2 

AgreeiDent : nature of coDBent required 3 

Obligation 4 

Ways of declaring conaent 5 

Promise 7 

Contract 8 

Void agreements 8 

Voidable contracts 9 

Rules as to proposal and acceptance 10 

Express and tacit contracts, and quasi-contracts 10 

Proposals to unascertained persons (contracts by offer of reward, 

&C.) 18 

Discussion of cases 15 

Difficulties considered ... 18 

Theory of floating obligation inadmissible 20 

Other kinds of general proposal 22 

Revocation of proposal 24 

Determination of proposal 26 

Communication of revocation 27 

JHckiiMon V. Dodds confidered ... ... ... 29 

Can there be double acceptance ? 80 

Continental opinions 81 

Communication of acceptance ... ... 32 

Contracts by correspondence... 34 

Artificial theories on the subject 34 

State of English authority 36 

Effect of death of proposer 88 

Certainty of acceptance 89 

Agreements in terms where consent not final ... 42 

Certainty of terms of agreement 44 

Illusory promisee 44 

Construction of tacit acceptances 47 

Promises by deed may bind without acceptance 48 



TABLK OW COMTKMTB. XI 

CHAPTER n. 
Oafaoitt or Pa; 



Yaiifttioiw in penowJ oi|Meity 60 

Aztifidal penoDs 61 

LimitotuniB of capacity 6S 

1. Infants. General sUtement 62 

Contneti generaU j voidAble, not void : tad qn, wfaeiher In any 

caae Toid at oommon lav 6S 

Special claiMa of coDtracU conddered on tbia point 64 

Avoldanoe of infant's contract 60 

Infanta' ReUef Act, 1874 60 

Liability on oUigations incident to property 64 

On beneficial contract 66 

For neocMarlei... ... ... ... ... ... ... ... 67 

What are neoeMaiiea 67 

Certain contracta of infants binding by costom 72 

By statute 72 

Liability of infants on wrongs collateral to contract 74 

In eqnity, on repreaentationa of full age 74 

Sabseqaent contract after fnll age prevails 77 

2. Married Women. Can contract only as to separate property ... 77 

/lu mari^ and sornvorsbip .. 78 

Cannot revive barred debt by acknowledgment 79 

Bxceptions at conunon law 80 

Costom of London as to married woman trading alone 81 

Agreements for separation between bnsband and wife alone ... 82 

Statutory exceptions : judicial separation, Ac 83 

Kquitable doctrine of separate estate 84 

Bilarried Women's Property Act, 1882 84 

3. LunaUee and Drunken Persons. Undisputed points 87 

History of opinions as to contract of lunatic, fta, ia general ... 8y 

Modem law : contract not void but voidable 90 

4. ConvidSfAe. 94 

Extension of capacity 94 

1. Agency 94 

Authority of Agent 95 

Contracts by authorised agents 96 

When agent known to be such, there is contract with principal... 96 

If principal named, prima facie no contract with agent 96 

If principal not named, prima facie there is contract with agent 97 

Thete rules subject to evidence of contrary iQtentioD 98 

When agent not known to be such, there is generally contract 

with undisclosed principal 99 

Exceptions to and limits of the rule 100 



SI TABLE OF CONTENTS. 

FAGB 

Bights of other contracting party 101 

Professed agent not having authority cannot roe on the contract 

if a responsible principal has been named 103 

Nor be sued on it ... 105 

Bat may be sned on implied warranty of authority 106 

Where no principal named, or one who coold not be responsible, 

prof essed agent is treated as principal 106 

2. Artificial PerawM 109 

Nature of artificial persons 109 

Coiporations Ill 

Capacities of corporations in themselves 112 

As Umited by positive law 117 

Conflicting theories of corporate potrers 117 

Application of partnership law 120 

Pablio policy and interests of the pnblic 122 

Decision of House of Lords on Companies Act, 1862 125 

Corporations cannot bind themselves by negotiable instruments : 

explanations of this ... 126 

Exceptions 128 

Conflicting theories in U. S. 129 

Corporations bound by estoppel, Ac. 180 



CHAPTER III. 
Form of Contraot. 



Position of informal contracts in ancient law 181 

Formal and informal cootracts in Roman law 182 

Similar doctrine of old English law in Bracton, &c 1 86 

Practice in modem continental law 1 86 

Remedies on contracts : debt on covenant or simple contract ... 188 

Action of account 189 

Introduction of aisompeit to supply remedy on executory agree- 
ments ... 141 

Modem law : requirements of form exceptional 148 

Contracts of Record 143 

Contracts subject to special forms 144 

C<mtracU of OorpcTfUioM : oIAIkw 145 

Modern exceptions to requirement of seal 147 

Trading corporations : Contracts in conrae of business 1 47 

Non-trading corporations : Contracts necessaiy and incidental to 

corporate purposes 150 



TABLS OF cx>mx!rr8. XIU 

FAOB 

Mimieii»l oorpoistloiM, fte. 151 

Appointments of officers 151 

Ezeented oontnete with corpontions 158 

Statotory forms of oontnct 154 

Sommsiy 155 

NegoHahU IndrumaUa 150 

auovte of FrmtdB 15« 

Gnitfuities 157 

Agreements upon oonsiderstion of manUge 158 

Interests in land 159 

Agreements not to be performed within a year 159 

Saleofgoods 180 

The *' note or memorandum '* 180 

TraDsfera of ships and copyright 188 

Marine Innuunee ... 188 

Tramfer of Sharet 184 

AekncwUdgwieni of barred debU 184 



CHAPTER rv. 

CONBIDBBATIOH. 



nie conception peenUar to English law 188 

Past consideration ineffectual 189 

Aofaiowkdgment of barred debts 170 

Adequacy of consideration immaterial ... 171 

Promises to perform dnties already existing 178 

Consideration for discharge of contract 178 

For Tariation of contract 180 

Forbearance to tne 180 

Compromises 181 

Treatment of gratnitoos contracts nnder seal in equity 188 

Imperfect gifts 184 



CHAPTEB V. 

PbBSONB imOTXD BT COHTBJiOr. 



PftUmiiiaKy 188 

I>efinitiaDB and roles 187 



XIV TABLE OF CONTENTS. 

FAOK 

1. PartiM muBt be oerUin 190 

2. Third penoDs not boond ... 191 

Apparent exceptionB ... 192 

Novation 198 

8. Third persons not entitled by the contract itself 195 

Apparent exceptions 195 

Tmsts 197 

Exception of oertain provisions for children 199 

Statutory exceptions 199 

Contract for benefit of third person gives him no right of action 

at law 200 

Authorities in equity . , 202 

Third person osnnot be empowered to sue for convenience of 

parties 204 

Negotiable instruments payable to holder of office 205 

4. Assignment of contracts 206 

Notice to debtor 209 

Assignment ** subject to equities '' 211 

Assignment free from equities by agreement of parties : tranifer- 

able debentures 214 

But agreen^ent of parties cannot malce contrsot negotiable ... 216 

Negotiable Instruments 217 

Bights of 5ona>{(2e holder 218 

What instruments may be negotiable 220 

How instruments may cease to be negotiable 221 

Transferable shares 222 

Obligations attached to property 224 

Covenants running with land 225 

Bills of lading 227 

Conflict between common law and equity as to burden of cove- 
nants running with land 228 

The foundation of the equitable doctrine 281 



CHAPTER VL 
Ddtiss ukdxb Comtbaot. 



Interpretation generatljf 

Necessity of interpretation 

Agreements in writing : rule against parol variations 

Apparent exceptions 

Extrinsic evidence 

Customs of the countiy 



238 
288 
286 
288 
289 
242 



TABLE OF OONTENTB. XT 

TAQM 

Tnde vmgim, Aa. S43 

CoMlnietloii s pnCeraiioe of g«Mral iBlentloa S48 

Special roles of oonrtmcHon 245 

Order and MvtnalUy of Performance 247 

Order of PerfomHUioe In ezeeatoiy oontrmdi 247 

Modem Milliovttlee look to genecml hitentioii of ooDtnot. . . 248 

Effect of defaolt 261 

Agreementi pieeamed to be ODtire 258 

DrfavU infirU or other hutalmente of IHfcontimtovs Performance 254 

BeletfordefiTeiybjiiielaliiMiiti 254 

Bffeot of defftolt ia ineUlmeoti 255 



CHAPTER Vn. 
Umlawpul AoBinmraa. 



Of milAwfol egreemeDte in general, end their cbeeifioitkm ... 261 

A. Contrery to pofitive law 268 

Agreemente to oominit an offence 268 

Agreements wrongful againet third peraone 265 

Fraud on ereditots 266 

DeaUngs between eredHor and principal debtor to prejndloe of 

saretj 270 

Dealings by sgent, ezecator, kc^ sgainst bis doty 272 

Settiements in fraud of marital right 275 

Married Women's Property Act, 1882 275 

Marriages within prohibited degreee 276 

Boyal Marriige Act 277 

Agreements illegal by statute 277 

Raise for oonttroction of prohibitory statntes 278 

When agreements may be not Toid though forbidden, or Told 

without being illegal 282 

Wagew 285 

B. Agreements contrary to morals or good manneis 287 

Agreements in consideration of Qlidt cohabitation 288 

Validity of separation deeds 291 

Agreement for future separation void 295 

PnbHoation of immoral or seditious works is not merely immoral 

but an offence 296 

Contracts as to slaves 297 

C. Agreements contrary to public policy 298 

Connexion of the doctrine with the common law as to wagers ... 298 

Modem extent of the doctrine : ^I7«rt<m V. Snnrfi^ov 800 

Public pdSey as to external relations of the State 804 

THbding with enemiee ... 804 



XVI TABLB OF CONTENTS. 

PAOB 

Effect of war on BubsiBting ooDtracti 805 

Negotiable instnimeiitB between England and hostile ooontry ... 806 

Hostilities against friendly Btates 807 

Trade with belligerents not nnlawfol 807 

Foreign revenue laws ... 808 

Public policy as to internal government: attempts to influence 

legislation, &a, by improper means 810 

Sale of offices, &a 813 

Assignments of salsrics 814 

*' Stifling prosecutions " and compounding offences 814 

Compromise of election petition 816 

Agreements for reference to arbitration : extent of their validity 

at common law, and by C. L. P. Act, 1854 817 

Maintenance and champerty ... 820 

Rules as to champerty 822 

Purchase of subject-matter of suit 825 

SUtute of Henry VIII. against buying pretended titles 827 

Maintenance in general 829 

Public policy as to duties of individuals 881 

Agreements as to custody of chOdren 881 

Discretion of equity 831 

Custody of Infants Act 882 

Insurance of seamen's wages 888 

Agreements against social duty 888 

Public policy as to freedom of individual action .. 888 

Agreements in restraint of marriage 884 

Agreements to Influence testators 837 

Agreements in restiaint of trade 887 

Partial restraint admitted 889 

History of the doctrine 840 

What agreements in partial restraint are valid, and of the 

alleged role as to limits of space 842 

Table of dedaions since 1854 844 

Contracts to serve for life or exclusively 847 

D. Judicial treatment of unlawful agreements in general ... 847 

Independent promises, where some lawful and some not ... 848 

Where consideration or immediate object unlawful 849 

Unlawful ulterior intention 850 

Connexion with unlawful design already executed 863 

Securities for payment under unlawful agreement are void ... 855 

Extrinsic evidence of illegality 856 

Speoiflc unlawful Intention, how shown or contradicted ... 857 

When payments can be recovered : rule as to party in pari ddieto 860 

Exceptions: duty of agents to principal tmaffectcd 861 

Money recoverable where agreement not executed 863 

Where the payment was compulsory 865 



TABLE OF CONTENTS. 



XVll 



Doi BUf nlj 



In eqnitj when o&reoniUiioM of fmid, ko^ m btiWMB Um 

pMtfai 

Final ■tatomant of the mis Mid qnalifieatloo 

Ccmflioi of lawi in apaoa 

QmunJlj lex lod §UuH4mi$ pnymk 

Bxcepfeiona whea a proldbltoiy mimicipal law ia 

local 

When agreaoMnt it immoral sure pnU>K«i 

Treatment of ilaTo oo n tracti ia Eogliah oonrta : Sanioi y. lUidsf^. 
Otber inataacaa of conflict of lawi aa to yalidity of agieaoMnt 

oonaldered 

A^[zeementa againit intereata of the loeal aofereigB 

Confliet of lawi in time: ■nbaeqnent iUegaUtj dimolTea oontiact 
Rolea aa to knowledge of partlea ooDeoled 



PAQI 

865 
S66 
867 
8«7 

868 
869 
870 

871 
878 
875 
876 



CHAPTER VIIL 



Impomibli AoBinnzm. 



Ptifonnaaoe of agreement may be impoaaible in itaell, by law, 

or in faet (ie. b/ reaaon of paitkalar itate of facta) 878 

General atatement of law 879 

Agreement impoeaible in itMlf ia yoid 880 

liOgieal impoaaibilitj 888 

Impoaaibility merely relatiye to promlaor no ezeoae 384 

Agieementi impoaaible ia law 885 

Ferformanoe beooming impoariUe by la«r 886 

Baying one'a own ptoperty 386 

Impoarihility in fact no ezeoae wImto contract abaolnte 888 

OhIigatioQ to pay rent when premiiea aoeidentally deatroyed ... 891 

Ezoeptiona in oaaea of eventa not contemplated by the oontraot. . . 894 
Perfonnaaoe dependent on ipeeifio thing ezlating: Taj^ y. 

CkddweU 895 

AppUbjf Y, Meyen 896 

Impoaaibility at date of contract from eziatfag atate of thinga 

not known to the partiea 898 

Sale of cargo already loat : CfoiUurier ▼. EcutU 400 

Coyenaatato work minea, fta : Clifford y. Watts 400 

Conatmction of e z pieai ezoepiioai in certain contracta 401 

Performance dependent on life or health of promiaor : Robinson 

Y.Daviton 408 

AnomalooB dedaion on contract to mirry in Eall y. Wright ... 406 

limits of role aa to penonal aerylcea 405 

p b 



XVUl TABLE OF CONTENTS, 



Bighta already aoquixed imder oontraol not diaeharged by sub- 
aequent impoaaibility 

Sabatitnted oontracta ... ... ... ... 

ImpoBBibility by default off dther party : saoh default of promiaor 
ia eqniyalent to breach of contract 

Default of promiaee disohargea promiaor 

Altematiye oontracta where one altematiye la or beoomee im- 
poaalble 

Conditional oontracta 

ImpoaaiUe oonditiona in bonda : pecoliar treatment of them 

Indian Contract Act on impoaaible agreements 



PAOB 

407 
407 

408 
408 

410 
412 
414 
417 



CHAPTER IX. 

MlBTAKB. 

Pabt L—Of Mistake in Oeneral. 

Claaaification of oooditlona affecting yalidity of oonaent in agree- 
ment : Mistake^ Frand, &a 419 

A. Mifltake in general 422 

Qenerally it ia in itself inoperative either to avoid civil liaUlitiea 422 
(Except in certain apedal caaea, and except ao far aa in tlie caae 

of porohaie for value without notice ignoranoe !■ a condition 

of acquiring rights) 423 

Or to take away or alter existing rights 428 

Or to alter conatruotion of contract 480 

Saving aa to variation by mutual consent 431 

Special caaea where mistake important 432 

B. Mistake of Fact and of Law 438 

Limits of the distinction : where certainly or probably not ap- 

pUcaWe 433 

Common mistake and rectification of instruments 434 

Renunciation of rights 435 

Recovering back money paid 437 



Pabt n. — MiHake a$ exduding trve eonaent. 

Division of casea under this head 

Error as to nature of transaction : TkoroughgootTs case 
„ „ „ Foster v. Mackiwwn 

Caaea in equity 

Distinction aa to contracts of lunatic, &c 

Error aa to legal character of transaction 



489 
441 
442 
444 
446 
447 



TABLE OF CONTENTS. XIX 

PAOB 

EiTor M to pefiOD of other party 448 

AmdogoQi doctrines : Mitkfaotion bj itraager 452 

Penonal contncts not trmnaferable 453 

Agency 455 

Error M to labject-matter 455 

With regard to identity of spedAo thing 457 

Inefauion of paroele bj mittnke on nle of Und 458 

Contneti to take ■hares exceptional 481 

Error with regard to kind, qoantity, fta 483 

Error in price 488 

Error as to qnality inoperatiTe vnless mnterial and common to 

both parties 484 

Even if error of one pnrty known to, hot not caoaed by, the other 488 
Cases distingnlthed where misdescriptioii of estate on tale entitUs 

pnrdiaBer to rescind 488 

Error as to existenoe of snbjeot-matter 489 

Purchase of one's own property 472 

Herein of ignorance of Iftw : Cboper y. P4t66s 473 

Assignments of leaets for liree 474 

Where only one party Is ignorant of the material fact, and 
generally where fundamental error is caosed by fraud or mis- 
representation .. 475 

Where foadamental esror prodnoed by misrcpreeentaiion 478 

Error as to sami^ in case of sale by sample ... ... 477 

Remedies of party to Toid agreement .. 478 

Eleetiofi to adopt agreement 479 



Past III. — Mistake in expruHng trme etmttnL 

Correction of mistake in expressing intention 480 

1. Rnles of constraction common to Inw and eqnity 481 

Effect given to general intent 481 

2. PeonHar roles of oonstnictlon in equity 488 

Bestriction of general words 483 

Stipulations as to time 485 

Indian Contract Act on making time of essence of contract ... 487 

Belief against penalties 488 

3. Peculiar defences and remediee deriTcd from equity 490 

Defence against specific performance where contract inoonectly 

expfecMd by mistake 490 

Effect of Statute of Frauds herein 492 

Bectificatioo of instruments 492 

Oral evidence how fair adndssible 494 

Real intention must be dirtinctly proved, and common to all parties 498 
Quasi estoppel of one party acting as other's agent in framing 

instrument 497 

62 



XX TABLE OF CONTENTS. 



Reformation of Eettlements 

Who 18 entitled to have deed rectified 
Rectification as alternative to cancellation 

Diaentailiog deeds 

Agreement ezecnted by Court cannot be rectified 



PAGE 

498 
499 
500 
600 
501 



CHAPTER X. 

Ml8BSPBS8EMTAT[ON AND FrADD. 

Part 1,— Generally, 

Of misrepresentation in general 502 

As to innocent statements 508 

Deceit in relation to contract 508 

Judicial language as to *' constmotiTe fraud " formerly ambiguous 505 

Estoppel 505 

Representation as term of contract 506 

The doctrine of " making representations good " 506 

Part 11,— Representation and non-dudowre. 

No general positive duty of disclosure 508 

But such duties implied in certain contracts 508 

Classes of contracts specially treated 509 

Representations amounting to Warranty or Condition 510 

Distinctions between warranty and condition on sale of goods ... 510 

Cases specially treated : Marine Insurance 512 

Life Insurance 518 

Fire Insurance 514 

Suretyship 515 

Extent of creditor's duty to surety 515 

Saleeofland 518 

Specific performance and compensation: three classes of cases 

distinguished 519 

General duty of vendor to describe property correctly 524 

TTiMe y. Otisoti considered 527 

Family Settlements 529 

Partnership, contracts to take shares in companiesi and contracts 

of promoters 529 

Contract to many not exceptional 582 

Part UL— Fraud or Deceit. 

Fraud generally but not always includes misrepresentation ... 883 

Bight of rescission 584 



TABLE OF CONTENTS. Xxi 

PAOB 

IVradolent npreMBtiitioo or OQOOMliiMnl 586 

"Actire oaDcealment" 586 

Fraud m adaoiiable wrong: reekleM ignonnoo eqnfTalanl to 

knowledge of nntrotli 587 

KepraMntotion of ezpectotion M preeent fnoi 588 

Special rale M to nlfli bj MMlioii 589 

Haiiliige na exception : not nyoided bj fraud 589 

Consent of third penoB pvoeoied bj frmad is YoidabU 540 

Derrjfw.Peek 541 



CHAPTER XI. 
Thb Biobt op Bnonsiov. 



General rales as to rescission for misrepreientation or fraud . . . 542 

The representation relied on most be of fact 548 

Not of mere matter of opinion 545 

The representation most be such as to indaoe the contract ... 546 

Effect of party misled hanog means of knowledge 546 

Materiality of rep r e s en tation 549 

ComtraetB connected with proTions frand 550 

Representation must be by a party to the contract 551 

Representations of agents and Uability of prindpali 552 

Statements of directors and promoters 558 

Agent always liable for his own wrong 554 

Representation mnst be in same transaction 555 

Rights of party misled : option to resoind 557 

Election how to be made 558 

Right exerdseable by and against representatives 562 

No rescission where the former state of things cannot be restored 568 

No rescission against innocent purchasers for valne 566 

I>istbiction in cases of obtaining goods by frand where no pro- 

pertypasMs 567 

Repudiation of shares 568 

Rescission most be within reasonable time, i,e, % time not sooh 

as to show aoqniasoence 570 

Spedal doty of shareholders in companies 572 

Resolt of nnfoonded charges of frand 574 

Cancellation of instrmnents ... 574 



CHAPTER XII. 

DUBBM AND XJnDUX InFLUXNOI. 

I. D uio s B at Common Law 576 

Recovery of money paid nnder oompnlnon 578 

IX The eqmtaUe doctrine of Undue Inilasnce 579 



XXll TABLE OF CONTENTS. 

PA6B 

Presumption of inflaence from oonfidentiftl rdatioiui 581 

Rales as to harden of proof 5S4 

Roles as to voluntary settlements 585 

PresumptionB against and duties of persons in fiduciary relations 586 

Family arrangements... 590 

Particular cases where influence presumed : 

Relations anabgous to parent and child... 591 

To solicitor and client 592 

Spiritual influence 598 

Undue influence without fiduciary relation 594 

Duty of trustees 594 

Undervalue material only as evidence 595 

Whether in itself a ground for refusing specific performance ... 598 

Exceptional protection of expectant heirs and reversioners ... 602 

Old law as to sales of reversions 605 

Act of 1867 605 

Rules of equity as to ** catching bargains " not affected 606 

What are " catching bargains " 607 

Burden of proof and terms of relief 609 

Sales of reversionary interests 611 

'* Surprise ** and ** improvidence " not substantive ground of relief 

against contracts, but only evidence of fraud, &a 612 

Right of rescission for undue influence 615 

Confirmation and acquiescence 617 

Special questions as to relation of solicitor and client 619 



CHAPTER XIII. 
Agbeements of IiipiRF«7r Obugation. 

Nature of Imperfect Obligations : Right without remedy ... 620 

1. Remedy lost Statutes of Limitation 621 

Rights of creditor notwithstanding loss of remedy by action . . . 628 

Adcnowledgment 624 

What is sufficient acknowledgment 624 

Statutes of limitation belong to 2ex/or( 626 

2. Conditions precedent to remedy not satisfied. 

A. Statute of Frauds, s. 4' 627 

A law of procedure only, not of substance 629 

Results of informal agreement : 

Where money paid 681 

Where agreement executed 632 

Part performance in equity 684 



TABLE OP CX>NT£NTS. XxiU 

PAQI 

Infoniud Mite-inq>tbl AgTeemeiifei, and ooDfirmfttkm by poet* 

naptial writing 636 

Dirtincfcion of equitable eatoppel 638 

R The" SJip" in marine inraranoe 688 

Recognition of it for coIUteial pwpoaei by niodera dednona ... 640 

Of stomp duties in general 642 

G. StotDtes regoUting prof essions 644 

Costo of nnoertificated solioiton 644 

Medical practitionerB 64S 

Medical Act, 1886 646 

Apothecaries' Act 648 

Special questions on Medical Act 647 

3. No remedy at alL 

Arbitrators 648 

Coonsel's f ees 648 

As to non-litJgioiis bosinesSi or acooont with solicitor, qn, ... 649 

Judicial recognition of counsel's fees 651 

Solicitors Remnneration Act, 1881 651 

Special agreements between solicitor and disnt 651 

Certain contracts of infants since Infants' Belief Act 652 

Tippling Act 652 

Trade Union agreements 653 

A oonyerse case on repeal of nsoxy laws 654 

^eatment of eqmtable obligations at Common Law 655 

Sammary of resolta of this dhi^^ 656 



APPENDIX. 



Note A. Terminology and fnndamental oonceptloni of contract ... 658 

Note B. Antborities on contract by oorrespondenoe 659 

Note C. History of the eqnitoble doctrine of separate estate ... 666 

Note D. Antborities on limits of corporate powers 678 

Note £. History of oonrideratlon 691 

Note F. Early authorities on assignments of choses in action ... 698 
Note 6. Occupations, dealmgs, ftc., regulated or restrained by 

statute 701 

Note H. Bracton on fundamental error 705 

Note L Mistake in wills 706 

Note K On the supposed equitable doctrine of ** making represen- 

tationsgood" 707 

Note L. Foreign laws on undue Influence and undervalne 716 



TABLE OF CASES. 



P»ge 

Abbott V. Sworder 600 

Abemman Ironworks Co. v. 

Wickens ... 524 

Ackrojd V. Smith 229 

Adams v, Lindsell. 659, 660, 661, 

664 

AddineU's Case 40 

Addison V. Cox 210 

Agar V, Athenaeum Life Ass. 

Soa 687 

Aggs V. Nicholson 220 

Aguilar 1^. Agnilar 672 

Aheame v, Sfogan ... 582, 592 

Aiken V. Short 437 

Albion Steel and Wire Co. v. 

Martin 278 

Alderson v. Maddison 708, 712 

Alexander v, Crosbie 494 

Alger V. Thacker 839 

Alison, jSb parte 471 

AUcard v. Skinner . 557, 561, 562, 

565, 571, 580, 581, 588, 584, 593, 

617, 618 

AUcook V, Moorhonse ... 225 

Allen r. Allen 56 

Allen V, Baker 406 

Allen V. Jackson 836 

Alliance Bank v. Broom ... 181 
Alliance Bank of Simla r. 

Carey 626 

Allkins V. Jupe ... 869,708 
Allsopp v. Wheatcroft 842, 843, 346 
Alton V. Midland By. Co. . 74, 202 
Alvanley v, Kinnaird ... 461 

Alvarez de la Rosa v. Prieto 647 
Anchor Ins. Co. Case ... 436 

Anderson's Case 430 

Aoderson v. Fitzgerald ... 513 
Anderson v. Baddiffe 822, 325 

Andrews, Re S6l 

Andrews v. Salt 331 

Angell, i?e 651 

Angell V. Duke, 159, 239, 892, 714 
Anglo - Egyptian Navigation 

Co. i;. Bennie 898 

Anon. (1 Bro. C. C.) 599 

Antoine V. Morshead ... 806 
Appleby V. Johnson ... 40 
Appleby v, Meyers 896 



Page 

Arbuthnotv. Norton ... 814 

Archer v, Hudson, 569, 582, 586, 

591, 592 

Ardglasse V. Muschamp ... 608 

ArgoB, Cargo ex 278 

Arkansas Smelting Co. v. Bel- 
den Co 453, 454 

Armstrong V. Armstrong ... 857 

Armstrong v, Lewis 857 

Armstrong v. Stokes 97, 102 

Armstrong V. Toler ... 850,858 
Amison v. Smith ... 537, 541 

Arnold v. Arnold 522 

Arnold v. Mayor of Poole, 145, 152 
Arrowsmith, £a; jxirfe ... 702 

Arthurs. Wynne 406 

Arundel's Cate Ill 

Ashbury By. Carriage Co. v, 

Biche. 119, 124, 125, 126, 482, 
687, 690 

Ashley's Case 561 

Afiatio Banking Corporation, 

ExparU 22,218 

Aspden v. Seddon 226 

AthensBum Life Assurance 

Sec. v. Pooley 215 

Atherfold v. Beard 299 

Atkinson v. Denby ... 365. 579 
Atkinson v. Bitchie ... 375, 888 

Atleev. Backhouse 577 

Attenborough v. St Katharine's 

Dock Co. 568 

Attomey-Gkneral v. G. E. By. 

Co 119,124,682,691 

Attorn^- General V. Bay ... 514 
Attorney -General v. Sitwell ... 4 95 
Attorneys and Solicitors Act, He 322 
Attwood V. Small ... 546, 547 
Austerbeny v. Corporation of 

Oldham 226, 227 

Austin v. Guardians of Bethnal 

Green 145,152 

Austin V, G. W. By. Co. ... 427 
Australian Boyal Mail, ko, 

Co. V. Marzetti 150 

Austria, Emperor of, v. Day 

and Kossuth 297 

Aveiy i;. Langf ord 846 

Azford V, B& 84 



TABLE OF €AS£8. 



XXV 



Page 
Ayen v. Sooth AofcrmUan 

BMiUngGo. ... 852,63 

Ayent v. Jenldas 289, 290, 861 
AylMv. Ooz ... ... 521 

AylMford, £«rl of, v. Morri% 602 
603, 604, 606, 607, 608, 610 
Ayr HArbour Trattow «. 

Oflwald 128 

Az^mar V. Caaell* 466 



Babeoek V. LftWMo ... 566,667 

Badoock, J?e 711 

Bagnall ff. Carlton 581 

Bi^ahaw v. Bait Unioii By. 

Co. 676,689 

Bagahaw V. SeTinoar ... 556 

Bag»tar v. Earl of Portamontb 88 
Bahift & Sid Fnndaoo By. 

Co., JZe 215 

Bailay V. Hairia 283 

Bftiley r. Piper ... 522, 528 

Bailey V. Stepliena 229 

Bailey V. Sweeting 628 

Bally'flCaae 27 

Baily v. De Creapigny, 884, 886, 
393, 894 
... 469 
... 172 
... 590 
... 42 
... 844 
... 120 
... 590 
... 433 
... 844 
... 592 
597, 618 
... 589 
220, 685, 686 
493, 495 
249 



Bain v. F< 

Bainfaridge v. jrirmstone 
Balnbrigge v. Browne 
Bainea V. Woodiall ... 
BaineavL Greary 
Baiid'a Case 
Baker r. Bradley ... 
Baker v. Cartwright... 
Baker v.Hedgecock... 
Baker V. Loader 
Baker v. lionk 
Baker V. Bead 
Ball oar v. Emeat 
BaUv.Storie... 
Bankart v. Bowen ... 
Bank of Aognsta v. Earle ... 118 
Bank of AustnlaoA v. Breillat 120, 

849 
Bank of Colombia v. Pattenon 147 
Bank of England v. Andenon 280 
Bank of Hindnataii v. Aliion 471 
Bank of Ireland v. Evana' 

Charitiea 180,146 

Bank of New Sooth Walea v. 

Owiton 423 

Bank of United SUtes v. 

Daniel 484,487 

Bank of United States v. 

Owens 281 

Banks «. Crosiland 681 

Bannsr «. Jolniston 197 



Baanennan v. White, 466, 467, 
^ , 509,528 

Barden V. Kersrbetg 81 

Barker V Cos 521 

Barker r Hodpon ... 875, 890 
Barkworth v. Young, 410, 636, 637 
Banieav. Toye 69 



Bamett, ^ parte .. 
Barrett*. Hartley .. 
Barry V Croikey 
Baxtlettv Weds .. 
Barton 9. Moir 
Barton V. Piggott ... 
Barwiok v. Boglisb Joint 

Stock Bank ...118, 552, 553 

Baakoomb v. Baokwith ... 523 

Bate V. Hooper 433 

Batsman v. BCayor, Aa, of 

Ashton-Qnder -Lyne 
Bateman v. Mid- Walea Bail- 

way Ca 

Bateman v. Pinder 

Bateman v. Coontem of Boas 

Bates, ExparU 

Bateaon V. Goding ... 
Bath's Case 77^ ... 

Bat h. Earl of , and BCoontagne's 

Case... 
Batson v, Newman ... 
Battenbee «. Fanrington 
Batty V. Chester ... 

Baxendale V. Seals 

Barter v. Earl of Portsmonth 
Bayley v. Mancfasster, Ac 

Bt. Co. 

BayUs v. Dindsy 
Beachey v. Brown . 
Beanland v. Bradley... 
Beard v. Webb 
Beattie t. Lord Eboiy 
Beancbamp, Earl, v. Wion 
Beanmont v. DoIdm ... 
Beanmont v, Beeve ... 
Beavan v. MDonnell 
Beeherraise v. Lewis 

Beck's Case 

Beck V. Pierce 
Beckham v. Drake ., 

Bedford V. BagsliAw 

Bedford, Doke of, v. Trustees 

of British Mnsenm 
Beer v. London and Paris 

Hotel Ca 

Beeston V. Beeston ... 
Begbie v. Phosphate Sewage 



451 
597 
550 
74 
279 
288 



679 

328 
624 
82 
77 
271 
6»2 

614 
285 
638 
290 
460 
88 

428 

... 55 
877, 582 
... 591 
... 82 
543 
421 
712 
289 
... 93 
... 271 
... 41 
... Add, 
...99, 100 
556 



232 

161 
862 



Belm V, Bomess 
BeUv. Beid ... 



861 
509, 511 
... 804 



XXV 



TABLE OF CASES. 



Bellaiis r. Be]lain 
Bellain v. Tacker 
Bellamy v. Sabine 
Belsbaw v, Buah 
Beman v. Bufford 



Page 
886 
545 
590 
452 
676 



Bennett (Doe d.) v. Hale ... 649 
Bensley v, Bignold ...279, 703 

Bentley v.Macka7, 431,496, 500,617 

Bentley V. Vilmont 567 

Benwell v. Inns 845 

Benyon v. Nettlefold ... 289 

Berdoe V. DawBon 617 

Berry V. Hendenon 703 

Bennt, JU 882 

Bemntv. Wood 292 

Beswick V, Swindella 414, 416 

Bettiniv. Gye 252 

Bettsv. Borch 490 

Beyerley's Case 87. 89 

Beyerley v. Lincoln G-as Co. 149 
Beynon v. Cook 608, 606, 609, 610 
BhogwandaiB v, Netherlands, 

&a Inanranoe Co. ... 22 

Bickerton V. BnrreU 108,104,105,108 

Bidder v. Bridgei 179 

Biffin v.Bignell 578 

Bigland V. Skelton 408 

Billage v. Sonthee 583, 592 

Bindley v. Molloney ... 295 

Biogham v. Bingham 434, 472 

Blrd'itr 244 

Birkmyr v. Darnell 158, 161 

Birmingham Bnkg. Ca..£'asf)arto 681 
Bizrell v. Dryer ... 284, 241 

Bieooe v. Kennedy 671 

Blaohford v, Preston ... 318 

Bladkbnm V. Haslam ... 518 

Blaokborn v. Smith 566 

Blaokbnm v. Vigors ... 518 

Biaokie v, Clark 497. 582, 584, 592 

BlacUook v. Dobie 268 

Blaoksmith's Case, The ... 314 
Blackwood v. London Char- 
tered Bank of Anatralia ... 425 
Blades v. Free 88, 96 

Bloomer v. Spittle 458, 500 

Bloxamv.Metrop.Ry. Co. 827,684 
Blyth and Co.'b Case ... 642 

Boast V, Firth 403, 405 

Bdbbett V. Pinkett 219 

Bold V, Hntohinson . ... 499 

Belingbroke v, Swindon Local 

Board 423 

Bolton, Dnkeof, «.Willluns 667, 672 

Bolton V. Madden 173 

Bolton Partners v. Lamberk 96 

Bonar v. Maodonald ... 270 
Bonav. Sklasi 363 



Page 
Bonner v, G. W. Ry. Co. ... 123 
Bannewell v. Jenkins ... 48 

Booth V. Bank of England 280, 281 

Borellv. Dann 600 

Berries v. Imperial Ottoman 

Bank 101 

Bosananetv. Wray 656 

Bostock V. N. Staffoidshire 

Ry. Co. 674, 681 

Boston Ice Co. v. Potter ... 449 

Bonlton V. Jones 449 

Bonssmaker, Ex parte ... 805 

Bowenv. Hall 192 

Bower v. Cooper 226 

Bowes V, Shand ... 240, 252 
Bowman V. Rndge ... 471,476 
Boy oe v, Tabb . . . 298, 875 

Boyd, Ex parte 85 

Boyse v. Rossborongh 419, 581, 583 
Braoewell v. Williams ... 182 
Bradford V. Romney ... 287 

Bradford v. Rooliton ... 169 

Bradford v. Symondaon ... 472 
Bradford f . Williams ... 248 

Bradlaugh r. Newdegate 321, 330 
Bradflhaw V. Bradshaw ... 267 
Bradshaw v. Lane and Yorks 

Ry. Co. 189 

Bramah V. Roberts 128 

Brandao 9. Bamett 218 

Brandon v. Nesbitt 307 

Branley v, S. £. R. Co. ... 867 

Brayshaw V. Baton 69 

Breton V. WooUven 185 

Bn^Ex wirU 584 

Brewer V. Brown 522 

Bridgman v. Green 592, 614 

Bridger V. Savage 362 

BriggB, Ex parte 559 

Bright V, Legerton 570 

Bristow v. SecqneTille ... 810 

Britain v. Roralter 628, 634 

British k American Tekgrai h 

Co. V. Colson 661, 662 

British Linen Co. V. Dmmmond 626 
British Mntnal Banking Co. v. 

Chamwood Forest Ry. Co. 113 

Broad V. Mnnton 526 

Brogden v, Metro. Ry. Co. 32, 43 

Bromley V. Smith 610 

Brook V, Brook . . . 276, 277 
Brookman's Tmst, Re ... 337 

Brotherhood's Case 688 

Brooghton v, Hutt 474 

Bronghton v, Manchester 

Waterworks Co. 127 

Bionn V. Kennedy ... 500, 592 
Brown v. Brine 316 



TABLE OF CASES. 



XXVU 



Brown v. Byen 128 

Brown DL Dale 115 

Brown v.JodMll 89 

Brown V. Mmjot of London 386, 416 
Brown v.RojallniorMioe. Co. 389, 

411 
Browning r. Wi igfat ... 482, 483 
Brownlie r. Campbell 506. 715 

BrantoD'H Claim 215 

Bryui (Doe d.) «. Bancka ... 54 

Brjantv. Ffi^t 46 

Bryant V. Herbert ... 139 

Bnbb V. TelTertoB 705 

Bnlkley tF. Witf Old 274 

Boltv MoTfel 128 

Bnlteel V. Pliimmer 337 

Bnrcfadl V. dark 244 

Bnrgeai'a Caae 569 

B ufg ees v. Eye 271 

BnrffkMtv.HaU 69 

Bnrkev. S. £. Ry.Co. ... 48 

Bumv-Carralho 209 

Bnmaid 9. fiaggia 74 

Ban^BxjxarU ... 267,544 

BoiroDgbea V. Bayne 141 

Burrow v.Seammell 523 

Borrowea V. Lock 538 

Barton V. Sturgeon 83 

Bate, Marqnia of, v. Tbumpaon 400 
Batter and Baker'a Caae ... 49 

Batter V. Batter 87 

Bwkb-y-Plwm Lead Mining 

Cav. Baynea 561 

Byrne v. Van TIenliofen ... 27 

Cftballero V. Henty 525 

Cahill V. Cahffl 88 

Cai'dv. Moea 501 

Ca}deoott, Ex parU 316 

Ca]der «. Doball ... 95, 97. 98 
Cabrerley v. WiUiama ... 458 

Camberwell and S. Lunion 

Boildfng Society v.HoUoway 521 
Cianbridge, Mayor of, v. D dnnia 270 
0«mecon v. WeUf, JU ... 199 

Campnnari V. Woodbam ... 38 
OampbeU's Caae . . . 685, 689 

Ctm^U, Ex parU 471 

G«npbell v, Fleming ... 559 

Campbell v. Frencb 707 

Gttnad% Soattiein Ry. Co. v. 

Oebhaxd 682 

Canbam v. Barry . . .884, 385, 535 

Cannv. WUlaon 587 

Cannam 9. Farmer 78 

Cannan m Bryce 351 

Canning v, Faiqnbar 20, 48 

Oapper, AiNMie 490 



Pagtj 

Caigill r. Bow%r 554 

Carhigton, Lord, v. Wyooml-e 

Ry.Co. 123 

Cariiiartben,Mayorof,v.]>wb 153 
Carrv. Jackron ... 99,109 

Carrington r. Roota 629 

Carrol r. Bleooow 80 

Carter V. McLaren ... 423 

Cartwrigbt V. Cartwright ... 295 
Cartwright v. Hateley 454 

Caaborae 9. Bnnham ... 587 

CaaUe V. Wilklnaon 521 

Catling r. King 161 

Cato V. Tbompaon 237 

Catonv. Cafton 685 

Catt V. Toorle ... ^42, 845 

Caodell V. Shaw 82 

Cayendish v. OreaTes 21 2, 213 

Central Ry. Co. of Venesnela 
V. Kiach ... 530,531,547,572 

Challia'a Caae 461 

Chamberlain v, Williamaon ... 406 
Chambers v. Mandieater and 
Milf ord Ry. Co. ... 280, 679 

Champion V. Rigby 618 

Chanter V. Hopkina 510 

Chanter 9. Leeae 204 

Chi^leo V, Bronawick Build- 
ing Society 687 

Chapman V. Cole 448 

Chappie r. Cooper .. .71 

Charlesworth v. Holt .. 294 

Charter V. Charter 707 

Charter p. Trerelyan 273, 563, 671 
Chaaemore V. Tamer ... 624 

ChMYmme, Ex parU 808 

Cheale V. Kenward 173 

Chemin de f er da Dauphin^ 

r. Clet 897 

Cheny v. Colonial Bank of 

Aoatralaaia 105 

Cherry r. Heniiug ... lUO, 162 
Chesterfield v. Jansaen 602, 603, 604 
Chicago ft G. S. By. Co. v. 

Dane 174 

Chiltoa V. Corporation of Lon- 
don 200 

Chinnook v. Marohioneis of Ely 24 
Chobnondeley V. Clinton ... 328 

Chorley, ^arjMife 215 

Chubb V. Stretch 671 

Churoh V, Lnperial Oaalight, 

ftc. Co. 145, 149 

Citiiena' Bank of Louiaiaoa 
V. First Natkmal Bank of 
New Orleans ... 638,712 
City Bank, fxpartel28,129,215,216 
Claok V. HoUand 211 



xxvm 



TABLE OF CASES. 



Glare v. Lamb 
Clark, Be 
Clark V. Girdwood 
Clark V. Malpas 
Clark V, Clark 
Clarke v, Birley 
Clarke v. Cobley 



Page 

, 137 
72 
498 
, 596 
, 292 
, 271 
76 



Clarke v, Cackfield Union ... 150 

Clarke v. Dickson 564 

Clarkson v. Edge 345 

Clay r. Ray 866 

Clayton V. AdamB 78 

Clayton tf. Corby 229 

Clegg V, Edmondflon ... 560 

Clementson v. Blessig ... 305 

Cleve V. Financial Corporation 1 78 
CUflford r. Watte ...379, 380, 401 

Clinan V. Cooke 492 

Clinch V. Financial Corpora- 
tion 674 

Clive V. Beanmont 41 

Closer. Close 271 

Cloth workers' Co. Case ... 841 

Clough V. L. & N. W. Ry. Co. 551, 

557, 559, 560, 562, 564, 573 

Clowes V. Higgloson 237,459,491 

Clnbb V. Hutson 815 

Clugas v. Fenalnna 309 

Coaks V, BosweU . . . 625, 526 

Coates V. Collins 476 

Cobbett V, Brock 682, 616, 617 
Cochrane v. WiUis ... 471, 472 

Cockell r. Taylor 596 

Cocker's Case 195 

Cocking V, Ward 638 

Cogan V. Daffield 499 

Cohen V. Kittell 362 

Cohen v, Wilkinson 676 

Colbome & Strawbridge, Ex 

parU 215 

Coldcot v. Hill 483 

Cole r. Gibbons 608 

Cole v. Gibson 334 

Coles V. Pilkinffton ... 167,711 

Coles V. Trecotoick 600 

Collen v. Wright 105 

Collier V. Brown 599 

Collins V. Blantern ... 816, 857 
ColUns V. Locke ... 819, 389 

Collyer V. Fallon 814 

Oohnant;. B. C.Ry. Co. 675,684, 689 

Oolyear v. Mnlgrave 202 

Commins V. Soott 161 

Commissioners of Sewers v, 

Reg. 867 

Commonwealth f. Lane ... 276 

Conquest's Caie 198 

Cook t;. Field 329 



Page 

Cook V. Lister 221 

Cooke V. Clayworth 90 

Cooke V.Cooke 818 

Cooke V. Cooke 828 

Cooke V. Eshelby 101 

Cooke V. Lamotte 684 

Cooke 17. Oxley 26, 31 

Coombee V. Dibble 706 

Cooper V, Evans 617 

Cooper V.Joel 517 

Cooper V. Phibbe ...421, 434, 437 

473, 474 

Cooper V. Simmons 66, 71, 454 

Cooper V. Vesey ... 426, 452 

Cooth V. Jackson 817 

Cope V. Rowlands 280 

Cope V. Thames Haven, &a 

Co. 152 

Copper Miners of England v. 

Fox 149 

Coppock V. Bower ... 816, 357 
Cordingley v. Cheesebrongh . . . 520 
Cork and Bandon Railway Co. 

V. Cazenove 66 

Cork and Yoaghal Railway 

Co,, JRe 280 

Corley v. Lord Stafford ...274, 498 

Cornell V. Hay 682 

Comf oot V. Fowke 562 

Cory V. Gertoken 76 

Coryv. Patton 640 

Costigan V. Hastier 601 

Cote, Exparte 429 

Cottage Street Church v. Ken- 
dall 664 

Coulson V. Allison 682 

County Life Assurance Co., 

Jie 686 

Courtenay V. ^niliams ... 623 

Coutts V. Acworth 616 

Couturier v. Hastie ...399, 400, 470 

707 
Coverdale V. Eastwood ... 711 
Cowan V. Milboum ...261, 352, 703 

Cowan V. O'Connor 32 

Coward and Adam's Purchase, 

Ee 84 

Coward v. Hughes ... 437, 606 

Cowdry v. Day 488 

Coz V. Prentioe . . . 467, 479 

Coxhead V. Mullis 61 

Cragoe V. Jones 270 

Orampton V. Ridley 648 

Crampton v. Varna Ry. Co. . . . 168 

Crears V. Himter 181 

Crippe V. HartnoU 158 

Croft V. Graham 606 

Crofts V. Middleton 278 



TABLE OF CASia 



XXIX 



Crook V. Corpontion of Soft- 

foid 129 

Gropion V. DaTiw 244 

Crosby v. WMUworth ... 629 

Cronlay V. M»jcock 40 

Cnmdi V. CrMit Fonder of 

Eiiglaiid...l27, 215, 217, 219, 221 

Crow V. RobiBMO 212 

Cmickahttiki V. Bose ... 663 
Cnllen v, Tbompson'f Tnutaet 

aodKerr 555 

Cumber V. Wane 179 

Cummiiig V. Ince 577 

Candy v. Lindsay ... 451, 568 

CanninghMn v. Dunn . . . 890 

Currie V. Goold 439 

Curie V. MIm 166 

Cnrtb V. WillUmeoii 102 

Curzon V. Belwortby ... 613 

Cotter V. Powell 254 

Onttsv. Ward 705 

Da OosU V. Dayfa 410 

Da Coeta V. Jonee 308 

Dacre V. Gorffes 459 

Dale V. Ham&ton 635 

DaUy V. Wonham 589 

D* Alte;rao, Ex parU ... 490 

DaltonV Angus 229 

DaltoB V. Gib 70 

Daltonv. Midland Ry. Co.... 79 
Daniell v. Sinclair ... 434, 437 

DarreU V. Tibbitte 514 

Dashwood v. Jermyn ... 711 

Danboz V. Monhead 806 

Danglish v. Tennent 267 

Davenport V. Bishopp ... 202 

Darenport V. Reg. 54 

Darey v. Shannon ... 160, 346 
Davies v, Daries (9 Eq.) ...59, 62 
Daries tf. Davies (36 Ch. Div.) 843 

844 

DaTiesv.Fittoo 494 

Daries V. Jenkins 669 

Danes V. London and Provin- 
cial Marine Inraranoe Co... 515 

Daries V. Mskuna 645 

Davis V. Dnke of Marl- 
borough 814 

Davis V.Starr 818 

Davis V. Thomas 488 

Dawes v. Harness 561 

Dawson v. iltsgerald ... 819 

Day V. Newman ... 599, 601 

Deacon V. Gridley 176 

Dearie v.HsU 209 

De Bell v. Thomson... 837, 708 
Debenhamv. Ox 837 



Pe«e 
De Bnssche v. Alt.. . 878^ 572 

De Oaillon v. L*Ai^« ... 81 

De Hoghton v. Money, 1 93, 322, 326 
De La Tooohe's Settlenent,^ 481 

De Mattos V. Gih«m 224 

Dendyv. Hendetson 844 

De Nicholls r. Sannders ... 453 

Denn V. Wilford 483 

Dennett V. Atberton 229 

Denny V. Hancock 460 

Dent V. Bennett 582, 583, 584, 592 

593 
Dentoo r. O. N. By. Co., 15, 18, 23 

Denton r. Peten 218 

Deposit Life Aannnoe Co. 

V. AysooQgh 561 

Deny v. Daahess of Manrine 81 
Devonshire's, Eariol, Cms... 140 
Dew V. Parsons ... 578, 579 
De Wahl v. Branna ... 80. 94 

De Watz V. Hendrioka ... 307 
Diamond Match Co. v. Bother 345 

Diekinsra«.BiifTsil 326 

Dickinson V. Dodds 25,28,80,88 

Dickinson v. Valpr 128 

DidEson r. Rsntars Telegmm 

Co. 202 

Dickson V. Swansea Vale Ry. 

Co 215 

Diggle V. Higga 28^ 363, 705 
Diggle V, London and Black- 
wall Ry.Ca 148 

Dillon V. Cunningham ... 671 

Dimmock v. Halbtt 520 

Dion r. Blake 432 

Ditcbam v. Worrall 63 

DUoUf Ex parU 100 

Dixon V. BoTill 220 

Dobell V. Stevens 546 

Doe d. BenneU v. Hale ... 649 
Doe d. Biyan v. Bancks ... 54 
Doe d. Gamons v. Knight ... 49 
Doe d. Leach V. Micklem ... 244 
Doe d. Pennington v, Taniera 158 
Doe d. Williams tf. Evans ... 828 

Don V. Lippoiann 626 

Donaldson v. FarweU 534, 562 
Douglas V. Culverwell ... 489 

Downes «. Jennings 275 

Drake v. Beckham 98 

Draycott v. Harrison 87, 670 

Dresser v. Norwood ... 97, 101 
Drew V. Nunn 89, 88, 94, 96 

Druiif V. Lord Parker 238, 493, 

495 
Drummond V. Van Ingen ... 478 
Dublin and Tnoklow Ry. Co. 
V. Black 65 



XXX 



TABLB OF CASESi. 



Page 

DackeU V. Gover 684 

Dudgeon v. Pembroke 85S, 704 

Dogdale v. LoTering 11 

Duke V. Andrews 42 

Dnncftn V. Cuhin 666 

Duncan, Fox & Co, v. N. ft S. 

Wales Bank 272 

Duncan V. Topham 661 

Dundas v. Dutens 637 

Dunlop V. Higgins ... 661, 662 
Dunmore, Countess of, v. 

Alexander... 660 

Dunnage V. White 696 

Dunne z;. English 274 

Dunston v. Imperial Gas 

Light Co 152 

Durham, Earl of, V. Le^ard 468, 522 

Dutton V. Marsh 220 

Dutton v. Poole 201 

Dutton V. Thompson . . . 585 

Duvergier 9. Fellows ... 856 

Dyer v. Hargraye 519, 528, 546. 

647 
Dyer's Caw, The ... 802,341 

Eagle Insurance Co., Ex parte 686 
Eaglesfteld v. Marquis of 
Londonderry ... 434,456 

Earle v. Hopwood 324 

Earle r. Oliver 169 

East Anglian Ry. Co. v, E. C. 

Ry. Ca 677,681 

East London Waterworks Co. 

p. BaUey 148 

Eastern Counties Ry. Co. v. 

Hawkes 680,689 

Eastwood V, Eenyon ... 1 58, 1 69 

Eaton V. Basker 155 

Ebbw Vale Co.'s Case ... 1 50 
Ebsworth & Tidy's Contracts Add. 
Ecdesiaatioal Commissioners 

«. Merral 153 

Eden v. Ridsdales, fco. Co. ... Add. 
Edgware Highway Board «. 

Harrow Gas Ca ... 166, 358 
Edgington V. FitDnaurioA ... 545 

Edmunds v. Bushell 98 

Edmunds v. Merchants' Des- 
patch Transport Co. 451, 568 
Edwards v. Aberayron, &c. 

Society 819 

Edwards t^. Brown 443 

Edwards V. Burt 610 

Edwards V. Meyriok 590 

Egan r. Guardians of Kensing- 
ton Union 649 

Egerton v. Earl Brownlow, 298, 
800, 801, 302, 803, 810 



Page 
ElUnger Aotien-Gesellsohaft 

V. Ciaye .« 97 

Eley V. PositiTe A*suraooe 

Co 160,208 

Eliason V. Henshaw 26 

EUen V. Topp 409, 410 

Elliot v.Inoe 93 

EUiott V. Richardson 817 

Elliott V, Royal Exchange 

Assurance Co 819 

Ellis V. Barker 594, 617 

Elphinstone, Lord, v. Monk* 

land Iron and Coal Co. ... 490 
Eltham V. Kingsman ... 299 

ElweU V. Martin 74 

Emmerson's Case 470 

Empress Engineering Co. 107, 203 

Empeon's Case 445 

En^nd v. Daridson ... 176 

England v. Downs 275 

English and Foreign Credit 

Cav.Arduin 41 

Equitable Insurance Co. v, 

Heame 497 

Erianger v. New Sombrero 

Phoephate Ca 531, 573, 583 

Ernest v. Nicholls . . . 665, 686 
Erskine V Adeane, 159, 239, 392,714 

Espey V.Lake 591 

Espodto V, Bowden, 804, 305, 306, 

375 
Estoourt V, Estoonrt Hop 

EswncaCa 296 

Erans v. Bioknell ... 708, 715 
Evans V. Brembridge ... 517 

Evans v. Carrington, 294, 633, 534 
Evans v. Edmonds, 534, 537, 538 
Evans V. Llewellyn, 612, 613, 614 

Evans V. Prothero 643 

Evans V. Smalloombe ... 688 

Evanturel v. Evanturel ... 302 
Evelyn v. Chichester ... 65 

Everitt V. Evtoritt 585 

Extonv. Scott 49 

Faine«. Brown 600 

Falrhurst v. Liverpool Adel- 
phi Loan Assooiation ... 78 

Fairlie v. Fenton 97 

Falcke v. Gray . . . 600, 601 

Fane V. Fane. 529 

Farewell V. Coker 484 

Farmer V. Farmer 582 

Farrow v. Wilson ... 1 88, 402 
Faviel v, E. C. Ry. Ca ... 152 
Fawcett v. Whitehouse ... 530 
Fellowes v. Lord Gwydyr ... 104 
Feltiiou'e v. Bindley 26, 38 



TABLE OF CA8XB. 



ZXXJ 



Page 1 
Fdtmakem, Co. ol, v. Dftvia 200 

Feratv.HUl 862.529 

ForgOMO V. GAiriagtoii 539, 558 
Ferguwrn v. Norman ... 283 

Fearon v. Earl of Aylof oid ... 294 
Fttcand «. BiadiolblMim ... 100 

Field «. Moon 58 

Fife V. ClAjton 491 

Financial Gorpanlioii'a claim 214 

Flndon v. Parker 830 

FSnlAT V. Btiatol and Exeter 

By. Co 148,155 

Ffanlny V. Cbiinav ... 189, 406 
Firth V. Midland By. Ca ... 407 
Fkehorn Kamaln Naidier... 830 
FUiBrftCo.v.ApdUinamCa 815 
Ffahar V. Bridges ... 854, 855 
FJdiar v. Uverpool BCarine 

Inraranoe Co. ... 639, 641 
FialmMngenf Co. V. Bobertaon 

145, 153 
Fltdi V. Jcnea . . . 286, 883 

Fitzgerald V. Chapman ... 83 

Firaz tf. Nieholla 861 

Fleet v.Mmion ... 95,99 

Fleet V. Fenina 79 

Fleetnrood n Hull '225 

Fletcher V. Fletcher 49 

Flight V. BoUand 60,62 

Flight V. Booth ... 468,518 
Flight V, Reed ... 64, 655. 705 

FUnt v. Woodin 589 

Flureaa V. ThomhUl 469 

Fcaket v. Beer . . 179, 180 

FofbeaftCa'aelaim 514 

Foibes V. Coehrane ... 870, H71 

Fofhea v. Watt 431 

Foidv. Beeeh 243 

Ford V. Coteiworth 390 

Ford and Hin, J2« 528 

Ford 9. Olden 597,616 

Ford V. White 211 

Fannnn t;. Wrisht ... 487, 606 
Foneat v. ManoheBter, fta By. 

Co 688 

Fester V. Coi^eidl 209 

Forter v, Maddnnon 442, 444, 446, 

476 

Foster V. Bedgimye 69 

Foster V. Wheeler 2,47 

Foolkes V. Metro. Dist. By. 

Co 427 

Foimtalne v. Caimarthen By. 

Co 685 

Fowler v. Fowler 496 

Fowler V. HoUlns 423 

Fowler v. Monnumthahire 
Canal Co 644 



Pago 



Fowles V, Maaahsstsr and 

London Ambimos Aasoa 235 

Foxv. Nott 228 

Franhlls V. Miller 251 

Franks, Sx parte 80 

Flanks v. Dnnhimide Pisnne 81 

Fraesrv. Hill 357 

*' Freedom," The ... 22*^ 

Freeman V. Cooke 506 

Freeman r. Jaffries 566 

Freeth v. Bar 254, 255, 256, 257 

Frend v. Dwnstt 155 

Freahiield*s Tmsti, JU. ... 209 

nrost V. Knight 19 

Fry V. Lane ... 597,606,611 

Fnentes v. Montis 227 

FvIlaloTe tr. Parker 644 

Fnlton V. Andrew ...442, 581, 706 

FnmlTal «. Coombea ... 107 

Fnitado V. Bodgcrs 305 

Gnbell V. S. £. Ry. Cit. .. 48 

Oadd V. HoQghton 98 

CMev. Gale 199 

Galloway v. Mayor of London 1 23 

Gandy v. Maoanlny 484 

Gardner V. Casenove ... 4H9 

Garland 9. Carlisle 424 

Gamone (Doe d.) r. Knight... 49 
Garrard V. Frankel ... 458,500 
Gas Light and Coke Ca r. 

Tomer 351 

Geere V. Mare 855 

Geipelv. Smith ... 305,402 

Gerhard V. Bates 556 

Gibbon v. Bodd 646 

Gibbons v. N. E. Metropolitan 

Asylum Dietriot 41 

Gibbs v. Harding 293 

Gibson v. D'Este 527 

Gibson v. East India Co. ... 152 
Gibson v. Jeyes .. 581, 582, 587 

Gibson v. Kirk 154 

Gidley v. Lord Pslmerston ... 99 

Gilbert 9. Lewis 574 

Gilbert V. Sykes 299 

Gilchrist, Bx parU 85, 87 

Gilee V. Edwards 408 

Gilkes V. Leonino 24 

Glasppoole V. Yoong ... 424 

Goddard v. O'Brien 179 

Gcddard r. Snow 275 

Godwin v. Francis 106 

Goman V. Salisbury 237 

Gomperts v. Bartlett ... 46.') 

Gooch'sCase 57,58 

Good V. Chessman 179 

Good V. Elliott .. 298 



XXXll 



TABLE OF CASES. 



Page 

Goode V. Harriflon 67 

Goodman V. Harvey 219 

Goodman V. Sayen 488 

Goodwin v. Robarts ... 220, 221 

Gorami;. Sweeting 703 

Gordon V. Gordon 529 

Gore V. Gibeon ... 88, 90, 446 

Gorgier V. Mieville 220 

Gover's Case 632 

Govett V. Kfchmond 193 

Gneme v, Wroughton 855, 703 

Grabam v. Jobnson ... 213, 215 

Grain'iCase 194,195 

Grant V. Maddox 240 

Gravely v. Barnard ... 173, 345 

Graves V. Legg 262 

Gray r. Fowler 659 

Grayv. Gibson 205 

Gray ft Lewis ... 146,684 

Gray v. Matbias ... 289, 290 

Gray V. Pearson 205 

Gray V. Warner 274 

Great Nortbein Ry. Co. v. 

Eastern Counties Ry. Co. . . . 676 
Gt.NorthemRy.Co.v.Witbam 174 

Ghreen v, Baverstock 639 

Green V. Dackett 577 

Green V. Sevin 487 

Greenv. Wynn .. ... 271 

Greenwood V. Greenwood ... 244 

Gregory V. WilUams 202 

Grellv. Levy 322,873 

Gresley v. Monsley 568, 582, 606, 
' 616, 618 

Griffin V. Devenille 691 

Griffitb V. Young . . . 631, 632 

Griffiths V. Jones 461 

Griffiths v. Robins 591 

Grigbyv.Cox 582 

Grimoldby r. Wellt 511 

Griswold v. Waddington ... 306 
Groevenor v. Sherratt 589, 591 

Gnardhonse v. Blackburn 238, 707 
Guest v. Smythe ... ... 273 

Guinness v. Land Corporation 

of Ireland 691 

Gunn'sCase 33 

Gumey v. Behrend 228 

Gumey v, Womersley . . . 466 

Guthing V. Lynn 44 

Guy V, Churchill 322, 326, 330 
Gwynne V. Heaton 596 

H. r.W. 295,296 

Hack V. London Provident 

Building Society 319 

Hadley ft Clarke 306 

Haigh ft Brooks 172 



Page 
Haigh ft North Bierley Union 1 51 

Haines ft Busk 358 

Halford ft Cameron's Coal- 
brook, &c. Co 226 

Halhead ft Toung 237 

Halifax Union Guardians r. 

Wheelwiight 443 

BtH,Re 650 

Hall ft Bainbridge 205 

Hall ft Cazenove 383 

HallftConder 466 

Hall ft Dyson 268 

HaUftEwin 227,231 

Ha11ftH«ll 583 

HallftHaU 686 

Hall ft Mayor of Swansea ... 154 
H*ll ft Old Talaigoch Lead 

Mining Co. 569 

HallftPahner 290 

Hall ft Palmer 49 

Hall ft Warren 87 

Ball ft Wright 335, 403, 405, 406 
Hall-Dare v Hall-Dare ... 500 

Hallows ft Femie 646 

Halsey ft Grant 619 

Hamilton ft Grainger ... 283 

Hamilton ft Hector 332 

HamUton ft Watson 516 

Hamlin ft Great Northern Ry. 

Co 16 

Hammersley ft Baron de Beil, 337, 

707, 708, 709, 710, 711 

Hammond ft Messenger ... 207 

Hampden ft Walsh 363 

Hanauer ft Doane ... 308,353 
Hancock ft Hancock ... 85 

Hancock v. Peaty 87 

Hanington ft Du Chastel ... 313 

Hanley v. Pearson 499 

Harben ft Phillips 684 

Harding, In the Goods of ... 79 
Hardman ft Booth ... 461,668 
Hardy v. Metropolitan Land 

and Finance Co. 428 

Hare's Case 461,661 

Barman's Case 195 

Harman ft Reeve 628 

Harms ft Parsons 345 

Harrington ft Long 822, 326 

Harris' Case 662 

Harris ft Brisco 321 

Harris ft G. W. Ry. Co. ... 48 
Harris r. Nickerson ... 15,18 
Harris ft Pepperell . . . 468, 500 

Harris ft Quine 626 

Harris ft Tremenheere ... 592 

Harris ft Wall 69 

Harrison ft Good 227 



TABLE OF CASEa 



XXXIU 



Page 
Huzboii «. GfMrt ... 696,508 
Hairinti V. Sejmoar ... 270 

Hjurtft.BMtemXJ11ioBB7.Co. 677 

Hart V. Hart 44 

Hartv.Milet 172 

Hart«.MiIb 468 

HartftSwaine 528 

Barter v.Harter 706 

Hartley v. Oiunmiiiga ... 847 

Hartley v. Pooaonbj . . 176 

Hartley tiBioe 885 

Harvey V. Famia ... 436, 487 

Harrey v. Mount 501 

Harvey V. Gibbona 885 

Haalam v. Sherwood ... 175 

Haatdow e. Jackaoo 868, 864 

Haetiiif;!, Lady, iZ0 672 

Hateh v. Hatch ... 582, 500 
Hawksworth v. H a w h aw o r th 881 

Hay'aOaee 278 

Hayoraftv. Of«My 545 

Ha>gartli v. WeMinff 525, 528, 618 
Haywood v. Bnmavidc BaUd- 

iDg Society ... 227,280 

Haywood v. Cope ... ^ 601 
HearUey V. NiekoUon ... 185 

Heath V. Crealook 426 

Heathcote V. Paigoon ... 601 

Hebb'sCaae ... 27,661 

Heffield V. Meadows ... 241 

Heilbott V. HidnoB 477, 511 

"Helen," The 808 

Heipe V. Clayton 71 

HenuDgway V. Hamilton ... 584 
Henderaoa v. Australian Boyal 

Mail, &C. Co. 140 

Hendenon v. Sterenpon ... 47 

Henkal v. Pape 462 

HenUe v. Boyal Ezob. Af see. 

Co. 406 

Hereford ft S, Walca Waggon 

and Kngineeiing Co., Re 551 
Herman v. Jencbner 816, 864 

Heme V. Sf^evenaon 482 

Heywood v. Mallalien 526, 520 
Heyworth v. Hntcbinaon ... 511 
Higglna V. Pitt ... .. 268 

Higgina 9. Samela 540 

Higgioa V. ScoU 623 

HIggins 17. Senior 07 

Higginaon v. Clowea 460, 401 

Higginson V. Simpaon ... 862 

Higgav.Nrtbm.AaumTeaCo. 215 

mil V.Boyle 826 

Hm V.Gray 586 

Hffl V.Lane 588 

Hill V. Tapper ... 228,280 
HUlv. Walker 628 



Paga 
Hmv. WflaoB ... 287,447 

HOIiaid V. Eifle ... 527, 574 

HUls V. Bowlaad 407 

Hillav. SnaU 448 

HiUa V. Siu;fanie ... 870, 888 
Hilton V. £&enley 887, 888 

Hindley v. Maiqnia of Weal- 

meath 205 

Hindaon v. Weatberiii ! ! ! 588 

HIpwell V. Knight 486 

Hiraohllald v. London, Brigh- 
ton and Sooth Coaat By. Oo. 548 

Hirst V. Tolaon 407 

Hial'ip V. LeokJe 280 

HitchooolE V. Coker 848 

Hitobooek v. Giddings .. 471 

Hoave V. Bremridge 575 

Hoars v. B«flmle 255, 256. 257 

Hobart V. Botler 648, 640, 651 

Hodgson V. Esrl of Powis ... 676 
HoggiiM V. Gordon 648, 640 

HoghtoB V. Hogbtoo 442,584,500 

Hole V. Bradhniy 454 

HoUaad v. HaU 850 

HolUna v. Fowler 428, 451, 568 
Holman v. Johnson ... 308, 860 
Holman v. Loynes 582, 586, 500, 616 

Holme V. Bmnskili 270 

Holme V. Gnppy 400 

Holmes v. Blogg ... 60, 68 

Holmes V. Jaqnea 206 

Homersham v. Wolverhamp- 
ton Waterworks Co. ... 148 

Hooek V. Muller 256 

Honeyman V. Marryat ... 40 
Hoole V. G. W. By. Co. ... 684 
Hope V. Hope... 292, 816, 873 

Hopkins V. Presoott 318 

Hopkinson v. Foster 672 

Home's Case 226 

Horrocks v. Bagby 522 

Horsfall v. Fanntleroy ... 102 

Horsf all V. Thomas 540 

Hort'sCase 194, 105 

Hotson V. Browne 106, 236, 237 

Hongh V. Manxanos 08 

Houldsworth v. City of Glaagow 

Bank 556 

Houldsworth V. Evans ... 688 
Hoosehold Fire Insoranoe Ca 

V. Grant 86,37, 692 

Howard v. Brownhill ... 656 

Howard v. Harris 488 

Howden V. Haigh 267 

Howden (Lord) v. Simpson ... 857 

Howell V. ConpLand 898 

Howell V. George . . . 599, 601 
Howley v. Knight ... Ill, 111 



XXXIV 



TABLE OF CASES. 



Page 
Haber v. Sterner . . . 626, 627 

Hughes V. Done 658 

Hughes V. HumphreyB ... 705 
Hughes V, Jones ...519, 520, 524 
Huguenin v. Baseley 588, 592, 594, 

616 

Hulme t;. Coles 271 

Hukne v. Tenant ... 666, 671 

lEulae, Ex parU 488 

Humble V. Hunter 450 

Hume V. Pooock 548 

Humfrey v. Dale ... 99,242 

Humphreys v. Green ... 634 

Hunt, In the goods of ... 444 

Hunt V. Hunt 288, 291, 292, 298, 

295 
Hunt v. Bousmaniere's Ajd- 

ministrators 435,497 

Hunti^. Silk 566 

Hunt 17. Wimbledon Local 

Board ... 130,151,154,155 

Hunter V. Atkins 616 

Hunter v. Daniel . . . 822, 826 
Hunter v. Walters ...443, 445, 451 
Hussey v, Home-Payne ... 40 

Hutcheson v. Eaton 98 

Hutchinson v. Tatham ...95, 99 
Hutley V. Hudey . . . 822, 330 

Hutton V. Bulloch 97 

Hutton V. Warren 242 

Hybart V. Parker 205 

Hyde v, Hyde and Wood- 

mansee 869 

Hydraulic Engineering Co. v. 

McHaffie 487 

Ind'sCase 461 

Limanv. Inman 77 

Inns of Court Hotel Co, Re... 681 
lonides v» Pacific Insurance 

Co 640 

lonides v. Pender ... 512, 550 

Ipswich Tailors* Case ... 340 

Imham, Lord, v. Child ... 435 

Irvine V. Wation 101 

liberg V. Bowden 100 

Ivens V. Butler 671 

Jackson, £x parte 282 

Jackson V. Duchaire 266 

Jackson t*. Turquand ... 40 
Jackson v. Union Marine In- 
surance Co. 402 

Jacobs V. CrWt Lyonnais, 367, 375, 

890 

Jacobs V. Seward 428 

JvmeB, £xparU 488 

James V. Coucfaman 585 



Page 

James v. Isaacs 452 

James V. Kerr 822 

Jarratt V. Aldam 618 

Jarrett V. Hunter 161 

Jay and Amphlett, i20 ... 671 

Jee V, Thurlow 298 

Jefferys v. Gurr 154 

Jenkins u Jones 828 

Jenkins v. Morris 94 

Jennings v, Broughton ... 546 
Jennings v, Johnaon... 824, 704 

Jennings v, Rundall 78 

Jervis v. Berridge 288 

Jervis v. Tomkinson 401 

Jewitt V. Eckhardt 163 

Johnasson V. Bonhote ... 629 

Johnson v. Gallagher, 668, 669, 670, 

672, 678 

Johnson V. Lansley 862 

Johnson v. Pie 78 

Johnson v. Baylton ... 241, 450 

Johnstone t*. Marks 69 

Joliffe V. Baker 528 

Jones, £x parte (12 Ch. Div.) 669 
Jones, Ex parte (18 Ch. Div.) 76 

Jones, ^ 644 

Jones V. Backley 249 

Jones V. Broadhurst ... 218, 452 

Jones V. Clifford 478 

Jones V, Gibbons 226 

Jones V.Giles 705 

Jones r. Gordon 219 

Jones V. Harris ... 668, 672 

Jones V. Holm 402 

Jones V. Jones (8 Sim.) ... 210 
Jones V. Jones (6 M. and W.) 682 
Jones V. Jones (1 Q. B. D.) ... 836 

Jones 17. Just 510 

Jones V.Lane 218 

Jones V. Lees. 845 

Jones V. North . . . 839, 877 

Jones V. Bicketts 605 

Jones V. Bimmer 525 

Jones V. Robinson 204 

Jones V. St. John's College, 

Oxford 888 

Jones V. Victoria Graving Dodc 

Co 162 

Jones V. Waite ...172, 178, 294 

Jorden r. Money, 685, 709, 712, 718 

Josephs V. Pebrer 228 

Joyce v.Swann 41 

Kay V. Duchess de Pienne ... 81 

Kay V.Smith 592 

Kaye V.Moore ... .^ 289 

Kearon V. Pearson 888 

Kearsley V. Cole 270 



TABLE OV OASKB. 



XXXV 



Koitei «. Eui OMlogMi 628^636 
Keatea v. Lvon ... 227, 280 
Kedar Na;^ BUttaohaiji v. 

Gone Mabomed 664 

Keeoh V. Saadfoid 274 

Keenan v. Haodlej 182 

Keir V. Leeman 315 

Kekewich v. 'M'^ww^wg ... 183 

KeUytF.Solari 433 

Kelner v. Baxter ... 106, 108 
Kemiaoii v. Airiibee ...560, 591, 618 
Kennedy v, Bronn .^648, 649, 651 

Kennedyv. Gteen 444 

Kennedy V. Lyell 328 

Kennedy «. FtaukDUs fto. Mail 

Co. 455,465,609 

Kent V. Freehold Land Co. ... 461 
KeppeU V. Bafley ... 230,231 

Kershaw v. KeUiey 804 

Kettlev Eliot 64 

Kibble, J^INirle 61 

Kidderminster, llAyor of, v. 

HardwidE 145,151,153 

Kien 9. Stokeley 601 

King V. Hamlet 609 

Kingsfoid V. Merry ...448, 451, 568 

Kingston V. Preston 249 

Kintrea^ ^apjpoffe ... 541,549 
Kirk tr. Bromky Union . . 153 

Kitchin 9. Hawkins 436 

Knight V. Bowyer ...822, 825, 326 
Knight V. Marjoribanks ... 597 

Knoz V. Oye 198, 621 

Knye V.Moore 289 

Kronheim V. Johnaon ... 162 

Laoey, JEcparte 272 

LacUan V. Reynolds 525 

Laidlaw V. Organ 608 

Laingv. Beed 681 

Tiaheman v, Moontstc'phen ... 157 
l4unare v. Dixon ... 712, 714 

Lamb's Case 386,415 

Lamb V. Brewster 703 

LampefsGaae 206 

Lampleigh v. Brathwait 12, 167, 169 
Lamprell v, Billerieay Union 151 

Lane v. Horlock 606 

Lassenoe v. Tiemey 636 

Langhter's Case ...410, 415, 416 

LaTer V. Dennett 500 

Lavery r. Pnisell 159 

LaTery V. Tarley 683 

Lawes V. Purser 172 

Lawrence V. Smith 296 

Laythoarp tiL Bryant 628 

Laxanis V. Cowie 221 

Left V. Whitaker 490 



Page 
Leaoh (Doe d.) «. MIeklem ... 254 

Lsadi SL Mniktt 462 

Leaak T.Scott 645 

LeatherClothCo.v.Hieronittns 162 
Leather Cloth Ca v. Lorsont 840, 
342, 343, 345 
Lebean e.OeneralSteam Navi- 
gation Co. 515 

Lebel V. Tucker 218 

Jj9e,ExparU 305 

Lee V. Bade, kc By. Ca ... 278 

Leev.GaakeU 159 

Lee V. Jones 516,536 

Leeds ir. Cheetham ... 391,392 

Legge V. Croker 627 

Leggott ir. O. N. B. Co. ... 189 

LeiMBter V. Bose 267 

Leif child's Case 184 

Leman r. Fletober 646 

Leman r. Honseley ... 283,647 

Lempri^re V. Lange 76 

Lennacd V. Robinson 98 

Lennon r. Napper ... 486,488 
Leronx v. Brown 628, 629, 680, 647 

LesUe V. Fitip«trick 56,60 

Letchf ord, iSe 72 

Levy V. Green 468 

Lewis V. Brass 43 

Lewis V. Bright 284 

Lewis V. Browning 38 

Tiowis 9. Jones ... 543 

Lewis V. Nksholson 105 

Leyland v. IlUngworth 459, 519 

Leyland V. Stewart 163 

Lichfield v. Baktt 488 

Life Assodation of Scotland 

v.Siddal 571 

Ltghtfoot 9. Heron 91 

Limpns V. London Greneral 

Omnibus Co 423 

Lindsay 9. Cnndy 451 

Lincoln College Case ... 54 

Lindo V, Lindo ... ... 484 

Lindsay Petroleam Co. r. 

Hud 545,671 

Lindas v. Bradwell ... 98 

•|r.ifhm^w t*. Northern Mari- 
time Insurance Co. ... 640 

Lister V. Hodgson 500 

Lister v.Pickf Old 429 

littv. Cowley 429 

Livioffston V. Ralli 318 

LlaneUy Ry. and Dock Co. v. 
L. & N. W. Ry. Co. ... 819 

Llojdv.Attwood 671 

Lloyd V. Banks 210 

Lloyd v.Cl*rk 592 

Lk>yd V. Crispe 385 

C2 



XXXVl 



TABLE OF CASES. 



Page 
lioyd V. Gnibert . . . 254, 367 
Load p. Green 534, 562, 566, 571 
Lofft V, Dennis 391, 392, 393 

LoflfuBv. Maw 710 

Lobre V. Aitohison 247 

London and N. W. Ry. Co. 

V. M'Micbael ... 60, 64, 66 
London and N. W. By. Co. 

V, Price 682 

London and Provincial Insur- 
ance Co. v. Seymour 575 
London aod S. W. By. Co. v, 

Blackmoie 484 

London and S. W. By. Co. v. 

Gomm 227 

London Assurance Co. v. 

Mansel 513,514 

London Chartered Bank of 

Australia v. Lempribre, 574, 668 
London Dock Co. v. Sinnott... 149 
London Joint Stock Bank v. 

Mayor of London 113 

London Land Co. v. Harris... 575 
London, Mayor of, v. Cox ... 424 
Longmate v. Ledger... 596, 597 

Lound f. Grimwade 316 

Loyeridge V. Cooper 209 

Lovesy V. Smith 498 

Lowe V. London and N. W. 

By. Co. 149, 154 

Lowe V. Peers 334,335 

Lewis V. Bumney 623 

Lowther v, Lowtber 273 

Lucas V. Dixon 162 

Lucas V. Wilkinson 452 

Luders V. Anstey 710 

Luddy's Trustee o. Peard ... 587 
Ludlow, Mayor of, v. Charlton 

145, 151 

Luker V. Dennis 230 

Lumleyv. Gye 192 

I Lumsden's Case 58 

Lush's trusts 638 

Lyall V. Edwaids 484 

Lyddon V. Moss 587 

Lynch, Bx parte 76 

Lyon V. Hajnes 223 

Lyon V. Home 593 

Lyons V. Blenkin 332 



Macbeath v. Haldimand ... 99 

McBlair v. Gibbes ... 307, 354 

Maobryde v. Weeks 487 

M'Callan r. Moitimer ... 361 

McCarthy v. Decaix 486 

McClean V. Kennard ... 431 

McConnell v. Hector ... 307 



Page 

Maccord v. Osborne 625 

M'Oulloch V. Gregory ... 628 
Macdonald v. Law fTnion In- 
surance Co 514 

Macdonald V. Longbottom ... 240 
MacDougall v. Gainer . . . 684 
Macgregor v. Dover and Deal 

By. Co. 124,677 

McGregor v. McGregor 83, 160, 292 
McHenry v. Davies ... 671, 672 
Mclver v. Bichardson . . 27 

Mackay, Ex parte 282 

Mackay v. Cummeroial Bank 
of New Brunswick 113, 553 

Mackay V.Dick 409 

Mackenzie p. Coulson ... 497 

McKenzie v. Hesketh 459, 464 

McKewan v. Sanderson 266, 268 

McKune V. Joynson 23 

Maclean's trusts 314 

M*Lean v. Clydesdale Bank- 
ing Co 219 

McManus V. Bark 180 

McNiell's Case 561 

McPherson v. Watt 587 

Maddison v. Alderson 507, 628, 629, 
684, 638, 710 

Madden v. White 56,66 

Magdalen Hospital, Governors 

of, V. Knotts 54 

Magee p. LaveU 490 

Mahony v. East Holyf ord Min- 
ing Co 686 

Mainprice v, Westley ... 17 

Maitland V. Backhouse ... 617 
Maitland v. Irving ...569, 582, 591 

Malins V. Freeman 458 

Malins t*. Freeman 54 

Mallalieu v. Hodgson 176, 267 

Mallet V. Bateman 1 58 

Manby v. Scott 669 

Mangles V. Dixon ' 212 

Mann V. Stephens 230 

Marriott v. Hampton . . . 578 

Marsh and Earl Granville ... 526 

Marsh v. Bainsford 169 

Mareh ». Whitmore 274 

Marshall v. Baltimore and Ohio 
BaUroadCo. ...110,310,811 

Marshall v, Berridge 43 1 

Marshall v. Collett 427 

Marshall V. Green ... 159 

MarshaU v, Marshall 292 

Marshall V. Button 78 

Martin's Claim 642 

Martin V. Gale 72 

Martin v. Pycroft . . . 236, 492 
Mason V. Harris 684 



TABLE OF CASES. 



XXXVU 



Page 
MaspoDs y HenuAno v. MU- 

dred 97 

Maney V. Davies 274 

Mather v. Lord Maidstone ... 180 

Matheaon 17. Ross 642 

Matthews v. Baxter 93, 446, 447, 

676 

Matthews v. WaUwyn ... 226 

MaanseU v. Hedges White 708, 709, 

711,713 

Mazfield tf. Bnrton 211 

Maw i;. Topham 523 

Mawson v. Fletcher 520 

Mayt^. O'NeiU 846 

Maydv. Field ... 668,669 

Mayhew v. Crickett 271 

Maynard ▼. Eaton 562 

Mayor, the (of NashviUe) v. 

Bay 129 

Meadv. Toang 427 

Meaiiog V. Hellings 864 

Megoiie v. Gorwine .. ... 812 

Megaw V. MoUoy 478 

Melbourne Banting Corpora- 
tion v. Brougham 129 

Melhado v. Porto Alegre By. 

Co 204 

Memphis, City of, v. Brown 357 
Meoier v. Hooper's Telegraph 

Works . 684 

Merchant Banking Ca of 
London v. Phoenix Bessemer 

Steel Ca 216,220 

Merchants of the Staple v. Bank 

of England 180 

Mersey Steel and Lron Co. v. 

Naylor ... 254, 255, 257 

Metcalfe's Trosts ... 616 

Meyerhoff v. Frdhlich 624 

Mxddleton v. Brown 609 

Midland G. W. By. Ca of 

Ireland v, Johnson ... 149, 430 
Midland By. Ca V. IVe ... 83 
Miles V, N. Z. Alford EsUte 

Co 181,182 

Mm V. Hawker ... 115,116 

Millar 9. Craig 484 

MUler'sCase 194 

Miller V. Cook 606 

Mills 17. Fox 712 

Mills 9. Fowkes 623 

Mills i;. Scott 200 

Millward v. LitUewood 106, 265, 276 

Milner, ^jMirte 266 

Miltenberger v. Cooke ... 854 

Mineral Water Bottle Co. v. 

Booth 388 

Mitchel V. Beynolds . . . 837, 339 



Page 

Mitchell's Claun 624 

Mitchell V. Homfray 618 

Mitchell V. Lancashire and 
Yorkshire By. Co. ... 428 

Mitchell V. Lapas^ 449 

Mittelholzer v. Fullarton ... 394 

Mody V. Gregson 510 

MoUett V. Robinson 273 

Molony v. Keroan 588, 592, 616 
Molton V. Camroax ... 92, 93, 446 

Mondel ». St*=el 511 

Monkman v. Shepherdson ... 179 

Monopolies, Case of 341 

Moore and De la Torre's Case 531, 

558 

Moore v. Moore 185 

Moorhouse v. Colvin 46 

Moranr. Pitt 163 

Mordue V. Palmer 432 

Morgan v. Griffith 159, 239, 892, 714 

Morgan v. Malleson 185 

Mor^n V. Minett 588, 596, 619 

Morgan V. Bavey 11 

Morgan v. Rowlands 625 

Morison v. Thompson ... 274 

Morley V. Rennoldson ... 336 

Morphett D. Jones 635 

Morrell v. Cowan 669 

Morrell V. Morrell 706 

Morris v. Hunt 650, 651 

Morrison v. Universal Marine 

Insurance Co. ... 473, 641 
Morse v. Royal ... 617, 618 

Mortara t;. Hall 70 

Mortimer V. Bell 539 

Mortimer V. Capper 599 

Mortimer 1^. Shortall 495 

Mortlock V. Bailer 620 

Morton V. Lamb 250 

Moss V. Averill 126 

Moss V. Smith 388 

M?styn V. Mostjn 649, 650 

Mostyn v. West Moetyn Coal • 

and Iron Co. ... 478,528 

Mouflet i;. Cole 347 

Mountstephen v. L%keman ... 157 
Moxon V. Payne ... 592, 617 

Moyce v. Newlngton 567 

Mozley v. Tinkler 27 

Mulliner v. Midland By. Ca 123 
Momford v. Gething « ... 345 
Mimidpal Building Society v, 

Kent 319 

MuhTOf Ex parte 652 

Murphy V. Boese ... ... 162 

Murray V. Barlee 667 

Murray v. E. India Co. ... 127 
Murray V. Flavell 208 



XXXVlll 



TABLE OF CASES. 





Page 




P»g» 


Murray, v, Parker . . . 


... 493 


Num V. Fabian 


... 684 


Munray V. Pinkett ... 


... 211 


NuttaU V. Braoewell... 


... 229 


My era 17. Sari 


240. 241 






Myen v. Watson 


... 712 


Oakden V.Pike 


... 486 



Naden, Ex parte 291 

Nash V. Hodgson 628 

National Provincial Bank of 

England, ^x jjarte 495 

Neale v. Turton 128 

Nedbyv. Nedby 582 

Neill V. D. of Devonshire ... 245 

^eil9on, £x parU 280 

Nelson V. Stocker 76 

Nerot r. Wallace 175 

Nesbitt V. Berridge 605 

NeviU V. Suelling . . .608, 609, 610 
Newbigging r. Adam 536, 563 

New Brunswick, fta Go. v. 

Conybeare 548, 554 

New Brunswick, &c. Co. v, 

Muggeridge 530 

New Sombrero Phosphate Co. 

t>. Erlanger 273,531.560 

New York Life Ins. Co. v, 

SUtham 306 

New Zealand Banking Cor- 
poration, Ex parte 214 

New Zealand Land Co. v. 

Watson 97 

Newborgh V. Newbnrgh ... 707 
Newcomb v. De Koos . . . 668 

NeweU V. Radf Old 161 

Newry and Enniskillen Ry. 

Co. V. Coombe 60,65 

Newton V. Marsden 336 

Nichol V. Godts 236 

Nichols V. Marsland ... 394 

Nicholson v. Bradfield Union 150 

NickaUs V. Meny 243 

Nicolr. Nicol 267 

Niell V. Morley 92 

, Nobler. Ward ... 287, 642 

Norrington v. Wright 249, 257, 258, 

259 
North British Insurance Co. v. 

Lloyd 515, 516 

Northumberland Avenue 

Hotel Co 107 

Norton V. Kelly 593 

Norwich, Mayor of, v. Norfolk 
Ry. Co. 118, 124, 263, 264, 265. 
376, 680, 690 

Norwood V. Read 191 

Nottidge V, Prince 593 

Nottingham Brick Co. v, 

Butler 230,526 

Nugent V. Smith 395 



Oakeley v. Pasheller 271 

Cakes v, Torquand 419, 461 558, 
568, 572 
Oakley v. Port of Portsmouth 

and Ryde Steam Packet Co. 894 
Odessa Tramways Co. v. 

Mendel 349 

Ogilvie V. Jeaffreson 445 

OgleyExparte 424 

Ogleaby v. Yglesias 99 

Oldershaw v. King 181 

OiiYer, Ex parte 267 

OUey V. Fisher 495 

Omerod V. Hardman 237 

Oriental Financial Corporation 

V. Overend, Carney & Co. . . 271 
Ormes v. Beadel . . . 559, 595 
O'Rorkev. Bolingbroke 606. 607, 611 
Osbom V. Nicholson ...298, 386, 398 

Osborne V. Rogera 13 

Osborne v. Williams . . . 313, 366 
Osoanyan v. Arms Co. ... 869 
Oswald V. Mayor of Berwiok- 

on-Tweed 270 

Onlds V. Harrison 286 

Overton v. Banister ... 75, 76 

Owenv. Davias 88 

Oweni;. Homan ... 378,588 
Owens V. Dickenson 667 

Pagev. Coz 208 

Page v. Home 582 

Paice V. Walker 97, 98 

Paine v. Strand Union ... 160 

Pakenham's Case 226 

Palmer V. Johnson ... 521,528 

Palmer V. Locke 387 

Palyart V. Leckie 364 

Panama and S. Pacific Tele- 
Co. V. India Rubber 

275 

Panmure, .£^ jxirte 106 

Paradina v, Jane . . . 891, 392 

Parfitt v. Lawless 588 

Paris Skating Rink Co., He. . . 326 

Parker v. Butcher 608 

Parker v, G. W. Ry. Co. ... 578 
Parker v, McKenna . . . 278, 574 
Parker v. S. E. Ry. Co. ... 48 

Parkes v. White 668 

Parkin v. Thorold ...485, 486, 488 
Parsons V. Alexander ... 706 
Partington V. Att-G«n. ... 79 
Partridge v. Stnmge 828 



TABLE OF CASBS. 



XZXIX 



P»ge 

F^itman V. Hariand 227 

Patrick V. Mfloer 486 

Paolingr. L.ftN.W.By.Co. 149 

Pawle'iCate 561 

Pajne'aCaae 541 

Payne v.CaTO 14 

Peacock v. Evans . . . 5»6, 603 

Peacock V. Monk 666 

Peacock V. PenaoQ 714 

Pearoe r. Brooke . . . 351, 352 

Pearce V. Watii 44 

Peazs tp. Laing 625 

Peaee r. Gloahec 567 

PecheU v. Watoon 320 

Peek V. Deny 502, 503, 504, 587, 

539, 542 

Peekv. Goney 536,538,556,715, 



Peeienv. Opie 


... 485 


Pebcev. Corf 


... 162 


Pellecat V. Angell .. 
Pence t, Langdon 


... 308 
... 571 




... 684 


Pennington (Doe d.) t 


. Tani- 


ere 


... 153 


PerdYal v, Dunn 


... 208 


Perrett'sCaae 


42,461 


Peny r. Baniett 


... 36? 


Perve 17. Pense 


... 829 


PeniTian Bye. Ga» JU 


... 128 


Peter V. Compion 


... 160 


Pefeen v. Fleming .. 


... 67 


Phamuiceiitical Soc. 


r. Lon- 


don and ProTindal Supply 


Afsodation 


... 114 


Phrfpe*. Lyle 


... 205 


PhiUqMV. BiatoDi .. 


458, 480 


PhiDiper.CaldcleDgb, 


468, 469, 518, 
520 


Phillipe IP. Cbgftt .. 


... 484 


PbilUpe V. FoxaU .. 


... 271 


Phillips V. Homfray .. 


... 525 


Phillipa V. Miller 


... 523 


Phillips V. Mnllings .. 


... 584 


Phillips V. Phillips 


425. 426 


Philpott V. Jones 


... 653 


Pbipps V. LoTegroTO 


211,212 


Phosphate of Lime Co. 


V.Green 689 


Picardv. Hine 


668,669 


Pxckaard V. Sean 


... 506 


Picker V. London ft 


Connty 


Banking Ca 


... 221 


Pickering's Claim .. 


... 98 


Pickering v.IlfracombeRy. Co. 212, 

849 
Pickering v. Stephenson ... 683 


PSdoock V. Bishop .. 


... 516 


Piercy v, Tonng 


... 318 


IHggott V. Sfawtton .. 


685, 712 



Pige 

ngot'sCaee 348 

Pigott V. Tliompsoii ... 200 

Pike V. Fitzgibbcn ... 86, 670, 671 

Pikev. Oogley 99 

POcher V. Bawlina 425 

PUkfaigton r. Soott 347 

PilUns V. Van Biierop 167, 697 

Ptnehon'8 Case 191 

PinkeUr. Wri^t 211 

Pinnel'sCaae 179 

Pisini V. A..G. for Gibraltar 588 
Pitt v. Smith ... 90,446 

Pittam V. Foster 80 

Piatt V. Bromage 437 

Playford v. United Kingdom 

Electric TelegrH>h Co. 201 

Pledge V. Boas 272, 515, 516 

Plewsv.Baksr 318 

Polhill V. Walter 589 

Police Jury v. Britton ... 129 

Popham V. Brooke 588 

Poplett V. Stockdale .. 265 

Pordage v. Cole 250 

Porrittv. Baker 702 

Port of Londoo Co.*s Case ... 686 

Porter's Case 358 

Potter V. Daffield 161 

Potter r. Sanders C61 

Potts V.Bell ... 804,305 

Ponltonv. L. ft a W. By. 

Co.. 428 

Ponssard v. Spiers and Pond 404 

PoweU V.Elliot 520 

Powell V. Smith 431 

Powell V. Thomas 635 

Practical Knowledge, Society 

of, V. AbboU ... 115,116 

Pratt r. Barker 593 

PreM V, Coke 597 

Prentwe v. London ... 819 

Preston v. Dsnia ... 414, 489 

Preston r. Lnck 480 

Price V. Berrington 93. 

Price V. Dyer 237 

Price V. Easton ... 201, 203 

Price V. Hewett 73 

Price v.L^ 492 

Price. V. Maeanlay 547 

Pride v. Bnbb . . . 667, 669 

Prideanz v. Lonsdale 275, 584 

Priestley V. Femie 102 

Prince of Wales Assoe. Co. v. 

Harding 687 

Printing and Nnmerioal Bogis- 

tering Co. v. Sampson 804, 346 
Pritchard v. Merchants' Life 

iBsoranoe Society ... 472 
Prole «. Soady 710 



xl 



TABLE OF CASES. 



Page 
ProMer v. Edmonds 821, 822, 826 

Proudf oot v. Montefiore ... 518 

Pryae v. Pryse 828 

Pulbrook V. Lawes 682 

Pulaford V. Kicbards ... 558 

pQToell V. Macnamara ... 595 

PybuBV. Gibb 270 

"PjkBfExparU 286 

Pym V. Campbell 288 

Quarrier V. Colston 872 

Qninoey V. Sbarpe 624 

Babone v. Williams 100 

Radenhunt tf. Bates 204 

Raffles V. Wichelhaus ... 457 

Raggett V. Bishop 654 

Raggett V. MosgraTe ... 654 
Railton v, Matthews. . . 515, 517 
Ram Coomar Coondoo v. 

Chnnder Canto Mookerjee 880 
Ramloll Thackoorseydass v, 

Soojnmnall Dhondmoll ... 299 

Ramsden v. Brearley 84 

Ramsden 17. Dyson 685 

Ramsgate Hotel Co. v. Gold- 

smid 27 

Ramsgate Hotel Co. v. Monte- 

fiore 27 

Randall V. Morgan 629 

Randegger V. Holmes ... 818 
RandeU, Saunders ft Co. v. 

Thompson 818 

Randell V. Trimen 106 

Rankin f. Potter 404 

Rannv Hughes 168 

Raphael v. Bank of England 219 

Rashdall V. Ford 543 

Rawley V. Rawley 61 

Rawlins v. Wickham 585, 588, 558 

Raymond v. Minton 409 

Rayner v. Orote ... 104, 105, 1 08 

Read V. Anderson 862 

Readv. Legard 88 

Readev. Lamb 629 

Redfem 9. Birning 244 

Redgrave V. Hnrd ... 586,547 

Reed V. Deere 642 

Rees v. WilUams . . . 652, 704 
Reese River Silver Mining Co. 

v. Smith 581,588,560 

Reidv. Reid 85 

Reg. V. Ashwell 448 

— V. Aspinall 266 

— V, Cumberland (Justices of) 152 

— V. Commissioners of Sewers 

for Essex 894 

^17. Doutre 660 



Page 

Reg. V. Grordon Add, 

— t.G.N.of Eng.Ry.Co. .. 118, 114 

— V.Holmes 668 

— V. Lord 56 

— V. Mayor of Stamford ... 152 

— v. McDonald 64 

— V. Middleton 448 

— r. Prince 422 

— V. Ramsey and Foote ... 297 
-r.Reed 119 

— V. Rowlands 266 

— r. Warburton 266 

Reidpath's Case 661 

Renals v. Cowlishaw. . . 227, 280 

Reoss v. Picksley 161 

Renter v. Electric Tel^raph 

Co 150 

Renter v. S^ 256, 258, 486, 487 

Reynard 9. Arnold 892 

ReyneU v. Spire 821, 822, 857, 866, 
586. 547. 549 
Rhodes v. Bate . . .586, 592. 618 

Rhodes v. Swithenbank ... 67 
Rice V.Gordon ... 517,596 

Richards v, Delbridge ... 185 

Richards v. Home Assurance 

Association 88 

Richardson V. Richardson ... 185 
Richardson V. Williamson ... 105 
Riche V. Ashbnry Ry. Carriage 

Co 674,682,688 

Ridgway v. Sneyd 400 

Ridgway v. Wharton ... 48 

Rigby V. Connol 654 

Ritchie V. Smith 282 

Rivaz V. Gemssi 512 

River Wear Commissioners v, 

Adamson 278 

Roberts V. Berry 486 

Roberts v. Bury Commii- 

sioners 408,409 

Roberts v. Smith 45, 46 

Roberts V. Brett 251 

Robinson v. Bland . . . 868, 871 
Robinson v. Dadson ... 408, 452 

Robinson v. MoUett 278 

Robinson v. Ommanney ... 885 

Robinson v. Page 237 

Robinson v, Pickering 668, 669 

Robson v. Dodds 684 

Robson V. Drunmiond 193, 460 

Roddam v. Morley ... 621, 625 

Roe V. Tranmarr 483 

Rogers V. Hadley 239 

Rogers V. Ingham ... 486,488 

Rolfe V. Flower 194 

Romford Canal Co. ... 665,685 
Rooke V. Lord Kensington 488, 497 



TABLE OF CASES. 



zU 



... 05« 



Boperv. Holland 

Boper V. DonoMter 669 

Boaoorla v. Thomaa 160 

SoMv-Gould 628 

Rosewwoe v. Billing ... 286 

Roaher 9. WilliMns ... 176,698 
Boonter v. MilUr ... 42, 161 

Boflttter V. Waldi 692 

Botheifaam Alum and Chemioal 

Ca,J8e 208 

Boiuillon V. Booafllon 844, 846 

Bowky V. Bowley 88 

BoimM»,J2e 623,632 

Bojal British Bank v. Tor- 
qnand ... 148,664,686,687 

Ruffles V. Alston 296 

Riimballv. Metropolitan Bank 220 
Russell r. Da Bandeiia 409 

RnsM^U V, RusseU ... 818 

Rnsaell v. Thornton 27 

RosaeU v. Wakefield Water- 
works Co. 684 

Rnawa V. Shoolbred 272 

Rjall r. Rowles 814 



^, 



Ryder v. Wombwell . 



67,69,70 



Yisoonnt 



499 
606 
276 
292 



Saoknlle-West 

Hohnesdale 

SL Alfaan V. Harding 

St. Geoige v. Wake 

St. John V. St John 

St. Leonards, Shorediteh | 

(Gnardians of) v. Franklin 114 j 

Sale V. Lambert 161 ' 

Salomons V. Laing ... 676,689 < 

Salter V. Bradshaw 606 

Sanders v. St Neoti Union 160 
Sanderson 9. Aston ... 270,271 
Sanderson v. Graves ... 688, 642 
Santos V. niidge 868,870,871,878 

704 i 

Savage ^.Tyen 244 

Saveryv.KLig ... 687,617 

Saville ft SavUle ... ... 599 

Savin v. Hoylake By. Go. ... 287 

Saxon Life Assorance Society 486 

Sayers V. CoUyer 282 

Scaltoek v. Hartson 226 

Scarpdlini v. Atcheson ... 622 
Sehmaltz v. Avery ... 108, 109 
8cholefi«]d v. Templer 670, 672 
Scholey v. Central By. Co. of 

Yenesoela 669 

Schotsmans v. Laneaahira and 

Yorkshire By. Co. 429 

8ootoon«.Pegg 177 

Soottv. Avery 819 



Soott V. Corp. of Livetpool 

Scott V. GOlmora 66$ 

Soott V. LittUdato 469 

Soott V. Lord Ebory ... 106, 107 

Soott r. PiLkingUm 22 

Scolt V.Tyler 886 

Scottish X. S. By. Co. r. 

Stowart . ... 680 

Scottish Petroleum Co., 681 661, 

718 

Seagflc 9. Aston 628 

Seaton V. Grant 684 

Seatonv Seaton 78 

Seear r. Lawsod ... 822, 826 

S«lby V. Jackson 87 

SelJgmann v. Le BoatilUer ... 818 
Selaey (Lord) v. Rhoades ... 692 
Sowers, Commls. of, v. Beg... 395 

Seconv. Slade 486 

Sewell V. Bojal Exchange 

Atsnrance Co 868 

SiBWeU V. Bnrdiek 228 

Seymour r. Bri'tge 862 

ShadireU v, Shadw«U ... 177 

Shakespear.^ 86 

Shand v. Da Bnisson ... 672 

Shtrington v. Strotton 696, 697 
Sbaidlow V. Cotterell ... 161 

Sharman v. Brandt ... 109, 278 

Sharp V. Iicach 691 

Sharp V. Taylor .. 809, 868, 862 

Sharps V. Foy 688 

Sharpies V. Adams 211 

Sharpley v. Loath and East 

Coast By. Co 669 

Shattock V. Shattock 668, 672 

Shaw's Claim 287 

Suaw V. Foster 198 

Shaw V, JeStiry 269 

Shaw v. Thaokray 91 

Sha«r V, Woodcock 678, 681 

Sheffield Nickel Co. V. Unsrin 565 
Sheffield, Earl of, v. London 

Joint Stock Bank 221 

Sh«9ppard v, Oxenford ... 868 

Ship's CaM 461 

Shrewttbory (Earl of), v. N. 

Staffordshire By. Co. ... 812 
Shrewsbury ft Birmingham 
Ry. Co. V. L. & N. W. By. 

Ca 676,679,691 

Shaey v. United States 21. 28 

Shttlter's Case 441 

Sidenham v. Worling on ... 169 
Silber Light Ca V. Silber ... 684 

SiUemv. Thornton 614 

Silliman V. United States ... 577 
Simons v. G. W. By. Co. ... 443 



xlii 



TABLE OF CASES. 



Page 

SImoiui V. Patchett 106 

SimiDondi, Ex parte 438 

SimpBon v, Denisoti 682 

Simpson V. Egginton ... 452 

Simpson v, Lbmb . . 822, 324, 

325 
Simpson v. Lord Howden ... 289 
Simpson v. Lord Ho^ den ... 312 
Simpfon V, Westminster Pa- 
lace Hotel Ca 676 

Simpson V. Grippin ... 255,256 

Sims v. Bond 100 

Sismeyv. Eley 290 

Skeate V. Beaie 577 

Skeet v. Lindsay 624 

Skidmore v, Bradford ... 710 

Skilbeck v. Hilton... 484, 565 

SkiUett V. Fletcber 270 

Shillito V. Hobeon 184 

Skottowe V. Williams ... 572 

Skyiing v. Greenwood . . . 437 

Slade'sCase 142 

Slark V. Highgate Archway 

Co 220,678 

Slater v. Brady 56, 77 

Slator V. Trimble ^0 

Slim V, CroQcher . . . 538, 715 

Sloman v. Walter 489 

Smart v. West Ham Union... 152 
Smethurst v, Mitchell ... 1 02 

Smith's Case (2 Ch.) 531, 538, 551. 

554 

Smith's Case (4 Ch.) 639 

Smith v.Andei son 702 

Smith V. Bromley 365 

Smith V. Brown 545 

Smith V. Cartwright 152 

Smith V, Chadwick ... 546, 550 

Smith V. Clarke 539 

Smith v.Cnff 365 

Smith V. Eggington 225 

Smith V. Hughes, 234, 440, 466, 475 
508, 549 

Smith v.Hifle 499 

Smith V. Kay . . .546, 549, 580, 581 
592, 595 
Smith V. Land and House 

Property Corporation ... 624 
Smith V. Lindo ... 283, 702 

Smith v.Lncas ... 59,244 

Smith V, Mawhood 283 

Smith v.Neale ... 159,161 

Smith V. Walton 705 

Smith V. Webster 40 

Smith V. Wheatcrof t 448 

Smith v. White 351 

Smith V. Wilson 239 

Smnrthwaite v. WHkins ... 228 



Page 

Smyth V. Griflin 289 

Society of Practical Know- 
ledge v. Abbott .. 115,116 
Sommersett's Case ... 347,370 
Sottomayor v. De Barros ... 277 
Souch V. Strawbridge ... 638 
South of Ireland Colliery Co. 

V. Waddle 147 

South Wales By. Co. v. Bed- 

mond 679 

South Toikshire, &c, Co. v. 

G. N. Ry. Co. ... 678,683 
Soutball V. Rigg ... 437, 606 
Southampton, Lord, v. Brown, 

98, 200 
Southern Development Co. v. 

SiWa 502,642 

Sonthey V. Sherwood ... 296 

Southwell V. Bowditch ... 99 

Spackman V. Evans 688 

Sparenborgh v, Bannatyne ... 307 

Sparling r. Brf^ reton 645 

Spears V. Hartly 623 

Spedding r. Novell 106 

Spence v. Chodwick 390 

Spencer's Caqe 224 

Spencer v. Harding 14, 18 

Spioer v. Martin ... 227,230 
Spiller V. Paris Skating Biok 

Co 107 

Splidt V. Bowles ... 224 

Sprott V. United States 308, 853 
Sprye v. Porter, 320, 322, 328, 824 

Spurr V.Cass 109,204 

Squire r. Wbiiton ... 1 90, 51 6 
Stafford (Major of) v. Till ... 158 

Stshlscbmidi V. Lett 623 

Stsnl* y r. Dowdeswell ... 40 
Stanley v. Jones . . . 322, 323 

Stanton V. TattersaU 528 

Stedman v. Hait 88 

Steed V. Callry 592 

Steele V. Harmer 128 

Steele v. WUliams . . . 578, 579 
Stephens V. Yeoables ... 218 

Sterry v. Clifton 313 

Stevens v. Benning ... 189, 454 

Stevens V. Biller 100 

Stevens r. Gronrley 283 

Stevenson v. MacLean 25, 27, 31 
Stevenson v. Newnham ... 567 
Stewart's Case ( Agriotilturistb' 

Cattle Ids. Co.) 688 

Stewart's Cane (Russian Vyk- 

sounsky Ironworks) ... 461 

Stewart V. AlUston 460 

Stewart v. Eddowes ... 161, 479 
Stewart V. Stewart ... 486,473 



TABLE OF GASES. 



zliii 



Ptffe 
Stewirt «. Wyoming BmmIm 

Co. Jdd. 

StikemMi v. Dftwaon 78, 76 

Staw«U V. WilUiM 596 

ScockdAle v. Onwhyn ... 296 

Htoda 9. DobMn 210 

Stone «.(St7aadOomt7BMik 668 

Stone V. Godfrey 4S5 

Stone V. MonklAnd Iron and 

Con! Co. 467 

Stonor'fl TroBts 85 

Storey V. Waddle ...478, 501, 575 
Strange v. Brennan ... 822, 824 

Stray V. BoMell 885 

Street v.BlaT 457 

Street V. Bigby 318 

Stribley v. Imperial ICarine 

iDsnrance Co. ... 512,613 

Strickland V. Turner 471 

Stnbbe v. HolyweU Ry. Co... 407 

Stodds V. Watson 162 

Stamp V. Gaby 617 

Stuige V. Starr 551 

Sturge V. Sturge 596 

Stmrlyn V.Albany 171 

SnlliTan V. Mitcalfe 632 

Sommam V. Griffith! 696 

Snrcome v. Pinniger ... 636 

Sonex Peerage CaM...277, 278, 2^0 
Sutton's Hospttal Case 674, 675, 
681, 691 
SwaUand v. Deanley ... 522 

Swan, Esparto 222 

Swan V. North British Ans- 

tralasianCo. ... 218,448 

Swansea Friendly Sodety ... 113 

Sweet V.Lee 631 

Swift 9. Jewsbmy 563 

Swift v.KeUy ... 633,640 

Swift V.Swift 332 

Swift V.Tyson 218 

Swift V. Winterbotham ... 555 
Swindon Waterworks Co. v. 

Wilts and Berks Canal Na- 

▼igAtionCo. 123 

Swire v. Franois 653 

Swire V. Bedman 271 

Sykes v. Beadon ... 263, 702 

Sylces V. Chadwick 172 

Sydney ft Ca «. Bird ... 531 
Symss V. Hnghes 364 

TsUe V. Gosling 226 

Talbot V. Staniforth 590 

TampUnv. James 430, 469, 460, 463, 
464,699 
Tanoed v. Delagoa Bay and 
East Africa Bailway Co. ... Add. 



TKXMadsn V. BandaU ... M4 

Tasker V. Small 193 

Tate V. WiOiamson 582, 688, 592 
Tayloe v. Merehants* Fire In- 

snranoeCa 662 

Taykv, S» parte 60, 64 

Taylor V. Ashtoa 637 

Taylor V. Bowen 364 

Taylor v. Brewer 45 

Taylor v. Corporation of St 

Ueleii's 245 

Taykir v. Caldwell 890, 891, 395, 

408, 414 

Taylor V. Chaster 360 

Taylor v. Chichester and Mid- 

hnrstRy.Co. 124.376.679,690 

Taylor v. Crowland Gas Ca 288 

Taylor V. Johnston 591 

Taylor V. Jones 668 

Taylor V. Lendej 368 

Tajlor V. Manners 178 

Taylor V. Meads 667 

Taylor V. Parry 193 

Taylor v. Portuigton ... 44 

Taylor v.Pogh 275 

Tenant V. Elliott 862 

Tennent v. City of Glasgow 

Bank 669 

Tennent v. Tenncnts 696 

-T^tonia,"The 402 

Teiasv. White 808 

Thacksr V. Key 837 

Thames HaTen, Ac. Co. v. 

HaU 162 

Thiedeman v. Goldsehmidt ... 219 

Thiis V. Byers 388 

Thomas v. Brown 631 

Thomas V. Uavis 483 

Thomas v. Thomas ... 167, 691 

Thompson v. Adams Add, 

Thompson V. Hudson ... 489 
Thompson v. Planet Benefit 

Building Society 319 

Thompson V. Powles 307 

Thompson v. Univenal Sal- 
vage Co. 128 

Thompson v. Whitmore 497, 499 

Thomson v. Davenport ... 96 

Thomson V. Eastwood ... 574 

Thomson V. Weems 513 

Thorn v. Mayor of London 389 

Thomborow V. Whitaore ... 381 

Thornton V. niingworth ... 55 

Thornton V. Kempeter ... 462 

Thorooghgood's Case ... 444 

Thursby v. Plant 224 

Tlchener, iZe 208 

Tilley V. Thomas 486 



xliv 



TABLE OF OASES. 



Page 

Tokerv. Toker 584 

Tomaon V. Judge 618 

Topham V. Moreomf t ... 656 

Toiranoe v, Bolton 468, 469, 520, 

523, 524 

Torre V.Torre 499 

Tottenham v. Emmet ... 603 

Tottenham v. Green 610, 617 

Totterdell v, Fareham Brick 

Co. 686 

Toache v, MetropolittfQ By. 

Warehousing Go. ... 203 

Towneend's Gate 661 

Townaend v. Growdy ... 433 

Townshend V. Stangroom ... 495 
Tiaill V. Baring 550, 713 

Trigge V. Lavall^ 182 

Trimble v. Hill 285, 363, 705 

Tristv. Ghild 312 

Trueman v. Loder 96 

Trumper v. Trnmper ... S74 

Trustees V. Thaoker 232 

Tucker v. Bennett 498 

Tucker r. Linger 242 

Tulkv. Moxhay 230 

Tullett V. Armstrong ... 668 

Turner v. Collins 500, 582, 617 

Turner v. Harvey 476 

Turner V. ReyniJl 647 

Tweddell v. TweddeU ... 590 

Tweddle v. Atkinson ... 201 

TwisUeton v. Griffith ... 603 

Two Sidlies, King of, v. Will- 

oox 114 

Twycraas V. Grant 532 

Tyler v.Tates ... 606,608 

Udell V. Atherton 535 

Underhill V. Horwood ... 596 

Underwood V. Hitchcox ... 599 
Ungley v. Ungley . . . 558, 63 i 
Unity Bank, £b iNirte ... 77 
Universal Life Ajiurance Co., 

ExpaHe 215 

Upperton v. Nickolson ... 487 
Urquhart V. Macpherson ... 565 
Upton V, TribUoook ... 434, 445 

Vallance v. Blagden ... 290 

Vandttart v. Vansittart 82, 292, 332 

Vaoghan v. Thomas 601 

Vaughan v. Vanderstegen . . . 667 
Veitch V. BuBsell ... 646, 648 
Vernon v. Keys ... 544, 545 

Vigers V.Pike 565 

Vi^y.ExparU .^ ... 282 
Yorley V. dooke 444 





Page 


W. V. B 


... 866 


Waddell^v. Blockey ... 


... 565 


Wain V. Wariters ... 


... 161 


Waite V.Jones 


... 349 


Wake r. Harmp 


... 238 


Wakefield v. Newbon 


... 578 



Waldyv. Gray ... 426,427 

Walford.v. Duchess de Pienne 81 

Walker v. Perkins 289 

Walker v. Smith 583 

Wall's Case 662 

Wallace v. Wallace 590 

WalUs V.Day ... 344,347 

Wallis V. Smith . . . 246, 490 
Walsh V. Bishop of Lincoln... 704 
Ward V. Bunk of NewZealand 272 
Warden v. Jones 687, 638 

Waring'sCaae ... 197 

Warlow V. Harrison 16, 19 

Wame V. RoQtledge 670 

Warner v. WiUington ... 47 

Warrender V. Warrender ... 292 
Warrintr V. Rogtrs ... .^ 185 

Warwick V. Bruce 55,58 

Warwick v. Richardson ... 266 

Wason V. Wareing 438 

Waterhouse V. Jamieson ... 569 
Watford and Rickmansworth 
Ry. Ca V. L. & N. W. Ry. 

Co. 319 

Watkins V. Rymill 48 

Watkins V. Nash 238 

Watson, JEb parte 77 

Watson V. AUoook ... 174, 271 
Watson V. Earl of Charlemont 550 
Watson V. Marston 490, 491, 598, 

599 
Watson V. Mid- Wales Ry. Co. 213 

Watts V. Porter 212 

Wauffh V. Morris . . .358, 859, 376 

Way's Trusts 586 

Way V. East 858 

Way V. Hearn ... 518, 556 

Waymell V. Reed 309 

Weaver, i2e 88 

Webb V. Heame Bay Com- 
missioners 129,214,216 

Webb V. Hewitt 271 

Webb V. Hughes 487 

Webbv. Whiffin 223 

Webster's Case 461 

Webster V. CeoU 464 

Webster V. Cook 608 

Webster v. Dd Tastet ... 333 

Wedgwood v. Adams ... 600 

Weeks V. Propert 106 

Weidner v. Hoggett ... 99 
Welrv. Bamett 554 



TABLE OF CASBS. 



xlv 



Weir V. BeU 504, 552, 554 

Weldon V. Winalow 85 

Well* V. Kingaloii-iipoa-Hall 

151, 159 

WeUs V. Malbon 83 

Welman V. Wefanaa . ... 495 

Wenlock, Baronea «. RiTer 

Dee CompMiy 691 

WemuJl V. Adney 169 

West Loodon ComnMrcUl 

Bankv. KitMo 543 

Western Bank of Scotland v. 

Addie 113, 537, 553, 555, 564 

Western V. Boswll 600 

Westlake V. Adan s 171 

Weftmeath v. Salisbniy 294, 295 
Westmeatb, MarquUi of, v. 

MarchioneH of Westmeath 

291, 292, 295 
Western Sabnrban Ac Go. v. 

Maitin 819 

Weston V, Metropolitaa Asy- 

lam District 490 

Wbarton V. Mackenzie ... 68 

Whatman v. Gibson 230 

Wbeatiey v. Lane 206 

Wheatley V. Slade 523 

Wbeelton v. Hardisty ... 551 

Wfaelan v. Palmer 238 

Whelpdale's Oase 576 

Wbicbcote v, Lawrence ... 273 
Whincop V. Hugh es ... 407 

Whitcomb V. Tmtiog ... 625 

White V. Bluett 175 

Wbttev. Cuddon 521 

White V. Damon ... 600,601 
White tr Garden ... 534, 567 

White V.Hart 298 

White «. White 500 

Whitehead v. Anderson ... 429 
WhitUker Ex parU ... 534 

Whittemore v. Wbit^emore 522 

Widgeiy V. Tepper 79 

Wigglesworth r. Dallison ... 242 

¥mbyv. £lg«e 624 

Unid V.Harris 106 

Wilde V. Gibson . . . 526, 527 

WOdes V. Dndlow 158 

Wilkinson v. Gibson ... 83 

Wilkinson v, Lloyd 885 

"Wilkinson t. Loodonaaok ... 876 

Willan V. Willan 481 

WOlesford v. Watson ... 318 

Williams' Gate ... 541,549 

Williams Ex parte 282 

Williams V. Bayley 814, 580, 594 
Williams V. Byrnes ... 24,161 

Wiltiams v. Garwacdlne 14, 20 



P«ge 
WiD]ams(Doe d.) v. Etsus 828, 829 

Williams v. Glenton 487 

Williams v. Hathaway ... 107 
Williams v. Hedley ... 865 

WilUams V. Jordan 161 

Williams V. Moor 59 

Wdliamav. Owen 489 

WiUiams v. Protheroe ... 827 

WUiiams v. Wentwottb ... 88 
Williams, app., Wheeler, resp. 630 
WOliamsv. Williams ... 590 

Williamson, ^x parte ... 681 

Williamson V. Gihon ... 834 

Willing lie v. Blaitland ... 200 

Willis r. Thorp 705 

Williaon v. Patteson ... 807 

Willmott V. Barber ... 635 

Wilsou V. Kart 227 

Wilson V. Lloyd 194 

Wilson V. Rankin 353 

Wilson V. Bay 865 

Wilson V. West Hartlepool 

Ry. Go. 129,682 

Wilson V. Wilson, 244^ 292, 293, 295 

481 

Wilton V. Ghambers 645 

Winnv. Bnll 43 

Wiseman v. Beake 603 

Wilt V. Gorcoran 318 

Wolfe V. Matthews 654 

WoWerhampton Banking Ga, 

Exparte 816 

Wood V. Abrey . . . 596, 597 

Wood V. Barker 267 

Wood V. Downes . . .822, 324, 330 

Wood V. Fenwiok 56,66 

Wood V.Griffith 520 

Woodv. Scarth .. ... 491 

Wood V.Tate 153 

Woolfev. Home 97 

Woirall V. Jacob 292 

Worthington v. Gurtis 363, 703 
Wright's Gase ...531, 551, 562 

Wright V. Chard 672 

Wright V. Leonard 78 

Wright V. Monarch Invest- 
ment Building Sodety . . 319 

Wright V. Proud 592 

Wright v.Snowe 75 

Wright V. Yanderplank, 572, 586 

617 

Wrigley V. Swainson 275 

Wolff V.Jay 271 

Wyatt V. Hertford 102 

Wycombe Ry. Co. v. Dan- 

nington Hospital 481 

Wynn v. Shropshire Union, 
&o.,Go. 876 



xlvi 



TABLE OF CA8I8. 



Page 

Wynne's CiMe 41 

Wythes v, Labonohere, 445, 515 



Zenos V. Widduun ... 7, 40, 689 



Yarborongh v. Bank of Eng- 
iMid 154 



Page 

Yates v.Boen 00 

Yeomans V. Williams ... 688 

Young v. Clark 500 

Yoang & Go. v. Hayor of 
Leunington 155 



Zonch V. Paiaons 



zlvii 



REFERENCES AND ABBREVIATIONS. 



BeDJamin on Sale. Third aditiaa, 1884. 

Dart, V. & P. Dart's Yendon and Pnrchawn. Sixth edition, 1888. 

Finch SeL Ga. A Seleetion o( Ceaet on the Engliih Law of Contract, by 

Gerard Brown Finch. London, 1886. 
Harraid Law Review. Gemhridge, Maae^ 1887—. Cited by Tolmne 

and page. 
L G. A. means the Indian Contract Act (IX. of 1872). 
L. Q. B. Law Quarterly BeTtew. London, 1885—. Cited by ▼olnme 

and page. 
Ijyigdea A Summary of the Law of Contracts, by C. C. L. Second 

edition. Boston, Mess., 1880. 
Law Journal. Always cited by the number of the tc^ in the New Series. 
Law Reports (1865—75). The Chancery Af^ieal and Equity cases are 

cited as " Ch." and " £q." simply. 
Law Reports (1 875— ). The Scotch Appeals to the Honse of Lords and 

appeals to the Judicial Committee of the Priry Council reported in 

the Appeal Csses series, if not exprsssly mentioned to be such in 

the context, are distinguiihed by the additions (Sc.) and (J. C.) 

respectiFely. Csses in the Court of Af^ieal are distlnguithed by 

the abbreviation of " Division" in the form " Div.** 
Lindley on Partnership, 1888, Undley on Companies, 1889. In this 

edition (the fifth) Lord Justice Lindley's treatiie has taken the form 

of two distinct books with different titles, which are abbreviated 

as above. 
Saunders' Reports, notes to, by the late Serjeant Williams (Wms. 

Saund.) Ed. 1871. Cited by the ptgiog of that edition, not the 

pages of Saunders. 
Savigny, System des hentigen romischen Rechts (Savigny, or Sav. Syst.) 

Berlin, 1840—1849. 
Savigny, Das Obligationenrecht (Sav. Obi.). Berlin, 1851—3. 
Sm. L. C. Smith's Lesding Cases. Ninth edition, 1887. 
Vangerow, Lehrbuch der Pandekten (Vangerow, Pand.). Seventh edition, 

Marburg and Leipng, 1863. 
Pothier's and Story's works are cited by the consecutive sections 
Savigny and Vangerow are cited indifferently by volume and page, or by 

the consecutive sections, often by both. 



xlviii 



ADDENDA. 

P. 84. Am regards a wife's antenuptial debts, the Statute of Limitation 
oontinaes after coverture to run in favour of the hnsband. On the 
other hand his liability for such debts cannot, by reason of the 
M.W.P. Act or otherwise, be treated as a joint liability only : Beck ▼. 
Pierce (1889) 23 Q.B. Div. 816, which see on this class of questions 
generally. 

P. 207. As to what is an absolute assignment within s. 25, sub-s. 6, of the 
Judicature Act, 1878, see Tancred v. Ddagoa Bay and East Africa Ry. 
Co. (1889) 23 Q- B. D. 289. 

P. 502. It seems that false representation of an existing intention may 
amount even to a criminally punishable false pretence : see the dicta 
in Beg. v. Gordon (1889) 28 Q.B.D. 354. Qu, whether the decision 
does not really involve this notwithstanding the distinction taken by 
Lord Coleridge C.J. at p. 859. 

P. 524. As to a vendor's duty to disclose restrictive covenants affecting the 
property, see Ebiworth and Tidy*a Coniruety 1889, 42 Ch. Div. 23, 47, 
51. 

P. 536. Add reference to SUwart v. Wyoming Banche Co. (1888) 128 U. S. 
383, 388, opinion of the Court per Gray J. " In an action of deceit 
it is true that silence as to a material fact is not necessarily, as 
matter of law, equivalent to a false representation. But mere sUence 
is quite different from concealment ; aliud eat tacert, aliud cdart ; a 
suppression of the truth may amount to a suggestion of falsehood ; 
and if, with intent to deceive, either party to a contract of »a1e conceals 
or suppresses a material fact which he Is in good faith bonod to 
disclose, this is evidence of and equivalent to a false representation^ 
because the concealment or suppression is in effect a representation 
that what is disclosed is the whole truth." 

P. 581. As to the relations between a company and its promoters and its 
directors, cp. Eden v. Bidtdalet Bailtcay Lamp and Lighting Co., 1889» 
23 Q.B. Div. 868 : so long as there is any question open between the 
company and a promoter, a director must account to the company for 
any gift from the promoter ; but the duty rests simply on the ground 
of agency. 

P. 638. In the case of fire insurance, there being no statutory requirement, 
there is nothing to prevent a slip from forming a complete contract of 
insurance ; the burden of proof is on the underwriter tc show a con- 
trary intention ; and there is not any implied condition that a policy 
shall be put forward for signature within a reasonable time : Thompton 
V. Adams (1889) 23 Q.B.D. 861. 



The attention of historical students of the Common Law who read 
German may he called to two articles by Mr. Ernst Schuster in 
Busch's Archiv fUr Handels — nnd Wechselrecht— " Der Yertragsschluta 
nach Kngliechcm Recht,'' vol. 45, p. 317, and "Die Consideration ab 
Gilltigkeitsbedingung des Vertrsgs im Englischen Kecht," vol. 46, p. 111. 
These papers, though primarily designed to make the rules of English law 
intelligible to German lawyers and men of business, are thoroughly worked 
out from first-band study, and contain much valuable independent criticism. 



PRINCIPLES OF CONTRACT. 



CHAPTER I. 

Agreement, Pboposal^ and Acceptance. 

The law of Contract may be described as the endeavour 
of the State, a more or less imperfect one by the nature of 
the case, to establish a positive sanction for the expectation 
of good faith which has grown up in the mutual dealings 
of men of average right-mindedness. Accordingly the 
most popular description of a contract that can be given is 
also tbe most exact one, namely that it is a promise or set 
of promises which the law will enforce. The specific mark 
of contract is the creation of a right, not to a thing, but to 
another man's conduct in the future. He who has given 
the promise is bound to him who accepts it, not merely 
because he had or expressed a certain intention^ but be- 
cause he so expressed himself as to entitle the other party 
to rely on his acting in a certain way. This is apt to be 
obscured in common cases, but is easily seen to be true. 
Suppose that A. agrees to sell to B. a thing of which not 
he but C. is the true owner. C. gives the thing to B. Here, 
though B. has got the thing he wanted, and on better 
terms than he expected, A. has not kept his promise ; and, 
if the other requisites of a lawful contract were present as 
between himself and B., he has broken his contract The 
primary questions, then, of tbe law of contract are first, 
what is a promise ? and next, what promises are enforce- 
able? 

p. B 



2 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

The importance and difficulty of the first of these ques- 
tions depend on the fact that men can justly rely on one 
another's intentions, and courts of justice hold them 
bound to their fulfilment, only when they have been 
expressed in a manner that would convey to an indiflferent 
person, reasonable and reasonably competent in the matter 
in hand, the sense in which the expression is relied on by 
the party claiming satisfaction. Judges and juries stand 
in the place of this supposed indifferent person, and have 
to be convinced that the dealings in the particular case 
contained or amounted to the promise alleged to have 
been made and relied upon. 

Our first business must therefore be to separate and 
analyse the elements which, generally speaking, must con- 
cur in the formation of a contract A series of statements 
in the form of definitions, though necessarily imperfect, 
may help to clear the way. 

Contract 1. Every agreement and promise enforceable by law is 
a contract. 

Agree- 2. An agreement is an act in the law whereby two or 

^^ more persons declare their consent as to any act or thing 

to be done or forborne by some or one of those persons for 
the use of the others or other of them (a). 

Ezpres- 3. Such declaration may consist of 

^^^ (a) the concurrence of the parties in a spoken or 

written form of words as expressing their 

common intention, or 
(6) a proposal made by some or one of them, and 

accepted by the others or other of them. 

PromiM. 4. The declaration by one person to another of his in- 
tention to do or forbear from anything at the request or 
for the use of that other is called a promise. 

(a) This statement has been adopted by Eekewicb J. Farier v. Wheder 
(1887) 36 Ch. D. 69.% 698, 57 h. J. Cb. 149. 



COKSENT. ^ 

5. An agreement which has no legal effect is said to be Tg^ 
void. An agreement which ceases to have legal effect is SmT 
said to become void or to be discharged. 

6. An agreement is said to be a voidable contract if it VoiWJa 
is enforceable by law at the option of one or more of the 
parties thereto but not at the option of the other or others. 

We proceed to develop and explain these statements, so 
far as appears convenient at the outset of the work. 

1. Definition of Agreemtnt. — ^The first and most essential N«t w> 
element of an agreement is the consent of the parties, of oonwt. 
There must be the meeting of two minds in one and the 
same intention. But in order that their consent may 
make an agreement of which the law can take notice, 
other conditions must be fulfilled. The agreement must 
be, in our old English phrase, an act in the law : that is, 
it must be on the face of the matter capable of having 
l^al effects. It must be concerned with duties and rights 
which, can be dealt with by a court of justice. And it 
must be the intention of the parties that the matter in 
hand shall, if necessary, be so dealt with, or at least they 
must not have the contrary intention. An appointment 
between two friends to go out for a walk or to read a book 
together is not an agreement in the legal sense : for it is 
not meant to produce, nor does it produce, any new legal 
duty or right, or any change in existing ones {b). Again, 
there must not only be an act in the law, but an act 

(6) Nothing bat the absence of in- tfttion and gone elwwhere fi. ahoiild 

tention seems to prevent % contract have a right of action f Only beoanse 

from azlaing in many oases of this no legal bond was intended by the 

kind. A. asks B. to dinner and parties. It might possibly be said 

B. accepts. Here is proposal and that these are really oases of con* 

acceptance of something to be done tract, and that only social nsage and 

by K at A.'b request, namely, com- the trifling amount of peonnittry 

ing to A.'s honse at the appointed Interest involved keep them oot of 

time, and the tronble and expense conrts of jostioe. Bnt I think Sa- 

of doing this are ample considera- vigny's view, which is here adopted, 

tion for A.'s promise to provide a Is the better one. There Is not a 

dinner. Why is A. not legiJly bound contract which it would be ridicolons 

to have meat and drink leady for B., to enforce, bat the original proposal 

so that if A. had forgotten his Invl- is not the proposal of a contract. 

B 2 



AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

which determines duties and rights of the parties. A 
consent or declaration of several persons is not an agree- 
ment if it affects only other people's rights, or even if it 
affects rights or duties of the persons whose consent is 
expressed without creating any obligation between them. 
The verdict of a jury or the judgment of a full Court 
is a concurrent declaration of several persons affecting 
legal rights ; but it is not an agreement, since the rights 
affected are not those of the judges or jurymen. If a 
fund is held by the trustees of a will to be paid over 
to the testator's daughter on her marriage vdth their con- 
sent, and they give their consent to her marrying J. S., 
this declaration of consent affects the duties of the trustees 
themselves, for it is one of the elements determining their 
duty to pay over the fund. Still it is not an agreement, 
for it concerns no duty to be performed by any one of the 
trustees towards any other of them. There is a common 
Obliga- duty to the beneficiary, but no mutual obligation. By 
obligation we mean the relation that exists between two 
persons of whom one has a private and peculiar right 
(that is, not a merely public or official right, or a right 
incident to ownership or a permanent family relation) to 
control the other's actions by calling upon him to do or 
forbear some particular thing (c). An agreement might 
be defined, indeed, as purporting to create an obligation. 
But for the purposes of English law we prefer to say 
(what is in effect the same) that an agreement contemplates 
something to be done or forborne by one or more of the 
parties for the use of the others or other. The word use 
is familiar in English law-books from early times in such 
a connexion as this ; and I think it mostly if not always 
imports the creation of a personal claim, Forderung as the 
German writers call it, on the part of him for whose use a 
thing is said to be done. 
It is proper to add that the common intention of the 

[c) Savlgny Syst. L 838—9 ; OW. i. 4, wg. 



tiOD. 



EXPRRSSIOK OF CONSENT. 

parties to aa agreement is a Cnct^ or inference of ttict^^^noici 
which, like any other fact, has to be proved according to """"* 
the general rules of evidence. When it is said, therefore, 
that the true intent of the parties must govern the dedsion 
of all matters of contract, this moans such an intent as a 
court of justice can take notice of If A., being a capable 
person, so bears himself towards B. that a reasonable man 
in B.'8 place would naturally understand A. to make a 
promise, and B. does take A.'s words or conduct as a 
promise, no further question can be made about what 
was passing in A.'s mind. "Mental acts or acts of the 
will," it has been well said, " are not the materials out of 
which promises are made" (d). Under such circumstances, as 
well as in certiun other more special cases, the law does not 
allow a party to show that his intention was not in truth 
such as he made op suffered it to appear. But in the 
comm.on and regular course of things the consent to which 
the law gives effect is real as well as apparent 

2. Ways of declaring consent, — Two distinct modes of F^ropoMl 
the formation of an agreement are here specified. It is [ 
possible, however, to analyse and define agreement as 
constituted in every case by the acceptance of a proposal. 
In fact this is done in the Indian Contract Act And it is 
appropriate to most of the contracts which occur in daily 
life, buying and selling, letting and hiring, in short all 
transactions which involve striking a bargain. One party 
proposes his terms ; the other accepts, rejects, or meets 
them with a counter-proposal : and thus they go on till 
there is a final refusal and breaking off, or till one of them 
names terms which the other can accept as they stand. 
The analysis is presented in a striking form by the solemn 
question and answer of the Roman Stipulation, where the 
one party asked (specifying fuUy the matter to be con- 
tracted for) : That you will do so and so, do you covenant ? 
and the other answered with the same operative word : I 

{d) Laagdell Sammsry, { ISO. 



6 AGRKEMENT, PROPOSAL, AND ACCEPTANCE. 

covenant (e). Yet the importance of proposal and accept- 
ance as elements of contract has been much more distinctly 
brought out in English jurisprudence than by writers on 
the modern civil law (/) : and, one may add, on the whole 
more rationally treated. 
Ib the Does this analysis, however, properly apply to a case in 

MiaiyRiB ^hich the consent of the parties is declared in a set form, 
tMj »p- as where they both execute a deed or sign a written agree- 
phcable? jj^^j^^j j|j jjjj^y \yQ ^[^ fj^^^^^ although there is no proposal 

or acceptance in the final transaction, the terms of the 
document must have been settled by a process reducible 
to the acceptance of a proposal. 

But then the formal instrument has a force apart from 
and beyond that of the negotiation which fixed its terms. 
And it may well be, and sometimes is the case, that the 
parties intend not to be legally bound to anything until 
their consent is formally declared. In such a case it 
cannot be said that the proposal and acceptance constitute 
an agreement, at all events not the true and final agree- 
ment. Take the common case of a lease. There is gene- 
rally an enforceable agreement, constituted by letters or 
memorandum, before the lease is executed. But the lease 
itself is (besides its effect as a transfer of property) a new 
contract or series of contracts. In this who is the proposer 
and who the acceptor ? Are we to say that the lessor is 
the proposer because in the common course he executes the 
lease before the lessee executes the counterpart ? Or are 
we to take the covenants severally, and say that in each 
one the party with whom it is made is the proposer, and 
the party bound is the acceptor? What, again, if two 

(e) Ko doabt the f ormala Spmidesf (/) Increased attention hM how- 
Bpondeo, originally the only binding ever been paid to this topic in Ger- 
one, was in early times supposed to many. See Yangerow, Pand. § 608, 
have a kind of magical effect Bnt or Windsoheid, Lehrbneh des Pan- 
it was necessary that the stipulator dektenreohts, § 806. The technical 
should hear the promisor's answer. terms are Antfug for our offer or 
Op. PalgraTC, Commonwealth of proposal, ilnTioAme for acceptance. 
England, 2, exxx^ii. exit. 



PROMISE. 7 

parties are discassiiig the tenns of a contract and cannot 
agree, and a third indifferent person soggests terms which 
they both accept? Shall we say that he who accepts them 
first thereby proposes them to the other? It is possible 
to say this, but not without a certain strain of thought 
and languaga And what if they accept at the same 
moment ? The truth is, as I venture to think, that the 
exclusive pursuit of the analytical method in dealing with 
legal conceptions always leads into some strait of this kind, 
and if the pursuit be obstinate, lands us in sheer fictions. 
In this case it seems at least harmless to let the formal or 
declaratory process of establishing a contract stand on its 
own footing side by side with the discursive or bargain- 
striking process. Even apart firom the difficulty, to which 
we shall immediately come, that there may be a binding 
promise without any acceptance at all, I do not think the 
one is fairly reducible to the other. 

8. Definition of Promise, — ^The definition of the Indian Pmoum : 
Contract Act is that '' a proposal when accepted becomes a ^htad 
promise " (g). This again is apt and sufficient for the every- IJL|^?^ 
day or bargaining type of contract But there are cases fore m. 
which it seems not to cover. Not only a promise, in the 2?Bo3wi 
ordinary sense of the word, may be made in writing before l*«^* 
there is any acceptance of it by the person to whom it is 
made, but if made by deed it is at once binding and 
irrevocable. Certainly this doctrine is of an archaic and 
technical kind, resting as it does more on the formal 
character of a deed than on any principle of general appli- 
cation ; and possibly, or more than possibly, its expediency 
is doubtful. But it is a settled part of the law of Eng^ 
land (A). If the analytical view of the Indian Contract 

(g) The terms propotal and aeeepi- nymoas tenii% afer being, if any- 

anee are alio defined bj this Aot, but thing, the more oommon. 
fornatoral-boniBpedkenof Engliah (A) Xetun r. Wiekham (1886) 

they teem herdly to need more L. R. 2 H. L^ 296, 828, and anthori. 

dcfiailion than Is implied in the ties there dted : see at pp. 800, 

ndee which have to be snbeeqnently 809. For the reasons on the other 

given. In English aathocities pro- side, see the opinien of WUles J. 

poio^ and qfer are used i% lyno- at pp. 816, 816. 



8 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

Act is to be applied to the existing state of English juris- 
prudence, it can be done only by treating this class of 
cases as anomalous. It will not do to say that the contract 
is complete when the other party knows of the promise and 
assents ; for if that were so, it could in the meantime be 
revoked. And if we say that acceptance is presumed in 
the case of an offer which is unconditional and wholly for 
the benefit of the party to whom it is made, we are at 
once in the region of fictions. It might serve a little 
better to say that, by an exceptional effect of the form of 
the transaction, the proposal is in these cases irrevocable. 
But this is only another way of saying that the regular 
analysis does not hold good. 
Bestrio- 4. Definition of Conirdct — The term contract is here 
w^nL confined to agreements enforceable by law. This restric- 
to enfoioe- tion, suggested perhaps by the Roman distinction between 
mentoT^ coni;ractv^ and pactum, is believed to have been first intro- 
duced in English by the Indian Contract Act. It seems 
a manifest improvement, and free from the usual draw- 
backs of innovations in terminology, as it makes the legal 
meaning of the words more precise without any violent 
interference with their accustomed use. 
Void 6. Void Agreements. — The distinction between void 

nSttt ; dis- ^^^ voidable transactions is a fundamental one, though it 
iinctioD of is often obscured by carelessness of language. An agree- 
voidMe. ment or other act which is void has from the beginning no 
legal effect at all, save in so far as any party to it incurs 
penal consequences, as may happen where a special pro- 
hibitive law both makes the act void and imposes a 
penalty. Otherwise no person's rights, whether he be a 
party or a stranger, are affected. A voidable act, on the 
contrary, takes its full and proper legal effect unless and 
until it is disputed and set aside by some person entitled 
so to do. The definitions of the Indian Contract Act on 
this head are simpler in form than those given above: 
but certain peculiarities of English law prevent us from 
adopting the whole of them as they stand. It is not 



VOIDABLE CONTRACTS. 9 

correct as an uniyersal proposition in England that ''an 
agreement not enforceable by law is said to be void," for 
we have agreements that cannot be sued upon, and yet are 
recognized by law for other purposes and have legal effect 
in other ways (i). 

6. VoidcMe Contracts. — The definition here given is ▼««■«• 
from the Indian Contract Act The idea is not an easy 
one to express in terms free from objection. Perhaps it 
would be better to say that a voidable contract is an agree- 
ment such that ODe of the parties is entitled at his option 
to treat it as never having been binding on him. The 
Anglo-Indian definition certainly covers rather more than 
the ordinary use of the terms. Cases occur in English law 
where, by the effect of peculiar enactments, there is a 
contract enforceable by one party alone, and yet we should 
not naturally call it a voidable contract. An example is 
an agreement required by the Statute of Frauds to be in 
writing, which has been signed by one party and not by 
the other. Here the party who has signed is bound and 
the other is free. " Voidable contract " seems not exactly 
the appropriate name for such a state of things. And it 
may even be said that a contract which has been com- 
pletely performed on one side is literally '' enforceable by 
law at the option of one of the parties " only. But the 
definition as it stands cannot practically mislead {k). 

Consideration is also defined in the interpretation clause Conriden- 
of the Indian Act Perhaps it is to be regarded rather as 
a condition generally (though not always) imposed by a 
positive rule of English law as needfril to the formation of 
a binding contract than as an elementary constituent of an 
agreement In fact the English system of law, as distin- 
guished from those of the Continent and even of Scotland, 

(i) See Ch. XIIL below. Mmethiiig hanh !a aaying that it 

(k) There is a similMr but alighter beoomes Toid, a tenn rag^etlre of 

difficulty about the use of tbe word ineffioacrrfttiMr than of completed 

void, Aoontract when it ii fully effect Heooe in the fifth deflnitloa 

perfonned ceaeee to hare legal I bare lotroduoed the word dit- 

effect ; Hk diidkarfftd, but there is chvrged at an altemati?*. 



10 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

is the only one in which the notion is fully developed. 
Hereafter a fuller discussion will be given : for the present 
it may serve to describe consideration as an act or forbear- 
ance, or the promise thereof, which is offered by one party 
to an agreement, and accepted by the other, as an induce- 
ment to that other's act or promise. 
Special Notwithstanding the difficulties that arise in making 

goTwiiinff pr<>Posal and acceptance necessary parts of the general 
proposal conception of Contract, there is no doubt that in practice 
oeptaQoe. ^^^7 ^^ ^^^ normal and most important elements. When 
agreement has reached the stage of being embodied in 
a form of words adopted by both parties, the contents of 
the document and the consent of the parties are generally 
simple and easily proved facts : and the only remaining 
question (assuming the other requirements of a valid con- 
tract to be satisfied) is what the words mean. The accept- 
ance of a proposal might seem at first sight an equally 
simple fact. But the complexity of human affairs, the 
looseness of common speech, the mutability of circum- 
stances and of men's intentions, and the exchange of com- 
munications between parties at a distance, raise questions 
which have to be provided for in detail. 

We may have to consider separately whether the offer 
of a contract was made ; what the terms of that offer 
were ; whether there was any acceptance of it ; and 
whether the acceptor was a person to whom the offer was 
made, 

ConmiuniccUiona m general. 

Proposal The proposal or acceptance of an agreement may be 
oeptance communicated by words or by conduct, or partly by the 
"toSr** ^^® *^^ partly by the other. In so far as a proposal or 

acceptance is conveyed by words, it is said to be express. 

In so far as it is conveyed by conduct, it is said to be tacit 
It would be as difficult as it is needless to adduce 

distinct authority for this statement. Cases are of constant 

occurrence, and naturally in small matters rather than in 



TACIT PB0MI8ES. 11 

great ones, where the propoaal, or the aoceptanoe, or both, 
are signified not by words but by act& For example, the 
passenger who steps into a ferry-boat thereby requests the 
ferryman to take him over for the usual fieure, and the 
ferryman accepts this proposal by putting off 

A promise made in this way is commonly said to be TM^ac- 
implied : but this tends to obscure the distinction of the ^^ tnm 
real though tacit promise in these cases from the fictitious 
promise " implied by law/' as we shaU immediately see, in 
certain cases where there is no real contract at all, but an 
obligation quasi ex contractu, and in others where definite 
duties are annexed by rules of law to special kinds of 
contracts or to relations arising out of them. Sometimes, 
no doubt, it is difficult to draw the line. " Where a relation 
exists between two parties which involves the performance 
of certain duties by one of them, and the payment of 
reward to him by the other, the law wiU imply [fictitious 
contract] or the jury may infer [true contract] a promise 
by each party to do what is to be done by him " {I). It 
was held in the case cited that an innkeeper promises in 
this sense to keep his guests' goods safely. The case of a 
carrier is analogous. So where A. does at B.'s request 
something not apparently illegal or wrongful, but which in 
fact exposes A. to an action at the suit of a third person, 
it seems to be not a proposition of law, but an inference of 
fact which a jury may reasonably find, that B. must be 
taken to have promised to indemnify A. (m). 

If A. with B.'s knowledge, but without any express 
request, does work for B. such as people as a rule expect 
to be paid for, if B. accepts the work or its result, and if 
there are no special circumstances to show that A. meant 
to do the work for nothing or that B. honestly believed 
that such was his intention, there is no difficulty in in- 
ferring a promise by B. to pay what A.'s labour is worth. 

(/) Per Cor. Morgan v. Jiavey (m) Dugdale t. hovering (1875) 

(1861) 6 H. ft N. 205, 80 L. J. Ex. L. R. 10 G. P. 190 ; 44 L. J. a P. 
181. 197. 



12 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

And this is a pure inference of fact, the question being 
whether B/s conduct has been such that a reasonable man 
in A.'s position would understand from it that B. meant 
to treat the work as if done to his express order. The 
doing of the work with B.'s knowledge is the proposal ot 
a contract, and B/s conduct is the acceptance. The like 
inference cannot be made if the work is done without B.'8 
knowledge. For hj the hypothesis the doing of the work 
is not a proposal, not being communicated at the time : 
B. has no opportunity of approving or countermanding it, 
and cannot be bound to pay for it when he becomes aware 
of the facts, although he may have derived some benefit 
irom the work ; it may be impossible to restore or reject 
that benefit without giving up his own property (n). Nor 
is the case altered if A. comes to B. and tells him that 
the work is done and requests to be paid for it. This is 
indeed a proposal, but a new and distinct one : and as it 
imports no new consideration, B.*s acceptance of it would 
in the view of English law be a merely gratuitous promise, 
and as such would make no contract. If A. of his own 
motion sends goods to B. on approval, this is an offer 
which B. accepts by dealing with the goods as owner. If 
he does not choose to take them, he is not bound to return 
them; though he may be bound, on the principle to be 
next mentioned, to take a certain amount of care of them 
till A. reclaims them. 
Duties But it does not follow that because there is no true 

^JJJ^ contract, there may not be cases falling within this general 
in Eogiiah description in which it is just and expedient that an 
^' obligation analogous to contract should be imposed upon 

the person receiving the benefit. In fact there are such 
cases : and as the forms of our common law did not recog- 
nize obligations quasi ex contractu in any distinct manner, 
these cases were dealt with by the fiction of an implied 
previous request, which often had to be supplemented (as 

(fi) Cp. dicta of Pollock C.B. 25 L. J. Ex. at p. 832. 



AGTINO UPON BEQUE9T. 18 

in the action for money had and received) by an eqnaUy 
fictitioas promise. The promise, actual or fictitious, was 
then supposed to relate back to the fictitious request, so 
that the transaction which was the real foundation of the 
matter was treated as forming the consideration in a 
fictitious contract of the regular type. Here, as in many 
other instances, the law was content to rest in a com* 
promise between the forms of pleading and the convenience 
of mankind. These fictions have long ceased to appear 
on the face oi our pleadings, but they have become so 
established in legal language that it is still necessary to 
understand them (o). The Indian Act provides for; 
matters of this kind more simply in form and more com- ^^f^^ 
prefaensively in substance than our present law, by a with tbem 
separate chapter, entitled " Of certain Relations resem* j^^ 
bling t^ose created by Contract " (ss. 68-^72, cp. a 73). 

A corollary from the general principle of tacit accept- Perfonn- 



ance, which in some classes of cases is of considerable ^^^aitloiM 
importance, is thus expressed by the Indian Contract Act j^g^ ^' 
(8. 8) :— oaptaace. 

" Performance of the conditions of a proposal, or the 
acceptance of any consideration for a reciprocal promise 
which may be ofifered with a proposal, is an acceptance of 
the proposaL" 

This rule contains the true legal theory of offers ofOffenby 
reward made by public advertisement for the procuring of , ^"*^' 
information, the restoration of lost property^ and the lika 
On such offers actions have many times been brought with 
success by persons who had done the things required as the 
condition of obtaining the reward. 

It appears to have been once held that even after per- 
formance an offer thus made did not become a binding 
promise, because " it was not averred nor declared to whom 

(o)For deUib Me notes to L. 0^ and Otbcme t. Roffm, 1 
LamfUigh T. BrtMwaUe in 1 Sm. Wme. SmomL 857. 



14 



AGREEMENT, PROPOSAL, AND ACCEPTANCE. 



DiflSonl- 
ties in 
working 
oat the 
principle. 



Dietino- 
tion be- 
tween 
offer and 
invitation 
of offers. 



the promise was made " (p). But the established modem 
doctrine is that there is a contract with any person who 
performs the condition mentioned in the advertisement (q). 
That is, the advertisement is a proposal which is accepted 
by performance of the conditions. It is an offer to become 
liable to any person who happens to fulfil the contract of 
which it is the offer (r). Until some person has done this, 
it is a proposal and no more. It ripens into a promise 
only when its conditions are fully satisfied. As Sir W. 
Anson has well put it, '' an offer need not be made to an 
ascertained person, but no contract can arise until it has 
been accepted by an ascertained person " («). We have 
no special term of art for a proposal thus made by way of 
general request or invitation to all men to whose know- 
ledge it comes. The Germans call it Avslohung. 

In the same manner each bidding at a sale by auction 
is a proposal ; and when a particular bid is accepted by 
the fall of the hammer (but not before), there is a com- 
plete contract with the particular bidder to whom the lot is 
knocked down (f). 

The principle is sufficiently clear, but its application is 
not wholly free firom difficulties. These are partly re- 
ducible to questions of fact or of interpretation, but partly 
arise from decisions which appear to give some countenance 
to a fallacious theory. 

First, we have to consider in particular cases whether 
some act or announcement of one of the parties is really 
the proposal of a contract^ or only an invitation to other 
persons to make proposals for his consideration (u). This 
depends on the intention of the parties as collected from 



(l>) Noy 11, 1 Rolle Ab. 6 M. 
pi. 1. 

{q) 1Fiaiam«Y.Cbn»m2tfie(18SS) 
4 B. A; Ad. 621. 

(r)Per Willee J. 8TpeM!er ▼. 
Harding (1870) L. R. 6 C. P. 668. 

(f) Principles of the English 
Law of Contract, p. 88, 5th ed 

(0 Payne v. Cave (1789) 8 T. R. 



148. Prof. Langdell (Summary, § 19) 
thinks it wonli have been better to 
hold that every bid oonstitntes "an 
actual sale, subject to the con- 
dition that no one else shall bid 
higher." 

(tt) In German this is Avfforde- 
rung zu AntrUgen as opposed to 
Antrag. Vangerow, Pand. § 608. 



PBOMI8E8 BT ADYEBTISEMKirr. 15 

their language and the nature of the tranaaetion, and 
the question is one either of pure fact or of construciioD. 
Evidently it may be an important one, but due weight 
has not always been given to it 

The proposal of a definite service to be done for reward, 
which is in fact a request (in the sense of the ordinary 
English law of contract) for that particular service, though 
not addressed to any one individually, is quite different in 
its nature from a declaration to all whom it may concern 
that one is willing to do business with them in a particular 
manner. The peison who publishes such an invitation 
does indeed contemplate that people who choose to act on 
it will do whatever is necessary to put themselves in a 
position to avail themselves of it. But acts so done are 
merely incidental to the real object ; they are not elements 
of a contract but preliminaries. It does not seem reason- 
able to construe such preliminaries into the consideration 
for a contract which the parties had no intention of making. 
Yet there are some modem decisions which seem to go 
very near such a result, and to let in a certain danger of 
treating mere declarations of intention as binding con- 
tracts (v). We shall now examine these cases. 

In Denton v. G. N. Railway Co. {w) the facts were Eumfauk- 
shortly these : The plaintiff had come from London to ^^^f 
Peterborough, had done his business there, and wanted to T>ciitMir. 
go on to Hull the same night. He had made his arrange- 0,',^ ' 
ments on the £aith of the company's current time-tables, 
and presented himself in due time at the Peterborough 
station, applied for a ticket to Hull by a train advertised 
in those tables as running to Hull at 7.20 p.m., and 
offered to pay the proper fare. The defendant company's 
clerk refused to issue such a ticket, for the reason that the 
7.20 train no longer went to Hull. The fftct was that 
beyond Milford Junction the line to Hull belonged to the 

(v) GomiMn tin judgments in («) (18M) 5 B. ft B. SCO, and 
ffarrU T. Nidxnon (1873X L. B. better In 25 L. J. Q. B. 129, when 
8 Q. B. 286 ; 42 L. J. Q. B. 171. the cMe itAted u giiren at Imigtb. 



16 AGBEEMENT, PROPOSAL, AND ACCEPTANCE. 

North Eastern Railway Company, who formerly ran attain 
corresponding with the Great Northern train, for which the 
Great Northern Railway Company issued through tickets 
hy arrangement between the two companies. This cor- 
responding train had now been taken off by the N. E. B. 
Co., but the G. N. R time-table had not been altered. 
The plaintiff was unable to go further than Milford Junc- 
tion that night, and so missed an appointment at Hull and 
sustained damage. The cause was removed from a County 
Court into the Queen's Bench, and the question was 
whether on the facts as stated in a case for the opinion of 
the Court the plaintiff could recover (x). 

It was held by Lord Campbell C.J. and Wightman J. 
that when any one offered to take a ticket to any of the 
places to which the train was advertised to carry passengers 
the company contracted with him to receive him as a pas- 
senger to that place according to the advertisement. Lord 
Campbell treated the statement in the time-table as a 
conditional promise which on the condition being performed 
became absolute. This proposition, reduced to exact lan- 
guage, amounts to saying that the time-table is a proposal, 
or part of a proposal, addressed to all intending passen- 
gers and suflSiciently accepted by tender of the fare at the 
station in time for the advertised train. Crompton J. (y) 
did not accept this view, nor was it necessary to the actual 
decision : for the Court had only to say whether on the 
given facts the plaintiff could succeed in any form of 
action, and they were unanimously of opinion that there 
was a good cau3e of action in tort for a false representa- 
tion ; an opinion perhaps questionable, but not in this 
place. 
Warlow V, In Warlow v. Hai^rison (z) a sale by auction was an- 

HamBoa. 

{x) A» to themeMnre of damage*, {y) The fuller report of bia judg- 

wMoh here was not in diapate, lee ment ia that in 5 K ft B. 

Hamlin ▼. G. N. A Co. (1856) 1 H. (2) (1868-9) 1 E. & E. 296, 28 L. 

ft N. 408, 26 L. J. Ex. 20 (where a J. Q. B. 18, in Ex. Ch. 1 £. ft £. 

ticket having been taken there waa 809, 29 L. J. Q. B. 14. 
an unquestionable contract). 



PROMISES BY ADVEBTlSElfENT. ]7 

nounced as without reserve, the name of the owner not 
being disclosed. The lot was put up, but in fact bought 
in by the owner. The plaintiff, who was the highest real 
bidder, sued the auctioneer as on a contract to complete 
the sale as the owner's agent The Court of Queen's Bench 
held that this was wrong ; the Court of Exchequer Cham- 
ber affirmed the judgment on the pleadings as they stood, 
but thought the facts did show another cause of action. 
Watson and Martin BB. and Byles J. considered that the 
auctioneer contracted with the highest bona fide bidder 
that the sale should be without reserve. They said they 
could not distinguish the case from that of a reward 
offered by advertisement, or of a statement in a time-table, 
thus holding in effect (contrary to the general rule as to 
sales by auction) that where the sale is without reserve the 
contract is completed not by the acceptance of a bidding, 
but by the bidding itself, subject to the condition that no 
higher bona fide bidder appears. In other words, every 
bid is in such a case not a mere proposal but a conditional 
acceptance. Willes J. and Bramwell B. preferred to say 
that the auctioneer by his announcement warranted that he 
had authority to sell without reserve, and might be sued for 
a breach of such warranty. The result was that leave was 
given to the plaintiff to amend and proceed to a new trial, 
which however was not done (a). The opinions expressed Doctrine 
by the judges, therefore, are not equivalent to the actual ^^uj 
judgment of a Court of Error, and have been in fact^***** 
regarded with some doubt in a later case where the Court extanded. 
of Queen's Bench decided that at all events an auctioneer 
whose principal is disclosed by the conditions of sale does 
not contract personally that the sale shall be without 
reserve (6). Still more recently the same Court has held 
that when an auctioneer in good faith advertises a sale of 
certain goods, he does not by that advertisement alone 

(a) The fMurtiee agreed to m $Ul {b) Mainpru^ v. We$lU^ (1865) 

prooemu ; we note in the L. J. re- 6 B. ft 8. 420, 34 L. J. Q. B. 229. 
port. 

P. C 



18 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

enter into any contract or warranty with those who attend 
the sale that the goods shall he actually sold (c). In an 
analogous case of Spencer v. Ha/rdimg {d) is was decided 
that a simple offer of stock in trade for sale hy tender does 
not amount to a contract to sell to the person who makes 
the highest tender. 
Diffionl- ^^^ doctrine of these cases is capable, as we have seen, 
ties of of beingf expressed in a manner conformable to the normal 

Denton v. i . / i -i* • • ^ i <• n a i 

G. N. R. analysis of contract ; but if it is to be fully accepted, 
mriowr *^li6re may be some diflSculty in settling its extent. If a man 
Harrison advertises that he has goods to sell at a certain price, does 
o?pro^ia ^® contract with any one who comes and offers to buy 
Midao- those goods that until further nofice communicated to 
cep noe. ^^ intending buyer he will sell them at the adveitised 
price ? («). Again, does the manager of a theatre contract 
with every one who comes to the theatre and is ready to 
pay for a place that the piece announced shall be per- 
formed ? or do directors or committee-men who summon a 
meeting contract with all who come that the meeting shall 
be held? In like manner it might be argued that a 
common carrier is liable in contract as well as in tort for 
refusing to carry goods. Indeed we might thus arrive at 
an extended notion of contract which would cover all the 
cases in which courts of equity have interfered, on grounds 
independent of contract, as was supposed, to compel per- 
sons to make good their representations (/), and would 
indeed go beyond them : for a representation not only of 
fact, but of mere intention, might be treated as a proposal, 
and as soon as anything was done on the faith of it there 
would be an acceptance and a complete contract. 
Difficulty Another matter for remark is the effect of notice of 

arising 

(c) Harris Y, Niekeraon (1878) L. them CMee we have the uaaDimoaB 

B. 8 Q. B. 286 ; 42 L. J. Q. B. dedsion of a strong Court 

171. (e) See per Crompton J. in Dai- 

id) (1870) L. R 6 O. P. 661 ; 89 ton v. G. N. R, Co. supra. 

L J. C. P. 332. It may be wotth (/) See Dav. Conv. 3, pt 1, «46 ; 

ifrhile to remark that in each of per Lord Selbome, L. R. 6 H: L. at 

p. 860. 



PROMISES BY ADVERTISEMENT. 19 

revocation. Suppose the traveller had seen and read a j^ '•J^ 
new and correct edition of the time-table in the booking- ptviMMaL 
office immediately before he offered to take his ticket. 
This would clearly have been a revocation of the proposal 
of the company held out in the incorrect time-table, and 
on the present hypothesis no contract could arise. Simi- 
larly if on putting up a particular lot the auctioneer 
expressly retracted as to that lot the statement of the sale 
being without reserve, there could be no such contract 
with the highest bona fide bidder as supposed in Warlow 
V. Harrison (g), yet the traveller's or bidder's grievance 
would be the same. 

There is also difficulty in determining what are the Difficulty 
contents and consideration of the contract supposed to be y^ ^p? 
made. In the case of the time-table, for example, it is 1 
not sufficient to say that the statements of the table are a 
term in the company's ordinary contract to carry the pas- 
senger. They may well be so afler he has taken his 
ticket But here we have a contract said to be concluded 
by the mere demand of a ticket and tender of the fare, 
which, therefore, cannot be the ordinary contract to carry. 
So in the case of the auction we have a contract alleged to 
be complete not on the acceptance but on the making of a 
bid. The anomalous character of these contracts may 
further be illustrated by considering whether it would be 
possible to maintain a remedy ex contractu in the case of a 
merely capricious refusal to issue tickets or hold the sale, 
as the case might be. On the whole it seems that some 
of the opinions and dicta in this class of cases have 
overstepped the true principles of contract However, 
authorities show that these refinements are not likely to 
be extended : and the distinction between the proposal of a 

iff) Tbe Continental doctrine that (1870) L. R. 5 Ex. at pi 337, and p. 

the revocation muat be bo comnranl- 25, below. As to the somewhat 

cated aa to amount to reasonable analogous suggestion made in t^at 

notice is of course inadmiMiHe for case, see s. c. in Kz. Cb. L. B. 7 Kx. 

our law : see note to Frott v. Knujht at p. 117. 

c 2 



20 AGREEMKNT, PROPOSAL, AND ACCEPTANCB. 

contract and the mere preliminaries is now clearly brought 
F*"°iSh^ *• out by a decision of the Court of Appeal. A "proposal " 
in the usual form was made to a life assurance society ; the 
actuary wrote a letter stating that the proposal had been 
accepted at a certain premium, but adding this note : ** No 
assurance can take place until the first premium is paid/* 
Afterwards, and before the time limited for that payment, 
an accident happened to the assured which affected his 
health, and the society, being informed of this, refused the 
premium when tendered. It was held that they were 
entitled to do so. The letter of acceptance did not con- 
clude a contract, first, because the amount of premium was 
then first specified, and the assured had therefore not con- 
sented to that material term of the agreement; next, 
because of the express declaration of contrary intention (A). 
Moflt there Another difficulty (though for English lawyers hardly a 
nooept- serious one) is raised by the suggestion that in these cases 
»"«^ the first offer or announcement is not a mere proposal, 
2^^°' but constitutes at once a kind of floating contract with the 
obligation, unascertained person, if any, who shall fulfil the prescribed 
condition. A vvncvZuTn iuria with one end loose is on 
principle an inadmissible conception, to say nothing of the 
inconvenience which would come from treating the offer 
as an irrevocable promise. Savigny quite justly held that 
on this theory the right of action could not be supported ; 
but he strangely missed the true explanation (t). To a 
certain extent, however, this notion of a floating obligation 
is countenanced by the language of the judges in the 
cases above discussed, and also in the much earlier case 
of Williams v. Carwardine Qc). There a reward had 
been offered by the defendant for information which should 
lead to the discovery of a murder. A statement which 
had that effect was made by the plaintiff, but not to the 

{h) Canning y. Farquhar (1886) of pages he does give the true 

16 Q. 6. Div. 727, 65 L. J. Q. B. aoaljBii for the not dilwimilar case 

225. of a sale by auction. 

(i) Obi. 2, 90. It is the more {k) (1853) 4 B. & Ad. 621 ; s.c. 

strange inasmnch as within a ooople at N. P. 5 G. & P. 566. 



PROMISES BY ADYEBTISBMENT. 21 

defendant, nor with a view to obtaining the reward, nor, 
for aught that appears, with any knowledge that a reward 
had been offered. The Court held, nevertheless, that the 
plaintiff had a good cause of action, because ** there was a 
contract with any person who performed the condition 
mentioned in the advertisement," and the motive with 
which the information was given was immaterial : but on 
this it must be observed that the question is not of motive 
but of intention. The decision seems to set up a contract 
without any cmimus contrahendi, and without any real 
consideration. Such a doctrine cannot now be received (I), 
though possibly the decision may have been right on the 
facts. There cannot be an acceptance constituting a con- 
tract without any communication of the proposal to the 
acceptor, o r of the acceptance to the proposer. The modem 
cases not already cited have turned only on the question 
whether the party claiming the reward had in fact per- 
formed the required condition according to the terms of 
the advertisement (m). 

The Supreme Court of the United States has held ^^ 
that a general proposal made by public announcement oIe« bv 
may be effectually revoked by an announcement of equal •^^*™'*- 
publicity, such as an advertisement in the same news- 
paper, even as against a person who afterwards acts on 
the proposal not knowing that it has been revoked. For 
" he should have known," it ia said, " that it could be 
revoked in the manner in which it was made " (n). In 
other words, the proposal is treats as subject to a tacit 
condition that it may be revoked by an announcement 
made by the same meana This may be a convenient 
rule, and may perhaps be supported as a fair inference 
of £bu^ from the habits of the newspaper-reading part of 
mankind : yet it seems a rather strong piece of judicial 
l^islation. 

(0 Cf . Lanffd«ll, § 3, and A merican f onner editions of ihii work (p. 175, 

antborities otSlected in 28 Am. Law 2nd ed.). 
Beg. 2d. & 116. (fi) Shuiy v. fnited Statet (1876) 

{m) References were given in (92 U. S.) 2 Otto 73. 



22 



AGREEMENT, PROPOSAL, AND ACCEPTANCE. 



Other 
general 
proposals 
Dot being 
offers of 
reward. 
£x parte 
Ariatic 
Banking 
Corpora- 
tion. 



This case 
free from 



There are other examples of general proposals, not being 
offers of reward, which have been dealt with as capable of 
acceptance by any one to whose hands they might come. 

In Ex parte Asiatic BankiTig Corporation (o), the 
following letter of credit had been given by Agra and 
Masterman's Bank to Dickson, Tatham and Co. 

''No. 904. You are hereby antborized to draw upon this bank at 
six months' sight, to the extent of £15,000 sterling, and such drafts I 
undertake duly to honour on presentation. This credit will remain in 
force for twelve months from this date, and parties negotiating bills 
under it are requested to indorse particulars on the back hereof. Th^ 
bills must specify that they are drawn under credit No. 394, of the Slst 
of October, 1865." 

The Asiatic Banking Corporation held for value biUs 
drawn on the Agra and Masterman's Bank under this 
letter ; the Bank stopped payment before the bills were 
presented for acceptance, and Dickson, Tatham and Co. 
were indebted to the Bank in an amount exceeding what 
was due on the bills : but the Corporation claimed never- 
theless to prove in the winding-up for the amount, one of 
the grounds being " that the letter shown to the person ad- 
vancing money constituted, when money was advanced on 
the faith of it, a contract by the Bank to accept the bills." 
Cairns L.J. adopted this view, holding that the letter did 
amount to " a general invitation " to take bills drawn by 
Dickson, Tatham and Co. on the Agra and Masterman's 
Bank, on the assurance that the Agra and Masterman's 
Bank would accept such bills on presentation ; and that 
the acceptance of the offer in this letter by the Asiatic 
Banking Corporation constituted a binding legal contract 
against the Agra and Masterman's Bank (p). The diflB- 



(o) (1867) 2 Ch. 891, 86 L. J. Ch. 
222. Gp. Bhugwandau v. Nether- 
landi, <C-e. InKB, Co. (1888) 14 App. 
Ca. (J. 0. ) 88, decided on the ground 
that the '* open cover " was a pro- 
posal of inhur»nce addressed to any 
uue having insurable interest in the 
cargo. 

ip) In ScvU V. PVkhgfon (1862) 2 
B. & S. 11, 31 L. J. g. B. 81, on the 



other hand, an action was brought 
on a judgment of the Supreme 
Court of New York on a very dini- 
lar state of facts. The decision of 
the English Courts was that the law 
applicable to the case was the law 
of New York, and that the judg- 
ment having been given by a court 
of competent jurisdiction in a case 
to which tl e li>cal law was properly 



PBOMISSS BT OKKERAL OFFER. 28 

culties above diacuased do not seem to exist in this case. tiM difli* 
From an open letter of credit (containing too in thisDaSoov. 
instance an express request to persons negotiating bills ^^* ^ 
under it to indorse particulars) there may be inferred 
without any violence either to law or to common reason a 
proposal or request by the author of the letter to the 
mercantile public to advance money on the faith of the 
undertaking expressed in the letter. This undertaking 
must then be treated as addressed to any one who shall 
so advance money : the thing to be performed by way of 
consideration for the undertaking is definite and substan- 
tial, and is in fact the main object of the transaction. If 
any question arose as to a revocation of the proposal^ it 
would be decided by the rules which apply to the revoca- 
tion of proposals made by letter in general (9). 

Another instance of contracts made by general offer is 
in the documents called " advance notes/' by means of 
which sailors' wages used commonly to be paid. The form 
was a promise to pay so much to any one who should 
advance so much on the document to a named person (the 
sailor), and the person who made the advance could there- 
upon sue for the {uromised amount (r). 

The bearing of the Statute of Frauds on these contracts Steftote of 
made by advertisements or general offers has been dis- jl^'^ 
cussed incidentally in a case brought before the Judicial tnota hf 
Ck>mmittee of the Privy Council on appeal from thejj^jjj^" 
Supreme Court of New South Wales (s). It is settled <f«<^ in 
that the requuements of the statute m the cases where it «. -^jram. 
iq[>plie8 are generally not satisfied unless the written 

IfJIcaMa^ thflre wm do room to and is therefore no poaltiTeMithovltj. 

qneefeioiiiteconeotafleiinaiiKBglfah (9) See Ikowever 8kMqf y. UwUed 

ooort 80 Ikr ae any opinion was Stafaf, p. 21, abore. 

eipreend by the Oomt as to what (r) See irdr«9i« ▼. /oyneon (1858) 

shonld have been the decision on 5 C. B. N. & 218, 28 L. J. C. P. 188. 

the same acts in a caee goTsnied Theee ad^aDoe notes are now UlegaL 

by the law of Knriand, It wae Merchant Seamen (Payment of 

against tmj r%ht of action at law Wages and RaUng) Aot, 48 ft 44 

bemg aoqnired bj the bffl-holdera. Vict c. 16, s. 2. 

ThiB howew was by the way, and (i) WUUami v. Bymet (1863) 1 

to the defendants, Iftoo. P. G. C. N. S. 154. 



24 AG&EEMEKT, PROPOSAL, AND ACCEPTANCE. 

evidence of the contract shows who both the contracting 
parties are. But it was suggested in the Colonial Court 
that in the case of a proposal made by advertisement, 
where the nature of the contract (e.g. a guaranty) was such 
as to bring it within the statute, the advertisement itself 
might be a sufficient memorandum, the other party being 
indicated as far as the nature of the transaction would 
admit (<). The Judicial Committee, however, showed a 
strong inclination to think that this view is not tenable, 
and that in such a case the evidence required by the 
statute would not be complete without some further 
writing to show who in particular had accepted the pro- 
posal. It was observed that as a matter of fact the cases 
on advertisements had been of such a kind that the statute 
did not apply to them, and it was a mere circumstance 
that the advertisement was in writing (u). We are not 
aware of the point having arisen in any later case. The 
opinion here expressed by the Court is worth noticing for 
another reason. It is an authority in favour of the view 
which we have adopted as the only sound one, namely, that 
there is no anomalous contract, but a contract between 
ascertained persons, which is constituted by the acceptance 
of the proposal. 

Revocdtum. 
Revoca- A proposal may be revoked at any time before accept- 

propMal. ^^^® ^^^ °^* afterwards. 

For before acceptance there is no agreement, and there- 
fore the proposer cannot be bound to anything (x). So 
that even if he purports to give a definite time for accept- 
ance, he is free to withdraw his proposal before that time 
has elapsed. He is not bound to keep it open unless there 

(0 Per Stephen C. J. at pp. 1 67, 184. applioable to oontraots made in this 

(u) See at p. 198. The hmguage manner, 
of the headnote is misleading ; (x) The same rule applies to a 
there is no suggestion in the ju^- proposal to vary an existing agree- 
ment of any such proposition of law ment : OUkes v. Leonino (1858) 4 
as that the Statute of Frauds is not C. B. N. S. 485. 



REVOCATION. 25 

is a distinct contract to that effect, founded on a distinct 
consideration. If in the morning A. offers goods to B. Cooke r. 
for sale at a certain price, and gives B. till four o'clock in 
the afternoon to make up his mind, yet A. may sell the 
goods to C. at any time before four o'clock, so long as B. 
has not accepted his offer (y). But if B. were to say to 
A« : ''At present I do not know, but the refusal of your 
offer for a definite time is worth something to me ; I will 
give you so much to keep it open till four o'clock," and A. 
were to agree to this, then A. would be bound to keep his 
offer open, not by the offer itself, but by the subsequent 
independent contract. K A. on Wednesday hands to B. ^^irj^j^^ 
a memorandum offering to sell a house at a certain price, ' 
with a postscript stating that the offer is to be " left over" 
till nine o'clock on Friday morning, A. may nevertheless 
sell ike house to C. at any time before the offer is aooepted 
by B. If B., having heard of A.'s dealing with C, tenders 
a formal acceptance to A., this is inoperative (2). It is 
different in the modem civil law. There a promise to 
keep a proposal open for a definite time is treated as 
binding, as indeed there appears no reason why it should 
not be in a system to which the doctrine of consideration 
is foreign : nay, there is held in effect to be in every pro- 
posal an implied promise to keep it open for a reasonable 
time (a). In our own law the effect of naming a definite 
time in the proposal is simply negative and for the pro- 
poser's benefit ; that is, it operates as a warning that an 

{y)Admiit»dinCookew.Oxle^{l790) at p. 851, 49 L. J. Q. B. 701. Bat 

3T.R.653;aifd.lii£x.Ch.,ieeiioto; the aetioa wm for not deliTeriiig 

FSndi SeL Ca. 86. The deokioD goM goode, m on » oomplete bergain 

farther, and has been the nibieet of and sale ; and this waf insisted 

mnch critkkm. For the oonflioting upon in the argument 

TiewB see Benjamin on Sale, 66 (z) Dicieinwn ▼. DodtU (1876) 2 

(8rd ed.) and Langdell's Sommary, Ch. I>ir. 463 ; 45 L. J. Ch. 777. 

§ 18*2. I now agr<$e with Mr. Lang- The case suggests, but does not 

deli that it cannot be sappoiied in decide, another qoestiun, which mi 1 

any sense. It wonld have been be presently oonsidsmd. Contra 

right if the action had been on the Langdell, Sommaiy, p. 244 ; and 

promiiM to keep the offer open, as on principle perha^ rightly. 



I to be sopposed by Lush J. in (a) Vangerow, Pand. § 603 (3, 

Stevautm v. MaeUan (1880)5 Q. B. U. 253) ; pee L. R. 5 Ex. 337, n. 



26 AGREEBfENT, PROPOSAL, AND ACCEPTANCE. 

acceptance will not be received after the lapse of the time 
named, not as an undertaking that if given sooner it shall 
be. In fact, the proposal so limited comes to an end of 
itself at the end of that time, and there is nothing for the 
other party to accept. This leads us to the next rule, 
namely : — 

CondUiona of Proposal. 

Detenni- ^e propoBor may prescribe a certain time within which 
proposal the proposal is to be accepted, and the manner and form 
^JjgJ^^ in which it is to be accepted. If no time is prescribed, 
orroMOD- the acceptance must be communicated to him within a 
•time. fei^sQQ|^2e time. In neither case is the acceptor answer- 
able for any delay which is the consequence of the pro- 
poser's own de&uli. If no manner or form is prescribed, 
the acceptance may be communicated in any reasonable 
or usual manner or form. 

This is almost self-evident, standing alone ; we shall see 
the importance of not losing sight of it in dealing with 
certain difficulties to be presently considered. Note, how* 
ever, that though the proposer may prescribe a form or 
time of acceptamce^ he cannot prescribe a form or time of 
re/ttaoZ, so as to fix a contract on the other party if he does 
not refuse in some particular way or within some particular 
time (&). 

Among other conditions, the proposal may prescribe a 
particular jUaoe for acceptance, and if it does so, an accept- 
ance elsewhere will not do (c). The question in cases 
of this kind is whether the condition as to time, place,, or 
manner of acceptance was in fact part of the terms of the 
proposal 

There is direct authority for the statement that the 
proposal must at all events be taken as limited to a reason^ 

(&) FdUwuu T. Bwdity (1802) 11 {e) Sliaaon ▼. HenAaw (1819) 

a B. N. S. 869, 876, 81 L. J. O. P. (Sup. Ct. U. S.), 4 Wheat 226, 

"M. Lanffdell, Sel. CSiw on Cont 48, 

rSnch Sel. Ca. 40. 



REVOCATION. 27 

able time (d) ; nor has it ever been openly disputed. The 
rule is obviously required by convenience and justice. It 
may be that the proposer has no means of making a re- 
vocation known Xe. g.f if the other party changes his address 
without notice to him, or goes on a long journey), and he 
cannot be expected to wait for an unlimited time. There 
is also direct authority to show that an acceptance not 
communicated to the proposer or his agent does not make 
a contract (e) ; but this is subject to an important ezcep* 
tion, as we shall presently see* where the parties are in 
correspondence through the post-oflSce. 

Lvmiis of Revocation. 

A proposal is revoked by communication to the other R«vo(«- 
party of the proposer's intention to revoke it, and thepmpoHa 
revocation can take effect only when that communication "^^{ 
is made before acceptance. oAtad 

The communication may be either express or tacit, and ^^** ^* 
notice received in £eu;t, whether from the proposer or from 
any one in his behalf or otherwise, is a sufficient commu- 
nication. 

The first point under this head is that an express revo- 5*['2t- 
cation communicated after acceptance, though determined jmwwfjmict 
upon before the date of the acceptance, is too late. This was *^ ^*^ 
decided so lately as in 1880 first by lindley J. in Byrne vu^rten 
V. Van Tienhoven (/), and again shortly afterwards by ho^en. 
Lush J. in Stevenson v. MdcLean (g). It will suffice to 
give shortly the fiEU^ts of the former case. The defendants 
at Cardiff wrote to the plaintiffs at New York on the 1st 
of October, 1879, offering for sale 1000 boxes of tinplates 

(<0 BaUft ciL (1868) 5 Eq. 428, 798, 804, 29 L. J. Ex. 9 ; ffM$ 

8 Cb. 592, S7 L. J. Ob. 256. cil (1867) 4 Sq. 9. 
RamtgaU EUd Co, T. Montdiort, (/) (1880) 5 C. P. D. 844, 49 L. 

tame Oq. t. Ooldmid (1866) L. R. J. O. P. 816, Finch 8aL Ca. 111. 
1 £z. 109, 85 L. J. Ex. 90. {g) (1880) 6 Q. B. D. 846, 49 L. 

(f) M'lver ▼. Jtiekardion (1818) J. Q. B. 701. Both iheM jndgn 

1 M. ft S. 557 ; Mazley t. Tinkler afterwards became memben of the 

(1885) 1 C. Bl & R. 692 1 RueMeU ▼. Court of Appeal 
ThanUon (1859) 4 H. & N. 788, 



28 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

on certain terms. Their letter was received on the 11th, 
and on the same day the plaintiff accepted the offer by 
telegraph, confirming this by a letter sent on the 16th. 
Meanwhile the defendants on the 8th of October had 
posted a letter withdrawing their offer of the 1st : this 
reached the plaintiffs on the 20th. The plaintiffs insisted 
on completion of the contract ; the defendants maintained 
that there was no contract, the offer having been, in their 
view, withdrawn before the acceptance was either received 
or despatched. Lindley J. stated as follows the questions 
to be considered : '• 1. Whether a withdrawal of an offer 
has any effect until it is communicated to the person to 
whom the offer has been sent? 2. Whether posting a 
letter of withdrawal is a communication to the person to 
whom the letter is sent?" The first he answered in the 
negative, on the principle "that a state of mind not 
notified cannot be regarded in dealings between man and 
man, and that an uncommunicated revocation is for all 
practical purposes and in point of law no revocation at 
all.'' The second he likewise answered in the negative, 
on grounds of both principle and convenience, and not- 
withstanding an apparent, but only apparent, inconsis- 
tency with the rule as to acceptances by letter which 
will be presently considered. 
As to tacit It seems impossible to find any reason in principle why 
JTot. the necessity for communication should be less in the case 

of a revocation which is made not by words but by conduct, 
as by disposing to some one else of a thing offered for sale. 
Nor does it seem practicable in the face of the decisions 
just cited, though they do not actually cover such a case, 
to say that any such difference is recognized by the law 
of England. The authority most in point, Dxckinaon v. 
Dodds (A), is not of itself decisive. The facts were these. 
A. offered in writing to sell certain houses to B., adding a 

(h) (1876) 2 Ch. Div. 463, 45 L. J. Ch. 777. One or two iuimaterial 
detaili are omitted in stating the facti. 



COMMUKICATION OF REVOCATION. 29 

staiement that the oGfer was to be '' left over " until a time 
named ; which statement, as we have already seen, could 
have no legal effect unless to warn B. that an acceptance 
would not be received at any later tima B. made up his 
mind the next morning to accept, but delayed oommuni- 
cating his acceptance to A. In the course of the day he 
heard from a person who was acting as his agent in the 
matter that A had meanwhile offered or agreed to sell the 
property to C. Early on the following day (and within 
the time limited by A.'s memorandum) B. sought out A. 
and handed a formal acceptance to him ; but A. answered, 
** You are too late. I have sold the property." It was 
held in the first instance by Bacon Y.C. that A had made 
to B an offer which up to the time of acceptance he had 
not revoked, and that consequently there was a binding 
contract between A. and B. But in the Court of Appeal 
it was said that^ although no " express and actual with- 
drawal of the offer" had reached B., yet by his own 
showing R, when he tendered his acceptance to A., well 
knew that A. had done what was inconsistent with a con- 
tinued intention of contracting with B. Knowing this, B. 
could not by a formal acceptance force a contract on A. (t). 
It does not appear that the knowledge which B. in fact had 
was conveyed to him or his agent by or through A., or any 
one intending to communicate it on A.'s behalf. The Court 
held that knowledge in point of fact of the proposer's 
changed intention, however it reaches the other party, will 
make the proposer's conduct a sufficient revocation. But 
what if B. had communicated his acceptance to A. without 
knowing anything of A.'s dealings with C. ? This question 
remains open, and must be considered on principle. 

(t) The hetd-noto Mys : '* SembU, to think, (and to do the lenraed 

that the nle of the property to a editon of Benjamin on Sale, 3rd 

third person would of itaelf amount ed.) ii quite unwarranted by the 

to a withdr»wAl of the offer, even jadgments. See the remarks of 

although the penon to whom the Jamee L.J. at p. 472, and of 

offer was first made had no know- Melliah L J. at p. 476. 
ledge of the tale." This, I venture 



80 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

^*7'*iM ^ Suppose that A. offers to sell one hundred tons of iron to 
aooept- B., not designating any specific lot of iron, and that B. 
*"^' desires time to consider, and A. assents. Then A. meets 
with C, they talk of the price of iron, and C. offers A. a 
better price than he has asked from B., and they strike a 
bargain for a hundred tons. Then B. returns, and in igno- 
rance of A.'8 dealings with C. accepts A.'s offer formerly 
made to him. Here are manifestly two good contracts. 
A. is bound to deliver 100 tons of iron to B. at one price, 
and 100 tons to C. at another. And if A. has in fact 
only one hundred tons, and was thinking only of those 
hundred tons, it makes no difference. He would be 
equally bound to B. and C. if he had none. He must 
deliver them iron of the quantity and quality contracted 
for, or pay damages. How then will the case stand if, 
other circumstances being the same, the dealing is for 
specific goods, or for a house? Here it is impossible 
that A. should perform his agreement with both B. and 
C, and therefore they cannot both make him perform 
it ; but that is no reason why he should not be answer- 
able to both of them. The one who does not get per- 
formance may have damages. It remains to ask which 
of them shall have the option of claiming performance, if 
the contract is otherwise such that its performance can be 
specifically enforced. The most convenient solution would 
seem to be that he whose acceptance is first in point of 
time should have the priority : for the preference must be 
given to some one, and the first acceptance makes the first 
complete contract. There is no reason for making the 
contract relate back for this purpose to the date of the 
proposal This is consistent with everything that was 
decided, if not with everything that was said, in Dickinson 
V. Dodds (k). 

(k) 2 Gh. Div. 463, 45 L. J. Ch. 28-33. There wm also a claim for 

777. Note that the auit web for damR^es, bnt apparently nothing 

rpeoiiic perfoimanoe, and cp. Lang- was said about it. 
dell, Snromary, 245-6, and Anson, 



COMMUNICATION. 31 

It is right to add that Cocke v. Oaley (I) maybe so read 
as to support the opinion that a tacit revocation need not 
he communicated at alL But the apparent inference to 
this effect is expressly rejected in Stevenson v. MacLean (m). 
If Cooke V. Oxley be still authority for anything, it is not 
authority for thai 

Eoman law supplies no direct answer to questions otWalom 
this class, and not much that tends to suggest one. tiMniia 
Modem civilians have differed greatly in their opinions. ' 
Pothier lays down a role directly contrary to that now 
settled in our law. The passage (Contr. de Yente, § 32) 
is well known, and may also be seen, slightly abridged, 
in Mr. Benjamin s work on Sale (p. 73). Pothier does 
not fail to see the manifestly unjust consequences of 
letting a revocation take effect, though the other party has 
received, accepted, and acted upon the proposal without 
knowing anything of the proposer's intention to revoke it; 
but he escapes them by imposing an obligation on the 
proposer, upon grounds of natural equity independent of 
contract, to indemnify the party so accepting against any 
damage resulting to him from the transaction. This treat* 
ment of the subject wholly overlooks the consideration 
that not intention in the abstract, but communicated 
intention, is what we have to look to in all questions of 
the formation of contracts (n). And the obligation to 
indemnify (which must be classed as qtiaai ex delicto if 
anything) is not only a cumbrous and inelegant device, 
bnt^ as Mr. Benjamin points out, overshoots its mark by 
being in turn unfair to the proposer. The same or a 
closely similar view has been taken by aome recent German 
writers of repute (o). Far more satisfactory is Vangerow 
(Pand. § 603), whose opinion in to this effect. The decla- 

(0 (1790) 8 T. B. 653. log unong oCben Iherbg, wlio oaUs 

(m) (1880) 5 Q. B. D. At p. 851, the right aoqidivd on thk theory by 

49 L. J. Q. Bw 701. the aoceptur witboat Bodoe of two- 

(n) Leake, Elementary Digeet of cation " dM negative Vertragftin- 

the Law of Cootracto, 44 n. t nre t M ." So too Bell, Prindplee of 

(o) Windeebeid, Pand. § 307, eit- the Law of Scotland, S 73. 



32 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

ration of an animus contrahendi (whether by way of pro- 
posal or of acceptance), when once made, must be regarded 
as continuing so long as no revocation of it is communi- 
cated to the other party. A revocation not communicated 
is in point of law no revocation at all. In this respect the 
revocation of a proposal or acceptance must be governed 
. by the same rules as the proposal or acceptance itsell 

Limits of Acceptance or of its Revocation, 

Accept- An acceptance must be communicated to the proposer 

reTocation to be efifoctual, and the communication of an acceptance or 

^'^^rt^ ^^ ^^ revocation is subject to the same rules as the com- 

commnni. munication of a proposal or of its revocation: provided 

^j!jj/j[f * that any means of communication prescribed or authorized 

■abject to by the proposer are as against him deemed sufficient. 

that means ^f ^^^ proposer prescribes or authorizes the despatch of 

authorized an acceptance by means wholly .or partly beyond the 

poser, and sender^s control, such as the public post or telegraph (p), 

kr de^°" then an acceptance so despatched 

spatch of (a) is complete as against the proposer from the time of 

J^^^ its despatch out of the sender's control ; 

deemed (})) is effectual notwithstanding any miscarriage or delay 

in its transmission happening after such dispatch. 
Geoeni It should seem obvious that, as a matter of general prin- 
commnni- oiplo, an uncommunicatcd mental assent cannot make a 
cation. contract ; though so lately as 1877 it was found needful to 
reassert this principle in the House of Lords (q). It is 
true that the proposer may dispense with actual communi- 
cation to this extent, that by prescribing a particular 
manner of communication he may preclude himself from 
afterwards showing that it was not in fact sufficient In 
Lord Blackburn's words, " when an offer is made to another 

(p) As to the telegraph being on (Lord Selbome), at p. 691 (Loid 

the same footing as letter pout, Blackburn), and at p. 697 (Lord 

C%n0an V. 0*C<7nnor (1888) 20 Q. B. D. Gordon). The judgments in the 

640, 57 L. J. Q. B. 401. Court below which gave rise to 

(q) Brogdm ▼. Metropolitan Fy. theae remarki are not reported. 
Co, (1877) 2 App. Ca. at p. 688 



CONTRACTS BY CORRESPONDENCE. 83 

party, aod in that offer there is a request express or 
implied that he must signify his acceptance by doing some 
particular thing, then as soon as he does that thing there 
is a complete contract " (r). The most important applica- 
tion of this exception will come before us immediately. But 
it is not true " that a simple acceptance in your own mind, 
without any intimation to the other party, and expressed 
by a mere private act, such as putting a letter into a 
drawer," will, as a rule, serve to conclude a contract. 

It was supposed at one time that the Companies Act, ^e^^- 
1862, had introduced a different rule in the case of agree- takesbares 
ments to take shares, and that an applicant for shares f-^^/*^ 
became a shareholder by mere allotment and registration, treated. 
though nothing were done to give notice to him ; but it is 
now settled that this is not so ; the ordinary rules as to 
the formation of contracts must be applied (a). Bearing in 
mind what these rules are for simple cases, let us proceed 
to more complex ones. 

The proviso above given and the explanation following Difficnl- 
it are intended to express the rules which, after much cimtnlcbi 
uncertainty, have at length been settled by our Courts ^ °?"* 

. 1 . , 1 1 t upondtnce. 

as to contracts entered mto by correspondence between 

persons at a distance. Before dealing with authorities 
it may be useful to show the general nature of the 
difficulties that arise. We start with the principle that 
the proposer is bound from the date of acceptance. Then 
we have to consider what is for this purpose the date of 
acceptance, a qiiestion of some perplexity, and much vexed 
in the books. It appears just and expedient, as concern- 
ing the accepting party's rights, that the acceptance 

(r) Tet would this hold if the appointing him to an office under 

preioribed act were not of a kind the company for which the shares 

fitted to make the aooeptor's inten- are a necessary qualification, is 

tion known to the proposer I enough. This of course is quite in 

(a) Ounn's case (1867) 3 Ch. 40 ; accordance with general prindplee. 

37 Lu J. Ch. 40. There need not Rickardg v. Home Aumranee AtBocia- 

be fonnal notice of allotment; acting turn (1871) L. R. 6 C. P. 591, 40 L. 

towards the applicant on the footing I. G. F. 290. 
thai he hai got the shares, eg. 



34 AGBSEMENT, PROPOSAL, AND AGOEPTANCE. 

should date from the time when he has done all he can to 
accept, by putting his affirmative answer in a determinate 
course of transmission to the proposer. From that time 
he must be free to act on the contract as valid, and disregard 
any revocation that reaches him afterwards. Hence the 
conclusion is suggested that at this point the contract is 
irrevocable and absolute. But are we to hold it absolute 
for all purposes ? Shall the proposer be bound, though, 
without any default of his own, the acceptance never 
reach him ? Shall the acceptor remain bound, though he 
should afterwards despatch a revocation which arrives with 
or even before the acceptance? The first question is 
answered by our Courts in the affirmative ; the second is 
still open. On principle a negative answer to both would 
seem the more reasonable. The proposercannot,at all events, 
act on the contract before the acceptance is communicated 
to him ; as against him, therefore, a revocation should be 
in time if it reaches him together with or before the 
original acceptance, whatever the relative times of their 
despatch. On the other hand, it seems not reasonable that 
he should be bound by an acceptance that he never receives. 
He has no means of making sure whether or when his 
proposal has airived (t), or whether it is accepted or not, 
for the other party need not answer at alL The acceptor 
might more reasonably be left to take the more avoidable 
risk of his acceptance miscarrying. 
Theoriee In the judicial treatment of these questions, however, 
Itoglkh" considerations of a different kind have prevailed. It has 
0M6S : been assumed that there must be some one moment at 
oommoii ^hich the consent of the parties is to be deemed complete, 
•8^*^**^ and the contract absolute as against both of them, and for 
all purposes ; and further, a peculiar character has been 
attributed to the post-office as a medium of communication. 
In some of the cases it is said that the acceptance of a pro^ 

(t) The German post-offioe, how- of any letter with an official oertlft- 
ever, undertakee (if required at the oate of iti deliTery. 
time of potting) to furniib the Bender 



CONTRACTS BY CORRESPONDENCE* 36 

posal by post completes the contract as soon as the letter 
is despatched, because the post-oflSce is the common agent 
of both parties. This may be so as regards the property 
in the letter^ but the promise expressed by the words 
written on the paper is not a subject of bailment. But 
the reason is now put in a different way ; namely, that a Doctrine 
man who requests or authorizes an acceptance of his offer poj^ 
to be sent in a particular way must take the risks of the '?*^*^^ 
mode of transmission which he has authorized, and that in his auUio- 
the common course of affairs the sending of a written offer ^"^i^- 
by post amounts to an authority to send the answer in the poet 
same manner. This would be a good reason in the case of 
a man desiring an answer to be sent to him by some 
extraordinary means of communication. But the post 
(which may now be said to include the telegraph) is the 
reasonable and usual means of communication between 
persons who are not &ce to face. There is no real 
authority or request, for none is needed. People use the 
poet-offioe as a matter of course. Even when a man 
desires an answer by return of post, he is not thinking of 
the answer being sent by post rather than in any other 
way, but of having it within a given time. An answer by 
tel^iaph would surely be a good acceptance of a proposal 
in this form, even if (as formerly in this country and still 
in the United States) the telegraph was not under the 
control of the post-office. The proposer of a contract by 
letter does not really choose the post as a means of com- 
munication more than the acceptor, for in most cases there 
is practically no choice. Our received doctrine first assumes 
a fictitious request, and thence infers a fictitious agreement 
to take all risks of transit, not only the risk of. delay, but 
that of the acceptance not being delivered at alL Much of Revooa- 
the language that has been used suggests the consequence ing before 
that even a revocation despatched after the acceptance ^^^^ 
and arriving before it would be iooperative. If the con- 
tract is absolutely bound by posting a letter of acceptance, 

J> 2 



36 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

a telegram revoking it would be too late ; and this even if 
the letter never arrived at all, so that the revocation were 
the only notice received by the proposer that there ever 
had been an acceptance. 

This is a startling consequence at first sight, but the 
hardship is less than it seems, for a party wishing to 
reserve his freedom of action as long as possible will still 
have two ways of doing so : he may make his acceptance 
in writing expressly subject to revocation by telegraph, or 
he may abstain from answering by letter at all, and only 
telegraph his final decision. I think an English Court 
would now be bound to hold that an unqualified acceptance, 
once posted, cannot be revoked even by a telegram or 
special messenger outstripping its arrival 
Earlier Turning to the authorities, we need not dwell much 

^JJ^ on the earlier cases, of which an accoimt is given in the 
byoorres- Appendix (u). They established that an acceptance by 
post, despatched in due time as far as the acceptor is con- 
cerned, concludes the contract notwithstanding delay in the 
despatch by the proposer's fault (as if the offer is mis- 
directed), or accidental delay in the delivery ; and that the 
contract, as against the proposer, dates from the posting, 
so that he cannot revoke his ofier after the acceptance is 
despatched. Until 1879 it was uncertain whether a letter 
of acceptance that miscarried altogether was binding on 
the proposer. In that year the point came before the 
Coml of Appeal (v). An application for shares in the 
plaintiff company, whose ofiice was in London, was handed 
by the defendant to a country agent for the company. A 
letter of allotment, duly addressed to the defendant, was 
posted from the London office, but never reached him. 
The company went into liquidation, and the liquidator 
sued for the amount due on the shares. It was held 

(tt) See Note R For recent {v) fftnuehold Fire Insurance Co. 

ContlnenUl opinions lee Prof. J. v. Cfrani (1879) 4 Ex. Div. 216, 

EohlenVertnigiinter Abwewnden, 48 L. J. Ex. 577, Finch Sel. Ca. 

inArchivfarbaigerl.Becht,Karch» 148. 

1889. 



pondenoeu 



CONTRACTS BT CORRESPONDENCE. 87 

by Thesiger and Baggallay L.JJ. that on the existing 
authorities (which were carefully reviewed) *• if an offer is 
made by letter, which expressly or impliedly authorizes 
the sending of an acceptance of such offer by post, and a 
letter of acceptance is posted in due time, a complete con- 
tract is made at the time when the letter of acceptance is 
posted, though there may be delay in its delivery '' (x) ; 
that, on the grounds and reasoning of the authorities, this 
extends to the case of a letter wholly failing to reach its 
address; that in the case in hand the defendant must 
under the circumstances be taken to have authorized the 
sending by post of a letter of allotment ; and that in the 
result he was bound. The rule, it seems, is to be taken 
as limited " to cases in which, by reason of general usage, 
or of the relations between the parties to any particular 
transactions, or of the terms in which the offer is made, the 
acceptance of such offer by a letter through the post is 
expressly or impliedly authorized" (y). Cases outside 
these limits, however, are not likely to be frequent. 
Nothing was said by the majority of the Court about the 
contingency of a revocation overtaking the acceptance. 
Bramwell L.J. delivered a vigorous dissenting judgment, 
in which he pointed out among other things the absurdity 
of treating such a revocation as ineffectual. But he relied 
mainly on the broad ground that a letter not delivered at 
aU " is not a communication, and that thei*e is 7io ag^^ee- 
Tnent to take it as an equivalent for or to dispense with a 
communication** (z). It may perhaps not be too pre- 
sumptuous, but it seems useless, to regret that this view 
did not prevail. It will be seen by reference to the 
Appendix that the decision of the Court of Appeal confirms 
that sense in which a previous decision of the House of 
Lords wns generally understood. The practical conclusion 
seems to be that every prudent man who makes an offer 

(x) BaggaUay L.tf. 4 Ex. Div. the same limiUtion seeiDs admitted 
at p. 224. by Thf aiifer L. J. at p. 2 1 8. 

(if) Baggallay L. J. at p. 2 (z) i Kx. Div. at p. 234. 



S8 AGREEMENT, PROPOSAL, AKD ACCEPTANCE. 

of any importance by letter should expressly make it con- 
ditional on his actual receipt of an acceptance within some 
definite time. It would be impossible to contend that a 
man so doing could be bound by an acceptance which 
either wholly miscarried or arrived later than the specified 
time (a). 
Aooept- We have seen that in general the contract dates from 
J22elSc ^^® acceptance ; and though the acceptance be in form an 
though re- acknowledgment of an existing agreement, yet this will 
2^^^^^^^ not make the contract relate back to the date of the pro- 
posal, at all events not so as to afiect the rights of third 
persons (b). 
Death of There is believed to be one positive exception in our 
JJ^^^ law to the rule that the revocation of a proposal takes 
absolate eficct only when it is communicated to the otber party, 
though ^is exception is in the case of the proposer dying before 
to* ^^^^ ^^^ proposal is accepted. This event is in itself a revoca- 
party. tion, as it makes the proposed agreement impossible by 
removing one of the persons whose consent would make 
it (c). There is no distinct authority to show whether 
notice to the other party is material or not ; but in the 
analogous case of agency the death of the principal in our 
law, though not in Roman law, puts an end ipso facto to 
the agent's authority, without regard to the time when it 
becomes known either to the agent or to third parties (d). 
It would probably be impossible not to follow the analogy 
of this doctrine. The Indian Contract Act makes the 
knowledge of the other party before acceptance a condition 
of the proposal being revoked by the proposer's death. As 

(a) See per Theeiger L.J. 4 Ex. 204. 

DiT. at p. 228, and per Bramwell (e) Per Mellish "LJ, in JHekm- 

L.J. at p. 288. Held aoc. in ton v. Ihddt (1876) 2 Oh. Div. at 

Massachusetti (where, however, the p. 475 ; 45 L. J. Oh. 777. 

general doctrine that an acoeptanoe {d) Bladet v. Free (1829) 9 B. 

by post condadea the contract from & G. 167; OampanariY, Woodbum 

the date of porting ifl not reoeiTed); (1854) 15 O. B. 400, 24 L. J. 

Lewis ▼. Browning (1880) 130 Mass. G. P. 18, 2 Kent Oomm. 646, D. 46, 

178. 8, de tolnt et Uberat 82. The 

(6) FeUhou$e ▼. Bindley (1862) Indian Gontract Act, 8. 208, iUnrt. 

11 0. B. N. S. 869, 81 L. J. 0. P. (c), adopts the Boman mle. 



BBQUnUQCENT OF CERTAIKTr. M 

for insaoily, which is treated in the same way by the^""!*^ 
Indian Act, that would not in general operate as a revoca- tfen. 
tion by the law of Enghoid, for we shall see that the 
contract of a lunatic (not so found by inquisition) is only 
voidable even if his state of mind is known to the other 
party. But it has been said that "if a man becomes so far 
insane as to have no mind, perhaps he ought to be deemed 
dead for the purpose of contracting" (e). 

Certainty of Acceptance, 

The next rule is in principle an exceedingly simple one. 
It is that 

'* In order to convert a proposal into a promise the Aoot pi* ^ 
acceptance must be absolute and unqualified" (/). hUZa^ 

For unless and until there is such an acceptance on the < 
one part of terms proposed on the other part, there is no 
expression of one and the same common intention of the 
parties, but at most expressions of the more or less different 
intentions of each party separately — ^in other words, pro- 
posals and counter-proposals. Simple and obvious as the 
rule is in itself, the application to a given set of facts is 
not always obvious, inasmuch as contracting parties often 
use loose and inexact language, even when their com- 
munications are in writing and on important matters. It 
will be seen that the question whether the language used 
on a particular occasion does or does not amount to an 
acceptance is wholly a question of construction, and gene* 
rally though not necessarily the construction of a written 
instrument. The cases in which such questions have been 
decided are numerous {g)j and we shall here give by way 
of illustration only a few of the more recent ones (A). 

(e) BnmweU L. J. Drew ▼. iVitiifi {inUralia) Yrj on Spedfio Perfonn- 

(1879) 4 Q. B. DiT. ftfc p. 669 ; 48 anoe, c % 

L. J. Q. R 591. (A) Cp. fOw the Franoh cms la 

(/) Indian Contnet Act, ■• 7, the Court of CMntion given in 

■ab.iL 1. LaagdeU't Seleet CMet on Con- 

(g) Vor cdlkoted aotlMKltiM, m trMSt» 166. 



♦0 AGREEMENT, PROPOSAL, AND ACCEPTANCE. 

InstuMses In Ilontyman ▼. MarryaJt (t), before the House of Lords, a proposal for 
ol iDsaffi. a Bale was accepted *' subject to the terms of a oontraot being arranged '* 
ampt- l^^een the vendor's and purchaser's solicitors : this was clearly no 
avce. contract. Compare with this Huuey ▼. Hrniie Payne (X;), from which it 

seems that an acceptance of an offer to sell land '* subject to the tide 
being approved by our solicitors " is not a qualified or conditional accept- 
ance, but means only that the title most be investigated in the usual 
way; in other words, it eipreases the conditions annexed by law to 
oontracts of this class, that a good title shall be shown by the vendor. 

IxL ApjMy V. Johnson {I), the plaintiff wrote to the defendant, a calico- 
printer, and offered his services as salesman on certain terms, among 
which was this : *' a list of tho merchants to be regularly called on by 
me to be made." The defendant wrote in answer : '* Yours of yesterday 
embodies the substance of our conversation and terms. If we can define 
some of the terms a little clearer, it might prevent mistakes ; but I think 
we are quite agreed on aU. We shall therefore expect you on Monday. 
(Signed)— J. Appleby. — ^P.S. — ^I have made a list of customers wliich we 
can consider together." It was held that on the whole, and especially 
having regard to the postscript, wliich left an important term open to 
discussion, there was no complete contract 

In Croidey v. Mayeock (m) an offer to buy certain land was accepted, but 
with reference to special conditions of sale not before known to the 
intending purchaser. Held only a conditional acceptance. 

In Stanley v. DowdaweU (n) an answer in this form : *' I have decided 
on taking No. 22, Belgrave Boad, and have spoken to my agent, Mr. C, 
who wUl arrange matters with you," was held insufficient to make a 
contract, as not being complete and unqualified, assuming (which was 
doubtful) that the letter of which It was part did otherwite sufficiently 
refer to the terms of the proposal. 

In AddindVt case (o) and Jackton v. Turquand (jp), a bank issued a 
circular offering new shares to existing shareholders in proportion to their 
interests, and also asking them to lay if la the event of any shares 
remaining they should wish to have any more. Certain shareholders 
wrote in answer, accepting their proportion of shares, and also desiring 
to have a certain number of additional shares, if they oonld, on the terms 
stated in the circular. In reply to this the directors sent them notices 
that the additional shares had been allotted to them, and the amount 
must be paid to the bank by a day named, or the shares would be for- 
feited. It was held by Kindersley Y.-C. and confirmed by the House 

(t) (1857) 6 H. L. C. 112, 26 L. (m) 18 Eq. 180; 48 L. J. Oh. 

J. Ch. 619, by Lord Wensleydale. 879 (1874). 

The case was not aigued, no one (n) L. R. 10 C. P. 102 (1874). 

appearing for the appellant. Compare Smith v. Webeter (1876) 8 

{k) (1879) 4 App. Ca. 811, 822 | Oh. Div. 49, 45 L. J. Ch. 528. 

48 L. J. Ch. 846. (o) 1 Eq. 225 (1865). 

{D (1874) L. K. 9 C. P. 158, 48 (p) (1869) L. R. 4 H. Ll 805 ; 39 

L. J. C. P. 146. L.J. Ch, 11. 



CKBTAINTY OF AGCEPTANCK. 41 

of Loidi^ thai m to the inl or pfoportloiuJ Mi of thatm tbo ahitro- 
holder's loitar wm ad aooipiftnoe oonstitiitiag a oooiraet, bot aa to the 
extra iharee it waa oolj a propoMl ; and that aa the direotori' anawen 
k^brodneed a maierial new term (aa to f orf aitore of the iharea if not paid 
for within a certain time), there waa no binding oontraot aa to theae. 

In Wftuu't oaae {q) two eompaniea agreed to amalgamate The agrea- 
mant waa engromed in two paiti, and contained a ooTeoant by the 
pordutfing company to pay the debta of the other. But the porduudng 
oompaoy (whidi waa nnlimited) before executing ita own part inaerted a 
proviao limiting the liability of ita memben nnder thia ooveaant to the 
amonnt unpaid on their aharea. Thia being a material new tenn, the 
▼arianoe between the two parte aa executed made the agreement void. In 
thia, and later In Beds^g caae (r), In the aame winding-np, a iharaholder 
in the abaorbed company applied for aharea In the porchaalng company 
credited with a certain aom according to the agreement, and received in 
anawer a letter allottiiig hfan aharea to be credited with a "proportionate 
amooni of the net aaMta" of hla former company. It waa held thai, 
apart from the qneation whether the allotment waa conditional on the 
amalgamation being valid, there waa no contract to take the aharec 

On the other hand, the foUowiag iniiancea will ehow thai the mk Inrtaneaa 
must be cantioDaly i^lied. An aoeeptance may be complete though it of i 
ezprcMoa diaaatiafaction at acme of the tetma, If the dimatirfacfion atopa ^^ l" 
■hort of dUientf ao thai the whole thing may be deacribed aa a ** gmm- '* ^"^^ 
blingaaaenfU). 

Again, an acceptance la of ooone not made conditional fay adding 
worda thai in truth make no difference ; aa where the addition ia aimply 
immatirrift] (<), or a mere formal memorandum ia encloeed for aignaturOi 
but not ahown to contain any new term («) And forther, if the peraon 
answering an unambiguous propooal accepta it with the addition of am- 
biguona words, which are capable of being conatrued oonsistently with 
the rest of the document and so a^ to leave the acceptance abaolute, they 
will if poesible be so construed {z). And perhaps it ia in like manner 
open to the accepting paity to disregard an inwusible or repugnant 
qualification annexed to the propopal : as where a man offers to take 
sbarea in a company, **if limited," which in contemplation of law he 
mofct know to be not limited, and the directors allot shares and notify the 
allotment to him without taking auy notice of the attempted qualifica- 
tion. But in the caae referred to thia view ia not neceteary to the reault: 
for the iq^plicant wrote a second letter recognising the allotment The 

(9) (1873) 8 Cb. 100*2. {t) Clire v. BeavnunU (1847) 1 

(r) {1874) 9 Cb. 892 ; 43 L. J. De G. & S. 397. 

Ch. 631. («) Oibbofu v. N,B, Metrop, Agy- 

{») Jo^ee V. Swarm (1864) 17 lum Ditiriet (1847) 11 Beav. 1. 

C. a N. S. 84 ; op. per Lord St. (x) EngliMh & Poreigm CredU Co. 

Leonards, -6 H. L. a 277—8 (in a v. Arduin (1870—1) L. R.5 H. L. 

disMntlog judgment). 64 ; per I^rd Westbury, at p. 79 ; 

40 L. J. Ex, 108. 



42 AQBEEMENT, PROPOSAL, AND ACCEPTANCE. 

letter of aUatmeiit might therefore he tre ate d m a ooonter-proponl — 
namely, to ftUot aharee in a oompanj not limited— of which this last wtm 
the aooeptanoe (y). And in fact theta is one caae somewhat against the 
▼lew here suggested: the letter of allotment was headed "not transfer- 
aUe," iq^parently through a mere mistake of law, so that on a fair 
oonstmotion it would seem to have been, not a really conditional accept- 
ance, but an acceptance with an imaginary and illusory condition, wrongly 
supposed to be implied in the nature of the transaction : but it was held 
that no contract was constituted (z). 

Again, the unconditional acceptance of a proposal is not deprived of 
its effect by the existence of a misunderstanding between the parties in 
the construction of collateral terms which are not part of the agreement 
itself (a). 



Parties One further caution is needed. All rules about the 

TOne^D^ formation and interpretation of contracts are subject to 
dnsion of the implied proviso, *' unless a contrary intention of the 
2^,^^ parties appears." And it may happen that though the 
•gwed on parties are in fact agreed upon the terms — ^in other words, 
til} em- though there has been a proposal sufficiently accepted to 
^^*«^ *" satisfy the general rule — yet they do not mean the agree- 
formal in- ment to be binding in law till it is put into writing or into 
strument ^ formal writing. If such be the understanding between 
them, they are not to be sooner bound against both their 
wills. " If to a proposal or oflfer an assent be given subject 
to a provision as to a contract, then the stipulation as to 
the contract is a term of the assent, and there is no agree- 
ment independent of that stipulation " (&). Whether such 
is in truth the understanding is a question which depends 
on the circumstances of each particular case; if the 
evidence of an agreement consists of written documents, 
it is a question of construction (not subject to any fixed 
rule or presumption) whether the expressed agreement is 
final (c). 

(y) PerreU't ca. (1878) 15 £q. The facts unfortunately do not 

250 ; 42 L. J. Oh. 805. admit of abridgment 

(2) Duke ▼. Andrews (1848) 2 Ex. (6) Chinnock ▼. MarekumesB of 

290 ; 17 L. J. Ex. 281. Ely (1865) 4 D. J. S. 688, 646. 

(a) Bdnet v. Woo<^faa (1859) 6 (e) BoetUer ▼. MUler (1878) 8 

G. B. N. & 657, 28 L. J. O. P. 888. Api». Ga. 1124, 1152, 48 L J. Ch. 10. 



FIKALIT7 OF AOCKPTAKCl. iS 

It is not to be supposed, "because persons wish to have 
a formal agreement drawn up, that therefore they cannot 
be bound by a previous agreement, if it is clear that such 
an agreement has been made; but the circumstance that 
the parties do intend a subsequent agreement to be made 
is strong evidence to show that they did not intend the 
previous negotiations to amount to an agreement" (d). 
Still more is this the case if the first record of the terms 
agreed upon is in so many words expressed to be " subject 
to the preparation and approval of a formal contract " (e) : 
or where a certain act, such as payment of the first premium 
of insurance, is expressly mentioned to fix the commence- 
ment of the contract (/). But again : " it is settled law 
that a contract may be made by letters, and that the mere 
reference in them to a future formal contract will not pre- 
vent their constituting a binding bargain '* (g). And in 
Brogden v. Metropolitan Ry. Co, (h), it was held by the 
House of Lords that the conduct of the parties, who in fact 
dealt for some time on the terms of a draft agreement 
which had never been formally executed, was inexplicable 
on any other supposition than that of an actual though 
informal consent to a contract upon those terms. 

The tendency of recent authorities is to discourage all 
attempts to lay down any fixed rule or canon as governing 
these cases. The question may however be made clearer 
by putting it in this way — whether there is in the par- 
ticular case a final consent of the parties such that no new 
term or variation (»n be introduced in the formal docu- 
ment to be prepared (i). 

{d^JUdffway^' Whafitm (1856-7) JenHm (1878) 8 Gh. Dit. 70, 78 ; 

6 H. L. O. 238, 264, 268, per Lord 47 L. J. Ch. 758; BoUon ▼. Lambert 

Cnmworth C. and see per Lord (1889) 41 Ch. Div. 295, 805. 

Wendeydale t pp. 805-6, 27 L. J. (A) (1877) 2 App. O*. 666 : Me 

Ch. 46. "Lord C«in»' ophiioD. 

(e) Winn ▼. BvU (1877) 7 Ch. D. 29. (t) Lord BlAokboni, 8 App. Ca. at 

(hCanmimg v. Farqvkar (1886) p.ll5L In addition to OMes alieMiy 

16 Q. B. Div. 727, 55 L. J. Q. K dted wteLewui. Bram (1877) 8 Q. 

225. B. Di7. 667. 

{g) Junes L.J. hi BotuuwdL v. 



44 AORBEMEKT, PROPOSAL, AND AGCRPTANCE. 

Certainty of Terms. 

Agree- An agreement is not a contract unless its terms are 

te^M^dn! c®'^*!'^ ^^ capable of being made certain. 

For the Court cannot enforce an agreement without 
knowing what the agreement is. Such knowledge can be 
derived only from the manner in which the parties have 
expressed their intention. It is their business to find such 
expressions as will convey their meaning with reasonable 
certainty to a reasonable man conversant with afiairs 
of the kind in which the contract is made. The 
question then is whether such certainty be present in the 
particular case. One or two instances will serve as well as 
many. A promise by the buyer of a horse that if the 
horse is lucky to him, he will give 5L more, or the buying 
of another horse, is " much too loose and vague to be con- 
sidered in a court of law." "The buying of another horse" 
is a term to which the Court cannot assign any definite 
meaning (Jc). An agreement to sell an estate, reserving 
" the necessary land for making a railway," is too vague (I). 
An agreement to take a house "if put into thorough repair," 
and if the drawing-rooms were "handsomely decorated 
according to the present style," has been dismissed as too 
uncertain to be specifically enforced (m). On the other hand 
an agreement to execute a deed of ^ separation containing 
** usual covenants " is not too vague to be enforced (n). 

Illusory To this head those cases are perhaps best referred in 

promb>«9. which the promise is illusory, being dependent on a con- 
dition which in fact reserves an unlimited option to the 
promisor. " Nulla promissio potest consistere, quae ex 
voluntate promittentis statum capit " (o). Thus where a 

{k) Outhing y, Lynn (1881) 2 B. not decide tbatftn action for dAinaget 

ft Ad. 232. would not lie. 

{I) Pearce ▼. WoUm (1876) 20 Eq. (n) Hart t. Bart (1881) 18 Gh. 

4Qi; 4i L. J. Ch. 492. T). 670, 684 ; 50 L. J. Gh. 697. 

(w) Taylor v. Partin</ton (18ftS) 7 («) D. 46, 1. de verb. obi. 108, § 1 
D. M. & G. 828. Ttiia of cocrse did 



CERTAINTT OF TERMS. 4A 

committee had resolved that for certain services "such 
remuneration be made as shall be deemed right/' this 
gave no right of action to the person who had performed 
the services ; for the committee alone were to judge 
whether any or what recompense was right (p). More* 
over a promise of this kind, though it creates no enforce* 
able contract, is so far effectual as to exclude the promisee 
from falling back on any contract to pay a reasonable 
remuneration which would be inferred from the transaction 
if there were no express agreement at all. In Roberts v. 
Smith (q) there was an agreement between A. and B. that 
B. should perform certain services, and that in one event 
A. should pay B. a certain salary, but that in another event 
A. should pay B. whatever A. might think reasonabla That 
other event having happened, the Court held there was 
no contract which B. could enforce. Services had indeed 
been rendered, and of the sort for which people usually are 
paid and expect to be paid; so that in the absence of 
express agreement there would have been a good cause of 
action for reasonable reward. But here B. had expressly 
assented to take whatever A. should think reasonable 
(which might be nothing), and had thus precluded himself 
from claiming to have whatever a jury should think 
reasonable. It would not be safe, however, to infer from 
this case that under no circumstances whatever can a 
promise to give what the promisor shall think reasonable 
amount to a promise to give a reasonable reward, or at all 
events something which can be found as a fact not to be 
illusory. The circumstances of each case (or in a written 
instrument the context) must be looked to for the real 
meaning of the parties ; and " I leave it to you" may well 
mean in particular ciraimstances (as in various small 
matters it notoriously does), " I expect what is reasonable 
and usual, and I leave it t«> you to find out what that is,'* 



(p) Tt^lor ▼. Brewer (1818) 1 Bi. (g) (1859) 4 & ft N. 815, 28 L 

&S.290. J. Ex.164. 



46 AGREEaOENT, PROPOSAL, AND ACCEPTANCE. 

or, " I expect what is reasonable, and am content to take 
your estimate (assuming that it will be made in good faith 
and not illusory) as that of a reasonable man " (r). 

Another somewhat curious case of an illusory promise 
(though mixed up to some extent with other doctrines) is 
Moorhouae v. Colvm (a). There a testator, having made 
a will by which he left a considerable legacy to his 
daughter, wrote a letter in which he said, after mentioning 
her other expectations, " this is not all : she is and shall 
be noticed in my will, but to what further amount I 
cannot precisely say/' The legacy was afterwards revoked. 
It was contended on behalf of the daughter's husband, 
to whom the letter had with the testator's authority been 
communicated before the marriage, that there was a 
contract binding the testator's estate to the extent of the 
legacy given by the will as it stood at the date of the 
letter. But it was held that the testator's language 
expressed nothing more than a vague intention, although 
it would have been binding had it referred to the specific 
sum then standing in the will, so as to fix that sum as a 
minimum to be expected at all events. 

"He ezpresaly promlaeB sach proviaioii only as he In hit will and 
pleasar* shall think fit If, on her marriage, the testator had said, 
'I wiU give to my ohOd a proper and soffioient provisiojD,* the Court 
might asoertain the amount ; bat if the testator had said, * I will give 
to my ohild such a provision as I shall ohoose,' would it be proper 
for the Court (if he gave nothing) to say what he ought to have given ? ** 

Promfae ^ promise to enter into a certain kind of agreement 
contract with a third person is obviously dependent for its perform- 
J^^^l"*^ ance on the will of that person, but is not thereby rendered 
so uncertain as not to afford a cause of action as between 
the parties to it. The consent of a third person is not more 

(r) Such a case (if it can be sup- ascertain how much the defendant, 

ported, see the remarks on it in acting honajidef would or ought to 

]t6berU ▼. SmUh) was BrvarU ▼. have awarded. 
Flighi (1839) 5 11 & W. 114, («) (1851) 15 Beav. 841, 848 

where the majority of the Court affd. by L. J J. i6. 850, n, 
held that it was for the jury to 



TACIT ACCSPTANCSL 47 

uncertain than many other things irhich parties may and 
do take on themselves to warrant (t). 

Acceptance hy Conduct. 

Conduct which is relied on as constituting the accept- Ti^ m- 
ance of a contract must (no less than words relied on for ^fMoS^Mt 
the same purpose) be unambiguous and unconditional (it). 5!^^ 

Where the proposal itself is not express, then it must gno«. 
also be shown that the conduct relied on as conveying the Cmm of 
proposal was such as to amount to a communication to^^^^ 
the other party of the proposer's intention. Difficult ^ 
questions may arise on this point, and in particular have 
arisen in cases where public companies entering into con- 
tracts for the carriage or custody of goods have sought to 
limit their liability by special conditions printed on a 
ticket delivered to the passenger or depositor at the time 
of making the contract. The tendency of the earlier 
cases on the subject is to hold that (apart from the statu- 
tory restrictions of the Railway and Canal Traffic Act, 
1854^ which do not apply to contracts with steamship 
companies, nor to contracts with railway companies for the 
mere custody as distinguished from the carriage of goods) 
such conditions are binding. A strong opposite tendency 
is shown in Henderson v. Stevenson (v), where the House 
of Lords decided that in the case of a passenger travelling 
by sea with his luggage an indorsement on his ticket 
stating that the shipowners will not be liable for loss does 
not prevent him from recovering from loss caused by their 
n^Iigence, unless it appears either that he knew and 
assented to the special terms, or at any rate that he knew 
there were some special terms and was content to accept 

it) Foitar ▼. Jfheder (1888) 38 further, and siiggwt that the oon- 

Gh. DfT. 130, 57, reL to L. J. Gh. tnMst is oomplete before the tioket 

149,871. is deliTeredftt all, lo that aome other 

(«) Warner v. WUlington (1856) commanication of the speoial tenns 

3 Brew. 523, 533. 25 L. J. Ch. 662. would have to be shown. Bat the 

(v) (1875) L. B. 2 Sc. ft D. 470. later oases have not adopted this 

Lord Chelmsford's and Lord Ha- Tiew, 
thede/s dicta (pp. 477, 479) go 



48 



AGREEMENT, PROPOSAL, AND ACCEPTANCE. 



Alto 
promiiM 
by deed. 



them without examination. Since this there have been 
reported cases arising out of the deposit of goods, for safe 
custody or otherwise, in exchange for a ticket on which 
were endorsed conditions limiting the amount of the 
receiver's liability (x). The result, as it stands at present, 
appears to be that it is a question of fact in each case 
whether the notice given by the depositee was reasonably 
sufficient to inform the depositor at the time of making 
the contract that the depositee intended to contract only 
on special terms. A person who, knowing this (y), enters 
into the contract, is then deemed to assent to the special 
terms ; but this, again, is probably subject to an implied 
condition that the terms are relevant and reasonable. It 
cannot be said that the subject is yet free from doubt 

The ordinary rules of proposal and acceptance do not 
apply, as we said at the beginning of this chapter, to 
promises made by deed. It is established by a series 
of authorities which appear to be confirmed by the ratio 



{x) mrru ▼. O, W. R Co. (1876) 
I Q. B. D. 515, 45 L. J. Q. B. 729 ; 
Parker v. 5. iT. R, Co, (1876) ; OabeU 
▼. a. E, R Co. (1877) 2 C. P. IMv. 
416, 46 L. J. C. P. 768, revg. in 
Parker*i oa. the jadgment of the 
0. P. Div. 1 C. P. D. 618, 46 L. J. 
C. P. 768 ; Watkint ▼. RymiU (1888) 
10 Q. B. D. 178, where the fonner 
CMOS are folly reviewed by Stephen J. 
Compare Burke v. S. E. R Co. 
(1879) 5 C. P. D. 1, 49 L. J. C. P. 
107. 

(y ) Are reaeonable means of know- 
ledge eqaiTalent to actual know- 
ledge T It eeeme better on principle 
to aay that aotoal knowledge may be 
inf ened aa a fact from reasonable 
means of knowledge, and infened 
against the bare denial of the party 
wboee interest it was not to Imow. 
This is one of the rales of evidence 
which are apt in particular depart^ 
ments to huden into rales of law ; 
and the judgment in Watiein9 v. 
R)fmiU (10 Q. K D. at p. 188) 
certainly tends in this direction. 
It would be carious however if, 



after "constractive notice'* has 
been justly discredited in eouity 
cases, a new variety of It should be 
introduced in a question of pure 
common law. Compare Ulpian*s 



remarks on a fairly analogous < 
D. 14, 8, de inst act 11, § 2, 3. 
De quo palam prosoriptnm fuerit, 
ne cum eo contrahatur, is prae- 
positi loco non habetur. .... 
Proscribere palam sic aodpimus : 
daris litteris, unde de piano recte 
legi possit, ante tabernam scilicet^ 
vd ante eum loeom, in quo nego- 
tiatio ezercetur, non in loco remote, 
sed in evidenti .... Certe si quis 
dicat igncrasse se litteras, vel non 
observasse quod propoeitum erat, 
cum multi legerent, cnmque palam 
asset propositum, non audietur. 
Before the recent cases on the sub- 
ject the conditions printed l^ rail- 
way companies on their tickets, and 
the corresponding notices exhibited 
by them, were not often, they are 
still not always, "daris litteris, unde 
de piano recte legi posrit," or '* in 
loco evidenti" 



PROMISES BY DEED. 



41) 



decidendi of Xenos v. Wickham (z), in the House of 
Lords (though perhaps the doctrine was not necessary for 
the decision itself), that a promise so made is at once 
operative vrithout regard to the other party's acceptance. 
It creates an obligation which whenever it comes to his 
knowledge aflfords a cause of action without any other 
signification of his assent, and in the meanwhile it is 
irrevocable. Nearly all the cases, it is true, were on 
instruments involving matter of conveyance as well as of 
contract, but no distinction is made or suggested on that 
ground. The general principles of contract are, however, 
respected to this extent, that if the promisee refuses his 
assent when the promise comes to his knowledge the con- 
tract is avoided. 

" If A. make an obligation to B., and deliver it to C. to 
the use of B., this is the deed of A. presently ; but if C. 
offers it to B., then B. may refuse it in pais " (i e. with- 
out formality) "and thereby the obligation will lose its 
force "(a). 



{z) (1866) L. R. 2 H. L. 296. The 
preTioas casifs were Doe d. Oamon$ 
▼. Knight (1826) 5 B. & C. 671 (a 
mortgage) ; Baton ▼. SeoU (1883) 6 
Sim. SI (the like) ; ffaU v. Palmer 
(1844) 18 L. J. Ch. 352 (bond to 
eeoore annnity after obligor's death); 
FUteher ▼. Fletcher (1845) 14 L. J. 
Ch. 66 (covenaBt for settlement to 
be made by exeeators). As to Xenoi 
▼. Wiekham, that case might have 
been decided on the gromid that 



the company's ezeoatlon of the 
policy was the acceptance of the 
phdntiffs' proposal, and the plain- 
tiffs* broker was their agent to 
receive commnnication of the ac- 
ceptance. But that ground is dis- 
tinctly not relied npon in the 
opinions of the Loras : see at 
pp. 820, 323. 

(a) Butler and Baker*i ca., 3 Co. 
liep. 26« quoted by Blackburn J. 
L. B. 2 M. L. at p. 312. 



P. 



( 50 ) 



CHAPTER 11. 

Capacity of Parties. 

VMiationfl All statements about legal capacities and duties are 
«^S^. taten, unless the contrary be expressed, to be made with 
reference to " lawful men/' citizens, that is, who are not in 
any manner unqualified or disqualified for the full exer- 
cise of a citizen's normal rights. There are several ways 
in which persons may be or become incapable, wholly or 
partially, of doing acts in the law, and among other things 
Diaabili- of becoming parties to a binding contract All persons 
JJj[J^ must attain a certain age before they are admitted to full 
penons : freedom of action and disposition of their property. This 
"'*^' is but a necessary recognition of the actual conditions of 
man's life. The age of majority, however, has to be fixed 
at some point of time by positive law. By English law it 
is fixed at twenty-one years ; and every one under that 
age is called an infant (Co. Lit. 171 &). 
Coverture. Every woman who marries has to sustain, as incident to 
her new status, technically called coverture, a loss of legal 
capacity in various respects ; a loss expressed, and once 
supposed to be sufficiently explained, by the fiction that 
husband and wife are one person. 
lMM"ty. Both men and women may lose their legal capacity, 
permanently or for a time, by an actual loss of reason. 
This we call insanity when it is the result of established 
mental disease, intoxication when it is the transient effect 
of drink or narcotics. Similar consequences, again, may 
be attached by provisions of positive law to conviction for 



EXTENSIONS OF CAPACITT. 51 

Griminal offences. Deprivation of civil rights also may be, 
and has been in England in some particular cases, a sub- 
stantive penalty ; but it is not thus used in any part of our 
law now in practical operation. 

On the other hand, the capacity of the " lawful man ^ Kitwirfua 
receives a vast extension in its application, while it remains otMdty : 
unaltered in kind, by the institution of agency. One man 
may empower another to perform acts in the law for him 
and acquire rights and duties on his behalf. By agency 
the individual's legal personality is multiplied in space, as 
by succession it is continued in time. The thing is now 
so familiar that it is not easy to realize its importance, 
or the magnitude of the step taken by legal theory and 
practice in its full recognition. We may be helped to this 
if we remember that in the Boman system there is no law 
of agency as we understand it The slave, who did much 
of what is now done by free servants and agents, was re* 
garded as a mere instrument of acquisition for his owner, 
except in the special classes of cases in which either slaves 
or freemen might be in a position analogous, but not 
fully equivalent, to that of a modem agent As between 
the principal and his agent, agency is a special kind of 
contract But it differs from other kinds of contract in 
that its legal consequences are not exhausted by perform* 
ance. Its object is not merely the doing of specified things, 
but the creation of new and active legal relations between 
the principal and third persons. Hence it may fitly 
have its place among the conditions of contract in 
general, though the mutual duties of principal and agent 
belong rather to the treatment of agency as a species of 
contract. 

While the individual citizen's powers are thus extended ArtlMal 
by agency, a great increase of legal scope and safety is 
given to the conjoint action of many by their association 
in a corporate body or artificial person. The development 
of corporate action presupposes a developed law of agency, 

E 2 



62 CAPACITT OF PABTIES. 

since a corporation can manifest its legal existence only 
through the acts of its agents. And as a corporation, in 
virtue of its perpetual succession and freedom from all or 
most of the disabilities which may in fact or in law affect 
natural persons, has powers exceeding those of a natural 
person, so those powers have to be defined and limited by 
sundry rules of law, partly for the protection of the indi- 
vidual members of the corporation, partly in the interest 
of the publia 

We proceed to deal with these topics in the order indi- 
cated : and first of the exceptions to the capacity of natural 
persons to bind themselves by contract 

PART L 
L Infants. 
Inftuito— An infant is not absolutely incapable of binding himself, 
22IS^t ^"* ^^» generally speaking, incapable of absolutely binding 
of the law. himself by contract (a). His acts and contracts are void- 
able at his option, subject to certain statutory and other 
exceptions. 

By the common law a contract made by an infant is 
generally voidable at the infant's option, such option to be 
exercised either before (&) his attaining his majority or 
within a reasonable time afterwards. 

Where the obligation is incident to an interest (or at all 
events to a beneficial interest) in property, it cannot be 
avoided while that interest is retained. 
Exceptions — 
A. Void agreements. 

By the Infants' Relief Act, 1874, loans of money to 
infants, contracts for the sale to them of goods other than 
necessaries, and accounts stated with them are absolutely 
void ; and no action can be brought on a ratification of 
any contract made during infancy. 

(a) Stated in thb foim by Hajm (5) A« to this Ma p. 60^ below. 

J. 14 Ir. a K B. at p. 856. 



CONTRACTS OF INFANTS. M 

(When the agreement of an infant is such that it cannot 
be for his benefit, it has been said to be absolutely void at 
common law ; but this distinction is believed to be ex- 
ploded by modem authorities.) 

B. Valid contracts. 

An infimt's contract is valid if it appears to the Court 
to be beneficial to the infitnt, and in particular if it is for 
necessaries. 

Explaruition, — ^"Necessaries" include all such goods, 
commodities, and services as are reasonably necessary for 
the use and benefit of a person in the circumstances and 
condition of life of the contracting party. 

Moreover in certain cases infants are enabled to make 
binding contracts by custom or statute. 

An infimt is not liable for a wrong arising out of or 
immediately connected with his contract, such as a frau- 
dulent representation at the time of making the contract 
that he is of full age. But an infant who has represented 
himself as of full age is bound by payments made and acts 
done at his request and on the faith of such representa- 
tions, and is liable to restore any advantage he has obtained 
by such representations to the person from whom he has 
obtained it. 

1. Of the contracts of infants in general at common Of infanfei' 
law, and as affected hy the Act of 1874. in cflaeni: 

It will be convenient to depart somewhat from ^'^mxppotn^ 
order of the forgoing general statement for the purpose of <^«^»«**on 
considering this whole subject together. It was once com- Me wholly 
monly said that an agreement made by an infant, if such ^^* 
that it cannot be for his benefit, is not merely voidable, 
but absolutely void ; though in general his contracts are 
only voidable at his option (c). But this distinction is in 

(«) Aoothflrdistfaictionis madeM SBorr. 1S06 ; 2 Dr. a W. 340. Bat 

to deeds taUng oon^ete effect by thk is of little pnotiGal importanoe^ 

deliTeiy or otherwise. See Shepp. and not material to the preient 

Toiichst288; Co. Ilt.516, note; sabject. 



64 CAPACITY OP PABTIES. 

itself unreasonable, and is supported by little or no real 
authority, while there is considerable authority against it. 
The unreasonableness of it seems hardly to need any de- 
monstration. The object of the law, which is the protection 
of the infant, is amply secured by not allowing the con- 
tract to be enforced against him during his infancy, and 
leaving it in his option to affirm or repudiate it at his 
full age (d). Moreover the distinction is arbitrary and 
doubtful, for it must always be difficult to say whether a 
particular contract cannot possibly be beneficial to the 
party. As for the authorities, the word void is no doubt 
frequently used ; but then it is likewise to be found in 
cases where it is quite settled that the contract ia in truth 
only voidable. And as applied to other subject matters 
it has been held to mean only voidable in fonnal instru- 
ments (e) and even in Acts of Parliament (/). Thus 
the language of text- writers, of judges, and even of the. 
legislature, is no safe guide apart from actual decisions. 
Examina- But when we look at the decisions they appear to 
^OTiti«r establish in the cases now in question only that the con- 
a« to tract cannot be enforced against the infant, or some other 
collateral point equally consistent with its being only 
voidable, except when they show distinctly that the 
contract is voidable and not void. Thus an infant's bond 
with a penalty and conditioned for the payment of interest 
has been supposed to be wholly void ; but nothing more 
is decided than that being under seal it cannot be ratified 
save by an act of at least equal solemnity with the 
original instrument : in the case referred to one judge 
(Bayley J.) rested his judgment simply on the law stated 
by Coke, who only says that an infant's bond with a 

{d) We are now speaking only of (/) Compare Davenport v. Sea. 

tbe oommon law. (1877) (J. C. from Qoeendand) 8 

(€) Lincoln ChlUg^B CJa. (1696) 8 App. Ca. at p. 128, 47 L. J. P. C. 8, 

Co. Bep. 69 6; Doe d. Bryan ▼. -mUtiCfovemon of Magdalen ffoepUal 

JBaneka (1821) 4 B. & Aid. 401 ; v, KnotU (1879) 4 App. Ca. 824, 48 

Malint ▼. Freeman (1888) 4 Bing. L. J. Ch. 679, in which oaee this 

K. C. 896. latitude has at lait been xeitrained. 



CONTRACTS OF INFANTS. 55 

penalty, even if given for necessaries, shall not bind him (g). 
A stronger case is Thornton v. lUingworth (h), where 
the judges said in terms that an infant's contract to buy PnrehMe 
goods for the purposes of trade is absolutely void, not ^ade. ^ 
voidable only : but all that had to be decided was that 
a ratification after action brought was no answer to the 
defence of infancy : and the dicta, as pointed out by Mr. 
Benjamin, are inconsistent with a former case of higher 
authority (but which seems not to have been cited) where 
an infant was allowed to sue on a trading contract for the 
purchase of chattels, the only special circumstance being 
that he had already paid part of the price, so that it was 
clearly for his benefit that he should be able to enforce 
the contract The decision was put on this ground in the 
Court of BLB. by Lord Ellenborough, but the broader 
opinion was expressed by Dampier J. that the other 
party could in no case avoid the contract, and that the 
contracts of infants are as to their validity of two kinds 
only, those which are clearly for the infant's benefit and 
therefore bind him, and those which are not so and are 
voidable at his option. The Court of Exchequer Chamber 
affirmed the judgment without calling on counsel to sup- 
port it, holding that " the general law is that the contract of . 
an infant may be avoided or not at his own option," and 
that this case was no exception (i). In a much later case Contnct 
the following opinion was given by the Court of Queen's ® ■®^***" 
Bench on the conviction of a servant for unlawfully ab- 
senting himself from his master's employment : — 

" Among miny objeotiomi one appean to qb clearly f aUJ. He wm 
an infant at the time of entering into the agreement, which anthorizea 
the mafftfr to stop hie wagea when the steam engine ia stopped working 
for any oaase. An agreement to serve for wages may be for the infant's 



ig) BauliM v. Dindey (1815) 8 M. (t) Benjamin on Sale, 28 ; War- 

k S. 477 ; Co. Ut. 172 a. with v. Bruce (1813) 2 M. & 8. 206, 

(A) (1824) 2 B. & C. 824. in Ex. Ch. 6 Tauit 118. 



56 CAPACITY OP PARTIES. 

benefit {k); bot an agreement which compels him to serye at all tfanea dnzing 
the tenn bat leaves the master free to stop his work and his wages when- 
ever he chooses to do so cannot be considered as beneficial to the servant. 
It is inequitable and wholly void. The conviction most be qnashed '* {l). 

But this decided only that the agreement was not en- 
forceable against the infant. The Court cannot have 
meant to say that if the master had ai'bitrarily refused to 
pay wages for the work actually done the infant could not 
have sued him on the agreement. Again, it is said that a 
lease made by an infant, without reservation of any rent 
(or even not reserving the best rent), is absolutely void. 
But this opinion was disapproved by Lord Mansfield, whose 
judgment Lord St. Leonards adopted as good law, though 
the actual decision was not on this particular point in 
either case (m). And in a modem Lrish case (n) it has 
been expressly decided that at all events a lease made by 
an infant reserving a substantial rent, whether the best 
rent or not, is not void but voidable ; and further that it 
is not well avoided by the infant granting another lease of 
the same property to another person after attaining his 
full age. There is good English authority for the proposi- 
tion diat if a lease made by an infant is beneficial to him 

Sale, fta, he cannot avoid it at all (o). It appears to be agreed that 
of IsAid. 

{k) It seems iAuA prima fade it is W. 807, 340 ; and see Bac AK i, 

so, even if it contains dansos im- 361. 

posing penalties, or giving a power (n) Slatar v. Brady (1883) 14 Ir. 

of dismissal, in certain events : C. L. 61. The Court inclined to 

Wood V. Fenwick (1842) 10 M. & think that some act of notoriety by 

W. 196 ; Ledie v. PU^patriek (1877) the lessor would be required, snob 

3 Q. B. D. 229, 47 L. J. M O. 22, as entering, l«inginff ejectment, or 

distinguishing Reg. v. Lord (next demanding posMSsraii | however 

note). there was another reason, namely, 

(0 Reg. V. Lord (1848) 12 Q. B. that the second lease might be con- 

757, 17 L J. Bf. C. 181, where the stmed as only creating a future 

head note rightly says '* void agoMiet interest to take effect on the deter- 

tke ii^ant" mhiation of the first With regard 

(m) Zouck V. Panone (1765) 3 to the first reason it seems to have 

Borr. 1794 (where the decision was been material that a freehold estate 

that the reconveyance of a mort- (for the life of the lessor or twenty- 

gagee's infant heir, the mortgage one years) had passed by the 

beuig properly paii off, coold not original lease, 

be avcnded by his entry before fuU (o) Maddtm v. WkiU (1787) 2 T. 

age) : AOea v. AUm (1842) 2 Dr. k B. 159. 



INFANT SHAREHOLDEBa 57 

the sale, purchase (p), or exchange (q) of land by an in&nt 
is both as to the contract and as to the conveyance only 
voidable at his option^ 

Again, there is no doubt that an infant may be a partner 
or shareholder (though in the latter case the company may Sa . 
refuse to accept him) (r) ; and though he cannot be made ^ 
liable for partnership debts during his infancy, he is bound 
by the partnership accounts as between himself and his 
partners and cannot claim to share profits without oootri- 
buting to losses. And if on coming of age he does not 
expressly disaffirm the partnership he is considered to 
affirm it, or at any rate to hold himself out as a partner, 
and is thereby liable for the debts of the firm contracted 
since his majority (a). 

The liability of an infant shareholder who does not 
repudiate his shares to pay calls on them rests, as far as 
existing authorities go, on a somewhat different form of 
the same principle (of which afterwards). As to contri- 
bution in the winding up of a company, Lord Justice 
Lindley (2. 1356) ^'is not aware of any case in which an 
infant has been put on the list of oontributories. Upon 
principle, however, there does not appear to be any reason 
why he should not, if it be for his benefit ; and this, if 
there are surplus assets, might be the case." Otherwise 
he cannot be deprived of his right to repudiate the shares, 
unless perhaps by fraud ; but in any case if he " does not 
repudiate his shares, either while he is an infant or within 
a reasonable time after he attains twenty-one, he will be a 
contributory," and still more so if after that time he 
does anything showing an election to keep the shares. On 
the whole it is clear on the authorities (notwithstanding a 

{p)Co.UL2b,B^e.AJb.lahmaj Oooeh'B oa. (1872) 8 CIl SM, 42 

L 8 (i. 860). L. J. Gh. 881. And M6 lindley 

(9) Ca Lit. 61 h. 74-76, 5Ui ad. 

{r) But the oompeny eMinot die- (f) lAndley, 1, on eompanlee, 6tli 

pn'.e the Talidity of n tnaefer to Ml ad. 811, 828; Ocode ▼. ffarritan 

faifiuit efler the inlukt haa tniM- (1821) 5 B. ft A]d. 147. 
lened over to a peieon gmwris: 



58 



CAPACITT OP PARTIES. 



few expresaions to the contrary), that both the transfer of 
shares to an infant and the obligations incident to his 
holding the shares are not void but only voidable (t). 

^^•"^g®* Marriage is on a dififerent footing from ordinary con- 
tracts (u), and it is hardly needful to say in this place that 
• the possibility of a minor contracting a valid marriage has 
never been doubted in any of our Courts. Even if either 
or both of the parties be imder the age of consent (four- 
teen for the man, twelve for the woman) the marriage is 
not absolutely void, but remains good if when they are 
both of the age of consent they agree to it (x). But the 
Marriage Act, 4 Geo. 4, a 76 (ss. 8, 22), makes it very 
difficult, though not impossible, for a minor to contract 
a valid marriage without the consent of parents or 
guardians (y). 

As to promises to marry and marriage settlements, it 
has long been familiar law that just as in the case of his 
other voidable contracts an infant may sue for a breach of 
promise of marriage, though not liable to be sued (z). An 
infant's marriage settlement is not binding on the infant 
unless made under the statute (see poet, p. 73), and the 
Court of Chancery has no power to make it binding in the 
case of a ward (a). A settlement of a female infant's 
general personal property, the intended husband being of 
full age and a party, can indeed be enforced, but as the 
contract not of the wife but of the husband ; the wife's 



PromiMS 
to marry 
and mar- 
riage let- 
Uementii 



{t) ZuflMdcn'sca. (1868) 4 Ch. 81 ; 
Choih'B GA. lait page ; q>. p. 64,tn/ra. 

(«) ContineDtal writen have 
wasted much ingenuity in debating 
with which olaw of oomtraote it 
shoold be reckoned. Sav. Syst. § 141 
(3. 817) ; Ortolan on Inst. 2. 10. 

(x) Bacon, Abr. 4. 886. 

(y) In most Gontineotal ooontries 
the earUest age of legal marriage is 
fixed : in France it U eighteen for 
the man, fifteen for the woman, and 
consent of ptrents or lineal anoeators 
is required np to the ages of twenty- 
five and twenty-one respeotiTely. 



(Code Civ. 144 aqq.) Bat this oon- 
sent may be dispensed with in 
▼arioQs ways by matter subsequent 
or lapse of time : see art 182, 188, 
185. The marriage law of other 
states (except some where the canon 
law still prevails) appears to differ 
little on the average from the law 
of France, in this particular. 

(f ) Bacon, Abr. Infancy and Age. 
1. 4 (4. 370). Per Lord BUen- 
borouffh, Warwick 7. Bruce (1818) 
2 M. & S. 205. 

(a) Fidd v. Moore (1865) 7 D. 
M. G. 691, 710 ; 25 L. J. Oh. 66. 



COKTR^GTS OF INFANTS. 59 

personal property passing to him by the marriage, he is 
boand to deal with it according to his contract (6). And 
particular covenants in an in&nt's settlement may be 
valid (c\ In any case the settlement is not void but only 
voidable ; it may be confirmed by the subsequent conduct 
of the party when of full age and aui iuris (d). Again an Nagotiftbfe 
infant's contract on a bill of exchange or promissory note ^^^^^ 
was once supposed to be wholly void, but is now treated Aoeomito 
as only voidable (e). The same holds of an account stated ; !|^£j?L^ 
and here the decisive case is a strong authority in favour fthiiO^iift 
of the general contention that a contract is not in any case ^j^^ 
absolutely void by reason of the party's infancy. The«»« 
Court said : — mSoL 

" The atgammt on behilf of Um def endant wm tiMit an aooooiit lUled 
by an infant is not meraly ToidaUe bat aotoally Voidy lo that no aabte 
qnent Tatification can make it of any avaO. Bat we ean we no loaBd or 
reaeonaUe distinction in this respect between the liability of an infant 
on an aoooant stated and his liability for goods sold and delivered or om 
oMp oiker eoniiraet . . . The general doctrine is that a party may after be 
attains the age of twenty-one years ratify and so make himself liable on 
contracts made daring infancy. We think that on principle onoppoeed by 
aoihority this may be done on a contract arising on an aoooant stated as 
well as on any ciker eontrad '* (/). 

On the whole, then, we have seen that in several im- Conofai- 
portant classes of cases (including some that were formerly reason^ 
supposed exceptional) an infant's contract is certainly not ^M^ 
void : and we have also seen that there is not any clear tracts of 
authority for holding that in any case it is in fact void. ^^^ 
The opinion here maintained appears to be now generally OL L. 
accepted. 

There is one exception to the rule that an infant may Infant 
enforce his voidable contracts agaiftst the other pftrtyJJJ^ 
during his infancy, or rather there is one way in which he tpMlfic 
cannot enforce them. Specific performance is not allowed So^*™" 

(() Davidson, Goby. 8, pL 2, 72S. (e) Byles on Bills, 59 (10th ed.); 

(e) Smith ▼. Lueat (1881) 18 Gh. undisputed in ffanrii ▼. WaU (1847) 

D. 58L 1 Ex. 122 ; 16 L. J. Bx. 270. 

{d) Damm ▼. Dimm (1870) Q Sq. {f) WUUamg t. Moor (1848)11 If. 

408; 89 L. J. Oh. 848. ft W.268,.2H 268, 12 L. J. Sz. 258. 



60 



CAPACITY OF PABTIE& 



At what 
time he 
may avoid 
his con- 
tracts. 



Money 
paid onder 
avoided 
oontnusti 
when not 
recover- 
able. 



Infants' 
Relief 

Act, 1874. 



at the suit of an infant, because the remedy is not mutual^ 
the infant not being bound (g). 

An infant may avoid his voidable contracts (with prac- 
tically few or no exceptions) either before or within a 
reasonable time after coming of age: the rule is that 
" matters in fait [i,e., not of record] he shall avoid either 
within age or at full age," but matters of record only 
within age (Co. Lit. 3806) (h). Subject to the general rule, 
established for the benefit of innocent third persons, that 
voidable transactions are not invalid until ratified but 
valid until rescinded (i), an infant cannot deprive him- 
self of the right to elect at full age, and only then 
can his election be conclusively determined (k). If 
an infant pays a sum of money under a contract, in con- 
sideration of which the contract is wholly or partly 
performed by the other party, he can acquire no right to 
recover the money back by rescinding the contract when he 
comes of age. Such is the case of a premium paid for a 
lease (I), or of the price of goods (not being necessaries) 
sold and delivered to an infant and paid for by him : and 
so if an infant enters into a partnership and pays a 
premium, he cannot either before or after his full age 
recover it back, nor therefore prove for it in the bankruptcy 
of his partners (m). 

We must now consider the effect of the Act of 1874 
(87 & 38 Vict c. 62), which enacts as follows .-— 

1. All contracts whether by specialty or by sunple contract henceforth 
entered into l^ infants for the repayment of money lent or to be lent, or 
for goods supplied or to be supplied (other than contracts for necessaries), 



iff) Flight V. BoOand (1828) 4 
Buss. 298. 

{K) See per Parke B. Newry and 
JSnnukUUn By, Co, v. Coombe (1849) 
S Ex. 666, 18 L. J. Ex. 825 ; per 
Chir. L, and N. W. B. v. M*Michad 
(1860) 6 Ex. 114, 20 L. J. Ex. 97. 
As to an infant being bound when 
he comes of age l^ an aeknowledff- 
ment made in a Oourt of Beooro, 
see Y. B, 20 & 21 Ed. L p. 820. 



(i) Per Lord Colonsay, L. R 2 
BL L. 875. 

{h) L,AN.W.R,y. M^Miehad. 
tupra; SkUor v. Trimble (1861) 14 
Ir. 0. L. 842. 

(I) ffdmu V. Blogg (1817) 8 
Taunt. 86, 508, 8. C. Moore, 1. 466, 
2.562. 

(m) £x parU Taylor (1866) 8 
D. M. G. 254» 268. 



RATIFICATION BT INFANT. 61 

•ad aU aoooosli iliited with faflaafti, ihiA bo tAmMbdj rdd : ptovidod 
•Iwftyi tlMt tidi enftabnent thdl not faiT»UdMe any oooinet into wfaioh as 
inlaat may ligr any «natiiig or futon alatote or by the rolaa d oommoa law 
or equity eater, eioepl aueh aa bow by law an roUable. 

2. NoaetkMnhanbobnaffatwberebf to eluMge aay penoa apoa aay 
promue made after foil age to pay aay debt ooatnwled daii^ ialaaey, or 
apoa aay ntificatloe made after foU age of aay proeun or ooatraet aiade 
dariag infaacy^ w h eth er then ihall or ihall aot be aay aew eoanderatioa 
lor euflh pnaiiie or ntifioatioB after foil agOb 

8. TUa Aot may be eitedae The labati Belief Aoti 1874. 

The 2nd section supersedes the 5th section of Lord S^^Sn 
Tenterden's Act (9 Geo. 4, c. 14) (n), by which no ratifica- opentin 
tion of a contract made during infancy could be sued upon '^ 
unless in writing and signed by the party to be chaiged. 
The new enactment forbids an action to be brought at all 
on any such promise or rati6cation, and it applies to a 
ratification since the Act of a promise made in infiemcy 
before the passing of the Act (o), whether the agreement 
IS or is not one of those included in s. 1 (j>). It probably 
also prevents the ratification from being available by way 
of set-off (q). This, however, is a different thing from 
depriving the ratification of all effect For it may have 
other effects than giving a right of action or set-off, and 
these are not touched. While the matter was governed 
by Lord Tenterden's Act there were many cases where a 
contract made during infancy might be adopted or con- 
firmed without any ratification in writing so as to produce 
important results. Thus in the case of a marriage settle- 
ment the married persons are bound not so much by 
liability to be sued (though in some cases and for some 
purposes the husband's covenants are of importance) as by 

(fi) Biaoe ezpready lepealed by been one of ratiBcation it may be 

the Statnte Law KeTikion Aot, left to the juy to tay whether the 

1875, 88 k 89 Vict. c. 86. oonduet of the partiee amoante to a 

(o) &c parte £MU (1876) 10 Ch. new promin : Diiekam ▼. IFormfi 

878 ; 44 Ll J. Bk. 68. (1880) 6 C. P. D. 410, 49 L. J. O. P. 

(p) Coxkead ▼. MuOk (1878) 8 688, by IJndlej aad Denmaa JJ. 

aP.l>.489,47L.J.C.P.761. It ditt. Lord Coleridge C.J. 

is held, however, that in a oaae {q) RawU^ ▼. Hawlew ^1876) 1 Q. 

whioh woohl before the Aet have B. IMv. 460 ; 45 L. J. Q. a 675. 



62 CAPACITY OP PARTIES. 

inability to interfere with the disposition of the property 
once made and the execution of the trusts once constituted: 
and so far as concerns this an infant's marriage settlement 
may, as we have seen, be sufficiently confirmed by his or 
her conduct after full age (r). Again an infant partner 
who does not avoid the partnership at his full age is, 
as between himself and his partners, completely bound 
by the terms on which he entered it without any formal 
ratification; and in taking the partnership accounts the 
Court would apply the same rule to the time of his 
minority as to the time after his full age. Again an infant 
shareholder who does not disclaim may after his full age, 
at any rate, be made liable for calls without any express 
ratification ; on the contrary, the burden of proof is on him 
to show that he repudiated the shares within a reasonable 
time (s). 

And as Lord Tenterden's Act did not formerly stand in 
the way of these consequences of the affirmation or non- 
repudiation of an infant's contract, so the Act of 1874 will 
not stand in the way of the same or like consequences in 
the future. In fact the operation of the present Act seems 
to be to reduce all voidable contracts of infants ratified at 
full age, whether the ratification be formal or not, to the 
position of agreements of imperfect obligation, that is, 
which cannot be directly enforced but are valid for all 
other purposes. Other examples of such agreements and 
of their legal eflfect will be found in the chapter specially 
assigned to that subject. 
SeaMe, no A collateral result of this enactment appears to be that 
p^orm- one who has made a contract during his infancy is not 
*?r ^^^ ^^^ *^^® ^ obtain specific performance of it after his full 
party of age, for the same reason that he cannot and formerly 

during The proviso about new consideration was presumably 

infancy* 

(r) Daviet t. Davie$ (1870) 9 Eq. {t) Flight ▼. BoOand (1828) 4 Rum. 

468 ; 89 L. J. Ch. 848, gupra^ p. 59. 298, p. 60, tupra, 
(t) See pp. 67, 64. 



infants' belief act. 63 

introduced by way of abaadant caution, to prevent colour- Bflfeot of 
able evasions of the Act by the pretence of a new contract u to i 



founded on a nooiinal or trifling new consideration (u) 
Where a substantial consideration appears on the &ce of 
the transaction these words can hardly be supposed to 
impose on the Court the duty of inquiring whether the 
apparent consideration is the whole of the real con- 
sideration. 

In the first section the words concerning the purchase ^ ■; l» 
of goods are not free from obscurity. If we might construe onta^ 
the Act as if it said " for payment for goods supplied," &c., ^^^J^^^*" 
it would be clear enough : but it is not so clear what is the 
precise operation of an enactment that contracts '' for goods 
supplied or to be supplied/' other than necessaries, shall be 
void. It seems to follow that no property will pass to the 
infant by the attempted contract of sale, and that if he pays 
the price or any part of it before delivery of the goods he 
may recover it back ; as indeed he might have done before 
the Act, for the contract was voidable, and he was free to 
rescind it within reasonable time. But it does not 
follow that if the goods are delivered no property passes 
or that if they are paid for the money may be recovered 
back. Such a consequence would be unreasonable, and is 
not required by the policy of the statute, which is to protect 
infants from running into debt, not to disable them from 
making purchases for ready money. It is certain that 
when a particular class of contracts is simply declared to 
be unlawful, this does not prevent property from passing 
by an act competent of itself to pass it, though done in 
pursuance or execution of the forbidden contract (aj). In 
this case also it seems dear that the delivery with intention 
to pass the property would pass it apart from any question 
of contract, and such authorities as Holmes v. Blogg (y) 

(v) Tet IB it effeotive for thia Banking Co. (1871) L. B. 3 P. O. 

porpoM 1 See JDUckam y. W^nrall, 646, 559 ; 40 L. J. O. P. 22. 

p. 61, wpra. {if) 8 Tftunt. 508 (1817). 

{») Ayen ▼. Sovtk Autitiralia.n 



64 CAPACITY OF PARTIES. 

and Ex parte Taylor {z\ where the contract was only 
voidable but was afterwards rescinded, would still be 
applicable, so that if the goods had been accepted the 
Qtt. Wag money could not be recovered. In fact it has been held 
8My t that an infant ma; be guilty of larceny as a bailee though 
the goods were delivered to him on an agreement void 
under the Act (a). It is difficult to see what result is 
obtained by the first section of the Act which is not equally 
well or better obtained by the second. At common law 
the infent was not bound by any of the contracts specified 
in the first section, unless he chose to bind himself at full 
age : by iLe second section he cannot henceforth so bind 
himself. No more complete protection can be imagined, 
and the first section appears superfluous. Perhaps the 
first section may be read as giving a popular exposition of 
the chief practical effects of the following one. 

It is doubtful whether a bond, bill of exchange, or note 
given by a man of full age, for which the consideration 
was in fact a loan of money or the supply of goods 
not necessaries during his infancy, would be void under 
8. 1 (6). But s. 2 would no doubt effectually prevent it 
from being enforced, though perhaps the words are not 
the most apt for that purpose. 

LUUlitj 2. Of the liability of infants on obligations incident to 

on obiiffA* 

tlona inci. interests in permanent jyroperty. 

^^iJ^ In an old case reported under various names in various 

and espe- books (c), it was decided that an infant lessee who con- 

^hfay* ^ tinues to occupy till he comes of full age is after his full age 

■**•'«»■ liable for arrears of rent incurred during his infancy. In 

like manner a copyholder who was admitted during his 

{z) 8 D. M. a. 254 (1856) p. (c) KtUle v. Eliot (1614) BoUe 

60 <u|>ra. Ab. 1, 731, K. ; Gro. Jm. 320; 

(a) R, ▼. McDonald (1885) 15 Brownlow 120 ; 2 Bulst 69. Sm 

Q. B. D. 328. the judgment of the Court of Bx- 

(6) Gp. PUghi V. Reed (1868) 1 ofaeqaer in X. ^ N. W, Ry, Co, y. 

BL & 0. 703, 32 L. J. Ex. 265. dPMichad (1850) 6 Ex. 114 ; 20 

L. J. Ex. 97. 



CONTRACTS OF INFANTS. 65 

minority and has not diaclaiined is bound to pay the fine (d). 
The same principle is applied to the case of infant share- 
holders in railway companies. An infant is not incapable 
of being a shareholder, and as such is prima facte liable 
when he comes of age to be sued for calls on his shares. 
He can avoid the liability (which, though regulated by 
statute, has the general incidents of contract) only by 
showing that he repudiated the shares either before attain- 
ing his full age (e), or in a reasonable time afterwards (/). 
A railway shareholder is not a mere contractor, but a 
purchaser of an interest in a subject of a permanent nature 
with certain obligations attached to it ; and those obliga- 
tions he is bound to discharge, though they arose while he 
was a minor, unless he has renounced the interest. A 
mere absence of ratification is no sufficient defence, even if 
coupled with the allegation that the defendant has derived 
no profit from the shares. For if the property is unpro- 
fitable or burdensome, it is the holder's business to disclaim 
it on attaining his fiill age, if not before ; and perhaps he 
could not exonerate himself even during his minority by 
showing that the interest was not at the time beneficial, 
unless he actually disclaimed it (g). Comparing the ana- 
logous case of a lease, the Court said — " We think the 
more reasonable view of the case is that the infant, even 
in the case of a lease which is disadvantageous to him, 
cannot protect himself if he has taken possession, and 

((2) Svd^n y. Ckiekeder (1765) 8 Act defininff the liiOiiU^ of ihare. 

But. 1717. holders. See per Lord Denman 

(e) Acvry S EwMdOtn R9. Co. O.J. and Palteeon J. in Cork dt 

T, Coombe (IS49) S Ex. .565, 18 L. Bt^dim Ry, Co, v. Caaenove (1847) 

J. Sz. 825. 10 Q. a 935. Thia view was after- 

(/) A plea whkdi merely alleged wards abandoned as inooDsisteiit 
repndiatioii after full a((e was there- with the established rale that gene- 
fore held bad in IhtUbn A WieHow ral words in statutes are not to be 
My, Co. ▼. Black (1852) 8 Sz. 181, constraed so as to deprive infants, 
22 L. J. Bz. 94. At one time it Innatlas, Ao.,of the protection given 
seems to haye been thoodit thai to them bj the common law. 
even an infant shareholder was {g) It is submitted that in such a 
made ahsolntely liable bj the gene- case the disclaimer if made wonld 
ral form of the enactment In the oonohiaively determine his interest 
Companies Claoses Consolidation and not merely suspend it. 

P. F 



66 CAPACITY OF PARTIES. 

if he has not disclaimed, at all events unless he still be a 
minor " (h). In all the decided cases the party appears 
to have been of full age at the time of the action being 
brought, but there is nothing to show that (except possibly 
in the case of a disadvantageous contract) he might not as 
well be sued during bis minority. 

The same results, except perhaps as to suing the share- 
holder while still a minor, would follow from the general 
principles of the law of partnership even if the company 
in which the shares were held had not any permanent 
property. 

Liability 3. Of the liability of an i/nfant when the contrax:t is for 
d»/oon?' ^^ benefit, and especially for necessaries, 
tract Qtfc It has been laid down in general terms that if an agree- 
the nile? m^nt be for the benefit of an infant at the time, it shall 
bind him (i), or even that the contract is binding unless 
manifestly to the infant's prejudice (J), What the actual 
decisions show is that an infant's contract of apprentice- 
ship yk), or an ordinar)'^ contract to work for wages, will, if 
it be reasonable, be considered binding on the infant to 
this extent, that he may no less than an adult incur 
the statutory penalties for unlawfully absenting himself 
from his master's employment (Q. Again there are many 
conceivable cases in which it might be for an infant's 
benefit, or at least not manifestly to his prejudice, to enter 
into trading contracts, or to buy goods other than neces- 
saries : one can hardly say for example that it would be 

(A) Lond, is N. W. Ry. Co. v. (I) In Ltdie v. Fiixpatriek (1877) 

M'Michad (1860) 6 Ex. 114, 20 L. 8 Q. B. D. 229, 47 L. J. M. C. 22, i 

J. Ex. 97, 101. oMe of rammary prooeedings nndw 

(i) AtacUUmy. !fAt^(1787)2T.B. the Employen and Workmen Act^ 

159. 1876, it may be ooUected that the 

(j) Cooper T. Simmoru (1862) 7 facta were of the same kind, though 
H & N. 707, 721 ; per Wilde B. the employer's plaint was in terms 
Not BO HtroDgly put in the Ia J. re- for a breach of contract As to in- 
port, 81 L. J. M. C. 188. 144. fant apprentices in London see p. 

(k) Wood V. Penwicfc (1842) 10 72, below. 
M. & W. 196. 



INFANTS: NECESSARreS. 67 

manifestly to the disadvantage of a minor of years of dis- 
cretion to buy goods on credit for re-sale in a rising market; 
yet there is no doobt whatever that such a contract would 
at common law be voidable at his option. Nor has it ever 
been suggested that an infant partner or shareholder is at 
liberty to disclaim at full age only in case the adventure 
has been unprofitable or is obviously likely to become 
so. However, inasmuch as since the Infants' Belief Act, 
1874, an infant's contract, if not binding on him from the 
first, can never be enforced against him at all, it seems 
quite possible that the Courts may in future be diqx)66d 
to extend rather than to narrow the description of con- 
tracts which are considered binding because for the infimt^s 
benefit (m). 

Sa, CimtrcLcts for necessaries. UnbOity 

The leading authority on this subject is now the^JJ 
judgment of the Exchequer Chamber in Ryder v. Wovah- 
vjell (n), from which the following introductory statement 
is taken : — 

"The generml rale of law is dearly MUUished, Mid u tiMit ui 
infant ib genenllj incapable of binding himself by a coBtraet To 
tfab nde there is an exception introduced, not for the benefit of the 
iradesDiaB who may trust the infant* bnt for that of the infant himself. 
Thk ezoeption is thai he may make a contract for nnnnssirJes, and is 
accurately stated by Parke B. in Peien ▼. Fleming (o). * From the 
earliest time down to the present the word necessaries is not oonfined in 
its strict sense to snch artioles as wen necessary to the support of life, 
but extended to articles fit to maintain the particnlar person in the states 
degree and station in life in which he is ; and therefore we must not take 
the word necessaries in its unqualified sense, but with the qualifioation 
above pointed oat.' " 

What in any particular case may fairly be called What are 
necessary in this extended sense, is what is called a 2^^^. » 
question of mixed fact and law : that is, a question for a q«««**« <•' 

(m) In an aetion brooght by an Q. B. Dir. 577. 

iohat, an undertaking giyen by the (n) (1868) L. R 4 Ex. 82, 88 ; in 

infant's next friend is not binding the Court below L. R. 8 £x. 90 ; 

if the drcnmitaooes are such that 38 L. J. Ex. 8. 

it cannot be for the infant's benefit : (o) (1 840) 6 M. ft W. at p. 46. 
ModtM ▼. SwUhenbank {ISQ9) 22 

F 2 



68 CAPACITY OF PAKTIE8. 

mixed fact jury, subject to the Court being of opinion that there is 
evidence on which the jury may not unreasonably find for 
the plaintiff. 
The Conii The station and circumstances of the defendant and the 
Uiings are particulars of the claim being first ascertained, it is then 
primafadefoY the Court to sav whether the thine^s supplied are 
prima facie such as a jury may reasonably find to be 
necessaries for a person in the defendant's circumstances, 
or '' whether the case is such as to cast on the plaintiff the 
onus of proving that the articles are within the exception 
[Le., are necessaries], and then whether there is any suflSi- 
cient evidence to satisfy that onus." In the latter case 
the plaintiff must show that although the articles would 
generally not be necessary for a person in the defendant's 
position, yet there exist in the case before the Court special 
circumstances that make them necessary. Thus articles of 
diet which are prima fame mere luxuries may become 
necessaries if prescribed by medical advice (p). It is said 
that in general the test of necessity is usefulness, and that 
nothing can be a necessary which cannot possibly be useful : 
but the converse does not hold, for a useful thing may be of 
unreasonably costly fashion or material. It is to be borne 
in mind that the question is not whether the things are 
such that a person of the defendant's means may reasonably 
buy and pay for them, but whether they can be reasonably 
said to be so necessary for him that» though an infant, he 
must obtain them on credit rather than go without. For 
the purpose of deciding this question the Court will take 
judicial notice of the ordinary customs and usages of 
society (q). 
The jury If the Court does not hold that there is no evidence on 
thl* ^ which the supplies in question may reasonably be treated 
in fact as necessaries, then it is for the jury to say whether they 

neceMary. 

(p) Ree Wharton ▼. MtMckenzU Ex. at p. 96. 
(1844) 5 Q. B. 606, 18 L. J. Q. B. (9) L. R. 4 Ex. at p. 40. 

180, and per BramweU B. L. R. 8. 



INFANTS: NECESSARIES. 69 

were in &ct necessaries for the defendant under all the 
circnmstanoes of the case. 

As a matter of common sense it seems relevant to this Supply 
question whether the defendant was or was not already,"^" ^ 



sufficiently provided with commodities of the particular ^^^J' 
description, especially when we bear in mind that this 
exceptional liability for necessaries is admitted in the in- 
terest not of the seller but of the infant buyer. The 
weight of authority is strongly in &vour of admitting 
evidence to this effect (r). On the whole it seems that 
the question whether goods supplied are necessaries is a 
question of fact, depending (among other conditions) on 
the extent to which the party is already supplied with 
similar goods; that if they are necessary the tradesman will 
not be the less entitled to recover because he made no 
inquiries as to the infant's existing supplies ; but that on 
the other hand, if the in&nt is already so well supplied 
that these goods are in truth not necessary, the tradesman's 
Ignorance of that fact will not make them necessary, and 
he cannot recover. There is no rule of law casting on him 
a positive duty to make inquiries, but he omits to do so at 
his peril (s). But the defendant having an income out of 
which he might. keep himself supplied with necessaries 
for ready money is not equivalent to his being actually 
supplied, and does not prevent him from contracting for 
necessaries on credit (Q. 

It would be natural for juries, if not warned against it. AppMrmt 
to fall into a way of testing the necessary character of JJJ^JJ^*^^ 
supplies, not so much by what the means and position of materiaL 

(r) Bru^Mkaw t. Saton (1839) 7 L. J. Q. B. 6. 

Sooll, 188 ; Potter t. Redanuve (1866) (t) See Bra^Mkaw v. Eaion (1889) 

L. B. 4 Ex. 85. fk ; to the oonlnury. 7 Scott. 188. 

Ryder T. WambweU{lMS) L. R. 8 Ex. {t) Burghart v. ffaU (1889) 4 M. 

90, 88 L.J. Ex.8 ;(tlie point was left ft W. 727. OofUra Mortara w. Ball 

opeD in Ex. Ch., U R. 4 Ex. 42) ; (1884) 6 Sim. 466. The dootrine tb^re 

bat tlue k dinented from in Bame$ laid down aeems rap^rflnoiu. for the 

T. To^ (1884) 18 Q. B. D. 410, and mippUea there eUimed for (aoch «e 

(bj membere of the G. A. ritting as 209 pair of glovts in half a year) 

a Dividonal Cknui) Jokndane ▼. could not have been n^asonably 

Markt (1887) 19 Q. B. D. 609, 67 found neceisary In any cai^. 



70 CAPACITY OF PARTIES. 

the buyer actually were, as by what they appeared to be 
to the seller, and such a view is not altogether without 
countenance from authority (u). It is conceived, however, 
that the knowledge or belief of the tradesman has nothing 
to do with the question whether the goods are necessary 
or not. It may be said that the question for the Court 
will, as a rule, be whether articles of the general class or 
description y^ere prima facie necessaries for the defendant, 
and the question for the jury will be whether, being of a 
general class or description allowed by the Court as neces- 
sary, the particular items were of a kind and quality 
necessary for the defendant, having regard to his station 
and circumstances. For instance, it would be for the 
Court to say whether it was proper for the defendant to 
buy a watch on credit, and for the jury to say whether the 
particular watch was such a one as he could reasonably 
afford. But this will not hold in extreme cases. In 
Ryder v. Wombwdl (x) the Court of Exchequer Chamber 
held, reversing the judgment of the majority below on this 
point, that because a young man must fasten his wrist- 
bands somehow it does not follow that a jury are at liberty 
to find a pair of jewelled solitaires at the price of 251, to be 
necessaries even for a young man of good fortune. 

What the Hitherto we have spoken of a tradesman supplying 
, >* goods, this being by far the most common case. But the 



mdudet. range of possible contracts for "necessaries" is a much 
wider one. ** It is clearly agreed by all the books that 
speak of this matter that an infant may bind himself to 
pay for his necessary meat, drink, apparel, physic [in- 
cluding, of course, fees for medical attendance, &a, as well 
as the mere price of medicines], and such other necessaries 
and likewise for his good teaching and instruction, whereby 



(tt) In Dalton v. Qib (18S9) 7 of the party. 
Scott, 117. ninch weight is given to (x) (1868) L. R. 4 Ex. 32, 38 

the apparent rmnktakdcircavMUakecB L. J. Ex. 8. 



INFANTS : NECESSARIES. 71 

he may profit himself afterwards" (y.) Thns learning a 
trade may be a necessary, and on that principle an infant s 
indenture of apprenticeship has been said to be binding on 
him (z). The jMreparation of a settlement containing 
proper provisions for her benefit has been held a necessary 
for which a minor about to be married may make a valid 
contract, apart from any question as to the validity of the 
settlement itself (a). 

A more remarkable extension of the definition of neces- 
saries is to be found in the case of Chappie v. Cooper (b), 
where an infant widow was sued for her husband's funeml 
expenses. The Court held that decent burial may be 
considered a necessary for every man, and husband and 
wife being in law the same person, the decent burial of a 
deceased husband is therefore a necessary for his widow. 
It would perhaps have been better to adopt the broader 
ground that a contract entered into for the purpose of 
perfonning a moral and social, if not legal, duty, which it 
would have been scandalous to omit, is of as necessary a 
character as any contract for personal service or purchase 
of goods for personal use. 

The supply of necessaries to an infant creates only aThelbU- 
liability on simple contract, and it cannot be made the fSpu**^ 



ground of any different kind of liability (c). Coke says : «»*'•«* 
"If he bind himself in an obligation or other writing with 
a penalty for the payment of any of these, that obligation 

(y) B«a Abr. Infancy and Age, I. money could not be deemed equiva- 

(4. S35). And lee Chappie v. Cooper lent to neoeanuries, though actQally 

(1844) 18 M. k W. 262, 18 L. J. upent on neo6«Mriet : Bee. Abr. 4. 

Sz. 286. 866. It if sngReeted by my Ameri- 

(2) Cooper T. Simmom (1862) 7 can editor, Mr. Wjd, that the 

H. ft N. 707, 81 L. J. M. G. 188, obligation k really qnasi ex oon- 



Martin B. See, however, |>. tractn only. In < 

02, mpro. which be cites it hae been held that 

(a) ife^ ▼. Cla^on (1864) 17 an infant la bonnd to pay for necea- 

C. K N. 8. 668, 84 L. J. C. P. 1, larieB though when Uiey were rap. 

aee the plwadinga, and the judgment pUed he waa too young to nndentand 

of the Court aajhi. the nature of a contract ; and in 

(6) (1844) 18 M. ft W. 262, 18 aeveral others that hi« dntT Is to 

Lb J. Ex. 286. p*^, not the price expraauy pro- 

(c) At common law a loan of miaed, but the reaaoDAble value. 



72 CAPACITY OP PARTIES. 

shall not bind him'* (d), A foii;iori, a deed given by an 
infant to secure the repayment of money advanced to buy 
necessaries is voidable (e). Such is also the common law 
with regard to negotiable instruments (/). But it is said 
that a bill or note given by an infant to a creditor for 
necessaries may be valid if it is not payable to order or 
negotiable (gr). 
What oon. There are some particular contracts of infants valid by 
fof^t Mn custom. By custom incident to the tenure of gavelkind 
™^« by an infant may sell his land of that tenure at the age of 
fifteen, but the conveyance must be by feoffment, and is 
subject to other restrictions (A). This, however, is not a 
full capacity of contracting, for there is no reason to sup- 
pose that an action could be brought against the infant for 
a breach of the contract for sale, or specific performance of 
it enforced. 

''Also by the custom of London an infant unmarried 
and above the age of fourteen, though under twenty-one, 
may bind himself apprentice to a freeman of London by 
indenture with proper covenants ; which covenants by the 
custom of London shall be as binding as if he were of full 
age," and may be sued upon in the superior coui1« as well 
as in the city courts (i). 
By btatnto. Infants, or their guardians in their names, are empowered 
by statute (11 Geo. 4 & 1 Wm. 4, c 65, ss. 16, 17) to grant 
renewals of leases, and make leases under the direction of 
the Court of Chancery, and in like manner to surrender 
leases and accept new leases (s. 12) (k). And by a later 



{d) Ca Lit 172 a, q>. 4 T. B. (A) RoblnsoD on Gavelkind, 

363. 194. 

(e) MaHin v. OaU (1876) 4 Ch. (t) Bacon, Ab. Infancy, B. 4, 

D. 428 ; 46 L. J. Gh. 84. 840. 

(/) Andaoof aocountBBtated,but (k) See Dan. Gb. Pr. 2. 1917; 

these aze now abeolntely' void, as Re Clark (1866) 1 Gb. 292, 35 L. J. 

weU as loans of money to infants. Gh. 314 ; Re Letekford (1876) 2 

^l>m,p. 60. Gh. D. 719;46L.J. Gh.530. (The 

{g) Anon. MS. Fisher's Dig. ed. provisions as to renewals of leases 

Mews, iv. 448. Gp. RoUe Ab. 1. ezt«rnd also to married women.) 
729, pL 7. 



infant's immunitt for wrongs. 78 

Act (18 & 19 Vict a 43) {I), infants may with the aanction 
of the Court make valid marriage settlements of both real 
and personal property. 

4. Of an vnfanfa immumity as to wrongs connected fj*^. "** 
with cojUracL wraig 

An infant is generally no less liable than an adult for IJ^i**? 
wrongs committed by him, subject only to his being in fact sabrtaooe 
of such age and discretion that he can have a wrongful 2^^' 
intention, where such intention is material ; but he cannot 
be sued for a wrong, when the cause of action is in sub- 
stance ex contractu, or is so directly connected with the 
ooDtract that the action would be an indirect way of 
enforcing the contract — ^which, as in the analogous case of 
married women {m), the law does not allow. Thus it was 
long ago held that an infant innkeeper could not be made 
liable in an action on the case for the loss of his guest's 
goods {n). There is another old case reported in divers 
books (o), where it was decided that an action of deceit 
will not lie upon an assertion by a minor that he is of 
full age. It was said that if such actions were allowed all 
the infants in England would be ruined, for though not 
bound by their contracts, they would be made liable as for 
tort ; and it appears in Keble's report that an infant had 
already been held not liable for representing a false jewel 
not belonging to him as a diamond and his own. The 
rule is decidedly laid down iu Jennings v. Rundall (p), 
where it was sought to recover damages from an infant for 

(Q Tbif Act doef not ftffect SUkeman v. Dawwn {\Si7) ID^ G. 

ooTeftareoraaydiMbfaUity other than k Sm. 118, 16 L. J. Ch. 205 ; uid 

infMicy : Seaion ^. Seaton (1888) 13 Me other caees ooUeotad ib. at p. 

App. Ga. 61, 57 L. J. Ca. 661. And 110, where ** the caae mentioned In 

qw, whether it applies to poct-naptiai Keble '* is that which, as stated in 

tettlements. the text, occurs in his report of 

(») See p. 78, infia. Johnum y. Pie. 

(n) RoUe Ab. 1. 2, Action sor (p) 8 T. R 835. It Is ako re. 

Case, B. 8. eognised in Price ▼. Ilewett (1852) 

(o) Johnson ▼. Pie (1665) Sid. 8 Ex. 146 (not a decision on the 

258, 1 Lev. 169, 1 Keb. 918, folW point), 
citfcd by Kiii^ht Brac«s V.O. in 



74 



CAPACITY OF PARTIES. 



BQt bable 
for wroDg 
Apart from 
coDtract, 
thorgh 
touching 
the sub- 
ject mat- 
ter of a 
contract. 



whether 
liable on 
contraot 
implied in 
law. 



overriding a hired mare. But if an infant's wrongful act, 
though concerned with the subject-matter of a contract^ 
and such that but for the contract there would have been 
no opportunity of committing it, is nevertheless indepen- 
dent of the contract in the sense of not being an act of the 
kind contemplated by it, then the infant is liable. The 
distinction is established and well marked by a modem 
case where an infant had hired a horse for riding, but not 
for jumping, the plaintiff refusing to let it for that 
purpose ; the defendant allowed his companion to use the 
horse for jumping, whereby it was injured and ultimately 
died. It was held that using the horse in this manner, 
being a manner positively forbidden by the contract, was 
a mere trespass, for which the defendant was liable (q). 

It is doubtful whether an infant can be made liable 
quasi ex contractu (as for money received), when the real 
cause of action is a wrong independent of contract ; but 
since the Judicature Acts have abolished the old forms of 
action, the question seems of little importance (r). 



In equity 5. Liability vn equity on representation of full age, 
bounVby When an infant has induced persons to deal with him 
Ate ^' ^y falsely representing himself as of full age, he incurs an 
reptesent obligation in equity, which however in the case of a con- 
of TnUage • *"^^ ^ ^^* *^ obligation to perform the contract, and must 
but only to be carefully distinguished from it (8). Indeed it is not a 



(9) Burnard ▼. Haggii (1863) 14 
C. B. N. S. 45, 32 L. J. C. P. 189. 
The bailment waa determined, ai 
where a bailee commits theft at 
common law by " breaking bulk.** 

(r) The liability is affirmed Yxy 
Mr. Leake (p. 546). and in the 
State of Veimont (Bltoell v. Martin^ 
32 Vt. 217, ap, CooUy on Torts, 
112), and disputed by Mr. Dioey 
(on Parties, 284), who is supported 
by a dictum of Willes J. assoming 
that infancy would be a good plea 
to an action for money received, 
though BubetantiaUy founded on a 



wrong. Alton v. Midland Ry. Co, 
(1865) 19 C. B. N. S. at p. 241 ; 84 
L. J. C. P. at p. 297. 

(«) Aec BarOeU v. Wdii (1862) 
1 B. & S. 836, 31 L. J. Q. B. 67. 
Declaration for goods sold, &o. 
Plea, infancy, ^^uitable replica- 
tion, that the contract was induced 
by defendant's fraudulent represen- 
Utiun that he was of age. The 
replication was held bad, as not 
meeting the defence, but only show- 
ing a distinct equitable right colla- 
teral to the cause of action sued 
upon. 



infants; false representations of aoe. 75 

contractual obligation at alL It is limited to the extent th* •Ktmt 
we liaye stated above (p. 53), and the principle on which MiTaatac* 
it IB founded is often expressed in the form : " An infant ^|^!f^ 
shall not take advantage of his own fraud." A review of 
the principal cases will clearly show the correct doctrine. 
In Clarke v. Cobley (Q the defendant being a minor had 
given his bond to the plaintiff for the amount of two 
promissory notes made by the defendant's wife before the 
marriage, which notes the plaintiff delivered up. The 
plaintiff, on discovering the truth, and after the defendant 
came of age, filed his bill praying that the defendant might 
either execute a new bond, pay the money, or deliver back 
the notea The Court ordered the defendant to give back 
the notes, and that he should not plead to any action 
brought on them the Statute of Limitation or any other 
plea which he could not have pleaded when the bond was 
given; but refused to decree payment of the money, 
holding that it could do no more than take care that the 
parties were restored to the same situation in which they 
were at the date of the bond. In Lempriire v. Lange^ a 
quite recent case, it was held that an infant who had 
obtained the lease of a furnished house by representing 
himself of full age could not be made liable for use and 
occupation (u). Caty v. Oertcken (x) shows that when an 
infant by falsely representing himself to be of full age has 
induced trustees to pay over a fund to him, neither he nor 
his representatives can afterwards charge the trustees with 
a breach of trust and make them pay again. Overton v. 
Banister {y) confirms this : it was there held, however, 
that the release of an infant cestui que trust in such a case 
is binding on him only to the extent of the sum actually 
received by him. The later case of Wright v. Snowe (z) 



(t) (17S9) 2 Coz, 178. It mort (tc) (1879) 12 Oh. D. 676. 

be taken, thoa^ H k not deer bj (x) (1816) 2 Medd. 40. 

the report, thet the defendant (y) (1844) 8 Ha. 508. 

fal«ely refmaented himaelf as of (s) (1848) 2 I>e O. ft Sm. 821. 
fall %e. 



76 



CAPACITY OF PARTIES. 



seems not to agree with this, though Overton v. Banister 

was cited, and apparently no dissent expressed. There a 

legatee had given a release to the executrix, representing 

himself to her solicitor as of full age ; afterwards he sued 

for an account, alleging that he was an infant at the date 

of the release. The infancy was not suflSciently proved, 

and the Court would not direct an inquiry, considering 

that in any event the release could not be disturbed. This 

appears to go the length of holding the doctrine of estoppel 

applicable to the class of representations in question, and 

if that be the effect of the decision its correctness may 

There perhaps be doubted. In StikeTnan v. Davison (a) the sub- 

wwiUve * 3^^ ^^ infant's liability for wrongs in general is discussed 

reprwen- in an interesting judgment by Knight Bruce V.-C. and 

mere dissi- the important point is decided that in order to establish 

" d*th"" • this equitable liability it must he shown that the infant 

othtr actually represented himself to be of full age ; it is not 

Cin Sc?* enough that the other party did not know of his minority. 

misled. And as there must be an actual false representation, so it 

has been more lately held that no claim for restitution can 

be sustained unless the representation actually misled the 

person to whom it was made. No relief can be given if 

the party was not in fact deceived, but knew the truth at 

the time ; and it makes no difference where the business 

was actually conducted by a solicitor or agent who did not 

know (b). 



niptoy. 



Proof in A minor cannot be adjudicated a bankrupt in the 
**'**^" absence of an express representation to the creditor that he 
was of full age. The mere fact of trading cannot be taken 
as a constructive representation (c). But if a minor has 
held himself out as an adult, and so traded and been made 
bankrupt, he cannot have the bankruptcy annulled on the 

(a) (1847) I De G. ft Sm. 90; 16 (c) Ex parte Janei (ISSl) 18 Ch. 
L J. Ch. 205. I>iv. 109 ; 50 L. J. Ch. 678, o^er- 

(b) Ndmm v. Stocker (1869) 4 De ruling Ex parU Lynch (1876) 2 Ch. 
O. & J. 468 ; 28 L. J. Ch. 751. D. 227, 45 L. J. Bkcy. 48. 



MARRIED WOMEN. 77 

ground of his infancy (d) ; and a loan obtained on the faith 
of an express representation that he is of full age is a ckim 
provable in bankruptcy (e). 

A transaction of this kind cannot stand in the way of a Baiaubiie- 
subsequeut valid contract with another person made by the v^^c<»n- 
in&ut after he has come of age ; and the person who first J^ •'*^ 
dealt with him on the strength of his representing himself ynrSu, 
as of age acquires no right to interfere with the perform- 
ance of the subsequent contract (/). This is another proof 
that the infant's false representation gives no additional 
force to the transaction as a contract 

It was also held in the case referred to that, assuming 
the first agreement to have been only voidable, it was 
clearly avoided by the act of the party in making another 
contract inconsistent with it after attaining his full age. 
But it has been decided in Ireland (as we have seen) that 
this is not so in the case of a lease granted by an infant ; 
the making of another lease of the same property to 
another lessee after the lessor has attained full age is not 
enough to avoid the first lease {g). The fact that an 
interest in property and a right of possession had passed 
by the first lease, though voidable, seems a sufficient 
ground for the distinction. 

II. Married Women. MMnad 

women caa 
A married woman is capable of binding herself by a oontesot 

contract only "in respect of and to the extent of her ^^^iJlIJi^ 

separate property " (A). This limited capacity is created l*<>P«rty. 

by a statute founded on the practice of the Court of Chan- mon^' 

eery, which for more than a century had protected married d"*Wllty. 

{d) Ex parU Watmm (1809) 16 (/) Inman ▼. Inman (1878) 15 

Ves.265, ExparU BaU$ (1841) 2 £q. 260. 



Mont D. ft D. 837. {<f) SUOar v. Brady (1863) 14 Ir. 

(e) Ex parU Unity Bank ""'"' « » -. -- 

3DDO.ftJ.63; 27L.J. 
ne observations of Jeaael 
thenxm, 18 Ch. D. ftt p. 121 



(e) Ex parU Unity Bank (1858) G. L. 61, iupra^n, 56. 
3 Dd O. ft J. 63; 27 L. J. Bk. 83, {h) Married Wom€n'a Property 

ne obeervatione of JeaMi M.B. Act, 1882, 45 ft 46 Vict c 75, «>. 1. 



78 CAPACITY OP PARTIES. 

women's separate interests in the manner to be presently 
mentioned. £xcept as to separate property the old com- 
mon law rule still exists, though with greatly diminished 
importance. That rule is that a married woman cannot 
bind herself by contract at all. 

If she attempts to do so " it is altogether void, and no 
action will lie against her husband or herself for the breach 
of iir*" (^) And the same consequence follows as in the 
case of infants, namely, that although a married woman is 
answerable for wrongs committed by her during the cover- 
ture, including frauds, and may be sued for them jointly 
with her husband, or separately if she survives him, yet 
she cannot be sued for a fraud where it is directly con- 
nected with a contract with her, and is the means of effect- 
ing it and parcel of the same transaction, €.g.y where the 
wife has obtained advances from the plaintiff for a third 
party by means of her guaranty, falsely representing her- 
self as sole (i) ; but it is doubtful whether this extends to 
all cases of false representation by which credit is ob- 
tained (k). For the same reason — that the law will not 
allow the contract to be indirectly enforced — a married 
woman is not estopped from pleading coverture by having 
described herself as aui iuris (l). 

The fact that a man*ied woman is living and trading 
apart from her husband does not enable her at common 
law to contract so as to give a right of action against her- 
self alone (m). Nor does it make any difference if she 
is living separate from her husband under an express 
agreement for separation, as no agreement between hus- 
band and wife can change their legal capacities and 
characters (n). 



(t) Per Our, Fairhunt y. Liver- (1) Cannam v. Farmer (1849) 8 

j)ool Addphi Loan A»9oeiation (18.54) Ex. 698. 

9 Ex. 422, 429, 28 L. J. Ex. 164. (m) olayUm ▼. Adams (1796) 6 T. 

ik) Wright V. Lecmard (1861) 11 R. 605. 

C. B. N. & 258, 80 L. J. C. P. 865, (n) MarthaU v. RuUon (1800) 8 

where the Court wm divided. T. R. 545 ; see Lord Brougbun'e 

remarks, 8 M. & K. 221. 



MARRIED WOMEN : COMMON LAW. 79 

But ** a married woman, though incapable of making a Bat may 
contract, is capable of having a chose in action conferred < 



upon her, which will survive to her on the death of the |?^ , 
husband, unless he shall have interfered by doing some for hm 



act to reduce it into possession " : thus she might, before bTne^tf' 
the Married Women's Property Act, buy railway stock, ^ «wreif« 
and become entitled to sue for dividends jointly with her daring tb« 
husband (o). When a third person assents to hold a sum ^wSSIb' 
of money at the wife's disposal, but does not pay it over, for bar 
this is conferring on her a chose in action within tfao^wtivl. 
meaning of the rule (p). 

During the joint lives of the husband and wife the 
husband is entitled iure mariti to receive any sum thus 
due ; " but if the wife dies before the husband has received 
it, the husband, although his beneficial right remains the 
same, must in order to receive the money take out ad- 
ministration to his wife ; and if he dies without having 
done so, it is necessary that letters of administration should 
be taken out to the wife's estate (for such is still the l^al 
character of the money), but the wife's administrator is 
only a trustee for the representative of the husband " (q). 
Accordingly the Court of Probate cannot dispense with 
the douUe administration, even where the same person is 
the proper representative of both husband and wife, and 
is also beneficially entitled (r). 

Inasmuch as according to the view established by modem Cuinot 
decisions a promise to pay a debt barred by the Statute of ^JJ^g^ 
Limitation operates not by way of postdating the original noewdott 
contract so as to ''draw down the promise "then made, sutof^ 
but as a new contract founded on the subsisting considera- ^b^^- 

(o) Per Cor. DaUon ▼. Midland ip) Fleet v. Petriiu (1869) L. R 

Ry, Co. (1853) 13 C R 474, 22 L. 8 Q. B. 536, 4 Q. R 500 ; 38 L. J. 

J. C. P. 177. And Me 1 Wma. Q. B. 257. 

SmukL 222, 223. On the qaestion {q) Prr Lord Westbuiy, Parting^ 

what MDounte to redacUuB ioto ton v. AUy.-Gen. (1869) L. R 4 U. 

posHMOD, see WiUwmt on Exe- L. 100, 119. 

CQton, 1. 856 (7th ed.), Widgery v. (r) In the Goods of Harding 

Ttpper (1877) 5 Ch. D. 616 ; 7 Ch. (1872) L. R 2 P. & D. 394, 
IHt. 423 ; 47 U J. Ch. 550. 



80 CAPACITY OF PARTIES. 

tion, a maiTied woman*s general incapacity to contract 
prevents such a promise, if made by her, from being 
effectual; and where before the marriage she became a 
joint debtor with another person, that person's acknow- 
ledgment after the marriage is also ineffectual, since to 
bind one's joint debtor an acknowledgment must be such 
as would have bound him if made by himself (a). 

The rules of law concerning a wife's power to bind her 
husband by contract, either as his actual or ostensible 
agent or, in some special circumstances, by a peculiar 
authority independent of agency, do not fall within the 
province of this work. 

Ezoep- Exceptiona at common law. — ^The wife of the King of 

Qoeen England may sue and be sued as a feme sole (Co. Litt. 



Oonflort. 



133 a). 



Wife of The wife of a person civilly dead may sue and be sued 
S^° alone (lb. 132 6, 133 a). The cases dwelt on by Coke are 
dead. such as practically cannot occur at this day, and it seems 
that the only persons who can now be regarded as civilly 
dead are persons convicted of felony, and not lawfully at 
large under any licence (t). An alien enemy, though dis- 
abled from suing, is not civilly dead, and his wife cannot 
sue alone on a contract made with her either before or 
during coverture; so that while he is an alien enemy 
neither of them can maintain an action on the contract. 
The remedy may thus be irrecoverably lost by the opera- 
tion of the Statute of Limitation, but this inconvenience 
does not take the case out of the general rule (u). This 

{») PiUam V. Fotter (1828) 1 K ft arff. in Ex parte Pranks (1831) 7 

C. 248 ; 1 Wmt. Saund. 172. Bing. 762. 

{t) TransporUtion WM oonaidered («) De Wa3d v. Bra/aine (1856) 1 

as an abjuration of the realm, which H. ft N. 178, 26 L. J. Ex. 848. 

oould be determined only by an Perhaps it may be doubted whether 

actual retom after the sentence 'rivil death' was ever reaUy ap- 

had expired : CwmA, v. Blencow propriate as a term of art in English 

(1801) 4 Esp. 27. The analofor to ooarts except ' when a man entersth 

Coke's * Civil Death' is discussed, into religion [t.e. a religious order 



HABBTED WOMEN. 



81 



decision does not expressly OTermle any earlier authority 
(and there is such authority) (x) for the proposition that 
she may he sued alone. But it is conceived that such 
must be the result 



It appears to be the result of the authorities that the ^ '^^ 
wife of an alien husband who has never been in England kn the 
may bind herself by contract if she purports to contract **V>«» ' 
as A feme sole. 

"By the custom, of London, if a feme covert, the wife J'""**" o* 
of a freeman, trades by herself in a trade with which her lo i ^ 



in England] and if prof eaMd ' : in 
that caae lie ocrald make a wiU and 
appoint ezeenton (who might be 
sued ai toch for hk debt^ F. N. B. 
121, 0.), and if he did not, hisgoodi 
ooold be adminirtezed (litl a. 200, 
Co. Litt. 131 6). Braeton, how- 
ever, spealDi of outlawry (426 b) am 
well as religioos profession (801 h) 
as man eivUii, A person nnder the 
penalties of praemunire^ which in- 
clude being pat out of the Queen's 
protection, would, I suppose, be in 
the same plight as an outlaw. The 
Boman man ehUii was a pore legal 
fiction, introduced not to create 
disabilities, but to obviate the in- 
oonyenient results of disabilitiea 
otherwise created. (Sav. Sjst 2. 
164.) As to the mort civile of modem 
-French law (now abolished since 
1854), see ib. 151 raq. 

{z) Derry ▼. Duchm of Matarine 
(1697) 1 Ld. Raym. 147. Lord 
Kenyon twice held that the wife of 
an iJien who has left the kingdom 
for some time, and is not known to 
have any intention of returning, 
may be sued alone on contracts 
made by her after his departure 
{Wdlford y. Duehiu de Pienne, 2 
Eep. 554; Prank$ v. same defen- 
dant, ib. 687 ; Dicey on Parties, 
296) ; the reason being, it seems, 
that in the case of an alien no 
ammugmertendi ooold be presumed. 
But In a third action against the 
» defendant(tlie husband haying 

P. 



in the mean time reionied to Sng- 
land and gone away acain) Lord 
EUenboroo^ took a dimsnt yiew 
and nonsuited the plaintiff. He 
thought sach an actioo ooold be 
maintahMid only iHiea the hos- 
band had neyer been In the king- 
dom (in whidi ease the right of 
action had already been uph^ by 
the Omrt of Common Pleas {De 
OttUUm y. VAigfe (1798) 1 Boa. ft 
P. 857) ; here the husband had 
liyed with his wife In England, and 
was under no legal disability to 
rejoin her. The Court refused a 
rule to set aside the noosuit {Kay 
y. DuehemdePimne (1811) 3 Camp. 
123.) In a more modem case, 
again, the Coort of EzelMquer 
thought that Lord Ellenborough 
had conceded too much, and tluit 
such an action was in no case main- 
tainable without showing that on 
the naitloular occasion the wife 
actually contracted as a feme §ole» 
{Barden y. Kemberg (1836) 2 M. ft 
W. 61, 6 L. J. Ex. 66.) It is sub- 
mitted that as to the former point 
it would be enough to show that 
the husband neyer had an English 
domloil, or at all eyents that he 
neyer resided in Engtand. It seems 
unreasonable that the mere fact of 
his haying at some time been in 
England uonld make all the differ^ 
ence. But the question is now of 
litUe interest. 



82 CAPACITY OF PABTIES. 

womui husband does not intermeddle, she may sue and be sued 
alone. as 2ifeme sole, and the husband shall be named only for 
conformity ; and if judgment be given against them, she 
only shall be taken in execution." (Bacon, Abr. Customs 
of London, D.) This custom applies only to the city 
courts {y)y and even there the formal joinder of the 
husband is indispensable. But if acted upon in those 
courts it may be pleaded as matter of defence in the 
superior courts (z), though they do not otherwise notice 
the custom (a). 
Gontaoti In certain exceptional cases in which the wife has an 
band Mto adverse interest to the husband she is not incapable of 
ffP^J- contracting with him. Where a wife had instituted a suit 
may be ' for divorce, and she and her husband had agreed to refer 
good. ijjg matters in dispute to arbitration, her next friend not 
being a party to the agreement, the House of Lords held 
that under the circumstances of the case she might be 
regarded as a feme sole, that the agreement was not in- 
valid, and that the award was therefore binding (6). 

The real object of the reference and award in this case 
having been to fix the terms of a separation, it was later 
held that the Court would not refuse to enforce an agree- 
ment to execute a deed of separation merely because it 
was made between the husband and wife without the in- 
tervention of a trustee (c). Li the simpler case of an agree- 
ment to live apart, with incidental provisions for main- 
tenance, the agreement does not require the intervention 
of a trustee, and the wife (apart from the Married Women's 
Property Act, which does not apply) can sue the husband 

(y) CaudeU v. Shaw (1791) 4 T. {h) Baieman t. CfowUm of i?oM 

E. 861. (1818) 1 Dow. 285. 

Iz) Beard v. WOb (1800) 2 Boi. (e) VamiUaHw. VandUofi (1858) 

k P. 98. Since the Act of 1882 4 K. ft J. 62 ; 27 L^ J. Gh. 222 ; 

the only effect of the cnstom, if Miy, but the agreement not enforoeftUe 

eeema to be that • nuurried woman for other reasons ; aiBimed on 

trading In the Oity of London may appeal, 2 De G. & J. 249 ; 27 L. J. 

be subject to greater personal lia- On. 289 ; but no opinion gf ren on 

bilitv than elsewhere. this point 

(a) Cauddl T. Shaw, iupra. 



MABBIED WOMEN: STATUTES. 83 

for arrears of maintenance due under it (<2). It does not 
follow that in such transactions a married woman has all 
the powers of a /erne sole. She has only those which the 
necessity of the case requires. She is apparently com- 
petent to compromise the suit with her husband (e): but 
she cannot, as a term of the compromise, bind her real 
estate (not being settled to her separate use) without the 
acknowledgment required by the Fines and Recoveries 
Act (/). 

8t(Uuto)v/ exceptions other than Married Tfomen's S*^^***^/ 
Property Act, SwiT: 

By the Act constituting the Court for Divorce andJa^icUl 
Matrimonial Causes, 20 & 21 VicL c. 83, a wife judicially ^^l^iiid 
separated from her husband is to be considered whilst so J^Jj!^" 
separated as a feme sole for the purposes of {inter alia) 
contract, and suing and being sued in any civil proceeding 
(s. 26) ig) ; and a wife deserted by her husband who has 
obtained a protection order is in the same position while 
the desertion continues (s. 21). This section is so worded 
as when taken alone to countenance the supposition that 
the protection order relates back to the date of desertion. 
It has been decided, however, that it does not enable the 
wife to maintain an action commenced by her alone before 
the date of the order (h). These provisions are extended 
by an amending Act in certain particulars not material to 
be noticed here (21 & 22 Vict c. 108, ss. 6-9) ; and third 
parties are indemnified as to payments to the wife, and 
acts done by her with their permission, under an order or 

(<2) MeOregor t. MeQttqor (18S8) (?i&wii (1867) 4 Eq. 162 ; 86 L. J. 

21 Q. B.IHt.421; 57 L. J. Q. B. Cb.646; see aIm, m to the dlToiced 

69L wife's rigbte, WtiU v. MoJOxm (1862) 

(e) Ba^€9 ▼. iZoMPiey (1866) L. B. 81 Be»v. 48 ; 31 L. J. Ch. 844 ; 

2 S& ft D. 6S. Fitzgerald v. Chapman (1875) 1 Ch. 

(/) CakOl T. CMm (1883) 8 App. D. 563 ; 45 L. J. Ch. 23; Burton y. 

Ca.420. iSteiraFAm (1876) 2 Ch. Div. 318 ; 45 

{a) The Mane ooneeqiieiioee foOiOfW L. J. Ch. 638. 
af6rtwn<m % di$9ohUiam6i mairiage, (A) Midland Rg. Co. t. Pge (1 861 ) 

tboogh tbeie ie no ezpreM eDact- 10 C. B. N. S. 179 ; 80 L. J. C. P. 

mentihat theyihaU: WilkimonY. 814. 

Q 2 



84 CAPACITY OF PARTIES. 

decree which is afterwards discharged or reversed (s. 10). 
The words as to " suing and being sued " in this section 
are not confined by the context to matters of property 
and contract, but are to be liberally construed : a married 
woman who has obtained a protection order may sue in 
her own name for a libel (i). 

Equitable In the last century, if not earlier, the Court of Chancery 
sepwate ^ recognized and sanctioned the practice of settling property 
«■*•*•• upon married women to be enjoyed by them for their 
separate use and free of the husband's interference or 
control. To this was added, towards the end of the 18th 
century, the curious and anomalous device of settling 
property in trust for a married woman " without power of 
anticipation," so that she cannot deal in any way with the 
income until it is actually payable. During the present 
century a doctrine was elaborated, not without difficulty 
and hesitation, under which a married woman having 
separate property at her disposal (not subject to the pecu- 
liar restraint just mentioned) might bind that property, 
though not herself personally, by transactions in the nature 
of contract Some account of this doctrine is given for 
reference in the Appendix. The authorities which estab- 
lished it are still applicable, as regards property acquired 
by a married woman for her separate use before January 
1, 1883, to transactions before that date on which any 
claim in respect of such property is founded. 

The Married Women's Propei^y Act 

45 & 46 The provisions of the Married Women's Property Act, 

Vie*, c. 76. J882, are so much wider that they may be described as a 

new body of law, consolidating and superseding the results 

(t) Ramtdm v. Brtarley (1876) non before the date of the order : 

L. R. 10 Q. B. 147 ; 44 L. J. Q. B. ReCowairdAAdam'iPurehate (1876) 

46. She can give a valid receipt 20 £q. 179; 44 L. J. Ch. 384. 
for a legacy not reduced into ] 



MARRIED WOMEN S PROPERTY ACT. 



85 



of numy cases in equity as well as the previous Acts of 
1870 and 1874, which this Act repealed. The law, as 
now declared, is to this eflTect : 

Separate property is 

(i) Property acquired by any married woman after 
January 1, 1883, including earnings (Jc) : 

(ii) Property belonging at the time of marriage to a 
woman marrying after January 1, 1883 {I). 

Special trusts created in favour of a married woman by 
will, settlement or otherwise are not affected by the 
Act (m). 

Subject to any settlement (n), a married woman can 
bind herself by contract " in respect of and to the extent 
of her separate property," and can sue and be sued 
alone (o). 

Damages and costs, if recovered by her, become her 
separate property ; if against her, are payable out of her 
separate property and not otherwise {p), A married 
woman trading alone can be made bankrupt in respect of 
her separate property (j). 

A contract made by a married woman 

(i) Is presumed to be made with respect to and to bind 
her separate property (r) : 



(k) Si. 6, 25. PropertT falling into 
ponenioo dn^ the Act under a 
title aoquired before it le not in- 
cluded : Bdi V. Rdi (1886) 31 
Cb. Dir. 402. 

(OS. 2. 

(m) Sw 19, which *'pieveDte the 
pfeTioQi enactment from interfering 
with any settlement which woold 
have boond the property if the Act 
had not paned": Cotton L. J. 
Maneodc ¥. Hancock (1888) 88 Ch. 
Dir. 78, 90, 57 L. J. Oh. 896. 

(n) See SUmar** TruaU (1888) 24 
Ch. P. 195; 52 L. J. Ch. 776. 

(o) Aa to the retroepeetire opera- 
tion ol the Act with legard to power 
to me on a caoae independent of 
oontraH', ^ee Wddon v. Window 



(1884) 13 Q. B. Dir. 784. 

{p) 8. 1, lab-s. 2. 

iq) S. 1, snb-s. 6. An nnexeented 
general power of appointment is not 
*' separate property, and a married 
woman cannot be compelled to exe- 
onte snch a power for the beneSt 
of her creditors : Bx parte OUchrid 
(1886) 17 Q. B. Dir. 621. 8. 19 
does not prerent property to which 
die is entitled nnder a settlementi 
withont restraint on anticipatioa, 
from paiining to the trostee in bank* 
rapt<7 : Ex parte Bofd (1888) 21 
Q. K Div. 264, 67 L. J. Q. a 558. 

(r) Formerly there was no snob 
presomption nnless she wasliring 
apart firom her hnsband. See 
noteO. 



86 CAPACITY OF PABTIES. 

(ii) If SO made and binding, binds her after-acquired 
separate property («). 

A married woman's separate property is liable for her 
ante-nuptial debts and obligations (t). She cannot avoid 
this liability by settling the property on herself without 
power of anticipation (u). As to women married before 
January 1, 1883, such liability applies only to separate 
property acquired by them under the Act (t). 

The Act contains other provisions as to the title to stocks 
and other investments registered in a married woman's 
name either solely or jointly (x), the effecting of life 
assurances by a married woman, or by either husband or 
wife for the benefit of the family (y), procedure for the 
protection of separate property (0),and other matters which 
belong more to the law of Property than to the law of 
Contract 

It is not expressly stated by the Act whether on the 
termination of the coverture by the death of the husband, 
or by divorce, a married woman's debts contracted during 
the coverture with respect to her separate property do or 
not become her personal debts. If not, the only remedy 
would be against her separate property which existed as 
such during the coverture, so far as it could still be identi- 
fied and followed. It can hardly have been intended by 
the legislature that a a-editor should be the worse off by 
his debtor acquiring a greater legal capacity. Perhaps 
the words " separate property " are large enough, though 
not strictly apt, to include property belonging to or 
acquired by a woman who has become a/em6 sole. 

The Act does not remove the effects of a restraint on 
anticipation. A married woman's creditor is not enabled 

(ff) S. 1, Bub-BB. 8,4. Formerly donbtfolincaBeB not andertheAot: 
otherwlBe: Pike v. Fitsgihbon (18S1) see Appendix, Note 0. Ab to the 



17 Gh. Div. 454 ; 50 Ii. J. Gb. 894. Act of 1870, Airfof^ v. Reid (1889) 

And now, it baB been beld, only 22 Q. B. Div. 548, 58 L. J. Q. B. 230. 

when Bbe hM Bepamte property at {u) S. 19. 

the date of the contract: Be Shaiee' {x) Sb. 6—10. 

apear (1885) 80 Gh. D. 169. 8ed ou. (y) S. 11. 

(0 S. 13. TdiB liability ia »t leatt (t) 8. 12. 



LUNACY AND DBUNKENNESa 87 

to have execation or any incidental remedies against pro- 
perty subject to snch restraint (a). 

On the other hand it does not exclude such equitable 
rights and remedies against a married woman's separate 
estate as were previously recognized. Where a married 
woman carries on a separate business, her husband can 
sue her for advances, made during the coverture, for the 
purposes of that business (6), on the general principle that 
in respect of her separate estate she is treated as a feme 9ole. 
And it may still be possible in some cases not within the 
Act to enforce a married woman's contract by means of 
the equitable doctrine of imperfect exercise of a power (c). 

III. Lunatics and Dbunksn PERSONa 

It will be convenient to consider these causes of dis- Dnmkca. 
ability together, since in our modem law drunken men Ymmej, 
(so far as their capacity of contracting is affected at all) are 
on the same footing as lunatics. 

First, as to the peculiar and exceptional contract of Liinfttio*s 
marriage. The marriage of a lunatic is void, and there is ^^Sl**** 
no ground for requiring a less degree of sanity for a valid 
marriage than for the making of a will or for other pur- 
poses (d). Apart from this, it seems to have been always Qeneral 
admitted^ on the one hand that a lunatic is incapable of p^^ 
contracting or doing other acts in the law after he has 9lw%j% 
been found lunatic by inquisition and while the commis- ituMtio's ' 
sion of lunacy is in force {e) ; and, on the other hand, that JJJJ?*** ^ 
a lunatic (not so found) who has lucid intervals is capable interral 
of contracting during those intervals (/). ***^ 

(a) DroMcaU t. Bwrrwm (1886) 80, is rep. bj the SUt Law Bavfalon 

17 Q. B. D. 147. Act, 1878. 

(&) BuUer t. Bvtier (1885) 16 {e)BeverU/»ot^(lt(S^) 4 Co. Rep. 

Q. B. Div. 874. 123 h ; Bmoo, Alnr. Idiote and Ln- 

(e) See per Fiy L.J. Mx parte naiioi (F). 

<7i2eArte(l886)17 Q.B.Dir.atp.682. (/) Beverle^aot^ ; ffaU v. Warrtm 

{dj Bancoek t. Fet^ (1867) L. (1804) 9 Vee. 606, q>. Sdbyy.Jaek' 

IL 1 P. It D. 885, 841 ; 86L. J. fon (1848) 6 Baav. 192; 18 L. J. 

Mat 57. Tbe staiate 15 Geo. 2, a Bk. 249. 



88 CAPACITY OF PARTIES. 

LUbiUty It is equally settled that a luiiatic or his estate may be 
BariM, &o. liable quasi ex contract'n for necessaries supplied to him 
in good faith (g) ; and this applies to all expenses neces- 
sarily incurred for the protection of his person or estate, 
such as the cost of the proceedings in lunacy {h). But it is 
doubtful whether a person who supplies necessaries to a 
lunatic knowing him to be such can have an action against 
the lunatic as on a contract '' implied in law " (i). A 
husband is liable for necessaries supplied to his wife while 
he is lunatic; for the wife's authority to pledge his credit 
for necessaries is not a mere agency, but springs from the 
relation of husband and wife and is not revoked by the 
husband's insanity (k). In the same way drunkenness or 
lunacy would be no answer to an action for money had and 
received, or for the price of goods furnished to a drunken 
or insane man and kept by him after he had recovered his 
reason : in this last case, however, his conduct in keeping 
the goods would be evidence of a new contract to pay for 
them (l). 

There is also express authority (which one would think 
hardly necessary) to show that contracts made by a man 
of sound mind who afterwards becomes lunatic are not 
invalidated by the lunacy (m). It seems that an agency is 
determined by the principal becoming insane, except as to 
persons who deal in good faith with the agent in ignorance 
of his insanity (n). 

On the general principles of the subject widely diflferent 
theories have been favoured at different times. 

HiBtory o! 1. According to Coke, the drunkenness or lunacy of the 

(g) Bagder v. SaH of Portmnouik {h) Bead v: Leaard (1861) 6 Ex. 

(1826) 6 B & C. 170, 8.c more fnUy, 686, 20 K J. Ex. 809. 

nom. BcucUr y. Bad P., 7 D. & B. {I) Chre y. Oibton (lB4b) 13 M. & 

614. W. 628, 14 L. J. Ex. 151. 

(A) WUliams r. WeiUtoorth (1842) (w) Owen v. Daviet, 1 Ves. Sr. 

6 Beav. 825 ; SUdman v. Bari, Kay, 82. 

607. (n) See Drew v. Nunn (1879) 4 

(i) Be Weaver (1882) 21 Ch. Div. Q. B. DW. 661 ; 48 L. J. (}. B. 591. 
at pp. 619, 620. 



LUNACY AND DRUNK£NN£88. 89 

party is no ground whatever for avoiding the contract JJ*^*?!^ 
For "as for a drunkard who is voluntarius dasman, he of lawtic, 
hath (as hath been said) no privilege thereby, but what hurt J^i^ 
or ill soever he doth, his drunkenness doth aggravate it" Coka : No 
(Co. Litt 247 a). And although this moral reason does ^tSxUj 
not exist in the case of lunacy, yet the lunatic is equally liinMlf. 
bound, for *' no man of full age shall be received in any 
plea by the law to disable his own person, but the heir 
may well disable the person of the ancestor for his own 
advantage in such case.'' (Litt s. 405 (o) ; Co. Litt 2 6 ; 
Beverley's ca. 4 Rep. 123 b, where, however, it is said that 
even the heir or executor could not avoid matter of record, 
and it is also said that the party when he recovers his 
memory cannot remember what he did when he was nan 
compos mentis.) As regards drunkenness, this doctrine is 
on the face of it a wholly mistaken application of a 
principle which is prop^ly applicable to criminal o£Fences 
and merely wrongful acts, but has nothing to do with 
liabilities ex contractu. As regards Innacy, it is a merely 
frivolous technicality. However, we find it adopted by 
Lord Tenterden as late as 1827, though, as we shall 
immediately see, it had long before that time been ex- 
ploded by other judges (p). It seems at least doubtful 
whether it was really supported by the authorities Coke 
had before him. At any rate they were conflicting, and 
Fitzherbert (F. N. B. 202 d) was expressly against him, 
considering the case of an infant as analogous. Bracton, 
following the Institutes (q), said: ''Furiosus autem 
stipulari non potest nee aliquod negotium agere, quia noa 
intelligit quid agit " (foL 100 a, cl 165 b ; and see Fleta, 
3,3. §§8,10.) 



(o) Thd text of litUeionoonoemo (p) Brown v. JodreU (1827) 8 C. 

only Um right of entiy after a & P. 80. 

descent, bat Coke's oommeiit is (9) Inst 8. 19, 8; Gat. 8. 106. Tm 

ganeial, and BoTerley's oasa was 00 exposition of the Koman Law, see 
a bond. Savkpy, Syst 8. 88—86; and op. 

Pothier, ObLi§49— 51. 



90 CAPAClXr OF PARTIES. 

*^ 2. Another theory is that a man so drunk or so insane 

theory : as Dot to know what he is about cannot have that con- 

^idto* renting mind which is indispensable to the formation of a 

absolute contract, and his agreement is therefore merely void. But 

^^^ ^^ if his mind is only so confused or weak that he cannot be 

voidable said not to know what he is about, but yet is incapable of 

aooording fuUy Understanding the terms and effect of his contract, 

Jj^^^^^" and if this is known to the other party, then he may 

indeed contract, but the contract will be voidable at his 

option, on the ground of the other party's fraud in taking 

advantage of his weakness. According to this the first 

class of cases would be reckoned with others in which 

agreements are absolutely void for want of real consent (as 

to which see post, Ch. IX.) and the second would come 

under the general head of fraud. 

We find the first branch of this opinion decidedly adopted 
in common law practice in the last century and the earlier 
part of this, no doubt by way of reaction against Coke's 
extravagant dogmas. Lunacy was held admissible as 
evidence under a plea of non est factum, i.e. as showing 
the lunatic's act to be wholly void (r) ; and the like was 
said of drunkenness (d). Lord Ellenborough distinctly laid 
down that when the existence of an agreement between 
the parties was in issue, it was completely negatived by 
the intoxication of one party at the time of making the 
alleged agreement ; and this was approved by the Court 
of King's Bench (Q. 

The same view is to be found in the modem case of 
Oore V. Oibaon (u), where however it was not material to 
the decision, as the drunkenness of the defendant and the 
plaintiff's knowledge of it were specially pleaded. And 

(r) YoUi y. Boen (1789) 2 Str. scope of the " general inae." Lord 

1104. EllenboroQgh'g doctrine was criti- 

(ff) Boiler, N. P. 172. dzed, however, as early as 1828 : 

(I) put V. Smiik (1811) 8 Camp. see the reporter's note in 1 Bli«h at 

88. We mnst not forget the ten- p. 161^2. 

deney of the Oonrts in the last («) (1846) 18 M. k W. 628, 14 U 

centuiy and the early part of this J. Ex. 151. 

to enlarge a« mooh as possible the 



LUNACY AND DRUNKENNES& 91 

both branches of the doctrine were recognized in equity 

and were completely stated by Sir W. Grant (x). 

''IthinkaGaortof EqidtycngfatDofctoaflutaiMmmtogotiidof any 
•greemeiifc or deed merely upon the gfoond of hk havfaig been latoaueeled 
etihe time: I eay merely ufKm that gfooiid; M if there WM . . . any 
uifair advaatage made of hie eitoatioii or . . . any oonfcriYanoe or 
management to draw hho Into drink, he might be a proper objeet of reUef 
laaGoiirtof Eqnity. Aa to that extreme etote of inftozieation that deprivee 
a man of hie re e e on , I apprehend that even at law it wonid invalidate a 
deed obtained from him while in that condition." 

This doctrine is quite intelligible, and in principle there JnetiflaUa 
is nothing to be said against it But the distinction between bnti^ 
inability to understand so much as the nature of a trans- ^^^^ 
action (which would make it wholly yoid) and inability to 
form a free and rational judgment of its effect (which if 
known to the other party would make it only yoidable) is 
too fine and doubtful to be convenient in practice. The 
confusion of mind generally produced by drunkenness is 
exquisitely described by Chaucer in the Elnight's Tale : 

^ A dronke man wot well he hath an hous, 

But he not [i,e., ne wot] which the rights way is thider." 

Whether in any particular case a state of consciousness of 
this kind does or does not amount to absolute deprivation 
of a consenting mind for the purposes of contract is a 
question which it would be probably impracticable, and 
certainly undesirable, for a court of justice to enter upon. 
The same considerations apply with almost or quite the 
same force to the capacity of a lunatic. 

The reason why this inconvenience so long escaped notice 
appears to be that in the greater number of cases it is not 

(x) Cocke T. Claifwyrtk (1811) 18 itanding the effect of hie oontraot le 

Vee. 12, 15. The referenoee to of itMlf a luifioient gronnd for 

earlier caaee are porpoeel j omitted, ref oeing ipeclfic perf ormanoe, it ii 

He also eaid that a Gonrt of Equity disdnotly contradioted by later 

oagfat not to aaeiet a pereon who dediioniL Lightfoot r. Heron (1889) 

has obtained an agreement from 8 Y. & G. Ex. 586 } Shaw ▼. Thack" 

another in a etate of intoiioation ; ray (1858) 1 Sm. k a. 587 (bat 

bat thie ie a mere dictam, and if It with aome hedtation, on the ground 

meeiis that intoxication not raoh ae that the real defendant waa not the 
to prerent the party fcum nnder- ' Tendor but a inbeeqnent porohaeer). 



Gamroax. 



1)2 CAPACITY OF PARTIES. 

necessary to decide whether the agreement was originally 
void or only voidable. 

Pwwnt 3, The opinion which has now prevailed is that the 

Ccmtakct contraot of a lunatic or drunken man who by reason of 
voidable If lunacy or drunkenness is not capable of understanding its 
lonacy,&c., terms or forming a rational judgment of its effect on his 
oSct" *^ interests is not void but only voidable at his option : and 
party. this only if his state is known to the other party. 
Molton V. The principle was established by the judgment of the 
Exchequer Chamber in Molton v. Camrovjx (y). The action 
was brought by administrators to recover the money paid 
by the intestate to an assurance and annuity society as the 
price of two annuities determinable with his life. The 
intestate was of unsound mind at the date of the purchase^ 
but the transactions were fair and in the ordinary course 
of business, and his insanity was not known to the society. 
It was held that the money could not be recovered ; the 
rule being laid down in the Exchequer Chamber in these 
terms : " The modem cases show that when that state of 
mind [lunacy or dmnkenness, even if such as to prevent 
a man from knowing what he is about] was unknown to 
the other contracting party, and no advantage was taken 
of the lunatic [or drunken man], the defence cannot pre- 
vail, especially where the contract is not merely executory 
but executed in the whole or in part, and the parties can- 
not be restored altogether to their original positions." 

The context shows that the statement was considered 
equally applicable to lunacy and drunkenness, and the law 
thus stated involves though it does not expressly enounce 
the proposition that the contract of a lunatic or drunken 
man is not void but at most voidable. The general rules 
as to the rescission of a voidable contract are then applicable, 

(y) (1848) 2 Ex. 487, 4 Ex. 17 ; wheUier there waa a oontraot at 

18 L. J. Ex. 68, 856. The same law : Nidi v. Morley (1804) 9 Vei. 

principle had long before been acted 478. 
opon in eqnity, bat without dedding 



LUNACT AKB DBUNKENNESa 93 

and among others the rule that it must be rescmded, if at 
all, before it ha3 been executed, so that the former state of 
things cannot be restored: which is the point actually 
decided. The decision itself has been fully accepted and 
acted on (z), though the merely voluntary acts of a lunatic, 
e.g., a voluntary disentailing deed (a class of acts with 
which we are not here concerned) remain invalid (a). The ^^•"^'^ 
complete judicial interpretation of the result of MoUon v. the doe- 
Carfiroux was given in Matthews v. Baxter (6). The decla- Jj^JS^ 
ration was for breach of contract in. not completing a pur- v. Baxter. 
chase : plea, that at the time of making the alleged con- 
tract the defendant was so drunk as to be incapable of 
transacting business or knowing what he was about, as the 
plaintiff well knew : replication, that after the defendant 
became sober and able to transact business he ratified and 
confirmed the contract As a merely void agreement can- 
not be ratified, this neatly raised the question whether the 
contract were void or only voidable : the Court held unani- 
mously (one member of it expressly on the authority of 
MoUon V. Camroux) that it was only voidable, and the 
replication therefore good. 

The special doctrine of our Courts with regard to part- 
nership (which IB a continuing contract) is quite in ac- 
cordance with this : it has long been established that the 
insanity of a partner does not of itself operate as a disso- 
iution of the partnership, but is only a ground for dissolu- 
tion by the Court, 

The law may be said then on the whole to be now BMtt«aiait 
settled to the following effect: A contract made by aniiT**** 
person who is drunk or of unsound mind so as to be in- Mttled. 
capable of understanding its effect is voidable at that 
person's option, unless the other contracting party did not 

(2) Beamn r. M'D^ndl (1854) 9 475, 488, 26 L. J. Ch. 821. 

Ex. 809 ; 28 L. J. Ex. 94 ; Price r, (a) SUioi t. Inee, tnpi 

Aninffton (1850—1) 8 Mml kQ. (6) L. B. 8 Ex. 182 (1878) ; 42 

486, 495, teyg. •. a 7 Ha. 894 ; L. J. Ex. 78. 
mUoi T. Inec (1857) 7 D. M. O. 



94 CAPACITY OF PARTIES. 

believe and had not reasonable cause to believe that he 

was drunk or of unsound mind. 
Partbl It is to be noted that the existence of partial delusions 

oompati. does not necessanly amount to msamty for the purposes of 
Ue with ^jjjg j.^1^ rjr^Q judge or jury, as the case may be, must 
for con- in every case consider the practical question whether the 
*"***^* party was incompetent to manage his own affiairs in the 

matter in hand (c). 

IV. Convicts, etc. 

Dinbility At common law convicted felons (as also outlaws) could 
▼icts. ' i^ot sue, but remained liable to be sued, on contracts made 
by them during outlawry or conviction (d). Since the 
Act to abolish forfeitures for treason and felony, convicts 
are incapable of suing or making any contract, except 
while they are lawfully at large under any licence (e), 
-^^» Alien enemies, as we have seen above, are disabled from 

enemicf. 

suing in an English Court, but not from binding them- 
selves by contract during war between their country and 
England, nor from enforcing such a contract after the war 
has ceased (/), unless meanwhile the right of acti(jn has 
been barred by the Statute of Limitation. 

PAKT II. 
Extension ^q qqw come to the extensions by special institutions of 
the ordinary power of making contracts. And first of agency. 

I. Agency. 

Agen<qr. We have not here to do with the relations created 
between principal and agent by agency regarded as a 
species of contract, but only with the manner in which 
rights and duties accrue to the principal through the 
dealings of the agent We must also distinguish cases 

{c) Jenking t. Morrii (1880) 14 (d) Dicey on Parties, 4. 

Ch. Div. 674 ; compare remark of {e) 88 & 84 Vict c. 28, ss. 8, 80. 
BramweU LJ. in Drew r. Num (/) De Wahl y, Braune (1856) 1 

(1879) 4 Q. fi. DiT. at p. 669 ; 48 H. It N. 178, 25 L. J. Ex. 848 : 

L. J. Q. B. 591. note (a), ante, p. 80. 



AGENCT. 95 

of real agency from those where the agencj is apparent 
only, and we shall further notice, for the sake of com- 
pleteness, the position of the true or apparent agent as 
regards third persona 

A person who contracts or professes to contract on 
behalf of a principal may be in any one of the following 
positions: 

1. Agent having authority (whether at the time or by 
snbsequent ratification) to bind his principal. 

(A) known to be an agent 

(a) for a principal named ; 
09) for a principal not named. 

(B) not known to be an agent (gr). 

2. Holding himself out as agent, but not having autho- 
rity to bind his principal 

(A) where a principal is named 

(a) who might be bound, but does not in fact 
authorize or ratify the contract ; 

03) who in law cannot be bound. 
(6) where the alleged principal is not named. 

1. As a rule an agent may be appointed without any AotiMrity 
special formality; though an agent to execute a deed^^^Mti- 
must himself be appointed by deed, and in certain cases ^^ *^ 
the appointment is required by the Statute of Frauds to tion. 
be in writing. Revocation of an agent's authority takes 
place either by the principal's actual withdrawal of his 
will to be represented by the agent (which may be known 
either by express declaration or by conduct manifesting 
the same intention) or by his dying or ceasing to be aui 
iwris, and thus becoming incapable of continuing it (h). 
In these last cases the authority is said to be revoked by 
the act of the law. *' The termination of the authority of 

{g) Sinoo the OMei of Caider t. whether the agent Is known to be 

Dobell, Fled ▼. Murton, and an agent ornot,imther than whether 

EuUikintm r. TaJthmi^ (aee f oUowinff the principal la named or not. 

notes), itmayperhapabeoonaldend (A) On the whole anbjeet aee at 

that the tine leading diatinotion la lacge Story on Agency, S § 474» aqq. 



96 



CAPACITY OF PARTIES. 



1. Agent 
for eziflt- 
ing prin- 
cipal 



A. Known 
to be an 
agent: 
contract 
with prin- 
cipal a6 
initio, 
a. Prin- 
cipal 
named : 
agent 



an agent does not^ so far as regards the agent, take effect 
before it becomes known to him, or, so far as regards third 
persons, before it becomes known to them" (i). It is 
held in England, but anomalously, that this rule does not 
apply to revocation by the death of the principal (j). It 
does apply in the case of the principal becoming insane, 
and it may perhaps yet be decided that in the case of 
death the principal's estate is liable to the other party for 
the actual loss incurred by the principal's representation — 
which, as regards him, was a continuing one at the date of 
the contract — that the agent was authorized (k). 

Authority conferred by ratification relates back to the 
date of the act done by the agent (l). 

In all cases where there is an authorized agent dealing 
on behalf of a real principal, the intention of the parties 
determines whether the agent, or the principal, or both, 
'are to be liable on the contract and entitled to enforce it. 
The question is to whom credit was really given (m). And 
the general rules laid down on the subject furnish only 
provisional answers, which may be displaced (subject to 
the rules as to admissibility of evidence) by proof of a 
contrary intention. 

A. When the agent is known to be an agent, a contract 
is made, and knowingly made, by the other party with the 
principal, on which the principal is the proper person to 
sue and be sued. 

And when the principal is named at the time, then 
there is prima facie no contract with the agent: but 
when the principal is not named, then prima facie the 



(f) I. C. A. 208, cp. Stoiy on 
Agency, § 470 ; Trueman v. Loder 
.(1840) 11 A. & B. 589. 

{J) Bladet v. Free (1829) 9 B. & 
G. 167. Contra, L 0. A. s. 208 
.(Illnat c), Code Kap. 2008, 2009, 
and German Commeroial Code, s. 
54 ; and see Kent, Comm. 2. 646. 
. {k) Drew y. Nunn (1879) 5 Q. B. 



Div. 661 : see per Biett L.J. at p. 
668. 

(0 BolUm Partnen v. Lambtrt 
(1889) 41 Ch. Div. 295. 

(m) Story on Agency, § § 279, sqq. 
288. ThotMon v. I>avenport (1829) 
in 2 Sm. L. C. ; Colder v. Dobdl 
(1871) L. R. 6 C. P. 486; 40 
L. J. C. P. 224. 



CX>NTRACrr8 OF AOENTB. 



97 



agent, though known to he an agent, does bind ^^^^^^{^f^V^ 
personally, the other party not being {Mresomed to give not ooo- 
credit exclusively to an unknown principal (n). *"*** *■ 



But when the agent would not prima facie be a con- ^ Priad* 
tracting party in person he may become so in various?^ 



ways. Thus he is personally liable if he expressly under- 
takes to be so (o) : such an undertaking may be inferred /^^"does 
from the general construction of a contract in writing, and J?'*'*** 
is always inferred when the agent contracts in his own ETidraoe 
name without qualification (p), though the principal is not J^J?' 
the less also liable, whether named at the time or not (9), iatentioQ 
or if he himself has an interest in the subject-matter of 
the contract, as in the case of an auctioneer (r). And 
when the agent is dealing in goods for a merchant resident 
abroad, it is held on the ground of mercantile usage and 
convenience that without evidence of express authority to 
that effect the commission agent cannot pledge his foreign 
constituent's credit, and therefore contracts in person (9). 



(») B«t one who daftk wiih an 
tgent known to be mioh cumot set 
off againrt the principal's ckim a 
debt doe to him fram the agent If 
be hae employed an agent on hie 
own part, that agent's knowledge Is 
for this p ur p os e treated as tbe em- 
ployer's own : and this eren thon^ 
the knowledge was not aoqidied m 
the ooorae of the particular empli^- 
ment : Dmter ▼. Norwood (1868) 
Ex. Cb., 17 a B. N. a 4S6, 84 
L. J. C. P. 48, rei^. s. a 14 
0. B. N. S. 674, 82 L. J. 0. P. 201. 
Contra L G. A. s. 229. <2«. by 
design or accident t 

(o) Stoiy on Agency, g 269, 
Smith, Merc Law, 168. 

(p) See Fairlie ▼. Faiion (1870) 
L. B. 6 Ex. 169; 89 L. J. Ex. 107; 
Paice ▼. Walker (1870) i6. 178, 89 
L. J. Ex. 109. Tbe Utter case, 
however, goes too far ; see note y, 
next page. 

{q)SiggiM$ r. Senior (1841) 8 
M. ft W. 834 : tbe law thero laid 
down goes to superadd the liability 
of the agent, not to take away that 

P. 



of the priodpal. Odder r. Dobdl 
(1871) L. R. 6 G. P. 486, 40 
L. J. C. P. 224. 

(r) 2 Sm. L. G. 899. As to an 
auctioneer's personal liability for 
non-deliyery to a pnrofaaser of goods 
bought at the anction, Woolfe ▼. 
Hom€ (1877) 2 Q. B. D. 855 ; 46 
L. J. Q. B. 584, yew Zealand Land 
Co, ▼. Wataon (1881) 7 Q. & Dir. 
874, 50 L. J. Q. B. 488. 

(ff) Armitrong t. Stoioet (1872) 
L.& 7Q. B. 698,605, Aee. EQtinMr 
AetienrQeeaeekaft ¥ Ooye (1878) 
L. K. 8 Q. R 813, 41 L. J. Q. B. 
268, showing that the foreign prin- 
cipal cannot sne on the contnct : 
HtOJUm V. BvUoek (1878) (affirmed 
on another pofait» 9 ift. 478; 43 
L. J. Q. B. 211), ib, 381, affirmed in 
Ex. Gb. 9 Q. B. 572, that he cannot 
be saed : Ne^ Zealand Land Oo, y. 
ffotem (1881) 7 Q. B. D. 874: 50 
L. J. Q. B. 438. In Maepom y 
Bermano ▼. Mildred (1883) 9 
Q. B. DiT. 630, 58 L. J. Q. B. 33, 
tbe Goort of Appeal refused to 
extend tills doctrine to a case wliere 



98 CAPACITY OF PARTIES. 

^chnieal When a deed is executed by an agent as such but purports 
deed of to be the deed of the agent and not of the principal, then 
■«•"*• the principal cannot sue or be sued upon it at law, by 
reason of the technical rule that those persons only can sue 
or be sued upon an indenture who are named or described 
in it as parties (t). And it is also held that a party who 
takes a deed under seal from an agent in the agent's own 
name elects to charge the agent alone (u). A similar rule 
has been supposed to exist as to negotiable instruments : 
but modem decisions seem to show that when an agent is 
in a position to accept bills so as to bind his principal, the 
principal is liable though the agent signs not in the 
principal's name but in his own, or, it would appear, in any 
other name. It is the same as if the principal had signed 
a wrong name with his own hand (x). 



Evidence 
of oon- 

intention 



Again, an agent who would otherwise be liable on the 
contract made by him may exempt himself from liability 
by contracting in such a form as makes it appear on the 
face of the contract that he is contracting as agent only 
and not for himself as principal (y) : but even then he 
may be treated as a contracting party and personally 
bound as well as his principal by the custom of the 



-i 



the commisnon agent m well as the 
principal was foreign ; the decision 
was affirmed in H. L-, 8 App. Ca. 
874, bat this point not discnsiied. 

{i) Lord simUkampUm y. Brown 
(1827) 6 B. & C. 718 ; Beckham, ▼. 
Drake (1841) 9 M. & W. at p. 96, 
affirmed 8ub nom. Drake w. Beck- 
ham, 11 ib, 815 ; 12 L. J Fx. 486. 

(u) Pickering'8 claim (1^71) 6 
Ch. 526. 

{x) Undue ▼. Bradwdl (1848) 6 
C. B. 688, 17 L. J. C. P. 123. Cp. 
Edmnndt v. Buehell (1866) L. R. 1 
Q. H. 97 ; 86 L. J. Q. R 20. 

iff) Words in the body of a dooo- 
ment which amount to a personal 
contract by the ag<5Lt are jpnt de- 
prived of their effect by a qualified 



signature : Lennard v. Bobimeon 
(1866) 5 E. ft B. 125, 24 L. J. Q. B. 
276 ; fffUeheaon v. Aatm (1881) 13 
Q. B. Dir. 861, pee per Brett M. R. 
at p. 866 ; and the description of 
him as agent in the body of the 
document may under special oiroum- 
stiinoes not be enough to make him 
Pafe, Paice v. Walker (1870) L. R. 
6 Ex. 178, 89 L. J. Ex. 109 ; see 
the remarks on that case in Getdd t. 
Houghton (1876) 1 Ex. l>iv. 867 ; 
46 L. J. Ex. 71, which decides that 
a contract *' on account of *' a nitmed 
principal conclusively discharges the 
agent Paice v. Walker is nearly 
but not quite ov*'miled : see hough 
V. Mamanoe (1879) 4 Ex. D. 104 
48 L. J. Ez^ b\i%. 



CONTRACTS OF AGENTS. 99 

particular trade in which he is dealing (z). Or he may 
limit his liability by special stipulations, e,g. when a 
charter-party is executed by an agent for an unnamed 
freighter, and the agent's signature is unqualified, but the 
charter-party contains a clause providing that the agent's 
responsibility shall cease as soon as the cargo is shipped (a). 

It is also a rule that an agent for a government ib not 
personally a party to a contract made by him on behalf of 
that government by reason merely of having made the 
contract in his own name (6). In some cases the agent, 
though prima facie not a party to the contract as agent, 
can yet sue or be sued as principal on a contract which he 
has made as agent. These will be mentioned under 
another head of this subject (c). 

Where an undertaking is given in general terms, no 
promisee being named, to a person who obviously cannot 
be a principal in the matter, it may be inferred as a fact 
from the circumstances that some other person interested 
is the real unnamed principal, and that person may re- 
cover on the contract (d). 

B. When a party contracts with an agent whom he does B. Agent 
not know to be an agent, the undisclosed principal isJ^^^J^" 
generally bound by the contract and entitled to enforce it, H^^ 
as well as the agent with whom the contract is made in Uiera u a 
the first instance («). ^hth« 

(2) Bumfreg t. DaU (1857) 7 2. 21 L. J. Ex. 187 
& B. 266, £. a ft £. 1004, 26 (b) Maebeatkw.BaldimMndarS^) 

L. J. Q. B. 187 ; FUH t. MwUm 1 T. B. 172, cp. tft. 674 ; OidU^ t. 

(1871) L. R. 7 Q. B. 126, 129; Lmrd Palmenton (1822) 8 Bra ft 

41 L. J. Q. B. 49 ; Hnt^^inton t. Bing. 276 ; Story on Agenoj, f 802, 
Tatham (1878) L. R. 8 C. R 482, iqq. 

42 L. J. C. P. 260 ; Pihe t. OngUy (c) Infra, pp. 106, 108. 

(1887) 18 Q. B. DW. 708. On the (rf) Weidner t. JtoggtU (1876) 1 

genenil question of the oonstroctiim C. P. D. 688. 
of contracts made by brokers for (e) The rule is not ezdaded by 

their prindpals see Soutkwefl ▼. the contract being in writing (not 

Bowditck (1876) 1 C. P. Div. 874 ; nnder seal) and signed by the a^ent 

45 h. J. C. P. 874, 630. in bis own name: Btckhum t. Drake 

(a) Offietby ▼. YgluiaM (1858) (1841) 9 al ft W. at p. 91. eee p. 

E. R ft E. 980,^7 L. J. Q. R 856; 98, tupra, 
(Mrr V. Jadcaon (1852) 7 fix. 382 ; 

H 2 



100 



CAPACmr OF PARTIES. 



oloied 
prindpaL 
Excep- 
tionp. 



Limita- 
tions of 
the rale 
when it 
applies. 
As to 
rights of 
prindpal. 



But the limitations of this rule are important. In the 
first place, it does not apply where an agent for an 
undisclosed principal contracts in such terms as import 
that he is the real and only principal There the principal 
cannot afterwards sue on the contract (/). Much less, of 
course, could he do so if the nature of the contract itself 
(for instance, partnership) were inconsistent with a prin- 
cipal unknown at the time taking the place of the apparent 
contracting party. Likewise, '' if the principal represents 
the agent as principal he is bound by that representation. 
So if he stands by and allows a third person innocently to 
treat with the agent as principal he cannot afterwards 
turn round and sue him in his own name " (g). 

Again, in the cases to which the rule does apply, the 
rights of both the undisclosed principal and the other con- 
tracting party are qualified as follows : 

The principal " must take the contract subject to all 
equities in the same way as if the agent were the sole 
principal " (h). Accordingly if the principal sues on the 
contract the other party may avail himself of any defence 
which would have been good against the agent {i) : thus 
a purchaser of goods through a factor may set off a claim 
against the factor in an action by the factor's principal for 
the price of the goods (k), " Where a contract is made 
by an agent for an undisclosed principal, the principal 



(/) Hvmbfev. Hunter (1848) 12 
Q. B. 810, 17 L. J. Q. B. 860. 

Ig) Ferrand t. Biiehofftheim 
(1868) 4 0. B N. a 710, 716, 27 
L. J. C. P. 802. 

{h) Btoiy on Agency, S *20 ; per 
Parke,B. Beckham t. Drake (1841) 9 
M. & W. at p. 98. see p. tupra, 

(t) If the agent sues in his own 
name the other party cannot set off 
a debt dne from the principal whom 
be has In the meantime disooTered, 
there being no mntoal debt within 
the statute of set-off ; I^ferg t. 
Boioden (1863) 8 Ex. 862, 22 
L J. Ex. 822. Under the Jndi- 
catnre Acts, however, be can make 



the principal a party to the action 
by oonnter-daim and hare the whole 
matter disposed d 

{k) Mdbane ▼. WOUamt (1786) 
7 T. R 860, n. ; Sinu ▼. Bond (1888) 
6 B. & Ad. 898. Per Cor., /sftei^ 
T. ^ofodeiH 8 Ex. at p. 869. It does 
not matter whether the factor Is or 
is not aotnally aathorised by Ins 
principal to sell in bis own name 
without disclosing the agency : Bx 
parU Dixon (1876) 4 Oh. Div. 188 ; 
46 L. J. Bk. 20, nor what 
restrictions may, as between himself 
and the prindpal, be imposed on 
him as to the price he is to m:\\ at : 
8Uffen$ y. BiUer, 26 Gb. DIt. 81. 



CONTRACTS OP AGENTS. 1 J 

may enforce performance of it, subject to this qualification, 
tiuU the person who deals with the agent shall be put in 
the same position as if he had been dealing with the real 
principal, and consequently he is to have the same right 
of set-off which he would have had against the agent** (/). 
And his claim to be allowed such set-off is not effectually 
met by the reply that when he dealt with the agent he 
had the means of knowing that he was only an agent 
The existence of means of knowledge is not material 
except as evidence of actual knowledge (m). On the 
other hand this equity against an undisclosed principal 
depends (so the House of Lords has held) on the third 
person's actual belief that he was dealing with a principal 
in that particular transaction. Mere absence of knowledge 
or belief whether the agent is dealing as an agent or on 
his own account is not enough (n). 

It has been said that conversely the right of the other Am to 
contracting party to hold the principal liable is subject to Sfotfir 
the qualification that the state of the account between V^* 
the principal and the agent must not be altered to the 
prejudice of the principal But this doctrine has been 
disapproved by the Court of Appeal as going too far. The 
principal is discharged as against the other party by pay- 
ment to his own agent only if that party has by his conduct 
led the principal to believe that he has settled with the 
agent, or, perhaps, if the principal has in good faith paid 
the agent at a time when the other party still gave credit 
to the agent alone, and would naturally, finom some 
peculiar character of the business or otherwise, be supposed 
by the principal to do so (o). 



(Z) Per WiUm J. Drtt$er t. Nor- Bank (1878) L. R 9 C. P. 38 ; 43 

wood (1863) 14 C. R N. 8. 674, 589, L. J. a P. 8. 

32 L. J. C. P. 201, 206. The xe- (») Oooke t. B$hdb)f (1887) 12 

▼anal of thfi caee in the Ex. Ch. 17 App. Oa.27]. It b unleM to criUcize 

C. B. N. a 466, 84 L. J. 0. P. 48, the decUon in England : bat see 

doea not affect thlt itotement of the L. Q. R. iiL 858. 

genena law. (o) Irvine ▼. WaUon (1880) 5 

(m) Borriei ▼. Imperial Ottoman Q. R Div. 414, 49 L. J. Q. B. 



102 CAPACITY OF PARTIES. 

Again, the other party tnay choose to give credit to the 
agent exclusively after discovering the principal, and in 
that case he cannot afterwards hold the principal liable ; 
and statements or conduct of the party which lead the 
principal to believe that the agent only will be held liable, 
and on the faith of which the principal acts, will have the 
same result (p). And though the party may elect to sue 
the principal^ yet he must make such election within a 
reasonable time after discovering him (5). When it is 
said that he has a right of election, this means that he 
may sue either the principal or the agent, or may com- 
mence proceedings against both, but may only sue one of 
them to judgment ; and a judgment obtained against one, 
though unsatisfied, is a bar to an action against the other 
It was decided in Priestley v. Fernie (r) that such is the 
rule as to principal and agent in general, and that there is 
no exception in the case of a shipowner and freighter, 
which was the case before the Court. 

The mere commencement of proceedings against the 
agent or his estate after the principal is discovered, although 
it may possibly be evidence of an election to charge the 
agent only, does not amount to an election in point of 
law (8). 

2. Pro. 2. We have now to point out the results which follow 

ag«nt not >vhen a man professes to make a contract as agent, but 

altthOTit ^ ^ ^"^*^ ^^^ *^ **®^t» ^^^ is, has no responsible 
principal. 

We may put out of consideration all cases in which the 
professed agent is on the face of the contract personally 

631, which Menu on thi« point to the other party's oondnot so m to 

reduce the aathority of Armstrong change his position : WifoU v. Ifert- 

T. 8toke$ (1872) L. B. 7 Q. B. ford (1802) 8 Bast, 147. 

598, 41 L. J. Q. B. 818, to that of (q) Snuthurtt t. MitehM (1859) 

a decision on peooliar facts. 1 B. & E. 622, 28 L. J. Q. B. 241. 

ip) Stoty on Aicency, |§ 279, 288, (r) (1865) 8 H. & 0. 977, 983, 84 

291 ; BanfaU r.PaufUerhy (1880) 10 L. J. Ex. 178 ; cp. L. B. 6 C. P. 

B. & C. 765 ; bat the principal is not 499. 

dii>cbarg«d nnleos he has aotuaUy («) Cfuriitw. WiUiammn (1874) L. 

dealt Hiih the agent on the faith of B. 10 Q. B 57 ; 44 L. J. Q. B. 27. 



COHTRACTB OP AGENTS. lOS 

bound 88 well as his pretended principal : for his own con- 
tract cannot be the less valid because the contract he pro- 
fessed at the same time to make for another has no effect. 
But when the contract is not by its form or otherwise such 
as would of itself make the professed agent a party to it 
there are several distinctions to be observed. 

A. First, let us take the cases where a principal is A. Prin- 
named. The other party prima faoie enters into the ^fUJ,^ 
contract on the £edth of that principal's credit. But credit 
cannot be presumed to be given except to a party who \a 
capable of being bound by the contract : hence it is 
material whether the alleged principal is one who might 
authorize or ratify the contract, but does not, or is one 
who could not possibly do so. 

a. The more frequent case in where the party named as a. wiio 
principal is one who might be responsible. rnLm- 

It is now settled law that there, subject to the qualifica- ■™' 
tions which will appear, the pretended agent has not either 
the rights or the liabilities of a principal on the contract. 

First, as to his rights. In Bickerton v. Burrell (t) the Vioimmd 
plaintiff had signed a memorandum of purchase at an IS!!^ mm 
auction as agent for a named principal Afterwards J*®**^^ 
sued in his own name to recover the deposit then paid 
finom the auctioneer, and offered evidence that he was 
really a principal in the transaction. But he was non- 
suit^ at the trial, and this was upheld by the full Court, 
who laid down that ** where a man assigns himself as 
agent to a person named, the law will not allow him 
to shift his position, declaring himself principal and the 
other a creature of straw ... A man who has dealt 
with another as agent (u) is not at liberty to retract that 
character with4)nt notice and to turn round and sue in the 
character of principal The plaintiff misled the defendant 

{t) (1816) 6 H ft a 883. («) y. e. for a named Mid rmpoo- 

riUe prinoipft]. 



104 



OAPACITT OF PARTIES. 



Qmtra in 
equity. 
Felloves 
V, Lord 
Gwydyr : 
tied qu. 



and was bound to undeceive him before bringing an 
action." This leaves it doubtful what would have been 
the precise effect of the plaintiff giving notice of his 
real position before suing: but the modem cases seem 
to show that it would only have put the defendant to his 
election to treat the contract as a subsisting contract 
between himself and the plaintiff or to repudiate it at 
once. FeUowes v. Lord Owydyr (x). One reported case, 
however, appears to be directly opposed to Bickerton 
V. BurrdL The facts were shortly these. Lord Gwydyr 
was entitled as Deputy Grand Chamberlain to the decora- 
tions used in Westminster Hall at the coronation of 
George IV. He sold these to the plaintiff FeUowes, who 
re-sold them to the defendant Page at an advanced price, 
but professed to be selling as the agent of Lord Gwydyr, 
and signed to agreement for sale in that character. 
FeUowes, being unable to procure Lord Gwydyr's consent 
to his name being used in an action, sued Page in his own 
name in equity for a balance due on the agreement It 
was argued for the defendant that he had been misled " as 
to a most important ingredient in the contract, as to the 
person, namely, with whom he had really contracted " (y). 
However it was held by Sir John Leach, V.C, and by Lord 
Lyndhurst on appeal, that Page could not resist the per- 
formance of the contract without showing that he had 
been actually prejudiced by having it concealed from him 
that FeUowes was the real principal. It is submitted that 
this decision is contrary to the principles laid down in 
Bickerton v. Burrell and the other cases to be presently 
cited, and is not law («). 



{x) (1826) 1 Sim 63. 1, Ross. & M. 
88. 

iff) 1 Robs. & M. at pp. 85, 88. 

(z) It mtkj have been risht on the 
facta, on the groond that rage con- 
tinued to act nnder the contract 
hWr knowing the true state of 
things (as was said in argument for 



the plaintiff, 1 Ross, k M. 88), which 
wonld bring the case within Bayner 
V. OraU (1846) 15 M. k W. 859, 16 
L. J. Ex. 69, bat this is not men- 
tioned In the judgments. Equitable 
of action there waa really 



OONTBACfTB OF AOimU 105 

The doctrine under consideration was further defined in IUjimt v. 
Rayner v. Orote (a). There the plaintiff sued to recover a 
balance due upon the sale by him to the defendants of a 
quantity of soda ash according to a bought note in this 
form: — ^"I have this day bought for you the following 
goods /rom J. it T. Johnson — 50 tons soda ash, .... 
J. H. Rayner." It was proved that the plaintiff was the 
real owner of the goods, and 13 tons out of the 50 had been 
delivered to the defendants and accepted by them at a 
time when there was strong evidence to show that they 
knew the plaintiff to be the real principal The law was 
stated as follows (6): — 

*' In many soofa cmw [Wt. where the contrftct is whoUy unperfomied] 
audi M for initMioft the CMe of cont^acte In whi<-h the skill or eolvencj of 
the person who is named as the principal may reasonably be oonddered as 
a material ingrecUent In the contract, it is dear that the agent cannol then 
show himself to be the real principal and soe in his own name; and perhaps 
it may be fairly nrged that this, in aU ezecntory oontraots, If wholly nnper- 
fonned, or if partly performed without the knowledge of who ki the real 
principal, may be the general mk.*' 

But here part performance had been accepted by the 
defendants with fiiU knowledge that the plaintiff was the 
real principal, and it was therefore considered that the 
plaintiff was entitled to recover. 

Next, as to the pretended agent's liability. It was at Nor can 
one time thought that an agent for a named principal feoed 
who turned out to have no authority might be sued asJJ^^o^ 
a principal on the contract (c). But it has been deter- the oob- 
mined that he is not liable on the contract itself (d). He ^Jji^ 
is liable however on an implied warranty of his authority ^•'^•J^ 
to bind his principal This was decided in CoUen v. nty. 
Wright (6),and has been followed in several later cases (/). 

(a) (1846) 15 H. & W. 369, 16 U {e) (1857) 7 E. & B. 801, 26 L. J. 

J. Sz. 69. Q. B. 147 ; in Ex. Ch. 8 E. & B. 

(5) Per Cor. at p. 365 ; and see 647. 27 L. J. Q. B. 216. 

ibb TmankM im BickerUm y, BurrtU, {/) Biehardnn ▼. WiUiammm 

ad M. (1871) L. R. 6 Q. B. 276, 40 L. J. 

(e) Op. Pothier, Obi. § 76. Q. B. 146 ; Cherrg ▼. Colonial Bank 

id) LemU y. NiehaUtm (1862) 18 of AuainUatia (1869) I^ R 3 P. C. 

Q. R 503, 21 L. J. Q. B. 311. 24, 81. Bat the lepresentotion of 



106 



CAPACITY OF PABTIIES. 



The pretended agent is also generally liable to an action 
in tort (g). 



p. Alleged 
principal 
who oould 
not be re- 
■poDsible : 
profeaeed 

treated M 
prJncipAl. 



/8. The rules last stated are applicable only where the 
alleged principal was ascertained and existing at the time 
the contract was made, and might have been in fact 
principal 

Here the doctrine of ratification is important. When a 
principal is named or described, but is not capable of autho- 
rizing the contract so as to be bound by it at the time, there 
can be no binding ratification: for ''ratification must be by 
an existing person on whose behalf a contract might have 
been made at the time" (h). 

There &11 under this head contracts entered into by 
professed agents on behalf of wholly fictitious persons, or 

certain persons or sets of persons with whom no con- 
tract can be made by the description given, persons in 
existence but incapable of contracting, and lastly (which 
is in practice the most important case) proposed companies 



tlM aflent that h« has authority 
most be a repreMntation of matter 
of fact and not of law : BetUHe ▼. 
Lard Ebtny (1872) L. R. 7 Oh. 777, 
7 H. L. 102 ; 41 L. J. Ch. 804 ; 44 
ib. 20 ; Wedtt v. Pr^peH (1873) L. 

B. 80. P. 427, 487 ; 42 L. J. C. P. 
1 29. At to the measure of damages, 
Simont v. PateheU (1867) 7 E. & B. 
668, 26 L. J. Q. B. 196; Spedd^itg v. 
Nevdl (1869) L. R. 4 C. P. 212; 88 
L. J. C. P. 188. Godwin v. FrcmeU 
(1870) L. B. 6 C. P. 296; 39 L. J. 
C.P. 121. ExparUPanmure{lSB3) 
24 Gh. Div. 867. 

(a) JlandeU ▼. Trimen (1866) 18 

C. R 786, 26 L, J. 0. P. 807. The 
object of establiihioff the liability 
exocnUraetu was to haye a remedy 
against eiecators. 

For a somewhat similar doelrine 
applied to the contract to many, see 
Mmward v. LUOewood (1860) 6 Ex. 



776, 20 L. J. Ex. 2, and TfSM t. 
JlarriM (1849) 7 C. B. 999, 18 L. J. 
C. P. 297. Here however there is 
not properly a warranty, for the 
promisor's undertaking Uiat he is 
legally capable of manying the pro- 
ndsee is a term in ttie principal 
contract itself. See chap.yil. below, 
ad fin, 

{h) Per Willes J. and Byles J. 
Kdner w, Basder (1866) L. R. 2 O. 
P. 174, 186; 36 L. J. C. P. 94; 
ScoU V. Lwrd Efmry (1867) ib. 266, 
267; 86 L. J. C. P. 161. When 
ratification is admitted, the original 
contract Is imputed by a ficMon of 
law to the person ratifying; and the 
fiction is not allowed to be extended 
beyond the bounds of possibility. 
Perhaps there Is no solid reason for 
the rule, but it Is an esUbttihed 



ooimuLcrB of AOXNTa. 107 

which have not yet acquired a legal existence (i\ Now 
when a principal is named who might have authorized the 
contract, there is at the time of the contract a possibility of 
his being bound by subsequent ratification. But when the 
alleged principal could not have authorized the contract, 
then it is plain from the beginning that the contract can 
have no operation at all unless it binds the professed agent. 
It is construed accordingly ut res magia valecU quam pereat, 
and he is held to have contracted in person (k). 

This principle has been carried so £ar that in a case 
where certain persons, churchwardens and overseers of a 
parish, covenanted "for theniaelves and for their successors, 
churchwardens and overseers of the parish," and there was 
an express proviso that the covenant should not bind the 
covenantors personally, but was intended to bind the 
churchwardens and overseers of the parish for the time 
being as such churchwardens, &c, but not otherwise, it was 
held that since the funds of the parish could not be bound 
by the instrument in the manner intended, the effect of the 
proviso was to make no one liable on the covenant at all, 
and therefore the proviso was repugnant and void, and the 
covenantors were personally liable ({). 

Accordingly the proper course for the other contract- 
ing party is to sue the agent as principal on the contract 

{ij Kdnerr.JBaxier,L.mC.V. M.&ar.786; 12 L. J. C. P. 286. 

174, Mid Mithoritfai then ref«rre4 Bat th* doctrio* of tfaii cms wfll 

to: 8eoU v. Lord Kbury (1867) «&. certainly never be extended (lee 

255; Emprm Engmeenng Co. (1880) WHHmm t. ffatkaway (1877) 6 Ch. 

16 Ch. DiT. 125,oyemi]iDg SpiUer ▼. D. 544) ; and qu. whether It would 

Paris SkaHng Bink Go, (1878) 7 Ch. apply to an inatnunettt not under 

B. 368. Companiei have been held oeaL It ia cieeriy oompetent to the 

in eqtdty to be boond by the agree- partlee to such an Inatniment to 

mente of their promoten, bat on make ita operation as a oontraot 

gronnda independent of oontraot conditiooal on any event they 

Action oponmeh an agreement by pleaee; and in rach a caee as this 

the company, nnder die mistaken why may they not agree that nobody 

belief that H Is binding, cannot be shaU be bound if the ptindpal can- 

treated aa evidence of a new Mp^ee- not be ? In Kdner v. Baxter onl 

raent : NoHkwmbeiitmd Avmme mid evidence was offered that such was 

Co. (1886) 88 Ch.Div. 16. the intention, bat was rejected as 



{k) Kdnery.JBaaaer,lA.K 2C.T. oontraiy to the terma of the writing 
at pp. 188, 186. Boed upon. 

{I) AirmmZ v. Coomhm (1848) 5 



108 CAPACITY OF PABTIE& 

itself, and he need not resort to the doctrine of implied 
waxranty (m). And as the agent can be sued, so it is 
apprehended that, in the absence of fraud, he might sue 
on the contract in his own name. 

When A slightly different case is where a man professes to 

AffenT^y contract as agent, but without naming his principal He 
be bii own is then (as said above) prima facie personally liable in his 
prindpnL character of agent. But even if the contract is so fr-amed 
as to exclude that liability (and therefore any correlative 
right to sue), he is not precluded from showing that he 
himself is the principal and suing in that character. This 
was decided in Schmaltz v. Avery (n). The action was on 
a charter-party. The charter-party in terms stated that 
it was made by Schmaltz & Co. (the plaintiffs) as agents 
for the freighters: it then stated the terms of the contract, 
and concluded in these words: "This charter being con- 
cluded on behalf of another party, it is agreed that all 
responsibility on the part of G. Schmaltz & Co. shall cease 
as soon as the cargo is shipped." This clause was not 
referred to in the declaration, nor was the character of 
the plaintiff as agent mentioned, but he was treated as 
principal in the contract. At the trial it was proved that 
the plaintiff was in point of fact the real freighter. Before 
the Court in banc the cases of Bickerton v. Btvi^ell and 
Raynei' v. Gh^ote (o) were relied on for the defence, but it 
was pointed out that in those cases the agent named a 
principal on the faith of whose personal credit the other 
party might have meant to contract. Here "the names 
of the supposed fi*eighters not being inserted, no induce- 
ment to enter into the contract from the supposed solvency 
of the freighters [could] be surmised. . . . The plaintiff 

(m) Kdnier ▼. BaaUr, tujpra. Cp. deoeit in 13 Q. K DiT. 860. 

West London Commercial Bank ^. (n) (1851) 16Q.B.655 (thesUto- 

Eittofi (1884) 12 Q. B. D. 157, ment of the facte is token from tbe 

where a bill wm aooeptod by direc- jadgment of the Ooort, p. 658); 20 

ton on behalf of a company which L. J. Q. B. 228. 

bad no power to aocept Ulls ; the (o) See pp. 104, 105, above, 
liability was pat on the ground of 



CORPORATIONS. 109 

might contract as agent for the freighter, whoever the 
freighter might turn out to he, and might still adopt 
that character of freighter himself if he chose" (p). And 
conversely, a man who has contracted in this form may 
nevertheless be sued on the contract as his own undis- 
closed principal, if the other party can show that he is in 
truth the principal, but not otherwise (q). In the same 
manner it is open to one of several persons with whom a 
contract was nominally made to show that he alone was 
the real principal, and to sue alone upon the contract 
accordingly (r). 

IL Artificial Persons. 
In a complex state of civilization, such as that of the Artificial 
Roman Empire, or still more of the modem Western SST" 
nations, it constantly happens that legal transactions have "**«^ 
to be undertaken, rights acquired and exercised, and duties 
incurred by a succession of sole or joint holders of an office 
of a public nature involving the tenure and administration 
of property for public purposes, or by or on behalf of a 
number of persons who are for the time being interested 
in canying out a common enterprise or object. This 
enterprise or object may or may not be of a kind likely to 
be worked out within a definite time, and may or may not 
further involve purposes and interests of a public nature. 
The rights and duties thus created as against the world at 
large are wholly distinct from the rights and duties of the 
particular persons immediately concerned in the transac- 
tions. Those persons deal with interests beyond their own, 
though in many cases including or involving them, and it 
is not to their personal responsibility that third parties 
dealing with them are accustomed to look. 

(p) In a later oaae In the Ez- sary for the dedsloii. Moreover 

dieqtierChamber {Sharman y, Brandt SchmdUz ▼. A very was not cited. 

(1871) L. B. 6 Q. B. 720, 40 L. J. (9) Oarr y. Jachtm (1852) 7 Ez. 

Q. R 812), there are eome expres- 382, 21 L. J. Ex. 187 

rione not very oonsfetent with tiiii, (r) Spurr ▼. Coat (1870) L. IL 5 

bat they were by no means neoes- Q. B. 666 ; 39 L. J. Q. B. 249. 



no CAPACITY OF PABTIKS. 

This distinction (the substantial character of which it 
is important to bear in mind) is conveniently expressed 
in form by the Roman invention, adopted and lai^ely 
developed in modem systems of law, of constituting the 
official character of the holders for the time being of the 
same office, or the common interest of the persons who for 
the time being are adventurers in the same undertaking, 
into an artificial person (s) or ideal subject of legal capar 
cities and duties. If it is allowable to illustrate one fiction 
by another, we may say that the artificial person is a 
fictitious substance conceived as supporting legal attributes. 
It would not be very difficult to show, were it not a matter 
of metaph}rsical rather than of legal interest, that what we 
call the artificial identity of a corporation is within its own 
sphere and for its own purposes just as real as any other 
identity (t). Such a creature of the law becomes, within 
the limits assigned to its existence, " a body distinct finom 
the members composing it, and having rights and obliga- 
tions distinct finom those of its members." This kind of 
fiction is however not confined to legal usage or legal 
purposes. In the case of an ordinary partnership the firm 
is treated by mercantile usage as an artificial person, 
though not recognized as such by English law ; and other 
voluntary and unincorporated associations are constantly 
treated as artificial persons in the language and transac- 
tions of eveiy-day life. An even more remarkable instance 
is fiimished by the artificial personality which is ascribed 
to the public journals by literary custom or etiquette, and 
is so familiar in writing and conversation that its curiosity 

(«) Fr. eorjn or itre moral, penonne dwelling is, aod therefore a citizen 

moiuU (bat this does not necessarily of, that state within the meaning of 

import capacity to sue or be soed the constitutional proTision wUoh 

in a corporate name) ; Germ, jwii- enables the Federal oonrts to enter- 

tbeke Permm; ente morale. Kent, tain snits between dtisens of 

Comm. 2. 268, uses the term ' moral different states. See Marshall ▼. 

i)er8on,' but it has not been gener- Baltimore and Ohio Bailr, Co, 

ally adopted by English writers. (1858) 16 Howard, 314. On the 

(() In the Unit^ States a cor- philosophy of legal perMMiality cpw 

poration duly created by the laws R Wallasohek, Studien sur Becbt?- 

of any state is treated aa a person pbiloecpbie, Leipsig, 1889. 



CORPORATIONS. HI 

most commonly escapes attention. But with these artificial 
persons by private convention, if we may so call them, we 
aie not further concerned 

The only artificial persons which in England have a legal Coqwr»- 
existence consist for the time being of natural persons who g^j 
are invested with the legal attributes above mentioned, and ^^f- 
aie known as corporations (u). These are either sole, i.e., of Cuot obIj 
which there is only one member at a time; or aggregate, i.e., JJJjJ.** 
of which there are several members. The principal instances dMed. 
of corporations sole are ecclesiastical persons ; of late years 
the holders of divers public offices have been made cor- 
porations sole by statute (x). The Sovereign is also said to 
be a corporation sole, but 8ui generis (y). In the case of 
a corporation sole the power of administering the corporate 
property and binding the corporate funds is for the most 
part not left to him alone, but belongs wholly or in part to 
a corporation aggregate of which the corporation sole is 
one member, or to some other body; or is guarded by 
statutory precautions. And it seems that a corporation 
sole cannot enter into a contract (except with statutory 
authority, or as incidental to an interest in land) in his 
corporate capacity ; at any rate the right of action on a 
contract made with him cannot pass to his successor, but 
only to his executors, unless by special custom (z). There 

(tt) The Bomui Iftw shows that foUowfaig note the CmitfaieiitAl 

other kinds of artificial persons are method (perhaps mors elegant than 

at least oonoeiTable : e^., the ken- ours) would treat the offioe or in- 

dkoi iaeen$, to which however stitotioD, nut the officer or adminis- 

BavigD J denies that this eharaotsr trator, aa an artific isl person, 
really belonged ; Sjst. | 102 (2. {x) Boch ai« the Official Trostae 

863-873). Savignj restricts the use of Charity Land, the StUidtor to 

of the term coiToration n> as to the Treasary (80 ft 40 Viet o. 18). 

exclnde charitable fonndations : op. Ck>iporatioii8 aggregate consisting 

a(.24S-i. The difficulty sot forth of very few members have been 

in his note arises simply from the created by statute or otherwise for 

absence in Ruman law uf any Urm special purpoees : thus 59 Oea 8, 

of art oo-extsDsive with our Trust : e. 12, s. 17, incorporates the churoh* 

not having at hand the conception warden and overseers for the pur- 

of a corporation as trustee, he sup- pose of holding p«ri*>h property, 
poses the artificial person in such (y) Allen on the Royal Preioga- 

to be not the incorporated tlve, pp, 6, 26. 



governing body, but the object of (2) Generally « bishops, deans, 

the charHable foundation itself. In parson^ vicars, and the Uke cannot 
cases UkDs tho^e mivtaoned in the take obligation to tbea and their 



112 CAPACITY OF PARTIES. 

is such a custom (for a limited purpose) in the case of the 
Chamberlain of the City of London (a). But no principles 
of general application or interest are to be found in this 
quarter, and we may practically confine our attention to 
corporations aggregate. 

We have to ascertain what contracts corporate bodies 
can make, and how they are to be made. The second of 
these questions is reserved for the following chapter on the 
Form of Contracts. 

The first cannot be adequately treated except in con- 
nexion with a wider view of the capacities, powers, and 
liabilities of corporations in general. 

CaiMMsities The Capacities of corporations are limited 

bilitiM of © By i^atural possibility, i.e., by the fact that they are 

C*"!^'^ artificial and not natural persons : 

limited by (ii) By legal possibility, i,e,y by the restrictions which 

the^afcuT© |. jjg power creating a corporation may impose on the legal 

»rii6cial existence and action of its creature. 

penoD. First, of the limits set to the powers and liabilities of 

corporations by the mere fact that they are not natural 
persons. The requirement of a common seal (of which 
elsewhere) is sometimes said to spring from the artificial 
nature of a corporation. The fact that it is not known in 
Scotland is however enough to show that it is a mere 
positive rule of English law. The correct and comprehen- 
sive proposition is that a corporation can do no act except 
by an agent (for even if all the members concur they are 
but agents); and it follows that it cannot do or be answer- 
able for anything of a strictly personal nature. It cannot 
commit a crime in the strict sense, such as treason, felony, 

BnooMion, bnt it will go to the exe* in saoowrion in m caee of a sole 

cnton." Arund^i cm. Hob. 64 ; ooiporAtion ;*' it wm otherwise in 

ace. Eofdey t. Knight (1849) 14 Q. the omo of the head of a reUgions 

B. 240 ; 19 L. J. Q. B. 8 ; the caM hooM, m he ooiild not make a will, 

in the Tear Book referred to by Ba AK 1. 515. 
the reporter* (at p. 244; P. 20 E. 4, (a) Baoon Ab. 2. 582, Ooetoma of 

2, pi. 7) shows the rale and its liondon, B ; Hofdey v. Knight, 

antuinity very plainly: so Go. Lit. supra. 
465 **regnlarly no ohatttl can go 



CORPORATIONS. 



113 



perjuiy, or offences against the person (6); though any or 
all of the members or officers of a corporation who should 
commit acts of this kind (e.g., should levy war against the 
Queen) under cover of the corporate name and authority 
would be individually liable to the ordinary consequences. 
" Offences, certainly offences of commission, are the offences 
of individuals, not of corporations " (c). Nor can it enter 
in any strictly personal contract or relation (d), nor under- 
take duties which, though it might be strictly possible for 
a corporation to perform them by its officers or agents, are 
on the whole of a personal kind (e\ On the other hand, -^s to acts 

1111 11 • • 1 • 1 o^ agents. 

though able to act only by an agent, it is subject to the 
same liabilities as any other employer for the acts, neglects, 
and de&ults of its agents done in the course of their em- 
ployment. And notwithstanding the apparent contradiction 
of imputing a fraudulent intention to a corporate body, it 
may be made liable in an action of deceit for the fraud of its 
agent committed in the course of the corporation's affairs (/). 



(b) Reg. v. O. ^\ qf Bug. Ry. Co, 
(1846) 9Q. P. 315, 826; 16 L. .1. 
M. C. 16 ; nor, it is Mid, can it be 
ezcommanicated, for it bas no tonl: 
10 Ca Rep. 82 h. So it cannot do 
homage: Co. Litt. 66 h. Nor can it 
be anbject to the jurisdiction of a 
cottomary oonrt whose process is 
exclonvely personal: London Joint 
JSioek Bank v. Mayor of London 
(1876) 1 C. P. D. 1; 46 L. J. C. S. 
213, in 0. A. chiefly on other 
grounds, 5 C. P. Div. 494 j affirmed 
on ibispdntinthe House of Lords, 
6 App. Ca. 898. We are not aware 
that any English writer ba^ thought 
it nece»sary to state in terms that 
a corporation cannot be married or 
have any next of kin. The state- 
ment IN to be fonnd in Savigny, 
Synt 3. 289: but is in part not quite 
po odd as it looks, as in Roman 
law patria poieUas and ail the family 
relations arising therefrom might 
be acquired by Adoption. 

(c) Bramwell L. J. 6 Q. B. D. at 
p. 813. 

id) See note (&). 



(e) Ex parte Swantea Friendly 
Society (1879) 11 Ch. D. 768; 48 L. 
J. Ch. 677. 

(/) Ba/ncick v. Eng, Joint Stock 
Bank (1867) L. K. 2 Ex. 269; 36 L. 
J. Ex. 147 ; notwithstanding dicta 
to the contrary in Western Bank of 
ScoOand v. Addie (1867) L. K. 1 Sc. 
& D. 146, see the later case 4 of 
Mackay v. Commercial Bank of New 
BruMwick (1874) L. R 6 P. C. 394, 
43 L. J. P. C. 31, and BrUish 
Muiutd Banking Co. v. Chamwood 
Forest Ry. Co. (1887) 18 Q. B. Div. 
714, 717, 66 L. J. Q. B. 449. 
Savigny's statement tbat a corpora- 
tion cannot commit a " trun delict'* 
(3. 317) is so qualified as perhaps 
not to be inoonsiBtent with the 
Englieh doctrine: however such 
questions an have arisen in recent 
times on the dealings of commercial 
oorpoiations were obviously not pre- 
sent to bis mind. It is still not quite 
certain in England whether a cor- 
poration can l^ liable for malicious 
prosecution, but no doubt seems to 
exist in the United States. 



114 CAPACITY OP PARTIES. 

And the same principle is extended to make it generally sub- 
ject to all liabilities incidental to its corporate existence and 
acts, though the remedy maybe in form ex delicto or even 
Indictable criminal. Although it cannot commit a real crime, " it 
in some ^^^ ^^ guilty as a body corporate of commanding a<;ts to 
be done to the nuisance of the community at large," and 
may be indicted for a nuisance produced by the execution 
of its works or conduct of its business in an improper or 
unauthorised manner, as for obstructing a highway or 
navigable river (g), A corporation may even be liable by 
prescription, or by having accepted such an obligation in 
its charter, to repair highways, &c, and may be indictable 
for not doing it (h). A corporation carrying on business 
may likewise become liable to penalties imposed by any 
statute regulating that business, if it appears from the 
language ^or subject-matter of the statute that corporations 
were meant to be included, but not otherwise (i). A 
steamship company has been held (on the terms of the 
particular statute, as it seems) to be not indictable under 
the Foreign Enlistment Act of Geo. 3, and therefore not 
entitled to refuse discovery which in the case of a natural 
person would have exposed him to penalties under the 
Act (ky As to the ^flSculty of imputing fraudulent in- 
tention to a corporation, which has been thought to be 
peculiarly great, it may be remarked that no one has ever 
doubted that a corporation may be relieved against fraud 
to the same extent as a natural person. There is exactly 
the same difficulty in supposing a corporation to be de- 
ceived as in supposing it to deceive, and it is equally 

ig) Reg. y. G. N, of Eng. Ry, Co. Lord Blaokbnm at p. 869. A oor- 

(1846) 9 Q. B. 815; per Cnr. p. 826; poration eannot sne m » common 

16 L. J. M. C. 16. informer without ipeoud stfttutorj 

{h) See Grant on Oorporations, authority : GuardiouM of SL Leo- 

277, 288; Angell & Ames on Cor- nard^i, Shoreditck v. FranHin, 8 C. 

poratioM, §§ 394-7; Wms. Saand. P. D. 877. 

1. 614, 2. 478. (k) King qf Two SieOUi ▼. WOeox 

(») PkarmaceuHcal Society r. Zoi*- (1860) 1 Sim. N. S. 886 ; 19 L. J. 

don and Provincial Supply Jmooo- Gh. 488. 
Hon (1880) 6 Appi Ga. 857; see per 



OORPORATION& 115 

necessaiy for the purpose of doing justice in both casefi to 
impute to the corporation a certain mental condition — of 
intention to produce a belief in the one case, of belief pro- 
duced in the other — ^which in &ict can exist only in the 
individual mind of the person who is its agent in the 
transaction (Q. Lord Langdale found no difficulty in 
speaking of two railway companies as " guilty of fraud and j^^^*"*!?* 
collusion/' though not in an exact sense (m). However bjMti of 
the membeis of a corporation cannot even by giving an ^^^^J** 
express authority in the name of the corporation make it when of » 
responsible, or escape from being individually responsible ^^^^' 
themselves, for a wrongfril act (as trespass in removing an chMmcter. 
obstruction of an alleged highway) which though not a 
personal wrong is of a class wholly beyond the competence 
of the corporation, so that if lawful it could not have been 
a corporate act (n). Likewise it is not competent to the 
governing body or the majority, or even to the whole of 
the members for the time being, of a corporation consti- 
tuted by a formal act and having defined purposes, to 
appropriate any part of the corporate funds to their private 
use in a manner not distinctly warranted by the constitu- 
tion ; for it is not to be supposed that ail tiie members of 
the corporation are equivalent to the corporation so that 
they can do as they please with corporate property. Lord 
Langdale held on this principle that the original members of a 
society incorporated by charter, who had bought up the shares 
of the society by agreement among themselves, were bound 
to account to the society for the full value of them (o). 

(0 See per Lord Blackbnro, 8 (ti) Mm y. JTaioter (1A74) L. R. 

App. Oft. 1264. The difficulty and a 9 Ex. 309 ; 44 L. J. Ex. 49 ; no 

solution are both given hy Ulpian, lodgment on thii part of the caie 

D. 4. 8. de dolo malo. 15 f 1. Sed in Ex. Oh. L. R. 10 Ex. 92. 

an In munidpes de dolo detnr (o) Society of PraeUcal Knowledge 

actio, dubitetur. Et pnto ex rao ▼. AhboU (1840) 2 Beav. 659, 567. 

quidem dolo non poise dari ; qoid Cp. Sav. Syit. 8. 288, 885. But it 

enim manidpes dolo faoere poesunt f may be otherwise if the oorpora- 

Sed si quid ad eoe pervenit ex dolo tion has no definite constitution and 

eorum qui res eorum administraot^ no rules prescribing the application 

puto dandam A company may of its property. Such cases are 

"feel aggrieved," Oompaoies Act, sometimes met with : Bnywn v. Dale 

1880, 48 Vict. c. 19, a. 7, snb-s. 5. (1878) 9 Oh. D. 78. 



(m) 12 fieay. 882. 



I 2 



116 CAPACITY OP PARTIES. 

The £Ekllacy of the opposite assumption (that a corpora- 
tion has no rights as against its unanimous members) 
is easily exposed by putting the extreme case of the 
members of a corporation being by accident reduced till 
there is only one left, who thereupon unanimously appro- 
priates the whole corporate property to his own use (p). 

It is further to be observed that such cases as those last 
mentioned have but a slight and perhaps a misleading 
likeness to those where we have to determine the rights of 
strangers against the corporation arising out of contract or 
dispositions of property. In Society of Practical Know- 
ledge V. A bbott (q) the principle is that, quite apart trom. 
the nature of its particular objects, a corporation does not 
exist for the sake of the persons who are the members at 
any one time, as is also shown by the rule of common law 
that they have no power of their own mere will to dissolve 
it. No corporate property can be treated as the property 
of the members, or divisible among them, unless there 
appears from the nature and constitution of the corpo- 
ration an intention that it shall be so treated. In MiU 
V. Hawker (r), again, the removal of an obstruction to a 
highway is a thing which by its nature cannot be a cor- 
porate act at common law. The common law right is 
founded on the use of the highway by the person removing 
the obstruction, but a corporation cannot use a highway. 
No doubt a corporation might have a statutory power or 
be under a statutory duty to remove obstructions, and the 
true question in the case was whether any such power or 
duty had been conferred on highway boards. The majority 
of the Court held that it had not. But if such had been 
the case, the right so conferred would still have been 
wholly distinct fiom the right, of a natural person at com- 

{p) Sav. Syst 3. 829 aqq. §§ keit vorhanden." 

97-99. The illustration in oar text {q) (1840) 2 Beav. 559. 

is given at p. 850, note, with the re- (r) (1874) L. R. 9 Ex. 809, tee at 

mark, *< Hier ist gewiss Einstimmig- p. 818. 



CORPORATIONS. 117 

mon law to remove things which obstruct his lawful use 
of a highway (9). 

We now come to consider the far more difficult and An Umitad 
complicated question of special restrictions. The ini- S^^l^^^^jJl^ 
portance of this subject is quite modem ; it arose from the flictfog 
general establishment of railway companies and others of eorponta 
a like nature incorporated by special Acts of Parliament, !»»•»• 
and has been continued and increased by the multiplication 
of joint stock companies, building societies, and other 
bodies which are incorporated or made "quasi-corpora- 
tions " under general Acts. On this there have been many 
decisions, much discussion, and some real conflict of judi- 
cial opinions. There are two opposite views by which the 
consideration of the matter may be governed, and they 
may be expressed thus : 

1. A corporation is an artificial creature of the law, and 
has no existence except for the purposes for which it was 
created An act exceeding the limits of those purposes 
is not the act of the corporation, and no one can be 
authorized to bind the corporation to such an act. In 
each particular case, therefore, the question is : Was the 
corporation em/powered to bind itself to this transaction ? 

2. A corporation once duly constituted has all such 
powers and capacities of a natural person as in the nature 
of things con be exercised by an artificial person. Trans- 
actions entered into with apparent authority in the name 
of the corporation are presumably valid and binding, and 
are invalid only if it can be shown that the Legislature has 
expressly or by necessary implication deprived the corpora- 
tion of the power it naturally would have had of entering 
into them. The question is therefore : Was the corpora- 
tion /orbieJcfen to bind itself to this transaction ? 



(f) On the Dftlme of ooiponte cl6; and on iU aiiificuJ ohMmotar, 

•otkm in general op. Hobbea,B6he- Maine, Early Hiatoiy of Inaiitu- 

moth, part 4^ ad tmt (6. 869, ed. tlons, 352. 
Mdcewoith), and Lenakhan, pt 1, 



118 CAPACITY OF PABTIES. 

As Lord Justice Lindley puts it (t), the difference is " as 
to whether the act of incorporation is to be regarded as 
conferring unlimited powers except where the contrary can 
be shown; or whether alleged corporate powers are not 
rather to be denied unless they can be shown to have been 
conferred either expressly or by necessary implication-" 

We may call these views (1) the doctrine of special 
capacities, and (2) the doctrine of general capa^ty, 
" Special There is much to be said on principle for the theory of spe- 
52l*^" cisil capacities. Most if not all corporations are established 
for tolerably well-defined purposes, which persons dealing 
with them can ascertain without difficulty. They are cer- 
tainly not intended to do anything substantially beyond 
those purposes, and a reasonable and liberal construction 
of their powers may be trusted to prevent the application 
of the doctrine from causing any real hardship (u). This 
theory was the prevalent one in the earlier period of the 
discussion. For a while the common law courts took it 
without question from the courts of equity, where for 
particular reasons to be mentioned afterwards it appeared 
in a somewhat more positive form and was maintained for 
a longer time (x). It also seems to have been taken for 
granted by those who fitoned the modem statutes defining 
the powers of incorporated companies (y) ; which, if the 
opposite view be correct, are redundant in permission and 
defective in prohibition. 

" General The theory of general capacity, on the other hand, may 

capacity, ^^j^ ^ supported on principle as tending to call the 

attention of the Legislature more distinctly to the limits 

(t) On GompaDiet, 164. trine : (in the latter editions, bow- 

(tt) See jadgment of Coleridge J. eyer, this is mach qualified by the 

Mayor of Norwich t. NorfoUc Ry. Co, note at p. 278. ) The Supreme Court 

(1856) 4 E. & B. 897, 24 L. J. Q. B. of the n.S. certainly seems to have 

105, 119. so held, at aU events as to oorpora- 

(ae) Accordingly it was till quite tions created by statute : Bamk of 

lately adopted by the best text- Augutta v. B<mU (1889) 13 Peters, 

writers. Kent, Comm. 2. 298—9, 519, 587 

even treated it as an obvious doc- (y) See L.*B. 9 Ex. 266. ^ 



COBPOlUTIONa 119 

it may be proposed to assign to corporate powers, and 
ultimately to promote general convenience by making those 
limits more certain. It is also favoured by the general 
analogies of the law. There is a fallacy latent in the phrase 
of the other theory. When we speak of an artificial person 
as a creature of the law, we mean its legal existence, not 
its particular rights and capacities. If legal existence as 
a subject of rights and duties is once admitted by a fiction, 
why not admit its ordinary incidents so far as they are 
physically possible ? All rights are in one sense creatures 
of the law, and it is in a special sense by creation of the 
law that artificial persons exist at all : but when you have 
got your artificial person, why call in a second special 
creation to account for its rights ? 

This last view seems on the whole to have in its favour Pow«» of 
a preponderance of modem authority. It is subject how- lorpvn7 
ever to an important qualification, finally established by ^J, . 
the leading case of Aahbury Railway Carriage Co. v. pnrpoM* 
Riche (z) ; namely, " that where there is an Act of Parlia- ^^j^ 
ment creating a corporation for a particular purpose, and 
giving it powers for that particular purpose, what it does 
not erpressly or impliedly authorize is to be taken as pro- 
hibited " {z). This makes the conflict between the two 
theories much less sensible in practice than might at first 
sight be expected. The considerations on which the quali- 
fication rests are in themselves foreign to the law of cor- 
porations as such, but they are constantly present in the 
modem cases and are often decisive. 

These considerations are derived (1) from the law oij^*^^ 
partnership : (2) from principles of public policy. ihniutioii 

(t) (1876) L. R. 7 H. L. 658, 44 principle ftppUfls genenllj to oorpo- 

L. J. Ex. 185 : Lord Bluckbnn in ntioni created by sUtnte for par- 

A, O. Y. G. E, Ry. Co, (1880) 5 App. ticnlar pnrpoeei ; it ia not confined 

Ca., at p^ 481; cp. Reg. t. Rttd tooompanieBfoiinednndfrtbeGom- 

(1880), 5 (^ B. Biy. at p. 488, 49 panif ■ Act ; Bimmeu Wenhek y. 

L. J. Q. B. 800, affinning 11 Ch. River Dee Co. (1886) 10 App. C3a. 

Diy. 449, 49 L. J. Ch. 546. The 854. 



120 CAPACITY OF PAKTIES. 

1. From 1. In trading corporations the relation of the members 
ship Iaw. or shareholders to one another is in fact a modified (a) 
contract of partnership, which in the view of courts of 
equity is governed by the ordinary rules of partnership law 
so far as they are not excluded by the constitution of the 
company. 
Righto of Now it is a well-settled principle of partnership law that 
yBxtamT 1^0 majority of the partners can bind a dissenting minority, 
or even one dissenting partner, to engage the firm in trans- 
actions beyond its original scope. In the case, therefore, 
of a corporation whose members are as between themselves 
partners in the business carried on by the corporation, any 
dissenting member is entitled to restrain the governing 
body or the majority of the company firom attempting to 
involve the company in an undertaking which does not 
come within its purposes as defined by its original con- 
stitution. Courts of equity have been naturally called 
upon to look at the subject chiefly fiiom this point of view, 
that is, as giving rise to questions between shareholders 
and directors, or between minorities and majorities. Such 
questions do not require the court to decide whether an act 
which dissentients may prevent the agents of the company 
from doing in its name might not nevertheless, if so done 
by them with apparent authority, be binding on the cor- 
porate body, or a contract so made be enforceable by the 
other party who had contracted in good faith. This dis- 
Doctrine tinction has not always been kept in sight. But further, 
Umtted according to the law of partnership a partner can bind the 
»g«ncy. firm only as its agent : his authority is priina facie an 
extensive one (6), but if it is specially restricted by agree- 
ment between the partners, and the restriction is known 

(a) Namely by provisioDs for (b) James L.J. BairtTs ca. (1870) 

transfer of shares, limited liability 5 CIl 788; Stoiy on Agenoy, §§ 

of shareholders, and other thiLgs 124, 126, adopted by the Jadidal 

which cannot (at least with con- Committee in Bcmk of AuitralasiaY. 

yenieoce or completeness) be made BreilUU (1847) 6 Moa P. C. 152, 

Incident to a partnership at common 195. 
law. 



CORPOBATIONa 121 

to the person dealing with him, he cannot bind the finn 
to anything beyond those special limits. Limits of this la pobBo 
kind may be imposed on the directors or other officers of a umiSTof 
company by its constitution ; and if that constitution is <**»«*«' 
embodied in a special Act of Parliament, or in a deed of | 



settlement or articles of association registered in a public J^^JL 
office imder the provisions of a general Act, it is considered 
that all persons dealing with the agents of the corporation 
must be deemed to have notice of the limits thus publicly 
set to their authority. The corporation is accordingly not 
bound by anything done by them in its name when the 
transaction is on the fiace of it in excess of the powers 
thus defined. And it is important to remember that in 
this view the resolutions of meetings however numerous, 
and passed by however great a majority, have of them- 
selves no more power than the proceedings of individual 
agents to bind the partnership against the will of any 
single member to transactions of a kind to which he did 
not by the contract of partnership agree that it might be 
bound. 

Irregularities in the conduct of the internal affairs of 
the body corporate, even the omission of things which as 
between shareholders and directors are conditions precedent 
to the exercise of the directors' authority, will not however 
invalidate acts which on the face of them are regular and 
authorized : third parties dealing in good faith are entitled 
to assume that internal regulations (the observance of which 
it may be difficult or impossible for them to verify) have 
in fact been complied with. 

These applications of partnership law materially cut 
down the results of the common law theory of general 
capacity so far as regards its application to almost all 
incorporated companies of modem origin. 

But it is to be observed that in the ordinary law of AiMntof 
partnership there is nothing to prevent the members of a mem^ 
firm, if they are all so minded, from extending or changing will re- 



122 CAPACITY OF PABTIES. 

"i?I^ its business without limit by their unanimous agreement. 

on this As a matter of pure corporation law, the unanimity of the 
members is of little importance : it may supply the want 
of a formal act of the governing body in some cases (c), 
but it can in no case do more. As a matter of mixed 
corporation and partnership law this unanimity may be 
all-important as being a ratification by all the partners of 
that which if any one of them dissented would not be the 
act of the firm : for although the corporate body of which 
they are members is in many respects different fix)m any 
ordinary partnership, it is treated, and justly treated, as a 
partnership for this purpose. It appears, then, that the 
unanimous assent of the members will remove all objections 
founded on the principles of partnership, and will so far 
leave the corporation in full possession of its common law 
powers. There are nevertheless many transactions which 
even the unanimous will of all the members cannot make 
binding as corporate acts. For the reasons which de- 
termine this we must seek farther. 



2. Fublic 2. Most corporations established in modem times by 

Sorrorft- Special Acts of Parliament have been established expressly 

ticins for special purposes the fulfilment of which is considered 

g^I^ to be for the benefit of the public as well as of the pro- 

pnrpofles. prietors of the undertaking, and for this reason they are 

must not anned with extraordinary powers and privileges. What- 

detet^ ^ ^^^^ * corporation may be capable of doing at common 

purpoMs law, there is no doubt that unusual powers given by the 

pori^iu Legislature for a special purpose must be employed only 

for that purpose : if Parliament empowers either natural 

persons or a corporation to take J. S.'s lands for a railway, 

J. S. is not bound to let them take it for a £eu;tory or to let 

them take an excessive quantity of land on purpose to 



(e) Even this ia in BtrietneBs their Bucoeuon by the name of X, 

hardly oonsbtent with the leading then A -f B + O + . . . &a 

principle that if A, B, C. . . . are 9io( = X. 
Ac., are incorporated to them and 



COBPORATIONS. 128 

re-sell it at a profit (d). K Parliament confers immunity 
for the obstruction of a navigable river by building a bridge 
at a specified place that will be no excuse for obstructing 
it in the like manner elsewhere. Moreover we cannot stop 
here. It is impossible to say that an incorporation for 
special objects and with special powers gives a restricted 
right of using those powers, but leaves the use of ordinaiy 
corporate powers without any restriction. The possession 
of extraordinary powers puts the corporation for almost all 
purpK)ses and in almost all transactions in a wholly different 
position from that which it would have held without them; 
and apart from the actual exercise of them it may do many 
things which it was otherwise legally competent to do, but 
which without their existence it could practically never 
have done. Any substantial departure from the purposes 
contemplated by the Legislature, whether involving on 
the &ce of it a misapplication of special powers or not^ 
would defeat the expectations and objects with which 
those powers were given. When Parliament, in the public 
interest and in consideration of a presumed benefit to the 
public, confers extraordinary powers, it must be taken in 
the same interest to forbid the doing of that which will 
tend to defeat its policy in conferring them ; and to forbid 
in the sense not only of attaching penal consequences to 
such acts when done, but of making them wholly void if 

(<D See OaUoway y. Mayor of Bat » ■totatoiy oorpontion ac- 

London (1866) L. R 1 H. L. at p. quirinff property takes it with aU 

48, 35 L. J. Ch. 477. Lord Caring^ its righta and inoidenta as against 

ton T. Wyeomhe %. Oo, (1868) 8 Ch. stnuigen, subject only to the dntj 

377, 881 ; 37 L. J. Ch. 218. Nor of exercising those rights in good 

may a company hold regattas or let faith with a view to the objects of 

out pleasare-boats to the inoon- incorporation : Swindon Waterworht 

venienoe of the former owner on a Cb. v. WUU and Berkt Canal Navi- 

piece of water acquired by them gatUm Co, (1875) L. R. 7 H. L. 697, 

nnder their Act for a reservoir : 704, 710 ; 45 L. J. Ch. 688 ; Bonner 

Bottoek T. N, SiaffinxUUre Ry. Co. v. Q, W. JL Co. (1888) 24 Ch. Div. 

(1856) 8 8m. & G. 288, 292 ; 25 1 ; and a corporation cannot bind 

L. J. Ch. 825 ; nor alienate land itself not to use in the fatnie special 

similaily acqnirad except for par- powers which have presamably been 



I anthoriEed by the Act : Mul- oonferred to be osed for the publio 
• V. Midland Ry. Co, (1879) 11 good : Ayr Barhovr TrugUu v. 
Ch. D. 611, 622 ; 48 L. J. Ch. 258. Onoald (1888) 8 App. Oa. 628. 



124 CAPACITY OF PARTIES. 

it is attempted to do them. Accordingly contracts of 
railway companies and corporations of a like public nature 
which can be seen to import a substantial contravention of 
the policy of the incorporating Acts are held by the courts 
to be void, and are often spoken of as mala prohibita, and 
illegal in the same sense that a contract of a natural 
person to do anything contrary to the provisions of an Act 
of Parliament is illegal {e). Others prefer to say that the 
Legislature, acting indeed on motives of public policy, has 
simply disabled the corporation from doing acts of this 
class ; " to regard the case as one of incapacity to contract 
rather than of illegality, and the corporation as if it were 
non-existent for the purpose of such contracts " (/). 

The difference, however, is but a verbal one, and both 
modes of expression have their convenience. The former 
seems appropriate in such a case as that where it was 
decided that the agreement of a third person to procure a 
company to do something foreign to its proper purposes is 
illegal and void (g). 

InteKrt of There is another consideration of a somewhat similar 
^•^^ kind which applies equally to what may be called public 
veston. companies in a special sense — i.«., such as are invested with 
special powers for carrying out defined objects of public 
interest — ^and ordinary joint-stock companies which have 
no such powers. The provisions for limited liability and 
for the easy transfer of shares in both sorts of companies 

(e) Blackburn J. in Taylor y. diMpproyes of calling rach acts 

ChiehuUr A Midkwmt Ry, Co. {1M1) illegal, poiDtiog out that if the7 

L. R 2 Bx. at p. 879 ; i)9 L. J. Ex. wero properly so called there would 

217; and (Brett and Grove J J. have been some means of restraining 

cone nrring) in Rieke y. AMury Ry. them in a court of common law «t 

Varriage Co. (1874) L. R 9. Bz. at the inttaooe of the Grown : A. O. 

pp. 262, 266 ; 48 L. J. Bx. 177. v. O. M. Ry. Co. (1880) 11 Ch. Div. 

Lord Hatherlej, a. c. now. Aahbury at ppi 501—3. 
Ry. Carrioift Co. t. Riche (1876) {y) MaeQregory. Dover A Deal Ry. 

L. B. 7 H. L. at p. 689. Co. (1852) 18 Q. B. 618, 22 

(/) Archibald J. L. R. 9 Ex. L. J. Q. B. 69. See per Erie J. 

298 ; Lord Cairns, L. R. 7 H. L. at in Mayor of Ifonnch v. Norfolk Ry. 

p. 672; Lord Selborne, ib. 694. Co. (1855) 4 K& B. 897, 24 L. J. 

And Bramwell L. J. rather strongly Q. B. 105. 



CORPORATIONS. 125 

must be ooDsidered, in their modem form and extent at 

least, as a statutory privilege. These provisions also invest 

the companies with a certain public character and interest 

apart from the nature of their particular objects in each 

case, but derived from the feet that they do professedly 52!!j^' 

exist for particular objects. By far the greater part of markci 

their capital represents the money of shareholders who JJ^g***^ 

have bought shares in the market without any intention giving 

of taking an active part in the management of the concern, |^ Qom. 

but on the feith that they know in what sort of adventure P^L ^7* 

^ % ligbt to 

they are investing their money, and that the company's ««iiiiie 

funds are not being and will not be applied to other objects JJ^J^y., 
than those set forth in its constitution as declared by the profaMid 
Act of incorporation, memorandum of association, or the \^^^g^^ 
lika This is not a mere repetition of the objections *«• 
grounded on partnership law ; the incoming shareholder 
may protect himself for the future, but the mischief may 
be done or doing at the time of the purchase : moreover 
persons other than shareholders deal with the company on 
the feith of its adhering to its defined objecta They are 
entitled to '' know that they are dealing with persons who 
can only devote their means to a given class of objects, and 
who are prohibited fix>m devoting their means to any other 
purpose" (A). The assent of all those who are share- 
holders at a given time will bind them individually, but it 
will not bind others (i). If I buy shares in a company 
which professes to make railway plant in England I have 
a right to assume that its frinds are not pledged to pay for 
making a railway in Spain or Belgium, and it is the same 
if dealing with it as a stranger I lend money or otherwise 
give credit to it Accordingly the provisions of the Com- 
panies Act, 1862, are to be considered as having been 
enacted in the interests of '^ in the first place, those who 
might become shareholders in succession to the persons 



(A) Lord HAtheri^. L. B. 7 H. (t) See L. R. 9 Ex. 270, 291. 

L. at p. 684. 



116 CAPACITY OF PARTIES. 

who were shareholders for the time being ; and secondly, 
the outside public, and more particularly those who might 
be creditors of companies of this kind " (k). The House of 
Lords has unanimously decided that by the general scheme 
and on the true construction of the Act a company 
registered under it is forbidden to enter, even with the 
unanimous assent of the shareholders for the time being^ 
into a contract foreign to its objects as defined in the 
memorandum of association (I), 

The reader is referred to the Appendix (m) for a selection 
of authorities showing how the doctrine of corporate powers 
here given in outline has gradually been worked out 

IxiM^ It is not proposed to enter on any further discussion of 

f^jSS^ the particular contracts which particular corporate bodies 

^ "fhi ^^^^ ^^^ ^^^^ incapable of making. One class of con- 

Initni- tracts, however, is in a somewhat peculiar position in this 

^'^^^ respect, and recjuires a little separate consideration. We 

moan the contracts expressed in negotiable instruments 

and governed by the law merchant It is said and truly 

said that as a general mle a corporation cannot bind itself 

by a nogotiablo instrument {n\ The origin and meaning of 

the rule are easily misappi^hended. At first sight it looks 

like an obvious dixluotion fi^m the doctrine of limited 

8|HH?ial oai)aiutie& If a corporation can only make such 

contnu^ts as it is empowen^ to make, then it follows of 

cHHirse that among other things it cannot issue bills or 

noti\9 without oxpivss twr implied authority to do so ; but 

wo hav^* soon that this ground is now hardly tenable. In 

onlor to state what we boliov^^ to be the true view we must 

{k) U^ OOnw, L. It 7 H. L. t^ railed SMm, ^^en it is held 
\f) AM^r^ »f^ (VfTNw^ /•*« prohibited fr« so doa« may n4 



t^^ X tn Kx. loid Kx. v^ (w]Mi« i» of tU l^^S!Sn!a^^ 
U R » Kx. Sii, ^4* 5 44 U J. Ki. (1S5S) loX. Y. 44^ mmd dfaer 






CORPORATIONS. It7 

to some extent anticipate the subject of the following 
chapter, so far as it relates to the form of corporate con- 
tracts. The general rule is that the contracts of a cor- '^^ ^^' 
poration must be made under its common seal, and it pMtiy 
follows that a corporation caimot prima fctcie be bound by ■<*'"^ 
negotiable instruments in the ordinary form. The only 
early authority which is really much to the point was 
argued and partly decided on this footing (o). Of late 
years incorporated companies have issued documents under 
seal purporting to be negotiable ; but by the law merchant 
an instrument under seal cannot be negotiable, and it is 
the better opinion that the fact of the seal being a cor- 
porate one makes no difference; it cannot be taken as 
merely equivalent to signature because the party sealing 
is an artificial person and unable to sign (p). Putting this Pw*lj in 

the Doii> 



last question aside, however, there are very many matters appiica- 
about which a corporation can contract without seal, and ^ 



of 



in particular in the case of a trading corporation all things ordiniry 
naturally incident to the business it carries on. Why p^rtiwr. 
should not the agents who are authorized to contract on '^^P 
behalf of the company in the ordinary course of its business 
be competent to bind the company by their acceptance or 
indorsement on its behalf, just as a member of an ordinary 
trading partnership can bind the firm ? There is a two- 
fold answer to this question. First, the extensive implied 
authority of an ordinary partner to bind his fellows cannot 
be applied to the case of a numerous association, whether 
incorporated or not, whose members are personally un- 
known to each other, and it has been often decided that 

(o) BroughtonY.MancheMUr Water- ment (p. 210). Giber osses ftt fint 

i0oris Co. (1819) 3 B. & Aid. 1. nght like ihete reUte to tbe Mtho- 

The chief point wm on the etatates rity of partknilftr agenti to Und » 

giying the Bank of England excln- corporate — or nnii]corporated>-as- 

dve rights of i«aing notes, Ac., sociation irrefpective of the theory 

within certain limits. In Murray of oorporate liabilitaea. See the 

y. B. India Co. (1821) 5 B. ft Aid. next note bat ona 

204, the sUtutory authority to israe (p) Onmeh y. CredU Fonder (1873) 

bills was not disputed ; a diificnlty L. a 8 Q. B. 374, 42 L. J. Q. B. 

was raised as to the proper remedy, 188. 
hot disposed of in the course of azgn- 



128 CAPACITY OF PARTIES. 

the managers of such associations cannot bind the indi- 
vidual members or the corporate body, as the case may be, 
by giving negotiable instraments in the name of the con- 
cern, unless the terms of their particular authority enable 
them to do so by express words or necessaiy implication (q). 
In the case of a corporation this authority must be sought 
in its constitution as set forth in its special Act, articles of 
And association, or the like. Secondly, the power of even a 

i^^ trading corporation to contract without seal is limited to 
pecttli" things incidental to the usual conduct of its business. But 
of the as was pointed out by a judge who was certainly not dis- 
°^^h*** ^' posed to take a narrow view of corporate powers, a nego- 
tiable instrument is not merely evidence of a contract, but 
creates a new contract and a distinct cause of action, and 
" it would be altogether contrary to the principles of the 
law which regulates such instruments that they should be 
valid or not according as the consideration between the 
original parties was good or bad ; " and it would be most 
inconvenient if one had in the case of a corporation to 
inquire "whether the consideration in respect of which 
the acceptance is given is suflSciently connected with the 
purposes for which the acceptors are incorporated " (r). 

The result seems to be that a corporation cannot be 
bound by negotiable instruments except in one of the 
following cases : — 



(9) AstounincorporfttedjointBtock CUy BarUt (1868) 8 Ch. 768, per 

onmpftnfes : I>feale y. TvrUm (1827) Selw^n L.J. The two last cases go 

iBii\g.lA9,Diekiniony.Valpy{]S29) rather far in the diiection of im- 

10 B. ft C. 128, Bramah v. Rcherts plying such a power from general 

(1887) 8 Bing. N. C. 968, BuU y. word». 

M(yrrd (1840) 12 A. ft E. 745, (r) Per Erie C.J. Bateman v. 

Br&um y. Byen (1847) 16 M. ft W. Mid Walen Ry. Co, (1866) L. B. 1 

252, 16 L. J. Ex. 112. Aa to in- G. P. 499, 509, 35 L. J. C. P. 205. 

corporated oompaniea : SUde y. Railway oompaniei are expreaaly 

Harmer (1845) 14 M. ft W. 831 (in forbidden to inoe negotiable or 

Ex. Gh. 4 Ex. 1, not on this point), assignable instmments without 

Thompton y. Univentd Salvage Co. statutory anthority, on pain of 

(1848) 1 Ex. 694, 17 L. J. Ex. 118, forfeiting the nominal amount of 

Be Peruvian Byg. Co. (1867) 2 Gh. the security : 7 ft 8 Vict. c. 85, s. 

617, 36 L. J. Gh. 864 ; ep. Fx parU 19. 



CORPORATIONS. 129 

1. When the negotiation of bills and notes is itself one 
of the purposes for which the corporation exists — '' within 
the veiy scope and object of their incorporation " («) — as 
with the Bank of England and the East India Company, 
and (it is presumed) financial companies generally, and 
perhaps even all companies whose business wholly or 
chiefly consists in buying and selling (a), 

2. When the instrument is accepted or made by an 
agent for the corporation whom its constitution empowers 
to accept bills, &c., on its behalf either by express words 
or by necessary implication. 

The extent of these exceptions cannot be said to be very 
precisely defined, and in fi-aming articles of association, &c., 
it is therefore desirable to insert express and clear provisions 
on this head 

In the United States the Supreme Court has decided ^^^doM? 
that local authorities having the usual powers of adminis- 
tration and local taxation have not any implied power to 
issue negotiable securities which will be indisputable in 
the hands of a bonajide holder for value (t), and has been 
equally divided on the question whether municipal corpo- 
rations have such power (u). It seems however that in 
American Courts a power to borrow money is held to cany 
with it as an incident the power of issuing negotiable 
securities (x). 

The common law doctrine of estoppel (^), and the kindred Bttopp^l 
equitable doctrine of part performance (z), apply to corpora- ysttSrm 

(«) Per MonUKue Smith J. L. L. J. Q. B. 221. 

K. 1 C. P. 612 ; J^ parte CUy Bank (z) WiUon v. Wai Hartlepool Ry, 

(1868) 3 Ch. 758. Co, (1864-5) 2 D. J. a 475, 498, per 

(0 Police Jury y. BriUon (1872) Tnraer L.J. 34 L. J. Ch. 241 ; 

15 Wallace (Sap. Ct, 17.8.) 566, Crook v. Corporation of Seajord 

572. (1871) 6 Ch. 551 ; Mdboume Bank- 

(h) The Mayor V. Bay (1873) 19 ing Corporation y, Brougham [IS7S-9) 

WallAce (Sup. Ct. U.S.) 466. 4 App. Ca. at p. 169, 48 L. J. C. P. 

(x) Police Jury v. Britton, 15 12. This must be ounfined however 

Wallace, 566, and Mr. Wald*e mite tu caees where the corporation is 

here in Ameiican ed. *' capable of being boimd by the 

{y) WM V. Heme Bay Commii- written contract of its directors as 

iicmm (1870) L. R. 5 Q. K 642, 39 an individual is cspable of being 



180 cAPAcrrr of parties. 

uioe apply tions as well as to natural persons. Even when the cor- 
ntiDiis. * porate seal has been improperly affixed to a document by 
a person who has the custody of the seal for other pur- 
poses, the corporation may be bound by conduct on the 
part of its governing body which amounts to an estoppel 
or ratification, but it will not be bound by anything less (a) 
The principles applied in such cases are in truth indepen- 
dent of contract, and therefore no difficulty arises fix)m the 
want of a contract under the corporate seal, or non-com- 
pliance with statutory forma But it is conceived that no 
sort of estoppel, part performance, or ratification can bind 
a corporation to a transaction which the legislature has in 
substance forbidden it to undertake, or made it incapable 
of undertaking. 

bound by hiB own oontraot in (a) Bank cf Irdand y. Svam* 

writing : '^ per Cotton L. J. Hunt y. CkariHa (1856) 6 H. L. C. 889 ; Mer- 

Wimbledon Local Board (1878) 4 C. cKanU of the Sta^ y. Bank of JBng- 

P. Diy. ftt p. 62, 48 L. J. 0. P. 207. land (1887) 21 Q. B. Div. 160. 



( 181 ) 



CHAPTER HL 

Form of Contract. 

According to the modem conception of contract, allOoninMi 
agreements which satisfy certain conditions of a general J^J""**** 
kind are valid contracts and may be sued upon, in the ncdmn 
absence of any special legislation forbidding particular £!^ 
contracts to be made or denying validity to them unless **5Sl! 
made with particular forms. So thoroughly has this con- rights of 
ception established itself in recent times that, having 
made the presence of a consideration one of the genersJ 
conditions of a valid contract, we are now accustomed to 
bring contracts under seal within the terms of the con- 
dition by saying that where a contract is under seal the 
consideration is presumed But in fact the doctrine of 
Consideration in its present general form is of com- 
paratively modem origin^ The ancient reason why a deed 
could be sued upon lay not in a consideration in our 
present sense of the word being presumed from the 
solemnity of the transaction, but in the solemnity itsel£ 
The forms of sealing and deliveiy come down to us from 
a time when the general theory of the law started fit>m a 
diBFerent or even opposite point to our own. WhenAndent 
promises are first recognized as creating legal duties atgn^^Qij 
all, their efficacy depends, not upon the substance of ^^^"■•' 
the transaction, but upon its fulfilling certain conditions of 
form, and being established by one or other of certain 
strictly specified modes of proof. The law relating to 
the form of corporate contracts is, as we shall presently 

K 2 



182 FOBM OF CONTRACT. 

find, still going through a process of struggling develop- 
ment not altogether unlike that which took place in 
earlier times with regard to the contracts of natural persons. 
Informal Both in the Roman law as presented to us in the Digest 
ftctionable and Institutes, and in the English law of the thirteenth, 
'^^y " and even down to the latter part of the fifteenth century, 
in Komui this pnmitive doctrme that formal contracts alone give 
E^ffUsh ™® ^ actions is at the base of the whole learning of con- 
l»w. tracts. Considerable classes of informal contracts are en- 

forceable on various grounds which are practically reducible 
to " convenience amounting almost to necessity," in the 
language of our modem cases on the contracts of corpora- 
tions. But these grounds are not as yet connected by any 
recognized general principle. In the medieval English 
system, so far as one can now judge, they are narrower 
in statement and less important in practice than in the 
Roman. 

In England we find this theory expressed by Bracton in 
almost purely Roman language (a), which is substantially 
repeated in Fleta. How far the theory was directly bor- 
rowed, or how far it already existed as a genuine parallel 
development of English legal ideas with which the au- 
thorities of the civil law were found in great measure to 
coincide, may perhaps be doubtful (6). At any rate the 
correspondence is so close that some statement of the 
Roman doctrine in its general effect (c) ia almost necessary 
to make its English counterpart intelligible. 

The Formal contracts (legitimae conventiones) gave a right 

of action irrespective of their subject-matter. In Justinian's 
time the only kind of formal contract in use was the Sti- 

(a) In Britton the bubeUntial Bimcton, § 18, pp. 107-8, where 

oorrespondenoe remains, but the the parallel ii accurately stated, 

details are much more modified to (e) SavifniJt ObL 2. 196 sqq. 

suit the real facts of English prae- Compare Sir H. liaine's aooount in 

tice, e.^. the Terbal Stipulation all his chapter on the Early History of 

but disappears. (Cap. De Dette, 1. Contract, which is in dose sgree- 

156, ed. Nicholls.) ment with Savigny's. 

(6) See Guterbock, Henr. de 



Roman 
doctrine. 



HIHTORT OF INFORMAL CONTRACTS. 133 

pulation (i2), or verbal contract by question and answer, the 
question being put by the creditor and answered by the 
debtor (as Dari spondes ? spondee : Promittis ? promitto : 
Fades ? faciam). The origin and early history of the 
Stipulation are uncertain. In our authorities it appears 
as a formal contract capable of being applied to any kind 
of subject-matter at the pleasure of the parties. Its 
application was in course of time extended by the following 
steps. 1. The question and answer were not required to 
be in Latin (e). 2. An exact verbal correspondence 
between them was not necessary (/). 3. An instrument 
in writing purporting to be the record of a Stipulation 
was treated as strong evidence of the Stipulation having 
actually taken place (g). 

Informal agreements (pacta) did not give any right of «^«<'«^ 
action without the presence of something more than the and 
mere &ct of the agreement This something more was 
called cavsd. Practically the term covers a somewhat 
wider ground than our *' consideration executed : " but it 
has no general notion corresponding to it, at least none co- 
extensive with the notion of contract; it is simply the 
mark, whatever that may be in the particular case, which 
distinguishes any particular class of agreements from the 
common herd of pacta and makes them actionable. In- 



((i) The UUermrtm obUffotio (Gal. It wemi quite ponible tbat the 

S. 128) WM obsolete. Whatftppean earliest type of oontract ia to be 

under that title in tbe Inatitatea aoogbt in coTenante made between 

(8. 21) h a general mle of eTidenoe independent tribes or famOiee. Gf. 



with tbe andent Gai S. 94 on tbe nae of tbe word 

nsage. Tbe dfviTation of the jpondeo In treaties. If ibis were 

Stipolation from the nexum is so, one would ezpeot tbe oovenant 

tempting, bot has been dbown, I to be confirmed by an oath, of 

think, to be nntenaUeu It is aban- which Prof. Mnirbead (on Gai. 8. 

dooed bj Ibeiing (Geist des rSm. 92) finds a trace on other gronncfs 

R. 4th ed. 1. 803 ; q>. 2. 555, 582, In the form pnmiUiil promMo, 

where be points ont that we know (e) Gal. 8. 98, I. 8. 15, de y. o. 

notUng of the form of tbe nexnm), { 1. 

Knntze (Ezoorse fiber rom. R. pp. (/) C. 8. 88. de oont et oomm. 

470, 474, 475), Girtanner (Die stipid. 10. 

Stipolatkm, Ac. Kiel, 1859), and {g) C. 8. 88. de oont. et comm. 

(independently, it seems) by Mr. stipnl. 14, 1. 8. 19. de innt. stipol, 

Hnnter in his work on Boman Law. 1 12. 



enforoe- 
»ble. 



184 FORM OF CONTRACT. 

formal agreements not coming within any of the privileged 
classes were called mida pacta and could not be sued on {h). 

The term nudum pactv/m is sometimes used, however, 
with a special and rather different meaning, to express the 
rule that a contract without delivery will not pass 
property (i). 

The further application of this metaphor by speaking 
of the cavsa when it exists as the clothing or vesture of 
the agreement is without classical authority but very 
common : it is adopted to the full extent by our own early 
writers (k). 

What The privileged informal contracts were the following : 

oMtraota 1- -^^^ contracts, where the caiLsa consisted in the delivery 
of money or goods : namely, mv/tui datio, commodaiwm, 
depositum, pigwus, corresponding to our bailments. This 
class was expanded within historical times to cover the 
so-called innominate contracts denoted by the formula 
Do ut dea, &c. (I), so that there was an enforceable obliga- 
tion re contracta wherever, as we should say, there was a 
consideration executed : yet the procedure in the different 
classes of cases was by no means uniform (m). 



(A) They gave riae however to action itself, instead of that which 

imperfect or ** natural ** obUgationa gives the right as being the 

which had other legal effects. " clothing." The notion some- 

(i) Traditionilms et nsocapionibos times met with that if a contract 

dominia rerum, non nndis pactis, by verbal question and answer was 

transfercntor. Cod. 2. 8. de pactis, good, a contract in writing must 

20. But the context is not pre- begooda/oftM>rt,iBofconr8eamere 

served, and the particnlar pctdum modem invention, 
in question may nave been nudum (2) Ant enim do tibi ut dee, ant 

in tne general sense too. When the do ut facias, aut f acio ut des, ant 

contrary rule of the Common Law facio ut facias ; in quibus quaeiitnr 

became fixed is a question for which auae obligatio nascatur. D. 19. 6. 

more light is still wanted. de praescr. verbis, 6 pr. and see 

(k) *< Obligatio quatuor species Yangerow, Pand. § 599 (8. 284, 7th 

habet quibus contrahitur et plura ed.). Blacksione (Comm. 2. 444) 

vestimenta," Bntcton, 99a. ** Obli- took this formula for a cIaa8i6cation 

gadoun deit estre vestne de v. of off valuable considerations, and 

maaeres de gamisaments," Britton his blunder has been copied without 

1. 156. Austin (2. 1016, 8rd ed.) refieotion bv later writers, 

spoke jMT tnevriom of the right of ' (m) Dig.Lc.§§l-4. 



HIBTORT IN ROMAN LAW. 135 

2. CcnwMiual contracts, being contracts of constant 
occuirence in daily life in which no caut>a was required 
beyond the nature of the transaction itself. For such 
contracts were recognised, the first three of them at all 
events {n) from the earliest times of which we know 
anything, namely. Sale, Hire, Partnership, and Mandate. 
(Emptio Venditio, Locatio Conductio, Societas, Mandatum.) 
To this class great additions were made in later tmies. 
Subsidiaiy contracts (pacta adiecta) entered into at the 
same time and in connexion with contracts of an already 
enforceable class became likewise enforceable : and divers 
kinds of informal contracts were specially made actionable 
by the Edict and by imperial constitutions, the most 
material of these being the c(m«titutum, covering the 
English heads of (uxov/nt stated and guaranty. Jus- 
tinian added the pactv/m, danationis, it seems with a 
special view to gifts to pious uses (o). Even after all 
these extensions, however, matters stood thus : " The 
Stipulation, as the only formal agreement existing in 
Justinian's time, gave a right of action. Certain par- 
ticular classes of agreements also gave a right of action 
even if informally made. All other informal agreements 
(nuda pacta) gave none. This last proposition, that Tmda 
pacta gave no right of action, may be regarded as the 
most characteristic principle of the Roman law of Con- 
tract " (p). We may now see the importance of bearing 
in mind that in Soman, and therefore also in early 
English law, nttdimi paetv/m does not mean an agreement 
made without consideration. 

So far the Soman theory. When it came to be adopted ^^ |^^^ 
or revived in Western Christendom, what happened in 

in) Sae Fkof. MnirliMMl on QfL pnrpoM. 

8. 216. (p) SftT. OU. 2. 281. Pkol Mnir- 

(o) C. 8. 54, de donaft. 86, § 5. hMd, on Ofti. 8. 184, mijn thU 

The wtihliihwwwt ol omphyteiHb "Mnoiigrtper^griiuiaHtuiiimtNMtem 

MadktIiMiBpedMof ootttTMi iiof wm craftttTe ol Actkm : " wfaioh 

importonoa lor onr pi eae n t ■e wni to be > ■lipi 



136 FORM OF CONTRACT. 

Gennany was, acccording to Savigny, that the form of the 
Stipulation being foreign and unsupported by any real 
national custom like that which kept it alive among the 
Romans, never found its way into practice : and as there 
was nothing to put in its place, the distinction between 
formal and informal agreements disappeared (q). The 
conclusion is that in the modem Roman law of Germany 
the requirement of causa does not exist. But this con- 
clusion is by no means undisputed ; in fact there is a 
decided conflict of opinion among modem writers, though 
the greater weight of authorities appear to be for the 
proposition here stated It has even been maintained that 
a coAiaa was required for the full validity of a Stipulation 
in the Roman law itself (r). Something of the same kind 
seems to have happened in Scotland, where no considera- 
tion is needed to make a contract binding : this is qualified 
however by the mle that a gratuitous promise cannot be 
proved by oral evidence, but only by writing (s). In 
French jurisprudence on the other hand the Roman causa 
has persisted (though in a pretty liberal interpretation) as 
a needful ingredient of every binding contract. Instead of 
pa^ta becoming legitimae conventioTies, the legithnae con- 
ventiones have simply vanished. 
Oorie- But our English authors did find something to put in 

^lish^ the place of the Stipulation : namely the solemnities of a 
doctrine in deed. Many things tend to show that in old English 
^ * and Anglo-Norman times a writing was regarded only as 
one of the possible modes of proof known to the law. 
The notion of the value of a deed being in its formality 
came in later, but it was well established before the thir- 
teenth century. As early as Glanvill we find that a man's 
seal is conclusive against him (t). Bracton after setting 
forth almost in the veiy words of the Institutes how 



{q) Sav. Obi. 2. 289. («) Enkine, Pr. of Law of So. Bk. 

(r) See Vaogerow, P«ncL § 600 8, Tit 2, § 1 ; Bt 4, Tit 2. § 11. 
(8 244). (t) L. 10, c. 12. 



EARLY ENGLISH LAW. 



187 



" Verbis contrahitur obligatio per stipulationem " (u\ &c 
adds: "Et quod per acriptiirain fieri poesit stipulatio 
et obligatio videtur, quia si scriptum fuerit in instru- 
mento aliquem promisisse, perinde habetur ac si interro- 
gatione praecedente responsum sit" (x). There is no 
doubt that he means only a writing under seal, though 
it is not so expressed : Fleta does say in so many words 
that a writing unsealed will not do (y). The equivalent 
for the Roman Stipulation being thus fixed, the classes of 
Real and Consensual contracts are recognized, in the terms 
of Roman law so far as the recognition goes: but the 
Consensual contracts are so meagrely handled that it looks 
as if they were introduced only for form's sake («). We 
hear of nothing corresponding to the later Roman exten- 
sions of the validity of informal agreements. Such agree- 
ments in general give no right of action : in Glanvill it 
is expressly said : ** Frivatas conventiones non solet curia 
domini regis tueri " (a), in a context suggesting that in his 



(«) One mfty doabi wbetber an 
TtngHali eonri erer In fact enf oroed 
or would hMTB enf oroed a Stipola- 
tftoo propOT, aa weU ai whether it 
e?er entertained an ''actio legia 



Aooiliae de hcmlniboi par i 

' 'k** fo. 108 b. Am to Btmch 



tom'a oae of Roman namea for 
forma of action oompare Bigelow, 
Leading Gaiea on the Law of 
Torta, p. 585. The following wild 
marghial note oocon In aa early 
14th oentcny MS. of Bracton In 
the Cambridge Univend^ Library 
(Dd. 7. 6) : Diifert paotom a eon- 
ventione qola paotom idiim con* 
datit in aarmoniboi, nt in atipola- 
tionlboa, oonTcntb tam in lermone 
qnam bi opera, vt com in Mfiptia 



(X) 99 h. 100 a. 

(y) lib. 2. a 60, S 25. Non 
■olomaafficiet ioriptara niai dlgilli 
ntia roboretar 
fide djgnomm 
iTor the oae d ttipth 
t, iHdoh in daarfoal Latin ooold 
only the ooyenantee, op. 



KemUe, Cod. DipL noi 628 (A.D. 
979), 'hia teatibiia asUjmtaiMMi,' 
and finmner, Rdmlaoh-gennaBiaoiie 
Uikimde, 224. 

(s) Gilterbocic (p. 118) jnatly le- 
marka that what Bracton aaya of 
theContract of Sale in another pUoe 
(fo. 61 6) ahowa that it waa not a 
tnie oonaenaoal contract in hia view. 
The paange ia onriona, inaamnch 
aa it cootradicta the modem law of 
England In nearly all pointiy and 
the civil law in moat 

(a) Lib. 10, a 18, and more folly 
i&. c & "* Curia domitU rtgU ^' 
ia aignifioant, for tlie eodeiiaBtl- 
cal ooorta did take *<*yWni?t of 
breaohei of informal agreamenta 
aa being againat good oonadence, 
fft. c 12, and aee Bladatone'a 
Comm. 1. 52, and aathoritiea there 
dted, and Archdeacon Hale*a Seriea 
of Precedeota and Proceedlaga^ 
where aevecal inatancea wiU oe 
found. It ia worth noting that 
they aeem to ceaae after the end of 
the 15th centoiy, i e. when the 
action of aarampait in the temporal 



138 



FORM OF CONTRACT. 



Remedies 
oncon- 
tractoin 
18th oen- 
tory. 
Debt on 

OOTODMlt 



Debt on 
■fanpla 
oontnoty 
detinoe^ 



time even the regular consensual contracts of the civil law 
fell within the proposition. In Bracton too, notwithstand- 
ing his elaborate copying of Koman sources, we read: 
" ludicialis autem esse potent stipulatio, vel conventionalis : 
iudicialis, quae iussu iudicis fit vel praetoris. CJonventio- 
nalis, quae ex conventione utriusque partis concipitur, nee 
iussu indicia vel praetoris, et quarum totidem sunt genera 
quot paene (6) rerum contrahendarum, de quibris orrniUms 
ommdno curia regis se non intromittU niai aliquando de 
gratia'' ((o. 100a). 

The sum of the matter seems to have been thua As to 
formal contracts : A contract under seal could be enforced 
by action of debt (pUicUum de debito). It was a good 
defence that the party's seal had been lost and afiSxed by 
a stranger without his knowledge, at least if the owner 
had given public notice of the loss (c) : but not if it had 
been misapplied by a person in whose custody it was ; for 
then, it was said, it was his own fault for not having it in 
better keeping. This detail shows how much more archaic 
English law still was than the developed Roman system 
from which it borrowed much of its language : and also 
that delivery was not then known as one of the essential 
requisites of a deed. As to informal contracts : An action 
of debt might be brought for money lent, or the price of 
goods sold and delivered, and an action of detinue (which 



courts bad become well eetabfisbed, 
and therefore the splxHiial oonrts 
would have been prohibited from 
entertaining inoh matters, as they 
had already been prohibited from 
entertaining snits nominally pro 
lauione fdei, but really equiyalent 
to actions of debt or the like : T. B. 
88 H. 6, 29, pL 11. 

(I) This is evidently the true 
reading : the printed book has 
pomae, a mere printer's misreading, 
as I suspect) of fwne, which is giren 
by the best MSS. Bracton was 
copying the language of L 8. 18, 



{c) Qlanvill (L. 10, o. 12) has not 
even this : Britton, 1, 164, 166, as in 
the text " Pur ceo qe il ad conn 
le fet estre seen en partie, soit 
agaid^ pur le pleyntif et se purveye 
autre foiz le defendaunt de meiUour 
gardeyn." Cp. Fleta, 1. 6, c. 88, 
§ 2 ; c. 84, § 4. That tbe practice 
of publishing formal notice in case 
of loss really existed is shown by 
the example given in Blount's Law 
IHotfonary, s.v. Bigiaum, dated 18 
Ria IL uk modem law such ques* 
tions, when they occur, come mider 
the head of estoppel 



XNGUSH FORMS OF ACTION. 129 

was but a species of debt) for chattels bailed (d). And 
probably an action of debt might be maintained for work 
done or on other consideration completely executed. At 
least the contractits innomiiiati {do ut des, &c.) are dis- 
tinctly recognized by the text- writers, though in Bracton 
strangely out of their natural place, under the head of 
conditional grants (Bracton 18b, 19a; Fleta L 2, c. 60, § 
23) («). About two centuries later we find it quite clear 
than an action of debt will lie on any consideration 
executed (the term, of course, is much later still), and also 
that on a contract for the sale of either goods or land an 
action may be main trained for the price before the goods 
are delivered or seisin given of the land (/). 

Some obligations which we now classify as quasi ex 
contractu might be enforced by action of debt In 1294 
such an action brought to recover money paid on a failure 
of consideration was held good in form (though there was 
in fact a covenant), Y. B. 21 & 22 Ed. 1, p. 600 (Rolls ed), 
where it is also said that money paid as the price of land 
might be recovered back in an action of debt if the seller 
would not enfeoff the buyer. This action must not be 
confused with the modem action of asaumpait on the 
" common counts." 

The action of account (g) was a remedy of wide appli- AooouBt 
cation (sometimes exclusively, sometimes concurrently with 
debt) to enforce claims of the kind which in modem times 

{d) For the preoise diffnrenoe in BUckitone^s langiuigs. 

the dereloped forms of pit- ading lee {e) In Bnetoa fow 19a, lines 14, 

per ICaole J. 15 C. B. 808. The 15uiedl569,f»(theseoond),jNwtHii< 

dedrion of the C. A. fn Bryant ▼. and tU rtpetere po$nm are cormpt 

fferbeH (1878) 8 C. P. IHt. 889, The trae rsMfingi, oonjectarallj 

47 L. J. C P. 670, that an action restored long ago by Outerbook, and 

for WTongf nl detention is " founded In faot given almost identically by 

on tort " within the meaning ol the the best liSS., mnaed , . . yomm 

Ooonty Court Acts is, and professes . . . non vl repetere poirim. 

to be^ beside the historical question. (/) Y. B. Mioh. 87 H. VL [A.D. 

The action of debt was in troth a 1459], 8, ^ 18, by Prisot O.J. 

writ of right for ohattela, an action, (ff) 52 Hen. 8 (Stot Marlb.) c. 17, 

not to enforce a nromiae, bat to get IS Ed. 1 (Stat Westm. 2) a 28. 



something conoeiTed as already be- For mora histoiT and details see 
longing to the plaintiff : a ooncep- Mr. T^mgdell m Hanrard Law 
tion wmch lingeis even in some of Ber. iL 2^, 251, 



140 FORM OF CONTRACT. 

have been the subject of actions of assumpsit for money 
had and received or the like. It covered apparently all 
sorts of cases where money had been paid on condition or 
to be dealt with in some way prescribed by the person 
pajring it (see cases in 1 Rol. Abr. 116). One must not 
be misled by the statement that " no man shall be charged 
in account but as guardian in socage, bailiff or receiver " 
(11 Co. Rep. 89, Co. Lit. 172 a): for it is also said "a 
man shall have a writ of account against one as bailiff or 
receiver where he was not his bailiff or receiver : for if a 
man receive money for my use I shall have an account 
against him as receiver; or if a man deliver money unto 
another to deliver over unto me, I shall have an account 
against him as my receiver" (F. N. B. 116 Q). This 
action might be brought by one partner against another 
(i6. 117 D). At common law it could not be brought by 
executors, except, it seems, in the case of merchants, nor 
against them unless at the suit of the Crown (Co. Lit. 90 6, 
and see Earl of Devonshire's ca. 11 Rep. 89) : but it was 
made applicable both for and against executors by various 
statutes to which it is needless to refer particularly (h). 
In modem times this action was obsolete except as between 
tenants in common (i). 

On informal executory agreements there was in general 
no remedy in the King's Courts. The Ecclesiastical Courts 
however took notice of them (see note p. 137 supra) : and 
it may well be that executory mercantile contracts were 
also recognized in the special courts which administered 
When no the law merchant. But we cannot here attempt to throw 
" ^ any light on that which Lord Blackburn has found to be 



^^* one of the obscurest passages in the history of the English 

law (A). Also there were exceptions by local custom. " In 

(A) The action !■ given againtt {k) Blackbun on the Contract of 

ezecaton by 4 ft 5 Ana. c 8 (Bar. Sale, 207-208. In addition to the 

Stot ; i Ann. a 16 in Roffhead) quotation there from the Year Book 

1. 27. of Ed. IV., see now T. B. 21 ft 22 

(i) See Lindlqr <m Partnenhip, Ed. L, p. 468. 
560, note h. 



HI8T0&Y OF ASSUMPSIT. 141 

London a man shall have a writ of covenant without a 
deed for the covenant broken," and there was a like custom 
in Bristol (l). 

It is significant that when a general remedy was at last ^J^j*^" 
found indispensable it was introduced in the form of an of i 
action nominally ex delicto. It was a new variety of tres- '^, 
pass on the case that ultimately became the familiar 
action of assumpsit and the ordinary way of enforcing 
simple contracts. The final prevalence of assumpsit over 
debt, like that of trover over detinue (m), was much aided 
by the defendant not being able to wage his law and by 
the greater simplicity and latitude of the pleadings : but 
the reason of its original introduction was to supply a 
remedy where debt would not lie at alL This was not 
effected without some fedlures. In the first recorded case (n), 
the action was against a carpenter for having failed to 
build certain houses as he had contracted to do. The writ 
ran thus : '' Quare cum idem [the defendant] ad quasdam 
domos ipsius Laurentii [the plaintiff J bene et fideliter 
infira certum tempus de novo construend' apud Grimesby 
assmnpsisset, praedictus tamen T. domos ipsius L. infra 
tempus praedictum, &c, construere non curavit ad damp- 
num ipsius Laurentii decem libr', &c." The report proceeds 
to this eflFect : — 

** Tirwit. — Sir, you see well that his count is on a 
covenant, and he shows no such thing: judgment. 

Chxscoigne, — Seeing that you answer nothing, we ask 
judgment and pray for our damages. 

{I) F. N. B. U6a, Liber Albu and the verj ftiU mmI CAreful hie- 

191a, 14 H. IV. 26a. pL 83, 6odb, torical diacoMioii of the whole mib- 

49, 386, Sty. 145, 198, 199, 228, jeot by Piof. Amea of Hanraid in 

Lftteh 184, 1 Leo. 2, 4 Leo. 105. the Hanrwd Law Beriew for April 

(m) See per Martin B. Hur- and May, 1888. Aotlooi of tree- 

ramffkn v. Bayne (1860) 5 H. & N. paae on the caee had previoiuly 

at p. 801, 29 L. J. Ex. 188. been allowed for malfeaienoe by the 

(n) Mkh. 2 H. lY., 3 6, pi. 9, tee negligent performance ol oontraote 

Beeves Hi«t Eng. Law (ed. Fin- (for which it is stiU held that there 

laeoo), 2. 508 ; 1 C. P. Guoper, u an alternative remedy in con- 

Appx. 549, whcve gnbaeqnent caaee tract and in tort), bat an action for 

are alio collected and translated ; mere non-feaeance was a novelty. 



142 FOBM OF CONTRACT. 

Tvrwit. — This is covenant or nothing {ceo est merement 
un covenant). 

Brenchesley J, — It is so : perhaps it would have been 
otherwise had it been averred that the work was begun 
and then by negligence left unfinished. 

(Hcmkford J, observed that an action on the Statute of 
Labourers might meet the case.) 

RickhUl J. — For that you have counted on a covenant 
and show none, take nothing by your writ but be in 
mercy." 

This was followed by at least one similar decision (o), but 
early in the reign of Henry VI. a like action was brought 
against one Watkins for fdlure to build a mill within the 
time for which he had promised it, and two out of three 
judges (Babington C.J. and Cockaine J.) were decidedly 
in favour of the action being maintainable and called on 
the defendant's counsel to plead over to the merits (p). 
Martin J. dissented, insisting that an action of trespass 
would not lie for a mere non-feasance : a difficulty by no 
means frivolous in itself. " If this action is to be main- 
tained on this matter," he said, " one shall have an action 
of trespass on eveiy agreement that is broken in the 
world." This however was the veiy thing sought, and 
so it came to pass in the two following reigns, when the 
general application of the action of assumpsit was well 
established (see Reeves, 3. 182, 403). But only in 1696 
was it conclusively decided that assumpsit was admissible 
at the plaintiff's choice where debt would also lie (y). The 
fiction of the action being founded on trespass was abolished 
by the Common Law Procedure Act. 
Bulethat It is stated in several books of authority (e,g. Shepp. 
not be Touchst. 54) that a deed must be written on parchment or 

(o) Micb. 11 H.iy. 38, pi. 60. And stantial oaose of action in Msunprit 

see Bigelow L.C. on Torta, 687. wai the oontraot O. W. Holmes, 

yp) Mil. 8 H. VI. 86, pL 38. The Common Law, 284—287. For 

{q) 8lade*§ oa. 4 Co. Rep. 91 o^ the earlier history see Prof. Ames, 

in Ex. Cb. It was still later Harvard Law Rev. IL 16. 

before it was admitted that the sub- 



OOHTRACflS 09 RKOBD. 14S 

paper, not on wood, &a This seems to refer to the then w ii t ton on 
common use of wooden tallies as records of contracts. ''***^ 
Fitzherbert in &ct says (F. N. R 122 I) that if such a tally 
is sealed and delivered by the party it will not be a deed; 
and the Tear Books afford evidence of attempts to rely on 
sealed tallies as equivalent to deeds; and it appears that 
by the custom of London they were so (r). These tallies 
were no doubt written* upon as well as notched, so that 
nothing could be laid hold of to refuse them the descrip^ 
tion of deeds but the hct of their being wooden : the 
writing is expressly mentioned in one case (a), and the 
Exchequer taUies used till within recent times were like- 
wise written upon (t)» 

The foregoing sketch has shown how in the ancient view Baqidie- 
no contract was good (as indeed no act in the law was) fo„B mm 
unless it brought itself within some favoured class by JT*** ■• 
satisfying particular conditions of form, or of evidence, or tioo. 
both. The modem view to which the law of England 
has now long come round is the reveise, namely that 
no contract need be in any particular form unless it 
belongs to some class in which a particular form is specially 
required 

Before we say anything of these classes it must be men- Contraois 
tioned that contracts under seal are not the only formal ^'^"^ 
contracts known to English law. There are certain so- 
called " contracts of record " which are of a yet higher 

(r) "Un UXn» de detta enMide CivU Codes expraidy ftdmlt talUcs 

par mage de 1* dtee est aim fort as evidenoe between traden wlio 

oome tme obligaooon '*: Liber Albas keep their aooounts in this waj ; 

191 a. nor is the use of them unknown at 

(«) Trin. 12 H. lY. 23, pL 8. The this day In EneUnd. By the oonr- 
other dtadons we have been able tesy of Mr. J. K Matthews, of 
to Terify are Paaeh. 25 B. III. 88 Worcester, I now have a spedmen 
(wrongly referred to as 40 hi the of the tallies with which the hop- 
last case and in the margin of picken in Herefordshire still keep 
I1tKh.),pL9,wherethe reporter notes aoooont of the quantities picked 
it is said to be [by custom] otherwise They were need In the Kentish hop 
In London } and TrIn. 44 Ed. III. coontry within living memoiy, and 
21, pL 28. In HamprfiIre not many yean ago. 

(() See aocoont of them In Pennv Cp. CoL Ynle'i note on Marco Polo, 

Cyck)p(Bdi%s.T.TaUy. TheFreni^ ii 78, 2nd ed. 
(art. 1838) and Italian (art. 1882) 



fomuL 



144 FORM OF CONTRACT. 

nature than contracts by deed The judgment of a Court 
of Kecord is treated for some purposes as a contract: and 
a recognizance, i,e, "& writing obligatory acknowledged 
before a judge or other oflScer having authority for that 
purpose and enrolled in a Court of Record," is strictly and 
properly a contract entered into with the Crown in its 
judicial capacity. The statutory forms of security knoMm 
as statutes merchant, statutes staple, and recognizances in 
the nature of a statute staple, were likewise of record, but 
they have long since fallen out of use (u). 

The kinds of contract subject to restrictions of form are 
these : 
Contracts (1), At common law, the contracts of corporations. The 
JJeoW rule that such contracts must in general be under seal is 
remarkable as not being an institution of modem positive 
law but a survival from a time when the modem doctrine 
of contracts was yet unformed Of late years great en- 
croachments have been made upon it, which have probably 
not reached their final limits ; as it stands, the law is in a 
state of transition or fluctuation on some points, and demands 
careful consideration. Both the historical and the practical 
reason lead us to give this topic the first place. 

(2). Partly by the law merchant and partly by statute, 
the peculiar contracts expressed in negotiable instruments. 
(3). By statute only — 

A. The various contracts within the Statute of Frauds. 
Certain sales and dispositions of property are regulated by 
other statutes, but mostly as transfers of ownership or of 
rights good against third persons rather than as agreements 
between the parties. 

B. Marine insurances. 

C. Transfer of shares in companies (generally). 

D. Acknowledgment of debts barred by the Statute of 
Limitation of James I. 

(«) Am to Contracti of Becord, of stAtntf ■ merchant, &c. 2 Wmi. 
Bee Aiuun, p. 46, and for an acoount Saund. 216—222. 



CONTRACTS OF CORPORATIONS. 145 

E Marriage: This, although we do not mean to enter on 
the subject of the Marriage Acts, must be mentioned here 
to complete the list 

1. A8 to Contracts of Corporations. 

The doctrine of the common law was that corporations Oofpot*. 
could bind themselves only under their common seal, except ow^fnie .. 
in small matters of daily occurrence, as the appointment of S^** 
household servants and the like (x). The principle ofnqdrwL 
these exceptions being, in the words of the Court of 
Exchequer Chamber, "convenience amounting almost to 
necessity " (y), the vast increase in the extent, importance, 
and variety of corporate dealings which has taken place 
in modem times has led to a corresponding increase of the 
exceptions. Before considering these, however, it is well to 
cite an approved judicial statement of the rule, and of the 
reasons that may be given for it: — 

** The seal is required aa authenticaiiiig the oonoarrenoe of the whole 
body corporate. If the legislature, in erecting a body ooiporate, invest 
any member of It, either ezprenly or impliedly, with authority to bind 
the whole body by his mere tignature or otherwise, then undoubtedly 
the adding a seal would be matter purely of form and not of substance. 
Everyone becoming a member of such a corporation knows that he Is 
liable to be bound in his corporate character by such an act ; and persons 
dealing with the coiporation know that by such an act the body will be 
bound. But in other cases the seal is the only aathentio evidence of what 
the corporation has done or agreed to do. The resolution of a meeting, 
however numerously attended, is, after all, not the act of the whole body, 
Eveiy member knows be Is bound by what is done under the corporate 
seal and by nothing else. It is a great mirtake, therefore, to speak of the 
necessity for a seal as a relic of ignorant times. It is no such thing: 
either a seal or some substitute for a seal, which by law shaU be taken as 
oonehisively evidencing the sense of a whole body corporate, is a necessity 
inherent in the very nature of a corporation " (2). 

(x) 1 Wms. Saond. 615, 616, and (z) Mapor of Ludlow v. CharUon 

see old authorities collected in notes (1840) 6 M. A; W. 815, 828, adopted 

to Arnold v. Maifor of Poole (1842) by Pollock B. in Mayor of Kidder- 

4 M. & Gr. 860, 12 L. J. C. P. 97 ; min$ier v. ffardwick (1878) L. R. 9 

•ad Fulunonger$* Company V, Robert- Ex. at p. 24 (48 L. J. Ex. 9) ; and 

ton (1848) 5 M. A; Gr. 181, 12 L. J. see per Keating J. Auatin v. Guar- 

G. P. 185. diant of Bethnal Qrten (1874) L. R. 

{y) Chtrek v. Imperial Oat, die, 9 C. P. at p. 95 ; 43 L. J. G. P. 100. 
Cbmpany (1888) 6 A. A; K 846, 861. 



146 FORM OF CONTRACT. 

It is, no doubt, a matter of " inherent necessity " that 
an artificial person can do nothing save by an agent ; and 
the common seal in the agent's custody, when an act in 
the law purports to be the act of the corporation itself, or 
his authority under seal, when it purports to be the act of 
an agent for the corporation, is in English law the recog- 
nized symbol of his authority. But there is no reason in 
the nature of things why his authority should not be 
manifested in other ways : nor is the seal of itself con- 
clusive, for an instrument to which it is in fact aflSxed 
without authority is not binding on the corporation (a). 
On the other hand, although it is usual and desirable for 
the deed of a corporation to be sealed with its proper 
corporate seal, it is laid down by high authorities that any 
seal will do (b). A company under the Companies Act, 
1862, must have its name engraved in legible characters 
on its seal, and any director, &c., using as the seal of the 
company any seal on which the name is not so engraved 
is subject to a penalty of 50L (ss. 41, 42) : but this would 
not, it is conceived, prevent instruments so executed from 
binding the company (c). The seal of a building society 
incorporated under the Building Societies Act, 1874 
(37 & 38 Vict. c. 42, a 16, sub-s. 10), " shall in all cases 
bear the registered name thereof," but no penalty or other 
consequence is annexed to the non-observance of this 
direction. 

(a) Bank of Ireland v. Evann^ cord of the piiy»te seal of * director 

CharUia (1855) 5 H. L. G. 889. being used wh*-!! the company had 

(6) 10 Co. Rep. 306, Shepp. been ao recently formed that there 
Touchst. 57. Yet the rule is had been no time to make a proper 
donbted, Grant on Corp. 59, but seal, Oray ▼. Leteit (1869) 8 Eq. at 
only on the ground of convenience p. 581 . The like direction and 
and without any authority. The penalty are contained in the Indus- 
like rule as to sealing by an indi- trial and Proyident Societies Act, 
▼idual is quite clear and at least 1876, 39 k 40 Vict. c. 45, sa. 10, 
as old as Bracton : Non multum snb.>B. 1, and 18, sub-s. 2. As to 
refert utrum [carta] proprio vel execution of deeds abroad by com- 
alieno sigillo sit signata, cum semel panies under the Acts of 1862 and 
a donatore coram testibus ad hoc 1867, see the Companies Act» 1862, 
vocatis recognita et concessa fnerit, s. 55, and the Companies SesJs Ao^ 
fo. 38a. Cp. Britton, 1. 257. 1864 (27 Vict c 19) ; in Scotland, 

(e) Notwithstanding the statutory the Conveyancing (Scotland) Act, 

penalty, there is an instance on re- 1874, 37 & 88 Vict c. 94, s. 56. 



TRADING CORPORATION& 147 

We now turn to the exceptions. According to the Modflm 
modem authorities it is now established, though not till SST 
after sundry conflictini? decisions, that the "principle o{^^^, 
convenience amounting almost to necessity will cover all v. Patter- 
contracts which can fairly be treated as necessary and ^ . ^ ^ ^ ^ 
incidental to the purposes for which the corporation exists : Comt, 
and that in the case of a trading corporation all contracts 
made in the ordinary course of its business or for purposes 
connected therewith fall within this description. The same 
or even a wider conclusion was much earlier arrived at in 
the United States. As long ago as 1813 the law was thus 
stated by the Supreme Court : — 

*' It wcmid Mem to be * Kmod rale ci law th«t wherever * corporatloii 
is acting within the loope of the legltlnuite porpoeee of Iti ioetitatioQ all 
parole oontracti made by iti authorized agents are express promises of the 
corporation, and aU dnties imposed on them by law, and aQ benefits 
conferred at their reqnest, raise implied promises for the enforoement of 
which an action may well lie " (<2). 

In England this rule still holds good only for trading Not so 
corporations, and perhaps also for non-trading corporations ^^ ^ "^ 
established in modem times for special purposes. The 
former conflict of decisions is much reduced, but there 
remains the inconvenient distinction of two if not three 
different rules for corporations of different kinds. 

As concerns trading corporations the law may be taken Trading 
as settled by the unanimous decisions of the Court of J 



Common Pleas and of the Exchequer Chamber in Sov;th Omiracti 
of Irdand CoUien/ Co. v. Waddle (e). The action was ©f J" 



brought by the company against an engineer for ^^^"fS**?"! 
delivery of pumping machinery, there being no contract Ireland 
under seal Bovill CJ. said in the Court below that it^^"^^ 
was impossible to reconcile all the decisions on the subject: Waddle, 
but the exceptions created by the recent cases were too 

(d) Bank of Columbia v. Pattenon need not be mider seal 

(1812) 7 Craiich,299, 306. It is also (e) (1868) L. R. 8 C. P. 468, (n 

held l^ the American anthorities Ex. Ch. 4 C. P. 617, 38 L. J. C. P. 

that the appointment by a eorpora- 338. Most if not aU of the preyioos 

tion of an agent, officer, or attorney authorities are there referred to. 

L 2 



148 FORM OF CONTRACT. 

firmly established to be questioned by the earlier deci- 
sions, which if inconsistent with them must be held not to 
be law : — 

"These exceptions apply to all contracts by trading coiporationB 
entered into for the purposes for which they are incorporated. A 
company can only carry on business by agents, — managers and otheis; 
and if the contracts made by these persons are contracts which relate to 
objects and purposes of the company, and are not inconsistent with the 
rules and regulations which govern their acts (/), they are valid and 
binding upon the company, though not, under seal It has been urged 
that the exceptions to the general rule are stUl limited to matters of 
frtquent occurrence and small importance. The authorities however do 
not sustain the argument." 

Caaee The decision was a£5rmed on appeal without hearing 

^^^fftlfU, counsel for the plaintiffs, and Cockbum C.J. said the 

defendant was inviting the Court to reintroduce a relic of 

barbarous antiquity. It is submitted that the following 

cases must since this be considered as overruled : — 

East Lmion Watervxn-ka Co, v. Bailey (1827) 4 Bing. 288. Action for 
non-delivery of iron pipes ordered for the company's works {g). Expressly 
said in the Court bolow to be no longer law, per Montague Smith J. See 
li. R. 3 0. P. 476. 

ffomersham v. Wolverhampton Watenoorhs Co. (1851) 6 Ex. 187, 20 L. J. 
Ex. 193. Contract under seal for erection of machinery : price of extra 
work done with approval of the company's engineer and accepted, but not 
within the terms of the sealed contract, held not recoverable. 

Digg^ v. London d: BlachoaU Ry, Co. (1850) 5 Ex. 442, 19 L. J. Ex. 808. 
Work done on railway in alterations of permanent way, &c. : this case 
already much doubted in Henderson v. AuttraXian Royal Mail ttx. Co, 5 E. 
& B. 409, 24 L. J. Q. B. 822, which is now confirmed in its full extent by 
the principal case. 

Probably FirUay v. Bristol iB Exeter Ry, Co, (1852) 7 Ex. 409, 21 L. J. 
Ex. 117, where it was held that against a corporation tenancy could in no 
case be inferred from payment of rent so as to admit of an action for 
use and occupation without actual occupation. 

(/) This qualification is itself (^) The directors were authorized 

subject to the rule established by by the incorporating Act of Parlia- 

Royal British Bank v. TurquaiuL ment to make contracts ; but it was 

(1856) 6 E. & B. 287 ; 25 L. J. Q. B. held that this only meant they 

817, and similar cases, and men- znight affix tiie seal without calling 

tioned at p. 122 above. For details a meeting, 
see Note I), in Appendix. 



TRADING AND NON-TRADING CORPORATIONS. 149 

Alfo London Dock Co. ▼. SmnoU (1857) 8 B. A; B.847, 27 L. J. Q. B. 129, 
where a contract for softvenging the oompMiy's doclu for * year wm 
held to require the aeal, ai not being of a mercantile nature nor with 
a cutomer of the company, can now be of little or no anthority beyeod 
its own special circnmstancee : see per Bovill C.J. L. B. 8 C. P. 471. 

Eyen in the House of Lords it has been assumed and said, though 
fortunately not decided, that a formal contract under seal made with a 
raQway company cannot be subsequently yaried by any informal mutual 
consent : Midland Q, W. Ry, Co, of Irdand v. Johnmn (1858) 6 H. L. C. 
798, 812. 

The following cases are afBrmed or not contradicted Cases 
Some of them were decided at the time on narrower or 
more particular grounds, and in one or two the trading 
character of the corporation seems immaterial : — 

Beverley v. lAnccln Oat Co, (1837) 6 A. A; £. 829. Action against the 
company for price of gas meters supplied. 

Church V. Imperial Chu Co. (1838) t&. 846 in Ex. Gh. Action by the 
ocmipany for breach of contract to accept gv. A supposed distinction 
between the liability of corporations on executed a*id on executory con- 
tntcts was exploded. 

Copper Minert of Sngiland v. Fox (1851) 16 Q. B. 229, 20 L. J. Q. B. 174. 
Action (in effect) for non-acceptance of iron rails ordered from the 
company. The company had in fact for many yean given up copper 
mining and traded in iron, but this waa not within the scope of its 
incorporation. 

Lowe V. L, cC- y. W. Ry. Co. (1852) 18 Q. B. 632, 21 L. J. Q. R 861. 
The company was held liable in an action for use and occupation when 
there had been an actual occupation for corporate purposes, partly on 
the ground that a parol contract for the occupation waa within the statu- 
tory powers of the directors and might be preenmed : cpi the next case. 

Pauling v. L. A N. W. Ry. Co. (1853) 8 Ex. 867, 23 K J. Ex. 105. 
Sleepers supplied to an order from the engineer's office and accepted : 
there was no doubt that the contract could under the Companiee Clauses 
Consolidation Act be made by the directors without seal, and it was held 
that the acceptance and use were evidence of an actual contract. 

Henderton y. Augtralian Royal MaU Co. (1855) 5 E. A; B. 409, 24 L. J. 
Q. B. 322. Action on agreement to pay for bringing home one of the 
company's ships from Sydney. Here it was distinctly laid down that 
" where the making of a certain description of contracts is necessary and 
incidental to the purposes for which the corporation was created " such 
contracts need not be under seal (by Wigfatman J.) : "The question is 
whether the contract in its nature Is directly connected with the purpose 
of the incorporation " (by Erie J.) 



160 FORM OF CONTRACT. 

AuHraUan Jtoyal MaU Co, v. ManetH (1855) 11 Ex. 228, 24 L. J. Ex. 
273. Action by the oompftny on agreement to supply proviBionB for iUi 
passenger ships. 

JteuUr 7. EUetrie TeUgrapk Co. (1856) 6 E. & B. 841, 26 L. J. Q. B. 46 : 
Where the chief point was as to the ratification by the directors of a 
contract made originally with the chairman alone, who certainly had no 
authority to make it. 

Mbw Vale Company^i ecue (1869) 8 Eq. 14, decides that one who sells to 
a company goods of the kind used in its business need not ascertain that 
the company means so to ose them, and is not prevented from enforcing 
the contract even if he had notice of an intention to nse them otherwise. 

Non- As concerns non-trading corporations, the question has 

^^^•^^ never been decided by a Court of Appeal. But the weight 
tions. of the most recent authorities, together with the analogy 
^J^ of those last considered, seems to give a sufficient warrant 
for special for the statement made above, that all contracts necessary 
State of ' And incidental to the purposes for which the corporation 
fj**^*^^ exists may be made without seal, at least when the corpo- 
ceasary ration has been established for special purposes by a 
Sentsl" ^od^m statute or charter. On the rule as thus limited 
contracts the latest case is Nicholson v. Bradfield Union (h), where 
"**" it was held that a corporation is liable without a contract 
under seal for goods of a kind which must be from time to 
time required for corporate purposes, at all events when 
they have been actually supplied and accepted. Earlier 
decisions are as follows : — 

Sanderi t. St. Neot^t Union (1846) 8 Q. B. 810, 15 L. J. M. C. 104. 
Iron gates for workhonse supplied to order without seal and accepted. 

Paine t. Strand Union (1846) ib. 326, 15 L. J. M. C. 89, is reaUy the 
same way, though at first sight contra : the decision being on the ground 
that making a plan for rating purposes of one parish within the union was 
not incidental to the purposes for which the guardians of the union were 
incorporated : they had nothing to do with either making or collecting 
rates in the several parishes, nor had they power to act as a corporation in 
matters confined to any particular parish. 

Clarke t. CuiAfidd Union (1852) 21 L. J. Q. B. 849 (in the BaU Ck>urt, 
by Wightman J.) Builders' work done in the workhouse. The former 
cases are reviewed. 

{h) (1866) L. B. 1 Q. B. 620, 85 L. J. Q. B. 176. 



MUNICIPAL CORPORATIONS. 151 

Bmgh ▼. North Bieriey Unitm (1858) E. B. A; E. 878, 28 L. J. Q. B. 62. 
Aa MooQiitaiik emplojed to in^Mtigito the Mooonta of the Qnion wm held 
entitled to reooTer for hie work m '* incidental end neoeeeeiy to the 
pupoeee for which the ooiponitaon wee oveftted," by Erie J., Grompton 
J. doobtittg. 

In direct oppodtion to the foregoing we heve only one decieion, but * 
conaidered one, LampreU v. BilUricay Union (1849) 3 Ex. 283, 18 L. J. Ex. 
282. Boilding contract under seal, pronding for extra worka on written 
directionB of the architect. Extra work done and accepted hot without 
•Dch direction. Held, with an exprenion of regret, that against an indi. 
vidoal this might have gi?en a good distinct came of action on simple 
contract, but this woold not help the plaintiff, as the def eodants could be 
bound only by deed. 

Bunt T. WimhUdon Local Board (1878) 4 C. P. IMt. 48 ; 48 L. J. G. P. 
207. Whether the preparation of plane for new offices for an incorporated 
local Board, whidi plane were not acted on, is work incidental and neoeseary 
to the pnrposes of the Board, quairt. The actual decision was on the 
ground that contracte above the value of bOL were imperatively required by 
statute to be under seaL 

With regard to municipal corporations (and it is pre- Mniddpal 
sumed other corporations not created for definite public SSotc 
purposes) the ancient rule seems to be still in force to a ^W rula 
great extent. An action will not lie for work done on mmJbU. ' 
local improvements (i), or on an agreement for the purchase 
of tolls by auction (k), without an agreement under seal 
Where a municipal corporation owns a graving dock, a 
contract to let a ship have the use of it need not be under 
the corporate seal; but this was said to fall within the 
ancient exception of convenience resting on the frequency 
or urgency of the transaction. The admission of a ship 
into the dock is a matter of frequent and ordinary occur- 
rence and sometimes of urgency (Z). 

There has also been little disposition to relax the rule Appoint- 
in the case of appointments to o£Sces, and it seems at ^^o^ y^ 
present that such an appointment, if the oflSce is of any ^^^P**^ 



(t) Mayor of LwUow v. Charlton L. J. Kx. 9. 

0840) 6 M. It W. 815. {I) WdU v. Kinatton-nfon-Hvil 

{k) Mayor of Kiddormimier v. (1875) L. R 10 C. P. 402, 44 

Bordmek (1878)L. B. 9 Ex. 18, 48 L. J. a P. 257. 



152 FORM OF CONTRACT. 

importance, must be under the corporate seal to give the 
holder a right of action for his salary or other remuneration. 
This appears by the following instances : — 

Appointment of attorney : Arnold y. Mayor of Pooie (1842) 4 M. & 6r. 
860, 12 L. J. C. P. 97. It is true that the corporation of London appoints 
an attorney in coart without deed, bat that is becaoae it is matter of 
record : see pp. 882, 896. But after an attorney has appeared and acted 
for a corporation the corporation cannot, ai againti the other party to the 
action, dispute his authority on this ground: FavidL v. E, (7. Ry, Co, (1848) 
2 Ex. 344, 17 i^. J. Ex. 228, 297. Nor can the other party dispute it after 
taking steps in the action : Thamee Haven, dsc. Co, v. Hall (1848) 5 M. ft 
Gr. 274. Cp. Reg. y. Juiticee of Cumbeiiand (1848) 17 L. J. Q. B. 102. 

Grant of military pension by the East India Company in its political 
capacity : Oibaon v. E. I, Co, (18S9) 5 Sing. N. G. 262. 

Increase of town clerk's salary in lieu of compensation : Reg. v. Mayor 
of Stamford (1844) 6 Q. B. 484, L. J. Dig. 6, 422. 

Office with profit annexed (coal meter paid by dues) though held at the 
pleasure of the corporation: Smith y. CaHwrigkt (1851) 6 Ex. 927, 20 L. J. 
Ex. 401. (The action was not against the corporation but against the 
person by whom the dues were alleged to be payable. The claim was also 
wrong on another ground.) 

CoUeotor of poor rates : SmaH y. Wett Hem Uwon (1865) 10 Ex. 867, 
24 li. J. Ex. 201 ; but partly on the ground that the guardians had not 
undertaken to pay at all, the salary being charged on the rates ; and wholly 
on that ground in Ex. Oh., 11 Ex. 867, 25 L. J. Ex. 210. 

Clerk to master of workhouse : Auttin y. Ouardiane of Eethnal Oreen 
(1874) L. R. 9 C. P. 91, 48 L. J. C. P. 100. 

Dunaton y. Imperial Oat Light Co. (1882) 8 B. ft Ad. 125, as to directors' 
fees yoted by a meeting; but chiefly on the ground that the fees were neyer 
intended to be more than a gratuity. 

Cope y. Thames Haven, dtc Co. (1849) 8 Ex. 841, 18 L. J. Ex. 845 : 
agent appointed for a special negotiation with another company not allowed 
to recover for his work, the contract not being under seal nor in the 
statutory form, vis. signed by three directors in pursuance of a resolution, 
although by another section of the special Act the directors had full power 
to "appoint and displace ... all such managers, officers, agents 
... as they shall think proper." It seems difficult to support the 
decision ; this was not like an appointment to a continuing office ; and cp. 
Reg. y. Jutticet of Cumberland (1848) 17 L. J. Q. B. 102, where under yeiy 
similar enabling words an appointment of an attorney by directors without 
seal was held good as against third parties. 

No equity It has been decided (as indeed it is obvious in principle) 
informal ^^^^ inability to enforce an agreement with a corporation 



CONTRACTS OF CORPORATIONa 1*9 

at law by reason of its not being under the corporate seal •JJJJ"?*''* 
does not create any jurisdiction to enforce it in equity (m). 



The rights of corporations to sue upon contracts are IWg*»* ^ 
somewhat more extensive than their liabilities. When tions to 
the corporation has performed its own part of the contract ] 
so that the other party has had the benefit of it, the i 
corporation may sue on the contract though not originally Tenaacj 
bound (n). For this reason, if possession is given under a potion. 
demise from a corporation which is invalid for want of the 
corporate seal, and rent paid and accepted, this will con- 
stitute a good yearly tenancy (o) and will enable the 
corporation to enforce any term of the agreement which is 
applicable to such a tenancy (p), and a tenant who has 
occupied and enjoyed corporate lands without any deed 
may be sued for use and occupation (q). Conversely the 
presumption of a demise from year to year from payment 
and acceptance of rent is the same against a corporation 
as against an individual landlord : " where the corporation 
have acted as upon an executed contract, it is to be pre- 
sumed against them that everjrthing has been done that 
was necessary to make it a binding contract upon both 
parties, they having had all the advantage they would 
have had if the contract had been regularly made " (r). 
And a person by whose permission a corporation has 
occupied lands may sue the corporation for use and occu- 

(») Kirky. Brom/qf Union (1846) P. N. R. 247. 

2 Phill. 640 ; Orampton t. Varna (p) EccUi. Oommn. ▼. Merral 

Ry. Co. (1872) 7 Ch. 562, 41 L. J. (1869) L.R. 4 Ex. 162,38 L. J. Ex. 93. 

Cb. 817. By Kelly C.B. this is oorrelatiTe 

(n) Puhmcmffen* Co, ▼. RoherUon to the teoaat's right to enforce the 

(1843) 5 M. A; 6r. 181, 12 L. J. C. Agreemeot in equity on the ground 

P. 185. The jadgment on this of part peiformanoe, seef^tt. 

point is at pp. 192-6 ; but the die- (a) Mayor of Stafford ▼. TiU 

tarn contained in the paraage *'£7en (1827) 4 Bing. 75. The like as to 

if . . . against themselves," toUs, Mayor of Carmarthen y, Lewit 

pp. 192-3 (extending the right to (1834) 6 C. It P. 608, hot see Seij. 

sne without Umit) is now overruled. Manning^s note, 2 M. & Or. 249. 

See Mayor of KiddermintUr ▼. (r) i)o« </. Pennington t. Taniert 

Hardwek (1878) L. B. 9 Ex. 13, 21, (1848) 12 Q. B. 998, 1013, 18 L. J. 

48 L. J. Ex. 9. Q. B. 49. 

(o) Wood ▼. Tate (1806) 2K k 



154 



FORM OF CONTRACT. 



Onpom- 
tioiui liable 
onqnasi- 
oontraots 
genwtlly. 



Stotatory 

fomiBof 

oontraet. 



pation (s). In the case of a yearly tenancy the presump- 
tion is of an actual contract, but the liability for use and 
occupation is rather quasi ex contractu (t). It is settled 
that in general a cause of action on a " contract implied in 
law," as it is inconveniently called in our books, is as good 
against a corporation as against a natural person. Thus a 
corporation may be sued in an action for money received 
on the ground of strict necessity ; " it cannot be expected 
that a corporation should put their seal to a promise to 
return moneys which they are wrongfully receiving " (u). 
It was held much earlier that trover could be maintained 
against a corporation — a decision which, as pointed out in 
the case last cited, was analogous in principle though not 
in form (x). Sometimes it is stated as a general rule that 
corporations are liable on informal contracts of which they 
have in fact had the benefit : but the extent and existence 
of the supposed rule are doubtfiil (y). 

Forms of contracting otherwise than imder seal are 
provided by many special or general Acts of Parliament 
creating or regulating corporate companies, and contracts 
duly made in those forms are of course valid But a 
statute may, on the other hand, contain restrictive provi- 
sions as to the form of corporate contracts, and in that 
case they must be strictly followed Enactments requiring 
contracts of local corporate authorities exceeding a certain 
value to be in writing and sealed with the corporate seal 
are held to be imperative, even if the agreement has been 



(«) Lowe V. L. A N. W, By. Co, 
(1852) 18 Q. B. 682, 21 L. J. Q. B. 
861. 

{t) The liability existed at oom- 
mon law, and the statute 11 GkM). 2, 
c 19, B. 14, made the remedy by 
action on the case co-extensive with 
that by action of debt, see CHiuon y. 
Kirk (1841) 1 Q. B. 850, 10 L. J. 
Q, B. 297. Since the 0. L. P. Act 
the statute seems in fact super* 
flaoQ*. 

(«) Mall y. Mafor of Swamea 



(1844) 5 Q. B. 526, 549, IS L. J. 
Q. K 107. The like of a gwui 
corporation empowered to »ue and 
be sued by an oflSoer, Jejery$ y. 
Chirr (1881) 2 B. A; Ad. 888. 

{x) Yarhorough v. Bank of Eng^ 
land (1812) 16 East, 6. See early 
cases of trespass against corporatiotas 
cited by Lord EUenborough at p. 10. 

(y) Hwnt y. WiwhUdon Local 
Board (1878) 4 C. P. Diy. at pp. 
58, 57, 48 L. J. C. P. 207. 



CONTRACTS OF CORPORATIONS: SUMMARY. 166 

executed and the corporation has had the full benefit of 
it (z). The general result seems to stand thus : — 

In the absence of enabling or restrictive statutory pro- 8«Myy \ \ 
visions, which when they exist must be carefully attended \ \ 

to— 

A trading corporation may make without seal any con* 
tract incidental to the ordinary conduct of its business ; 
but it cannot bind itself by negotiable instruments unless 
the making of such instruments is a substantive part of 
that business, or is provided for by its constitution (a). 

A non-trading corporation, if expressly created for special 
purposes, may make without seal any contract incidental 
to those purposes; if not so created, cannot (it seems) 
contract without seal except in cases of immediate necessity, 
constant recurrence, or trifling importance. 

In any case where an agreement has been completely 
executed on the part of a corporation, it becomes a con- 
tract on which the corporation may sue. 

The rights and obligations arising fix>m the tenancy or 
occupation of land without an express contract apply to 
corporations both as landlords and as tenants or occupiers 
in the same manner (b) and to the same extent as to 
natural persons. 

A corporation is bound by an obligation implied in law 
whenever under the like circumstances a natural person 
would be so bound. 

It is much to be wished that the whole subject should 
be reviewed and put on a settled footing by the Court of 
Appeal, and that those cases which are already virtually 

{2)Frmdv.Denndt (1858) 4 C. provukm of this Und in iha PaUlo 
K N. & 576, 27 L. J. C. P. 814 : Heftlth Aot, 1875, i^pliM only to 
Jfunt T. WimUedon Local Board oontnieta known at tho time of 



(1878) 8 C P. D. 208, in C. A. 4 making them to ezoeed theipeoified 

0. P. D. W. 48 ; 48 L. J. G. P. 207, -walw or amoont" of 502. 

Yowng S Co. ▼. Majfor of Leammff' {a) See p. 128, tuprcL 

Urn (1888) 8 App. Ca. 517, 52 (6) AMoming Finla^ ▼. BrUtol 

L.J.Q.B.718. In Baton r, BaOcer ami Bxeier B^f. Co. {1B52) 7 'S^ i09, 

(1881) 7 Q.&DIT. 529, 50 L. J. 21 L. J. Ex. 117, not to be now law. 
Q. B. 444, ft was decided Uat » 



16.6 FORM OF CONTRACT. 

overruled should be expressly declared to be no longer of 
authority (c). 

Negoti- 2. Negotiable instruments. 

Btromenti. The peculiar contracts undertaken by the persons who 
issue or endorse negotiable instruments must by the nature 
of the case be in writing. Part of the definition of a 
bill of exchange is that it is an unconditional order in 
writing (d). The acceptance of a bill of exchange, though 
it may be verbal as far as the law merchant is concerned, 
is required by statute to be in writing and signed (e). 

Stetnte of 3. As to purely statutory forms. 

^^°^ A- Contracts within the Statute of Frauds. 

To write a commentary on the Statute of Frauds would 
be beyond the scope of this work (/). It may be convenient 
however to state as shortly as possible, so far as contracts 
are concerned, the contents of the statute and some of the 
leading points established on the construction of it. 

The statute (29 Car. 2, c. 3) enacts that no action shall 
be brought on any of the contracts specified in the 4th 
section "unless the agreement upon which such action 
shall be brought or some memorandum or note thereof 
shall be in writing and signed by the party to be charged 
therewith or some other person thereunto by him law- 
fiiUy authorized" The contracts comprised in this section 
are — 

PromisM CL Any special promise by an executor or administrator 

to ^AoT*" " ^ answer damages out of his own estate." No diflSculty 
has arisen on the words of the statute, and the chief 
observation to be made is the almost self-evident one 
(which equally applies to the other cases within the 
statute) that the existence of a written and signed memo- 



(c) See per Lord Blackburn, 8 promiaM>r7 notea, ■. 88. 
App. C». at p. 628, agreeing with {e) lb. b. 17. 

Lindley L. J. 8 Q. B. Div. at p. 586. (/ ) An exhanstive oommentary 

id) Bills nf Kxcbai ge Act, 1S82 by JuHge Reed of Philadelphia was 

(45 k 46 Vict. r. 61), s. 8. So uf puMitfhed in 1884. 



STATUTE OF FRAUDa 157 

randum is made a necessary condition of the agreement 
being enforceable, but will in no case make an agreement 
any better than it would have been apart from the statute, 
A good consideration, a real consent of the parties to the 
same thing in the same sense, and all other things neces- 
sary to make a contract good at common law are still 
required as much as before {g). 

fi. " Any special promise to answer for the debt de&ult Oqum- 
or miscarriages of another person." ***• 

On this the principal points are as follows. A promise 
is not within the statute unless there is a debt &c. of some 
other person for which that other is to remain liable 
(though the liability need not be a present one) : for there 
can be no contract of suretjrship or guaranty unless and 
until there is an actual principal debtor. " Take away the 
foundation of principal contract, the contract of suretyship 
would fail" (h). Where the liability, present or futiure, 
of a third person is assumed as the foundation of a contract, 
but does not in fact exist, then, independently of the 
statute, and on the principle of a class of cases to be ex- 
plained elsewhere, there is no contract On the other hand 
a promise to be primarily liable, or to be liable at all events, 
whether any third person is or shall become liable or not, 
is not within the statute and need not be in writing. 
Whether particular spoken words, not in themselves con- 
clusive, e.g. " Go on and do the work and I will see you 
paid," amount to such a promise or only to a guaranty is 
a question of fact to be determined by the circumstances 
of the case (t). 

Nor is a promise within the statute unless it is made 
to the principal creditor : " The statute applies only to pro- 



(17) Ab to these contracts of eze- Ex. Cb.) 48 L. J. Q. B. 188, per 

ca'on, 2 Wms. Exon. Pt. 4, Bk. 2, WUlei J. ftffd. L. B. 7 B. L. 17 

c. 2, § 1. nom. lakeman ▼. MourUH^en 

{h) MounUUphen ▼. Lakeman (1874). 

(1871) li. B. 7 Q. B. 196, 202 (in {i) Lakemanr. M<nmt9tq>hen,$upra, 



158 FORM OF CONTRAC?r. 

mises made to the person to whom another is answer- 
able " (k) or is to become so. 

A mere promise of indemnity is not within the sta- 
tute (l), though any promise which is in substance within 
it cannot be taken out of it by being put in the form of an 
indemnity (m). 

A contract to give a guaranty at a future time is as much 
within the statute as the guaranty itself (n). 

Agree- ry. "Any agreement made upon consideration of mar- 

upon oon- riage." A promise to marry is not within these words, the 
rideration consideration being not marriage, but the other party's 
riage. reciprocal promise to marry. For further remarks on the 
effect of this clause see Chapter XIIL on Agreements of 
Imperfect Obligation, infra. 

In the old books we frequently meet with another sort, 
of difficulty touching agreements of this kind; it was much 
doubted whether matrimony were not so purely spiritual a 
matter that all agreements concerning it must be dealt 
with only by the ecclesiastical courts : the type of these 
disputed contracts is a promise by A. to B. to pay B. lOl. 
if he will marry A.'s daughter. But this by the way (o). 

{I) Eaxtwood ▼. Kmyon (1840) 11 without dissent) Trin. 17 Ed. IV. 4, 

A. & E. 488, 446 ; concesfi. Cripp$ ▼. pi. 4. In Bracton's time the ezcla- 
HcurtnoU (1868) 4 B. & 8. 414, sive jnrisdiotion of the spiritnal 
32 L. J. Q. B. 881 (Ex. Ch). courts appears to have been adroit- 

(2) GrippB ▼. ffartnoU (last note) ; ted : '* ad fonim seculare trahi non 

Wildes v. DudUno (1874) 19 Eq. debet per id quod minus est et non 

198, 44 L. J. Ch. 841. prindpale id quod primum et prin- 

(m) CrippM ▼. ffartnoB-, oipale est in foro eoclesiastioo, ut si 

(») MaUet y. BaUman (1865) L. ob oausam matrimonii pecunia pro- 

B. 1 U. P. 168 (Ex. Cb.) 85 L. J. C. mittatur, licet videatnr prima fade 
P. 40. See further on this clause, quod oognitio super catalusetdebitis 
1 Wms. Saund. 229-285, or 1 Sm. L. pertineat ad forum seculare, tamen 

C. 884, note to Birkmyr v. Darnell propter id quod mains est et dignins 
( 1 705). trahitur oognitio pecuniae promissae 

(o) Such promise may be sued on et debitae ad forum ecdesiasticum, 

in the King's Court if by deed, 22 et ubi [? ibi] locum non habet prohi- 

Ara. 101, pi. 70 ; otherwise if he bad bitio, cum debitum sit de testaroento 

promised 10^ with hit daughter in vel matrimonio : '* fol. 175 a. It 

marriage^ then it should be in the should be remembered that ordinary 

Court Christian ; Trin. 45 Ed. IIL 24, debts were still indirectly enioroed 

pi. 80; action good without specialty in the spiritual courts by the impo- 

where the marriage had taken place, sition of penance. 
Mich. 87 H. YI. 8.pl. 18 ; C(mtra{not 



STATUTE OF FRAUDa 169 

S. "Any contract or sale of lands, tenements, or here- J"*"Jjf" 
ditaments, or any interest in or concerning them." This 
clause is usually and conveniently considered as belonging 
to the topic of Vendors and Purchasers of real estate ; and 
the reader is referred to the well-known works which treat 
of that subject (p). Questions have arisen, however, 
whether sales of growing crops and the like were sales of 
an interest in lands within the 4th section or of goods 
within the l7th (q). A sale of tenant s fixtures, being a 
sale only of the right to sever the fixtures from the free- 
hold during the term, is not within either section (r). 

By the 1st and 2nd sections of the statute leases for more 1«m«. 
than three years, or reserving a rent less than two-thirds 
of the improved value, must be in writing and signed by 
the parties or their agents authorized in writing, and now 
by 8 & 9 Vict c 106, s. 3, they must be made by deed 
But an informal lease, though void as a lease, may be good 
as an agreement for a lease (a). 

e " Any agreement that is not to be performed within Agre»- 
the space of one year from the making thereof" to be mt- 

"Is not to be," not "is not" or "may not be." ThisJ^^^ 
means an agreement that on the face of it cannot be per- jmx. 
formed within a year. An agreement capable of being 
performed within a year, and not showing any intention to 
put off the performance till after a year, is not within this 
clause {t). Nor is an agreement within it which is com- 

(p) A« to u agraenaent eoUaieral L. J. C. P. 257. 

to % demise of land not being within {q) Marthall ▼. Orem (1875) 1 C. 

tbe Btaiote, see ifor^wm ▼. GriiUk P. D. 85. 45 L. J. C. P. 158. Ai 

(1871) L. R. 6 Bz. 70, 40 L. J. £x. to boilding materials to be seveivd 

46 ; Bnkine v. Adtane (1873) 8 Gb. from the boU, Lavery ▼. Pwndl 

756, 42 L. J. Ch. 835 ; AngeU ▼. (1888) 89 Cb. D. 508, 57 L. J. Ch. 

Ihtke (1875) L. R. 10 Q. K 174 ; 570. And see 1 Wms 8aDnd.395. 

44 L. J. Q. R 78. As to the dis- (r) Lee ▼. GiuhU (1876) 1 Q. B. 

tinction between a demise and a D. 700 ; 45 L. J. Q. K 540. 

mere Uoenoe or agreement for the («) I^rt, V. ft P. 1, 198. 

uve of land withont any change of {t) Smith y. Necde (1857) 2 C. B. 

possession, WeOt ▼. Kingetcn-upon- N. S. 67, 26 L. J. G. P. 143. 
BiUl (1875) L. R. 10 C. P. 402, 44 



160 FORM OF CONTRACT. 

pletely performed by one party within a year (u). It 
appears to be now settled that an agreement depending on 
the life of a party or of some other person, or otherwise 
determinable on a contingency which may possibly happen 
within a year, though this be not expected or desired by 
the parties, is not within this branch of the statute (x). 

Asto«.l7. The seventeenth section of the statute (sixteenth in the 
Revised Statutes, but it will probably keep its accustomed 
name) (y) is extended by Lord Tenterden's Act, 9 Geo. IV. 
c. 14, s. 7, and as so extended includes all executory sales 
of goods of the value of 101. and upwards, whether the 
goods be in existence or not at the time of the contract. 
Its effect is thoroughly discussed and explained in Lord 
Blackburn's and Mr. Benjamin's well-known works. We 
will here only refer very briefly to the question of what is 
a sufficient memorandum of a contract within the Statute. 

P* Mr. Benjamin exhibits (p. 193, sqq.) the curious dif- 

ference in the judicial interpretation of the "agreement" of 



which a memorandum or note is required by s. 4, and the 
"bargain" of which a note or memorandum is required by 
8. 17. The " agreement " of s. 4 includes the consideration 
of the contract, so that a writing which omits to mention 
the consideration does not satisfy the words of that section: 
but the "bargain" of s. 17 does not. So far as regards 
guaranties, however, this construction of s. 4 having been 
found inconvenient is excluded by the Mercantile Law 
Amendment Act, 1856, 19 & 20 Vict. c. 97, s. 3, which 
makes it no longer necessary that the consideration for a 
"special promise to answer for the debt default or mis- 



(«) Cherry ▼. Heming (1849) 4 Ex. (1876) 1 Ex. D. 20 (in G. A. A. 88, 

681, 19 L. J. Ex. 68. See notes to not on this point), 45 L. J. Ex. 451. 

Peter ▼. Oompion, 1 Sm. L. G. 859. See Amerioui anthoritiefl in Reed 

(x) MeOregor y. McOregor (1888) on the Statute of FnndB, a. 204. 

21 4 B. Div. 426, 57 L. J. Q. B. (y) The difference ariset from the 

591, oveirolinff Davey ▼. Shannon preamble and the enacting part of 

(1879) 4 Ex. D. 81, and (it should s. 13 being separately numbered aa 

seem) £ley ▼. PoeUive Auurance Co, 18 and 14 in former editions. 



STATUTE OF FRAUDS. 161 

carriage of another person" should appear in writing or by 
necessary inference lErom a written document (z). 

The note or memorandum under the 4th as well as the 
l7th section must show what is the contract and who are 
the contracting parties (a), but it need be signed only by 
the party to be charged, whether under the 4th or the I7th 
section: it is no answer to an action on a contract evidenced 
by the defendant's signature to say that the plaintiff has 
not signed and therefore could not be sued, and if a written 
and duly signed proposal is accepted by word of mouth the 
contract itself is completed by such acceptance and the 
writing is a sufficient memorandum of it (6). It has also 
been decided that an acknowledgment of a signature 
previously made by way of proposal, the document having 
been altered in the meantime and the party having assented 
to the alterations, is equivalent to an actual signature of 
the document as finally settled and as the record of the 
concluded contract The signature contemplated by the 
statute is not the mere act of writing, but the writing 
coupled with the party's assent to it as a signatiue to the 
contract: and the effect of the parol evidence in such a 
case is not to alter an agreement made between the parties 
but to show what the condition of the document was when 
it became an agreement between them (c). Moreover it 
matters not for what purpose the signature is added, since 

(z) See aIbo «n artiole by lir. Ltmdtm df ParU Botd Co. (1876) 20 

Justice Stephen and the preMnt Eq. 412 1 BoBtUer ▼. Miller (1878) 8 

writer in the Law QnarterljBeyiew, App. Oe. 1124, 48 L. J. Cb. 10; 

Jan. 1885, «nd the noted to Byrkmyr OMing ▼. King (1877) 6 Ch. DiT. 

V. Damdl (1706) and Warn t. 660, 46 L. J. Ch. 884 ; JwrreU ▼. 

IFartteTA (1804) in Sm.L.C. ITitnter (1886) 84 Ch. D. 182. Aa 

(a) WUUams ▼. Bfma (1863) 1 to what is toffideDt description of 

Moo. P. C. N. S. 154 ; A'ewett y. Rod- the property sold tinder a. 4, Shard- 

ford (1867) L. R 8 C. P. 52, 87 L. J. Una ▼. CoUerea (1881) 20 Ch. Div. 

C.P.1; lfiHMW«v./ordan(1877) 6Ch. 90, 61 L. J. Ch. 863. 

D. 617, 46 L. J. Ch. 681 ; and aa to (6) SmUh v. Nealt (1857) 2 C. B. 

Boi&aency of deacription otherwiae N. S. 67, 26 L. J. C. P. 148 ; Reuu 

than by name, SoU ▼. Lamheri (1875) ▼. Pickd^ (1866) in Ex. Cb. L. K. 

18 Eq. 1, 43 L. J. Ch. 470 ; PotUr 1 Ex. 842, 86 L. J. Ex. 218. 

▼. DvMdd (1874) A. 4, 48 L. J. Cb. (c, SiewaH v. Eddowa (1874) L. 

472 r^MMUfW ▼. 8coU (1876) 20 R. O. P. 811, 48 L. J. C. P. 204. 
Eq. 11, 44 L. J. Ch. 668 ; Beer v. 



162 FORM OF CONTRACT, 

it is required only as evidence, not as belonging to the 
substance of the contract. It is enough that the signature 
attests the document as that which contains the terms of 
the contract (d). Nor need the particulars required to 
make a complete memorandum be all contained in one 
document: the signed document may incorporate others by 
reference, but the reference must appear from the witing 
itself and not have to be made out by oral evidence: for in 
that case there would be no record of a contract in writing, 
but only disjointed parts of a record pieced out with un- 
written evidence (e). The reference, however, need not be 
in express terms. It is enough if it appears on the docu- 
ments that they are parts of the same agreement (/). One 
who is the agent of one party only in the transaction may 
be also the agent of the other party for the purpose of 
signature (g). The memorandum must exist at the time 
of action brought (h). 
^^^^ It seems that the Statute of Frauds does not apply 
within the to deeda Signature is unnecessary for the validity 
of a deed at common law, and it is not likely that the 
legislature meant to require signature where the higher 
solemnity of sealing (as it is in a legal point of view) 
is already present (i). But as in practice deeds are 
always signed as well as sealed, and distinctive seals 
are hardly ever used except by corporations, the absence 
of a signature would nowadays add considerably to 

{d) Jonety.VictoriaOravingDoek tendency is to be aetoto to relax 

Co. (1877) 2 Q. B. Div. 814, 828, 46 nilet of thii kind. 

L.J.Q.D. 219. It mey be doubted (0) Ab to this, Mwyky y, Boeae 

whether this view of the sUtnte (1876) L. R 10 Ex. 126, 44 L. J 

does not tend to thmst oontnoti Ex. 40. 

npon parties by •orprlse And contnuy (h) Luea» ▼. Dkam (1889) 22 Q. 

to their real intentxoD. B. Div. 857, 68 L. J. Q. B. 161 

(e) See Peiree y. Cbt*/ (1874) L. (defendant's affidavit on interlocn- 

R. 9 Q. B. 210, 48 L. J. Q. B. 62; tory proceedings in the action wUl 

Kronheim v. Johnmm (1877) 7 Ch. not do). 

D. 60, 47 L. J. Ch, 182 ; LeaOur (i) Chary v. Hembig (1849) 4 

Ciotk Oo. V. frimmmw (1875) L. R Ex. 681, 19 L. J. Ex. 68. Black- 

10 Q. B. 140, 44 L. J. Q. B. 54. stone (2. 806, a&d see note in 

(/) Studdt V. Walton (1884) 28 Stephen's Comm., 1. 610, 6tli ed.) 

Cb. D. 805, WyUon v. Dunn (1887) assumed signature to be necessary. 
34 Ch. D. 569. No doubt the modem 



Statute. 



STATUTORY FORM& li^i 

the difficulty of supporting a deed impeached on any 
other ground. 

The law as to the sale and disposition of personal chattels 1^>U> of 
is affected, in addition to the Statute of Frauds, by the ^^ ^"^^ 
Bills of Sale Acts, 1878 and 1882, 41 & 42 Vict c. 31, 45 
& 46 Vict. c. 43: but the subject is too special to be 
entered on here. 

Transfers of British ships are required by the Merchant TnMfeti 
Shipping Act, 1854 (a 65 sqq.) to be in the form thereby »iid^. 
prescribed Assignments of copyright are directly or in- "^h*- 
directly required by the various statutes on that subject 
to be in writing (k), and in the case of sculpture by deed 
attested by two witnesses (54 Geo. 3, c. 56, s. 4). But an 
executory agreement for an assignment of copyright 
apparently need not be in writing. And informal executory 
agreements for the sale or mortgage of ships seem 
now to be valid as between the parties, though under 
earlier Acts it was otherwise, and it is doubtful whether 
at common law a sale without writing would pass the 
property (i). 

There is "An Act to avoid Horse-stealing" of 31 Eliz. S«U of 
c. 12, which prescribes sundiy forms and conditions to be j^^^ 
observed on sales of horses at fairs and markets : and ^^^^ 
" every sale gift exchange or other putting away of any 
horse mare gelding colt or filly, in fair or market not used 
in all points according to the true meaning aforesaid shall 
be void " (m). The earlier Act on the same subject, 2 & 3 
Phil. & Mary, c. 7, only deprives the buyer of the benefit 
of the peculiar rule of the common law touching sales in 
market overt. 

B. Marine Insurances. 

{k) Le^and ▼. SUwaH (1876) 4 ofaant Shipplog, 4lh ed. pp. 42, 65, 

Ch. D. 419 ; 46 L. J. Gh. 108, and 56. And see the Amendment Act 

M to designB JewiU ▼. Eckkardi of 1862, 25 k 26 Vict, c 63, ■. 8. 
(1878) 8 Cb. D. 404. («) Moran y. PiU (1878) 

(0 liAode and Pollock on Her- 42 L. J. Q. B. 47. 

M 2 



J 64 FORM OF CONTRACT. 

Marine By 30 Vict., c. 23, s. 7, marine insurances must (with the 

I Monnop. exception of insurances against owner's liability for certain 
accidents) be expressed in a policy. 

But the words are not so strict as those of the repealed 
statutes on the same subject, and the preliminary " slip," 
which in practice though not in law is treated as the real 
contract, has for many purposes been recognized by recent 
decisiona These will be spoken of in another place under 
the head of Agreements of Imperfect Obligation (Chap. 

xni). 



J^Jjte 0. Transfer of Shares. 

There is no general principle or provision applicable to 
the transfer of shares in all companies. But the general 
or special Acts of Parliament governing classes of com- 
panies or particular companies alwajrs or almost always 
prescribe forms of transfer. An executory contract for the 
sale of shares need not as a rule be in writing. 

Assuming joint-stock partnerships with transferable 
shares to be lawful at common law (which is the better 
opinion) their shares should be transferable without 
writing in the absence of agreement to the contrary. But 
this IB now of no practical importance. 



PromlM to D. Acknowledgment of barred debts. 

1^2^^ l^ The operation of the Statute of Limitation, 21 Jac 1. c. 

J^^ 16, in taking away the remedy for a debt may be excluded 

tiun. by a subsequent promise to pay it, or an acknowledgment 

from which such promise can be implied The promise or 
acknowledgment if express must be in writing and signed 
by the debtor (9 Geo. 4, c. 14, a 1) or his agent duly 
authorised (19 & 20 Vict c 97, a 13). The subject calls 
for mention here, inasmuch as the promise or acknowledg- 
ment is for some purposes a new contract But we say 
more of it under the head of Agreements of Imperfect 
Obligation, Ch. XIII. below. 



FOBKltiN LAWS. 10) 

A note on the provisionfl of foreign laws prescribing Foreign 
forms of contract was given in the Appendix to former '* 
editions of this book (n). It is now omitted to save space. 
But it is worth mention that, while the general laws of 
France, Italy, and some Gterman States contain require- 
ments more or less like those of the 17th section of the 
Statute of Frauds^ commercial contracts are in all those 
countries exempt from them. In British India both s. 4 
and 8. 17 have been repealed by the C!ontract Act 

(») 4Ui od. p. 671. 



( 166 ) 



CHAPTER IV. 
Consideration. 

Sn*what! ^^^ following description of Consideration was given by 
the Exchequer Chamber in 1875 : " A valuable considera- 
tion, in the sense of the law, may consist either in some 
right, interest, profit, or benefit accruing to the one 'porty, 
or some forbearance, detriment, loss, or responsibility, given, 
sufifered, or undertaken by the other " (a). 

The second branch of this judicial description is really 
the more important one. Consideration means not so much 
that one party is profited as that the other abandons some 
legal right in the present, or limits his legal freedom of 
action in the future, as an inducement for the promise of 
the first. It does not matter whether the party accepting 
the consideration has any actual benefit thereby or not : it 
is enough that he accepts it, and that the party giving it 
does thereby undertake some burden, or lose something 
which in contemplation of law may be of value. 

An act or forbearance of the one party, or the promise 
thereof, is the price for which the promise of the other is 
bought, and the promise thus given for value is enforce- 
able. 

A consideration, properly speaking, can be given only for 
a promise. Where performance on both sides is simul- 
taneous, there may be agreement in the wider sense, but 
there is no obligation and no contract It may be amusing 

(a) CurrU t. Miu (1875) L. R. 10 Highway Board v, Harrow Oat Co. 

Bz. at p. 162, 44 L. J. Ex. 94 ; per (1874) L. R. 10 Q. B. 92, 95, 44 L. 

Cur. refening to Com. Dig. AoUon J. Q. B. 1, and for the hbtorlcal 

ontheGaBejAflsampsitB.!— 15.Cp. distinotion between debt and aa- 

Evani, Appendix to Pothier on tumpdt in this respect, Langdell, 

Obligations, No. 2, and Edgwaire Summaiy, $§ 64, 65. 



CONSIDERATION. 167 

and not uninstractdve to consider the difltinctions to be 
observed in the legal analjnsis of sach common dealings as 
being ferried across a river and paying on the other side, 
buying a newspaper on a railway platform, obtaining a box 
of matches from an automatic machine. The reader may 
multiply examples at his pleasure. 

A consideration which is itself a promise is said to be 
executory, A consideration which consists in performance 
is said to be executed. It is important to remember that 
in the former case ** it is the counter-promise and not the 
performance that makes the consideration " (6). 
' Consideration is that which is actually given and ac- 
cepted in retuni for the promise. Ulterior motives, pur- 
poses, or expectations may be present, but in a legal point 
of view they are indifferent The party seeking to enforce 
a promise heis to show the actual legal consideration for it, 
and he need not show anything beyond (c). 

Ah informal and gratuitous promise, however strong may GrAtai- 
be the motives or even the moral duty on which it is *" 
founded, is not enforced by English courts of justice at all 
Even a formal promise, that is a promise made by deed, or 
in the pr6per technical language a covenant, is deprived, if 
gratuitous, of some of their most effectual remedies. 

The early history of the law of Consideration is singu- Flacto»- 
larly dbscure, both as to its origin and as to the manner in dootrine. 
which it was developed (d): and it was a long and gradual 
process, even in modem times, to settle the doctrine in all 
points as we now have it A curious illustration of the 
extent to which it was left open as late as the last century 
is furnished by PUlcms v. Van Mierop (e). The actual pjUmmi v, 
decision was on the principle which is characteristic of our Mierop. 
law, that ** any damage to another or suspension or forbear- 

(6) UohmKtbkLamjileighY.BraUi' (d) llie hirtorical diwnwion which 

ipait(1610) 1 8v. L. C 155. fonnerij stood here in the text ii 

(c) Tkama$ t. Tkomaa (1842) 2 Q. now tnnsfeiTed to the Appendix, 

a 851, Finoh SeL Ca. 263. In CoU$ See Note £. 

r. PUkingtan {lB7i) 19 Bq. 174, (e) (1765)8 Burr. 1664, sad Finch 

44 L. J. Ob. 381,. thii cMe WM SeL 0». 269. 
ttnagel J oTerlodked. 



168 CONSIDERATION. 

ance of his right is a foundation for his undertaking, and 
will make it binding, though no actual benefit accrues to 
the party undertaking " (J). But Lord Mansfield threw 
out the suggestion (which Wilmot J. showed himself in- 
clined to follow, though not wholly committing himself to 
it) that there is no reason why agreements in writing, at 
all events in commercial affairs, should not be good with- 
out any consideration. "A nudwm pactum does not 
exist in the usage and law of merchants. I take it that 
the ancient notion about the want of consideration was for 
the sake of evidence only ... in commercial cases 
amongst merchants the want of consideration is not an 
objection " (g). It is true that this was and has remained 
a solitary dictum barren of results; its anomalous character 
was rightly seen at the time and it has never been 
followed {h)\ but the fact that such an opinion could be 
expressed at all fix)m the bench is sufficiently striking. 
This suggestion of setting up a new class of Formal Con- 
tracts (for such would have been the effect) came, as it 
was, too late to have any practical influence. But if it had 
occurred a century or two earlier to a judge of anything 
like Lord Mansfield's authority, the whole modem develop- 
ment of the English law of contract might have been 
changed, and its principles might have been (with only 
minute theoretical differences) assimilated to those of the 
law of Scotland. 
Pramlaes For a long time it was thought that the existence of a 
onmonl pi^vious moral obligation, constituted such a relation 
*»^8 between the parties as would support an express promise. 

(/) Per Yates J. at p. 1674. any saoh third dan, ai aome of the 

(^) 8 Barr. 1669 — 70. ootmsel have endeavoured to main 

{h) In 1778 it was distinctly con- tain, as contracto in writing." Prof, 

tradicted by the opinion of the Langdell ingeniously argues (Stun- 

Jndges delivered to the House of mary, §§49, 50) that contracts 

Lords in Rann y. Hughes (1778) 7 governed by the law merchant need 

T. R. 850, n: "AH contracts are, by on principle no consideration; in 

the laws of England, distinguished short that a negotiable instrument 

into agreements by specialty and is a specialty. In this ooontry one 

agreements by parol; nor is there can only say dit aliier visum. 



PAST CONSIDERATION. 169 

The Exchequer Chamber finally decided as late as 1840, 1 



that " a mere moral obligation arising from a past benefit SMtwood 
not conferred at the request of the defendant " is not a *• KMyon. 
good consideration (i), A question still not free from un- Paiiooo. 
certainty is whether a past benefit is in any case a good ioeireo. ^ 



consideration for a subsequent promise. On our modem ^ 
principles it should not be (k), and it is admitted that it 
generally is not (i). For the past service was either ren- 
dered without the promisor's consent at the time, or with 
his consent but without any intention of claiming a reward 
as of right, in neither of which cases is there any founda- 
tion for a contract (m) ; or it was rendered with the 
promisor's consent and with an expectation known to him 
of reward as justly due, in which case there were at once 
all the elements of an agreement for reasonable reward. It SappoMd 
is said, however, that services rendered on request, no^j^.' 
definite promise of reward being made at the time, are a good I^Mop- 
consideration for a subsequent express promise in which snth- 
the reward is for the first time defined But there is no ^^'^ 
satisfactory modem instance of this doctrine, and it would 
perhaps now be held that the subsequent promise is only 
evidence of what the parties thought the service worth (n). 
It is also said that the voluntary doing by one party of Pwform- 
something which the other was legally bound to do is a j^JJiwt'i 
good consideration for a subsequent promise of recompense, ^^t^ d^ty. 

({) Eattteood ▼. Kenyan (1840) 11 The Irish cue of Bradford ▼. BouU- 

A. & K 488, 449. See lihe note to um (1868) 8 Ir. C. L. 488, will, 
Wennaa y. Adney^ 3 B. & P. 252, for ^liah Uwrers At leMt, hwdlv 
ud in Pinch SeL Oa. at p. 401, oatweigh this fflotam. C^. Cl«rk 
wfaleh is approved by P«^e B. in Here on Gontnwts, 246-249. A*; 
EaiU ▼. mver, 2 Ex. 71, at p. 90. an earlier time it was held that a 
This note is important on tite whole past consideration would not support 
question of past consideration. an action of debt, bat was enoogh 

(h) Op. Langdell. op. dt § 91. for assumpsit Ma/rth t. Baimford 

(0 Bo9euHa v. Thamai {1S42) S (I (1588) 2 Leon. Ill, Sidenkam ▼. 

B. 824, Finch SeL Ca. 879. WorUngttm (1595) ib. 224; O. W. 
(m) " It is not reasonable that one Holmes, The Common Law, 286, 297. 

man shoold do another a kindness, The theory was that the broach of 
and then charge him with a recom- promise was an actionable wrong be- 
pense.'* 1 Wms. Saond. 856. cause of an existing relation between 
(n) LampUigh v. BnUkwait (1616) the parties which created a spedal 
Hob. 105, and 1 Sm. L. O. ; weeper daty; not that an executory con- 
Brie O.J. 18 C. B. N. S. at p. 740. tract, as such, created an obligation. 



170 CONSIDERATION. 

But the authority for this proposition is likewise found to 
be unsatisfactory. Not only is it scanty in quantity, but 
the decisions, so far as they did not proceed on the now 
exploded ground that moral obligation is a sufficient con- 
sideration, appear to rest on facts establishing an actual 
tacit contract independent of any subsequent promise. 
Aoknow- Another exceptional or apparently exceptional case which 
of SrrS certainly exists is that of a debt barred by the Statute of 
^^*^ Limitation, on which the remedy may be restored by a new 
promise on the debtor's part. It is said that the legal 
remedy is lost but the debt is not destroyed, and the debt 
subsisting in this dormant condition is a good consideration 
for a new promise to pay it. This is not logically satisfy- 
ing, and in fact it belongs to the now discredited view of 
past consideration* There is no real equivalent for the new 
promise, and the only motive that can generally be 
assigned for it is the feeling that it would be morally 
wrong not to pay. It seems better at this day to say that 
the law of limitation does not belong to substantive law at 
all, but is a special rule of procedure made in favour of the 
debtor, who may waive its protection if he deliberately 
chooses to do so (o). 

As matter of history, the modem law of contract was 
formed by an alliance, to some extent in the nature of 
compromise, between the old action of debt and the 
newer action of assumpsit While the rules were yet 
plastic, the interest of plaintiffs and the desire of judges 
to arrive at complete justice endeavoured, with varying 
fortune, to strain them in order to compel defendants to 
make a return for benefits which, if not exactly con- 
tracted for, were not intended to be gratuitous. These 
attempts were favoured in part by the original laxity of 
the '' consideration " in assumpsit as distinct from the 
quid pro quo in debt, in part by the confused and 
fictitious maimer in which all quasi-contractual trans- 

(o) See more on this point in Gb. Xllt. 



ABSQUACT. 171 

actionB were treated ; request, consideration, and pro- 
mise having become, instead of the names of real &ct8» 
oonnters for pleaders to play with. In many cases the 
enterpnae fidled, in some it succeeded The residue of 
successes appeals in a few rules still laid down by the 
text* writers which from the generalized modem point of 
view are anomalous (p). 

It is an " elementary principle that the law will not Adeqnaqr 
enter into an inquiry as to the adequacy of the considera- Mmikm 
tion *' (q). The idea is characteristic not only in English "2^" 
positive law but in the English school of theoretical juris- into, 
prudence and politica Hobbes says : '' The value of all 
things contracted for is measured by the appetite of the 
contractors, and therefore the just value is that which 
they be contented to give '' (r). And the legal rule is of 
long standing, and illustrated by many casea " When a 
thing is to be done by the plaintiff, be it never so small 
this is a sufficient consideration to ground an action '' (s). 
** A. is possessed of Blackacre, to which B. has no manner 
of right, and A. desires B. to release him all his right to 
Blackacre, and promises him in ccMisideration thereof to 
pay him so much money ; surely this is a good omsidera- 
tion and a good promise, for it puts R to the trouble of 
making a release " (t). The following are modem examples. 
If a man who owns two boilers allows another to weigh 
them, this is a good consideration for that other's promise 
to give them up after such weighing in as good condition 
as before^ "The defendant" said Lord Denman "had 
some reason for wishing to weigh the boilers, and he could 
do so only by obtaining permission from the plaintiff, 
which he did obtain by promising to return them in good 

ip) This tspie it ezoeUoitly dis- (9) WetOake ▼. Adamt (1868) 6 

~ bgr Sir W. R. AMon (Pria- C. B. N. 8. 248, 266, 24 L. J. O. P. 



dplflsof tha Bni^ Lmt olCoQ- 271, per Byln J. 

tettot, 94-104). TIm IndiaD Con. (r) LeriatiiHi, pt 1, o. 16. 

toMi Ad, 8. S, raKHL d« Ium («) AifWyn ▼. Albtmf, Ora. Slis. 

mfottvMitely ilereotjptd wroQg 67, and see Oro. Cat. 70, and mar- 

dooMne. la a. 26 ft franUy tnato ginal raf emoea there, 

ezoeptloiia aa exceptiinaL (I) HdU C.J. 12 Mod. 469. 



172 CONSIDERATION. 

condition. We need not inquire what benefit he expected 
to derive " (u). So parting with the possession of a docu- 
ment, though it had not the value the parties supposed it 
to have {x), and the execution of a deed (y), though 
invalid for want of statutory requisites (z), have been held 
good considerations. In the last-mentioned case the justice 
of the decision was very plain : the deed was an appren- 
ticeship Indenture which omitted to set forth particulars 
required by the statute of Anne then in force (a) : the 
apprentice had in fact served his time, so that the benefit 
of the consideration had been fully enjoyed. In like 
manner a licence by a patentee to use the patented inven- 
tion is a good consideration though the patent should turn 
out to be invalid (6). In the Supreme Court of the United 
States a release of a supposed right of dower, which the 
4 parties thought necessary to confirm a title, has been held 
a good consideration for a promissory note (c). The 
modem theory of the obligation incurred by a bailee who 
has no reward is that the bailor's delivery of possession is 
the consideration for the bailee's promise to keep or carry 
safely. The bailor parts with the present legal control of 
the goods ; and this is so far a detriment to him, though it 
may be no benefit to the bailee, and the bailee's taking the 
goods is for the bailor's use and convenience (d). The 
determination of a legally indiflferent option in a particular 

(tt) Bainbridgev.FirfMtoneO,d»6) (6) Lawes v. Purter (1856) 6 E. 

8 A. & £. 748. & B. 930, 26 L. J. Q. a 25. 

{x) Haigh v. Brooki (1889) (Q. B. (e) Syket ▼. Ohadwick (1878) 18 

and Ex. Cb.), 10 A. & E. 809, 320, WfOUoe, 141. 

884. Or leiting the promiBor retain (d) O. W. Holmee, The Common 

poMenion of a document to which Law, 291 §qq. Hiatorioally the 

the promiiee ia entitled : IfaH v. explanation ia different, Uk 196. 

Mild (1858) 4 G. B. N. S. 871, 27 The baQor parts with very Uttle, 

L. J. 0. P. 218. for he as well as the bailee can soe 

(y) Op. Jone9 V. WaUc (1842) 9 a trespasser. The real difficolty, 

CL ft F. 101. however, is that in snch cases, for 

(s) See note {q), p. 171. the most part, the baUor does not 

(a) 8 Ann. a 5 (9 in Raffb.) rep. deliyer possession at the bailee's 

Inland BeTenne Repeal Act, 1870, request, bat requests the bailee to 

88 k 84 Yict c 99. See now the take it One of the neoessacy ele- 

Stamp Act, 1870, 83 k 84 Vict c. ments is tberefore fictitious. (X>. 

97, s. 40. LangdeU, § 68. 



ADEQUACY. 173 

way, as voting for a {>articular candidate for a charity 
where there is not any duty of voting for the candidate 
judged fittest, is legal " detriment " enough to be a good 
consideration (e). It has been held in equity, to the same SaiM ni]« 
effect, that a transfer of railway shares on which nothing •l*^' 
has been paid is a good consideration (/) ; and that if a 
person indebted to a testator s estate pajrs the probate 
and legacy duty on the amount of the debt, this is a good 
consideration for a release of the debt by the residuary 
legatees (g) : a strong case, for this view was an after* 
thought to support a transaction which was in origin and 
intention certainly gratuitous, and in substance an incom- 
plete voluntaiy release ; the pa}nnent was simply by way 
of indemnity, it being thought not right that the debtor 
should both take his debt out of the estate and leave the 
estate to pay duty on it The consent of liquidators in a 
voluntary winding-up to a transfer of shares is a good con- 
sideration for a guaranty by the transfer or for the pa}nnent 
of the calls to become due from the transferee (A). An 
agreement to continue — ^. e. not to determine immediately 
— an existing service terminable at will, is likewise a good 
consideration (i). The principle of all these cases may be 
summed up in the statement made in so many words by 
the judges in more than one of them, that the promisor 
has got all that he bargained for. The law will be satis- 
fied that there was a real and lawful bargain, but it leaves 
parties to measure their bargains for themselves. There 
has been another rather peculiar case in equity which was 
to this effect. An agreement is made between a creditor, 
principal debtor, and surety under a continuing guaranty, 
by which no new undertaking is imposed on the surety, 
but additional remedies are given to the creditor, which 

(€) JBoUon ▼. Madden (1873) L. B. L.J. duh. Knight Bnioe L.J. 

9Q.B.56. (A) a^vew.FmofuMCbrporatiomt 

{/) CheaU V. Kenward (1858) 8 (1873) 16 Eq. 863, 875, 48 L. J. 

D«. G. & J. 27, 27 L. J. Ch. 784. Ch. 54. 

ig) Ta^ ▼. Mannen (1865) 1 (i) Gravdy v. Barnard (1874) 18 

Ch. 48, 85 L. J. Oh. 128, by TnriMr Eq. 518, 48 L J. Ch. 659. 



174 CiONSIDERATIOX. 

he is to enforce if requested to do so by the surety. Held 
that if by his own negligence the creditor deprives himself 
of the benefit of these remedies, the surety is discharged 
The real meaning of what is there said about consideration 
seems to be that, as between the creditor and the surety, 
Coniiii- it is not material (k). It has been suggested that on a 
ndemi^ similar principle the consideration for a promise may be 
contingent, that is, it may consist in the doing of some- 
thing by the promisee which he need not do unless he 
chooses, but which being done by him, the contract is 
complete and the promise binding. But this cannot be. 
A consideration must be either a present act or forbearance 
or a promise. If a tradesman agrees to supply on certain 
terms such goods as a customer may order during a foture 
period, this is not a promise, but an offer. He cannot 
sue the customer for not ordering any goods, but if the 
customer does order any the condition of the offer is ful- 
filled, and the offer being thus accepted, there is a complete 
contract which the seller is bound to perform (Q. 
Inade- Inadequacy of consideration coupled with other things 

Mar^ may however be of great importance as evidence of firaud 
^*|^^ or the like, when the validity of a contract is in dispute : 
Gbap.XlI. and it has been considered (though the better opinion is 
otherwise) to be of itself sufficient ground for refusing 
specific performance. This subject will be examined under 
the head of Undue Influence, Ch. XIL, poet. 
Rwaprocal Reciprocal promises may be, and in practice constantly 
•8 oon- are, the consideration for one another, and so constitute a 

{k) TTotoon T. ilOflodb (1858) 4 D. Aoqiiu«d rigfati ftnd remediet. 
M. G. 242, 22 L. J. Cb. 858. Tlie (Q 0. N, Ry, Co, t. WUham 

gnamity wasdetermiiiAble by notice (1878) L. R. 9 C. P. 16, 48 L. J. C. 

nom the niretj, and it was ragges- P. 18. Cp. Chicago dt 0. M, Jiy, Co, 

ted by way of supplying a new con- t. Zkme (1873) 48 N. T. (4 Hand.) 

sideration that on the faith of the 240, where it was rightly held that 

oreditot^B increased remedy the a general assent to an offer of this 

surety might in fact ha^e abstained kind (not nndertaking to order, or 

from determining it. Bnt snrely as in the particalar case tender to 

this will not do : the tme ground is be carried, any definite quantity of 

the creditor's original dn^ to the goods) did net of itself constitute a 

surety, wliich covers subsequently contract' < • 



MUTUAL PBOMI8ES. 175 

binding contract Mutuality is required as much as in MtnAm. 
the case of executed consideration ; the counter-promise po2ble : 
relied on as consideration must not only move from the v^ ^J^* 
promisee but be accepted by the promisor as inducement to 
his promise. It is said that in order to be a good con- 
sideration a promise must be a promise to do something 
which the promisor has the means of performing ; but this 
proposition, though affirmed by an authority little short of 
judicial (m), is too wide. The true limitation, it is sub- 
mitted, is that the thing promised must be in Uaelf pos- 
sible, and such as the promisor is legally competent to 
perform ; this last point is what the cases dted for the 
general statement really go to show, though there are 
some dicta more largely expressed (ti). In this form the 
proposition is completely covered by the general law 
touching impossible and unlawful agreements, and we 
know of nothing that requires us to lay down any wider 
rule as part of the distinct learning of consideration. 

A promise which is to be a good consideration for a ^*»^ ^ 
reciprocal promise must be such as can be enforced ; it Mr. 
must therefore be not only lawful and in itself possible, 
but reasonably definite. Thus a promise by a son to his 
&ther to leave off making complaints of the &ther's con- 
duct in family affidrs is no good consideration to support 
an accord and satisfaction, for it is too vague to be en- 
forced (o). And upon a conveyance of real estate without 

(m) 2 Wms. Sftund. 430. nndertakiiig of » legml UaJblUij is 

(n) ffadam v. Sherwood (1884) 10 not to be deemed a oonddentioA 

Bing. 540, Nentt t. Wallaee (1789) iiiile« the ISebOity be mibrteiitiAl. 

8 T. R 17, where the dicta of Loid we thoold be lettiog vp In another 

Kenyoo O. J. and Aabhont J. an* ihape the often exploded mipporitioii 

thoea meant in the text Buller that the adeqnapjr of the ooniideta- 

■nd Gfoee J J. confined their jodg- tion can be inqnned inta 
mentfi to the tme gioond of the (o) WkUe ▼. BlveU (1853) 28 L. 



caw, viz. that the agreement then J. Kx. 86 : this teems the ratio ded" 

in qoestion was illegal as being dendi^ thooffh so exp res s ed only by 

sgsinst the policy of the bankmfi Parke K who asked in the coarse 

laws. There is certainly no geoenl of aignment, " Is an apeement t^ 

rale that a promise cannot be saud a father in oonsidsration that his 

on onless tlM promisor had io f«ct non wiU not bore him a bbding 

the means of performing it when he contract ? " 
made it ; and if we said that the 



176 



CONSIDERATION. 



Muflt not 
be of a 
thing one 
isalraedy 
bound 
yenemUy 
otto the 
promiMet 
to do. 



any pecuniary consideration a covenant by the grantee to 
build on the land granted such a dwelling-house as he or 
his heirs shall think proper is too vague to save the con- 
veyance fix)m being voluntary within 27 Eliz. c. 4 (p). 

For the same reason, neither the promise to do a thing 
nor the actual doing of it will be a good consideration if 
it is a thing which the party is already bound to do either 
by the general law or by a subsisting contract with the other 
party (g). It is obvious that an express promise by A. to B. 
to do something which B. can already call on him to do can 
in contemplation of law produce no fresh advantage to B. 
or detriment to A. But the doing or undertaking of any- 
thing beyond what one is already bound to do, though of 
the same kind and in the same transaction, is a good con- 
sideration. A promise of reward to a constable for render- 
ing services beyond his ordinary duty in the discovery of 
an offender is binding (r) : so is a promise of extra pay to 
a ship's crew for continuing a voyage after the number of 
hands has been so reduced by accident as to make the 
voyage unsafe, so that the crew are not bound to proceed 
under their original articles (s). Again there will be con- 
sideration enough for the promise if an existing right is 
altered or increased remedies given. Thus an agreement 
to give a debtor time in consideration of his paying the 
same interest that the debt already carries is inoperative, 
but an agreement to give time or accept reduced interest 
in consideration of having some new security would be good 
and binding. The common proviso in mortgages for reduc- 
tion of interest on punctual pajnnent — i. «., pajnnent at the 
very time at which the mortgagor has covenanted to pay 
it — seems to be without any consideration, and . it is con- 



{p) Roiher y. WiUianu (1875) 20 
Eq. 210, 44 L. J. Cb. 419. 

iq) See Leake, 618 ; end beddee 
anthoritiee there given, Deacon v. 
OricUey (1884) 16 O. B. 295, 24 L. 
J. G. P. 17, and tbe judgment on 
the 7th plea in MaUaUeu y. Hodgton 



(1851) 16 Q. B. 689, 20 L. J. Q. B. 
339. 

(r) England t. Davidmm (1840) 
11 A. & K 856. 

(<) ffarOeif y. Pon$onby (1857) 7 
£. & B. 872, 26 L. J. Q. K 822. 



PBOMISES TO PERFORM EXISTING DUTY. 177 

ceived that if not under seal such a proviso could not be 
enforced (Q. Again the rule does not apply if the promise 
is in the nature of a compromise, that is if a reasonable 
doubt exists at the time whether the thing promised be 
already otherwise due or not, though it should be afterwards 
ascertained that it was sa We shall return to this when 
we speak of forbearance as a consideration. 

In the case where the party is already boimd to do the ProniM 
same thing, but only by contract with a third person, there oJbU^ 
is some difference of opinion. The new promise purports ^'^^^^J^ 
to create a new and distinct right, which, if really created, penm to 
must always be of some value in law, and may be of ^ 
appreciable value in &ct R may well be much interested 
in A.'s performing his contract with C, but yet so that the 
circumstances which give him an interest in fact do not 
give him any interest which he can assert in law. The 
power to claim A.'s performance in his own right will then 
be valuable to him, and why may he not entitle himself to 
it by contract, and bind himself to pay for it ? This 
opinion has been expressed and acted on in the Court of 
Exchequer (u), and seems implied in the judgment of the 
majority of the Court of Common Pleas in a case decided 
some weeks earlier (x), which affords a ciuious modem 
example of a class of agreements already mentioned as 
having in former times given rise to much litigation and 
even to conflicts of jurisdiction. An uncle wrote to his 
nephew in these terms : " I am glad to hear of your in- 81mm1w«u 
tended marriage with R N. ; and as I promised to help |J;^^' 
you at starting I am happy to tell you that I will pay to 
you one hundred and fifty pounds yearly during my life," 
subject to a contingency not material to be now stated 

J I) TUm oonld be At oooe no- (s) JSkadweU t. Skadmdl (1860) 

ed«giiiirt,lioweTer,lf loderaw), 9 0. B. N. & 169, 80 L. J. 0. P. 

by fixing the timae for ^'pimotael 146. Mr. LMigdell (f 68) oenraree 

pajmeiit " a ifaigle daj earlier then the deoiaioii, it eeeme ilghtlj, od 



thoee named in the nMnrtgagDi's the broader ground that the laoti 

ooYenant. thowed no ammut eotUrakmdi in 

(«) SeoUtm V. Pegg (1861) 6 H. either party at the time, but only a 

9l N. 296, 80 L. J. &. 226. promiMd and ezpeeted boon^. 

P. N 



178 CONSIDERATION, 

The marriage took place, and for several years this annuity 
was paid ; after which it fell into arrear, the uncle died, 
and the nephew sued his executors. It was pleaded 
amongst other things that the marriage was not at the 
testator's request and that there was no consideration for 
the promise. Erie C. J. and Keating J. held (but with- 
out saying in terms that the existence of the engagement 
to marry at the date of the uncle's promise could make no 
difference) that on the whole the marriage must be taken 
to have been at the testator's request, and so was a suffi- 
cient consideration. It seems, however, that the perform- 
ance of an existing obligation, as distinct fix)m a new 
promise to a stranger to perform it, can in any view not 
involve any legal detriment, and therefore cannot be a 
consideration (y). Byles J. dissented, thinking that as no 
express request appeared, so none could be implied, for 
the nephew was already bound to the marriage, and the 
uncle knew it : he stated the rule to be that a promise to 
do what one is already bound, though only to a third per- 
son, to do, cannot be a consideration (z) ; and he seemed 
disposed to treat it as a matter of public policy. 

The reasoning of these cases assumes that a promise to 

A. to perform an existing duty to B. is itself enforceable 

by A., which is not clear on principle, and has not been 

directly decided Perhaps the best explanation is that the 

promise to perform ati existing contract with B. is to be 

read as being or including a promise not to exercise the 

right of rescinding it with B.'s consent (a). 

Bolai as The doctrine of Consideration has been extended with 

ridention not very happy results beyond its proper scope, which is 

toti^dt- ^ govern the formation of contracts, and has been made 

cliaxge of to regulate and restrain the discharge of contracts. For 
ooBtraoiA 

(y) Langdell, § 84. other way, had it not boen aaBnmed 

(z) And Bo tbonght some of the at the time that an agreement to 

judges in Jonn y. Waite (1842) 5 ezeoate a separation deed ooold not 

Bing. N. C. 341, 861, 866. Bat the be directly enforoed. 

actoal decision there {ib, 9 CL & F. (a) Anson, p. 90. 

101) would be a dear authority the 



ACCORD AND SATISFACTION. 179 

example, where there is a contract of hiring with a stipula- 
tion that the wages due shall be forfeited in the event of 
the servant being drunk, a promise not under seal to pay 
the wages notwithstanding a forfeiture is not binding 
without a new consideration (6). It is the rule of English 
law that a debt of 1002. may be perfectly well discharged 
by the creditor's acceptance of a beaver hat or a pepper- 
corn, or of a negotiable instrument for a less sum (c), at 
the same time and place at which the 1002. are payable, or 
of ten shillings at an earlier day or at another place, but 
that nothing less than a release under seal will make his 
acceptance of 992. in money at the same time and place a 
good discharge (d) : although modem decisions have con- 
fined this absurdity within the narrowest possible limits («). 
A judgment creditor agreed in writing with the debtor to 
take no proceedings on the judgment in consideration of 
immediate payment of part of the debt and payment of 
the residue by certain instalments ; here there was no legal 
consideration for the creditor's promise, and he was entitled 
to claim interest on the debt though the whole of the 
principal was paid according to the agreement (/). This 
rule does not touch the ordinary case of a composition be- 
tween a debtor and several creditors ; for eveiy creditor 
undertakes to accept the composition in consideration of 
the like undertaking of the other creditors as well as of 
the debtor's promise to pay it (qr). 

{b) Mankman t. Skepkerdton nlprindple beyond the booncb with- 

(1840) 11 A. lb K 411. in whieh it is TmamMj MplicOdA. 

(e) Ooddard r. (TBrien (1832) 9 (e) See the Notes to CmOer t. 

Q. B. D. 87 ; Bidder t. Bridget Hans (1719) in 1 8m. L. C. 

(1887) 37 Ch. DiT. 406, 67 L. J. (/) Poakee y. Beer, evpra, Bnt 

Oh. 300. where the eolichor d a defendent 

{d) PfiMMTf ea. (1602) 6 Co. Bep. entitled to taxed eoeti aooepted 

117, confirmed with relnctanoeby the from the plainiifTB eolidtor a cbeqne 

House of Lords in Foaket y. Beer for the amoont of costs (nothing; 

(1884) 9 App. Oa. 60&, Lord Black- hdog said about faiteiest), this was 

bmn an bot disswitiog. Thelndian held to be an accord and satisfsetloB 

Contract Act (s. 68, iUnst b.) is for eyerything dne» and the de- 

aoooidingly carefnl to express the fendant wee not allowed to issoe 

oontrarr. ThemleinPiiiiMr«case,it execntlon for the interest ; Bidder 

may be noted, thoogh paradoxics], y. Bridget (1887) 37 Ch. Diy. 406. 

bnotanomaloas. ft is the strictly (g) Good y. Okeeeman (1831) 2 

logical result of esxrying oat a gene- B. ft Ad. 828, Finch Bel. Ca. 343. 

N 2 



180 



CONSIDERATION. 



Theoon* 
■Identioii 
for vaiift- 
tionof 
oooinoto. 



IioMor 

fofbew- 

Anoeof 

rightiM 

omidera- 

lioD. 



If it is agreed between creditor and debtor that the 
duty shall be performed in some particular way diflferent 
from that originally intended, this may well be binding : 
for the debtor's undertaking to do something di£Ferent 
though only in detail from what he at first undertook to 
do, or even relinquishing an option of doing it in more 
ways than one, would be consideration enough, and the 
Court could not go into the question whether it gave any 
actual advantage to the creditor. But if the new agree- 
ment amoimts to saying that the debtor shall at his own 
option perform the duty as at first agreed upon or in some 
other way, it cannot be binding without a new considera- 
tion : as where an entire sum is due, and there is an agree- 
ment to accept pajnnent by instalments, this would be 
good, it seems, if the debtor undertook not to tender the 
whole sum : bnt in the absence of anything to show such 
an undertaking, the agreement is a mere voluntary in- 
dulgence, and the creditor remains no less at liberty to 
demand the whole sum than the debtor is to pay it (h). 

The loss or abandonment of any right, or the forbearance 
to exercise it for a definite or ascertainable time, is for 
obvious reasons as good a consideration as actually doing 
something. In Mather v. Lord Maidstone {%) the loss of 
collateral rights by the promisee supported a promise not- 
withstanding that the main part of the consideration fedled 
The action was on a bill of exchanga This bill was given 
and endorsed to the plaintiff as in renewal of another bill 
purporting to be accepted by the defendant and endorsed 
to the plaintiff. The plaintiff gave up this first bill to the 
defendant ; thirty days afterwards it was discovered that 
it was not really signed by the defendant : yet it was held 
that he was liable on the second bill, for the plaintiff had 
lost his remedy against the other parties to the first bill 



{k) McMomm T. Bark (1870) L. R. 
5 Ex. 66, 89 L. J. Ex. 65. Cp. 
Foaka ▼. JBter, nipra. 



(4 (1866) 18 C. B. 278, 26 L. J. 
C. P. 810. 



FORBEARANCE. 181 

(luring the time for which he had parted with the possession 
of it, and that was consideration enough. 

As to forbearance, the commonest case of this kind of ForbMu*. 
consideration is forbearing to sue. Forbearance for a^^ nra»t 
reasonable time is enough, on the principle of c^'fMn^^Jl^^ 
reddi poteet : and terms in themselves vague, such as i 
''forbearing to press for inmiediate payment/' may be' 
construed by help of the circumstances and context as 
meaning forbearance for a reasonable time. A promise to 
guarantee a debt if the creditor will give time to the 
principal debtor is in the first instance an oflfer; it becomes 
a binding promise when the condition of giving the speci- 
fied time, or a reasonable time, has been performed It 
is a question of fiact what is reasonable time in a given 
case (k). 

That which is forborne must also be the exercise or Them 
enforcement of some legal or equitable right which is JSli^Jr*" 
honestly believed to exist This is simply the converse of bona /de 
a rule already given. As a promise by A. to B. is naught ^^ 
if it is only a promise to do something A. is already bound, 
either absolutely or as against R, to do, so it is equally 
worthless if it is a promise not to do something which B. 
can already, as a matter either of public or of private right, 
forbid A. to do. So fsff we assume the existing rights of 
the parties to be known : but as in practice they often are Why oom- 
not known, but depend on questions of law or of &ct, or SlJtold- 
both, which could not be settled without considerable ing. 
trouble, common sense and convenience require that com- 

{i) (Hdenkaw t. King (1867) (Ex. oondderation wm AotaAl fortwar- 

Ch.) 2 H. & N. 617, 27 L. J. Ex. mms. TIm promiw being in the 

120, and tea 1 WniA. Sannd. 226. fonn oi a proninoiy note, t«. 

In AUiana Bank v. Broom (1864) niwnHally nnoooditionAl, oerUinly 

2 Dr. k Sm. 289, 84 K J. Ch. 968, buJem a diffionlty, for It would 

a promise to forbear raing for a leem there wae a oomplete 



weeonaMe time may perbaps be before the oonaideiation, m for- 

inferxed horn the request to give bearing to ene for a r e aa on able time, 

Moozity: tei 911. In Ortwrt w. was or ooold be ezeeated. Ontbe 

BtmUr (1887) 19 Q. K Di?. 841, prindple lee per Bowen KJ. In 

whiclihaebeenoritioiMdaeambign- MUe$ r. New ZtaloMd AJfirrd JSdaie 

001, K Q. R UL 484, it most be Cb. (1886-6) 82 Cb. Diy.at p. 289. 
taken, with the head-note, that the 



182 CONSIDERATION. 

promises of doubtful rights should be recognized as binding, 
and they constantly are so recognized. "If an intend- 
ing litigant bona fide forbears a right to litigate a question 
of Jaw or fe/jt which it is not vexatious or firivolous to 
litigate, he does give up something of value " (i); and such 
forbearance is good consideration for a promise even 
though the claim is not well founded, provided it is 
honestly believed in and the promisee does not conceal from 
the promisor any fact which to his knowledge would affect 
its validity (m). 

The real consideration and motive of a compromise, as 
well in our law as in the civil law and systems derived from 
it, is not the sacrifice of a right but the abandonment of a 
claim (n). The same rule applies in the case where the 
claim given up is on a disputed promise of marriage (o). 
A partial compromise in which the undertaking is not 
simply to stay or not to commence legal proceedings, but 
to conduct them in some particular manner or limit them 
to some particular object, may well be good : but here 
again the forbearance must relate to something within the 
proper scope of such proceedings. A promise to conduct 
proceedings in bankruptcy so as to injure the debtor's 
credit as little as possible is no consideration, for it is in 
truth merely a promise not to abuse the process of the 
Court (p). 

KaMdon The main end and use of the doctrine of Consideration 

^^^ in our modem law, whatever may have been its precise 

doctrine of origin, is to ftimish us with a comprehensive set of rules 

tion on"*" which can be applied to all informal contracts without 

oontnoto distinction of their character or subject-matter. Formal 
midor maL 

{I) MUe$ V. New Zealand Atfcrd Lower Oaaiadft, then under old Fr. 

E9UUe Co, <1886-6) 82 Oh. Div. 266, l»w). TFi% t. Bigee (1875) L. R. 

Bowen L J. at p. 291, xeviewing 10 O. P. 497, 44 L. J. O. P. 254. , 

preyioiu oaaee and dicta. (o) Keenan v. BandUy (1864) 2 



(m) Ck>ttoii L. J. ib, at p. 284. D. J. S. 288. 

(n) Trigge ▼. LavaUSe (1864) 15 (p) BraeevoeU i 

Moo. P. O. 271, 292 (a case from L. R. 2 O. P. 196. 



BULK OF BQtTITT. 188 

oontracts remain, strictly speaking, outside the scope of 
these rules, which were not made for them, and for whose 
help they had no need. But it was impossible that so 
general and so useful a legal conception as that of Con- 
sideration should not make its way into the treatment of 
formal ocmtracts, though with a different aspect. The 
ancient validity of formal contracts could not be amplified, 
but it might be restrained : and in £act both the case-law 
and the legislation of modem times show a marked tendency 
to cut short if not to abolish their distinctive privileges, 
and to extend to them as much as possible the free and 
rational treatment of legal questions which has been 
developed in modem times by the full recognition of 
informal transactions. 

This result is mainly due to the action of the Court of Mo«iooB- 
Chanceiy* A merely gratuitous contract under seal isU^^Sy. 
enforceable at common law (with some peculiar exceptions) 
unless it can be shown that behind the apparently gratui- 
tous obligation there is in fact an unlawful or immoral 
consideration. Courts of equity did not, in the absence of 
any special ground of invalidity, interfere with the legal 
effect of formal instruments : but they would not extend 
their special protection and their special remedies to 
agreements, however formal, made without consideration. 
A voluntary covenant, though under seal, "in equity, where 
at least the covenantor is living (q), or where specific per- KoipaoUo 
formance of such a covenant is sought, . . stands scarcely, £?' 
or not at all, on a better footing than if it were contained ][^2J2t 
in an instrument unsealed'' (r). And this restriction is tboagh by 
not affected by the union of legal and equitable jurisdic- * 
tion in the High Court of Justice. The rule that a court 
of equity will not grant specific performance of a gratuitous 

{q) We ihaU aee ludar the heed if the donor, or eren hie le pr ewote- 

of undiie <«»^im«^ thai a ^yitem of tl^ei, ohooee within any reeeoneUe 

pnsomptiou hae been eatabUdied time aftenrardi to dlq>ate it 
vUeh makea it dililonlt in many (r) Per Kniffht Bmoe L. J. Kdce- 

oaiea for penone daiming under a wick y. Manmng (1S61) 1 D. H. O. 

Tohutaiy deed to uphold ita validiigr 176, 188. 



184 CONSIDERATION. 

contract is so well settled that it is needless to dte further 
authorities for it: and it is not to be overlooked that 
whereas the other rules that limit the application of this 
peculiar remedy are of a more or less discretionary kind» 
and founded on motives of convenience and the practical 
requirements of procedure rather than on legal principle, 
this is an absolute and unqualified rule which must be 
considered as part of the substantive law. 
^"* *^' ^* ^ *^® practice of equity, however, at all events when 
ooiidd«ni« the want of consideration is actively put forward as an 
bedioi^ objection (and the practice must be the same, it is oon- 
aliwide. ceived, when the objection is made by way of defence in 
an action for specific performance) to admit evidence of an 
agreement under seal being in fact founded on good con- 
sideration, where the deed expresses a nominal considera- 
tion (s) or no consideration at all (t), though (save in a 
case of fraud or illegality) a consideration actually incon- 
sistent with that expressed in the deed could probably not 
be shown (»). 
Equity Closely connected with this in principle is the rule of 

^JJ^ to * ®^^*y *^^^> although no consideration is required for the 
ImiMnfeot validity of a complete declaration of trust, or a complete 
* transfer of any legal or equitable interest in property, yet 
an incomplete voluntary gift creates no right which can be 
enforced. Thus a voluntary parol gift of an equitable 
mortgagee's security is not enforceable; and, since his 
interest in the deeds deposited with him, where the mort- 
gage is by deposit, is merely incidental to his security, 
delivery of such deeds by the mortgagee to his donee 
makes no difference, and does not entitle the donee to 
retain them against the mortgagee's representatives (u). 
Certain recent decisions have indeed shown a tendency to 
infiinge on this rule by construing the circumstances of an 

(«) /;e{fcAtZ(r« Oft. (1866) lEq. 281. Ch. Dir. 896. The deUfeiy otot 

(t) UaneUy Ry. dc Dock Oo. v. L. seems to be a trespess against the 

4k N. W, Ry, Co, (1878) 8 Ob. 942. depositor, 
(tf) SkfUito w. Hobatm (1885) 80 



RULES OF BQumr. 186 

incomplete act of bounty into a declaration of trust, not- 
withstanding that the real intention of the donor was 
evidently not to make himself a trustee, but to divest 
himself of all his iuterest (a). But these have been dis- 
approved in still later judgments which seem entitled to 
more weight (y). 

{x) Ridnardmm w. JUcktmittm J. Ch. 469, Moan ▼. Moon (1874) 
(1867) 8 Eq. 688^ 88 L. J. Ch. 668, 18 Eq. 474» 48 L. J. Oh. 617, ffmriieg 



Marram t. MaOmm (1870) 10 Eq. w.MdUdmm (1874) 19 Eq. 288, 44 L. 

476, 89 L. J. Oh. 680. — -- ~ - .. 

(y) Wmrrimer ▼. Bogen (1878) 16 
Eq. 841), 42 L. J. Oh. 681, iUdUitfa 
▼. DdMdge (1874) 18 Eq. 11, 48 I.. 



476, 89 L. J. Oh. 680. J. Oh. 277. Op. Brtion t. WoMvm 

(y) Wmrrimer ▼. Bogen (1878) 16 (1881) 17 Oh. & «t ik 420, 60 L. J. 
Eq. 841), 42 L. J. Oh. 681, iUdUitfa Oh. 869. 



( 186 ) 



CHAPTER V. 

Pebsons affected by Contract. 

OeTiercU Rules as to Parties, 

OrigiiuJ The original and simplest type of contract is an agree- 
^Ji^ ment creating an obligation between certain persons. The 
persons are ascertained by their description as individuals, 
and not by their satisfying any general class description : 
or, more shortly, they are denoted by proper names and 
not by class names (a). And the persons who become 
parties in the obligation created by the agreement are the 
persons who actually conclude the agreement in the first 
instance, and those only. The object of this chapter will 
be to point out the extent to which modem developments 
of the law of contract have altered this primary type either 
by modifications co-extensive with the whole range of con- 
tract or by special classes of exceptions. 

The fundamental notion from which we must take our 
departure is one that our own system of law has in common 
with the Roman system and the modem law of other 
civilized countries derived therefix)m. A wide statement 
of it may be given in the shape of a maxim thus : 
li^itml The legal effects of a contract are confined to the con- 

^^i^to tracting parties. 

oonteMst- This, like most, if not all, legal maxims, is a generaliza- 
pMtfei. tion which can be useful only as a compendious symbol of 

(a) Sftvigny, ObL | 58 (2. 16), o|». on the mibjeet of this ohftptor gtoer* 
ally, ib. H 63-70, pp. 17-186. 



PABmS TO GONTRACr. 187 

the particalaiB fix>m which it is generalized, and cannot be 
understood except by reference to those particulars. The 
first step towards the necessary development may be given ^ 
in a series of more definite but still very general rules, 
which we shall now endeavour to state, embodying at the 
same time those qualifications, whether of recent introduc- 
tion or not, which admit of being stated in an equally 
general form. 

It will be convenient to use certain terms in extended D«Aai- 
or special sensea A contract creates an obligation between 
the contracting parties, consisting of duties on the one part 
and the right to demand the performance of them on the 
other. 

Any party to a contract, so far as he becomes eptitled to « Oro- 
have anything performed under the contract, is called the ^^ " 
creditor. So (Seu: as he becomes bound to perform anything "dibCor." 
under the contract he is called the debtor. 

BepreseTUcUion, representativea, mean respectively sue- "Rspre- 
cession and the person or persons succeeding to the general ^^ 
rights and liabilities of any person in respect of contracts, 
whether by reason of the death of that person or otherwise. 
A third person means any person other than one of the ' 
parties to the contract or his representatives (6). 

Rules. 1. The original parties to a contract must be RoIm. 
persons ascertained at the time when the contract is made. PMrtiM. 

2. The creditor can demand performance fix>m the debtor TUid per- 
or his representatives. He cannot demand nor can thej^^ 
debtor require him to accept performance bom any third 
person ; but the debtor or his representatives may perform 
the duty by an agent 

(&) Coiitractoforth6Ma« ofknd pwtieik Bofc h«n the obligation b 
are enforoeable in equity by and treated aa attaohed to the partieolar 
againat the hein or de?iieea of the p rop e r ty . 



debtor. 



188 PERSONS AFFECTED BY CONTRACT. 

ThW per- 3. A third person cannot become entitled by the contract 
entitlttd. itself to demand the performance of any duty under the 
contract 

Exception, Provisions contained in a settlement made 
upon and in consideration of marriage for the benefit of 
children to be bom of the marriage, or, in the case of a 
woman marrying again, for the benefit of her children by 
any former marriage, may be enforced by the persons 
entitled to the benefit thereof (c). 

Anign. 4. Persons other than the creditor may become entitled 

"*" by representation or assignment to stand in the creditor's 

place and to exercise his rights under the contract. 

NoCloe to Eocplanation 1. Title by assignment is not complete as 
against the debtor without notice to the debtor, and a 
debtor who performs his contract to the original creditor 
without notice of any assignment by the creditor is thereby 
discharged 

Bqiiltle«. Explanat^n 2. The debtor is entitled as against the 
representatives, and, unless a contrary intention appears 
by the original contract, as against the assignees of the 
creditor to the benefit of any defence which he might 
have had against the creditor himsel£ 

The following exceptions given here in order to com- 
plete the general statement are connected in principle 
with the cases of a contract for personal services or the 
exercise of personal skill becoming impossible of perform- 
ance by inevitable accident, of which we speak in Chapter 
Vni. below. 
Bzoep- Exception 1. If it appears to have been the intention of 

Stdetlv the parties that the debtor should perform any duty in 
g»2°"*^ person, he cannot perform it by an agent, nor can per- 
formance of it be required fix)m his representativea Such 
an intention is presumed in the case of any duty which 

(c) See p. 199, below. 



GENERAL RULES. 189 

involves personal confidence between the parties, or the 
exercise of the debtor's personal skill 

Exception 2. If it appears to have been the intention of SMMy 
the parties that only the creditor in person should beS^hST, 
entitled to have any duty performed, no one can become 
entitled by representation or assignment to demand the 
performance of it, nor can such performance be required 
from the debtor's representatives. 

Such an intention is presumed if the nature of the 
transaction involves personal confidence between the parties, 
or is otherwise such that *' personal considerations " are of 
the foundation of the contract (cQ. 

Exception 3. The representatives of a deceased person 
cannot sue for a breach of contract in a case where the 
breach of contract was in itself a merely personal injury, 
unless special damage to the estate which they represent 
has resulted from the breach of contract But where such 
damage has resulted the representatives may recover 
compensation for it, notwithstanding that the person whose 
estate they represent might in his lifetime have brought 
an action of tort for the personal injury resulting from the 
same act {e). 

These propositions are subject to several special qualifi- 
cations and exceptions. Most of the exceptions are of 
modem origin, and we shall see that since their establish- 
ment many attempts have been made to extend them. 
Such attempts have in some departments been successful, 

(cQ Pp. XndianCo&tmet Aet, n. niMter^s fiinQy, or if » pidntet^i 

87, 40. SeeSteveiuT.BennMi^ (1854) exeoator, Mng alio » pointer, wen 

1 K. ft J. 168, 24 L. J. Ch. 168, to oomplefco an uniliiiflbed portoalt 

Farrowy. TTOftm (1869)L. R. 4 C. on the original tenDs »! the littar's 

P. 744, 746. 88 L. J. C. P. 826 ; request 

J?o&tiMonv.i>avwoii(1871)L.B.6Kz. (e) Seel Wma. Exon. 708. 7th 

269, 40 L. J. Ex. 172; FMa/y ▼. ed. and ^nuUUw ▼. LomeoMrt S 

Ckimev (1888) 20 Q. B. Div. 494. Tarkihirt Rg, Co. (1875) L. R. 10 

If in any of theee OMea the txanMO- C. P. 189, 44 L. J. O.P. 148 (dnoe 

tkniaoontinQedbjmiitDalooiianit, qnertloned in Zmott ▼. 0, N, Ry, 

itlianewoontract,€^. if aaorvant do. (1876) 1 qTB. D. 599, 45 L. 

oonlinDiahiasenioewithadeceaeed J. Q. B. 557). 



190 PERSONS AFFECTED BY CONTRACT. 

while in others exceptions which for some time were 
admitted have been more recently disallowed. 

We shall now go through the rules thus stated in order, 
pointing out under each the limits within which exceptions 
are admitted in the present state of the law. The deci- 
sions which limit the exceptions are(as commonly happens 
in our books) for the most part the chief authorities to 
show the existence of the rules. 

Rule 1. Our first rule is that the arigi/nal parties to a contract 

PatUm *niU8t be persons ascertained at the time whenthe cordraot 
must be ^ 



Umed. 



is made. It is obvious that there cannot be a contract 
without at least one ascertained party to make it in the 
first instance : and it is also an elementary principal of 
law that a contracting party cannot bind himself by a 
floating obligation to a person unascertained The rule 
has been thus expressed : " A party cannot have an agree- 
ment with the whole world ; he must have some person 
with whom the contract is made" (/). It is theoreticially 
possible to find exceptions to this rule in such cases as 
those of promises or undertakings addressed to the public 
at large by advertisements or the like, and sales by auction. 
No rml But we have shown at length in Chap. I. that this view is 
^^ imnecessary and untenable, and that in every such case 
where a contract is formed it is formed between two 
ascertained persons by one of them accepting a proposal 
made to him by the other, though possibly made to him 
in common with all other persons to whose knowledge it 
may come. 

Effects of Contract as to Third Persons. 

The- affirmative part of our second rule, namely : The 
creditor can demcmd performance from the debtor oi* his 

if) Sqkire v. WhiUon (1848) 1 H. L. C. 333, 358. 



PARTIK MUST BB A8CERTAINSD. 191 

repreaentatives, is now and long has been, though it was 
not always elementary (^). 

The negative part of it states that the creditor carmot Bob s. 
demcmd, nor can the debtor require him to accept, per- Vo Hup 
farmanMefrom amy third person. This is subject to the po^ oq 
explanation that the debtor or his representatives may per- ^f^^ 
form the duty by an agent, which again is modified by the 
exception of strictly personal contracts as mentioned at the 
end of the rules. On this we need not dwell at present 

It is obvious on principle that it is not competent to Itn fom. 
contracting parties to impose liabilities on other persons pHaoipU. 
without their consent 

Every person not subject to any legal incapacity may 
dispose freely of his actions and property within the limits 
allowed by the general law. Liability on a contract con- 
sists in a further limitation of this disposing power by a 
voluntaiy act of the party which places some definite por- 
tion of that power at the command of the other party to 
the contract So much of the debtor's individual freedom 
is taken from him and made over to the creditor (h). 
When there is an obligation independent of contract, a 

{g) AMio the lutiility of penon«l tb«t " Qui* exeoatores naa poMnnt 

reprewntativea on the oonirMts of faoere legem pro defancto, petens 

the testetor or intertftto eeel Wms. fwohabit tailiMn raam, vel lihabeftt 

SMmd. 241-2. The old rale that aa Motoin tecte debet exemfaiari : " T. 

Mtion of debt on simple oontraot B. 20 ft 21 Ed. L p. 456. For the 

wmdd not lie egainet exeonton oonflict of opinion tm to the remedy 

where theteatetoroooldhftTe waged by am&mptUf eee Reetree 8. 408, T. 

hie law (though it is said the ob- K Miofa. 2. H. VIIL 11. pL 8, the 

jeotlon ooold be taken only by ttraagediotam eonlro of Bluherbert, 

demnrrer) ieeme to have been in Trin. 27H. VIII.23,pL21,whoaaid 

trath an innovation. See the fonn there waa no remedy at all, and 

of writ for or against ezeeators, /Norwood v. Read (1657-8) in B. B., 

Fleta 1. 2. c 62. § 9, and ep. F. N. Pl.>«r. 180. In Pinekon*i oa. (1612) 

B. 119 M, 121 O (the latter passage in Ex. Ch. 9 Co. Rep. 86 b, this 

is corioos : if a man haH entered into diotam was overruled, aathorities 

religion his exeeaton shall be sned reviewed and explained, and the 

for his debt, not the abbot who oommoa law settled in sabstanoe as 

aooepted Urn into religion : see itno^is. 
p. 80, n. (tt), wpra), and T. a 30 (A) Op. Savlgnj, ObL § 2. 

Ed. L p. 288. It is said however 



192 PERSONS AFFECTED BY CONTRACT. 

similar result is produced without regard to the will of the 
party; the liability is annexed by law to the part/s own 
wrongful act in the case of tort, and in the case of contracts 
"implied in law" to another class of events which may be 
roughly described as involving the accession of benefit 
through the involuntary loss of another person; but when 
an obligation is founded upon a real contract, the assent of 
a person to be bound is at the root of the matter and is 
indispensable (i). 

Agaooy : The ordinary doctrines of agency form no real exception 

tion^o^ to thi& For a contract made by an agent can bind the 

ftpfMNot principal only by force of a previous authority or subsequent 

ratification; and that authority or ratification is nothing 

else than the assent of the principal to be bound, and the 

contract which binds him is his own contract Under 

certain conditions there may be a contract binding on the 

agent also, as we have seen in CL IL, but with that we are 

vniMk i^ot here concerned. Another less simple apparent excep- 

?29^** tion occurs in the cases in which companies have been held 

equitjto liable to fulfil the agreements made by their promoters 

JJJ^f*"* before the companies had any legal existence. These cases 

mrata however proceed partly on the ground of a distinct obliga- 

^H^ltctu. tion having either been imposed on the company in its 

original constitution, or assumed by it after its formation (k), 

partly on a ground independent of contract and analogous 

to estoppel, namely, that when any person has on certain 

terms assisted or abstained firom hindering the promoters 

of a company in obtaining the constitution and the powers 

sought by them, the company when constituted must not 

exercise its powers to the prejudice of that person and in 

(«) Lmde^ ▼. Oye (1858) 2 B. ft A. mUi hfa land to B. the daty of 

B. 216, 22 L. J. Q. K 468, Mid aU men to Mpeetthe lightiof K 

Bawm ▼. BaU (1881) 6 Q. B. Div. insleMl of A.. Mowner off thai land, 

888, 50 K J. Q. B. 805, ahow that la a daty xaadu the oontraot of nle 

a atranger maj be liable in tort for or the oonfreyaaoe. 

the breach of a oontra t. (k) lindley on Companlee, 146, 



Bat this 18 not an obligation under 149. 
the Qontraoti any more than when 



NOVATION. 198 

violation of those terms. The doctrine as now established 
probably goes as &r as this, but certainly no farther (l). 

In one case of a suit in equity for specific performance of Stnnger 
an award a third person interested in the subject-matter ^^^ |,^ 
was made a party, and was held to be bound by the award, »««ni in 
though he had not been a party to the reference and had 12i^* 
in no way assented to it, but simply knew of it and re- 
mained passive (m). But it has been held by higher 
authority (n) that in a suit for the specific performance of 
a contract third persons claiming an interest in the 
subject-matter are not even proper parties: and even 
without this it seems obvious that A and B have no busi- 
ness to submit C.'s rights to the arbitration of D. It is 
apprehended accordingly that this exception may be treated 
as non-existent. 

Another branch of the same general doctrine is that the NotratioD. 
debtor cannot be allowed to substitute another person's 
liability for his own without the creditors assent. A 
contract cannot be made except with the person with 
whom one intends to contract (o). When a creditor assents 
at the debtor's request to accept another person as his 
debtor in the place of the first, this is called a novation. 
Whether there has been a novation in any particular case 
is a question of fact, but assent to a novation is not to be 
inferred from conduct unless there has been a distinct and 
unambiguous request (p). Such questions are especially 
important in ascert^aining who is liable for the partnership 
debts of a firm when there has been a change in the mem- 
bers of the firm, or on contracts made in a business which 



(0 lindky on Gompwiies, 152. (n) Ta§ker ▼. 8maU (1887) S My. 

As to mtifioiilloii by oompMiiM tee ft Cr. 68, followed in De Hoghton v. 

p. 107, ftbove. Money, (1866) 2 Cb. 164. 

{m)QoveUy.Riek'mand (1884) 7 (o) Rohwn ▼. Drumvwnd (1831) 

Slm.l. (8irL.ShadweU). InTay^ 2 B. ft Ad. 808. Other <mm 

▼. Pamy (1840) 1 Mao. ft Or. 604, beerisff on the aeme point Me con- 

tbe Court leUed on poeitiye Mti of idderedfor another pwpoee in Ch. 

the pMtiee as ahowiog that they IX. below. 

adopted the reference and were rab- (p) CcnqytafB ea. (1875) 1 Gh. 

■tantiaUy parties to ft, Div, 834, 841, 45 L. J. Ch. 886. 

P. O 



194 PEBSONS AFFECTED BY CONTRACT. 

has been handed over by one firm (whether carried on by 
a single person, a partnership, or a company) to another. 
• A series of cases which were, or were supposed to be, of 
this kind has arisen in late years out of successive amalga- 
mations of life insurance companies (q). 

The question may be resolved into two parts : Did the 
new firm assume the debts and liabilities of the old ? and 
did the creditor, knowing this, consent to accept the 
liability of the new firm and discharge the original 
debtor (r) ? It would be beyond our scope to enter at 
large on this subject, for an exposition of which the 
reader is referred to Lord Justice Lindley's work on 
Partnership («). 



under 
Bole 4. 



Real ex- There exist however exceptions to the general rule. In 
toMme certain cases a new liability may without novation be 
created in substitution for or in addition to an existing 
liability, but where the possibility exists of such an 
exceptional transfer of liabilities it is bound up with the 
correlated possibility of an exceptional transfer of rights, 
and C€umot be considered aJona For this reason the 
exceptions in question will come naturally to our notice 
under Rule 4, when we deal with the peculiar modes in 
which rights arising out of certain classes of contracts are 
transferred. 

Apart fix)m novation in the proper sense, the creditor 
may bind himself once for all by the original contract to 
accept a substituted liability at the debtor's option. Such 
an arrangement is in the nature of things unlikely to occur 
in the ordinaiy dealings of private persons among them- 
selves. But it has been decided in the winding-up of the 
European Assurance Society that where the deed of settle* 

{q) It is doabtfol whether nme of (a) 6tfa ed. 289, 247: And m to 

these were really oMes of noTfttion : the general prinoiple of novation see 

■ee Hort*B ca. and Orain'i oa. (1875) WiUtm ▼. iJo^ (1878) 16 Eq. 60, 

1 Ch. D. 807, 822, 45 L. J. Ch. 821. 74, 42 L. J. Oh. 559, for a later 

(r) See Bolfi y. Itower (1865) instanoe of trae novation, MtOer^M 

L. B. 1 P. C. 27, 44, 85 L. J. P. G. 18. ok (1876) 8 Oh. Div. 891« 



AOKNCT. 195 

ment of an insunnoe company contains a power to transfer 
the business and liabilities to another company, a transfer 
made under this power is binding on the policy-holders 
and they have no claim against the original company (t). 
In the case of a policy-holder there is indeed no subsisting 
debt (t), but he is a creditor in the wider sense above 
defined (p. 187). 

Rule 3. A third person ccmnot become erUiUed by the 
contract itself to demand the ^performance of any 
duty vmder the contract. 

Before we consider the possibility of creating arbitrary Bol* 8. 
exceptions to this rule in any particular cases, there are oo^^^Snd 
some extensive classes of contracts and transactions ^ ^^"^ 
analogous to contract which call for attention as offering *^*^ 
real or apparent anomalies. 

A. Contracts made by agents. Here the exception is ifixoep- 
only apparent The principal acquires rights under a Agai«j ; 
contract which he did not make in person. But the agent H^p^ra^t 
is only his instrument to make the contract within the 
limits of the authority given to him, however extensive 
that authority may be: and from the beginning to the 
end of the transaction the real contracting party is the 
principal. 

Consider the following series of steps from mere service Dagnei of 
to full discretionary powers: •S«mj- 

1. A messenger is charged to convey a proposal, or the 
acceptance or refusal of one, to a specified person. 

2. He is authorized to vaiy the terms of the proposal, or 
to endeavour to obtain a variation on the other party's 
proposal (i. e. to make the best bargain he can with the 
particular person), within certain limits. 

{t) Ewft Ok and (7ram'« <». Diy. 828, 45 L. J. Ch. 882 ; Coeker't 
(1875) 1 Ch. D. 807, 45 L. J. Cb. oil (1876) 8 QIl DIy. 1, 45 L. J. Cb. 
321; JSraman't <». (1875) 1 QIl 882. 

O 2 



196 



PERSONS AFFECTED BY CONTRACT. 



A««nt 
contnot- 
iiigper- 
■oiiaUy. 



BalificA- 



3. He is not confined to one person, but is authorized 
to conclude the contract with any one of several specified 
persons, or generally with any one from whom he can get 
the best terms. 

4. He is not confined to one particular contract, but is 
authorized generally to make such contracts in a specified 
line of business or for specified purposes as he may judge 
best for the principal's interest (u). 

The fact that in many cases an agent contracts for him- 
self as well as for his principal, and the modifications which 
are introduced into the relations between the principal and 
the other party according as the agent is or is not known 
to be an agent at the time when the contract is made, do 
not prevent the acts of the agent within his authority fit)m 
being for the purposes of the contract the acts of the 
principal, or the principal from being the real contracting 
party. Again when the agent is also a contracting party 
there are two alternative contracts with the agent and with 
the principal respectively. 

As for the subsequent ratification of unauthorized acts, 
there is no difference for our present purpose between a 
contract made with authority and one made without 
authority and subsequently ratified. The consent of the 
principal is referred back to the date of the original act by 
a beneficent and necessary fiction. 



Other 

raUtioDs: 

principal 

and 

■nretj; 

terms 



byiftw to 

original, 

oontTMt 



B. There are certain relations created by contract, of 
which that of creditor, principal debtor, and surety may 
be taken as the type, in which the rights or duties of one 
party may be varied by a new contract between others. 
But when a surety is discharged by dealings between the 
creditor and the principal debtor, this is the result of a 
condition annexed by law to the surety's original contract. 
There is accordingly no real anomaly, though there is an 
apparent exception to the vague maxim that the legal 



(«) Cp. Savigny, ObL 2. 57-dO. 



TRusra 197 

effects of a contract are confined to the contracting parties : 
and there is not even any verbal inconsistency with any of 
the more definite rules we have stated. However it seems 
proper not to omit the mention of such cases, inasmuch as 
they have been considered as real exceptions by writers of 
recognized authority (x). 

Insolvency and bankruptcy, again, have various conse- A°J"^ 
quences which affect the rights of parties to contracts, but eUaota of 
which the general principles of contract are inadequate to JjS^ 
explain. We allude to them in this place only to observe and in- 
that it is best to regard them not as derived from or inci- ^ ^*'**^' 
dental to contract, but as results of an overriding necessity 
and beyond the region of contract altogether (y). Even 
those transactions in bankruptcy and insolvency which have 
some resemblance to contracts, such as statutory composi- 
tions with creditors, are really of a judicial or quasi-judicial 
character. It is obvious that if these transactions were 
merely contracts no dissenting creditor could be bound 

C. The case of trusts presents a real and important TrMte: 
exception, if a trust is regarded as in its origin a contract aoaptioii, 
between the author of the trust and the trustee. It is ^ *!"*L* 
quite possible, and may for some purposes be useful so to between 
regard it. The Scottish institutional writers (who follow J^^^gnj 
the Roman arrangement in the learning of Obligations as tmstee. 
elsewhere) consider trust as a species of real contract by goot- 
coming under the head of depositation (z). Conversely ^ •f^ 
deposits, bailments, and the contract implied by law which wrlten : 
is the foundation of the action for money received, are JJ^Jted 
spoken of in English books as analogous to trusts (a). A in Kngluh 
chapter on the duties of trustees forms part of the best 
known American text-books on contracts, though no 

{x) See PotUer, OU. § 89. Cb. 730. 

(y) A etrikiiig iasfeuice is for- (z) Sie^ tlioogh no racb ftbeinust 

iiiahHl by tbe rale in Warin^i caee teim Ib known in Boman kw. 8*-e 

(1815) 19 Yes. 345 ; lee per Jj'nd Enkine, Init. Bk. 8, Tit 1. ■. 82. 
Cairnt, Banner v. JohnaUm (1871) (a) BUcksione, Gomm. iii. 432. 

Lr. B. 6 H. li. At p. 174, 40 L. J. 



198 PERSONS AFFECTED BT OONTRACTT. 

attempt is made, so £Eir as we have ascertained, to explain 
the logical connexion of this with the rest of the subject. 
By the creation of a trust duties are imposed on and 
undertaken by the trustee which persons not parties to the 
transaction, or even not in existence at its date, may after- 
wards enforce. 
OoEwnd And the relation of a trustee to his cestui que trust is 
oo]it»0t closely analogous to that of a debtor to his creditor, in so 
far as it has the nature of a personal obligation and is 
governed by the general rules derived finom the personal 
character of obligations. Thus the transfer of equitable 
rights of any kind is subject, as regards the perfection of 
the transferee's title, to precisely the same conditions as 
the transfer of rights under a contract. And the true way 
to understand the nature and incidents of equitable owner- 
ship is to start with the notion not of a real ownership 
which is protected only in a court of equity, but of a 
contract with the legal owner which (in the case of trusts 
properly so called) cannot be enforced at all, or (in the case 
of constructive trusts, such as that which arises on a con- 
tract for the sale of land) cannot be enforced completely, 
except in a court of equity (6). 

However, although every trust may be said to include a 
contract, it includes so much more, and the purposes for 
which the machinery of trusts is employed are of so different 
a kind, that trusts are distinct in a marked way not merely 
from every other species of contract, but from all other 
contracts as a genus. The complex relations involved in 
a trust cannot be conveniently reduced to the ordinary 
elements of contract, and there seems to be sufficient jus- 
tification (independently of the historical reason supplied 
by the exclusive jurisdiction of Equity) for the course 
hitherto adopted by all English writers in dealing with 
trusts as a separate branch of law. 

(6) Pee per Lord Wett bory, Knox FoHer (1872) L. K 6 H. K at p. 888 
▼. Oye (1871-2) L. K 5 H. L. at p. (Lord Gainu) and tX p. 856 (Lord 
675, 42 L. J. Oh. 284 ; Shaw v. HalherVy) 48 L. J. Ch. 49. 



PROVISIONS FOR CHILDRBN. 199 

D. Closely connected with the cases covered by the] 
doctrine of trusts, but extending beyond them, we have 



the rules of equity by which special favour is extended ■" «W**- 
to provisions made by parents for their children. This 
exception has already been noted in stating the general 
rule (c). In the ordinary case of a marriage settlement 
the children of the contemplated marriage itself are said 
to be '' within the consideration of marriage " ((i) and may 
enforce any covenant for their benefit contained in the 
settlement. Where a settlement made on the marriage of 
a widow provides for her children by a former marriage, 
such children, though in the technical language of equity 
volurUeers, or persons having no part in the consideration, 
are likewise entitled to enforce the provisions for their 
benefit ; but this appears not to extend to the case of 
a husband making a provision for his children by a former 
wife (e). 

The question how far limitations in a marriage settle- 
ment to persons other than children can be supported by 
the consideration of marriage, so as not to be defeasible 
under 27 Eliz. c. 4, against subsequent purchasers, is a 
distinct and wider one, not falling within the scope of the 
present work (/). 

K There is also a class of statutory exceptions (though Statoiofy 
of decreasing importance) in cases where companies and ^^^^. 
public bodies, though not incorporated, are empowered to P^**^ *• 
sue and be sued by their public officers or trustees. poblio 

The trustees of Friendly Societies and Trade Unions are J^l^ 
likewise empowered to sue, and may be sued, in their own 

{e) P. 18S, aboye^ op, per Cotton 144, 152, 46 K J. Cb. 809 ; JU 

L.J. 15 Cai. D. At p. 242. Cammm and WeUi (1887) 87 Ch. 

{d) It ifl even eaid «h«t oonaidem- D. 82, 57 L. J. Ch. 69. 

tloii mofree, or u Mnuned to move (/) The vef erenoet in Oale v, OaU 



from them. Bat it mm* not bein- (lent note) wiU gnide the reeder, if 
f ened from thie thet eqnitj regftrde deoied, to the aatboritiee, indndiDg 
«1n peine denattre'*Meleg»ldetri- the foU dlMQinon in Mr. Umj't 

book on Yolmiteiy end Fmodolent 



(«) Chde ▼. Gale (1877) 6 Ch. D. CooTeyanoee. 



200 



PERSONS AFFECTED BT CONTBACT. 



names, in cases concerning the property of the society or 
union (g). 
Oovenants By the 8 & 9 Vict. c. 106, 8. 5, a person who is not a 
party to an indenture may nevertheless take the benefit of 
a covenant in it relating to real property. This enactment 
has not, so far as we know, been the subject of any re- 
ported decision (A). 



reUting 

tontl 

propertj. 



Genend 

ttoaof 
nileii 



Having disposed of these special exceptions, we may 
now proceed to examine the rule in its ordinary applica- 
tion, which may be expressed thus : — The agreement of 
contracting parties cannot confer on a third person any 
right to enforce the contract. 

There are two different classes of cases in which it may 
seem desirable, and in which accordingly it has been 
attempted to effect this : (1) where the object of the con- 
tract is the benefit of a third person : (2) where the parties 
are numerous and the persons really interested are liable 
to be changed from time to time. 



It was for a long time not clear whether a contract 



OoDtnot 

few fmnnfit 

of thiid between A. and B. that one of them should do something 

P***^"- for the benefit of C. did or did not give C. a right of action 

on the contract (i). And there was positive authority 



ig) Friendly Societies Act, 1875, 
38 ft 89 Viot. c. 60, s. 21 ; Trade 
Union Act, 1879, 34 & 86 Vict, c 
8 1, p. 9. It ifl the UMue with LaUd- 
iiig RociettcB formed before the Act 
of 1874 and not incorporated under 
it A statute enabling a local au- 
thority to recover ezpensen, and not 
specifying any remedy, has been 
held to mske the local authoii y a 
quasi-corporation for the purpose 
of suing : Milftv, ScoU (1873) L. 
R. 8 Q. B. 496, 42 L. J. Q. B. 234. 
And the grant of a right by the 
Crown to a class of persons may 
have the effect of moorporating 
them to enable th<>m to exercise the 
lieht : WULingaU v. Maiiland, 
(1866) 3 E<i. 103, 86 L. J. <Jb. 64, 
explained by Jessel M.B. in CkUtan 



V. OorponUion of London (1878) 7 
Ch. D. at p. 741, 47 L. J. Ch. 
433. 

(A) For an example of the incon 
▼enience provided against by it s*^ 
Lord Southampton ▼. Broum (1897) 
6 B. & C. 718, where the person who 
m as really intemted in the payment 
of rent on a demise made by trus- 
tees, and with whom jointly with 
the trustees the covenant for pay- 
ment of rent was expressed to be 
made, was held incapable of joining 
in an action on the covenant 

(t) S*e Viner, Abr. Assumpdt, Z. 
(1. 838-7) ; per Eyre O.J. Co. of 
Fdtmaken v. DavUi (1797) 1 Bos. 
&P.98 ;uo^toPigottv, Tkomprnm 
(1802) 8 Bos. ft P. 149. 



THIRD PERSON CANNOT SUE. 201 

that at all events a contract made for the benefit of a 
person nearly related to one or both of the contracting 
parties might be enforced by that person (k). However AM per- 
the rule is now settled that a third person cannot sue on gg^ ^ ||^^. 
a contract made by others for his benefit even if the con- 
tracting parties have agreed that he may, and also that 
near relationship makes no difference as regards any 
common law right of action. The final decision was in 
TioeddU v. A tkinaon {I). The following written agreement 
had been entered into : 

" M«moniidiim ol aa agiMiiMnt mad* Ihia day iMkWMia William 
Gny/' ke., "of Uie caie pait, and John Twaddle of tlio other pari. 
WhflVMM it if mutnall J agreed that the laid William Qvj shall and 
win pay the tarn of £200 to Uniliam Twaddle hie aon-in-law, raflwny 
iaapector, residing in Thornton, in the ooonty of Fife in Sootland, and 
the nid John Twaddle father to the afoMaid William Twaddle ahaU and 
wnipaj the som of £100 to the laid William Twaddle eaeh and MTeraDj 
the Mid aoma on or before the 21«t daj of Angiiet, 1855 ; and it it heiabj 
further agreed by the afotaaaid Wiaiam Guy and the eald John Twaddle 
that the eaid William Twaddle has fall power to rae the eald parties in 
any Court of law or equity for the aforeeaid eons hereby piamised and 
specified." 

William Tweddle, the son of John Tweddle, brought an 
action against the executor of William Guy on this agree- 
ment, the declaration averring his relationship to the 
parties, and their intention to carry out a verbal agree- 
ment made before the plaintiiFs marriage to provide a 
marriage portion. The action was held not to be main- 
tainable. The Court did not in terms overrule the older 
cases to the contrary, considering that their authority was 
already sufficiently disposed of by the effect of modem 
decisions and practice (m). 

{k) Duitm ▼. PooU (1677) (Kx. (m) SeealsoPrtM v. JSaitoii(18d3) 

Ch.) 2 Ley. 213, Vent. 818, 822. 4 B. ft Ad. 438. Mneh leas can a 
Approved by Lord Mansfield, Cowp. stranger to a oootraot who baa snf • 
443. Tliere appears to have been fered damafpe by the non-perform- 
much difference of opinion at the anoe of it sue the defaulting party 

OD the contract Plavford v. 



{I) (1861) 1 B. & & 898, 80 L J. UnUed Kingdom Sleetne fdegrapk 
Q. K 265. Co. (1869) L. B. 4 Q. B. 706, 88 L. 



PERSONS AFFECTED BY CONTRACrT. 

Antliori. The doctrines of equity are at first sight not so free 
9^ty ^^ doubt. There is clear and distinct authority for 
^^^ these propositions : When two persons, for valuable consi- 
thiid deration as between themselves, contract to do some act 
P®"***"* for the benefit of another person not a party to the 
contract — 

(i) That person cannot enforce the contract against 
either of the contracting parties, at all events if not nearly 
and legitimately related to one of them (n). Probably the 
only exception is that mentioned above, pp. 188, 199, in 
favour of children provided for by marriage settlements. 

(ii) But either contracting party may enforce it against 
the other although the person to be benefited had nothing 
to do with the consideration (o). 

Appu«Dt On the other hand the case of Oregory v. WiUicmis (p) 
ti^^ shows that a third person for whose benefit a contract is 
^^°^*'made may join as co-plaintiff with one of the actual 
(third contracting parties against the other, cmd insist on the 
^2Sff*^ arrangement being completely carried out The facts of 
with ooD- that case, so far as now material, may be stated as follows : 
'* Parker was indebted to Williams €uid also to Gregory; 
Williams, being informed by Parker that the debt to 
Gregory was about 9001, and that there were no other 
debts, undertook to satisfy the debt to Gregory on having 
an assignment of certain property of Parker's. Gregory 
was not a party to this arrangement, nor was it com- 
municated to him at the time. The property having been 
assigned to Williams accordingly, the Court held that 
Gregory, suing jointly with Parker, was entitled to call 
upon Williams to satisfy his debt to the extent of 900?. 

J. Q. B. 249 ; JHckton ▼. Seuter'§ book od the Law of Toxtt, p. 456. 
TeUffram Co, (1877) 2 G. P. D. 62, (n) Colyear ▼. Mulgrave (1886) 2 

in C. A- 3 C. P. Div. 1, 47 L. J. C. Kee. 81. 

P. 1. It IS » dirtlnct qaertioii (o) DavenpoH v. Bithojup (1843) 2 

whether these decidoiis rightiy Y. ft C. 451, 460, 1 Ph. 698, 704. 
denied that there was any cause of (p) (1817) 8 Mer. 582. 

actional alL See the preient writer's 



THIBD PBBSON CANNOT HWL 208 

(but not farther, although the debt was in fact greater) 
out of the proceeds of the property. It was not at all 
suggested that he could have sued alone in equity any 
more than at law (q); and the true view of the case 
appears to be that the transactions between Williams and 
Parker amounted to a declaration of trust of the property 
assigned for the satisfaction of Gregory's claim to the 
specified extent (r). 

Another apparent exception is the case of Page v. Cox (a), F^ «l 
where it was held that a provision in partnership articles ^^ ^ 
that a partner's widow should be entitled to his share of widow in 
the business might be enforced by the widow. But the ]" 
decision was carefully put on the ground that the provision < 
in the articles created a valid trust of the partnership pro- 
perty in the hands of the surviving partner. The result 
is that there is no real and allowed authority for holding 
tliat rights can in general be acquired by third parties 
under a contract, unless by the creation of a trust 

The general principle has been re-affirmed of late years. 
" A mere agreement between A. and B. that B. shall pay 
C. (an agreement to which C. is not a party either directly 
or indirectly) will not prevent A. and B. from coming to 
an agreement the next day releasing the old one " (t). 

"An agreement between A. and B. that B. shall pay 
0. gives C. no right of action against B." (u). 

{q) For an attempt of a thircl («) Liadlej L.J. JU Roiherkam 

penoQ to toe at law under very Alvm and Chtmieal Co, (18S3) 26 

rimilar oiicaoutanoea aee Priee ▼. Ch. IMfr. at p. 111. TImm state- 

Autoii (1883) 4 B. ft Ad. 483, show- meata oTermle what is Mid in 

ing eleariy that A. cannot mie on a Touekt ▼. Metrop. RaUwaf Wart* 

promiae 1^ B. to G. to paj G/s houmng Co. (1871) 6 Gh. 671, 677, 

debt to A. 40 L. J. Gh. 496. Aa to that oaae 

{r) Rnprm Engineering Co.{lSSO) aee Lindley. Gompare farther iSZey 

16 Gh. DiT. 125. 129, 180, by JeaMl ▼. PoeiUve, Ac, iXfe Aennramee Oo. 

M.R. and Jamea L.J. (1876) 1 Ex. Div. 88, 45 L. J. Bx. 



(fl) (1851) 10 Ha. 163, cp. Murray 451 (a proTiiion In actioles of 

▼. PUwdi (1883) 25 Gh. Difr. 89, 53 dation that A. shaU be aoUoitor to 

L. J. Gh. 185. the company and tranaaot all ita 

(t) Jeawl M.K Bmf/rem Bngi- legal bodncaa ia aa regards A. ret 

aeerin^ Co., 16 Gh. IHt. 125, 129. uUer olioe acta and giyea him no 



204 PERSONS AFFECTED BY CONTRACT. 

It is proper to mention that a different opinion is widely 

accepted in America, but there does not seem to be any 

general agreement as to the limits of third persons' 

rights (a?). 

TUrd We now come to the class of cases in which contracting 

j^JJJJ^J"' parties have attempted for their own convenience to vest 

toraefor the rififht of enforcingf the contract in a third person. 

> of Except within the domain of the stricter rules applicable 



EJJ^J' . to parties to actions on deeds and negotiable instruments, 

ingpiirties there appears to be no objection to several contracting 

^^ * parties agreeing that one of them shall have power to sue 

**'«™»«l^«" for the benefit of all except the party sued. Thus where 

to 106 on . . 

behalf of partners create by agreement penalties to be paid by any 

^^^ partner who breaks a particular stipulation, they may 
otlien : empower one partner alone to sue for the penalty (y). The 
application of the doctrines of agency may also lead to 
similar results (z). It seems doubtful whether a promise 
to several persons to make a payment to one of them will 
of itself enable that one to sue alone (a), 
^'t* **"bi "^^^ ^* ^ quite clear that the most express agreement of 
ft struiger. contracting parties cannot confer any right of action on 
^*^P^ the contract on a person who is not a party. Various 
ooipomted devices of this kind have been tried in order to evade the 
J^'JJ^^ difficulties that stand in the way of unincorporated asso- 
ft nominal 
plaintiff. 

right againrt the company) ; Md- (a) ChafOer ▼. Leae (1839) 4 M. 

hado V. Porio Alegre Ry. Co, (1874) k W. 295, in Ex. Ch. 6 M. & W. 
L. R. 9 C. P. 603, 48 L. J. C. P. 253. 698, where both Ck>iirtB inoUned to 
(x) See the Amenoan Law Re- think not, bat gave no deciaion. In 
view, April, 1881, and Mr. Wald's /onet v. R6bin9(m (1847) 1 Bx. 454, 
note here in American edition. 17 L. J. £z. 36, an action was 

iy) Radaihunt v. Bates (1826) 8 brooght by one of two late paitnera 
Bing. 463, 470. Of oonrse they against the porohaser of the bosi- 
mnst take care to make the penal^ ne« on a promise to pay the plain- 
payable not to the whole firm, but tiff what was dae to him from tiie 
to the members of the firm mmtu firm for advances. This was de- 
the offending partner. Whether dared on as a separate promise in 
nnder the present Bnles of Court addition to a ganoml promise to the 
the other partners conld nse the two partners to pay the partnership 
name of the firm to sue for the debts, and the only question was 
penalty, qiuere* whether there was any separate 

(z) Spurr V. Can (1870) L. R 5 consideration for the promise soed 
Q. B. 656, 39 L. J. (^ B. 249. on. 



THIRD PERSON CANNOT SUE. 205 

• 

dations enforcing their rights, but have always failed when 
attention was called to them. This has happened in the 
case of actions brought by the chairman for the time being 
of the directors of a company (6), by the directors for the 
time being of a company (c), by the purser for the time 
being of a cost-book company (d), and by the managers 
of a mutual marine insurance society (e). It will not be 
necessary to dwell on any instance other than the last In 
Gray v. Pearson the reasons against allowing the right of 
action are well given in the judgment of Willes J. : — 

'* I am of opiDifvn thai thia action oaimot be maintiinod, and for Um JndgOMat 
ample reason, — a roaaon not i^ypUcable merely to tbe prooedore of thia ^ WiUfla 
conntiy, but one affeoting all aoiind prooednre,— that the proper penon ^^g,^^ 
to bring an action la the person whose right has been violated. Though 
there are certain exceptions to the general role, for instance in the case 
of agents, auctioneers, or factors, these exceptions are in tmth more 
apparent than real The persons who are suing here are mere agents, 
managers of an assurance asfloci*tion of which they are not members; 
and they are suing for premiuma aUeged to haye become payable by the 
defendant in respect of policies effected by the plaintiffs for him, and for 
his share and oontribations to losses and damages paid by them to other 
members of the assodbtlon whose vessda haye been lost or damaged. The 
bare statement of the facts is enough to show thai the action cannot be 
maintained. 

" It is in eflect an attempt to substitute % person as a nominal plaintiff 
in lien of the peisons whose ri^^ts haye been yiolated." 

At common law the payee of a negotiable instrument Notes and 
must, on the same principle, be a person who can be^^^" 
ascertained at the time of accepting the bill or making hdder of 
the note. But by the Bills of Exchange Act, 1882, s. 7, a ^ 
bill (and it seems by ss. 73 and 89 also a cheque or a pro- 

(h) HaU y. Bwrbridge (1840) 1 of coiporation sole for the purpose 

Man. k Gr. 42. of Hri^|ing actions. 

(«) PhdM y. Lffie (1839) 10 A« & (e) Gray y. Prnntm (1870) L. R 

R 118. 5 C. P. 568 : in the earUer case of 

{d) HyhaH y. Parlur (1858) 4 C. Qray y. Qibmm (1866) L. R 2 C. P. 

B. N. a 209, 27 L. J. C. P. 120 : 120, 86 L. J. C. P. 99, a similar 

where WiUes J. suggested that it action succeeded, the question of the 

was trenohing on um prerogatiyes manager's ri^t to sue not being 

of the down to make n new spedts raised. 



206 



PERSONS AFFECTSD BT CONTRACT. 



missoiy note) may be made payable to the holder of an 
office for the time being (/). 



Rule 4. 
Transfer 
of lights 
under 
oootract. 



Bight to 
sue on 
oontrsct 
not as- 
signable 
at common 
law: 
probable 
origin of 
themle. 



Assignment of CoTitrdcta. 

Ride 4. We now come to the fourth rule, which we have 
expressed thus : — 

Persovs other them the creditor may becoms entitled by 
representation or assignment to stand in the cred/Uor's 
place and to exercise his rights uvder the contract. 

We need say nothing here about the right of personal 
representatives to enforce the contracts of the person they 
represent, except that it has been recognized from the 
earliest period of the history of our present system of 
law (g). With regard to assignment, the benefit of a 
contract cannot be assigned (except by the Crown) at 
common law so as to enable the assignee to sue in his own 
name (A). The origin of the rule was attributed by Coke 
to the " wisdom and policy of the foimders of our law " in 
discouraging maintenance and litigation (i): but it is 
better explained as a logical consequence of the archaic 
view of a contract as creating a strictly personal obligation 
between the creditor and the debtor (k). Anyhow it has 
been long estabUshed that the proper course at common 
law is for the assignee to sue in the name of the assignor. 
It appears from the Year Books that attempts were some- 
times made to object to actions of this kind on the ground 



(/) On the former law see HolrMS 
v..Jaqtt€$ (1866) L. B. 1 Q. B. 876, 
86 L. J. Q. B. 130. 

iff) Subject to some teohnioal 
exceptions which have now dis- 
appeared : see notes to WkeaUey ▼. 
Lane (1667) 1 Wms. Sannd. 240 sqq. 
and for early instances of actions of 
debt bronght by ezecators, Y. B. 
20 & 21 Ed. I. pp. 804, 874. 

(h) Terma de la Ley, tit Cfum in 
Actum. 

(») LampdC$ ca. (1618) 10 Co. Bep. 
48 a. For exposition of the rule in 



detail see Dicey on Parties, 115. 

{Jk) Spenoe, Bq. Juzisd. of Ghy. 
2. 850. An examination of the 
earlier authoritiee has been found 
to confirm this view. The rule is 
assumed as unquestionable, and 
there is no trace of Coke's reason 
for it. Hie objection of main- 
tenance was set up, not against the 
assignee suing in his own name, 
which was never attempted so far 
as we can find, but against his suing 
in the name of the assignor: see 
Note F in Appendix. 



ASSIONMSNT OF CONTRACI& S07 

of maintenanoe, but without success. The same rule is 
stated by Gaius as prevailing in the Roman law (I). 

In equity the right of the assignee was pretty soon In eqmiy 
recognized and protected, that is, if the assignor refused to jjlliy^ 
empower the assignee to sue in his name at law. Where 
the assignee had an easy remedy by suing in the name of 
the assignor, the Court of Chanceiy would not inter- 
fere (m). 

The Supreme Court of Judicature Act, 1873 (s. 25, ^^ 
sub-s. 6), creates a legal right to sue in the assignee's own Mrfgnm 
name, but confined to cases where the assignment is J^Jj^'*' 
absolute, and by writing under the hand of the assignor Aoi» 1878. 
and express notice in writing has been given to the debtor 

There may still be more extensive equitable rights ofI»«l'**J 
this kind By the Statute of Frauds (29 Car. 2, c. 3, s. 9) ^S!L|t6 : 
" all grants and assignments of any trust or confidence " ^'^'^^IJ^j 
must be in writing signed by the assignor, and by s. 7, br Sua. of 
equitable interests in land must be created by writing. S. ij^ 
9 does not require writing for the creation in the first 
instance by the legal owner or creditor of an equitable 
interest in personal property or a chose in action : and it 
may be argued perhaps that its operation is altogether 
confined to interests in land by the context in which it 
occurs. The writer is not aware of any decision upon 
it (n). 

It seems that to constitute an equitable assigimient 

{I) GftL 2. 88, 89. Quod mihi Thk Miou to hav* hem fint intro- 

ab aliqno debotar, Id n Yelim tibi dtioed only for the benefit of the 

debeii, nnllo eoram modo qnibiu res pnrchmir of an InheritMioe, D. 2. 

ooiponlet ad aliun traaafenintar, 14 de paotia» Id pr., C. 4. 89. de 

id eiBoere pooram : led opw eat, at hered. vel act vend. 1, 2, 4--S, 

inbente me tn ab eo stipaleru: and afterwaida extended to aUcaaei, 

qoae raa eflBcit nt a me liberetor et G. eod. tit. 7, 9. See too G. 4. 10. 

indpiat tiUt teneri. quae dicitur de oU. et act 1, 2, C. 4. 16. anando 

noratio oibllgatloDis. Sine hao two fieeoe, 6, Anidti, Lehibooii der 

novatione non poteria too nomine Pandekten, f 254. 

agera, led debee ex penona mea {m) ffammmitdy,Me$$tnger {18S8) 

qoad oognitor aut pfooomtor meos 9 Sim. 827 ; Spenoe 2. 854 ; Harr. 

experiri. In later times the trans. Law Bey. L 6—7. 

feiee of a debt was enabled to sae (a) See 1 Sanden on Uiea (5th 

by uHUb aeUo in hie own name, ed.) 848. 



208 



PEBSONS AFFECTED BY CONTRACfT. 



In other 
■pedal 
oases by 
stetale. 

Limita. 
tionof 
anignee's 
righti. 



there must be at least an order to pay out of a specified 
fund (o). 

As for the notice to the debtor, the rule of equity is that 
it must be express but need not be in writing (jj). 

There remain, therefore, a great number of cases where 
the right is purely equitable, although the enlarged juris- 
diction of every branch of the Supreme Court makes the 
distinction less material than formerly. 

Several partial exceptions to the common rule have been 
made at different times by modem statutes, on which 
however it seems unnecessary to dwell (q). 

In ordinary cases rights under a contract derived by 
assignment from the original creditor are subject, as 
already stated, to the following limitations : — 



1st Title by assignment is not complete as against the 
debtor without notice to the debtor, and a debtor who 
performs his contract to the original creditor without 
notice of any assignment by the creditor is thereby dis- 
charged 

2nd. The debtor is entitled as against the representa- 
tives, and, unless a contrary intention appears by the 
original contract, as against the assignees of the creditor, 



(o) Pereival ▼. Dunn (1885) 29 
Oh. DiT. 128. 

ip) Re Tiehener (1865) 85 Beav. 
317. 

{q) Hie more Important instanoes 

East India Bonds, 51 Geo. 3, 
c 64, 8. if which makes them 



Mortgage debentures issued by 
land companies under the Mortirage 
Debenture Act, 1865, 28 k 29 Yiot. 
c. 78, amended by 33 &. 34 Vict 
c. 20. 

Policies of life assurance : 30 &. 
31 Vict c. 144. 

Policies of marine assurance : 81 
& 82 Vict c 86. 

Things in action of companies 



(Companies Act, 1862. s. 157) and 
bankrupts (Bankruptcy Act, 1883, 
ss. 56, 57, and see definition of 
*' property," s. 168) assigned hi 
pursuance of those Acts respec- 
tively. As to the effect of registra- 
tion under the present Acts of 
previously existing companies, Ac, 
in transferring the right to sue on 
the contracts made by the company 
or its ofBoers in its former state^ 
see the Companies Act, 1 862, s. 193. 
Local autnorities (including any 
authority having power to levy a 
rate) may issue transferable deben- 
tures and debenture stock under the 
Local Loans Act, 1875, 88 9l 39 
Vict c 83. 



ASSIGNMENT: NOTICE TO DEBTOB. 209 

to the benefit of any defence which he might have had 
against the creditor himsel£ 

1. As to notice to the debtor. Notice is not necessary ^^'J^^ 
to complete the assignee's equitable right as against the aMign- 
original creditor himself, or as against his representatives, ^|^^ 
including assignees in bankruptcy (/-) : but the claims of Notioe to 
competing assignees or incumbrancers rank as between 
themselves not according to the order in date of the assign- 
ments, but according to the dates at which they have 
respectively given notice to the debtor. This was decided 
by the cases of Dearie v. HaU and Laveridge v. Cooper («), 
the priudple of which was soon afterwards affirmed by 
the House of Lords (t). The same rule prevails in the 
modem civil law (u) and has been adopted firom it in the 
Scottish law (x) ; and the true reason of it, though not 
made very prominent in the decisions which establish the 
rule in England, is the protection of the debtor. He has 
a light to look to the person with whom he made his con- 
tract to accept performance of it, and to give him a 
discharge, unless and imtil he is distinctly informed that 
he is to look to some other person. According to the 
original strict conception of contract {" k ne consid^rer que 
la subtilit^ du droit" as Pothier (y) expressed it), his 
creditor or his creditor's assignee cannot even require him 
to do this, any more than in the converse but substantially 
different case a debtor can require his creditor to accept 
another person's liability, and his assent must be expressed 
by a novation (z). Such was in fact the old Roman law, 
as is shown by the passage already cited firom Gains. By 
the modem practice the novation is dispensed with, and 

(r) Bum V. Oarvalho (1889) 4 M. equally gain priority by notioe : 

& Cr. 690. FreshfieUTi tr. (1879) 11 Ch. Diy. 

(«) (1828-7) 8 Rnss. 1, 88, 48. 198. 

(0 Fatter v. OockertU (1835) 8 CL (u) See Pothier, GontratdeVcnte. 

A; F. 456. It has only lately been g§ 560, 554 eqa. 
decided that a leoond aadgnee who (x) Erskine Inrt. Bk. 8, Tik 5. 

takes his assfprnent not from the {y) Gontrat de Vente, f 551. 

beneficiary himself, but from his (s) See p. 198| above^ 

legal personal representative^ may 



210 PERSONS AFFECTED BY CONTRACT. 

the debtor becomes bound to the assignee of whom he has 
notice. But he cannot be bound by any other assignment, 
though prior in time, of which he knows nothing. He is 
free if he has fulfilled his obligation to the original creditor 
without notice of any assignment ; he is equally free if he 
frilfils it to the assignee of whose right he is first informed, 
not knowing either of any prior assignment by the original 
creditor or of any subsequent assignment by the new 
creditor (a). It is enough for the completion of the 
assignee's title " if notice be given to the person by whom 
payment of the assigned debt is to be made, whether that 
person is himself liable or is merely charged with the duty 
of making the payment " (6), e,g, as an agent entrusted 
with a particular fund. Notice not given by the assignee 
may be sufficient, if shown to be such as a reasonable man 
ThisdoM would act upon (c). All this doctrine of notice has no 
toL^BBto application to interests in land (d) : but, subject to that 
in land ; exception, it applies to rights created by trust as well as 
all other to those created by contract ; the beneficial iaterest being 
Pto^^ treated for this purpose exactly as if it were a debt due 
from the trustee. In the case of trusts a difficulty may 
arise from a change of trustees ; for it may happen that a 
fund is transferred to a new set of trustees without any 
notice of an assignment which has been duly notified to 
their predecessors, and that notice is given to the new 
trustees of some other assignment. It is still unsettled 
which of the assignees is entitled to priority in such a case: 
but it has been decided that the new trustees cannot be 



(a) See per Willee J. L. R 6 is donbiful. Iti effect is that eqnit- 

G. P. at p. 594. Per Knight Bruoe able interests in land stand on a 

L.J. 8toek9 Y. DcHyton (1853) 4 different footing ^m personal 

D. M. 6. 11, 17, 22 L. J. Ch. 884. righU : see this relied on as the 

(&) Per Lord Selbome C. Addiwn ground of the exoeption, J(me$ v. 

T. Oox (1872) 8 Ch. 76, 79, 42 L. J. J<me$ (1887-88) 8 Sim. 683. Bat on 

Ch. 291. the other hand their liability to be 

(c) Uoyd y. Bav3c$ (1868) 8 Ch. defeated by a porchase of the legal 

488. estate for valne without notice 

{d) AlthoQgh the exception Is shovmthst they have not the nature 

folly established its reasonableness of real ownership. 



ASSIGNMENT SUBJECT TO EQUITIES. 211 

made personally liable for having acted on the second 
assignment (e). 

The rules as to notice apply to dealings with future or 
contiugent as well as with present and liquidated claims. 
" An assurance office might lend money upon a policy of 
insurance to a person who had insured his life, notwith- 
standing any previous assignment by him of the policy of 
which no notice had been given to them " (/). 

2. As to the debtor's rights against assignees. The rule AMlgnM 
laid down in the second explanation is often expressed in j^^ ^ 
the maxim " The assignee of an equity is bound by all the JJ^** * 
equities affecting it." This however includes another rule mcMiag 
founded on a distinct principle, which is that no transac- ^^^ 
tion purporting to give a beneficial interest apart from 
legal ownership (g) can confer on the person who takes or 
is intended to take such an interest any better right than 
belonged to the person professing to give it him. If A, 
contracts with 6. to give 6. something which he has 
already contracted to give to C, then C.'s claim to have 
the thing must prevail over B/s, whether B. knew of the 
prior contract with C. or not (A). And if B. makes over 
his right to D., D. will have no better right than B. had (i). 
And this applies not only to absolute but to partial inte- 
rests (such as equitable charges on property) to the extent 
to which they may affect the property dealt with. Again, 
by a slightly different application of the same principle, a 
creditor of A. who becomes entitled by operation of law to 



(e) Phippi ▼. Lovegrovt (1878) 16 iuiher ; but it leeiiis at least doabt- 

£q. 80, 42 L. J. Ch. 892 ; we p. ful whether they can be supported. 
90 as to the precaotioiis to be takidi {h) This Is of oonrse consistent 

by an assignee of an equitable with B. having his remedy In 

inttfeat who wishes to be perfectly damages. Op. p. 29, above, 
aafe. («) See PinkeU v. Wright (1842) 

(/) 76. at p. 88. 2 Ha. 120, afld. nom. M%irray t. 

(o) Certain dicta in 8harjU$ v. PinkdLt (1846) 12 CI. & F. 764 ; Fwrd 

A&m» (1868) 82 Bear. 218, 216, v. White (1852) 16 Beav. 120 ; 

and MaoifMd v. BurUm (1878) 17 Clack v. Holland (1864) 19 Beav. 

Eq. 15, 19, 48 L. J. Ch. 46, go even 262. 

p 2 



212 PERSONS AFFECTED BY CONTRAC?!. 

appropriate for the satisfaction of his debt any beneficial 
interest of A.'s (whether an equitable interest in property 
or a right of action) can claim nothing more than such 
interest as A. actually had ; and he can gain no priority by 
notice to A.'s trustee or debtor even in cases where he 
might have gained it if A. had made an express and 
unqualified assignment to him (k). But we are not con- 
cerned here with the development of these doctrines, and 
we return to the other sense of the general maxim. In 
that sense it is used in such judicial expressions as the 
following : 

" If there is one role mote perfectly eitabUshed in » ootirt of equity than 
Mother, it is this, thftt whoever tskes an assignment of a ohoee in action 
takes it subject to all the equities of the person who made the assign- 
ment " (Q. 

*' It is a rale and principle of this Conrt, and of eyery Conrt^ I believe, 
that where there is a chose in action, whether it is a debt, or an obligation, 
or a trust fund, and it Ib assigned, the person who holds the debt or 
obligation^ or has undertaken to hold the trust fund, has as against 
the assignee exactly the same equities that he would have as against the 
assignor " (m). 

This is in fact the same principle which is applied by 
common law as well as equity jurisdictions for the protec- 
tion of persons who contract with agents not known to 
them at the time to be agents (n). What is meant by 
this special use of the term " equities " will be best shown 
by illustration. A debt is due from B. to A., but there is 
also a debt due from A. to B. which B. might set off in an 
action by A. In this state of things A. assigns the first 
debt to 0. without telling him of the set-off. B. is entitled 
to the set-off as against C. (o). Again, B. has contracted 

{k) Piekervng v. Ilfrawmbe Rf, JHxtm (1852) 8 H. L. 0. 702, 781. 
Co. (1868) L. R 8 G. P. 235, 87 (m) James L.J. (ritting as V.-C.) 

L. J. C. P. 118, overruling virtually P1dpp9 v. Lovtgrwe (1878) 16 Eq. 

WaUi V. Porter (1854) 8 E. & B. 80, 88, 42 L. J. Ch. 892. 
748, 28 L. J. Q. B. 845, see Crow v. (n) See p. 101, above. 

JUAintan (1868) L. R 8 0. P. 264 ; (o) Cavendiik v. Otavet (1857) 24 

jndnnent of Erie J. (diss.) in WaUi Beav. 168, 178, 27 L. J. Ch. 814, 

V. Porter, where the doctrine is fully ezpound- 

(Q Lord St Leonards, Manglet v. ed. As to set-oflF aooruing after 



ASSIGNMENT FREE FROM EQUITIES. 2l3 

to pay a sum of money to A« but the contract is voidable 
on the ground of fraud or misrepresentation. A« assigns 
the contract to C, who does not know the circumstances 
that render it voidable. B. may avoid the contract as 
against C. (p). Again, in a somewhat less simple case, 
there is a liquidated debt from B. to A« and a current 
account between them on which the balance is against A. 
A. assigns the debt to C. who knows nothing of the 
account. B. may set off as against C. the balance which 
is due on the current account when he receives notice of 
the assignment, but not any balance which becomes due 
afterwards (q). 

But it is open to the contracting parties to exclude the T^ ^ 
operation of this rule if they think fit by making it a term exidLdad 
of the original contract that the debtor shall not set up ^^fJJT 
against an assignee of the contract any counter claim orighuJ 
which he may have against the original creditor. This is SJ***^ 
established by the decision of the Court of Appeal inp«t>««- 
Chancery in Ex parte Asiatic BaTiking Corporation, the Bwikiiig 
facts of which have abready been stated for another aspect ^S^ToLe 
of the case (r). 

Two alternative grounds were given for the decision in 
favour of the claim of the Asiatic Banking Corporation 
under the letter of credit. One, which we have abready 
noticed, was that the letter was a general proposal, and 
that there was a complete contract with any one who 
accepted it by advancing money on the fSedth of it The 
other was that, assuming the original contract to be only 
with Dickson, Tatham, & Co. to whom the letter was 
given, yet the takers of bills negotiated under the letter 
were assignees of the contract, and it appeared to have 
been the intention of the original parties that the equities 

notioe ol Mrignment, SUpkau t. Eq. 86, 88 L. J. Oh. 874. 

VenaUa (1862) 80 Bmv. 626, {q) CavencUak v. Omva (1857) 24 

WaiBon r. Mid WtUa Ry, Co, Beav. 168, 27 L. J. Gh. 814. 

(1867) L. B. 2 0. P. 698, 80 L. J. (r) (1867) 2 Oh. 891, 86 L. J. Oh. 

C. P. 286. 222, p. 22, nipm. 
{p) Oraham y. Jokmon (1869) 8 



214 



PERSONS AFFECTED BY CONTRACT. 



which might be available for the bank against Dickson, 
Tatham, & Co. should not be available against assignees. 
Lord Cairns, then Lord Justice, thus stated the law: — 

" Generally speaking a chose in act'on assignable only in equity must be 
assigned subject to the equities existing between the original parties to the 
contract ; but this is a rule which most yield when it appears from the 
nature or terms of the contract that It must have been intended to be 
assignable free from and unaffected by such equities." 

Where assignees of a chose in action are enabled by 
statute to sue at law, sinailar consequences may be pro- 
duced by way of estoppel (s); which really comes to the 
same thing, the doctrine of estoppel being a more technical 
and definite expression of the same principle. 



Subse- 
quent 
decisions 
form of 
instru- 
ment, 
how far 
matwiftL 



The principle thus laid down has been followed out 
in several later decisions on the effect of transferable 
debentures issued by companies. The question whether 
the holder of such a debenture takes it free from equities 
is to be determined by the original intention of the 
parties. 

The form of the instrument is of course material, but 
the general tenor is to be looked to rather than the words 
denoting to whom payment will be made; these cannot 
be relied on as a sole or conclusive test. Making a de- 
benture payable to the holder or bearer does not necessarily 
mean more than that the issuing company will not require 
the holder who presents the instrument for payment to 
prove his title, especially if the object of the debenture is 
on the face of it to secure a specific debt (t). But an 
antecedent agreement to give debentures in such a form is 
evidence that they were meant to be assignable free friom 
equities (u) ; and debentures payable to bearer without 



(») Webb V. Heme Bay Commis- 
tUmeri (1870) L. B. 5 Q. B. 642, 89 
L. J. Q. B. 221. 

(t) Financial Carporatfon*i oUim 
(lb6l>) 8 Ch. 865, 860, f 7 L. J. Ch. 



862. 



(u) Sx parte New Zealand Banking 
jrpratUm (1867) 8 Ch. 154, 37 L. 



ASSIGNMENT FIi££ FROM EQUITIES. 215 

naming any one as payee in the first instance are prima 
facie so assignable (x); so again if the document resembles 
a negotiable instrument rather than a common money bond 
or debenture in its general form (y). 

Even when there is nothing on the face of the instru- 
ment to show the special intention of the parties, the 
issuer cannot set up equities against the assignee if the 
instrument was issued for the purpose of raiedng money on 
it (z). The general circumstances attending the original 
contract — e,g. the issue of a number of debentures to a 
creditor instead of giving a single bond or covenant for 
the whole amoimt due — ^may likewise be important More- 
over, apart firom any contract with the original creditor, 
the issuing company may be estopped from setting up 
equities against assignees by subsequent recognition of 
their title (a). 

The rule extends to an order for the delivery of goods as 
well as to debentures or other documents of title to a debt 
payable in money (6). 

On principle this doctrine seems inapplicable in a case Q^ ^^ 
where the original contract is not merely subject to a cross nai ^^' 
claim but voidable. For the agreement that the contract *2?SL 
shall be assignable firee from equities is itself part of the 
contract, and should thus have no greater validity than 
the rest A collateral contract for a distinct consideration 

(x) Mx parU CoUbome A Straw- Ex. 238; Ex parte Univenal JAfe 

bridge (1870-1) 11 £q. 478, 40 L. AMturanee Co. (1870) 10 £q. 458, 89 

J. Ch. 98, 848, which oannot now L. J. Ch. 829 (on iMne facts) ; JSx 

be taken m wurnuiting anything parte Ckoriey (1870) 11 Eq. 167, 40 

beyond the statement in the text, L. J. Ch. 168 ; op. Re Bahia A San 

ep. Crouch y. CrSdU Foneier (1878) Franeieeo Rp. Co. (1868) L. R. 8 Q. 

L. B. 8 Q. B. 874, 886, 42 L. J. Q. B. 684, 87 L. J. Q. B. 176. Qt(.oan 

B. 188. Aikenasum Life Aeauranee Soc. v. 

{y) Ex parte City Bank (1868) 8 Pooley (1868) 8 De G. & J. 294, 28 

Ch. 768. L. J. Ch. 119, be reconoUtd with 

{t) DicJaon v. Swansea Vale Rp Co. these cases ? It seems not : jDrun- 

(1868) L. & 4 Q. B. 44, 88 L. J. Q. Um'$ claim (1874) 19 Eq. 802, 812, 

Bw 17. Qraham y. Johneim (1869) 44 L. J. Ch. 460. 

8 Eq. 86, 88 L J. Ch. 874, seems not (6) Merchant Banking Co. of Lon- 



Dt with this. don y. Photnix Bessemer Sted Co. 

(a) Higgs y. Northern Assam Tea (1877) 6 Cb. D. 206, 46 L. J. Ch. 
Co. (1869) L. B. 4 Ex. 887, 88 L. J. 418. 



216 PERSONS AFFECTED BY CONTRACT. 

might be another matter: but the notion of making it a 
term of the contract itself that one shall not exercise any 
right of rescinding it that may afterwards be discovered 
seems to involve the same kind of fallacy as the sovereign 
power in a state assuming to make its own acts irrevocable. 
Nor does it make any difference, so long as we adhere 
to the general rules of contract, that the stipulation is 
in favour, not of the original creditor, but only of his 
assignees (c). However, the point has not been distinctly 
raised in any of the decided cases. In Graham v. John- 
son (d), where the contract was originally voidable (if not 
altogether void: the plaintiff had executed a bond under 
the impression that he was accepting or indorsing a bill of 
exchange) («), an assignee of the bond as well as the 
obligee was restrained from enforcing the bond : but the 
decision was rested on the somewhat unsatisfactory ground 
that, although the instrument was given for the purpose of 
money being raised upon it, there was no intention ex- 
pressed on the face of it that it should be assignable free 
from equities. 

However, if the contract were not enforceable as be- 
tween the original parties only by reason of their being in 
pari delicto, as not having complied with statutory require- 
ments or the like, an assignee for value without notice of 
the original defect will, at all events, have a good title by 
estoppel (/). 
LimitB to The transferable debentures, the effect of which came in 
b?doMbv 4^^**^^^ ^ ^^^ csaea we have just reviewed, were no doubt 
amement intended to be equivalent to negotiable instruments, and 
oonSiSr' tliere have been dicta in the Court of Chancery favouring 
oannotbe the view that they were such in fact (a). But a later 

(e) In principle it ii the same as but the Ck>iirt took this view of the 

the OMe put in the Digest (50. 17, facts : see at p. 48. 

de reg. iuris,28) "non valere si oon- (/) See WM v. Ifeme Bay Com- 

▼enerit, ne dolus praestetur.** mUtiontn (1870) L. R. 5 Q. B. 642, 

id) (1869) 8 Bq. 86, 88 L. J. Ch. 89 L. J. Q. B. 221. 

874. iff) See etpedaUy Bx po/rU City 

(e) The evidence wae conflicting, Bank (1868) 8 Ch. 758. 



NEGOTIABLE INSTRUMENTS. 217 

decision of the Court of Queen's Bench (1873) shows that P^*^ • 
this intention cannot be fully earned out The debtor credit 
may contract in such a way as to alter or abandon his ''****•• 
own rights as against assignees of the contract; but 
he cannot alter or abandon the rights of subsequent 
assignees, and therefore cannot enable an intermediate 
transferor having no title to give a good title to his 
transferee (h). 

This marks the extreme limit of the extension which 
can be given to the power of transferring rights under a 
contract consistently with the general rules of law. 

We are now in a position to see the nature of the N«goti- 
difficulties which make the mere assigimient of a con- 



tract inadequate for the requirements of commerce, and I>Mteol- 
to meet which negotiable instruments have been in- aMignee «.f 
troduced oidfai«y 

The assignee of a contract is under two inconveniences (i). 
The first is that he may be met with any defence which 
would have been good against his assignor. This, we 
have seen, may to a considerable extent if not altogether 
be obviated by the agreement of the original contracting 
parties. 

The second is that he must prove his own title and that 
of the intermediate assignees, if any; and for this purpose 
he must inquire into the title of his immediate assignor. 
This can be in part, but only in part, provided against by 
agreement of the parties. It is quite competent for them 
to stipulate that as between themselves payment to the 
holder of a particular document shall be a good discharge ; 
but such a stipulation will neither a£fect the rights of in- 
termediate assignees nor enable the holder to compel 
payment without proving his title. Parties cannot set up 
a market overt for contractual rights. 

The complete solution of the problem, for which the Bamedj 
^ '^ by I *- 

{h) Crtfwsh ▼. OMU Fimdar (1878) 188. 
L. B. 8 Q. B. 874, 42 L. J. Q. B. (t) Op. Savlpiy, 0U.§ 02. 



218 



PERSONS AFFECTED BV CONTRACT. 



roles of 
law mer- 
ohftnt. 



Negoti- 
able in- 
■tnimenfaL 
Peculiar 
and 

extendve 
rights of 
honafide 
holder. 



ordinary law of contract is inadequate, is attained by the 
law merchant {k) in the following manner : — 

(i.) The absolute benefit of the contract is attached to 
the ownership of the document which according to ordinary 
rules would be only evidence of the contract. 

(ii) The proof of ownership is then facilitated by pre- 
scribing a mode of transfer which makes the instrument 
itself an authentic record of the successive transfers : this is 
the case with instruments transferable by indorsement. 

(iii) Finally this proof is dispensed with by presuming 
the bona fide possessor of the instrument to be the true 
owner: this is the case with instruments transferable by 
delivery, which are negotiable in the fullest sense of the 
word. 

The result is that the contract is completely embodied (l) 
for all practical purposes in the instrument which is the 
symbol of the contract; and both the right under the 
contract and the property in the instrument are treated in 
a manner quite at variance with the general principles 
of contract and ownership. We give references to a few 
passages where specimens will be found of the positive 
terms in which the privileges of bona fide holders of nego- 
tiable instruments have been repeatedly asserted by the 
highest judicial authority (m). 

The narrower doctrine which for a time prevailed, re- 
quiring a certain measure of caution on the part of the 
holder, is now completely exploded Nothing short of 
actual knowledge of the facts affecting his transferor's title 



{k) Extended to promissory notes 
bj statute : 8 & 4 Anne c. 8 (in Rev. 
Stat) SB. 1—8, now superseded and 
repealed by the Biils of Exchange 
Act, 1882. 

{I) "Verkbiperangder Obligation," 



(m) See per Bjles J. Swan v. M 
3, Australasian Co. (1868) in Ex. 
Cb. 2 H. A (\ 184, 81 L. J. Ex. 425; 
per Lord CaippbeU. Brandao r. 
BarMtt (1846) 12 01. ft F. 787; 



opinion of Supreme Ooart, U.S. de- 
livered by St >ry J. Sw^t v. Tyson 
(1842) 16 Peters 1, 15. The follow- 
ing references as to Uie nature of 
the contracts undertaken by the 
ptrties to a bill of exchange may be 
found usef uL Acceptor and drawer : 
Jones V. Broadhw*st (1850) 9 0. B. 
173, 181 ; Lebd v. Tucker (1867) L. 
R. 3 Q. B. 77, 84. 37 L. J. Q. B.46. 
Indordcr : L. R. 8 Q. B. 88, Denton v. 
PeUrs (1870) L. R 6 Q B. 475, 477. 



^EGOTIABLE INSTRUMENTS. 211) 

or wilful and therefore dishonest avoidance of inquiry (ii) 
will defeat the holder s right (o). 

Moreover, there is no discrepance between common law 
and equity in this matter. Equity has interfered in certain 
cases of forgeiy and fraud to restrain negotiation ; but 
at law^ no title to sue on the instrument can be made 
through a forgery (jp); and "the cases of fraud where a 
bill has been ordered to be given up are confined to those 
where the possession, but for the fraud, would be that of 
the plaintiff in equity " (q). The rights of bona fide 
holders for value are as fully protected in equity as at 
common law, and against such a holder equity will not 
interfere (r). 

The most frequent examples of negotiable instruments QwOitlai 
are bills of exchange (of which cheques are a species) (a) J|[^^f^. 
and promissoiy notes. Their exceptional qualities are >^tuneiiti. 
concisely stated in the case of Crouch v. Credit Foncier (t) nlm^ 
which has been already referred to : — SS?'* ** 

Foooi«r. 
" Bilb of ezchftage And promlnoiy notci, whether pajable to order or 

to better, are bj the Uw merehant negotiable in both eenaet of the word. 

The perM>n who, by a genuine indoraement, or, where it ia pajable to 

bearer, hj a deliveiy, beoomei holder, may toe in hia own nana on the 

oontraot, and if he ia a bona Jlde holder for value he haa a good title not- 

withatanding any defect of title in the party (whether indoiaer or deliverer) 

from whom he took it.'* 

We may here notice the positions contaiaed in the 
judgment of the Court, which show the limits beyond 



(fi) Lord Blaekbom in Jone$ v. 555. 

Gordon (1877) 2 App. Ca. at p.'629. (9) Jone$ v. Lane (1838.9) 3 Y. 

(o) Goodman v. Barrey (1886) 4 A C. Bz. in Eq. 281, 293. 

A. & E. 876 ; Raphad v. Bank of (r) Thiedemann v. GoUttckmidt 

England (1855) 17 C. B. 161, 175, (1859) 1 D. F. J. 4. 

25 L. J. C. P. 83: Billa of Exchange («) Billa of Exchange Act, 1882 

Act, n 90, and Judge Chahnen' note (45 k 46 Vict c. 61, 1. 73). And they 

thereon. are equally negotiable : M*Ltan v. 

(p) The (ona^ede holder of an in- Clpde$dale Banking Co. (1883) 9 

stroment with a forged indoTsement App. Ga. 95. 

may ba expoied to considerable {t) L. R. 8 Q. B 374, 42 L. J. Q. 

hwdihip. See BobheU v. PinkeU B. 183. 
(1876) 1 Ex. D. 868, 85 L. J. Ex. 



220 PERSONS AFFECTED BY CONTRACT. 

which the special law of English negotiable instruments 
cannot be extended. 

1. It is extremely doubtful whether the seal of a cor- 
poration can be treated as equivalent to signature for the 
purpose of making an instrument under it negotiable at 
common law (u). 

2. A bond containing a contract not merely to pay the 
principal but to cause the bonds to be drawn for payment 
in a specified manner cannot be negotiable, since it violates 
the general rule that the contract to pay must be uncon- 
ditional (It must also be a contract to pay money or to 
deliver another negotiable security representing money (x): 
therefore a promise in writing to deliver 1000 tons of iron 
to the bearer is not negotiable and gives no right of action 
to the possessor) (y). 

3. Mere private agreement or particular custom cannot 
be admitted as part of the law merchant so as to introduce 
new kinds of negotiable instruments. But the fact that a 
universal mercantile usage is modem is no reason against 
its being judicially recognized as part of the law merchant. 
The notion that general usage is insufficient merely be- 
cause it is not ancient is founded on the erroneous assump- 
tion that the law merchant is to be treated as fixed and 
invariable {z). 

(tt) Bat if ft corporation is ezprew- Ex. 848; Bai/owr t. Emut (1859) 5 

Ijr enabled by rtatute to iisue pro- C. B. N. S. 601, 28 L. J. C. P. 170; 

miBBOiy notes under seal they may VuUon y. Marth (1871) L. R. 6 Q. 

be sued on as ordinary prominory B. 361, 40 L. J. Q. B. 175. 

notes: Slcurh v. Highgalt Archway (x) Goodwin ▼. RcharU (1876) Ex. 

(Jo. (1814) 5 Taunt 792, and in any Oh., L. B. 10 Ex. 887, 1 App. Ca. 

case the addition of the seal wiU 476, 45 L. J. Ex. 748. 

not prevent an Instniment from (y) Dixon r, BovHl (1856) 8 Maoq. 

being a good bill or note if it is also 1, and see Byles on Billis, Ob. 7. 

signed by an agent or agents for the Such a contract may howeyer be 

company so tl^t it wonld be eood made assignable free from equities: 

without the seal, which may perhaps Merchant Banking Co, of London v. 

be regarded as an ear-mark or Phmnix Bestemer i^ed Co. (1877) 5 

memorandum made by the company Oh. D. 205, 46 L. J. Oh. 418. 

or its agents for their own conveni- (2) Goodwin v. RabaHit mpro, 

ence: see ffa^ford v. Cameron** Coal- oyeiruling Crouch y. OrSdU Fonder 

brook, <f«., Co. (1851) 16 Q. B. 442, on this point; RumbaU v. Me^poU- 

20 L. J. Q. B. 160 s Agq9 v. Nichd- tan Bank (1877) 2 Q. B. D. 194, 46 

$an (1856) I H. ft N. 165, 25 L. J. L. J. Q. B. 846. 



NEQOTIABLE INSTRUMENT& 221 

The bonds of foreign governments issued abroad and 
treated in the English maiket as negotiable instruments 
are recognized as such by law (a). So is the provisional 
scrip issued in England by the agent of a foreign govern* 
ment as preparatoiy to giving definite bonds (6). Such 
bonds or scrip, and other foreign instruments negotiable 
by the law of the oountiy where they are made, may be 
recognized as negotiable by our Courts though they do not 
satisfy all the conditions of an English negotiable instru- 
ment (c). 

From what was said in Ooodwin v. RdbarU (cQ in the N«goti« 
House of Lords it seems that where the holder of an instru- «gtoppeL 
ment purporting on the £ace of it to be negotiable, and in 
fact usually dealt with as such, intrusts it to a broker or 
agent who deals with it in the market where such usage 
prevails, he is estopped from den}dng its negotiable quality 
as against any one who in good faith and for value takes 
it from the broker or agent But where a person takes 
documents of value, negotiable or not, from one whom he 
knows to be an agent having limited authority, he must 
at his own peril ascertain what that authority is ; and this 
whether his knowledge be derived from the principal or 
not (e). 

It is also to be observed that an instrument which has How in» 
been negotiable may cease to be so in various ways, Ifjj^'^JI^ 
xiamely — to be »e. 

Payment by the person ultimately liable (/). **^ 

Restrictive indorsement (g). 

(a) Gifrgier v. MMUe (1824) 8 B. (cQ 1 App. Ca. 486, 480, 408, 407. 

ft C. 46. NegotUbilitj In % foreign (e) Bairl of Sk^field v. Ltmdm 

market is not enough: Piekery.Lon- Joint Stock Bank (1888) 18 App. 

dan and County Banking Co. (1887) Ca. 838, 67 L. J. Ch. 086. 

18 Q. K Div. 616. (/) loMonu t. Cowie (1842) 8 Q. 

(6) Goodwin y. BobarU (1876) L. K 464. Aa to the po^biUty of 

R. 10 Ex. 76, affd. in Ex. Gh. t6. niing on a biU after it baa been paid 

887, in H. L. 1 App. Oa. 476, 46 L. hf some other pereon, see Oook t. 

J. Ex. 748. lAder (1868) 18 C. B. N. S. 648, 82 

(c) See Cronek t. Oridit Fonder L. J. C. P. 121. 

(1878) L. B. 8 Q. K at PPL 884-6 ; {g) Bills of Ezohange Aot, 1883, 

Goodwin t. RaharU^ 1 App. Ca. at as. 86, 86. 
pp. 404-6. 



222 



PERSONS AFFECTED BY CONTRACT. 



Crossing with the words "not negotiable " (A). 

To a certain extent, in the case of bills payable to order, 
indorsement when overdue, which makes the indorsee's 
rights subject to what are called equities attaching to the 
bill itself, e,g, an agreement between the original parties 
to the bill that in certain events the acceptor shall not be 
held liable, but not to collateral equities such as set- 
off (i). 



Transfer 
of oon- 
traots 
where 
daties as 
well as 
rights 
trans- 
ferred. 



We have purposely left to the last the consideration of 
certain important classes of contracts which may be roughly 
described as involving the transfer of duties as well as of 
rights. This happens in the cases 

(A) Of transferable shares in partnerships and com- 
panies. 

(B) Of obligations Qc) attached to ownership or interests 
in property. 



(A) Part- 
nerships : 
Shares in 
ordinary 
partner- 
ships and 
nnin cor- 
pora ted 
companies 
may be 
made 
transfer- 
able at 
common 
law. 



A- The contract of partnership generally involves per- 
sonal confidence, and is therefore of a strictly personal 
character. But, " if partners choose to agree that any of 
them shall be at liberty to introduce any other person into 
the partnership, there is no reason why they should not : 
nor why, having so agreed, they should not be bound by 
the agreement " (Z). At common law the number of per- 
sons engaged in a contract of partnership does not make 
any difference in the nature or validity of the contract ; 
hence it follows that if in a partnership of two or three the 
share of a partner may be transferred on terms agreed on 
by the original partners, there is nothing at common law 
to prevent the same arrangement firom being made in the 



(A) Bills of Exchange Act, 1882, 
8. 77. A person taking a cheque so 
crossed has not and cannot giya a 
better title than the person from 
whom he took it: %. 81. 

(t) See Ex parte Swan (1868) 6 
£q. 844, 859, where the authorities 



are disoossed. 

(k) We use the word here in its 
wide sense so as to denote the 
benefit or burden of a contract, or 
both, according to the nature of the 
case. 

{I) Lfndley on Partnership, 864. 



TRANSFER OF SHARES. 223 

case of a larger partnership, however numerous the mem- 
bers may be; in other words, unincorporated companies 
with transferable shares are not unlawful at common law. 
But this, as Lord Justice Lindley observes, is now only of 
historical interest (m). 

At first sight this may seem to involve the anomaly of But do 
a floating contract between all the members of the partner- Jontowt" 
ship for the time being, who by the nature of the case are *n<J "« 
unascertained persons when we look to any future time (n). anomaly 
But there is no need to assume any special exception from '^ ^^ 
the ordinal}' rules of contract. It was pointed out by 
Lord Westbury that the transfer of a share in a partner- 
ship at common law is strictly not the transfer of the out- 
going partner's contract to the incoming partner, but the 
formation of a new contract. " By the ordinary law of 
partnership as it existed previously to " the Companies 
Acts " a partner could not transfer to another person his 
share in the partnership. Even if he attempted to do so 
with the consent of the other partners, it would not be a 
transfer of his share, it would in effect be the creation of 
a new partnership" (o). This therefore is to be added 
to the cases in which we have already found apparent 
anomalies to vanish on closer examination. 

Notwithstanding the theoretical legality of unincor- PraoticAl 

porated companies, there does not appear to be any very ^^JJ^^^ 

satisfactory way of enforcing either the claims of the com- corporated 

pany against an individual member (p\ or those of an ww3dr^ 

individual member against the company (q\ But the ""^ f^^^ 
« /» . , • • , , , apart from 

power of formmg such companies is so much cut short by compnl- 

the Companies Act, 1862, which renders (with a few ex- ^^~"f 

(m) Lindley on Companies, 180— 6 H. L. 711, 727, 42 L. J. Ch. 161. 
136. ip) We have aeen {nipra, p. 204.) 

(n) Cp. per Abbott 0. J. in tbat they oannot empower an officer 

Joiejph9 y. Pebrer (1825) 3 B. ft C. to sue on behalf of the aesodation. 
639, 643. This line of objection, {q) See Lyon ▼. Ifayna (1848) 5 

however, does not appear to have M. ft Gr. 504 ; but perhaps ^ni w* 

been distinctly taken in any of the the Jodicatore Acts a partner can 

cases where the legality of joint- sue or be sned hj the partnership in 

Mtock companies was discoseed. the firm -name, Iiindley on Partner- 

(o) WM r, Wkiffin (1872) L. R ship, 459. 



224 PERSONS AFFECTED BY CONTRACT. 

ConpanieB ceptions) unincorporated and unprivileged (r) partnerships 
of more than twenty (a) persons positively illegal, that 
questions of this kind are not likely to have much practical 
importance in future. In like manner the transfer of 
shares in companies as well as their original formation is 
almost entirely governed by modem statutes. 

OUiga- B. Obligations ex contractu attached to ownership or 

^!J[^^^ interests in property are of several kinds. With regard to 
property, those attached to estates and interests in land, which alone 
offer any great matter for observation, the discussion 
of them in detail is usually and conveniently treated as 
belonging to the law of real property. We may however 
point out a real divergence in modem times between com- 
mon law and equity as to the right way of dealing with 
burdens imposed on the use of land by contract. 

A preliminary statement in a summaiy form may be 
usefol. 



General OBLIGATIONS ATTACHED TO OWNERSHIP AND INTERESTS 
tW. I^ PROPERTY. 

I. Goods. 

A contract cannot be annexed to goods so as to foUow the property in 
the goods either at oommon law {t) or in equity («). 

By sUtnte 18 k 19 Vict. c. Ill the indorBement of a bill of lading 
operates as a legal transfer of the contract, if and whenever by the law 
merchant it operates as a transfer of the property in the goods. 

n. Land {x). 

a. Relations between landlord and tenant on a demise. 



(r) !.«. such as bat for the Act (ti) De MaUos v. OiUon (1858) 4 

would liave been mere partnerships De G. ft J. 276, 895. 
at oommon law. {x) On this generally see Dart V. 

(«) Ten in the case of banking : ft P. 2. 862 sqq. ; Srd Report of R. 

Ckmipanies Act, 1862, », 4. P. Commission, Dav. Cony. 1. 122 

(t) Srd resolution in Speneer't (4th ed.) ; and aboTe all the notes 

ca., 1 8m. L. G. 65 ; S^icU t. to Sjpeneer't ca. in 1 Sm. L. C. : and 

B^wU» (1808) 10 Bast 279. "In also as to covenants in leases the 

geDcral contracts do not by the law notes to ThurAy v. Plants 1 Wm& 

of England nm with goods:" Black- Sannd. 278-281, 299, 805. 
bom on Sale, 276. 



OBLIGATIONS ATTACHED TO PROPERTY. 



225 



Burden: 
of lenee's ooveiuuiti 



of lenor's coyenanti 



Aa to Ml ezistlDg thing paroel 
of the damise, Mrignow an bound 
iHiether named or not 

Am to something to be newly 
made on the premlaea, amgneea 
are boond only if named (y). 

mne with the revenion. 
(32 Hen. YIIL, c. 84.) 



of lanee'i oovenaata 



mna with the reversion. 
(82 Hen. YIIL, c. 84.) 

The itatate of Henry VUL applies only to demises nnder seal {z), and 
includes (by constractlon in Spencer't oa.) only such coyenants as touch and 
eoneem the thing demised (a). 

of lessor's oovenants runs with the tenancy. 

See also 4i 4t 45 ITiot. e. 41, ss. 10, 11, 58. 

NoU. 

(i) The lessee may safely pay rent (h) to his lessor so long as he has no 
notice of any grant over of the reversion : 4 & 5 Anne e. 8 [in Bev. Stat. : 
aL 4 Ann. c 16], which Is In fact a declaration of common law : see per 
WDles J. L. B. 5 C. P. 594. 

(ii) The lessee may still be sued on his express covenants (though 
under the old practice he could not be sued in debt for rent) after an assign- 
ment of the term (e). 

(iii) The doctrine conoeming a reversion in a tenn of years Is the same 
as concerning a freehold reversion (cQ. 

(iv) Where the statute of Heniy VIIL does not apply, the assignee of 
the reversion cannot sue an original lessee who has assigned over all his 
estate, there being neither privity of estate nor priylty of contract (<). 

p. Mortgage debts. 

The transfer'of a mortgage security operates in equity as a transfer of 
the debt (/). Notice to the mortgagor Is not needed to make the assign- 



(y) As to this distinction, see 1 
Sm. L. C. 81-84. 

(z) e,g. Smith v. EggingUm (1874) 
L. R 9 C. P. 146, 48 L. J. C. P. 
140. 

(a) For the meaning of this see 
1 8m. L. a 79 ; Fleetwood v. HuU 
(1889) 28 Q B. D. 85. 

(6) In the case of the lessee's 
covenants other than for payment of 
rent, an assignee of the reversion 
Is not bound to give notice of the 
assignment to the lessee as a con- 
dition precedent to enforcing Ub 
rights : SedUock v. ffareton (1875) 

P. 



1 0. P. D. 106, 45 L. J. C. P. 125. 

(c) 1 Sm. L. C. 84, 1 Wms. 
Saund. 298 

(d) 1 Sm. L. C. 74, 75. 

(e) AUeock v. Moorhouee (1882) 9 
Q. B. Div. 866. 

(/) This Is one of the cases in 
whidi the equitable transfer of a 
debt is not made = a legal transfer 
by the Judicature Act, 1878. In 
practice an express assiniment of 
the debt is always added : the old 
power of attorney however Is now 
superfluous. 



226 PERSONS AFFECTED BY CONTRACT. 

ment yalid ; tmt without such notice the Mugnee is bound by the stftte 
of the aocoants between mortgagor and mortgagee {g). 

y, Bent-oharges and annuities imposed on land independently of teoftncy 
or oocnpation {h). 

An agreement to grant an annuity charged on land implies an agree- 
ment to giye a personal coreumt for payment (i) ; but by a somewhat 
cnrions distinction the borden of a covenant to pay a rent* charge does 
not ran with the land charged, nor does the benefit of it ran with the 
rent {k). 

8. Other covenants not between landlord and tenant, relating to land 
and entered into irith the owner of it 

The benefit rons with the covenantee's estate so that an assignee can 
sue at common law. The lessee for years of the covenantee may enforce 
the covenant as an assign if assigns are named (2). It is immaterial 
whether the covenantor was the person who conveyed the land to the 
covenantee or a stranger (m). The nsual vendor's covenants for title come 
nnder thu head. 

ff. The like covenants entered into hy the owner. 

The borden of sach covenants appeals on the whole not to ran with the 
land in any case at common law (n). Bat where a right or easement 
affecting land — snch as a right to get minerals free from the ordinary 
duty of not letting down the surface — is granted subject to the duty of 
paying compensa^on for damage done to the land by the ezerdse of the 
right, there the duty of paying compensation rans at law with the benefit 
of the grant. Here, however, the correct view seenks to be that the right 
itself is a qualified on»— vu. to let down the surface, &a, paying compen- 
sation and not otherwise (o). 

The burden doet run with the land in equity (subject to the UmiUtion 
to be mentioned) hi this sense, that a court of equity will enforce the 



ig) Jtma V. OihUm» (1864) 9 Ves. (I) TaUe v. Qoding 0879) 11 Oh. 

407, 411 ; MaUhew v. WaXlynfn I>. 278, 48 L. J. ObT897. 

(1798) 4 Ves. 118, 126. (m) Contra Sugd. V. & P. 684—6, 

{h) These must be regarded as but alone among modem writers, 

arisiug from contract (we do not The cases from the Tear Books 

speak of rents or services incident relied on by Lord St. Leonards 

to tmurt) : the treatment of rent- {Pakenham*$ ca. H. 42 E. III. 8, pi. 

charges in Euglish law as real rights 14, Home't ca. M. 2 H. I V. 6, pL 26) 

or incorporeal hereditaments seems seem to show only that it was once 

arbitrary. For a real right is the thought doubtful whether the 

power of exercising some limited assignee could sue without being 

part of the righto of ownership, and also hdr of the original covenantee. 

IS ^uite distinct from the right to See also O. W. Hohnes, The Com- 

receive a fixed payment without the men Law, 896, 404. 

immediate power of doing any act of (») 8rd report of R. P. Commis- 

ownership on the property on which sioners, in 1 Dav. Con v. Austerberry 

the payment is secured. v. Corporation of Oldham (1886) 29 

(t) Bower ?. Cooper (1842) 2 Ha. Oh. Div. 760. 

408, 11 L. J. Oh. 287. (o) Atpden v. Seddon (1876) 1 Ex. 

(*) 1 Wms. Saund. 808. Div. 496, 609, 46 Ll J. Ex. 863. 



COVENANTS RUNNING WITH LAND. 227 



ooTVBsnt agaiart AHigiiMS who 1m?« Mtaal or ooMlniotl?« (/ ) 1^^ 
and when the ooTenanl b for the benefit of other land (ae in pnotiee la 
comnionly the eaae) the benefit generally though not alwayi mna with that 
other land. 

JSxpianaUon. Let na call the land on the nee of whioh a l ee tiluUutt ii 
impoeed bj oorenant the gnoe i ewi/iwtf tenement^ and the land for whoae 
benefit U ie impoeed the quad-dommtmi tenement Now leeUiutif 
oovenaata may be entered Into 

(1) By a vendor ae to the nee of other land retained or 
aold, for the benefit of the hmd edld fay him : 

Inthiaoaie the burden rana with the < 
benefit alao mna with the qnaai-dominant \ 

(2) By a por cb aee r ae to the nee of the land porohaeed fay hlm» for the 
benefit of other land retained or eimnltaneonaly eold by the vendor : 

In thie eaae the harden rana with the qnaai-aervient tenement, and 
the benefit may ran with the qnaal-doniinant tenement when inch Ii the 
intention of the partlea, and eppeoially when a portion of land Ii divided 
Into aeveral tenementa and dealt with aooording to a pveaoribed pbn {q). 

All tbeee rights and UabiMtiee befaig poiely equitable are like all other 
equitable rights and liabilitiee subject to the rule that purohaie for vahie 
without notice ia an abeolute defence. 

Further, this doctrine applies only to reetrlotive, not to affirmative 
covenants. Thua it does not apply to a covenant to repair. ** Only aooh 
n covenant as can be complied with without expenditure of money will 
be enforced against the assignee on the ground of notioe " (r). 

The only points which seem to call for more notice here Further 
are the doctrines as to bills of lading (L) and restrictive ^ i^ |^ 
covenants as to the use of land (IL c). ^ lading. 

As to (L) it is to be borne in mind that bills of lading 
are not properly negotiable instruments, though they may 
be called so " in a limited sense as against stoppage in 
transitu only " (a). As far as the law merchant goes the 
bill of lading only represents the goods, and does not enable 

(p) Wilmm V. Eart (1866) 1 Ch. (r) Lindley L.J. Haywood v. 

468 ; Potman v. Borland (1881) 17 BrwMwiek BwUting Society (1881) 8 

Cb. D. 858, 50 L. J. Ch. 642. Q. B. Div. 408, 410, 51 L. J. Q. B. 

iq) Eeatea v. Lyon, 4 Ch. 218, 88 78. L. ic S. W, By. Co. v. Oomm, 

Ii. J. Ch. 857, and other casee there 20 Ch. Div. 562, 51 L. J. Ch. 530 ; 

considered, ^afrisimv. t^iod (1871) Auiteriferryr.ChrporaiionofOldham, 

11 Eq. 888, 40 L. J. Ch. 294; BenaU mtpra ; Batt v. JSwin (1887) 87 Ch. 

V. OowiUMaw (1878) Ch. D. 125, Biv. 74, 57 L. J. Ch. 05. 
11 Oh. Div. 866, 48 L. J. Ch. 880 ; {$) Per Willee J. Fuentei v. Moniit 

Spieer v. Martin (1888) 14 App. Ca. (1868) L. B. 8 0. P. at p. 276 (88 

12, 68 L. J. Cb. 800. L. J. C. P. 95). 

Q2 



228 PERSONS AFFECTED BY CONTRACT. 

any one who gets it into his hands to give a better title 
than his own to a transferee ; " the transfer of the symbol 
does not operate more than a transfer of what is repre- 
sented " (t). And the whole effect of the statute is to 
attach the rights and liabilities of the shipper's contract 
not to the symbol, but to the property in the goods them- 
selves (u) : the right to sue on the contract contained in 
the bill of lading is made to " follow the property in the 
goods therein specified ; that is to say, the legal title to 
the goods as against the indorser " (x), 

Aa to box- As to (n. €) the theory of the common law is to the 
yenanti following effect. The normal operation of a contract, as 
^h'hSad : ^® ^^^® ab-eady had occasion to say, is to limit or cut short 
differenoe in some way the contracting party's control over his own 
a^rSd actions. Among other kinds of actions the exercise of rights 
equity of Ownership over a particular portion of property may be 

OD tn i**t 1 m»» « f-^ A 1 ^ ^ W tf 

Treatment thus Imiited. So far then an owner "may bind himself by 
auction ^^®^®^* ^ all^w ^7 right he pleases over his property" (y) 
at 0. L. or to deal with it in any way not unlawfiil or against 
public policy (z). But if it be sought to annex such an 
obligation to the property itself, this is a manifest depar- 
ture fix)m the ordinary rules of contract. An obligation 
attached to property in this manner ceases to be only a 
burden on the freedom of the contracting party's individual 
action, and becomes practically a burden on the freedom of 
ownership. Now the extent to which the law will recog- 
nize such burdens is ah-eady defined. Certain well-known 
kinds of permanent burdens are imposed by law, or may be 
imposed by the act of the owner, on the use of land, for the 

* B- 622, 688, 28 L. J. Q. B. 265. (1884) 10 App. Ca. 74, 108. 
Jnlo^jA r"^ ^i^^^) 6 H. & N. (y) HUL^, fupper (1863) 2 H. & C. 

630,686,80L.J.Ex.269;^«r«A. 121, 127, 82 L.TEx. 217. 

°' .^f ^'«?.^^'« ^ ^- '^- ^' ^' 2^*- owner to let aU hia land He waste • 

JAFa^ FTf^ ^' ^ }J' ^- ?°* » covenant to do so would pro-' 
594, 599. Aa to indonement by way bably be invalid . 



COVENANTS BUNNINO WITH LAND. 229 

permanent benefit of other land: these, and these only, are 
recognized as being necessary for the ordinary convenience 
of mankind, and new kinds cannot be admitted And this 
principle, it may be observed, is not peculiar to the law of 
England (a). Easements and other real rights in re ali&na 
cannot therefore be extended at the arbitrary discretion of 
private owners : '' it is not competent for an owner of land 
to render it subject to a new species of burden at his fancy 
or caprice " (&). Still less is it allowable to create new 
kinds of tenure or to attach to property incidents hitherto 
unknown to the law. But if it is not convenient or allow- 
able that these things should be done directly in the form 
of easements neither is it convenient or allowable that 
they should be done indirectly in the form of obligations 
created by contract but annexed to ownership. If the 
burden of restrictive covenants is to run with land, people 
can practically create new easements and new kinds of 
tenure to an indefinite extent. Such appears to be the 
view of legal policy on which the common law doctrine 
rests (c). 

On the other hand the Court of Chancery treated the In equity, 
question differently, looking not so much at general policy 
as at individual rights. An owner of land has bound 
himself by contract to limit his use of that land in a par- 
ticular manner : why should lus successors in title not be 
bound also, save in the case of a purchase for value with- 

(a) Cp. SftTignj, OU. 1. 7 : and WUlea J. A. 12 0. B. N. S. 111. 

for a nngnUr ooinddoioe In detail The Gonrti might have held that 

D. 8. 8. de eerr. praed. met 5 § 1, new negative eeaements might be 

6 vr.^ClayUm t. Ccfby (1848) 5 created, bat not podtiye onee, bat 

Q. B. il5, 14 L. J. Q. B. 864. thie eolation doee not leem to have 

(6) Per liactin B. NuUaU t. ever been propoeed : and the whole 

BraceweU (1866) L. R 2 Ex. 10, 86 sabjeot of negative eaaementa la 

L. J. Ex. 1; for the C. L. prindplee still obeenre, ae ia thown by the 

generallv lee Aekrcfd t. Smith widely different opinions held in 

(1850) 10 C. B. 164, 19 L. J. 0. P. Ikdton v. Angu$ (1881) 6 App. Ca. 

816 ; BaUe^ t. SU^iem (1862) 12 740, 60 L. J. Q. B. 689. 

C. B. N. a 91, 81 L. J. C. P. 226. (c) See per Willee J. delivering 

Rights of this kind are to be oare- the jndgment of the Ex. Ch. In 

fniily distingaished from those DenneU v. Athertan (1872) L. R. 7 

ercated by grants in gross ; see per Q. B. 816, 826. 



230 PERSONS AFFECTED BY CONTRACT. 

out notice of the restriction ? It is no hardship on them ; 
for those who buy the land subject to the restriction will 
pay so much the less, and the intention of the parties would 
be firustrated if contracts of this kind were considered merely 
personal The history of the doctrine is somewhat curious. 
Lord Brougham adopted and enforced what we have called 
the common law theory in an elaborate judgment which 
seems to have been intended to settle the question (cZ). But 
this judgment, though treated as an authority in courts of 
law (e), has never been followed in courts of equity. After 
being disregarded in two reported cases (f) it was overruled 
by Lord Cottenham in T^dk v. Moxkay (g), now the leading 
case on the subject The most important of the recent 
cases are Keatea v. Lyon (h) (where the authorities are 
collected), Haywood v. Brunswick Building Society (i), 
which decided that the rule applies only to negative 
covenants, and Nottingham, Brick Co. v. BvUer (J). When 
a vendor sells land in building lots and takes restrictive 
covenants in identical terms from the several purchasers, 
not entering into any covenant himself, it is a question of 
fact whether these covenants are meant to operate for 
the protection of purchasers between themselves. The 
vendor^s not reserving any part of the property for 
himself is strong evidence that such was the intention ; 
and if so any purchaser can enforce the restriction 
against any other purchaser, or his assigns having notice, 
nor can the vendor release the covenant to any pur- 
chaser or his successors in title without the consent of 
all the rest (ik). 

(d) Keppdl y. BaUey (1834) 2 M. Ch. 857. 

k K 527. (t) (1881) 8 Q. B. Div. 4C3, 51 L. 

{€) Hm V. Tupper (1868) 2 H. A J. Q. B. 73. 

0. 121, 82L. J. Bx.217. ij) (1886) 16 Q. B. DW. 778. 

(/) Whaiman t. Qibton (1838) 9 For the oorreBponding Scottiah doo- 

Sim. 196 ; Mann v. 8Uphm% (1846) tri&e Bee Hulop y. Leckie (1881) 6 

15 Sim. 877. App. 0%, 560. 

{g) (1848) 2 Pb. 774. See per Fry (k) See Spicer ▼. MaHin (1888) 12 

J. in Lvker t. Dmmf (1877) 7 Cb. App. Ca. 12, 23, 58 L. J. CIl 809, 

D. 227 ft* pp. 285, 286, 47 L. J. Ch. " 

174. 



per Lord Macnftghten, approving 
the BUtement of Hall V. 0. in JUnaU 



(A) (1869) 4 Ch. 218, 38 L. J. v. Cowluktiw, 9 Ch. D. 125, 129. 



RESTRICTIVE COVENANTS AS TO LAND. 281 

The result of the equitable doctrine is in practice to TIm fom- 
enable a great number and variety of restrictions to be y^ 
imposed on the use of land for an indefinite time, subject J^^Siit 
to the contingency of a purchase for value without notice 
of the restriction (Z). But equity does not profess to 
enforce a restrictive covenant on a purchaser with notice 
as being a constructive party to the covenant; it only 
restrains him firom using the land in a manner which would 
be unconscientious as depriving the covenantee of his 
effectual remedy. So far as common law remedies go, 
covenants of this kind can be always or almost always 
evaded ; if the equitable remedy by injunction were 
confined to the original covenantor, that also could be 
evaded by a collusive assignment. On this principle how- 
ever an assign cannot be and is not made answerable for 
the active performance of his predecessor's covenant : he 
can only be expected not to prevent its performance. 
Hence the decisions to that effect which have been 
cited (m). The jurisdiction is a strictly personal and 
restraining one. No rule of the law of contract is violated, 
for the assign with notice is not liable on the contract but 
on a distinct equitable obligation in his own person. Lord 
Brougham fell into the mistake of supposing that the 
covenant must be operative in equity, if at all, by way of 
giving effect to an intention to impose permanent burdens 
unknown to the law. Equity does not trouble itself to 
assist intentions which have no legal merits, and any such 
action. Lord Brougham rightly saw, was beyond its proper 
province. The decision of KeppM v. Bailey (n) was 
erroneous on this point, not firom any defect of reasoning 
in the judgment, but because the reasoning proceeded on 
an erroneous assumption. 



(Q Wben there hae onoe been (not hj tlie p r eeeni writer) on HaU 

each a pnrcbMe, a snbeeqnent pur- ▼. jB'wm, 86 W. R. 84, 87 Ch. Div. 

ohaeer cannot be affected by nolioe. 74, 57 L. J. Ch. 96, where the 

See per Lindley L.J. 16 Q. B. Diy. doctrine ie weU explained. 
at p. 788. (n) 2 M. A K 627. 

(m) SeeanoteinL.Q.R.ir.U9 



232 PERSONS AFFECTED BY COKTRACT. 

Change of The true principle is further illustrated by the rule that 
* even with notice an assign is not liable " where an altera- 
tion takes place through the acts or permission of the 
plaintiff or those under whom he claims, so that his 
enforcing his covenant becomes unreasonable " (o). Were 
the liability really on the covenant, nothing short of 
release or estoppel would avoid it. 

(o) Fry L. J. in Sayen ▼. OoUyer not to be recognized : Trustees v. 

(1884) 28 Oh. Div. 108, 109, 62 L. Thaeksr (1882) 87 N. Y. 811, where, 

J. Ch. 770, explaining the limits of the reddential amenity of a street 

the role as originally laid down in havhig been destroyed by the 

Dvkeof Btdfordy,TrasUesof BrUuk elevated railway, the oonrt refused 

Museum (1822) 2 M. & K. 552. In to enforoe a ooyenant against using 

New Tork this limitation seems the houses for trade. 



( 233 ) 



CHAPTER VL 

Duties under Contract. 

1. Interpretation generally. 

We have now gone through the general and necessary NeoeMlty 
elements of a contract, and shall hereafter consider the ^J^Ition. 
further causes which may annul or restrain its normal 
effect. This work is not directly concerned with the 
rules of law which govern the construction, performance, 
and discharge of contracts. But we cannot apply the 
principles by which disputes as to the validity of an 
agreement have to be determined without first determining 
what the substance of the agreement is ; and a dispute as 
to the original substance and force of a promise may often 
be resolved into a conflict on the less fundamental question 
of what is a sufficient performance of a promise admitted 
to be binding. A summary view of the leading rules of 
interpretation may therefore be found useful at this stage. 
We suppose an agreement formed with all the positive 
requisites of a good contract ; and we proceed to ascer- 
tain what are the specific duties created by this agreement 

If there be not any special cause of exception^ theMeMnieof 
promisor must fulfil the obligation which his own act has §|[^. 
created. He must perform his promise according to its 
terms. Here there are two distinct elements of which 
either or both may be more or less difficult to ascertain : 
first the terms in which the promise was made, and then 
the true sense and effect of those terms. The former 
must be determined by proof or admission, the latter by 



234 DUTIES UNDER CONTRACT. 

interpretation, which, however, may have to take account 
of specific facts other than those by which the promise 
itself is established. We assume the terms to be reduced 
to a form in which the Court can understand them, as for 
example by translation from any language of which the 
Court does not assume judicial knowledge, or by explana- 
tion of terms of art in sciences other than the law, 
which is really a kind of translation out of the language 
of specialists. 
Ezpecta- The nature of a promise is to create an expectation in 
piraiSeee. *^® person to whom it is made. And, if the promise be 
a legally binding one, he is entitled to have that expecta- 
tion fulfilled by the promisor. It has, therefore, to be 
considered what the promisor did entitle the promisee to 
expect from him. Every question which can arise on the 
interpretation of a contract may be brought, in the last 
resort, under this general form. 

In order to ascertain what the promisee had a right to 

expect, we do not look merely to the words used. We 

must look to the state of things as known to and affecting 

the parties at the time of the promise, including their 

information and competence with regard to the matter in 

hand, and then see what expectation the promisor's words, 

as uttered in that state of things, would have created in 

the mind of a reasonable man in the promisee's place and 

with the same means of judgment (a). The reasonable 

expectation thus determined gives us the legal effect of 

the promise. 

Boason. Now this measure of the contents of the promise will 

of*promfae ^ found to coincide, in the usual dealings of men of good 

on pro- faith and ordinary competence, both with the actual 

"^""^* intention of the promisor and with the actual expectation 

of the promisee. But this is not a constant or a necessary 

coincidence. In exceptional cases a promisor may be 

bound to perform something which he did not intend to 

(a) dee par Blftckbom J. Smith 597, 607, 40 L. J. Q. B. 22l;BirreU 
V. Huyhei (1871) L. R. 6 Q. B. v. Dryer (1884) 9 App. Ca. 845. 



INTERPRETATION OF PROMISE. 235 

promise, or a promisee may not be entitled to require that 
performance which he understood to be promised to him. 
The problem has been dealt with by moralists as well as 
by lawyers. Paley's solution is well known, and has been 
quoted by text- writers and in Court (6) : " where the 
terms of promise admit of more senses than one, the 
promise is to be performed in that sense in which the 
promises apprehended at the time that the promisee 
received it.'' But this does not exactly hit the mark. 
Reflection shows that, without any supposition of fraud, 
Paley's rule might in peculiar cases (and only for such 
cases do we need a rule) give the promisee either too much 
or too little. And Archbishop Whately, a writer of great 
acuteness and precision within the limits he assigned to 
himself, perceived and corrected the defect : " Paley," he 
says, "is nearly but not entirely right in the rule he has 
here laid down .... Every assertion, or promise, or 
declaration of whatever kind, is to be interpreted on the 
principle that the right meaning of any expression is that 
which may be fairly presvm^d to be understood by it "(c). 
And such is the rule of judicial interpretation as laid 
down and used in our Courts. " In all deeds and instru- 
ments " — and not less, when occasion arises, in the case of 
spoken words — " the language used by one party is to be 
construed in the sense in which it would be reasonably 
understood by the other " {d). All rules of construction 
may be said to be more or less direct applications of this 
principle. Many rules of evidence involve it^ and in 
particular its development in one special direction^ exten- 
ded from words to conduct, constitutes the law of estoppel 
in pais, which under somewhat subtle and technical 

{b) L. B. 6 Q. B. 600, 610. rabtiity, thftt a ptomJMr who has by 

(c) Paley, Moral PhiL iii 5 ; Ms own fMdt oauMd the'pronuMe 

Wbfttely thereon in notes to ed. to expect nuNre than wm mtHit is 

1S59. I am indebted to my learned bound *bod ex ^ promiMionli led 

friend Mr. A. V. Dioey for calling ex damno per oolpam date' 

my attention to Whately's amend- (d) Bladcbom J. in Fawka ▼. 

ment. Anatin'i attempt ( Jnrispra- Mamchuter and London Auwranee 

dence, L 456, ed. 1869) is nothing AttoeUxtUm (1868) 8 B. ft 8. 917, 

to the poipose. Some modem 929, 32 L. J. Q. B. 158, 159. 
civilians have said, with nseless 



236 DUTIES UNDER CONTBACT. 

appearances is perhaps the most complete example of the 
power aod flexibility of English jurisprudence. 
Agree- ^j^Q hB,Ye already seen that the terms of an offer or 

evidenced promise may be expressed in words written or spoken, or 
by writing: conveyed partly in words and partly by acts, or signified 
against wholly by acts without any use of words (e). For the 
vMiationa. Purposes of evidence, the most important distinction is 
not between express and tacit significations of intention, 
but between writing and all other modes ot manifesting 
one's intent. The purpose of reducing agreements to 
writing is to declare the intention of the parties in a 
convenient and permanent form, and to preclude subse- 
quent disputes as to what the terms of the agreement 
were. It would be contrary to general convenience, and 
in the great majority of cases to the actual intention of 
the parties at the time, if oral evidence were admitted to 
contradict the terms of a contract as expressed in writing 
by the parties. Interpretation has to deal not with con- 
jectured but with manifest intent, and a supposed intent 
which the parties have not included in their chosen and 
manifest form of expression cannot, save for exceptional 
causes, be regarded. Our law, therefore, does not admit 
evidence of an agreement by word of mouth against a 
written agreement in the same matter. The rule is not a 
technical one, and is quite independent of the peculiar 
qualities of a deed. " The law prohibits generally, if not 
universally, the introduction of parol evidence to add to a 
written agreement, whether respecting or not respecting 
land, or to vary it " (/). " If A. and B. make a contract 
in writing, evidence is not admissible to show that A. 
meant something different from what is stated in the 
contract itself, and that B. at the time assented to it. If 
that sort of evidence were admitted, every written docu- 
ment would be at the mercy of witnesses that might be 
called to swear anything" (g), 

(e) P. 10, above. {g) Per PoUock O.B. Nichol v. 

if) MaHinv. Pycroft (1852) 2 D. Oodts (1864) 10 Ex. 191,194,28 L. J. 

M. G. 785, 795, 22 L. J. Gh. 94. Ex. 814. See also IfoU(m v. Browne 



CONSTBUCnON ; PAROL YABUTIONS. 237 

Under normal conditions the same rule prevails in Bole of 
equity, and this in actions for specific performance as well ^^^' 
as in other proceedings, and whether the alleged variation 
is made by a contemporaneous (h) or a subsequent (i) verbal 
agreement. " Variations verbally agreed upon . . . are 
not sufficient to prevent the execution of a written agree- 
ment, th^ situation of the parties in all other respects 
remaining unaltered " (k). 

Similarly, when a question arises as to the construction 
of a written instniment as it stands, parol evidence is not 
admissible (and was always inadmissible in equity as well 
as at law) to show what was the intention of the parties. 
A vendor s express contract to make a good marketable 
title cannot be modified by parol evidence that the pur- 
chaser knew there were restrictive covenants (t). It is 
otherwise where it is sought to rectify the instrument 
under the peculiar equitable jurisdiction which will be 
described in a later chapter. And therefore the Court 
has in the same suit refused to look at the same evidence 
for the one purpose and taken it into account for the 
other (m), 

(I860) 9 C. B. N. S. 442, 80 L. J. C. only tliAt a new verbal agreement 

P. 106 ; Halheady, Young (1856) 6 intended to Baperaede an existing 

£. & B. 312, 26 L. J. (}. B. 290. contract^ bat by reawn of the 

{k) Omerod ▼. ffardman (1801) 6 Statute of Frandi incapable of 
Vea. 722, 730. Lord St Leonards being enforced, cannot operate as a 
(V. k P. 163) says this cannot be mere rescinion of the former con- 
deemed a general rule : bnt see tract ; the ground being that there 
Hill ▼. Wtl9on9 8 Ch. 888 ; per is nothing to show any intention of 
Mellish L.J. at p. 899, 42 L. J. Ch. the parties to rescind the first oon- 
817. tract absolutely. 

(») Price V. Dyer (1810) 17 Ves. {k) Price v. Dyer (1810) 17 Ves. 
856; Bobinion v. Page (1826) 3 atp. 364; C72otrei v. ^^^'n«on (1813) 
Buss. 114, 121. But a subsequent 1 Yes. k B. 524, where it was held (1) 
waiver by parol, if complete and that evidence was not admiiaible to 
nnoonditional, may be a good de- explain, contradict, or vary the writ- 
fence ; %b. : Ooman v. Saliibury, ten agreement, but (2) that the writ- 

1 Yem. 240. And cp. 6 Yes. ten agreement was too ambiguous 
837a, note. Qu. if not also at law, to be enforced. 

if the contract be not under aeal : {I) CkUov. Tlwmpmm (1882) 9 Q.6. 

see Chitty on Contracts, 707 (8th Div. 616. Li such a ease the true 

ed.) ; Dart, Y. k P. 1096, contra ; intention may well be that the 

\mt NdbiU V. Ward (1867) L. R. vendor ahall remove the defect 

2 Ex. 135, does not prove that "a (m) Bradford v. Jiomney (1862) 
verbal waiver of a written agree- 30 Beav. 481, cp. per Lindley L.J. 
ment is no defence at law " but 9 Q. B. Div. 620. 



238 DUTIES UNDER CONTRACT. 

Appwrent Jt jg ^q r^jj exception to this rule that though " evi- 

ezceptioTUi * /. .... 

ftt law and dence to vary the terms ot an agreement m wnting is not 
In eqmty. admiasible," yet " evidence to show that there is not an 
agreement at all is admissible/' as where the operation of 
a writing as an agreement is conditional on the approval 
of a third person (n). "A written contract not under 
seal is not the contract itself, but only evidence — the 
record of the contract. When the parties have recorded 
their contract, the rule is that they cannot alter or vary it 
by parol evidence. They put on paper what is to bind 
them, and so make the written document conclusive evi- 
dence between them. But it is always open to the parties 
to show whether or not the written document is the 
binding record of the contract " (o). 

" The rules excluding parol evidence have no place in 
any inquiry in which the Court has not got before it some 
ascertained paper beyond question binding and of full 
effect " (jp). It may even be shown that what appears to 
be a deed was delivered as an escrow, notwithstanding 
that a deed once fully delivered is conclusive (g). 

So in Jervis v. Berridge (r) it was held that a document 
purporting to be a written transfer of a contract for the 
purchase of lands "was . . . not a contract valid and 
operative between the parties but omitting (designedly or 
otherwise) some particular term which had been verbally 
agreed upon, but was a mere piece of machinery . . . 
subsidiary to and for the purposes of the verbal and only 
real agreement." And since the object of the suit was not 
to enforce the verbal agreement, nor " any hybrid agree- 
ment compounded of the written instrument and some 
terms omitted therefrom,*' but only to prevent the defen- 

(n) Pym ▼. Campbell (1856) 6 E. P. 116. And we per Page Wood 

k R 870, 874, 25 L. J. Q. B. y,-CAnJ)ruiffT.LordParker{U6S) 

277. 5 Bq. 181, 187, 87 L. J. Ch. 241. 

(o) Per Bramwell B. Wake y. (q) See Watkint v. Naeh (1875) 

ffarrop (1861-2) 6 H. & N. at p. 775, 20 Bq. 262; Whelan ▼. Palmer (1888) 

30 L. J. Ex. at p. 277. 89 Cb. D. 648, 655, 57 L. J. Ch. 784. 

( i>) Ouardhouuv^BUtekhumO 866) (r) (1878) 8 Ch. 851, 859, 860, 42 

L. R. 1 P. & D. 109, 115, 85 L. J. L. J. Ch. 618. 



CONSTBUCTION ; EXTRINSIC EVIDENCE. 239 

dant firom using the written document in a manner incon- 
sistent with the real agreement, there was no difficulty 
raised by the Statute of Frauds, ''which does not make 
any signed instrument a valid contract by reason of the 
signature, if it is not such according to the good faith and 
real intention of the parties." If it appears that a docu- 
ment signed by the parties, and apparently being the 
record of a contract, was not in fact intended to operate as 
a contract, then ** whether the signature is or is not the 
result of a mistake is immaterial '* (a). 

Again it has been held, and that by Courts of common Conater»l 
law not having equity jurisdiction, that even where there ^^^ 
is an agreement by deed a collateral agreement not°^°^ 
inconsistent with the written terms may be shown. For 
such a collateral agreement, moreover, the promisee's 
execution of the principal writing or deed is consideration 
enough (t), in the same way as on a sale of goods no 
distinct consideration is required for a simultaneous 
collateral warranty. 

Another class of cases in which an apparent, or some- '^^ndmoe 
times, perhaps, a real exception occurs, is that in which pwU^ilAr 
external evidence is admitted to explain the meaning in ^^™'* 
which particular terms in a contract were understood by 
the parties, having regard to the language current in that 
neighbourhood or among persons dealing in that kind of 
business. Witnesses have been aUowed, in this way, to 
prove that by local custom " a thousand " of rabbits was 
1200 (i.e. ten long hundreds of six score each, the old 
" Anglicus numerus " of Anglo-norman surveys) (u) ; to 
show what was meant by ''weekly accounts'' among 



(f) Per Bnunwell B. Rogen v, 756, 42 L. J. Oh. 885 ; Morgan t. 

Eadl^ (1868) 2 H. ft G. 227, 249, 82 Oriffith (1871) L. B. 6 Ex. 70, 40 L. 

L. J. Ex. 241. In tiuflcaie there was J. Ex. 46 (affreement by leawr to 

*'& reel oontnust not in writing keep down n9>bite) ; Angdly, Duke 

and ft peper prepared in order to (1875) L. B. 10 Q. B. 174 (agreement 

oomplj with some form, which waa to do repairs and send in funitare). 
ttated at the time to oontatn a (u) Smith t. WiUon (1882) 8 B. 

merely nominal price." k Ad. 728. 

(0 EnHne ▼. Ackane (1878) 8 Ch. 



240 DUTIES UNDER CONTRACT. 

builders (aj) ; to define " year," in a theatrical contract to 
pay a weekly salary for three years, as meaning only the 
part of the year during which the theatre was open {y) ; 
to identify the wool described as "your wool" in a contract 
to buy wool {z). 
Not oon- The theory is that such evidence is admitted " not to 
w^°*S- c^^^^'^'*'^^* ^ document, but to explain the words used in 
aiy to the it, supply, as it were, the mercantile dictionary in which 
^"^' you are to find the mercantile meaning of the words which 
are used " (a) (or other meaning received by persons in the 
condition of the paiiies, as the case may be). The process 
may be regarded as an extension of the general rule that 
words shall have their primary meaning. For when words 
are used by persons accustomed to use them technically, 
the technical meaning is for those persons at any rate the 
primary meaning (6). It is a question not of adding or 
altering, but of identifying the subject-matter. " Suppose 
that I sell ' all my wool which I have on Dale Farm,' 
evidence must always be admissible to show that the wool 
which was delivered was the wool on Dale Farm" (c). 
The terms thus explained need not be ambiguous on their 
£a,ce ((2). Parol evidence is equally admissible to explain 
words in themselves ambiguous or obscure and to show, as 
in the case of " a thousand of rabbits," that common words 
were used in a special sense. " The duty of the Court 
... is to give effect to the intention of the parties. . . . 
It has always been held . . . that where the terms in the 
particular contract have, besides their ordinary and popular 
sense, also a scientific or peculiar meaning, the parties who 
have drawn up the contract with reference to that parti- 
es;) ilfyerfY.5arM1860)dKa^E. Clark on InterpreUtioD, 48, 57; 
806, 30 li. J. Q. B. 9. and Mr. Elpbinstone on*<The Limits 

(y) QrarU v. Maddox (1846) 15 of Ralea of Constmction," L. Q. R. 
M. & W. 787, 16 L. J. Ex. 227. i. 466. 

(2) Macdonald y. LonghoUontt Ex. (c) Erie J. in Maedonald v. Long- 

Ch. 1850-60, 1 E. ft E. 977, 28 L. boUom (1859-60) 28 L. J. Q. B. at 
J. Q. B. 298, 29 ib. 256. p. 297. 

(a) Lord Caima, Botoes v. Shand {d) See the judgment of Black- 
(1877) 2 App. Ca. 455, 468. bom J. in Myeri v. Sari, above. 

(6) See KlphinBtone, Norton and 



interpretation; customary terms. 241 

cular department of trade or business must fairly be taken 
to have intended that the words should be used not in 
their ordinary but in their peculiar sense " (e). 

This kind of special interpretation must be kept distinct 
from the general power of the Court to arrive at the true 
construction of a contract by taking account of the 
material facts and circumstances proved or judicially 
known. The words " warranted no St. Lawrence '* in a 
time policy of marine insurance have been decided, by 
reason of the known facts of geography and the nature 
and risks of the navigation, to include the Gulf of St. 
Lawrence as well as the river, notwithstanding the fiEulure 
of an attempt to prove that such was the customary 
meaning (/). In another modem case the Court found 
no difficulty in holding that, in the circumstances of the 
transaction, a guaranty for the price of goods to be 
supplied, definite as to the amount but otherwise loosely 
worded, must be read as a continuing guaranty and not as 
a guaranty confined to a single sale then about to be 
made (g). 

The Courts have taken yet a further step in this line of Inoorpo- 
interpretation by reference to unexpressed matter. Not cnstQaivy 
only particular terms may be explained, but whole new ^J^ ^ 
terms (provided they be not inconsistent with the terms ac- andenoe. 
tually expressed in writing) may be added by proving those 
terms to be an accustomed part of such contracts, made 
between such persons, as the Court has before it Custom, 
when the word is used in these cases, does not necessarily 
imply either antiquity or universality or any definite local 
range. It is merely a usage so general and well under- 
stood in fact, with reference to the business, place, and 
class of persons, that the parties are presumed to have 
made their contract with tacit leference to it, and to have 

(e) Gockbnzn C. J. in Myer$ v. 8arl B. 758, an implied wamnty allegwl 

(18S0) 30 L. J. Q. B. at p. 12. to be onstomary was decided to be 

(/) BirreU v. £ryer (1884) 9 A|.p. p*rt of the geneial law. 
Ca. 846. In Johnson v. RayUon {g) H^fiM y. Jlieadawt (1869 

(1881) 7 Q. B. IHv. 488, 50 L. J. Q. L. R. 4 C. P. 595. 



242 DUTIES UNDKB CONTRACT. 

intended to be governed by it in the same way and to the 
same extent as other like persons in like cases. It might 
perhaps be better not to use in this connexion the word 
" custom/' which has a perfectly distinct meaniug in the 
law. of tenure and rights over land, or at least to speak 
by preference of "usage/* except where the phrase 
"custom of trade *' has become too familiar to be easily 
dropped. It would take us too far to enlarge upon this 
class of cases ; it must suffice to indicate them and refer 
to a few leading authorities. 
Custonifl Rights allowed to agricultural tenants by the " custom 
ooantry. of the country/' such as to take the away-going crop after 
the expiration of the term, to receive compensation for 
particular kinds of improvement, and the like, have been 
held for more than a century (h) not to be excluded by 
anything short of actual contradiction in the terms ex- 
pressed between the parties, and this even where the 
contract is under seal. In recent cases of this class (i) the 
question has generally been whether something in the 
express terms was or was not so inconsistent with the 
usage as to exclude the presumption that '* the parties did 
not mean to express in writing the whole of the contract 
by which they intended to be bound, but to contract with 
reference to those known usages "(A;). 
Of t»de, In the present century there have been a great number 
of decisions arising out of the usages current in trades 
and in various kinds of mercantile dealings and public 
employments. One strong application of the principle 
now before us has been to make agents or brokers 
in certain trades and markets personally liable (uncon- 
ditionally or in some particular event) notwithstanding 
that they contracted only as agents {I). This has been 

{h) The earliest case commonly at p. 511. 

dted u WiggUtworth ▼. DaUiwn {k) Parke B. in HtOUm ▼. Wwr- 

(1778-81) Dongl. 201, 1 Sm. L. C. ren, 1 11 & W. 466, 476. 

669, where see the notes. {I) Hwnfrey v. Dale (1857) E. B. 

(t) As in Tucker v. Linger (1888) & £. 1004, 26 L. J. Q. B. 187, and 

8 App^ Ca. 508, 52 L. J. Ch. 941. other oases cited p. 99, above. 
See per Lord Blackbom, 8 App. Ca. 



Ibo. 



OOKSTBUCTf ON : GENERAL INTENTION. S4S 

thonght to go too far, as adding to the written contract not 
merely a new term as between the same parties, but a new 
party. But the point is settled by an unbroken current 
of authority (m). Some important groups of cases have 
turned on particular rules and usages of the Stock 
Exchange, with regard especially to the determination 
of the persons on whom they were binding without in- 
dividual assent or notice (n). 

As it is not always easy to say where the ordinary 
construction of the language used in affairs ends, and 
explanation of special terms and senses by a " mercantile 
dictionary," as Lord Cairns called it (o), begins, so there is 
a more or less fluctuating boundary line, even now that 
the law merchant is part of the general law, between 
the establishment, by evidence of usage, of particular 
incidents of particular mercantile contracts, and the 
general development of mercantile law by the judicial 
recognition of universal custom. 

Supposing the terms of the contract, express or in- CoBftmo- 
corporated by reference, to be finally established, there p^.^. 
remains the task of construction in the stricter sense ; ^^'^^ ^ 
namely of deciding, where the terms are capable of more lotentioii 
than one meaning, which meaning is to be preferred. On f^L^JerauL' 
this head there are few rules, if any, which are confined 
to contracts, or are more applicable to them than to 
instruments in writing genemlly. The one universal 
principle is that effect is to be given to the intention 
of the parties collected from their expression of it as a 
whole. It must be collected from the whole ; that is, 
particular terms are to be construed in that sense which 
is most consistent with the general intention (p). It 
must also be collected from what is expressed, not from 
a mere conjecture of some intention which the parties 
may have had in their minds, and would have expressed 

(m) See 1 Sm. L. 0. 68S. (p) See Ford v. Beedk^ Ex. Gh. 

(n) See NiekaU$ ▼. Meny (1876) 1848, 11 Q. B. 862, 17 L. J. Q. R 

li. R. 7 H. L. 680. 114. 
(o) P. 240, above. 

R 2 



244 



DUTIES UNDER CONTRACT. 



Limits of 
rules of 
ooDstmc- 
tion. 



if they had been better advised (q). This caution, how* 
ever, does not prevent the correction of mistakes which 
are obvious on the face of the document. In such cases 
the general intent, as expressed by the immediate con- 
text, or collected from the whole scope of the instrument, 
is clear enough to overcome the di£Bculty arising from 
erroneous or defective expression in some part. Mere 
verbal blunders have always, in modem times at any 
rate, been corrected without difficulty by the ordinary 
jurisdiction even of courts of common law (r). Mcda 
grammatica non vitiat chartaTn («). In construing in- 
struments of well-known types, such as family settlements, 
even omitted clauses have often been supplied by aid of 
the context (t). 

For the rest, our Courts are now much less disposed to 
hold themselves bound by canons of construction than they 
were even one or two generations ago. *' They were framed 
with a view to general results, but are sometimes pro* 
ductive of injustice by leading to results contrary to the 
intention of the parties " (u) ; and the recent tendency is 
to pay less attention to any such rules and more to all 
admissible indications of what the intention actually was 
in the case in hand. It will be remembered that a rule 
which does not yield to sufficient evidence of contrary 
intention is not a rule of construction at all, but a rule 
of law (v). Again, many rules of construction are in 



(9) Jessel M.R. Smith v. Luca$ 
(1881) 18 Ch. D. 581, 542, and see 
fvther authorities in Elphinatone, 
Norton and Clark on Interpretation, 
p. 87. 

(r) See per Lord Mansfield, 3 
Burr. 1635, and Doe d. Ltack v. 
MiekUm, (1805) 6 East 486 ; Lord 
St Leonard, WUxm v. TTi^ton (1854) 
5 H. L. O. 40, 66, 28 L. J. Ch. 697, 
Sugd. V. ft P. 171. 

{9) See Shepp. Touchst., 55, 87, 
869. 

{t) CropUm V. Daviet (1869) L. R. 
4 C. P. 159, 88 L J. C. P. 159 ; 



Savoffe V. Tifert (1872) 7 Ch. 356; 
DanttCi SetOement (1875) 1 Ch. 
Div. 875, 45 L. J. Ch. 105 ; Binrt 
Tr. (1876) 8 Ch. D. 214 ; Grtmwood 
V. (?re«MPood (1877) 5 Ch. Div. 954, 
47 L. J. Ch. 298; Redffemv,Bryning 
(1877) 6 Ch. D. 138 ; as to deciding 
on conflict in the terms of a lease by 
reference to the counterpart, Bur^ 
chdL V. Clark (1876) 2 C. P. Dir. 88, 
46L. J. C.P. 115. 

(li) Cockbum C.J. 2 C. P. Div. 
at p. 93. 

(r) F. V. Hawkiiis on the Con- 
struction of Wills, Preface. 



SPECIAL RULES OF fONSTRUCTtON. 245 

truth more auxiliary than explanatory ; their purpose is 
to supply the guidance required for dealing with events 
for which the parties have omitted to provide. In the 
language of Willes J. *' disputes arise not as to the terms 
of the contract, but as to their application to unforeseen 
questions which arise incidentally or accidentally in the 
course of performance, and which the contract does not 
answer in terms, yet wliich are within the sphere of the 
relation established thereby, and cannot be decided as 
between strangers " (x). The parties may really have 
taken no thought, and therefore had no intention at 
all with respect to those events, and yet something 
must be done. In such cases any rule not inconsistent 
with justice is better than uncertainty, and it matters 
little whether the reasons originally assigned for an 
established rule be convincing or not. Among rules 
or maxims of construction some are much weaker than 
others, and are entitled, as it were, only to a casting 
vote. Such is that which says that words are to be taken, 
in case of doubt, against the person using them ; a maxim 
to which the late Master of the Rolls denied even a sub- 
sidiary value {y), but which is in substance classical (z) 
and seems reasonable, and on the whole stands approved 
on condition of being used to turn the scale where there 
is real doubt, not to force a less natural meaning on words 
which have a more natural one (a). 

There are artificial rules of construction in particular ArtiSdal 
cases which stand apart from the ordinary principles ; ^,^1^^^. 
they are derived chiefly, but not wholly, from the jurisdic- !>«•»- 
tion of the Court of Chancery, and in their origin did not intentloD. 
profess t/O be consistent with the expressed intention of 

(x) lUnfdv,0vibert,Ex.Ch.lS6rt, et qui looavit, nooere, in qaoram 

Jj, R. 1 Q. B. 115, 120, 35 L. J. Q. fnit potestate legem aperiitiB con- 

B. 74. scribere. 

(y) Taylor v. Corporation of St. (a) £lphisstone,NortoiiandClark. 

HeUn^t (1877) 6 Ch. Div. 264, 270. op. cU. 98. Lord Selborne in NeUl 

(z) Papinian in D. 2, 14, de paotis, v. Ihtke of Dtvonahire (1882) 8 App. 

89. VeteribQS placet pacUonem Ca. at p. 149, etatei it in a guarded 

obeeniam Tel ambtgoam venditori, form. 



246 DUTIES tJNDER CONTRACT. 

the parties. To some extent they went upon a presumed 
real intention, but the presumption was at least as much 
of what the Court thought the parties ought to have 
intended as of what it thought they did intend (6). They 
were in truth rules of positive restriction, imposed by a 
policy which was then in the hands of the judges, but is 
now held to be in the exclusive competence of the Legisla- 
ture, and for the purpose of making the substance of the 
transaction conform to the requirements of fair dealing, as 
understood by the Court. Our Courts have long ceased 
to dictate to parties of full age and with the means of 
independent judgment on what terms they shall contract, 
but certain forms and terms have had an artificial meaning 
firmly impressed on them. The modem justification of 
such rules is that they are well known, and parties using 
the accustomed forms do in fact know and expect that 
their words will be construed in that sense which, by the 
standing practice of the Courts, has become a received and 
settled technical sense. 

" If cases have laid down a rule that in certain events 
words are to have a particular meaning, and that has 
become a settled rule, it may be assumed that persons in 
framing their agreements have had regard to settled law 
and may have purposely used words which, though on the 
face of them they may have a different meaning, they 
know, by reason of the decided cases, must bear a parti- 
cular or special meaning " (<?). 
Paitieeare Policies of marine insurance are to this day made in a 
sqmed to ^^m which on the face of it is clumsy, imperfect, and 
adopt the obscure. But the effect of every clause and almost everv 

artificuJ Ji_-L iji 

sense. word has been settled by a series of decisions, and the 
common form really implies a whole body of judicial rules, 
" which originated either in decisions of the Courts upon 
the construction or on the mode of applying the policy, or 

(6) Cp. LIndley L. J. 21 Oh. Div. (1882) 21 Ch. DIt. 248, 264, 52 L 
•tp. 274. J. Ch. 146. 

(c) Jessel M.R WallU v. SmUk 



ORDER OF PKETORHANCR. t47 

in customs proved before the Courts so clearly or so often 
as to have been long recognized by the Courts without 
further proof. Since those decisions, and the recogniti<»i 
of those customs, merchants and underwriters have for 
many years continued to enter into policies in the same 
form. According to ordinary principle, then, the later 
policies must be held to have been entered into upon the 
basis of those decisions and customs. If so, the rules 
determined by those decisions and customs are part of the 
contract " (d). 

The rules applied to restrain the effect of releases in 
general terms, of stipidations as to time, and of penal 
clauses, had a different origin, but have been brought 
round to rest on similar reasons. They are now admitted 
to be rules of construction which the parties can supersede, 
if so minded, by the adequate expression of a different 
intention. Still, they preserve traces of their history, and 
so lead up to the methods by which equity jurisdiction has 
dealt, and still deals, with cases of real mistake in expres- 
sing an agreement ; and in that connexion we shall find it 
useful to return to them. 



2. Order and Mutuality of Perforvuxmce, 

When a contract consists in mutual promises which on Oider of 
one or both sideA are not to be completely performed at mm in 
one time, and a party who has not performed the whole of •**^*2? 
his own obligation complains of a failure on the other side, 
questions arise which may be of great difficulty. How far 
is the plaintiff bound to show performance of the contract 
on his own part, or readiness and willingness to perform ? 
Or, to look at it from the other side, how far will a failure 
of one party to fulfil some part of his duties under the 
contract have the effect of discharging the other party 

{d) Ow. pw Bratt LJ. Lohre ▼. AUehiMim (1878) 8 Q. B. Div. 668, 562. 



248^ DITTIKS UNDER CONTRACT. 

from further performance or the ofiFer thereof on his part ? 
Such cases have been of increasing frequency and impor- 
tance in recent times, especially with regard to contracts 
for delivery and payment by instalments. To a certain 
extent the diflSculty is one of interpretation, for the 
modern decisions at any rate endeavour to find a solution 
in accordance with the true intent of the parties, although 
the difficulty is much increased by the general want of 
any specific evidence of that intent. Most contracts are 
originally made in good faith, and the parties do not 
necessarily, perhaps they do not usually, expect that all 
or any of the promises contained in the contract will be 
broken, or contemplate in any distinct way what will be 
the consequences of a breach. 
The From Lord Mansfield's time to the present attempts 

"thrrritifti ^^^^ heexx made to lay down rules for determining, in the 
look to absence of express provisions or other clear indication of 
of oontraot intent (a), the relation of the one party's obligation 
aaawhole.^^ the other as regards the order of performance of 
mutual promises and the extent to which either is 
bound to accept perfonnance of part, notwithstanding 
failure to perform other part. In the earlier decisions 
the Courts inclined to treat the several terms of a con- 
tract as separate and independent promises, paying little 
regard to the eflTect which default in some or one of 
them might produce in defeating the purpose of the con- 
tract as a whole. At this day the tendency is the other 
way. The Court looks to the purpose and efifect of the 
contract as a whole as a guide to the probable intention of 
the parties (/), and the presumption, if any there be, is 
that breach or default in any material term of a contract 
between men of business amounts to default in the whole. 
Common Certain terms which constantly recur in the authorities 
must be well understood and distinguished. 

[e) Cp. Leake, Elem. Digest, 651, (/) Bradford v. Williams (1872) 

and the chapter on "The Promise " L. R. 7 £z. 259, 41 L. J. £z. 259, 
generaUy. lee judgment of Martin B. 



DEPENDENT AND INDEPENDENT PROMISEa 249 

Promises or covenants are said to be independent when, 
although they be mutual, breach of any of them gives the 
other party a right of action without showing performance 
on his own part (g). 

They are said to be dependent where " the performance 
of one depends on the prior performance of another, and, 
therefore, till this prior condition is performed, the other 
party is not liable to an action on his covenant" 

Where one party cannot sue for breach of the other's 
promise without showing on his own part performance of 
some promise made by himself, or at least readiness and 
willingness to perform it, there, if the performance on his 
part was due before the other party's., it is said to be a 
condition precedent to his right of action {h\ 

If the fulfilment of mutual promises is due at the same 
time, and so that the ]>arty suing must be at least ready 
and willing to perform his part, it may be said that these 
are concurrent conditions. ** Neither is a condition pre- 
cedent^" but " the performance of each is conditional upon 
the other's being performed at the same time " (i). 

A contract which can be fulfilled only as a whole, so 
that failure in any part is failure in the whole, is said to 
be entire. A contract of which the performance can be 
separated, so that failure in one part affects the parties' 
rights as to that part only, is said to be divisible. 

It must always be understood that questions of this 
kind are possible only where a contract consists of mutual 
promises. For if performance itself is the consideration 
for a promise, there is no contract at all without perform- 
ance. But when there is a contract made by mutual 
promises, we may have to enquire whether, in addition to 
each promise or set of promises being the consideration 
for the other, the performance thereof on the one side is 

iff) Lord ]i£«nf6eld in King$ton (A) See Banhurt ▼. Bowert (1866) 

V. PreaUm (1778) dted in Jonea v. L. R. 1. G. P. 484, NorringUm v. 

Baddey, Dong. 699 ; Finoh, SeL Gft. Wright (1885) 116 U. S. 189. 

768 (where »t p. 769 " independent " (t) Langdell, Snmmary, § 132. 
is miifpHnted "dependent") 



250 DUTIES UNDER CONTRACT. 

not a condition, precedent or concurrent, of the right to 
claim performance on the other. There is no logical 
reason why it should not be so, or why express words 
should be required to manifest an intention that it should. 
Each party's promise is the consideration for the promise 
of the other, not for the pertbrmance which is due by 
reason of the promise. What are the terms and con- 
ditions of the duty created by the promise is another 
matter. In an executory contract of sale the promise to 
deliver is the consideration for the promise to pay ; but 
this need not be a promise to pay before or without 
delivery. However, the earlier line of decision was 
biassed by rules laid down in cases on promises by deed 
before the law of executory simple contracts was deve-- 
loped ; and for a long time it was supposed that promises 
which were the consideration for each other must, as a 
matter of law, be independent (k). Late in the eighteenth 
centiury this view was abandoned, and it was held that 
"whether covenants be or be not independent of each 
other must depend on the good sense of the case, and on 
the order in which the several things are to be done," so 
that '' if one party covenant to do one thing in considera- 
tion (I) of the other party's doing another, each must be 
ready to perform his part of the contract at the time he 
charges the other with non-performance " (m). 
Older of Generally " the order in which the several things are 
perfonn- ^ ]^ ^^^^ >' j^ ^j^^ ^^^^ moat readily applicable (n) ; accord- 
ingly it is said that '' if a day be appointed for payment 
of money, or part of it, or for doing any other act, and the 
day is to happen, or may happen, before the thing which 



[k) SeeLaiiffdel],§§140, 899, and promiies is that performance thaU 

notes to Pordage v. CoU, 1 Wma. be exchanged for performance, 

Saand. 649. neither party can demuid perform- 

(I) The word *' consideration " is ance on any other terms. 

here used in an elliptical manner, (m) Morton v. La$nh (1797) 7 T. 

and perhaps not quite aocurately. R. 125, per Lord Kenyon G.J. 

The promises are the consideration, and Giose J. 

and the only oonsiden^on, for each (n) Cp. Clark Hare on Contracts, 

other. But if the substance of the 689. 



EFFECT OF PARTIAL DEFAULT. S51 

is the consideration of the money (or other act) ib to be 
performed, an action may be brought for the money (or 
for not doing such other act) before performance "(o). But 
this is really no more than a rule of interpretation ; it 
''only professes to give the result of the intention of the 
parties " (p) ; the reason given for it is that ** it appears 
that the party relied upon his remedy, and did not intend 
to make the performance a condition precedent" There- 
fore the rule, like all rules of its kind, must yield to 
evidence of a different intention, and " where it is clear 
that the intention was to rely on the performance of the 
condition and not on the remedy, the performance is a 
condition precedent ** {p). 

Another test often applied is whether the term of the Totia or 
contract in which defftult has been made " goes to the KSiI 
whole of the consideration," or only to part; in other 
words, whether the importance of that term with r^;ard 
to the contract as a whole is or is not such that perform- 
ance of the residue would be, not a defective performance 
of that which was contracted for, but a total failure to 
perform it. Can it be said that the promisee gets what 
he bargained for, with some shortcoming for which 
damages will compensate him ? or is the point of failure 
so vital that his expectation is in substance defeated ? 
The necessity of dealing with this question as a whole was 
perhaps obscured to some extent by the requirements of 
formal pleading (g), but it has been strongly asserted in 
all the recent authorities. 

''Parties may think some matter, apparently of very 
little importance, essential; and if they sufficiently express 
an intention to make the literal fulfilment of such a thing 
a condition precedent, it will be one ; or they may think 
that the performance of some matter, apparently of essen- 

(o) Wnu. S»und. 551; Jervis C.J. overlooked : tee Wiikeny. BevnokU 

in Robertt y. BreU (1856) 18 C. B. (1881) 2 K & Ad. 882, FranUin ▼. 

878, 25 L. J. C. P. 280, 286. Miller (1886) 4 A. & E. 599, both 

(p) Jervis G.J. loc ciL long before the Oommon Law Pro- 

{q) It caimot be said that it was oednre Act 



252 DUTIES UKDEK CONTRACT. 

tial importance and prima facie a condition precedent; 
is not really vital, and may be compensated for in damages, 
and if they sufficiently expressed such an intention, it will 
not be a condition precedent. 

"And in the absence of such an express declaration, 
we think that we are to look at the whole contract, and 
applying the rule stated by Parke B. to be acknow- 
ledged (q), see whether the particular stipulation goes to 
the root of the matter, so that a failure to perform it 
would render the performance of the rest of the contract 
by the plaintiff a tiling different in substance from what 
the defendant has stipulated for ; or whether it merely 
partially affects it and may be compensated for in 
damages. Accordingly, as it is one or the other, we 
think it must be taken to be or not to be intended to 
be a condition precedent'' (r). 

The agreement sued on in the case where the principle 
was thus declared was an opera singer's engagement. The 
singer, who was plaintiff in the cause, was to sing in 
concerts as well as operas, and during a period of a year, 
beginning three months before the active duties of the 
engagement, he was not to sing out of the theatre in the 
United Kingdom (in the opera season, or within fifty 
miles of London) without the defendant's permission. 
He was also to be in London for rehearsals six days 
before the commencement of the engagement. 

This last term was not fulfilled, but it was held that, 
having regard to the whole scope of the agreement, it did 
not go to the root of the matter so as to justify the 
defendant in determining the engagement and refusing 
to employ the plaintiff. Matter of excuse was alleged 
by the plaintiff for his failure to arrive at the time 
stipulated, but nothing turned upon this. 



{q) In Oravet v. Legg (1854) 9 Ex. (1876) 1 Q. B. D. 183, 187, 188 ; 
at p. 716 ; 23 L. J. Ex. 228. Finch SeJ. Ca. 776. 

(r) Blackbarn J. BetUni v. Oye 



BREACH OF ENTIRE CONTRACT. 253 

If, however, there be any presumption either vray inAgree- 



the modem view of such cases, it is that, in mercantile ]^ p^. 
contracts at any rate, all express terms are material. ■'"'>?** 
" Merchants are not in the habit of placing upon their nther 
contracts stipulations to which they do not attach some ^^y^ 
value and importance" («). In a case not mercantile, 
where the contract before the Court was held on its 
terms to be divisible, the late Lord Justice Mellish said : — 

"I quite agree that as a general rule all agreements 
must be considered as entire. Generally speaking, the 
consideration for the performance of the whole and each 
part of an agreement by one party to it is the perform- 
ance of the whole of it by the other, and if the Court is 
not in a position to compel the plaintiff, who comes for 
specific performance, to perform the whole of it on his 
part, the Court will not compel the defendant to perform 
his part or any part of the agreement. As a general rule, 
therefore, an agreement is entire. I can also conceive 
that a Court of Equity might treat an agreement as 
entire even in cases where a Court of law would 
say that the performance of one part is not a condition 
precedent to the performance of the other part, because 
the Court might see that those rules as to conditions 
precedent, which to a certain extent are technical, might 
not meet the real justice of the case. But, on the other 
hand, I do not find it laid down anywhere that it is 
impossible for the parties so to fi*ame an agreement that 
there may be a specific performance of part " (t). 

The question lo what extent, if at all, a party is bound Enftire 
to accept performance of less than all that was promised ^lon a^ 
him is to be distinguished from the question, not to be «««><«» 
pursued here, of the duty incurred by one who does accept 
and in fact has some benefit from a partial performance. 
It may be the intention of a contract that nothing Ichs 
than complete performance on one side shall found any 

(«) Lord Cairns in Bawuy.Shand (t) WUkinton v. CSemenU (1872) 

(1877) 2 App. Cft. 465, 468. 8 Ch. 96, 110. 



254 DUTIBS UND1ER CONTRACT. 

daim at all to payment on the other. In such cases effect 
is given to the intention, and an imperfect performance, 
from whatever cause remaining imperfect, affords no ground 
of action. The express terms are not fulfilled, and a term 
or new contract to pay what the benefit received is 
reasonably worth cannot be introduced where the express 
terms exclude it. But such a contract, it seems, cannot 
be executory ; the complete performance itself is the only 
consideration for the promise to pay. It is like the offer 
of a reward by advertisement to the first person who 
procures certain information. A person who brings the 
information, but is not the first to briog it, evidently has 
no claim on .the advertiser, whatever amount of trouble 
and expense he may have incurred, and although the 
delay may be due to inevitable accident (u). 

8. Default in First or other InstaJmventB of 
Discontinuoue Performance. 

Qaeitioiis Peculiarly troublesome questions have arisen upon con- 
ooialesfor ^^^^g for the sale of goods to be delivered and paid for 
by iB0tol- by instalments. It is not yet settled whether failure to 
"•"** deliver the first or any subsequent instalments is or is 
not presumed, in the absence of any special indication 
of the parties' intention, to go to the whole of the con- 
sideration and entitle the buyer to refuse acceptance 
of any further deliveries. It seems to be admitted that 
failure on the buyer's part to pay according to the terms 
of the contract for the first or any particular instalment 
as delivered is not of itself a breach of the entire con- 
tract (x) ; but such default or refusal may by the reason 
assigned for it, or because of other particular circum- 
stances, manifest an intention to repudiate the contract 

(tt) See Cutter v. PoweU (1796) 6 pany v. Naylor (1884) 9 App. Ca. 

T. R. 820. and notes thereto in 2 Sm. 484, 489, 444, 68 L. J. Q. B. 497 ; 

L. C. 1, 11 «qq. Fr^eth v. Bvrr (1874) L. R. 9 C. P. 

(x) Meney Sted and Iron Com- 208, 48 L. J. C. P. 91. 



DEFAULT IK INSTALXENTS. S56 

as a whole, in which case the seller may justly refuse in 
his turn to go on with the contract (y). 

In Hoare v. Rennie (z), a case decided on pleadings, JETmnv ▼. 
the contract appeared to have been to sell about 667 tons 
of iron of a specified kind, to be shipped in June, July 
August, and September, in about equal portions each 
month. The action was by the sellers for non-acceptance, 
and for wrongful repudiation of the contract. The buyers 
pleaded, in effect, that a June shipment of 21 tons only 
was offered by the plaintiffs, who were never ready and 
willing to deliver a proper June shipment according to the 
contract, and that the defendants thereupon refused to 
receive the portion shipped and tendered, and gave notice 
that they would not receive the residue. The plaintifh 
demurred, and the pleas were upheld, as showing that the 
plaintiffs had not been ready and willing to perform the 
substance of their contract within the appointed time. 
In the judgments almost exclusive attention is paid to the 
question whether the defendants were bound to accept the 
first shipment ; in only one of them (a) is it stated in 
general terms that the defendants were at liberty to 
rescind the contract, but the decision evidently involves 
this (6). 

In Simpson v. Crippvn (c) the contract was to supply Simpmn ▼. 
about 6000 to 8000 tons of coal, to be delivered into the ^^^*P^ 
buyers' waggons, in " equal monthly quantities during the 
period of twelve mooths from the 1st of July next." 
During the first month of the contract the buyers, though 
pressed by the sellers to send waggons, took only 158 tons. 
The sellers thereupon gave notice to the buyers that they 

(y) Witkert v, lUyndtU {ISSl) 2 B. (b) Maeh of the luigiiage of the 

k Ad. 882 ; Freetk v. Burr (1874) jadgm«nti would cerUinly bave 

L. R 9 G. P. 208, 48 L. J. O. P. been more iqpproprUte if the notion 

91, and see per Lord BUckbam, had been for noo-aooeptaoce of the 

Meraey Sted and Iron Compare y. first shipment only. Of. L. Q. R 

I^afflir, Beraon S Co, (1884) 9 App. ii. 281, and per Bowen L.J. in 

Ga. at p. 442. Mentjf Sted and Iron Company t. 

(«) (1859) 5 H. & N. 19, 29 L. J. Nar^r (1884) 9 Q. B. Div. at p. 671, 

Ex. 78. and per Jeasel M.R. ib. at p. 658. 

(a) ChanneUK5H.&N.atp.29. (e) (1872) L. B. 8 Q. B. 14. 



256 DUTIES UNDER CONTRACT. 

cancelled the contract. It was held that the breach did 
not justify rescission, and great doubt was thrown upon 
Hoare v. Rennie. 

5ti!&t^* In Honck v. MuUer (d) the contract was to deliver 
2,000 tons of iron, "November, 1879, or equally over 
November, December, and January next, at 6d, per ton 
extra." The buyer failed to take any of the iron in 
November, but near the end of the month offered to " take 
delivery of all in December and January " (e). On 
December 1 the seller cancelled the contract, and was 
held by the majority of the Court of Appeal to have been 
entitled to do so, even on the supposition that in the cir- 
cumstances the buyer could and did elect to take delivery 
in three portions in the three months named. " I think," 
said Bramwell L. J. " where no part of a contract has been 
performed, and one party to it refuses to perform the 
entirety to be performed by him, the other party has a 
right to refuse any part to be performed by him. I think 
if a man sells 2,000 tons of iron, he ought not to be bound 
to deliver 1,333^ only, if it can be avoided " (/). 

j^reeih ▼. Meanwhile it had been held in Freeth v. Burr (g) that 
refusal by a buyer to pay for a much delayed delivery of 
the first instalment (under a mistaken claim to set off loss 
arising from any future default in delivering the residue) 
did not entitle the seller to rescind the contract. It was 
suggested that, " in cases of this sort, where the question 
is whether the one party is set free by the action of the 
other, the real matter for consideration is whether the acts 
or conduct of the one do or do not amount to an intimation 
of an intention to abandon and altogether to refuse per- 

(<i) (1881) 7 Q. B. Div. 92, 50 tbe ground that th oontnct had in 

L. J. Q. B. 529. tbftt case been partly peiformed. 

{e) See on p. 94 (not one-third in Brett L. J. diaaented, thinking Simp- 

December and one-third in January «cm ▼. Cr^pjrin right, and Iloare 

as stated in the head-note). y. Eenme wronff ; q>. his dissenting 

(/) 7 Q. B. Div. 98. Baggallay judgment in Meuter v. Sola (1879) 

L.J. to the same effect, approving 4 G. P. Div. 289, 48 L. J. C. P. 492. 
ffoare v. Renniet and disapproving (a) (1874) L. R. 9 G. P. 208, 43 

Simpton v. Crippin, which BramweU L. J. G. P. 91. 
L. J. endeavoured to distinguish on 



Burr. 



DEFAULT IN INSTALMENTa 257 

formance of the contract/' or, in other words, ** evince an 
intention no longer to be bound by the contract " (h). 

The later case of the Mersey Steel and Iron Cam'Memw 
pany (i), where there was only a postponement of pay- j^^ q,^ 
ment, in peculiar circumstances, under erroneous advice, P^^y t. 
confirms Freeth v. Burr, so far as it goes {k). As a ^^^^' 
positive test, the rule of Freeth v. Burr is doubtless 
correct ; that is, a party who, by declaration or conduct, 
" evinces an intention no longer to be bound by the con- 
tract," entitles the other to rescind, and this whether he 
has or has not, apart from this, committed a breach of the 
contract going to the whole of the consideration. But it 
seems doubtful whether the test will hold negatively. Can 
an intention to repudiate the contract be necessary as well 
as sufficient to constitute a total and irreparable breach ? 
Can there not be, without any such intent, a failure in a 
vital x>art of the performance which destroys the benefit 
of the contract as a whole ? Must it not depend on the 
nature of the contract and the order and apparent con- 
nection of its terms ? All that the authorities require of 
us is not to presume delay in payment, as distinguished 
from delivery, to be in itself a total breach. In other 
words, non-payment will not as a rule justify refusal to 
perform on the other side, unless there be something more 
in the circumstances by which it is shown to amount to 
repudiation; as in Withers v. Reynolds Q), where there was 
a deliberate and vrilful refusal to pay for the successive 
deliveries according to the terms of the contract. 

In 1885 the Supreme Court of the United States (m) Ncrring^ 
had to deal with a case very like Hoare v. Rennie. The %^]^ 
contract was for 5000 tons of iron rails to be shipped from 
Europe " at the rate of about 1000 tons per month, begin- 

(A) LordOoIeridgeC.J.atp. 218; (I;) See per Lord Selbome »t p. 

Keakng and Doimaii JJ. ooii« 488, and per Lord Blaokbnm at p. 

eorred in affirming this principle. 4 42* 8. 

(i) (1884) 9 App. Ca. 484, 58 L. (0 (1881) 2 B. & Ad. 882, Finoh 

J. Q. B. 497. The Home of Lorde SeL Oa. 749. 

■eeme to liaye thought critidnn of (m) NorringUm t. WrigfU (1885) 

Boon V. Rmnie not relevant 115 IT. S. 189. 

P. S 



258 DUTIES UNDER^CONTRACT. 

ning February, 1880, but whole contract to be shipped 
before August 1, 1880." The action was for non-accept- 
ance. A few passages from the judgment of the Court 
will best show the view taken by them. 

"In the contracts of merchants, time is of the essence {n). 
The time of shipment is the usual and convenient means 
of fixing the probable time of arrival, with a view of 
providing funds to pay for the goods, or of fulfilling con- 
tracts with third persons . . . 

'' The contract sued on is a single contract for the sale 
and purchase of 5000 tons of iron rails, shipped from a 
European port or ports for Philadelphia. The subsidiary 
provisions as to shipping in different months, and as to 
payment for each shipment upon its delivery, do not split 
up the contract into as many contracts as there shall be 
shipments or deliveries of so many distinct quantities of 
iron . . . 

" The seller is bound to deliver the quantity stipulated, 
and has no right either to compel the buyer to accept a 
less quantity, or to require him to select part out of a 
greater quantity ; and when the goods are to be shipped 
in certain proportions monthly, the seller's failure to 
ship the required quantity in the first month gives the 
buyer the same right to rescind the whole contract that 
he would have had if it had been agreed that all the 
goods should be delivered at once. 

" The plaintiff, instead of shipping about 1000 tons in 
February and about 1000 tons in March, as stipulated 
in the contract, shipped only 400 tons in February, and 
885 tons in March. His failure to fulfil the contract on 
his part in respect of these first two instalments justified 
the defendants in rescinding the whole contract, pro- 
vided they distinctly and seasonably asserted the right 
of rescission." 



(n) Thi4 had Already been laid Ootton L.J. at p. 249, 48 L. J. O. 
down in England : ReuUr v. Sola P. 492. 
(1879) 4 G. P. Div. 239, see per 



DSFAX7LT IN IKSTALMINTS. 259 

The Court went on to review the English cases, which 
did not in their opinion establish any rule inconsistent 
with the decision arrived at in the case «t bar. All will 
agree with them that " a diversity in the law as admini- 
stered on the two sides of the Atlantic, concerning the 
interpretation and effect of commercial contracts of this 
kind, is greatly to be deprecated " (o). And although the 
decision is not authoritative in this country, we may 
expect that an opinion of such weight, and so carefully 
and critically expressed, will receive full consideration 
whenever the point is again before the Court of Appeal 
or the House of Lords. It is a notable addition of force 
to the modem tendency to eschew sti£f and artificial 
canons of construction, and to hold parties who have 
made deliberate promises to the full and plain meaning 
of their terms. 

(o) 115 U. a ftft p. 206. 



u 2 



( 260 ) 



CHAPTER VII 
Unlawful Agreements. 

Subject- We have already seen that an agreement is not in any 

matter or ^^^ enforceable by law without satisfying sundry con- 
perform- •^ 1*^1 • I • 
•noea ditions: as, being made between capable parties, bemg 

^§vfly sufficiently certain, and the like. If it does satisfy these 
forbiddcD, conditions, it is in general a contract which the law com- 
TtninfM. mands the parties to perform. But there are many things 
*^°° ^h^^ which the law positively commands people not to do. The 
is for- reasons for issuing such commands, the weight of the 
I^^t sanctions by which they are enforced, and the degree of 
their apparent necessity or expediency, are exceedingly 
various, but for the present purpose unimportant. A 
murder, the obstruction of a highway, and the sale of a 
loaf otherwise than by weight, are all on the same footing 
in so far as they are all forbidden acts. If the subject- 
matter of an agreement be such that the performance of it 
would either consist in doing a forbidden act or be so 
connected therewith as to be in substance part of the same 
transaction, the law cannot command the parties to perform 
that agreement. It will not always command them not to 
perform it, for there are many cases where the performance 
of the agreement is not in itself an offence, though the 
complete execution of the object of the agreement is : but 
at all events it will give no sort of assistance to such a 
transaction. Agreements of this kind are void as being 
iUegal in the strict sense. 



CLASSIFICATION. 261 

Again, there are certain things which the law (a) does Not pon- 
not forbid in the sense of attaching penalties to them, but bidden baft 
which are violations of established rules of decency, morals, **««*^ 
or good manners, and of whose mischievous nature in this 
respect the law so far takes notice that it will not recognize 
them as the ground of any legal rights. " A thing may be 
unlawful in the sense that the law will not aid it, and yet 
that the law will not immediately punish it " (6). Agree- 
ments whose subject-matter ialls within this description 
are void as being immoral. 

Further, there are many transactions which cannot fairly Not pod- 
be brought within either of the foregoing classes, and yet hMdm,^" 
cannot conveniently be admitted as the subject-matter of^°JS***"** 
valid contracts, or can be so admitted only under unusual poUey, 
restrictions. It is doubtful whether these can be com- 
pletely reduced to any general description, and how far 
judicial discretion may go in novel cases. They seem in 
the main, however, to fall into the following categories : 

Matters governed by reasons outside the regular scope 
of ^lunicipal law, and touching the relations of the com- 
monwealth to foreign states : 

Matters touching the good government of the common- 
wealth and the administration of justice : 

Matters affecting particular legal duties of individuals 
whose performance is of public importance : 

Things lawful in themselves, but such that individual 
citizens could not without general inconvenience be allowed 
to set bounds to their freedom of action with regard to 
those things in the same manner or to the same extent as 
they may with regard to other things (c). 



(a) {.& the oonmum Uiw. Bat qu, 86 L. J. Ex. 124. 

wbethOT theoommoolftwooaldtiJLa (c) We have already eeen that 

notice of Anything as hnmoral which the specific operation of contract is 

wo^ not constitate an offence none other than to set boonds to 

against either common or eodesias- the party's freedom of action as 

ti<mllaw. regaids the sabjeot-matter of the 

{h) BrMnwell B. Cowan ▼. Mil- contract. 
Inmm (1867) L. R. 2 Kx. at p. 286, 



262 TTNLAWFUL AGBEEMENTS. 

Summaiy. Agreements falling within this third description are void 
as being agai/nd pv^lic policy. 

We have then in the main three sorts of agreements 
which are unlawful and void, according as the matter or 
purpose of them is — 

A. Contrary to positive law. (Illegal). 

B. Contrary to positive morality recognized as such by 
law. (Immoral). 

C. Contrary to the common weal as tending 

(a) To the prejudice of the State in external relations. 

(b) To the prejudice of the State in internal relations. 

(c) To improper or excessive interference with the 
lawful actions of individual citizens. (Against 
public policy). 

Gaation «■ The distinction here made is in the reasons which 
tenM. determine the law to hold the agreement void, not in the 
nature or operation of the law itself: the nullity of the 
agreement itself is in every case a matter of positive law. 
Bearing this in mind, it is a harmless abbreviation to 
speak of the agreement itself as contrary to positive law, 
to morality, or to public policy, as the case may be. 



Thear- The arrangement here given is believed to be on the 

ment only whole the most convenient, and to represent distinctions 
^[°^" which are in fact recognized in the decisions that constitute 
the law on the subject. But like all classifications it is 
only approximate : and where the field of judicial discretion 
is so wide as it is here (for nowhere is it wider) we must 
expect to find many cases which may nearly or quite as 
well be assigned to one place as to another. The authori- 
ties and dicta are too numerous to admit of any detailed 
review. But the general rules are (with some few excep- 
tions) suflSciently well settled, so far as the nature of the 
case admits of general rules existing. Any given decision, 
on the other hand, is likely to be rather suggestive than 



CONTBABT TO POSITIVB LAW. 268 

conclusive when applied to a new set of facts. Some 
positive rules for the construction of statutes have been 
worked out by a regular series of decisions. But with this 
exception we find that the case-law on most of the branches 
of the subject presents itself as a clustered group of 
analogies rather than a linear chain of authority. We 
have then to select firom these groups a certain number of 
the more striking and as it were central instances. The 
statement of the general rules which apply to all classes of 
unlawful agreements indifferently will be reserved, so far as 
practicable, until we have gone through the several classes 
in the order above given. 

A. Agreements contrary to positive law, ^^^hH^ f 

1. The simplest case is an agreement to commit a crime JJJJJJ^ 

or indictable offence : A. Con- 

"If one bind himself to kill a man, bum a house, ^|*jy**^ 

maintain a suit, or the like, it is void " (d). law. 

With one or two exceptions on which it is needless to ^- -^8"^ 
, , in6iit to 

dwell, obviously criminal agreements do not occur in our oommit 

own time and in civilized countries, and at all events no ^^j^^ 

attempt is made to enforce them. It is said that in the 

last century a bill was filed in Chancery by a highwayman 

against his fellow for a partnership account, but the story 

is more than doubtful (e). The question may arise, how- Sometimes 

ever, whether a particular thing agreed to be done is or is p^^! ^ 

not an offence, or whether a particular agreement is or is »»<» of 

not on the true construction of it an agreement to commit ^^uTbe 

an offence. In the singular case of Mayor of Norwich ^^^^ 

V. Norfolk Ry. Co. (/), the defendant company, being Jj^^^^' 

authorized to make a bridge over a navigable river at one ^' Norfolk 

Ry. Co. 

(d) Shepp. Toncbit. 370. ibis ? The case was cited with ap- 

(«) See Undley, 1. 93. Lord parent gravity by Jessel M.R. in 

Kenyon once said by way of illus- Syke$ y. Beadon (1879) 11 Ch. D. 

tration, it appears, that be would not 170. at p. 195, 48 L. J. Gh. 522. 

sit to take an account between two (/) (1855) 4 E. ft B. 897, 24 L. J. 

robbers on Hoanslow Heath. May Q. B. 105. 

not the legend have arisen from 



264 UNLAWFUL AQREEHENTS. 

particular place, had found difficulties in executing the 
statutory plan, and had begun to build the bridge at another 
place. The plaintiff corporation took steps to indict the 
company for a nuisance. The matter was compromised by 
an arrangement that the company should — ^not discontinue 
their works, but— complete them in a particular manner, 
intended to make sure that no serious obstruction to the 
navigation should ensue : and an agreement was made by 
deed, in which the company covenanted to pay the corpora- 
tion £1,000 if the works should not be completed within 
twelve months, whether an Act of Parliament should within 
that time be obtained to authorize them or not. The cor- 
poration sued on this covenant, and the company set up 
the defence that the works were a public nuisance, and 
therefore the covenant to complete them was illegal. The 
Court of Queen's Bench was divided on the construction 
and effect of the deed. Erie J. thought it need not mean 
that the defendants were to go on with the works if they 
did not obtain the Act. " Where a contract is capable of 
two constructions, the one making it valid and the other 
void, it is clear law the first ought to be adopted." Here 
it should be taken that the works contracted for were works 
to be rendered lawful by Act of Parliament. Coleridge J. 
to the same effect : he thought the real object was to 
secure by a penalty the speedy reduction of a nuisance to 
a nominal amount, which was quite lawful, the corporation 
not being bound to prosecute for a nominal nuisance. 
Lord Campbell C.J. and Wightman J. held the agree- 
ment bad, as being in fact an agreement to continue an 
existing unlawful state of things. The performance of it 
(without a new Act of Parliament) would have been an 
indictable offence, and the Court could not presume that 
an Act would have been obtained. Lord Campbell said, 
" In principle I do not see how the present case is to be 
distinguished from an action by A. against B. to recover 
£1000, B. having covenanted with A. that within twelve 
calendar months he would murder C, and that on failing 



AQBKEMINTS TO OOMHIT WBOKO. 265 

to do SO he would forfeit and pay to A. £1000 as liqui- 
dated damages, the declaration alleging that although B. 
did not murder C. within the twelve calendar months he 
had not paid A. the £1000 " (g). 

It seems impossible to draw any conclusion in point of 
law from such a division of opinion (h). But the case 
gives this practical warning, that whenever it is desired to 
contract for the doing of something which is not certainly 
lawful at the time, or the lawfulness of which depends on 
some event not within the control of the parties, the terms 
of the contract should make it clear that the thing is not 
to be done unless it becomes or is ascertained to be lawful. 

Moreover a contract may be illegal because an offence is WImb tiM 
contemplated as its ulterior result, or because it invites ^i^w |^ 
to the commission of crime. For example, an agreement *^ * " 
to pay money to A.'s executors if A. commits suicide would 
be void (i) ; and although there is nothing unlawful in 
printing, no right of action can arise for work done in 
printing a criminal libel Qc). But this depends on the 
more general considerations which we reserve for the 



2. Again an agreement will generally be illegal, though 2. A«ne- 
the matter of it may not be an indictable offence, w^d^S*'" 
though the formation of it may not amount to the offence wrong to 
of conspiracy, if it contemplates (Z) any civil injury to,oo,|f*" 
third persons. Thus an agreement to divide the profits of ''^^^ 
a fraudulent scheme, or to carry out some object in itself 



(^) 4 E. ft B. 441. B. ft M. 887. 

(4) Not only was the Goart (0 If A oontnotB with B. to do 

equally diTkled, but ft penml of the Mmething whkh In faet, bat not 

jndgme&ti «t large will ahow that to B'a knowledge^ would involve a 

no two membera of it really looked breach of contraot or tmat, A. 

at the caae in the same way. The oannot lawfully perform his pro- 

lepoiten (4 E. ft B. 897) add not miae, bat jret may well be liable in 

without reaaon to the head-note: damages for the breach. MUlward 

m <niaere inde, v. LUUewood (1850) 5 Ex. 775, 20 

(») Per Bramwdl L. J. 5 C. P. L. J. Ex. 2. See farther at end of 

D. at p. 807. thia chapter. 

(k) PopUU V. atoekdaU (1825) 1 



266 UNLAWFUL AORKEMENTfiL 

not unlawful by means of an apparent trespass, breach of 
contract, or breach of trust is unlawful and void (m). A. 
applies to his friend B. to advance him the price of certain 
goods which he wants to buy of C. B. treats with C. for 
the sale, and pays a sum agreed upon between them as the 
price. It is secretly agreed between A. and C. that A. 
shall pay a further sum : this last agreement is void as a 
fraud upon B., whose intention was to relieve A. from 
paying any part of the price (n). Again, A. and B. are 
interested in common with other persons in a transaction 
the nature of which requires good faith on all hands, and 
a secret agreement is made between A. and B. to the pre- 
Agree- judice of those others' interest Such are in fact the cases 
j^J^^ of agreements "in fiuud of creditors"; that is, where 
creditoMia there is an arrangement between a debtor and the general 
body of the creditors, but in order to procure the consent 
of some particular creditor, or for some other reason, the 
debtor or any person on his behalf, or with his know- 
ledge (o), secretly promises that creditor some advantage 
over the rest. All such secret agreements are void: 
securities given in pursuance of them may be set aside, 
and money paid under them ordered to be repaid (p). 

(m) An agreement to commit a iUenJ: Warwiekv}jRickardt(m{lBi2) 

dyil injury ia a conapiracT in many, 10 M. ft W. 284, and agreements to 

but it teems impossilue to say indemnify tniBtees against formal 

in what, cases. See the breaches of trust are in practice 



title of Conspiracy in Roscoe's constantly assumed to be valid in 

Digest, (ed. Horace Smith, 1884). eqnity as weU as law. 

An agreement to commit a trespass {n) JarJcton y. Ihiehaire (1790) 

likely to lead to a breach of the 8 T. R. 551. 

peace, Meg, v. JRowlandt (1851) 17 (o) Equality among the creditors 

Q. B. 671, 686, 21 L. J. M. G. 81— va of the essence of the transaction, 

or to commit a civil wrong by frand Any agreement to give a preference, 

and false pretences, JReg, v. War- made with the debtors privity, 

burUm (1870) L. B. 1 C. C. R. 274, strikes at the root of the deed. It 

40 L. J. M. C. 22, CD. JUg. y. As- va immaterial whether the arrange- 

pinaU (1876) 2 Q. B. I>iv. at p. 59, ment is under a statute or not, and 

46 L. J. M. C. 145 — IB a conspiracy. whether the preferential payment 

An agreement to commit a simple is to come out of the debtor's funds 

breach of contract is not a con- or not £x parte MUner (1885) 15 

spiracy. Before the C. L. P. Act Q. B. Div. 605. 

a court of common law could not (p) MeEewan v. Sander$(m (187S) 

take notice of an agreement being 15 £q. at p. 284, per Malins Y.-C. 

in breach of trust so as to hold it 42 L. J. Ch. 296. 



AGBEEMSHTB IK TBAUD OF CREDlTOBa 267 



Moreover, the other creditors who know nothing of the And 
finaud and enter into the arrangement on the assumption noiboiiiid 
" that they are contracting on terms of equality as to each J^^JJ. 
and all " are under such circumstances not bound by any tioii. 
release they give (q). And it will not do to say that the 
underhand bargain was in fact for the benefit of the 
creditors generally, as where the preferred creditor becomes 
surety for the payment of the composition, and the real 
consideration for this is the debtor's promise to pay his 
own debt in full; for the creditors ought to have the means 
of exercising their own judgment (r). But where one 
creditor is induced to become surety for an instalment of 
the composition by an agreement of the principal debtor 
to indemnify him, and a pledge of part of the assets for 
that purpose, this is valid : for a compounding debtor is 
master of the assets and may apply them as he will (s). 

The principle of these rules was thus explained by 
Erie J. in MaUalieu v. Hodgson {t) : — 

" Eftch creditor oouents to Iom p»rt of hia debt in oonildeniiioii that 
the othen do the nme^ and each creditor may be eootideTed to sti|nilate 
with the others for a release from them to the debtor in conrideration of 
the release by him. Where any creditor, in fraud of the agreement to 
accept tlie composition, stipnlates for a preference to himself, his stipn- 
latlon is altogether void — not only can he take no advantage from it, 
bat he is alio to lose the benefit of the composition (tt). The requirement 
of good faith among the creditors and the preventing of gain by agree- 
ments for preference have been nniformly maintained by a series of oases 
from LeieesUr ▼. Ro§e {x) to ffowden y. ffaigh (u) and Bradshaw y. Brad- 



From the last cited case (y) it seems probable, though 
it is not decided, that when a creditor is induced to join 
in a composition by having an additional payment from 



(o) Daugliah y. Tenntnt (1866) parU Oliver (1849-51) 4 De O. ft 

L. K. 2 Q. B. 49, 54, 36 L. J. Q. B. Sm. 854. 
10. (tt) (1840) 11 A. ft E. 1038. 

(r) Wood y. Bofrktri 1 £q. 139. {x) (1808) 4 East, 872 : showing 

(«) Ex parte Burrell (1876) 1 Gb. that the advanUge given to the 

Div. 537, 45 L. J. Bk. 68. preferred creditor need not be in 

(t) (1851) 16 Q. B. 689, 20 L. J. money. 
Q. K 889, 847. Bee further Bx (y) (1841) 9 M. ft W. 29. 



268 UNLAWFUL AGREEMENTS. 

a stranger without the knowledge of either the other 
creditors or the debtor, the debtor on discovering this may 
refuse to pay him more than with such extra payment 
will make up his proper share under the composition, or 
may even recover back the excess if he has paid it involun- 
tarily, e.g. to bona fide holders of bills given to the creditor 
under the composition* 

A debtor who has given a fraudulent preference can 
claim no benefit under the composition even as against 
the creditor to whom the preference has been given (z). 

A secret agreement by a creditor to withdraw his oppo- 
sition to a bankrupt's discharge or to a composition is 
equally void, and it does not matter whether it is made 
with the debtor himself or with a stranger (a), nor whether 
the consideration oflfered to the creditor for such with- 
drawal is to come out of the debtor's assets or not (i) ; and 
this even if it is part of the agreement that the creditor 
shall not prove against the estate at all (c). In like 
manner if a debtor executes an assignment of his estate 
and effects for the benefit of all his creditors upon a secret 
agreement vriith the trustees that part of the assets is to 
be returned to him, this agreement is void (d). 

We have here at an early stage of the subject a good 
instance of the necessarily approximate character of our 
classification* We have placed these agreements in fi^ud 
of creditors here as being in effect agreements to commit 
civil injuries. But a composition with creditors is in most 
cases something more than an ordinary civil contract ; it 
is in truth a quasi-judicial proceeding, and as such is to 
a certain extent assisted by the law (e). Public policy, 
therefore, as well as private right, requires that such a 

(s) HiggiM ▼. PiU (1849) 4 Ex. P. D. 265, 45 L. J. C. P. 498. 
812, 18 L. J. Ex. 488. (t) Bankrnptpy Act, 1888, a. 18, 

(a) Biffgint v. Pttt, last note. 19. Sinoe thiB Act there ia a neta- 

{b) ffall y. Dyion (1852) 17 Q. B. ble increaae of private oompoaitiona 

785, 21 L. J. Q. B. 224. independent of the Act» wluofa may 

(c) MeKtwan v. Saiidermm (1875) lead to the revival of variooa oom- 

20 Eq. 65, 42 L. J. Oh. 296. mon law qneationa. 

(({) BUuMoek v. DobU (1876) 1 C. 



DEALINGS TO PRBJUDICK OF 8X7RBTT. 269 

proceeding should be conducted with good faith and that 
no transaction which interferes with equal justice being 
done therein should be allowed to stand. The doctrine of Fnrad on 
fraud on third parties, as it may be called, Is however not ^^J^ 
to be extended to cases of mere suspicion or conjecture. A be pte- 
possibility that the performance of a contract may injure fi^^n mtn 
third persons is no ground for presuming that such was gj"*"*^" 
the intention, and on the strength of that presumed inten- 
tion holding it invalid between the parties themselves. 

" Wbflm an tnitnimeiit between two pertiee bee been entered Into for 
ft pinpoee whieh ni*y be ooneidered tendnlent ae egeinet Mine third 
pereoo, it may yet be binding, aooording to the tme o u Be touet ion of iti 
langnage, ae between themielyee.** 

Nor can a supposed fraudulent intention as to third 
persons (inferred from the general character and circum- 
stances of a transaction) be allowed to determine what the 
true construction is (/). 

8. There are certain cases analogous enough to the fore- 8. Oeitain 
going to call for mention here, though not for any full, 



treatment. Their general t3rpe is this : There is a contract ^*^!!V* 
giving rise to a continuing relation to which certain duties ''fmod on 
are incident by law ; and a special sanction is provided for ^jjj^ 
those duties by holding that transactions inconsistent with 
them avoid the original contract, or are themselves voidable 
at the option of the party whose rights are infringed. We 
have results of this kind from 

(a) Dealings between a principal debtor and creditor to 
the prejudice of a surety : 

(b) Dealings by an agent in the business of the agency 
on his own account : 

(c) Voluntary settlements before marriage " in fraud of 
marital rights." 

In the first case the improper transaction is as a rule 
valid in itself, but avoids the contract of suretyship. In 

if) SkawT. J^fery (1860) 18 Moo. P. C. 482, 465. 



270 UNLAWFUL AGBEEMENTS. 

the second it is voidable as between the principal and the 
agent. In the third it is (or was) voidable at the sidt of 
the husband 

DediiigB (a) '^ Any variance made without the surety's consent in 
^JJJ^ the terms of the contract between the principal debtor and 
en^ux the creditor dischai^es the surety as to transactions sub- 
to preinF. sequent to the variance " (gr), unless it is evident to the 
dioe of Court " that the alteration is unsubstantial, or that it can- 
not be otherwise than beneficial to the surety " (h). The 
surety is not the less discharged "even though the original 
agreement may notwithstanding such variance be substan- 
tially performed " (i). An important application of this 
rule is that " where there is a bond of suretyship for an 
officer, and by the act of the parties or by Act of Parlia- 
ment the nature of the office is so changed that the duties 
are materially altered, so as to affect the peril of the sure- 
ties, the bond is avoided " (&). But when the guaranty is 
for the performance of several cmd distinct duties, and 
there is a change in one of them, or if an addition is made 
to the duties of the principal debtor by a distinct contract, 
the surety remains liable as to those which are unaltered (I). 
The following rules rest on the same ground : 

" The surety is discharged by any contract between the 
creditor and the principal debtor by which the principal 
debtor is released, or by any act or omission of the creditor 
the legal consequence of which is the discharge of the 
principal debtor" (m). 

ig) Indian Gontaraot Act, s. 133. 41 ; Majfor of Cambridge ▼. Det^nit 

(A) Holme t. BrumkiU (1877) 8 (1858) B. B. & B. 660. 27 L. J. Q. 

Q. R Diy. 496 (din. Brett L.J.), B. 474. 

overraling on this point Sandenon (l) Harruon y. Seymnwr (1866) L. 

y. Atton (1878) L. R. 8 Ex. 78 | 42 B. 1 0. P. 518, 85 L J. 0. P. 264 ; 

L. J. Ex. 64. SlaReU y. Fldck^ (1866) L. R 1 C. 

(») Per Lord Gottenhun, Bonair P. 217, 224, in Ex. Oh. 2 0. P. 46», 

y. Macdmudd (1850) 8 H. L. 0. 226, 86 L. J. C. P. 206. 
288. (m) L G. A. 1. 184. Keardeg y. 

{k) Oivfcdd y. Mayor of Berwick- OoU (1846) 16 M. & W. 128, 16 L. 

im-Tweed (1856) 5 H. L. C. 856, 25 J. Ex. 115 ; Onigoe y. Jonee (1878) 

L. J.Q.B.888; Pfhuey.GibbCLSiB) L. B. 8 Ex. 81, 42 L. J. Ex. 68. 
6 K Ifc R 902^ Oil, 26 L. J. Q. B. 



DEA.LINaS BT AQEMT AQAIHST SURBTT. 271 

''A contract between the creditor and the principal 
debtor, by which the creditor makes a composition with, or 
promises to give time to or not to sue the principal debtor, 
discharges the surety, unless the surety assents to such 
contract" (n), or unless in such contract the creditor 
reserves his rights against the surety (o), in which case the 
surety's right to be indemnified by the principal debtor 
continues (p). One reported case constitutes an apparent 
exception to the general rule, but is really none, as there 
the nominal giving of time had in substance the effect of 
accelerating the creditor s remedy (q). 

" If the creditor does any act which is inconsistent with 
the rights of the surety, or omits to do any act which his 
duty to the surety requires him to do, and the eventual 
remedy of the surety himself against the principal debtor 
is thereby impaired, the surety is dischaiged " (r). 

"A surety is entitled to the benefit of every security 
which the creditor has against the principal debtor at the 
time when the contract of suretyship is entered into, 
whether the surety knows of the existence of such security 
or not ; and if the creditor loses or without the consent of 
the surety parts with such security, the surety is discharged 
to the extent of the value of the security " («). Not only 

(n) I. C. A. 1. 135. Oakdeg ▼. Our. in Swire v. RednuM (1876) 1 

PoikeOer (1836) 4 GL ft F. 207 ; Q. R D. 541-2. 

Orienial Finaneial Oorporathn y, (9)iSru{flMy.a)<0i(1827)2Siiii.l2. 

Overmd, Ourney A Oo, (1874) L. (r) L 0. A. a. 139 (== Stoiy, Bq. 

R 7 H. L. 848; Cfreen ▼. Wynn Jar. 1 325 neftriv); WattimY.AIkoek 

(1 869) 4 Oh. 204, 88 L. J. Oh. 220 | (1858) 4 D. 11 G. 242, tupra, p. 174 ; 

Baiemm v. Chdhig (1871) L. B. 7 a Bwoeu ▼. Mve (1872) 13 Sq. 450, 

P. 9,41 L. J. 0. P. 58. It moat be il i. J. Ch. SU; PkilUpi v. FoxM 

ahiiidiiigooiitnetwiUitbapriaolpia (1872) L. B. 7 Q. B. 666, 41 L. J. 

debtor : €Uark$ v. BiHeg (1889) 41 Q B. 298; Sandencm ▼. Atim (1873) 

Oh. D. 422, 434. L. B. 8 Bz. 78, 42 L. J. Be 64. 

(o) Whether the enrety know« of («) I. 0. A. ■. 141. Mt^ktm w, 

H ornot : WM t. HtwiU (1857) 8 Oriekett (1818) 2 Swawt 185, 191 ; 

K.ft J. 438, 442; and tee per Lord Wv^T y. Jay (1872) L. B. 7 Q. K 

Hatberii^, 7 Oh. 150. 756, 762, 41 L. J. Q. B 822 ; Beaner- 

(f) OUm ▼. OUm (1853) 4 D. B£. vaim y. LnrU (1872) L. B. 7 0. P. 
G. 176. 185. The veMonnbleneei of 372, 41 L. J. 0. P. 161 ; leoarities 
the role ia open to qneitlon (it has now rabeiit notwithstanding pay- 
been carried " to the verge of sense," ment of the debt for the benefit of 
Brett L. J. 8 Q. B D. at p. 509), a sorety who has paid, ICera Law 
bat It w firmly estaUished. Seeiier Amendment Aot, 1856, 19 k 20 



272 UNLAWFUL AGREEMENTS. 

an absolute parting with the security, but any dealing with 
it, such that the surety cannot have the benefit of it in the 
same condition in which it existed in the creditor's hands, 
will have this eflFect (t). For the same reason, if there be 
joint sureties, and the debtor releases one, it is a release to 
all ; otherwise if the sureties are several (u). 

jy^tltagB (b) '* If an agent deals on his own account in the business 
£ ^"^ of the agency without first obtaining the consent of his 
«[«'*«' <>^ principal and acquainting him with all material circum- 
on hli own stances which have come to his own knowledge on the 
•*******^** subject, the principal may repudiate the transaction " (v). 
''If an agent without the knowledge of his principal 
deals in the business of the agency on his own account in- 
stead of on account of his principal, the principal is entitled 
to claim from the agent any benefit which may have resulted 
to him fit)m the transaction " (x). 

These rules are well known and established and have 
been over and over again asserted in the most general 
terms. The commonest case is that of an agent for salo 
himself becoming the purchaser, or conversely : " He who 
undertakes to act for another in any matter shall not in the 
same matter act for himself Therefore a trustee for sale 
shall not gain any advantage by being himself the person 
to buy." " An agent to sell shall not convert himself into 
a purchaser unless he can make it perfectly clear that he 
famished his employer with all the knowledge which he 

Viet c. 97, 1. 5. A right to distrain (u) Ward y. Bank of New Zealand 
tor rent is not ft security or remedy (1888) (J. C.) 8 App. Ca. 765, 52 
within this enaetment, Rvudl v. L. J. P. G. 65. 
Skootbred (1885) 29 Gh. DiT. 254. (v) L C. A. ■. 215. The Indian 
Daring the correnqr of a bill of Act goes on to add, ''if the case 
exchange an indorser is not a iorety show either that any material fact 
or the acceptor. Bat after notice has been dishonestly concealed from 
of dishonoar he is entitled in like him by the agent, or that the deal- 
manner as if he were a surety to ings of the agent have been disad* 
the benefit of all payments made vantageoosto him," bat these qaali- 
and secarities given by the acceptor fications are not recognized in 
to the holder : Ihincan^ Pox Je Co. English law. See Story on Agency 
v. Nwth A SwA WalaBank(l%%(i) § 210; ^iNMte Laoey (1802) 6 Yes. 
6 App. Ga. 1, revg. s. c. in G. A. 11 625. 
Oh. Div. 88, 50 L. J. Oh. 855. («) I. 0. A. s. 216. 
{t)PUdgeY.Buu{n^)3fAauL 668. 



DJfiALIKOS BT AGENT AGAINST DUTY. 278 

himself possessed '' {y). " It is an axiom of the law of prin- 
cipal and agent that a broker employed to sell cannot him- 
self become the buyer, nor can a broker employed to buy 
become himself the seller, without distinct notice to the 
principal, so that the latter may object if he think proper "(a;). 
If the local usage of a particular trade or market counter- 
venes this axiom by " converting a broker employed to buy 
into a principal selling for himself," it cannot be treated as 
a custom so as to bind a principal dealing in that trade or 
market through a broker, but himself ignorant of the 
usage (a). 

The rule is not arbitrary or technical, but rests on the 
principle that an agent cannot be allowed to put himself 
in a position in which his interest and his duty are in 
conflict, and the Court will not consider "whether the 
principal did or did not suffer any injury in fact by reason 
of the dealing of the agent ; for the safety of mankind 
requires that no agent shall be able to put his principal to 
the danger of such an inquiry as that." It is a corollary 
firom the main rule that so long as a contract for sale made 
by an agent remains executory he cannot re-purchase the 
property firom his own purchaser except for the benefit of 
his principal (6). A like rule applies to the case of an 
executor purchasing any part of the assets for himself 
But it is put in this somewhat more stringent form, that 
the burden of proof is on the executor to show that the 

(y) Which4!oU v. Lawrence (1798) toms of this kind De Buucke ▼. AU 

8 Yee. 740| I^ywUier t. Lowth^ (1877) 8 Gb. Div. 286, 47 L. J. Ch. 

(1806) 18 Yep. 95, 108 ; and w^ 886. For tbe apecial upplication of 

ChmrUrY, Trevdyan (1844) 11 Ci. & the rule to tbe dnty of direoton of 

F. 714, 782. compuiieB, Ifay'i ca. (1875) 10 Ch. 

(a) Per WiUes J. hi Mofktt ▼. 598, 44 L. J. Ch. 721 ; Albion Sted 

JMnnmm (1870) L. B. 5 C. P. at p. Wire Co, v. Martin (1875) 1 Ch. D. 

655, 89 L. J. C. P. 290. Cp. Ovett at p. 585, per Jewel M.R., 45 L. J. 

▼. Smythe (1870) 5 Cb. 551, per Ch. 173; as to promoten, New 

Glifard L.J. 89 L. J. Cb. 586 : Sombrero Pkoephate Co. ▼. Erlanger 

Skamum y. Brandt (1^71) L. R. 6 (1877) 5 Ch. IMv. 78, 46 L. J. Cb. 

Q. B. 720, 40 L. J. Q. B. 812. 425. 

(a) Sobinaon y. MoUeU (1874-5) L. (6) Parker y. McKenna (1874) 10 

R. 7 H. L. 802, 888, 44 L. J. C. P. Cb. 96, 118, 124, 125, 44 L. J. Ch. 

862; and further aa to aUeged oua- 425. 

P. T 



274 UNLAWFUL AGREEMENTS. 

transaction is a fair ona This brings it veiy near to the 
doctrine of Undue Influence, of which in a later chapter. 
It makes no difference that the legatee from whom the 
purchase was made was also co-executor (c). Another 
branch of the same principle is to be found in the rules 
against trustees and limited owners renewing leases or 
purchasing reversions for themselves (d). 

Again : '^ It may be laid down as a general principle 
that in all cases where a person is either actually or con- 
structively an agent for other persons, all profits and ad- 
vantages made by him in the business beyond his ordinary 
compensation are to be for the benefit of his employers " (<?). 
"If a person makes any profit by being employed con- 
trary to his trust, the employer has a right to call back 
that profit" (/). And it is not enough for an agent who is 
himself interested in the matter of the agency to tell his 
principal that he has some interest : he must give full 
information of all material facts (g). 

Even this is not all : an agent, or at any rate a pro- 
fessional adviser, cannot keep any benefit which may 
happen to result to him from his own ignorance or negli- 
gence in executing his duty. In such a case he is con- 
sidered a trustee for the persons who would be entitled to 
the benefit if he had done his duty properly {h). 
Natape of In this class of cases the rule seems to be that the 
appUcable. transaction improperly entered into by the agent is void- 
able so far as the nature of the case admits. Where it 
cannot be avoided as against third parties, the principal 



(c) Orayy. Warner (1878) 16 Eq. ton (1874) L. R 9 Q. B. 480, 485, 

577, 42 L. J. Ch. 556. 48 L. J. Q. B. 215, where aeyenl 

{d) Notes to Keech t. Bamdford caeet are ooUected. 

(1726)inl Wh.ftT.L.C. Thelatt (/) Ma*»ty y. Z^avies (1794) 2 

case on the subject is Trumptr y. Yes. 817, 820. 

Trumpet (1878) 14 Eq. 295, 8 Gh. {g) See authorities collected, and 

870, 42 L. J. Ch. 641. On the obseryations of the Court thereon, 

general rule see also Martk y. Dwmm y. EngUih (1874) 18 Eq. 

Wkiimore (1874) (Sup. Court, U. S.) 524, 584. 

21 Wall. 178. (A) BvlkUy y. Wilford (1884) 2 

(e) Story on Agency, §211, adopted CI. ft F. 102. Cp. Corley y. Lord 

by the Court in Moritcn y. Thimp^ Stafford (1857) 1 I>e G. ft J. 288. 



FRAUD OM MARITAL RIGHT. 276 

can recover the profit fiom the agent But where there 
are a principal, an agent, and a third party contracting 
with the principal and cognizant of the agent's employ- 
ment, and there are dealings between the third party and 
the agent which give the agent an interest against his 
duty, there the principal on discovering this has the option 
of rescinding the contract altogether. Thus when company 
A. contracted to make a telegraph cable for company B., 
and a term of the contract was that the work should be 
approved by C, the engineer of company B., and C. took 
an \mdisclosed sub-contract firom company A. for doing 
the same work ; and further it appeared that this arrange- 
ment was contemplated when the contract was entered 
into ; it was held that company B. might rescind the con- 
tract (i). 

7. The rule as to settlements " in fraud of marital Sefetia- 
right " was thus given by Lord Langdale {k) : — f^^^ ^ 

*' If a woman entitled to property enters Into a treaty for marriage and ^^^ 
dmiog the treaty repreaents to her intended hnaband that ehe is so entitled 
that npon her maniage he will become entitled ^ufv mariU, and if during 
the same treaij she dandertinely oonveys away the pruperiy in snob 
manner as to defeat his marital right and secure to herself the separate ose 
of it, and the concealment conttnnes till the marriage takes place, there 
can be no donbt but that a fraud is thus practised on the husband and he 
is entitled to reUef"(0. 

Moreover — ** If both the property and the mode of its conTeyanoe, 
pending the marriage treaty, were concealed from the intended husband, 
as in the ease of Ooddard v. Snow (m), there is still a fraud practised on 
the husband. The non-acquisition of property of which he had no notice 
is no disi^pointment, but stiU his legal right to property aotuaUy existing 
is defeated " (n). 

The Married Women's Property Act, 1882, has made 

(t) Panama A S, Pacific Telegraph tupra, Cp. Jknonav. Jennings (1863) 

Co, y. India Jivbber, dtc. 0^. (1875) 82 Beav. 290, 294. See further 

10 Ch. 515, 45 L. J. Cfa. 121. 8L George ▼. Wake (1881-8) 1 My. 

{k) Cp. on this subject Dav. Cout. & K. 610, 625 ; WrigUy ▼. Swain- 

Yol. 8, pt.2. 707. eon (1849) 3 De 6. ft Sm. 458 ; 

(0 England v. Dotone (1840) 2 Prideaux v. LonedaU (1868) 4 GifT. 

Beav. 522, 528. 159, on appeal, 1 D. J. S. 433, 438, 

(Jii) (1826) 1 Ross. 485. See the no dedsion on this part of the case ; 

earlier authorities there discussed. Taglor ▼. Pugh (1842) 1 Hare 608. 

(n) 2 Bear. 629;BnglandY. Downt, 

T 2 



276 UNLAWFUL AGREEMENTS. 

the subject obsolete in this country as regards all marriages 
contracted after its commencement, and there has been no 
reported decision for many years. It is now thought ad- 
visable to omit the details given in former editions. 

4. Mat- 4. Marriages within the prohibited degrees of kindred 
within £^d affinity are another class of transactions contrary to 
prohibited positive law. For although no direct temporal penalties 
are attached to them, they have been made the subject 
of express and definite statutory prohibition (o). They 
formerly could not be treated as void unless declared so by 
an ecclesiastical Court in the lifetime of the parties : but 
by a modem statute (5 & 6 Wm. 4, c 54) they are now 
absolutely void for all purposes. An executory contract 
to marry within the prohibited degrees is of course abso- 
lutely void also (p), and would indeed have been so before 
the statute. These rules are not local, like other rules of 
municipal law prescribing the solemnities of the marriage 
ceremony, requiring the consent of particular persons, or 
the like : the legislature has referred the prohibition to 
public grounds of a general nature (speaking of these 
marriages as "contrary to God's law") (g), and it concerns 

(o) 82 H. 8, c. 88, «nd earlier haben eine streng positive Natnr.*' 

repealed Rtatates of the same reign. Savigny'a authority ia perhaps 

It is the better irapported opinion enfiScient to defend the doctrine of 

that 5 & 6 Wm. 4, a 54, does not Brook y. Brook against the caustic 

contain any new substantive prohi- criticism passed npon it by the 

bition. See Brook ▼. Brook {\Sei) Chief Jostice of Massachusetts in 

9 H. L. C. 198. CommonweaUh ▼. Lane (1878) 118 

(/>) It seems from MiUward v. Mass. at p. 478 :— 

LitUewood (1850) 5 Ex. 775, 20 L. '*The judgment proceeds npon 

J. Ex. 2, that in the barely possible the ground that 'an Act of Parlia- 

case of the relationship being known ment is not merely an ordinance of 

to only one of the parties, by whom man but a conclusive declaration of 

it is fraudulently concealed from the law of God ; and the result is 

the otlier, the innocent party may that the law of 6od, as declared by 

sue as for a breach of contract, Act of Parliament, and expounded 

though the performance of the agree- by the House of Lords, varies 

ment would be unlawful. according to the time, place, length 

(q) The use of these particular of life of parties, pecuniary interests 

words seems of little importance, of third persons, petitions to human 

The true reason is shortly put by tribunals, and technical rules of 

Savigny, Syst. 8. 826 : *' die hier statutory constmction and jodicial 

dnsdilagenden Gesetze, die auf procedure." 
sittUchen Rdcksichten beruhen. 



PROHIBITORY STATUTES. 277 

not the fonn but the substance of the contract ; it there- 
fore applies to the marriages of domiciled British subjects, 
in whatever part of the world the ceremony be performed, 
and whether the particular marriage ia or ia not of a kind 
allowed by the local law (r). 

Where a marriage has been contracted in England be- 
tween foreigners domiciled abroad, English Courts will 
recognize disabilities, though not being iuria gentiuvi, 
imposed by the law of the domicil of both parties («) : but 
a marriage celebrated in England is not held invalid by 
English Courts on the ground that one of the parties ia 
subject by the law of his or her domicil to a prohibition 
not recognized by English law, at all events where the 
other party's domicil is English (t). 

The " Act for the better regulating the future marriages Koy«l 
of the Royal Family" (12 Geo. 3, c. 11) imposes on the Act. "* 
persons within its operation disabilities (absolute before the 
age of 25, qualified after that age) to marry without the 
consent of the Sovereign : and this disability ia personal, 
not local, so that a marriage without consent is equally in- 
valid wherever celebrated (u). 

6. Moreover a great variety of dealings of which con- 5. Agree- 
tracts form part, or to which they are incident in themegalby 
ordinary course of affairs, are for extremely various reasons •*»*«^ 
forbidden or restricted by statute. During the last century, 
in particular, Acts of Parliament regulating the conduct of 
sundry trades and occupations were strangely multiplied 
Most of these are now repealed, but the decisions upon 

(r) Brook ▼. Brook (1861) 9 H. L. (() Sotiomayor t. 2>e Barroi, 6 P. 

C. 198. See per Lord CMopbdl at D. 94, dinenting from some diota 

pi 220. Ha iilio doubted whether a in the preTioos jtidgment of the 

marriage allowed by the law of the C. A., which bowtiTer went on a 

plaoe, bnt contracted hj Bngliih rappoaed different state of the facta, 

enbjecte who had oome there on par- Qee further, on this perplexed topic, 

now to evade the Snglifth law, would Mr. H. W. Elphinstone^B 'Notei on 

be recognized even bj the local the English Law of Marriage' in L. 

oomta, C^SoUoma^orv.DeBarroo, Q. B. ▼. 44. 

ii^ra. (u) The Suioex Peerage case (1844) 

(«) SoUoma^ r. Ik Bafro9 (1877) 11 OL & F. 85. 
8 P. Div. 1, 47 L. J. P. 28. 



278 



UNLAWFUL AGREEMENTS. 



Confltrao- 
tion of 
prohibi- 
tory 
■ti^tes. 



them established principles on which our Courts still act in 
dealing with statutes of this kind. 

The question whether a particular transaction comes 
within the meaning of a prohibitory statute is manifestly 
one of construction. So far as we have to do with it here, 
we have in each case to ask, Does the Act mean to forbid 
this agreement or not ? And in each case the language of 
the particular Act must be considered on its own footing. 
Decisions on the same Act may of course afford direct 
authority. But decisions on more or less similar enactments, 
and even on previous enactments on the same subject, 
cannot as a rule be regarded as giving more than analogies. 
Attempts have indeed been made at different times to lay 
down fixed rules, nominally of construction, but really 
amounting to rules of law which would control rather than 
ascertain the expressed intention of the legislature. But 
in recent times our courts have fully and explicitly dis- 
claimed any such powers of interpretation. 

" The only rule for the ooDstmotioii of Acts of Parliament is that they 
ehonld be oonitmed aooording to the intent of the Parliament whioh 
passed the Act;" provided that the words be "saffident to aooompUah the 
manifest poipoee of the Act " {x). 

In like manner it is now understood that one or two dicta 
which are to be found in the books, suggesting that an Act 
of Parliament against "common right" or "natural equity" 
would be void, must stand as warning rather than autho- 
rity (y). The effect of plain and unambiguous words is not 
to be limited by judicial construction even though anoma- 
lous results should follow (z). 



(«) Opinion of the Judges in the 
Sussex Peerage ca. 11 GL ft F. at p. 
148, per Tindal C.J. ; per Lord 
Brou^am at p. 150. And see per 
Knight Brace L. J. Crofts v. Middle-' 
ton (1856) 8 D. M. 6. at p. 217 ; 
per Lord Blackbarn, in Mver Wear 
Oommrs. v. Adamson (1877) 2 App. 
Ca. at p. 764, 47 L. J. Q. B. 198. 

(y) Per WUlmJ.Leey.Bude^dfe, 



Ry, Co, (1871) L. R. 6 G. P. 576, 582, 
40 L. J. C. P. 285. Op. for the old 
view the dictmn of Lord Holt, 12 
Mod. 687-8 : *'An act of parliament 
can do no wrong, thoagh it may do 
several things that look pretty odd," 
and the context. 

(2) Cargo ex Argos, fta (1872-8) 
L. B. 5 P. 0. at pp. 152^. 



PBOHIBITOBT STATUTES. 279 

On the other hand the general intention is to be rerarded, PoKcr o* 
and may if necessary prevail over particular expressions, no 
less than in the interpretation of private instruments. But 
it must also be an intention collected from what the legis- 
lature has said, not arrived at by conjectures of what the 
legislature might or ought to have meant (a). A transac- 
tion not in itself immoral is not to be held unlawful on a 
conjectural view of the policy of a statute (6). The true 
policy of a statute is for a court of justice neither more nor 
less than its true construction. The Courts no longer 
undertake either to cut short or to widen the effect of 
legislation according to their views of what ought to be the 
law. " Before we can make out that a contract is illegal 
under a statute, we must make out distinctly that the 
statute has provided that it shall be so " (o). 

The cases in which acts of corporate bodies created for 
special purposes have been held void as ''contrary to 
the policy of the legislature " and tending to defeat the 
objects of the incorporation have already been considered 
inCai.rL 

These principles, when applied to the more limited 
subject-matter of prohibitory statutes, give the following 
corollaries : • 

(a). When a transaction is forbidden, the grounds of the K«l^ 
prohibition are immaterial Courts of justice cannot take * ^** ^'" 
note of any difference between Truila pi*okibita (i.e, things between 
which if not forbidden by positive law would not ^^h^um 
immoral) and mala in se (i.e. things which are so forbidden '^^ malum 

ifi ML 

as being immoral). 

(b). The imposition of a penalty by the legislature on *• P«n»lt7 
any specific act or omission is pri/ma facie equivalent to an importi 
express prohibition. ^^' 

These rules are established by the case of Bensley v. 
Bignold (d), which decided that a printer could not 

(a) Cp. p. 248, above. (c) Field J. 4 Q. B. D. at p. 224. 

(6) BarUm ▼. Mvir (1874) L. B. (d) (1822) 6 B. & Aid. 88& 

6 P. 0. 184, 44 L. J. P.O. 19. 



280 UNLAWFUL AGREEMENTS. 

recover for his work or materials when he had omitted to 
print his name on the work printed, as then required by 
statute (e). It was argued that the contract was good, as 
the Act contained no specific prohibition, but only a 
direction sanctioned by a penalty. But the Court held 
unanimously that this was untenable, and a party could 
not be permitted to sue on a contract where the whole 
subject-matter was " in direct violation of the provisions 
of an Act of Parliament." And Best J. said that the 
distinction between mala prohiMta and mala in se was 
long since exploded. The same doctrine has repeatedly 
been enounced in later cases. 

Thus, for example, by the Court of Exchequer : 

" When the oontimot which the plaintiff aeeks to enforce, be it exprese 
or implied, is ezprenly or by implication forbidden by the common or 
statute law, no Court will lend its assistance to give it effect It is 
equally dear that a contract is void if prohibited by a statute though 
the statute inflicts a penalty only, because such a penalty implies a 
prohibition " (/). 

It is needless to discuss the "policy of the law" when it 
is distinctly enunciated by a statutory prohibition (g), 
e. But ab- (c). Conversely, the absence of a penalty, or the failure 
^^^ty of A penal clause in the particular instance, will not 
does not prevent the Court from giving effect to a substantive 
pess pro- prohibition (h). 

hibition. ^^^ ^^i^Ti^j^t |.jj^ la^^ forbids to be done directly cannot be 
may not i^^Mie lawful by being done indirectly, 
be done In Booth V. Barik of England (i) a joint-stock bank 

must not procured its manager to accept certain bills on the under- 
^dL^sthr standing that the bank would find funds, these bills being 
such as the bank itself could not have accepted without 

ie) See now 82 k 83 Vict o. 24. parte Neilson (1868) 8 D. M. O. 556, 

(/ ) Cope ▼. Botdanda (1836) 2 M. 566. 

k W. 149, 157. Cp. Chamben ▼. {h) Suttex Peerage ca. (1844) 11 

ManehetUr ^ MUford By, Co. (1864) CI. k, F. at pp. 1489. 

5 B. A; S. 588, 33 L. J. Q. B. 268 ; (i) (1840) 7 CI. k, F. 509, 540, 

Re Cork d: Yougkal Ry, Co, (1869) upholding Bank of England ▼. An- 

4 Ch. 748, 758, 80 L. J. Ch. dermn (1886) 2 Keen 328, 8 Binff. 

277. N. C. 589. 

is) See per Lord Cranworth, Bx 



PBOmBITORY STATUTES. 281 

violating the privileges of the Bank of England It was 5^^* 
held by the House of Lords, following the opinion of the Bngland. 
judges, that this proceeding "must equally be a violation 
of the rights and privileges of the Bank of England, upon 
the principle that whatever is prohibited by law to be 
done directly cannot legally be effected by an indirect and 
circuitous contrivance : " for the acceptor was merely 
nomiaal, and the bills were in fact meant to circulate on 
the credit of the bank. 

In Bank of United States v. Owens (k) (Supreme Court, BMik of 
n.S.) the charter of the bank forbade the taking of aowvin.' 
greater rate of interest than six per cent., but did not say 
that a contract should be void in which such interest was 
taken. A note payable in gold was discounted by a 
branch of the bank in a depreciated local paper currency 
at its nominal value, so that the real discount was much 
more than six per cent. The Court held this transaction 
void, though there was no express prohibition of an agree- 
merU to take higher interest, and though the charter 
spoke only of taking, not of reserving interest. Parts of 
the judgment are as follows : ''A fraud upon a statute is a 
violation of the statute." "It cannot be permitted by law 
to stipulate for the reservation of that which it is not 
permitted to receive. In those instances in which Courts 
are called upon to inflict a penalty it is necessarily other- 
wise ; for then the actual receipt is generally necessary to 
consummate the offence. But when the restrictive policy 
of a law alone is in contemplation, we hold it to be an 
universal rule that it is unlawful to contract to do that 
which it is unlawful to do." 

"There can be no civil right where there can be no legal 
remedy, and there can be no legal remedy for that which 
is itself illegal .... there is no distinction as to 
vitiating the contract between nudum in se and malwni 
prohibitum" (Q. 

{k) (1829) 2 Pelen 527. {I) 2 Peton 5S6, 689. 



282 UNLAWFUL AQREEMENTS. 

The cases are similar in principle in which transactions 
have been held void as attempts to evade the bankruptcy 
law: thus, to take only one example, a stipulation that a 
security shall be increased in the event of the debtor's bank- 
ruptcy, or any provision designed for the like purpose and 
having the like effect, is void (m). 

Where When conditions are prescribed by statute for the 

^esorii^ conduct of any particular business or profession, and such 
for oon- conditions are not observed, ainreements made in the course 
particolar of such busmess or protession — 

trade, Aa, ^^^ ^^j^ ^^jj jf j[^ appears by the context that the object 
obaerr- of the legislature in imposing the condition was the main- 
Slam— tenance of public order or safety or the protection of the 
e. avoids persons dealing with those on whom the condition is 
J^tail imposed: 

the oon- (f) are valid if no specific penalty is attached to the 

fOT genwia specific transaction, and if it appears that the condition 
paWio was imposed for merely administrative purposes, e, g. the 

^"'*^' convenient collection of the revenue. 
/. not if 

for merely 



tratlTe The following are instances illustrating this distinction : — 

pnipoeea. 

ninrtm- 

tiona. Agreement Void. 

RUdM ▼. amUh (1848) 6 0. B. 462, 18 L. J. C. P. 9. The owner of a 
lioenaed house underlet part of it to another person, in order that he mi|^t 
there deal in liquor on his own aoconnt under oolour of his lessor's Uoence 
and without obtaining a separate licence. This agreement was void, its 
purpose being to enable one of the parties to infringe an Aet passed for 
the protection of public morals : (the licensing Acts are of this nature, and 
not merely for the benefit of the reyenue, for this resson, that licences are 
not to be had as a matter of right by paying for them.) For the same 

(m) Ex parte Mackay (1 878) 8 Ch. 725. It must be shown, to vitiate a 

648, 42 L. J. Bk. 68 ; Bx parte transaction on this ground, that the 

WiUiami (1877) 7 Ch. Div. 188, provision was inserted in contem- 

where the device need was the plation of bankruptcy and for tiie 

attornment of the debtor to his purpose of defeating the bankruptcy 

mortgagee at an excessive rent; Ex law : Ex parte Voitey (1882) 21 Ch. 

parte faekton (1880) 14 Ch. Div. Div. 442, 461, 62 L. J. Ch. 121. 



PBOHIBITOBT STATUTES. t88 

tmmm and aibo beoMiie tben ii » speoiflo penalty for meh dleiioe againal 
tiie lieensiiig law, it leema that a aala of Uqoor in an imlioeiiaed hoiiae li 
▼oid (n). HiuMlKm ▼. Oramfftr (1850) 6 H. ft N. 40. 

TayfM- ▼. Orowland Gat Oo. (1854) 10 Ex. 293, 28 L. J. Ex. 254. A 
penalty being impooed by etatote on nnqnalified penons acting as ocmToy- 
aocen (o), the Court held that the object waa not merely the gain to the 
revenue from the datiea on oertiftcates, but the protection of the pahlio 
from nnqnalified practitionen ; an nnqnalified perMm waa therefore not 
allowed to reooyer for work of thia nature. Cp. Lemon v. ffouteUf 
(1874) L. R 10 Q. B. 66, 44 L. J. Q. B. 22. 

Fergusmm y. Norman (1838) 5 Bing. N. C. 76. When a pawnbroker lent 
money without oom|4ying with the requirements of the statute, the loan 
was roid and he had no lien on the pledge {p), 

Jn Stevens Y. QourUy (1S59) 7 C, B. N. 8. 09, 29 L. J. C. P. 1, a builder 
was not allowed to reooTer the price of putting up a wooden shed oontrary 
to the regulations imposed by the Metropolitan Building Act, 18 ft 19yiot 
c. 122. The only question in the case was whether the structure was a 
huUding within the Act But note that here the prohibition was for a 
public purpose, namely to guard against the risk of fire. 

Sarton y. P^990« (1874) L. R. 10 Q. B. 86. By 5 ft 6 Wm. 4, o. 50, s. 46, 
a penalty is imposed on any suryeyor of highwajrs who shall haye an interest 
in any contract, or sell materials, ftc for work on any highway under his 
eare, unless he first obtain a licence from two justices. The effect of this 
is that an unlicensed contract by a surveyor to perform woA or supply 
materials for any highway under his care is absolutely illegal, and the 
justices have no discretion (under s. 44) to allow payments in respect 
of it. 

Contract not Avoided. 

BaUeif y. ffarrit (1849) 12 Q. B. 905, 18 L. J. Q. B. 115. A contract of 
sale is not void merely because the goods are liable to seizure andforfsituie 
to the Grown under the exdae laws. 

Sm^Uh y. Matokood (1845) 14 Bi. ft W. 452, 15 L. J. Ex. 149. The sale 
of an exeiseable article is not avoided by the seller having omitted to 
paint up his name on the licensed premises as required by 6 Gko. 4, 
o. 81, s. 25. Probably this decision would govern the construction of 
the very similar enactment in the licensing Act, 1872 (35 ft 36 Yict 
e. 94, B. 11). 

StnitkY. Lindo (1858) 4 C. B. N. a 395, in Ex. Oh. 5 G. B. N. S. 587, 
27 L. J. O. P. 196, 385. One who acts as a broker in the Gity of London 

(n) For the penal enactments now enacts that an offence against the 

in force see the Licensing Act, 1872, Act by a pawnbroker, not being an 

35 ft 86 Yict. c. 94, ss. 8-8. odSence against any provision re- 

(o) Now by 83 ft 34 Yiet a 97, lating to Ucenses, shall not avoid 

s. 60. the contract or deprive him of his 

ip) The present Pawnbrokers Act lien. 
(1872 ; 85 ft 86 Yiot a 98, s. 51), 



284 UNLAWFUL AGREEMENTS. 

without being lioenied under 6 Ann. c. 68 (Bey. Stat. : aL 16) and 67 
Geo. 8, c. ]x. {q) cannot recover any commindon, but a purchaee of sbaiM 
made by him in the market is not void : and if he has to pay the pnrohsae- 
money by the nsage of the market, he can reooyer from his principal the 
money so paid. 

And see farther, as to statutory prohibitions of this kind, Benjamin on 
Sale, 521 sqq. 



And in general an agreement which the law forbids to 
be made is void if made. But an agreement forbidden by 
statute may be saved from being void by the statute itself, 
and on the other hand an agreement made void or not 
enforceable by statute is not necessarily illegal. An agree- 
ment may be forbidden without being void, or void with- 
out being forbidden. 

^. Agree- (g). Where a statute forbids an agreement, but says 
Toid ^^^^ ^f made it shall not be void, then if made it is a con- 

?ri^ tract which the Court must enforce. 

if statute' By 1 & 2 Vict. c. 106, it is unlawful for a spiritual 
sorar^^ person to engage in trade, and the ecclesiastical Court may 
vides. inflict penalties for it. But by s. 31 a contract is not to 
be void by reason only of being entered into by a spiritual 
person contrary to the Act. It was contended without 
success in Lewia v. Bright (r) that this proviso could not 
apply when the other party knew with whom he was 
dealing. But the Court held that the knowledge of the 
other party was immaterial ; the legislature meant to pro- 
vide against the scandal of such a defence being set up. 
And Me J. said that one main purpose of the law was to 
make people perform their contracts, and in this case it 
fortunately could be carried out. 

A. Agree- (h). Where no penalty is imposed, and the intention of 
mentmay 

{q) These Acts are repealed as to Brokers Belief Act, 1870, 83 k 34 

the power of the dty coort to make Yict. c. 60. 

rales, &C., bat not as to the neoeesity (r) (1855) 4 E. & K 917, 24 L. J. 

of brokers beings admitted, by the Q. B. 191. 
somewhat obsoorely framed London 



WAGERS AND OAMINO. 285 

the legislature appears to be simply that the agreement is be rimp^ 
not to be enforced, there neither the agreement itself nor fonMbte, 
the performance of it is to be treated as unlawful for any J^JJJJi, 
other purpose. imkwfiiL 

Modem legislation has produced some very curious 
results of this kind In several cases the agreement can- 
not even be called void, being good and recognizable by 
the law for some purposes or for every purpose other than 
that of creating a right of action. These cases are reserved 
for a special chapter («). 

In the case of wagers the agreement is null and void by Wtgwi. 
8 & 9 Vict. c. 109, s. 18, and money won upon a wager ^^'^Jjlj?* 
cannot be recovered either from the loser or from a stake- luteij 
holder (with a saving as to subscriptions or contributions *^^8*'* 
for prizes or money to be awarded " to the winner of any Joom.*'* 
lawAil game, sport, pastime, or exercise;'' the saving 
extends only to cases where there is a real competition 
between two or more persons (t), and the *' subscription or 
contribution " is not money deposited with a stake-holder 
by way of wager) (it). Wagers were not as such unlawful 
or unenforceable at common law : and since the statute 
does not create any offence or impose any penalty, a 
man may still without violating any law make a wager, 
and if he loses it pay the money or give a note for the 
amount. The consideration for a note so given is in point 

(t) See Cb. XIIl., Oo Agreements eotioiie prohibited by them (that 1% 

of Imperfect ObligatloB. The die- m Ugu perftetae) whether it were io 

tinotioD between «& eneotment ezpreeeed or not 

which imposes » penalty without \t) e.g.% wi^ thai a hone wfll 

making the iransaotloa void, and trot eighteen miles inan hoar is not 

one which makes the forl^den within it, as there can be no winner 

traosaetion void, is expressed in in the tnie sense of the danse : 

Roman law hj the terms mimu Batmm ▼. Nenman (1876) 1 O. P. 

qvam ferfetia Ux and ferfteHa lex. Dl?. 578. 

Ulp. Beg. 1 § 2, op. Sa?. Sjst («) DiggU ▼. H%gy9 (1877) 2 

4. 650. A coostitntion of Theo- Ex. Div. 422, 46 L. J. Ex. 

dodos and Valentinian (God. 1. 721 ; TrimUt r, HiU (1879) (J. 

14. de leg. 5) enjdned that aU C.) 5 App. Ca. 842, 49 L. J. P. 

pohibitory enactments weie to C. 49. 
be coostmed as afoidlag the ' 



286 X7NLAWFUL AGREEMENTS. 

of law not an illegal consideration, but merely no considera- 
tion at alL The diflFerence is important to the subsequent 
holder of such a note. If the transaction between the 
original parties were fraudulent or in the proper sense 
illegal, the burden of proof would be on the holder to show 
that he was in fact a holder for value; but here the 
ordinary presumption in favour of the holder of a negotiable 
instrument is not excluded (x). In like manner ''if a party 
loses a wager and requests another to pay it for him, he is 
liable to the party so pa}dng it for money paid at his 
request : " as where a broker is employed in fictitious deal- 
ings in shares which are really wagers on the price of 
shares, and according to custom himself pa}rs the amount 
due (y). This goes farther than an earlier case in which 
it was held, in a somewhat guarded manner, that payment 
by the drawer of racing debts of the acceptor is a good 
consideration for a bill of exchange (z). 

But imder another modem statute (6 & 6 Wm. 4, c. 41, 
s. 1) securities for money won at gaming or betting on 
games, or lent for gaming or betting, are treated as given 
for an illegal consideration (a). 

It would be inappropriate to the general purpose of this 
work, as well as impracticable within its limits, to enter in 
detail upon the contents or construction of the statutes 
which prohibit or affect various kinds of contracts by regu- 
lating particular professions and occupations or otherwise. 
It has been attempted, however, to make some collection of 
them in the Appendix (6). 

Agne- The rules and principles of law which disallow agree- 

— ^iln 

(x) FUeh ▼. Jona (1856) 5 E. ft As to reooToring money depodtad 

B. 238, 24 L. J. Q. B. 298, aee jodg- with a itakeholder or agent, see p. 

ments of Lord CampbeU C. J. and 868, below. 
Brie J. (a) The statute does not affect a 

(y) BoiewameY.BUUng (IS6Z)15 loan of money to pay a debt pre- 

O. B. N. S. 816, 88 L. J. G. P. 55. vioiuly loet : Bx parte Pyke (1878) 

(0 Otildi ▼. Barru(m (1854) 10 8 Ob. Div. 754, 47 L. J. Bk. 100. 
Ex. 572, 577, 24 L. J. Ex. 66. (6) See Note G. 



IMMORAL AOBBKMSNT& 287 



ments whose object is to contravene or evade an Act of J^ -.^^^ 
Parliament do not apply to private Acts, so far as these are Aoto of 
in the nature of agreements between parties. If any of ^^^^^^^ 
the persons interested make arrangements between them- neoMwrily 
selves to waive or vary provisions in a private Act relating 
only to their own interests, it cannot be objected to such 
an agreement that it is in derogation of, or an attempt to 
repeal the Act (e), 

B. Agreements contrary to morale or good manners. 

It is not eveiy kind of immoral object or intention that B. Coo- 
will vitiate an agreement in a court of justice. When we p^ye 
call a thing immoral in a legal sense we mean not only ^oon^tj. 
that it is morally wrong, but that according to the common SSTdmS 
understanding of reasonable men it would be a scandal oolyi«iMl 
for a court of justice to treat it as lawful or indiflFerent, ■'*"*°^' 
though it may not come within any positive prohibi- 
tion or penalty. What sort of things fall within this 
description is in a general way obvious enougL And the 
law might well stand substantially as it is, according to 
modem decisions at any rate, upon this ground alone. 
Some complication has been introduced, however, by the Infinenoe 
influence of ecclesiastical law, which on certain points has ji^^^ \ 
been very marked, and which has certainly brought in a '»^* 
tendency to treat these cases in a peculiar manner, to mix 
up the principles of ordinary social morality with considera- 
tions of a different kind, and with the help of those 
considerations to push them sometimes to extreme conclu- 
sion& Having regard to the large powers formerly exercised 
by spiritual Courts in the control of opinions and conduct, 
and even now technically not abolished, it seems certain 
that everything which our civil C!ourts recognize as immoral 
is an offence against ecclesiastical law. Perhaps, indeed, 

(e) Savin t. Hoylake Ry. Co. Cp. and dUt. Sha^9 claim (1875) 
(1865) L. K. 1 Bz. 9, S5L. J. Ez.52. 10 Gh. 177, 44 L. J. Ch. 670. 



288 X7NLAWFUL AGREEMENTS. 

the converse proposition is theoretically true, so far as the 
ecclesiastical law is not directly contrary to the common 
law (d). But this last question may be left aside as merely 
curious. 

As a matter of fact sexual immoraUty, which formerly 
was and in theory still is one of the chief subjects of 
ecclesiastical jurisdiction, is the only or almost the only 
kind of immorality of which the common law takes notice 
as such. Probably drunkenness would be on the same 
footing. It is conceived, for example, that a sale of 
intoxicating liquor to a man who then and there avowed 
his intention of making himself or others drunk with it 
would be void at common law. The actual cases of sale of 
goods and the like for immoral purposes, on whose analogy 
this hypothetical one is put, depend on the principles 
applicable to unlawful transactions in general, and are 
accordingly reserved for the last part of this chapter. 
Putting apart for the present these cases of indirectly im- 
moral agreements, as they may be called, we find that 
agreements are held directly immoral in the limited sense 
above mentioned, on one of two grounds : as providing for 
or tending to illicit cohabitation, or as tending to disturb 
or prejudice the status of lawful marriage ("in derogation 
of the marriage contract," as it is sometimes expressed). 

Illicit CO- With regard to the first class, the main principle is this, 

tion— if Th® promise or expectation of fixture illicit cohabitation is 

^J™J» •■ an unlawful consideration, and an agreement founded on 

oonaident- it is void. Past cohabitation is not an unlawful considera- 

^^^ tion ; indeed, there may in some circumstances be a moral 

oiDiidef»- obligation on the man to provide for the woman ; but the 

^^ general rule applies (e) that a past executed consideration, 

(d) Cp. Lord Wetihwry*» remarks when a different docfcrine prevailed; 
in Hunt ▼. Hunt (1861-2) 4 D. F. they therefore diMon matters which 
J. at pp. 226-8, 233. in the modem view are simplj irre- 

(e) But the rale is modern (Gh. levant, e.g. the previous character of 
lY. p. 169 above), and the earlier the parties. The phrase jpra€mticm 
oases on this sobjeot belong to a time yudteUiae comes from this period. 



IKMOBAL AGBEEMENT8. 289 

whether such as to give rise to a moral duty or not, is 
equivalent in law to no consideration at all An agree- 
ment made on no other consideration than past cohabita- 
tion is therefore in the same plight as any other merely 
voluntary agreement If under seal it is binding and 
can be enforced (/), otherwise not (g). The existence of 
an express agreement to discontinue the illicit cohabita- 
tion, which is idle both in fact (as an agreement which 
neither party could break alone) and in law — or the fact of 
the defendant having previously seduced the plaintiff, 
which "adds nothing but an executed consideration resting 
on moral grounds only/' — can make no difference in this 
respect (flr). 

The manner in which these principles are applied has JndgnMot 
been thus stated by Lord Selbome : — 8eiboni«i 

'^Moft of the older ftntlioiitlei o& the rabjeot of oontnoti foonded on je^na. 
ImmorAl oonildeimtiaii mo oolleoted in the note to Benycn t. Ntttlrfdld (A). 
Their results m*y be thus stated : 1. Bonds or ooTenaats founded on pest 
oohabitetion, whether ftdnlterons (f)» inoestoons, or simply immond, ere 
Ttlid in Iaw and not lieUe (unless there ere other elements in the oeee) to 
be set aside in eqnity. 2. Bneh bonds or ooyenants, if given in considera- 
tion of fntaxe ooliabitation, are yoid in law {k)t and therefore of coarse 
also void in eqioity. 8. Belief cannot be given against any anch bonds 
or corenants in equity if the illegal consideration H»peers on the face of 
the instrument (2). 4. If an illegal cmsideration does not appear on the 
teoe of the instmment the objection of jperMcepf eruamii wiU not prevail 
against a bOl of discovery in eqnity in aid of the def enoe to an action at 
law (m), [this is of no oonseqnenoe in England since the Jndicatore Aote]. 
6. Under some (but not nnder all) ciroomstanoes when the consideration 
is nnlawfol, and doee not appear on the face of the instrument^ relief may 
be given to a jNWiieepf criminU in equity " (a). 

The exception alluded to in the last sentence is pro- 



m. 



Omg V. MaOUat (1800) 5 Yes. 286| 8mM v. Orithi (1842) 18 Sim. 

246, 14 L. J. Ch. 28, appears to be 

(o) BtaumoiU t. JUeve (1840) 8 really nothing else than an instance 

<^ B. 488, 16 L. J. Q. B. 141. of the same rule. The rule is or 

{h) (1860) 8 Mac & G. 94, 100. was a general one : 8imp§ony. Lard 

(i) Katfe r. Moortt 1 Sim. ft St. ^oimiefi (1887)8 My. ft Or. 07,102. 

64. (m) Benyon v. IvetUefold, iupra. 

{h) WiOter V. Perhnt (1704) 8 (n) AfcrU v. Jenkina (1878) 16 

Burr. 166& Eq. 276, 282, 42 L. J. Oh. 690. 

(2) Grmif v. Maihioi (1800) 5 Yee. 

P. U 



290 UNLAWFUL AGREEMENTS. 

bably this : that "where a party to the illegal or immoral 
purpose comes himself to be relieved from the obligation 
he has contracted in respect of it, he must state distinctly 
and exclusively such grounds of relief as the Court can 
legally attend to " (o). He must not put his case on the 
ground of an immoral consideration having in fact failed, 
or complain that the instrument does not correctly express 
the terms of an immoral agreement (p). 

Where a security is given on account of past cohabita- 
tion, and the illicit connection is afterwards resumed, or 
even is never broken off, the Court will not presume from 
that fact alone that the real consideration was future as 
well as past cohabitation, nor therefore treat the deed as 
invalid (g). 

There existed a notion that in some cases the legal per- 
sonal representative of a party to an immoral agreement 
might have it set aside, though no relief would have been 
given to the party himself in his lifetime: but this has been 
pronounced "erroneous and contrary to law" (r). It must 
be borne in mind that the whole doctrine applies to execu- 
tory agreements only. An actual transfer of property, 
which is on the face of it "a completed voluntary gift, valid 
and irrevocable in law " and confers an absolute beneficial 
interest, cannot be afterwards impeached either by the 
settlor or by his representatives, though in fact made on 
an immoral consideration («). 
Proviso for Where parties who have been living together in illicit 
reconoUia- QQ^abitation separate, and the man covenants to pay an 
quasi sepa- annuity to the woman, with a proviso that the annuity 
deed u shall cease or the deed shall be void if the parties live 
void. together again, there the covenant is valid as a simple 

(o) BaUy v. Chester (1842) 5 286 ; ffaU v. Palmer, 8 Ha 582 ; 

Beftv. 108, 109. Vallance v. Biagden (1884) 26 Ch. 

(p) SembU, relief will not be given if D. 353. 

it appears that the immoral conridera- (r) Aysrst v. Jenkins (1873) 16 

lion has been executed: Sismeyv.EUy Eq. 275, 281, 284, 42 L. J. Ch. 690. 

(1849) 17 Sim. I, 18 L. J. Ch. 360: (*) Ayerst v. Jenkins (1873) 16 Eq. 

but the case is hardly intelligible. 275, 2S1, 284. 

(9) Oray v.Matk!as(} SOO) 5 Yea. 



SEPARATION DBBDa 291 

voluntary covenant to pay an annuity, but the proviso is 
wholly void It makes no diflFerence, of course, if the 
parties, being within the prohibited degrees of affinity, 
have gone through the form of marriage, and the deed is 
in the ordinary form of a separation deed between husband 
and wife (t). When the parties are really married such a 
proviso is usual but superfluous, for the deed is in any 
case avoided by the parties afterwards living together (u). 
This brings us to the second branch of tUs topic, namely 
the validity of separation deeds and agreements for 
separation. 

The history of the subject will be found very clearly set Sapantioii 
forth in Lord Westbury's judgment in Humt v. Hunt (x). genenJT 
From the ecclesiastical point of view marriage was aHnnt». 
sacrament creating an indissoluble relation. The duties ^ 
attaching to that relation were "of the highest possible 
religious obligation" and paramount to the will of the 
parties. In ecclesiastical Courts an agreement or provision 
for a voluntary separation present or future was simply an 
agreement to commit a continuing breach of duties with 
which no secular authority could meddle, and therefon^ 
was illegal and void 

For a long while all causes touching marriage even 
collaterally were claimed as within the exclusive jurisdic- 
tion of those courts. The sweeping character and the 
gradual decay of such claims have already been illustrated 
by cases we have had occasion to cite from the Tear Books 
in other places. In later times the ecclesiastical view of 
marriage was still upheld, so far as the remaining eccle- 
siastical jurisdiction could uphold it (y), and continued to 
have much influence on the opinions of civil Courts ; the 
amount of that influence is indeed somewhat understated 

(0 Ex parte Naden (1874) 9 Gb. Lords, bat the proceeding! came to 

670, 43 L. J. Bk. 121. tn end without any decision by the 

(«) WettmeaJUi v. Weximeaih ( 1 820-1 ) death of the hnsband : see per Lord 

1 Dow k CI. 519. Selbome, 8 App. Ca. at p. 421. 

(2) (1861-2) 4 D. F. J. 221. The (jf) See 4 D. F. J. 235>8. 
case was taken to the House of 

U 2 



292 UNLAWFUL AOaEEMENTS. 

in Lord Westbxiry's exposition. But the common law, 
when once its jurisdiction in such matters was settled, 
never adopted the ecclesiastical theory to the full extent. 
A contract providing for and fixing the terms of an im- 
mediate separation is treated like any other legal contract, 
only the ordinary rule that the wife cannot contract with 
her husband without the intervention of a trustee is dis- 
pensed with in these cases (0). Being good and enforceable 
at law, the contract is also good and enforceable in equity, 
nor is there any reason for refusing to enforce it by any of 
the peculiar remedies of equity. In Hv/rU v. HiltU the 
husband was restrained from suing in the Divorce Court 
for restitution of conjugal rights in violation of his covenant 
in a separation deed (a), on the authority of the decision 
Wikon V. of the House of Lords (&), which had abready established 
Wilron. ^i^g^^ ^jjg Court may order specific performance of an agree- 
ment to execute a separation deed containing such a 
covenant. The case may be taken as having put the law 
on a consistent and intelligible footing, though not without 
overruling a great number of pretty strong dicta of various 
judges in the Court of Chancery and even in the House of 
Lords (0); and it has been followed both in the Chancery 
and in the Probate Divisions (cQ. But an agreement by 
the wife not to oppose proceedings for a divorce pending at 
the suit of the husband is void, being not only in deroga- 
tion of the marriage contract, but a collusive agreement to 
evade the due administration of justice (e). 

(z) P. 88, above, MeOregor ▼. F. 527 (Lord Brongham), 661-2 

MeQrtgor (1888) 21 Q. B. Diy. 424, (Lord Lyndhont). Mort of then 

67 L. J. Q. B. 268. are to be found dted in the ar{ra- 

(a) Thii ooyenant oonld not then ment in WUion t. Wihon, And 

be pleaded in the Diyoroe Court, even nnce that case VcumUaH t. 

which held itself bound by the FaiwittoH (1868) 2 De G. ft J. at p. 

former eooleiiaetioal practice to 266 (Lord Ghelmeford). 

take no notice of separation deeds. (d) Bettmt v. Wood (1879) 12 Gh. 

(6) WiUim T. WUavn (1864) 1 D. at p. 628 ; MankaU t. MtunhaU 

H. L. C. 688. (1879) 6 P. D. 19, 48 L. J. P. 49. 

(<;) IniSt/oAii y.A./o^n (1808-6) A like covenant on the wife's be- 
ll Yes. 626, ftc, WmtnMaaiy. Wet^ half by a trustee is bindinff on her, 
fneath (18201) 1 Jac. 142 (Lord Oark v. Clark, 10 P. Div. 188. 
Eldon) ) Worraa ▼. Jacob (1816-7) (e) Hope v. ff€pe(\S67) 8 D. BC. G. 
3 Mer. 268 (Sir W. Grant) ; War- 781, 746, 26 L. J. Gh. 417. 
render t. Warrender (1886) 2 GL ft 



SEPARATION DEEDS. 29S 

We have seen that when it is sought to obtain the 2?^S?"' 
specific performance of a contract the question of con- 



sideration is always material, even if the iostrument is ^^^^|||^ 
under seal Generally it is part of the arrangement in dtediL 
these cases that the trustees shall indemnify the husband 
against the wife's debts, and this is an ample consideration 
for a promise on the husband's part to make provision for 
the wife, and of course also for his undertaking to let her 
live apart from him, enjoy her property separately, &c. (/)• 
But this particular consideration is by no means necessary. 
The trustee's undertaking to pay part of the costs of the 
agreement will do as well But if the agreement is to 
execute a separation deed containing all usual and proper 
clauses, this includes, it seems, the usual covenant for in- 
demnifying the husband, so that the usual consideration is 
in fact present (g). In the earlier cases, no doubt, it was 
supposed that the contract was made valid in substance as 
well as in form only by the distinct covenants between the 
husband and the trustee as to indenmity and payment, or 
rather that these were the only valid parts of the contract. 
But since WUaon v. WUaon (h) and Hunt v. Hunt such a 
view is no longer tenable: in Lord Westbury's words " the 
theory of a deed of separation is that it is a contract 
between the husband and wife through the intervention of 
a third party, namely the trustees, and the husband's con- 
tract for the benefit of the wife is supported by the con- 
tract of the trustees on her behalf" (i). A covenant not Mpor 
to sue for restitution of conjugal rights cannot be implied, toMpwa- 
and in the absence of such a covenant the institution of ***"* ^•^^ 
such a suit does not discharge the other party's obligations 
imder the separation deed (k). Subsequent adultery does 
not of itself avoid a separation deed unless the other 

(/) See Day. Cony. 5, pt 2, 1079. frame of the deed, Wilton y. WiU(m 

ig) QibU y. Harding (1870) 6 Ch. (1854) 6 H. L. O. 40 ; and bj Lord 

886, 89 L. J. Ch. 874. Weeibnry, 4 D. F. J. 284. 

(A) Ob the effect •! that caee see (i) 4 D. F. J. 240. 

the remarka in the Hoiue of Lorda (k) Ju y. Thuriow (1824) 2 B. & 

in a gabeeqiient appeal as to the C. 547. 



294 UNLAWFUL AGREEMENTS. 

party's covenants are expressly qualified to that effect (I). 
A covenant by the husband to pay an annuity to trus- 
tees for the wife so long as they shall live apart, remains 
in force notwithstanding a subsequent dissolution of the 
marriage on the ground of the wife's adultery (m) ; but it 
seems it would be void if future adultery were contem- 
plated at the time (n). The concealment of past miscon- 
duct between the marriage and the separation may render 
the arrangement voidable, and so may subsequent miscon- 
duct, if the circumstances show that the separation was 
fraudulently procured with the present intention of obtain- 
ing greater facilities for such misconduct (o). 

A separation, or the terms of a separation, between hus- 
band and wife cannot lawfiiUy be the subject of an agree- 
ment for pecuniary consideration between the husband 
and a third person. But in the case of JoTiea v. Waite (p) 
it was decided by the Exchequer Chamber and the House 
of Lords that the husband's execution of a separation deed 
already drawn up in pursuance of an existing agreement is 
a good and lawful consideration for a promise by a third 
person. 

A separation deed, as we have above said, is avoided by 
subsequent reconciliation and cohabitation (q). If it were 
not so, but could remain suspended in order to be revived 
in the event of a renewed separation, it might become 
equivalent to a contract providing for a contingent separa- 
tion at a future time : and such a contract, as will imme- 
diately be seen, is not allowable. However, a substantive 
and absolute declaration of trust by a third person con- 

{l) Jb, i Evamr.CarringUm {I860) 9 CI. A; F. 101. In the Ex. Ch. 

2 D. F. J. 481, SO L. J. Gb. 864. both Lord Abinger and Lord Den- 

(m) Oharieaworth y. Holt (1873) man diBsented. Cp. p. 178, ab)ve. 
L. R. 9 Ex. 88, 48 L. J. Ex. 25. {q) Bee also Weitmeath ▼. SaUs- 

(n) Fearon v. EaH of Aylesford hury (1881) 5 Bli. N. S. 389. 

(1884) 14 Q. B. Div. 792, 58 L. J. Qaeations may arise whether parti- 

Q. K 410. ODlar terms are part of the agree- 

(o) EvanB ▼. CarringUm, $uprat ment for separation, and therefore 

and per Gotten L.J. 14 Q. B. D. snliject to be so avoided, or are of a 

at p. 795. permanent and independent nature: 

ip) (1842) 1 Bfaig. 14. G. 656, in see Nicol v. Niisol (1886) 81 Gh. Div. 

Ex. Gh. 5 Bing. N. G. 841, in H. L. 624. 



SEPARATION DEEDS. 295 

tained in a separation deed has been held not to be avoided 
by a reconciliation (r). 

As to all agreements or provisions for a future sepa- Agfee- 
ration, whether post-nuptial («) or ante-nuptial (0 {^)>^f^^ " 
and whether proceeding from the parties themselves or*op«ntioa 
fix>m another person {u\ it remains the rule of law that 
they can have no effect If a husband and ¥rife who have 
been separated are reconciled, and agree that in case of a 
future separation the provisions of a former separation 
deed shall be revived, this agreement is void (a). A con- 
dition in a marriage settlement varying the disposition of 
the income in the event of a separation is void (u). So is 
a limitation over (being in substance a forfeiture of the 
wife's life interest) in the event of her living separate firom 
her husband through any fault of her ovm: though it 
might be good, it seems, if the event were limited to mis- 
conduct such as would be a groimd for divorce or judicial 
separation {t). 

Likewise a deed purporting to provide for an immediate 
separation is void if the separation does not in fact take 
place: for this shows that an immediate separation was 
not intended, but the thing was in truth a device to pro- 
vide for a future separation («). Nor can such a deed be 
supported as a voluntary settlement (y). 

The distinction rests on the following ground: — ^An Rewon of 
agreement for an immediate separation is made to meet a 
state of things which, however undesirable in itself, has 
in fact become inevitable. Still that state of things is 

(r) RvficM T. AliUm (1876) 19 Eq. («) Cartwrightv. (7arfvr^;k<(1858) 

539, 44 L. J. Cb. 388. 8 D. M. G. 982, 22 L. J. Ch. 841 ; 

(<) MarquUcf Wetimtaik y. Jfor- note that this and the cave last 

chioneu of Westmeath (1820-1) 1 eited were after Wifton ▼. WiUan. 
Bow A; d. 519, 541 ; Westmeaih v. {x) tiindUy y. Marqui$ of Wat- 

SaHAury (1831) 5 BIL N. S. 339, meath (1827) 6 B. A; C. 200 ; con- 

898. firmed by Watnuath v. Salisbury 

[t) ff. V. W, (1857) 3 K. A J. (1831) 5 Bli. N. S. 339, 896-7. 
882. Some of the reasons giyen in (y) Bindley y. MuUone^ (1869) 7 

th<« ea?e (at p. 386) cannot b'u'^ Eq. 348. 
Hunt y. Bunt be supporAd. 



296 UNLAWFUL AGREEMENTS. 

abnormal and not to be contemplated beforehand. "It is 
forbidden to provide for the possible dissolution of the 
marriage contract, which the policy of the law is to pre- 
serve intact and inviolate" {z). Or in other words, to 
allow validity to provisions for a future separation would 
be to allow the parties in effect to make the contract of 
marriage determinable on conditions fixed beforehand by 
themselves (a). 

Lnmoml It is a well-established rule that no enforceable right 
^QjJT can be acquired by a blasphemous, seditious, or indecent 
Being publication, whether in words or in writing, or by any 
offences, contract in relation thereto (6) ; but it does not really be- 
**^®^^® long to the present head. The ground on which the cases 
\opo9Uive proceed is that the publication is or would be a criminal 
^^ offence; not merely immoral, but illegal in the strict sense. 

The criminal law prohibits it as mcdwm, in se, and the 
civil law takes it from the criminal law as malv/ni prohi- 
bitum, and refuses to recognize it as the origin of any 
right (c). Then the decisions in equity profess simply to 
follow the law by refusing in a doubtfiil case to give the 
aid of equitable remedies to alleged legal rights until the 
existence of the legal right is ascertained (d). It would 
perhaps be difficult to assert as an abstract proposition that a 
Court administering civil justice might not conceivably pro- 
nounce a writing or discourse immoral which yet could not 
be the subject of criminal proceedings. But we do not 
know of such a jurisdiction having ever in fact been exer- 
cised; and considering the very wide scope of the criminal 

(z) ZK.St J. 882. Btteourt ▼. Steouri Hop Enenoe Co, 

(a) Agreements between husband (1875) 10 Gh. 276, 44 L J. Gh. 223. 
and wife contemplating a fatore (e) E»g, StockdaU v. Onwhyn 

judicial separation (separation de (1826) 5 B. Ai G. 178. 
corps) are void in French law : (d) Southejf ▼. Skarwood (1817) 

Sirey & Gilbert on Gode GIt. art. 2 Mer. 485 ; Lavrence v. Smith 

1138, na 55. (1822) Jac 471. For a foU acoonnt 

(6) The somewhat analogous qnee- of the cases see Shortt on the Law 

tion— Will the law protect the trade relating to Works of Literature and 

mark of an article intended to de- Art, pp. ^11, 2d ed. 1884. 
ceive the public I —is left open by 



IMMORAL PUBLICATIONS. 297 

law in this behalf {e\ it aeems unlikely that there should 
arise any occasion for it Some expressions are to be 
found which look like claims on the part of purely civil 
Courts to exercise a general moral censorship apart from 
any reference to the criminal law. But these are overruled 
by modem authority. At the present day it is not true 
that "the Court of Chancery has a superintendency over 
all books, and might in a summary way restrain the print- 
ing or publishing any that contained reflections on religion 
or morality/' as was once laid down by Lord Macclesfield; 
or that ''the Lord Chancellor would grant an injunction 
against the exhibition of a libellous picture/' as was laid 
down by Lord EUenborough (/). On the whole it seems 
that for all practical purposes the civil law is determined 
by and co-extensive with the criminal law in these matters : 
the question in a given case is not simply whether the pub- 
lication be immoral, but whether the criminal law would 
punish it as immoral 

A very curious doctrine of legal morality was started in Coiiti«ot« 

AC to bIav^ 

some of the United States alFfcer the abolition of slavery, in xj.s. 
It was held that the sale of slaves being airainst natural Jf*^ "^^ 
right could be made valid only by positive law, and that BtaiM 
no right of action arising from it could subsist after the de- ^Jjj^ 
termination of that law (gr). The Supreme Court of Louisiana wliwi 
in particular adjudged that contracts for the sale of persons, 
though made in the State while slavery was lawful, must 
be treated as void: but the Supreme Court of the U. S. 
did not hold itself bound by this view on appeal from the 

(e) Se0 RaneU on Orimei, Bk. 2, loimithing like the older view aeemi 

OL 24, Stwkie on Libel (8rd ed.) to be inToWed in OnMii v. JfO&oiini 

oe. 88, 84, Shorit, op. cU. Part lY., (1867) L. B» 2 Ex. 280, 86 L. J. Iz. 

or Ifir. Blake Odgen's Digeit; and 124, Irat aee eontra the sunming op 

Stephen's Digest of the Oriminal of Lord Coleridge 0. J. in Rig, t. 

Law, artt 91-95, 161, 172. RamMV ds FooU, op. Blake Odgen 

(/) Wmperor o/AuMria t. Day A (2d ed.) 688. 
KamOi (1861) 8 D. F. J. 217, 288, {g) Story on Oontraets, ( 671 (1. 

SOLu J. Ch. 690. As to blasphemons 647, 6th ed.) 
or qnaai-blasphanioiifl pablioations 



298 UNLAWFUL AGREEMENTS. 

Circuit Court, and distinctly refiised to adopt it, thinking 
that neither the Constitutional Amendment of 1865, nor 
anthing that had happened since', avoided a contract good 
in its inception (A). 

C. Agreements contrary to public policy. 
Of the Before we go through the different classes of agreements 

public"^ ^ which are void as being of mischievous tendency in some 
policy in one of certain different ways, something must be said on 
the more general question of the judicial meaning of "public 
policy." That question is, in ejBFect, whether it is at the 
present time open to courts of justice to hold transactions 
or dispositions of property void simply because in the 
judgment of the Court it is against the public good that 
they should be enforced, although the grounds of that 
judgment may be novel. The general tendency of modem 
ideas is no doubt against the continuance of such a juris- 
diction. On the other hand there is a good deal of modem 
and even recent authority which makes it diflScult to deny 
its continued existence. 
Its exten- As a matter of history, there seems to be little doubt 
anxiety of ^^^^ ^^® doctrine of public policy, so far as regards its 
Courts to assertion in a general form in modem times, if not its 
wagen^^ actual origin, arose from wagers being allowed as the foun- 
while dation of actions at common law. Their validity was 
BQoh wero assumed without discussion until the judges repented of it 
oontoacti ^^ ^^^^' ^g^etting that wagers could be sued on at all (i), 
they were forced to admit that wagering contracts as such 
were not invalid, but set to work to discourage them so 
far as they could This they did by becoming "astute even 
to an extent bordering upon the ridiculous to find reasons 
for refusing to enforce them " in particular cases (k). 

{h) Boyee y. Tahh (1873) 18 on events in which the parties had 

WaUace (Sup. Ot. U.S.) 646. Cp. no interest. 

WhiU 7. HaHy 18 Wall. 646, (h) Per Parke B. Bgerton v. Earl 

08bom y. Nick6U(m, ib, 654 (1871). Brownlow (1858) 4 H. L. C. at p. 

(t) Oood y. MioU (1790) 3 T. R. 124 ; psr WiUiams J. t6. 77 ; per 

693, where Bailer J. proposed (with- Alderson B. ib, 109. 
oat sacoess) to hold yoid all wagers 



PUBLIC POLICY: WAOEBS. 299 

Thus a wager on the future amount of hop duty was held 
void, because it might expose to all the world the amount 
of the public revenue, and Parliament was the only proper 
place for the discussion of such matters (I). Where one 
proprietor of carriages for hire in a town had made a bet 
with another that a particular person would go to the 
assembly rooms in his carriage, and not the other s, it was 
thought that the bet was void, as tending to abridge the 
fireedom of one of the public in choosing his own conveyance, 
and to expose him to "the inconvenience of being impor- 
tuned by rival coachmen " (m). A wager on the duration of 
the life of Napoleon was void, because it gave the plaintiff an 
interest in keeping the king's enemy alive, and also because 
it gave the defendant an interest in compassing his death 
by means other than lawful warfare (n). This was probably Later re- 
the extreme case, and has been remarked on as of doubt- th^ 
fill authority (o). But the Judicial Committee held in ^<«W<»« 
1848, on an Indian appeal (the Act 8 & 9 Vict. c. 109, not far now 
extending to British India) that a wager on the price of ' 
opium at the next Qovemment sale of opium was not 
illegal (p). The common law was thus stated by Lord 
Campbell in delivering the judgment: — 

" I regret to say tbut we are bound to ctinsider the common law of 
England to be that an action may be maintained on a wager, althoogh 
the parties had no previooe interest in the qneetion on which it is laid, if 
it be not against the interests or feelings of third persons, and does not 
lead to indecent evidence, nod is not contrary to puMic policy. I look with 
concern and almost with shame on the subterfages and contrivances and 
evasions to which Judges in England long resorted in struggling against 
this role" {q). 

It may surely be thought at least doubtful whether 

(l) AtherfM v. Beard (1788) 6 Moo. P. G. 812. 

2 T. R. 610. ip) By the Indian Contract Act, 

(m) EUham v. Kinginum (1818) s. 80, agreements by way of wager 

1 B. Ai Aid. 683 : this, however, was are now void, with an exception in 

not strictly necessary to the decision, favoor of prices for horse- racing of 

(n) Gilbert y.Syka (1812) 16 East, the value of IN. 500 or upwards. 

150. (^) RamWl Thackoor$eyd<u ' v. 

(o) By Alderson B. in Egtrton ▼. SoqfumnvU DkandhuU (184S) 6 Moo. 

Earl BvouftUaw, supra, and in the P. C. 300, 3:0. 
Privy GonncU in the case next cited, 



300 UNLAWFUL AGREEMENTS. 

decisions so produced and so reflected upon can in our own 
time be entitled to any regard at all. But it has been 
said that they establish a distinction of importance between 
cases where the parties " have a real interest in the matter, 
and an apparent right to deal with it " and where they 
" have no interest but what they themselves create by the 
contract ; " that in the former case the agreement is void 
only if "directly opposed to public welfare/' but in the 
latter "any tendency whatever to public mischief" will 
render it void (r). It is difficult to accept this distinction, 
or at any rate to see to what class of contracts other than 
wagers it applies. In the case of a lease for lives (to 
take an instance often used) the parties *' have no interest 
but what they themselves create by the contract " in the 
lives named in the lease : they have not any '' apparent 
right to deal with " the length of the Sovereign's or other 
illustrious persons' lives as a term of their contract : yet it 
has never been doubted that the contract is perfectly good. 

Egerion v. The leading modem authority on " public policy " is the 
Brown- great case of Egerton v. Earl Brovmlow (s). This, 
although not a case of contract, must not be left without 
special mention. By the will of the seventh Earl of 
Bridgewater a series of life interests (t) were limited, 
subject to provisoes which were generally called conditions, 
but were really conditional limitations by way of shifting 
uses upon the preceding estates (u). The eiSect of these 
was that if the possessor for the time being of the estates 
did not acquire the title of Marquis or Duke of Bridgewater, 
or did accept any inferior title, the estates were to go 
over. The House of Lords held by four to one, in accord- 
ance with the opinion of two judges (a?) against eight (y), 

(r) (1858) 4 H. L. C. 148. (u) See Lord St Leonards' jadg. 

{$) 4 H. L. C. 1-250. ment, 4 H. L. G. at p. 208. 

(e) Not estotes of freehold with {x) PoUock C.B. and Piatt B. 
remainder to first and other sons in (y) Crompton, Williams, Cress- 
tail in the usnal way, bat a chattel well, Talfoord, Wightman, and 
interest for 99 years, if the taker Erie JJ. Alderson and Parke 
should so long live, remainder to the BB. Coleridge J. thought the 
heirs male of his body. See Dav. limitations good in part only. 
Oonv. 8, pt 1. 851. 



PUBUG POLICY. 301 

that the limitatioDs were void as being against public 
policy. 

The whole subject was much discussed in the opinions OplnioM 
on both sides. The greater part of the judges insisted on ^ ^"^^•■' 
such considerations as the danger of limiting dispositions 
of property on speculative notions of impolicy (z); the 
vague and unsatisfactory character of a jurisdiction founded 
on general opinions of political expedience, as distinguished 
from a legitimate use of the policy, or rather general inten- 
tion, of a particular law as the key to its construction, and 
the confusion of judicial and legislative functions to which 
the exercise of such a jurisdiction would lead (a) ; and 
the £Eillacy of supposing an object unlawful because it 
might possibly be sought by unlawful means, when no 
intention to use such means appeared (b). On the other 
hand it was pointed out that these limitations held out 
" a direct and powerful temptation to the exercise of cor- 
rupt means of obtaining the particular dignity " (c) ; that 
besides this the restraint on accepting any other dignity, 
even if it did not amount to forbidding a subject to obey 
the lawful commands of the Sovereign (d), tended in pos- 
sible events to set private interest in opposition to public 
duty (e) ; and that the provisoes as a whole were fitted to 
bias the political and public conduct of the persons 
interested, and introduce improper motives into it (/), and 
also to embarrass the advisers of the Crown, and influence 
them to recommend the grant of a peerage or of promotion 
in the peerage for reasons other than merit {g). LordOjudam 
Lyndhurst, Lord Brougham, Lord Truro, and Lord St. of L^Sl 

(2) Orompton J. At p. 68. 6 Rio. 2. St 2. 0. 4], bat oumot be 

(a) Aldenon B. at p. 106 ; Parke compelled to aooept it by any par- 



B. at p. 128. ticalar title^ or at aU evente cannot 

(6) WiUiama J. at p. 77 ; Parke be oompeUed to accept promotion by 

B. at p. 124. any particular new title if he ii a 

{e) Piatt B. at py 99 ; Lord St peer already. 



Leonards at p. 232 ; Lord Brougham (e) FoUock O.B. at p^ 151, 

at p. 172. . - - . 

(d) On this point the preTaHing 
opinion, on the whole^ was that a 
subject cannot refuse a peerage [cp. 



at py 172. if) Lord liyndhnrst at p. 163. 

(d) On this point the prsTalUng {g) FoUock O.B. and Lord St 

opinion, on the whole^ was that a Leonards, mpm. 



302 UNLAWFUL AOREEMENTa 

Leonards adopted this view. Lord Cranworth dissented, 
adhering to his opinion in the Court below (h\ and made 
the remark (which is certainly difficult to answer) that the 
Thellusson will, which the Courts had felt bound to uphold, 
was much more clearly against public policy than this. 
The fullest reasons on the side of the actual decision are 
those of Pollock C.B. and Lord St. Leonards. Their 
language is very general, and they go far in the direction 
of claiming an almost unlimited right of deciding cases 
according to the judge's view of public policy for the time 
being. Lord St. Leonards mentioned the fluctuations of 
the decisions on agreements in restraint of trade as showing 
that rules of common law have been both created and 
modified by notions of public policy. But, assuming the 
statement to be historically correct (i), we must distinguish 
between the purely legal and the historical point of view. 
In theory the common law does not vary. In fact we 
know that it does vary, but the fact of the variation is no 
argument for an unlimited power of judicial legislation in 
this more than in any other class of questions. He also 
said that each case was to be decided upon principle, but 
abstract rules were not to be laid down (A). If this means 
only that the Court is to be guided by recognized prin- 
ciples, but will not and can not bind itself by verbal defini- 
tion, the proposition is correct and important, though by 
no means confined to this topic ; but if it means to say 
that the Court may lay down new principles of public 
policy without any warrant even of analogy, it seems of 
Eflfect of doubtful and dangerous latitude. But the ratio decidendi 

the deci- ® 

won itself : of the case does not in truth seem to require any of these 
crw^tfa*^* wide assertions of judicial discretion. The limitations in 
new head question were held bad because they amounted in ejBFect to 

(h) 1 Sim. N. S. 464. (pu 841, below). See, however, as to 

(t) In fact it Beems doubtful. the variation of the ** policy of the 

The casea on wagen are anomalous, law " in general, EvarUurel v. Evan- 

as above shown : and as to restraint turd (1874) L. R. 6 P. C. at p. 29, 

of trade it appears from the book 48 L. J. P. C. 58. 

that Hull J. was really alone in his [k) At pp. 238-9. 
opinion in the Dyer*$ ca. in 2 H, V. 



PUBUC POUCT* 303 

a gift of pecuniary means to be used in obtaining aof**piiblie 
peerage, and oflFered a direct temptation to the improper V^^^y- 
use of such means, and the improper admission of private 
motives of interest in political conduct : in short, because 
in the opinion of the Court they had a manifest tendency 
to the prejudice of good government and the administra- 
tion of public affairs. But it is perfectly well recognized 
that transactions which have this character are all alike 
void, however different in other respecta Such are 
champerty and maintenance, the compounding of offences, 
and the sale of oflSces. The question in the particular case 
was whether there was an apparent tendency to mischiefs 
of this kind, or only a remote possibility of inconvenient 
consequences. The decision did not create a new kind of 
prohibition, but affirmed the substantial likeness of a very 
peculiar and unexampled disposition of property to other 
dispositions and transactions already known to bt»long to 
a forbidden class. And the broadly expressed language 
of certain parts of the judgments may be taken, it is 
submitted, as applicable only within the bounds of that 
particular class. 

Egerton v. Earl Brownlmu^ however, is certainly a 
cardinal authority for one rule which applies in all cases 
of ** public policy:" namely that the tendency of the 
transaction at the time, not its actual result, must be 
looked to. It was urged in vain that the will of the 
seventh Earl of Bridgewater had in fact been in exist- 
ence for thirty years without producing any visible ill 
effects (J), 

The view here put forward, that there is really nothing 
in the case to warrant the invention of new heads of 
" public policy," seems to be borne out by the following 
remarks of the late Sir Q. Jessel : — 
\ 
(l) Cp. Da Coria y. Jones (1778) appear that the person had made 
Covrp. 729. Wager on sex of third any objection, and the oanse bad in 
penon void, as offensiv^e to that fact been tried without any indecent 
person and tending to indecent eW- evidence, 
dence ; notwit.h^t'tnding it did not 



304 UNLAWFUL AGREEMENTS. 

" It mtist not be forgotten that yon are not to extend arUtrarilj those 
roles which say that a given contract is void as being against pablic policy, 
because if there is one thing which more than another public policy 
requires, it is that men of fall age and competent understanding shall haye 
the utmost liberty of contracting, and that their contracts, when entered 
into freely and Toluntarily, shall be held sacred and shall be enforced by 
courts of justice. Therefore, you have tins paramount pablic policy to 
coDsider— that you are not Ughtly to interfere with this freedom of 
contract" (m). 



We now proceed to the several heads of the subject 

a. Pablic a. First, as to matters concerning the commonwealth in 
tou^Dg ^^ relations with foreign powers. 

extenuJ 

the State. " On the principles of the English law it is not com- 
petent to any " domiciled British (n) " subject to enter into 
a contract to do anything which may be detrimental to 
the interests of his own country " (o). 

An agreement may be void for reasons of this kind 
either when it is for the benefit of an enemy, or when the 
enforcement of it would be an afiront to a friendly state. 

TnMUng As to the first and more important branch of this rule : 
" It is now fully established that, the presumed object of 
war being as much to cripple the enemy's commerce as to 
capture his property, a declaration of war imports a pro- 
hibition of commercial intercourse and correspondence 
with the inhabitants of the enemy's country, and that 
such intercourse, except with the licence of the Crown, is 
iUegal"(p). 

Potts «. The case of Potts v. Bell (q), decided by the Exchequer 
Chamber in 1800, is the leading authority on this subject. 
The following points were there decided : 



with 
enemy. 



BelL 



{m)PnntmgandNununealRigii» (o) 7 B. ft B. 782. 
teHna Oo, v. 8amjp9on (1875) 19 Eq. (p) JBtpotUo t. B<nodw (1857) (in 

462, 44 L. J. Gh. 705. Ex. Oh.), 7 B. ft B. 768, 779, 

(n) The role does not apply to 24 L. J. Q. B. 210 ; Kenhuw t. 

Britiih Bubjeeti domiciled abroad : Kditjf^ 100 MaaiL 561. 
BeU T. Rod (1818) 1 M. ft B. 726. {q) (1800) 8 T. B. 548. 



TRADING WITH ENEMIES. 305 

It IS a principle of the commou law (/*) that trading 
with an enemy without licence from the Crown is illegal. 

Purchase of goods in an enemy's country during the 
war is trading with the enemy, though it be not shi^wn 
that they were actually purchased from an enemy : and an 
insurance of goods so purchased is void. 

As to insurances originally effected in time of peace : 
"When a British subject insures against captures, the 
law infers that the contract contains an exception of 
captures made by the government of his own country* (s). 

The effect of the outbreak of war upon subsisting Effect of 
contracts between subjects of the hostile states varies ^bdiSiig 
according to the nature of the case. It may be that the ocmtrmoii. 
contract can be lawfully performed by reason of the 
belligerent governments or one of them having waived 
their strict rights : and in such case it remains valid. In 
CUmentHo^n v. Blesaig (t) goods had been ordered of the 
plaintiff in England by a firm at Odessa before the de- 
ciaiution of war with Russia. By an Order in Council six 
weeks were given after the declaration of wax for Russian 
merchant vessels to load and depart, and the plaintiff 
forwarded the goods for shipment in time to be lawfully 
shipped under this order : it was held that the ^ale 
remained gooil. 

If the contract cannot at once be lawfully performed, 
then it is suspended during hostilities (a) unless the nature 
or objects of the contract be inconsistent with a suspen- 
sion, in which case " the effect is to dissolve the contract 
and to absolve both parties fix)m further performance of 
it " (v). The outbreak of a war dissolves a partnership 

(r) In the Admiialty it was el- (u) ExparUBouumaker (1S06)1Z 

ready beyond question : aee the Vee. 71. 

seriei of precedents cited in PoU$ v. (v) EnpotUo ▼. Bowdm (1857) 7 

Bdl E. & B. 763, 783, 27 L. J. Q. B. 17 

(t) Furtado v. Bodgers (1802) 3 (in Ex. Ch.) revg. s. c. 4 K. & B. 

B. & P. 191, 200 ; £x parte lee 963, 24 L. J. Q. B. 210. For a later 

(1806) 13 Ves. 64. application of the same reakon of 

{t) (1855) 11 Ex. 135, and on the convenience cp. Oeiptl v. Smith 

subject geiier«Uy see the reporters* (1872) L. R. 7 Q. B. 404, 41 L. J. 

note, pp. 141-5. Q. B. 153. A contract to carry 



306 UNLAWFUL AGREEMENTS. 

previously existing between subjects of the two hostile 
countries (x). 

In Eapoaito v. Bowden (y), a neutral ship was chartered 
to proceed to Odessa, and there load a cargo for an English 
freighter, and before the ship arrived there war had 
broken out between England and Russia, and continued 
till after the time when the loading should have taken 
place : here the contract could not be performed without 
trading with the enemy, and in such a case it is con- 
venient that it should be dissolved at once, so that the 
parties need not wait indefinitely for the mere chance of 
the war coming to an end, or its otherwise becoming 
possible to perform the contract lawfiiUy. 
Bills of Questions have arisen on the validity of bills of ex- 

St«wn* change drawn on England in a hostile country in time of 
EngUnd war. Here the substance of the transaction has to be 
oonntry. looked at, not merely the nationality of the persons who 
are ultimately parties to an action on the bill. Where a 
bill was drawn on England by an English prisoner in a 
hostile country, this was held a lawfiil contract, being 
made between English subjects ; and by the necessity of 
the case an indorsement to an alien enemy was further 
held good, so that he might well sue on it after the return 
of peace (z). But a bill drawn by an alien enemy on a 
domiciled British subject, and indorsed to a British subject 
residing in the enemy's country, was held to give no right 

goods baa been held to be only sua- Court that, the premiumB having 

pended by a temporary embargo, been unpaid during the war, the 

though it lasted two years : ffcuUey policies were avoided ; bat that in 

V. Clarke (1799) 8 T. R 259. Sed the circumstances the assured were 

qiL is not this virtually overruled entitled to the surrender value of 

by Etpogito v. JBowden t their policies at the date of the first 

(x) Grismdd v. Waddington (1818) default. But the opinions that the 

15 JohuH. (Sup. Ct. N. Y.) 57, in contract was avoided without com- 

error, 16 t6. 438. In Netc York Life pensation, and that it revived at 

Insurance Co. v. Statham (1876) 3 the end of the war, also found 

Otto (93 U. S.) 24, a curious ques- support 

tion arose as to the effect of the {y) See note (v) previous page. 

Civil War on life policies effected by (z) Antaine v. Aforthead (1815) 6 

residents in the Southern States Taunt. 237, cp. Dauhuz v. Mortikead 

with a company in the North. It (1815) t&. 382. 
was held by the majority of the 



HOSTILITIES AGAINST FRIENDLY NATION. 307 

of action even after the end of the war : for this was a 
direct trading with the enemy on the part of the ac- 
ceptor (a). It seems proper to observe that these cases 
must be carefully distinguished from those which relate 
only to the personal disability of an alien enemy to sue in 
our Courts during the war (fc). 

On the other hand, an agreement cannot be enforced in HortOitiM 
England which has for its object the conduct of hostilities J§^J^ 
against a power at peace wath the English government, at daUoh 
all events by rebellious subjects of that power who are Sibj^ of 
endeavouring to establish their independence, but have^^'™* 
not yet been recognized as independent by England. 
This was laid down in cases arising out of loans contracted 
in this country on behalf of some of the South American 
Republics before they had been oflScially recognized. 

" It is contrary to the law of nationi, which in all cates of international 
law is adopted into the mnnicipal oode of every civilised oonntiy, for 
penons in England to enter into engagements to raise money to support 
the subjects of a government in amity with oar own in hostilities against 
their government, and no right of action can arise oat of snch a transac- 
tion "(c). 

The Supreme Court of the United States has held, 
however, that an assignment of shares in a company 
originally formed for a purpose of this kind was so re- 
motely connected with the original illegality of the loan 
as not to be invalid between the parties to it (d). 

It is not a " municipal offence by the law of nations " Xeotral 
for citizens of a neutral country to carry on trade with a beilige^ 
blockaded port — that is, the courts of their own country f »*■ » »* 

(a) WiUittm v. PoUeton (1817) 7 (e) Best G.J. De WiUz v. Hen- 

TaoDt. 439. The circumstances of d^nck* (1824) 2 Bing. 314. Cp. 

the indorsement seem immaterisl. Tkomjpton v. PtneUB (1828) 2 Sim. 

(6) Such are McCkmneU v. Heetcr, 194, where the language seems un- 

3 B. & P. 118 ; Brandon v. AttbiU necessarily wide. 

(1794) 6T. R. 28. As to prisoners {d) McBUnr v. Oibbea (1854) 17 

of war here, Sparenburgh v. Banna- Howard, 232. 
tyne (1797) 1 B. & P. 188. 

x2 



808 UNLAWFUL AGREEMENTS. 

capture cannot be expected to treat it as illegal (though of course 
unlftwfuL it is done at the risk of seizure, of which seizure, if made, 
the neutral trader or his government cannot complain) : 
and agreements having such trade for their object — e,g. 
a joint adventure in blockade running — ^are accordingly 
valid and enforceable in the courts of the neutral state {e). 
Several decisions on this topic of aiding or trading with 
enemies have been given in the American Courts in cases 
arising out of the Civil War. They will be found collected 
in the last edition of Mr. Story's work (/). 

Exoeo- It is admitted as a thing required by the comity of 

treatment nations that an agreement to contravene the laws of a 
of foreign foreifiTi country would in jreneral be unlawful. But it is 
laws. said that revenue laws (m practice the most important 
cases) are excepted, and that " no country ever takes notice 
of the revenue laws of another " (gr). 

As a general proposition, however, this is strongly dis- 
approved by most modem writers as contrary to reason 
and justice Qi). It should be noted that our Courts, so far 
as they have acted upon it, have done so to the prejudice 
of our own revenue quite as much as to that of foreign 
states. Thus a complete sale of goods abroad by a foreign 
vendor is valid, and the price may be recovered in an 
English Court, though he knew of the buyer s intention 
to smuggle the goods into England. " The subject of a 
foreign country is not bound to pay allegiance or respect 
to the revenue laws of this " (i). But it is admitted that 

{e) fxjMirto CAanMM (1865) 4 D. in our bookti, and the di»>ent of 

J. 8. 655, pee Lord Westbury's Field J. speini well founded, 

judgment ; The Helen (1875) L. R. (y) Lord Mansfield in Holman v. 

1 Ad. k Eoc. 1, 84 L. J. Ad. 2, and Johnton (1775) 1 Cowp. 841. 

American authorities there cited ; {h) Kent, Comro. 3. 263-266 ; 

Kent, Comm. 8. 267. V^ barton, Conflict of Jiaws, §§ 484- 

(/) Texat V. White (1868) 7 5. And see WestUke on Private 

Wallace (Sup. Ct. U. 8.) 700 (where International Law (1880), pp. 281, 

however the chitf points are of con- 238. 

stitutional law) ; Hanauer v. Doane (i) Holman v. Johntmi (1775) I 

(1870) 12 t&. 342; Story on Con- Cowp. 431; PelUcat r, Angdi {1SS5) 

tractP, §744. SproUY.U,S.{lS7i) 2 C. M. & B. Sll-S, per Lord 

20 WaU. 459, goes Uyond an> thing Abinger C.B. 



rORETON REVENUE LAWS. 309 

an agreement to be performed in England in violation of 
English revenue laws would be void — ^as if, for example, 
the goods were to be sniuggled by the seller and so 
delivered in England. And a subject, domiciled in the 
British dominions (though not in England or within the 
operation of English revenue laws) cannot recover in an 
English Court the price of goods sold by him to be smuggled 
into England (k) ; and even a foreign vendor cannot recover 
if he has himself actively contributed to the breach of 
English revenue laws, as by packing the goods in a manner 
suitable and to his knowledge intended for the purpose of 
smuggling (I), 

The cases upholding contracts of this kind, whether as 
against our own or as against foreign laws, would probably 
not be now extended beyond the points specifically decided 
by them, and perhaps not altogether upheld (m). There is 
one modem case which looks at first sight like an authority 
for saying that our Courts pay no regard to foreign shipping 
registration laws : but it really goes upon a different prin- 
ciple, and, besides, the law of the United States was not 
properly brought before the Court (n). 

As to instruments wnich cannot be used in their own Fotdgn 
country for want of a stamp, it is now settled that regard j^^ 
will be paid by the Courts of other States to the law which 
regulates them, and the only question is as to the real effect 
of that law. If it is a mere rule of local procedure, re- 
quiring the stamp to make the instrument admissible in 
evidence, a foreign Court, not being bound by such rules of 
procedure, will not reject the instrument as evidence : it is 
otherwise if the local law " makes a stamp necessaiy to 

{k) Clvffot y. Pena/una (1791) 4 the general law m to sale of goods, 

T. R. 466. It Mems, bat it is not &c., which the teller knows will be 

quite certain, from this case, that nsed for an nolawfol purpose, was 

mere knowledge of the buyer's in- not fully settled at the date of these 

tention would disentitle him. sutboritiep. 

{I) Waymdlr.Reed{^79i)5T.K. (n) Sharpy. Tayior (1849) 2 Pb. 

599. 801, see Lindley on Partnership, 1. 

(s») It must be remembered that 107. 



310 UNLAWFUL AGREEMENTS. 

the validity of the instrument," Le. a condition precedent 
to its having any legal effect at all (o). 

h. PoUio 1). As to matters touching good government and the 

S^^ng administration of justice. 

internal 

ttowem- 

ment It is needless to produce authorities to show that an 

Oonrnpt or agreement whose object is to induce any oflScer of the 
falflooDoe State, whether judicial or executive, to act partially or 
on public corruptly in his office, must in any civilized country be 

OtuOtOtt OF . 

k|{i». void. But an agreement which has an apparent tendency 
"•• that way, though an intention to use unlawful means be 
not admitted, or even be nominally disclaimed, will equally 
be held void The case of Egerioii v. Earl Browiilow, of 
which an account has been given a few pages above, was 
decided on the principle that all transactions are void 
which create contingent interests of a nature to put the 
pressure of extraneous and improper motives upon the 
counsels of the Crown or the political conduct of legis- 
lators, 
lianball A decision in the American Supreme Court which hap- 
]nore,Ac., pens to be of nearly the same date shows that an agree- 
^' ment is void which contemplates the use of underhand 

Conrt means to influence legislation. In Marshall v. Baltimore 
^^ and Ohio Railroad Co. (p) the nature of the agreement 
sued on appeared by a letter from the plaintiff to the 
president of the railway board, in which he proposed a 
plan for obtaining a right of way through Virginia for the 
company and offered himself as agent for the purpose. 
The letter pointed (though not in express terms) to the use 
of secret influence on particular members of the legisla- 
ture : and it referred to an accompan}dng document which 
explained the nature of the plan in more detail This 
document contained the following passage : — " I contem- 

(o) See Wharton, Oonfliot of 289. 
Lftw«, $$ 685-8 ; Britiow y. Secque- {p) (1858) 16 Howard, 814. 

vOU (1850) 5 Ex. 275, 19 L. J. Ex. 



AGREEMENTS FOR OORRCFT INFLUENCE. 311 

plate the use of no improper means or appliances in the 
attainment of your purpose. My scheme is to surround 
the legislature with respectable agents, whose persuasive 
arguments may influence the members to do you a naked 
justice. This is all I require — secrecy from motives of 
policy alone — because an open agency would furnish 
ground of suspicion and unmerited invective, and might 
weaken the impression we seek to make." The arrange- 
ment was to be as secret as practicable : the company was 
to have but one ostensible agent, who was to choose such 
and so many sub-agents as he thought proper : and the 
pajonent was to be contingent on success. The actual 
contract was made by a resolution of the directors, accord- 
ing to which agents were to be employed to " supi»rintend 
and further " the contemplated application to the legisla- 
ture of Virginia ** and to take all proper measures for that 
purpose ; " and their right to any compensation was to be 
contingent on the passing of the law. The Supreme 
Court held, first, that it was sufficiently clear that the con- 
tract was in fact made on the footing of the previous com- 
munications, and was to be carried out in the manner 
there proposed ; and secondly, that being so made it was 
against public policy and void. 

" It is an nndoofaied principle of the common law that it will not lend 
its aid to enforce a contract to do an act that is illegal, or which is incon- 
sistent with sound morak or public policy ; or which tends to oornipt or 
contaminate, by improper influences, the integrity of our social or political 
institntions. . . . Legislators should act from high eontiderations of 
public duty. Public policy and sound morality do therefore imperatiyely 
require that Courts should put the stamp of their disi^robation on every 
act and pronounce void every contract the ultimate [qn. immediate ?] or 
probable tendency of which would be to suUy the purity or mislead the 
judgments of those to whom the high trust of legiiilation is confided.'* [The 
judgment then points out that persons interested in the results of pending 
legislation have a right to urge their daams either in person or by agents, 
but in the latter case the agency must be open and acknowledged.] " Any 
attempts to deceive persons intrusted with the high functions of legislation 
by secret combinations, or to create or bring into operation undue influ- 
enots of any kind, have all the effects of a direct fraud on the public ** (f). 

(9) (185d) 16 Howard, at pp. 8d4-fi. 



312 UNLAWFUL AGREEMENTS. 

And the result of the previous authorities was stated to 
be— 

"Ist. That all contracts for a contingent compenfation for obtaining 
legislation, or to use personal or any pecret or ^iniiter influence on legiBlaton* 
are (r) void by the policy of the law. 

" 2nd. Secrecy as to the character undei which the agent or solicitor acta 
tends to deception and ii immoral and fraadnlent, and where the agent 
contracts to use secret iofluences, or volnntarlly without contract with his 
principal unes such mean«, he cannot have the assistance of a Court to re- 
cover compensation. 

" 3rd. That what in the technical vocabulary of politiciacs is termed 
'log-rolling' (f) is a misdemeanour at common law punishable by in- 
dictment '* (t). 

So in a later case (u) an agreement to prosecute a claim 
before (^ongress by means of personal influence and solici- 
tations of the kind known as "lobby service" has been held 
void. 
Otherwise But as it is open to a landowner or other interested 
by penon P^^'^'^ ^ defend his interest by all lawful means against 
interested proposed legislation from which he apprehends injury, so 
draw op- i^ ^ open to him to withdraw or compromise his claims on 

position ; ^ny terms he thinks fit. There is no reason afirainst bar- 
Simpeon v. . . . . 

Lord gains of this kind any more than against a compromise of 

Howden. disputed civil rights in ordinary litigation. And the law- 
fulness of such an agreement is not altered if it so happens 
that the party is himself a member of the legislature. In 
the absence of anything to show the contrary, he is pre- 
sumed to make the agreement solely in his character of a 
person having a valuable interest of his own in the matter* 
and he is not to be deprived of his rights in that character 
merely because he is. also a legislator (x), " A landowner 
cannot be restricted of his rights because he happens to be 
a member of Parliament " (y). This may seem a little 

(r) " M " by a clerical error in the (101 U. S.) 108. 

report. (x) Simpton v. Lord HowdenllSZ9) 

(«) Arrangements between mem- 2 P. & D. 714, 10 A. & E. 798, 9 

bers for the barter of votes on private CI & F. 61. 

bflls. (y) Kindersley V.-C. in Bad of 

{t) 16 Howard, 336. Shrrwibury v. iV. Stc^^vrdthire Hy. 

(tt) Triii V. ChUd (1874) 21 Wall Co. (1865) 1 E4. 698, 613, 3.5 L. J. 

(Sup. Ct U. S.) 441. See, too, Ch. 166. 
Meguire v. Corw nt (1879) 11 Otto 



SALE OF OFFICES. 313 

anomalous : but it must b:* remembered that in practice 
there is little chance of a conflict between duty and interest, 
as the legislature generally informs itself on these matters 
by means of committees proceeding in a quasi-judicial 
manner. Of course it would be improper for a member 
personally interested to sit on such a committee. 

On similar grounds it is said that the sale of oflSces^^j^' 
(which is forbidden by statutes extending to almost every ^c., »t 
case) is also void at common law(2f). However, there may be ^ 
a lawful partnership in the emoluments of offices, although 
a sale of the offices themselves or a complete assignment 
of the emoluments would be unlawful (a). The same 
principles are applied to other appointments which though 
not exactly public offices are concerned with matters of 
public interest. " Public^ policy requires that there shall 
be no money consideration for the appointment to an office 
in which the public are interested: the public will be 
better served by having persons best qualified to fill offices 
appointed to them ; but if money may be given to those 
who appoint, it may be a temptation to them to appoint 
improper persons." Therefore the practice which had 
grown up in the last century of purchasing commands of 
ships in the East India Company's service was held unlaw- 
ful, no less on this ground than because it was against the 
Company's regulations (6). 

In like manner a secret agreement to hand over to 
another person the profits of a contract made for the public 
service, such as a Post Office contract for the conveyance 
of mails, is void (c). 

Nevertheless many particular offices, and notably subor- 
dinate offices in the courts of justice, were in fact .'.aleable 
and the subject of sale by custom or otherwise until quite 



(2) Haningion v. Du ChMtd (1781) B. 110, 19 L. J. C. P. 287. 

2 Swanst. 159, n. ; ffopHm v. (6) Blackford y. Pruton (1799) 

Pre$eoU (1847) 4 C. B. 678, 16 L. J. 8 T. R. 89. 93. 

O. P. 259, per Coltm«i J. (c) Oibome ▼. WUliami (1811) 18 

(a) SUny ▼. Oiftan (1850) 9 C. Yea. 879. 



314 UNLAWFUL AGREEMENTS. 

modem times. But the commission of an officer in the 
army could not be the subject of a valid pledge even under 
the S3rstem of purchase recently abolished (d), 
Aflrign- For like reasons certain assignments of salaries and pen- 

JJU^^^ sions have been held void, as tending to defeat the public 
objects for which the original grant was intended. Thus 
military pay and judicial salaries are not assignable. The 
rule is that " a pension for past services may be aliened, 
but a pension for supporting the grantee in the perform- 
ance of future duties is inalienable ": and therefore a pen- 
sion given not only as a reward for past services, but for the 
support of a dignity created at the same time and for the 
same reason, is inalienable (e). But an assignment by the 
holder of a public office of a sum equivalent to a propor- 
tionate part of salary, and secured to his legal personal 
representatives on his death by the terms of his appoint- 
^ment, is not invalid, such a sum being simply a part of his 
personal estate like money secured by life insurance (/). 
In a late case a mortgage by an officer of the Customs of 
his disposable share in the " Customs Annuity and Bene- 
volent Fund " created by a special Act was unsuccessfully 
disputed as contrary to the policy of the Act (g), 

Interfer- Agreements for the purpovse of " stifling a criminal 
oourarof prosecution " are void as tending to obstruct the course of 
justice. public justice. An agreement made in consideration 
nal pro- ostensibly of the giving up of certain promissory notes, the 
•'Istifl'^*' notes in fact having forged indorsements upon them, and 
proeeou- the real consideration appearing by the circumstances to 
wmiamB ^ *^^ forbearance of the other party to prosecute, was 
V. Bayley. held void on this ground in the House of Lords. The 
principle of the law as there laid down by Lord Westbury 
is " That you shall not make a trade of a felony " (h). 

{d) Collyer v. Fallon (1828) T. & (1749) 2 Wb. & T. L C. 729. 
R. 469. (/) Arbuthnot v. Norton^ ntpra. 

{e) Davit v. Duke of Marlborough {q) Madean^f truttt (1874) 19 Eq. 

(1818) 1 Swansf. 74, 79. C^. 274. 

Arbuthnot v. Nort4m (1846) 5 Moo. (A) WiUiam* v. Bayley (1866) L. 

P. C. 219. And see authorities R. 1 H. L. 200, 220, 35 L. J. Ch. 

ooUeoted in notee to JiyaU ▼. RowUs 717. 



COMPOUNDING OFFENCES. 815 

However the principal direct authority must still be ^^'-^ 
sought in the earlier case of Keir v. Leeraan (i). The 
Court of Queen s Bench there said : — 

**The priDoiple of Uw is laid down by WOmot C.J. in CotUm ▼. 
Blantem {i) th*t » contract to withdraw a proaeootion for perjnxy and con- 
sent to give no evidence against the accased ia founded on an nnlawfol 
consideration and void. On the sonndness of this dedsion no donbt can be 
entertained, whether the party aoensed were innocent or guilty of the 
crime charged. If innocent, the law was abated for the porpoie of extor- 
tion ; if gnilty, the law was eluded by a corrupt compromise screening the 
criminal for a bribe. [The cases are then reviewed.] We shall probably 
be safe in laying it down that the law will permit a compromise of all 
offences, though made the subject of criminal prosecution, for which offences 
the injured party might sue and recover damages in an action. It is often 
the only manner in which he can obtain redress. But if the offence is of a 
public nature no agreement can be valid that is founded on the considera- 
tion of stifling a prosecution for it ** {I), 

Accordingly the Court held that an indictment for 
offences including riot and obstruction of a public oflScer 
in the execution of his duty cannot be legally the subject 
of a compromise. The judgment of the Exchequer Cham- 
ber (ttv) aflSrmed this, but showed some dissatisfaction even 
with the limited right of compromise admitted in the 
Court below. It was observed that there was really very 
little authority for it ; and although it was n<^t actually so 
laid down, it looks as if the Court would have been ready 
to decide if necessary that the compromise of any criminal 
offence is illegal. In a late case, however, the Court of 
Appeal entertained no doubt that where there is a choice 
of a civil or criminal remedy a compromise of criminal as 
well as civil proceedings is lawfiil (n). 



(i) (1844) 6 Q. B. 808, 13 L. J. there is no real ground for a prosecu- 

Q. B. 259. in Ex. Ch. 9 Q. B. 871, tion, the supposed offence being an 

15 L. J. Q. B. 860. act not criminally punishable 1 See 

{k) 1 Sm. L. C. 869, 882. per Fry J. 8 Ch. B. at p. 477. It is 

(0 Aco. in Clvhb v. ffutmm (1865) submitted that the agreement would 

18 C. B. N. S. 414, held that forbear- be void for want of consideration, 
anoe to prosecute a charge of (m) 9 Q. B. at p. 392. 

obtaining money by false pretences (n) Fisher de Co, v. Apo/lwarU Co, 

is an illegnl consideration. What if (1875) 10 Ch. 297, 44 L. J. Ch. 500. 



316 TN LAWFUL AGREEMENTS. 

It is not compounding felony for a person whose name 
has been forged to a bill to adopt the forged signature and 
advance money to the forger to enable him to take up the 
bill. It is doubtful whether a security given by the forger 
for such advance is valid : but he cannot himself actively 
dispute it (on the principle potior est condicio defendtntis, 
of which afterwards), nor can his trustee in bankruptcy, 
who for this purpose is in no better position than him- 
self, as there is in any case no offence against the bankrupt 
laws (o). 

An agreement by an accused person with his bail to 

indemnify him against liability on his recognizances is 

illegal, as depriving the public of the security of the 

bail (p). 

iSEliz. The compounding of offences under penal statutes is 

expressly forbidden by 18 Eliz. c. 5, s. 5. 

Compro- An election petition, though not a criminal proceeding, 

election is a proceeding of a public character and interest which 

petition, jj^^y j^^^y^ penal consequences ; and an agreement for 

pecuniary consideration not to proceed with an election 

petition is void at common law, as its effect would be to 

deprive the public of the benefit which would result firom 

the investigation {q\ 

In like manner an agreement for the collusive conduct 
of a divorce suit is void (r), and agreements not to expose 
immoral conduct («), and to conduct criminal proceedings 
against a third person in such a way that the name of a 
party who was in fact involved in the transaction should 
not be mentioned (t) have been held void as against public 
policy. 



(o) otherwise where, after an Q. B. Div. 561. 

act of bankraptoy, the banknipt's {q) Coppockv, Bower {ISZS) 4 M.k 

money has been paid for stifling a W. 861. 

pioeecation : there the trustee can (r) Hi>pe v. Hope (1857) 8 D. M. 

reooverit : Ex parte Wolverhampton G. 731, 26 L. J. Cb. 417. 

Banking Vo. (1884) 14 Q. B. D. 82 ; (f ) Brovm v. BHne (1875) 1 Ex. D. 

Ex parte CakUcoU (1876) 4 Ch. 5, 46 L. J. Ex. 129. 

IMv. 160. 46 L. J. BW. 14. (0 Lound v. Orimwade (1888) 8» 

(p) Umnan v. Jeuckntr (1886) 16 Cb. D. 605, 57 L. J. Ch. 726. 



ARBITRATION HOW FAR ENITORCUABLE. 317 

Agreements relating to proceedingH in civil courts, and ][°°T*} 
involving anything inconsistent with the fiill and impartial ing,. oom- 
course of justice therein, though not open to the charge ?«>""» 
of anything like actual corruption, are likewise held void pa^ 
Where an agreement for compromise of a suit (a thing P™"'** • 
regarded as in itself rightful and even laudable) was in j^knoo. 
fact founded on information privily given to one of the 
parties by an officer of the 0>urt in violation of his duty 
(such information not being specific, but a general inti- 
mation that it would be for the party's interest to 
compromise). Lord Eldon held that it could not be en- 
forced (u), 

A shareholder in a company which was in course of Saorat 
compulsory winding-up agreed with other shareholders, JU^^J^ 
who were also creditors, in consideration of being indem- ^"^t of 
nified by them against all fiitiu^ calls on his shares, that up : 
he would help them to get an expected call postponed, Elliott v. 
and also support their claim ; it was held that " such an ^^ 
agreement amounts to an interference with the course of 
public justice " : for the clear intention of the Winding-up 
Acts is that the proceedings should be taken with reason- 
able speed so that the company's affairs may be settled and 
the shareholders relieved ; and therefore any secret agree- 
ment to delay proceedings to the prejudice of the other 
shareholders and creditors is void (jl). This conies near 
to the cases of secret agreements with particular creditors 
in bankruptcy or composition : and those cases do in fact 
rest partly on this groimd. But the direct fraud on the 
other creditors is the chief element in them, and we have 
therefore spoken of them under an earlier head (p. 266^. 

Agreements to refer disputes to arbitration are, or rather Agree- 
were, to a certain extent regarded as encroachments on referenoe 
the proper authority of coiurts of justice by the substi- J? •'Wt». 
tution of a *' domestic forum " of the parties' own making, far Yalid «t 

(tt) Cooth ▼. Jack»n (1801-2) 6 L. B. 5 G. P. 744, 74d-9, per 
V««. U. SI, 82. WiUet J. 89 L. J. C. F. 840. 

{») BUioU ▼. Riekardton (1870) 



318 



UNLAWFUL AOKEEMENTS. 



oomoDon 

Iaw. 



Fraoti- 
oally en- 
forceable 
under C. 



At common law such an agreement, though so £ar valid 
that an action can be maintained for a breach of it (y), 
does not " oust the ordinary jurisdiction of the Court " — 
that is, cannot be set up as a bar to an action brought in 
the ordinary way to determine the very dispute which it 
was agreed to refer. Nor could such an agreement be 
specifically enforced (z), or used as a bar to a suit in 
equity (a). It is said however " that a special covenant 
not to sue may make a difference " (a). And the law has 
not been directly altered (a) : but the Common Law Pro- 
cedure Act, 1854 (17 & 18 Vict. c. 125, s 11), gave the 
1864. Courts a discretion to stay proceedings in actions or suits 
on the subject matter of an agreement to refer, which 
amounts in practice to enabling them to enforce the agree- 
ment : and this discretion has as a rule been exercised by 
Courts both of law (6) and of equity (c) in the absence of 
special circumstances, such as a case where a charge of 
fraud is made, and the party charged with it desires the 
inquiry to be public (d), or where the defendant appeals 
to an arbitration clause not in good faith, but merely for 
the sake of vexation or delay (e). A question whether on 
the true construction of an arbitration clause the subject- 
matter of a particular dispute falls within it is itself to be 
dealt with by the arbitrator, if it appears from the nature 
of the case and the terms of the provisions for arbitration 
that such was the intention of the parties. Otherwise it 
must be decided by the Court (/). 



(y) lAvingtUm v. RaUi (1855) 5 B. 
&K 132, 24L. J.Q. B. 269. 

(z) Street v. Righy (1802) 6 Ves. 
815, 818. 

(a) Cooke v. Cooke (1867) 4 Eq. 
77, ft6-7, 30 L. J. Cb. 480. 

{h) Randegger v. Hotmet (1866) 
L. K. 1 C. V. 679 ; Seligmann v. Le 
BoutUlier (1S^6) ib, 681. 

{€) WUUsford V. WaUon (1878) 
14 £q. 572, 8 Cb. 478, 42 L. J. Gh. 
447 ; PUtn v. Baker (1878) 16 Eq. 
564, 43 L. J. Cb. 212. 

{d) Ruuell ▼. Rut9dl (1880) 14 
Cb.D.»ip. 476(JeMel M.R.). 

(<) 14 &q. 578 ; WiU y. Coreoran 



(1871) 8 Cb. 476, «., 16 Bq. 571 : 
or after acting on bla own view of 
the matters in difference, Davit v. 
Starr (1889) 41 Cb. Div. 242. The 
enactment applies only wbere tbere 
is at tbe time of action brougbt 
an existing agreement for reference 
wbiob can be carried into effect 
Randellf Saundere ^ Co, v. Tkomp- 
son (1876) 1 Q. K Div. 748, 45 L. J. 
Q. B. 718. 

(/) Piercy v. Foun^ (1879) 14 Cb. 
Div. 200, 208, per Jeasel M.R. 
qualifying tbe apparent effect of 
WilUrfordy. Watton (1878) 8 Ch. 
473. 



ABBTTRATION: STATUTORY PROVISIONa 819 

And when the question is whether an agreement con- 
taining an arbitration clause is or is not determined, that 
question is not one for arbitration, since the arbitration 
clause itself must stand or &11 with the whole agree- 
ment (g). 



Certain statutory provisions for the reference to arbitra- Speeud 
tion of internal disputes in friendly and building societies Jl^itwSou 
have been decided (after some conflict) to be compulsory daoMt. 
and to exclude the ordinary jurisdiction of the Courts (/t). 
The Railway Companies Arbitration Act, 1859, is also 
compulsory (i). 

Moreover parties may if they choose make arbitration Agre©- 
a condition precedent to any right arising at all, and in pvtiet 
that case the foregoing rules are inapplicable : as where ^IJ^^ 
the contract is to pay such an amount as shall be deter- action 
mined by arbitration or foimd due by the certificate of a ^^"^^^J^ 
particular person {k). Whether this is in &ct the contract, ^^^ 
or it is an absolute contract to pay in the first instance, 
with a collateral provision for reference in case of difference 
as to the amount, is a question of construction on which 
there has been some difference of opinion in recent cases (/). 



(^)Per James L.J. in Uandly 609. 
Jty. 4s Dock Co, y, L, A N. W. By, (i) WaJtford dr Ridcman^worth Jig. 

Co. (1878) 8 Ch. »l p. 948. Co. v. L. d: N. W. Ry. Co. (1869) 8 

{h) Thomywn r. Planet Benefit £q. 231, 38 U J. Ub. 449. 
Building Society (1878) 15 £q. 833 ; {k) ScoU ▼. Avery (1865-6) 5 H. 

Wright V. Monarch Investment L. O. 811, 25 L. J. £z. 803; 

Building Society (1877)5 Oh. D. 726, which does not overrale the former 

46 L. J. Ch. 649 ; Hack w. London general law on the subject, see the 

Provident Building Society (1883) 23 jadgfuente of Brett J. and Kelly 

Gh. Div. 103, 52 L. J. Ch. 542; if urn- O.B. in Ex. Ch. in Bdwarde w. 

cipal Building Society Y. Kent {IBS4) Aberayron, dfec. Society (1875-6) 1 

9 App. Oa. 260, 53 L. J. Q. B. 290. Q. B. D. 563 ; ScoU v. Corporoium 

Not so where the real quesvion is of Liverpool (1858) 3 De G. k J. 

whether a party claiming against 384, 28 L. J. Cb. 236. Cp. Collins 

the society is a member of the ▼. Locke (1879) (J. C.) 4 App. Ca. 

society at all : Prentice v. London 674, 689, 48 L. J. P. C. 68. 
(1875) L. R. 10 C. P. 679, 44 L. (/) BUiott v. Boyal Exchange As- 

J. C. P. 353. See the Bailding suranee Co. (1867) L. K. 2 Ex. 287, 

Societies Act, 1884, 47 & 48 Vict. 86 L. J. Ex. 129 ; Dau>san v. FUz- 

c. 41, and Western Suburban, d:c. $«ra^ (1876) 1 Ex. Div. 257, revg. s. 

Co. V. MartM (1886) 17 Q. B. Div. c L. R. 9 Ex. 7, 45 L. J. Ex. 898. 



320 UNLAWFUL AGREEMENTS. 

Kainte- We now come to a class of transactions which are 

°*°^ *" specially discouraged, as tending to pervert the due course 



P«*y« of justice in civil suits. 

These are the dealings which are held void as amounting 
to or being in the nature of champerty or maintenance. 
The principle of the law on this head has been defined to 
be " that no encouragement should be given to litigation 
by the introduction of parties to enforce those rights 
which others are not disposed to enforce " (m). Main- 
tenance is properly a general term of which champerty is a 
species. Their most usual meanings (together with certain 
additions and distinctions now obsolete) are thus given 
by Coke : — 

"First, to maintain to have part of the land or anything 
out of the land or part of the debt, or any other thing in plea 
or suit ; and this is called cambipartia [champart, campi 
pa'tiifio], champertie." 

The second is " when one maintaineth the one side 
without having any part of the thing in plea or suit" (n). 
Champerty may accordingly be described as "maintenance 
aggravated by an agreement to have a part of the thing in 
dispute" (o). 

Agreements falling distinctly within these descriptions 

are punishable under certain statutes (p). It has always 

been considered, however, that champerty and maintenance 

are offences at common law, and that the statutes only 

declare the common law with additional penalties (q). 

Relation Whether by way of abimdant caution or for other 

^LtetM reasons, the law was in early times applied or at any rate 

to the asserted with extreme and almost absurd severity (r). It 



oomnum 



(m) By Lord Abinger in Prouer 25 ; 13 Ed. 1 (Stat. Weatro. 2), c 

V. Edmonda (1835) 1 Y. & C. Ex. 49 ; 28 Ed. 1, at 1, c. 11 ; Stat de 

481, 497. ConspiratoribuB, temp, inoert ; 20 

(n) Co. Lit. 368 b. Every cham- Ed. 3, c. 4 ; 1 Ria 2, o. 4 ; 7 Ria 2, 

perty is maintenance, 2 Ho. Ab. c. 15 ; and 32 H. 8, c. 9, of which 

1 19 R more presently. 

(o) Bovill, arg. in Sprye v. Porter (q) Pechll v. WaUon (1841) 8 M. 

(1866) 7 E. & B. 68, 26 L. J. Q. & W. 691, 700 ; 2 Ro. Ab. 114 D. 

B. 64. (r) See Bacon's Abridgment, 

(|>) S Ed. 1 (SUt. Weetnu 1), c. Maintenance, A. (6. 250). 



MAINTBNAKCR AMD CHAXPERTT. Ml 

was even contended, as we had occasion to see in the last I^Jl^* 
chapter, that the absolute beneficial assignment of apoUojof 
contract was bad for maintenance. The modem cases, how- *^* ^^^' 
ever, proceed not upon the letter of the statutes or of the 
definitions given by early writers, but upon the real object 
and policy of the law, which is to repress that which 
Knight Bruce L.J. spoke of as "the traffic of merchan- 
dising in quarrels, of huckstering in litigious discord," 
which decent people hardly require legal knowledge to 
warn them firom, and which makes the business and profit 
of " breedbates, barretors, counsel whom no Inn will own, 
and solicitors estranged firom every roll" («). On the 
other hand the Courts have not deemed themselves bound 
to permit things clearly within the mischief aimed at any 
more than to forbid things clearly without it. They have 
in &ct taken advantage of the doctrine that the statutes 
are only in affirmance of the common law to treat them 
as giving indications rather than definitions ; as bearing 
witness to the general ''policy of the law" but not exhausting 
or restricting it. It is not considered necessary to decide 
that a particular transaction amounts to the actual offence 
of champerty or maintenance in order to disallow it as a 
ground of civil rights : it will be void as " savouring of 
maintenance" if it clearly tends to the same kind of 
mischief. 

The cases are somewhat numerous, and various in their 
special circumstances. A full examination of them would 
lead us to a length out of proportion to the place of the 
subject here (t). Their general effect, however, is suf- 
ficiently clear. Of maintenance pure and simple, an im- 
portant head in the old books, there are very few modem 
examples (u); almost all the decisions illustrate the more 
special mle against champerty, namely that "a bargain 

(i) JteyneUy.Sprye{1B52)l'D.'hS.. 454. More lately it hM been decided 

G. at pp. 680, 686. that charity is excuse enoa«:h for 

(0 For an aroonnt of the decisiona mafntainiog a stranger*! action even 

see Leake's Di^ent, 780. without reasonable irround. ffarrii 

(u) One is Bradlaugh v. NewdegaU v. Btueo (1886) 17 Q. B. DiT. 604. 
(1883) 11 Q. B. D. 1. 52 L. J. Q. B. 

P. T 



822 UNLAT7FUL AQREEMENTS. 

whereby the one party is to assist the other in recovering 
property, and is to share in the proceeds of the action, is 
illegal" (x). On this head the rules now established appear 
to be as follows : 

l^lesMto ^a) An agreement to advance funds or supply evidence 
perty. with or without professional assistance (or, it seems, 
professional assistance only) (y) for the recovery of property 
in consideration of a remuneration contingent on success 
and proportional to or be paid out of the property re- 
covered is void (z). 

(fi) A solicitor cannot purchase the subject-matter of a 
pending suit fix)m his client in that suit (a) : but he may 
take a security upon it for advances already made and costs 
already due in the suit (6). 

(7) Except in the case last mentioned, the purchase of 
property the title to which is disputed, or which is the sub- 
ject of a pending suit, or an agreement for such purchase, 
is not in itself unlawful (c): but such an agreement is 
unlawful and void if the real object of it is only to enable 
the purchaser to maintain the suit (d). 

We proceed to deal shortly with these propositions in 
order. 

(«) Per BUckbum J. ffvOey v. L. R 8 Q. B. 112, 42 L. J. Q. 

HvUey (1878) L. R 8 Q. B. 112. B. 62. 

Champerty is apt to be complicated (a) Wood v. Dovmes (1811) 18 Yes. 

with undue influeoce, see ReyndL y. 120; Simpson v. Lamb (1857) 7 E. & 

Sprytt inf,^ and Jama v. Kerr (1889) B. 84, 20 L. J. Q. R 121. 

40 Ch. D. 449. (&) Anderton v. JladcHffe (1858) 

{y) Per Jessel M.R Re AUomey$ (Ex. Ch.) E. B. A E. 806, 29 L. J. 

and SolicUart Act (1875) 1 Ch. D. Q. B. 128. 

573, 44 L. J. Ch. 47, where the (e) Hunter v. Danid (1845) 4 

agreement was to pay the solicitors Ha. 420; Knight y. Bowyer (1858) 

In the event of success a percentage 2 De G. & J. 421, 444, 27 L. J. Ch. 

of the property recovered ; but pro- 521. 

bablythe real meaning of it was {d) Pro$$er y. Edmonds (1885) 1 

that the solicitors should find the Y. & C. Ex. 481; Harrington v. 

funds. Cp. OrdL v. Levy (1864) 16 L(mg (1883.4) 2 My. & K. 590; De 

C. B. N. S. 73, and Bbrcmgt v. Bren- ffoghton v. Money (1866) 2 Ch. 164; 

nan (1846) cited p. 824, below. Seearr. Lawson (1880) 15 Ch. D. 

{z) Stanley Y, Jones (ISSl) 7 Bing. 426, 49 L. J. Bk. 69, where the 

869; lieyneUY.SpryeilSi^)!!),^. predse extent of the doctrine is 

O. 660, 21 L. J. Ch. 638 ; Sprye v. treated as doubtful; Ouy v. ChurchiU 

Porter (1852) 7 E. & R 58, 26 L. J. (1888) 40 Ch. D. 481, 56 L. J. Ch. 

Q. B. 64; HuOey v. HuOey (1878) 670. 



CHAMPERTY. 323 

€L This rule was laid down in very clear tenns by Tindal, («) Agree- 
C. J. in Stanley v. Jones (e), which seems to be the first of famiah 
the modem cases at law. SSS« 

'* A b argain bj m man who has eTidenoe in hit own pMMnkm retpeedng ^^ ^^' 
a matter in dispute between third persons and who at the same time pro- tenns of 
fat SGs to have the means of procnriog more evidenoe, to porehase from odo sharing 
el the contending patties^ at the price of the evidenoe which he so powesses ^^^^^j^ 
or can procure, a share of the sum of money which shall be reooTered by |. yM, 
means of the prodnction of that very oTidence, cannot be enforced in a 
Court of law.** 

It is quite immaterial for this purpose whether any 
litigation is already pending or not, although the offence 
of maintenance is properly maintaining an existing suit, 
not procuring one to be commenced It is obvious that 
the mischief is even greater in the case where a person is 
instigated by the promise of indemnity in the event of 
failure to undertake litigation which otherwise he would 
have not thought o£ If a person who is in actual posses- 
sion of certain definite evidences of title proposes to deliver 
them to the person whose title they support on the terms 
of having a certain share of any property that may be 
recovered by means of these evidences, there being no suit 
depending, and no stipulation for the commencement of 
any, this is not unlawful; for litigation is not necessarily 
contemplated at all, and in any case there is no provision 
for maintaining any litigation there may be (/). But it Verbal 
is in vain to put the agreement in such a form if these f Jeff^ 
terms are only colourable (g), and the real agreement is *n^ 
to supply evidence generally for the maintenance of an 
intended suit: the illegal intention may be shown, and the 
transaction will be held void (A). Still less can the law be 
evaded by slighter variations in the form or manner of the 
transaction : for instance, an agreement between solicitor and 
client that the solicitor shall advance funds for carrying 

(e) (1831) 7 Bing. 869, 877. cnlt to snppose that they could ever 

if) Sprue ▼. Porter (1856) 7 B. & be othtrwiae. 

B. 58, 26L. J. Q. B. 64. (h) Sprye v. Porter (1856) 7 K & 

((r) As a matter of fact, it is diffi- B. 58, 26 L. J. Q.B. 64. 

y2 



324 UNLAWFUL AGREEMENTS. 

on a suit to recover possession of an estate, and in the 
event of success shall receive a sum above his regular costs 
"according to the interest and benefit" acquired by the 
possession of the estate, is as much void as a bargain for a 
specific part of the property (i). So where a solicitor 
was to have a percentage of the fund recovered in a suit, it 
was held to be not the less champerty because he was not 
himself (and in fact could not be) the solicitor in the suit, 
but employed another (k). 

An agreement by a solicitor with a client simply to 
charge nothing for costs in a particular action is not 
champerty (I). 

W Solid- fi^ This rule came to be laid down in a somewhat curious 

cannot way. In Wood V. Dowries {m) Lord Eldon set aside a pur- 

P^J?J^ chase by a solicitor from his client of the res litigiosa, 

matter of partly on the ground of maintenance. But it is to be 

from his i^o^^d as to this ground that the agreement for sale was 

dient. in substitution for a previous agreement which clearly 

anoma. amounted, and which the parties had discovered to amount, 

lo"* to maintenance : and the Court appears to have inferred 

as a fact that it was all one illegal transaction, and the sale 

merely colourable (n). The other ground, which alone 

would have been enough, was the presumption of undue 

influence in such a transaction, arising firom the fiduciary 

relation of solicitor and client (of which we shall speak in 

a subsequent chapter). The Court of Queen's Bench, 

however, in Simpson v. Lamb (o) followed Wood v. 



{{) Bmrie V, ffojnoood (1861) C. (n) Cp. Sprye v. Porter, supra. In 

B. N. S. 566, 80 L. J. C. P. 217. Wood ▼. Downet the parties do not 

{k) Skvnge y. Brenman (1846) 15 seem to bave e^en kept the original 

Sim. 846, 2 C. P. Cooper (temp. and real agreement off the face of 

Cottenham) 1, 15 L. J. Ch. 889. the transaction in its ultimate shape. 

The agreement was made with a See p. 123. It is to be regretted 

solicitor in Ireland, not being a that the reporter did not preserve 

solicitor of the English Coort of the fnll statement of the facts (p. 

Ohanoezy, and the fnnd to be re- 122) with which the judgment 

covered was in England. opened. 

(0 JtMiingt V. Mnton (1878) L. (o) (1857) 7 E. & B. 84, 20 L. J. 

B. 8 0. P. 425. Q. B. 121. 

(m) (1811) 18 Yes. 120. 



PURCHASE OF THIN08 IN UTIOATION. 3t5 

Daivnes^ as having laid down as a matter of the " policy 
of the law/' the positive rule above stated In AThderaan 
V. Raddiffe (p), unanimous judgments in both the Q. B. and 
the Ez. Ch. added the qualification that a conveyance by 
way of security for past expenses is nevertheless good 
The Court of Exchequer Chamber showed a decided 
opinion that Svrrypson v. Lamb had gone too fiur, but 
without positively disapproving it. In Knight v. Borvyer, 
again. Turner, L. J. said " I am aware of no rule of law 
which prevents an attorney firom purchasing what anybody 
else is at liberty to purchase, subject, of course, if he pur- 
chases from a client, to the consequences of that rela- 
tion " (q). But the case before the Court was not the 
purchase by a solicitor from his client of the subject- 
matter of a suit in which he was aolicUoi*; Simpson v. 
Lamb, therefore, was only treated as distinguishable (q). 
The case must at present be considered a subsisting 
authority, but anomalous and not likely to be at all 
extended (r). 



7. As to the purchase of things in litigation in general, (y) Por- 
the authorities cannot all be reconciled in detail But the T!!?!?' 

■DDjeOK- 

distinction which runs through them all is to this effect. nwUer of 
The question in every case is whether the real object be J^\a 
to acquire an interest in property for the purchaser, or {Jjj^""" 
merely to speculate in litigation on the account either of 
the vendor and purchaser jointly or of the purchaser alone. 
It is not unlawful to purchase an interest in property 
though adverse claims exist which make litigation neces- 
sary for realizing that interest : but it is unlawful to pur- 
chase an interest merely for the purpose of litigation. In But !■ on* 
other words, the sale of an interest to which a right to sue Jj,^^' 



(p) (1858) E. B. & E. 806, 28 L. (r) Cp. however the Attstriui Civil 

J, Q. B. 82, 29 t5k 128. Coide, which makes rach agreemente 

(9) (1858) 2 De a. & J. at jk 445. void (§ 879)» 



826 UNLAWFUL AOBKEMENta 

intention is incident is good (e) ; but the sale of a mere right to sue 

ISxintwa is bad (0. 

mere right ^ ^^qj^ ^j^q }iag conveyed property by a deed voidable 

in equity retains an interest not only transmissible by 
descent or devise, but disposable inter vivos, without such 
disposition being champerty. But '' the right to complain 
of a fraud is not a marketable commodity/' and an agree- 
ment whose real object is the acquisition of such a right 
cannot be enforced (u). In like manner, a creditor of a 
company may well assign his debt, but he cannot sell as 
incident to it the right to proceed with a winding-up 
petition {x). 

The payment of the price being made contingent on the 
recovery of the property is probably under any circum- 
stances a sufficient, but is by no means a necessary, condi- 
tion of the Court being satisfied that the real object is to 
traffic in litigation. If the purchase is made while a suit 
is actually pending, the circumstance of the purchaser in- 
demnifying the vendor against costs may be material, but 
is not alone enough to show that the bargain is in truth 
for maintenance (y). But the only view which on the 
whole seems tenable is that it is a question of the real 
intention to be collected from the &cts of each case, for 
arriving at which few or no positive rules can be laid 
down. 

{$) DickiMon v. BurrtU (1866) 1 and qu, whether the right to oat 

Eq. 387, 842, 85 L. J. Ch. 871. down an abeolnte oonveyanoe to a 

(t) lb.; Proner ▼. Edmondt (1885) mortgage be saleable : Seear y. 

1 Y. & 0. Ex. 481 (the main part of Lawion (1880) 15 Ch. Div. 426, 49 

Lord Abinger's judgment is extrac- L. J. Bk. 69. 

ted in a note to Story, Eq. Jar. § (x) Parii SkaHngRmk Co. (1877) 

1040A). DiBt Guy y. ChurehiU 5 Ob. Div. 959. 

(1888) 40 Ch. D. 481, 56 L. J. Ch. (|^) ffarrmgUm y. Long (1888-4) 

670} bankrnpt's right of action 2 Af. & E. 590, as corrected by 

assigned by the trustee to one Knight y. Botoyer, mpra, and see 

creditor (in fact ac<^g for himself Hanter y. Danid (1845) 4 Ha. at p^ 

and others), who was to keep threor 430. But the true ground of the 

fourths of the proceeds ; held justi- case seems the same as in Prantr y. 

fiable as a beneficial arrangement JSdmondi and De Hogkton v. Money, 

for the creditors. namely, that the real object was to 

(u) Prouer v. Edmonds; DeHogh- give the purchaser a locu» iUmdi to 

ton y. Money (1866) 2 Ch. 164, 169. set aside a deed for fraud. 
Cp. HiU y. Boyle (1867) 4 Eq. 260, 



PUBCUABE OF THINGS IN UTIGATION. 827 

There k no champerty in an agreement to enable the 
bond fide purchaser of an estate to recover for rent due or 
injuries done to it previously to the purchase {z). 

It has been decided in several modem cases that the Puehaia 
purchase of shares in a company for the purpose of in- ^ <,^^. 
stituting a suit at one's own risk to restrain the governing P^^^**^ 
body of the company from acts unwarranted by its con- to rae 
stitution cannot be impeached as savouring of mainte- ^5r^ 
nance (a). It is worth while to note that it was recognized ton 
as long ago as 21 Ed. HI., that a purchase of property pend- riAnoX^ 



ing a suit affecting the title to it is not of itself champerty : ' 
'* If pending a real action a stranger purchases the land of 
tenant in fee for good consideration and not to maintain 
the plea, this is no champerty " (6). 

The statute 32 H. YUI., a 9, '' Against maintenance and sut 82 
embracery, bu3dng of titles, &c.," deserves special mention. ^ g * 
Affcer reciting the mischiefs of " maintenance embracery None shAll 
champerty subornation of witnesses sinister labour bu]ring or bargaio 
of titles and pretensed rights of persons not being in ^^^L 
possession,'' and confirming all existing statutes against Uodi 
maintenance, it enacts that : BeUer'hath 

"No penon or penons, of what estate degree or condition ao e^er i^"°| 
he or they be, shall from henceforth bargain bny or aell, or by any or taken 
ways or means obtain get or have, any pretensed rights or titles, or the profits 
take promise grant or covenant to have any right or title of any ^o' ^^^ 
person or persons in or to any manors lands tenements or heredita- ^^^' 
ments, bat if sach person or persons which shall so bargain sell give 
grant covenant or promise the same their antecessors or they by 
whom he or they claim the same have been in possession of the same 
or of the reversion or remainder thereof or taken the rents or profits 
thereof by the space of one whole year next before the said bargain 
covenant grant or promise made." 

The penalty is forfeiture of the whole value of the lands P«i»lty 
(s. 2), saving the right of persons in lawful possession to saving, 
buy in adverse claims (s. 4). There is no express saving 

(2) Per Cnr. (Ex. Ch.) Wilianu IIL, 10. pL 33 [cited as 52 in Rolle] ; 

V. Protkeroe (1829) 5 Bing. 309. 314. but in 50 Am. 323, pi. 3, the general 

(a) See Bloxam v. Metrop. Ry. Co. opinion of the Serjeants is contra, 

(1868) 3 Gh. at p. 353. Cp. 4 K-ut, Comm. 449. 

(6) 2 Ro. Ab. 113 B. ; Y. B. 21 E. 



328 UNLAWFUL AOaEEMENTS. 

of grants or leases by persons in actual possession who have 
been so for less than a year : but either the condition as to 
time applies only to receipt of rents or profits without 
actual possession, or at all events the intention not to touch 
the acts of owners in possession is obvious (c). 
DeatingB This, like the other statutes against maintenance and 
within th champerty, is said to be in affirmance of the common 
^^^ law (c). It " is formed on the view that possession should 
meat to remain undisturbed. Dealings with property by a person 
M^^^Hde ^^^ ^^ possession tend to disturb the actual possession to 
P'^^'P^rty. the injury of the public at large " (d). It is immaterial 
whether the vendor out of possession has in truth a good 
title or not (c). An agreement between two persons out of 
possession of lands, and both claiming title in them, to 
recover and share the lands, is contrary to the policy of 
this statute, if not champerty at common law ; therefore 
where co-plaintifis had in fact conflicting interests, and it 
was sought to avoid the resulting difficulty as to the frame 
of the suit by stating an agreement to divide the property 
in suit between them, this device (which now would in any 
case be disallowed on more general grounds) (e) was un- 
availing; for such an agreement, had it really existed, 
would have been unlawful, and would have subjected the 
parties to the penalties of the statute (/). 
Sale of Where after the death of a lessee a stranger had entered, 

i^i^. and remained many years in possession, a sale of the term 
tmtor oat y^y ^he administrator of the lessee was held void as contrary 



(<;) By M>imtagae O.J. PMiridgt tare aader the at ttite tie pi liatiff 

7. Stranye, FlowS. 88, dtdd in Dje mait shojr that the purjhaier kae jt 

d, Wiiiiams V. Evam (1845) 1 G. the title to b) " prdtiuajd " : 

B. 717 ; ib. 89, 14 L. J. C. P. 237. Kmtedif v. LifeU (1835) 15 Q. B. 

See farther Jenkins v, Jones (1882) D. 491. 

9 Q. B. Di7. 128, 51 L. J. Q. B. {d} Per Lord BedesdUe, Oholm(m^ 

438, as to the meaaing of "pre- ddey v. ainUm (1821) 4 Bligh, at 

temed rights " and the limited ap- p. 76. 

plication of the sUtate at the {e) See Ooyke y. Oooke (1864) 4 D. 

present tima A right or title which J. S. 704 ; Pryu y. Prjfte (1872) 15 

is granUble aader 8 & 9 Vict c Bq. 86, 42 L. J. Oh. 253. 

106,i8notnow "pretensed" merely (/) Oholmondtleg v. 0^'a^oa(1821) 

becaose the grantor has neyer been 4 Bligh, I, 43, 82, per Jjord JSldOii 

in possession. To enf oroe a f orf ei- and Lord Bedesdale. 



MAINTENANCE. 329 

to the statute, although in terms it only forbids sales of of pot- 
pretended rights, &c., under penalties, without expressly ••~^* 
making them void {g). But the sale of a contingent right 
or a mere expectancy, not being in the nature of a claim secm ■»!« 
adverse to any existing possession, is not forbidden. The fij^*" 
sale of a man's possible interest as the devisee of a living ezpec- 
owner, on the terms that he shall return the purchase- ****^* 
money if he does not become the devisee, is not bad either 
at common law as creating an unlawful interest in the 
present owner's death, or as a bargain for a pretended title 
under the statute {h). 

Proceedings in lunacy seem not to be within the general Prooeed- 
rules as to champerty, as they are not analogous to ordinary luSkw not 
litigation, and their object is the protection of the person witbin iiu 
and property of the lunatic, which is in itself to be ^^.^ 
encouraged ; and " this object would in many cases be im- ^^' 
peded rather than promoted by holding that all agree- 
ments relative to the costs of the proceedings or the 
ultimate division of the property were void " (i). 

As to maintenance in general, maintenance in the strict MUnte- 
and proper sense is understood to mean only the mainte- genani" 
nance of an existing suit, not procuring the commencement 



{g) I>oe d. Williams y, Evam titem' (G. 2. 3. depaeiU, 30). By 

(1845) C. B. 717, 11 L. J. C. P. the Frenoh Cinl Code, art. 1600 

237. Cp. abo7e m to Che conAtrac- (foilovred by the It*liaii Code, art. 

tion of prohibitory statatee in 1460). '^ On ne peat vendre la suo- 

genend, p. 262. oeaeion d*ane personne vivante, 

(4) Cook V. PiM (1850) 15 Q. B. nUme de mm conserUemml : " op. 791, 

460, 19 L. J. Q. B. 441. By the 1130. The Austrian Code (§ 879) 

ol?il lavr, however, such contraoti also expressly forbids the alienation 

are regarded as contra bonou mora. of an expected inheritance or legacy. 

" Hmnsmodi paotiones odiosae vi- In Roman law the role that the in- 

dentar et plenae tristissimi et peri- heritanoe of a living person oouM 

cnlosi eventos," we re id hi a not be sold is put only on the tech - 

rescript of Juitinian on an agree- nical ground "quia in rerumnatura 

ment bbtween expectant co-heirs as non sit quod yenierit " (D. 18. 4. de 

to the disposal of the inheritance. hered. yel actione yendita, 1, and 

The rescript goes on, quite in the see eod. tU. 7-11). 
spirit of our own statute, to forbid (t) Persse ▼. Persae (1840) 7 CJ. & 

in general terms all dealings "in F. 279, 816, per Lord Coctenham. 
alienis rebus contra domini ?olun* 



830 UNLAWFUL AGREEMENTS. 

of a new one. But the distinction is in practice immaterial 
even in the criminal law (k). It is of more importance that 
a transaction cannot be void for champerty or maintenance 
unless it be " something against good policy and justice^ 
something tending to promote unnecessary litigation, 
something that in a legal sense is immoral, and to the 
constitution of which a bad motive in the same sense is 
necessary " (i). Therefore, for example, a transaction can- 
not be bad for maintenance whose object is to enable a 
principal or other person really interested to assert his 
rights in his own name (I). Nor is it maintenance for 
several persons to agree to defend a suit in th6 result of 
which they have, or reasonably believe they have, a com- 
mon interest (m). But a bargain to have a share of pro- 
perty to be recovered in a suit in consideration of maintain- 
ing the suit by the supply of money and evidence is not 
saved from being champerty by the party's having a mere 
collateral interest in the result of the suit (n). Where a 
person sues for a statutory penalty as a common informer, 
it is maintenance to indemnify him against costs (o). 
Certain Lineal kinship in the first degree or apparent heirship, 

i(da*^^ifv *^^ ^ * certain extent, it seems, any degree of kindred or 
munte- affinity, or the relation of master and servant, may justify 
not diam* *^ which as between strangers would be maintenance : 
petty. but blood relationship will not justify champerty (p). 



{k) See Wood t. Ihwna (ISllj 18 we free to »dopt the doctrine of 

Yes. at p. 125. champerty, lo far as they think it 

(l) Flicker y. Kamala Naieker reasonable, as part of the general 

(1860) 8 Moo. Ind. App. 170, 187. jodidal scheme of public policy. 

This is not necessarily applicable in {m) Fifidon y. Parker (1843) 11 

England, being said with reference M. & W. 675, 12 L. J. £x. 444. 

to the law of British India, where Cp. 2 Bo. Ab. 115 G. 

the English laws agamst mainte (n) ffuOey v. ITtUUy (1878) L. R. 

nance and champerty are not sped- 8 Q. B. 112, 42 L. J. Q. B. 52. Bat 

fically in force: see Earn Ooomar the interest of a bankropt's creditors 

Coondoo V. Chunder Oanto Mookerjee is more than ** collateral" : Ovm y. 

(1876) 2 App. Ca. 186, 207-9. But OkurchiU (1888) 40 Ch. D. 481, &Q 

it fairly represents the principles on L. J. Ch. 670. 

which English judges have acted in (o) Bradlaugh y. NewdegaU (1888) 

the modem cases. The result of the 11 Q. B. D. 1, 52 L. J. Q. B. 454. 

Indian case last mentioned seems to {p) HutUy v. ffuUev, mp. See 2 

be that in British India the Courts Ro. Ab. 115116. 



CtrSTODT OF CHILDRKM. 881 

C As to matteiB touching legal (and possibly moral) ^;^*|j^ 
duties of individuals in the performance of which the to legal 
public have an interest* 2^^.^' 

diudt. 

Certain kinds of agreements are or have been considered 
unlawful and void as providing for or tending to the omis- 
sion of duties which are indeed duties towards individuals, 
but such that their performance is of public importance. 
To this head must be referred the rule of law that a father Agi«^ 
cannot by contract deprive himself of the right to the to oastody 
custody of his children (q) or of his discretion as to their ^IJ^^f^ 
education. He "cannot bind himself conclusively by con- cfaUdnn. 
tract to exercise in all events in a particular way rights 
which the law gives him for the benefit of his children and 
not for his own." And an agreement to that effect — such 
as an agreement made before marriage between a husband 
and wife of different religions that boys shall be educated 
in the religion of the £Either, and girls in the religion of the 
mother-— cannot be enforced as a contract (r). 

After the fsEkther's death the Court has a certain discre- 
tion. The children are indeed to be brought up in his 
religion, unless it is distinctly shown by special circum- 
stances that it would be contrary to the infeint's benefit (s). 
When such circumstances are in question, however, the 
Court may inquire ''whether the father has so acted that 
he ought to be held to have waived or abandoned his right 
to have his children educated in his own religion " ; and in 
determining this the existence of such an agreement as 
above mentioned is material (t). The Other's conduct in 
giving up the maintenance, control, or education of his 
children to others may not only leave the Court free to 
make after his death such provision as seems in itself best; 



{q) Be Andtewi (1878) L. B. 8 Q. 622, 686. 

B. 158, 9ub mm. Re Edtoard$, 42 L. («) ffawkiwoHh r. Mawkttoorik 

J. Q. B. 99, and Mthoritiw there (1871) 6 Ch. 539, 40 L. J. Ch. 584. 

ooUeoted. (<) Andrew y. SaU (1878) 8 Ch. 

(r) Andrem t. SaU (1878) 9Ciu «t p. 687. 



382 UNLAWFUL AGREEMENTS. 

it may preclude him even from asserting his rights in his 
lifetime (u). 

In sepAra- Clauses in separation deeds or agreements for separation, 
' purporting to bind the father to give up the general 
custody of his children or some of them, have for the like 
reasons been held void; and specific performance of an 
agreement to execute a separation deed containing such 
clauses has been refused (x). In one case, however, such a 
contract can be enforced; namely, where there has been 
such misconduct on the father's part that the Court would 
have interfered to take the custody of the children from 
him in the exercise of the appropriate jurisdiction and on 
grounds independent of contract. The general rule is only 
that the custody of children cannot be made a mere matter 
of bargain, not that the husband can in no circumstances 
bind himself not to set up his paternal rights (y). 

86 Vict. c. The law on this point is now modified by the Act 36 

*' No agreement oontained in any separation deed between the father 
and mother of an infant or infants shall be held to be invalid by reason 
only of its providing that the father of snch infant or infants shall give 
up the custody on control thereof to the mother : Proyided always, that 
no Court shall enforce any such agreement if the Court shall be of 
opinion that it will not be for the benefit of the infant or infants to give 
effect thereto." 

This Act does not enable a father to delegate his general 
rights and powers as regards his infant children (z). 

On this The objections formerly entertained (as we have seen) 

^^'^ttle" first against separation deeds in general, and afterwards 
doctrines down to quite recent times against giving full effect to 



(tt) Lffont V. BlenHn (1820.1) 701, 18 Bq. 511, 40 L. J. Ch. 692. 
Jac. 245, 255, 263. (y) Swtft v. Swift (1865) 4 D. F. 

(x) VamiUoHv, VansiUaH {1S6S) J. 710, 714, 84 L. J. Ch. 209, 894, 

2 De G. & J. 249, 259, 27 L. J. Ch. and see the renuurks in 6 Ch. 705, 

222. As to the validity of partial 18 E^, 520. 

restrictions of the hasband's right, (e) Re BetarU (1879) 11 Ch. Diy. 

HanUUon v. ffeetor (1871) 6 Ch. 508, 518, 48 L. J. Ch. 497. 



BBSTBICriYB AGRKEMENTS. 888 

them in Courts of equity, were based in part upon the •■ ^ ptf^ 
same sort of grounds : and so are the reasons for which dMda in 
agreements providing for a future separation have always g«»«»l » 
been held invalid For not the parties alone, but society 
at large is interested in the observance of the duties inci- 
dent to the marriage contract, as a matter of public 
example and general wel£Eure. 

Considerations of the same kind enter into the policy aad m to 
of the law with respect to the sale of oflSces, also spoken of 'flj^ 
above. Such transactions clearly involve the abandonment 
or evasion of distinct legal duties. 

On similar grounds, again, seamen's wages, or any Insonnoe 
remuneration in lieu of such wages, cannot be the subject men's 
of instirance at common law (a). The reason of this is ^»R^ 
said to be '' that if the title to wages did not depend upon 
the earning of freight by the performance of the voyage, 
seamen would want one great stimulus to exertion in times 
of difficulty and danger " (6). This reason, however, is 
removed in England by the Merchant Shipping Act, 1854 
(17 & 18 Vict. c. 104, s. 183), which makes the right to 
wages independent of freight being earned. The question 
has not yet presented itself for decision whether the rule 
founded upon it is to be considered as removed also. 

It has never been decided, but it seems highly probable. Agree- 
that agreements are void which directly tend to discourage Againtt 
the performance of social and moral duties. Such would J^^ 
be a covenant by a landowner to let all his cultivable land 
lie waste, or a clause in a charter-party prohibiting devia- 
tion even to save life (c). 

D. As to agreements unduly limiting the freedom of d. Poblio 
individual action. tolSedom 

There are certain points in which it is considered that ^ ,*^'" 
the choice and free action of individuals should be as MtioD. 

(a) WebHer v. De Tasiet (1707) 7 (c) Per Cockburn C.J. 6 0. P. D. 
T. B. 157. It p. 805. 

(h) Kent, Oomm. 8. 260. 



riAge 

brokage 

agree- 



334 UNLAWFUL AGREElfENTa 

unfettered as possible. As a rule a man may bind him- 
self to do or omit, or procure another to do or omit, 
anything which the law does not forbid to be done or 
lefb undone. The matters as to which this power is specially 
limited on grounds of general convenience are : — 

(a) Marriage. 

(fi) Testamentary dispositions. 

(7) Trade. 

(a) Mar- (a) Marriage is a thing in itself encouraged by the law ; 
!?^®y, the marriage contract is moreover that which of all others 
should be the result of full and free consent. Certain 
agreements are therefore treated as against public policy 
"^J^ either for tending to impede this freedom of consent and 
introduce unfit and extraneous motives into the contracting 
of particular marriages, or for tending to hinder marriage 
in general. The first class are the agreements to procure 
or negotiate marriages for reward, which are known as 
marriage brokage contracts. All such agreements are 
void (d), and services rendered without request in procur- 
ing or forwarding a marriage (at all events a clandestine 
or improper one) are not merely no consideration, but an 
illegal consideration, for a subsequent promise of reward, 
which promise, even if under seal, is therefore void (e). 
The law is said to be comparatively modem on this head : 
but it has already ceased to be of any practical im- 
portance (/). 
Agree- We pass on to the second class, agreements "in restraint 

general of marriage" as they are called. An agreement by a 
restraint bachelor or spinster not to marry at all is clearly void (g) ; 

{d) Eg, Ccie v. QiJlnon (1756) 1 stitution preeerved only in a Greek 

Yes. Sr. 508. See Stoiy, Eq. Jnr. epitome : 0. 5. 1. de sponaalibnSi 

§§260 8qq. &c. 6. The Austrian Code agrees 

(e) WiUiamim y. Qihon (1805) 2 with onr law (§ 879). 

Sch. k L. 857. {g) Lowe ▼. Pecn (1768) Wilmot, 

(/) In the Roman law these oon> 871 : where it is said that it is a con- 
tracts were good apart from special tract to omit a moral duty, and 
legislation : they were limited as to " tends to depopulation, the greatest 
amount (though with an expression of all political sins." 
of general d^pproval) by a con- 



BESTRAIirr OF MARftIAO£. 88S 



80, it seems, would be a bare agreement not to marry of i 
within a particular time (A). In Lowe v. Peers (i) a cove- ** ^ 
nant not to marry any person other than the covenantee 
was held void. A promise to many nobody but A. R 
cannot be construed as a promise to marry A. B. and is 
thus in mere restraint of marriage : and even if it could, 
it was thought doubtfol whether an unilateral covenant to 
many A. B. would be valid, A. B. not being bound by 
any reciprocal promise (i). Lord Mansfield threw out the 
opinion (not without followers in our own time) (i), that 
even the ordinary contract by mutual promises of marriage 
is not free from mischievous consequences. The decision 
was affirmed in the Exchequer Chamber, where it was 
observed that : — 

" Both Ijkdies Mid gentlemen . . . frequently Are indnoed to pro- 
miie not to mwrry any other persons bat the objects of their present 
pesrion ; and if the law should not rescind each engagements, they wonld 
become prisoners for life at the will of most inexorable jaflors— dis- 
appointed loTeis " (m). 

A covenant not to revoke a will is not void as being a Covenant 
covenant not to marry, though the ptuliy's subsequent mar- ^oke wilt, 
riage would revoke the will by operation of law. As a 
covenant not to revoke the will in any other way it is 
good ; but the ptuliy's marriage gives no ground of action 
as for a breach (7?). 

In the absence of any known express decision, it may be ^.**> ^ 
gathered from the analogy of the cases on conditions in restraint of 
restraint of marriage that a contract not to marry some '"•"'•8^ 
particular person, or any person of some pcuiiicular class, 
would be good unless the real intention appeared to be 
to restrain marriage altogether ; and that a contract by 

(A) HarOey y. Itiet (1808) 10 East, principles. 

22 (a wager). {I) 4 Barr. 2280 ; per Martin B. 

(») (1768) 4 Barr. 2225, in Ex. Ch. HaU ▼. Wright (1858) £. B. k E. at 

Vflhn. 864. p. 788, 29 L. J. Q. B. at p. 49. 

{h) But of this 911. : for a refnsal (m) Wilm. 871. 

by A. B. to marry on request mithin \n) Robhuon ▼. Ommanneif (1888) 

a reasonable time wonld snrely 21 Ch. D. 780, 28 Oh. Div. 285, 52 

discharge the promisor on general L. J. Ch. 440. 



886 UNLAWFUL AGREEMENTa 

a widow or widower not to marry at all would probably 
be good (o). It may be worth while to give a summary 
statement of what is believed to be the result of the au- 
thorities upon these conditions ; they hardly occur except 
in wills. 

CondUiom in restrairU of marriage : — 

If precedent^ are with trifling exceptions (if any) valid as to both real 
and personal estate. 

If tuhuquitni^ — 

General restraint Good, it seems, as to real estate (see 1 Atk. 380, n,) ; 
at any rate if the disposition, in whatever form, can be taken to show an 
intention not of discouraging^ marriage but of making a provision until 
marriage : /ones v. JtmeB (1876) 1 Q. B. D. 279. 

Bad as to personal estate {p) or mixed fund (or a fund arising only from 
sale of realty, tmbU) : Bdlairs v. BdUUn (1874) 18 £q. 510, 48 L. J. Ch. 
669 — and this whether there is a gift over or not. 

Particular restraint. Good as to real estate (1 Ro. Ab. 418 X., pL 6); 
and good as to personal estate if there is a gift over, otherwise not. 

These rules do not apply to conditions restraining the second marriage 
either of a woman : Newton v. Marsden (1862) 2 J. & H. 856 ; or of a man : 
AUen V. Jaclcton (1875) 1 Ch. Div. 399, 45 L. J. Ch. 810. 

Nor to conditional limitations (as a gift until marriage) in a disposition 
of either real or personal estate. 

This result is neither simple nor rational But the rule 
against such conditions, at first adopted from the ecclesi- 
astical courts on grounds of public policy, has been so 
modified in its application by courts of equity that it can 
now be treated only as an arbitrary rule of constniction (q). 
By the law of France promises of marriage are in- 
valid, " comme portant atteinte k la liberty illimit^e qui 
doit exister dans les manages " : nevertheless if actual 
special damage (prejudice) can be shown to have resulted 
from non-fulfilment of the promise, the amount of it can 
be recovered, it would seem as due ex delicto rather than 
ex contractu (r). 

(o) See Scott v. Tyler (1788) in 2 {q) See per Jessel M.R. BeOaiirt 

Wb. & T. L. 0. and notes. v. Bdlair$ (1874) 18 Eq. 510, 516, 

(p) For a general account of the 43 L. J. Ch. 669. 

doctrine as to personalty, see Morley (r) See notes in Sirey & Gilbert 

V. Rennddum (1843)2 Ha. 570. on Code Civ. art. 1142, Nob. 11-19. 



RESTRAINT OF TRADE. 337 

P, An agreement to use influence with a testator in (A Agree- 
&vour of a particular person or object is void («). On the iuflnenoe 
other hand, it is well established that a man may validly *««*»t<"^- 
bind himself or his estate by contract to make any par- 
ticular disposition (if in itself lawful) by his own will {t). 
Such contracts were not recognized by Roman law (u), 
and even a gift i/nier vivos of all the donor s after-acquired 
property would have been bad as an evasion of the rule : 
but in the modem civil law of Germany, as with us, a 
contract of this sort (Erbvertrag) is good (x). 

7. Agreements in restraint of trade. It would be im- (7) Im- 
possible to give an adequate account of this subject on trade, 
the plan and within the limits of this book ; and it is 
satisfactory to feel that any attempt to do so is rendered 
needless by the place already given to it in a work of no 
small authority (y). We shall here only give the prin- 
ciples and the short results of the authorities, with some 
mention of recent decisions. 

The general rule is that a man ought not to be allowed Qeoenl 
to restrain himself by contract fipom exercising any lawful I****^P**- 
craft or business at his own discretion and in his own way. 
Partial restrictions, however, are admitted to the extent 
and for the reasons to be presently stated. Thus an airree- ffllum v. 

Bfikenlev 

ment between several master manufacturers to regulate 
their wages and hours of work, the suspending of work 
partially or altogether, and the discipline and management 
of their establishments, by the decision of a majority of 
their number, is in general restraint of trade as depriving 

(») Dtbenkan ▼. Ox (1849) 1 Vei. y. Plummtr (1870) 6 C^h. D. 160 ; 

Sr.276. p^r Brett LJ, Palmer ▼. Loekt 

(0 Dt BeU y, Tk(m$on (1841) 8 (1880) 15 Ch. Biv. at p. 800. 

Beay. 469, 8. c. nom. ffammerdeif (u) Stipulatio hoc modo oonoepta : 

▼. Bairon de BeU (1845) 12 CL & F. Si heredem me non feoerle, tantom 

45 ; £rookman*t <r. (19^9) ^ CJh. dam spondee ? inntilu est, quia con- 

182, 89 L. J. Gh. 188. Whether tra bonoc moree est haec stiptOatio. 

a ooyeoant to exercise a power of D. 45. 1. de y. o. 61. 

testamentary appointment In s per- {x) Savigny, Syst 4. 142-5. 

tionlar way be yalid, guerre : Thacker (y) See notes to Mitehd t. Bejf' 

y. Key (1869) 8 Eq. 408 ; Bulieel ndd$ (1711) in 1 Sm. L. C. 



838 UNLAWFUL AGBEEMEKTS. 

each one of them of the control of his own business, and 
is therefore not enforceable (2;). It makes no difference 
that the object of the combination is alleged to be mutual 
defence against a similar combination of workmen. The 
case decides on the whole that neither an agreement for a 
strike nor an agreement for a lock-out is enforceable by 
law. The Court of Exchequer Chamber thus expressed the 
general principle in the course of their judgment : — 

*' Prima fade it iB the priviloga of a trader in a free ooaatry, in aU 
matten not oontrarj to law, to regulate hii 01m mode of carrying it [his 
trade] on aooording to hie own discretion and ohdoe. If the law has in any 
matter [qu, manner f] regolated or restrained his mode of doing thle, the 
law most be obeyed. Bat no power ihort of the geaenJ law ought to 
restrain hie free dimsretion " (a). 

On like grounds a restrictive agreement between the 
members of a trade society as to the employment by any 
one member of travellers and other persons who had left 
the service of any other has been disallowed (6). 

It is not an unlawful restraint of trade for several 
persons carrying on the same business in the same place 
to agree to divide the business among themselves in such 
a way as to prevent competition, and provisions reasonably 
necessary for this purpose are not invalid because they 
may operate in partial restraint of the parties' freedom to 
exercise their trade. But a provision that if other persons , 
strangers to the contract, do not employ in particular cases 
that one of the contracting parties to whom as between 
themselves the business is assigned by the agreement, 

(z) BiUon y. Sekerdey (1 855-6) 6 E. not named, are not within the mean - 

k B. 47, in Exoh. Ch. ib. 66, 24 U ing of the Act. See 86 Ch. Diy. 468. 
J. Q. B. 853, 22 ib. 199. The (a) 6 K & B. at pp. 74-5. 
dicU there leave it doubfcful if the (6) Mineral Water BotUe, dse, 

agreement would be a criminal SocUty ▼. BooiK (1887) 86 Ch. Div. 

offenoe at common law. By the 465. The terms were :" No member 

Trade Union Act, 1871, 84 & 86 of the society shaU employ any tra- 

Viot a 31, 88. 2, 5, agreements of Teller, carman, or outdoor employ^ 

this kind between workmen are pro- who has left the aervioe of another 

tected against the criminal taw, member, without the consent in 

though not enfoBoeabla It would writing of his late employer, until 

be difficult to maintain that the like alter the expiration of two vearn 

agreements between masterB, though from his leaving such serfioe.'' 



BESTBAINT OF TRADE. 389 

then none of the others will aooept the employment, is 
bad (c). 

The reasons against allowing agreements in unlimited ?^^??* 
restraint of trade are set forth at large in the leading case aUowtag 
of Mitchd V. ReyTiolds (d), and at a more recent date ! 
(1837) were put somewhat more condsely by the Supreme 
Court of Massachusetts, who held a bond void which was 
conditioned that the obligor should never carry on or be 
concerned in iron founding : — 

'^l. Saoh oontnusts injore the pftrtiai rnddog theniy beoMiae thej dlminiih 
their msMit of prooariag livelihoodi and a oompeteaoj for thoir famlliet. 
Thej tempt improTident penoos for the take of gain to deprive themielYea 
of the power to make future aoquisltioiia. Aad thej e^Mte saoh penooa 
to impodtioii and opprenioii. 

2. They tend to deprive the paUio of the Bervioee of men in the employ- 
ments and capadtiee in whioh they may be most luefal to the comm unity 
as well as themeelTee. 

8. They diaoourage induitiy and enterpriae^ and dlminiih the pcodooti 
of ingenuity and akill. 

4. They prevent competition and enhanoe prioee. 

5. They expose the public to all the eviUi of monopoly " (e). 

The second and fifth of these reasons appear to be 
the really elfficient ones both in themselves and as a matter 
of history. 

The admission of limited restraints is commonly spoken For aUow- 
of as an exception to the general policy of the law. But J**!*™* 
it seems better to regard it rather as another branch of it. 
Public policy requires on the one hand that a man shall 
not by contract deprive himself or the state of his labour , 
skill or talent; and on the other hand, that he shall be 
able to preclude himself from competing with particular 
persons so £Eur as necessary to obtain the best price 
for his business or knowledge, when he chooses to sell 

(e) OoUinB V. Locke (1879) (J. 0.), {d) (1711) 1 P. Wms. 181, and in 

4 App. Oa. 674, 688, 48 L. J. P. 0. 1 Sm. L. C. 

68;/<m€tv.iVora(1876)19Eq.426, {e) Mger ▼. Tkaeker (1887) 10 

44Ii.J. Oh.388,aoMenotfrao Pick. 61, 54. 
from dUfionltiiw on other gronnda. 

Z 2 



340 



UNLAWFUL AGREEMENTS. 



Questions 
as to 
historical 
origin of 
the doc- 
trine. 



Abeolate 
freedom of 
trade 
asserted 
liyCk>kea8 
old oom- 
moD law. 



it. Restriction which is reasonable for the protection of 
the parties in such a case is allowed by the very same 
policy that forbids restrictions generally, and for the like 
reasons (/). 

It has been suggested by a learned American writer that 
in its origin the doctrine was founded on a much more 
obvious and immediate inconvenience than can be now 
assigned as the consequence of allowing these contracts. 
It dates from the time when a man could not lawfully 
exercise any trade to which he had not been duly appren- 
ticed and admitted: so that if he covenanted not to 
exercise his own trade, he practically covenanted to exercise 
none — in other words not to earn his living at all (gr). One 
might even go a step farther: for by the statute 5 Eliz. 
c. 4 (now wholly repealed by the Conspiracy and Protection 
of Property Act, 1875, 38 & 39 Vict. c. 86), which consoli- 
dated earlier Acts of the same kind, not only the common 
labourer, but the artificer in any one of various trades, was 
compellable to serve in his trade if unmarried or under the 
age of 30 years, and not a forty-shilling freeholder or copy- 
holder or "worth of his own goods the clear value of ten 
pounds." An agreement by a person within the statute 
not to exercise his own trade might therefore be deemed, 
at any rate if unlimited, to amount to an agreement to 
omit a legal duty — which of course is positively illegal. 
But it must not be forgotten that absolute freedom of 
trade is positively asserted as the normal state of things 
always assumed and upheld by the common law; wherefore 
it may be doubted if any artificial explanation is wanted. 
It was resolved in the Ipswich Tailors* case (/i) that at the 
common law no man could be prohibited from working in 
cmy lawful trade : and it was said that 

" The statute of 5 Eliz. o. 4, which prohibits every person from using or 
exercising any craft mystery or occupation, unless he has been an apprentice 



(/) James V.-C. Leather Cloth 
Co. V. Loiitmt (1S69) 9 Eq. 345, at 
p. 353. 



{g) ParBoiiS on Contracts, 2. 255. 
(A) (1615) 11 Go. Rep. 53a, 546. 



RESTRAINT OF TRADE. 341 

by the spAoe of Mven yews, wm not enaoted only to the intent that work- 
men Bhoold be BkilhUy bat alao that yonth shoold not be nonriahed in 
idleneai, bat broaght ap uid educated in Uwfol adenoet and trades ; and 
thereby it mppemn, that withoat an act of parliament (t) none can be pro- 
hibited from working in any lawfol trade." 

And certain ordinances, by which the tailors of Ipswich 
forbade any one to exercise the trade of a tailor there 
until he had presented himself to the master and wardens 
and satisfied them of his qualification, were held void, 
inasmuch as 

** Ordinances for the good order and government of men of trades and 
mysteries are good, bat not to restrain any one in his lawful mystery *' {k). 

It seems that partial restraints were recognized as valid P«*W 
at an early time. The well-known Dyei*8 case in 2 H. V. befoie the 
5, pi. 26, is far from showing the contrary. The action was ^^ *° ^ 
debt on a bond conditioned that the defendant should not 
use his craft of a dyer in the same town with the plaintiflF 
for half a year: a contract which would now be clearly 
good if made upon valuable consideration. The defence 
was that the condition had been performed. To this 
Hull J. said : "To my mind you might have demurred to 
him that the obligation is void, because the condition is 
against the common law; and per Dieu if the plaintiff 
were here he should go to prison till he had made fine to 
the King" ({). This was not and could not be more than 
a dictum, and the parties proceeded to issue on the question 
whether the condition had in &ct been performed or not. 
Hull's opinion, however, was approved by all the Justices In 29 Blis. 
of the C. P. in a blacksmith's case in 29 Eliz., of which we 
have two reports (m), and has often been cited as if it had 
expressed the mind of the Court. It does not appear in 

(%) So again in the case of Mono- His expletive has been wrongly 

jpoliei (1602) 11 Ca Bepu 87&. supposed to be nniqae in the re- 

{k) Cp. the case of the Clcth- ports. In the earlier Tear Books 

worker^ Co. mentioned ib. 866. it is not onoommon. 

(0 This HiU or Hall, Justice of (m) Moore, 242, pt 879, 2 Leo. 

C. P., is to be distingnished from 210. 
Hnls, who sat fai K. B. till 8 H. V. 



842 UNLAWFUL AGREEMENTS. 

either case what was the real occasion or consideration of 
the contract. For aught the reports show it may have 
been the ordinary transaction of a sale of goodwill or the 
like in both the dyer's and the blacksmith's case. 

Contrftoii The contracts in partial restraint of trade which occur in 
re^^M niodem books are chiefly of the following kinds: 
in modein Agreements by the seller of a business not to compete 
with the buyer. 

Agreements by a partner or retiring partner not to 
compete with the firm. 

Agreements by a servant or agent not to compete with 
his master or employer after his time of service or employ- 
ment is over. It by no means follows, however, that an 
agreement in partial restraint of trade must fall within one 
of these descriptions in order to be valid 

The rule established by the modem decisions is in effect 
as follows: 
Roles M An agreement not to cany on a particular trade or 
JIJ^Z business is a valid contract if it satisfies the following 
conditions : 

(L) It must be founded on a valuable consideration* 

(ii) The restriction must not go, as to its extent in 

space or otherwise, beyond what in the judgment of the 

Court is reasonably necessary for the protection of the 

other party, regard being had to the nature of the trade or 

business (n), 

OoMldei*. It was at one time thought that the consideration must 

^* be not only valuable but adequate : but it is now clearly 

settled that this class of contracts forms no exception to 

the general rule. Here as elsewhere the Court will not 

inquire into the adequacy of the consideration. It is 

enough if a legal consideration of any value, however 



(n) See per Selwyn L.J. OaU ▼. p. 349; AUtopp v. Wheaicroft (1872) 
TourU (1869) 4 Ch. 669; mud Leather 16 £q. 61 (arg.) 
aoih Co. v. Lormmt (1869) 9 Eq. at 



RESTRAINT OF TRADE. 343 

small, be shown (o). On the other hand the necessity of 
showing some consideration is not dispensed with, or 
the burden of proof shifted, by the contract being under 
seal 

Until lately it was assumed to be an univerBal or at least Limiti of 
a general rule that the restraint must not be unlimited aa ^"^ 
to space. But there is some ground for holding that the 
real question is in every case whether the restriction im- 
posed is commensurate with the benefit conferred. It has 
never been doubted that a partner may bind himself abso- 
lutely not to compete with the firm during the partnership: 
so may a servant in a trade bind himself absolutely not to 
compete with the master during his time of service (p), A 
contract not to divulge a trade secret need not be qualified, 
and a man who enters into such a contract may to the 
same extent bind himself not to carry on a manufactiire 
which would involve disclosure of the process intended to 
be kept secret (g). It has even been denied that the 
alleged rule as to limits of space exists, as a positive rule 
of law, in any class of cases (r) : but more lately one 
member of the Court of Appeal has re-aflSrmed it, while 
another inclined to think, though not as part of his decision, 
that it was too much " ingrained in our history" to be 
changed by any Court below the House of Lords (s). 

Whether the restriction contracted for in any particular G«i«nd 
case be reasonable is a question not of fact but of law. A |[SonoM of 
covenant not to carry on " any business whatsoever," w»tric**«i 

(o) HUekmek v. Coker (18S7) 6 14 Ch. D. 351, 866 (Fiy J.) dis- 

Ad. ft E. 488 (Ex. Cb.) which ftlso nenting from AUsopp ▼. Wkeaierofi 

Mttles thftt a limit in time la not (1872) 15 Eq. 69, 42 L. J. Ch. 12 

indispenMble ; Gravdy y. BaimtMrd (WickensV.-U.) 

(1874) 18 Eq. 518, 48 L J. Cb. 659. («) Dtma ▼. Daviet (1887) 36 Cb. 

Pro^irionf m to time may of oonne Div. 359, 56 L. J. Ch. 962. Cotton 

be such as to make the agreement L. J. based his deolBion on the old 

one that is not to be (wrformed rule, Bowen L. J. ooncarred on other 

within a year, and therefore within grounds, not expressing a decided 

8. 4 of the Statnte of Fraodsi opinion on this point (pp. 891-2), 

{p) WallU y. Day (1887) 2 M. ft and Fry L.J. was IncUned to stand 

W. 273. by his former opinion in RounUon 

(9) Leaiher Cloik Co, v. LoriorU v. Rounllon. The question seems 

(1869) 9 Eq. 345, at p. 353. therefoie to stand open. 

(r) Hotuilhn y. BoutiUon (1880) 



344 



UNLAWFUL AGREEMENTS. 



in p«rtioa- within however narrow limits of time and space, is mani- 
festly unreasonable. Nor will the Court construe it as if 
limited to the particular business which is really in ques- 
tion (t), A covenant to retire, without expressed limit in 
space or time, from a partnership, and '' so far as the law 
allows, from the trade or business thereof in all its 
branches," is bad for unreasonableness if the words " so far 
as the law allows " are surplusage, and bad for uncertainty 
if they are not; there must be limits of some kind, but 
the parties cannot throw on the Court the task of deter- 
mining them (u). A restrictive covenant which contains 
or may be read as containing distinct undertakings bounded 
by diflFerent limits of space or time may be good as to part 
and bad as to part (x). 

What amounts of restriction have been held reasonable 
or not for the circumstances of different kinds of business is 
best seen in the tabular statement of cases (down to 1854) 
subjoined to the report of Avery v. Langford (y). It may 
be convenient to add the later decisions in the same form. 



TaUe o! 
recent 



(rinoe 
Avery v, 
Lftng- 
ford). 



Restriction held Reasonable. 



Name and Date of 



1856. Dendy ▼. 
ffenderton {z) 11 
Ex. 194, 24 L. J. 
Ex. 324. 



Tnde or Buslneai. 



Solicitor. 



Extent of Beatriotion 
in Time. 



21 years fromdC' 
termination of 
defendant's em- 
ployment as 
managing clerk 
to plaintiff. 



Extentof Beetrlotion 
InSjwoe. 



21 miles from 
parish of Tormo- 
nam, Torquay. 



(0 Bakery, Hedgecock (1888) 39 
Ch. D. 620, 67 L. J. Ch. 889. 

(u) Davies r. Davia (1887) 86 
Ch. Div. 859. 66 L. J. Ch. 962. 

{x) See Bainea v. Oea/ry (1887) 86 
Ch. D. 154, and anthorities there 
collected. 

(y) (1854) Kay 667,23 L. J. Ch. 
837. WaUis v. i)ay (1837) 2 M. & 
W. 278, did not decide that a co- 
venant unlimited in space was en- 
forceable, but only that it did not 
prevent an independent covenant to 



pay money contained in the same 
deed from being enforced. It might 
have been held valid in any case as 
being incidental to a contract of 
service ; bnt this is immaterial if 
the view taken by Fry J. in J?ou- 
ailhn v. JtoutUhn, 14 Ch. D. 851, is 
accepted. 

(2) Whether an agreement not 
to reside at a given pkce as well as 
not to cany on bnsinesB be good, 
qvare. 



RESTRAINT OF TRADE. 

Restriction hdd Reaaonakle, 



345 



Name and Date of 



1856. /ofWt y. 
Leei,\ H. & N. 
189, 26 L. J. 
Ex. 9. 



1857. BeniwA y. 

/iNW, 24 Bmy. 

807, 26 L. J. Ch. 

663. 
1859. Mumford^. 

OeOUng, 7 G. B. 

N. S. 805, 29 L. 

J. O. P. 105, 



1861. ffarnu y. 

Parmmif 82Bea?. 

328, 82 L. J. Ch. 

247. 
1863. C^rkion y. 

Edge^ 38 Befty. 

227, 83 li. J. Ch. 

448. 
1869. CaUr.TowrUj 

4 Ch. 654, 88 L. 

J. Ch. 665. 



1869. LeatheraM 
Co, y. LonotU (a), 
9 £q. 845, 89 L. 
J. Ch. 86. 



1874. Oravdy y. 
Barnard, 18 Eq. 
518, 43 L. J. Ch. 
659. 



Muiiif Adnre or Oontliiiuuice of 
sale of Blubbing defendaat'i U< 
and royiog oence fro 



Trade or Bualneaa 



Extent of Reatrietlon 
In Time. 



KztentofReetrietlon 
in Space. 



Bneland? (not li- 
mited in taims). 



frames not fit- 
ted with plain- 
tilTs patent in- 
yention. 

Cowkeeper, milk- 
man, milk-seller, 
or milk- carrier. 

Trayelling in laoe 
trade for any 
house other than 
plaintiff's. 



Hone-hair manu- 
factorer. 



Gas 
factorer and gas 



Coyenant bj pmr- 
chaser of land that 
yendor should 
haye exdnsiye 
rv^t of sopplj 
ingbeer. 

Mannfactore or 
sale of patent 
leather doth. 



Snrgeon. 



plaintiff to use 
and seD the 
patented inyen 
uon. 

ContlniiBDce of de- 
fendant's seryiee 
with plaintiff and 
24 months after. 

Unlimited. 



Unlimited. 



Ten jears. 



Unlimited. 



Unlimited. 



So long as plaintiff 
or ms assigns 
should carry on 



Three miles from 
Charies Street, 
Groeyenor Sq. 

'Anj part of the 
same groand," ie. 
the district in 
which defendant 
was employed 
as trayeller for 
plaintiffs. 
200 miles from 
P irtw 1 wo fj am ■ 



20 miles from 
Gieat Peter St, 
Westminster. 

Any public house 
erected on the 
land. 



. bot to be 
constmed as = 
Great Britain or 
United Kingdom, 
temble, see at p. 
851 (6). 

Parish of Newiokft 
lOmiles roand,ex- 
oepting the town 
of Iiewes. 



(a) See p. 848, aboye. 

(6) Cp. Diamond Match Co. y. 
Bother (1887) 106 N. T. 478, 60 Am. 
Rep. 464, where a restriction coyer- 
ing the whole territory of the United 
States except Montana and Neyada 
was held not too wide. << The 



boandaries of the States [tLe.the 
mnnidpal jurisdictions of New York 
or other indiridnal States] are not 
those of trade and commerce, and 
business is restrained witiiin no soch 
limit" 



S46 



UNLAWFUL AOREEMENTa 

Restriction held ReasonaMe, 



Name and Date of 
Caae. 



1875. PHfUing A 
Numerical Regit- 
iering Co. ▼. Samp- 
ton, 19 Eq. 462, 
44L.J.Gh.705. 



1875. May v. 
O'Nem, W. N. 
179, 44 L. J. Cb. 
660. 



1879. Davey v. 
Shannon, 4 Ex. 
D. 81, 48 L. J. 
Ex. 459 (no ob- 
jectioQ taken). 

1880. SotmUonY. 
SousOlon, 14 Ch. 
D. 851, 49 L. J. 
Cb. 839. 



Trade or Biiplneaa. 



Agreement bj ven- 
dor of patent to 
aBOgB to pnr- 
cbaaer all after- 
aoqnbned patent 
rights of like 
nature. 

Solicitor (ooyenant 
in derk*i articles). 



Outfitter and 
tailor. 



TraveUingin cham- 
pagne trade : set- 
ting up or entering 
into partnership 
in same trade. 



Extent of Restriction 
In Time. 



Lifetime 
dors. 



Unlimited. 



UnUmited (taken 
by the Oonrt as 
for joint lives of 
plaintiff and de- 
fendant). 

Two years after 
leaving plaintiffs 
servioe as to tra- 
velling : ten as to 
dealing on 
aooount 



Kztent of Baalrlelluu 
In Space. 



Europe (c). 



London, Middle- 
sex and Essex ; 
and nnlimited as 
to acting for 
clients of plain- 
tilTs firm, or any 
one who had been 
such client dnring 
the term of the 
articles. 

Five mUes from 
Devonport. 



Unlimited. 



Restriction held UTMreasonable. 



Name and Date of 



1872. AlUojm v. 
Wkeatcroft,lSEq. 
59, 42 L. J. Oh. 
12 id). 



Trade or Bualneas. 



<<Shall not directly or in 
directly sell, procure 
orders for the sale, or re- 
commend, or be in any 
wise concerned or en- 
gaged in the sale or re- 
commendation ... of 
any Burton ale, &a, or of 
any ale, ftc., brewed at 
Bmton or offered for sale 
as Buch," other than ale, 
&C., brewed by plaintiffs. 



BztentofReatriotlon 
la Time. 



During defendant*! 
service with plain- 
tiffs and two years 
after. 



Bxtentof 
Bestriotlon 
InHpaoe. 



Unlimited. 



{c) See note (6) previous page. 
{a) This appears to be in direct 



conflict with JtoutiUon v. JZotMt22oa, 
tupra. 



RESTRAINT OF TRADE. 347 

It is now settled, after some little uncertainty, that ^< 
distances specified in contracts of this kind are to be mea- 
sured as the crow flies, i,e. in a straight line on the map, 
neglecting curvature and inequalities of surface. This is 
only a rule of construction, and the parties may prescribe 
another measurement if they think fit, such as the nearest 
mode of access (e). 

It is clear law that a contract to serve in a particular Ooiit»ot 

. toBOTvefor 

business for an indefinite time, or even for life, is not void ufe sot 
as in restraint of trade or on any other ground of public '^^^•^• 
policy (/). It would not be competent to the parties, how- 
ever, to attach servile incidents to the contract, such as 
unlimited rights of personal control and correction, or over 
the servant's property (g). By the French law indefinite 
contracts of service are not allowed (h). It is undisputed Contrict 
that an agreement by A. to work for nobody but B. in A.'s oim^e 
particular trade, even for a limited time, would be void in "*ji? 
the absence of a reciprocal obligation upon B. to employ i 
A* (i). But a promise by B. to employ A. may be collected 
from the whole tenor of the agreement between them, and 
so make the agreement good, without any express words to 
that effect ( j). 

D. The judicial treatTnerU of urdawful agreements in 
general. 



Thus far of the various specific grounds on which agree- B. Rules 
ments are held unlawful. It remains for us to give as to^tment 
briefly as may be the rules which govern our Courts in ^ wJ»w- 



{e) Moujlet ▼. CoU (1872) L. R. 7 (A) Cod. Civ. 1780 : On ne peat 

Ex. 70, In Bx. Gh. 8 Ex. 82, 42 L. engager see seryioes qn' k temps, on 

J. Ex. 8. pour une entreprise d^termin^ : so 

(/) WaUu ▼. Da^ (1837) 2 M. & the Italian Code, 1628. 

W. 278. The law of Scotland is (t) See next note, and cp. the 

apparently the same according to similar doctrine as to promises of 

the modem authorities. marriage, tupra, 

ig) See Hargrave's argament in (;') Pilkingtan y. SeoU (1846) 15 

5omiii«r»ett'« ca.( 1771 2)20 StwT. 49, M & W. 657, 15 L. J. Ex. 829. 

66, and Bowen L.J. 86 Oh. Di?. Cp. Hartley v. Cummings (1847) 5 

at p. 898. O. B. 247. 17 L. J. C. P. 84. 



348 UNLAWFUL AGREEMENTS. 

fnl Affree- dealing with them, and which are ahnost without excep- 
general. tion independent of the particular ground of illegality. 
The general principle, of course, is that an unlawfiil agree- 
ment cannot be enforced. But this alone is insufficient. 
We still have to settle more fully what is meant by an un- 
lawful agreement. For an agreement is the complex result 
of distinct elements, and the illegality must attach to one 
or more of those elements in particular. It is material 
whether it be found in the promise, the consideration, or 
the ultimate purpose. Again, there are questions of evi- 
dence and procedure for which auxiliary rules are needed 
within the bounds of purely mimicipal law. Moreover, 
when the jurisdictions within which a contract is made, is 
to be performed, and is sued upon, do not coincide, it has 
to be ascertained by what local law the validity of the 
contract shall be determined, or there may be a "conflict 
of laws in space": again, if the law be changed between 
the time of making the contract and the time of perform- 
ance there may be "conflict of laws in time." 

This general division is a rough one, but will serve to 
guide the arrangement of the following statement. 

Unlawfulness ofdgreement as determined by particvlar 
elements. 

1. Inde- 1. A lawful promise made for a lawful consideration is 

promi^ not Valid by reason only of an unlawful promise being 

aome law- made at the same time and for the same consideration. 

some on- Ii^ Pigot's case (]c) it was resolved that if some of the 

lawhil : covenants of an indenture or of the conditions indorsed 
the lawiQi 

ones can upon a bond are against law, and some good and lawful, 

^^ the covenants or conditions which are against law are void 

ah initio and the others stand good. Accordingly " from 

Pigofs case (l) to the latest authorities it has always been 

(k) (1615) 11 Ca Bep. 27 h. whloh ooDtoinfl pmU 11, 12 and 

(Z) Referred to In the report ae 6 18. 
Co. Rep. 26 ; it la really in vot. 6, 



GENERAL BULSB: UNLAWIfUL CONSIDERATION OR OBJECT. 349 

held that when there are contained in the same instrument 
distinct engagements by which a party binds himself to do 
certain acts, some of which are legal and some illegal at 
common law, the performance of those which are legal may 
be enforced, though the peiformance of those which are 
illegal cannot *' (m). And where a transaction partly valid 
and partly not is deliberately separated by the parties into 
two agreements, one expressing the valid and the other 
the invalid part; there a party who is called upon to per- 
form his part of that agreement which is on the face of it 
valid cannot be heard to say that the transaction as a whole 
is unlawful and void (n). 

It was formerly supposed that where a deed is void in 
part by statute it is void altogether : but this is not so. 
" Where you cannot sever the illegal from the legal part of 
a covenant, the contract is altogether void ; but where you 
can sever them, whether the illegality be created by statute 
or by the common law, you may reject the bad part and 
retain the good ** (o). 

2. If any part of a single consideration for a promise 2. Unkw- 
or set of promises is unlawfiil, the whole agreement isJid^JSioii 
void. «f P««* of 

"For it is impossible in such case to apportion the ti^n ^^oids 
weight of each part of the consideration in inducing the ^^ ^^^l^ 
promise " (p). In other words, where independent promises i 
are in part lawful and in part unlawful, those which are 
lawful can be enforced; but where any part of an entire 
consideration is unlawful, all promises founded upon it are 
void. 

3. When the immediate object of an agreement is un- s. Agrae- 
lawfiil the agreement is void. " U wb 

(m) Bank of Augtraioiia v. BrcO- C. P. »t p. 250. 

ItU (1847) 6 Moo. P. C. 152, 201. ( p) Leake on Contnuste (let ed), 

(n) Ode$ta Tnmway$ Co. v. Mm- 409. WaUe y. Jona (1885) 1 Bin^. 

dd (1878) 8 Oh. Div. 285, 47 L. J. N. C. 656, 662. To be oonabtent 

Ch. 505. with the foregoing rale thie nraet be 

(o) Per 'Wllles J. Pidcermg r, limited to ceaee where the oonsidera- 

Hfraeombe Ity, Oo. (1868) L. B. 8 tion ia reaUy inMpArable. 



350 UNLAWFUL AQSEEMENT& 

fanmediate This ifl an elementary proposition, for which it is never- 
wJ^^rfrfi. theless rather difficult to find unexceptionable words. We 
mean it to cover only those cases where either the agree- 
ment could not be performed without doing some act 
unlawful in itself, or the performance is in itself lawful, 
but on grounds of public policy is not allowed to be made 
a matter of contract. The statement is material chiefly 
for the sake of the contrasted class of cases under the next 
rule. 

4. Where 4. When the immediate object or consideration of an 

obieofc not agreement is not imlawful, but the intention of one or both 

"iZfS' P*^^^ ^ making it is unlawful, then — 

intentioii If the imlawful intention is at the date of the agreement 

^S^ common to both parties, or entertained by one party to the 

of one' knowledge of the other, the agreement is void. 

^^ ^ K the imlawful intention of one party is not known to 

the other, the other at the date of the agreement, there is a contract 

agreement voidable at the option of the innocent party if he dis- 

void : covers that intention at any time before the contract is 
unlawful . '^ 

intention executed, 
of one not 

time Here it is necessary to consider what sort of connexion 

"'■^^L* ^f ^^® subject-matter of the agreement with an unlawful 
voidable plan or purpose is enough to show an unlawful intention 
option!^' that will vitiate the agreement itself This is not always 
What easy to determine. In the words of the Supreme Court of 
nSawfnl ^^e United States : — 

intention « Questions upon illegal contracts have arisen very often 
cases. both in England and in this coimtry ; and no principle is 
better settled than that no action can be maintained on a 
contract the consideration of which is either wicked in 
itself or prohibited by law. How far this principle is to 
affect subsequent or collateral contracts, the direct and 
immediate consideration of which is not immoral or illegal, 
is a question of considerable intricacy " (q). 

iq) Armstrong v. Tider (1826) 11 Wheat at p. 272. 



UNLAWFUL USB OF SUBJECT-HATTER. 851 

We have in the first place a well marked class of trans- iniMitioQ 
actions where there is an agreement for the transfer of ^^^^ 
property or possession for a lawful consideration, but for ohMwd, 
the purpose of an unlawful use being made of it Allonu^rfia 
agreements incident to such a transaction are void ; and it ^'■^ 
does not matter whether the unlawful purpose is in &ct 
carried out or not (r). The later authorities show that the 
agreement is void, not merely if the unlawful use of the 
subject-matter is part of the bargain, but if the intention 
of the one party so to use it is known to the other at the 
time of the agreement (a). Thus money lent to be used 
in an unlawful manner cannot be recovered (t). It is true 
than money lent to pay debts can be recovered, but that, as 
we have seen, is because there is nothing unlawful in 
either making a bet or paying it if lost, though the pay- 
ment cannot be enforced. K goods are sold by a vendor 
who knows that the purchaser means to apply them to an 
illegal or immoral purpose, he cannot recover the price : it 
is the same of letting goods on hire (a). If a building is 
demised in order to be used in a manner forbidden by a 
Building Act, the lessor cannot recover on any covenant in 
the lease (r). And in like manner if the lessee of a house 
which to his knowledge is used by the occupiers for im- 
moral purposes assigns the lease, knowing that tbe assignee 
means to continue the same use, he cannot recover on the 
assignee's covenant to indemnify him against the covenants 
of the original lease (u). It does not matter whether the 
seller or lessor does or does not expect to be paid out of 
the firuits of the illegal use of the property (s). 

An owner of property who has contracted to sell or let Option 
it, but finds afterwards that the other party means to use imSoSt 
it for an unlawful purpose, is entitled (if not bound) to |° **^ ^^ 
rescind the contract; nor is he boimd to give his reason at avoid the 

(r) ChuLigktA Ooke Co. v. TWimt («) Cannon ▼. Bruee (1819) 8 B. & 

(1889) 6 BiDg. N. C. 666, in Ex. Ch. Aid. 179. 

6 •&. 824. (») SmUk ▼. WkUe (1866) 1 Eq. 

(f) Pemte ▼. Brook$ (1866) L. R. 696, 86 L. J. Ch. 464. 
1 Ex. 218, 86 L. J. Ex. 184. 



352 UNLAWFUL AGREEMENTS. 

^dlT* *^^ *™® ^^ refusing to perform it. He may justify the 
oovering refusal afterwards by showing the unlawful purpose, 
t^«!n.' ^l^ough he originally gave no reason at all, or even a 

different reason {x). 

But an But a completely executed transfer of property or an 

timnafer of interest in property, though made on an unlawful con- 

P<j^2^" sideration, or, it is conceived, for an unlavrfiil purpose 

good known to both parties, is valid, and cannot afterwards be 

set aside (y). And an innocent party who discovers the 

unlawful intention of the other after possession has been 

delivered under the contract is not entitled to treat the 

transaction as void and resume possession {z). 

As with contracts voidable on other grounds, this rule 

applies, it is conceived, only where an interest in possession 

has been given by conveyance or delivery. The vendor 

who had sold goods so as to pass the general property, but 

without delivery, or the lessor who had executed a demise 

to take effect at a future day, might rescind the contract 

and stand remitted to his original possession on learning 

the unlawful use of the property designed by the purchaser 

or lessee (a). 

Insnranoe On the same principle an insurance on a ship or goods 

wbm ^ ^^^^ ^^ ^^® voyage covered by the insurance is to the 

voyage knowledge of the owner unlawful (which may happen by 

ki^ledge ^^^ omission of the statutory requirements enacted for the 

of owner, protection of seamen and passengers, as well as in the 

case of trading with enemies or the like). " Where the 

object of an Act of Parliament is to prohibit a voyage, the 

illegality attaching to the illegal voyage attaches also to 

the policy covering the voyage," if the illegality be known 

to the assured. But acts of the master or other persons 

(») Cowan V. MiJhowm (1867) L. qu, if the lewor oonld not have had 

B. 2 Ex. 230, 36 L. J. Ex. 124, see the lease set aside in equity. As to 

per Bramwell B. ad fin, chattels, ctmJtfra per Martin B. in 

{y) Ayera v. Jenkint (1878) 16 Pearce y. Brooks (1866) L. B. 1 Ex. 

Eq. 275, 42 L. J. Cb. 690. 217 ; bat this seems unsapported : 

(«) Feret v. Hia (1854) 15 C. B. see L. R 4 Q. B. 311, 315. 
207, 28 L. J. G. P. 185, where an (a) Gp. Cowan ▼. Milbowm{n67) 

interest in realty h%d passed ; hat L. B. 2 Ex. 230, 86 L. J. Ex. 124. 



TRANSACTION UNLAWFUL AS WHOLE. 35.*] 

not known to the owner do not vitiate the policy, though 
they may be such as to render the voyage illegal (6). 

An agreement may be made void by its connexion with Agree- 
an unlawful purpose, though subsequent to the execution oonn«oted 
of it. ^>;^ ^^ 

To have that effect, however, the connexion must be quent to 
something more than a mere conjunction of circumstances *^^^^* 
into which the unlawful transaction enters so that without action, 
it there would have been no occasion for the agreement. agTeemmt 
It must amount to a unity of design and purpose such "*>' ^^^^ 
that the agreement is really part and parcel of one entire integral 
unlawful scheme. This is well shown by some cases „^^J^ 
decided in the Supreme Court of the United States, and design, 
spreading over a considerable time. They are the more slmrenw 
worth special notice as they are unlike anything in our Court, 
own books. In Armstrong v. Toler (c) the point, as put Arm- 
by the Court in a slightly simplified form, was this : " A. ^"^ J 
during a war contrives a plan for importing goods on his 
own account from the country of the enemy, and goods are 
sent to B. by the same vessel. A. at the request of B. 
becomes surety for the payment of the duties [in fact a 
commuted payment in lieu of confiscation of the goods 
themselves] which accrue on the goods of B., and is 
compelled to pay them ; can he maintain an action on the 
promise of B. to return this money ? " The answer is 
that he can, for the " contract made with the government 
for the payment of duties is a substantive independent 

(6) WU$on V. Rnnkin (1865) L. Government, knowing that the pur- 

R. 1 Q. B. 162, 35 L. J. Q. B. 203 efaase-money would ba applied in 

(Ex. Ch.) ; Dudgeon v. Pembroke eapport of the rebellion, conld not 

(1874) L. R. 9 Q. B. 581, at p. 585, be recognized by the U. S. courts as 

43 L. J. Q. B. 220, per Qoain owner of the cotton : due. Field J. 

J. and anthorilies there referred oo the grounde (which seem right) 

ta Cp. further, on the general that it was a question not of con- 

head of agreements mide with tract but of ownerahip, and that in 

an unlawful purpose, Hanauer v. deciding on title to personal pro- 

Doane (1870) 2 Wallace (Sup. Ct. perty the <fe/acto govemmeot exist- 

IJ. S.) 842 : in SproU y. U,S, (1874) ing at the time and place of the 

20 ih. 459, it was held that a buyer tmnsaotion must be regarded. 
of cotton from the Confederate (c) (1826) 11 Wheaton 258, 269. 

P. A A 



854 UNLAWFUL AOREEKENT8. 

contract entirely distinct from the unlawful importation." 
But it would be otherwise if the goods had been imported 
on a joint adventure by A. and B. In McBlair v. Gibbes (d) 
an assignment of shares in a company was held good 
as between the parties though the company had been 
originally formed for the unlawful purpose of supporting 
the Mexicans against the Spanish Government before the 
independence of Mexico was recognized by the United 
States. In MiUenherger v. Cooke (e) the facts were these. 
In 1866 a collector of United States revenue in Mississippi 
took bills in payment when he ought to have taken coin, 
his reason being that the state of the country made it 
still unsafe to have much coin in hand. In account with 
the government he charged himself and was charged with 
the amount as if paid in coin. Then he sued the acceptors 
on the bills, and it was held there was no such illegality 
as to prevent him from recovering. If the mode of pay- 
ment was a breach of duty as against the Federal govern- 
ment, it was open to the government alone to take any 
objection to it. 
Fither v. We return to our own Courts for a case where on the 
^ ^ other hand the close connexion with an illegal design was 
established and the agreement held bad. In Fisher v. 
Bridges (/) the plaintiff sued the defendant on a simple 
covenant to pay money. The defence was that the cove- 
nant was in fact given to secure payment of part of the 
purchase-money of certain leasehold property assigned by 
the plaintiff to the defendant in pursuance of an unlawfril 
agreement that the land should be resold by lottery 
contrary to the statute (g\ The Court of Queen's Bench 
held unanimously that the covenant was good, as there 
was nothing wrong in paying the money, even if the 
unlawful purpose of the original agreement had in fact 
been executed : and the case was likened to a bond given 

{d) (1854) 17 Howard 232. J. Q. B. 270 ; in Ex. Ch. 3 £. A B. 

{€) (1878) 18 WaUace 421. 642, 28 L. J. Q. B. 276. 

(/) (1853) 2 S. & B. 118, 22 L. (^) 12 Geo. 2, c. 28, t. 1. 



SECURITIES FOR PAYMENT WHEN VOID. 366 

in coDsideration of past cohabitation. But the Court of 
Exchequer Chamber unanimously reversed this judgment, 
holding that the covenant was in substance part of an 
illegal transaction, whether actually given in pursuance 
of the first agreement or not "It is clear that the 
covenant was given for payment of the purchase-money. 
It springs from and is a creature of the illegal agree- 
ment; and as the law would not enforce the original 
contract, so neither will it allow the parties to enforce a 
security for the purchase-money which by the original 
bargain was tainted with illegality." They further pointed 
out that the case of a bond given for past cohabitation 
was not analogous, inasmuch as past cohabitation is not 
an illegal consideration but no consideration at all. But 
" if an agreement had been made to pay a sum of money 
in consideration of future cohabitation, and after cohabi- 
tation, the money being unpaid, a bond had been given to 
secure that money, that would be the same case as this ; 
and such a bond could not imder such circumstances be 
enforced." 

Some of the language used may have been " vague in Principle 
itself and dangerous as a precedent " (h). The decision, ^ndgment 
however, does not appear to require anjrthing wider than 
this — ^that where a claim for the pajonent of money as on 
a simple contract would be bad on the ground of illegality, 
a subsequent security for the same pajrment, whether given 
in pursuance of the original agreement or not, is likewise 
not enforceable : or, more shortly — 

5. Any security for the payment of money under an un- 6. Seonrity 
lawful agreement ia itself void, even if the giving of the ^IiSs^" 
security was not part of the original agreement. imder 

To this extent at least the principle of Fisher v. BHdges agreement 
has been repeatedly acted on (i). In Geere v. Mare (i) a " ^^".^7 

(h) 1 Sm. L. G. 428. Oeere v. Mare (1868) 2 H. A C. 889, 

(i) Ortane v. Wrowfhton (1866) 88 L. J. Ex. 60; Clay v. Jtay (1864) 
11 Ex. 146, 24 L. J. Ex. 266 ; 17 C. B. N. S. 188. 

A A 2 



356 



UNLAWFUL AGREEMENTS. 



the 

original 
agree- 
ments 



policy of assurance was assigned by deed as a further 
security for the payment of a bill of exchange. The bill 
itself was given to secure a payment by way of fraudulent 
preference to a particular creditor, and accepted not by the 
debtor himself but by a third person. It was held, both on 
principle and on the authority of Fisher v. Bridges, that 
the deed could not be enforced Again in Clay v. Ray (i) 
two promissory notes were secretly given by a compounding 
debtor to a creditor for a sum in excess of the amount of 
the composition. Judgment wajs obtained in an action on 
one of these notes. In consideration of proceedings being 
stayed and the notes given up a third person gave a 
guaranty to the creditor for the amount : it was held that 
on this guaranty no action could be maintained. 

It seems doubtful whether this principle would apply to 
a security for money payable under an agreement of which 
the performance was not unlawful, though the agreement, 
on grounds of public policy, were not enforceable. 



This is a convenient place to state a rule of a more special 
kind which has already been assimied in the discussion of 
various instances of illegality, and the necessity of which is 
obvious: namely: — 

5a. Bond 5a. If the condition of a bond is tmlawful, the whole 

^lawful bond is void {k). 

oondition 

18 wholly 

^^^^ Rvlea of Evidence and Procedure tovxMng Urdawful 

Agreements. 

6. niega- 6. Extrinsic evidence is always admissible to show that 
liwmhe ^^^ object or consideration of an agreement is in fact 

shown by illegal. 



{i) 17C. B N. S 188. 

{k) Co. Lit. 206 6, Sh*pp. Touch. 
372 ; where it is naid that if the 
matter of the condition be only 
nudum prohibitum, the obligation is 



absolute (as if the condition were 
meie^y impoffsihlt:) : but this dis- 
tinctiun is now clearly not law : see 
Duvergier v. Pdlovn (1830) 10 B. & 
C. 826. 



EVIDENCE OF UNLAWTTL PUBPOSE. 357 

This is an elementar}- rule established by decisions both «3ttrin»io 
at law (l) and in equity (m). Even a document which for *^ *°*^ 
want of a stamp would not be available to establish any 
right is admissible to prove the illegal nature of the trans- 
action to which it belongs (n). 

But where the immediate object of the agreement (in 
the sense explained above) is not unlawful, we have to 
bear in mind a qualifying rule which has been thus 
stated : 

6a. ** When it is sought to avoid an agreement not being in itaell nnlawfnl 6a. Where 
on the gronnd of itn being meant ae part of an unlawful Kheme or to carry anlAwful 
ont an unlawful object, it must be shown that such was the intention of j"^?**^ 
the parties at the time of making the agreement " (o). £^ ^^ 1^ 

shown to 
have 
The fact that unlawful means are used in performing an 2**"*^ ** 
agreement which is pi'ima facie lawful and capable of agree- 
being lawfully performed does not of itself make thcg*^ 
agreement unlawful (j>). This or other subsequent conduct quent 
of the parties in the matter of the agreement may be ™,i2g ^ 
evidence, but evidence only, that a violation of the law ^^7 be 
was part of their original intention, and whether it was so original 
is a pure question of fact (q). The omission of statutory ^^f^ 
requisites in carrying on a partnership business is con- 
sistent with the contract of partnership itself being lawful; 
but if it is shown as a fact that there was fix)m the first 
a secret agreement to cany on the business in an illegal 
manner, the whole must be taken as one illegal transac- 
tion (r). Again, it is no answer to a claim for an account 
of partnership profits that there was some collateral breach 



(1) CoUint V. Blantem (1767) 1 in a way that would make it un- 

8m. L. C. lawful is merely inoperative, and 

(m) Reyndl v. Sprye (1852) 1 D. leaves the original contract in force: 

M. G. 660, 672, 21 L. J. Ch. 638, City of Memphis v. Brown (1878) 20 

per Knight Bruce, L. J. Wallace (Sup. Ct U. S.) 289. 

(n) Coppoek v. Bower (1888) 4 M. {q) Fraterv. HiU (1858) 1 McQu. 

ft W. 361. 892. 

{o)Lordffowdenv.SimpB(m{lSS9) (r) ArmMtrongT.Ar7Mtrong{lSSi) 

10 A. ft £. 798, 818. 3 M. ft K. 45, 64, 13 L. J. Ch. 101, 

ip) A lubeequent agreement to s. c. nom. Amutrong y. Lewis (1884) 

vary the performance of a contract in Ex. Ch. 2 Or, ft M. 274, 297. 



368 UNLAWFUL AGREEMENTS. 

of the law in the particular transaction in which they 
were earned (a). Where a duly enrolled deed inter vivos 
purported to create a rent-charge for charitable purposes, 
but the deed remained in the grantor's keeping, no payment 
was made during his lifetime, nor was the existence of the 
deed communicated to the persons interested, and the 
conduct of the parties otherwise showed an understanding 
that the deed should not take effect till after the grantor's 
death, it was set aside as an evasion of the Mortmain 
Act (t). Again, an agreement is not imlawful merely 
because something remains to be done by one of the 
parties in order to make the performance of the agreement 
or of some part of it lawful, such as obtaining a licence 
from the Crown (u). On the same principle it is not 
illegal for a highway board to give a licence to a gas com- 
pany to open a highway within the board's jurisdiction, for 
it must be taken to mean that they are to do it so as not 
to create a nuisance (x). 
Wftu^b V. In Waugh v. Morris (y) it was agreed by charter-party 
Materiai that a ship then at Trouville should go thence with a cargo 
on the of hay to London, and all cargo was to be brought and 
^^tion taken from the ship alongside. Before the date of the 
T^**^i charter-party an Order in Council had been made and 
know the published under the Contagious Diseases (Animals) Act, 
**^' 1869, prohibiting the landing of hay from France in this 

country. The parties did not know of this, and the master 
learnt it for the first time on arriving in the Thames. In 
the result the charterer took the cargo from alongside the 
ship in the river into another vessel and exported it, as he 
lawfully might, but after considerable delay. The ship- 
owner sued him for demurrage, and he contended that the 
contract was illegal (though it had in fact been lawfriUy 

(«) Sharp y. Taylor (1849) 2 Ph. ca. 1 Co. Rep. 25 a, the like m to a 

801. ooodition in a devise. 

(t) Way y. Ba$t, 2 Drew. 44, 28 (x) Edgware Highway Board y. 

L. J. Ch. 109. Harrow Gat Co. (1874) L. B. 10 Q. 



(u) Sewdl v. Boyal Exch, Amimnce B. 92, 44 L. J. Q* B. 1. 
Co, (1813) 4 Taunt 856 ; iToinef v. (y) (1878) T 

BuA (1814) 5 ib. 521; cp. PoHer*9 L. J. Q. a 57. 



EVIDSNCE OF UNLAWFUL PURPOSE. 359 

performed), as the parties had intended it to be performed 
by means which at the time of the contract were unlawful, 
viz. landing the hay in the port of London. The Court 
however refused to take this view. It was true that the 
plaantiflF contemplated and eicpected that the hay would be 
landed, as that would be the natural course of things. But 
the landing was no part of the contract, and if the plaintiff 
had had before him the possibility of the landing being for- 
bidden, he would probably have expected the defendant not 
to break the law ; as in fiEu;t he did not, for no attempt was 
made to land the goods. 

"We quite agree thftt where a contrftct is to do a thing which cannot he 
performed without » rioUtion of the law it is void, whether the purties knew 
the Iaw or not But we think that in order to avoid a contract which oan 
be legallj performed on the ground that there was an intention to perform 
it in an illegal manner, it is necessary to show that there was the wicked 
intention to break the law ; and if this be so, the knowledge of what the 
Uw is beoomes of great importance " (z). 

But on the other hand where an agreement is prima Where 
facie illegal, it lies on the party seeking to enforce it to ^SIwu^S^ 
show that the intention was not illegal. It is not enough iinlawful, 
to show a mere possibility of the agreement being lawfully enough to 
performed in particular contingent events. " If there be '****\j?.r^ 
on the face of the agreement an illegal intention, the of lawful 
burden lies on the party who uses expressions prima fade ^^™" 
importing an illegal purpose to show that the intention 
was legal" (a). 

We now come to the rule, which we will first state As to 
provisionally in a general form, that money or property bj^j^ * ^ 
paid or delivered under an unlawful agreement cannot be "aoney or 

J I. 1 property. 

recovered back. 



(s) (1878) L. R. 8 Q. B. 207-8. prohibent, si perpetnam causam ser- 

(a) Holland y. Hall (1817) 1 B. A vatumm est, c^ssat obliflfatio . . . 

Aid. 68, per Abbott J. ; AUkint v. quamquam etiam si non sit perpetua 

Jupe (1877) 2 C. P. D. 875, 46 L. causa . . . idem dicendam est, 

J. C. P. 824. The same principle quiastatun contra mores sit" D.46. 

in expressed in a different form by 1. de y. o. 86 § 1. 
Paulus : ** Item quod leges fieri 



360 



UNLAWFUL AGREEMENTS. 



This rule (which is subject to exceptions to be pre- 
sently stated) is the chief part, though not quite the 
whole, of what is meant by the maxim In pari delicto 
'potior eat condicio defendentis (b). To some extent it 
coincides with the more general rule that money voluntarily 
paid with full knowledge of all material facts cannot be 
recovered back. However the principle proper to this 
class of cases is that persons who have entered into 
dealings forbidden by the law must not expect any assist- 
ance from the law, save so far as the simple refusal to 
enforce such an agreement is unavoidably beneficial to the 
party sued upon it. As it is sometimes expressed, the 
Court is neutral between the parties. The matter is thus 
put by Lord Mansfield : 

"The objection, that % cortraet is immoral or illegal as between plaintiff 
and defendant, sonnda at all timee very ill in the month of the defendant. 
It is not for his sake, however, that the objection is ever allowed, but it is 
fonnded in general prindples of policy, which the defendant has the 
adyantage of contrary to the real justice as between him and the plaintiff, 
by accident, if I may say so. The principle of pablic policy is this: ex dolo 
malo non oritur actio, Nu Court will lend its aid to a man who founds his 
caute of action upon an immoral or an illegal act. If from the plaintiff's 
own stating or otherwise the cause of action appears to arise ex turpi oauso, 
or the transgression of a positiye law of this country, there the Court says 
he has no right to be assisted. It is upon that ground the Court goes } not 
for the sake of the defendant, but because they will not lend their aid to 
such a plaintiff. So if the plaintiff and defendant were to change sides, 
and the defendant was to bring his action against the plaintiff, the latter 
would then have the advantage of it ; for where both are equally in fault, 
poUor ett conditio drfendentis *' (e). 

Plaintiff The test for the application of the rule is whether the 
recover plaintiff Can make out his case otherwise than " through 
where his ^]^q medium and by the act of an illecfal transaction to 

own un- •' o 

lawful which he was himself a party " (d). It is not confined to 

part of hU *^^ ^^^^^^ ^^ actual money payments, though that is the most 
own case, common. Where the plaintiff had deposited the half of a 



Lord 
Mans- 
field's ex- 
planation 
of the 
rule. 



(6) Op D. 50. 17. de reg. iiuis, 
164, C. i. 7. de condict ob turpem 
causam, 2. 

(e) ffolman v. Joknton (1775) 



Cowp. 341, 343. 

id) Taylor v. Chester (1869) L. R. 
4 Q, B. 309, 314, 38 L. J. Q. B. 225. 



WHEN PAYMENTS CAN BE RECOVERED. 361 

bank note with the defendant by way of pledge to secure 
the repayment of money due for wine and suppers supplied 
by the defendant in a brothel and disorderly house kept 
by the defendant for the purpose of being consumed there 
in a debauch, and for money lent for similar purposes, it 
was held that the plaintiff could not recover, as it was 
necessary to his case to show the true character of the 
deposit. (This is apparent by the course of the pleadings ; 
the declaration was on a bailment of the half-note to be 
re-delivered on request, and in detinue. Pleas, in effect, 
that it was deposited by way of pledge to secure money due. 
Replication, the immoral character of the debt as above) (e). 
The Court inclined also to think, but did not decide, that 
the plaintiff's case must &il on the more general ground 
that the delivery of the note waa an executed contract by 
which a special property passed, and that such property 
must remain (/). 

The rule is not even confined to causes of action ex 
contractu. An action in tort cannot be maintained when 
the cause of action springs from an illegal transaction to 
which the plaintiff was a party, and that transaction is a 
necessary part of his case (g). 

Independently of the special grounds of this rule, a 
completely executed transfer of property, though originally 
made upon an unlawful consideration or in pursuance of 
an unlawful agreement, is afterwards valid and irrevoc- 
able (A). 

The rule is not applicable in the following classes of 
cases, most of which however cannot properly be called 
exceptions. 

An agent is not discharged from accounting to his prin- Duty of 
cipal by reason of past unlawful acts or intentions of the ^"jj^'g^ 

(e) L. R. 4 Q. B. ftt p. 312. 501. 513, 16 L. J. C. P. 125, a pecu- 

(/) Compare Ex parU CaldeeoU liar and apparently solitary example. 

(1876) 4 Ch. Div. 150, 46 L. J. Bk. (A) Ayertt v. Jenl-ins (1873) 16 Eq. 

14, p. 816, above ; BegbUv.PhosphaU 275, 42 L. J. Ch. 690. Cp. M'CaUan 

Sewage Co. (1875) L. R. 10 Q. B. 491, v. MorUmer (1842) (Ex. Cb.) 9 M. 

500, affd. in C. A. 1 Q. B. Div. 679. & W. 636. 
{g) Pivaz V. N%choa$ (1846) 2 C. B. 



362 



UKLAWFUL AGREEMENTS. 



aoooimtto principal collateral to the matter of the agency. If A. 
notwith- paj^ money to B. for the use of C, B. cannot justify a 
"^U**^! '^^^^^^^^^ ^ V^y ^^®^ ^ ^- ^y stowing that it was paid 
illegality, under an unlawful agreement between A. and C. (i). 
Again, if A. and B. make bets at a horse-race on a joint 
account and B. receives the winnings, A. can recover his 
share of the money or sue on a bill given to him by B. for 
it : here indeed there is nothing illegal in any part of the 
business (k). For the same reason an agent employed to 
bet and collect winnings is bound to account to his prin- 
cipal for what he collects, though the losers could not have 
been compelled to pay (JL). In like manner the right to an 
account of partnership profits is not lost by the particular 
transaction in which they were earned having involved a 
breach of the law (tw.). Nor can a trustee of property refuse 
to account to his cestui qwe trust on grounds of this kind : 
a trust was enforced where the persons interested were the 



(t) Tenam v. ElUoU (1797) 1 B. 
ft P. 8. 

(i^) Johnmrn y. Lemdty (1862) 12 
C. B. 468. And where B. naee 
moneys of his own and A.*b in bet- 
ting, on the terms of dividing win- 
nings in oertain proportions, A. can 
sue B. on a cheque given for bis 
share of winnings: Beetton v. Beaton 
(1875) 1 Ex. D. 18, 46 L. J. Ex. 
230. Cp. and dist ffigginaon v. 
Simpmn (1877) 2 C. P. D. 76, 46 
L. J. C. P. 192, where the transac- 
tion in question was held to be in 
substance a mere wager. Where an 
agent is employed to bet in his own 
ncane and receive winnings or pay 
losses, the authority to pay losses 
becomes irrevocable on the bet being 
made; Ready, Ander9(m(\%Si)\Z(t 
B. Div. 779, 53 K J. Q. B. 682 ( Bowen 
and Fiy K J J. affirming Hawkins J., 
dM8. Brett M. R.). The ground taken 
by the majority ii that, under the 
conditions of betting as commonly 
practised and known to the parties, 
the employment of the plaintiff 
must imply an indemnity against 
all payments made in the regular 
course of business. A fine distinc- 
tion has been taken in two recent 



cases of purchase of bank shares 
through brokers, where the contract 
note omitted to specify the num- 
bers of the shares as required by 
Leeman's Act, 80 k 81 Vict. o. 29, 
s. 1. The brokers, if they had not 
completed the contracts, might have 
been declared defaulters, and ex- 
pelled from the Stock Exchange. 
In Seyrnwur v. Bridge (1885) 14 Q. R 
D. 460, Mathew J. held that the 
principal could not repudiate ; in 
Perry v. BameU (1885) 15 Q. B. Div. 
888, 64 K J. Q. B. 466, it was held 
(distinguiBhing the case from Read 
V. Anderton and Seymowr v. Bridge), 
that, if he did not know the usage 
of the Stock Exchange, he could. 

(0 Bridget v. Sawige (1884) 16 Q. 
B. Div. 868, 64 L. J. Q. B. 464: the 
contract of agency is not a gaming or 
wagering contract But be cannot 
be liable for failing to make bets or 
collect winnings, for the collection is 
precarious: Cohen v. KiUdl (1889) 
22 Q. R D. 681, 58 L. J. Q. B. 241. 

(m) Sharp v. Taylor (1849) 2 Ph. 
801. or course it is not so where 
the main object of the partnership 
is unlawful. 



RECOVERY FROM AGKNT OR STAKEHOLDER. 363 

members of an uninoorporated trading afisociation, though 
it was doubtful whether the association itself was not 
illegal (n). So, if A. with B/s consent eflFects a policy for 
his own benefit on the life and in the name of B., having 
himself no insurable interest, the policy and the value of it 
belong, as between them, to A. (o). If a man entrusts 
another as his agent with money to be paid for an unlaw- 
ful purpose, he may recover it at any time before it is 
actually so paid ; or even if the agent does pay it after 
having been warned not to do so (p); the reason of this, 
clearly put in one of the earUer cases (q), is that whether 
the intended payment be lawful or not an authority may 
always be countermanded as between the principal and 
agent so long as it is not executed (r). It is the same 
where the agent is authorized to apply in an unlawful 
manner any part of the moneys to be received by him on 
accotmt of the principal ; he must account for so much of 
that part as he has not actually paid over (r). The 
language of the statute 8 & 9 Vict. c. 109, s. 18, which 
says that no money can be recovered " which shall have 
been deposited in the hands of any person to abide the 
event upon which any wager shall have been made " does 
not prevent either party from repudiating the wager at 
any time either before or after the event and before the 
money is actually paid over and recovering his own deposit 
from the stakeholder (a). 

Where money has been paid under an unlawful agree- Money re- 
ment, but nothing else done in performance of it, the ^aok, 

money may be recovered back. But in the decision which ^^^® ^ 
. . ..... Mrrcement 

establishes this exception it is intimated that it probably not exe- 
cuted. 

in) Sheppard v. Oxenford {1866) (») J>iffffU v. Biffgi (1877) 2 Ex. 

1 K. & J. 491. Div. 422, 46 L. J. Ex. 721 ; Hampden 

(o) W(n-tkin0ton v. OurHs (1875) ▼. Walth (1876) 1 Q. B. D. 189, 46 

1 Cb. Diy. 419, 45 L. J. Ch. 259. L. J. Q. B. 288, where fonner 

( jb) Hattdov} ▼. Jaek9on (1828) 8 autboritieB are oolleoted and oon- 

B. & C. 221, 226. fidered; TrvmbU ▼. Hm (1879) (J.C.) 

{q) Taylor v. Lendey (1807) 9 East on a oolonial atatate io the same 

49. terms, 5 App. Ga. 842, 49 L. J. P. 

(r) Bane v. iSHew (1860) 5 H. A C. 49. 
N. 925, 29 L. J. Ex. 488. 



364 UNLAWFUL AGREEMENTS. 

would not be allowed if the agreement were actually 
criminal or immoral (t). In general, " if money is paid or 
goods delivered for an illegal purpose, the person who has 
so paid the money or delivered the goods may recover 
them back before the illegal purpose m carried out ; but if 
he waits till the illegal purpose is carried out, or if he seeks 
to enforce the illegal transaction, in neither case can he 
maintain an action " (u). And the action cannot be main- 
tained by a party who has not given previous notice that 
he repudiates the agreement and claims his money back (x). 
In Taylor v. Bowers (u) A. had delivered goods to B. 
imder a fictitious assignment for the purpose of defrauding 
A.'s creditors. B. executed a bill of sale of the goods to 
C, who was privy to the scheme, without A. s assent. It 
was held that A. might repudiate the whole transaction 
and demand the return of the goods from C. In Symes v- 
Httghea (y), a case somewhat of the same kind, the plain- 
tiff had assigned certain leasehold property to a trustee 
with the intention of defeating his creditors ; afterwards 
under an arrangement with his creditors he sued for the 
recovery of the property, having undertaken to pay them 
a composition in case of success. The Court held that, as 
the illegal purpose had not been executed, he was entitled 
to a reconveyance. It vdll be observed however that the 
plaintiff was in effect suing as a trustee for hia creditors, so 
that the real question was whether the fraud upon the 
creditors should be continued against the better mind of 
the debtor himself. The cases above mentioned as to 
recovering money fix)m agents or stakeholders are also put 
partly on this ground, which however does not seem neces- 
sary to them (z). 

(0 TapperuUn v. Randall (1801) («) Palyart v. Leckie (1817) 6 Bi. 

2 B. & P. 467. ft S. 290. 

(tt) Per MelliBh L.J. Taylor v. (y)(1870)9Eq.475,89L.J.Cb.804. 

B<niftn (1876) 1 Q. B. Div. 291, at (z) Bastdow v. Jackton (1828) 8 

p. 800 ; in Herman ▼. Jeuehner B. ft C. 221. Meaning v. BdUngt 

(1886) 16 Q. B. Div. 661, soine (1846) 14 M. ft W. 711, 16 L. J. 

doubt is thrown on the fint branch Ex. 168, where that case was 

of this statement, but the ground of doubled, decides only this : A man 

the decision was that an illegal pur- cannot sue a stakeholder for the 

pose had in fact been cariied ouL whole of the sweepstakes he has 



WHEN PAYMENTS CAN BE BBCOVERED. 365 

In certain cases the parties are said not to be in pari P*rti« 
delicto, namely where the unlawful agreement and the deUeto, 
payment take place under circumstances practically ^"^^^ 
amounting to coercion. The chief instances of this kind tor's Mseot 
in courts of law have been payments made by a debtor by ^^™^ 
way of firaudulent preference to purchase a particular 
creditor's assent to his discharge in bankruptcy or to a 
composition. The leading case is now Atkinson v. 
Denby (a). There the defendant, one of plaintiff's 
creditors, refused to accept the composition unless he had 
something more, and the plaintiff paid him 501. before he 
executed the composition deed. It was held that this 
money could be recovered back. " It is true," said the 
Court of Exchequer Chamber, " that both are in delicto, 
because the act is a fraud upon the other creditors, but it 
is not par delictum, because the one has the power to 
dictate, the other no alternative but to submit." On the 
same ground money paid for compounding a penal action 
contrary to the statute of Elizabeth may be recovered 
back (6). But where a bill is given by way of fraudulent 
preference to purchase a creditor s assent to a composition, 
and after the composition the debtor chooses to pay the 
amount of the bill, this is a voluntary payment which 
cannot be recovered (c). 

In equity the application of this doctrine has been the ^*« 
same in substance, though more varied in its circumstances, of equity. 
The rule followed by courts of equity was thus described 
by Knight Bruce L. J. : " Where the parties to a contract 
against public policy or illegal are not in pari delicto (and 
they are not always so) and where public policy is 
considered as advanced by allowing either, or at least the 

won m A lottery, and then reply to 984, SI L. J. Ex. 862 : the chief 

the objection of illegality that if the earlier oneif are Smith y. Bromley 

whole thing is illegal he mnst at (1760) 2 Doug. 605, Smith t. Oujf^ 

all eventB recover hia own stake. (1817) 6 M. ft S. 160. 

AUegans contraria non est andien- (6) Witliams v. ffedley (1807) 8 

dus. Bast, 878. 

(a) (1860) 6 H. ft N. 778, SO L. (e) Wili<m ▼. Rajf (1839) 10 A. ft 

J. Ex. 861, in Ex. Cb. 7 H. ft N. B. 82. 



866 TTKLAWFXTL AGREEMENTS. 

more excusable of the two, to sue for relief against the 
transaction, relief is given to him, as we know from various 
authorities, of which Osborne v. WUlia/ma [see below] is 
one " (d). 
Spedal On this principle relief was given and an account 

5*^^f decreed in Osborne v. WiUiaras {e), where the unlawful 
sale of the profits of an office was made by a son to his 
fstther after the son had obtained the office in succession to 
his &ther and upon his recommendation, so that he was 
wholly under his father's control in the matter. In ReynM 
V. Sprye (/) an agreement bad for champerty was set aside 
at the suit of the party who had been induced to enter 
into it by the other's false representations that it was a 
usual and proper course among men of business to advance 
costs and manage litigation on the terms of taking all the 
risk and sharing the property recovered. In a later case a 
mortgage to secure a loan of money which in fact was lent 
upon an immoral consideration was set aside at the suit of 
the borrower on the ground that the interest of others 
besides parties to the corrupt bargain was iuvolved (g). A 
wider exception is made, as we have seen above, in the 
case of agreements of which the consideration is future 
illicit cohabitation between the parties. The treatment 
of this kind of agreements is altogether somewhat anoma- 
lous and ill-defined, and may perhaps be considered open 
to review. Apart from this particular question, there 
seems to be no reason (at all events since the Judicature 
Acts) why the analogy of the cases in equity where agree- 
ments have been set aside should not apply to the legal 
right of recovering back money paid. If this be correct, 
the rule and its qualifications will be to this effect : 

Statement 7. Money paid or property delivered under an unlawful 
M quall^ ^ agreement cannot be recovered back, nor the agreement 
fied. get aside at the suit of either party — 

(d) Jteifndl v. Sprye (1852) ID. (/) 1 D. M. G. 660, 679. 

M. G. 660, at p. 679. {^) W, v. £. (1868) 22 Beav. 574. 

{e) (1811) 18 Vee. 879. 



CONFUCT or LAWS. 867 

unless nothing has been done in the execution of the 
unlawful purpose beyond the payment or delivery itself 
(and the agreement is not positively criminal or im- 
moral?); 

or unless the agreement was made under such circum- 
stances as between the parties that if otherwise lawful it 
would be voidable at the option of the party seeking 
relief (A); 

or, in the case of an action to set aside the agreement, 
unless in the judgment of the Court the interests of third 
persons require that it should be set asida 

8. Where a difference of local laws is in question, the 8. Confliot 
lawfulness of a contract is to be determined by the law ^p^^, 
governing the substance of the contract (that is, according heat lod 
to the English authorities, the law of the place where the ^^^JJJjT 
contract is made, subject to the consideration of matters 
showing a different intention, for example, if the contract 
is wholly to be performed in some other place) (i). 

Exception 1. — An agreement entered into by a citizen ^"*?^ . 
in violation of a prohibitory law of his own state cannot in by pro- 
any case be enforced in any court of that state. hibito^ 

Exception 2. — An agreement contrary to common prin- law of the 
ciples of justice or morality, or to the interests of the state, or'uniws 
cannot in any way be enforced. the agree- 

What we here have to do with is in truth a fragment of contrary to 
a much larger subject, namely, the consideration of the ?«n>p»«n 
local law governing obligations in general (k). mterests 

(A) This form of ezprenion ii not pared by Willee J.; Jaeobi v. OrSdU 

pomtiTely warranted by the authori- Lyonnait (1884) 12 Q. B. IHv. 589, 

ties, but is submitted as fairly re- 600, 58 L. J. Q. B. 156. 
presenting the result. {k) For the treatment of it in this 

(t) Westlake, 234, 287 ; per Erie connexion, see Savigny, Syst. 8. 269- 

C.J. BranUy v. S. B. R. Co. (1862) 278 (§ 874 0.) ; Story, Conflict of 

12 O. R N. S. at p. 72 : « As a Laws, §§ 243 pqq 258 sqq. ; Whar- 

general rule, the lean loci emtractus ton, §§ 482-497. Mr. Westlake 

governs in deciding whether there (Private Intern. Law, ed. 1880, §§ 

was iUegaiity in the contract ; " 203, 204) states the rules thus : 

Uaifd V. OwbeH (1865) Ex. Ch., L. Where a contract contemplated the 

R. 1 Q. B. 115, 122, 85 L. J. Q. B. violation of English law, it cannot 

74, in a very careful judgment pre- be enforced here, notwithstanding 



368 UNLAWFUL AGREEMENTS. 



of the The main proposition is well established, and it would 

" be idle to attempt in this place any abridgment or restate- 

the fi»t ment of what is said upon it by writers on so-called Private 
exception. International Law (I). The first exception is a simple one. 
The municipal laws of a particular state, especially laws of 
a prohibitory kind, are as a rule directed only to things 
done within its jurisdiction. But a particular law may 
positively forbid the subjects of the state to undertake some 
particular class of transactions in any part of the world : 
and where such a law exists, the courts of that state must 
give effect to it. A foreigner cannot sue in an English 
court on a contract made with a British subject, and itself 
lawful at the place where it was made, if it is such that 
British subjects are forbidden by Act of Parliament to 
make it anywhere (m). It may be doubted whether such 
a contract would be recognized even by the courts of the 
state where it was made, unless the prohibition were of so 
hostile or restrictive a character as between the two states 
as not to fall within the ordinary principles of comity {e,g. 
if the rulers of a people skilled in a particular industry 
should forbid them to exercise or teach that industry 
abroad). The authorities already cited (p. 276, above) as to 
marriages within the prohibited degrees contracted abroad 
by British subjects may also be usefully consulted as illus- 
trating this topic. 
Ab to The second exception is by no means free from diffi- 

exoeption. culties touching its real meaning and extent (n). There 

tbftt it may have been valid by its iits g^nHum^ bat not in any Benee 

S roper law. Where a contract oon- inter gentes, 
ictfl with what are deemed in Eng- (mj Santos v. TUidge (1860) in 
land to be essential pablio or moral Ex. Cb. 8 C. B. N. 8. at p. 874, 29 
interests, it cannot be enforced here, L. J. C. P. at p. 350, per Black- 
notwithstanding that it may have bam J. 

been valid by its proper law. (n) "Whether an action can be 

(l) The name, though cnrrent, is supported in England on a contract 

both clumsy and absnni. The rtdes which is void by the law of Eng- 

of municipal juriBdiction concerning land, but valid by the law of the 

the recognition and application of country where the matter is trans- 

foreign laws have a certain ooemo- acted, is a great question": per 

politsn character, but are not in- Wilmot J. MMiion v. Bland (1760) 

temational: they are in one sense 2 Burr. 1083. 



CONFLICT OF LAWS. 369 

is no doubt that an agreement will hot necessarily, though 
it will generally, be enforced if lawful according to its 
proper local law. The reasons for which the court may 
nevertheless refuse to enforce it have been variously ex- 
pressed by judges and text-writers, and sometimes in very 
wide language. 

It may be taken for granted that the courts of a civilized TrMnao- 
state cannot give effect to rights alleged to be valid by Jj^"^^"" 
some local law, but arising from a transaction plainly commoa 
repugnant to the ht8 gentiitm in its proper sense — theSfcm?i^ 
principles of law and morality common to civilized nationa ""**»<>«>*» o' 
In other words, a local law cannot be recognized, though a wholly 
otherwise it would be the proper law to look to, if it is in ^^^^ f 
derogation of all civilized laws (o). This indeed seems a family 
fundamental assumption in the administration of justice, JJ^tn^- 
in whatever forum and by whatever procedure. Likewise n*««d- 
it is clear that no court can be bound to enforce rights 
arising under a system of law so different from its own, 
and so unlike anything it is accustomed to, that not only 
its administrative means, but the legal conceptions which 
are the foundation of its procedure, and its legal habit of 
mind (p), so to speak, are wholly unfitted to deal with 
thent For this reason the English Divorce Court cannot 
entertain a suit founded on a Mormon marriage. Apart 
from the question whether such marriages would be 
regarded by our courts as immoral iitre gentium (q), the 
matrimonial law of England is wholly inapplicable to 
polygamy, and the attempt to apply it would lead to 
manifest absurdities (r). Practically these difficulties can 

(o) It haa been laid down that (p) In German one might apeak 

eontraots to bribe or corruptly In- without any atrangeneas of the 

flaence officers of a foreign govern- JleehUbewussUein of the Court 

ment— even if not prohibited by the {q) That is, among Western 

law of that fl^ovemment — ^will not nations. The recognition of Hindu 

be enforced in the courts of the and Mahometan law in British 

XTnited States: 09cany€m v. Amu India stands on wholly different 

Co. 108 U.S. 261, 277 ; and this not ground. 

in the interest of the foreign govern- (r) ffyde ▼. Hyde JL Woodmantee 

ment, but for the sake of moraUty (1866) L. R. 1 P. A B. 180, 85 L. 

and the dignity of law at home. J. Mat. 57. 

P. B B 



370 UNLAWFUL AaREEMENTa 

hardly arise except as to rights derived fix)m &mily rela- 
tions. One can hardly imagine them in the proper region 
of contracta 

Bat oppo- Again, judicial observations are to be found which go to 
mu^pal *^® further extent of saying that no court will enforce 
principles anythinfif contrary to the particular views of justice 

of lagrnot '^ ,., ,. , • . . / . . 

enoogh. morality or policy whereon its own mumcipal juris- 
prudence is founded. And this doctrine is supported by 
the general acceptance of text-writers, which in this 
department of law must needs count for more than in any 
other, owing to its comparative poverty in decisive 
Contract authorities. But a test question is to be found in the 
s?avOT * ^ treatment of rights arising out of slavery by the courts of a 
enforced free country : and for England at least the decision of the 
V. illidge. Exchequer Chamber in Santos v. Illidge («) has given such 
an answer to it as makes the prevailing opinion of the 
books untenable. Slavery is as repugnant to the principles 
of English law as anjrthing can well be which is so &r 
admitted by any other civilized system that any serious 
question of the conflict of laws can arise upon it. There 
is no doubt that neither the statvs of slavery nor any 
personal right of the master or duty of the slave incident 
thereto can exist in England (t), or within the protection 
of English law (u). But it long remained uncertain how 
an English court would deal with a contract concerning 
slaves which was lawful in the country where it was made 
and to be performed. Passing over earlier and indecisive 
authorities {x), we find Lord Mansfield assuming that a 
contract for the sale of a slave may be good here (y). On 
the other hand, Best J. thought no action " foimded upon 

(8) (1860) 8 0. B. N. S. 861, 29 («) Viz, on board an English 

L. J. C. P. 348, revg. b. c. in court ship of war on the high seas or in 

below, 6 0. B. N. S. 841, 28 L. J. G. hostile occupation of territorial 

P. 317. Very strangely there is no waters, Forbes ▼. Cochrane (1824) 

mention of the case either in Whar- 2 B. & C. 448. 

ton*8 Cunflict of Laws or in the last (x) They are collected in Har- 

edition of Story. grave's argument in Sommendt^t 

(0 SommerteU'M oa. (1771-2) 20 



St. T. 1. (y) 20 St T. 79. 



CONFUCT OF LAWa 371 

a right arising out of slavery " would be maintainable in 
the municipal courts of this country (s). In Santos v. 
midge (a) a Brazilian sued an English firm trading in 
Brazil for the non-delivery of slaves under a contract for 
the sale of them in that country, which was valid by Brazilian 
law. The only question discussed was whether the sale was 
or was not under the circumstances made illegal by the 
operation of the statutes against slave trading : and in the 
result the majority of the Exchequer Chamber held that it 
was not. It was not even contended that at common law the 
court must regard a contract for the sale of slaves as so repug- 
nant to English principles of justice that, wherever made, 
it could not be enforced in England. Nor can it be sug- 
gested that the point was overlooked, for it appears to 
have been marked for argument. Perhaps it is a matter 
for regret that it was not insisted upon, and an express 
decision obtained upon it : but as it is, it now seems im- 
possible to say that purely municipal views of right and 
wrong can prevail against the recognition of a foreign 
law. Moreover, apart fix)m this decision, the cases in 
which the dicta relied upon for the wider doctrine have 
occurred have in fact been almost always determined on 
considerations of local law, and in particular of the law of 
the place where the contract was to be performed. 



Thus in Robinson v. Bland (b) the plaintiff sued (1) upon EarUer 
a bill of exchange drawn upon England to secure money JJJIJJdered 
won at play in France : (2) for money won at play in with re- 
France : (3) for money lent for play at the same time and ^^^ 
place. As to the bill, it was held to be an Enriish bill : general 
for the contract was to be performed by payment m 
England, and therefore to be governed by English law. 
For the money won, it could not have been recovered in a 



(£) Forbes y. Codirane (1824) 2 B. authority being advene. 
& G. at p. 468. To same effect (a) See note (<), cuUe. 

Story, § 269, in spite of American (6) (1760) 2 Burr. 1077. 

B B 2 



372 UNLAWFUL AGREEMENTS. 

French court of justice (c), and so could not in any case be 
sued for here ; but as to the money lent, the loan was law- 
ful in France and therefore recoverable here. Wilmot J. 
said that an action could be maintained in some countries 
by a courtesan for the price of her prostitution, but 
certainly would not be allowed in England, though the 
cause of action arose in one of those countries. Probably 
no such local law now exists. But if it did, and if it were 
attempted to enforce it in our courts, we could appeal, not 
to our own municipal notions of morality, but to the 
Roman law as expressing the common and continuous 
understanding of civilized nations. Such a bargain is 
immoral itire gentium. 

In Quarrier v. Colston (d) it was held that money lent 
by one English subject to another for gaming in a foreign 
country where such gaming was not unlawful might be 
recovered in England. This, as well as the foregoing case, 
is not inconsistent with the rule that the law of the place 
of performance is to be followed. It must be taken, no 
doubt, that the parties contemplated payment in England. 
Then, what says the law of England ? Money lent for an 
unlawful use cannot be recovered. Then, was this money 
lent for an unlawful use ? That must be determined by 
the law existing at the time and place at which the money 
was to be used in play. That law not being shown to 
prohibit such a use of it, there was no unlawful purpose in 
the loan, and there was a good cause of action, not merely 
by the local law (which in fact was not before the court) (e), 
but by the law of England. These cases do show, how- 
ever, that the English law against gaming is not considered 
to be founded on such high and general principles of 

(c) Nor, under the circumstancefl, ably, without making gaming un- 
in the mamhal's court of honour lawful, reduce debts for m<*ney lent 
which then existed ; but it seems at play to the rank of natural ob- 
the court would in any cane have ligations or debte of honour not 
declined to take notice of an ex- enforceable by legal process : if the 
traordinary and extra- legal juris- view in the text he correct, the 
diction of that sort existence of tuch a law would make 

(d) (1842) 1 Ph. 147. no difference in the English court. 

(e) The local law might conceiv- 



CONFLICT OF LA.wa 373 

morality that it is to override all foreign laws, or that an 
English court is to presume gaming to be unlawful by a 
foreign law (/). 

In Hope V. Hope (g) an agreement made between a 
husband and wife, British subjects domiciled in France, 
provided for two things which made the agreement void 
in an English court : the collusive conduct of a divorce 
suit in England, and the abandonment by the husband of 
the custody of his children. It is worth noting that at 
the time of the suit the husband was resident in England, 
and it does not seem clear that he had not recovered an 
English domiciL Knight Bruce L.J. put his judgment 
partly on the ground that an important part at least of 
the provisions of the document was to be carried into 
effect in England. Turner L.J. did say in general terms 
that a contract must be consistent with the laws and 
policy of the country where it is sought to be enforced, 
and he appears to have thought the provision as to the 
custody of the children was one that an English court 
must absolutely refuse to enforce, whether to be performed 
in England or not, and whether by a domiciled British 
subject or not. But this is neither required by the 
decision nor reconcilable with Santos v. lUidge, 

In Orell v. Levy (h) an agreement was made in France 
between an English attorney and a French subject that the 
attorney should recover a debt for the client in England 
and keep half of it. Our rules against champerty are not 
known to the French law : but here the agreement was 
to be performed in England by an officer of an English 
court (i). Perhaps, indeed, the English law governing 



(/) CotUra Savigny, who thinks 276. The old mnrj laws were 

laws reUiting to usury sad gaming without doubt supposed to express 

must be reckoned strictly compnl- the dictates of uniyersal Christian 

sory (yon strong positiver, zwin- morality. 

goider Natnr)— «.& must be ap- {g) (1857) 8 D. M. G. 781 ; 

plied without legaid to local law per Knight Bruce L. J. at p. 740 ; 

1^ every court within their alle- per Turner L. J. at p. 748. 

gUmce, but see not to be regarded (A) (1864) 16 C. K N. a 78. 

hj any court outside it. Syst 8. {%) Per Erie G. J. at p. 79. 



374 UNLAWFUL AGREEMENTS. 

the relations and mutual rights of solicitor and client may 
be regarded as a law of English procedure ; and in that 
character, of course, private arrangements cannot acquire 
any greater power to vary it by being made abroad (k). 

Am to As for agreements contrary to the public interests of the 

^^ state in whose courts they are sued upon, it is obvious 
agfunst that the courts must refuse to enforce them without con- 
interest sidering any foreign law. The like rule applies to the 
of Btote. ^jiggg Qf agreements in aid of hostilities against a friendly 
state of which we have already spoken. In practice, 
however, an agreement of this kind is more likely than 
not to be unlawful everjrwhere. Thus an agreement made 
in New York to raise a loan for insurgents in Cuba would 
not be lawful in England ; but it would also not be lawful 
in New York, and for the same reason. It might possibly 
happen on the other hand that the United States should 
recognize the Cuban insurgents while they were not 
recognized by England ; and in that case the courts of 
New York would regard the contract as lawful, but ours 
would not. 

It should be borne in mind that the foregoing discussion 
has nothing to do with the formal validity of contracts, 
which is governed by other rules (expressed in a general 
way by the maxim lociis regit dctum) ; and also that all 
rules as to the conflict of laws depend on practical assump- 
tions as to the conduct to be expected at the hands of 
civilized legislatures and tribunals. It is in theory per- 
fectly competent to the sovereign power in any particular 
state to impose any restrictions, however capricious and 
absurd, on the action of its own municipal courts ; and 
even to municipal courts, in the absence of any paramoimt 
directions, to pay as much or as little regard as they please 
to any foreign opinion or authority. 

{k) See jadgment of Wll]iamt J. 



OONFLICr OP LAWS IN TDCB. 876 

9. Where the performance of a contract lawful in its Conflict 
inception is made unlawful by any subsequent event, the time, 
contract is thereby dissolved (I). ». Where 

£xplanation. — Where the performance is subsequently anoe 
forbidden by & foreign law, it is deemed to have become ^^"^ 
not unlawful but impossible (m). contract 

This rule does not call for any discussion. It is ad- 
mitted as certain in Atkinson v. Ritchie (n), and is suffi- 
ciently illustrated by the modem case of Esposito v. Bow- 
den (p)f of which some account has already been given. It 
applies to negative as well as to affirmative promises. " It 
would be absurd to suppose then an action should lie 
against parties for doing that which the legislature has 
said they shall be obliged to do " (p). To the qualification 
we shall have to return in the following chapter on Im- 
possibility. 

10. Otherwise the validity of a contract is generally lo. other- 
determined by the law as it existed at the date of the^j"f'*^. 

■^ at date of 

contract. agreement 

This is a wider rule than those we have already stated, if^^®""- 
as it applies to the form as well as to the substance of the 
contract, and not only to the question of legality but to 
the incidents of the contract generally (q). It is needless 
to seek authority to show that an originally lawful contract 
cannot become in itself unlawful by a subsequent change 
in the law (r). It does not seem certain, however, that Q^ ^^^ 
the converse proposition would alwa3rs hold good. Perhaps made in 
the parties might be entitled to the benefit of a subsequent ^j^^ 
change in the law if their actual intention in making the illetralitj, 
contract was not unlawful *° ^'' 

{I) Athinwn ▼. Jtitchie (1809) 10 (n) See note {t), anU. 

East, 580 ; Kspotiio ▼. Bovfden (1867) (o) See note (Q, ante, 

4 E. A 6. 968, 24 L. J. Q. B. 210 ; (p) Wynn y. Shropthirt Union 

in Ex. Ch. 7 E. ft B. 768, 27 L. J. Jlyt. ds Canal €h, (1850) 5 Ex. 420, 

Q. B. 17, p. 804, «ipm. 440. 

(m) Barker v. Hodgmm (1814) 8 (q) Say. Syst § 892 (8. 485). 

M. ft S. 267 ; Jacobs y. CraU Lycn- (r) See Biryee y. Taih (1878) 18 

nai» (1884) 12 Q. B. Diy. 589, 58 L. Wallace (Sap. Ct U. S.) 546; «u|)ra^ 

J. Q. B. 156. p. 298. 



376 



UNLAWFUL AGREEMENTS. 



fonnanoe 
afterwftrdt 
becomet 
Iftwfal. 



Contract 
oondi- 
tioaal on 
perform- 



beoomiog 
lawfol. 



The question may be put as follows on an imaginary 
case, which the facts of Waugh v. Morris (a) show to be 
quite vdthin the bounds of possibility. A. and B. make 
an agreement which by reason of a state of things not 
know to them at the time is not lawful. That state of 
things ceases to exist before it comes to the knowledge of 
the parties, and before the agreement is performed, but A. 
refuses to perform the agreement on the ground that it 
was unlawful when made. Is this agreement a contract 
on which B. can sue A. ? Justice and reason seem to call 
for an afHrmative answer, and the analogy of Wwugh v. 
Morris (f), where the court looked to the actual know- 
ledge and intention of the parties at the time of the con- 
tract, is also in its favour. Apart from this a contract 
which provides for something known to the parties to be 
not lawful at the time being done in the event, and only 
in the event, of its being made lawful, is free from objec- 
tion and valid as a conditional contract (u) : unless, indeed, 
the thing were of such a kind that its becoming lawful 
could not be properly or seriously contemplated (oj). 



Geiiend 
TeaaltaaB 
to know- 
ledge of 
parties. 



It may be useful to collect here in a separate form 
the results of the foregoing discussion, so far as they 
show in what circumstances and to what extent the 
knowledge of the parties is material on the question of 
illegality. 

a. Immediate object of agreement unlawful Knowledge 
of either or both parties is immaterial {y): except, perhaps, 
where the agreement is made in good faith and in ignor- 
ance of a state of things making it unlawful : and in this 



(a) (1878) L. R. 8 Q. B. 202, 42 
L. J. Q. B. 57 ; nipra, p. 858. 

(t) Last note. 

(tt) Taylor v. Chichttter dt Mid- 
hurtt JSy. Co. (1^67) L. R. 4 H. L. 
628, 640, 645, 89 L. J. Ex. 217 ; q). 
Mayor of Norwich v. Norfolk Ry Oo. 
(1855) 4 E. A B. 897, 24 L. J. Q. B. 
105, ntptu, p. 268. 

{%) Cp. D. 18. 1 



84 § 2 (Paolns). Lib«ram hominem 
edentes emere non powumns } Bed 
nee talis emptio aut atipulatio ad- 
miitenda eat : ewm aervus erit, 
qnamvis dixerimiis, futuraa res emi 
pone; nee oDim fas est eiosmodi 
casus ezspeotare. 

(y) A strong illustration of this 
¥rill be foond in WUkinton v. Lou- 



de cent empt. donaaek (1814) 8 M. A S. 117. 



KNOWLEDGE OF PARTIEa 377 

case it is submitted for the reasons above given that the 
agreement becomes valid if that state of things ceases to 
exist in time for the agreement to be lawfully performed 
according to the original intention. 

/8. A. makes an agreement with B. the execution of 
which would involve an unlawful act on B/s part {e.g. a 
breach of B/s contract with C). 

If A. does not know this, there is a good contract, and 

A. can sue B. for a breach of it, though B. cannot be com- 
pelled to perform it or may be restrained {z) from per- 
forming it. We may say if we like that B. is deemed to 
warrant that he can lawfully perform his contract 

The contract is voidable at A.'s option on the ground of 
frawA, if B. has falsely stated or actively concealed the 
facts, but not otherwise (a). 

If A. does know it, the agreement is void. 

7. A. makes an agreement with B. who intends by 
means of the agreement or of something to be obtained or 
done imder it to effect an unlawful or immoral purpose. 

If A. does not know of this purpose, there is a contract 
voidable at his option when he discovers it 

If he does know of it, the agreement is void. 

(2) /onef V, North (1875) 19 £q. drawing any general oondasioo fnvn 

426, 44 L. J. Gh. 388. a decision oa the contract to marry. 

(a) Btaekey ▼. Brown (1860) E. And op. D. 18. 1. de oont. empt. 

B. A E. 796, 29 L. J. Q. B. 105 ; 84 § 8. 
bat one can never be quite safe in 



C 878 ) 



CHAPTER VIIL 
Impossible Agreements. 

Perform- An agreement may be impossible of performance at the 
i^reement *™® when it is made, and this in various ways, 
may be It may be impossible in itself; that is, the agreement 

ini^f itself may involve a contradiction, as if it contains 
(logically promises inconsistent with one another or with the date 

or phyu- ^ 

oally). of the agreement. Or the thing contracted for may be 
contrary to the course of nature, " quod TUitura fieri non 
concedit " (a). 

As if a man should undertake to make a river run up 
hill ; to make two spheres of the same substance, but one 
twice the size of the other, of which the greater should 
fall twice as fast as the smaller when they were both 
dropped from a height ; or to construct a perpetual 
motion (6). 

By law (in- It may be impossible by law, as being inconsistent with 

^UmI*^1 ^^® iogol principle or institution. 

princ^le, As in the cases already considered in Chap. V. of 

^'' attempts to enable a stranger to a contract to sue upon it 
by agreement of the parties ; or as if a man should give 
a bond to secure a simple contract with a collateral 
agreement that the simple contract debt should not be 
merged (c), or should covenant to create a new manor. 
Again, it is the general rule of law that a man may con- 

(a) D. 45. 1. de ▼. o. 85 pr. mechanical handicraft without me- 

(6) Of theie particolar imponi- chanical prindplei : we choose the 

Ulitiee the leornd was supposed examples as all the more instractive 

to be an elementary fact befofre on that account. 

Galileo made the experiment ; the (c) See Owen t. ffoman (1851) 8 

last contfaiues to be now and then Mac. A O. 878, 407-411. 
attempted by penoni who know 



nCPOfiSIBLE AORESMEITT&L 879 

tract for the sale of a specific thing which is not his own at 
the time. But if the thing be abready the buyer's own, or 
cannot be the subject of private ownership at all (as the 
site of a public building, the Crown jewels, a ship in the 
Royal Navy) (d), the agreement is impossible in law. 

It may be impossible in fact by reason of the existence In fact 
of a particular state of things which makes the perform- ^^°t' 
ance of the particular contract impossible. As where the with par- 
contract is to go to a certain island and there load a full g^^e of 
cargo of guano, but there is not enough guano there to '■«*■ •»• 
make a cargo (e) : or a lessee covenants to dig not less than the time). 
1,000 tons of a certain kind of clay on the land demised 
in every year of the term, but there is no such clay on the 
land(/). 

Moreover the performance of a contract which was Or may 
possible in its inception may become impossible in either ^|^5ble 
the second or third of these ways. The authorities are in in l*w or 
a somewhat fluctuating condition, and perhaps not wholly Aocording 
consistent. But the strong and concurrent tendency of the ^ modem 
later cases is to avoid laying down absolute rules, and to ritiee the 
give effect as far as possible to the real intention of the ™J^ ^ 
parties — ^in other words, to treat the subject as one to be canttrue- 
govemed by rules of construction rather than by rules of ^'^ 
law. And by this means they have done much to clear up 
and simplify the matter for practical purposes, though a 
formally accurate statement of the law may be difficult to 
extract firom them. Before proceeding to any details we 
may at once give an outline of the results. 

1. An agreement is void if the performance of it is General 
either impossible in itself or impossible by law. rtatement 

When the performance of an agreement becomes im- 
possible by law, the agreement becomes void. 

{d) In Boman law " qnorom com- 6 pr. 

meidom non nt, nt pablica quae («)i7»af y.5t^AnM(1846)15M.& 

non in peonnia popaU aed hn pablioo W. 258. 

nea babeantnr, ut ert Campos {/) OUfordY, WoUm {lS70)Jj.B, 

Siartiiia." D. 18. 1. da oont empt. 5 C. P. 677, 40 L. J. C. P. 86. 



380 IMPOSSIBLE AGREEMENTS. 

2. An agreement is not void merely by reason of the 
performance being impossible in fact, nor does it become 
void by the performance becoming impossible in &ct with- 
out the defeult of either party, unless according to the 
true intention of the parties the agreement was con- 
ditional on the performance of it being or continuing 
possible in fact. 

Such an intention is presumed where the performance 
of the contract depends on the existence of a specific 
thing, or on the life or health of a party who undertakes 
personal services by the contract. 

3. If the performance of any promise becomes im- 
possible in fact by the default of the promisee, the promisor 
is discharged, and the promisee is liable to him under the 
contract for any loss thereby resulting to him. 

If it becomes impossible by the default of the promisor, 
the promisor is liable under the contract for the non- 
performance. 

1. Agree- 1. On the first and simplest rule — ^that an agreement 
wwBibleiii impossible in itself is void — ^there is little or no direct 
itaelf is authority, for the plain reason that such agreements do not 
but even occur in practice ; but it is always assumed to be so. 
**>»*■ Perhaps even this rule is not accurately stated as an 
rale of absolute one. It may be put on the ground that the 
So^*'m impossible nature of the promise shows that there was 
impoflfli- no real intention of contracting and therefore no real 
wU^the agreement. It would thus be reduced to a rule of con- 
parties as struction or presumption only, though a strong one. 
awTmen Brett J. scdd in Clifford v. Watts (g) : "I think it is not 
"™* ^ competent to a defendant to say that there is no binding 
to know, contract, merely because he has engaged to do something 
^im«li^ which is physically impossible. I think it will be found in 
contra- all the cases where that has been said, that the thing 
** stipulated for was, according to the state of knowledge of 



iff) (1870) L. R. 6 C. P. p. 668. 



ARSOLUTB IMPOSSIBILITY. 381 

the day, so absurd that the parties cannot be supposed to 
have so contracted." The same view is also distinctly 
given in the Digest (h). It seems to follow then that the 
question is not whether a thing is absolutely impossible (a 
question not always without difficulty), but whether it is 
such that reasonable men in the position of the parties 
must treat it as impossible (i). 

On the other hand a thing is not to be deemed impos- a thing is 
sible merely because it has never yet been done, or is not "Sj^*?^' 
known to be possible. '' Cases may be conceived," says caiue not 
Willes J. in the case last cited, "in which a man mayj^^^*^ 
undertake to do that which turns out to be impossible, rfble : 
and yet he may still be bound by his agreement. I am 
not prepared to say that there may not be cases in which 
a man may have contracted to do something which in the 
present state of scientific knowledge may be utterly impos- 
sible, and yet he may have so contracted as to warrant the 
possibility of its performance by means of some new dis- 
covery, or be liable in damages for the non-performance, 
and cannot set up by way of defence that the thing was 
impossible." Indeed many things have become possible 
which were long supposed to be impossible ; and this not 
only in the well-known instances of mechanical invention 
and the applications of scientific discovery to the arts of 
life, but in the regions of pure science and mathematics (Jfc). 

(A) D. 44. 7. da obL et act. 81. Holt to be " only impoidblo with 

Noa lolam stipnlationea . . Bed reapcot to the defendiuit's ability," 

etiam oeteri qnoqae oontractos . . tboogh it waa nrged for the de- 

impoadbill oondioione Inteipodt* fendauit that *' aU the lye in the 

aequo nnUiiia moment! annt, qnift world waa not ao mnob." No 

in ea le, quae ex dnonim ploriomye judgment waa given, the oaae being 

conieniu agitnr, omniom volnntaa aetUed. The point that the partiea 

•peotetur | qnonim procol dubio in ooold not have been in eameat waa 

hiiin*modi acta talia oogitatio eat, not made. 

ut nihil agi eziatiment apposit* ea {k) Prof. SyUeater and M. Pean- 

condicione qnam adant eaae impoa- oellier reapeotively have reaolyed 

aibilem. oertain algebraloal and geometriad 

(i) In Tkomborow ▼. Wkitacre problema long thooght inaolnble. 
(1706) 2Ld. Raym. 1164, apromiae One form of the problem of link- 
to deliver two graina of rye on a motion investigated by Peaooellier 
certain Monday, and fonr, eight, waa even thooght to have been 
alxteen, fta, on alteinate MomiikyB proved to be inaolnUe. 
following for a year, waa aald by 



oonceiv- 
able that 



9S% IMPOSSIBLE AGBEEMENTB. 

Fifty years ago it seemed impossible that we should ever 
have direct evidence of the physical constitution of the sun 
and fixed stars : we now have much, 
f*^* '^ It is submitted, nevertheless, that the doctrine of the 
ably foregoing dicta must be limited to cases where it may be 
within the serious contemplation of a reasonable man at 
itthouid the time that the thing may somehow be done. For 
pjj^^ example, a man agrees to make a flying machine and 
warrants that it shall fly. This may well be a good con- 
tract. It is true that no one has yet succeeded in making 
such a machine. But the difficulties, great as they are, 
consist in details ; it is a question of weight and strength 
of materials, disposition of parts, and application of power ; 
and these obstacles diifer not in kind firom such as have 
already been overcome in other quarters by the progress of 
mechanical invention and workmanship. Suppose, again, 
that a man agrees to make a flying machine and fly to the 
moon with it. Now this involves an undertaking either 
to live in interplanetary space, which is absolutely impos- 
sible, or to make a habitable atmosphere between the earth 
and the moon, which is likewise impossible, though not 
precisely in the same manner. It is surely needless to put 
the question whether any court could regard such an agree- 
ment as valid, even though the parties were so ignorant as 
to believe it possible. 

This last qualification — ^that the parties must be pre- 
sumed to have the ordinary knowledge of reasonable men, 
even if the whole thing is treated as a question of inten- 
tion — ^is obviously required by convenience, and is con- 
tained by implication in the Indian Contract Act (a 56, 
ilhist. a), which says that an agreement to discover treasure 
by magic is void. In some regions at least of British 
India the parties might really believe in the efficacy of 
magic for the purpose. 
" Practi. If a man may bind himself to do something which is 
SbilUy/^" ^^^y ^^* known to be impossible, much more can he bind 
i.e. ex- himself to do something which is known to be possible. 



BKPUONANCT. 388 

however expensiye and troublesome. For some purposes tnme ooet 
practical impossibility may be treated as equivalent to ^ty^ not 
absolute impossibility : a ship is said to be totally lost ma^n*!- 
when it is in this sense practically impossible, though not 
physically impossible, to repair her (I). But this does not 
apply to the matter now in hand (m). 

The other conceivable cases of absolute impossibility Logicul 
may be very briefly dismissed. Inconsistent or, in the bul^ljRe- 
usual technical phrase, repugnant promises contained inP^V^^ 
the same instrument cannot of course be enforced : this repng. 
however is rather a case of failure of that certainty which, ^^5^ 
as we saw in the first chapter, is one of the primary condi- and oon- 
tions for the formation of a contract. There may also be imtm. 
a repugnancy as to date, as if a man promises to do a thing ™«a^ 
on a day already past. Practically, however, such a re- cMes ozay 
pugnancy can hardly be more than apparent. Either it *^5^^** 
is a mere clerical or verbal error, in which case the Court not avoid 
may correct it by the context (n), or it arises from the xt^^g^' 
terms of the agreement being fixed before and with refer- 
ence to a certain time but not reduced into writing and 
executed as a written contract till afberwarda In such a 
case it must be determined on the circumstances and con- 
struction of the contract whether the stipulation as to time 
is to be treated as having ceased to be part of the contract 
(in other words, as having been left in the statement of 
the contract by a common mistake), or as still capable of 
giving an independent right of action. At all events it 
cannot be treated as a condition precedent so as to prevent 
the rest of the contract from being enforced (o). 

(2) Mou y. Smith (1850) 9 C. B. kB, 238, 24 L. J. Q. B. 298, where a 

94, 108, 19 L. J. C. P. 225. Mr. note psjiaUe two months after date, 

Leake's citation of this dictum and made in January, 1855, was 

(Digest, 682) appears to me irrele- dated by mistake 1854, bat across 

▼ant. it was written ** due the 4th Maroh, 

(m) See per MeUor J. L. R. 6 1855." The Conrt held that this 

Q. R 128, per Hannen J. ib. 127. saffioiently correoted the mistake. 

These dicta seem to go even beyond and might be taken as a direction 

what is said in the text, bat are to read 5 for 4. 
probably limited in their trae effect (o) ffaU v. Cazeitove (1804) 4 Bast 

to what is here called impossibility 477, where the Court agreed to this 

in fact. extent, bat differed on the other 

(n) See FUdi ▼. /oii€9(1855) 5 B. 



384 



IMPOSSIBLE AGREEMENTS. 



Promisor 
not ex- 
onsedbj 
rdaHve 
imponi- 
bility, ie. 
not hAyisg 
themeMis 
of per- 
fonnanoe. 



One mfty 
warrant 
acts of 
third per- 
sons, or 
natiural 
eyent in 

itMlf 

possible. 



Leaving, however, this rather barren discussion, we 
come to a qualification, or rather explanation of more 
practical importance, which follows a fortiori from the 
principle laid down by Willes J. DiflSculty, inconvenience, 
or impracticability arising out of circumstances merely 
relative to the promisor will not excuse him. " Impos- 
sibility may consist either in the nature of the action in 
itself, or in the particular circumstances of the promisor. 
It is only the first or objective kind of impossibility that 
is recognized as such by law. The second, or subjective 
kind, cannot be relied on by the promisor for any purpose, 
and does not release him from the ordinary consequences 
of a wilful non-performance of his contract. On this last 
point the most obvious example is that of the debtor who 
owes a sum certain, but has neither money nor credit. 
There is plenty of money in the world, and it is a matter 
wholly personal to the debtor if he cannot get the money 
he has bound himself to pay " (p). Therefore a man is not 
excused who chooses to make himself answerable for the 
acts or conduct of third persons, though beyond his control ; 
or even, it seems, for a contingent event in itself possible 
and ordinary but beyond the control of man. It has been 
said that a covenant that it shall rain to-morrow might 
be good (q)y and that " if a man is bound to another in 
20i. on condition quod pluvia debet pluere eras, there ai 
pluvia non pluit eras the obligor shall forfeit the bond, 
though there was no default on his part, for he knew not 
that it would not rain. In like manner if a man is bound 
to me on condition that the Pope shall be here at West- 
minster to-morrow, then if the Pope comes not there is 
no default on the defendant's part, and yet he has forfeited 
the obligation" (r). "Generally if a condition is to be 



(p) Sayigny, OU. 1. 884. 

(o) By Manle J. Camham y. 
Barry (1855) 15 C. B. at p. 619, 24 
L. J. O. P. at p. 106. Fer Onr. 
BaOy y. De Oretpigny (1869) L. R. 
4 Q. B. at p. 185. But qu. woold 
not snoh a oontraot be a mere wager 
in almost any oonosiyaUe dronm- 



stances ? 

(r) Per Brian C.J. Mieb. 22 Ed. 
IV. 26. Tbe whole disenssion there 
is curious, and well worth perusal 
in the book at large. Note Brian's 
change of opinion as to the plea in 
the case at bar, ad in. 



IMPOSSIBILITY IN ULW. 885 

performed by a stranger and he refuses, the bond is forfeit, 
for the obligor took upon himself that the stranger should 
do it" («). "If the condition be that the obligor shall 
ride with L S. to Dover such a day, and I. S. does not go 
thither that day ; in this case it seems the condition is 
broken, and that he must procure I. S. to go thither and 
ride with him at his peril" (t). Where the. condition of a 
bond was to give such a release as by the Court should 
be thought meet, it was held to be the obligor's duty to 
procure the judge to devise and direct it (m). If a lessee 
agrees absolutely to assign his lease, the lease containing 
a covenant not to assign without licence, the contract is 
binding and he must procure the lessor's consent (x). But 
on the sale of shares in a company, on the Stock Exchange 
at all events, the vendor is not bound to procure the 
directors' assent, though it may be required to complete 
the transfer (y), and it seems at least doubtful whether he 
ia so bound in any case (z). 

Where an agreement is impossible by law there is no Agrech 
doubt that it is void : for example, a promise by a servant ^^bl« in 
to discharge a debt due to his master is void, and there- ^T,*" 
fore no consideration for a reciprocal promise (a) ; though, 
by the rule last stated, a promise to procure his master to 
discharge it would (in the absence of any fraudulent 
intention against the master) be good and binding. And 
when the performance of a contract becomes wholly or in 
part impossible by law, the contract is to that extent dis- 
charged A good instance of this is BaUy v. De Cres- J^«n P«- 
pigny (6). There a lessor covenanted with the lessee that beoomM 

(«) Bo. Ab. 1. 452, L. pL 6. not aUowisg Wilhinaon y. HawjL 

{t) Shepp. Tonohst 892. (1845) 7 Q. B. 27, 14 L. J. Q. B. 

. («) Lqmb^$ e«w 5 Co. Bep. 28 Ik 165, to be dow Uw. 

(a;)Z^y.Crurp« (1818) 5 Taunt. {a) Harvey v. Oihtxytu (1674) 2 

249;cp. amAamv.jBarrsf(1855)15 Lev. 161. It <■ called an iUigal 

C. B. 597, 24 L. J. G. P. 100. oonaideralion, bat tuoh yerbal oon- 

(y) Stray y. RumEL (1859) Q. B. & fnnons are eonstant in the early 

:Ez.'Cb. IS. & £.888, 916, 28 L. J. repoits. 

Q. B. 279, 29 L. J. <). B. 115. \l) (1869) L. B. 4 Q, B. ISO, 88 

(«) Lindley (4th ed.) 1. 703, 712, L. J. Q, B. 9.8. 

P. C C 



386 DCP06SIBLE AGREEMENTS 



neither he nor his heirs nor his assigns would allow any 
^^Hnkor building (with certain small exceptions) on a piece of land 
*J""""^ of the lessor's fronting the demised premises. Afterwards 
De Ctm- a railway company purchased this piece of land under the 
P*^^* compulsoiy powers of an Act of Parliament, and built a 
station upon it. The lessee sued the lessor upon his cove- 
nant ; but the Court held that he was dischaiged by the 
subsequent Act of Parliament, which put it out of his 
power to perform it. And this was agreeable to the true 
intention, for the railway company coming in under com- 
pulsory powers, " whom he [the covenantor] could not 
bind by any stipulation, as he could an assignee chosen by 
himself," was '' a new kind of assign, such as was not in 
the contemplation of the parties when the contract was 
entered into." Nor was it material that the company was 
only empowered by Parliament, not required, to build a 
station at that particular place (c). As the American 
phrase concisely puts it, a covenant of warranty does not 
extend to the State in the exercise of its eminent 
domain {d). If a subsequent Act of Parliament malring 
the performance of a contract impossible were a private 
Act obtained by the contracting party himself, he might 
perhaps remain bound by his contract as if he had made 
the performance impossible by his own act (of which after- 
wards) : but where the Act is a public one, its effect in 
discharging the contract cannot be altered by showing 
that it was passed at the instance of the party originally 
bound (e). 
Bayio^r The case of a man agreeing to buy that which is 

pi^0^^ already his own is a peculiar one. Here the performance 
is impossible in law ; and the agreement may be regarded 
as void not only for impossibility but for want of con- 
sideration. But this class of cases is by its nature strictly 
limited. No man will knowingly pay for what belongs 

(e) (1869) L. R 4 Q. B. 186. (1861) 9 C. B. N. a 726, 80 L. J. 

(d) See OOwm v. NickdlMm (1871) C. P. 225, in Ex. Ob. 18 C. B. N. 

18 Wall, at p. 657. & 828, 81 L. J. C. P. 280. 
(«) Brovm ▼. Mayor of London 



MPOSSIBILITY IN LAW. 887 

to him already. If on the other hand the parties are in 
doubt or at variance as to what their rights are, any 
settlement which they come to in good faith, whatever its 
form, has the character of a compromise. There remam 
only the cases in which the parties act imder a common 
mistake ad to their respective rights. The presence of the 
mistaken assumption is the central point on which the 
whole transaction turns, and is decisive in fixing its true 
nature. Hence it is the most conspicuous element in 
practice, and these cases are treated as belonging not to 
the head of Impossibility but to that of Mistake. Under 
that head we recur to them in the next chapter. It is 
hardly needful to add that a contract for the sale of some- 
thing which the seller has not at the time is perfectly 
good if the thing is capable of private ownership. The 
effect of the contract is that he binds himself to acquire a 
lawAil title to it by the time appointed for completing the 
contract. 

The general principles above considered are well brought Expon- 
together in the Digest, in a psussage j&om a work of game 
Venuleius (/) on Stipulations. " lUud inspiciendum est, P'^S^^^ 
an qui centum dari promisit confestim teneatur, an vero Uw. 
cesset obligatio donee pecuniam conferre posset Quid 
ergo si neque domi habet neque inveniat creditorem ? 
Sed haec recedunt ab impediment© naturali et respiciunt 
ad facultatem dandi (g). . . . Et generaliter causa 
difficultatis ad incommodum promiasoris, non ad impedi- 
mentum stipulatoris pertinet [i. e. inconvenience short of 
impossibility is no answer]. . . . Si ab eo stipulatus 
sim, qui efficere non possit, cum alii possibile sit, iure 
factam obligationem Sabinus scribit." He goes on to say 
that a legal impossibility, eg. the sale of a public building, 
is equivalent to a natural impossibility. ..." Nee ad 



if) See Roby*0 Introduciiou, pw very clear Ulnstratioti which fullows 
dzxxiii. here, »iid u f>nittte<1 in our text, see 

iff) For the «»xpl«ii»tioik of » ool Sav. Obi. 1. 885. 

C C 2 



888 IMPOSSIBLE AGREEMENTS. 

rem pertinet quod iua mutari potest et id quod nunc 
impoasibile est postea possibile fieri ; non enim secundum 
futuri temporis ius sed secundum praesentis aestimari 
debet stipulatio " (h) : (as if it should be contended that a 
covenant to create a new manor is not a covenant for a 
legal impossibility, because peradventure the statute of 
Quia emptores may be repealed.) All this is in exact 
accordance with English law. 

2. Per- 2. We now come to the cases where the performance of 

l^^iy^ an agreement is not impossible in its own nature, but 
in fact: impossible in fact by reason of the particular circum- 
wh^^'^n- 8tance& It is a rule admitted by all the authorities, and 
*™°* ^ supported by positive decisions, that impossibility of this 
kind is in itself no excuse for the failure to perform an 
unconditional (i) contract, whether it exists at the date of 
the contract, or arises from events which happen after- 
wards {k). Thus an absolute contract to load a full cargo 
of guano at a certain island was not discharged by there 
not being enough guano there to make a cargo (I) : and 
where a charter-party required a ship to be loaded with 
usual despatch, it was held to be no answer to an action for 
delay in loading that a frost had stopped the navigation 
of the canal by which the cargo would have been brought 
Afortwri to the ship in the ordinary course (m). Still less will 
oS^'L- ^uiexpected difl&culty or inconvenience short of impossi- 
oonvenioDt bility serve as an excuse. Where insured premises were 
ScaWe.'**' damaged by fire and the insurance company, having an 

{h) D. 45 1. de y. a 187. §§ 4-6. oMgo wm to be fuimd by the 

(t) It may be shown, and not owner. "He is to receive freight 

neceasazily by the preaenoe of ez- at a high rate, and It looks yery 

press saving words, that the fact or much like a contract for supplying 

event was outside the risks under- guano at that price : '* Paike B at 

taken by the promisor : in other p. 261. And see Anson, 826, 827. 
words that the contract was not (m) iTrarony.PtfarKm (1861) 7 H. 

unconditional. &, N. 386, 81 L. J. Ex. 1. So where 

(k) Atkinton v. Jtitthie (1809) 10 a given number of days is aUowed 

East, 680. to the charterer for unloading, he is 

{D Situ y. Svghrue (1846) 15 M. held to take the risk of any ordinary 

& W. 258. This case turned in vicissitudes which may cause delay : 

part on the unusual incident of the ThiU v. Bjftn (1876) 1 Q. B. D. 244, 

chartor-party providing that the 45 L. J. Q. K 511. 



PRACTICAL IMPOSSIBILITY. 389 

option to pay in money or reinstate the building, elected 
to reinstate, but before they had done so the whole was 
pulled down by the authority of the Commissioners of 
Sewers as being in a dangerous condition ; it was held 
that the company were bound by their election, and the 
performance of the contract as they had elected to perform 
it was not excused (n). So again if a man contracts to do 
work according to orders or specifications given or to be 
given by the other contracting party, he is bound by his 
contract, although it may turn out not to be practicable to 
do the work in the time or manner prescribed In Jones 
V. St John's College (Oxford) (p) the plaintiffs contracted 
to erect certain farm buildings according to plans and 
specifications furnished to them, together with any altera- 
tions or additions within specific limits which the de- 
fendants might prescribe, and subject to penalties if the 
work were not finished within a certain time. And they 
expressly agreed that alterations and additions were to be 
completed on the same conditions and in the same time as 
the works under the original contract, unless an extension 
of time were specially allowed It was held that the 
plaintiffs, having contracted in such terms, could not avoid 
the penalties for non-completion by showing that the 
delay arose fix)m alterations being ordered by the de- 
fendants which were so mixed up with the original work 
that it became impossible to complete the whole within 
the specified tima In Thorn v. Mayor of London (p) a 
contractor imdertook to execute works according to speci- 
fications prepared by the engineer of the corporation. It 
turned out that an important part of the works could not 
be executed in the manner therein described, and after 
fiiiitless attempts in which the plaintiff incurred much 
expense, that part had to be executed in a different way. 

(n) Brown y. Boyal Imwanee Co, sible by the act of the Iaw. 

(1869) 1 E. & B. 868, 28 L. J. Q. B. (o) (1870) L. R. 6 Q. B. 116, 124, 

276, disi. Erie J. who thought saoh 40 L. J. Q. B. 80. 

ft reinstfttementfts was oontempUted (p) (1876) L. R. 9 Ex. 168, in Ex. 

by the contraot (not being an en- Ch. 10 Ex. 112, ftffd. in H. L. 1 App, 

tire rebuilding) had become impof. Oa. 120, 46 L. J. Ex. 487. 



390 IMPOSSIBLIS A^RElSMEKTS. 

It was held that no warranty could be implied on the 
part of the corporation that the plans were such as to 
make the work in fact reasonably practicable, and that 
the plamtiff could not recover as on such a warranty the 
value of the work that had been thrown away. The 
judgments in the House of Lords leave it an open 
question whether, assuming the extra work thus caused 
not to have been extra work of the kind contemplated by 
the contract itself and to be paid for under it, the plaintiflF 
might not have recovered for it as on a quarvtv/m meruit. 
In short, it is admitted law that generally where there is a 
positive contract to do a thing not in itself unlawftil, the 
contractor must perform it, or pay damages for not doing 
it, although in consequence of unforeseen accidents the 
performance of his contract has become unexpectedly 
burdensome or even impossible (q). 

h^^'hv Where the performance of a contract becomes imprac- 

foreign ticable by reason of its being forbidden by cl foreign law, 

^^Jl^™" it is deemed to have become impossible not in law but in 

In fact fact. In Barker v. Hodgson (r) intercourse with the port 

to which a ship was chartered was prohibited on account 

of an epidemic prevailing there, so that the freighter was 

prevented from furnishing a cargo ; but it was held that 

this did not dissolve his obligation. So if the goods are 

confiscated at a foreign port that is no answer to an action 

against the shipowner for not delivering them (s). But 

where the effect of a foreign law is to prevent both parties 

fit)m performing their respective parts of the contract, 

both are excused (t), 

iq) Taylor y. OaldweU (1868) 8 R (r) (1814) 8 M. & S. 267, cp. Jacobs 

k 8. 826, 888, 82 L. J. Q. B. 164, v. OrSdU Zyontuiu (1884) 12 Q. B. 

166. This rale does not extend, Diy. 589, 68 L. J. Q. a 156, where 

however, beyond express contracts. the exportation of the oargo oon- 

An undertiJdDg to be answerable tracted for was forbidden by local 

for delay caused by via maior cannot law. 

be made part of an implied con- («) Spenoe t. Chodvfick (1847) 10 

tract.: Ford v. Cotettoorth (1870) Q. B. 617, 16 L. J. Q. B. 818. 
(Ex. Ch.) L. R. 6 Q. R 644, 89 L. (t) Cunningham ▼. Jhum (1878) S 

J. Q. B. 188. C. P. Diy. 448. 



SOTEEVl!NINd ACCmiJNt. 391 

Certain cases, of which Paradime v. Jane (u) is the 9*^* 
leading one, are often referred to upon this head. The tenant to 
effect of them is that the accidental destruction of a lease- JJ'J,^* 
hold building, or the tenant's occupation being otherwise demised 
interrupted by inevitable accident, does not determine or JJSS^- 
suspend the obligation to pay rent (a?). In these cases, ^^7 ^ 
however, the performance of the contract does not really No fan-' 
become impossible. There is obviously nothing impossible C^^*'^ 
in the relation of landlord and tenant continuing vdth its 
regular incidenta We must be careful not to lose sight 
of the two distinct characters of a lease as a contract (or 
assemblage of contracts) and as a conveyance. There is a 
common misfortune depriving both parties to some extent 
of the benefit of their respective interests in the property ; 
not of the benefit of the contract, for so fisu* as it is a 
matter of contract, neither party is in a legal sense dis- 
abled from performing any material part of it. The 
expense of getting housed elsewhere, or the loss of profits 
from a business carried on upon the premises, may render 
it difficult or even impracticable for the tenant to go on 
paying rent. But it does not render the payment of his 
rent impossible in any other sense than it renders the 
payment of any other debt to any other creditor impos- 
sible (y). It is a personal and relative "causa difficultatis;" 
which, as we have seen, is irrelevant in a legal point of 
view. The lessee's special covenants, if such there be, to 
paint the walls at stated times or the like, do become 
impossible of performance by the destruction of their 
subject-matter, and to that extent, no doubt, are dis- 
charged or suspended as being within the rule in Taylor 
V. CaXdwdL, which we shall immediately consider. Only 
to this limited extent is there any precise resemblance to 
the wider class of cases where the performance of a contract 
becomes in frtct impossible. The true analogy is in the 



(tt) (1648) Aleyn 26. E. k E. 474, 28 L. J. Q. B. 168. 

(») Ltidt V. Chedham (1827) 1 (y) See per Lord BUusklmin, 2 

Sim. 146, Lofi ▼. DmnU (1869) 1 App. Oft. 770. 



392 IMPOSSIBLE AGREEMENTS. 

^* * nature of the question which the rule of law has to decide : 
qaestion, namely, whether the contract is in substance and effect as 
i& ^2r ^^^ ^ ^ terms unconditional and without any implied 
oontnot is exception of inevitable accident. We shall see that this 
^l^jj.™*' is always the real question. The answer being here deter- 
Uonal. mined by Paradine v. Jane (z\ it was held in the later 
cases (a) (about which difficulties are sometimes felt, but 
it is submitted without solid reason) that it is not affected 
by the landlord having protected himself by an insurance, 
which is a purely collateral contract of indemnity. There 
might indeed be a fiirther collateral agreement between 
the landlord and tenant that the landlord should apply 
the insurance moneys to rebuilding the premises. Such 
an agreement would be good without any new considera- 
tion on the tenant's part beyond his acceptance of the 
lease, and probably without being put into writing (6). On 
the other hand it is often a term of the lease that the 
tenant shall keep the premises insured and that in case of 
fire the insurance moneys shall be applied in reinstate- 
ment. There, if the landlord has insured separately with- 
out the knowledge of the tenant, so that the damage is 
apportioned between the two policies, and the amount 
received by the tenant is diminished, the tenant is entitled 
to the benefit of the other policy also (c). 

^wrfro The rule or presumption might, of course, be the other 

Uw. ^^y> as it is by the civil law, where it is an incident of the 

contract to pay rent that it is suspended by inevitable 
accident destroying or making useless the thing demised. 
The particular event on which Paradine v. Jane was 
decided, eviction by alien enemies (d), is expressly dealt 

W Aleyn 26. L. R. 6 Ex. 70, 40 L. J. Ex. 46, 

(a) Leeda v. OteOham (1827) 1 AngeU v. Duke (1876) L. R. 10 Q. 
Sim. 146, Lojft v. Bennu (1869) IE. R 174, 44 L. J. Q. R 78. 

& B. 474, 28 L. J. Q. R 168. (c) Seyftard v. Arnold (1876) 10 

(b) Parol oolUtoral agr^emeiits Ch. 886. 

bftve been held good in Ertkine y. {d) Si incanoB hostinm fiftt, D. 

J<iaon«(1878) 8 Oh. 766, 42 L. J. 19. 2. locati conducti, 16 § 2; 6r, 
Oh. 886, Morgan y. Qrifflai (1871) eyen reawnftble f ear of it : Si quis 



ACCIDENTS NOT CONTEMPLATED BT CONTBACT. 893 

with in this maimer. The law of Scotland follows the 
civil law {e)y and the Irish Landlord and Tenant Act of 
1860 gives the tenant the option of surrendering on a 
dwelling-house "or other building constituting the sub- 
stantial matter of the demise" being by fire or other 
inevitable accident destroyed or made incapable of bene- 
ficial occupation (/). Either way the rule is subject to 
any special agreement of the parties, and it is but a 
question which, in the absence of such agreement, is the 
better distribution of the hardship that must to some extent 
fall upon both. It is hard for a tenant, according to the 
English rule, to pay an occupation rent for a burnt out 
plot of groimd. It is hard for a landlord, according to the 
Bomanr and Scottish rule, to lose the rent as well as (it 
may be) a material part of the value of the reversion. 
Either party m^y be insured ; but that, as we have said, is 
not of itself relevant as between them. 

So &T the general rule. The nature of the exceptions Exoep- 
is thus set forth by the judgment of the Court in Baily v. ^^^ 
De Crespigny : — <»■« of 

qaent 
** There can be no donbl th*t » m*n may by an absolnte oontr»ok bind impossi- 

himself to perform thingi which sabeequeoily become impottible or to bility. 
pay dftmages for the non-perfomumce, and this constraofeion b to be pnt 
npon an nnqnallfied nndertaking, where the event which caoses the 
impnrsibiKty wae or might have been anticipated and guarded against in 
the contract, or where the imponibility arises from the act or defanlt of 
the promisor. 

** Bat where the event is of soch a character th^t it cannot reasonably 
be supposed to have been in the contemplation of the contracting patties 
when the contract was made, they wiU not be held bonnd by general 
words which, though large enongh to include^ were not used with refer- 
ence to the possibility of the partioolar contingency which afterwards 
happens. It is on this principle that the act of Gk>d is in some casee 
said to eieose the breach of a contract This is in fact an fnaocnrato 



timoris cansa emigrasset ... re- eocL ^. 27 § 1. 

Spondit, si cansa foisset cur peri- ' (e) Per Lord Oampbell, Lqffi v. 

cnlum timeret, quamvis pericatum VamU (1859) tupra; Bell, Prin- 

vere non fnisset, tamen non debere dples, § 1208. 

meroedem ; sed ri causa timoris insta (/) £3 & 24 Vict. c. 154, s. 40. 

non fulflset, nihilominas debere, D. 



894 IMPOSSIBLE AGREEMENTa 

ezprestlon, becausei where it is mi Muwer to a oompUint of tai alleged 
breach of contraot ih%t the thing done or left nodone wm so by the act 
of God, what Is mean^ u iti%t it was not within the oontraot " {g). 

^^^*^tM "^^^ ^*^ ^^^^ ^ *^^ following context, which is too long 
the con- to quote) well shows the modem tendency, to which we 
*f°S^**^" have already called attention, to reduce all the rules on 
contract this Subject to rules of construction. By the modem 
understanding of the law we are not bound to seek for a 
general definition of " the act of God " or vis maiar (A), 
but only to ascertain what kind of events were within the 
contemplation of the parties, including in the term event 
an existing but unascertained state of facts. This is yet 
more apparent if one attempts to frame any definition of 
the term " act of Gtod." It is said to be generally confined 
to events which cannot be foreseen, or which if they can 
be foreseen cannot be guarded against (i). It does not 
include every inevitable accident; contrary winds, for 
example, are not within the meaning of the term in a 
charter-party. Nor is the reason far to seek ; the risk of 
contrary winds, though inevitable, is one of the ordinary 
risks which the parties must be understood to have before 
them and to take upon them in making such a contract : 
therefore it is said that the event must be not merely 
accidental, but overwhelming (k). But on the other hand 
the term is not confined to unusual events: death, for 
example, is an " act of God " as regards contracts of per- 
sonal service, because in the particular case it is not 
calculable. Yet the fact that this very event is not only 
certain to happen, but on a sufliciently large average is 
calculable, and therefore in one sense can be guarded 
against, is the foundation of the whole system of life 

(g) (1869) L. R 4 Q. B. at p. 185. eee MiUdkolzer y. FuOoHon (1844) 

(A) Both these terms are olaari- 6 Q. B. 989, 1018. 

cal : " Via maior, qnam Graed (i) Cave J. in R, v. Conwmitumen 

eeov jSfor appellant." Gains in D. of Sewers for Estex (1885) 14 Q. B. 

19. 2. locati 25 § 6. VU maior is D. 561, 574. 

sometimes the only appropriate {k) Per Martin B. OakUff v. 

term, as where the idea is applied PortsmotUh A Rydt Steam Packet Co. 

to acts of a human sovereign posrer, (1856) 11 Et. 618, 25 L. J. Ex. 99. 



DESTRUCTION OP StTBJBCT-MATTER. 395 

annuities and life insurance. Again, death is inevitable 
sooner or later, but may be largely prevented as to parti- 
cular causes and occasions. The effects of tempest or of 
earthquake may be really inevitable by any precaution 
whatever. But fire is not inevitable in that sense. Pre- 
cautions may be taken both against its breaking out and 
for extinguishing it when it does break out. We cannot 
arrive, then, at any more distinct conception than this : An 
event which, as between the parties and for the purpose oj 
the matter in hand, cannot be definitely foreseen or con- 
trolled. In other words, we are thrown back upon the 
nature and construction of the particular contract (I), 

We may now proceed to the specific classes of excep- 
tional cases. 

a. Where the performance of the contract depends on («) Where 
the existence of a specific thing. The law was settled on tommoe 
this head by Taylor v. Caldwell (m), where the defendants ^•P?^ 
agreed to let the plaintiffs have the use (m) of the Surrey ezistenoe 
Gardens and Music-hall on certain days for the purpose ^^ ^JJlIia 
of giving entertainments. Before the first of those days TaTlor r. 
the music-hall was destroyed by fire so that the entertain- 
ments could not be given, and without the fault of either 
party. The Court held that the defendants were excused, 
and laid down the following principle : " Where firom the 
nature of the contract it appears that the parties must 
from the beginning have known that it could not be 
fulfilled unless, when the time for the fulfilment of the 
contract arrived, some particular specified thing continued 
to exist, so that when entering into the contract they must 
have contemplated such continued existe