Skip to main content

Full text of "Principles of contract: a treatise on the general principles concerning the validity of agreements in the law of England"

See other formats 


This  is  a  digital  copy  of  a  book  that  was  preserved  for  generations  on  library  shelves  before  it  was  carefully  scanned  by  Google  as  part  of  a  project 
to  make  the  world's  books  discoverable  online. 

It  has  survived  long  enough  for  the  copyright  to  expire  and  the  book  to  enter  the  public  domain.  A  public  domain  book  is  one  that  was  never  subject 
to  copyright  or  whose  legal  copyright  term  has  expired.  Whether  a  book  is  in  the  public  domain  may  vary  country  to  country.  Public  domain  books 
are  our  gateways  to  the  past,  representing  a  wealth  of  history,  culture  and  knowledge  that's  often  difficult  to  discover. 

Marks,  notations  and  other  marginalia  present  in  the  original  volume  will  appear  in  this  file  -  a  reminder  of  this  book's  long  journey  from  the 
publisher  to  a  library  and  finally  to  you. 

Usage  guidelines 

Google  is  proud  to  partner  with  libraries  to  digitize  public  domain  materials  and  make  them  widely  accessible.  Public  domain  books  belong  to  the 
public  and  we  are  merely  their  custodians.  Nevertheless,  this  work  is  expensive,  so  in  order  to  keep  providing  this  resource,  we  have  taken  steps  to 
prevent  abuse  by  commercial  parties,  including  placing  technical  restrictions  on  automated  querying. 

We  also  ask  that  you: 

+  Make  non-commercial  use  of  the  files  We  designed  Google  Book  Search  for  use  by  individuals,  and  we  request  that  you  use  these  files  for 
personal,  non-commercial  purposes. 

+  Refrain  from  automated  querying  Do  not  send  automated  queries  of  any  sort  to  Google's  system:  If  you  are  conducting  research  on  machine 
translation,  optical  character  recognition  or  other  areas  where  access  to  a  large  amount  of  text  is  helpful,  please  contact  us.  We  encourage  the 
use  of  public  domain  materials  for  these  purposes  and  may  be  able  to  help. 

+  Maintain  attribution  The  Google  "watermark"  you  see  on  each  file  is  essential  for  informing  people  about  this  project  and  helping  them  find 
additional  materials  through  Google  Book  Search.  Please  do  not  remove  it. 

+  Keep  it  legal  Whatever  your  use,  remember  that  you  are  responsible  for  ensuring  that  what  you  are  doing  is  legal.  Do  not  assume  that  just 
because  we  believe  a  book  is  in  the  public  domain  for  users  in  the  United  States,  that  the  work  is  also  in  the  public  domain  for  users  in  other 
countries.  Whether  a  book  is  still  in  copyright  varies  from  country  to  country,  and  we  can't  offer  guidance  on  whether  any  specific  use  of 
any  specific  book  is  allowed.  Please  do  not  assume  that  a  book's  appearance  in  Google  Book  Search  means  it  can  be  used  in  any  manner 
anywhere  in  the  world.  Copyright  infringement  liability  can  be  quite  severe. 

About  Google  Book  Search 

Google's  mission  is  to  organize  the  world's  information  and  to  make  it  universally  accessible  and  useful.  Google  Book  Search  helps  readers 
discover  the  world's  books  while  helping  authors  and  publishers  reach  new  audiences.  You  can  search  through  the  full  text  of  this  book  on  the  web 


at|http  :  //books  .  google  .  com/ 


"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  oontracti  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  ezpieai  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  representation           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.  DuiosB  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 

Bufgees  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.  Hawhaworth      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.  Hughes  ...     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«tw> 
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,  or  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.  tnretM."   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  Aootpi*  ^ 
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  treated  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^  whether  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  reeeon,  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  purpose  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 0  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  pieaent  ■ewni  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  wiitton  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.  0  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  expressed  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  reaaonable  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  leprewote- 

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      property. 


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  Howin» 
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  ^niw* 

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  leetiluUutt  ii 
impoeed  bj  oorenant  the  gnoei  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  porcbaeer  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)   0  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    tni**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  preeeni  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  ouBetouetion  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 
fatSGs  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)  0  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 
Pirtw  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  existence  as  the  foun- 

(0  As  to  what  iB  such  ao  '*  act  of  of  Sewers  y.  Reg,  (1886)  11  App.  Ga. 

Qod  "  M  will  make  an  exception  to  449. 

a  duty  imposed  not    specially  by  (m)  (1868)  8  B.  ft  S.  826, 82  L.  J. 

oontraet  but  by  the  general  law,  Q.  B.  164.    There  were  words  suffi- 

see  NickoU  y.  Mareland  (1876)  2  Ex.  dent  for  an  actual  demise,  bat  the 

DiT.  1,  46  L.  J.  Ex.  174,  NvtgeiU  y.  Ooort  held  that  the  manifest  general 

BmAtk  (1876)  1  G.  P.  Diy.  428,  444,  intention  preyafled  oyer  them. 
45  L.  J.  G.  P.  697,  Cmnmiuionen 


896  IMPOSSIBLE  AGREEMENTS. 

Implied     dation  of  what  was  to  be  done :  there  in  the  absence  of  any 

ooDoition  ,         .  , 

thftt  express  or  implied  (n)  warranty  that  the  thing  shall  exist, 

'wfo*'  ^^^  contract  is  not  to  be  considered  a  positive  contract,  but 
anoe  ia  Subject  to  the  implied  condition  that  the  parties  shall  be 
the  thiDg  excused  in  case,  before  breach,  performance  becomes  im- 
perishes  possible  from  the  perishing  of  the  thing  without  default 
the  putt's  of  the  contractor."  And  the  following  authorities  and 
®^  analogies  were  relied  upon  : — 

The  civil  law,  which  implies  such  an  exception  in  all 
cases  of  obligation  de  certo  coiyore  (o). 

The  cases  of  rights  or  duties  created  by  a  contract  of  a 
strictly  personal  nature  which,  though  the  contract  is  not 
expressly  qualified,  are  by  English  law  not  transmissible 
to  executors. 

The  admitted  rule  of  English  law  that  where  the  pro- 
perty in  specific  chattels  to  be  delivered  at  a  future  day 
has  passed  by  bargain  and  sale,  and  the  chattels  perish 
meanwhile  without  the  vendors  default,  he  is  excused 
from  performing  his  contract  to  deliver ;  and  the  similar 
rule  as  to  loans  of  chattels  and  bailments.  In  all  these 
.  cases,  though  the  promise  is  in  words  positive,  the  excep- 
tion is  allowed  "  because  from  the  nature  of  the  contract 
it  is  apparent  that  the  parties  contracted  on  the  basis 
of  the  continued  existence  of  the  particular  person  or 
chattel." 
Appleby  The  same  principle  was  followed  in  Appleby  v.  Meyers  (p), 
eyera.  rjij^^j,^  ^j^^  plaintiffs  agreed  with  the  defendant  to  erect  an 
engine  and  other  machinery  on  his  premises,  at  certain 
prices  for  the  separate  parts  of  the  work,  no  time  being 
fixed  for  payment.     While  the  works  were  proceeding,  and 

(n)  That  is,  understood  in  fact  promiMoris  in  rebcu  homanis  erne 

between   the   parties  :    the  whole  desiit    Fothier,  ObL  §  149^  %b.  Purt 

scope  of  the  pansage  being  that  it  8,  cb.  6,  §§  649,  sqq*,  and  CknUrai 

is  not  to  be  implied  by  law.  de  Vtnte,  §  808,  sqq.  translated  in 

(o)  D.  45.  1.  de  y.  o.  28,  83.    Op.  Blackburn    on    Sale»  178   (249  in 

also  D.  46.  8.  de  solut  107.    Ver-  2d  ed.  by  Graham), 
borum  obligatio  aut  naturaliter  re-  (p)  (1867)  L.  R  2  0.  P.  651,  in 

solvitur  aut  civiliter ;   naturaliter,  Ex.  Ch.  revg.  s.  c  1  0.  F.  615,  86 

yeluti   solutione,  aut  cum  res   in  L.  J.  0.  P.  881. 
stipnlationem   deduota   sine  culpa 


DESTRUCTtON  OF  SUBJECT-MATTER.  397 

before  any  part-  was  complete,  the  premises,  together  with 
the  uncompleted  works  and  materials  upon  them,  were 
accidentally  destroyed  by  fire.  In  the  Common  Pleas  it 
was  held  that  the  plaintiflfe  might  recover  the  value  of  the 
work  already  done  as  on  a  term  to  that  effect  to  be  im- 
plied in  the  nature  of  the  contract.  In  the  Exchequer 
Chamber  the  judgment  of  the  Common  Pleas  was  reversed. 
It  was  admitted  that  the  work  under  the  contract  could  .  . 
not  be  done  unless  the  defendant  s  premises  continued  in 
a  fit  state  to  receive  it.  It  was  also  admitted  that  if  the 
defendant  had  by  his  own  default  rendered  the  premises 
xmfit  to  receive  the  work,  the  plaintiff's  might  have  re- 
covered the  value  of  the  work  already  done.  But  it  was 
held  that  the  Court  below  were  wrong  in  thinking  that  there 
was  an  absolute  promise  or  warranty  by  the  defendant  that 
the  premises  should  at  all  events  continue  so  fit.  "  Where, 
as  in  the  present  case,  the  premises  are  destroyed  without 
fault  on  either  side,  it  is  a  misfortune  equally  affecting 
both  parties,  excusing  both  from  further  performance  of 
the  contract,  but  giving  a'  cause  of  action  to  neither." 
Another  argument  for  the  plaintiffs  was  that  the  property 
in  the  work  done  had  passed  to  the  defendant  and  was 
therefore  at  his  risk  (q).  To  this  the  Court  answered  that  . 
it  was  at  least  doubtful  whether  it  had ;  and  even  if  it  had, 
the  contract  was  still  that  nothing  should  be  payable  unless 
and  until  the  whole  work  was  completed. 

Where  there  is  an  entire  contract  for  doing  work  upon  Saving  m 
specific  property,  as  fitting  a  steamship  with  new  machinery,  J^^*^/ 
for  a  certain  price,  but  the  price  is  payable  by  instalments,  payment 
and  the  ship  is    lost  before    the  machinery  has    beeneameZ 


{q)  In  the  case  dted  in  argument  whole  was  finished,  bat  "  de  con- 

from  Dallos,  Jniisp.  G^n.  1861,  pt.  straotions  dont  lee  mat^rianx  et  la 

1.106,  Chemin  defer  duDauphintT,  main  d'oeuvre  dtaient  fournis  p«^ 

cut  (1861)  where  railway  works  in  rentrepreneur  et  qui  s'inoorporaient 

oourse  of   constructton    had   been  au  sol  du  propridtaire,'^  as  ezclud- 

spotlt  by  floods,  the  Court  of  Gassa-  ing  the  application  of  articles  178a- 

tion  refied  on  the  distinction  that  1790  of  the  Code  Civil,  whioh  la^ 

they  were  not  such  as  remained  in  down  a  rule  similar  to  that  of  the 

the  contractor's  dispositiain  till  the  principal  case. 


398  IMPOSSIBLE  AQKEEMENTS. 

delivered,  but  after  one  or  more  of  the  instalments  has 
been  paid,  the  further  performance  of  the   contract  is 
excused,  but  the  money  already  paid,  though  on  account 
not  of  a  part,  but  of  the  entire  contract,  cannot  be  re- 
covered back  (r). 
OoBtraet        The  same  doctrine  has  been  applied  where  the  subject- 
^H^fio      matter  of  the  contract  is  a  fiiture  specific  product  or  some 
I*^™*"     part  of  it.     In  March  A.  agreed  to  sell  and  B.  to  purchase 
200  tons  of  potatoes  grown  on  certain  land  belonging  to 
A-    In  August  the  crop  fiedled  by  the  potato  blight,  and  A. 
was  unable  to  deliver  more  than  80  tons :  the  Court  held 
that  he  was  excused  as  to  the  rest    "  The  contract  was 
for  200  tons  of  a  particular  crop  in  particular  fields  "... 
"  not  200  tons  of  potatoes  simply,  but  200  tons  oflF  par- 
ticular land"  .  .  .  "and  therefore  there  was  an  implied 
term  in  the  contract  that  each  party  should  be  free  if  the 
crop  perished  "  («). 
Abolition       The  same  principle  is  involved  in  the  decision  of  the 
^^^^     Supreme  Court  of  the  United  States  that  a  warranty  of 
title  and  quiet  enjoyment  given  on  the  sale  of  a  slave 
before  the  war  was  discharged  by  the  Thirteenth  Amend- 
ment to  the  Constitution  (t), 
Impow-        These  are  all  cases  of  the  performance  becoming  im- 
dtttoof^     possible  by  events  which  happen  after  the  contract  is 
oonlmei     made.      But  sometimes  the  same  kind  of  impossibility 

from  Htifctitt  Mr  ^ 

of  things    I'^ults  from  the  present  existence  of  a  state  of  things  not 
""**  ^lSLi  contemplated  by  the  parties,  and  the  performance  is  excused 
by  pArtieB.  to  the  game  extent  and  for  the  same  reasons  as  if  that 
state  of  things  had  supervened.     Where  this  impossibility 
consists  in  the  absolute  non-existence  of  the  specific  pro- 
perty or  interest  in  property  which  is  the  subject-matter 

(r)  Anglo-SytfpUan  I^avigoHon  Co.  farther  on. 

y.  Bminie  (1876)  L.  R.  10  0.  P.  271,  («)  ffowdl  w,  Coupland  (1876)  L. 

44  L.  J.  C.  P.  180.    It  woold  aeem  R.  9  Q.  R  462,  466,  46  L.  J.  Q.  B. 

the  same  on  principle  where  the  147»  affd.  in  C.  A.  1  Q.  B.  Diy.  258» 

whole   price    is  paid    in  advance.  lee  per  Cleaeby  B.  at  p.  268. 

See  Vangerow,  Pand.  3.  284  aqq. ;  (<)  OOom  y,  IVidulmm  (Wl)  18 

and  the  oaaee  on  contracts,  personal  Wallace  654. 
■ervice,    and   apprentioeship   cited 


NON-EXISTENCE  OF  SUBJECT-MATTER.  399 

of  the  agreement,  it  is  evident  that  the  agreement  would 
not  have  been  made  unless  the  parties  had  contemplated 
the  subject  matter  as  existing.  Otherwise  it  would  be 
reduced  to  a  case  of  absolute  impossibility;  for  when  a 
thing  is  once  known  to  be  in  the  events  which  have 
happened  impossible,  it  is  the  same  as  if  it  had  been  in 
its  own  nature  impossible.  Here,  then,  the  agreement  of 
the  parties  is  induced  by  a  mistaken  assumption  on  which 
they  both  proceed,  as  in  the  analogous  cases  noticed  above 
imder  the  head  of  impossibility  in  law.  Here,  as  there, 
it  is  a  question  whether  impossibility  or  mistake,  or  both, 
shall  be  assigned  as  the  ground  on  which  the  agreement 
is  void.  And  here  likewise,  according  to  our  authorities, 
mistake  seems  to  be  the  ground  assigned  by  preference. 
It  is  not  so  much  the  impossibility  of  performance  that  is 
regarded  as  the  original  non-existence  of  the  state  of 
things  assumed  by  the  contracting  parties  as  the  basis  of 
their  contract.  The  main  thing  is  to  ascertain,  not  whether 
the  agreement  can  be  performed,  but  what  was  in  the 
true  intention  and  contemplation  of  the  parties  (u).  If  it 
appears  that  they  conceived  and  dealt  with  something  non- 
existent as  existing,  the  agreement  breaks  down  for  want 
of  any  real  contents.  Hence  these  cases  are  treated  for 
the  most  part  as  belonging  to  the  head  of  Mistake. 

It  may  be  that  the  peculiar  historical  conditions  of 
English  law  count  for  something  in  this.  Accident,  Fraud, 
and  Mistake  were  the  accustomed  descriptions  of  heads 
of  equity  under  which  the  Court  of  Chancery  gave  relie£ 
The  fiction  of  this  relief  being  something  extraordinary, 
and  as  it  were  supra-legal,  was  kept  up  in  form  long  after 
it  had  ceased  to  be  either  true  or  useful:  and  the  terms 
Fraud  and  Mistake  were  extended  far  beyond  any  natural 


(tt)  See  eepecUlly  CotUwrUr  ▼.  he  holds,  the  knowledge  or  other 
ffaiUe  (1856)  6  H.  L.  C.  673,  25  state  of  mind  of  the  parties  makes 
L.  J.  Ex.  253.  Savigny  (Syat.  3.  no  difference.  It  is  at  least  doubt- 
SOS)  is  decidedly  against  error  bdng  fol,  as  we  shall  have  opportunities 
considered  the  ground  of  nullity  in  of  seeing,  whether  this  position  be 
these  oases :  but  chiefly  because,  as  true  in  English  law. 


400  IMPOSSIBLE  AQBEEMENTS. 

t)r  scientifically  admissible  meaning  in  order  to  support 
the  jurisdiction  of  the  Court  in  a  great  variety  of  cases 
where  the  procedure  and  machinery  of  the  common  law 
Courts  were  inadequate  to  do  justice.  In  the  cases  now 
before  us,  however,  there  is  real  difficulty  in  drawing 
the  line:  and  one  or  two  examples  of  the  class  will  be 
given  in  this  place. 
Sale  of  In  the  leading  case  of  Couturier  v.  Hastie  (x),  decided 

^ioSly"    '^y  *h^  House  of  Lords  in  1856,  a  bought  note  had  been 
^<**'  signed  for  a  cargo  of  Indian  com  described  as  "of  fidr 

average  quality  when  shipped  from  Salonica."-  Severad 
days  before  the  sale,  but  unknown  to  the  parties,  the  cargo, 
then  on  the  voyage,  was  found  to  be  so  much  damaged 
from  heating  that  the  vessel  put  into  Tunis,  where  the 
cargo  was  sold.  The  only  question  seriously  disputed  was 
what  the  parties  really  meant  to  deal  with,  a  cargo  supposed 
to  exist  as  such,  or  a  mere  expectation  of  the  arrival  of 
a  cargo,  subject  to  whatever  might  have  happened  siQce  it 
was  shipped.  Lord  Cranworth  in  the  House  of  Lords,  in 
accordance  with  the  opinion  of  nearly  all  the  judges,  held 
that  "what  the  parties  contemplated,  those  who  sold  and 
those  who  bought,  was  that  there  was  an  existing  some- 
thing to  be  sold  and  bought."  No  such  thing  existing, 
there  was  no  contract  which  could  be  enforced. 
Cove-  When  a  lessee  under  a  mining  lease  covenants  in  un- 

work         qualified  terms  to  pay  a  fixed  minimum  rent,  he  is  bound 
P*j*2J^    ^  P*y  ^^  (y)'  *h<>^g^  tt^  ^iii®  i^ay  turn  out  to  be  not 
minimam  worth  working  or  even  unworkable.     But  it  is  otherwise 
amount,     ^^jj  ^  covenant  to  work  the  mine  or  to  raise  a  minimum 
amount.     Where  a  coal  mine  was  foimd  to  be  so  interrupted 
by  fietults  as  to  be  not  worth  working,  it  was  said  that  the 
lessor  might  be  restrained  from  suing  on  the  covenant 
to  work  it  on  the  terms  of  the  lessee  paying  royalty  on  the 
estimated  quantity  of  coal  which  remained  imworked  {z). 


(x)  (I860)  5  H.  L.  G.  678.  Ex.  05.    So  in  equity,  Bidgway  v, 

iy)  Marqw9  of  BuU  v.  Thompmm      Sneyd  (1864),  Kay,  627. 
(1844)  18  M.  k  W.  487,  17  L.  J.  (z)  Bidytpoy  ▼.  Sneyd,  wpra. 


IMPLIED  OB  EXPRESS  EXCEPTIONS.  401 

A  similar  question  was  fully  dealt  with  in  Clifford  v.  OUfford  r. 
Watts  (a).  The  demise  was  of  all  the  mines,  veins,  etc.,  of 
clay  on  certain  land.  There  was  no  covenant  by  the  lessee 
to  pay  any  minimum  rent,  but  there  was  a  covenant  to  dig 
in  every  year  of  the  term  not  less  than  1000  tons  nor  more 
than  2000  tons  of  pipe  or  potter's  clay.  An  action  was 
brought  by  the  lessor  for  breach  of  this  covenant.  Plea  (6), 
to  the  effect  that  there  was  not  at  the  time  of  the  demise 
or  since  so  much  as  1000  tons  of  such  clay  under  the  lands, 
that  the  performance  of  the  covenant  had  always  been  im- 
possible, and  that  at  the  date  of  the  demise  the  defendant 
did  not  know  and  had  no  reasonable  means  of  knowing 
the  impossibility.  The  Court  held  that  upon  the  natural 
construction  of  the  deed  the  contract  was  that  the  lessee 
should  work  out  whatever  clay  there  might  be  under  the 
land,  and  the  covenant  sued  on  was  only  a  subsidiary  pro- 
vision fixing  the  rate  at  which  it  should  be  worked.  The 
tenant  could  not  be  presumed  to  warrant  that  clay  should 
be  found:  and  "the  result  of  a  decision  in  favour  of  the 
plaintiff  would  be  to  give  him  a  fixed  minimum  rent  when 
he  had  not  covenanted  for  it "  (c). 

In  certain  kinds  of  contracts,  notably  charter-parties,  it  Analogous 

is  usual  to  provide  by  express  exceptions  for  the  kind  of  express 

events  we  have  been  considerins:.      It  is  not  within  our  ?*°®P**°"* 

r         ^  .         ,  .  ,  in  coin- 

province  to  enter  upon  the  questions  of  construction  which  merdai 

arise  in  this  manner,  and  which  form   important  special  .*^"*'^*''" 

(a)    (1870)   L.  R.  5  C.  P.  677,  they  ezeoated  the  leaw.    As  to  the 

40  li.  J.  G.  P.  86.  relation  of  CUford  ▼.  WatUUtEUU 

(6)  It  WM  pleaded  as  an  equitable  r.  Sughnu  (pp.  879, 880, 888,  above), 

plea  under  the  C.  L.  P.  Ajolt,  bat  it  is  perhMpe  enough  to  say  that  the 

the    Court  treated  the  offence  as  Oonrt  of  Oommon  Pleas  as  consti- 

a  lei^  one.  tnted  in  1870  would  scarcely  have 

(c)  Per  Montague  Smith  J.  at  p.  arrived,  on  the  facts  of   ffUU  y, 

587.   Op.  and  dist  JervU  y.  Tomkin-  Sughrue,  at  the  same  result  as  the 

jofi  (1866)  1  H.  &  N.  196,  26  L.  J.  Court  of  Exchequer  in  1847  :   but 

Ex.  41,  where  the  covenant  was  not  there  is  no  actual  conflict,  as  the 

only  to  get  2000  tons  of  rock  salt  per  question  in  every  case  is  of  the  true 

annum,  but  to  pay  6d«  a  ton   for  intention  of  the  contract  taken  as  a 

every  tun  shor^  and    the    lessees  whole,  and  the  contracts  in  these 

knew  of  the  state  of  the  mine  when  cases  are  of  quite  different  kinds. 

P.  D  D 


402  IMPOSSIBLE  AGREEMENTS. 

topics  of  commercial  law.  However,  when  the  exception 
of  a  certain  class  of  risks  is  once  established,  either  as 
being  implied  by  law  from  the  nature  of  the  transaction, 
or  by  the  special  agreement  of  the  parties,  the  treatment 
is  much  the  same  in  principle  :  and  a  few  recent  decisions 
may  be  mentioned  as  throwing  light  on  the  general  law. 
Where  the  principal  part  of  the  contract  becomes  impos- 
sible of  performance  by  an  excepted  risk,  the  parties  are 
also  discharged  from  performing  any  other  part  which 
remains  possible,  but  is  useless  without  that  which  has 
become  impossible  (d).  It  is  a  general  principle  that  a 
contract  is  not  to  be  treated  as  having  become  impossible 
of  performance  if  by  any  reasonable  construction  it  is  still 
capable  in  substance  of  being  performed  (e) :  but  on  the 
other  hand  special  exceptions  are  not  to  be  laid  hold  of  to 
keep  it  in  force  contrary  to  the  real  intention.  Thus  where 
the  contract  is  to  be  performed  "with  all  possible  despatch," 
saving  certain  impediments,  the  party  for  whose  benefit 
the  saving  is  introduced  cannot  force  the  other  to  accept 
performance  after  a  delay  imreasonable  in  itself,  though 
due  to  an  excepted  cause,  if  the  manifest  general  intention 
of  the  parties  is  that  the  contract  shall  be  performed  within 
a  reasonable  time,  if  at  all  The  saving  clause  will  protect 
him  from  liability  to  an  action  for  the  delay,  but  that  is 
all :  the  other  party  cannot  treat  the  contract  as  broken 
for  the  purpose  of  recovering  damages,  but  he  is  not  pre- 
vented from  treating  it  as  dissolved  (/). 

(/3)  When  fi.  Where  the  contract  is  for  personal  services  of  which 
McedS."  ^^^  performance  depends  on  the  life  or  health  of  the 
grade  on  party  promising  them.  "All  contracts  for  personal  services 
healtri  of  which  can  be  performed  only  during  the  lifetime  of  the 
ImplSd'    V^^y  contracting  are  subject  to  the  implied  condition  that 

id)  Oeipd  ▼.  Smith  (1872)  KB.  Ex.  885. 

7  Q.  B.  404,  411,  41 L.  J.  Q.  R  158.  (f)  Jackio*  y.  Union  Marine  In- 

(e)  The  TeuUmia  (1872)  L.  B.  4  narance  Co.  (1874)  in  Ex.  Ch.  L.  R 

P.^  0.  171,  182.  41  L.  J.  Ad.  57.  10  0.  R  125,144  8qq.44  L.  J.  0.  R 

Op.  Jonet  T.  Holm  (1867)  L.  R.  2  27. 


PERSONiO.  SEBVICEa  408 

he  shall  be  alive  to  perform  them ;  and  should  he  die,  his  oonditloa 
executor  is  not  liable  to  an  action  for  the  breach  of  contract  penon 
occasioned  by  his  death"  (g).     Conversely,  if  the  master  J^**" 
dies  during  the  service,  the  servant  is  thereby  discharged,  alive  and 
and   cannot  treat  the  contract  as   in  force  against  the  "^j^ 
master's  personal  representatives   (A).     The  passage  now  for  the 
cited  goes  on  to  suggest  the  extension  of  this  principle  to  ffXT" 
the  case  of  the  party  becoming,  without  his  own  default,  ««*»•«*• 
incapable  of  fulfilling*  the  contract  in  his  lifetime :  "  A 
contract  by  an  author  to  write  a  book,  or  by  a  painter  to 
paint  a  picture  within  a  reasonable  time,  would  in  my  judg- 
ment be  deemed  subject  to  the  condition  that  if  the  author 
became  insane,  or  the  painter  paralytic,  and  so  incapable 
of  performing  the  contract  by  the  act  of  God,  he  would 
not  be  liable  personally  in  damages  any  more  than  his 
executors  would  be  if  he  had  been  prevented  by  death," 
This  view,  which  obviously  commends  itself  in  point  of 
reason  and  convenience,  is  strongly  confirmed  by  Ta/ylor 
V.  CcddiveU  (^apra,  p.  395),  where  indeed  it  was  recognized 
as  correct,  and  it  has  since  been  established  by  direct  deci- 
sions.    In  Boast  v.  Firth  (i)  a  master  sued  the  father  of  BoaBtu. 
his  apprentice  on  his  covenant  in  the  apprenticeship  deed    ^^ 
that  the  apprentice  should  serve  him,  the  plaintiff,  during 
all  the  term.     The  defence  was  that  the  apprentice  was 
prevented  from  so  doing  by  permanent  illness  arising  after 
the  making  of  the  indenture.     The  Court  held  that  "  it 
must  be  taken  to  have  been  in  the  contemplation  of  the 
parties  when  they  entered  into  this  covenant  that  the 
prevention  of  performance  by  the  act  of  God  should  be  an 
excuse  for  non-performance  "  (k),  and  that  the  defence  was 
a  good  one.    In  Robmson  v.  Davison  (l)  the  defendant's  Robiiitoa 
ynie,  an  eminent  picmoforte  player,  was  engaged  to  play  at  J^*^' 
a  concert.    When  the  time  came  she  was  disabled  by 

{g)  PoUook    0.  B.    IB    ffaU   v.  L.  J.  0.  P.  1. 

Trr^A<(1868)KB.  &E.  at  p.  793,  {k)  Per  Montague  Smith  J.  at 

29  L.  J.  Q.  K  at  p.  51.  p.  7. 

(A)  Farrow r.WiU(m(^ 869)  Jj.B.  {1}  (1871)  L.  B.  6  Ex.  269,  40 

4  0.  P.  744,  88  L.  J.  O.  P.  826.  L.  J.  Bz.  172. 

(i)  (1868)  L.  R.  4  0.  P.   1,  38 

D  D  2 


404 


IMPOSSIBLE  AGBEEMENTS. 


The 
oontnct 


▼aid,  not 
obIj 
▼oidable 
at  option 
of  piirty 
disabled. 
Smile, 
notice 
■hooldbe 
given  to 
the  other 
party. 


illness.  The  giver  of  the  entertainment  sued  for  the  loss 
he  had  incurred  by  putting  off  the  concert,  and  had  a 
verdict  for  a  small  sum  under  a  direction  to  the  effect  that 
the  performer's  illness  was  an  excuse,  but  that  she  was 
bound  to  give  the  plaintiff  notice  of  it  within  a  reasonable 
time.  The  sum  recovered  represented  the  excess  of  the 
plaintiffs  expenses  about  giving  notice  of  the  postpone- 
ment to  the  public  and  to  persons  who  had  taken  tickets 
beyond  what  he  would  have  had  to  pay  if  notice  had  been 
sent  him  by  telegraph  instead  of  by  letter.  The  Court  of 
Exchequer  upheld  the  direction  on  the  main  point.  The 
reason  was  thus  shortly  put  by  Bramwell  B.  "  This  is  a 
contract  to  perform  a  service  which  no  deputy  could  per- 
form, and  which  in  case  of  death  could  not  be  performed 
by  the  executors  of  the  deceased :  and  I  am  of  opinion 
that  by  virtue  of  the  terms  of  the  original  bargain  in- 
capacity either  of  body  or  mind  in  the  performer,  without 
defeult  on  his  or  her  part,  is.  an  excuse  for  non-perform- 
ance "  (m).  The  same  judge  also  observed,  in  effect,  that 
the  contract  becomes  not  voidable  at  the  option  of  the 
party  disabled  firom  performance,  but  wholly  void.  Here 
the  player  could  not  have  insisted  "on  performing  her 
engagement,  however  ineffectually  that  might  have  been," 
when  she  was  really  unfit  to  perform  it.  The  other  party's 
right  to  rescind  has  since  been  established  by  a  direct 
decision  (n).  No  positive  opinion  was  expressed  on  the 
other  point  as  to  the  duty  of  giving  notice.  But  it  may 
be  taken  as  correct  that  it  is  the  duty  of  the  party  disabled 
to  give  the  earliest  notice  that  is  reasonably  practicable. 
Probably  notice  reasonable  in  itself  could  not  be  required, 
for  the  disabling  accident  may  be  sudden  and  at  the  last 
moment,  and  the  duty  must  be  limited  to  cases  where 
notice  can  be  of  some  use  (o).    It  further  appears  from 


(m)  (1871)  L.  B.  6  Ex.  at  p.  277. 

(n)  Pouuard  y,  Spien  A  Pond 
(1876)1  Q.K  D.  410,45  L.  J.  Q.  K 
621. 

(o)  Cpw  the  doctrine  as  to  giving 


notice  of  abandonment  to  onder- 
writen,  Rauikyn  y.  P<Mer  (1872-3) 
L.  R  6  H.  L.  83,  121,  167,  42 
L.  J.  0.  P.  169. 


PEBSOllAL  SfiBVlCl&S.  405 

the  case  that  the  effect  of  an  omission  of  this  duty  is  that 
the  contract  remains  in  force  for  the  purpose  only  of 
recovering  such  damage  as  is  directly  referable  to  the 
omission.  The  decision  also  shows,  if  express  authority  be 
required  for  it,  that  it  matters  not  whether  the  disability 
be  permanent  or  temporary,  but  only  whether  it  is  such  as 
to  prevent  the  fulfilment  of  the  particular  contract. 

In  the  earlier  and  very  peculiar  case  of  HaU  v.  Wright  (p)  5^^* . 
the  question,  after  some  critical  discussion  of  the  pleadings,  aoonudoiu 


which  it  is  needless  to  follow,  came  to  this :  "  Is  it  a  term  ^  ^^ 
in  an  ordinary  agreement  to  marry,  that  if  a  man  irom  oontnMt 
bodily  disease  cannot  marry  without  danger  to  his  life,  and  ajj^mT^' 
is  unfit  for  marnacfe  from  the  cause  mentioned  at  the  time  imllttfng 
appointed,  he  shall  be  excused  marrying  then?"  (q)  or  in  riagvno 
other  words:  "Is  the  continuance  of  health,  that  is,  of  such  •^^^ 
a  state  of  health  as  makes  it  not  improper  to  marry,"  an 
implied  condition  of  the  contract  ?  (r).     The  Court  of  Ex- 
chequer Chamber  decided  by  four  to  three  that  it  is  not, 
the  Court  of  Queen's  Bench  having  been  equally  divided. 
The  majority  of  the  judges  relied  upon  two  reasons:  that 
if  the  man  could  not  marry  without  danger  to  his  life,  that 
did  not  show  the  performance  of  the  contract  to  be  im- 
possible, but  at  most  highly  imprudent ;  and  that  at  any 
rate  the  contract  could  be  so  far  performed  as  to  give  the 
woman  the  status  and  social  position  of  a  vdfe.     It  was  not 
disputed  that  the  contract  was  voidable  at  her  option. 
"  The  man,  though  he  may  be  in  a  bad  state  of  health, 
may  nevertheless  perform  his  contract  to  marry  the  woman, 
and  so  give  her  the  benefit  of  social  position  so  far  as  in 
his  power,  though  he  maybe  unable  to  fulfil  all  the  obliga- 
tions of  the  marriage  state ;  and  it  rests  with  the  woman 
to  say  whether  she  will  enforce  or  renounce  the  con- 
tract "  (a).    As  to  the  first  of  these  reasons,  the  question 

(2>)  (1868)  E.  K  &  E.  746,  29  («)  The  oam  Ib    thoi  explained 

L.  J.  Q.  B.  48.  and    dirtingoidied   by   MonUgae 

(a)  Per   BnunweU  B.  29  L.  J.  Smith  J.  in  Bo€ui  t.  Firth  (1868) 

a  B.  45.  L.  R.  4  0.  P.  8. 

(r)  PerPoUookG.Rt&.52. 


406  IMPOSSIBLE  AGREEMENTS. 

is  not  whether  there  is  or  not  an  absolute  impossibility, 
but  what  is  the  true  meaning  of  the  contract ;  and  in  this 
case  the  contract  is  of  such  a  kind  that  one  might  expect 
the  conditions  and  exceptions  implied  in  strictly  personal 
contracts  to  be  extended  rather  than  excluded  {t).  As  to 
the  second  reason,  it  cannot  be  maintained,  except  against 
the  common  understanding  of  mankind  and  the  general 
treatment  of  marriage  by  English  law,  that  the  acquisition 
of  legal  or  social  position  by  marriage  is  a  principal  or  in- 
dependent object  of  the  contract.  Unless  it  can  be  so  con- 
sidered, the  reason  cannot  stand  with  the  principle  affirmed 
in  Gdpd  v.  Smith  (u),  that  when  the  main  part  of  a 
contract  has  become  impossible  of  performance  by  an  ex- 
cepted cause,  it  must  be  treated  as  having  become  im- 
possible altogether.  The  decision  itself  can  be  reviewed 
only  by  a  court  of  ultimate  appeal ;  but  it  is  so  much 
against  the  tendency  of  the  later  cases  that  it  is  now  of 
little  or  no  authority  beyond  the  point  actually  decided, 
which  for  the  obvious  reasons  indicated  in  some  of  the 
judgments  is  not  at  all  likely  to  recur  (x). 
Limite-  The  rule  now  before  us  applies  only  to  contracts  for 
^  to  ****  ^.ctual  personal  services.  A  contract  of  which  the  perform- 
oontractfl  ance  depends  less  directly  on  the  promisor's  health  is  not 
j^^^^  presumed  to  be  conditional.  If  a  man  covenants  to  insure 
his  life  within  a  certain  time,  he  is  not  discharged  by  his 
health  becoming  so  bad  before  the  end  of  that  time  as  to 
make  his  life  uninsurable  (y).  It  has  never  been  supposed 
that  the  current  contracts  of  a  manufacturing  firm  are 
affected  in  law  by  the  managing  partner  being  too  ill 

(I)  It  has  long  been  setUed  that  (u)  (1872)  L.  B.  7  Q.  B.  404,  41 

the  contract  to  many  is  bo  far  per-  L.  J.  Q.  B.  153. 

Bonal  that  exeoatorB,  in  the  absence  (x)  See  Wharton  on  Contraots, 

of  special  damage  to  the  personal  §  824,  and  AUm  ▼.  Baker  (1882)  86 

estate,  cannot  sue  npon  it      Ckam-  K.  O.  91,  there  cited,  where  the 

beriain  ▼.  WUHamton  (1814)  2  M.  Supreme  Court  of  North  Carolina 

k  8.  408.    And  it  is  now  decided  expressly  declined  to  follow  Hall  r. 

that  tbey  cannot,  except  perhaps  for  Wright. 

spedal  temporal  damage,  be  sued :  {y)  Arthur  v.    Wynne  (1880)   14 

Finlay  v.  Chimey  (1888)  20  Q.  B.  Ch.  D.  608,  49  L.  J.  Ch.  557. 
IMt.  494. 


sernoes. 


VARIATION  OF  CONTBACTT.  407 

to  attend  to  business,  though  there  are  many  kinds  of 
business  in  which  the  proper  execution  of  an  order  may 
depend  on  the  supervision  of  a  particular  person.  And  in 
general  terms  it  may  be  said  that  no  contract  which  may 
be  performed  by  an  agent  can  be  discharged  by  a  cause  of 
this  kind. 

As  we  saw  in  the  case  of  contracts  jGeilling  directly  Bights 
within  the  rule  in  Taylor  v.  Caldwell,  so  in  the  case  of  ^^q^j^ 
contracts  for  personal  services  the  dissolution  of  the  con-  on^w  **»• 
tract  by    subsequent  impossibility  does  not  affect    anyrenuuo. 
specific  right  already  acquired  under  it.     Where  there  is 
an  entire  contract  of  this  kind  for  work  to  be  paid  for 
by  instalments  at  certain  times,  any  instalments  which 
have  become  due  in  the  contractor  s  lifetime  remain  due 
to  his  estate  after  the  contract  is  put  an  end  to  by  his 
death  (z).   In  like  manner  where  a  premium  has  been  paid 
for   apprenticeship,  and  the  master  duly  instructs  the 
apprentice  for  a  part  of  the  term,  and  then  dies,  his 
executors  are  not  bound  to  return  the  premium  or  any 
part  of  it  as  on  a  jEBdlure  of  consideration  (a). 

Where  an  existing  contract  is  varied  or  superseded  by  a  Sab«t!- 
Bubsequent  agreement,  and  the  performance  of  that  agree-  oontnct 
ment  becomes  impossible  (e.g,,  by  the  death  of  a  person  ^^JJ^ 
according  to  whose  estimate  a  sum  is  to  be  assessed)  so  that  of  per- 
the  parties  are  no  longer  bound  by  it,  they  will  be  remitted  '®"™*"^ 
to  the  original  contract  if  their  intention  can  thereby  be 
substantially  carried  out.     At  all  events  a  party  for  whose 
benefit  the  contract  was  varied,  and  who  but  for  his  own 
delay  might  have  performed  it  as  varied  before  it  became 
impossible,  cannot  afterwards  resist  the  enforcement  of  the 
contract  in  its  original  form  (6). 

(s)  SMIbi  T.  Hclywett  Ry,    Co.  ffint  ▼.  ToUon  (1850)  2  Uac  ft  G. 

(1867)  L.  B.  2  Ex.  811,  86  L.  J.  Ex.  18i,  10  L.  J.  Ch.  441,  purported 

166.  to  be  founded,    ffint  y,  TbUon  doee 

(a)  Whineup  v.  ffughei    (1871)  not^  of  oonrae,   establish  anj  role 

L.  B.  6  a  P.  78, 40  L.  J.  0.  P.  104,  ef  equity. 

diBientingfromtbeTiewof  theoom-  {h)  Furth    y.    MidUmd   Ry,    Co. 

num  ]aw  on  wbich  the  deddon  In  (1876)  20  Eq.  100,  44  L.  J.  Ch.  818. 


408  IM1>0SSIBLE  AGH&fiM£NTS. 

8.  ImpoB-       3,  We  now  come  to  the  case  of  a  contract  becoming  im- 
defauit  of  possible  of  performance  by  the  default  of  either  party. 

either 

P**^*  Where  the  promisor  disables  himself  by  his  own  default 

promiso/  ^^^  performing  his  promise,  not  only  is  he  not  excused 
no  excuee,  (for  which  indeed  authority  would  be  superfluous)  but  his 
breaoh  of    conduct  is  equivalent  to  a  breach  of  the  contract,  although 
ooniract.    ^-^^  ^^^  f^p  performance  may  not  have  arrived,  and  even 
though  in  contingent  circumstances  it  may  again  become 
possible  to  perform  it  (c).     A  defeiult  consisting  in  mere 
omission  may  have  the  same  eflFect.     Where  an  arbitrator 
awards  that  the  defendant  shall  pay  the  plaintiff's  taxed 
costs  of  a  suit  on  a  certain  day,  it  is  the  defendant's  busi- 
ness to  have  them  taxed  before  that  day,  and  it  is  no  excuse 
that  in  fact  he  had  not  notice  of  the  taxation  in  time  to 
pay  them  at  the  time  and  place  fixed  by  the  award  (d). 
Default  of      On  the  other  hand,  where   the  promisor  is  prevented 
dischargee  from  performing  his  contract  or  any  part  of  it  by  the  de- 
promisor,    f3^^l^  Qj.  refusal  of  the  promisee,  the  performance  is  to  that 

and  may  ^  '  r 

be  treated  extent  excused  ;  and  moreover  default  or  refusal  is  a  cause 

OT^Stw'  ^^  action  on  which  the  promisor  may  recover  any  loss  he 

contract     has  incurred  thereby  (e),  or  he  may  rescind  the  contract 

at  his        and  recover  back  any  money  he  has  already  paid  under 

option.       i^  ^     Default  may  consist  either  in  active  interruption 

or  interference  on  the  part  of  the  promisee  (g),  or  in  the 

mere  omission  of  something  without  which  the  promisor 

cannot  perform  his  part  of  the  contract  (h). 

(e)  1  Bo.  Ab.  448,  B.,  citing  21  with  a  special  contract,  e,g.,  RoberU 

E.  IV.  54,  pL  26 :  "If  you  are  bound  ▼.  Bvary  Oommisiionert  (1869)  L.  R. 

to  enfeoff  me  of  the  manor  of  D.  4  C.  P.  755,  in  Ex.  Ch.  5  0.  P.  810, 

before  such  a  feast,  and  you  make  89  L.  J.  O.  P.  129. 

a    feoffment    of    that    manor    to  (/)  OUa    w,  Bdwardi   (1797)   7 

another  before  the  feast,  yon  have  T.  R.  181. 

forfeited  the  bond  noth withstanding  {ff)  1  Bo.  Ab.  458,  N. 

that  yon  have  the  land  back  before  {h)  Where   a  condition   can  be 

the   feast,   having   once    disabled  performed  only   in    the    obligee's 

yourself   from     making    the    said  presence,  his  absence  is  an  exooae, 

feoffment,"  per  Choke  J.  1  Ba  Ab.  457,  XT.     A  covenant  to 

{d)  Bigland  v.  Skdton  (1810)  12  make  within  a  year  such  assurance 

East,  486.  as  the  covenantee's  counsel  shall 

(e)  As  in  the  familiar  case  of  an  devise  is  discharged  if  the  cove- 
action  for  non-aoceptance  of  goods,  nantee  does  not  tender  an  assurance 
for  not  furnishing  a  cargo,  &c. ;  so  within  the  year,  i6.  446,  pL  12. 


DEFAULT  OF  PBOMISEtL  409 

The  principle,  in  itself  well  settled,  is  illustrated  by  Roberte  v. 
several  modem  cases.  Where  the  £ailiire  of  a  building  Commia- 
contractor  to  complete  the  works  by  the  day  specified  is  i^*"» 
caused  by  the  failure  of  the  other  parties  and  their  archi- 
tect to  supply  plans  and  set  out  the  land  necessary  to 
enable  him  to  commence  the  works,  "  the  rule  of  law 
applies  which  exonerates  one  of  the  two  contracting  parties 
from  the  performance  of  a  contract  when  the  performance 
of  it  is  prevented  and  rendered  impossible  by  the  wrongful 
act  of  the  other  contracting  party"  (i),  and  the  other  party 
cannot  take  advantage  of  a  provision  in  the  contract 
making  it  determinable  at  their  option  in  the  event  of  the 
contractor  failing  in  the  due  performance  of  any  part  of 
his  undertaking  (i).  So  where  it  is  a  term  of  the  contract 
that  the  contractor  shall  pay  penalties  for  any  delay  in  the 
fulfilment  of  it,  no  penalty  becomes  due  in  respect  of  any 
delay  caused  by  the  refusal  or  interference  of  the  other 
party  (k).  Where  a  machine  is  ordered  for  doing  certain 
work  on  the  buyer's  land,  on  the  terms  that  it  is  to  be 
accepted  only  if  it  answers  a  certain  test ;  there,  if  the 
buyer  fails  to  provide  a  fit  place  and  occasion  for  trying 
the  machine,  and  so  deals  with  it  as  to  prevent  a  fair  test 
from  being  applied  according  to  the  contract,  he  is  bound 
to  accept  and  pay  for  the  machine  (Q. 

In  Raymond  v.  Minton  (m)  it  was  pleaded  to  an  action  OasM  of 
of  covenant  against  a  master  for  not  teaching  his  appren-  ^JJJ" 
tice  that  at  the  time  of  the  alleged  breach  the  apprentice 
would  not  be  taught,  and  by  his  own  wilful  acts  prevented 
the  master  from  teaching  him.  This  ¥ras  held  a  good 
plea,  for  "  it  is  evident  that  the  master  cannot  be  liable 
for  not  teaching  the  apprentice  if  the  apprentice  will  not 
be  taught"    An  earlier  and  converse  case  is  EUen  v. 


{%)  BtlerU  ▼.  Bury  Oommitiionen  L.  J.  C.  P.  68. 

(1869)  L.  R.  5  C.  P.  310.  329.  (Q  Maekay    v.    Dick   (1881)   in 

{k)  Holme  v.  Quppy  (1888)  8  M.  H.  L.  (So.),  6  App.  Ca.  261. 

k  W.  887 ;  Ru»»ea  ▼.  Da  Bandeira  (m)  (1866)  L.  R.  1  Bz.  244,  85 

(1862)  18  C.  B.    N.  S.  149,    82  L.  J.  Ez«  158. 


410  IMPOSSIBLE  AQREEMENTa 

Tojpp  (n),  referred  to  by  the  reporters.  There  a  master 
undertook  to  teach  an  apprentice  several  trades;  it  was 
held  that  on  his  giving  up  one  of  them,  and  thus  making 
the  complete  performance  of  his  own  part  of  the  contract 
impossible/  the  apprentice  was  no  longer  bound  to  serve 
him  in  any.  ''If  the  master  is  not  ready  to  teach  in  the 
very  trade  which  he  has  stipulated  [promised]  to  teach, 
the  apprentice  is  not  bound  to  serve."  A  case  of  the  same 
sort  is  put  by  Choke  J.  in  the  Year  Book,  22  Ed.  IV.,  26,  in 
a  case  firom  which  one  passage  has  already  been  given. 

"  If  I  am  boond  to  Cateeby  [then  aaother  judge  of  the  Gommon  Fleas] 
that  my  eon  shaU  wrre  him  for  aeyen  yean,  and  I  come  with  my  eon  to 
Cateahy,  and  offer  my  Km  to  him,  and  he  will  not  take  him,  there  beeaose 
there  is  no  default  on  my  part  I  ahaU  not  forfeit  the  bond.  In  like  manner 
if  he  took  my  son  and  afterwards  within  the  teim  sent  him  away,  it  is 
nnreasonable  that  this  should  be  a  forfeiture.'* 

Altema-        Where  a  contract  is  in  the  alternative  to  do  one  of  two 
tract         things  at  the  promisor  s  option,  and  one  of  them  is  impos- 
^^'j^^sible,  the  promisor  is  bound  to  perform  that  which  is 
possible,     possible  (o).     We  find  the  rule    clearly  stated  in  the 
UeSoe      I^ig^s*  (p)-    Where  one  of  two  things  contracted  for  in 
Mstbe     the  alternative  subsequently  becomes  impossible,  it  is  a 
Where  one  question  of  construction  for  which  no  positive  rule  can  be 
^^^     laid  down,  whether  according  to  the  true  intention  of  the 
Bible,         parties  the  promisor  must  perform  the  alternative  which 
of^ora!^^  remains  possible,  or  is  altogether  discharged  (gr).    It  was 
stmction.   held,  indeed,  in  Laughter^a  case  (r)  that  where  the  con- 
dition of  a  bond  is  for  either  of  two  things  to  be  done  by 
the  obligor,  and  one  of  them  becomes  impossible  by  the 
act  of  God,  he  is  not  bound  to  perform  the  other.     But 
this  is  to  be  accounted  for  by  the  peculiar  treatment  of 
bonds,  of  which  we  shall  speak  presently,  the  right  of 

(n)  (1851)  6  Ex.  424,  442,  20  Lb  doH^  proinde  etit  atqne  te  sisti 

J.  Ex.  241.  Bolmnmodo  stipalatns  essem.     D. 

(o)  Da  Ootta  ▼.  Dam  (1778)  1  B.  45. 1.  de  r.  o.  97  pr. 

k  P.  242.  iq)  Barkworth  ▼.  Toung  (1856)  4 

(p)  Si   ita   stipalatns   faero:   te  Drew.  1,  25,  26  L.  J.  Ch.  158. 

tisU ;  niti  tUttriB^  kigppoeeniawrwm  (r)  5  Ga  Bep.  21  ft. 


ALTERNATIVB  C0KTKACT8.  411 

election  being  part  of  the  benefit  of  the  condition,  of  which 
the  obligor  is  not  to  be  deprived  And  even  as  to  bonds 
the  general  proposition  has  been  denied  (a).  In  the 
absence  of  anything  to  show  the  intention  in  the  particular 
case,  the  presumption  should  surely  be  the  other  way, 
namely,  that  the  promisor  should  lose  his  election  rather 
than  the  promisee  lose  the  whole  benefit  of  the  contract. 
Where  either  the  promisor  or  the  promisee,  having  the 
right  under  a  contract  to  choose  which  of  two  things  shall 
be  done,  chooses  one  which  becomes  impossible  after  the 
choice  is  determined,  there  (on  authority  as  well  as  prin- 
ciple) it  is  the  same  as  if  there  had  been  fix)m  the  first 
a  single  imconditional  contract  to  do  that  thing  (t).  In 
Roman  law  the  presumption  seems  distinctly  in  favour  of 
the  promisor  remaining  bound  to  do  what  is  possible  (u)  ; 
otherwise  it  agrees  with  ours  (v).  The  exception  as  to  Effeoti  of 
rnora  in  th^  extract  given  in  the  note  shows  the  applica- 
tion here  of  the  general  rule  as  to  impossibility  caused  by 
acts  of  the  parties.  The  case  put  is  that  the  creditor  has 
made  his  election  (to  have  Stichus,  suppose)  but  has 
neglected  or  refused  to  accept  Stichus:  now  if  Stichus  dies 
he  cannot  demand  Pamphilus.  It  is  the  same  as  if  there 
had  been  a  single  promise,  and  the  performance  made 
impossible  by  the  promisee's  de&ult.  The  same  rule  is 
given  in  another  passage  (x). 

(«)  See  note  (j),  previons  page.  tunc  enim  perlnde  solus  llle  qui 

(()  Brawn  v.  Moyal  Imuranee  Co.  deoessit  praebetar  ac  si  solos  in  ob- 

(1859)  p.  389,  above.  Ugationem  dedootns  fmsset    Quod 

(tt)  SaTe  that  in  the  case  of  an  si   promissoris    fuerit   electio,    de- 

alternatiye   obligation    to    deliver  fnnoto   altero  (t.e.  before  election 

speeifio   objects  at  the  promisor's  made),    qpi   snperest    aequo    peti 

election  he  stall  has  an  election  in  potest    D.  46.  8.  de  solnt.  et  lib. 

ioiuUonef  as  it  is  said,  %,e.  he  may  at  95  pr.    He  proceeds  to  this  curious 

his  option  pay  the  value  of  that  question :  What  if  one  dies  by  the 

which  has  perished.    See  Yange-  debtor^s    default     before    election 

row,  Pand.  §  569,  note  2  (8. 22  sqq.)  made^    and   afterwards   the  other 

where  the  subject  is  fully  worked  dies  without  his  default  ?    No  ac« 

out.  tion   can   be   maintained  on   the 

(v)  Papinian  says ;   SUehtm  out  stipulation,  but  there  is  a  remedy 

PampkUuM,  utrum  ego  vdiw^  dam  by  ddi  €uHo, 
ipondei^   altero  mortuo,  qui  vivit  (ac)   Stlpulatus  sum  Damam  aut 

solus  petetur,  nisi  si  mora  faw^a  tit  Erotem  lervum  daii,  cum  Damam 

in  eo  mortuo,  quem  petitor  elegit ;  dares,  ego  quominus  aodparem  in 


412  IMPOSSIBLE  AOIt£EM£KT& 

OoiM'  There  is  yet  something  to  be  said  of  the  treatment  of 

oontvMtii  conditional  contracts  where  the  condition  is  or  becomes 
impossible.  A  condition  may  be  defined  for  the  present 
purpose  as  an  agreement  or  term  of  an  agreement  whereby 
the  existence  of  a  contract  ia  made  to  depend  on  a  future 
contingent  event  assigned  by  the  will  of  the  parties  (y). 

The  condition  maybe  either  that  an  event  shall  or  that 
it  shall  not  happen,  and  is  called  positive  or  negative 
accordingly.  Now  the  event  which  is  the  subject-matter 
of  the  condition,  instead  of  being  really  contingent,  may  be 
necessary  or  impossible,  in  itself  or  in  law.  But  the  nega- 
tion of  a  necessary  event  is  impossible  and  the  negation 
of  an  impossible  event  is  necessary.  It  therefore  depends 
further  on  the  positive  or  negative  character  of  the  con- 
tingency whether  the  condition .  itself  is  necessary  or 
impossible. 

In  what         Thus  we  may  have  conditional  promises  with  conditions 

^Saa^    of  these  kinds: 

■*»y  ^  Necessary : 

or  impoB-       (a)  By  affirmation  of  a  necessity.    As  a  promise  to  pay 

•ible.         100^.,  "if  the  sun  shall  rise  to-morrow." 

(/8)  By  negation  of  an  impossibility:  "If  J.  S.  does  not 
climb  to  the  moon,"  or  "if  my  executor  does  not  sue  for 
my  debt  to  him." 
Impossible: 

(7)  By  affirmation  of  an  impossibility:  "If  J.  S.  shall 

climb  to  the  moon,"  or  "if  J.  S.  shall  create  a  new  manor." 

(S)  By  negation  of  a  necessity:   "If  the  sim  shall  not 

rise  to-morrow,"  or  "if  my  personal  estate  shall  not  be 

liable  to  pay  my  debts"  (z). 

It  is  obvious  that  as  a  matter  of  logical  construction  the 


mora  foi ;  mortnus  est  Duna ;  an  debebat    Bolvetet,    oontfanio    eum 

potes  mo   ez    stipolatn   actionem  debito  liberail    D.  45,  1.  de  v.  o. 

liabere  ?  Bospondit,  Beomdmn  Mas-  105. 

sorii  Sabini  opinionem  pato  to  ex  (y)  Savigny,  Syst  §  116  (8. 121) ; 

■tipolatn  agere  non  posse ;  nam  is  Pothier,  ObL  §  199. 

reote  ezistimabat,  si  per  debitorsm  {z)  SUghtly  modified   from    Sa- 

mora  non  esset,  quominns  id  qnod  ngnj,  Syst  §  121  (8. 166, 168). 


OONDinOKS  IN  BONDS.  413 

fonns  (a)  and  (0)  are  equivalent  to  unconditional  promises, 
(7)  and  (S)  to  impossible  or  nugatory  promises.  And  so 
we  find  it  dealt  with  by  the  Roman  law  (a).  It  is  equally 
obvious  that  (still  as  a  matter  of  logical  construction)  there 
is  nothing  to  prevent  the  condition  fix)m  having  its  regular 
effect  if  the  event  is  or  becomes  impossible  in  fiwjt.  For 
example,  "if  A.  shall  dig  1000  tons  of  clay  on  B.'s  land 
in  every  year  for  the  next  seven  years:"  here  there  may 
not  be  so  much  clay  to  be  dug  or  A.  may  die  io  the  first 
year.  But  a  promise  so  conditioned  is  perfectly  consistent 
and  intelligible  without  importing  any  further  qualification 
into  it;,  and  it  is  obviously  more  difficult  to  infer  that  some 
further  qualification  was  intended  than  in  the  case  of  a 
direct  and  unconditional  contract  by  A.  himself  to  dig  so 
much  clay. 

Direct  covenants  or  promises  dependent  on  express  con- 
ditions must  be  construed  with  reference  to  these  general 
principles :  beyond  this  no  rule  can  be  given  except  that 
effect  is  to  be  given  so  &r  as  possible  to  the  real  meaning 
of  the  parties  (b). 

Practically  the  discussion  in  our  books  of  conditions  and  TnAtman 
their  effect  on  the  legal  transactions  into  which  they  enter  Uons'in" 
is  limited  to  the  following  sorts  of  questions :  Englwh 

1.  What  contracts  are  really  conditional,  or  in  technical 
language,  what  amounts  to  a  condition  precedent  (b) : 

2.  The  effect  of  conditions  and  conditional  limitations 
in  conveyances  at  common  law  and  under  the  Statute  of 
Uses  (which  topics  are  obviously  beyond  our  present 
scope): 

3.  The  effect  of  conditions  in  bonds.  This  form  of  con- 
tract is  now  used  only  for  certain  special  purposes,  but  was 


(a)  "SiimpoasibiliaoondioiooUi-  itipiiletiir :    Si  digito  cftelum  non 

gaiionibiii    adidfttur,    nihil    Talet  attigeio,  dwe  spondes?  pure  fftoU 

■tipulaftia    Impooibilli  autem  oon-  obligafcio  intellagitiur  ideoqne  statim 

wU>  habetar,  cui  natara  impedi-  petere  poteii."    I.  8.  19.  de  inat. 

mento  est  quo  miniw  ezistet,  yelnti  itipoL  $  11. 
•1  quifl  iU  dizerit :  Si  digito  caelam  (6)  Supra,  Cb.  YI.,  p.  248. 

attigero^  dan  spondesf    At  n  ita 


414  IMPOSSIBLE  AOREEMENT& 

formerly  of  general  application,  insomuch  that  almost  all 
the  older  learning  on  the  construction  and  performance  of 
contracts  is  to  be  found  under  the  head  of  conditiona 
Here  there  are  some  peculiarities  which  call  for  our  atten- 
tion in  this  place. 
Bonds.  So  £Eir  as  the  form  goes,  a  bond  is  a  contract  dependent 

between     on  a  negative  condition.     In  the  first  instance  the  obligor 
the  tooh-    professes  to  be  bound  to  the  oblicfee  in  a  sum  of  a  certain 

nical  f  onn  ^  .... 

and  the      amount.     Then   follows  the  condition,  showing  that  if  a 

Im  Sthe  ^rtain  event  happens  (generally  something  to  be  done  by 
instra-  the  obligor)  the  bond  shall  be  void,  but  otherwise  it  shall 
remain  in  force.  "The  condition  is  subsequent  to-  the 
legal  obligation  ;  if  the  condition  be  not  AilfiUed  the 
obligation  remains  "  (c).  This  is  in  terms  a  promise,  stated 
in  a  singularly  involved  way,  to  pay  a  sum  of  money  if  the 
event  mentioned  in  the  condition  does  not  happen.  But 
this,  as  everybody  knows,  is  not  the  true  nature  of  the  con- 
tract. The  object  is  to  secure  the  performance  of  the 
condition,  and  the  real  meaning  of  the  parties  is  that  the 
obligor  contracts  to  perform  it  under  the  conventional 
sanction  of  a  penal  sum.  This  view  is  fiiUy  recognized  by 
the  modem  statutes  regulating  actions  on  bonds,  by  which 
the  penalty  is  treated  as  a  mere  security  for  the  performance 
of  the  contract  or  the  payment  of  damages  in  default  (d) 
On  principle,  therefore,  a  bond  with  an  impossible  con- 
dition, or  a  condition  which  becomes  impossible,  should 
be  dealt  with  just  as  if  it  were  a  direct  covenant  to  per- 
form that  which  is  or  becomes  impossible.  In  the  former 
case  the  bond  should  be  void,  in  the  latter  the  rule  in 
Taylo7'  V.  Ccddv^eU  (e)  would  determine  whether  it  were 
avoided  or  not.  We  have  seen  that  where  the  condition 
is  illegal  our  Courts  have  found  no  difficulty  in  considering 
the  bond  as  what  in  truth  it  is,  an  agreement  to  do  the 


(c)  Sir  W.  W.  Follett,  org.  Bet-  Darda  (1872)  L.  R  8  Ex.  19,  42  L. 

toick  ▼.  SwinddU  (1885)  8  A.  &  E.  J.  Ex.  83. 
875.  ie)  (1868)  8  K  &  S.  826»  tv^pra,  p 

{d)  As  to  theM,  lee  Pretton  ▼.  895. 


CONDITIONS  IN  BONDS.  415 

illegal  act     But  in  the  case  of  impossibility  the  law  has  ^^?2 
stuck  at  the  merely  formal  view  of  a  bond  as  a  contract  to  immedi- 
pay  the  penal  sum,  subject  to  be  avoided  by  the  perform-  *^y^' 
ance  of  the   condition;  accordingly  if  the  condition  is  obligation 
impossible  either  in  itself  or  in  law  the  obligation  remains  J^^  ^ 

absolute.  conMng  to 

"  If  a  man  be  bound  in  an  obligation,  &c.,  with  condition  foASd  ^ 
that  if  the  obligor  do  go  from  the  church  of  St  Peter  in  «>Mtrao. 
Westminster  to  the  church  of  St  Peter  in  Rome  within 
three  hours,  that  then  the  obligation  shall  be  void.  The 
condition  is  void  and  impossible  and  the  obligation  standeth 
good."  So,  again,  if  the  condition  is  against  a  maxim  or 
rule  in  law,  as  "  if  a  man  be  bound  with  a  condition  to 
enfeoff  his  wife,  the  condition  is  void  and  against  law, 
because  it  is  against  the  maxim  in  law,  and  yet  the  bond 
isgood"(/). 

In  the  same  way,  **  when  the  condition  of  an  obligation 
is  so  insensible  and  incertain  that  the  meaning  cannot  be 
known,  there  the  condition  only  is  void  and  the  obligation 
good"(sr). 

On  the  point  of  subsequent  impossibility,  however,  the  Bat  wah- 
strictly  formal  view  is  abandoned,  and  an  opposite  result  J^^^- 
arrived  at,  but  still  in  an  artificial  way.     The  condition,  it  ^^  "  • 
is  said,  is  for  the  benefit  of  the  obligor,  and  the  perform- 
ance thereof  shall  save  the  bond ;  therefore  he  shall  not 
lose  the  benefit  of  it  by  the  act  of  Grod  (h),  and  where  the 
condition  is  possible  at  the  date  of  the  instrument,  ''and 
before  the  same  can  be  performed  the  condition  becomes 
impossible  by  the  act  of  Grod,  or  of  the  law,  or  of  the 
obligee,  there  the  obligation  is  saved  "  (i)  ;  or  as  another 
book  has  it,  ''the  obligation  and  the  condition  both  are 


(/)  Oo»  lit   2065  (some  of  the  London  to  Rome  being  not  quite 

Aa's  in  Ck>ke'8  text  are  omitted),  forty-eiffht  houn. 

To  the  same  eflfeot  Shepp.  Toaohst  (g)  Shepp.  Toaohst  873. 

872.     Am  to  going  to  Bome  the  (A)  This  reasoning  appears  both 

more  nsnal  phrase  &  the  old  books  in  LoMghter^i  ca.  5  Co.  Rep.  216, 

is  three  days  ;  which  is  now  in-  and  Lami!'$  ca.  ib,  286. 

appUcahUk  the  coarse  of  post  from  (t)  Go.  Lit.  208a. 


416 


IMPOSSIBLE  AOBEEMENTS. 


become  void"  (t).  "Generally  if  a  condition  that  was 
possible  when  made  is  become  impossible  by  the  act  of 
Clod,  the  obligation  is  discharged  "  (Z).  As  to  the  acts  of 
the  law  and  of  the  obligee  this  agrees  with  the  doctrine  of 
contracts  in  general:  as  to  inevitable  accident  it  establishes 
a  diflFerent  rule.  The  decision  in  Lavgkter'a  case  (mpra, 
p.  410)  was  an  application  of  the  same  view,  and  it  there- 
fore appears  that  there  should  never  have  been  any 
question  of  extending  it  to  direct  covenants  or  contracts. 

The  peculiar  law  thus  laid  down  is  distinctly  recognized 
by  modem  authorities  (tTi).  However,  if  a  bond  appears 
on  the  fiuje  of  it  to  be  given  to  secure  the  performance  ol 
an  agreement  which  it  recites,  the  condition  will  take 
effect  according  to  the  true  intention  of  the  agreement 
rather  than  the  technical  construction  resulting  from  the 
form  of  the  instrument  (n). 


Alterna- 
tive oon- 
ditioDB, 
andde- 
fanlt  of 
parties; 
same  law 
as  for 
ordinary 
oonincti. 


Alternative  conditions,  at  any  rate  as  to  immediate  im- 
possibility, and  conditions  made  impossible  by  the  defeult 
of  the  parties,  or  otherwise  than  by  the  "  act  of  God,"  are 
treated  in  the  same  way  as  direct  promises. 

"  When  a  condition  becomes  impossible  by  the  act  of  the  oUlgor,  such 
imposribility  forms  no  answer  to  an  action  on  the  bond  "  (o). 

'*  When  the  condition  of  an  obligation  is  to  do  two  things  by  a  day,  and 
at  the  time  of  making  the  obligation  both  of  them  are  poasibley  bnt  after, 
and  before  the  time  when  the  same  are  to  be  done,  one  of  the  things  14 
become  impossible  by  the  act  of  Grod,  or  by  the  sole  act  and  laches  of  the 
obligee  himaelf ;  in  this  ease  the  obligor  is  not  bennd  to  do  the  other  thing 
that  is  possible,  but  is  discharged  of  the  whole  oUigatioD.  Bnt  if  at  the 
time  of  making  of  the  obligation  one  of  the  things  is  and  the  other  of  the 
things  is  not  possible  to  be  done,  he  mnst  perform  that  which  is  possible. 
And  if  in  the  first  case  one  of  the  things  become  impossible  afterwards  by 
the  act  of  the  obligor  or  a  stranger,  the  oUigor  most  see  that  he  do  the 
other  thing  at  his  peril"    If  the  condition  be  that  A.  shall  marry  B.  by 


{k)  Shepp.  Tonohst  872. 

{I)  Bo.  Ab.  1.  449,  G,  pi.  1 ; 
repeated  on  p.  451,  I,  pi.  1. 

(m)  1  Wms.  Sannd.  238;  per 
Williams  J.  Brown  v.  Mayor  of 
London  (1861)  9  C.  B.  N.  S.  726, 


747.  80  L.  J.  C.  P.  226,  230. 

(n)  Beswick  ▼.  SwinddU  (1835) 
Ex.  Ch.  3  A.  ft  E.  868. 

(o)  Per  Cor.  Bewick  y.  SmndilU, 
3  A.  ft  E.  at  p.  883. 


CONDITIONS  IN  BONIXS.  417 

»  d«y»  Mid  before  the  day  the  obligor  hImMlf  doth  marry  her  :  in  ftUi  oaia 
the  oonditkm  ia  broken.  But  if  the  obligee  maixy  her  before  the  day,  the 
obligation  ii  diachaiged  {p). 

"If  a  man  ii  bouid  to  me  in  M,  on  condition  that  he  pay  me  102.,  in 
that  oaae  if  he  tender  me  the  money  end  I  refnie  he  ia  altogether  exeoaed 
from  the  obligation,  bccaoee  the  default  is  on  my  part  who  am  the 
obligee"  (9). 

The  Indian  Contract  Act,  s.  56,  is  so  worded  as  to  extend  bidiaa 
the  rule  in  Taylor  v.  Caldwell  to  every  kind  of  contract. 
This  is  a  wide  and  (it  must  be  assumed)  a  deliberate 
departure  from  the  common  law. 

(p)  Shepp.  Tooohet.    882,    892.         (9)  Brian  C.J.  22  Ed.  IV.  26. 
And  aee  pp.  898*4. 


P.  «K 


(    «8    ) 


CHAPTER  IX 
Mistake. 


Part  I.    Of  Mistake  in  General. 

^iwl^^"'  Hitherto  we  have  been  dealing  with  perfectly  general 
reality  or  conditions  for  the  formation  or  subsistence  of  a  valid  con- 
Jj^^"  ^  tract,  and  as  a  consequence  of  this  the  rules  of  law  we 
have  had  occasion  to  explain  are  for  the  most  part 
collateral  or  even  paramount  to  the  actual  intention  or 
belief  of  the  partiea  Apparent  exceptions  occur,  but 
mostly  in  cases  where  the  rules  are  found  to  be  reducible 
to  rules  of  construction.  We  have  had  before  us,  on  the 
whole,  the  purely  objective  conditions  of  contract;  the 
questions  which  must  be  answered  before  the  law  can  so 
much  as  think  of  giving  effect  to  the  consent  of  the 
parties.  We  now  come  to  a  set  of  conditions  which  by 
comparison  with  the  foregoing  ones  may  be  called  subjec- 
tive. The  consent  of  the  parties  is  now  the  central  point 
of  the  inquiry,  and  our  task  is  to  examine  how  the  legal 
validity  of  an  agreement  is  affected  when  the  consent  or 
apparent  consent  is  determined  by  certain  causes. 

The  existence  of  consent  is  ascertained  in  the  first  in- 
stance by  the  rules  and  principles  set  forth  in  the  first 
chapter.  When  the  requirements  there  stated  are  satisfied 
by  a  proposal  duly  accepted,  there  is  on  the  fiice  of  things 
a  good  agreement,  and  the  mutual  communications  of  the 
parties  are  taken  as  the  expression  of  a  valid  consent.  But 
we  still  require  other  conditions  in  order  to  make  the  con- 
sent binding  on  him  who  gives  it,  although  their  absence 


GENERAL  PRINCIPLES. 


419 


is  in  general  not  to  be  assumed,  and  the  party  seeking  to 
enforce  a  contract  is  not  expected  to  give  affirmative  proof 
that  they  have  been  satisfied.  Not  only  must  there  be 
consent,  but  the  consent  must  be  true,  full,  and  free. 

The  reality  and  completeness  of  consent  maybe  affected  (a) 
by  ignorance,  that  is,  by  wrong  belief  or  mere  absence 
of  information  or  belief  as  to  some  fact  material  to  the 
agreement.  Freedom  of  consent  may  be  aflFected  by  fear 
or  by  the  consenting  party  being,  though  not  in  bodily  or 
immediate  fear,  yet  so  much  under  the  other's  power,  or  in 
dependence  on  him,  as  not  to  be  in  a  position  to  exercise 
his  own  deliberate  choice.  Now  the  results  are  different 
according  as  these  states  of  mind  are  or  are  not  due  to  the 
conduct  of  the  other  party  (or,  in  certain  cases,  to  a 
relation  between  the  parties  independent  of  the  particular 
occasion).  When  they  are  so,  the  legal  aspect  of  the  case 
is  altogether  changed,  and  we  look  to  that  other  party's 
conduct  or  position  rather  than  to  the  state  of  mind  in- 
duced by  it.  We  speak  not  of  Mistake  induced  by  Fraud, 
but  of  Fraud  simply,  as  a  ground  for  avoiding  contracts, 
though  there  can  be  no  Fraud  where  there  is  no  Mistake. 
We  have  then  the  following  combinations : 

A.  Ignorance, 

A.  Not  catued  by  aot  (h)  of  other  ptrty,  fa  re- 

ferred in  law  to  the  head  of 
Canied  by  act  (()  of  other  party 

B.  withoQt  wroDgfnl  intention, 
a  with  wrongful  intention. 


Mittale. 


Classifica* 
tion  and 
legal  oon- 
seqnenoea 

Fraud,  Fraud,  Ac 


B.  Peaff  or  dependence  excUidung  freedom  of  action. 
Not  canaed  by  acts  of  other  party  or  relation 
between  the  partiei.  (Immaterial). 

D.  Oaneed  by  snch  acta.  Durete  or  Ooereion 

B.  By  rach  relation.  Undue  vnfuenee. 


(a)  It  fa  qoite  wrong,  as  Savigny 
baa  shown,  to  Pay  that  a  oonsent 
determined  by  mistake,  frand,  or 
ooereion  is  no  consent.  Syst.  §§114, 
115  (8.  98  sqq.).  If  it  were  so  the 
agreement  would  be  abeolntely  void 
in  all  cases  :  »  reducHo  ad  (Umirdum 
which  is  ro  Iops  complete  for  Englfah 


than  for  Roman  law.  See  per  Lord 
Granworth,  Boyee  ▼.  Bossborough 
(1856-7)  6  H.  L.  C.  at  p.  44,  and 
per  Lord  Chelmsford,  Oakes  ▼. 
Turquand  (1867)  L.  R.  2  H.  L.  at 
p.  849. 

(6)  It  will  be  seen  hereafter  that 
omissions  are  equivalent  to  aots  for 

£  E  2 


420  MISTAKK 

The  legal  consequences  of  these  states  of  things  are 
exceedingly  various. 

A.  Mistake  does  not  of  ifsdf  affect  the  validity  of  con- 
tracts at  all  (c).  But  mistake  may  be  such  as  to  prevent 
any  real  agreement  from  being  formed ;  in  i^hich  case  the 
agreement  is  void:  or  mistake  may  occur  in  the  ex- 
pression of  a  real  agreement ;  in  which  case,  subject  to 
rules  of  evidence,  the  mistake  can  be  rectified.  There 
are  also  rules  in  the  construction  of  certain  species  of 
contracts  which  are  founded  on  the  assumption  that 
the  expressions  used  do  not  correspond  to  the  real  inten- 
tion {d), 

B.  Contracts  induced  by  misrepresentation  are  not  void. 
In  many  cases,  and  under  conditions  depending  on  the 
nature  of  the  contract,  they  are  voidable  at  the  option  of 
the  party  misled 

c.  Contracts  induced  by  firaud  are  not  void,  but  voidable 
at  the  option  of  the  party  deceived. 

D,  E.  Contracts  entered  into  under  coercion  or  xmdue 
influence  are  not  void,  but  voidable  at  thfe  option  of  the 
party  on  whom  coercion  or  undue  influence  is  exercised. 

In  almost  every  branch  of  the  subject  there  have  been 
differences  between  the  doctrines  of  the  common  law  and 
those  of  equity ;  the  real  extent  of  these  differences,  how- 
ever, is  often  &r  bom  easy  to  ascertain. 

These  topics  have  now  to  be  considered  in  order.  And 
first  of  Mistake. 

Mfatakes  The  whole  topic  is  surrounded  with  a  great  deal  of  con- 
^^j^  fiision  in  our  books,  though  on  the  whole  of  a  verbal  kind, 
^obSoub  and  more  embarrassing  to  students  than  to  practitioner& 
Sjj^'JJJ^  Exactly  the  same  kind  of  confizsion  prevailed  in  the  civil 
i®^  law  (whence  indeed  some  of  it  has  passed  on  to  our  own) 

until  Savigny  cleared  it  up  in  the  masterly  essay  which 

thlB  pQxpoea  In  oartein  exceptional  immateriaL   As  Fear  !•  to  Coercion, 

caaei.  so  is  Mlatake  to  Fraud.    Say.  Syat. 

(c)  Jnat  as  fear,  merely  as  a  atate  9. 116. 

of  mind  ia  the  pwty,  is  In  itself  ((Q  P.  245,  above. 


QENERAX  PKIHCIPLES.  4^1 

forms  the  Appendix  to  the  third  volume  of  his  System 
The  principles  there  established  by  him  have  been  ftilly 
adopted  by  later  writers  (e),  and  appear  to  be  in  the  main 
applicable  to  the  law  of  England. 

The  difficulties  which  have  arisen  as  well  with  us  as  in 
the  civil  law  may  be  accounted  for  under  the  following 
heads: 

(1.)  Confusion  of  proximate  with  remote  causes  of  legal 
consequences  :  in  other  words,  of  cases  where  mistake  has 
legal  results  of  its  own  with  cases  where  it  determines  the 
presence  of  some  other  condition  from  which  legal  results 
follow,  or  the  absence  of  some  other  condition  from  which 
legal  results  would  follow,  or  even  where  it  is  absolutely 
irrelevant. 

(2.)  The  assertion  of  propositions  as  general  rules  which 
ought  to  be  taken  with  reference  only  to  particular  effects 
of  mistake  in  particular  classes  of  cases.  Such  are  the 
maxim  Non  videifUur  qui  erra/nt  conaerUire  and  other 
similar  expressions,  and  to  some  extent  the  distinction 
between  ignorance  of  fact  and  of  law  (/). 

(3.)  Omission  to  assign  an  exact  meaning  to  the  term 
"  ignorance  of  law  "  in  those  cases  where  the  distinction 
between  ignorance  of  law  and  ignorance  of  fact  is  material 
(the  true  rule,  affirmed  for  the  Roman  law  by  Savigny, 
and  in  a  slightly  different  form  for  English  law  by  Lord 
Westbury  (g),  being  that  "  ignorance  of  law  "  means  only 
ignorance  of  a  generaX  rule  of  law,  not  ignorance  of  a  right 
depending  on  questions  of  mixed  law  and  £gtct,  or  on  the 
true  construction  of  a  particular  instrument). 

It  is  needless  to  point  out  in  detail  how  these  influences 
have  operated  on  our  books  and  even  on  judicial  expres- 

(e)  Some  of  his  oonjectoral  deal-  B.  ac  P.  L  If.  c.  11,  6.    'De  paoio 

Ings  with  epedfic  anomaliee  in  the  errantis  perplex*  aatis  traetatio  eat.' 
Romaa  texta  are  »t  least  daring,         (/)  See  Sayigny's  Appendix,  Noe. 

but  this  doMi  not  oonoeni  Bnglish  VII.,  VUI.  Syst  3.  842,  ZiL 
stadents^       Yangerow    gi^es    the         {a)  Cooper  y.  PhUibB  (1867)  L.  B. 

general  doctrine  (Pand.  §  88, 1. 116  2  H.  L.  at  p.  170  :  to  whioh  the 

■qq.)  and  its  special  application  to  dicta   in  the    later   ca^  of    EaH 

contract  (t&.  §  604,  8.  275)  in  a  BeaucKamp  v.  Winn  (1878)  L.  R.  6 

compact  and  nsefal  form.    For  the  H.   L.    228,  really  add    little    or 

old  diflBcnltlss  op,  Grotias  De  lore  nothing. 


i22  kISTAK£. 

fiions  of  the  law.  We  rather  proceed  to  deal  with  the 
matter  affirmatively  on  that  which  appears  to  us  its  true 
footing. 

A.  Geiiflni     A.  Mistake  in  general. 

MisUke  cm     "^^^  general  rule  of  private  law  is  that  mistake  as  stick 
meh  in-      has  no  legal  effects  at  alL    This  may  be  more  definitely 
expressed  as  follows : 

When  an  act  is  done  under  a  mistake,  the  mistake  does 

not  either  add  anything  to  or  take  away  anjrthing  firom  the 

legal  consequences  of  that  act  either  as  regards  any  right 

of  other  persons  or  any  liability  of  the  person  doing  it,  nor 

does  it  produce  any  special  consequences  of  its  own ; 

except  Unless  knowledge  of  something  which  the  mistake  pre- 

J/^JJ^e^  vents  from  being    known,   or   an    intention    necessarily 

iwture  of    depending  on  such  knowledge,  be  bom  the  nature  of  the 

knowledge  particular  act  a  condition  precedent  to  the  arising  of  some 

%^^^'    right  or  duty  under  it. 

pieoedent  Special  exceptions  to  the  rule  exist,  but  even  these  are 
conSr  founded  on  special  reasons  beside,  though  connected  with, 
qoenoee.     the  mistake  itsel£ 

There  are  abundant  examples  to  show  the  truth  of  this 

proposition  in  both  its  branches. 

As  to  the       First,  mistake  is  in  general  inoperative  as  to  the  legal 

thepwBon  position  or  liability  of  the  party  doing  an  act.     We  must 

•<*ting        premise  that  a  large  class  of  cases  is  altogether  outside  this 

mistake,     question,  as  appears  by  the  qualification  with  which  the 

rule  has  just  been  stated ;  those,  namely,  where  a  liability 

attaches  not  to  the  doing  of  an  act  in  itself,  but  to  the 

doing  of  it  knowvngly.    There,  if  the  act  is  done  without 

knowledge,  the  offence  or  wrong  is  not  committed,  and  no 

liability  arises.     It  is  not  that  ignorance  is  an  excuse  for 

the  wrongful  act,  but  that  there  is  no  wrongful  act  at 

all  (A). 

(A)  The  wider  question  how  far  Digest  of  Criminal  Law,  Art  84, 

and  under  what  conditions  ignoianoe  Reg,  v.  Prinu  (1875)  L.  B.  2  C.  C. 

of  fact  excludes  criminal  liability  is  R  164,  44  L.  J.  M.  G.  122  ;  and 

beyond  the  scope  of  this  work,  and  consult  O.  W.  Holmes,  The  Common 

too  important  to  be  discussed  iod-  Law,  pp.  49  sqq. 
dentally.      See   thereon    Stephen's 


IGNORANCE  NO  EXCUSE.  423 

It  is  certain  that  ignorance  is  as  a  rule  no  excuse  as  Wrongful 
regards  either  the  UabiKties  of  a  quasi-criminal  kind  which  JJ^^^oe 
arise  under  penal  statutes  (i)  or  such  as  are  purely  civil.  ^  genenl 
Thus  ignorance  of  the  real  ownership  of  property  is  no  '^ 
defence  to  an  action  for  its  recovery,  except  for  carriers  and 
a  few  other  classes  of  persons  exerdsing  public  employ- 
ments of  a  like  nature,  who  by  the  necessity  of  the  case 
are  specially  privileged  (j).  Again,  railway  companies  and 
other  employers  have  in  many  cases  been  held  liable  for 
acts  of  their  servants  done  as  in  the  exercise  of  their 
regular  employment,  and  without  any  unlawful  intention, 
but  in  truth  imlawfiil  by  reason  of  a  mistake  on  the  part 
of  the  servant :  the  act  being  one  which,  if  the  state  of 
circumstances  supposed  by  him  did  exist,  would  be  within 
the  scope  of  his  lawful  authority  (k).  Of  course  the 
servant  himself  is  equally  liable.  Here,  indeed,  it  looks 
at  first  sight  as  if  the  mistake  gave  rise  to  the  employer's 
liability.  For  the  act,  if  done  with  knowledge  of  the  facts, 
and  so  merely  wrongful  in  intention  as  well  as  in  effect, 
would  no  more  charge  the  employer  than  if  done  by  a 
stranger.  But  it  is  not  that  mistake  has  any  special  effect, 
but  that  knowledge,  where  it  exists,  takes  the  thing  done 
out  of  the  class  of  authorized  acta  The  servant  who 
commits  a  wilful  and  gratuitous  (I)  wrong  (or  goes  out  of 
his  way  to  do  something  which  if  the  facts  were  as  he 
thought  might  be  lawful  or  even  laudable,  but  which 

(i)  That    ignoranoo    cannot    be  Swindon  Local  Board  (1874)  L.  R. 

pleaded  in  dieoharge  of  statatory  9  O.  P.  676,  43  L.  J.  C.  P.  675  (em. 

penaltiee,   see    Carter   ▼.  McLaren  ployer  not  liable).    See  further  on  . 

(1871)  L.  R.  2  Sa  ft  D.  126-6.  the  prindpleB  governing  this  daes 

ij)  Fowler  ▼.  BoOine  (1872)  Ex.  of  oaeee,  Bank  of  Niw  South  Walee 

Ch.,  L.  R.  7  Q.  B.  616,  affd.  In  H.  ▼.  Owtton  (1879)  (J.  C),  4  App.  Ca. 

L.  nowk  HoUim  v.  Fowter  (1874-6)  270,  48  L.  J.  P.  C.  26. 
L.  B.  7  H.  L.  767.  (t)  A  wilful  treepaBs  which  ia  not 

(k)  See  the  distinction  explained  gratnitouB,  but  done  in  the  course 

and  illustrated  by  PouUon  f,  L.AS,  of  employment  and  for  the  master's 

W,  R.  Co.  (1867)  L,  R.  2  Q.  K  684,  intended  beneSt,  though  without  or 

36  L.  J.  (^  B.  294,  and  sevetal  later  against  orders,  ma^  mi&e  the  master 

cases  :  the  last  are  Bayley  v.  Man"  liable  :    at  in    Limput  ▼.    London 

ehetter,  Ac  Ry.  Co.  (1872)  Ex.  Ch.  General  Omnibus   Co.    (1862)   (Ex. 

L.  R.  8  C.  P.  148,  42  L.  J.  0.  P.  78  Ch.),  1  H.  ft  C.  526,  32  L.  J.  Ex.  34. 
(employer  liable) ;   Boling^Mroke  ▼. 


424  MISTAKE. 

he  has  no  charge  to  do)  is  no  longer  about  his  master's 
business. 
Ezoep-  Real  exceptions  are  the  following : — ^An  officer  of  a  court 

f^(M*      ^^^  ^^  quasi-judicial  duties  to  perform,  such  as  those 
prooeai,'     of  a  trustee  in  bankruptcy,  is  not  personally  answerable 
limitad.      ^^^  money  padd  by  him  under  an  excusable  misappre- 
hension of  the  law  (m).     Also  an  officer  who  in  a  merely 
ministerial  capacity  executes  a  process  apparently  regular, 
and  in  some  cases  a  person  who  pays  money  under  com- 
pulsion of  such  process,  not  knowing  the  want  of  jurisdic- 
tion, is  protected,  as  it  is  but  reasonable  that  he  should 
be  (n).     But  this  special  exception  is  confined  within 
narrow  bounda     Mistake  as  to  extraneous  facts,  such  as 
the  legal  character  of  persons  or  the  ownership  of  goods, 
is  no  excuse.    It  is  "a  well  established  rule  of  law  that  if 
by  process  the  sheriff  is  desired  to  seize  the  goods  of  A., 
and  he  takes  those  of  B.,  he  is  liable  to  be  sued  in  trover 
for  them  "   (o).    A  sheriff  seized  under  a  Ji.  fa,  goods 
supposed  to  belong  to  the  debtor  by  marital  right.     After- 
wards the  supposed  wife  discovered  that  when  she  went 
through  the  ceremony  of  marriage  the  man  had  another 
wife  living  :  consequently  she  was  still  the  sole  owner  of 
the  goods  when  they  were  seized.     Thereupon  she  brought 
trover  against  the  sheriff,  and  he  was  held  liable,  though 
possibly  the  plaintiff  might  have  been  estopped  if  she  had 
asserted  at  the  time  that  she  was  the  wife  of  the  person 
against  whom  the  writ  issued  (p). 
Igaoranoe      There  are  certain  classes  of  cases  in  which  it  may  be  said 
cL^oon-  *^*^  mistake,  or  at  any  rate  ignorance,  is  the  condition  of 
dition  of    acquiring  legal  or  equitable  rights.     These  are  the  excep- 
righte :       tional  cases  in  which  an  apparent  owner  having  a  defective 
(purohaae  title,  or  even  no  title,  can  give  to  a  purchaser  a  better  right 
without     than  he  has  himself,  and  which  &11  partly  imder  the  rules 


Dotioe). 


(m)  Bx  parte  OgU  (187  j$)  8  Gb.  wmU  v.  Y(Amg  (1829)  9  B.  &  C.  696, 

711,  42  L.  J.  Bk.  99.  700  $  cp.  ChHand  v.  (Jarme  (1887) 

(n)   See  Mayor  of  London  y.  Ooz  4  CI.  ft  F.  693. 

(1866)  L  B.  2  H.  L.  at  p.  269,  86  (p)  GUuspooU   v.    Young  (1829) 

L.  J.  Ex.  225.  9  B.  ft  G.  696,  701. 

(o)  Lord  Tenterden  G.J.    Glau- 


IGNORANGfl  AS  CONDITION  OF  TITLE.  i25 

of  law  touching  market  overt  and  the  transfer  of  negotiable 
instruments,  partly  under  the  rule  of  equity  that  the  pur- 
chase for  valuable  consideration  without  notice  of  any  legal 
estate,  right,  or  advantage  is  "an  absolute,  unqualified,  un- 
answerable defence"  (q)  against  any  claim  to  restrict  the 
exercise  or  enjoyment  of  the  legal  rights  so  acquired  (r). 
These  rules  depend  on  special  reasons.  The  two  former 
introduce  a  positive  exception  to  the  ordinary  principles  of 
legal  ownership,  for  the  protection  of  purchasers  and  the 
convenience  of  trade  (a).  It  is  natural  and  necessary  that 
such  anomalous  privileges  should  be  conferred  only  on 
purchasers  in  good  £sdth.  Now  good  ftith  on  the  purchaser's 
part  presupposes  ignorance  of  the  facts  which  negative  the 
vendor  s  apparent  title.  It  may  be  doubted  on  principle, 
indeed,  whether  this  ignorance  should  not  be  iGree  firom 
negligence  (in  other  words,  accompanied  with  "good  fiuth" 
in  the  sense  of  the  Indian  Codes),  in  order  to  entitle  him. 
For  some  time  this  was  so  held  in  the  case  of  negotiable 
instruments,  but  is  so  no  longer  (t).  The  rule  of  equity, 
though  in  some  sort  analogous  to  this,  is  not  precisely  so. 
A.  transfers  legal  ownership  to  B.  a  purchaser  for  value,  by 
an  act  effectual  for  that  purpose.  If  in  A.'s  hands  the 
legal  ownership  is  fettered  by  an  equitable  obligation 
restraining  him  wholly  or  partially  from  the  beneficial 
enjoyment  of  it,  this  sdone  will  not  impose  any  restriction 
upon  B.  For  all  equitable  rights  and  duties  are  in  their 
origin  and  proper  nature,  not  in  rem  but  in  peraona/m: 
they  confer  obUgcUionea  not  daminia.    But  if  B.  (by  him- 

{o)  PUeher   ▼.    Rawlini     (1872)  eqidty  concorrently  with  oourto  of 

7  Gh.  269,  269,  il  L.  J.  Oh.  485,  Uw.    Per  Lord  Westbory,  PkOUpi 

per  James  L.   J. ;    Blackwood  ▼.  v.  PhiUvps  (1861)  4  D.  F.  J.  208,  81 

London  Chartered  Bank  o/Atu^ralia  L.  J.  Ch.  821. 

(1874)  L.  ^  6  P.  C.  92,  111,  43  L.  («)  As  to  market  oyerfc  the  policy 

J.  P.  0.  25.  of  the  role  seems  an  open  question. 

(r)  This  applies  not  only  toptuely  The  Indian  Contract  Aot  contains 

eqnitahle  dauns  birt  to  all  ptirely  no  each  proyirion  (see  s.  108),  while 

etinitalde  rennedies  incident  to  legal  on  the  other  hand  the  Qerman  Com- 

rights.    Bat  it  does  not  apply  to  merdal  Code  (s.  806)  extends  it  to 

tMe  remedies  for  the  enforcement  aU  sales  made  by  a  trader  in  the 

of  legal  rights  which  in  a  few  cases  course  of  his  bosiness. 

have  been  administered  by  courts  of  (<)  See  Chapter  V.,  p.  218,  above. 


426 


MISTAKE. 


self  or  his  agent)  knows  of  the  equitable  liability,  or  if  the 
circumstances  are  such  that  with  reasonable  diligence  he 
would  know  it,  then  he  makes  himself,  actively  by  know- 
ledge, or  passively  by  negligent  ignorance,  a  party  to  A-'s 
breach  of  duty.  In  such  case  he  cannot  rely  on  the  legal 
right  derived  from  A.,  and  disclaim  the  equitable  liability 
which  he  knew  or  ought  to  have  known  to  attach  to  it : 
and  the  equitable  claim  is  no  less  enforceable  against  him 
than  it  formerly  was  against  A.  To  be  accurate,  therefore, 
we  should  say  not  that  an  exception  against  equitable  claims 
is  introduced  in  fEkvour  of  innocent  purchasers,  but  that  the 
scope  of  equitable  cledms  is  extended  against  purchasers 
who  are  not  innocent ;  not  that  ignorance  is  a  condition  of 
acquiring  rights,  but  that  knowledge  (or  means  of  know- 
ledge treated  as  equivalent  to  actual  knowledge)  is  a 
condition  of  being  laden  with  duties  which,  as  the  lan- 
guage of  equity  has  it,  affect  the  conscience  of  the 
party  (u). 
Limito  Even  here  the  force  and  generality  of  the  main  rule  is 

ezoep-  shown  by  the  limits  set  to  the  exceptions.  The  purchaser 
!!*!^  ^^  ^^y  ^^^^^  ^S^^  ^^^  value  and  without  notice  is  to  that 
extent  absolutely  protected.  But  the  purchaser  of  an 
equitable  interest,  or  of  a  supposed  legal  right  which  turns 
out  to  be  only  equitable,  must  yield  to  all  prior  equitable 
rights  (x),  however  blameless  or  even  unavoidable  his 
mistake  may  have  been.  Again,  no  amount  of  negligence 
will  vitiate  the  title  of  a  bona  fde  holder  of  a  negotiable 
instrument,  but  not  the  most  innocent  mistake  will  enable 
him  to  make  title  through  a  forged  indorsement.  Where 
a  bill  was  drawn  payable  to  the  order  of  one  H.  Davis  and 

(t»)  Observe  that  on  the  point  of  poneanon  of  title  deecU  :  Heath  v. 

negligence  the  rule  of  equity  diffen  Crealock  (1874)  10  Ch.  22,  44  I*  J. 

from  the  roles  of  law  :  though,  as  Oh.  167  ;  Waldy  v.  Qrmy  (1876)  -20 

the  subject-matter  of  the  rules  is  £q.  238,  44  L.  J.  Ch.  394;  but  now 

difFerent,  there  is  no  actual  conflict.  that  the  Court  can  adminiiter  both 

(»)  PhUUpt  V.  PhiUipi  (1861)  4  legal   and   equitable   remedies   in 

D.  F.  J.  208,  81  L.  J.  Ch.  821.    A  every  case  this  rule  has  lost    its 

court  of  equity  would  not  deprive  a  practical  importance :  Choperv,  Vuey 

purchaser  for  value  without  notice  (1882)  20  Ch.  Div.  611,  682,  61  L. 

.of  anything  he  had  actually  got^  eg,  J.  Ch.  862. 


rights. 


WHEN   INOPERATIVE.  427 

indoised  by  another  HI  Davis,  it  was  held  that  a  person 
who  innocently  discounted  it  on  the  faith  of  this  indorse- 
ment had  no  title  (y).  It  might  also  be  said  that  where 
tacit  assent  or  acquiescence  is  in  question,  there  ignorance 
is  in  like  manner  a  condition  of  not  losing  one's  rights. 
But  this  is  not  properly  so.  For  it  is  not  that  ignorance 
avoids  the  effect  of  acquiescence,  but  that  there  can  be  no 
acquiescence  without  knowledge.  It  is  like  the  case  where 
knowledge  or  intention  must  be  present  to  constitute  an 
offence.  In  this  sense  and  for  this  purpose  "nulla  voluntas 
errantis  est "  (0). 

The  same  principles  hold  in  cases  more  directly  con-  Applica- 
nected  with  the  subject  of  this  work.     A  railway  company  **^n^^l**^* 
carries  an  inflEmt  above  the  age  of  three  years  without  rale  in 


taking  any  fare,  the  clerk  assuming  him  to  be  under  that  ^^^^ 
age,  and  there  being  no  fraud  on  the  part  of  the  person  in 
whose  care  he  travels ;  the  mistake  does  not  exclude  the 
usual  duty  on  the  company's  part  to  carry  him  safely  (a). 
A  person  who  does  not  correctly  know  the  nature  of  his 
interest  in  a  fund  disposes  of  it  to  a  purchaser  for  value 
who  has  no  greater  knowledge  and  deals  with  him  in  good 
ftith ;  if  he  afterwards  discovers  that  his  interest  was  in 
truth  greater  and  more  valuable  than  he  supposed  it  to 
be,  he  cannot  claim  to  have  the  transaction  set  aside  on 
the  ground  of  this  mistake  (6).  This,  however,  is  to  be 
taken  with  caution,  for  it  applies  only  to  cases  where  the 
real  intention  is  to  deal  with  the  party's  interest,  whatever 
it  may  be.      The  result  would  be  quite  different  if  the 

(y)  dfead  v.  Yovng  (1790)  4  T.  to  a  puticiiUur  boriness  or  under- 

S.  28.  taking,  soch  aa  waa  the  groond  of 

(z)  D.  89.  8.  de  aqoa  plnv.  20.  the  action  of  atsumpsU  in  its  original 

(a)  Auitin  ▼.  0,  W.  R  Co.  (1869)  form.    See  judgment  of  Blaokbnm 

L.  S.  2  Q.  B.  442,  86  L.  J.  Q.  K  J.  and  op.  the  remarks  of  Grore  J. 

201.      The  mother  of  the  infant  in  FouUtet  v.  MetropolUan  Dittrkt 

plaintijS  took  only  one  ticket  for  Ry,  Co,  (1880)  A  C.  P.  D.  at  p.  279, 

herself ;  it  seems  that  the  contract  49  L.  J.  G.  P.  861,    Bigelow  L.G. 

operated  in  favour  of  both  (Lush  J.  on  Law  of  Torts,  615,  and  the  pre 

at  p.  447).    Bat  the  case  is  really  sent  writer's  '*Law  of  Torts,"  486, 

one  of  those  on  the  border-line  of  440. 

contract  and  tort,  where  the  breach  (6)  MarAaU  ▼.  CcUeU  (1885)  1  Y. 

is  not  so  much  of  a  contrsctoaldaty  k  C.  Ex.  282. 
as  of  a  general  daty  annexed  by  law 


428  MISTAKE. 

intention  of  both  parties  were  to  deal  with  it  only  on  the 
implied  condition  that  the  state  of  things  is  not  otherwise 
than  it  is  supposed  to  be,  as  we  shall  find  under  the  head 
of  Fundamental  Error. 

So  £Eir,  then,  mistake  as  such  does  not  improve  the 
position  of  the  party  doing  a  mistaken  act.  Neither  does 
it  as  a  rule  make  it  any  worse.  A  mistaken  demand  which 
produces  no  result  does  not  affect  a  plaintiff's  right  to  make 
the  proper  demand  afterwards.  Where  B.  holds  money  as 
A.'b  agent  to  pay  it  to  C,  and  appropriates  it  to  his  own 
use,  C.  may  recover  from  A-  notwithstanding  a  previous 
mistaken  demand  on  B.'s  estate,  made  on  the  assumption 
that  B.  would  be  treated  as  C.'s  own  agent  (c).  Nor  does 
a  mistaken  repudiation  of  ownership  prevent  the  true  owner 
of  goods  frt)m  recovering  damages  afterwards  for  injury 
done  to  them  by  the  negligence  of  a  bailee,  whose  duty  it 
was  to  hold  them  for  the  true  owner  at  all  events  (d).  This 
is  independent  of  and  quite  consistent  with  the  rule  that  a 
party  who  has  wholly  mistaken  his  remedy  cannot  be 
allowed  to  proceed  by  way  of  amendment  vn  the  sa/me 
action  in  an  entirely  different  form  and  on  questions  of  a 
different  character  (e). 

Aa  to  Next,  mistake  does  not  in  general  alter  existing  rights. 

^J^l  The  presence  of  mistake  will  not  make  an  act  effectual 
«^«r  which  is  otherwise  ineffectual.  Many  cases  which  at  first 
sight  look  like  cases  of  relief  against  mistake  belong  in 
truth  to  this  class,  the  act  being  such  that  for  reasons 
independent  of  the  mistake  it  is  inoperative.  Thus  a 
trustee's  payment  over  of  rents  and  profits  to  a  wrong 
person,  whether  made  wilfully  and  fraudulently,  or  igno- 
rantly  and  in  good  £Edth,  cannot  alter  the  character  of  the 


(c)  Hardy  y.  Metropolitan  Land  A  thire  Ry,  Co,  (1876)  L.  R  10  Q.  B. 

Pmance  Oo,  (1872)  7  Ch.  427,  488,  256,  261,  44  L.  J.  Q.  B.  107. 
41  L.  J.  Ch.  257.     Op.  Vwigerow,  (e)  Jacobs  ▼.  Seu>ard  (1872)  L.  B. 

Pand.  1.  118.  5  H.  L.  464,  41  L.  J.  C.  P.  221. 


penoni. 


{d)  MUchea  T.LaneaMrtdt  York- 


WHEN  INOPERATIVE.  429 

trustee's  possession  (/).  Where  the  carrier  of  goods  after 
receiving  notice  from  an  unpaid  vendor  to  stop  them 
nevertheless  delivers  them  by  mistake  to  the  buyer,  this 
does  not  defeat  the  vendor's  rights :  for  the  right  of 
possession  (g)  revests  in  the  vendor  from  the  date  of  the 
notice,  if  given  at  such  a  time  and  under  such  circum- 
stances that  the  delivery  can  and  ought  to  be  prevented  (A), 
and  the  subsequent  mistaken  delivery  has  not,  as  an 
intentional  wrongful  delivery  would  not  have,  any  power 
to  alter  it  (i).  Again,  by  the  rules  of  the  French  Post 
Office  the  sender  of  a  letter  can  reclaim  it  after  it  is  posted 
and  before  the  despatch  of  the  mail.  C,  a  banker  at 
Lyons,  posted  a  letter  containing  bills  of  exchange  on 
England  indorsed  to  D.,  an  English  correspondent.  These 
were  in  return  for  a  bill  on  Milan  sent  by  D.  to  0.  Before 
the  despatch  of  the  mail,  learning  from  D.'s  agent  at  Lyons 
that  the  bill  on  Milan  would  not  be  accepted  and  D. 
desired  that  no  remittance  should  be  made,  C.  sent  to  the 
post-office  to  stop  the  letter.  It  was  put  aside  from  the 
rest  of  the  mail,  but  by  a  mistake  of  C.'s  clerk  in  not 
completing  the  proper  forms  it  was  despatched  in  the 
ordinary  course.  It  was  held  that  there  was  no  effectual 
delivery  of  the  bills  to  D.  and  that  the  property  remained 
in  C.  The  mistake  of  the  clerk  could  not  take  "the  effect 
of  making  the  property  in  the  bills  pass  contrary  to  the 
intention  of  both  indorser  and  indorsee"  Qc).  Had  not  the 
revocation  been  at  the  indorsee's  request,  then  indeed  the 
ailment  would  probably  have  been  correct  that  it  was  a 
mere  uncompleted  intention  on  C.'s  part :  for  bjb  between 
0.  and  the  post-office  everything  had  not  been  done  to  put 


(/)  lAUer  ▼.  Pfdtford  (1865)  84  840,  36  L.  J.  Ch.  861. 

Beav.  576,  582.  (A)  WhUehead  y,  Anderton  (\%it) 

{g)  The  book  hui  property;  bat  9  M.  &  W.  518,  11  L.  J.  Ex.  157  ; 

the  word  mtui  here,  as  often,  mean  Blackburn  on  Oont  of  Sale,  269, 

only  right  to  poaesB.     It  is  now  2nd  ed.  by  Graham,  884. 

general^   held   that   stoppage   in  (i)  LiU  ▼.  OawUg  (1816)  7  Taoat 

traruitu  does  not  retoind  the  con*  169. 

tract :  Schottmant  v.  Laneathire  ds  {k)  SxparU  Odie  (1878)  9  Gh.  27, 

Yarkthire.  Ry,  Po.  (1867)  2  Gb.  882,  82,  48  L.  J.  6k.  19. 


430 


MISTAKE. 


Subse- 
qnent 
oondnct  of 
parties 
fonnded 
on  mjw« 
taken  oon- 
Btraction 
does  not 
alter  the 
contract: 


an  end  to  the  authority  of  the  poet-oflBce  to  forward  the 
letter  in  the  regular  course  of  post. 

ATideraon'a  case  (!)  may  possibly  be  supported  on  a 
similar  ground.  It  was  there  held  that  a  transfer  of  shares 
sanctioned  by  the  directors  and  registered  in  ignorance 
that  calls  were  due  fix>m  the  transferor  might  afterwards 
be  cancelled,  even  by  an  officer  of  the  company  without 
authority  from  the  directors,  on  the  facts  being  discovered. 
It  may  be  that  the  directors'  assent  to  the  transfer  is  not 
irrevocable  (apart  fix)m  the  question  of  mistake)  until  the 
parties  have  acted  upon  it. 

Again,  the  legal  effect  of  a  transaction  cannot  be  altered 
by  the  subsequent  conduct  of  the  parties :  and  it  makes  no 
difference  if  that  conduct  is  founded  on  a  misapprehension 
of  the  original  legal  effect.  A  man  who  acts  on  a  wrong 
construction  of  his  own  duties  under  a  contract  he  has 
entered  into  does  not  thereby  entitle  himself,  though  the 
acts  so  done  be  for  the  benefit  of  the  other  party,  to  have 
the  contract  performed  by  the  other  according  to  the  same 
construction  (m).  This  decision  was  put  to  some  extent 
upon  the  ground  that  relief  cannot  be  given  against 
mistakes  of  law.  But  it  is  submitted  that  this  is  not  a 
case  where  the  distinction  is  really  material  Suppose  the 
party  had  not  construed  the  contract  wrongly,  but  acted  on 
an  erroneous  recollection  of  its  actual  contents,  the  mistake 
would  then  have  been  one  of  fiwit,  but  it  is  obvious  that  the 
decision  must  have  been  the  same.  Still  less  can  a  party 
to  a  contract  resist  the  performance  of  it  merely  on  the 
ground  that  he  misunderstood   its   legal   effect   at   the 


(0  (1869)  8  Eq.  509.  Sed  qu.  Lord 
Justice  Lindley,  who  was  himself 
couDsel  in  the  case,  dtes  it  (on  Com- 
panies, 829)  with  thematerial  qualifi- 
cation, **  if  the  transferee  does  not 
object."  The  case  is  remarkable 
for  the  dictum  (which  ought  never 
to  have  been  reported)  that  ^  fraud 
or  mit>take,  either  of  them,  is  enough 
to  vitiate  anv  trantaeUan.** 


{m)  Midland  O.  W.  Ry,  of  Ireland 
V.  Johnton  (1858)  6  H.  L.  G.  798, 
811,  per  Lord  Chelmsford.  On  the 
other  hand,  one  who  takes  a  wider 
view  of  his  rights  under  a  contract 
than  the  other  party  will  admit,  is 
free  to  waive  that  dispute  and  en- 
force the  contract  to  the  extent 
which  the  other  does  admit:  Ptettcn 
v.  Luck  (1884)  27  Ch.  Div,  497. 


OF  CONSTRUCTION.  431 

time  (n).  Every  party  to  &n  instrument  has  a  right  to 
assume  that  the  others  intend  it  to  operate  according  to 
the  proper  sense  of  its  actual  expressions  (o). 

It  must  be  remembered,  however,  that  where  both  parties  nnlcw 
have  acted  on  a  particular  construction  of  an  ambiguous  ^^  j^j^^ 
document,  that  construction,  if  in  itself  admissible,  will  be  nuatake  it 
adopted  by  the  Court  (p).    To  this  extent  its  original  amount  to 
eflfect,  though  it  cannot  be  altered,  may  be  explmned  by  J*^^J^ 
the  conduct  of  the  parties.     And  moreover,  if  both  parties  oonMnt 
to  a  contract  act  on  a  common  mistake  as  to  the  construc- 
tion of  it,  this  may  amount  to  a  variation  of  the  contract 
by  mutual  consent  (q).    This  is  in  truth  another  illus- 
tration of  the  leading  principle.     Here  their  conduct  in 
performing  the  contract  with  variations  would  show,  an 
intention  to  vary  it  if  the  true  construction  were  present 
to  their  minda    And  it  might  be  said  that  they  cannot 
mean  to  vary  their  contract  if  they  do  not  know  what  it 
really  is.     But  the  answer  is  that  their  true  meaning  is  to 
perform  the  contract  at  all  events  according  to  their 
present  understanding  of  it,  and  thus  the  mistake  is  im- 
material.  Practically  such  a  mistake  is  likely  to  represent  a 
real  original  intention  incorrectly  expressed  in  the  contract : 
so  that  principle  and  convenience  agree  in  the  result. 

We  may  also  mention  that  there  is  no  jurisdiction  to  set  Mistakes 
aside  an  award,  or  refer  it  back  to  the  arbitrator,    on*°*'^*^ 
the  ground  of  a  mistake  in  fact  or  law,  unless  the  arbi- 
trator admits  the  mistake  and  desires  the  assistance  of  the 


(n)  P(ywtU  r.  SmUh  (1872)  14  Eq.  (1874)  9  Ch.  886,  849,  48  L.  J.  Cb. 

85,  41  L.  J.  Ch.  784.     The  dictma  828.    And  a  parihr  who  has  acted 

in  WycoTnbe  Ry,  Co.  ▼.  Donnington  on  one  of  two  poBoble  constnictions 

Bat^p4tal  (1866)  1  Gh.  273,  caonot  of    an  obeoure   agreement    cannot 

be  sapported  ii&  anj  sense  contrary  afterwards  enforce  it  according  to 

to  this.  the    other  :    MankaU  v.   Berndge 

(o)  Per  Knight  Brace  L.  J.  Sm<2Qr  (1881)  19  Ch.  Div.  283,  241,  51  L. 

T.  Machay  (1869)  4  D.  F.  J.  285.  J.  Oh.  329. 
Op.  Oh.  VI.,  p.  248,  above.  (g)  6  H.  L.  0.  p.  8128.    In  the 

ip)  Forbes  ▼.  WaU  (1872)  L.  B.  particular  case  the  appellants  were 

2  So.  &  D.  214.    Eyidence  of  the  an  incorporated  company,  and  there- 

ooEstruotion  pat  on  an  instrament  fore  it  was  said  could  not  be  thus 

by  9ome  of  the  parties  is  of  course  bonnd  :  ted  qu. 
inadmissible:  McCUan  v.  Kennard 


432  MISTAKE. 

Court  to  rectify  it,  or  unless  there  is  an  actual  excess  of 
jurisdiction  (r). 

Special  What  then  are  the  special  classes  of  cases  in  which 

^^  mistake  is  of  importance,  and  which  have  given  rise  to 

mistake  is  the  language  held  by  our  books  on  the  subject  ?    They  are 

pJSmoe.  believed  to  be  as  follows : 

1.  As  ex-       1.  Where  mistake  is  such  as  to  exclude  real  consent,  and 
true"^      so  prevent  the  formation  of  any  contract,  there  the  seeming 
coDseDt     agreement  is  void.   Of  this  we  shall  presently  speak  at  large 
(Part  2  of  this  chapter). 

g«  In  «x-        2.  Where  a  mistake  occurs  in  expressing  the  terms  of  a 
traT™  *  real  consent,  the  mistake  may  be  remedied  by  the  equitable 
ooDBODt     jurisdiction  of  the  Court.      Of  this  also  we  shall  speak 
separately  (Part  3). 

8.  Renun-      3.  A  renunciation  of  rights  in  general  terms  is  understood 
righUL  °     ^^*  ^  include  rights  of  whose  actual  or  possible  existence 

the  party  was  not  aware.     This  is  in  truth  a  particular 

case  under  No.  2. 

All  these  exceptions  may  be  considered  as  more  apparent 
than  real. 

4.  Pay.  4.  Money  paid  under  a  mistake  of  fact  may  be  recovered 

™^*''^      back 
money.        oacn. 

This  is  a  real  exception,  and  the  most  important  of  all. 

Yet  even  here  the  legal  foundation  of  the  right  is  not  so 

much  the  mistake  in  itself  as  the  failure  of  the  supposed 

consideration  on  which  the  money  was  paid;    and  the 

question  is  not  of  avoiding  an  existing  obligation  but  of 

creating  a  new  one. 

(r)  Diwn  t.  Blake  (1875)  L.  B.  10  in  his  award  after  signing  it :  he 

0.  P.  888,  44  L.  J.  G.  P.  276.    An  should  apply  to  the  Court :  Mordve 

arbitrator  cannot  of  hk  own  motion  v.  Palmer  (1870)  6  Gh.  22,  40  L.  J. 

correct  even  a  manifest  clerical  error  Gh.  8. 


OF  FACT  AKB  OF  LAW.  433 

B.  Mistake  of  Fact  and  of  Law. '  ».  Mistake 

...  of  FACt 

It  is  an  obvious  principle  that  citizens  must  be  presumed  and  of 
for  all  public  purposes  to  know  the  law,  or  rather  that  ^'^• 
they  cannot  be  allowed  to  allege  ignorance  of  it  as  an 
excuse.  As  has  often  been  said,  the  administration  of 
justice  would  otherwise  be  impossible.  Practically  the 
large  judicial  discretion  which  can  be  exercised  in  criminal 
law  may  be  trusted  to  prevent  the  rule  from  operating  too 
harshly  in  particular  cases.  On  the  other  hand  it  would 
lecul  to  hardship  and  injustice  not  remediable  by  anv 
judicial  discretion  if  parties  were  always  to  be  bound  in 
matters  of  private  law  by  acts  done  in  ignorance  of  their 
civil  rights.  There  is  an  apparent  conflict  between  these 
two  principles  which  hajs  given  rise  to  much  doubt  and 
discussion  (s).  But  the  conflict,  if  indeed  it  be  not  merely 
apparent,  is  much  more  limited  in  extent  than  has  been 
supposed 

It  is  often  said  that  relief  is  given  against  mistake  of  How  far 
fact  but  not  against  mistake  of  law.     But  neither  branch  ^^^ 
of  the  statement  is  true  without  a  great  deal  of  limitation  applicable 
and  explanation.      We  have   already  seen  that  in  most 
transactions  mistake  is  altogether  without  eflfect.     There 
such  a  distinction  has  no  place.     Again,  there  are  the 
many  cases  where,  as  we  have  pointed  out  above,  know- 
ledge or  notice  is  a  condition  precedent  to  some  legal 

(«)Savlgn J,  followed  bjVangerow  are  material  only  as  evidence   of 

and  other  later  writers,  ttriket  oat  actual  knowledfre :  Kdljf  v.  Solari 

a  general  role  thofl  :  VHieremifltoke  (1841)  9  M.  ft  W.  54, 11  L.  J.  Ex. 

ii  a  special  ground  of  relief   (and  10 ;  Tovmaend  v.  Orotody  (1800)  8 

there  only),  the  right  to  sach  reUef  C.  B.  N.  S.  477,  29  L.  J.  0.  P.  800. 

is  excladed  by  negligence.    Igno.  The  only  limitation  b  that  the  party 

ranoe  of  law  is  presnmed  to  be  the  seeldnff  to  recover  mntt  not  have 

result  of  negligence,  bat  the  pre-  waived  aU  inquiry ;  per  Parke  B. 

somption  may  be  rebutted  by  special  9  Bf.  &  W.  59,  and  per  Williams  J. 

drcamstanoes,  e,g,  the  law  being  8  G.  B.  N.  S.  494.     See  now  for 

really  doubtful  at  the  time.    There  fuU  discuMion  of  Anglo-American 

is  much  to  be  said  for  tbb  doctrine  authorities    Bdr.    Bf.  M.  Bigelow's 

on  principle,  but  it  will    not    fit  notes  to  Story's  Eq.  Jarisp.  13 ihed. 

English  law  as  now  settled  on  the  ss.  Ill,  140.    The  former  note  (on 

most  important  topic,  v».  recovering  Mistake  of  Law)  had  appeared  in 

back  money  paid;  f or  thwe,  so  long  substance  in  L.  Q.  B.  L  298,  ep 

as  the  ignorance  is  of  fact,  negli-  IL  78. 
gence  b  no  bar:  means  of  knowledge 

P.  F  F 


484 


MISTAKE. 


Where 
oommon 
miBtake 
excludes 
real  agree- 
menty 
ignoraDce 
of  private 
right  at 
all  event! 
=  igno- 
rance of 
fact 


Rectifica- 
tion of 
inatm- 
menti: 
relief 
given 
against 
mistake  of 
draftsman 
though 
not 
against  a 


consequence.  By  the  nature  of  these  cases  it  generally 
if  not  alwa}rs  happens  that  the  subject-matter  of  such 
knowledge,  or  of  the  ignorance  which  by  excluding  it 
excludes  its  legal  consequences,  is  a  matter  of  fact  and  not 
of  law.  The  general  presumption  of  knowledge  of  the 
law  does  so  far  apply,  no  doubt,  that  a  person  having 
notice  of  material  facts  cannot  be  heard  to  say  that  he 
did  not  know  the  legal  eflfect  of  those  facts.  All  these, 
however,  are  not  cases  of  relief  against  mistake  in  any 
correct  sense. 

Then  come  the  apparent  exceptions  to  the  general  rule, 
which  we  have  numbered  1, 2,  and  3.  As  to  No.  (1)  it  is  at 
least  conceivable  that  a  common  mistake  as  to  a  question 
of  law  should  go  so  completely  to  the  root  of  the  matter  as 
to  prevent  any  real  agreement  from  being  formed.  It  is 
laid  down  by  very  high  authority  "that  a  mistake  or  igno- 
rance of  the  law  forms  no  ground  of  relief  from  contracts 
fairly  entered  into  with  a  full  knowledge  of  the  facts"  (t) : 
but  this  does  not  touch  the  prior  question  whether  there  is 
a  contract  at  all.  On  cases  of  this  class  English  decisions 
go  to  this  extent  at  all  events,  that  ignorance  of  particular 
private  rights  is  equivalent  to  ignorance  of  &ct  (u).  As 
to  No.  (2)  the  principle  appears  to  be  the  same.  A.  and 
B.  make  an  agreement  and  instruct  C.  to  put  it  into  legal 
form.  C.  does  this  so  as  not  to  express  the  real  intention, 
either  by  misapprehension  of  the  instructions  or  by  ig- 
norance of  law.  It  is  obvious  that  relief  should  be  equally 
given  in  either  case.  In  neither  is  there  any  reason 
for  holding  the  parties  to  a  contract  they  did  not  really 
make. 


(t)  Bwnh  of  U,  8.  v.  Danid  (1888) 
(Snp.  Ot.  U.  S.)  12  Peters,  82,  56  ; 
bat  see  DawUU  v.  Sinclair  (J.  C.) 
(1881)  6  App.  Ca.  181,  190.  The 
language  of  recent  American  an- 
thority  persists  in  the  old  »barp 
distinction :  UpUm  ▼.  Tribdcodc 
(1875)  91  U.  S.  45,  50.  Common 
mistake  as  to  a  cdUUerai  matter  of 


law  does  not  of  oonrse  avoid  a 
contract :  Eas^ete/idd  v.  MarquU  of 
Londonderry  (1876)  4  Ob.  D.  693. 

(«)  Bingham  v.  Bin^nm  (1748) 
1  Vee.  Sr.  126,  Brovghton  v.  ffutt 
(1858)  8  De  G.  &  J.  501,  Cooper  v. 
Pkibln  (1867)  L.  R.  1  H.  L.  149, 
170 ;  of  which  cases  a  faller  account 
is  given  below. 


OF  LAW:  WHEN  REMEDIABLE.  485 

Authority,  so  far  as  it  goes,  is  in  fevour  of  what  is  here  ^}^®^ 
advanced  (x).    There  is  clear  authority  that  on  the  other  the  pw- 
hand  a  court  of  equity  will  not  reform  an  instrument  by  f^^^^ 
inserting  in  it  a  clause  which  the  parties  deliberately  agreed  oonteoti 
to  leave  out  (y),  nor  substitute  for  the  form  of  security  the  ^enta. 
parties  have  chosen  another  form  which  they  deliberately 
considered  and  rejected  (x),  although  their  choice  may 
have  been  determined  by  a  mistake  of  law.    The  reason 
of  these  decisions  is  that  in  such  cases  the  form  of  the 
instrument,  by  whatever  considerations  arrived  at,  is  part 
of  a  real  agreement.     The  parties  have  not  been  deprived 
by  mistake   or  ignorance   of  the   means  of  an  effective 
choice  of  courses,  but  have  made  an  effective  choice  which 
some  or  one  of  them  afterwards  mislikes. 

As  to  No.  (3),  there  is  quite  sufficient  authority  to  show  RenimoU. 

that  a  renunciation  of  rights  under  a  mistake  as  to  par-  ^^h^ . 

ticular  applications  of  law  is  not  conclusive,  and  some  dittmctioii 

.  .Miio  coni' 

authority  to  show  that  it  is  the  same  even  if  the  mistake  promiae  or 

is  of  a  general  rule  of  law.  The  deliberate  renunciation  ^Jj^*^ 
or  compromise  of  doubtful  rights  is  of  course  binding ;  if  meat 
would  be  absurd  to  set  up  ignorance  of  the  law  as  an  objec- 
tion to  the  validity  of  a  transaction  entered  into  for  the 
very  reason  that  the  law  is  not  accurately  known  (z).  A 
compromise  deliberately  entered  into  under  advice,  the 
party's  agents  and  advisers  having  the  question  fully  before 
them,  cannot  be  set  aside  on  the  ground  that  a  particular 
point  of  law  was  mistaken  or  overlooked  (a).  Conduct 
equivalent  to  renimciation  of  a  disputed  right  is  equally 
binding,  at  least  when  the  party  has  the  question  fairly 
before  him.  Thus  in  Stone  v.  Godfrey  (6)  the  plaintiff  had 
been  advised  on  his  title  unfavourably  indeed,  but  in  such 
a  way  as  to  bring  before  him  the  nature  of  the  question 


{x)  Hunt  y.  Jtousmaniere't  Adm.  miaet  in  Ch.  IV.,  p.  181,  above. 

(1828)  (Sup.  Ot.  U.  S.)  1  Peters,  1,  (a)  SiewaH  v.StewaH  (1839)  6  C), 

18,  14.  &  F.  911 ;  aee  the  aathoriti««i  re- 

(y)  Lord  Imham  r.  CkUd  (1781)  Tiewed,  pp.  966-970. 

1  Bro.  0.  C.  92.  (6)  (1854)  5  D.  M.  G.  76. 

(z)  Gp.  the  remarks  on  oompio« 

F  F  2 


4:^6  MISTAKE.    : 

and  give  him  a  fair  opportunity  of  considering  whether  he 
should  raise  it.  Adopting,  however,  the  opinion  he  had 
obtained,  he  acted  upon  it  for  a  considerable  time,  and  in 
a  manner  which  amounted  to  representing  to  all  persons 
interested  that  he  had  determined  not  to  raise  the  ques- 
tion. It  was  held  that  although  the  mistake  as  to  title 
might  in  the  absence  of  such  conduct  well  be  a  ground  of 
relief,  a  subsequent  discovery  that  the  correctness  of  the 
former  opinion  was  doubtful  did  not  entitle  him  to  set  up 
his  claim  anew.  In  Rogers  v.  Ingham  (c)  a  fund  had  been 
divided  between  two  legatees  under  advice,  and  the  pay- 
ment agreed  to  at  the  time.  One  of  the  legatees  after- 
wards sued  the  executor  and  the  other  legatee  for  repay- 
ment, contending  that  the  opinion  they  had  acted  upon 
was  erroneous;  it  was  held  that  the  suit  could  not  be 
maintained.  Similarly  where  creditors  accepted  without 
question  payments  under  a  composition  deed  to  which 
they  had  not  assented,  and  which,  as  it  was  afterwards 
decided,  was  for  a  technical  reason,  not  binding  on  non- 
assenting  creditors,  it  was  held  that  they  could  not  after- 
wards treat  the  payments  as  made  on  account  of  the  whole 
debt,  and  sue  for  the  balance.  They  might  have  guarded 
themselves  by  accepting  the  payments  conditionally,  but 
not  having  done  so  they  were  bound  (d).  In  Re  Saxon 
Life  Assurance  Society  {e)  it  was  held  that  a  creditor  of  a 
company  was  not  bound  by  a  release  given  in  considera- 
tion of  haying  the  substituted  security  of  another  com- 
pany, which  security  was  a  mere  nullity,  being  given  in 
pursuance  of  an  invalid  scheme  of  amalgamation.  Here 
the  mistake  was  obviously  not  of  a  general  rule  of  law ; 
and  perhaps  the  case  is  best  put  on  the  ground  of  total 
failure  of  consideration  (/). 


(e)  (1876)  8  Gb.  D.  851,  46  L.  J.  (/)  In  former  editions  ■ome  to. 

Ch.  822  (Hall  Y.-G.  and  C.  A.).  marks  were  made  on  McCarthy  t. 

{d)  EUchin  ▼.  Hawkint  (1866)  L.  Deeaix  (1881)  2  Rnss.  ft  My.  614, 

B.  2  C.  P.  22.  as  raising  a  diffionltj  in  this  con- 

(e)  (1862)  2  J.  ft  H.  408,  412  (the  hezion.    As  that  case  is  no  longer 

Anchor  ca.).  of  authority  (see  Harvey  y.  Parme 


MISTAKEN  PAYMJ5NTS.  437 

As  to  No.  (4),  the  subject  of  recovering  back  money  Money 

paid  by  mistake  does  not  properly  fall  within  our  scope,  ^rtake 

It  is  here,  however,  that  the  distinction  between  mistakes  '!?^®': 

ADie  only 
of  fact  and  of  law  does  undoubtedly  prevail    While  no  when  the 

amount  of  mere  negligence  avoids  the  right  to  recover  ^^J^*  ** 

back  money  paid   under  a   mistake  of  fact  (g),  money 

paid  under   a   mistake   of  law  cannot  in   any  case  be 

recovered  (A).     Nor  does  anything  like  the  qualification 

laid  down  by  Lord  Westbury   in   Cooper  v.  Phibbs  (i) 

appear  to  be  admitted.     Ignorance  of  particular  rights, 

however  excusable,  is  on  the  same  footing  as  ignorance 

of  the  general  law  (j). 

An  important  decision  of  the  American  Supreme  Court 
appears  to  assume  that  giving  a  negotiable  instrument  is 
for  this  purpose  equivalent  to  the  payment  of  money,  so 
that  a  party  who  gives  it  under  a  mistake  of  law  has  no 
legal  or  equitable  defence  (k).  But,  according  to  later 
English  doctrine,  inasmuch  as  "  want  of  consideration  is 
altogether  independent  of  knowledge  either  of  the  facts  or 
of  the  law,"  the  defence  of  failure  of  consideration  is  avail- 
able as  between  the  parties  to  a  negotiable  instrument, 
whether  the  instrument  has  been  obtained  by  a  misrepre- 
sentation of  fact  or  of  law  (Q. 

A  covenant  to  pay  a  debt  for  which  the  covenantor 
wrongly  supposes  himself  to  be  liable  is  valid  in  law,  nor 
will  equity  give  any  relief  against  it  if  the  party's  igno- 

|1882)  8  App.  Cft.  48,  62,  60,  63,  re»tti  on  the  lame  ground,  if  the 

52  L.  J.   P.   42),    they    are   now  tnnuiotion  in  that  ctfe  be  regarded 

omitted.  as  the  hire  payment  of    another 

{g)  Note  (f),  p.  433,  aupra.  pereoo^s  debt ;  if  it  be  regarded  aa 

(4)  Bat  as  to  reopeaing  aooottnti  the  pnrohaae  of  a  secmrity,  it  is  an 

in  eqaity  see  Daniell  ▼.  Sinclair  application  of  the  rule  cavejU  emptor, 

(.J.  0.)  (1881)  6  A.pp.  Oa.  181.  as  to  which  op.  Clare  ▼.  Lamb  (1875) 

(t)  (1867)  L.  R.  2  H.  L.  at  p.  170.  L.  R.  10  O.  P.  834,  44  U  J.  0.  P. 

{j)  See     Skyring    v,    Greenwood  177. 
(1825)  4  B.  ft  G.  281,  and  cp.  PlaU  {k)  Bank  of  U.  8.  ▼.  Daniel  (1888) 

v.  Bromoffe  (1854)  24  L.  J.  Ex.  63,  12  Peters,  32  ;  bat  this  was  not  the 

where  however  the  mistake  was  not  onlv  ground  of  the  decision, 
only  a  mistake  of  law^  but  oollateral  (f)  SouthaU  t.  Rigj,  F<frfMn   ▼. 

to  the  payment,  the  money  being  WrijlU  (1851)  11  0.  B.  481,  492, 

really  doe;  Aiken  r,  JShart  (1856)  2)  L.   J.    0.   P.  145;   Coward    v. 

1  H.  ft  N.  210,  25  L.  J.  K<  321,  ffoffhee  (1855)  1  K.  ft  J.  443. 


488  MISTAKE. 

ranee  of  the  facts  negativing  his  liability  is  due  to  his  own 

negligence  (m). 
App«i«nt  The  Court  of  Bankruptcy  will  order  repayment  of  money 
fi^R^SSf  P^d  ^  *  trustee  in  bankruptcy  under  a  mistake  of  law  : 
rapfeoy :  but  this  is  no  real  exception,  for  it  is  not  like  an  ordinary 
officeTof  payment  between  party  and  party.  The  trustee  is  an 
Coort  officer  of  the  Court  and  "  is  to  hold  money  in  his  hands 
rules  upon  trust  for  its  equitable  distribution  among  the  credi- 


*°  *t  u*^  *^™  "  ^^^'  ^^  general  the  rule  that  a  voluntary  payment 
made  with  full  knowledge  of  the  fusts  cannot  be  recovered 
back  is  no  less  an  equitable  than  a  legal  one ;  "  the  law 
on  the  subject  was  exactly  the  same  in  the  old  Court  of 
Chancery  as  in  the  old  Courts  of  Common  Law.  There 
were  no  more  equities  affecting  the  conscience  of  the 
person  receiving  the  money  in  the  one  Court  than  in  the 
other  Court,  for  the  action  for  money  had  and  received 
proceeded  upon  equitable  considerations'*  (o).  Thus  a  party 
who  has  submitted  to  pay  money  under  an  award  cannot 
afterwards  impeach  the  award  in  equity  on  the  groimd  of 
irregularities  which  were  known  to  him  when  he  so  sub- 
mitted (p).  It  has  also  been  laid  down  that  in  a  common 
administration  suit  a  legatee  cannot  be  made  to  refund 
over-payments  voluntarily  made  by  an  executor  (q) :  but 
the  context  shows  that  this  was  said  with  reference  to  the 
frame  of  the  suit  and  the  relief  prayed  for  rather  than  to 
any  general  principle  of  law :  moreover  it  was  not  the 
executor,  but  the  persons  beneficially  interested,who  sought 
to  make  the  legatee  liable.  But  in  BcUe  v.  Hooper  (r)  the 
point  arose  distinctly:  certain  trustees  were  liable  to  make 

{m)  Woiim  ▼.  Wareinff  (1852)  15  and  it  leems  to  extend  to  all  officen 

Beav.  151.    Whether  relief  could  of  the  Court  and  aU  branohei  o?  the 

be  given  in  aav  eaae,  unless  there  Supreme  Court, 

were  fraud  on  the  other  side,  quare,  (o)  Rogen  v.  Ingham  (1876)  8  Ch. 

(n)  Ex  pirte  Jamet  (1874)  9  Ch.  Div.  at  p.  855,  per  James  L.  J. 

609,  614,  per  James  L.J.  43  L.  J.  (p)  Goodman  v.  Sajfert  (1820)  2 

Bk.  107.    This  holds  even  after  the  Jaa  k  W.  249.  268. 

money  paid  l^  mistake  has  been  (c)  Per  Lord  Cottenham,  Lick- 

distributed,  if  the  trustee  still  has  Jidd  v.  Baker  (1850)  18  Beav.  447, 

or  maj  have  funds  applioable  for  458. 

payment   of   dividends  :   Ex  parU  (r)  (1855)  5  B.  M.  G.  88& 
8imm4md$  (1885)  16  Q.  K  Div.  808  ; 


EXCLUBIKG  CONSENT.  439 

good  to  their  testator  s  estate  the  loss  of  principal  incurred 
by  their  omission  to  convert  a  fund  of  Long  Annuities : 
they  contended  that  the  tenant  for  life  ought  to  recoup 
them  the  excess  of  income  which  she  had  received  :  but  as 
she  had  not  been  a  willing  party  to  any  over-payment  (js), 
it  was  decided  that  she  could  not  be  called  upon  to  refund 
the  sums  which  the  trustees  voluntarily  paid  her.  In  an 
earlier  case  an  executor  paid  interest  on  a  legacy  for  several 
years  without  deducting  the  property  tax,  and  it  was  held 
that  he  could  not  claim  to  retain  out  of  subsequent  pay- 
ments the  sums  which  he  should  have  deducted  firom 
preceding  ones  (t). 


Part  IL    Mistake  as  excluding  true  Consent. 

In  the  first  chapter  we  saw  that  no  contract  can  be  0mm  to 
formed  when  there  is  a  variance  in  terms  between  the  ^^  ^^^ 
proposal  and  the  acceptance.     In  this  case  the  question  ^  !"^ 
whether  the  parties  really  meant  the  same  thing  cannot 
arise,  for  they  have  not  even  said  the  same  thing.    A 
court  of  justice  can  ascertain  a  common  intention  of  the 
parties  only  from  some  adequate  expression  of  it,  and  the 
mutual  communication  of  different  intentions  is  no  such 
expression. 

We  now  have  to  deal  with  certain  kinds  of  cases  in 
which  on  the  face  of  the  transaction  all  the  conditions  of  a 
concluded  agreement  are  satisfied,  and  yet  there  is  no  real 
common  intention  and  therefore  no  agreement. 

First,  it  may  happen  that  each  party  meant  something,  where  no 
it  may  be  a  perfectly  well  understood  and  definite  thing,  JJ^^^^. 
but  not  the  same  thing  which  the  other  meant.     Thus  tion,  each 
their  minds  never  met,  as  is  not  uncommonly  said,  aoid^Iiiiag 
the  forms  they  have  gone  through  are  inoperative.    This  <UffeRiit 
is  quite  consistent,  as  we  shall  see,  with  the  normal  and 

(f).Sh«  had  in  f aet  denied  fhe         it)  Oiurier.GooUHlSn)2UtM. 
tnuteM  to  oonyert  the  fond :  Me      168. 
p.  840. 


440  MISTAKE. 

necessary  rule  (Ch.  VL,  p.  233,  above)  that  a  promisor  is 
bound  by  his  promise  in  that  meaning  which  his  expression 
of  it  reasonably  conveya 
Where  Next,  it  may  happen  that  there  does  exist  a  common 

***""  "  •  intention,  which  however  is  founded  on  an  assumption 
intentioii  made  by  both  parties  as  to  some  matter  of  fiact  essential  to 
iJJ^^  the  agreement.  In  this  case  the  common  intention  must 
stand  or  bH  with  the  assumption  on  which  it  is  founded. 
'  If  that  assumption  is  wrong,  the  intention  of  the  parties  is 
fi!X)m  the  outset  incapable  of  taking  effect.  But  for  their 
common  eiror  it  would  never  have  been  formed,  and  it  is 
treated  as  non-existent.  Here  there  is  in  some  sense  an 
agreement :  but  it  is  nullified  in  its  inception  by  the 
nullity  of  the  thing  agreed  upon.  And  it  seems  hardly 
too  artificial  to  say  that  there  is  no  real  agreement.  The 
result  is  the  same  as  if  the  parties  had  made  an  agreement 
expressly  conditional  on  the  existence  at  the  time  of  the 
supposed  state  of  facts :  which  state  of  facts  not  existing, 
the  agreement  destroys  itself. 

In  the  former  class  of  cases  either  one  party  or  both  may 
be  in  error:  however  that  which  prevents  any  contract 
from  being  formed  is  not  the  existence  of  error  but  the 
want  of  true  consent.  ''  Two  or  more  persons  are  said  to 
consent  when  they  agree  upon  the  same  thing  in  the  same 
sense : "  this  consent  is  essential  to  the  creation  of  a  con- 
tract (u),  and  if  it  is  wanting,  and  the  facts  be  not  other- 
wise such  as  to  preclude  one  party  from  denying  that  he 
agreed  in  the  sense  of  the  other  (y),  it  matters  not  whether 
its  absence  is  due  to  the  error  of  one  party  only  or  of  both. 
In  the  latter  class  of  cases  the  error  must  be  common  to 
both  parties.  They  do  agree  to  the  same  thing,  and  it 
would  be  in  the  same  sense,  but  that  the  sense  they  intend, 
though  possible  as  far  as  can  be  seen  from  the  terms  of  the 
agreement,  is  in  fact  nugatory.     Ajb  it  is,  their  consent  is 


(tij    HMnen    J.     in    Smiih    ▼.        (v)  HaaiMli  J.  Lc,  Blackbarn  J. 
Jluffka  (1871)  L.  B.  6  Q.  B.  608 ;    tA  p.  607^ 
tndiMi  Oontnot  Act,  1872,  e.  18. 


AS  TO  NATURE  O?  TRANSACTION.  441 

idle  ;  the  sense  in  which  they  agree  is,  if  one  may  so  speak, 
insensible. 

In  both  sets  of  cases  we  may  say  that  the  agreement  is 
nullified  by  fundamental  error ;  a  term  it  may  be  conve- 
nient to  use  in  order  to  mark  the  broad  distinction  in 
principle  from  those  cases  where  mistake  appears  as  a 
ground  of  special  relief. 

We  proceed  to  examine  the  different  kinds  of  funda-  Diviiipos 
mental  error  relating :  menul 

A.  To  the  nature  of  the  traniftu^tion.  «n«f. 

B.  To  the  person  of  the  other  party. 

C.  To  the  subject-matter  of  the  agreement. 

A.  Error  as  to  tfie  nature  of  the  transaction. 

On  this  the  principal  early  authority  is  Thm^oaghgood'a  ^^ 
case  (a;).    In  that  case  the  plaintiff,  who  was  a  layman  and  the  tnos- 
unlettered,  had  a  deed  tendered  to  him  which  he  was  told  ^^^g^ 
was  a  release  for  arrears  of  rent  only.    The  deed  was  not  good'a 
read  to  him.     To  this  he  said, ''  K  it  be  no  otherwise  I  am 
content ; "  and  so  delivered  the  deed.      It  was  in  fact 
a  general  release  of  all  claima    Under  these  circumstances 
it  was  adjudged  that  the  instrument  so  executed  was  not 
the  plaintiff^s  deed     The  effect  of  this  case  is  ''  that  if  an 
illiterate  man  have  a  deed  fiJsely  read  over  to  him,  and  he 
then  seals  and  delivers  the  parchment,  it  is  nevertheless 
not  his  deed  "  {y) :  it  was  also  resolved  that  "  it  is  all  one 
in  law  to  read  it  in  other  words,  and  to  declare  the  effect 
thereof  in  other  manner  than  is  contained  in  the  writing:" 

{x)  2  Co.  Rei>.  9  h.    Cp.  Shv^Uer't  leal  the  deed,  thk  deed  is  utterly 

oe.  12  Rep.  90  (deed  falsely  read  to  ^  oid  whether  the  feoffor  be  lettered 

ft  blisd  nuyi).  or  not,  becaii**  he  gave  credence  to 

(if)  Per  Car.  L.  R.  4  C.  P.  711.  me  and  I  dec«ived  him."    (KeUw. 

It  had  been  long  before  nid,  in  21  70,  6,  pi.  6)     An'l  see  the  older 

Hen.  VIT.,  that  *'if  I  dedreaman  aathoritles  referred  to  in  note  (<{), 

to  enfeoff  me  of  an  aore  of  land  in  next  page.     An  anonymona  caae  to 

Dale,  and  he  tell  me  to  make  a  deed  the  oontraiy,  Skin.   159,  ii  aniB- 

for  one  acre  with  letter  of  attorney,  dently   diipoeed  of  by  Lord  St 

and  I  make  the  deed  for  two  acr^i,  Leonard'a   dlnpproTal   (V.  ft    P 

and  read  and  dedare  the  deed  to  178)^ 
him  aa  for  only  one  aeve^  and  he 


Maokin- 


44^  MISTAKE. 

but  that  a  party  executing  a  deed  without  requiring  it  to 
be  read  or  to  have  its  effect  explained  would  be  bound  («). 
Agreeably  to  this  the  law  is  stated  in  Sheppard's  Touch- 
stone, 56.  But  at  present  the  mere  reading  over  of  a  deed 
without  an  explanation  of  the  contents  would  hardly  be 
thought  sufficient  to  show  that  the  person  executing  it 
understood  what  he  was  doing  (a). 
Foster  V.  The  doctrine  was  expounded  and  confirmed  by  the 
luminous  judgment  of  the  Court  of  Common  Pleas  in 
Foster  v.  Mackiniwn  (h).  The  action  was  on  a  bill  of 
exchange  against  the  defendant  as  indorser.  There  was 
evidence  that  the  acceptor  had  asked  the  defendant  to  put 
his  name  on  the  bill,  telling  him  it  was  a  guaranty ;  the 
defendant  signed  on  the  faith  of  this  representation  and 
without  seeing  the  &ce  of  the  bill.  The  Court  held  that 
the  signature  was  not  binding,  on  the  same  principle  that 
a  blind  or  illiterate  man  is  not  bound  by  his  signature  to  a 
document  whose  nature  is  wholly  misrepresented  to  him. 
A  signature  so  obtained 

"  Ib  invalid  not  merely  on  the  ground  of  fraud,  where  fraud  ezirte,  bat 
on  the  ground  that  the  mind  of  the  signer  did  not  aooompany  the  signa- 
tnre ;  in  other  words,  that  he  never  intended  to  sign,  and  therefore  in 
contemplation  of  law  never  did  sign  the  contract  to  which  his  name  is 
appended  (c).  .  .  .  The  position  that  if  a  grantor  or  covenantor  be 
deceived  or  misled  as  to  the  actual  eonUnU  of  the  deed,  the  deed  does  not 
bind  him,  is  supported  by  many  authorities:  see  Com.  Dig.  PaU  (B.  2)  (ct), 

(z)  /.  e.  to  this  extent,  that  he  of  Diodetian  and  Maximian:   Si 

could  not  say  it  was  not  his  deed,  falsum     instrumentum    emptioiiis 

apart  from  any  question  of  fraud  oonscriptum    tibi,  velut  locationis 

or  the  like.  qusm  fieri  mandaveras,  subscribers 

(a)  Hoghion  v.  ffoghion   (1852)  te  non  relecto  sed  fidem  babentem 

15  Beav.  278,  311.    In  the  case  of  suasit,    neutrum    ountractum,    in 

a  will  the  execution  of  it  by  a  utroqne  alterutrius  conaensu  defi- 

lestator  of  sound  mind  after  having  dente,  cnnstitisse  procul  dubio  est. 

had  it  read  over  to  him  b  evidence,  C.  4.  22.  plus  valere,  5. 
but  not  conduaive  evidence,  that  he  {d)  Cittd   also  by  Willes  J.  2 

understood  and  approved  its  con-  G.  B.  N.  S.  624,  snd  see  2  Bo.  Ab. 

tents:  Fvlton  v.  Andrew  (1875)  L.  28  S  :  the  cases  there  referred  to  (80 

R.  7  H.  L.  448,  460,  sqq.,  472,  44  £.  III.  31  6  ;  10  H.  VL  5,  pL  10) 

L.  J.  P.  17.  show  that  the  prindpla  was  rcojg- 

(()  (1869)  L.  B.  4  0.  P.  704, 711,  nised  in  very  early  ^es.  Cp.  jFleta 

88  L.  J.  G.  P.  810.  1.  6,  0.  88  §  2.    Si  autem  vocatus 

(c)  The  same  rule  is  laid  down,  dicat  quod  carta  aibi  nooeie  non 

acd  for  the  mme  reason,  in  a  rescript  dabeat  .....   vd  quia  per  ddam 


AS  TO   NATURK  OF  TRANSACTION.  443 

and  is  roc^gnized  by  Barley  B.  and  the  Court  of  Exoheqaer  in  the  eaie  of 
Bdwardi  v.  Brown  (c).  Accordingly  it  liM  recently  been  decided  in  the 
Exchequer  Chamber  that  if  a  deed  be  delivered,  aud  a  blank  left  therein 
be  afterwards  improperly  611ed  up  (at  least  if  that  be  done  without  the 
grantor's  negligence),  it  b  not  the  deed  of  the  grantor:  Swan  t.  NwrtK 
BrUtah  AuatraUuian  Land  Company  (/).  These  oases  apply  to  deeds ;  but 
the  principle  b  equally  applicable  to  other  written  eontracts." 

The  judgment  proceeds  to  notice  the  qualification  of  the 
general  rule  in  the  case  of  negotiable  instruments  signed 
in  blank,  when  the  party  signing  knows  what  he  is  about, 
i.e,  that  the  paper  is  afterwards  to  be  filled  up  as  a 
negotiable  instrument  (g).  But  here  the  defendant  "never 
intended  to  indorse  a  bill  of  exchange  at  all,  but  intended 
to  sign  a  contract  of  an  entirely  different  nature."  He  was 
no  more  bound  than  if  he  had  signed  his  name  on  a  blank 
sheet  of  paper,  and  the  signature  had  been  afterwards 
fraudulently  misapplied  (h).  This  decision  shows  clearly 
that  an  instrument  executed  by  a  man  who  meant  to 
execute  not  any  such  instrument  but  something  of  a 
different  kind  is  in  itself  a  mere  nullity,  though  the  person 
so  executing  it  may  perhaps  be  estopped  fi^om  disputing  it 
if  there  be  negligence  on  his  part  (t)  ;  and  that,  notwith- 

advenit,  u'.sicartJMndefeoffamento  Whedwrighi  (1875)  L.  R.  10  Ex. 

sIgilUtam  [qu.  sigOlayit  or  sigilla-  188,  192,  44  L.  J.  Ex.  121. 

Twit]  cum    acrlptam   de    termino  (g)  Whether  thii  ii  a  branch  of 

annonim  sirillare  crediderit,  vel  ut  the  general  principle  of  estoppel  or 

bL  carta  fieri  debuit  ad  vitam,  iUam  a  positive  rule  of  the  law  merchant 

fieri  fecit  in  feodo  et  huiusmodi,  wai  much  doubled  in  Stcan  v.  North 

dum  tamen  nihil  sit  quol  imperi-  British  AtutrdUuian Land  Co.  {1S6Z) 

Vm    vel  negligen'lae  suae  ponit  in  the  Court  below,  7  H.  &  N.  603, 

imputari,  ut  [qu.  vl\  st]  sigillam  81  L.  J.  Ex.  425.     In  the  present 

snum  seoescaUotradiderit  yeluzori,  judgment  the  Court  of  C.  P.  seems 

quod  cantius  debuit  custodiyiase.  to  incline  to  the  latter  view. 

(e)  (1881)  1  C.  &  J.  812.  (A)  L.  R.  4  C.  P.  at  p.  712. 

(/)  (1863)  2  H.  AC.  175,  82  L.  J.  (i)  Cp.  SimcM  t.  Oreai  WuUrn 

Ex.  273.  And  it  was  there  doubted  Ry.  Go.  (1857)  2  C.  6.  N.  S.  620, 

whether  a  man  can  be  estopped  by  where  the  plaintiff  was  held  not 

mere  negligence  from  showing  that  bound  by  a  paper  of  special  condi- 

a  deed  is  not  really  his  deed.    See  tions  liooittDg  the  company's  respoi- 

per  Byles  J.  2  H.  ft  C.  184,  82  L.  sibility  as  carriers,   which  he  had 

J.  Ex.  278,  and  per  Cockbura  C.J.  signed  without  reading  it,  being  in 

2  H.  &  C.  189,  82  L.  J.  Ex.  279.  fast  unabli  at  the  time  to  read  it 

Mellish  L..J.  in  Hunter  ▼.  Walterg  for  want  of  hii  glaaset,  and  being 

(1871)  7  Cb.  75,  87,  41  L.  J.  Ch.  assured  by  the  railway  chrk  that  it 

175,  mentioned  this  question  as  still  was   a  mere  form.     **  Th't    whole 

open :  and  see  Bchfta»  Union   r.  question  was  whotber  the  plaiaMff 


444  MI6TAK& 

standing  the  importance  constantly  attached  by  the  law  to 
the  security  of  bona  fide  holders  of  negotiable  instruments, 
no  exception  is  in  this  case  made  in  their  favour. 
Such  The  existence  of  a  fundamental  error  of  this  sort,  not 

fa  Eq^w  °^®r®ly  ^  *^  pfiuticulars,  but  as  to  the  nature  and  substance 
genefHiiy    of  the  transactions,  has  seldom  been  considered  by  courts 
oaM  with  ^^  equity  except  in  connection  with  questions  of  fraud  from 
c™»»-      which  it  is  not  always  practicable  to  disentangle   the 
fraud.        previous  question,  Was  there  any  consenting  mind  at  all  ? 
There  is  enough  however  to  show  that  the  same  principles 
are  applied. 
Kennedy        Thus  in  Keimedy  v.  Oreefa  (k)  the  plaintiff  was  induced 
reen.    ^  execute  an  assignment  of  a  mortgage,  and  to  sign  a 
receipt  for  money  which  was  never  paid  to  her,  "  without 
seeing  wfuU  she  vhjis  setting  her  hand  to,  by  a  statement 
that  she  was  only  completing  her  execution  of  the  mort- 
gage deed  itself,  or  doing  an  act  by  which  she  would  secure 
the  regular  payment  of  the  interest  upon  her  mortgage- 
money."    Lord  Brougham  expressed  a  positive  opinion 
that  a  plea  of  nxm  est  factumi  would  have  been  sustained 
at  law  under  these  circumstances  {I).     But  his  decision 
rested  also  on  the  defendant  having  constructive  notice  of 
the  fraud,  and  no  costs  were  given  to  the  plaintiff,   her 
conduct  being  considered  not  free  from  negligence, 
Vorley  •.        In  Vorley  v.  Cooke  (m)  there  were  cross  suits  for  fore- 

Cooke. 

signed  the  reoeipt  knowing  what  cree  affirmed  and  Lord  Brangham'e 

he  was  about : "  per  Cookbnm  G.J.  view    of  the  case.    Stnart  V.-C.'b 

at  p^  624.    The  clerk*B  stotement  remark  (2  Giff.  881)  applies  to  the 

distinguishes  this  from  the  class  of  >L   R.'8   jadgment,   not   to   Lord 

oases  cited  at  p^  47  above.    Wh«re  Brougham's. 

intending  to  ezecate  his  (m)  (1857)  1  Giff.  230,  27  L.  J. 


has   by  mistake  ezecated   a  Ch.  185  :    and  see  the  rdporter*s 

wrong  document^    that   document  note,  p.  287.    Thi<  deoision  seems 

eannot  be  admitted  to  probate  even  to    be    withhi    the    authority    of 

if  the  real  intention  iroiUd  thereby  Tlui^rtmghgood'i  case    (which    cnri- 

be  partlsllv  carried  out :    In  the  ously  enough  was  not  dted),  at  all 

wb  of  Hunt  (1875)  L.  R  8  P.  &  events  as  sines  oonstrned  in  Fotter 


250,  44  Lb  J.  P.  48.  v.    Mackinnon,     Howwer,  James 

{k)  (1834)  3  M.  &  K  699.  L.J.  intimated  an  opinion  that  a 

{I)  8  M.  ft  K.  at  pp.  717,  718  :  plea  oi  ncn  at  factum  eould  not 

(but  see  the  following  note).    The  have  been  sustained  at  law  either 

M.  R.  seems  to  have  thought  the  here    or   in    Kennedjf    v.    Orem : 

«stale  did  pass  (pw  718).   Henoe  the  HtuUer  v.  Waiten  (1871)  7  Ch.  at 

varianoe  between  the  form  of  the  de^  p.  84  (1869-60)  2  Giff.  858. 


AB  TO  NATURE  OF  TRANSACnOK.  4*8 

closure  and  for  cancellation  of  the  mortgage  deed  The 
alleged  mortgagor  had  executed  the  mortgage  deed  at  the 
instance  of  his  solicitor,  believing  it  to  be  a  covenant  to 
produce  deeda  This  mortgage  so  obtained  was  assigned 
to  a  purchaser  for  valuable  consideration  without  notice, 
against  whom  no  relief  could  have  been  given  had  the  deed 
been  only  voidable  (p.  425,  above).  It  was  held  that  the 
deed  was  wholly  void  and  no  estate  passed  by  it,  and 
decreed  accordingly  that  it  must  be  delivered  up  to  be 
cancelled  The  somewhat  similar  decision  in  Ogilvie  v. 
Jeaffreson  was  mainly  on  the  ground  that  the  defendants 
were  not  purchasers  without  notice  ;  the  use  of  the  words 
"  wholly  void  "  is  therefore  immaterial. 
On  the  other  hand, 

**  When  a  man  knowi  that  he  is  coDTeying  or  doing  tomething  with  kii 
ertata^  but  doea  not  a»k  what  ia  the  predae  effect  of  the  deed,  becanae  he 
ie  told  it  is  a  mete  fomiy  and  has  raoh  confidenoe  in  hii  i  oliottor  ai  to  exe- 
cute the  deed  in  ignorance,  then  a  deed  lo  execute d,  although  it  may  be 
voidable  upon  the  ground  of  fraud,  ii  not  a  void  deed  "  (n). 

A  contractor  must  stand  by  the  words  of  his  contract, 
and,  if  he  will  not  read  what  he  signs,  he  alone  is  respon- 
sible for  his  omission  (o). 

And  it  has  been  laid  down  that  a  man  of  business  who 
executes  "  an  instrument  of  a  short  and  intelligible  de- 
scription cannot  be  permitted  to  allege  that  he  executed  it 
in  blind  ignorance  of  its  real  character"  (jp).     Probably 

(n)  UnnHr  w.  Waliart  (1871)  7  Gh.  held  that  he  waa  not  a  contributory 
76;  per  Melliah  L.  J.  at  p.  88.  Emp-  in  the  winding-up  of  the  looiety. 
ion't  case  (1870)  (9  £q.  597,  where  Here  the  matter  of  the  fictitious 
no  authorities  appear  to  have  been  recitals  was  eollateral  to  the  main 
cited)  seems  dbtinguisbable.  There  purpose  of  the  transaction.  Obs^rre 
the  appb'cant  bought  land  of  a  build-  that  so  far  as  the  deed  professf  d  to 
ing  society  and  executed  without  treat  Empson  as  a  shareholder  it 
examination  mortgage  deeds  pre-  was  void,  not  only  Toidable:  other- 
pared  by  the  society's  solicitor  to  wise  it  wou'd  have  been  tro  late  to 
secure  the  price.  These  deeds  con-  repudiate  the  »hAres  after  the  wind- 
tainod  recitals  that  he  was  a  ing-up  order, 
member,  and  treated  the  whole  (o)  Upton  ▼.  TrOUcock  (1875)  91 
transaction  as  an  advance  by  the  U.S.  45,  50. 
saciely  to  oae  of  ita  own  members.  (p)  Per  Lord  Chehnsford  O. 
He  was  never  admitted  or  otherwite  Wyrto  v.  Lab<mehire  (1858-9)  8  De 
treated  as  a  member.    The  Court  G.  ft  J.  598,  801. 


44tf 


MISTAKE. 


this  is  to  be  taken  as  stating  an  inference  of  fact  rather 
than  a  rule  of  law ;  but  under  such  conditions  the  infer- 
ence is  irresistible. 


Dtotlno- 

iionM  to 
agree- 
mente  of 
dnmkea 
man  or 
lunatia 


The  doctrine  above  stated  in  Ch.  II.,  p.  90,  that  the 
contract  of  a  lunatic  or  a  drunken  man  is  not  absolutely 
void  but  only  voidable,  seems  at  first  sight  not  consistent 
with  the  principles  recognized  by  the  Court  of  Common 
Pleas  in  Fostei'  v.  Mackinnon  (supra,  p.  442).  It  was  in 
fact  held  by  Lord  Ellenborough  (q)  that  "  an  agreement 
signed  by  a  person  in  a  state  of  complete  intoxication  is 
void,  for  such  a  person  has  no  agreeing  mind,"  and  the 
judges  of  the  Court  of  Exchequer  were  at  least  inclined  to 
the  same  view  in  Gore  v.  Gibson  (r).  However,  it  is  now 
settled,  as  we  have  seen  (s),  that  the  agreement  of  a 
lunatic  or  drunken  man  known  to  be  so  by  the  other  pfiuty 
is  not  a  void  agreement,  but  a  voidable  contract  which 
after  he  becomes  sober  he  may  ratify  so  as  to  make  it 
binding  on  the  other  party,  and  therefore  on  himself  also. 
It  is  obviously  reasonable  that  one  who  offers  to  contract 
with  a  drunken  man  or  a  madman,  knowing  his  condition, 
should  do  so  at  his  peril.  If  the  drunkenness  or  lunacy  be 
not  actually  or  presumably  known  to  the  other  party  the 
contract  is  valid :  for  a  man  who  is  apparently  sane  or 
sober  cannot  be  supposed  incapable  of  knowing  what  he  is 
about.  But  except  in  this  case  the  other  party  must  be 
able  to  see  that  it  is  at  least  doubtful  whether  the  man  Is 
capable  of  understanding  the  effect  of  a  contract ;  if  he 
chooses  to  disregard  that  doubt,  he  cannot  afterwards  com- 
plain of  being  taken  at  his  word.  He  is  in  a  manner 
estopped  from  saying  that  by  reason  of  the  other's  in- 
capacity there  is  no  contract  which  can  be  made  binding 
on  either  of  them.     The  law  says  to  him  :  You  offer  to 


iq)  Ptit  y.  Smith  (1811)  3  Camp. 

OQ 

\r)  (1846)  13  M.  &  W.  623,  14 
L.  J.  Ex.  151. 

(<)  MoUon  y.  Cammua  (1848)  2 


Ex.  487,  in  Ex.  Gh.  4  Ex.  17,  18 
L.  J.  Ex.  68,  866;  Matthewt  y. 
Baxter  (1878)  L.  B*  8  Ex.  132,  42 
L.  J.  Ex.  78. 


AS  TO  LEGAL  EFFECT.  447 

contract  with  a  man  whom  you  have  reason  to  believo 
incapable  of  contracting  :  and  if  he  chooses  to  hold  you  to 
the  bargain  when  he  comes  to  his  right  mind,  it  does  not 
lie  in  your  mouth  to  say  there  was  no  contract  because  he 
did  not  understand  what  he  was  about.  If  you  thought 
he  did  understand  it,  you  cannot  complain  of  being  in  the 
same  situation  as  if  such  had  been  the  fact.  If  you  knew 
he  did  not  understand  it,  then  (unless  you  meant  to 
commit  a  fraud  by  taking  an  unfair  advantage  of  his  con- 
dition) you  were  careless  enough  to  take  the  risk  of  his 
repudiating  the  contract,  or  you  thought  the  mere  chance 
of  a  ratification  worth  having ;  still  less  can  you  complain 
in  that  case  that  the  contract  is  ratified  instead  of  being 
repudiated.  And  you  have  the  correlative  benefit  of  being 
able  to  sue  on  the  contract  if  it  is  ratified  (t),  or  even  if  it 
is  not  repudiated  within  a  reasonable  time. 


There  may  also  be  a  fundamental  error  affecting  not  ^^^ 
the  whole  substance  of  the  transaction,  but  only  its  legal  character 
character.     It  is  apprehended  that  on  principle  a  case  of  jj,j^^. 
this  kind  must  be  treated  in  the  same  way  as  those  we  tion. 
have  already  considered ;  that  is,  if  the  two  parties  to  a 
transaction  contemplate  wholly  different  legal  effects,  there 
is  no  agreement :  but  this  will  not  prevent  an  act  done  by 
either  party  from  having  any  other  effect  which  it  can 
have  by  itself  and  which  it  is  intended  to  have  by  the 
party  doing  it. 

Thus  if  A.  gives  money  to  B.  as  a  gifb,  and  B.  takes  it 
as  a  loan,  B.  does  not  thereby  become  A.'s  debtor  (w),  but 
the  ownership  of  the  money  is  not  the  less  effectually 


(0  L.  K  8  Ex.  182.  was  beld  that  an  advance  at  6r8t 
(u)  Bat  if  R  oommnnicatea  to  A.  intended  to  be  a  gift  had  in  this 
his  intention  of  treating  the  money  way  been  turned  into  a  loan,  and 
as  a  loan,  and  A.  assents,  then  there  was  a  good  consideration  for  a  pro- 
is  a  good  contract  of  loan.  See  HiU  mitsory  note  sabeequently  given  for 
▼.  WiUon  (1873)  8  Ch.  888 ;  per  the  anaount. 
Mellish  L.  J.  at  p.  896 ;  where  it 


448 


MISTAKK. 


transferred  to  B.  (.v).  Or  "  if  A.  sends  a  case  of  wine  to 
B.  intending  to  sell  it,  but  fiedls  to  oonimunicate  his  inten- 
tion, and  B.  honestly  believing  it  to  be  a  gift  consames  it, 
there  is  no  ground  for  holding  B.  to  be  responsible  for 
the  price  either  in  law  or  equity,  if  he  be  blameless  for  the 
mistake"  (z). 

We  have  seen  however  (p.  430)  that  mistake  as  to  any 
particular  effect  of  a  contract  depending  on  its  true  con- 
struction does  not  discharge  the  contracting  party  or 
entitle  him  to  act  upon  his  own  erroneous  construction. 


Error  ttt 


B.  Hrror  as  to  the  person  of  the  other  party. 

Another  kind  of  fundamental  error  is  that  which  relates 
to  the  person  with  whom  one  is  contracting.  Where  it  is 
material  for  the  one  party  to  know  who  the  other  is,  this 
prevents  any  real  agreement  from  being  formed  (a).  Such 
knowledge  is  in  fact  not  material  in  a  great  part  of  the 
daily  transactions  of  life,  as  for  instance  when  goods  are 
sold  for  ready  money,  or  when  a  railway  traveller  takes 
his  ticket :  and  then  a  mere  absence  of  knowledge  caused 


[y)  Savigny,  Syat  8.  269  ;  Paoliiis 
D.  44.  7.  de.  o.  et*.  8  §  1.  Non  satis 
antem  est  daotis  esse  nnmos  et  fieri 
aocipfentis,  ut  obligatio  naicatnr,  sed 
etiam  boc  animo  dari  et  aodpi  nt 
obligatio  oonstitnatur.  Itaqae  si 
quis  peooBiam  soam  donandl  caasa 
dedf  rit  mihi,  qnamqnam  et  donantis 
fnerit,  et  mea  fiat,  tamen  non  obli* 
gabor  ei,  quia  non  hrc  inter  noe 
actum  est.  As  to  the  transfer  of 
tlie  property  being  effectual  (not- 
withstanding Ulpian's  opinion  in 
P.  12.  1.  de  reb.  ored.  18  pr.)  op. 
Julianus,  P.  41.  1.  de  acq.  rer.  dom. 
86.  The  reason  is  that  to  that  ex- 
tent there  is  an  intention  free  from 
error  on  the  one  part  and  an  assent 
on  the  other.  But  a  wholly  mistaken 
handing  over  of  money  or  goods 
passes  no  property :  Reg.  ▼.  Middle- 
ton  (1873)  L.  R.  2  C.  C.  K.  88,  44, 
42  L.  J.  M.  C.  73 ;  Kingiford  v. 
Meny  (1866)  (Ex.  Ch.)  1  H.  ft  N. 
508,  26    L.  J.  Ex.  88  ;  and  see 


Chapman  v.  Cole  (1858)  12  Gray 
(&fasB.)  141,  it  y.  AOiwett  (1885)  16 
Q.  B.  D.  190. 

(z)  Benjamin  on  Sale^  878  ;  cp. 
the  somewhat  similar  case  put  by 
Bramwell  B.  in  Jieg.  v.  Middleton 
(1^78)  L.  R.  2  C.  C.  R  at  p.  56, 
and  Hint  v.  8neU  (1870)  104  Mass. 
178,  where  a  baker  who  had  ordtrtd 
flour  of  A.  was  by  a  warehouseman's 
mistake  supplied  with,  and  coni^umed, 
more  valuable  flour  of  B.'8,  and  was 
held  not  liable  either  on  an  implied 
contract  with  B.,  or  for  convi  rsion 
of  the  flour. 

(a)  Savigny,  Syst.  8.  269  ;  Po- 
thier,  ObL  §  19,  adopted  by  Fry  J. 
in  Saiitk  v.  Wheatcroft  (1878)  9  Ch. 
D.  at  p.  280,  47  L.  J.  Ch.  745.  U 
I  take  a  loan  from  A.  thinking  he 
is  B.'s  agent  to  lend  me  the  money 
when  he  is  in  truth  C's  there  is  no 
contract  of  loan,  though  C.  may  get 
back  his  money  l^  condieUo :  D.  12. 
1.  de  reb.  Qted,  82. 


ERROR  AS  TO  PERSON.  449 

by  complete  indifference  as  to  the  person  of  the  other 
party  cannot  be  considered  as  mistake,  and  there  can 
hardly  be  any  question  of  this  kind  In  principle  how- 
ever, the  intention  of  a  contracting  party  is  to  create  an 
obligation  between  himself  and  another  certain  person, 
and  if  that  intention  fiedls  to  take  its  proper  effect,  it 
cannot  be  allowed  to  take  the  different  effect  of  involving 
him  without  his  consent  in  a  contract  with  some  one  else. 

In  Botdton  v.  Jones  (6)  an  order  for  goods  had  been  Joolton  v. 
addressed  by  the  defendants  to  a  trader  named  Brockle- 
hurst,  who  without  their  knowledge  had  transferred  his 
business  to  the  plaintiff  Boulton.  The  plaintiff  supplied 
the  goods  without  notifying  the  change,  and  after  the 
goods  had  been  accepted  sent  an  invoice  in  his  own  name, 
whereupon  the  defendants  said  they  knew  nothing  of  him. 
It  was  held  that  there  was  no  contract,  and  that  he  could 
not  recover  the  price  of  the  goods.  Possibly  the  person 
for  whom  the  order  was  meant  might  have  adopted  the 
transaction  if  he  had  thought  fit.  But  with  the  plaintiff 
there  was  no  express  contract,  for  the  defendants'  offer 
was  not  addressed  to  him ;  nor  yet  an  implied  one,  for 
the  goods  were  accepted  and  used  by  the  defendants  on 
the  footing  of  an  express  contract  with  the  person  to  whom 
their  offer  was  really  addressed  The  defendants  might 
have  had  a  set-off  against  the  person  with  whom  they 
intended  to  contract. 

A  similar  case  was  Mitchell  v.  Lapage  (not  cited  in  Mitchell  v. 
BotiUon  V.  Jones)  (c).    The  action  was  assumpsit  for  not  ^^^^••®* 
accepting  goods.    A  change  had  taken  place  in  the  seller's 


(6)  BouUon  V.  JoMi  (1867)  2  H.  contended  that 

&   N.    564,    27    L.   J.   Bz.    117.  nsaffe   a   Dropoflal  addresie^  to  a 

Mr.  Benjamin  has  criticized  Chii  trader  at  dIb  place  of  boslnen  for 

case  in  his  treatise  on  Sale  (p.  872).  the  sopply  of  goods  in  the  way  of 

I  am  nnable  to  follow  him  in  finding  that  bnsiness  is,  in  the  absenoe  of 

any  groond  of  equitable  as  distinct  anything  showlDg  special  personal 

from  legal  olaun  on  the  plaintiff's  considerations,  a  proposal  to  who- 

side.    And  see  BotUm  lee  Co,  ▼.  ever  is  carrying  on  toe  same  busi- 

PcUtr  (1877)  123  Mass.  28,  where  ness  oootinnonsly  at  the  same  place 

BoviUon  V.  /ofict  was  followed  in  its  and  under  the  same  name? 

fall  extent.    Bot  might  it  not  be  (c)  (1816)  Holt  N.  P.  253. 

P.  Q  a 


450  MISTAKE. 

firm,  and  the  broker  had  by  mistake  given  the  old  name 
instead  of  the  new  ona  Gibbs  C.  J.  ruled  as  follows : 
"  I  agree  with  the  defendant's  counsel  that  he  cannot  be 
prejudiced  by  the  substitution.  Metcalfe  [the  broker]  has 
misdescribed  the  names  of  his  principals ;  and  if  by  this 
mistake  the  defendant  was  induced  to  think  that  he 
entered  into  a  contract  with  one  set  of  men  and  not  with 
any  other,  and  if  owing  to  the  broker  he  has  been  pre- 
judiced or  excluded  from  a  set-off,  it  would  be  a  good 
defence."  It  appeared  however  on  the  &cts  in  this  case 
that  the  defendant  had  elected  to  treat  the  contract  as 
subsisting  after  notice  of  the  change :  and  the  contract 
seems  to  have  been  considered  as  voidable  at  the  option  of 
the  buyer  rather  than  as  absolutely  void.  Again,  if  a  man 
enters  into  a  continuing  contract  with  one  of  two  partners 
alone,  not  knowing  of  the  existence  of  the  partnership,  and 
the  peui^ner  with  whom  the  contract  was  made  retires  from 
the  business,  then  the  continuing  and  previously  undis- 
closed peui^ner  cannot  insist  on  the  further  performance  of 
the  contract  even  by  joining  the  name  of  the  original  con- 
tractor with  his  own  as  plaintiff.  When  it  had  become 
impossible  for  the  contract  to  be  performed  by  the  person 
with  whom  it  was  actually  made,  "  the  defendant  had  a 
right  to  object  to  its  being  performed  by  any  other 
person  "  (cZ).  This  case  was  referred  to  with  approval  in 
HvmMe  v.  Hunter  (e),  where  Lord  Denman  said :  "  You 
have  a  right  to  the  benefit  you  contemplate  fi:om  the 
character,  credit,  and  substance  of  the  party  with  whom 
you  contract."  On  like  grounds  it  has  been  held  by  a 
majority  of  the  Court  of  Appeal  that  when  a  purchaser 
orders  goods  of  a  manufacturer  of  such  goods  who  is  not  a 
general  dealer  in  them,  he  is  (if  there  be  no  agreement  or 
trade  custom  to  the  contrary)  entitled  to  have  in  per- 
formance of  the  contract  goods  of  that  manufacturer's  own 

((2)  JRobion  y.  Drumnumd  (1881)  (e)  (1848)  12  Q.  B.  310,  317,  17 

2  B.  &  Ad.  803  ;  per  Lord  Tenterden      L.  J.  6.  B.  350, 
O.  J.  p.  307. 


AS  TO  PERSON.  451 

make  (/).  Again,  if  A.  means  to  sell  goods  to  B.,  and 
C.  obtains  delivery  of  the  goods  by  pretending  to  be  B/s 
agent  to  make  the  contract  and  receive  the  goods  (gr),  or  if 
C,  who  is  a  man  of  no  means,  obtains  goods  from  A.  by 
writing  for  them  in  the  name  of  B.,  a  solvent  merchant 
already  known  to  A.,  or  one  only  colourably  differing  fix)m 
it  (A),  there  is  not  a  voidable  contract  between  A.  and  C, 
but  no  contract  at  all;  no  property  passes  to  C,  and  he 
can  transfer  none  (save  in  market  overt)  even  to  an 
innocent  purchaser.  The  pretended  sale  fails  for  want  of 
a  real  buyer.  There  is  only  an  offer  on  A.'8  part  to  the 
person  with  whom  alone  he  means  to  deal  and  thinks  he 
is  dealing. 

Whether  any  analogous  doctrine  applies  to  deeds  is  a  Probably 
question  on  which  there  does  not  seem  to  be  any  clear  gipi^""' 
authority.     We  have  seen  that  if  a  man  seals  and  delivers  <»mot  be 
(at  any  rate  without  culpable  negligence)  a  parchment  to  deeds, 
tendered  to  him  as  being  a  conveyance  of  his  lands  of 
Whiteacre,  which  is  in  fact  a  conveyance  of  his  lands  of 
Blackacre,  it  is  not  his  deed   and   no  estate  passes.    It 
might  be  argued  that  there  is  no  reason  why  the  insertion 
of  a  wrong  party,  if  material,  should  not  have  the  same 
result  as  the  insertion  of  wrong  parcels ;  and  that  if  a  man 
executes  a  conveyance  of  Whiteacre  to  A.  as  and  for  a 
conveyance  of  the  same  estate  to  B.  it  is  equally  not  his 
deed.     But  the  judgment  in  Hunter  v.  Walters  (i)  is  cer- 
tainly adverse  to  such  a  view. 


(/)  Jokmon  y.  Sayltan  (1881)  7  $patehTran»paHCo,,lS6MMn,  283, 

Q.  B.  TAw.  488,  50  L.  J.  Q.  a  768  deddes  that  if  A.  in  penon  obtains 

(diu.  Bnmwell  Lb  J.)  goods  by  pretending  to  be  B.,  then, 

(ff)  Hardman  y.  Booth  (1863)  1  MA-is^'identifiedbyBightandhear- 

H.  k.  C.  803,  82  L.  J.  Ex.  106  ;  cp.  ing,"  property  does  pass.     Soi  qu, 

Kingtford  y.  Merry  (1866)  1  H.  ft  and  cf.  Pothier,  Obi.  §  19. 

N.  608,  26  L.  J.  Ex.  88  ;  Holliiu  y.  (t)  (1871)  7  Ch.  76  ;  twpra,  p.  446. 

PowUr  (1874-6)  L.  R  7  H.  L.  767,  On  the  otherhand,  "if  A.  personat- 

763,  796.  ing  B.  exeoates  a  deed  in  tbe  name 

(A)  lAndtay  y.  CfurUly,  Cundy  y.  of  B.    purporting  to  conyey    K's 

Litidmy  (1878)  3  App.  Ca.  469,  47  property,  no  right  or  interest  can 

L.  J.  Q.  B.  481 ;  Ex  parte  BmrneU  possibly  pass  by  snch  an  instmment. 

(1876)  3  Ch.  D.  128,  46  L.  J.  Bk.  It  is   not  a  deed.    It  makes  no 

120  ,*   Sdmmndi  y.   Merchant^  Dt-  difference  in  law  that  A.  had  the 

G  O  2 


452 


mSTAKE. 


Satisfao-  It  is  on  the  same  principle  that  a  party  to  whom  any- 
Btran^  thing  is  due  under  a  contract  is  not  bound  to  accept  satis- 
^  *tfLst.  ^*^^^  fr^°^  *^y  ^^^  except  the  other  contracting  party,  in 
person  where  the  nature  of  the  contract  requires  it  (i),  or 
otherwise  by  himself,  his  personal  representatives,  or  his 
authorized  agent  :  and  it  has  even  been  thought  that  the 
acceptance  of  satisfaction  from  a  third  person  is  not  of  itself 
a  bar  to  a  subsequent  action  upon  the  contract  It  seems 
that  the  satisfaction  must  be  made  in  the  debtor's  name 
in  the  first  instance  and  be  capable  of  being  ratified  by 
him  (I),  and  that  if  it  is  not  made  with  his  authority  at 
the  time  there  must  be  a  subsequent  ratification,  which 
however  need  not  be  made  before  action  (m).  But  these 
refinements  have  not  been  received  without  doubt  (n) :  and 
it  is  submitted  that  the  law  cannot  depart  in  substance, 
especially  now  that  merely  technical  objections  are  so  little 
fevoured,  from  the  old  maxim  "  If  I  be  satisfied  it  is  not 
reason  that  I  be  again  satisfied  "  (o). 
Assign-  So  fiw  the  rule  of  common  law.      The  power  of  assign- 

contracts,  ^g  contractual  rights  which  has  long  been  recognized  in 
equity,  and  which  under  the  Judicature  Act,  1873  (s.  25, 
sub-s.  6)  is  now  recognized  as  effectual  in  law,  does  not 
constitute  a  direct  exception.  For  we  are  now  concerned 
only  to  ascertain  the  existence  or  non-existence  of  a  binding 


fame  name  as  B.  if  the  false  per- 
sonation is  established  ;  stiU  the 
instrument  is  not  a  deed,  and  that 
plea  wonld  be  a  complete  answer 
by  B.  or  any  one  claiming  throngb 
him:"  Cooper  v.  Vetey  (1882)  20 
Ch.  Div.  611, 623,  61  L.  J.  Ch.  862. 
(Kay  J. ;  affd.  in  C.  A.  20  Ch.  Div. 
627). 

(k)  See  Jtobinsonv.  Daviwn  (1871) 
L.  R.  6  Ex.  269,  40  L.  J.  Ex.  172. 

[1)  JafMt  ▼.  Jtaacs  (1852)  12  C.  B. 
791,  22  L.  J.  C.  P.  73 ;  Lueat  ▼. 
Wilkinwn  (1856)  1  H.  &  N.  420,  26 
L.  J.  Ex.  13. 

(m)  Simpson  v.  Eggiiiglon  (1856) 
10  Ex.  845,  24  L.  J.  Ex.  812  (ratifi- 
cation by  plea  of  payment  or  at  the 
trial  may  be  good). 


(n)  SeeperWilles  J.in  CookY.IAHer 
(1868)  13  C.  B.  N.  S.  594,  82  L.  J. 
C.  P.  121,  who  considered  the  doc- 
trine laid  down  in  Jone»  ▼.  Broad" 
kwrai  (next  note)  that  payment  hj 
a  stranger  is  no  payment  till  assenl^ 
as  contrary  to  a  well  known  prin- 
ciple of  law  :  the  civil  law  being  tiio 
other  way  expressly,  and  mercantUe 
law  by  analogy  :  at  the  least  assoit 
ought  to  be  presomed  (cp.  10  Ch. 
416). 

(o)  Fitzh.  Ab.  tit  Barren  pL  166, 
repeatedly  cited  in  the  modem  cases 
where  the  doctrine  is  discussed. 
See  in  addition  to  those  already  re- 
ferred to,  Jones  V.  BroadhurH  (1850) 
9  C.  R  173,  Belthaw  ▼.  Btuh  (1861) 
11  C.  B.  191, 267,  22  L.  J.  C.  P.  24. 


RIGHTS  FOUNDED  ON   PERSONAL   CONFIDENCE.  453 

contract  in  the  first  instance.  But  on  the  other  hand  the 
limits  set  to  this  power  (which  we  have  already  considered 
under  another  aspect)  (p)  may  be  again  shortly  referred  to 
as  illustrating  the  same  principle. 

Grenerally  speaking,  the  liability  on  a  contract  cannot  be 
transferred  so  as  to  discharge  the  person  or  estate  of  the 
original  contractor,  unless  the  creditor  agrees  to  accept  the 
liability  of  another  person  instead  of  the  first  (q). 

The  benefit  of  a  contract  can  generally  be  transferred 
without  the  other  party's  consent,  yet  not  so  as  to  put  the 
assignee  in  any  better  position  than  his  assignor.  Hence 
the  rule  that  the  assignee  ia  bound  by  all  the  equities 
aflfecting  what  is  assigned.  Hence  also  the  "rule  of  general 
jurisprudence,  not  confined  to  choses  in  action  .  .  .  that  if 
a  person  enters  into  a  contract,  and  without  notice  of  any 
assignment  fulfils  it  to  the  person  with  whom  he  made  the 
contract,  he  is  discharged  fi"om  his  obligation"  (r),  and  the 
various  consequences  of  its  application  in  the  equitable 
doctrines  as  to  priority  being  gained  by  notice. 

Again,  rights  arising  out  of  a  contract  cannot  be  trans-  Righto 
ferred  if  they  are  coupled  with  liabilities,  or  if  they  involve  ^,n  p^. 
a  relation  of  personal  confidence  such  that  the  party  whose  ^^  ^^' 
agreement  conferred  those  rights  must  have  intended  them  caimot  lie 
to  be  exercised  only  by  him  in  whom  he  actually  con-  "8»g"«^- 
fided  (e).    Thus  one  partner  caimot  transfer  his  share  so  as 
to  force  a  new  psutner  on  the  other  members  of  the  firm 
without  their  consent :  all  he  can  give  to  an  assignee  is  a 
right  to  receive  what  may  be  due  to  the  assignor  on  the 
balance  of  the  partnership  accounts,  and  if  the  partnership 

(p)  Cb.  v.,  supra,  p.  206,  sqq.  (1)   the   transferor   is   not  imme- 

{q)  See  p.  198,  above.    The  ex-  diately  disoharged  :  (2)  the  company 

oeptions   to  this  are   but  partial.  is  not  always  bound  to  register  the 

Thus    the    assignor    of   leaseholds  transfer. 

remains    liable     on     his    express  (r)  Per  Willes  J.  De  NiehoUs  v. 

covenanto :  1  Wms.  Sannd.  298.    A  Saunden  (1870)  L.  R  6  C.  P.  589 

stronger  esse   is   the  transfer   of  at  p.  594,  89  L.  J.  C.  P.  297. 

shares  in  a  company  not  folly  paid  (<)  This  statement  was  approved 

np  :  bat  the  speciil  statatory  law  by  the  Supreme  Court  of  the  U.  S. 

governing   these    transactions    has  in  Arkaruat  SmeUing  Co.  ▼.  Bdden 

not   altogether   lost  sight   of  the  Co.  (1888)  127  U.  S.  879,  888. 

principles  of  the  gener^  law  :  for 


454  MISTAKE. 

is  at  will,  the  assignment  dissolves  it;  if  not,  the  other 
partners  may  treat  it  as  a  ground  for  dissolution.  And  a 
sub-partner  has  no  rights  against  the  principal  firm. 

"At  the  present  day,  no  doubt,  an  agreement  to  pay 
money,  or  to  deliver  goods,  may  be  assigned  by  the  person 
to  whom  the  money  is  to  be  paid  or  the  goods  are  to  be 
delivered,  if  there  is  nothing  in  the  terms  of  the  contract, 
whether  by  requiring  something  to  be  afterwards  done  by 
him,  or  by  some  other  stipulation,  which  manifests  the 
intention  of  the  parties  that  it  shall  not  be  assignable. 
But  every  one  has  a  right  to  select  and  determine  with 
whom  he  will  contract,  and  cannot  have  another  person 
thrust  upon  him  without  his  consent "  (t). 

In  the  same  way  a  contract  of  apprenticeship  is  prima 
fdde  a  strictly  personal  contract  with  the  master;  this 
construction  may  be  excluded  however  by  the  intention 
of  the  parties,  e,g,  if  the  master's  executors  are  expressly 
named  (u),  or  by  custom  (a?). 

So  if  an  agent  appoints  a  sub-agent  without  authority, 
the  sub-agent  so  appointed  is  not  the  agent  of  the  principal 
and  cannot  be  an  accounting  party  to  him  (y).  On  the 
same  principle  it  was  held  in  Stevens  v.  Benning  (z)  that 
a  publisher's  contract  with  an  author  was  not  assignable 
without  the  author's  consent.  The  plaintiflFs,  who  sought 
to  restrain  the  publication  of  a  new  edition  of  a  book, 
claimed  under  instruments  of  which  the  author  knew 
nothing,  and  which  purported  to  assign  to  them  all  the 
copjrrights,  &a,  therein  mentioned  (including  the  copyright 
of  the  book  in  question)  and  all  the  agreements  with 
authors,  &c.,  in  which  the  assignors,  with  whose  firm  the 
author  had  contracted,  were  interested.  It  was  decided 
that  the  instrument   relied   on  did  not  operate  as  an 

(0    Gar.  per  Gny  J.  Arkamas  (y)  Cariwrtg]U  ▼.  ffaldey  (1791)  1 

SmMng  Co.  ▼.  Bddtn  Co,  (1888)  Yes.  jnn.  292.    Cp.  Indlftn  ContrMt  . 

127  U.S.  879,  387.  Act,  1872.  b.  198. 

(tt)  Cooper  v,Simmon»(n^2)Ta.  («)  1  K  &  J.   168,  6  D.  M.  O. 

&  N.  707,  81  U  J.  M.  C.  188.  223  ;  foUowed  in  H6U  ▼.  Bradburp 

(or)  Bac.  Abr.    Master  and  Ser-  (1879)  12  Gh.  D.  886. 
▼an^B. 


AS  TO   SUBJKCT-MATTER.  455 

aasignment  of  the  copjrright,  because  on  the  true  con- 
struction of  the  original  agreement  with  the  publishers 
the  author  had  not  parted  with  it :  also  that  it  did  not 
operate  as  an  assignment  of  the  contract,  because  it  was 
a  personal  contract,  and  it  could  not  be  indifferent  to 
the  author  into  whose  hands  his  interests  under  such  an 
engagement  were  entrusted.  In  the  plainti£fs,  however 
trustworthy,  the  author  had  not  agreed  or  intended  to 
place  confidence :  with  them,  however  respectable,  he  had 
not  intended  to  associate  himself  (a). 

The  law  of  agency,  which  we  have  already  had  occasion  PeooU- 
to  consider  (6),  presents  much  more  important  and  peculiar  f^**^  *° 
exceptions.     Here  again  we  find  that  the  limitations  under  a««noy. 
which  those  exceptions  are  admitted  show  the  influence 
of  the  general  rule  ;  thus  a  psuty  dealing  with  an  agent 
for  an  undisclosed   principal   is   entitled   as  against  the 
principal  to  the  benefit  of  any  defence  he  could  have  used 
against  the  agent. 

C.  Error  as  to  the  subject-matter.  ^^M^ 

There  may  be  fundamental  error  concerning  c  matter. 

A.  The  specific  thing  supposed  to  be  the  subject  of  the 
transaction. 

B.  The  kind  or  quantity  by  which  the  thing  is  described, 
or  some  quality  which  is  a  material  part  of  the  description 
of  the  thing,  though  the  thing  be  specifically  ascertained. 

The  question  however  is  in  substance  always  the  same, 
and  may  be  put  in  this  form  :  It  is  admitted  that  the 
party  intended  to  contract  in  this  way  for  something; 
but  is  this  thing  that  for  which  he  intended  to  contract  ? 
The  rule  governing  this  whole  class  of  cases  is  fully  ex- 
plained in  the  judgment  of  the  Court  of  Queen's  Bench  in 
the  case  of  Kennedy  v.  Pan/xma,  <fec.,  Mail  Company  (c),  Kennedy 

(a)  See  1  E.  ft  J.  at  p.  174,  6  D.  (c)  (1867)  L.  K  2  Q.  B.  680,  86 

11  6.  at  p.  ?29.  L.  J.  Q.  B.  260. 

(6)  Oh.  n.,  p.  9f^  abore. 


466  MISTAKE. 

°?»,*S-»  There  were  cross  actions,  the  one  to  recover  instalments 
panj.  paid  on  shares  in  the  company  as  money  had  and  received, 
the  other  for  a  call  on  the  same  shares.  The  contention 
on  behalf  of  the  shareholder  was  "  that  the  effect  of  the 
prospectus  was  to  warrant  to  the  intended  shareholders 
that  there  really  was  such  a  contract  as  is  there  repre- 
sented (d),  and  not  merely  to  represent  that  the  company 
bona  fide  believed  it,  and  that  the  difference  in  substance 
between  shares  in  a  company  with  such  a  contract  and 
shares  in  a  company  whose  supposed  contract  was  not 
binding  was  a  difference  in  substance  in  the  nature  of  the 
thing;  and  that  the  shareholder  was  entitled  to  return 
the  shares  as  soon  as  he  discovered  this,  quite  indepen- 
dently of  fraud,  on  the  ground  that  he  had  applied  for  one 
thing  and  got  another  "  (e). 

The  Court  allowed  it  to  be  good  law  that  if  the  shares 
applied  for  were  really  different  in  substance  from  those 
allotted,  this  contention  would  be  right  But  it  is  an 
important  fsxt  of  the  doctrine  (/)  that  the  difference  in 
substance  must  be  complete.  In  the  case  of  fraud,  a 
fraudulent  representation  of  any  fact  material  to  the  con- 
tract gives  a  right  of  rescission  ;  but  the  misapprehension 
which  prevents  a  valid  contract  from  being  formed  must 
go  to  the  root  of  the  matter.  In  this  case  the  misappre- 
hension was  not  such  as  to  make  the  shares  obtained  sub- 
stantially different  bom  the  shares  described  in  the  pro- 
spectus and  applied  for  on  the  faith  of  that  description  (g). 
It  was  at  most  like  the  purchase  of  a  chattel  with   a 


{d)  A  contract  with    the    post-  aacribed  to  Panlcn  in  the  report 

master-general  of  New  Zealand  on  {g)  So,  where   new  stock   of   a 

behalf  of  the  Government,  which  company  is  iasned  and  purchased  on 

tamed  ont  to  be  beyond  his  au-  the  sapposition  that  it  will  have  a 

thority.  preference  which  in  fact  the  oom- 

{e)  ret  Cnr.  at  p.  586.  pany  had  no  power  to  give  to  it, 

(/)  In  Roman  law  as  well  as  in  this  does  not  amonnt  to  a  generic 

the  Common  law,  ibid,  at  p.  588,  difference  between  the  thins  oon- 

citing  D.  18. 1.  de  oont  empt  9, 10,  traoted  for  and  the  thing  pon^aaed: 

11.  By  a  cleriad  error  the  fragment  Eagle^fidd  ▼•  Marquis  of  Lomdo/t^ 

of  TJlpian  (^  f.  1    14)  "Si  aes  pro  rfmy  (1876)  4  Ch.  Div.  698. 
anro    veneat,  non*   valet,'*  &c.,    is 


AS  TO  SPECIFIC  THING.  457 

collateral  warranty,  where  a  breach  of  the  warranty  gives 
an  independent  right  of  action,  but  in  the  absence  of  fraud 
is  no  ground  for  rescinding  the  contract  (A). 

In  the  particular  case  of  taking  shares  in  a  company 
the  contract  is  not  in  any  case  void,  but  only  voidable  at 
the  option  of  the  shareholder  if  exercised  within  a  reason- 
able time :  this,  although  in  strictness  an  anomaly,  is 
required  for  the  protection  of  the  company's  creditors,  who 
are  entitled  to  rely  on  the  register  of  shareholders  (i). 

We  also  reserve  for  the  present  the  question  how  the 
legal  result  is  affected  when  the  error  is  due  to  a  repre- 
sentation made  by  the  other  party.  The  exposition  of  the 
general  principle,  however,  is  not  the  less  valuable :  and 
we  now  proceed  to  give  instances  of  its  application  in  the 
branches  already  mentioned. 

A.  Error  as  to  the  specific  thing  (in  corpore).  A  striJdng  Sab- 
modem  case  of  this  kind  is  Baffles  v.  Wididhaus  (j).   The  b^J^^' 
declaration  averred  an  agreement  for  the  sale  by  the  corpore, 
plaintiff  to  the  defendants  of  certain  goods,  to  wit,  126  ©m  muno. 
bales  of  Surat  cotton,  to  a/rrive  ex  "Peerless**  from  Bombay, 
and  arrival  of  the  goods  by  the  said  ship :  Breach,  non- 
acceptance.     Plea,  that  the  defendants  meant  a  ship  called 
the  "Peerless,"  which  sailed  from  Bombay  in  October, 
and  that  the  plaintiff  offered  to  deliver,  not  any  cotton 
which  arrived  by  that  ship,  but  cotton  which  arrived  by  a 
different  ship  also  called  the  "  Peerless  "  and  which  sailed 
from  Bombay  in  December.     The  plea  was  held  good,  for 
"The  defendant  only  bought  that  cotton  which  was  to 
arrive  by  a  psuticular  ship ; "  and  to  hold  that  he  bought 
cotton,  to  arrive  in  any  ship  of  that  name  would  have 
been  "  imposing  on  the  defendant  a  contract  different  from 
that  which  he  entered  into  "  (k).     Misunderstanding  of  an 

{h)  Street  y.  BU^  (1881)  2  B.  ft  (h)  Per  PoUock  C.B.  and  Martin 

Ad.  456.  R  2  H.  &  C.  at  p.  207.  The  further 

(^  8ee  caiea  died  p.  461,  imfra,  qnestiona  which  might  have  arisen 

{j)  (1864)  2  H.  &  C.  906,  38  L.  on  the  faots  are  of  oonrse  not  dealt 

J.  Ex.  160.  with.    Snch  a  case  can  occor  only 


468  MISTAKE. 

offer  made  by  word  of  mouth  might  conceivably  have  a 

like  effect,  but  obviously  is,  and  ought  to  be,  difficult  to 

prove  (l). 

ParoeU  In  Malvos  V.  Freeman  (m)  specific  performance  was 

1^  mis-      refused  against  a  purchaser  who  had  bid  for  and  bought 


lot  different  from  that  he  intended  to  buy :  but 
the  defendant  had  acted  with  considerable  negligence, 
and  the  question  was  left  open  whether  there  was 
not  a  valid  contract  on  which  damages  might  be  re- 
covered at  law.  The  case  of  OaZverley  v.  Williams  (n) 
sht^ws  however  that  the  same  principle  has  been  fully 
recognized  by  courts  of  equity.  The  description  of  an 
estate  sold  by  auction  included  a  piece  which  appeared 
not  to  have  been  in  the  contemplation  of  the  parties,  and 
the  purchaser  was  held  not  to  be  entitled  to  a  conveyance 
of  this  part.  "  It  is  impossible  to  say,  one  shall  be  forced 
to  give  that  price  for  fart  only,  which  he  intended  to  give 
for  the  whole,  or  that  the  other  shall  be  obliged  to  sell  the 
whole  for  what  he  intended  to  be  the  price  of  a  part 
only.  ....  The  question  is,  does  it  appear  to  have 
been  the  common  purpose  of  both  to  have  conveyed  this 
H^m^.  part?"  In  Harris  v.  Pepperdl  (o)  the  vendor  had  ac- 
fto.  '  tually  executed  a  conveyance  including  a  piece  which  he 
had  not  intended  to  sell,  but  which  the  defendant  main- 
tained he  had  intended  to  buy :  Lord  Romilly,  acting  in 
accordance  with  his  own  former  decision  in  Ourrard  v. 
Frankd  (p),  gave  the  defendant  an  option  "of  having  the 
whole  contract  annulled  or  else  of  taking  it  in  the  form 
which  the  plaintiff  intended."  The  converse  case  occurred 
in  Bloomer  v.  Spittle  (g),  where  a  reservation  had  been 
introduced  by  mistake.    The  principle  of  these  cases  seems 

where  *<  the  ordinary  evidence  as  to  (I)  PhUUpt  ▼.  BiUolU  (1824)  2  B. 

the  primary  meanings  of  the  words  "  &  C.  51 1 . 

naed  "  shows  that  the  words  may  (m)  (1836-7)  2  Kee.  25. 

bear  more  than  one  meaning,  with-  (n)  (1790)  1  Ves.  jnn.  210. 

ont  showing  in  which  of  those  mean-  (o)  (1867)  5  Eq.  1. 

ings  other  party  nsed  them,  so  that  (p)  (1862)  80  Beav.  445,  81  L.  J. 

we  have  a  case  of  equivocation"  :  Ch.  604. 

H.  W.  Elphinstone  in  L.  Q.  R  ii  (9)  (1872)  18  Eq.  427,  41  L.  J. 

110.  Oh.  869. 


AS  TO  SPECIFIC  THING.  459 

to  be  that  the  Court  will  not  hold  the  plaintiff  bound  by 
the  defendant's  acceptance  of  an  offer  which  did  not 
express  the  plaintiffs  real  intention,  and  which  the  de- 
fendant could  not  in  the  circumstances  have  reasonably 
supposed  to  express  it  (r) ;  nor  yet  require  the  defendant 
to  accept  the  real  offer  which  was  never  effectually  com- 
municated to  him,  and  which  he  perhaps  would  not  have 
consented  to  accept :  but  will  put  the  parties  in  the  same 
position  as  if  the  original  offer  were  still  open  (s).  The 
Court  having  come  to  the  conclusion  that  the  parties  did 
not  rightly  understand  each  other, "  it  is  not  possible  with- 
out consent  to  make  either  take  what  the  other  has 
offered  "  (t).  This  does  not  mean  that  a  party  who  has 
accepted  in  good  fisdth  and  in  its  natural  sense  a  proposal 
made  in  explicit  terms  can  be  deprived  of  his  right  to  rely 
on  the  contract  merely  because  the  proposer  failed  to 
express  his  own  intention.  In  such  a  case  the  proposer  is 
estopped  from  showing  that  his  reasonably  apparent  mean- 
ing was  not  his  real  meaning  (u). 

The  case  of  Dacre  v.  Gorges  (v),  though  shortly  reported 
and  no  reasons  given  for  the  judgment,  appears  to  belong 
to  this  clas&  The  plaintiff  and  others,  tenants  in  common, 
had  agreed  upon  a  partition,  the  allotments  to  be  ascer- 
tained on  a  valuation  by  surveyora     Certain  land  to  which 

(r)  This  limitation  i«  material :  an    equitable   plea),  the   point  of 

op.  Paget  ▼.  ManhaU  (1884)  28  Ch.  mistake  {viz,  the  vendon  of  a  spedfio 

IMv.  255,  with   Tamplin  v.  James  carffOBhowingthepnrchaeeraiample 

(1880)    15    Oh.    IMt.   215.     Lord  which  in  fact  was  of  a  different  balk) 

Bomilly's   judgments    do   not,    in  did  not  go  tothe  etsenceof  the  oon- 

terms  at  any  rate^  sufficiently  attend  tract:  the  oorrespondenoe  of    the 

to  the  prindple  Miforoed  in  Tamplin  balk   to  the  sample  was   only  a 

Y.  Jama,  collateral  term  which  the  parchaaer 

(f)  For  the  principle  of  these  de-  might   waive  if    he   choie.     Tlie 

dsions  compare  Claiet  v.  Higgin»on  vendors,    therefore,    were    at    all 

(next  note)  and  Lej^nd  v.  ItUng-  events  not  entitled  to  rescind  the 

^wrth    (1860)  2   D.   F.    J.    252-8.  contract  onconditionally. 

McKenaie    v.    Hedcetk     (1877)     7  (0  Clowea  v.  HigginMn  (1818)  1 

Ch.   D.  676,  47  L.    J.   Ch.    281,  Ves.  &  B.  524, 686. 

well  shows  the  dirtinction  between  (u)  Tamplin  v.  /amef,  see  note  (r) 

this  dass  of  cases  and  those  where  a  above. 

troe  contract  is  carried  oat  with  (v)  (1826)  2  S.  ft  St  464  ;  it  does 

abatement    or    compensation.     In  not  appear  how  the  lapse  of  time 

SeoU  V.  LUOedale  (1858)  8  E.  ft  B.  (eleven  years)  was  explained. 
815,  27  L.  J.  Q.  B.  201  (a  case  on 


460  MISTAKE. 

the  plaintiff  was  solely  entitled  was  by  mistake  included 
in  the  valuation  and  in  the  allotment  made  to  the  plaintiff, 
so  that  the  plaintiff  thereby  got  less  than  her  due  share  of 
the  rest.  The  allotments  were  conveyed  according  to  this 
distribution,  and  the  mistake  not  discovered  till  several 
years  later.  Specific  restitution  was  then  impossible,  parts 
of  the  other  allotments  having  been  sold.  But  a  suit  was 
instituted  for  a  money  compensation  against  the  only  one 
of  the  other  tenants  in  common  who  refused  it,  and  it  was 
held  a  plain  case  for  relief.  Obviously  there  was  never  any 
agreement  on  the  plaintiff's  part  to  be  bound  by  an  allot- 
ment which  treated  her  sole  property  as  common  property. 
Ambigu-  Similarly,  "where  the  terms  of  the  contract  are  am- 
of  con-  biguous,  and  where,  by  adopting  the  construction  put  upon 
tract  them  by  the  plaintiff,  they  would  have  an  effect  not  con- 
templated by  the  defendent,  but  would  compel  him  to 
include  in  the  conveyance  property  not  intended  or 
believed  by  him  to  come  within  the  terms  of  the  contract," 
and  the  plaintiff  refiises  to  have  the  contract  executed  in 
the  manner  in  which  the  defendant  is  willing  to  complete 
it,  specific  performance  cannot  be  granted  (w). 

When  the  purchaser  erroneously  but  not  unreasonably 
supposes  a  portion  of  property  to  be  included  which  is  of 
no  considerable  quantity,  but  such  as  to  enhance  the  value 
of  the  whole,  this  is  a  "  mistake  between  the  parties  as  to 
what  the  property  purchased  really  consists  of"  so  material 
that  the  contract  will  not  be  enforced  (x). 

In  this  class  of  cases  a  simple  misunderstanding  on  the 
buyer's  part  of  the  description  of  the  property  sold,  if  such 
as  a  reasonable  and  reasonably  diligent  man  might  fall 
into,  may  be  enough  to  relieve  him  from  specifically  per- 
forming the  contract,  though  not  from  liability  in 
damages  (y).      A  vendor  is  in  the  same  position  if  his 

{w)  Baxendaie  v.  Seale  (1854)  19  (1808)  15  Vi-a.  516,  524. 

Beav.  601,  24  L.  J.  Ch.  385.    Cp.  (x)  Den»y  v.  Hancock  (1870)  6 

per  Lon)  Eldon,  Stewart  v.  AUUttm  Gh.  1,  14. 

(1815)  1  Mer.  26,  38;  and  |>er  Sir  (v)  Tamplia  v.  Jama  (1880)  15 

W.    Grant,    ffigginton   v.    Glowet  Gh.  Div.  215. 


AS  TO  SHARES.  461 

agent  has  by  ignorance  or  neglect  included  in  a  contract 
for  sale  property  not  intended  to  be  sold  (z). 

It  was  for  some  time  (a)  held  that  a  material  variance  ^  *® 
between  the  objects  of  a  company  as  described  in  the  pros- 
pectus and  in  the  memorandum  of  association  would 
entitle  a  person  who  had  taken  shares  on  the  faith  of  the 
prospectus  to  say  that  the  concern  actually  started  was  not 
that  in  which  he  agreed  to  become  a  partner,  and  to  have 
his  name  removed  from  the  register.  But  these  decisions 
were  disapproved  of  in  the  House  of  Lords  on  the  ground 
that  "  persons  who  have  taken  shares  in  a  company  are 
bound  to  make  themselves  acquainted  with  the  memor- 
andum of  association,  which  is  the  basis  upon  which  the 
company  is  established  "  (6).  The  rights  and  liabilities  of 
persons  taking  shares  in  companies  are  indeed  of  a  peculiar 
kind ;  and  the  imposition  of  this  special  duty  upon  them 
does  not  affect  the  general  truth  of  the  principle  now  being 
considered. 

It  has  also  been  attempted  to  dispute  the  validity  of  a  Enor  in 
transfer  of  shares  because  the  transferor  had  not  the  shares  guiahig 
corresponding  to  the  numbers  expressed  in  the  transfer,  njwabeni 
although  he  had  a  sufficient  number  of  other  shares  in  the  not 
company ;  but  it  was  held  that  the  transferee,  who  had  in  "n**«f*^ 
substance  agreed  to  take  fifty  shares  in  the  company,  could 
not  set  up  the  mistake  as  against  the  company's  creditors  (c). 
"  The  numbers  of  the  shares  are  simply  directory  for  the 
purposes  (d)  of  enabling  the  title  of  particular  persons  to 

(z)  Alvardejf  v.  Kinnaird  (1849)  the  contract  is  in  BOoh  oases  not 

2  Mac.  ft  G.  1,  8.    Cp.  Orifitht  v.  void,  bnt  only  voidable  at  the  option 

J<me$  (1873)  15  Eq.  279,  42  L.  J.  of  the  ahardiolder,  which  mnst  be 

Gh.  468.  exercised  within  a  reasonable  time. 

(a)  Skip's  case  (1865)  2  D.  J.  S.  So,  a  person  who  applies  for  vbares 

544,  L.  B.  3  H.  L.  848,   Webtter's  in   a  company   not   described    as 

case  (1866)  2  Eq.  741,  Stewart's  case  limited  cannot  afterwards  be  heard 

(1866)  1  Ch.  574.  to  pay  that  he  did  not  mean  to  take 

(2r)  Per  Lord  Chelmsford,  Oakes  shared  in  an  imlimited  company : 

V.  Turqvamd  (1867)  L.  R.  2  H.  L.  Perrett's  ca.  (1873)  15  Eq.  250,  42 

825,  351,  36  L.  J.  Gh.  949.  See  ace  L.  J.  Gh.  805. 

Kent  V.  FreehM  Land  Co.  (1868)  3  (c)  Indies  ca.  (1872)  7  Gh.  485,  41 

Gh.   493  ;  Boreas  ca.  (1869)  4  Gh.  L.  J.  Gh.  564. 

503 ;  CkaUis's  ca.  (1870-1)  6  Gh.  266,  {d)Sie'mibB  report. 
40  L.  J.  Gh.  431 ;  all  shewing  that 


462  MISTAKE. 

be  traced ;  but  one  share,  an  incorporeal  portion  of  the 
profits  of  the  company,  is  the  same  as  another,  and  share 
No.  1  is  not  distinguishable  from  share  No.  2  in  the  same 
way  as  a  grey  horse  is  distinguishable  from  a  black 
horse  (e). 

Error  m        b.  Error  as  to  kind,  quantity,  or  quality  of  the  thing. 

to  kind, 

*<*•  A  material  error  as  to  the  kind,  quantity,  or  quality  of 

a  subject-matter  which  is  contracted  for  by  a  generic 
description  (whether  alone  or  in  addition  to  an  individual 
description)  may  make  the  agreement  void,  either  because 
there  was  never  any  real  consent  of  the  parties  to  the  same 
thing,  or  because  the  thing  or  state  of  things  to  which  they 
consented  does  not  exist  or  cannot  be  realized. 
0«nti8 :  In  Thornton  v.  Kempater  (/)  the  common  broker  of  both 

V.  Kemp-   parties  gave  the  defendant  as  buyer  a  sale  note  for  Riga 
■*«'•  Rhine  hemp,  but  to  the  plaintiff  as  seller  a  note  for  St 

Petersburg  deem  hemp.  The  bought  and  sold  notes  were 
the  only  evidence  of  the  terms  of  the  sala  The  C!ourt 
held  that  "  the  contract  must  be  on  the  one  side  to  sell 
and  on  the  other  side  to  accept  one  and  the  same  thing  " : 
here  "  the  parties  so  far  as  appeared  had  never  agreed  that 
the  one  should  buy  and  the  other  accept  the  same  thing ; 
consequently  there  was  no  agreement  subsisting  between 
them. 

In  a  case  of  this  kind  however  there  is  not  even  an 
agreement  in  terms  between  the  proposal  and  the  accept- 
ance. 
Quantity.  A  curious  case  of  error  in  quantity  happened  in  Henkel 
V.  Pape  (g)y  where  by  the  mistake  of  a  telegraph  clerk  an 
order  intended  to  be  for  three  rifles  only  was  transmitted 
as  an  order  for  fifty.  The  only  point  in  dispute  was  whether 
the  defendant  was  bound  by  the  message  so  transmitted, 

{e)  Or  house  No.  2  in  a  street  MttUeU  (1827)  3  Car.  ft  P.  115. 
from  house  Na  4  in  the  same  street,  (/ )  5  Taunt.  786. 

though  of  the  same  description  and  (s)  (1870)  L.  R.  6  Ex.  7,  40  L.  J. 

in  equally  good  repair  :    Leach  y.  Ex.  15. 


AS  TO  PRICE.  463 

and  it  was  held  that  the  clerk  was  his  agent  only  to  trans- 
mit the  message  in  the  terms  in  which  it  was  delivered  to 
him.  The  defendant  had  accepted  three  of  the  fifty  rifles 
sent,  and  paid  the  price  for  them  into  C!ourt:  therefore  the 
question  whether  he  was  bound  to  accept  any  did  not 
arise  in  this  case.  It  is  settled  however  by  former  autho- 
rity that  when  goods  ordered  are  sent  together  with  goods 
not  ordered,  the  buyer  may  refose  to  accept  any,  at  all 
events  ''  if  there  is  any  dimger  or  trouble  attending  the 
severance  of  the  two  "  (h). 

The  principle  of  error  in  quantity  preventing  the  forma-  Price, 
tion  of  a  contract  is  applicable  to  an  error  as  to  the  price 
of  a  thing  sold  or  hired  (i).  As  there  cannot  be  even  the 
appearance  of  a  contract  when  the  acceptance  disagrees 
on  the  face  of  it  with  the  proposal,  this  question  can  arise 
only  when  there  is  an  unqualified  acceptance  of  an  errone- 
ously expressed  or  understood  proposal.  If  the  proposal  is 
misunderstood  by  the  acceptor,  it  is  for  him  to  show  that 
the  misunderstanding  was  reasonable.  "  Where  there  has 
been  no  misrepresentation,  and  where  there  is  no  ambi- 
guity in  the  terms  of  the  contract,  the  defendant  cannot 
be  allowed  to  evade  the  performance  of  it  by  the  simple 
statement  that  he  has  made  a  mistake  "  (k),  A.  makes  an 
offer  to  B.  to  take  a  lease  of  a  named  tarm,  specifying  as 
its  contents  land  amounting  to  250  acres ;  B.'s  agent,  who 
meant  to  invite  offers  for  only  200  acres,  accepts  A.'s  oflFer 
without  examining  its  particulars.  Here  there  is  a  con- 
tract  binding   on    B.,   and   A.    is   entitled    to    specific 


{h)  Leog  Y.  Oreen  (1857)  8  E.  &  (i)  D.   19.  2.  looftti,  52.  8i  de- 

B.  575,  Id  Ex.  Gh.  1  £.  ft  E.  969 ;  oem  tibi  looem  fnndum,  ta  autem 

27  L.  J.  Q.  B.  Ill,  28  ib.  819  ;  per  existimes    qoinqae    te    oonduoen, 

Byles  J.  I  R  ft  E.  at  p.  976  :   and  nihil  agitnr.      Sad  et  ai  ego  mi- 

cp.  ffart  ▼.   Milli  (1846)  15  M.  ft  noria  me  looare  aensero,  ta  plans 

W.  85,  15  L.  J.  Ex.  200,  where  a  te    oonduoere,    ntiqae    non    plurii 

newoontract  was  implied  as  to  part  erit   oondoctio    qoam    qnantl    ego 

of  the  goods  which  was  retained :  patavL 

Imt  in  that  ease  the  qoality  as  well  {k)    TampUn    y.    James    (1880) 

as  the  quantity  of  the  goods  sent  was  15  Gh.  Div.   215,  217  (Baggallay 

not  in  conformity  with  the  order.  L.J.) 


464  MISTAKE. 

performance  to  the  extent  of  B.'s  power  to  give  it,  with  a 
proportionate  reduction  of  the  rent  (m). 

If,  on  the  other  hand,  the  proposal  is  by  accident 
wrongly  expressed,  the  proposer  must  show  that  the 
acceptor  could  not  reasonably  have  supposed  it  in  its 
actual  form  to  convey  the  proposer's  real  intention.  This 
occurred  in  Webster  v.  GecU  (n),  where  the  defendant  sent 
a  written  offer  to  sell  property  and  wrote  1,1002.  for  1,2002. 
by  a  mistake  in  a  hurried  addition  of  items  performed  on 
a  separate  piece  of  paper.  This  paper  was  kept  by  him 
and  produced  to  the  CJourt.  On  receiving  the  acceptance 
he  discovered  the  mistake  and  at  once  gave  notice  of  it. 
It  appeared  that  the  plaintiff  had  reason  to  know  the  real 
value  of  the  property.  Under  the  circumstances  specific 
performance  was  refused.  The  case  is  explained  by 
James  L. J.,  as  one  "  where  a  person  snapped  at  an  offer 
which  he  must  have  perfectly  well  known  to  be  made  by 
mistake"  (o). 

Material        But  sometimes,   even  when   the  thing  which  is  the 
^  subject-matter  of  an  agreement  is  specifically  ascertained, 

the  agreement  may  be  avoided  by  material  error  as  to 
some  attribute  of  the  thing.  For  some  attribute  which 
the  thing  in  truth  has  not  may  be  a  material  part  of  the 
description  by  which  the  thing  was  contracted  for.  If  this 
is  so,  the  thing  as  it  really  is,  namely,  without  that  quality, 
is  not  that  to  which  the  common  intention  of  the  parties 
was  directed,  and  the  agreement  is  void. 

An  error  of  this  kind  will  not  suffice  to  make  the  trans- 
action void  unless — 
Conditioni  (1)  It  is  such  that  according  to  the  ordinary  course  of 
to  avSd  dealing  and  use  of  language  the  difference  made  by  the 
^■"■•®'  absence  of  the  quality  wrongly  supposed  to  exist  amounts 
this  to  a  difference  in  kind  (/)); 

ground. 

(m)  McKensAe  y.  HtAeth  (1877)  (v)  Tampiin  y.  Jama  (1880)  15 

7  Ch.  D.  676,  47  L.  J.  Ch.  231.  Oh.  D.  &t  p.  221. 

(n)  (1861)  80  Be%v.  62.  (/>)  Savigny,  Syst  §  187  (8.  288). 


AS  TO  ESSENTIAL  QUALITY.  465 

(2)  and  the  error  is  also  common  to  both  parties. 

Thus  we  read  "  Mensam  argento  coopertam  mihi  igTio- 
ranti  pro  solida  vendidisti  imprtidens ;  nulla  est  emptio, 
pecuniaque  eo  nomine  data  condicetur "  {q\  Again,  "  Si 
aes  pro  auro  veneat,  non  valet "  (r).  "  If  a  bar  [is]  sold  as 
gold,  but  [is]  in  fact  brass,  the  vendor  being  innocent,  the 
purchaser  may  recover  "  («).  This,  however,  is  not  to  be 
taken  too  largely.  What  does  pro  auro,  as  and  for  gold, 
imply  as  here  used  ?  It  implies  that  the  buyer  thinks  he 
is  buying,  and  the  seller  that  he  is  selling,  a  golden  vessel : 
and  further,  that  the  object  present  to  the  minds  of  both 
parties  as  that  in  which  they  are  traflScking — ^the  object  of 
their  common  intention — ^is,  not  merely  this  specific  vessel, 
but  this  specific  vessel,  being  golden.  Then,  and  not  other- 
wise, the  sale  is  void. 

If  the  seller  fraudulently  represents  the  vessel  as  golden, 
knowing  that  it  is  not,  the  sale  is  (as  between  them)  not 
void  but  voidable  at  the  option  of  the  buyer.  For  if  both 
parties  have  been  in  innocent  and  equal  error  it  would  be 
unjust  to  let  either  gain  any  advantage  :  but  a  party  who 
has  been  guilty  of  fi-aud  has  no  right  to  complain  of  having 
been  taken  at  his  word;  and  it  is  conceivable  that  it  might 
be  for  the  interest  of  the  buyer  to  affirm  the  transaction, 
as  if  the  vessel  supposed  by  the  iGraudulent  seller  to  be  of 
worthless  base  metal  should  turn  out  to  be  a  precious 
antique  bronze.  Probably  the  results  are  the  same  if  the 
buyer's  belief  is  founded  even  on  an  innocent  representa- 
tion made  by  the  seller.  This  seems  to  be  assumed  by  the 
language  of  the  Court  in  Kennedy  v.  Pcmama,  Jke,  Mail 
Company  {t).  We  shall  recur  to  this  point  presently.  Or 
in  an  ordinary  case  the  buyer  may  choose  to  treat  the 
seller's  affirmation  as  a  warranty,  and  so  keep  the  thing 
and  recover  the  difference  in  value. 

Iq)  D.  18. 1.  de  oont  ampt  41  s  1.  («)  Per  Loid  CMupbeU  C.J.  Oom- 

(r)  D.  eod.    tit.    14,   cited  and  perU  ▼.  BarOett  (1868)  2  B.  ft  B. 

adopted  by  the  Court  of  Q.  B.  in  849,  864^  28  L.  J.  Q.  B.  66. 
Kenmedy  v.  Panama,  Ac.  MaU  Co.,         (0  (1867)  L.  R.  2  Q.  B.  680,  687, 

jtipra.  86  L.  J.  Q.  B.  260,  p.  465,  «ii|ms. 

P,  H  H 


466  MISTAKE. 

Again,  if  the  sale  of  the  specific  vessel  is  made  in  good 
faith  with  a  warranty  of  its  quality,  the  vendor  must 
compensate  the  purchaser  for  breach  of  the  warranty,  but 
the  sale  is  not  even  voidable.  For  the  existence  of  a 
separate  warranty  shows  that  the  matter  of  the  warranty 
is  not  a  condition  or  essential  part  of  the  contract,  but  the 
intention  of  the  parties  was  to  transfer  the  property  in 
the  specific  chattel  at  all  events.  Whether  a  particular 
affirmation  as  to  the  quality  of  a  specific  thing  sold  be 
only  a  warranty,  or  the  sale  be  ''conditional,  and  to  be 
null  if  the  affirmation  is  incorrect,"  is  a  question  of  £act 
to  be  determined  by  the  circimistances  of  each  case  (u). 
Kno'  Accordingly,  when  the  law  is  stated   to   be  that  "a 

oommon  P^^y  is  ^ot  bound  to  accept  and  pay  for  chattels,  unless 
they  are  really  such  as  the  vendor  professed  to  sell, 
and  the  vendee  intended  to  buy"  (x),  the  condition  is 
not  alternative  but  strictly  conjunctiva  A  sale  is  not 
void  merely  because  the  vendor  professed  to  sell,  or  the 
vendee  intended  to  buy,  something  of  a  different  kind.  It 
must  be  shown  that  the  object  was  in  £act  neither  such  as 
the  vendor  professed  to  sell  nor  such  as  the  vendee  in- 
tended to  buy. 

And  so  in  the  case  supposed  the  sale  will  not  be  in- 
validated by  the  mistake  of  the  buyer  alone,  if  he  thinks 
he  is  buying  gold ;  not  even  if  the  seller  believes  him 
to  think  so,  and  does  nothing  to  remove  the  mistake, 
provided  his  conduct  does  not  go  beyond  passive  acqui- 

(tt)  See  per  WightmAn  J.  Oumeif  deferves  cAreful  stady.    Of  ooime 

y.    Wcmerdey   (1854)    4   R   ft  B.  the  oondiuionB  in  detail  are  not 

188,  142,  24  L.  J.  Q.  B.  46  :  Ban-  always  the  same  as  in  our  law :  and 

nerman  ▼.  WhUe  (1861)  10  C.  B.  the  fundamental  difference  in  the 

N.   S.   844,  81  L.  J.  0.  P.   28 ;  rules  as  to  the  acteal  transfer  of 

finch  SeL  Ca.  681 ;  AzSmar  v.  Co-  property  in  goods  sold  (as  to  which 

tdJa  (1867)  L.  R.  2  C.  P.  481,  677,  see  Blaekbom  on  the  Contract  of 

86  L.  J. G. P.  124.    TheBomanUw  Bale,  Part  2,  Ch.  8)  most  not  be 

is  the  same  as  to  a  sale  with  war-  overlooked.    Bat  this  does  not  affect 

ranty;  D.  19. 1.  de  act  empt.  21  §  2.  the  nsefnlness  and  importance  of  the 

expld.  hy  Savigny,  Syst.   8.  287.  general  analogies. 

The  whole  of  Savigny's  admirable  {x)  Fer  Our,  ffaUy,  Gander  {1S57) 

exposition  of  so-called  error  in  sub-  2  G.  B.  N.  S.  22,  41,  26  L.  J.  G.  P. 

itaniia  in  §§  137, 138  (8.  276,  sq<].),  188, 148. 


AS  TO  QUALITY.  467 

escence  in  the  self-deception  of  the  buyer.  In  a  case  (y)  ^^^  ^' 
where  the  defendant  bought  a  parcel  of  oats  by  sample, 
believing  them  to  be  old  oats,  and  sought  to  reject  them 
when  he  found  they  were  new  oats,  it  was  held  that  "  a 
belief  on  the  part  of  the  plaintiff  that  the  defendant  was 
making  a  contract  to  buy  the  oats  of  which  he  offered  him 
a  sample  under  a  mistaken  belief  that  they  were  old  would 
not  relieve  the  defendant  firom  liability  unless  his  mis- 
taken belief  was  induced  by  some  misrepresentation  of  the 
plaintiff  or  concealment  by  him  of  a  fact  which  it  became 
his  duty  to  communicata  In  order  to  relieve  the  defendant 
it  was  necessary  that  the  jury  should  find  not  merely  that 
the  plaintiff  believed  the  defendant  to  believe  that  he  was 
buying  old  oats,  but  that  he  believed  the  defendant  to 
believe  that  he,  the  plaintiff,  was  contracting  to  sell  old 
oats."  "There  is  no  legal  obligation  on  the  vendor  to 
inform  the  purchaser  that  he  is  under  a  mistake  not  in- 
duced by  the  act  of  the  vendor"  (z);  and  therefore  the 
question  is  whether  we  have  to  do  merely  with  a  motive 
operating  on  the  buyer  to  induce  him  to  buy,  or  with  one 
of  the  essential  conditions  of  the  contract  (a).  "  Videamus, 
quid  inter  ementem  et  vendentem  actum  sit "  (6) :  "  the 
intention  of  the  parties  governs  in  the  making  and  in  the 
construction  of  all  contracts"  (c);  this  is  the  fundamental 
rule  by  which  all  questions,  even  the  most  refined,  on  the 
existence  and  nature  of  a  contract  must  at  last  come  to  be 
decided 

Another  curious  case  of  this  class  is  Cox  v.  Prentice  (d).  Cox  v. 
The  declaration  contained  a  count  in  assumpsit  as  on  a         ^ 

(y)  SmUh  Y.  ffughet  (1871)  L.  B.  fraud :  the  sale  being  wholly  void 

6Q.  B.  597,  40L.  J.  Q.B.  221:per  in  any  case. 

Cookbi]rnG.J.p.603;perHaimenJ.  (z)  Ibid,   per  Bladcbozn   J.   at 

p.  610.    The  somewhat  refined  dis-  p.  607. 

tinction  here  taken  does  not  seem  (a)  Ibid,  per  Cockbom  C.J. 

to  exist  in  the  ciyil  law.    D.  19.  1.  (b)  Jnllanus  in  D.  18. 1.  de  cont. 

de  act  empt  11  §  5  :  Sayigny,  8.  empt  41  pr. 

298,  according  to  whom  it  makes  (c)  Per  Cur.  Bannerman  y.  White 

no  difference  whether  there  be  on  (1861)  10  G.  B.  N.  S.  844,  860,  81 

the  part  of  the  vendor  ignorance,  L.  J.  C.  P.  28,  82. 

passiYe  knowledge,  or  even  actual  (d)  (1815)  8  M.  ft  S.  844/ 

H  H  2 


468  MISTAKE. 

warranty,  and  the  common  money  counts.  The  nature  of 
the  material  facts  will  sufficiently  appear  by  the  following 
extract  fix)m  the  judgment  of  Bayley  J. : — 

**What  did  the  plAlntiffi  bargain  to  bay  and  the  defendants  to  aeU? 
They  both  nndentand  [tie]  that  the  one  agreed  to  buy  and  the  other  to 
•ell  a  bar  containing  eaoh  a  quantity  of  sUver  as  should  appear  by  the 
assay,  and  the  quantity  is  fixed  by  the  assay  and  paid  for ;  bat  throagh 
some  mistake  in  the  assay  the  bar  turns  oat  not  to  contain  the  quantity 
represented  but  a  smaller  quantity.  The  plaintiff  therefore  may  rssdnd 
the  oontraot  and  facing  money  had  and  recelTed,  having  offered  to  return 
thebarofsUTer." 


And  by  Dampier  J. : — "The  bargain  was  for  a  bar  of  silver 
of  the  quality  ascertained  by  the  assay-master,  and  it  is  not 
of  that  quality.  It  is  a  case  of  mutual  error."  These 
judgments  went  farther  than  was  necessary  to  the  deci- 
sion (e\  for  a  verdict  had  been  taken  only  for  the  difference 
in  value. 
Cases  It  is  important  to  distinguish  from  the  cases  above  con- 

deraiih      si^ered  another  class  where  persons  who  have  contracted 
tion  on      for  the  purchase  of  real  property  or  interests  therein  have 
reiTpio-    '^^^  h®^^  entitled  at  law  (/)  as  well  as  in  equity  (g)  to 
PfJ^         rescind  the  contract  on  the  ground  of  a  misdescription  of 
guished.     the  thing  sold  in  some  particular  materially  affecting  the 
title,  quantity,  or  enjoyment  of  the  estate.    In  some  of 
these  cases  language  is  used  which,  taken  alone,  might  lead 
one  to  suppose  the  agreement  absolutely  void ;  and  in  one 
or  two  {e.g.  Torrance  v.  Bolton)  there  is  some  real  difficulty 
in  drawing  the  line.    But  they  properly  belong  to  the  head 
of  Misrepresentation,  or  else  (which  may  be  the  sounder 


{€)  And  certainly  farther  than  the  (1868)  L.  R.  4  Q.  B.  159, 88  L.  J.  Q. 

cl?il  law:  see  D.  18. 1.  de  cont  emt  B.  68. 

H  where  though  a  bracelet  *<  quae  (g)  SUmUm  t.   TattermU  (1858) 

aurea  dioebatur  "  should  be  found  1  Sm.  ft  G.  529  ;  £M  of  Durham 

"magnaex  parte  aenes,"  yet  "ven-  v.    Legard    (1866)  84    Beav.   611, 

ditionem  ewe  constat  ideo,  quia  auii  84  L.  J.    Oh.    689;    Torrance  v. 

allquid  habuit."  BoUon  (1872)  8  Ch.  118,  42  L.  J. 

(/)  Flight  V.  Booth  (1884)  1  Bing.  Ch.  177.    See  authorities  colled td 

N.   C.  870  ;   Phiflipt  v.  Oafddeagh  in  Dart.  V.  ft  P.  114  pqq. 


AS  TO  EXISTENCE  OF  SUBJECT-MATTER.  469 

view  where  applicable)  (h)  are  cases  where  the  contract  is 
rather  broken  than  dissolved.  A  man  is  not  bound  to  take 
a  house  or  land  not  corresponding  to  the  description  by 
which  he  bought  it  any  more  than  he  is  bound  to  accept 
goods  of  a  different  denomination  from  what  he  ordered,  or 
of  a  different  quality  from  the  sample.  Mistake  or  no 
mistake,  the  vendor  has  failed  to  perform  his  contract.  The 
purchaser  may  say:  "You  offered  to  sell  me  a  freehold: 
that  means  an  unincumbered  freehold,  and  I  am  not  bound 
to  take  a  title  subject  to  covenants"  (i):  or,  "You  offered 
to  sell  an  absolute  reversion  in  fee  simple  :  I  am  not  to  be 
put  off  with  an  equity  of  redemption  and  two  or  three 
Chanceiy  suits  (J).  I  rescind  the  contract  and  claim  back 
my  deposit."  Cases  of  this  kind,  therefore,  are  put  aside 
for  the  present. 

Again,  an  agreement  is  void  if  it  relates  to  a  subject-  Subject- 
matter  (whether  a  material  subject  of  ownership  or  ainexist- 
particular  title  or  right)  contemplated  by  the  parties  as  ®°^ 
existing  but  which  in  fact  does  not  exist.    Herein,  as  before, 
everything  depends  on  the  intention  of  the  parties,  and  the 
question  is  whether  the  existence  of  the  thing  contracted 
for  or  the  state  of  things  contemplated  was  or  was  not  pre- 
supposed as  essential  to  the  agreement.   Such  is  presimied 
to  be  the  understanding  in  the  case  of  sale.    We  may  con- 
veniently use  the  illustrations  given  on  this  point  in  the 
Indian  Contract  Act  (k). 

a.   A  agrees  to  sell  to  B.  a  specific  cargo  of  goods  miutni. 

tions. 

{h)   The    difference    is     purely  lale  of  goods :  bat  the  oontraot  is 

theoretical  ;     for     if     it    be    an  not  merely  to  sell  speoific  land,  bat 

actaal  breach  of  contract  the  par-  to  give  a  certain  kind  of  titla 

chaser  can   recover  only   nominal  (i)  PhiUipi  ▼.  Caldcleugh  (1868) 

damages  :^atiiy.i7o(A«ryta(l 878.4)  L.  R.  4  Q.  B.  169,  88  L.  J.  Q. 

L.  B.  7  H.  L.  158,  48  L.  J.  Ex.  6.  68. 

248,  confirming  Flwreau  v.  Thom'  U)  Torrwnce  ▼.  BotUm  (1872)  8 

hm  (1776)    2  VT.  BL  1078.    The  Ch.  118  :  see  at  p.  124. 

analogy  saggested  in  the  text  shoald  (k)  §  20 ;  the  rale  is  rather  widely 

perhaps  be  confined  to  cases  where  stated  :  Where  both  the  psrties  to 

the  misdeMviption  goes  to  matter  an  agreement  are  onder  a  mistake 

of   title.     One  cannot  compare  a  as  to  a  matter  of  fact  essential  to  the 

specific  sale  of  land  to  a  non-specific  agreement,  the  sgreement  is  void. 


470  MISTAKE. 

supposed  to  be  on  its  way  from  England  to  Bombay.  It 
turns  out  that,  before  the  day  of  the  bargain,  the  ship  con- 
veying the  cargo  had  been  cast  away  and  the  goods  lost. 
Neither  party  was  aware  of  these  facts.  The  agreement 
is  void. 
Couturier  This  was  assumed  in  the  House  of  Lords  and  by  all  the 
judges  in  CotUurier  v.  Hastie  (Z),  where  the  only  question 
in  dispute  was  on  the  effect  of  the  special  terms  of  the 
contract. 

b.  A.  agrees  to  buy  frt)m  B.  a  certain  horsa  It  turns  out 
that  the  horse  was  dead  at  the  time  of  the  bargain,  though 
neither  party  was  aware  of  the  feet.  The  agreement  is 
void  (m). 

We  may  add  a  like  example  frx)m  the  Digest.    A.  agrees 

with  B.  to  buy  a  house  belonging  to  B.     The  house  has 

been  burnt  down,  but  neither  A.  nor  B.  knows  it.    Here 

there  is  not  a  contract  for  the  sale  of  the  land  on  which  the 

house  stood,  with  compensation  or  otherwise,  but  the  sale 

is  void  (v), 

Sune  In  like  manner  a  sale  of  shares  in  a  company  will  not  be 

applied  to  enforced  if  at  the  date  of  the  sale  a  petition  for  winding-up 

J^^       has  been  presented  of  which  neither  the  vendor  nor  the 

purchaser  knew  (o).    But  the  ignorance  of  the  buyer  only 

in  similar  circumstances  does  not  of  itself  invalidate  the 

sale.    It  seems  however  that  the  sale  would  be  voidable 


(/)  (1856)  5  H.  L.  G.  678,  25  L.  J.  empi  57,  pr.   Domum  emi  cum  earn 

Bx.  253.    For  a  fuller  account  of.  et  ego  et  venditor  oombuatam  igno- 

the  case,  and  the  relation  of  this  remua  ;   Nerva,   Sabinus,  Caamua, 

class  of  cases  to  the  doctrine  of  nihil  venisse  quamyis  area  maneat, 

impossibiUty  of  perf  oxmanoe,  see  ppi  pecuniamque  solutam  condid  posse 

899,  400,  above.  aiunt.    Op.  Pikpinian,  eod.  tit  58. 

(m)  Pothier,  Oontrat  de  Vente,  §  4,  Arboribus  quoque  vento  deiectis  vel 

cited5H.L.C.  678,  says:  "Si done,  absumptis  igne  dictum  est  empti- 

ignorant  que  mon  cheval  est  mort,  onem    fundi    non  videri  esse  con- 

je  le  vends  jk  quelqu'un,  il  n*y  aura  traetam  si  contemplatione  illarum 

pas  un  contrat  de  vente,  faute  d'one  arborum,  velati  oliveti,  fundus  com- 

chose  qui  en  soit  Tobjet."  Gp.  Gode  parabatur,  sive  soiente  sive  igno- 

Giv.  1601.    *<Si  au  moment  de  la  rante  venditore. 

vente  la  chose  vendue  6tait  p6rie  en  (o)  EmmenonCM  ca  (1866)  1  Gh. 

totality,  la  vente  serait  nulle  : "  s  483,  expld.  8  Gh.  891,  per  Page 

Italian  Gode,  1461.  Wood  KJ. 

(n)  Paulus  in  D.  18  1.  de  oont 


AS  TO  EXISTENCE  OF  6UBJECT-MATTER.  471 

on  the  ground  of  fraud  if  the  seller  knew  of  the  buyer's 
ignorance,  but  that  such  knowledge  should  be  distinctly 
and  completely  alleged  (p).  An  agreement  to  take  new 
shares  in  a  company  which  the  company  has  no  power  to 
issue  is  also  void,  and  money  paid  under  it  can  be  recovered 
back  (g). 

•    c,  A.  being  entitled  to  an  estate  for  the  life  of  B.  agrees  ^o/n- 
to  sell  it  to  G.     B.  was  dead  at  the  time  of  the  agreement,  and  life 
but  both  parties  were  ignorant  of  the  &ct.    The  agreement  ™**'****' 
is  void. 

This  was  so  held  at  law  in  Strickland  v.  Turrier  (r). 
There,  at  the  date  when  the  sale  of  a  life  annuity  was 
completed,  the  life  had  dropped  unknown  to  both  vendor 
and  purchaser;  it  was  held  that  the  purchase-money  might 
be  recovered  back  as  on  a  total  fiulure  of  consideration.  So 
in  Hitchcock  v.  Oiddings  (a)  a  remainderman  in  fee  ex- 
pectant on  an  estate  tail  had  sold  his  interest,  a  recovery 
having  been  already  suffered  unknown  to  the  parties :  a 
bond  given  to  secure  the  purchase-money  was  set  aside. 
"  Here  is  an  estate  which  if  no  recovery  had  been  suffered 
was  a  good  ona  Both  parties,  being  equally  ignorant  that 
a  recovery  had  been  suffered,  agree  for  the  sale  and  pur- 
chase of  the  estate,  and  the  purchaser  is  content  to  abide 
the  risk  of  a  recovery  being  subsequently  suffered  He 
conceives  however  he  is  purchasing  something,  that  he  is 
purchasing  a  vested  interest.  He  is  not  aware  that  such 
interest  has  already  been  defeated  .  .  .  [The  defendant] 
has  sold  that  which  he  had  not — and  shall  the  plaintiff  be 
compelled  to  pay  for  that  which  the  defendant  had  not  to 
give  ? "  (t).    More  recently,  in  Cochrane  v,  WUlis  (it),  an 

(p)  RvdQ€  ▼.  B9¥fm«n  (1868)  L.  parU  Ali$on  (1874)  15  £q.  894,  9  Oh. 
R  8  Q.  B.  689,  697.    The  Romui      1,  24  ;  Ex  parU  CampbeU  (1873)  16 


lawyers  seem  to  have  treated  the  Eq.  417,  9  Oh.  1, 12,  42  L.  J.  Ch.  771. 

presamptioD  of  dolu$  as  absolute  If  (r)  (1852)  7  Ex.  208, 22  L.  J.  Ex. 

the  seller  knew  the  facts.    See  the  115. 

contmoation  of  the  passages  above  («)  (1817)  4  Fri.  (Ex.  in  Eq.)  135, 

dted.  and  better  in  Dan.  1. 

(0)  Btmk  of  HinduiUm  y.  Ariaon  {t)  Dao.  at  p.  7. 

(1870)  L.R6C.  P.  64.inEx.Oh.  (»)  (1866)   1  Oh,  68,  85  L.  J. 

t6.  222,  40  L.  J.  O.  P.  1, 117 ;  Ex  Ch.  86. 


472  MISTAKE. 

agreement  had  been  made  between  a  remainderman  and 
the  assignee  of  a  tenant  for  life  of  a  settled  estate,  founded 
on  the  assignee  8  supposed  right  to  cut  the  timber.  The 
tenant  for  life  was  in  fact  dead  at  the  date  of  the  agree- 
ment. The  C!ourt  refused  to  enforce  it,  as  having  been 
entered  into  on  the  supposition  that  the  tenant  for  life  was 
alive,  and  only  intended  to  take  effect  on  that  assumption. 
So  a  life  insurance  caimot  be  revived  by  the  pajonent  of  a 
premium  within  the  time  allowed  for  that  purpose  by  the 
original  contract,  but  after  the  life  has  dropped  unknown 
to  both  insurers  and  assured,  although  it  was  in  existence 
when  the  premium  became  due,  and  although  the  insurers 
have  waived  proof  of  the  party's  health,  which  by  the  terms 
of  renewal  they  might  have  required  :  the  waiver  applies 
to  the  proof  of  health  of  a  man  assumed  to  be  alive,  not  to 
the  fact  of  his  being  alive  (x), 
Pnrcbase  The  case  of  Binghami  v.  Bingham  (y),  which  was  relied 
^er^"       on  in  the  argument  of  Cochrane  v.   WUlia,  and  in  the 

■**^y      judgment  of  Turner  L.  J.  must  be  considered  as  belonrinef 
one  •  own.  •'      o  o     o 

Blng-  ^  ^^^  clasa  As  in  Cochrane  v.  WUlia,  the  substance  of 
h*m  V,  the  &cts  was  that  a  purchaser  was  dealing  with  his  own 
property,  not  knowing  that  it  was  his.  This  consideration 
seems  to  remove  the  doubt  expressed  by  Story  {z),  who 
criticizes  it  as  a  case  in  which  relief  was  given  against 
a  mere  mistake  of  law.  But,  with  all  respect  for  that 
eminent  writer,  his  objection  is  inapplicable.  For  the  case 
does  not  rest  on  mistake  as  a  ground  of  special  relief 
at  alL  There  was  a  total  failure  of  the  supposed  subject- 
matter  of  the  transaction,  or  perhaps  we  should  rather  say 
it  was  legally  impossible.  We  have  already  pointed  out 
the  resemblance  of  this  class  of  cases  to  some  of  those 
considered  in  the  last  chapter.     The  one  party  could  not 

(«)  Priickard  ▼.  UenShamlbi  lAft  wiihoat  the  knowledge  of  the  p«r- 

Inturance  Society  (1858)  8  0.  B.  N.  ties,    see    Bradford  t.  Symmidmm 

&  622,  27  L.  J.  G.  P.  169.    For  the  (1881)  7  Q.  B.  Div.  456, 50  L.  J.  Q. 

somewhat   different   treatment   of  B.  582. 

the  oontraot  of  marine  insurance,  (y)  (1748)  1  Yes.  Sr.  126,  Belt's 

where  at  the  date  of  effecting  the  sapp.  79. 

pulicy  (he  risk  has  been  determined  (z)  Eq.  Jorisp.  §  124. 


BUYING   one's  own   PROPERTY.  473 

buy  what  was  his  own  abready,  nor  could  the  other  (in  the 
words  of  the  judgment  as  reported)  be  allowed  "  to  run 
away  with  the  money  in  consideration  of  the  sale  of  an 
estate  to  which  he  had  no  right "  (a).  So  we  find  it 
treated  in  the  Roman  law  quite  apart  from  any  question 
of  mistake,  except  as  to  the  right  of  recovering  back  money 
paid  under  the  agreement.  A  stipulation  to  purchase 
one's  own  property  is  "  natural!  ratione  inutilis"  as  much 
as  if  the  thing  was  destroyed,  or  not  capable  of  being 
private  property  (6).  Such  an  agreement  is  naught  both 
at  law  and  in  equity,  without  reference  to  the  belief  or 
motive  which  determined  it. 

Moreover  the  diflSculty  was  cleared  up  by  Lord  West-  Agree- 
bury,  though  not  quite  on  this  broad  ground,  in  a  case"^^^. 
exactly  similar  in  principle.     In  Cooper  v.  Phibbs  (c)  A.  &  one's 
agreed  to  take  a  lease  of  a  fishery  trom.  B.,  on  the  assump-  ^y?^ 
tion  that  A.  had  no  estate  and  B.  was  tenant  in  fee.    Both  p??P?f  *'• 
parties  were  mistaken  at  the  time  as  to  the  effect  of  a 
previous  settlement ;  and  in  truth  A  was  tenant  for  life 
and  B.   had  no  estate  at  alL      It  was  held  that  this 
agreement  was  invalid.    Lord  Westbury  stated  the  ground 
of  the  decision  as  follows : — "  The  result  therefore  is  that  Lord 
at  the  time  of  the  agreement  for  the  lease  which  it  is  the  i^^l  ex- 
object  of  this  petition  (d)  to  set  aside,  the  parties  dealt  planation 
with  one  another  under  a  mutual  mistake  as  to  their  Jia^turlfc'*" 
respective  rights.     The  petitioner  did  not  suppose  that  he 
was,  what  in  truth  he  was,  tenant  for  life  of  the  fishery. 
The  other  parties  acted  under  the  impression  given  to  them 
by  their  &ther  that  he  (their  father)  was  the  owner  of  the 
fishery  and  that  the  fishery  had  descended  to  them.     In 
such  a  state  of  things  there  can  be  no  doubt  of  the  rule  of 

(a)  The  oaee  ii  conndered,  unong  valet,  tAwe  Bcieiut,  8i?e  ignoraui  emi ; 
other  aatboritiefl,  and  upheld  on  the  Bed  ri  Ignorans  emi,  qnod  lolvero 
trae  ffronnd,  in  Stewart  ▼.  Stewui  repetere  potero,  quia  nulla  obligatio 
(1839)  6  GL  ft  F.  at  p.  968 ;  cp.  the  fmt :  Pomponins,  D.  18. 1.  de  oont. 
remarks  of  Hall  V.-O.  in  Jona  v.  empt.  16  pr. 

(Ward  (1876)  3  Ch.  D.  779,  790,  (c)  (1867)  L.  K.  2  H.  L.  149. 

45  L.  J.  Oh.  809.  (d)  A  Caoro  Petition  in  the  Irish 

(b)  Oaini  in  D.  44.  7.  de^  obL  et  Court  of  Chanoery. 
act.  1  §  10.    Suae  rei  emptio  non 


474  MISTAKE. 

a  court  of  equity  with  regard  to  the  dealing  with  that 
agreement.  It  is  said  '  IgnararUia  iuris  havd  excusat ; ' 
but  in  that  maxim  the  word  '  ivs  *  is  used  in  the  sense  of 
denoting  general  law,  the  ordinary  law  of  the  country.  But 
when  the  word  '  ius '  is  used  in  the  sense  of  denoting  a 
private  right,  that  maxim  has  no  application.  Private 
right  of  ownership  is  a  matter  of  feet;  it  may  be  the  result 
also  of  matter  of  law;  but  if  parties  contract  under  a 
mutual  mistake  and  misapprehension  as  to  their  relative 
and  respective  rights,  the  result  is  that  that  agreement  is 
liable  to  be  set  aside  as  having  proceeded  upon  a  common 
mistake.  Now  that  was  the  case  with  these  parties — ^the 
respondents  believed  themselves  to  be  entitled  to  the 
property,  the  petitioner  believed  that  he  was  a  stranger  to 
it,  the  mistake  is  discovered,  and  the  agreement  cannot 
stand  "  ifi). 
Brongb-  The  principle  here  laid  down  also  covers  BroughUm  v. 
Hail'  ^^  (/)•  '^hei^  the  heir-at-law  of  a  shareholder  in  a 
company  joined  with  several  other  shareholders  in  giving 
a  deed  of  indemnity  to  the  directors,  believing  that  the 
shares  had  descended  to  him  as  real  estate,  whereas  they 
were  personal  estate.  The  deed  was  held  to  be  void  as 
against  him  in  equity  at  all  events,  and  probably  at  law. 
"  The  plaintiff  never  intended  to  be  bound  unless  he  was  a 
shareholder,  and  the  defendants  never  intended  him  to  be 
bound  unless  he  was  sa"  Here  the  mistake  was  plainly 
one  of  fact  within  Lord  Westbury's  definition,  namely  as 
to  the  character  of  the  shares  by  the  constitution  of  the 
particular  company.  It  is  submitted,  however,  that  an 
erroneous  fundamental  assumption  made  by  both  parties 
even  as  to  a  general  rule  of  law  might  well  prevent  any 
valid  agreement  from  being  formed 
Assign-  In  the  same  way  an  agreement  to  assign  a  lease  for  lives 

Saw  for     would  be  inoperative  if  all  the  lives  had  dropped  unknown 
livet.         t6  the  partiea    But  the  only  thing  which  the  parties  can 
here  be  supposed,  in  the  absence  of  expressed  condition  or 

(e)  L.  B.  2  H.  L.  170.  (/)  (1868)  8  De  G.  *  J.  601. 


IGNORANCE  OF  ONE  PARTY.  475 

warranty,  to  assume  as  essential  is  that  the  lease  is  sub- 
sisting, that  is,  that  at  least  one  of  the  lives  is,  not  that 
they  all  are  still  in  existence.  Where  the  assignor  of  a 
lease  for  the  lives  of  A.,  B.,  and  0.,  expressly  covenanted 
with  the  assignee  that  the  lease  was  a  subsisting  lease  for 
the  lives  of  A.,  B.,  and  C,  and  the  survivors  and  survivor 
of  them,  this  was  held  to  be  only  a  covenant  that  the  lease 
was  subsisting,  and  not  that  all  the  lives  were  in  being  at 
the  date  of  the  assignment  (g).  That  is,  his  contract  was 
interpreted,  according  to  the  general  practice  and  under- 
standing of  conveyancers,  as  a  contract  to  transfer  an 
existing  lease  for  three  lives,  not  necessarily  a  lease  for 
three  lives  all  existing. 

If  in  any  state  of  things  otherwise  resembling  those  just  Remlte 
now  discussed  we  find,  instead  of  ignorance  of  the  material  J^jJ^ne 
fact  on  both  sides,  imorance  on  the  one  side  and  know-  P^y  ^ 
ledge  on  the  other,  then  the  matter  has  to  be  treated  of  the 
differently.  Suppose  A.  and  B.  are  the  contracting  parties;  JJ^J^ 
and  let  us  denote  by  X.  a  fact  or  state  of  facts  materially 
connected  with  the  subject-matter  of  the  contract,  which  is 
supposed  by  A.  to  exist,  but  which  in  truth  does  not  exist, 
and  is  known  by  B.  not  to  exist.    Then  we  have  to  ask 
these  questions : — 

1.  Does  A.  intend  to  contract  only  on  the  supposition 
that  X.  exists  ?  which  may  be  put  in  another  way  thus : 
If  A.'s  attention  were  called  to  the  possibility  of  his  belief 
in  the  existence  of  X.  being  erroneous,  would  he  require 
the  contract  to  be  made  conditional  on  the  existence  of  X? 

2.  If  so — ^Does  B.  know  that  A.  supposes  X.  to  exist  ? 

3.  If  B.  knows  this — ^Does  he  also  know  that  A.  intends    . 
to  contract  only  on  that  supposition  ? 

If  the  answer  to  any  one  of  these  questions  is  in  the 
negative,  it  seems  there  is  a  binding  contract  (A).  But  it 
is  to  be  observed  that  a  negative  answer  to  the  second 

(g)  Coates  ▼.  CoUinB  (1871)  L.  R.  {h)  SmUk  ▼.  Hughet  (1871)  L.  R. 

6  Q.  B.  469,  in  Ex.  Gb.  7  Q.  B.  144,      6  Q.  B.  697,  nipra,  p.  467. 
41  L.  J.  Q.  B.  90. 


47G 


MISTAKE. 


(|uestion  will  generally  require  strong  evidence  to  establish 
it,  and  that  if  this  question  be  answered  in  the  affirmativey 
an  affirmative  answer  to  the  third  question  will  often  follow 
by  an  almost  irresistible  inference.  Thus  if  a  purchaser  of 
a  reversionary  interest  subject  to  prior  life  interests  knows 
that  one  of  these  has  ceased,  and  nothing  is  said  about  it 
at  the  time  of  the  contract,  then  the  purchaser  can  hardly 
expect  anybody  to  believe  either  that  he  himself  overlooked 
the  material  importance  of  that  &ct,  or  that  he  was  not 
aware  of  the  vendor's  ignorance  of  it,  or  that  he  supposed 
that  the  vendor  would  not  treat  it  as  material  (t).  So  in 
the  case  already  cited  (j)  of  the  sale  of  shares  after  a 
petition  for  the  winding-up  of  the  company  had  been 
presented,  a  distinct  allegation  in  the  pleadings  that  the 
seller  knew  of  the  buyer  s  ignorance  of  that  £act,  would,  it 
seems,  have  been  sufficient  to  constitute  a  charge  of  fraud. 

If  the  questions  above  stated  be  all  answered  in  the 
affirmative,  either  by  positive  proof  or  by  probable  and 
uncontradicted  presumption  from  the  circumstances,  then 
it  may  be  considered  either  that  the  case  becomes  one  of 
fraud,  or  at  least  that  the  party  who  knew  the  true  state 
of  the  facts,  and  also  knew  the  other  party's  intention  to 
contract  only  with  reference  to  a  supposed  diflferent  state 
of  facts,  is  precluded  bom  denying  that  he  understood  the 
contract  in  the  same  sense  as  that  other,  namely,  as  con- 
ditional on  the  existence  of  the  supposed  state  of  facts. 

On  a  similar  principle  (as  we  have  already  mentioned 
incidentally)  it  is  certain  that  where  frmdamental  error  of 
one  party  is  caused  by  a  fradulent  misrepresentation,  and 
BentaSon.  probable  that  where  it  is  caused  by  an  innocent  misrepre- 
sentation on  the  part  of  the  other,  that  other  is  estopped 
from  denying  the  validity  of  the  transaction  if  the  party 
who  has  been  misled  thinks  fit  to  affirm  it. 

Does  it  follow  that  the  contract  is  in  its  inception  not 
void,  but  voidable  at  the  option  of  the  party  misled?    Not 


Fnndft- 
menUl 
error  pro* 
daced  by 
XDUirepre* 


(i)  See  Tumtr  ▼.  Hwrvty  (1821) 
Joe.  160. 


{j)  Rudge  t.  Bauman  (1868)  L.  R. 
3  Q.  K  689. 


AS  TO  SAMPLE  ON  SALE.  477 

BO  :  for  the  fraud  or  negligence  of  the  other  must  not  pu  t 
him  in  any  worse  position  as  regards  third  person&  These, 
if  the  transaction  be  simply  voidable,  are  entitled  to  treat 
it  as  valid  until  rescinded,  and  may  acquire  indefeasible 
rights  under  it :  if  it  be  void  they  can  acquire  none,  how- 
ever blameless  their  own  part  in  the  matter  may  be  (k). 
Thus  there  is  a  real  difference  between  a  contract  voidable 
at  the  option  of  one  party  and  a  void  agreement  whose 
nullity  the  other  is  estopped  as  against  him  from  asserting. 
In  the  case  of  contracts  to  take  shares  in  companies  an 
anomaly  is  admitted,  as  we  have  seen,  for  reasons  of  special 
necessity,  and  the  contract  is  treated  as  at  most  voidable. 
But  even  here  there  must  be  an  original  anvmua  contra- 
hendi to  this  extent,  that  the  shareholder  was  minded  to 
have  shares  in  some  company.  An  application  for  shares 
signed  in  absolute  ignorance  of  its  true  nature  and  con- 
tents, like  the  bill  in  Foster  v.  Madcinvnon  (i),  could  not 
be  the  foundation  of  a  binding  contract  to  take  shares. 
An  allotment  in  answer  to  such  an  application  would  be  a 
mere  proposal,  and  whether  it  were  accepted  or  not  would 
have  to  be  determined  by  the  ordinary  rules  of  law  in  that 
behalf  (see  Ch.  I.). 

We  may  here  call  attention  to  the  rule  concerning  sales  ?^^**f^? 
by  sample  which  may  be  gathered  from  Heilbutt  v.  Hick-  ^pie. 
8(m  (m)  and  is  stated  by  Mr.  Benjamin  to  this  effect :  ''  If  a 
manu&cturer  agrees  to  fiimish  goods  according  to  sample, 
the  sample  is  to  be  considered  as  if  fi^e  from  any  secret 
defect  of  manufacture  not  discoverable  on  inspection  and 
unknown  to  both  parties." 

Here  we  have  a  common  error  as  to  a  material  fact, 
namely  the  character  of  the  sample  itself  by  which  the 
character  of  the  bulk  is  to  be  tested.  But  it  is  possible  to 
put  the  parties  in  the  same  position  as  if  their  erroneous 
assumption  had  been  correct,  and  therefore  their  contract, 

{k)  FoiUr  ▼.  Mackinrum  (1869)  L.  (m)  (1872)  L.  R  7  G.  P.  488,  41 

R.  4  G.  P.  704,  38  L.  J.  G.  P.  310,  L.  J.  G.  P.  228 ;  Benjamin  on  Sale, 

supm,  p.  442.  642. 

(0  See  note  (it),  tupra. 


478  MISTAKE. 

instead  of  being  avoided,  is  upheld  according  to  their  true 
intention,  i.  e.  aaif  the  sample  had  been  what  they  both 
supposed  it  to  be.  If  they  had  themselves  discovered  the 
mistake  in  time  they  would  have  made  the  same  contract 
with  reference  to  a  proper  sample  in  place  of  the  defective 
one.  The  result  is  thus  the  converse  of  that  which  occurs 
when  the  error  goes  to  the  matter  of  the  whole  agreement, 
as  in  the  cases  we  have  been  considering.  It  may,  how- 
ever, be  more  simply  arrived  at  on  the  broad  ground  that 
reference  to  a  sample  does  not  exclude  the  general  duty  of 
the  seller  to  furnish  merchantable  goods  answering  the 
description  in  the  contract  (n). 

A  mistake  in  the  sample  exhibited  on  a  sale,  in  the 

sense  of  its  being  taken  from  a  bulk  different  from  that 

which  is  intended  and  expressed  to  be  sold,  may  wholly 

prevent  the  formation  of  a  contract  (o). 

Kights  It  appears  fit)m  the  authorities  which  have  been  adduced 

and  reme-     ,  t  •  i    •         •  i  i 

dies  of       that  a  party  to  an  apparent  agreement  which  is  void  by 
party  to  a  reason  of  fundamental  error  has  more  than  one  course  open 

agree-         to  him. 

""®^*'  He  may  wait  until  the  other  party  seeks  to  enforce  the 

alleged  agreement  and  then  assert  the  nullity  of  the  trans- 
action by  way  of  defence  (p).  If  he  think  fit  he  may  also 
take  the  opportunity  of  seeking  by  coimterclaim  to  have 
the  instrument  sued  on  set  aside  (q). 

Or  he  may  right  himself,  if  he  prefers  it,  by  coming 
forward  actively  as  plaintiff.  When  he  has  actually  paid 
money  as  in  performance  of  a  supposed  valid  agreement, 
and  in  ignorance  of  the  &cts  which  exclude  the  reality  of 
such  agreement,  he  may  recover  back  his  money  as  having 
been  paid  without  any  consideration  (the  action  "for  money 

(n)    l>rutnmond   v.    Van    Ingen  {q)  Storey  v.  Waddle  (1879)  4  Q. 

<1887)  12  App.  Ga.  284.  B.  Biv.    289,   aeems    to  oveinile 

(o)  Megaw  v.  MoUoy  (1878)  2  L.  yutaally  the  doctrine  aonmed  in 

B.  Ir.  530.  Mog^yn  ▼.   Wett  Mottyn  Coal  and 

(p)  Am  to  the  proper  mode  of  Iron  Oo,  (1876)  1  C.  P.  D.  145,  45 

pleading  inch  a  deleooe  under  the  L.  J.  C.  P.  401,  that  it  ia  needful 

old  practice  at  common  law,  see  for  this  purpose  to  obtain  a  transfev 

notes  (5)  and  (c),  p.  404  of  the  fint  of  the  action  to  the  Chancery  Divi- 

edition  of  this  book.  sioo. 


VOID  AQBEEHENT.  479 

received  "  of  the  old  practice)  (r).  He  paid  on  the  suppo- 
sition that,  he  was  discharging  an  obligation,  whereas  there 
was  in  truth  no  obligation  to  be  discharged. 

Moreover  he  may  sue  in  the  Chancery  Division,  whether 
anything  has  been  done  under  the  supposed  agreement  or 
not,  to  have  the  transaction  declared  void  and  to  be 
relieved  from  any  possible  claims  in  respect  thereof  (a). 

On  the  other  hand,  although  he  is  entitled  to  treat  the  EieeHon 
supposed  agreement  as  void,  and  is  not  as  a  rule  prejudiced  *®."i*^ 
by  anything  he  may  have  done  in  ignorance  of  the  true  void 
state  of  the  &ctSy  yet  after  that  state  of  facts  has  come  to  JJ^ 
his  knowledge  he  may  nevertheless  elect  to  treat  the  agree- 
ment as  subsisting :  or,  as  it  would  be  more  correct  to  say, 
he  may  carry  into  execution  by  the  light  of  correct  know- 
ledge the  former  intention  which  was  frustrated  by  want 
of  the  elements  necessary  to  the  formation  of  any  valid 
agreement.     It  is  not  that  he  confirms  the  original  trans- 
action (except  in  a  case  where  there  is  also  misrepresenta- 
tion, see  p.  476),  for  there  is  nothing  to  confirm,  but  he 
enters  into  a  new  ona 

It  might  be  thought  to  follow  that  in  cases  within  the 
Statute  of  Frauds  or  any  other  statute  requiring  certain 
forms  to  be  observed,  we  must  look  not  to  the  original 
void  and  improperly  so-called  agreement,  but  to  the  sub- 
sequent election  or  conjfirmation  in  which  the  only  real 
agreement  is  to  be  found,  to  see  if  the  requirements  of 
the  statute  have  been  complied  with.  No  express  autho- 
rity has  been  met  with  on  this  point.  But  analogy  is 
in  favour  of  a  deliberate  adoption  of  the  form  already 
observed  being  held  sufficient  for  the  purpose  of  the 
new  contract  (t). 


(r)  E.  g.,  Cox  r.  Prentice  (1815)  8  of  eqni^)  are  asalgned  to  the  Ohan- 

M.  A  S.  848.  eery  Division  by  8.  84  of  the  Sa- 

(<)  AU  OAuaes  and-  mfttten  for  preme  Coort  of   JacUoainre  Aot, 

(UUvr  alia)  the  setting  aside  or  can-  1878. 

oellAtion  of  deeds  or  other  written  (0  Stewart  v.  Eddtyan  (1874)  L. 

instruments,  (which   formerly  be-  R  9  C.  P.  811,  48  L.  J.  C.  P.  204, 

longed  to  the  exdosive  jurisdiction  wpra^  p.  161. 


480  MISTAKE. 

A  note  on  Bracton's  treatment  of  the  subject  of  funda- 
mental error  will  be  found  in  the  Appendix  (u). 


Pabt  IIL  Mistake  in  expressing  true  Consent. 

Mistake  in  This  occuTS  when  persons  desiring  to  express  an  intention 
Satentionf  ^^^^^  when  expressed  carries  with  it  legal  consequences 
generftUy    have  by  mistake  used  terms  which  do  not  accurately 

occurs |w  ..  -a  -  _, 

writing,  represent  their  real  mtention.  As  a  rule  it  can  occur  only 
when  the  intention  is  expressed  in  writing.  It  is  not 
impossible  to  imagine  similar  diflSculties  arising  on  verbal 
contracts,  as  for  example  if  the  discourse  were  carried  on 
in  a  language  imperfectly  understood  by  one  or  both  of 
the  speakers.  But  we  are  not  aware  that  anything  of  this 
kind  has  been  the  subject  oT  judicial  decision  {v\  The 
general  result  of  persons  talking  at  cross  purposes  is  that 
there  is  no  real  agreement  at  alL  This  class  of  cases  has 
already  been  dealt  witL  We  are  now  concerned  with 
those  where  there  does  exist  a  real  agreement  between  the 
parties,  only  wrongly  expressed.  Such  mistakes  as  we  are 
now  about  to  consider  were,  even  before  the  Judicature 
Acts,  not  wholly  disregarded  by  courts  of  law ;  but  they 
are  fiiUy  and  adequately  dealt  with  only  by  the  jurisdiction 
which  was  formerly  peculiar  to  courts  of  equity.  We 
shall  see  that  this  jurisdiction  is  exercised  with  much 
caution  and  within  carefully  defined  limits. 

ClMnfica-  On  the  whole  the  cases  of  mistake  in  expressing  inten- 
tion fall  into  three  classes  : — 


acceding       j^  Those  which  are  suflSciently  remedied  by  the  general 
remedies    rules  of  construction. 

Me^'  ^'  Those  which  are  remedied  by  special  rules  of  con- 

1.  General  struction  derived  from  the  practice  of  courts  of  equity. 
ooiSrao-        3-  Those  which  require  peculiar  remedies  administered 
tion.  \yy  ^he  Court  in  its  equitable  jurisdiction. 

(tt)  Note  H.  tolli  (1824)  2  B.  &  C.  511,  which 

(v)  Bee  however  Phillips  v.  Bis-      comes  near  the  supposed  case. 


IN  EXPRESSION:    OBVIOUS  ERRORS.  481 

We  proceed  to  take  the  classes  of  cases  above  mentioned  ^  ^P^ 

in  order.  rales  of 

oonatrao* 
tion. 

1.  Oeneral  Rules.  s.  Spedal 

equitable 

We  have  already  seen  that  the  more  obvious  forms  of '*'^<^«"' 
mistaken  expression,  mechanical  errors  as  we  may  call^^^J^c 
them,  can  be  dealt  with  in  the  ordinary  course  of  interpre- 
tation (w).     A  few  more  authorities  may  now  be  added. 

In  a  modem  case  in  the  House  of  Lords  the  rule  was  laid  General 
down  and  acted  upon  that  "both  courts  of  law  and  of^^^Jj, 
equity  may  correct  an  obvious  mistake  on  the  fece  of  an  ov&c 
instrument  without  the  slightest  difficulty  "  (x).    Here  a  SsSlen 
draft  agreement  for  a  separation  deed  had  by  mistake  been  ^^  '?^' 
copied  BO  as  to  contain  a  stipulation  that  the  husband  prewioiifl. 
should  be  indemnified  against  his  own  debts  :  but  it  was 
held  that  the  context  and  the  nature  of  the  transaction 
clearly  showed  that  the  wife's  debts  were  meant,  and  that 
in  framing  the  deed  to  be  executed  under  the  direction  of 
the  Court  in  pursuance  of  the  agreement  the  mistake  must 
be  corrected  accordingly.    So  the  Court  may  presume  from 
the  mere  inspection  of  a  settlement  that  words  which, 
though  they  make  sense,  give  a  result  which  is  unreason- 
able   and    repugnant  to  the  general  intention  and  to 
the  usual  fiume  of  such  instruments,  were  inserted   by 
mistake  (y). 

An  agreement  has  even  been  set  aside  chiefly,  if  not 
entirely,  on  the  ground  that  the  unreasonable  character  of 
it  was  enough  to  satisfy  the  Court  that  neither  party 
could  have  understood  its  true  effect :  such  at  least  appears 
to  be  the  meaning  of  Lord  Eldon's  phrase,  "  a  surprise  on 
both  parties  "  (z).  The  agreement  itself  purported  to  bind 
the  tenant  of  a  leasehold  renewable  at  arbitrary  (and  in 

{w)  Chap.  VL^p.  244,  ftbove.  86 ;  where  however  the  mistake  was 

(x)  WiUan  v.  Wilton,  6  H.  L.  C.  also  eetablished  ^  evidenoe. 

40,  66,  per  Lord  St  Leonards,  and  (2)  WiUan  v.  WiUan  (1809-10)  16 

see  his  note,  V.  ft  P.  171.  Ves.  72,  84;  affirmed  in  Dom.  Proc. 

iy)  Be  Ik  la  T<mch^t  tOOement  2  Dow.  275,  278. 
(1870)  10  Eq.  699,  603,  40  L.  J.  Oh. 

P.  I  I 


text. 


482  MISTAKE. 

(act  always  increasmg)  fines  at  intervals  of  seven  years  to 
grant  an  underlease  at  a  fixed  rent  with  a  perpetual  right 
of  renewal  The  lessor  was  in  his  last  sickness,  and  there 
was  evidence  that  he  was  not  fit  to  attend  to  business. 
Charges  of  fi»ud  were  made,  as  usual  in  such  cases,  but  not 
sustained  :  the  decision  might  however  have  been  put  on 
the  ground  of  undue  influence,  and  was  so  to  some  extent 
by  Lord  Redesdale. 
Genenl  Again,  there  is  legal  as  well  as  equitable  jurisdiction  to 
JS£^'  restrain  the  effect  of  general  words  if  it  sufficiently  appears 
by  oon-  \yy  the  context  that  they  were  not  intended  to  convey  their 
apparent  unqualified  meaning.  It  was  held  in  Browning 
V.  Wright  (a)  that  a  general  covenant  for  title  might  be 
restrained  by  special  covenants  among  which  it  occurred. 
And  the  same  principle  was  again  deliberately  asserted 
shortly  afterwards  (in  a  case  to  the  particular  fiwjts  of 
which  it  was  however  held  not  to  apply)  : — 

"  However  general  the  words  of  ft  covenant  may  be  if  standing  alone, 
yet  if  from  other  covenants  in  the  same  deed  it  is  plainly  and  inreaistibly 
to  be  inferred  that  the  party  could  not  have  intended  to  nae  the  words  in 
the  general  sense  which  they  import,  the  Court  will  limit  the  operation  of 
the  general  words  "  (&). 

Similarly  the  effect  of  general  words  of  conve3rance  is 
confined  to  property  of  the  same  kind  with  thajt  which  has 
been  specifically  described  and  conveyed  (c).  When  there 
is  a  specific  description  of  a  particular  kind  of  property, 
followed  by  words  which  prima  fade  would  be  sufficient 
to  include  other  property  of  the  same  kind,  it  has  been 
held  that  those  words  do  not  include  the  property  not 


(a)  (1799)  2  B.  &  P.  18,  26  ;  bat  (c)  RookeY.LofttKfntingUmaSBQ) 

it  was  also  thought  the  better  con-  2  K.  ft  J.  753,  771,  25  L.  J.  Ch. 

.stmctioa    to    tsJce   the   clanse   in  795.    Hie  same  principle  applies  to 

qneetion  ■•  being  actoally  part  of  a  general  words  in  the  statement  of  a 

special  covenant  and  so  no  general  company's  objects  in  its  memoran- 

.coveniuit  at  aU.  dum  of  association.  AMurtft  dfc.  Co. 

(6)  Besie  v.  Stevcnton  (1808)  8  B.  v.  JStdU  (1875)  L.  IL  7  H.  L.  653, 

ft  P.  565.  574.  ,44  L.  J.  Ex.  185. 


IN  EXPRESSION:    RULES  OF  CONSTRUCTION.  483 

specifically  described,  on  the  principle  expreaaio  unius  est 
exduaio  aUerius  (c2). 

2.  Peculiar  Rules  of  Construction  in  Equity. 

Such  rules  have  been  introduced  by  courts  of  equity  in 
dealing  with : 

A.  General  words. 

B.  Stipulations  as  to  time. 

C.  Penalties. 

A.  Restriction  of  General  Words,  Bastrieted 

We  have  seen  that  courts  both  of  law  and  of  equity  have  ^ST^" 
assumed  a  power  to  put  a  restricted  construction  on  general  S^J^ 
words  when  it  appears  on  the  fSstce  of  the  instrument  that  earned 
it  cannot  have  been  the  real  intention  of  the  parties  that  [jjj^^ 
they  should  be  taken  in  their  apparent  general  sense.  common 

Courts  of  equity  went  farther,  and  did  the  like  if  the  pJdiuy^in 
same  conviction  could  be  arrived  at  by  evidence  external  ^ol®"*"' 
to  the  instrument.  Thus  general  words  of  conveyance  (e) 
and  an  unqualified  covenant  for  title  (/),  though  not 
accompanied  as  in  Browning  v.  Wright  (g)  by  other 
qualified  covenants,  have  been  restrained  on  proof  that 
they  were  not  meant  to  extend  to  the  whole  of  their 
natural  import. 

{d)  DennY.Waford{lS26)SI>ow.  the  Daiare  and  character  of   the 

ft  Ry.  649.    The  case  was  a  cmioua  property ;  next  (as  a  oonsequetioe 

one.    A  fine  had  been  levied    off  of      the    constmction     thereupon 

{inter  mUa)  twelve  messoages  and  adopted     by    the    Coart)    which 

twenty  acres  of  land  in  Chelsea.  twelve  out  of   the  nineteen  mes- 

The  conusor  had  less  tiian  twenty  snages  were    intended.      And  see 

acres  of  land  in  Chelsea,  bat  nine-  f  urUier  the  notes  to  Hoe  v.  Tranmarr 

teen  messnaees.     It  was    deoide<l  (1758)  2  Sm.  h.  C. 

that  although   all   the    messoages  {e)   Thoma$   v.  IktvU    (1757)    1 

would  have  passed  under  the  gene-  l>ick.  ^01. 

ral  description  of  land  if  no  lees  (/)  Chldeot  v.  Bill,  1  Ch.  Ca.  15, 

number   of    messuages   had   been  aed  qu,  for  the  case  looks  very  like 

mentioned,    yet   the    mention    of  admitting  contemporaneous  oonver- 

twelve   messuages    prevented    any  sation  to  vary  the  e£feot  of  a  solemn 

greater  number  from  passing  under  instrument,  aud  that  without  any 

the  description  of  land ;  and  that  mistake  or  fraud  being  made  ouW 

parol  evidence  was  admissible  to  which    is    quite   contrary   to  the 

show  first  that  there  were  in  fact  modem  rule, 

nineteen  mesmages,  this  behig  no  {g)  (1799)  2  B.  &  P.   18,  last 

more  than  was  necessary  to  explain  p«ge. 

1  I  2 


484  MISTAKE. 

This  jurisdiction,  in  modem  times  a  well  established 
one,  is  exercised  chiefly  in  dealing  with  releasea  "The 
general  words  in  a  release  are  limited  always  to  that  thing 
or  those  things  which  were  specially  in  the  contemplation 
of  the  parties  at  the  time  when  the  release  was  given  "  (h). 
This  includes  the  proposition  that  in  equity  "a  release 
shall  not  be  construed  as  applying  to  something  of  which 
the  party  executing  it  was  ignorant "  (i).  There  is  at 
least  much  reason  to  think  that  it  matters  not  whether  such 
ignorance  was  caused  by  a  mistake  of  &ct  or  of  law  (j). 

In  particular  a  release  executed  on  the  footing  of  accounts 
rendered  by  the  other  party,  and  assuming  that  they  are 
correctly  rendered,  may  be  set  aside  if  those  accounts  are 
discovered  to  contain  serious  errors,  and  this,  in  a  grave 
case,  even  after  many  years  (k).  It  would  be  otherwise 
however  if  the  party  had  examined  the  accounts  himself 
and  acted  on  his  own  judgment  of  their  correctness.  An 
important  application  of  this  doctrine  is  in  the  settlement 
of  partnership  affairs  between  the  representatives  of  a 
deceased  partner  (especially  when  they  are  continuing 
partners)  and  the  persons  beneficially  interested  in  his 
estate  (I). 

A  releasor,  however,  cannot  obtain  relief  if  he  has  in  the 
meanwhile  acted  on  the  arrangement  as  it  stands  in  such 
a  way  that  the  parties  cannot  be  restored  to  their  former 
position  (m). 

{h)  Per  Lord  Wertbrny,  L,  A  S,  (1848)  11  M.  &.  W.  84, 12  L.  J.  Ex. 

W,  Ry,  Oo,  V.  Bladmore  (1870)  L.  R.  275. 

4  H.  L.  at  p.  628, 89  L.  J.  Oh.  718 ;  (;*)  See  the  caMB  oonnderad  at 

op.  Undo  y.  Undo  (1839)  1  Beav.  p.  484,  aboTe. 

496,  606  ;  FareweU  ▼.  Ooher  (1726)  {k)  Qandy  v.  Mcusaulay  (1885)  81 

dted  2  Mer.  858  ;  Dav.  Gonv.  5.  pt  Ch.  Div.  1,  where  no  aooounts  had 

2.  622-4.  been  rendered  or  examined  at  aU ; 

(i)  Per  WQde  B.  LyaU  y.   Ed-  twenty  yean  had  elapeed  and  the 

vxvrdB  (1861)  6  H.  &  N.  887, 848, 80  releasee  waa  dead. 

L.  J.  Ex.  198, 197.  This  wm  a  case  (Q  MiUar  v.  Craig  (1848)  6  BeaT. 

of  equitable  jurisdiotion  under  the  488  ;  Lindley,  1.  489. 

G.  L.  P.  Act,  1854:  bat  before  that  (m)  SkUJbeck  v.  HiUtm  (1866)  2 

Act  courts  of  law  would  not  allow  £q.  587,  but  qu,  whether  the  prin- 

a  release  to  be  set  up  if  clearly  oiple  was  rightiy  applied   in   the 

satisfied  that  a  oonrt  of  equity  would  pwticular  case. 
set   it   aside:    PkiUipB  ▼.   ClageU 


IN  EXPRESSION:   STIPUULTIONS  AS  TO  TIME.  485 

B.  Stipulationa  as  to  Time.  Stipoia- 

taons  as  to 
It  is  a  familiar  principle  that  in  all  cases  where  it  is  ^^e* 

sought  to  enforce  contracts  consisting  of  reciprocal  pro- 
mises, and  "  where  the  plaintiff  himself  is  to  do  an  act  to 
entitle  himself  to  the  action,  he  must  either  show  the  act 
done,  or  if  it  be  not  done,  at  least  that  he  has  performed 
everything  that  was  in  his  power  to  do  "  (n). 

Accordingly,  when  by  the  terms  of  a  contract  one  party 
is  to  do  something  at  or  before  a  specified  time,  and  when 
he  fails  to  do  such  thing  within  that  time,  he  could  not 
afterwards  claim  the  performance  of  the  contract  if  the 
stipulation  as  to  time  were  construed  according  to  its 
literal  terms.  The  rule  of  the  common  law  was  that 
"  time  is  always  of  the  essence  of  the  contract."  When 
any  time  is  fixed  for  the  completion  of  it,  the  contract  must 
be  completed  on  the  day  specified^  or  an  action  will  lie  for 
the  breach  of  it  (o). 

The  rule  of  equity,  which  now  is  the  general  rule  of 
English  jurisprudence,  is  to  look  at  the  whole  scope  of  the 
transaction  to  see  whether  the  parties  really  meant  the 
time  named  to  be  of  the  essence  of  the  contract.  And  if 
it  appears  that,  though  they  named  a  specific  day  for  the 
act  to  be  done,  that  which  they  really  contemplated  was 
only  that  it  should  be  done  within  a  reasonable  time ;  then 
this  view  will  be  acted  upon,  and  a  party  who  according  to 
the  letter  of  the  contract  is  in  default  and  incompetent  to 
enforce  it  will  yet  be  allowed  to  enforce  it  in  accordance 
with  what  the  Court  considers  its  true  meaning. 

**  Conrts  of  equity  have  enforced  oontraots  spedfically,  where  no  action 
for  damage!  could  be  maintained ;  for  at  law  the  party  plaintiff  mnst  have 
•tiiotiy  performed  his  part,  and  the  inoonvenienoe  of  iniiinting  npon  that  in 
all  cases  was  saffident  to  require  the  interference  of  courts  of  equity.  They 
dispense  with  that  which  would  make  compliance  with  what  the  law 
requires  oppressiye,  and  in  various  oases  of  such  contraoii  they  are  in  the 

(n)  Notes  to  Peeter»  v.   Opie,  2  (o)  Parkm  v.  Thorold  (1862)  16 

Wms.  Saund.  743  ;  and  see  Ch.  VI.,      Beav.  59,  65. 
p.  249,  above. 


486  MISTAKE. 

ooDstont  hftbit  of  relieving  the  man  who  htm  acted  faiily,  though 
negligently.  Thus  in  the  case  of  ah  estate  sold  Yry  auction,  there  is  a  con- 
dition to  forfeit  the  deposit  if  the  pnrchaee  be  not  oompleted  within  a 
certain  time;  yet  the  Ckrart  ii  in  the  constant  habit  of  relieving  against  the 
lapse  of  time  :  and  so  in  the  case  of  mortgages,  and  in  many  instances  relitif 
is  given  against  mere  lapse  of  time  where  lapse  of  time  is  not  essential  to 
the  substance  of  the  contract." 


So  said  Lord  Redesdale  in  a  judgment  which  has  taken 
a  classicfd  rank  on  this  subject  (p).  Contracts  between 
vendors  and  purchasers  of  land  are  however  the  chief  if 
not  the  only  class  of  cases  to  which  the  rule  has  been 
habitually  applied  (q). 

As  to  It  was  once  even  supposed  that  parties  could  not  make 

Sneofthe  ^™®  ^^  ^^^  essence  of  the  contract  by  express  agreement ; 


» o^  but  it  is  now  perfectly  settled  that  they  can,  the  question 
tract  being  always  what  was  their  true  intention  (r),  or  rather 
"what  must  be  judicially  assumed  to  have  been  their 
intention"  (s).  "If  the  parties  choose  even  arbitrarily, 
provided  both  of  them  intend  to  do  so,  to  stipulate  for  a 
particular  thing  to  be  done  at  a  particular  time,"  such  a 
stipulation  is  effectual  There  is  no  equitable  jurisdiction 
to  make  a  new  contract  which  the  parties  have  not  made  (t). 
The  &ct  that  time  is  not  specified,  or  not  so  specified 
as  to  be  of  the  essence  of  the  contract,  does  not  affect  the 
general  right  of  either  party  to  require  completion  on  the 
other  part  within  a  reasonable  time,  and  give  notice  of 
his  intention  to  rescind  the  contract  if  the  default  is  con- 


(p)  Lennon  v.  Napper  (1802)  2  Wh.  &  T.  L.  0.;  Parhin  v.  ThorM 

Sch.   &  L.   684,  cited  by  Knight  (1852)  «upm. 

Brace  L.J.  Jlobertt  v.  Berrif  (1853)  (<)  Grove  J.  in  Patrick  v.  Milner 

8  D.  M.  O.  at  p.  289,  22  L.J.  Ch.  (1877)  2  C.  P.  D.  342,  848.  46  L.  J, 

398,    and   again  adopted   by    the  C.  P.  587. 

L.JJ.  in  TiUey  v.  Thomas  (1867)  3  (0   Per  Alderson  K  ffipwdl  v. 

Ch.  61.  Knight  (1835)  1  Y.  &  C.  (Ex.)  415. 

(q)  See  per  Cotton  L.J.  4  C.  P.  Andseethe  observatioDs  of  Kinder  <- 

D.  at  p.  249.  ley    V.C  to  the  same    effect    in 

(r)  Seton  v.  Slade  (1802)  7  Vcf.  Oakden  v.  Pike  (1865)  34  L.  J.  Ch. 

265,  275,  and  notes  to  that  case  in  2  620. 


IN  EXPRESSION:    STIPULATIONS  AS  TO  TIMK  487 

tinued  (u),  as  on  the  other  hand  conduct  of  the  party  entitled 
to  insist  on  time  as  of  the  essence  of  the  contract,  such  as 
continuing  the  negotiations  without  an  express  reservation 
after  the  time  is  past,  may  operate  as  an  implied  ¥raiver  of 
his  right  (v).  In  mercantile  contracts  the  presumption,  if 
any,  is  that  time  where  specified  is  an  essential  condi- 
tion (w).  An  express  promise  to  do  a  thing  "  as  soon  as 
.possible  "  binds  the  promisor  to  do  it  within  a  reasonable 
time,  with  an  undertaking  to  do  it  in  the  shortest  prac- 
ticable time  (x).  The  principles  of  our  jurisprudence  on 
this  head  are  well  embodied  by  the  language  of  the  Indian 
Contract  Act,  s.  55  : 

When  a  paziy  to  a  coatraot  promiies  to  do  a  oertaln  thing  at  or  before  Indian 
a  apedfied  time,  or  certain  thiaga  at  or  before  epeoified  times,  and  faile  to  Oontnet 
do  any  inch  thing  at  or  before  the  ipecified  time,  the  contract,  or  ao  mnoh  ^Mmon. 
of  it  ••  hu  not  lieen  performed,  becomes  voidable,  at  the  option  of  the 
promisee,  if  the  intention  of  the  parties  was  that  time  shonld  be  of  the 
essence  of  the  oontract. 

[The  Court  may  infer  from  the  nature  of  a  contract,  even  though  no 
time  be  specified  for  its  completion,  that  time  was  intended  to  be  of  its 
essence  to  this  extent,  that  the  contracting  party  is  bound  to  use  the  utmost 
diligence  to  perform  his  part  of  the  contract]  {y). 

If  it  was  not  the  intention  of  the  parties  that  time  should  be  of  the 
essence  of  the  contract,  the  oontract  does  not  become  voidable  Yry  the 
failure  to  do  such  thing  at  or  before  the  specified  time  ;  but  the  promisee 
is  entitled  to  oompeosation  from  the  promisor  for  any  loss  occasioned  to 
him  by  such  failure. 

If  in  case  of  a  contract,  voidable  on  account  of  the  promisor's  failure  to 
perf(»m  his  promise  at  the  time  agreed,  the  promisee  accepts  performance 
of  such  promise  at  any  time  other  than  that  agreed,  the  promisee  cannot 
claim  compensation  for  any  loss  occasioned  by  the  non-performance  of  the 
promise  at  the  time  agreed,  unless,  at  the  time  of  such  acceptance,  he  gives 
notice  to  the  promisor  of  his  intention  to  do  so  (z), 

(tt)  This  is  the  true  and  only  48  L.  J.  0.  P.  402. 

admissible  meaning  of  the  statement  (x)  Hydraulic  SngtMering  Co,  v. 

that  time  can  be  made  of  the  essence  McHafie  (1878)  4Q.B.  Div.670,673. 

ef  a  contract  by  subsequent  express  {y)  JUacbryde  v.  Weeke$  (1856)  22 

notice.    Per  Vry  J.  Orem  v.  aevin  Beickv.  683  (contract  for  a  lease  of 

(1879)  13  Ch.  D.  689,  699;  per  working  mines). 

Turner    L.  J.   WilUaTM  v.  Glenton  {z)  **  It  constantly  luippens  that 

(1866)  1  Gh.  200,  210.  an  objection  is  waived  tiy  the  con- 

{v)  WM  V.  Hiigh€$  (1870)  10  £q.  duct  of  the  parties,"  per  James  L.J. 

281,  39  L.  J.  Gh.  606,   and  see  {^pp^rton  v.  ^tcfo^son  (1871)  6  Ch.  at 

note  (z).  p.  443,  40  L.  J.  Gh.  401.    And  see 

(w)  Per   Cotton   L.  J.  Reuter  v.  Dart,  V.  k  P.  424. 
Sola  (1879)  4  C.  P.  Div.  at  p.  249, 


488  MTflTAKK, 

C.  lUil/Uf  cLgaingt  PcTialties. 
BeBei  In  like  maimer  penal  provisions  inserted  in  instruments 

^Mm,  to  secure  the  payment  of  money  or  the  performance  of 
J^J*^  contracts  will  not  be  literally  enforced,  if  the  substantial 
moit-  performance  of  that  which  was  really  contemplated  can  be 
***^  otherwise  secured  (a).  The  most  important  application  of 
this  principle  is  to  mortgages.  A  court  of  equity  treats 
the  contract  as  being  in  substance  a  security  for  the  repay- 
ment of  money  advanced,  and  that  portion  of  it  which 
gives  the  estate  to  the  mortgagee  as  mere  form,  "and 
accordingly,  in  direct  violation  of  the  [form  of  the]  con- 
tract," it  compels  the  mortgagee  to  reconvey  on  being 
repaid  his  principal,  interest  and  costs  (6).  Here  again  the 
original  ground  on  which  equity  interfered  was  to  carry  out 
the  true  intention  of  the  parties.  But  it  cannot  be  said 
here,  as  in  the  case  of  other  stipulations  as  to  time, -that 
everything  depends  on  the  intention.  For  the  general 
rule  "once  a  mortgage,  and  always  a  mortgage  "  cannot  be 
superseded  by  any  express  agreement  so  as  to  make  a 
mortgage  absolutely  irredeemable  (c).  However,  limited 
restrictions  on  the  mutual  remedies  of  the  mortgagor  and 
mortgagee,  as  by  making  the  mortgage  for  a  term  certain, 
are  allowed  and  are  not  uncommon  in  practice.  Also  there 
may  be  such  a  thing  as  an  absolute  sale  with  an  option  of 
repurchase  on  certain  conditions ;  and  if  such  is  really  the 
nature  of  the  transaction,  equity  will  give  no  relief  against 
the  necessity  of  observing  those  conditions  ((2). 

"  That  this  Court  will  treat  a  transaction  as  a  mortgage, 
although  it  was  made  so  as  to  bear  the  appearance  of  an 
absolute  sale,  if  it  appears  that  the  parties  intended  it  to 

(a)  In  addition  to  the  anthoritieB  merely  penonal  right,  and  its  oon* 

dted  below  see  the  later  case  of  E»  seqaences,    see   Lord   Blackbnm's 

parte  HuUe  (1878)  8  Gh.  1022,  48  remarks,  6  App.  Ca.  at  p.  714. 

U  J.  Ch.  261.  (c)  H(mard  v.  Hama,  1   Vera. 

(6)  Per  Romilly  M.R  Parhin  v.  190  ;  ChwAry  v.  Daiff  (1859)  1  Giff. 

Thj(^6ld  (1862)  16  Beav.  59, 68 ;  and  816,  see  reporter's  note  at  p.  328 ;  1 

see  Lord  Redesdale*s  jadgment  in  Ch.  Ga.  141,  29  L.  J.  Gh.  89. 

Letmxm  v.  Napper,  supra.  As  to  the  {d)  Davit  v.  ThmoB  (1830)  1  Boas. 

old  theory  of  an  ''equity  of  redemp-  ft  M.  506. 
tion"  being  not  an  estate  bat  a 


IN  EXPRESSION:    BELIEF  AGAINST  PENALTIES.  489 

be  a  mortgage,  la  no  doubt  true  "  (e).  "  But  it  is  equally 
clear,  that  if  the  parties  intended  an  absolute  sale,  a  con- 
temporaneous agreement  for  a  repurchase,  not  acted  upon, 
will  not  of  itself  entitle  the  vendor  to  redeem  "  (/). 

The  manner  in  which  equity  deals  with  mortgage  trans-  General 
actions  is  only  an  example  of  a  more  general  rule : — 

''Where  there  is  ft  debt  actaally  due,  ftnd  in  respect  of  thftt  debt  ft 
security  is  given,  be  it  by  way  of  mortgage  or  be  it  by  way  of  stiptdation 
that  in  case  of  its  not  being  paid  at  the  time  appointed  a  larger  sum  shall 
become  payable^  and  be  paid,  in  either  of  those  oases  Equity  regards  the 
security  that  has  been  given  as  a  mere  pledge  for  the  debt,  and  it  will  not 
allow  either  a  forfeiture  of  the  property  pledged,  or  any  augmentation  of 
the  debt  as  a  penal  provision,  on  the  ground  that  Equity  regards  the  con- 
templated forfeiture  which  might  take  place  at  law  with  reference  to  the 
estate  as  in  the  nature  of  a  penal  provision,  against  which  Equity  will 
relieve  when  the  object  in  view,  namely,  the  securing  of  the  debt,  is 
attained,  and  regarding  also  the  stipulation  for  the  payment  of  a  larger 
sum  of  money,  if  the  sum  be  not  paid  at  the  time  it  is  due,  as  a  penalty 
and  a  forfeiture  against  which  Equity  will  relieve  "  (ff). 

This  applies  not  only  to  securities  for  the  pajonent  of 
money  but  to  all  cases  "where  a  penalty  is  inserted  merely 
to  secure  the  enjoyment  of  a  collateral  object "  (h).  In  all 
such  cases  the  penal  sum  was  originally  recoverable  in  full 
in  a  court  of  law,  but  actions  brought  to  recover  penalties 
stipulated  for  by  bonds  or  other  agreements,  and  land  con- 
veyed by  way  of  mortgage,  have  for  a  long  time  been 
governed  by  statutes  (i). 


(e)  QeeDouglasY,€fulverwdl{lSQ2)  Act  1860  (23  &  24  Vict  c.  126),  a. 

81  L.  J.  Ch.  543 ;  and  so  also  at  25.    As  to  other  bonds  and  agree- 

common  law,  Oardner  t.  C<uenove  ments :  8  &  9  Wm.  8,  c.  11,  s.  8. 

(1856)  1  H.  &  N.  423,  436,  438,  26  The  statutes  are  coUected  and  re- 

L.  J.  Ex.  17, 19,  20.  viewed  in  Preiton  v.  Dania  (1872) 

(/)  Per  Lord  Gottenham  C.  WU-  L.  R.  8  Ex.  19,  42  L.  J.  Ex.  33.    A 

liams  V.  Owen  (1840)  5  M.  &  Gr.  303,  mortgagee  suing  in  ejectment,  or  on 

806, 12  L.  J.  Gh.  207.  a  bond  given  as  collateral  security, 

{g)     Per    Lord    Hatherley    G.  may  be  compelled  by  rule  of  Gourt 

Thompson  v.  Hudson  ( 1 869)  L.  B.  4  to  reconvey  on  payment  of  principal, 

H.  L.  1,  15,  38  L.  J.  Gh.  431.  interest,  and  ooets.    7  Geo.  2,  o.  20; 

(h)  Per  Lord  Thurlow,  Sloman  t.  G.  L.  P.  Act  1852  (16  k  16  Vict.  c. 

Walter  (1784)  1  Bro.  G.  G.  418.  76)  s.  219.    Bonds  of  the  kind  last 

(»)  As  to  common  money  bonds  :  mentioned  hardly  oeeur  in  modem 

4  &  5  Anne,  c.  16,  s.  13  ;  G.  L.  P.  practice. 


490  MISTAKE.     : 

It  would  lead  us  too  far  beyond  our  present  object  to 
discuss  the  cases  in  which  the  question,  often  a  very  nice 
one,  has  arisen,  whether  a  sum  agreed  to  be  paid  upon  a 
breach  of  contract  is  a  penalty  or  liquidated  damages.  It 
may  be  noted  however  in  passing  that  "  the  words 
liquidated  damages  or  penalty  are  not  conclusive  as  to 
the  character  of  the  sum  stipulated  to  be  paid"  This 
must  be  determined  from  the  matter  of  the  agreement  (A;). 

3.  Peculiar  Defences   and  Remedies   derived  from 

Equity, 

Defence         ^  Defence  against  Specific  Perforrrvance. 
upecific  When  by  reason  of  a  mistake  (e-gr.  omitting  some  terms 

J^^™"  which  were  part  of  the  intended  agreement)  a  contract  in 
writing  fails  to  express  the  real  meaning  of  the  parties,  the 
party  interested  in  having  the  real  and  original  agreement 
adhered  to  {e.g.  the  one  for  whose  benefit  the  omitted  term 
was)  is  in  the  following  position. 

If  the  other  party  sues  him  for  the  specific  performance 
of  the  contract  as  expressed  in  writing,  it  will  be  a  good 
defence  if  he  can  show  that  the  written  contract  does  not 
represent  the  real  agreement :  and  this  whether  the  con- 
tract is  of  a  kind  required  by  law  to  be  in  writing  or  not. 
Thus  specific  performance  has  been  refused  where  a  clause 
had  been  introduced  by  inadvertence  into  the  contract  (Q. 
It  is  sometimes  said  with  reference  to  cases  of  this  class 
that  the  remedy  of  specific  performance  is  discretionary. 
But  this  means  a  judicial  and  regular,  not  an  arbitrary 

(A)  Per  Bramwell  B.  in  BttU  v.  per  (1876)  4  Cb.  Div.  724,  46  L.  J. 

BwFch  (1869)  4  H.  &  N.  506,  511,  Bk.  6,  57 ;  WdUU  v.  SmWi,  (1882)  21 

28  L.  J.  Br.  267,  271.    The  latest  Ch.  Div.  243,  62  L.  J.  Ch.  146;  Cx 

oases  on  this  subject  are — Lea  v.  Wttton  t.  Metrop,  Aeylum  District 

WhUaker  (1872)  L.  R.  8  0.  P.  78  ;  (1882)  9  Q.  B.  Dir.  404,  51  L.  J.  Q. 

Magee  v.  LaveU  (1874)  L.  R  9  C.  P.  B.  399,  on  the  similar  question  of  a 

107,  43  L.  J.  0.  P.  131  (authorities  penal  rent    In  the  Indian  Contract 

discussed  by  Jemei  M.R) ;  Lord  Act  the  knot  is  out  by  abolishing 

£lphin8tone  v.  MonHand  Iron  and  the  distinction  altogether :  see  s.  74. 

Coal  Co.  (1886)  11  App.  Ca.  (So.)  {I)  fFateon  v.  iTarttoti  (1853)  4  D. 

832  ;  ExparU  irAUeymc  (1872)  16  M.  G.  230,  240. 
Eq.  36,  42  L.  J.  Ch.  6 ;  Expeurte  Cap- 


IN  EXPRESSION:    PAROL  VARIATIONS.  491 

discretion.  The  Court  "  must  be  satisfied  that  the  agree- 
ment would  not  have  been  entered  into  if  its  true  effect 
had  been  understood  "  (Q. 

On  the  other  hand  a  party  .cannot,  at  all  events  where 
the  contract  is  required  by  law  to  be  in  writing,  come 
forward  as  plaintiff  to  claim  the  performance  of  the  real 
agreement  which  is  not  completely  expressed  by  the 
written  contract.  Thus  in  the  case  of  TiyumaheTid  v.  Town- 
Stangroom  (m)  (referred  to  by  Lord  BJAtherley  when  V.-C.  gtw-  *' 
as  perhaps  the  best  illustration  of  the  principle)  (n)  there  ««»»• 
were  cross  suits  (o),  one  for  the  specific  performance  of  a 
written  agreement  as  varied  by  an  oral  agreement,  the 
other  for  specific  performance  of  the  written  agreement 
without  variation ;  and  the  fact  of  the  parol  variations 
fi-om  the  written  agreement  being  established,  both  suits 
were  dismissed  And  the  result  of  a  plaintiff  attempting 
to  enforce  an  agreement  with  alleged  parol  variations,  if 
the  defendant  disproves  the  variations  and  chooses  to 
abide  by  the  written  agreement,  may  be  a  decree  for  the 
specific  performance  of  the  agreement  as  it  stands  at  the 
plaintiff's  cost  (p). 

But  it  is  open  to  a  plaintiff  to  admit  a  parol  addition  or 
variation  made  for  the  defendant's  benefit,  and  so  enforce 
specific  performance,  which  the  defendant  might  have 
successfully  resisted  if  it  had  been  sought  to  enforce  the 


(Q  Waiaon  ▼.  Manhnf  last  note.  amoontiiig  to  an  offer  to  perform 

{m)  (1801)  6  Yes.  828.  whatever  the  Goart  might  ooBsider 

(n)  Wood  V.  Soarth  (1855)  2  K.  &  the  real  agreement,  perhaps  even  if 

J.  33,  42.  eetabliahed  by  evidenoe  which  would 

(o)  Under  the  Jadicatore  Acts  otherwiae  have  been  adminiUe  only 

there   wonld   be    an    action    and  by  way  of  defence.    But  after  a 

oonnter-claim.  plaintiff  has  failed  to  support  his 

ip)  See  Higgiruon  v.  C!owe$  (1808)  own  oonstruction  of  an  agreement 

15  Ves.  516,  525 ;  and  such,  it  is  which  the  Court  thinks  ambiguous, 

submitted,  is  the  real  effect  of  Fife  he  cannot  take  advantage  of  such  an 

v.  Clayton  (1807)  18  Ves.  546,  s.c.  offer  contained  in  his  own  pleadings 

more  fully  given  1  C.  P.  Cooper  "  to  take  up  the  other  construction 

(temp.  CoUenham)  351.  In  this  case  which  the  defendant  was  at  one  time 

'Lord  Eldon  laid  hold  on  the  plain-  willing  to  have  performed  : "  Clowe$ 

tiff's  attempt  to  set  up  a  variatioD,  v.   Higginaon  (1813)  1  Ves.  &  B. 

combined  with  an  off«rr  in  general  524,  535. 

terms  to  perform  the  agreement,  as 


492  MISTAKE. 

written  agreement  simply.  This  was  settled  in  Martin  v. 
Pycroft  (q) :  "  The  decision  of  the  Court  of  Appeal  pro- 
ceeded on  the  ground  that  an  agreement  by  parol  to  pay 
200i.  as  a  premium  for  .  .  a  lease  [for  which  there  was 
a  complete  agreement  in  writing  not  mentioning  the  pre- 
mium] was  no  groimd  for  refuang  specific  performance  of 
the  written  agreement  for  the  lease,  where  the  plaintiff 
submitted  by  his  bill  to  pay  the  200?.  That  case  intro- 
duced no  new  principle  as  to  the  admissibility  of  parol 
evidence  "  (r). 
^^*^  It  is  to  be  observed  (though  the  observation  is  now 
doctrine  to  &miliar)  that  these  doctrines  are  in  principle  independent 
l»n£ ""'  ^^  ^^®  Statute  of  Frauds  (s).  What  the  fourth  section  of 
the  Statute  of  Frauds  sap  is  that  in  respect  of  the  matters 
comprised  in  it  no  agreement  not  in  writing  and  duly 
signed  shall  be  sued  upon.  This  in  no  way  prevents  either 
party  from  showing  that  the  writing  on  which  the  other 
insists  does  not  represent  the  real  agreement ;  the  statute 
interferes  only  when  the  real  agreement  cannot  be  proved 
by  a  writing  which  satisfies  its  requirements.  Then  there 
is  nothing  which  can  be  enforced  at  all  The  writing  can- 
not, because  it  is  not  the  real  agreement ;  nor  yet  the  real 
agreement,  because  it  is  not  in  writing.  A  good  instance 
of  this  state  of  things  is  Price  v.  Ley  (t).  The  suit  was 
brought  mainly  to  set  aside  the  written  agreement,  and  so 
far  succeeded.  It  appears  not  to  have  been  seriously  at- 
tempted to  insist  upon  the  real  agreement  which  had  not 
been  put  into  writing. 

B.  Bectijlcatian  of  Instruments. 

When  the  parties  to  an  agreement  have  determined  to 
embody  their  common  intention  in  the  appropriate  and 
conclusive  form,  and  the  instrument  meant  to  effect  this 

iq)  (1852)  2  D.  M.  G.  785,  22  L.  CUnan  v.  Cooke  (1802)  1  Sch.  &  L. 

J.  Oh.  94.  88-89. 

(r)  Per  Staart  Y.-O.  Price  v.  Ley  {t)  (1868)  4  Giff.  235,  afflnned  on 

(1863)  4  Giff.  at  p.  appeal,  82  L.  J.  Ch.  534. 

(«)  See  per  Lord  Bedesdale,  in 


IN  EXPRESSION:    RECmFIOATION.  493 

purpose  is  by  mistake  so  framed  as  not  to  express  the  real 
intention  which  it  ought  to  have  expressed,  it  is  possible 
in  many  cases  to  correct  the  mistake  by  means  of  a  juris- 
diction formerly  peculiar  to  courts  of  equity,  and  still 
reserved,  as  a  matter  of  procedure,  to  the  Chancery 
Division, 

Courts  of  equity  "  assume  a  jurisdiction  to  reform  in- 
struments which,  either  by  the  fraud  or  mistake  of  the 
drawer,  admit  of  a  construction  inconsistent  with  the  true 
agreement  of  the  parties.  And  of  necessity,  in  the  exercise 
of  this  jurisdiction,  a  court  of  equity  receives  evidence  of 
the  true  agreement  in  contradiction  of  the  written  instru- 
ment." Relief  will  not  be  refused  though  the  party  seeking 
relief  himself  drew  the  instrument ;  for  "  every  party  who 
comes  to  be  relieved  against  an  agreement  which  he  has 
signed,  by  whomsoever  drawn,  comes  to  be  relieved  against 
his  own  mistake  "  (u).  The  jurisdiction  is  a  substantive 
and  independent  one,  so  that  it  does  not  matter  whether 
the  party  seeking  relief  would  or  would  not  be  able  to  get 
the  benefit  of  the  true  intention  of  the  contract  by  any 
other  form  of  remedy  (v).  It  would  be  neither  practicable 
nor  desirable  to  discuss  minutely  the  very  numerous  cases 
in  which  this  jurisdiction  has  been  exemplified.  The  most 
important  thing  to  be  known  about  a  discretionary  power 
of  this  kind  is  whether  there  is  any  settled  rule  by  which 
its  exercise  is  limited.  In  this  case  there  are  ample 
authorities  to  show  that  there  is  such  a  rule,  and  they 
expound  it  so  ftiUy  that  there  is  very  little  left  to  be  added 
by  way  of  comment. 

The  manner  in  which  the  Court  proceeds  is  put  in  a  Principles 
very  clear  light  by  the  opening  of  Lord  Romilly's  judg-  TOoita*^ 
ment  in  the  case  of  Mv/rray  v.  Panrker  {x) : —  equity  will 

**  In  mfttten  of  mistake,  the  Gotizt  nndonbtedly  has  jorisdiotion,  and 
though  this  jnriadiotion  is  to  be  exercised  with  great  cantion  and  care, 

(if)  BcM  V.  SUnit  (1828)  1  Sim.  &      Eq.  181, 37  L.  J.  Ch.  241. 
St.  210,  219.  (x)  (1864)  19  Beav.  805,  808. 

(r)  Drviffy.  lord  Parker  (1868)  5 


494  MISTAKE. 

rectify  in-  lUIl  it  Is  to  be  ezeroiMd  in  all  eases  where  a  deed,  m  executed,  is  not 
Btrnments.  acoording  to  the  resl  sgrecmcnt  between  the  pertief.  In  all  cases  Ihe 
real  agreement  most  be  established  l^  CTidenoe,  whether  parol  or  written  ; 
if  there  be  a  previous  agreement  in  writing  which  is  nnambignoof,  the 
deed  will  be  reformed  accordingly  ;  if  ambignoos  parol  evidence  may  be 
need  to  express  it,  in  the  same  manner  as  in  other  cases  where  parol 
ividence  is  admitted  to  explain  ambiguities  in  a  written  instrument." 

Previous        In  the  case  of  "  a  previous  agreement  in  writing  which 
in  writing  IS  Unambiguous"  the  Court  cannot  admit  parol  evidence 
?owed  to     *^  rectify  the  final  instrument  executed  in  accordance  with 
be  varied,  such  agreement  any  more  than  it  could  allow  the  party  to 
maintain  a  suit,  while  the  agreement  was  yet  executory, 
first  to  rectify  the  agreement  by  parol  evidence  and  then 
execute  it  as  rectified — ^which,  as  we  have  seen,  it  will  not 
do.     For  this  would  be  to  "reform  [the  instrument]  by 
that  evidence,  which  if  [the  instrument]  rested  in  fieri, 
would  be  inadmissible  to  aid  in  carrying  it  into  execu- 
tion "(y). 

This  language,  it  will  be  seen,  is  not  in  terms  confined 

to  cases  within  the  Statute  of  Frauds.      But  it  might 

perhaps  well  be  argued,  should  the  occasion  for  it  ever 

arise,  that  no  other  cases  were  in  fact  contemplated  by 

Lord  St.  Leonards  in  giving  the  judgment  now  cited. 

Oral  evi-        If  there   be   no  previous  agreement   in   writing,  the 

thelre^     modem  rule  is  that  a  deed  may  be  rectified  on  oral  evi- 

agreement  dence  of  what  was  the  real  intention  of  the  parties  at  the 

in  the        time,  if  clear  and  uncontradicted. 

***^oS  °'      ^^*  ^  ^^^  alleged  mistake  is  positively  denied  by  any 
if  not  oon-  party  to  the  instrument,  parol  evidence  alone  is  inadmissible 
tradicted.   ^^  prove  it.    The  rule  is  contained  in  two  judgments  given 
by  Lord  St.  Leonards  in  the  Irish  Court  of  Chancery. 
He  said  in  Alexander  v.  Crosbie  (z)  : — 

"  In  all  the  oasef,  perhaps,  in  which  the  Court  has  refonned  a  settle- 
ment, there  has  been  something  beyond  the  parol  evidence,  such  for 

(y)  Per  Lord  8t  Leonards,  DavUi  (z)  (1835)  LL  ft  O.  temp.  Sui 
V.  FUUm  (1842)  2  Dr.  ft  War.  225,  145,  150.  Cp.  Daviet  v.  ' 
283.  (1842)  2  Dr.  ft  War.  238. 


IN  EXPRESSION:    RECTTIFICATION.  495 

iostaiioe  as  the  iosfcrodtioiii  for  preparfog  tlie  oonvejanoe  or  a  note  bj 
the  attorney,  and  the  mistake  properly  acoonnted  for ;  bat  the  Court 
would,  I  think,  ict  where  the  mistake  ia  clearly  established  l^  parol 
evidence,  even  though  there  is  nothing  in  writing  to  which  the  parol 
evidence  may  attach." 

What  is  here  meant  by  "  clearly  established  "  is  shown 
by  his  later  statement  in  Mortvmer  v.  ShortaU  (a) :  "  There 
is  no  objection  to  correct  a  deed  by  parol  evidence,  when 
you  have  cmything  beyond  the  parol  evidence  to  go  by. 
But  where  there  is  nothing  but  the  recollection  of  witnesses, 
and  the  defendcmt  by  his  answer  denies  the  case  set  up  by 
the  plaintiff,  the  plaintiff  appears  to  be  without  a  remedy. 
Here  I  am  not  acting  upon  parol  evidence  alone;  the 
documents  in  the  cause,  and  the  subsequent  transactions, 
corroborate  the  parol  evidence,  and  leave  no  doubt  in  ray 
mind  as  to  a  mistake  having  been  made.'' 

Again,  it  was  said  in  a  case  on  the  equity  side  of  the 
Court  of  Exchequer,  where  the  whole  subject  was  consider- 
ably discussed : 

"  It  seems  that  the  Court  onght  not  in  any  case,  vhere  the  mitlake  i$ 
denied  or  nd  admUied  ly  the  antwer,  to  admit  parol  evidence,  and  upon 
that  evidsfioe,  to  reform  an  ezeoatoiy  agreement "  (&). 

On  the  other  hand,  when  the  mistake  is  admitted,  or  not 
positively  denied,  written  instruments  have  repeatedly  been 
reformed  on  parol  evidence  alone  (c). 

Thus  far  as  to  the  nature  of  the  evidence  required;  next  What 
let  us  see  what  it  must  prove.    It  is  indispensable  that  the  ^JJI^e  J : 

(a)  (1842)  2  Dr.  k  War.  868,  874.  L.  J.  Ch.  141 ;  Ex  parte  National      . 

(6)  Per  Alderson   B.  Atty.-OenL  Provincial  Bank  of  England  (1876) 

y.  Si^well  (1885)  1  T.  &  C.  Ex.  559,  4  Ch.  D.  241,  46  L.  J.  Bk.  11 ; 

588.    OUey  v.  Fisher  (1886)  84  Ch.  Wdman  y.  Wdman  (1880)  15  Ch. 

D.  867,  seems   to   pat   this  rule  D.  570,  49  L.  J.  Ch.  786,  where  a 

wholly  on  the  Statute  of  Frands,  power  of  reyocation  appearing  in 

Bed  qu,  the  first  draft  liad  been  strock  oat 

(e)  TownAend  y.  Stangroom  (1801)  in  the  instmment  as  it  finally  stood, 

6   Yes.  828,  384  ;   Ball  y.  Storie  and  there  was  nothing  to  show  how 

(1828)  1  Sim.  &  St.  210 ;  Druiffv,  this  had  happened. 
Ltyrd  Pa/rher  (1868)  5  Bq.   181,  87 


496 


MISTAKR 


intention 

of  parties 

different 

from 

expressed 

intention. 


Proof  of 
one 

party's 
intention 


evidence  should  amount  to  "  proof  of  a  mistake  common 
to  all  the  parties  "  (d),  i.e.  a  common  intention  different 
horn  the  expressed  intention  and  a  common  mistaken  sup- 
position that  it  is  rightly  expressed  :  it  matters  not,  sa  we 
have  seen,  by  whom  the  actual  oversight  or  error  is  made 
which  causes  the  expression  to  be  wrong.  The  leading 
principle  of  equity  on  the  head  of  rectification, — ^that 
there  must  be  clear  proof  of  a  real  agreement  on  both 
parties  different  fix)m  the  expressed  agreement,  and  that  a 
different  intention  or  mistake  of  one  party  alone  is  no 
ground  to  vary  the  agreement  expressed  in  writing, — ^was 
distinctly  laid  down  by  Lord  Hardwicke  aj9  long  ago  ajB 
1749  (6> 

The  same  thing  was  very  explicitly  asserted  in  Fowler 
V.  Fowler  (J) : 

"The  power  which  the  Court  poMenes  of  refonning  written  agree- 
ments where  there  has  been  an  omission  or  insertion  of  stipulations 
contrary  to  the  iAtention  of  the  parties  and  nnder  a  mntnal  mistake^  is 
one  which  has  been  frequently  and  most  nsefnUy  exercised.  But  it  is 
also  one  which  should  be  need  with  extreme  care  and  oantion.  To 
snbstitnte  a  new  agreement  for  one  which  the  parties  have  deliberately 
sabsoribed  ought  only  to  be  permitted  upon  evidence  fA  a  different 
intention  of  the  dearest  and  most  satisfactory  description.  It  Is  dear 
that  a  person  who  seeks, to  rectify  a  deed  upon  the  ground  of  mistake 
must  be  required  to  establish,  in  the  dearest  and  most  satisfactory 
manner,  that  the  alleged  intention  to  which  he  desires  it  to  be  made  con- 
f  onnable  continued  concurrentiy  in  the  minds  of  all  parties  down  to  the 
time  of  its  execution,  and  also  must  be  aUe  to  show  exactly  and  precisely 
the  form  to  which  the  deed  ought  to  be  brought  Tor  theie  Is  a  material 
difference  between  setting  aside  an  instrument  and  rectifying  it  on  the 
ground  of  a  mistake.  In  the  latter  case  you  can  only  act  upon  the 
mutual  and  concurrent  intention  of  all  parties  for  whom  the  Court  is 
virtually  making  a  new  wtitten  agreement "  {g). 

So  it  has  been  laid  down  by  the  American  Supreme 
Court  that  equity  may  compel  parties  to  perform  their 
agreement,  but  has  no  power  to  make  agreements  for 


((f)  Per  Lord  Romilly  M.  R 
BtnUey  v.  Madca/tf  (1869)  81  Beav. 
at  p.  151. 

(e)  HeMe  v.  It<yyal  Exch.  Asset. 


Co.  1  Ves.  Sr.  818. 
if)  (1859)  4  De  G.  &  J.  260,  264. 
{g)  Pp.  264-6. 


IN  EXPRESSION:  RECTIFICATION.  497 

parties,  and  then  compel  them  to  execute  the  same  (h) ;  to  win  not 
the  same  eflFect  in  RooJce  v.  Lord  Kensington  {%)  by  Lord 
Hatherley  when  V.-C. ;  and  more  recently  by  James,  L.  J, 
when  V.-C.  in  Mackenzie  v.  CouLson  (k).  On  this  principle, 
as  we  have  ahready  seen,  the  jurisdiction  to  rectify  instru- 
ments does  not  extend  beyond  particular  expressions.  The 
Court  cannot  alter  that  form  of  instrument  which  the 
parties  have  deliberately  chosen  (A). 

The  Court  therefore  cannot  act  on  proof  of  what  was 
intended  by  one  party  only  (i).  And  when  an  instrument 
contains  a  variety  of  provisions,  and  some  of  the  clauses 
may  have  been  passed  over  without  attention,  "  the  single 
fact  of  their  being  no  discussion  on  a  particular  point  will 
not  justify  the  Court  in  saying  that  a  mistake  committed 
on  one  side  must  be  taken  to  be  mutual"  (m).  The  Court 
will  not  rectify  an  instrument  when  the  result  of  doing  so 
would  be  to  affect  interests  already  acquired  by  third 
parties  on  the  faith  of  the  instrument  as  it  stood  (n). 

Without  derogation  from  the  above  general  rules,  a 
contract  of  insurance  is  liberally  construed  for  the  purpose 
of  reforming  the  policy  founded  upon  it  in  accordance  with 
the  true  intention  (o). 

There  exists  a  rare  class  of  cases  (we  know  of  only  two  Posdble 
complete  instances  at  present,  and  none  in  a  Court  of  J|^j^^°^ 
Appeal)  in  which  the  rule  that  a  common  mistake  must  be  P»rty  adta 
shown  may  admit  of  modification.     This  is  where  one  agent 
party  acts  as  another's  agent  in  preparing  an  instrument 
which  concerns  them  both — (in  both  the  particular  cases 
referred  to  an  intended  husband  had  the  marriage  settle- 
ment prepared  in  great  haste  and  without  any  advice  being 
taken  on  the  wife's  part) — and  that  other  gives  no  definite 


(h)  Hunt  V.  Rouimaniere'i  Adm,  (m)  Tkompion  r.  WhUmare  (1860) 

(1828)  1  Peten.  1,  14.  IJ.  ft  H.  268,  276. 

(t)  (1856)  2  K.  ft  J.  758,  764,  25  (»)  BUuJne  t.   Clark  (1852)  15 

L.  J.  Gh.  795.  Beav.  595. 

{k)  (1869)  8  Eq.  868,  875.  (o)  EquitabU  Inmranee  Company 

{I)  Hills  V.  Jtoidand  (1858)  4  D.  v.  ffearne  (1874)  20  Wa'lace  (Sup. 

M.G.  430,  436.  Ct.U.  S.)  494. 

P.  K   K 


498  MISTAKE. 

instructions,  but  relies  on  the  good  Mth  and  competence 
of  the  acting  party  to  carry  out  the  true  intention.  Here 
the  acting  party  takes  on  himself  the  duty  of  framing  a 
proper  instrument — such  an  instrument,  in  fact,  as  would 
be  sanctioned  by  the  Court  if  the  Court  had  to  execute 
the  agreement.  And  the  instrument  actually  prepared, 
and  executed  by  the  other  party  on  the  assumption  that  it 
is  properly  framed,  may  be  corrected  accordingly  (p). 

But  cases  of  this  kind  would  perhaps  be  better  put  on 
the  ground  that  the  acting  party  is  estopped  by  his  con- 
duct, having  taken  on  himself  a  fiduciary  relation  and 
duty,  horn  denying  that  the  intention  of  the  other  party 
was  in  tact  the  common  intention  of  both.  Compare  p.  476 
abova 
Reform*-       The  most  frequent  application  of  the  jurisdiction  of 
settle-       equity  to  rectify  instruments  is  in  the  case  of  marriage 
"®^H.      «uad  other  family  settlements  (a),  when  there  is  a  discre- 

Aooording  •'  .  ■*' 

to  preyiooB  pance  between  the  preliminary  memorandum  or  articles 
articles.  ^^^  ^j^^  settlement  as  finally  executed  As  to  marriage 
settlements,  the  distinction  was  formerly  held  that  if  both 
the  articles  and  the  settlement  were  ante-nuptial,  the 
settlement  should  be  taken  in  case  of  variance  as  a  new 
agreement  superseding  the  articles,  unless  expressly  men- 
tioned to  be  made  in  pursuance  of  the  articles ;  but  that 
a  post-nuptial  settlement  would  always  be  reformed  in 
accordance  with  ante-nuptial  articles.  The  modem  doc- 
trine of  the  Court  has  modified  this  as  follows,  so  far  as 
regards  settlements  executed  after  preliminary  articles  but 
before  the  marriage : 
Special  1.  When  the  settlement  purports  to  be  in  pursuance  of 

thig.  articles  previously  entered  into,  and  there  is  any  variance, 


ip)  Clarl  V.  Qirdwood  (1877)  7  665,  49  L.  J.  Ch.  809.    The  Court 

Gh.  Div.  9,  47  L.  J.  Ch.  116,  on  the  of  Appeal  does  not  seem  likely  to 

authority  of  Corley  v.  Lord  Stafford  extend  this  jurisdiction.  See  Tucker 

(1857)   1  De  G.  &  J.  238,  where  v.  BmneU  (1887)  88  Ch.  Di?.  1,  57 

however  there  was  no  rectification:  L.  J.  Ch.  507. 
a  later  and  very  similar    case  is  [q)  See  further  on  this  subject 

Lovety  v.  Smith  (1880)  15  Ch.  D.  Dav.  Conv.  8,  pt.  1.  Appx.  No.  8. 


IN  EXPRESSION:  RECTIFICATION.  499 

the  variance    will    be    presumed    to    have  arisen  from 
mistake. 

2.  When  the  settlement  does  not  refer  to  the  articles,  it 
will  not  be  presumed, but  it  maybe  proved, that  the  settle- 
ment was  meant  to  be  in  conformity  with  the  articles,  and 
that  any  variance  arose  from  a  mistake. 

In  the  first  case  the  Court  will  act  on  the  presumption, 
in  the  second  on  clear  and  satis£eictory  evidence  of  the 
mistake  (r). 

A  settlement  may  be  rectified  even  against  previous 
articles  on  the  settlor's  uncontradicted  evidence  of  de- 
parture from  the  real  intention,  if  no  ftirther  evidence  can 
be  obtained  (s). 

The  fact  that  a  provision  inserted  in  a  settlement  (e.g» 
restraint  on  anticipation  of  the  income  of  the  wife's  pro- 
perty) is  in  itself  usual  and  is  generally  considered  proper, 
is  not  a  ground  for  the  Court  refusing  to  strike  it  out  when 
its  insertion  is  shown  to  have  been  contrary  to  the  desire 
of  the  parties  and  to  the  instructions  given  by  them  {t). 
There  is  however  a  general  presumption,  in  the  absence  of 
distinct  or  complete  evidenice  of  actual  intention,  that  the 
parties  intend  a  settlement  to  contain  dispositions  and 
provisions  of  the  kind  usual  under  the  circumstances  (u). 

It  is  not  necessary  that  a  person  claiming  to  have  a  At  whow 
settlement  rectified  should  be  or  represent  a  party  to  the  fi^tiwa 
original  contract,  or  be  within  the  consideration  of  it  (v),  ^^y  ^ 
But  a  deed  which  is  wholly  voluntary  in  its  inception 
cannot  be  reformed  if  the  grantor  contests  it,  but  must 


(r)  Bold  ▼.  Hvickifirm  (1855)  5  ddU  (1870)  L.  R.  4  H.  L.  643,  555, 

D.  M.  G.  558,  567,  568.   In  reform-  565,  89  L.  J.  Ch.  505. 

iog  a  settlement  the  intent  rather  («)  Smith  v.  Iliffe  (1875)  20  Eq. 

than  the  literal  words  of  the  articles  666,  44  L.  J.  Ch.  755;  ffanley  v. 

will  be  followed :  for  a  late  instance  Pearton  (1879)  13  Ch.  D.  545. 

see  Oogan  ▼.  Dufidd  (1876)  2  Ch.  .      {t)  Torre  v.  Torre  (1858)  1  Sm.  & 

Div.  44,  45  L.  J.  Ch.  307.    As  to  G.  518. 

the    general    principles    on  which  .      (u)  See  p.  481,  above, 

courts  of   equity  constnie  instru-  (v)  Thompeon  v.  WhUmore  (1860) 

ments  creating  executory  trustii,  see  1  J.  &  H.  268,  273. 
SiickviUe-WeU  v.   VUcount  HoLfMe" 


K  K   2 


600  MISTAKE. 

stand  or  fall  in  its  original  condition  without  alteration  (x); 
the  reason  of  this  has  been  explained  to  be  that  an  agree- 
ment between  parties  for  the  due  execution  of  a  voluntary 
deed  is  not  a  contract  which  the  Court  can  interfere  to 
enforce  (y). 

But  the  Court  has  power  to  set  aside  a  voluntary  deed 
in  part  only  at  the  suit  of  the  grantor  if  he  is  content  that 
the  rest  should  stand  (z). 

K«»*»fi»-  An  agreement  will  not  be  cancelled  at  the  suit  of  one 
altemative  party  when  he  has  rejected  a  proper  offer  to  rectify  it.  It 
Jl^jJJg^  was  agreed  between  A.  and  B.  that  A.  should  give  B.  the 
exclusive  right  of  using  a  patent  in  certain  districts :  a 
document  was  executed  which  was  only  a  licence  from  A. 
to  B.  Some  time  afterwards  B.  complained  that  this  did 
not  carry  out  the  intention,  and  A.,  admitting  it,  offered  a 
rectification.  B.  refused  this  and  sued  for  cancellation. 
Held  that  the  relief  prayed  for  could  not  be  granted  (a). 

In  certain  .  cases  already  mentioned  for  another  pur- 
pose (b)  the  plaintiff  sought  to  reform  an  instrument, 
and  satisfied  the  Court  that  it  did  not  represent  what  was 
his  own  intention  at  the  time  of  execution,  but  fiailed  to 
establish  that  the  other  party  s  intention  was  the  same ; 
and  the  Court  gave  the  defendant  his  choice  of  ''  having 
the  whole  contract  annulled,  or  else  of  taking  it  in  the 
form  which  the  plaintiff  intended "  (c).  The  anomalous 
character  of  these  cases  has  already  been  pointed  out. 
Diaentaa-  The  Court  is  not  prevented  by  the  Fines  and  Recoveries 
ing  deeds.  ^^^^  ^^^  ^q^  ^y^  f^^^  exercising  its  ordinary  jurisdiction  to 
rectify  the  resettling  part  of  a  disentailing  assurance  (d). 


{x)  Broun  v.  Kennedy  (1868)  88  U.  S.  90. 

Beav.  at  p.  147.  (h)  Supra,  pp.  458,  469. 

.  iy)  Usury, Hodgton  (1867)  4Eq.  (c)  Harris  ▼.  PeppereU  (1867)  6 

At  p.  84.  Eq.  1,  5;  Garrard  v.  Frankd  (1862) 

(z)  Turner  Y,CdUn${m\)1Ch.  80  Beav.  445,  81  L.  J.  Gh.  604; 

S29,  342,  41  L.  J.  Gh.  558;  and  see  Bloomer  t.  8pime{m2)  18  Eq.  427» 

per  Timer  KJ.  BenOey  ▼.  Mackay  41  L.  J.  Cb.  869. 

(1869)  4  D.  F.  J.  286.  {d)  Hall-Dare  ▼.  Hail-Dare  (1885) 

(a)  Laver  v.  DennHt  (1888)   109  31  Ch.  Div.  261. 


IN  EXPRESSION:  RECTIFICATION.  501 

An  agreement  cannot  be  rectified  after  it  has  been  Agree- 
adjudicated  upon  by  a  competent  Court  and  performed  ™^^ 
under  the  direction  of  that  Court  (e).  ^  OoweL 

It  is  sometimes  said,  but  inexactly,  that  in  certain  cases  Mi«tak«  in 
wills  may  be  rectified  on  the  ground  of  mistake  (/). 

Actions  for  the  rectification  of  instruments  must  be  Minor 
assigned  to  the  Chancery  Division ;  but  where  a  statement  ^j^^ 
of  defence  to  an  action  brought  in  another  Division  is 
accompanied  by  a  counterclaim  for  rectification,  this  is  not 
a  sufficient  reason  for  transferring  the  action  (g). 

When  a  conveyance  is  rectified  the  order  of  the  Court 
is  sufficient  without  a  new  deed.  A  copy  of  the  order  is 
indorsed  on  the  deed  which  is  to  be  rectified  (h). 

(e)  Caird  v.  Moss  (1886)  38  Cb.  {g)  Storey  y.   WoddU  (1879)  i  Q. 

Div.  22,  55  L.  J.  Oh.  864.  B.  Div.  289. 

(/)  On  this  point  8de  the  Appen-  (h)  WhUe  v.  WhiU  (1872)  16  Eq. 

diz,  Note  L  247,  42  L.  J.  Oh.  28& 


(     502     ) 


CHAPTER  X. 
Misrepresentation  and  Fraud. 


Part  1. — Generally. 

Mitrepre-  The  consent  of  one  party  to  a  contract  may  be  caused  by 
by  fraud  a  misrepresentation  made  by  the  other  of  some  matter, 
ordecscit.  g^^jj^  thsit,  if  he  had  known  the  truth  concerning  it,  he 
would  not  have  entered  into  the  contract.  Putting  off  for 
a  while  the  closer  definition  of  the  term,  we  see  at  once 
that  there  is  a  broad  distinction  between  fraudulent  and 
innocent  misrepresentation.  A  statement  may  be  made 
with  knowledge  of  its  falsehood  and  intent  to  mislead  the 
other  party,  or  with  reckless  ignorance  as  to  its  truth  or 
falsehood.  According  to  the  recent  judgment  of  the  Court 
of  Appeal  (a),  the  blame  of  reckless  ignorance  is  not  to  be 
mitigated,  nor  its  consequences  escaped,  by  the  allegation 
of  credulity.  A  man's  averment. of  his  own  personal  belief 
cannot  excuse  him  for  stating  as  truth  for  the  guidance  of 
his  fellow-citizens,  in  furtherance  of  some  interest  of  his  own, 
that  which  he  had  no  reasonable  cause  to  believe.  In  any  of 
these  cases  the  making  of  such  a  statement  is  morally  wrong 
and  also  wrongful  in  a  legal  sense,  and  the  conduct  of  the 
party  making  it  is  called  Fraud  or  Deceit,  and  may  be  a 
substantive  wrong  giving  rise  to  a  claim  for  redress  in 

(a)  Peek  v.  Derry  (1887)  37  Ch.  cidon  of  the  0.  A.  in  Peel  v.  Derry, 

Div.  541,  57  L.  J.  Ch.  847.     Cp.  This  cannot,  in  any  view,  have  any 

SotOkem  Devdopment  Co.  v.  SUva  direct  bearing  on  the  right  of  re- 

(1888)  125  U.  S.  247, 250.  Since  this  Bcinding  a  contract.     See  further  at 

was  printed,  the  Honse  of  Lords  end  of  this  chapter,  p.  541. 
(July  1, 1889)  has  reversed  the  de- 


FRAUD  IN  GENERAL.  503 

damages,  independent  of  any  contract.    The  present  writer 
has  endeavoured  to  discuss  this  aspect  of  it  elsewhere  (6). 

On  the  other  hand  a  man  is  generally  safe,  for  the  Innocent 
purpose  now  being  considered,  in  stating  as  true  that 
which  he  believes  on  reasonable  grounds  to  be  trua  Still 
more  is  he  safe  in  giving  his  opinion,  as  an  opinion,  for 
what  it  may  be  worth.  If  he  communicates  at  the  same 
time  the  grounds  on  which  he  formed  his  opinion,  or 
reasonable  means  of  access  to  those  grounds,  he  has  done 
all  that  an  honest  man  can  do. 

Whenever  consent  to  a  contract  is  obtained  by  deceit,  Deceit  in 
the  contract  is  voidable  at  the  option  of  the  party  deceived,  ^ntr^ct. 
subject  to  the  conditions  to  be  presently  mentioned.  The 
other  party  cannot  take  advantage  of  his  own  wrong.  We 
shall  see  that  the  working  of  this  rule  involves  careful 
definition  and  distinction ;  but  the  substance  of  the  law 
now  rests  on  broad  and  simple  grounds  which  may  perhaps 
be  yet  further  simplified.  As  matter  of  history,  courts  of 
common  law  and  of  equity  have  approached  the  subject, 
until  quite  lately,  by  different  methods  and  with  different 
habits  of  thought  and  language  :  and  thus  the  terminology 
has  been  affected  by  complication  and  confusion  arising 
from  more  than  one  source.  But  our  modem  law  seems  to 
be  arriving  at  the  principle  that  a  man  who  makes 
positive  statements  to  the  intent  that  others  should  act 
upon  them  undertakes  a  burden  of  the  same  kind  as  all 
men  who  do  voluntary  acts  attended  with  risk  to  others. 
He  does  not  bind  himself  to  be  infallible,  but  he  is  bound 
to  take  care  that  he  has  reasonable  ground  for  material 
statements  which  he  issues  as  statements  of  fact  and 
intending  others  to  act  upon  them  (c).  He  need  not  make 
an  unqualified  statement,  but  if  he  does  make  it  he  is 
answerable  to  this  extent. 

The  combination  of  this  principle  with  the  still  wider  Oonrtroo- 
principle  of  responsibility  for  the  acts  and  defaults  of^^^J^^^ 

(6)  In  "  The  Lav  of  Tortg,"  Ch.  (c)  Cotton  L.  J.   37  Ch.  Div.  568, 

viii  cp.  Sir  James  Hannen  at  p  .578. 


604  MISREPKESENTATION  AND  FRAUD. 

agents  in  the  course  of  their  employment  gives  rise  to 
difficult  questions,  and  in  some  cases  to  consequences  of 
apparent  hardship.  A  man  who  had  no  fraudulent  inten- 
tion, or  who  has  not  even  been  personally  negligent,  may 
be  liable  as  for  fiuud.  The  ground  of  liability  in  such 
cases  is  shortly  described  as  "constructive  fraud,"  or 
perhaps  less  aptly  "  legal  fiuud "  (d).  The  word  "  con- 
structive" negatives  actual  fraud,  but  affirms  that  the 
actual  conditions  will  have  similar  consequences.  "  Con- 
structive possession  "  signifies,  in  the  same  way,  that  an 
owner  out  of  possession  has  certain  advantages  originally 
given  only  to  possessors;  "constructive  delivery"  is  a 
change  of  legal  possession  without  change  of  physical 
custody;  and  we  speak  of  "constructive  notice"  where 
the  existence  of  means  of  knowledge  dispenses  with  the 
proof  of  actual  knowledge. 

Further,  it  seems  harsh  even  in  terms  of  art,  and  in 
speaking  of  causes  which  have  the  same  legal  consequences, 
not  to  distinguish  between  wilfiil  dishonesty  and  culpable 
but  not  consciously  dishonest  negligence.  "The  word 
Fraud  is  in  common  parlance  reserved  for  actions  of  great 
turpitude,  but  the  law  applies  it  to  lesser  breaches  of 
moral  duty";  hence  "legal  fiuud"  has  been  thought 
appropriate  to  signify  "that  degree  of  moral  culpability 
in  the  statement  of  untruth  to  induce  another  to  alter  his 
position,  to  which  the  law  attaches  responsibility  "  (e).  It 
may  be  suggested  that  the  one  word  Deceit  is  capable  of 
taking  the  place  of  "  legal  fiuud,"  It  is  a  milder  term 
than  Fraud ;  one  cannot  defiuud  one's  neighbour  otherwise 
than  wilfiiUy,  but  one  may  deceive  by  carelessness  or  in- 
advertence. Thus  in  a  case  of  wilfiil  deception  we  should 
say  there  was  both  Deceit  and  Fraud ;  in  a  case  of  mis- 
leading by  want  of  reasonable  care  we  should  say  there  was 

{d)  Cdnpare  the  remarks  o!  Cot-  of  the  tenn  in  Weir  v.  BeU  (18^8)  S 

ton  L.J.  and  Sir  James  Hannen,  Ex.  Div.  at  p.  243,  47  I^  J.  Ex. 

87  Ch.  Div.  at  pp.  667,  682,  with  704. 
Lord  Bramweirs  total  repudiation  {e)  Sir  James  Hannen,  I.  e. 


FRAUD  IN  GENERAL.  605 

Deceit  short  of  Fraud;  and  we  should  speak  of  "constructive" 
or  "legal"  Fraud  or  Deceit  only  where  a  party  is  made  liable, 
without  being  personally  to  blame,  through  the  fraud  or  deceit 
of  some  one  for  whose  acts  and  defaults  he  is  answerable  (/). 

It  must  also  be  remembered  that  for  a  long  time  equity  Fonner 
judges  and  text  writers  thought  it  necessary  or  prudent  om'q^^ 
for  the  support  of  a  beneficial  jiu-isdiction  to  employ  the  language, 
term  Fraud  as  nomen  genercUissimum  {g),  "  Constructive 
fraud  "  was  made  to  include  almost  every  class  of  cases  in 
which  any  transaction  is  disallowed,  not  only  on  grounds 
of  fair  dealing  between  the  parties,  but  on  grounds  of 
public  policy  {h).  This  lax  and  ambiguous  usage  of  the 
word  was  conftising  in  the  books  and  not  fi^e  from  con- 
fusion in  practice.  PlaintiflFs  were  too  apt  to  make  un- 
founded charges  of  fraud  in  fact,  while  a  defendant  who 
could  and  did  indignantly  repel  such  charges  might  some- 
times divert  attention  from  the  real  measure  of  his  duties. 
Cases  in  which  there  was  actual  fraud  or  culpable  care- 
lessness of  truth  were  not  sufficiently  distinguished  from 
cases  in  which  there  was  only  a  failure  to  fulfil  a  special 
duty.  But  it  seems  needless  at  this  day  to  pursue  an 
obsolete  verbal  controversy. 

Innocent  representations  are  not  necessarily  harmless  to  Estoppel, 
the  person  making  thena.  They  may  give  rise  to  liability, 
or,  as  it  is  more  exact  to  say,  representations  may  give 
rise  to  liability  without  any  need  for  determining  whether 
they  are  innocent  or  otherwise,  in  various  ways.  A  state- 
ment made  on  quite  reasonable  grounds  may  nevertheless 
be  defamatory  and  actionable ;  but  this  is  remote  from  our 
subject.  The  rule  of  estoppel  comes  nearer  to  it.  "Where 
one  by  his  words  or  conduct  wilfully  causes  another  to 
believe  the  existence  of  a  certain  state  of  things  and 
induces  him  to  act  on  that  belief,  so  as  to  alter  his  own 
previous  position,  the  former  is  concluded  fix)m  averring 

(/)  Cp.  Mr.  Bigelow'g  remarks  in  (h)  See  Story's  Eq.  Jurisp.  ch. 

L.  Q.  R.  ▼.  143.  vii 

ig)  James  L.J.  8  Ch.  at  p.  124. 


506  MISREPRESENTATION  AND  FRAUD. 

against  the  latter  a  different  state  of  things  as  existing  at 
the  same  time"  (i).  And  "whatever  a  man's  real  intention 
may  be,"  he  is  deemed  to  act  wilfully  "if  he  so  conducts  him- 
self that  a  reasonable  man  would  take  the  representation  to 
be  true,  and  believe  that  it  was  meant  that  he  should  act 
upon  it "  (j).  The  rule  is  not  a  rule  of  substantive  law,  in 
the  sense  that  it  does  not  declare  any  immediate  right  or 
claim.  It  is  a  rule  of  evidence,  but  capable  of  having  the 
gravest  effects  on  the  substantive  rights  of  parties. 
Repre-  Again,  the  existence  of  a  certain  state  of  facts,  or  the 

M  term  of  truth  of  a  certain  assertion,  may  be  made  a  condition  or 
contraot    term  of  a  contract,  apart  from  any  question  of  good  faith, 
so  that  if  the  fex5t  be  otherwise  the  proposed  contract  may 
never  become  binding, or  else  there  maybe  a  non-perform- 
ance or  breach  of  the  contract,  with  the  usual  consequences. 
Such  conditions  or  terms  are  in  some  important  kinds  of 
contracts  implied  by  special  rules  of  law. 
OverUm-        It  will  be  observed  that  these  possible  qualities  of  a  repre- 
§|2§^      sentation  are  not  mutually  exclusive.     One  and  the  same 
groands  of  statement  may  well  be  a  deceit  and  a  breach  of  contract 

and  capable  of  operating  by  estoppel  (k). 
Tlie  During  a  certain  time  some  judges  in  the  Court  of 

dootrineof  Chancery  seem  to  have  thought  that  under  certain  condi- 
rera«len?   ^^^T^  »  representation  which  is  not  operative  as  part  of  a 
toUoDi      contract,  or  by  way  of  estoppel,  or  as  amounting  to  an 
^    '         actionable  wrong,  may  still  be  binding  on  the  person 
making  it.     But,  when  these  three  effects  are  duly  con- 
sidered, it  appears  that  there  is  no  other  way  in  which  it 
can  be  binding. 

To  say  that  a  man  is  answerable  for  the  truth  of  his 
statement  is  to  say  that  it  is  his  legal  duty  to  see  that  it 
is  borne  out  or  to  make  compensation  for  its  not  being 

{%)  Pickard  v.  Seart  (1887)  6  A.  &  (X;)  See  pep  Lord  Blackburn  in 

E.  469,  Finch  Sel.  Ca.  552.  Broumlie  y.  CampbtU  (1880)  5  App. 

{fj  Freeman  v.  Cooh  (1848)  2  Ex.  Ca.  926,  953.     A  hint  of  this  was 

654,    Finch.    Sel.    Ca.    555.      See  already  given  by  Parke  B.  in  Free- 

further  Bigelow  on  Estoppel,   4th  man  v.  Cooke,  supra :  see  the  end  of 

ed.  1886,  ch.  zviii  the  judgment 


VARIOUS  EFFECTS  OF  REPRESENTATIONS.  507 

borne  out.  We  need  not  dwell  on  cases  of  deceit,  or  of 
estoppel  independent  of  contract.  Then,  if  the  statement 
is  of  a  fact,  and  made  as  an  inducement  to  another  person 
to  enter  into  a  contract,  the  substance  of  the  duty  can 
only  be  that  the  person  making  the  statement  undertakes 
that  it  is  true.  In  that  case  must  not  his  undertaking  be 
a  contract  or  a  term  in  the  contract  ?  For  if  not,  why 
should  it  bind  him?  It  might  peradventure  work  an 
estoppel  also,  but  for  all  practical  intents  the  estoppel  is 
merged  in  the  contract. 


If,  on  the  other  hand,  the  statement  is  of  something  to  Represen. 
be  performed  in  the  future,  it  must  be  a  declaration  of  the  the  ftitare 
party's  intention  unless  it  is  a  mere  expression  of  opinion,  operates  m 
But  a  declaration  of  intention  made  to  another  person  in  at  aU. 
order  to  be  acted  on  by  that  person  is  a  promise  or  nothing. 
And  if  the  promise  is  binding,  the  obligation  laid  upon  its 
utterer  is  an  obligation  by  way  of  contract  and  nothing 
else :  promises  de  fiduro,  if  binding  at  all,  must  be  binding 
as  contracts  (i).      There  is  no  middle  term  possible.     A 
statement  of  opinion  or  expectation  creates,  as  such,  no 
duty.     If  capable  of  creating  any  duty,  it  is  a  promise. 
If  the  promise  is  enforceable,  it  is  a  contract.     The  de- 
scription of  promise  or  contract  in  a  cumbrous  and  inexact 
manner  will  not  create  a  new  head  of  law  (m). 

The  difficulties  of  the  subject  have  been  caused  by  the 
slowness,  amounting  to  reluctance,  with  which  common 
law  judges  allowed  that  anything  short  of  wilful  and 
downright  falsehood  could  be  treated  as  deceit  by  a  court 
of  justice.  Equity  judges,  not  being  free  under  the  system 
of  divided  jurisdiction  to  have  an  opinion  of  their  own  on 
the  common  law,  were  driven  to  develop  the  true  prin- 
ciples under  cover  of  a  nebulous  terminology.  There  are 
stages  of  a  battle  when  smoke  has  its  use&     When  the 


(0  Lord  Selbome,  Maddiaon  y.  representations  good  "are  (perhaps 

Aldermm  (1883)  8  App.  Ga.  at  p.  473.  now  saperfluously)  discossed  in  the 

(m)   The  authorities  on  the  sup-  Appendix,  Note  K. 
posed  eqnitable  doctrine  of  "  making 


508  MISREPRESENTATION  AND  FRAUD. 

final  attack  has  been  delivered,  and  the  position  captured, 
the  smoke  is  merely  a  hindrance  to  sight,  and  clears  itself 
away  unregretted  (n). 

Part  2. — Misrepresentation  and  Non-disclosurk 

No  gene-        So  far  nothing  has  been  said  of  any  affirmative  duty  to 

ralpoeitive  ^^jj  ^j^g  whole  truth  in  relation  to  the  matter  of  a  con- 
diity  of  •  1  • 

disolosnxe.  tract,  as  distinct  firom  the  negative  duty  of  telling  nothing 

but  the  truth,  or  at  least  what  one  honestly  holds  for 

truth.     In  general  one  is  not  bound  in  law  to  disclose  in 

the  treaty  for  a  contract  all  known  facts  which  may  be 

material  to  the  other  party's  judgment,  nor  even  to  remove 

a  mistake  not  induced  by  one's  own  act  (o).     And  if  one 

party  asks  a  question  which  the  other  is  not  boxmd  to 

answer,  and  it  is  not  answered,  he  is  not  entitled  to  treat 

the  other's  silence  as  a  representation  (p);  that  is,  when  there 

is  really  nothing  beyond  silence.    A  very  slight  departure 

from  passive  acquiescence  might  be  enough  to  convert  a 

lawfril  though  scarcely  laudable  reserve  into  an  actionable 

deceit.    This  must  in  every  case  be  a  question  of  fact. 

Bat  BTioh        There  are  several  kinds  of  contracts,  however,  such  that 

^ntw"  M«  the  one  party  must  in  the  ordinary  course  of  business  take 

certain      from  the  other,  wholly  or  to  a  great  extent,  the  description 

contnctiL   of  the  subject-matter  of  the  contract.     Now  the  parties 

may  if  they  please  make  any  part  of  that  description  a 

term  or  even  a  preliminary  condition  (q)  of  the  contract. 

Whether  they  have   done  so  is  a  question  of  construc- 

(n)  The  deddon  of  the  Hoiue  of  seller  asked  if  there  was  any  news 

Lords  in Peeil;Y.  D«n*s^,  July  1,1889,  affecting  the    market   price;    the 

shows  that  these  woids  are  prema-  bnyer  gave  no  answer,  nor  did  the 

ture.    Nevertheless  I  let  them  stand,  seller  insist  on  one.    Held  that  the 

believing  that  time  will  ran  in  their  bayer's  silence  was  not  fraudulent 

favour.  Cp.  L  G.  A.  s.  17,  illustration  (d). 

(o)  Smith  V.  Bughet  (1871)  L.  R.  (q)  In  such  a  case  it  has  been 

6  Q.  B.  597,  40  L.  J.  Q.  B.  221.  said   that   there   is    not    a    oon- 

(j>)  Laidlaw.Y.  Organ  (1817)   2  ditional  promiie,  but  either  an  ab- 

Wheat  178  :  a  sale  of  tobacco  ;  the  solute  promise  or  no  promise  at  all 

buyer  knew,  and  the  seller  did  not,  Langdell,  §  28.      But  see  Holmes, 

that  peace  had  been  concluded  be-  ''The  Common  Law,"  804. 
tween  the  U.S.  and  England ;  the 


SPECIAL  DUTIES  OF  DISCLOSURE.  509 

tion  (r).  But  therein  the  nature  of  the  contract,  and  the 
extent  to  which  an  erroneous  description  or  material  omis- 
sion may  deprive  either  party  of  the  benefit  to  be  reason- 
ably expected,  will  justly  count  for  much.  More  than  this, 
fixed  rules  on  this  point  have  been  established  as  to 
particular  classes  of  contracts,  and  in  some  of  these  they 
go  to  the  extent  of  a  positive  duty  of  disclosure ;  not  only 
that  all  information  given  shall  be  true,  but  that  all 
material  information  shall  be  fully  as  well  as  truly  given. 
The  character  and  stringency  of  the  duties  thus  imposed 
varies  according  to  the  specific  character  and  risks  of  the 
contract.  It  will  be  convenient  to  take  a  view  of  the 
classes  of  contracts  thus  treated  before  we  examine  in 
detail  the  universal  rules  as  to  Deceit.  These  classes  are 
believed  to  be  the  following.  It  is  by  no  means  certain, 
however,  that  the  same  principle  may  not  be  applicable  in 
other  forms.  The  development  of  modem  commerce  may 
bring  into  prominence  new  kinds  of  transactions  in  which 
the  subject-matter  of  the  contract,  or  a  material  part  of  it, 
is  within  the  peculiar  knowledge  of  one  party,  and  thq 
other  has  to  rely,  in  the  first  instance  at  all  events,  on  the 
correctness  of  the  statements  made  by  him. 

(A)  Insurance.  Contracts 

(B)  Suretyship.  ^ted.^ 

(C)  Sales  of  land 

(D)  Family  settlements, 

(E)  The  contract  of  partnership,  and  thence,  by  analogy, 
contracts  to  take  shares  in  companies  and  contracts  of  pro- 
moters (a). 

We  proceed  to  follow  out  these  topics  in  order.  And 
first  we  shall  say  something  In  general  of  representations 
which  amount  to  a  condition  or  a  warranty. 

(r)  B^ny.  Bumess  (lSQS)'Ex.Ch,  before  the  Jadicature  Acts.  Kennedy 

8  B.  &  S.  751,  32  L.  J.  Q.  R  204,  v.  Panama,  ibc  Mail  (7o.(1867)  L.  R. 

rinch  Sel.  Ca.  507  ;  Banna-man  v.  2  Q.  B.  580,  36  L.  J.  Q.  B.  260, 

White  (1861)  10  G.  B.  N.  S.  844,  31  p.  456,  above,  aeems  a«:aiiiBt  it :  but 

L.  J.  C.  P.  28,  Finch  Sel.  Ca.  531.  the  question  was  not  there  fairly 

(«)  It  is  not  easy  to  say  whether  ra'sed,  nor  is  it  now  of  any  practioiJ 

this  last  extension  would  have  been  importance, 
adopted  by  courts  of  common  law 


510  MISREPRESENTATION  AND  FRAUD. 

Reiyresentationa  amounting  to  Warranty  or  Condition. 

Wairanty  The  law  on  this  subject  is  to  be  found  chiefly  in  the 
diiion.  "  decisions  on  the  sale  of  goods ;  the  principles  however  are 
of  general  importance,  and  not  without  analogies,  as  we 
shall  presently  see,  in  other  doctrines  commonly  treated 
as  peculiar  to  equity.  We  therefore  mention  the  leading 
points  in  this  place,  though  very  briefly.  In  the  first 
place  a  buyer  has  a  right  to  expect  a  merchantable  article 
answering  the  description  in  the  contract  (Q;  but  this  is 
not  on  the  ground  of  warranty,  but  because  the  seller  does 
not  fulfil  the  contract  by  giving  him  something  different. 
"If  a  man  offers  to  buy  pea^  of  another  and  he  sends  him 
beans,  he  does  not  perform  his  contract ;  but  that  is  not  a 
warranty;  there  is  no  warraniy  that  he  should  sell  him 
peas ;  the  contract  is  to  sell  peas,  and  if  he  sends  anything 
else  in  their  stead  it  is  a  non-performance  of  it "  (u).  So 
that,  even  if  it  be  a  special  term  of  the  contract  that  the 
buyer  shall  not  refuse  to  accept  goods  bought  by  sample 
on  the  score  of  the  quality  not  being  equal  to  sample,  but 
shall  take  them  with  an  allowance,  he  is  not  bound  to 
accept  goods  of  a  different  kind  (x).  It  is  open  to  the 
parties  to  add  to  the  ordinary  description  of  the  thing 
contracted  for  any  other  term  they  please,  so  as  to  make 
that  an  essential  part  of  the  contract :  a  term  so  added  is 
a  condition.  If  it  be  not  fulfilled,  the  buyer  is  not  bound 
to  accept  or  keep  the  goods  even  if  there  has  been  a  bar- 
gain and  sale  of  specific  goods  (y).     On  a  bargain  and  sale 


(0  Jones  V.  Just  (1868)  L.  R.  8  Q.  said  that  there  is  a  tcarraniy  that 

B.  197,  204,  87  L.  J.  Q.  B.  89.  the    goodg  shall  be  merohantable 

(tf)  Lord  Abinger  C.B.  m  Chanter  besides  the  condition  that  they  shall 

v.  Hopkins  (1888)  4  M.  &  W.  899,  answer  the  deeoription  :    Mody  v. 

404;  **as  sonnd  an  exposition  of  (?r«!9»>n  (1868)  L.  R.  4  Ex.  49, 88  L. 

the  law  as  can  be,"  per  Martin  B.  J.  Ex.  12. 

Azh^ar  v.  Casdia  (1867)  (Ex.  Ch.)  (a?)  Aiimary,  CaseOa  (1867)  L.  R, 

li.  R.  2  C.  P.  677,  679,  86  L.  J.  C.  2  C.  P.  481,  in  Ex.  Cb.  677,  36  L. 

P.    263.      There    is    a    class    of  J.  C.  P.  124, 263. 
cases,  however,  in  which  it  is  com-  (y)  Benjamin  on  Sale,  596  sqq. 

monly,  ard  perhaps  conveniently, 


WAKRANTY  AND  CONDITION.  511 

of  specific  goods  with  a  warranty  the  buyer  cannot  reject 
them  (0),  but  he  may  obtain  compensation  by  way  of 
deduction  firom  the  price,  or  by  a  cross  action  (a). 

When  there  has  been  a  sale  with  a  warranty  of  goods 
not  in  existence  or  not  ascertained,  and  the  warranty  is 
broken,  the  buyer  may  refuse  to  accept  the  goods,  and  this 
after  keeping  them,  if  necessary,  for  a  time  reasonably 
sufficient  for  trial  or  examination,  provided  he  has  not 
exercised  further  acts  of  ownership  over  them  (6).  This 
appears  at  first  sight  to  put  a  warranty  on  the  same 
footing  as  a  condition  where  the  sale  is  not  of  specific 
goods :  but  the  true  explanation  is  that  given  by  Lord 
Abinger — that  the  tender  of  an  article  not  corresponding 
to  the  warranty  is  not  a  performance  of  the  contract. 
The  warranty  retains  its  peculiar  efiect  in  this,  that  if  the 
buyer  chooses  to  accept  the  goods,  he  has  a  distinct  col- 
lateral right  of  action  on  the  warranty;  whereas  if  there  is 
a  condition  but  not  a  warranty  the  party  may  indeed 
insist  on  the  condition,  but  if  he  accepts  performance  of 
the  contract  without  it  he  may  have  no  claim  to  com- 
pensation. 

Similar  questions  have  not  unfrequently  arisen  on  the 
construction  of  charter-parties.  Thus  in  Behn  v,  Burnesa  (0) 
it  was  agreed  that  the  plainti£f's  ship  "now  in  the  port  of 
Amsterdam  "  should  go  to   an  English  port  and  load  a 

(z)  Heyworih  v.  Hutehinwn  (1867)  him  to  give  a  clear  notioe  that  they 

L.  B.  2  Q.  B.  477,  36  L.  J.  Q.  B.  270,  are  not  accepted,  and  then  it  is  the 

bat  as  to  the  application  of  the  rule  seller's    baslnefls    to    fetch    them  t 

in  the  particular  case  see  Benjamin,  OrimMby  v.    WdU    (1875)    L.  R, 

pp.  896-8.  10  0.  P.  891,  396,  44  L.  J.  C.  P 

(a)  The  reduction  of  the  price  203. 
can  be  only  the  actual  loss  of  yalue :  (c)  (1863)  3  B.  &  S.  751,  32  L.  J. 

any  further  damages  must  be  the  Q.  B.  204.    Was  the  charter-party 

subject  of  a  couoter-claim  (under  void  or  only  voidable?    See  O.  W. 

the  old  practice  a  separate  action) :  Holmes,  The  Common  Law,  329.   I 

Mondd  V.  SUd  (1841)  8  M.  &;  W.  submit  that  it  was  void,  bot  the 

858,  871, 10  L.  J.  Ex.  426.  plaintiff  would  have  been  estopped 

(6)  HeilbuU  v.  Hickson  (1872)  L.  from  showing  that  his  own  state* 

R.  7  G.  P.  438,  451,  41  L.  J.  C.  P.  ment  that  his  ship  was  in  the  port 

228  ;  Indian  Coniract  Act,  §  118.  of  Amsterdam  was  not  true.    Cp, 

It  is  not  the  bujer's  duty  to  send  pp.  476, 477,  above, 
the  goods  back :  it  is  enough  for 


512 


MISREPRESENTATION  AND  FRAUD. 


cargo  of  coals.  The  ship  did  not  in  fact  reach  the  port  of 
Amsterdam  till  some  days  after  the  date  of  the  contract. 
It  was  held  that  the  description  of  her  as  in  the  port  of 
Amsterdam  was  a  condition,  and  that  by  its  non-Ailfilment 
the  defendant  was  discharged  from  his  obligation  to  load  a 
cargo.  We  pass  on  to  the  contracts  above  mentioned  as 
being  under  exceptional  rules. 


Marine 
insuranoe: 
duty  of 
diflolo- 
Bure. 


A.  Insurance, 

The  law  as  to  the  contract  of  marine  insurance  is 
peculiar.  Not  only  misrepresentation  but  concealment  (d) 
of  a  material  feet,  "  though  made  without  any  fraudulent 
intention,  vitiates  the  policy"  (e),that  is,  makes  it  voidable 
at  the  underwriter's  election  (/). 

For  this  purpose  a  material  fact  does  not,  on  the  one 
hand,  mean  only  such  a  fact  as  is  "  material  to  the  risks 
considered  in  their  own  nature";  nor  on  the  other  hand 
does  it  include  everything  that  might  influence  the  under- 
writer's judgment  :  the  rule  is  "that  all  should  be 
disclosed  which  would  affect  the  judgment  of  a  rational 
underwriter  governing  himself  by  the  principles  and  cal- 
culations on  which  underwriters  do  in  practice  act "  (g). 
The  only  exception  is  that  the  insured  is  not  bound  to 
communicate  anything  which  is  such  matter  of  general 
knowledge  that  he  is  entitled  to  assume  the  underwriter 
knows  it  already  {h):  and  the  obligation  extends  not  only 
to  facts  actually  within  the  knowledge  of  the  assured,  but 


{d)  This  is  the  usual  word,  but 
ncm-dudosure  would  be  more  ac- 
curate. 

(e)  lanidet  y.  Pender  (1874)  L.  R. 
9  Q.  B.  631,  637,  48  L.  J.  Q.  B.  227; 
2  Wms.  Saund.  666-9. 

(/)  See  Morrison  v.  Universal 
MaHnt  Insurance  Co.  (1873)  L.  R. 
8  Ex.  197,  206,  42  L.  J.  Ex.  116. 

{g)  Parsons  on  Insurance,  adopted 
per  Cur.  lanfdes  v.  Pender  (1874) 
L.  R.  9  Q.  B.  at  p.  639.  What  falls 
witMn  this  description  is  a  question 


of  fact :  Strthley  y.  Imperial  Marine 
Insurance  Co.  (1876)  1  Q.  B.  D.  507, 
45  L.  J.  Q.  6.  396.  And  the  policy 
will  be  yitiated  by  concealment  of 
a  fact  material  to  gnide  the  under- 
writer's judgment,  though  not  ma- 
terial to  the  risk  insured  against  in 
itself:  Rivaz  y.  Oenati  (1880)  6  Q. 
B.  Div.  222,  60  L.  J.  Q.  B.  176. 

(h)  Morrison  v.  Universal  Marine 
Insurance  Co.  (1873)  L.  B.  8  Ex.  40, 
42  L.  J.  Ex.  116. 


LIFE  INSURANCE.  613 


to  facts  which  in  the  ordinary  course  of  business  he  ought 
to  know,  though  by  the  fraud  or  negligence  of  his  agent  he 
does  not  know  them  (i). 


lAfe  Inaurance.  Life  in- 

As  regards  life  insurance,  the  assured  is  bound  to  dis- 
close all  material  facts  within  his  knowledge  affecting  the 
life  on  which  the  insurance  is  made  (j).  But  where  that 
life  is  not  his  own  but  some  other  person's,  that  person  is 
not  his  agent,  and  if  "the  life"  or  his  referees  make  false 
statements  which  are  passed  on  in  good  faith  by  the 
assured,  their  falsehood  will  not  of  itself  avoid  the  con- 
tract (k). 

Practically  life  policies  are  almost  always  framed  with 
some  sort  of  express  reference  to  the  statements  made  by 
the  assured  as  to  the  hefdth  and  circumstances  of  "the 
life."  Not  unfi^quently  it  is  provided  that  the  declaration 
of  the  assured  shall  be  the  basis  of  the  contract ;  and  if 
the  declaration  thus  made  part  of  the  contract  is  not 
confined  to  the  belief  of  the  party,  but  is  positive  and 
unqualified,  then  the  contract  is  avoided  by  any  part  of 
the  statement  being  in  fact  untrue  (I),  though  not  to  the 


(i)  Protfdfoot  y.  Mant^/lore  (1867)  (/)  See  aathorities  coUeoted  in 
L.  R.  2  Q.  B.  511, 86  L.  J.  Q.  B.  225.  London  Amtranee  v.  Mantd  (1879) 
This  applies  only  to  the  agent  11  Ch.  D.  863,  48  L.  J.  Ch.  381. 
through  whom  the  insuianoe  was  {k)  miedUm  y.  Harditty,  8  E.  & 
aotoaUy effected,  Blaekhwmyr.Vigan  B.  232,  in  Ex.  Ch.  285,  26  L.  J.  Q. 
(1887)  12  App.  Ca.  531,  57  L.  J.  Q.  B.  265,  27  t6.  241.  The  judges  ap- 
B.  114,  unless  there  is  a  continuous  pear  to  haye  been  inclined  to  restrict 
negotiation  by  more  than  one  agent,  the  yiew  taken  before  and  since  of 
Blackburn  v.  ffadam  (1888)  21  Q.  the  uderrima^Scies  generally  required 
B.  D.  144,  57  L.  J.  Q.  B.  479.  Kon-  in  this  contract,  unless  the  dicta 
disdosnre  by  an  agent  of  the  assured,  (which  in  any  case  decide  nothing) 
without  fraudulent  intention,  has  can  be  taken  as  limited  to  the  special 
been  held  to  ayoid  the  policy  only  case  before  them, 
to  the  extent  of  the  loss  or  risk  ({)  It  need  not  be  shown  that  the 
arising  from  the  particular  facts  so  particular  mis-statement  was  ma- 
withheld  :  Stribley  y.  Imperial,  dx.  terial:  Andertonv.  Fitzgerald  (1858) 
Cb.raj9ra:  but  see  per  Lord  Watson,  4  H.  L.  G.  484.  Cp.  Thomson  y. 
12  App.  Ca.  at  p.  540.  Weem$  (1884)  (So.)  9  App.  Ca.  671. 

P.  L  L 


51 4  MISBEPBESENTATION  AND  PBAUD. 

knowledge  of  the  assured  (m),  or  by  the  conceahnent  of  any 
material  fact  (n). 

On  the  same  ground  the  grant  of  a  life  annuity  by  the 
Commissioners  for  the  Reduction  of  the  National  Debt 
was  set  aside  at  the  suit  of  the  Crown,  the  age  of  the  life 
having  been  mis-stated;  not  so  much  on  the  ground  of 
misrepresentation  simply,  as  because,  considering  the  sta- 
tutory powers  and  duties  of  the  commissioners,  "  it  was  an 
essential  part  of  the  contract  itself  that  the  representation 
should  be  true  "  (o). 


lire  in-  The  contract  of  fire  insurance  is  treated  in  somewhat  the 

same  way  as  that  of  marine  insurance  (which  it  resembles 
in  being  a  contract  of  indemnity)  (p),  though  not  to  the 
same  extent.  The  description  of  the  insured  premises 
annexed  to  a  fire  policy  amounts  to  a  warranty  (or  rather 
a  condition)  that  at  the  date  of  the  policy  the  premises 
correspond  to  the  description,  or  at  least  have  not  been 
altered  so  as  to  increase  the  risk ;  and  also  that  during  the 
time  specified  in  the  policy  the  assured  will  not  voluntarily 
make  any  alteration  in  them  such  as  to  increase  the  risk. 
The  description  must  be  the  basis  of  the  contract,  for  the 
terms  of  insurance  can  be  calculated  only  on  the  supposition 
that  the  description  in  the  policy  shall  remain  substantially 
true  while  the  risk  is  running  (q). 


(m)  Maedonald  y.  Zofo  Undon  In-  tationa  of  the  aanired  tan  maAe  the 

surance  Co.  (1874)  L.  R.  9  Q.  B.  828,  baais  of  the  contnct 
43  L.  J.  Q.  B.  181.  (p)  J>arrea  y.  TihbUii  (1880)  5  Q. 

(n)  London  Assurance  ▼.  Mansd  B.  Diy.  560,  50  L.  J.  Q.  B.  88. 
(1879)  11  Ch.  D.  868,  48  L.  J.  Ch.  (q)  Sillem  v.  Thomton(lS5i)  8  E. 

381.  Probably  a  material  fact  means  &  B.  868,  28  L.  J.  Q.  B.  862;  where 

for  this  purpose  a  fact  such  that  its  it  was  held   aocordingly  that  the 

concealment  makes  the  statement  addition  of  a  third  story  to  a  house 

aotoally  famished,  though  literally  described  as  being  of  two  stories 

true,  so  misleading  as  it  stands  as  to  was  a  material  alteration,  and  dis- 

be  in  effect  nntrue.  charged  the  insurer :  and  see  farther, 

(o)  ^.  (7.y.i2ay(1874)9Ch.397,  as   to  what   amonnts  to  material 

407,  43  L.  J.  Ch.  821,  per  Mellish  misdescription,  For^  d;  Co.*s  claim 

L.J.  expressly  comparing  the  case  (1875)  19  £q.  485,  44  L.  J.  Cb.  761. 
of  a  life  policy  where  the  represen- 


SURETTSHIP.  515 

The  eflfect  of  a  misdescription  of  the  goods  in  a  bill  ?**^P' 
of  lading,  apart   from  any  fraudulent  intention,  e,g,  of  goods  in 
avoiding  payment  of  a  higher  rate  of  freight,  is  not  pre-  ^1^^ 
cisely  settled:  but  it  seems  that  at  most  it  would  limit  the  &o. 
carrier's  liability  to  what  the  value  of  the  goods  would  be 
if  the  description  were  correct  (r). 

B.  Suretyship.  ^^• 

The  contract  of  suretyship  "  is  one  in  which  there  is  no  Minepre- 
universal  obligation  to  make  disclosure"  («);  but  it  has"®"*^^®" 
peculiar  incidents  after  it  is  formed,  which  bring  it  within  oontract 
our  present  scope.    A  surety  is  released  from  his  obligation 
by  any  misrepresentation,  or  concealment  amounting  to 
misrepresentation,  of  a  material  fact  on  the  part  of  the 
creditor  {t).    The  language  used  in  different  cases  is  hardly 
consistent :  the  later  decisions  establish  however  that  the 
rule  is  not  parallel  to  that  of  marine  insurance.      The 
creditor  is  not  boimd  to  volunteer  information  as  to  the 
general  credit  of  the  debtor  or  anything  else  which  is  not 
part  of  the  transaction  itself   to  which  the  suretyship 
relates :  and  on  this  point  there  is  no  difference  between 
law  and  equity  (u).    But  the  surety  is  entitled  to  know  ^'^JJ^" 
the  real  nature  of  the  transaction  he  guarantees  and  of  the  know  real 
liability  he  is  undertaking :  and  he  generally  and  naturally  Jjjjj^!*' 
looks  to  the  creditor  for  information  on  this  point,  although  tion. 
he  usually  is  acting  at  the  debtor's  request  and  as  his 
friend,  and  so  relies  on  him  for  collateral  information  as  to 
general  credit  and  the  like.     In  that  case  the  creditor's 
description  of  the  transaction  amounts  to,  or  is  at  least 
evidence  of,  a  representation  that  there  is  nothing  ftirther 


(r)  Lebeau  v.  Otneral  Steam  Navi-  (t)  Fry  J.  Daviet  y.  London  and 

gatUm  Go.  (1872)  L.  R.  8  C.  P.  88,  Provvncial    Marine    Insurance    Co. 

42  L.  J.  G.  P.  1.     The  point  dedded  (1878)  8  Ch.  D.  at  p.  475,  47  L.  J. 

is  that  the  addition  of  the  words  Gh.  511. 

" Weight,  value,  and  oontenta  un-  (u)  Pledgee.  Bum  (1860)  Johns, 

known  "  by  the  shipowner  is  an  en-  663  ;   WyUus  v.  Labouchere  (1858-9) 

tire  waiver  of  the  description.  3  De  G.  &  J.  693,  609,  approving 

(a)  Railton  v.  Mathews  (1844)  10  North  British  Insurance  Co.  v.  lUoyd 

CL  &  F.  934.  (1854)  10  Ex.  523,  24  L.  J.  Ex.  14. 

L  L  2 


616  MISREPRESENTATIOK  AND  FRAUD. 

that  might  not  naturally  be  expected  to  take  place  between 
the  parties  to  a  transaction  such  as  described    Whether  a 
circumstance  not  disclosed  is  such  that  by  implication  it  is 
represented  not  to  exist  depends  on  the  nature  of  the 
transaction  and  is  generally  a  question  of  fact  (v).    Thus 
where  the  suretyship  was  for  a  cash  credit  opened  with  the 
principal  debtor  by  a  bank,  and  the  cash  credit  was  in  &ct 
applied  to  pay  off  an  old  debt  to  the  bank,  the  House  of 
Lords  held  that  the  bank  was  not  bound  to  disclose  this, 
no  actual  agreement  being  alleged  or  shown  that   the 
money  should  be  so  applied,  and  the  thing  being  one  which 
the  surety  might  naturally  expect  to  happen  (x).     So  the 
creditor  is  not  bound  to  tell  the  surety  that  the  proposed 
guaranty  is  to  be  substituted  for  a  previous  one  given  by 
another  person  (y).    But  the  surety  is  not  liable  if  there 
is  a  secret  agreement  or  arrangement  which  substantially 
varies  the  nature  of  the  transaction  or  of  the  liability  to 
be  undertaken :  as  where  the  surety  guarantees  payment 
for  goods  to  be  eold  to  the  principal  debtor,  but  the  real 
bargain,  concealed  from  the  surety,  is  that  the  debtor  shall 
pay  for  the  goods  a  nominal  price,  exceeding  the  market 
price,  and  the  excess  shall  be  applied  in  liquidation  of  an 
old  debt  (z):  or  where  the  loan  to  be  guaranteed  is  obtained 
not  in  the  ordinary  way,  but  by  an  advance  of  trust  frmds 
of  which  the  principal  debtor  himself  is  a  trustee  (a).    In 
Lee  V.  Jones  (6)  there  was  a  continuing  guaranty  of  an 
agent's  liabilities  in  accoimt  with  his  employers.     He  was 
in  fact  already  indebted  to  them  beyond  the  whole  amoxmt 


(v)  Lee  T.  Jonei  (1863)  li  0.  6.  Ex.  14. 
N.  S.  886,  in  Ex.  Ch.  17  C.  B.  N.  (2)  Pidcock  v.  Biihop  (1826)  8  B 

S.  482,  608,  84  L.  J.  0.  P.  181, 138,  &  0.  605 ;  I.  C.  A.  §  148,  ill««t  6. 
which  may  be  taken  as  a  judicial  (a)  Squire  ▼.  WhiUon  (1848)  1  H. 

commentary  on  the   role  given  in  L.  G.  833,  decided  however  chiefly 

Bamilton  v.  Waiton  (1846)  12  CI.  k  on  the  broader  gronnd  that  there 

P*  109.  cannot  be  a  contract  of  luretyahip 

(x)  ffanUUan  v.  Watmn  (1845)  12  in  blank,  for  no  creditor  wae  ever 

CI  AF,  109  ;  ace  Pledge  v.  Bust  named  or  ipecified  to  the  rarety. 
(1860)  Johns.  663.  {b)  (1868)  17  C.  B.   N.   S.   482, 

(y)  North  British  Insurance  Co.  v.  84  L.  J.  Ex.  181. 
Uiid  (1864)  10  Ex.  628,  24  L.  J. 


SURETYSHIP.  617 

guaranteed  by  the  surety's  agreement,  which  was  so  worded 
as  to  cover  existing  as  well  as  future  liabilities.  The 
surety  was  not  informed  of  this,  and  the  recitals  in  the 
agreement,  though  not  positively  false,  were  of  a  mis- 
leading and  dissembling  character.  The  majority  of  the 
Court  of  Exchequer  Chamber  held  that  there  was  evidence 
of  "  studied  effort  to  conceal  the  truth "  amounting  to 
fraud  And  on  the  whole  it  appears  frx)m  this  case  and 
RaiUon  v.  Mathews  (c)  that  the  concealment  from  the 
surety  of  previous  defeults  of  the  principal  debtor,  when 
there  is  a  continuing  guaranty  of  conduct  or  solvency,  is 
in  itself  evidence  of  fraud  Where  a  person  has  become 
a  surety  on  the  £uth  of  the  creditor's  representation  that 
another  will  become  co-surety,  he  is  not  bound  if  that  other 
person  does  not  join ;  and  in  equity  it  makes  no  difference 
that  the  guaranty  was  xmder  seal  (d).  Where  a  guaranty 
was  given  to  certain  judgment  creditors  in  consideration  of 
their  postponing  a  sale  under  an  execution  already  issued 
against  the  principal  debtor,  but  in  &ct  they  did  not  stop 
the  sale,  being  unable  to  do  so  without  the  consent  of 
other  persons  interested,  it  was  held  that  the  guaranty 
was  inoperative  (e) ;  but  perhaps  tlus  case  is  best  accounted 
for  as  one  of  simple  fSetilure  of  consideration ;  for  the  con- 
sideration for  the  guaranty  was  not  merely  the  credit 
given  to  the  principal  debtor,  but  the  immediate  stopping 
of  the  sale. 

The  authorities,  taken  as  a  whole,  establish  that  as  Beyond 
between  creditor  and  surety  there  is  in  point  of  law  no  ^^^^ 
positive  duty  to  give  information  as  to  the  relations  be-  Sn^  to 
tween  the  creditor  and  the  principal  debtor,  but  the  surety  ^Son.  **'  • 
is  discharged  if  there  is  actual  misrepresentation,  and  that 
silence  may  in  a  particular  case  be  equivalent  to  an  actual 

(e)  (1844)  10  CL  &  F.  984.  4  Eq.  45,  S6  L.  J.  Ch.  481,  where 

{d)  Rice  y.  Gordon  (1847)  11  Beav.  the  prmdpeldebtorhMl  not  ezeoated 

265,  Bvant  y.  Bremridge  (1856)  2  K.  the  bond,  bat  had  exeeated  a  npa- 

&  J.  174,  8  D.  M.  G.  100,  25  L.  J.  rate  agreement  nnder  teal 

Ch.  884.  The  nde  does  not  apply  if  («)  Cooper  y.  Jod  (1859)  1  D.  F. 

the  Borety'fl  ramediee  are  not  really  J.  240. 
diminiihed :  Choper  y.  Evarn  (1867) 


518  MISBEPRESENTATIOK  AND  FRAUD. 

representation,  whether  it  is  so  being  a  question  of  fiw^t  (i). 
So  fer  as  these  rules  attach  special  duties  to  the  creditor 
they  do  not  apply  to  a  mere  contract  of  indemnity  {k). 

SalM  of         C.  Sales  of  Land, 

oontract         A  misdescription  materially  affecting  the  value,  title,  or 
voidable     character  of  the  property  sold  will  make  the  contract  void- 
terial         able  at  the  purchaser  s  option,  and  this  notwithstanding 
■oriptioii.    special  conditions  of  sale  providing  that  errors  of  descrip- 
tion shall  be  matter  for  compensation  only.      Flight  v. 
Booth  (l)  is  a  leading  case  on  this  subject.     The  contract 
was  for  the  sale  of  leasehold  property,  and  the  lease  im- 
posed restrictions  against  carrying  on  several  trades,  of 
which  the  particulars  of  sale  named  only  a  few:  it  was  held 
that  the  purchaser  might  rescind  the  contract  and  recover 
back  his  deposit     Tindal  C.  J.  put  the  reason  of  the  case 
on  exactly  the  same  grounds  which,  as  we  shall  imme- 
diately see,  have  been  relied  on  in  like  cases  by  courts  of 
equity. 

"  Where  the  misdescription,  although  not  proceeding  from  fraud,  is  in  a 
material  and  substantial  point,  so  far  affecting  the  subject-matter  of  the 
contract  that  it  may  reasonably  be  supposed  that  but  for  such  misdescrip- 
tion the  purchaser  might  never  have  entered  into  the  contract  at  all,  in  such 
case  the  contract  is  avoided  altogether,  and  the  purchaser  is  not  bound  to 
resort  to  the  clause  of  compensation.  Under  such  a  state  of  facts  the  pur- 
chaser may  be  considered  as  not  having  purchased  the  thing  which  was 
really  the  subject  of  the  sale." 

So  in  Phillips  v.  Calddeugh  (m),  where  the  contract 
was  for  the  sale  of  "  a  freehold  residence  " — which  means 
free  of  all  incumbrances  (m) — and  it  appeared  that  the 
property  was  subject  to  restrictive  covenants  of  some  kind, 

(t)  Cp.  L  C.  A.  ss.  U2-144.  S.  B.  N.  S.  292,  82  L.  J.  C.  P.  34 ; 

143:   *'Any   guarantee  which  the  but  the  point  of  that  case  is  rather 

creditor  has  obtained  by  fneans  of  that  there  was  no  misrepresentation 

keeping  silence  as  to  a  material  cax-  dam  locum  contraehtL 

cumstance  is  invalid,"  is  probably  (I)  (1884)  1  Bing.  N.  G.  870,  377 

not   intended    to    go   beyond   the  (m)  (1868)L.  R.4  Q.  B.  159, 161 

English  law.  88  L.  J.  Q.  B.  68. 

(J)   Way  V.   Ifeam  (1862)  18  C. 


SALES  OF  LAND:  COMPENSATION.  619 

the  purchaser  was  held  entitled  to  rescind,  though  the 
covenants  were  in  a  deed  prior  to  that  fixed  by  the  con- 
tract as  the  commencement  of  the  title. 

Questions  of  this  kind  arise  chiefly  in  suits  for  specific  Spedfio 
performance  between  vendors  and  purchasers  of  real  estate,  ^oe'l^ 
when  it  is  found  that  the  actual  tenure,  quantity,  or  de-  ^P">»- 
scription  of  the  property  varies  fix)m  that  which  was  stated 
in  the  contract.     The  efiPect  of  the  conditions  of  sale  in  the 
particular  instance  has  almost  alwajrs  to  be  considered,  and 
the  result  of  the  variance  may  be  very  different  according 
to  these,  and  according  to  the  amount  and  importance  of 
the  discrepance  between  the  description  and  the  fact.    A 
complete  or  nearly  complete  sj^tem  of  rules  has  been 
gradually  established  by  the  Court  of  Chancery. 

(i.)  "  If  the  feilure  is  not  substantial,  equity  will  inter-  Where 
fere "  and  enforce  the  contract  at  the  instance  of  either  n^t  mib- 
party  with  proper  compensation  (n).    The  purchaser,  "if  ■^■^jji 
he  gets  substantially  that  for  which  he  bargains,  must  take  enf oroe- 
a  compensation  for  a  deficiency  in  the  value  "  (o).     Here  JJ^J^  ^^. 
the  contract  is  valid  and  binding  on  both  parties,  and  the  penaation, 
case  is  analogous  to  a  sale  of  specific  goods  with  a  collateral  ^|^^ 
warranty.  P»^« 

(ii.)  There  is  a  second  class  of  cases  in  which  the  con-  Where 
tract  is  voidable  at  the  option  of  the  purchaser,  so  that  he  gab- 
cannot  be  forced  to  complete  even  with  compensation  at  »*"i***l 
the  suit  of  the  vendor,  but  may  elect  either  to  be  released  otapMe  of 
firom   his  bargain  or  to  perform   it  with   compensation.  ^J^^ 
"  Generally  speaking,  every  purchaser  has  a  right  to  take  tion, 
what  he  can  get,  with  compensation  for  what  he  cannot  EJi^ 
get "  (p),  even  where  he  is  not  bound  to  accept  what  the  'T^^ 
other  has  to  give  him  (q).  or  enforoe 

(»)  HaJLaeyv.  Grant  (1806)  18  Vee.  LeyUmd  y.  nUngwortk  (1860)  2  D. 

78,  77.  F.  J.  ^48,  252. 

(o)  Dyer  v.  Hargravt  (1805)  10  {q)  "If  a  person  possessed  of  a 

Ves.  506,  508.  term  for  100  yearn  oontraots  to  seU 

(l>)  Hughn  V.  /onet  (1861)  8  D.  the  fee  he  cannot  compel  the  pnr- 

F.  J.  807,  815,  81  L.  J.  Gh.  88 ;  chaser  to  take,  but  the  porohssar 


520  MISREPRESENTATION  AND  FRAUD. 

it  with  However  a  purchaser's  conduct  may  amount  to  an  affir- 

2^^"     mation  of  the  contract  and  so  deprive  him  of  the  right  to 

rescind,  but  without  affecting  the  right  to  compensation  (r); 

again,  special  conditions  may  exclude  the  right  to  insist  on 

compensation  and  leave  only  the  right  to  rescind  («). 

Under  this  head  &11  cases  of  misdescription  affecting  the 
value  of  the  property,  such  as  a  statement  of  the  existence 
of  tenancies,  not  shovdng  that  they  are  under  leases  for 
lives  at  a  low  rent  (t) ;  or  an  imqualified  statement  of  a 
recent  occupation  at  a  certain  rent,  the  letting  value  of 
the  property  having  been  meanwhile  ascertained  to  be 
less,  and  that  occupation  having  been  peculiar  in  its  cir- 
cumstances (x)\  or  the  description  of  the  vendor's  interest 
in  terms  importing  that  it  is  free  from  incumbrances — such 
as  "  immediate  absolute  reversion  in  fee  simple  " — where 
it  is  in  fa^t  subject  to  undisclosed  incumbrances  (t/). 

The  treatment  of  this  class  of  cases  in  equity  is  analo- 
gous to  the  rules  applied  at  common  law  to  the  sale  of 
goods  not  specifically  ascertained  by  sample  or  with  a 
warranty :  see  p.  510,  above. 
Ezcep-  l^he  doctrine  that  a  vendor  who  has  less  than  he  under- 

**<**»••  took  to  sell  is  bound  to  give  so  much  as  he  can  give  with 
an  abatement  of  the  price  applies,  it  is  to  be  understood, 
only  where  the  vendor  has  contracted  to  give  the  purchaser 
something  which  he  professed  to  be,  and  the  purchaser 
thought  him  to  be,  capable  of  giving.     Where  a  husband 

can  compel  him  to  conyey  the  term."  kind  Mawgon  v.  Fletcher  (1870)  6  Ch 

Per  Lord  Eldon,    Wood  v.  Oriffilh  91,  40  L.  J.  Ch.  131. 

(1818)  1  Sveanst.  at  p.  54  (though  in  {t)  Hughes  v.  Jonet  (1861)   8  D. 

this  case  not  with  compensation,  see  F.  J.  807,  81  L.  J.  Gb.  83. 

next  page) :    and  see  Mortlock  v.  (x)  Dimmock  v.  HaUett  (1866)  2 

BvUer  (1804)  10  Vea.  292,  816.  Ch,  21,  86  L.  J.  Oh.  146. 

(r)  Hughes  v.  Jones,  supra.  (y)  Torrance  v.  BoUon  (1872)  8 

(«)    Cordingley    v.     Cheesebrough  Ch,  118,  42  L.  J.  Ch,  177.    Of  the 

(1862)  8  Gi£f.  496,  4  D.  F.  J.  379,  peculiar  character  of  the  non-dis- 

81  L.  J.  Ch.  617,  where  the  pur-  dosnre  in  that  case  presently.    Cp. 

chaser  daimiog  specific  performance  Phillips  v,  Cdiddeugh  (1868)  L.  R. 

with  compensation,  and  having  re-  4  Q.  B.  159,  p.  510,  38  L.  J.  Q.  B. 

jected  the  vendor's  offer  to  annul  68,  ahove.    As  to  the  proper  mode 

the  contract  and  repay  the  purchaser  of  assessing  compensation  in  a  case 

his  costs,  was  made  to  perform  the  of  mis-statement  of  profits,  see  PoweB 

contractunconditionally.  See  further  v.  Ellioi  (1875)  10  Ch.  424. 
as  to  the  effect  of  conditions  of  this 


SALES  OF  LAND:  WHERE  NO  COMPENSATION.  621 

and  wife  had  agreed  to  sell  the  wife's  estate  (her  interest 
being  correctly  described  and  known  to  the  purchaser),  and 
the  wife  would  not  convey,  the  Court  refused  to  compel 
the  husband  to  convey  his  own  interest  alone  for  an  abated 
price  {z). 

Also  the  Court  will  not  order  vendors  who  sell  as  trustees 
to  perform  their  contract  with  compensation,  on  account 
of  the  prejudice  to  the  cestui  que  trust  which  might 
ensue  (a). 

It  is  now  settled  (after  many  conflicting  decisions  and  Pmohaaer 

dicta)  that  a  purchaser  otherwise  entitled  to  compensation  ^^ 

can  recover  it  after  he  has  taken  a  conveyance  and  paid  compen- 

the  purchase-money  in  fiill  (6).  jjier'^oom- 

pletion. 

(iiL)  But  lastly  the  variance  may  be  so  material  (either  Where 

in  quantity,  or  as  amounting  to  a  variance  in  kind)  as  to  ^^^^ 

avoid  the  sale .  altogether  and  to  prevent  not  merely  the  p»We  of 

general  jurisdiction  of  the  Court  as  to  compensation,  but  ^^^ 

even  special  provisions  for  that  purpose,  fix)m  having  any  optioD  to 

application.    ''  If  a  man  sells  freehold  land,  and  it  turns  aimplj. 

out  to  be  copyhold,  that  is  not  a  case  for  compensation  (c); 

so  if  it  turns  out  to  be  long  leasehold,  that  is  not  a  case  for 

compensation ;  so  if  one  sells  property  to  another  who  is 

particularly  anxious  to  have  the  right  of  sporting  over  it, 

and  it  turns  out  that  he  cannot  hkve  the  right  of  sporting 

because  it  belongs  to  somebody  else  ...  in  all  those  cases 

the  Court  simply  says  it  will  avoid  the  contract,  and  will 

(z)  CadU  y.  WUkinmm  (1870)  5  fanoieB  of  mankind  are  infinite ;  and 

Cb.  584, 89  L.  J.  Ch.  843 ;  in  Barker  it  ia  imneowtary  for  a  man  who  has 

V.  Ooz  (1876)  4  Ch.  D.  464,  46  L.  J.  contracted  to  pnrobase  one  thing  to 

Ch.  62,  the  fuU  purchaae-money  had  explain  why  he  refuses  to  acoept 

been  paid  and  the  facts  were  oUier-  another :  "  Ayla  v.  Cox  (1852)  16 

wise  peooliar.  Bear.  28.    As  to  leaseholds,  it  is  a 

(a)  WkUe  V.  Cuddcm  (1842)  8  CI.  settled  though  perhaps  not  a  reason- 

&  F.  766.  ftUe  nde  that  a  contract  to  sell  pro- 

(6)  PaLiMT  ▼.  JokfkMon  (1884)  13  perty  held  under  a  lease  is  prifiia 

Q.  B.  Div.  851,  58  L.  J.  Q.  B.  848.  fwit  a  contract  to  show  title  to  an 

See  tiie  former  oases  there  discussed.  original  lease:    CambcnB^  and  S, 

(c)  And  convenely,  a  man  who  London  Building  Society  y.  IfoUowAy 

boys  an  estate  as  copyhold  is  not  (1879)  13  Ch.  D.  754,  49  L.  J.  Ch. 

boand  to  accept  it  if  it  is  in  fact  861. 
freehold.     For  '*the  motives  and 


522  MISREPRESENTATION  AND  FRAX7D. 

not  allow  either  party  to  enforce  it  unless  the  person  who 
is  prejudiced  by  the  error  be  willing  to  perform  the  con- 
tract without  compensation  "  (d),  A  failure  of  title  as  to 
a  part  of  the  property  sold  which,  though  small  in  quantity, 
is  important  for  the  enjoyment  of  the  whole,  may  have  the 
same  efiPect  (e).  This  class  of  cases  agrees  with  the  last 
in  the  contract  being  voidable  at  the  option  of  the  party 
misled,  but  it  differs  from  it  in  this,  that  if  he  elects  to 
adopt  the  contract  at  all  he  must  adopt  it  unconditionally, 
since  compulsory  performance  with  compensation  would 
here  work  the  same  injustice  to  the  one  party  that  com- 
pulsory performance  without  compensation  would  work  to 
the  other.  Such  waa  the  result  in  the  case  now  cited  of 
the  real  quantity  of  the  property  falling  short  by  nearly 
one-half  of  what  it  had  been  supposed  to  be  (/).  But  in 
a  later  case  where  the  vendors  were  found  to  be  entitled 
only  to  an  undivided  moiety  of  the  property  which  they 
had  professed  to  sell  as  an  entirety,  the  Court  found  no 
difficulty  in  ordering  specific  performance  with  an  abate- 
ment of  half  the  price  at  the  suit  of  the  purchaser,  as  no 
injustice  would  be  done  to  the  vendors,  who  would  be  fully 
paid  for  all  they  really  had  to  sell  (gr).     The  real  question 

(d)  Earl  of  Durham  ▼.  Legard  Hatic  legem  veiiditioiiiB :  Si  quid 
(1865)  84  BeftY.  611,  34  L.  J.  Ch.  sacri  vd  rdigioai  eti,  eitu  tmU  mhU, 
589.  Bapervaonam  non  ene,  sed  ad  modica 

(e)  Arnold  t.  Arnold  (1880)  14  loca  pertinere:  oeterum  si  onme 
Ch.  Div.  270,  where  partioulan  of  religioram,  vel  Bacmin,  vel  publicum 
sale  were  misleading  as  to  boundaries  venierit,  nullam  esse  emptionem  : 
and  frontage,  the  purchaser  was  and  see  eotitt^.  18,40  pr.  In  WhiUe- 
held  entiU^  to  rescind  uncondi-  more  v.  Whittemore  (1869)  8  Eq.  603, 
tionally:  Brewer  v.  Brown  (1884)  a  case  of  material  deficiency  in 
28  Ch.  D.  309.  quantity,  it  was  held  that  a  condi- 

(/)   The   price  asked  had  been  tion  of  sale  providing  generally  that 

fixed    by  reference    to    the  rental  errors  of  descriptions  uiould  be  only 

alone.  Qu,  how  the  case  would  have  matter  of  compensation  did  apply, 

stood  could  a  price  proportional  to  but  another  exduding  compensation 


the  area  have  been  arrived  at.   And  for  errors  in  quantity  did  not;  so 

see  Swaidtmd  v.  Dearsley  (1861)  27  that  on  the  whole    the  purchaser 

Beav.  430  (where  it  is  left  doubtful  could  not  rescind,  but  was  entitled 

whether  the  purchaser  could  or  could  to  compensation, 
not  have  enforced  the  contract  with  {g)  Bailey  t.  Piper  (1874)  18  Eq. 

compensation).      Cp.  D.  18.  1.  de  683,  48  L.  J.  Ch.  704;  Horrock$  v. 

oont.  empt.  22-24,  enunciating  pre-  Bigby  (1878)  9  Ch.  D.  180,  47  L.  J. 

ciselv  the  same  principle  as  that  Ch.  800,  where  the  moiety  was  so 

applied   by  our  courts  of  equity.  incumbwed  that  the  yendor  in  the 


SALES  OF  LAND:  WHERE  NO  COMPENSATION.  523 

is  whether  the  deficiency  is  such  as  to  be  fiiirly  capable  of 
a  money  valuation  (h).     It  seems  that  where  it  is  in  the  7^^  ** 
vendor  s  power  to  make  good  the  description  of  the  pro-  vendor'i 
perty,  but  not  by  way  of  money  compensation,  he   can  ^J"  ^ 
enforce  the  contract  on  condition  of  doing  so,  but  not  good  his 
otherwise.     A  lot  of  building  land  (part  of  a  larger  estate  tSfflaaT" 
intended  to  be  sold  together)  was  sold  under  restrictive 
conditions  as  to  building,  and  in  particular  that  no  public- 
house  was  to  be  built ;  the  purchaser  assumed  from  the 
plan  and  particulars  of  sale,  and  in  the   opinion  of  the 
Court  with  good  reason,  that  the  whole  of  the  adjoining 
property  would  be  subject  to  like  restrictions.     One  small 
adjacent  plot  had  in  fact  been  reserved  by  the  vendor  out 
of  the  estate  to  be  sold,  so  that  it  would  be  free  from 
restrictive  covenants ;  but  this  did  not  suflBciently  appear 
fix)m  the  plan.     The  vendor  sued  for  specific  performance. 
It  was  held  that  he  was  entitled  to  a  decree  only  on  the 
terms  of  entering  into  a  restrictive  covenant  including  the 
reserved  plot  (k). 

This  third  class  of  cases  may  be  compared  (though  not 
exactly)  to  a  sale  of  goods  subject  to  a  condition  or 
"  warranty  in  the  nature  of  a  condition,"  so  that  the  sale 
is  "  to  be  null  if  the  aflSrmation  is  incorrect "  {m). 

A  purchaser  who  in  a  case  felling  under  either  of  the  Depodt, 
last  two  heads  exercises  his  option  to  rescind  the  contract  J^^^^ig 
may  sue  in  the  Chancery  Division  to  have  it  set  aside,  and  in  eqnii^ 
recover  back  in  the  same  action  any  deposit  and  expenses  at  law. 
already  paid  under  the  contract  (n).    And  it  seems  that 

resalt  got  DothiDg  but  an  indemnity:  10  Yes.  at  p.  507  ;  and  on  the  dis* 

WkeaOey  t.  Slade  (1830)  4  Sim.  126,  tinotion  of  the  different  classes  of 

is    practically    overmled    by  these  cases   generaUy,  per   Amphlett  B. 

cases.     SimUarly    as  to  leasehold,  Phillips  v.  MiUer  (1875)  L.  R.  10  C. 

Burrow  v.  ScammeU  (1881)  19  Ch.  P.  427-8,  44  L.  J.  C.  P.  265. 

D.  175,  51  L.  J.  Gh.  296,  where  ap-  {k)  £a$kcomh  t.  BeckwUh  (1869) 

parently     Bailey     v.     Piper    was  8  Eq.  100,  88  L.  J.  Gh.  536. 

overlooked.    Maw  v.  Topham  (1854)  (m)  Bannerman  y.  WkUe  (1861)  10 

19  Beav.  576,  is  distinguishable,  as  G.  B.  N.  S.  844,  81  L.  J.  G.  P.  28. 

there  the  purchaser  knew  or  ought  (n)  E.g,  Stanton v,  TaUertaHilSbZ) 

to  haye  known  that  a  good  title  1  Sm.  &  G.  529,  Torrance  v.  Bolton 

could  not  be  made  to  the  whole.  (1872)  8  Gh.  118,  42  L.  J.  Gh.  177. 
(A)  See  Dyer  y.  Hargrwve  (1805) 


524 


MISBEPBESEMTATION  AND  FRAUD. 


G«iienl 
dnty  of 
vendor  to 
giye  cor- 
rect de- 
scriptioD. 


Oonceal- 
mentin 
particQ- 
unnot 
ezciued 
by  correct 
statement 
in  con- 
ditions 
only  read 
oat  at  the 
nk: 
Torrance 
V.  BoltoD. 


there  is  an  independent  right  to  sue  in  equity  for  the 
return  of  the  deposit  and  expenses,  at  all  events  if  there 
are  any  accompanying  circiunstances  to  afford  ground  for 
equitable  jurisdiction,  such  as  securities  having  been  given 
of  which  the  specific  restitution  is  claimed  (o). 

To  return  to  the  more  general  question,  it  is  the  duty  of 
the  vendor  to  give  a  feir  and  unambiguous  description  of 
his  property  and  title.  And,  notwithstanding  the  current 
maxim  about  simplex  commeTulatio,  language  of  general 
commendation — such  as  a  statement  that  the  person  in 
possession  is  a  most  desirable  tenant — is  deemed  to  include 
the  assertion  that  the  vendor  does  not  know  of  any  fact 
inconsistent  with  it.  A  contract  obtained  by  describing  a 
tenant  as  "most  desirable"  who  had  paid  the  last  quarter's 
rent  in  instalments  and  under  pressure  has  been  set  aside 
at  the  suit  of  the  purchaser  (p).  If  the  vendor  does  not 
intend  to  offer  for  sale  an  unqualified  estate,  the  qualifica- 
tions should  appear  on  the  fece  of  the  particulars  (g).  In 
Ton^ance  v.  Bolton  (r)  an  estate  was  offered  for  sale  as  an 
immediate  reversion  in  fee  simple.  At  the  auction  condi- 
tions of  sale  were  read  aloud  fix)m  a  manuscript,  but  no 
copy  given  to  the  persons  who  attended  the  sale.  One  of 
these  conditions  showed  that  the  property  was  subject  to 
three  mortgages.  The  plaintiff  in  the  suit  had  bid  and 
become  the  purchaser  at  the  sale,  but  without  having,  as 
he  alleged,  distinctly  heard  the  conditions  or  understood 
their  effect.  The  CJourt  held  that  the  particulars  were 
misleading ;  that  the  mere  reading  out  of  the  conditions  of 
sale  was  not  enough  to  remove  their  effect  and  to  make  it 
clear  to  the  mind  of  the  purchaser  what  he  was  really 
buying;  and  that  he  was  entitled  to  have  the  contract 


(o)  Aheraman  Irontoorki  Co»  v, 
Wickent  (1868)  4  Cb.  101,  where 
the  contract  having  been  rescinded 
by  consent  before  Uie  snit  was  held 
not  to  deprive  the  Conrt  of  jaris- 
diction. 

ip)  Smith  V.  Land   and   House 


Property  Corporation  (1884)  28  Gh 
Div.  7. 

(o)  Ifuffhei  V.  Jone$  (1861)  8  D. 
F.  J.  807.  314,  31  L.  J.  Ch.  83. 

(r)  (1872)  8  Ch.  118,  42  L.  J. 
Ch.  177. 


SALES  OP  LAND  :    DUTIES  OF  VENDOR  AND  PTTRCHASER.  626 

rescinded  and  his  deposit  returned.     Mere  silence  as  to    • 
facts  capable  of  influencing  a  buyer's  judgment,  but  not 
such  as  the  seller  professes  or  undertakes  to  communicate, 
is  not  of  itself  any  breach  of  duty  («). 

A  misleading  description  may  be  treated  as  a  misrepre- 
sentation even  if  it  is  in  terms  accurate:  for  example, 
where  property  was  described  as  "  in  the  occupation  of  A." 
at  a  certain  rental,  and  in  truth  A.  held  not  under  the 
vendor,  but  under  another  person's  adverse  possession  (t), 
or  where  immediate  possession  is  material  to  the  purchaser, 
and  the  tenant  holds  under  an  unexpired  lease  for  years 
which  is  not  disclosed  (u).  A  misleading  statement  or 
omission  made  by  mere  heedlessness  or  accident  may 
deprive  a  vendor  of  his  right  to  specific  performance,  even 
if  such  that  a  more  careful  buyer  might  not  have  been 
misled  (v). 

All  this  proceeds  on  the  supposition  that  the  vendor's  l>nty  of 
property  and  title  are  best  known  to  himself,  as  almost  b^pecuj 
alwajrs  is  the  case.  But  the  position  of  the  parties  may  ^ 
be  reversed  :  a  person  who  has  become  the  owner  of  a 
property  he  knows  very  little  about  may  sell  it  to  a  person 
well  acquainted  with  it,  and  in  that  case  a  material  mis- 
representation by  the  purchaser  makes  the  contract,  and 
even  an  executed  conveyance  pursuant  to  it,  voidable  at 
the  vendor's  option  (x).  So  it  ia  where  the  purchaser  has 
done  acts  unknown  to  the  vendor  which  alter  their  position 
and  rights  with  reference  to  the  property  :  as  where  there 
is  a  coal  mine  under  the  land  and  the  purchaser  has  tres- 
passed upon  it  and  raised  coal  without  the  vendor's  know- 
ledge ;  for  here  the  proposed  purchase  involves  a  buying 
up  of  rights  against  the  purchaser  of  which  the  owner  is 
not  aware  (y). 

On  a  sale  under  the  direction  of  the  Court  a  person 

M  Ooakt   V.    BotweU  (1886)   11  (v)  Jtmes  v.  Rimmer  {ISSO)  UCh. 

App.  Ca.  232-286.  Div.  588,  49  L.  J.  Ch.  776. 

{t)  Lachlany.Iteynold${lB6Z)Ka,j  {x)  Haygarth  y.    Wearing  (IS7 1) 

62,  28  L.  J.  Ch.  8.  12  Eq.  320,  40  L.  J.  Ch.  677. 

(«)  CabaUero  v.  Henty  (1874)  9  (y)  PhiUipi  v.  Homfray  (1871)  6 

Ch.  447,  43  L.  J.  Ch.  636.  Ch.  770,  779. 


526 


MISREPRESENTATION  AND  TRAUD. 


Effect  of 
■pedal 
oooditioDS 
as  to  title. 


Non-difl- 
oloenre  of 
defect  of 
title  not 
actually 
known  to 


ofiFering  to  buy  is  not  under  any  extraordinary  duty  of 
disclosure.  It  is  not  the  law  "that,  because  information 
on  some  material  point  or  points  is  offered,  or  is  given 
on  request,  by  a  purchaser  from  the  Court,  it  must 
therefore  be  given  on  all  others  as  to  which  it  is  neither 
offered  nor  requested,  and  concerning  which  there  is  no 
implied  representation,  positive  or  negative,  direct  or  in- 
direct, in  what  is  actually  stated"  (z). 

Vendors  of  land  may,  and  constantly  do  in  practice,  sell 
under  conditions  requiring  the  purchaser  to  assume  par- 
ticular states  of  fact  'and  title.*  But  such  conditions  must 
not  be  misleading  as  to  any  matter  within  the  vendor  s 
knowledge  (a).  "  The  vendor  is  not  at  liberty  to  require 
the  purchaser  to  assume  as  the  root  of  his  title  that  which 
documents  within  his  possession  show  not  to  be  the  feet, 
even  though  those  documents  may  show  a  perfectly  good 
title  on  another  ground  :"  and  if  this  is  done  even  by  a 
perfectly  innocent  oversight  on  the  part  of  the  vendor  or 
his  advisers,  specific  performance  will  not  be  enforced  (6). 
A  special  condition  limiting  the  time  for  which  title  is  to 
be  shown  must  be  fair  and  explicit,  and  "  give  a  perfectly 
fair  description  of  the  nature  of  that  which  is  to  form  the 
root  of  title"  (c). 

The  House  of  Lords  decided  in  Wilde  v.  Gibson  (d)  that 
the  vendor's  silence  as  to  a  right  of  way  over  the  pro- 
perty, of  the  existence  of  which  he  was  not  known  to  be 
aware,  was  no  ground  for  setting  aside  the  contract     This 


(2)!CbaJt«  V.  BotweU  (1886)  11  App. 
Oa.  232,  440,  revg.  s.  c.  27  Ch.  Div. 
424,  mainly  on  the  facte. 

(a)  Heywood  v.  MaUalieu  (1883) 
26  Ch.  D.  357,  63  L.  J.  Ch.  492 
(definite  adverse  claims  known  to  a 
▼endor  must  be  disclosed  even  if  he 
thinki  them  unfounded). 

(6)  Broad  v.  MurUon  (1879)  12 
Ch.  Div.  131,  per  Cotton  L.J.  at  p. 
149,  48  L.  J.  Cb.  837  :  whether  this 
would  be  sufficient  ground  for  res- 
cinding the  contract,  qwere^  per 
Jessel  M.R.  at  p.  142  ;  Nottingham 


Brick  Co,  v.  ButUr  (1886)  16  Q.  B. 
Div.  778,  where  the  vendor's  solid, 
tor  erroneously  denied  the  existence 
of  restrictive  covenants  contained  in 
deeds  prior  to  those  which  he  had 
read.    Cf.  L.  Q.  R.  ii.  414,  416. 

(c)  Marth  and  Earl  GranvUU 
(1883)  24  Ch.  Div.  11,  22,  68  L.  J. 
Ch.  81,  where  the  purchaser  was  held 
not  bound  to  accept  as  the  com- 
mencement of  title  a  voluntary  deed 
not  stated  in  the  contract  to  be 
such. 

{d)  (1848)  1  H.  L.  C.  606. 


SALES  OF  LAND :    DUTIES  OF  VENDOR  AND   PURCHASER.  527 

reversed  the  decision  of  Knight  Bruce  V.-C.  (e),  who  held  vendor : 
that  the  silence  of  the  particulars  taken  together  with  the  Gibeon. 
condition  of  the  property  (for  the  way  had  been  enclosed) 
amounted  to  an  assertion  that  no  right  of  way  existed.  In 
any  view  it  seems  an  extraordinary,  not  to  say  dangerous, 
doctrine  to  say  that  a  vendor  is  not  bound  to  know  his 
own  title,  so  far  at  least  as  with  ordinary  diligence  he  may 
know  it :  and  the  case  is  severely  criticized  by  Lord  St, 
Leonards  (/).  The  Lish  case  relied  on  by  the  Lords  as  a 
direct  authority  may  be  distinguished  on  the  ground  that 
the  representation  there  made  by  the  lessor  that  there  was 
no  right  of  way  was  made  not  merely  with  an  honest  belief, 
but  with  a  reasonable  belief  in  its  truth  (gr). 

The  decision  in  WUde  v.  Gibson  was  much  influenced  by 
the  purchaser's  case  having  been  rested  in  the  pleadings 
to  a  certain  extent  upon  charges  of  actual  fraud,  which 
however  were  abandoned  in  argument  :  the  doctrine  of 
constructive  notice,  it  was  said,  could  not  be  applied  in 
support  of  an  imputation  of  direct  personal  fraud.  Even 
so  the  result  in  modern  practice  would  only  be  that  the 
plaintiflF  would  have  to  pay  the  costs  occasioned  by  the 
unfounded  charges ;  he  would  not  lose  any  relief  for  which 
he  otherwise  showed  sufficient  grounds  (A).  And  on  exa- 
mining the  pleadings  it  is  difficult  to  find  any  imputation 
sufficient  to  justify  the  grave  rebukes  expressed  in  the 
judgments  (i).  It  was  also  said  by  Lord  Campbell  that  a 
court  of  equity  will  not  set  aside  an  executed  conveyance 
on  the  ground  of  misrepresentation  or  concealment,  but 
only  for  actual  fraud  (k)  :  but  this  dictum  has  not  been 
followed.     Where  copyhold  land  has  been  sold  as  freehold, 

(e)  S.  C.  nom.   Cfib$on  v.   ITStU  7  H.  L.  89  ;  see  next  chapter. 

(1843)  2  T.  &  C.  642.  (t)  The  bUl  in  Oibion  v.  ITEtte, 

if)  Sngd.  Law  of  Property,  614,  which  is  to  be  found  in  the  printed 

687,  &C.  casefl    of    1848,    has    the    words 

ig)  Indeed  the  Court  seems  to  "carefully  concealed*'  hi  one  pas- 
have  thought  it  tocu  true,  notwith-  sage  :     *'  fraudulently    concealed  " 
standing  the  adverse  result  of  an  in  another  may   mean,  of  course, 
action.      Legge  v.  Croker  (1811)  1  fraudulently  in  a  technical  sense. 
BaU  &  B.  506,  Rugd.  op,  cU.  657.  (k)  1  H.  L.  C.  632. 

(A)  HOUard  ▼.  Eife  (1874)  L.  K. 


628  MISBEPRBSENTATION  AND  FRAUD. 

apparently  in  good  iaith,  the  sale  was  set  aside  after  con- 
veyance (Z).     Here,  however,  the  seller  had  notice  when 
he  bought  the  land  himself  that  some  part  of  it  at  least 
was  copyhold.     On  the  other  hand  there  may  be  a  want 
of  diligence  on  the  purchaser's  part  which,  although  not 
such  as  to  deprive  him  of  the  right  of  rescinding  the  con- 
tract before  completion,  would  preclude  him  firom  having 
the  sale  set  aside  after  conveyance  (m). 
jQenenl         As  a  general  result  of  the  authorities  there  seems  to  be 
no  doubt  that  on  sales  of  real  property  it  is  the  duty  of  the 
party  acquainted  with  the  property  to  give  substantially 
correct  information,  at  all  events  to  the  extent  of  his  own 
actual  knowledge  (n),  of  all  fiwts  material  to  the  descrip- 
tion or  title  of  the  estate  oiFered  for  sale,  but  not  of 
extraneous  fisuits  affecting  its  value :  the  seller,  for  example, 
is  not  bound  to  tell  the  buyer  what  price  he  himself  gave 
for  the  property  (o). 
Exception      The  general  rule  seems  not  applicable  as  between  lessor 
JJ^o^^"  and  lessee,  where  the  letting  is  for  an  occupation  by  the 
««*»•       lessee  himself,  and  so  fisif  as  concerns  any  physical  fact 
which  can  be  discovered   by  inspection;  for  in  ordinary 
circumstances  the  landlord  is  entitled  to  assume  that  the 
tenant  will  go  and  look  at  the  premises  for  himself,  and 
therefore  is  not  bound  to  tell  him  if  they  are  in  bad  repair 
or  even  ruinous  (p). 


(0  ffart  V.  Swaine  (1877)  7  Ch.  per  Smith  J.  in  Palmer  v.  Johnatm 

D.  42,  47  L.  J.  Ch.  5,    also    in  (1884)  12  Q.  B.  D.  at  p.  87,  explain- 

Haygairth  v.  Wearing  (1 871)  12  £q.  ing  hif  own  part  in  Jolife  v.  Baker. 

820,  40  li.  J.  Ch.  577,  an  executed  Neither  vendon  nor  their  Bolidton 

oonveyaace  was  Bet  aRide  on  simple  are  boand    to    answer    a  general 

misrepresentation.  inqniry  as  to  non-apparent  incnm- 

(m)  ATCuOock  v.  Ortffory  (1855)  branoes ;  JRe  Ford  and  HUl  (1879) 

1  K  &  J.  286,  24  li.  J.  Ch.  246,  10  Ch.  Div.  365. 

where  a  will  was  mis-stated  in  the  (o)  8  App.  Ca.  1267. 

abstract  so  as  to  conceal  a  defect  of  (p)  Keate$  v.  Earl  Cadoffon  (1851) 

tiUe,  bnt  the  purchaser  omitted  to  10  C.B.  591, 20  L.  J.  C.  P.  76.    The 

examine  the  originals.  general  role  does  apply  as  to  mat- 

In)  See  Joliffe  ▼.  Baker  (1883)  11  ten  of  title  :  Moet^  v,  WeH  Motivn 

Q.  B.  Div.  255,  52  L.  J.  Q.  B.  609,  Coal,  Ac.  Co,  (1876)  1  C.  P.  D.  145 

but  that  case  is  of  little  authority,  if  45  L.  J.  C.  P.  401. 
any,  on  the  question  of  contract,  see 


FAMILY  SETTLEMENTS:    PARTNERSHIPS  AND  COMPANIES.  529 

E.  Family  SetOements.  ^^^ 

In  the  negotiations  for  family  settlements  and  com-  menti ; 
promises  it  is  the  duty  of  the  parties  and  their  professional  ^JjfjjJ. 
agents  not  only  to  abstain  from  misrepresentations,  but  to  do«ire. 
communicate  to  the  other  parties  all  material  facts  within 
their  knowledge  affecting  the  rights  to  be  dealt  with.  The 
omission  to  make  such  communication,  even  without  any 
wrong  motive,  is  a  ground  for  setting  aside  the  transaction. 
**  Full  and  complete  communication  of  all  material  circum- 
stances is  what  the  Court  must  insist  on  "  (q),  "  Without 
full  disclosure  honest  intention  is  not  sufficient,"  and  it 
makes  no  difference  if  the  non-disclosure  is  due  to  an 
honest  but  mistaken  opinion  as  to  the  materiality  or 
accuracy  of  the  information  withheld  (r).  The  operation 
of  this  rule  is  not  affected  by  the  leaning  of  equity,  as  it 
is  called,  towards  supporting  re-settlements  and  similar 
arrangements  for  the  sake  of  peace  and  quietness  in 
families  (a), 

F.  Partnership,  Contracts  to  take  Shares  va  Companies^  ^?^ 
and  Contra^  of  Promoters,  Contwwte 

The  contract  of  partnership  is  always  described  as  one  ^  take 
in  which  the  utmost  good  feith  is  required.  So  far  as  this 
principle  applies  to  the  relations  of  partners  after  the 
partnership  is  formed,  it  belongs  to  the  law  of  partnership 
as  a  special  and  distinct  subject ;  and  in  &at  the  principle 
is  worked  out  in  definite  rules  to  such  an  extent  that  it  is 
seldom  appealed  to  in  its  general  form.  But  it  also  applies 
to  the  transactions  preceding  the  fomwrtion  of  a  partner- 
ship, or  rather  its  full  and  apparent  constitution.  For 
example,  an  intending  partner  must  not  make  a  private 
profit  out  of  a  dealing  undertaken  by  him  on  behalf  of 

iq)  Gordon  v.  Oordon  (1816-9)  8  esse  of  marine  iiwonyioe^  p.  612» 

Sw.  400,  473.  aboye)  whether  the  jodgmeiit  of  a 

(r)  Ih.  477.     How  far  does  thii  reasonable  man  woow  be  affected, 

go  ?    It  can  baldly  be  a  duty  to  Cp.  Heywood  t.  MdBaUm  (1888)  25 

oommnnicate  mere  goesip   on  the  CL  D.  857,  68  L.  J.  Cb.  492. 

chance  of  there  being  something  in  {a)  Ih.  ;  Pane  v.  Fame  (1876)  20 

it.    Probably  the  test  Is  (as  in  the  £q.  698. 

P.  MM 


$30  MrSBSFBEBBNTATION  AND  FRAITD. 

the  future  firm  (t).  There  is  little  or  no  du^ct  authority 
to  show  that  a  person  inviting  another  to  enter  into  part- 
nership with  him  is  bound  not  only  to  abstain  firom  mis- 
statementy  but  to  disclose  everything  within  his  knowledge 
that  is  material  to  the  prospects  of  the  undertaking.  But 
the  existence  of  such  a  duty  (the  precise  extent  of  which 
must  be  determined  in  each  case  by  the  relative  position 
and  means  of  knowledge  of  the  parties)  is  postulated  by 
the  stringent  rules  which  have  been  laid  down  as  binding 
on  the  promoters  of  companies.  These  are  expressed  with 
the  more  strictness,  inasmuch  as  the  public  to  whom  pro- 
moters address  themselves  are  for  the  most  part  not  versed 
in  the  particular  kind  of  business  proposed,  but  are  simply 
persons  in  search  of  an  investment  for  their  money,  and 
with  slight  means  at  hand,  if  any,  of  verifying  the  state- 
ments made  to  them. 
Prospeo-  "The  public,"  it  is  said,  "who  are  invited  by  a  pro- 
be both  spectus  to  join  in  any  new  adventure,  ought  to  have  the 
pontiyely  game  opportunity  of  judging  of  everything  which  has  a 
tiyely  material  bearing  on  its  true  character  as  the  promoters 
correct  themselves  possess  "  (u):  and  those  who  issue  a  prospectus 
inviting  people  to  take  shares  on  the  faith  of  the  repre- 
sentations therein  contained  are  bound  "not  only  to  abstain 
from  stating  as  fiict  that  which  is  not  so,  but  to  omit  no  one 
feet  within  their  knowledge  the  existence  of  which  might 
in  any  degreie  affect'  the  nature  or  extent  or  quality  of  the 
privileges  and  advantages  which  the  prospectus  holds  out 
as  an  inducement  to.tsJke  shares"  (x).  Therefore  if  untrue 
or  misleading  representations  are  made  as  to  the  character 
and  value  of  the  property  to  be  acquired  by  e^  company 


{t)  liodley  on  Partnership,  818  ;  Ry.  Co.  of  Venezuda  v.  KUdi  (1867) 

PawcOt  V.  WhUehouK  (1829)  1  Russ.  L.  R  2  H.  L.  99,  113,  36  L.  J.  Oh. 

&M.182.   Yet  the  duty  is  incident,  849. 

not  precedent,  to  the  contract  of  (ae)  Kindersley  V.-O.  New  Bruns^ 

partnership ;  for  if  there  were  nut  a  wicJcy  Ac,  Co.  v.  Muggeridge  (1860) 

complete   contract    of    partnership  1  Dr.  &  Sm.  363,  381,  30  L.  J.  Cb. 

there  would  be  no  doty  at  all.  242,  adopted  by  Lord  Chelmaford, 

'  <«)  Lord  Chelmsford  in  Central  I,  c. 


C0HPANIS8:    CONTRACTS  OF  FB01COTEB&  531 

for  the  purposes  of  its  operations  {y)y  the  privileges  and 
position  secured  to  it,  the  amount  of  capital  {z\  or  the 
amount  of  shares  already  subscribed  for  (a),  a  person  who 
has  agreed  to  take  shares  on  the  &ith  of  such  representa- 
tions, and  afterwards  discovers  the  truth,  is  entitled  to 
rescind  the  contract  and  repudiate  the  shares,  if  he  does 
so  within  a  reasonable  time  and  before  a  winding-up  has 
given  the  company's  creditors  an  indefeasible  right  to  look 
to  him  as  a  contributory.  For  foil  information  on  this 
subject  the  reader  is  referred  to  Lord  Justice  Lindley's 
treatise  (6). 

There  is  likewise  a  fiduciary  relation  between  a  promoter  "^^^y  <>' 
and  the  company  in  its  corporate  capacity,  which  imposes  to  ccm- 
on  the  promoter  the  duty  of  full  and  fair  disclosure  in  any  P"*^* 
transaction  with  the  company,  or  even  with  persons  pro- 
visionally representing  the  inchoate  company  before  it  is 
actually  formed  (c).     Promoters  who  form  a  company  for 
the  purpose  of  buying  their  property  are  not  entitled  to 
deal  with  that  company  as  a  stranger  {d).    They  must 
provide  it  with  "  a  board  of  directors  who  can  and  do 
exercise  an  independent  and  intelligent  judgment  on  the 
transaction"  (c).     "The  old  familiar  principles  of  the  law  of 
agency  and  of  trusteeship  have  been  extended  and  very 
properly  extended  to  meet  such  cases  "  if). 

iy)  Rette  River  Silrer  Mining  Co.  padlfttion.     The  sliAreholder  iLiist 

▼.  Smith  (1869)  L.  B.  4  B.  L.  64,  do  Bometbiog   to   alter  his  status 

89  L.  J.  Cb.  849,  affg.  s.  a  nam.  as  a  member  :    per  Lindley  L.J. 

SmiOCi  ca.  (1867)  2  Ch.  604.  SeoUish  Petroienm  Co,  28  Cb.  Div. 

(s)  Oeniral  Ry,  Co,  of  Vtwiu^a  v,  485. 

Riich,  mpra.  (c)  New  Somhrero  Phosphate  Co. 

(a)  Wright's  ct^  (1871)  7  Cb.  65,  v.  liHangtr  (1877)  6  Ch.  Div.  78, 

41    L.  J.   Ch.  1,  Moore  d:  De  Ja  per  Jan.es  L.J.  at  p.  118,  46  L.  J. 

Torres  c».  (1874)  18  Eq.  661,  48  L.  Ch.  425;  sffd.  in  H.  L.  nom.Erlanger 

J.  Ch.  751.  y.  New  Sombrero  PhosphaU  Co.  (1878) 

(6)  Lindley  on    Partnership,  2.  8  App.  Ca.  1218,  48  L.  J.  Ch.  78  ; 

985,  1424.    And  see  Amenran  Law  BagnaU  ▼.  CarUon  (1877)  6  Cb.  Div. 

Beview,  N.  S.  vol  1,  p.  177  (March,  871,  47  L.  J.  Ch.  80. 

1880),  "Effect  of  Frand  on  Sub-  {d)    Rrlanger   v.  New   Sombrero 

scriptions  to   Stock,"  by  Seymour  PhosphaU  Co.  (1878)  8  App.  Ca.  at 

D.  Thompson,  where   English  and  p.  1268. 

American  anthorities  are  very  folly  {e)  lb.  at  pp.  1229,  1236, 1255. 

coUected.    Mere  communication  to  (/)  Sydney ^  Ac.  Co.  v.  Bird  (1886) 

the  company  is  not  a  snfficient're-  83  Cb.  Div.  85,  94. 

M  M  2 


532  MISREPKESENTATION  AND  FRAUD. 

The  Companies  Act,  1867,  s.  38,  makes  it  the  duty  of 
promoters  of  a  company  to  disclose  in  the  prospectus  any 
previous  contract  entered  into  by  the  company  or  the  pro- 
moters; in  default  of  which  the  prospectus  is  deemed 
"  fraudulent  on  the  part  of  the  promoters,  directors,  and 
officers  of  the  company  knowingly  issuing  the  same  "  as 
regards  any  one  taking  shares  on  the  faith  of  the  prospectus 
and  without  notice  of  the  contract.  This  creates  no  duty 
on  the  part  of  any  one  who  was  not  a  promoter  at  the  date  of 
the  contract  (gr),  nor  towards  any  one  but  shareholders  (h) : 
and  it  seems  the  right  it  gives  the  shareholder  is  to 
bring  an  action  of  deceit  against  the  delinquent  personally, 
and  not  to  be  released  from  his  contract  (g).  The  contracts 
mentioned  in  this  very  loosely  drawn  enactment  include 
not  only  contracts  binding  or  intended  to  bind  the  company 
itself,  but  all  contracts  involving  dealings  with  the  com- 
pany's shares  or  assets  which,  if  known  to  a  prudent  man, 
would  be  material  to  determine  his  judgment  as  to  taking 
shares  (i).  It  is  not  quite  clear  how  far  the  obligations  of 
promoters  to  shareholders,  under  this  clause  or  otherwise, 
can  be  waived  by  express  notice  in  the  prospectua 
Special  terms  intended  to  have  that  eflFect,  and  pre- 
sumably settled  under  good  advice,  are  however  in  frequent 
use. 

Oontncfc        Thus  much  of  the  classes  of  contracts  to  which  special 

to  BIARy* 

duties  of  this  kind  are  incident.  The  absence  of  any  such 
duty  in  other  cases  is  strongly  exemplified  by  the  contract 
to  marry.  Here  there  is  no  obligation  of  disclosure,  except 
so  far  as  the  woman's  chastity  is  an  implied  condition. 
The  non-disclosure  of  a  previous  and  subsisting  engagement 
to  another  person  (fe),  or  of  the  party's  own  previous  in- 

{g)  Chver's  ea.  (1875)  20  Eq.  114,  SvUivan  y.  MUeaZfe  (1880)  5  C.  P. 

1  Ch.  Div.  182,  45  L.  J.  Cb.  83.  Div.  455,  49  Sj.  J.  0.  P.  815  (with 

{h)  ChmtU  V.  Hay  (1873)  L.  R.  oonriderable  difrennioet  of  opinion). 

8  0.  P.  828,  42  L.  J.  G.  P.  136.  (h)  Beackey  t.  Braum  (1860)  B.  K 

(»)  Twyerois  v.  Grant  (1877)  2  0.  &  E.  796,  29  L.  J.  Q.  B.  105. 
P.  Dly.  469,  46  L.  J.  C.  P.  646, 


FRAUD  OR  DECEIT.  633 

sanity  (I),  is  no  answer  to  an  action  on  the  promise.  If 
promises  to  marry  are  to  give  a  right  of  action,  one  would 
think  the  contract  should  be  treated  as  one  requiring  the 
utmost  good  faith  :  but  such  are  the  decisions. 

Marriage  itself  is  said  not  to  be  avoided  even  by  actual 
fraud  (m),  but  the  reasons  for  this  are  obviously  of  a 
different  kind:  nor  is  a  marriage  settlement  rendered 
voidable  by  the  wife's  non-disclosure  of  previous  mis- 
conduct (n). 

Part  3. — Fraud  or  Deceit. 

Fraud  generally  includes  misrepresentation.   Its  specific  ^nnd 
mark  is  the  presence  of  a  dishonest  intention  on  the  part  ^indes^ 
of  him  by  whom  the  representation  is  made,  or  of  reckless-  ™"ff£^' 
ness  equivalent  to  dishonesty.     In  this  case  we  have  a 
mistake  of  one  party  caused  by  a  representation  of  the 
other,  which  representation  is  made  by  deliberate  words  or 
conduct  with  the  intention  of  thereby  procuring  consent  to 
the  contract,  and  without  a  belief  in  its  truth,  or  with  such 
lack  of  all  reasonable  grounds  of  belief  as  is  equivalent 
to  disbelief. 

There  are  some  instances  of  fraud,  however,  in  which  But  not 
one  can  hardly  say  there  is  a  misrepresentation  except  by  a  m^wS'b  a 
forced  use  of  language.     It  is  fraudulent  to  enter  into  a  ^^^i'*^^^ 
contract  with  the  design  of  using  it  as  an  instrument  of  aool* 
wrong  or  deceit  against  the  other  party.    Thus  a  separation  Jj^l^^i 
deed  is  fraudulent  if  the  wife's  real  object  in  consenting  or  or  uSaw- 
procuring  the  husband's  consent  to  it  is  to  be  the  better  ^fj^ 
able  to  renew  a  former  illicit  intercourse  which  has  been  «'*'^ont 

iutentioii 

concealed  from  him.     "  None  shall  be  permitted  to  take  of  per- 
advantage  of  a  deed  which  they  have  fraudulently  induced  |^'™"»8 
another  to  execute  that  they  may  commit  an  injury  against 

(0  Baher  v.  CaHuright  (1861)  10  below. 
C.  B.  N.  S.  124,  80  L.  J.  C.  P.  864.  (n)  Evans  v.  CamngUm  (1860)  2 

(m)  Svfifi  y.  Kdly  (1885)  8  Knapp,  D.  F.  J.  481,  80  L.  J.  Cb.  864.    It 

P.0.257,298:batLordBroDgham^8  is   there   aaid  however  that  non- 

Uogiuige  is  much  too  wide ;  as  to  disdosnre   of   adnlteiy   would   be 

the  point  actnally  decided  see  p.  540,  enough  to  avoid  a  separatloD  deed. 


534  MISREPBESEMTATION  AND  FRAUD. 

morality  to  the  injury  and  loss  of  the  party  by  whom  the 
deed  is  executed  "  (o).  So  it  is  firaud  to  obtain  a  contract 
for  the  transfer  of  property  or  possession  by  a  representa- 
tion that  the  property  will  be  used  for  some  lawful  purpose, 
when  the  real  intention  is  to  use  it  for  an  unlawful  pur- 
pose (p).  It  has  been  said  that  it  is  not  firaud  to  make  a 
contract  without  any  intention  of  performing  it,  because 
perad venture  the  party  may  think  better  of  it  and  perform 
it  afker  all :  but  this  was  in  a  case  where  the  question 
arose  wholly  on  the  form  of  the  pleadings,  and  in  a  highly 
technical  and  now  happily  impossible  manner  (q).  And 
both  before  and  since  it  has  repeatedly  been  considered  a 
firaud  in  law  to  buy  goods  with  the  intention  of  not  paying 
for  them  (r).  Here  it  is  obvious  that  the  party  would  not 
enter  into  the  contract  if  he  knew  of  the  fi^udulent  inten- 
tion :  but  the  firaud  is  not  so  much  in  the  concealment  as 
in  the  character  of  the  intention  itself.  It  would  be  ridi- 
culous to  speak  of  a  duty  of  disclosure  in  such  cases.  Still 
there  is  ignorance  on  the  one  hand  and  wrongfiil  contri- 
vance on  the  other,  such  as  to  bring  these  cases  within  the 
more  general  description  of  firaud  given  in  CL  IX.,  p.  391, 
above. 
Right  of  The  party  defirauded  is  entitled,  and  in  modem  times 
Inloddic^  has  always  been  entitled  at  law  as  well  as  in  equity,  to 
contract    rescind  the  contract.     "Fraud  in  all  courts  and  at  all 


(o)  Effam  V.  Carrington  (1860)  2  15  A£  &  W.  216, 15  L.  J.  Ex.  118; 

D.  F.  J.  481,   501,  80  L.  J.  Oa,  White  v.  Gardm  (1851)  10  C.  B. 

864  ;  op.  Evaw  y.  Edrnvadi  (1853)  919,  928,  20  L.  J.  G.  P.  166 ;  CUmgk 

18  O.  B.  777,  22  L.  J.  C.  P.  211,  y,  L  A  N.  W,  Ry.  Co,  (1871)  L.  B. 

where,  however,  express  repreeenta-  7  Ex.  26, 41 L.  J.  Ex.  17  ;  Ex  parte 

tion  was  averred.  WhiUaker  (1875)  10  Ch.  446,  449, 

(p)  Feret  v.  HiU  (1854)  15  G.  B.  per  MeUish  L.J.  44  L.  J.  Bk.  91 1 

207,  28  L.  J.  C.  P.  185,  oonoedee  J)onaldi(m  v.  Parwdl  (1876)  8  Otto 

this,  dedding  only  that  poflBeesioii  (98  U.  S.)  681.    Bat  it  is  not  soch 

actually  given  under  the  contract  a   "false  representation   or   other 

cannot  bd  treated  as  a  mere  trespass  frau  I "    as   to    oonstitnte    a   mis- 

by  the  party  defrauded.  demeanor  onder  s.  11,  snb-s.  19  of 

{q)Ifeminffwayv.ffam%U(m{lS9S)  the  Debtors  Act,  1869;  Ex  parte 

4  M.  &  W.  115.  BreU  (1875)  1  Ch.  Div.  151,  45  L. 

(r)  Ferguwn  v.  CarnngUm  (1829)  J.  Bk.  17. 
9  B.  &  C.  59;  Load  v.  dreen  (1846) 


FRAUD  OB  DECEIT.  536 

stages  of  the  transaction  has  been  held  to  vitiate  all  to 
which  it  attaches"  (s). 

We  shall  now  consider  the  elements  of  firaud  separately:  ElemflDta 
and  first  the  false  representation  in  itself  It  does  not  ™^', 
matter  whether  the  representation  is  made  by  express 
words  or  by  conduct,  nor  whether  it  consists  in  the  posi- 
tive assertion  or  suggestion  of  that  which  is  false,  or  in  the 
active  concealment  of  something  material  to  be  known  to 
the  other  party  for  the  purpose  of  deciding  whether  he 
shall  enter  into  the  contract.  These  elementary  rules  are 
so  completely  established  and  so  completely  assumed  to  be 
established  in  all  decisions  and  discussions  on  the  subject 
that  it  will  suflSce  to  give  a  few  instances. 

There  may  be  a  fiJse  statement  of  specific  facts  :  this  BxampUw 
seldom  occurs  in  a  perfectly  simple  form.  CarJuim  v.  j^nt  repre^ 
Barry  (t)  is  a  good  example.  There  the  contract  was  for ' 
the  sale  of  a  leasehold  The  vendor  was  under  covenant 
with  his  lessor  not  to  assign  without  licence,  and  had 
ascertained  that  such  licence  would  not  be  refused  if  he 
could  find  an  eligible  tenant.  The  agreement  was  made 
for  the  purpose  of  one  M.  becoming  the  occupier,  and  the 
purchaser  and  M.  represented  to  the  vendor  that  M.  was  a 
respectable  person  and  could  give  satisfactory  references 
to  the  landlords,  which  was  contrary  to  the  fact.  This  was 
held  to  be  a  firaudulent  misrepresentation  of  a  material 
fact  such  as  to  avoid  the  contract.  A  more  firequent  case 
is  where  a  person  ia  induced  to  acquire  or  become  a 
partner  in  a  business  by  £Etlse  accounts  of  its  position  and 
profits  (u). 

Or  the  representation  may  be  of  a  general  state  of 
things :  thus  it  is  firaud  to  induce  a  person  to  enter  into  » 
particular  arrangement  by  an  incorrect  and  unwarrantable 

is)  Per  Wilde  B.  UdeU  v.  Ather-  (1868)  3  De  G.  A;  J.  804,  28  L.  J. 

ton  (1861)  7  H.  ft  N.  ak  p.  181,  80  Gh.  188.  The  oases  whero  contracts 

L.  J.  Ex.  887.  to  take  shares  have  heen  held  void- 

it)  (1855)  15  C.  B.  597  ;  24  L.  J.  able  for  misrepresentatioii  in  the 

0.  P.  100.  praspeotas  ara  of  the  same  khuU 

(«)   £,  g,  SawUm  ▼•   WiMam 


536  MISREPRESENTATION  AND  FRAUD. 

assertion  that  such  is  the  usual  mode  of  conducting  the 
kind  of  business  in  hand  (x).    How  far  it  must  be  a  repre- 
sentation of  existing  facts  will  be  specially  considered. 
What  U         "  Active   concealment  "   seems   to  be   the  appropriate 
description  for  the  following  sorts  of  conduct:  taking  means 


ment.  appropriate  to  the  nature  of  the  case  to  prevent  the  other 
party  from  learning  a  material  fact — such  as  using  contri- 
vances to  hide  the  defects  of  goods  sold  (y) :  or  making  a 
statement  true  in  terms  as  far  as  it  goes,  but  keeping 
silence  as  to  other  things  which  if  disclosed  would  alter  the 
whole  effect  of  the  statement,  so  that  what  is  in  fact  told 
is  a  half  truth  equivalent  to  a  falsehood  (z) :  or  allowing 
the  other  party  to  proceed  on  an  erroneous  belief  to  which 
one  s  own  acts  have  contributed  (a).  It  is  suflScient  if  it 
appears  that  the  one  party  knowingly  assisted  in  inducing 
the  other  to  enter  into  the  contract  by  leading  him  to 
believe  that  which  was  known  to  be  false  (b).  Thus  it  is 
where  one  party  has  made  an  innocent  misrepresentation, 
but  on  discovering  the  error  does  nothing  to  undeceive  the 
other  (c).  If  he  does  not  remove  when  he  has  better 
knowledge  the  error  to  which  he  contributed  in  excusable 
ignorance,  he  is  no  longer  excused  In  effect  he  is  con- 
tinuing the  representation  with  knowledge  of  its  falsity. 

RepreMd-       That  which  irives  the  character  of  fraud  or  deceit  to  a 

iation  ^ 

nuMie         representation  untrue  in  fact  is  that  it  is  made  without 

beUeMn     reasonable  belief  in  its  truth ;  not  necessarily  with  positive 

its  tnith :   knowled&^e  of  its  falsehood.     Where  a  false  representation 

^oMW'        amounts  to  an  actionable  wrong,  it  is  always  in  the  party's 

(x)  JUyneU  v.  &ffrye  (1852)  1  D.  {h)  Per  Blaokborn  J.  Lee  v.  Jonet 

M.  G.  680,  21  L.  J.  Ch.  638.  (1868)  17  O.  B.  N.  8.  at  p.  507,  84 

(y)  See  Benjamin  on  Sale,  449.  L.  J.  C.  P.  at  p.  140. 

(z)  Peek  r.  Cfurneg  (1878)  L.  K.  (c)  lUyndl  v.  Sprye  (1852)  1  D. 

6  H.  L.  892,  403,  43  L.  J.  Ch.  19.  M.  G.  at  p.  709 1  Bedgrave  v.  Burd 

(a)  Hm  y.  Oray  (1816)  1  Stark.  (1881)  20  Ch.  Div.  at  pp.  12,  18, 

434,  ai  explained  in  Keatet  v.  EaH  51   L.  J.  Gb.  118,  bat  at  to  the 

Cadogan  (1851)  10  C.  B.  591,  600 ;  difference  there  aaramed  between 

20  L.  J.  C.  P.  76  ;  qu,  if  tiie  expla-  equity  and   oommon  law  see  per 

nation    does    not   really   overrole  Bowen  L.J.  In  NeuHngging  v.  Adam 

the  particular  decision,  per  Lord  (1886)  84  Ch.  Div.  at  p.  594,  56 

Chehnsford,  L.  K.  6  H.  L.  891 ;  L.  J.  Oh.  275. 
Benjamin,  451-2. 


FRAUD  OR  DECEIT:    KNOWLEDGE  OF  UNTRUTH.  537 

choice,  as  an  alternative  remedy,  to  seek  rescission  of  the  J*?2^^ 
contract,  if  any,  which  has  been  induced  by  the  fraud:  and  not  neoet- 
it  is  settled  that  a  false  representation  may  be  a  sub- ""'' 
stantive  ground  of  action  for  damages  though  it  is  not  AcUon  of 
shown  that  the  person  making  the  statement  knew  it  to  ^•^*' 
be  false.     It  is  enough  to  show  that  he  made  it  as  being 
true  within  his  own  knowledge,  with  a  view  to  secure  some 
benefit  to  himself,  or  to  deceive  a  third  person,  and  without 
believing  it  to  be  true  (d),  or  (it   is  submitted  as  the 
better  opinion  on  principle)  without  any  grounds  on  which 
a  reasonable  man  in  his  position  could  so  believe  (e). 

It  may  be  and  has  been  said  that  this  is  only  a  rule  of 
evidence ;  the  want  of  any  reasonable  ground  for  believing 
a  thing  makes  it  very  difficult,  though  perhaps  not  impos- 
sible, to  prove  that  it  was  really  believed.  "  Supposing  a 
man  makes  an  untrue  statement,  which  he  asserts  to  be 
the  result  of  a  bona  fide  belief  of  its  truth,  how  can  the 
bona  fides  be  tested  except  by  considering  the  grounds  of 
such  belief  ?  "  (/).  It  was  the  clear  and  unanimous  opinion 
of  the  Court  of  Appeal  in  Peek  v.  Derry  (g)  that  a  belief 
not  founded  on  any  rational  ground  is  not,  as  matter  of 
law,  to  be  counted  as  belief  at  alL  This  opinion,  however, 
has  been  disapproved  in  the  House  of  Lords,  and  cannot 
now  be  relied  on  in  jurisdictions  bound  by  its  decisions  (h). 

At  all  events  mere  ignorance  as  to  the  truth  or  falsehood  Effect  of 
of  a  material  assertion  which  turns  out  to  be  untrue  must  ignorMice 
be  treated  as  equivalent  to  knowledge  of  its  untruth.     "If 
persons  take  upon  themselves  to  make  assertions  as  to 
which  they  are  ignorant  whether  they  are  true  or  untrue, 
they  must  in  a  civil  point  of  view  be  held  as  responsible 

{d)  Taylar  v.  AtJtUm{lSiS)  11  M.  Lord  Granworth'a  ooinion  (p.  168) 

&  W.  401 ,  12  L.  J.  Ex.  363 ;  Evans  tr^a's  it  more  decidedly  m  matter  of 

V.  EdmondM  (1868)  13  C.  B.  777.  22  evidence. 

L.  J.  G.  P.  211.  (ff)  Supra  n  >te    (e) ;  followed  i*i 

(e)  Peek  v.  Verr^  (1887)  37  Ch.  Oann  v.  WiUton  (1888)  39  Ch.  D. 

Div.  541.  89,  57  L.  J.  Cb.  1034,  Amiaan  v. 

(/)  Western  Bank  of  Scotland  v.  Smith  (1889)  41  Ch.  Div.  348. 

Addie  (1867)  L.  R.  1  Sc.  &  D.  145,  (A)  Derry  v.  Peek,  July  1, 1889. 

per  Lord    (^Ihehnsford  at  p.   162.  


538  MISREFBES1ENTATI0N  AND  FRAUD. 

as  if  they  had  asserted  that  which  they  knew  to  be 
untrue  "  (i).  In  other  words,  wilful  ignorance  may  have 
the  same  consequences  as  fraud  (k).  So  may  ignorance 
which,  though  not  wilful,  ia  reckless :  as  when  positive 
assertions  of  &ct  are  made  as  if  founded  on  the  party's  own 
knowledge,  whereas  in  truth  they  are  merely  adopted  on 
trust  fi^m  some  other  person.  The  proper  course  in 
such  a  case  is  to  refer  distinctly  to  the  authority  relied 
upon  (Q. 
Negligent  It  is  no  less  established  that  a  person  who  makes  a  wrong 
statement  as  to  a  fact  which  was  once  actually  within  his 


^J°^^»<*  own  knowledge,  and  which  it  is  his  business  to  remember, 
cannot  excuse  himself  by  alleging  that  he  had  forgotten  it 
at  the  time  of  making  the  statement  (m). 

Silence  is   equivalent  to  misrepresentation  for  these 

purposes  if  "  the  withholding  of  that  which  is  not  stated 

makes  that  which    ia   stated    absolutely  &lse,''  but  not 

otherwise  (n). 

Unwar-         If  a  man  expects,  however  honestly,  that  a  certain  state 

Btotement  ^^  things  will  shortly  exist,  he  is  not  thereby  justified  in 

^^"^     asserting  by  words  or  conduct  that  it  does  now  exist,  and 

tion  B8       any  such  assertion,  if  others  have  acted  on  the  fiiith  of  it 

JJ2®"*      to  their  damage,  ought  to  be  a  ground  of  action  for  deceit, 

and  is  of   course    ground    for  rescinding  any  contract 


(t)  Per  Lord  Cainus,  JUete  JUver  of  that  whiob  he  bo  afleeits." 

Silver  Mining  Co,  v.  Smith  (1869)  L.  {k)  Owen  v.  Homan  (1851)  4  H.  L. 

IL  4  H.  L.  79;  Rawlini  Y,Wickham  C.  at  p.  1085. 

(1858)  8  De  G.  &  J.  804,  816,  28  L.  (t)   RawUns  v.    Wiekham  (1858) 

J.  Ch.  188.    At  oommon  law  the  3  De  G.  &  J.  at  pi  818,  SmiUh^i  oa. 

flame  rule  was  given  by  Maale  J.  in  (1867)  2  Oh.  at  p.  611. 

Bvant  V.  Edmonds  (1858)  18  G.  K  (m)  Burrowea  v.  Lock  (1805)  10 

777,  786,  22  L.  J.  O.  P.  211.    "I  Vea.  470 ;  SUm  v.  Crowiker  (1860) 

conceive  that  if  a  man  having  no  1  D.  F.  J.  518,  525,  29  L.  J.  Oh.  273. 

knowledge  whatever  on  the  sabject  (n)  Peek  v.  Ourney  (1878)  L.  B. 

takee  upon  himself  to  represent  a  6  H.  L.  377,  890,  408,  48  L.  J.  Oh. 

certain  state  of  facts  to  exist,  he  19,  an  equity  case  of  the  same  clan, 

does  so  at  his  peril,  and  if  it  be  For  other  examples  of  suits  in  equity 

done  either  with  a  view  to  secare  beforetheJudioatore Acts  analogous 

some  benefit  to  himself  or  to  deceive  to  the  action  of  deceit  at  law  see 

a  third  person,  he  is  guflty  of  a  SUm  v.  OrowkeTf  supra  ;   ffiU  v. 

fraud,  for  ha  takes  upon  himself  to  Lane  (1870)  1  Eq.  215, 220,  40  L. 

wamnt  his  own  belief  of  the  troth  J.  Oh.  41. 


FRAUD  :    SALES  BY  AUCTION. 

obtamed  by  its  meana  A  stranger  who  accepts  a  bill  as 
agent  for  the  drawee  on  the  chance  of  his  ratifying  the 
acceptance  {o)  acts  at  his  peril  But  we  have  learnt  from 
the  House  of  Lords  that  directors  of  a  tramway  company  . 
may  say  they  have  statutory  authority  to  use  steam  power 
when  they  only  expect  to  obtain  a  consent  which  the 
statute  requires  (p). 

Representations  of  this  kind,  which  deliberately  discount 
the  future,  seem  to  be  of  a  different  kind  from  statements 
honestly  made  on  erroneous  information  of  existing  fietcts. 
For  they  are  in  their  nature  incompatible  with  belief  in 
the  truth  of  the  assertion  which  is  actually  made.  This 
distinction  however  is  not  always  clearly  brought  out  in 
the  authorities  (g). 

The  application  of  the  doctrine  of  fraud  to  sales  by  Sales  l^r 
auction  is  peculiar.    The  courts  of  law  held  the  employ-  ^J^" 
ment  of  a  puffer  to  bid  on  behalf  of  the  vendor  to  be  ""^J*  ^ 
evidence  of  fraud  in  the  absence  of  any  express  condition 
fixing  a  reserve  price  or  reserving  a  right  of  biddiisg ; 
for  such  a  practice  is  inconsistent  with  the  terms  on  which 
a  sale  by  auction  is  assumed  to  proceed,  namely  that  the  ^ 

highest  bidder  is  to  be  the  purchaser,  and  is  a  device  to  i 
put  an  artificial  value  on  the  thing  offered  for  sale  (r). 
There  existed  or  was  supposed  to  exist  (s)  in  courts  of 
equity  the  different  rule  that  the  employment  of  one  puffer 
to  prevent  a  sale  at  an  undervalue  was  justifiable  {t\ 
with  the  extraordinary  result  that  in  this  particular  case 
a  contract  might  be  valid  in  equity  which  a  court  of  law 
would  treat  as  voidable  on  the  ground  of  fr^ud.  The  Sale 
of  Land  by  Auction  Act,  1867  (30  &  31  Vict,  a  48), 
assimilated  the  rule  of  equity  to  that  of  law.    The  Indian 

(o)  PMiUy,  Walter  (1882)  8  R  &  C.  B.  N.  S.  204.  82  L.  J.  C.  P.  181. 
Ad.  114.  (<)  Doabt  w»4  thrown  upon  it  in 

{p)  Derr^  v.  Peek,  July  1, 1889,  Mortimer  v.  BeU  (1866)  1  Ch.  10, 16, 

reveniiig  Peek  ▼.  Derry,  87   Ch.  86  L.  J.  Oh.  25. 
Div.  641.  (0  8mUh  v.  COarke  (1806)  12  Yea. 

(9)  See  L.  Q.  B.  iv.  869,  v.  102,  488 ;  EmU  y.  Woodin  (1862)  9  Ha. 

108.  618. 

(r)  Oreen  ▼•  BimrUodi  (1868)  14 


540 


MISREPRESENTATION  AND  FRAUD. 


relatioii  to 
manbge. 


Contract  Act  (a  123)  adopts  the  rule  of  the  common 
law  (u). 
Frwnd  in  Marriage  is,  to  some  extent,  an  exception  to  the  general 
rule:  but  marriage,  though  including  a  contract,  is  so  much 
more  than  a  contract  that  the  exception  is  hardly  a  real 
one.  It  has  been  said  that  "unless  the  party  imposed  upon 
has  been  deceived  as  to  the  person  and  thus  has  given  no 
consent  at  all  [or  is  otherwise  incapable  of  giving  an 
intelligent  consent],  there  is  no  degree  of  deception  which 
can  avail  to  set  aside  a  contract  of  marriage  knowingly 
made"  (y).  At  any  rate  a  marriage  is  not  rendered  invalid 
by  the  parties  or  one  of  them  having  practised  a  fraud  on 
the  persons  who  performed  the  ceremony.  Where  a  mar- 
riage had  been  celebrated  in  due  form  by  Roman  ecclesi- 
astics at  Rome  between  two  Protestants,  who  had  previously 
made  a  formal  abjuration  (the  marriage  not  being  otherwise 
possible  by  the  law  of  the  place  as  it  then  was),  it  was  held 
immaterial  whether  the  abjuration  had  been  sincere  or 
not,  though  as  to  the  woman  there  was  strong  evidence  to 
show  that  it  was  not  (x). 

We  may  observe  in  this  place  that  when  the  consent 
of  a  third  party  is  required  to  give  complete  effect  to  a 
transaction  between  others,  that  consent  may  be  voidable 
if  procured  by  fraud,  and  the  same  rules  are  applied,  so 
far  as  applicable,  which  determine  the  like  questions  as 
between  contracting  parties.  Thus  where  the  approval  of 
the  directors  is  necessary  for  the  transfer  of  shares  in  a 
company,  a  felse  description  of  the  transferee's  condition, 
such  as  naming  him  "gentleman"  when  he  is  a  servant  or 


Ckmaent 
of  third 
penona 
obtained 
by  band. 


(tt)  "  If  at  a  aale  by  auction  the 
aeUer  makes  nae  of  pretended  bid- 
disffs  to  raise  the  price,  the  aale  ia 
voidable  at  the  option  of  the  buyer.'' 

{v)  Smftv,KeUy(lSd5)Z  Knapp, 
257,  298 :  bat  thia  is  one  of  Lcrd 
Brongham'a  donbtfnl  or  more  than 
doabtfnl  generalities.  In  several  of 
the  United  States  marriage  is  in 
some  oircumstanoes  voidabl  e  for 
fraad:  see  Mr.  Wald'a  note  here, 


refeirinff  to  Bishop  on  Marriage 
and  Divorce,  §§  166—206.  The 
Bcotlish  Courts  have  also  set  aside 
marriages  wht  re  the  woman's  con- 
sent, though  obtained  by  fraudulent 
means  and  what  we  call  "undue 
influence/'  appealed  to  have  been  a 
leal  one:  fSraser  on  the  Personal 
and  Domestic  Relations,  L  234. 

{x)  Swift  v.  KeUy  (1885)  3  Knapp, 
257. 


PEEK  V.  DEBRY.  541 

messenger,  or  a  false  statement  of  a  consideration  paid  by 
him  for  the  shares,  when  in  truth  he  paid  nothing  or  was 
paid  to  execute  the  transfer,  is  a  fraud  upon  the  directors, 
the  object  being  to  mislead  them  by  the  false  suggestion 
of  a  real  purchase  of  the  shares  by  a  man  of  independent 
position ;  and  on  a  winding-up  the  Court  will  replace  the 
transferor's  name  on  the  register  for  the  purpose  of  making 
him  a  contributory  (y). 

It  is  needful  to  add  a  few  words  on  the  decision  of  the 
House  of  Lords  in  Peek  v.  Derry  {z).  That  decision 
appears  to  include  the  following  points : — 

The  right  to  bring  an  action  of  deceit  for  a  misrepre- 
sentation inducing  damage  is  not  coextensive  with  the 
right  to  rescind  a  contract  obtained  by  misrepresentation. 

In  an  action  of  deceit  the  cause  of  action  includes,  as  a 
necessary  element,  that  the  party  making  the  untrue 
representation  did  not  believe  it  to  be  true. 

The  want  of  sufficient  ground  for  a  particular  belief  is 
consistent  with  that  belief  being  honestly  entertained ; 
and  want  of  diligence  (it  would  seem  even  the  total 
omission  of  any  care  at  all)  in  ascertaining  the  truth  of 
one's  statements  is  not  of  itself  an  actionable  wrong. 

At  the  same  time  the  want  of  any  reasonable  ground 
for  an  alleged  belief  in  the  truth  of  a  statement  which 
in  fact  was  untrue,  or  the  omission  to  use  any  care  to 
ascertain  the  truth,  is  evidence,  and  may  be  sufficient 
evidence,  that  no  such  belief  was  honestly  held. 

The  Lords  seem  also  to  have  thought  on  the  facts  that, 
in  the  case  before  them,  the  grounds  of  belief  alleged  by 
the  defendants,  though  not  correct  or  sufficient,  were  such 
as  to  make  it  not  wholly  unreasonable  for  them  to  regard 
their  statement  as  substantially  true. 

(y)  Ex  parte  Kintrea  (1849)  5  Cb.  from    Lord    HenoheU's    opinioii. 

95,  39  L.  J.  Ch.  198 ;  Payne'i  oa.  MettnwhUe  the  view  taken  in  the 

(1869)  and  WilUami  ca.  (1869)  9  Ounrt  of  Appeal  has  again  been  Mt 

£q.  223  ;  Ltndlej,  2, 1436.  forth  by  Cotton  and  l2ndle7  L.JJ. 

(s)  Sub  nom.   Derry  v.  Peek,  5  in  ArnUon  ▼.  Smith  (1889)  41  Oh. 

Timee  Law  Bep.  625.     The  ratio  Dir.  848,  871,  872,  decided  while 

decidendi  is  to  be  colkcted  chiefly  Peek  v.  Derry  was  under  appeaL 


t  848    ) 


Ezanin*- 
tlon  of 
qvesiioiMi 


nan  of 

voidable 

oootnoti. 


CHAPTER  XI. 

The  Right  of  Rescission. 

We  have  now  to  examine  a  class  of  conditions  which  apply 
indifferently,  or  very  nearly  so,  to  cases  of  simple  mis- 
representation (that  is,  where  the  truth  of  a  representation 
is  in  any  way  of  the  essence  of  a  contract)  and  cases  of 
deceit  Some  of  them,  indeed,  extend  to  all  contracts 
which  are  or  have  become  voidable  for  any  cause  what- 
ever. 

The  questions  to  be  dealt  with  may  be  stated  as  follows : 

What  must  be  shown  with  regard  to  the  representation 
itself  to  give  a  right  to  relief  to  the  party  misled  ? 

What  is  the  extent  of  that  right,  and  within  what 
bounds  can  it  be  exercised  ? 

The  Supreme  Court  of  the  United  States  (a)  has  lately 
summed  up  the  points  which  a  plaintiff  in  an  action  for 
the  rescission  of  a  contract  must  establish  : — 

1.  That  the  defendant  has  made  a  representation  in 
regard  to  a  material  tact ; 

2.  that  such  representation  is  false ; 

3.  that  such  representation  was  not  actually  believed 
by  the  defendant,  on  reasonable  grounds  (6),  to  be  true ; 

4.  that  it  was  made  with  intent  that  it  should  be  acted 
upon; 

5.  that  it  was  acted  on  by  complainant  to  his  damage ; 

6.  that  in  so  acting  on  it  the  complainant  was  ignorant 
of  its  falsity  and  reasonably  believed  it  to  be  true. 


(a)  SouUkem  DevdopmetU  Co.  y. 
SUva  (1888)  125  U.  S.  247,  250. 
{b)  ObterTo  the  agreement  of  thie 


with  the  opinion  of  the  Court  of 
Appeal  in  Peek  ▼.  Deny,  tupra^  p. 


BEFBESENTATION  MUST  BE  OF  FACT.  548 

1.  As  to  the  representatioD  itself 

A.  It  must  (except,  it  would  seem,  in  a  case  of  actual  As  to  the 

fraud)  be  a  representation  of  fact,  as  distinguished  on  the  SSaT**" 

one  hand  fi^m  matter  of  law,  and  on  the  other  hand  from  v^^^^d  on 

a  matter  of  mere  opinion  or  intention.  Mindiiig  » 

As  to  the  first  branch   of   the  distinction,  there  is^"*"*^, 

'  It  must  be 


authority  at  common  law  that  a  misrepresentation  of  the  of 
legal  effect  of  an  instrument  by  one  of  the  parties  to  it^^J^/J^ 
does  not  enable  the  other  to  avoid  it  (c).  And  in  equity  ?«•.»•  to 
there  is  no  reason  to  suppose  that  the  rule  is  otherwise,  fraud), 
though  the  authorities  only  go  to  this  extent,  that  no 
independent  liability  can  arise  from  a  misrepresentation  of 
what  is  purely  matter  of  law  (d).  But  this  probably  does 
not  apply  to  a  deliberately  fraudulent  mis-statement  of  the 
law  (e).  The  circumstances  and  the  position  of  the  parties 
may  well  be  such  as  to  make  it  not  imprudent  or  unreason- 
able for  the  person  to  whom  the  statement  was  made  to 
rely  on  the  knowledge  of  the  person  making  it :  and  it 
would  certainly  work  injustice  if  it  were  held  necessary  to 
apply  to  such  a  case  the  maxim  that  every  one  is  presumed 
to  know  the  law.  The  reason  of  the  thing  seems  to  be  that 
in  ordinary  cases  the  law  is  equally  accessible  to  both 
parties,  and  statements  about  it  are  equally  verifiable  by 
both,  or  else  are  in  the  region  of  mere  opinion.  But  there 
is  no  need  to  extend  this  to  exceptional  cases.  At  all  events 
the  rule  applies  only  to  pure  propositions  of  law.  The 
existence  and  actual  contents  of  eg.  a  private  Act  of 
Parliament  are  as  much  matters  of  fact  as  any  other 
concrete  facts  (/). 


(c)  Lewis  y.  Jones  (1825)  4  B.  &  held  there  was  no  mlfirepreeeDtation 
C.  506.     Not  8o  if  the  Actnal  oon-  at  all). 

tents  or  natnie  of  the  instrument  (e)  Hirsehfdd  y.  London,  BrighUm, 

are  misrepresented,  as  we  raw  in  Gh.  <Cr  South  Coast  Ry.  Co.  (1876)  2  Q.  B. 

IX.  D.  1,  46  L.  J.  Q.  B.  1 ;  Bowea  L.  J. 

(d)  Baskdad  y.  Ford  (1866)  2  £q.  in  West  London  Commercial  Bank 
750,  36  L.  J.  Ch.  769  ?  BeaUie  y.  y.  Kitson  (1884)  18  Q.  B.  Div.  at  p. 
Lord  Ebury  (1872)  7  Ch.  777,  802,  863. 

L.  R.  7  H.  L.  102, 180, 41 L.  J.  Ch.  (/)  Bowen  L.J.  ubi  sup. 

804,  44  t6.  20  (the  House  of  Lords 


544  THE  RIGHT  OF  RESCISSION. 

And  oo(  As  to  the  second  branch,  we  may  put  aside  the  cases 
mofciTe  already  mentioned  in  which  the  substance  of  the  fraud  is 
or  inten-  ^q|.  misrepresentation,  but  a  wrongful  intention  going  to 
the  whole  matter  of  the  contract.  Apart  fix)m  these  it 
appears  to  be  the  rule  that  a  false  representation  of  motive 
or  intention,  not  amounting  to  or  including  an  assertion  of 
existing  facts,  is  inoperative.  "  It  is  always  necessary  to 
distinguish,  when  an  alleged  ground  of  false  representation 
is  set  up,  between  a  representation  of  an  existing  fact 
which  is  untrue  and  a  promise  to  do  something  in  future  "  (g). 
On  this  ground  was  put  the  decision  in  Vernon  v. 
Keys  (h),  where  the  defendant  bought  a  business  on  behalf 
of  a  partnership  firm.  The  price  was  fixed  at  4,500i.  on 
his  statement  that  his  partners  would  not  give  more :  a 
statement  afterwards  shown  to  be  fe^lse  by  the  fact  that  he 
charged  them  in  account  with  a  greater  price  and  kept  the 
resulting  difference  in  their  shares  of  the  purchase-money 
for  himself.  It  was  held  that  the  vendor  could  not  main- 
tain an  action  of  deceit,  as  the  statement  amounted  only 
to  giving  a  false  reason  for  not  offering  a  higher  price. 
The  case  also  illustrates  the  principle  that  collateral  fraud 
practised  by  or  against  a  third  person  does  not  avoid  a 
contract.  Here  there  was  fraud,  and  of  a  gross  kind,  as 
between  the  buyer  and  his  partners ;  but  we  must  dismiss 
this  from  consideration  in  order  to  form  a  correct  estimate 
of  the  decision  as  between  the  buyer  and  seller.  It  must 
be  judged  of  as  if  the  buyer  had  communicated  the  whole 
thing  to  his  partners  and  charged  them  only  with  the 
price  really  given.  Still  the  decision  is  difficult  to  accept. 
For  the  buyer  was  the  agent  of  the  firm,  and  in  substance 
made  a  false  statement  of  a  distinct  matter  of  fact  touching 
the  extent  of  his  authority,  though  it  was  no  doubt  a 
matter  as  to  which  he  was  not  bound  to  make  any  state- 

{g)  Mellish  L.J.  Ex  parte  Burrdl  that  the  Iniyer'B  liberty  mutt  be  co- 

(1876)  1  Ch.  Div.  at  p.  552.  extensive  «ith  the  8eUer>,  which  is 

(A)   (1810)   12  East  682,  in  Ex.  lo  *'tell  every  falsehood  he  can  to 

Ch.  4  Taunt.  488.    The  language  induce  a  buyer  to  purchase,"  is  of 

used  in  the  Ex.  Ch.  to  the  effect  couise  not  to  be  lit ei  ally  accepttd. 


BEPRESENTATIONS  OF  FACT  OB  OTHERWISE.  545 

ment  or  to  answer  any  questions.  And  it  has  been  held 
in  the  Privy  Council  that  it  is  clearly  fraudulent  for  A. 
and  B.  to  combine  to  sell  property  in  6.'s  name,  B.  not 
being  in  truth  the  owner  but  only  an  intermediate  agent, 
and  the  nominal  price  not  being  the  real  price  to  be  paid 
to  the  owner  A.,  but  including  a  commission  to  be  retained 
by  B.  (i).  This  seems  to  shake  the  authority  of  Vernon 
V.  Keys,  though  it  cannot  actually  overrule  the  decision  (k). 
This  difficulty,  however,  affects  only  the  particular  applica- 
tion of  the  doctrine  on  which  the  Court  proceeded.  And 
under  particular  conditions  a  statement  of  intention,  such 
as  the  purpose  to  which  a  proposed  loan  is  intended  to  be 
applied,  may  be  a  material  statement  of  fact  (I), 

It  needs  no  authority  to  show  that  a  statement  of  what  State- 
is  merely  matter  of  opinion  cannot  bind  the  person  making  ^^ter^of 
it  as  if  he  had  warranted  its  correctness.    And  it  is  said  opinion, 
that  if  a  man  makes  assertions,  as  of  matter  of  fact  within 
his  own  knowledge,  concerning  that  which  is  by  its  nature 
only  matter  of  more  or  less  probable  repute  and  opinion, 
he  is  not  legally  answerable  as  for  a  deceit  if  the  assertion 
turns  out  to  be  fiJse  (m).     But  it  seems  doubtful  if  this 
could  be  upheld  at  the  present  day.     For  surely  the  affir- 
mation of  a  thing  as  within  my  own  knowledge  implies  the 
affirmation  that  I  have  peculiar  means  of  knowledge  :  and 
if  I  have  not  such  means,  then  my  statement  is  false  and 
I  shall  justly  be  held  answerable  for  it,  unless  indeed  the 


(f)  LindtayPttroleumOo.y.ffurd  stated,  m  »  fact  within  his  own 
(1S74)  L.  R.  5  P.  G.  221,  243.  knowledge,  that  a  person  was  sol- 
vit) The  decisionB  off  the  Jodioial  yent  who  appeared  to  have  ample 
Committee,  though  they  carry  great  means,  bnt  turned  ont  to  ba  an  im- 
weight,  are  not  binding  in  English  poster.    The  majority  of  the  Court 
Conrt« :  see  Leoik  v.  SeoU  (1877)  2  seem  to  have  thonizht  that  the  plain- 
Q.  B.  Div.  876,  46  L.  J.  Q.  B.  576,  tiff  must  in  the  (nroumstances  have 
where  the  C.  A.  refused  to  follow  known  the  defendant  to  be  express- 
the  Judicial  Committee,  also  Smith  ing  only  an  opinion  founded  on  that 
V.  Broton  (1871)  L.  R.  6  Q.  B.  at  p.  which  appeared  to  all  the  world. 
786,  40  L.  J.  Q.  B.  214.  So  a  statement  of  confident  expecta- 
(/)  SdgingUm  v.  FUtmauriee  (1885)  tion  of  profits  must  be  distiogoished 
29  Ch.  Div.  459,  480,  488.  from    an    assertion    as    to    profits 
(m)  Eayeraft  v.  Creeuif  (1801)  2  actually  made  :  Bellain  v.  Tucker 
East  92.    Here  the  defendant  had  (1884)  18  Q.  &  D.  562. 

P.  N  N 


546  THE  RIGHT  OP  RESCISSION. 

special  knowledge  thus  claiined  is  of  a  kind  manifestly 
incredible. 
Ambigu-  Statements  which  in  themselves  are  ambiguous  cannot 
mentB.  be  treated  as  fraudulent  merely  because  they  are  false  in 
some  one  of  their  possible  senses.  In  such  a  case  the  party 
who  complains  of  having  been  misled  must  satisfy  the 
Court  that  he  understood  and  acted  on  the  statement  in 
the  sense  in  which  it  was  false  (n). 

There-  g.  The  representation  must  be  such  as  to  induce  the 

tion  most  contract  (daTis  locuvi  contra-ctui)  (o). 
^**tn!ot.*^*  Relief  cannot  be  given  on  the  ground  of  fraud  or  mis- 
No  relief  representation  to  a  party  who  has  in  fact  not  acted  on  the 
*V  ^^  statements  of  the  other,  but  has  taken  steps  of  his  own  to 
acted  on  verify  them,  and  has  acted  on  the  judgment  thus  formed 
jTd^t.  by  himself. 

"  The  Court  must  be  careful  that  in  its  anxiety  to  correct 
frauds  it  does  not  enable  persons  who  have  joined  with 
others  in  speculations  to  convert  their  speculations  into 
certainties  at  the  expense  of  those  with  whom  they  have 
joined  "  (p). 

It  is  not  perfectly  fi^e  from  doubt  whether  in  any,  and 
if  in  any,  in  what  cases  the  possession  of  means  of  know- 
ledge which  if  used  would  lead  to  the  discovery  of  the 
truth  will  bar  the  party  of  his  remedy. 
Ab  to  In  the  case  of  active  misrepresentation  it  is  no  answer 

know-  °  i°  proceedings  either  for  damages  or  for  setting  aside  the 
ledge :  im-  contract  to  say  that  the  party  complaining  of  the  misrepre- 
in  case  of  sentation  had  the  means  of  making  inquiries.  "  In  the 
active        ^jggg  ^f  Dobell  V.  Stevens  (q)     .     .     which  was  an  action 

(n)  Smith  V.  Ckadwick  (1884)  9  to  a  mere  blunder. 

App.  Ca.  187,  51  L.  J.  Ch.  597,  see  (o)  Lord  Brougham,  AUwood  v. 

especially  per  Lord  Blackburn  at  Small  (1835-8)  6  CI.  k  F.  444;  Lord 

pp.  199-201.     The  lani^nage  used  in  Wensleydale,  Smith  v.  Kay  (1859) 

HaUmvi  v.  Femie  (1868)  3  Ch.  at  7  H.  L.  C.  775-76. 

p.  476  seems  to  go  too  far.     Lord  {p)Jmningt\.Br<mgkUm{\%bZ'Ai) 

Blackburn  leaves  it  as  an  unsettled  6  D.  M.  O.  126,  140,  22  L.  J.  Ch. 

question  what  would  happen  if  the  584  ;  Dyer  v.  Bargrave  (1805)   10 

defendant  could  in  turn  prove  the  Yes.  505. 

falsehood  or  ambiguity  to  be  due  (q)  (1825)  3  B.  &  C.  623. 


EFFECT  OF  MEANS  OF  KNOWLEDGE.  547 

for  deceit  in  feJsely  representing  the  amount  of  the  business  in>w«p»- 
done  in  a  public-house,  the  purchaser  was  held  to  be 
entitled  to  recover  damages,  although  the  books  were  in 
the  house,  and  he  might  have  had  access  to  them  if  he  had 
thought  proper  "  (r).  The  rule  was  the  same  in  the  Court 
of  Chancery.  It  was  said  of  a  purchaser  to  whom  the 
state  of  the  property  he  bought  was  misrepresented : — 
"  Admitting  that  he  might  by  minute  examination  make 
that  discovery,  he  was  not  driven  to  that  examination,  the 
other  party  having  taken  upon  him  to  make  a  representa- 
tion. .  .  The  purchaser  is  induced  to  make  a  less 
accurate  examination  by  the  representation,  which  he  had 
a  right  to  believe  "  (a).  The  principle  is  that  "  No  man 
can  complain  that  another  has  too  implicitly  relied  on  the 
truth  of  what  he  has  himself  stated  "  (t).  And  it  is  not 
enough  to  show  that  the  party  misled  did  make  same 
examination  on  his  own  account ;  proof  of  cursory  or  in- 
eifectual  inquiries  will  not  do  (u).  In  order  to  bar  him  of 
his  remedy,  it  must  be  shown  either  that  he  knew  the  true 
state  of  the  facts,  or  that  he  did  not  rely  on  the  facts  as 
represented  (w). 

In  1 867  the  same  principle  was  affirmed  by  Lord  Chelms- 
ford in  the  House  of  Lords  (x).  The  suit  was  instituted 
by  a  shareholder  in  a  railway  company  to  be  relieved  from 
his  contract  on  the  ground  of  misrepresentations  contained 
in  the  prospectus.  Here  it  was  contended  that  the  pro- 
spectus referred  the  intending  shareholder  to  other  docu- 
ments, and  offered  means  of  further  information  :  besides, 
the  memorandum  and  articles  of  association  (and  of  these 
at  all  events  he  was  bound  to   take   notice)   sufficiently 


(r)  Per  Lord  ChelmBford,  L.  R  {w)  Redgrave  v.  Hurd  (1881)  20 

2  H.  L.  121.  Ch.  DW.  1,  21  (Je*el  M.  R.). 

(«)  Dyer  v.  Hargrave  (1806)  10  («)  Central  Ry.  Co,  of  Venezuela 

Yes.  at  p.  509.  v.  Kiach  (1867)  L.  R  2  H.  L.  99, 

it)  ReyneU  v.  Sprye  (1852)  1  D.  120,  86  L.  J.  Ch.  849.     As  to  the 

M.  G.  at  p.  710 ;  Price  v.  Macatdaf  earlier  and  indtciidve  caseof  AUwood 

(1852)  2  D.  M.  G.  839,  846.  v.  SmaU  (1835-8)  6  CI   &  F   232, 

(tt)  Redgrave  v.  Burd  (1881)  20  see  now  Redgrave  v.  Hurd  (1881)  20 

Ch.  Div.  1,  51  L.  J.  Ch.  113.  Ch.  Div.  at  p.  14,  51  L.  J.  Ch.  113. 

N  N  2 


548  THE  RIQHT  OF  RESCISSION. 

corrected  the  errors  and  omissions  of  the  prospectus.     But 
the  objection  is  thus  answered  : — 

**  When  once  it  im  established  that  there  has  been  any  f  randolent  mis- 
representation or  wilf  ol  ooDoealment  by  which  a  person  has  been  induced 
to  enter  into  a  contract,  it  is  no  answer  to  his  claim  to  be  relieved  from  it 
to  tell  him  that  he  might  have  known  the  truth  by  proper  inquiry.  He  has 
a  right  to  retort  upon  his  objector,  *  You  at  least,  who  have  stated  what  is 
untrue,  or  have  concealed  the  truth  for  the  purpose  of  drawing  me  into  a 
contract,  cannot  accuse  me  of  want  of  caution  because  I  relied  implicitly 
upon  your  fairness  and  honesty.'  " 

Otherwise  This  doctrine  appears,  also  on  Lord  Chehnsford's 
merTnon-  A'Uthority,  not  to  apply  to  the  case  of  mere  non-disclosure, 
disdo-  without  fraudulent  intention,  of  a  fact  which  ought  to 
$embU,       have  been  disclosed. 

"  When  the  fact  is  not  misrepresented  but  concealed  [or 
rather  not  communicated]  (y)  and  there  is  nothing  done  to 
induce  the  other  party  not  to  avail  himself  of  the  means 
of  knowledge  within  his  reach,  if  he  neglects  to  do  so  he 
may  have  no  right  to  complain,  because  his  ignorance  of 
the  fact  is  attributable  to  his  own  negligence  "  (z). 
Mwe  as-  It  appears  also  not  to  apply  to  a  mere  assertion  of  title 
title.  by  a  vendor  of  land  (a). 

In  a  case  before  Lord  Hatherley,  when  V.-C,  the  double 
question  arose  of  the  one  party's  knowledge  that  his  state- 
ment was  untrue,  and  of  the  other  s  means  of  learning  the 
truth.  The  suit  was  for  specific  performance  of  an  agree- 
ment to  take  a  lease  of  a  limestone  quarry.  The  plaintiff 
made  a  distinct  representation  as  to  the  quality  of  the 
limestone  which  was  in  fact  untrue  :  he  did  not  believe  it 
to  be  false,  but  he  had  taken  no  pains  to  ascertain,  as  he 
might  easily  have  done,  whether  it  was  true  or  not.  But 
then  the  defendant  had  not  relied  exclusively  upon  this 
statement,  for  he  went  to  look  at  the  stone ;  still  he  was 

(y)  See  L.  K.  2  H.  L.  889.  879,  885,  35  L.  J.  Ch.  781,  where 

(z)  New  Bruntwickj   dec,    Co,   v.  however  the  real  contract  was  to 

Conybeare  (1862)  9  H.  L.  0.  711,  buy  up  a  particular  claim  of  title 

742,  31  L.  J.  Gh.  297.  whatever  it  might  be  worth, 
(a)  Hume  v.  Pooock  (1866)  1  Cb. 


REPRESENTATION  INDUCING  CONTRACT.  649 

not  a  limebumer  by  trade,  and  could  not  be  supposed  to 
have  trusted  merely  to  what  he  saw,  being  in  fact  not 
competent  to  judge  of  the  quality  of  limestone.  The  result 
was  that  the  Court  refused  specific  performance,  declining 
to  decide  whether  the  contract  was  otherwise  valid  or 
not  (6). 

The  case  of  HorsfaU  v.  Thomas  (c)  was  decided  on  the  Attempt 
same  principle ;  there  a  contrivance  was  used  to  conceal  a  in 


defect  in  a  gun  manufactured  to  a  purchaser's  order,  but  ^^** 
the  purchaser  took  it  without  any  inspection,  and  therefore,  omite  to 
although  the  vendor  intended  to  deceive  him,  had  not  been  ^ 
in  fact  deceived. 

It  might  also  be  given  as  a  rule  that  the  representation 
must  be  material.  But  to  make  this  quite  accurate  it 
should  be  stated  in  the  converse  form,  namely  that  a 
material  representation  may  be  presumed  to  have  in  fact 
induced  the  contract ;  for  a  man  who  has  obtained  a  con- 
tract by  false  representations  cannot  afterwards  be  heard 
to  say  that  those  representations  were  not  material.  The 
excuse  has  often  been  put  forward  that  for  anything  that 
appeared  the  other  party  might  no  less  have  given  his 
consent  if  the  truth  had  been  made  known  to  him,  and 
the  Court  has  always  been  swift  to  reject  it.  When  a 
falsehood  is  proved,  the  Court  does  not  require  positive 
evidence  that  it  was  successful  {d);  it  rather  presumes 
that  assent  would  not  have  been  given  if  the  facts  had 
been  known  (e).  Those  who  have  made  false  statements 
cannot  ask  the  Court  to  speculate  on  the  exact  share  they 
may  have  had  in  inducing  the  transaction  (/);  or  on 
what  might  have  been  the  result  if  there  had  been  a  fiill 
communication  of  the  truth  (g) :  it  is  enough  that  an  untrue 

(6)  ffiggint  ▼.  Samds  (1862)  2  J.  225,  n, 
&  H.  460,  468,  469.  («)  ExparU  Kvntrea  (1869)  5  Cb. 

(c)  (1862)  1  H.  &  C.  90,  31  L.  J  at  p.  101,  89  L.  J.  Gb.  198. 
Ex.  822,  diwented  from  by  Cook-  (/)  Reyndi  v.  Spryc  (1862)  1  D. 

bam  C.J.,  8mUk  v.  Hughet  (1871)  M.  G.  at  p.  708. 
L.  R.  6  Q.  B.  at  p.  605,  but  it  aeems  [g)  Smith  v.  Kay  (1859)  7  H.  L. 

g.K)d  law.  C.  at  p.  759. 

{d)   WiBiama*  ca.  (1869)    9   Eq. 


660  THE  RIGHT  OF  RESCISSION. 

statement  has  been  made  which  was  likely  to  induce  the 
party  to  enter  into  the  contract,  and  that  he  has  done 
so  (h).  This  inference  or  presumption  is  one  of  fact,  not 
of  law,  and  is  open  to  contradiction  like  other  inferences  of 
the  same  kind  (i). 

In  like  manner,  if  there  has  been  an  omission  even 
without  fraud  to  communicate  something  which  ought  to 
have  been  communicated,  it  is  too  late  to  discuss  whether 
the  communication  of  it  would  probably  have  made  any 
difference  (j). 

If  it  be  asked  in  general  terms  what   is   a  material 
fact,  we  may  answer,  by  an  extension  of  the   language 
adopted  by  the  Queen's  Bench  in  a  case  of  marine  in- 
surance (k),  that  it  is  anything  which  would  affect  the 
judgment  of  a  reasonable  man  governing  himself  by  the 
principles  on  which  men  in  practice  act  in  the  kind  of 
business  in  hand. 
And  oon-        There  is  an  exception,  but  only  an  apparent  one,  to  the 
denui  to    rule  that  the  representation  must  be  the  cause  of  the  other 
i^t^toMiB-  P*"^y  ^  contracting.     A  contract  arising  directly  out  of  a 
action  is     previous  transaction  between  the  same  parties  which  was 
^ted  M  voidable  on  the  ground  of  fraud  is  itself  in  like  manner 
fraadn-      voidable.  A.  makes  a  contract  with  B.,  with  the  fraudulent 
intention  of  making  it  impossible  by  a  secret  scheme  for  B. 
to  perform  the  contract.     B.  ultimately  agrees  to  pay  and 
does  pay  to  A.  a  sum  of  money  to  be  released  from  the 
contract :  if  he  afterwards  discovers  the  scheme  B.  can 
rescind   this    last    agreement    and    recover    the    money 
back  (l). 


{h)  Per  LordDenman  C.J.  Wat-  196. 

»on  V.  Earl  of   Charltmont    (1848)  {J)  TraiU  ▼.  BaHng  (1864)   4  D. 

12  a  B.  866,  864. 18  K  J.  Q.  B.  65.  J.  S.  at  p.  330. 

To  tbe  like  effect,  Jerael  M  .R.  in  (k)  Ionide$  v.  Pender  (1874)  L.  R. 

SmWi,  V.   Chadmck  (1884)  20  Cb.  9  Q.B.  581,  43  L.  J.Q.  B.227,n(i>ra, 

Div.  at  p.  44    (see   however   Dext  p.  512. 

note).  (l)  Barry  v.  Cfrotkey  (1661)  2  J.  & 

(»)     Lord    Blackbnm,    SmUh   v.  H.  1, 
QhaOwick  (1884)  9  App.  Ca.  at  p, 


REPRESENTATION  INDUCING  CONTRACT.  551 

"If  the  promoter  of  a  oompany  pnouree  a  company  to  be  formed 
by  improper  and  frandnlent  meanr,  and  for  the  purpoie  of  aecoring  a 
profit  to  himielf,  which,  if  the  oompany  was  soooessful,  it  woald  be 
onjiut  and  inequitable  to  allow  him  to  retain  [in  the  particnlar  case  a 
secret  payment  to  the  promoter  out  of  purchase-money]  and  the  company 
proves  abortive  and  is  ordered  to  be  wound  up  without  doing  any  business, 
the  promoter  cannot  be  allowed  to  prove  against  the  company  in  the 
winding-up^  either  in  respect  of  his  services  in  forming  the  oompany  or 
in  respect  of  his  services  as  an  officer  of  the  company  after  the  company 
was  registered  "  (m). 

So  it  is  where  the  parties  really  interested,  though  not 
the  nominal  parties,  are  the  same.  Thus  where  a  sale  of 
goods  is  procured  by  fraud,  and  the  vendors  forward  the 
goods  by  railway  to  the  purchaser  s  agent,  and  afterwards 
reclaim  them,  indemnifying  the  railway  company,  these 
facts  constitute  a  good  defence  to  an  action  by  the  pur- 
chaser s  agent  against  the  railway  company,  though  the 
re-delivery  to  the  vendors  was  before  the  discovery  of  the 
fraud  and  arose  out  of  an  unsuccessfiil  attempt  to  stop  the 
goods  in  transitu  (n). 

C.  The  representation  must  be  made  by  a  party  to  the  Must  be 
contract.     This  rule  in  its  simple  form  is  elementary.     It  JJ^y  ^J  * 
is  obvious  that  A.  cannot  be  allowed  to  rescind  his  contract  **>«  ^on- 
with  B.  because  he  has  been  induced  to  enter  into  it  by 
some  fraud  of  C.  to  which  B.  is  no  party  (o).     Thus  in 
Sturge  v.  Starr  (p)  a   woman  joined  with  her  supposed 
husband   in   dealing  with  her  interest  in  a  fimd.     The 
marriage  was  in  fiact  void,  the  man  having  concealed  from 
her  a  previous  marriage.     It  was  held  that  this  did  not 
affect  the  rights  of  the  purchaser. 

{m)  Per  Cur.  Her^ord  A  8.Wale8  to  the  true  ground  of   nscission 

Waggon  <fc  Engineering  Co.  (1876)  afterwards  discovered,  cp.  Wrights 

2  Oh.  Div.  621,  626,  45  L.  J.  Ch.  oa.  (1871)  7  Cb.  65,  41  L,  J.  Ch.  1. 
461.  (o)  See  per  Lord  Cairns,  Smith'9 

(n)  Clowih  V.  L,  ic  ^'  W.  Ry.  Co.  ca.  2  Ob.  at  p.  616. 
(1871)  (Ex.  Ch.)  L.  R.  7  Ex.  26,  {p)  (1833)  2  My.  ft  K.  195,  cp. 

41  L.  J.  Ex.  17,  an  exceedingly  in-  WkeeUon  v.  HarditAy  (1867^  8  E.  ft 

structive  case :    as  to  the  misoon-  B.  282,  26  L.  J.  Q.  B.  265,  27  ib. 

ceivedaot being  justified  by  referenoe  241. 


552  THE  RIGHT  OF  RESCISSION. 

Ai  to  r©-        When  we  come  to  deal  with  contracts  made  by  agents 
ti^^e  the  question  arises  to  what  extent  the  representations  of 
by  »gent«.  ^j^^  agent  are  to  be  considered  as  the  representations  of  the 
principal  for  the  purposes  of  this  rule.     And  this  question, 
though  now  practically  set  at  rest  by  recent  decisions,  is 
one  which  has  given  rise  to  some    difficulty.      A  felse 
statement  made  by  an  agent  with  his  principaUs  express 
authority,  the  principal  knowing  it  to  be  false,  is  obviously 
equivalent  to  a  falsehood  told  by  the  principal  himself;  nor 
can  it  make  any  difference  as  against  the  principal  whether 
the  agent  knows  the  statement  to  be  false  or  not.    But  we 
may  also  have  the  following  cases.     The  statement  may 
be  not  expressly  authorized  by  the  principal,  nor  known  to 
be  untrue  by  him,  but  known  to  be  untrue  by  the  agent ; 
or  conversely,  the  statement  may  be  not  known  to  the 
agent  to  be  untrue,  and  not  expressly  authorized  by  the 
principal,  the  true  state  of  the  facts  being,  however,  known 
to  the  principal     There  is  no  doubt  that  in  the  first  case 
the  principal  is  answerable,  subject  only  to  the  limitation 
to  be  presently  stated  (q).    In  the  second  case  there  is 
every  reason  to  believe  that  the  same  rule  holds  good,  not- 
withstanding a  much  canvassed  decision  to  the  contrary  (r), 
which,  if  not  overruled  by  the  remarks  since  made  upon 
it  (s),  has  been  cut  down  to  a  decision  on  a  point  of 
pleading  which  perhaps  cannot,  and  certainly  need  not, 
ever  arise  again. 
The  only        These  distinctions  have  to  be  considered  only  when 
^ethw  "  there  is  a  question  of  fraud  in  the  strict  sense,  and  then 
*^®/2"^  chiefly  when  it  is  sought  to  make  the  principal  liable  in 
was  within  damages.     Where  a  non-fraudulent  misrepresentation  suf- 
authS^!*  fices  to  avoid  the  contract,  there  it  is  clear  that  the  only 
thing  to  be  ascertained  is  whether  the  representation  was 

iq)  The  rnle  applies  to  an  agent  &  W.  S58. 
who  profits  by  the  fraud  of  a  sab-  (<)  2  Sm.  L.  C.  95, 100  :  and  see 

agent  employed  bv  him  :  Cockbam  eepeolHUy  per  'Voiles  J.  in  Banoick  y. 

C.J.  in  Weia-  v.  Bdl  (1878)  8  Ex.  D.  Bn^ltah  Joint  Stock  Bank  (1867)  L. 

at  p.  249.  B.  2  Ex.  262. 

(r)  Comfoot  ▼.  Fowhe  (1840)  6  M. 


FRAXTD  OF  AGENia  663 

in  fiswt  within  the  scope  of  the  agent's  authority.     And  it  ^^^^^ 
seems  to  be  now  the  law  that  this  is  the  only  question  joint 
even  in  a  case  of  fraud     It  has  been  so  laid  down  by  a  ^^ 
considered  judgment  of  the  Exchequer  Chamber  (Q,  fully  Mackay  v. 
approved  by  later  decisions  of  the  Judicial  Committee  (u).  ciJbJSc 
Accordincf  to  this  the  rule  is  "that  the  master  is  answerable  ^  New 
for  every  such  wrong,"  including  fraud,  "  of  the  servant  or  wick, 
agent  as  is  committed  in  the  course  of  the  service  and  for 
the  master's  benefit,  though  no  express  command  or  privity 
of  the  master  be  proved"    Although  the  master  may  not 
have  authorized  the  particular  act,  yet  if  "  he  has  put  the 
agent  in  his  place  to  do  that  class  of  acts  "  he  must  be 
answerable  for  the  agent  s  conduct.    It  makes  no  difference 
whether  the  principal  is  a  natural  person  or  a  corpora- 
tion (x).     In  two  of  the  cases  just  referred  to,  a  banking 
corporation  was  held  to  be  liable  for  a  false  representation 
made  by  one  of  its  officers  in  the  course  of  the  business 
usually  conducted  by  him  on  behalf  of  the  bank ;  and  this 
involves  the  proposition  that  the  party  misled  is  entitled 
to  rescind  the  contract  induced  by  such  representation. 

The  directors  and  other  officers  of  companies,  acting  Direcicm 
within  the  functions  of  their  offices,  are  for  this  purpose  mataSr 
agents,  and  the  companies  are  bound  by  their  acts  and 
conduct.  Conversely,  where  directors  employ  an  agent  for 
the  purposes  of  the  company,  and  that  agent  commits  a 
fraud  in  the  course  of  his  employment  without  the  personal 
knowledge  or  sanction  of  the  directors,  the  remedy  of 
persons  injured  by  the  fi^ud  is  not  against  the  directors, 
who  are  themselves  only  agents,  but  against  the  company 


{t)  Barwick  v.  EngU$h  Joint  Stock  from   the   diota  on  this  point  in 

Bank  (1867)  L.  B.  2  Ex.  259,  86  L.  Wetiem  Bamk  of  SeoOand  ▼.  Addie 

J.  Ex.  147.  (1867)  L.  R.  1  8a  ft  D.  146,  which. 

(tt)  Mackay  ▼.  ChmmerciaL  Bank  of  thonsh  apparently  intended  to  be 

New  Brun9wick{lS7i)  L.  R.  fi  P.  C.  dedrire,  have  not  been  followed. 

894,  411,  48  L.  J.  P.  0.  81 ;  Swire  Swift  v.  JewOmry  (1874)  (Kx.  Ch.) 

y.  PranciM  (1877)  8  App.  Ca.  106,  L.  R.  9  Q.  B.  at  p.  812,  per  Lord 

47  L.  J.  P.  C.  18.  Coleridge  CJ.  Cp.  L  C.  A.  §  288. 

{x)  L.  R.  5  P.  C.  418-5,d]flMnting 


664  THE  RIGHT  OF  RESCISSION. 

as  ultimate  principal  {y)  :  and  one  director  is  not  liable 
for  fraud  committed  by  another  director  without  his 
authority  or  concurrence  (z).  Reports  made  in  the  first 
instance  to  a  company  by  its  directors,  if  afterwards 
adopted  by  a  meeting  and  "industriously  circulated,"  must 
be  treated  as  the  representations  of  the  company  to  the 
public,  and  as  such  will  bind  it  (a).  Statements  in  a 
prospectus  issued  by  promoters  before  the  company  is  in 
existence  cannot  indeed  be  said  with  accuracy  to  be  made 
by  agents  for  the  company :  for  one  cannot  be  an  agent 
even  by  subsequent  ratification  for  a  principal  not  in 
existence  and  capable  of  ratifying  at  the  time  (fe).  But 
such  statements  also,  if  afterwards  expressly  or  tacitly 
adopted,  become  the  statements  of  the  company.  It  is  a 
principle  of  general  application,  by  no  means  confined  to 
these  cases,  that  if  A.  makes  an  assertion  to  B.,  and  B. 
repeats  it  to  C.  in  an  unqualified  manner,  intending  him  to 
act  upon  it,  and  C.  does  act  upon  it,  B.  makes  that  assertion 
his  own  and  is  answerable  for  its  consequences.  If  he 
would  guard  himself,  it  is  easy  for  him  to  say :  "  This  is 
what  A.  tells  me,  and  on  his  authority  I  repeat  it ;  for  my 
own  part  I  believe  it,  but  if  you  want  any  further  assurance 
it  is  to  him  you  must  look  "  (c). 
Agent  It  is  to  be  borne  in  mind  that  in  a  case  of  actual  fraud 

iu!blefor    ^^  ^^^  P*^  ^^  ^^  agent  the  responsibility  of  the  principal 
hiB  own      does  not  in  any  way  exclude  the  responsibility  of  the  agent. 
JJJJ^        "All  persons  directly  concerned  in  the  commission  of  a  fraud 
are  to  be  treated  as  principals";  and  in  this  sense  it  is  true 


(y)  Weir  v.  BameU  (1877)  8  Ex.  ton  L.J.  who  took  this  view  of  the 

D.  32,  affd.  in  C.  A.  nom.  Weir  v.  facta. 

BM  (1878)  i6.  288,  47  L.  J.  Ex.  704.  (2)  CargiU  v.  Bower  (1878)  10  Ch. 

But  a  director  who  pn.fited  by  the  D.  502,  47  L.  J.  Ch.  649. 

fraud  after  knowled^  of  it  would  (a)    Per    Lord    Westbuiy,    New 

probaUy  he  liable:  see  judgments  Bruntwick,    ^c.    Co.    v.    Oonybeare 

of  Cockbum  C.J.  and  Brett  L.J.  (1862)  9  H.  L.  C.  711,  726,  81  L.  J. 

And  directors  who  delegated  their  Ch.  297. 

office  without  authority,    so   that  (6)  P.  106,  tkhove. 

their  delegate  did  not  become  the  (c)  Smith* »  oa.  (1867)  2  Oh.  604, 

company's,  agent,  would  be  liable :  611,  p.  681,  above. 
see  the  dissenting  judgment  of  Cot- 


reprbsentahons  of  agents.  655 

that  an  agent  or  servant  cannot  be  authorized  to  commit  a 
fraud.  He  cannot  excuse  himself  on  the  ground  that  he 
acted  only  as  agent  or  servant  (d). 

D.  The  representation  must  be  made  as  part  of  the  The  repre- 

lentatioii 
same  transaction.  mosi  be  in 


It  is  believed  that  the  statement  of  the  rule  in  this  form,  ***• 
though  at  first  sight  vague,  is  really  more  accurate  than  tion. 
that  which  presents  itself  as  an  alternative,  but  is  in  fiu;t 
included  in  this — namely  that  the  representation  must  be 
made  to  the  other  party  or  with  a  view  to  his  acting  upon 
it.  The  effect  of  the  rule  is  that  the  untruth  of  a  repre- 
sentation made  to  a  third  person,  or  even  to  the  party  him- 
self on  some  former  occasion,  in  the  course  of  a  different 
transaction  and  for  a  different  purpose,  cannot  be  relied  on 
as  a  ground  either  for  rescinding  a  contract  or  for  main- 
taining an  action  of  deceit.  Thus  in  Western  Bank  of^^^ 
Scotland  v.  Addie  (e)  the  directors  of  the  bank  had  made  Scotland 
a  series  of  flourishing  but  untrue  reports  on  the  condition  ^' ' 
of  its  affairs,  in  which  bad  debts  were  counted  as  good 
assets.  The  shareholder  who  sought  relief  in  the  action 
had  taken  additional  shares  on  the  faith,  as  he  said,  of 
these  reports.  But  it  was  not  shown  that  they  were  issued 
or  circulated  for  the  purpose  of  inducing  existing  share- 
holders to  take  more  shares,  or  that  the  local  agent  of  the 
bank  who  effected  this  particular  sale  of  shares  used  them 
or  was  authorized  to  use  them  for  that  purpose.  Thus  the 
case  rested  only  on  the  purchaser  having  acted  under  an 
impression  derived  from  these  reports  at  some  former 
time ;  and  that  was  not  such  a  direct  connexion  between 
the  false  representation  and  the  conduct  induced  by  it  as 
must  be  shown  in  order  to  rescind  a  contract.  This,  how- 
ever, was  not  the  only  ground  of  the  decision :  its  main 
principle,  as  explained  in  a  later  case  in  the  House  of 

id)  Per  Loid  Westbory,  CuUen  v.       hotham  (1878)   L.  R  8  Q.  B.  244, 
nain#oii'«  Trutteei  and  Kerr  (1862)      254.  42  L.  J.  Q.  B.  111. 
4  ^Mq.  424,  482  ;  Sto^ft  v.  Winter^         (e)  (18Q7)  L.  K.  1  Sc.  &  D.  146, 


566  THE  RIGHT  OF  RESCISSION. 

Lords,  being  that  a  person  who  remains  a  shareholder, 
either  by  having  aflfirmed  his  contract  with  the  company 
or  by  being  too  late  to  rescind  it,  cannot  have  a  remedy  in 
damages  against  the  corporate  body  for  representations  on 
the  faith  of  which  his  shares  were  taken  (/). 
Peek  V,  In  Peek  v.  Gurney  {g)  the  important  point  is  decided 

™™*^'  that  the  sole  office  of  a  prospectus  is  to  invite  the  public 
to  take  shares  in  the  company  in  the  first  instance.  Those 
who  take  shares  in  reliance  on  the  prospectus  are  entitled 
to  their  remedy  if  the  statements  in  it  are  false.  But 
those  statements  cannot  be  taken  as  addressed  to  all 
persons  who  may  hereafter  become  purchasers  of  shares  in 
the  market ;  and  such  persons  cannot  claim  any  relief  on 
the  ground  of  having  been  deceived  by  the  prospectus 
unless  they  can  show  that  it  was  specially  communicated 
to  them  by  some  further  act  on  the  part  of  the  company 
or  the  directors.  Some  former  decisions  the  other  way  (A) 
are  expressly  overruled.  The  proceeding  there  in  hand 
was  in  the  nature  of  an  action  of  deceit,  but  the  doctrine 
must  equally  apply  to  the  rescission  of  a  contract. 
Way  V.  In  Way  v.  Heam  (i)  the  action  was  on  a  promise  by 

the  defendant  to  indemnify  the  plaintiff  against  half  of  the 
loss  he  might  sustain  by  having  accepted  a  bill  drawn  by 
one  R  Shortly  before  this,  in  the  course  of  an  investiga- 
tion of  R's  afi'airs  in  which  the  defendant  took  part,  R 
had  at  the  plaintiff  s  request  concealed  from  the  accountant 
employed  in  the  matter  the  fact  that  he  owed  a  large  sum 
to  the  plaintiff;  the  plaintiff  said  his  reason  for  this  was 
that  he  did  not  wish  his  wife  to  know  he  had  lent  so  much 
money  upon  bad  security.  At  this  time  the  bill  which 
was  the  subject  of  the  indemnity  was  not  thought  of;  it 

(/)  ffotddtworth  V.  City  of  Glasgow  Bagshaw  v.  Seymour  (1 856)  18  C.  B. 

Bank  (1880)  6  App.  Ca.  817,  48  L.  908,   29   L.   J.    Ex.    62,    n.    The 

J.  Cb.  19.  authority  of  Gerhard  ▼.  Bates  (1863) 

(g)  (1873)  L.  R.  6  H.  L.  377,  2  E.  &  H.  476,  22  L.  J.  Q.  R  866, 

396  :  and  see  the  case  put  by  Lord  is  saved  by  a  rather  fine  distinction: 

Cairns  as  an  illustration  at  p.  411.  L.  R.  6  H.  L.  399. 

(A)  Bedford  v.   Bagshaw  (1859)  («)  (1862)  13  C.  B.  N.  S.  292,  82 

4  H.  &  N.  638,  29  L.  J.  Ex.  59  ;  L.  J.  C.  P.  84. 


Hearn. 


ELECTION  TO  RESCIND  OR  RATIFY.  557 

was  in  ta/ct  given  to  get  rid  of  an  execution  afterwards  put 
in  by  another  creditor.  Here  a  misrepresentation  as  to 
R's  solvency  was  made  by  R  in  concert  with  the  plaintiff, 
and  communicated  to  the  defendant;  but  it  was  in  a  trans- 
action unconnected  with  the  subsequent  contract  between 
the  plaintiff  and  the  defendant,  and  the  defendant  was 
therefore  not  entitled  to  dispute  that  contract  on  the 
ground  of  fraud. 

2.  As  to  the  right  of  the  party  misled.     This  right  is  A«  to 
one  which  requires,  and  in  several  modem  cases  of  import-  ^J^  ^ 
ance  has  received,  an  exact  limitation  and  definition.     It  n»Ml«d : 
may  be  thus  described  :  statement. 

The  party  who  has  been  induced  to  enter  into  a  contract 
by  fraud,  or  by  concealment  or  misrepresentation  in  any 
matter  such  that  the  truth  of  the  representation  made,  or 
the  disclosure  of  the  fact,  is  by  law  or  by  special  agreement 
of  the  parties  of  the  essence  of  the  contract,  may  affirm 
the  contract,  and  insist,  if  that  is  possible,  on  being  put  in 
the  same  position  as  if  the  representation  had  been  true  : 

Or  he  may  at  his  option  rescind  the  contract,  and  claim 
to  be  restored,  so  far  as  may  be,  to  his  former  position 
within  a  reasonable  time  (k)  after  discovering  the  mis- 
representation, unless  it  has  become  impossible  to  restore 
the  parties  to  the  position  in  which  they  would  have  been 
if  the  contract  had  not  been  made,  or  unless  any  third 
person  has  in  good  faith  and  for  value  acquired  any 
interest  under  the  contract. 

It  will  be  necessary  to  dwell  separately  on  the  several 
points  involved  in  this.  And  it  is  to  be  observed  that  the 
principles  here  considered  are  not  confined  to  any  particular 
ground  of  rescission,  but  apply  generally  when  a  contract 
is  voidable,  either  for  fitiud  or  on  any  other  ground,  at  the 
option  of  one  of  the  parties ;  on  a  sale  of  land,  for  example, 
it  is  constantly  made  a  condition  that  the  vendor  may 

{h)  But  qu,  whether  time  u  in  itself  mAteziftl :  see  L.  B.  7  Ex.  86, 
8  Ex.  205. 


558  THE  RIQHT  OF  RESCISSION. 

rescind  if  the  purchaser  takes  any  objection  to  the  title 
which  the  vendor  is  unable  to  remove ;  and  then  these 
rules  apply  so  fiar  as  the  nature  of  the  case  admits. 


Of  affirm*-      A.  As  to  the  nature  of  the  right  m  general,  and  what  is 
tion  and 
roBoiMion    ' 
in  generaL 


jJ^^J2^jj   an  affirmation  or  rescission  of  the  contract. 


"  A  contract  induced  by  fraud  is  not  void,  but  voidable 
only  at  the  option  of  the  party  defrauded;"  in  other  words, 
valid  until  rescinded  (1), 

Where  the  nature  of  the  case  admits  of  it,  the  party 
misled  may  affirm  the  contract  and  insist  on  having  the 
representation  made  good.  If  the  owner  of  an  estate  sells 
it  as  unincumbered,  concealing  from  the  purchaser  the 
existence  of  incumbrances,  the  purchaser  may  if  he  thinks 
fit  call  on  him  to  perform  his  contract  and  redeem  the 
incumbrances  (m).  If  promoters  of  a  partnership  under- 
taking induce  persons  to  take  part  in  it  by  untruly 
representing  that  a  certain  amount  of  capital  has  been 
already  subscribed  for,  they  will  themselves  be  put  on  the 
list  of  contributories  for  that  amount  (n), 
Eleotionto  It  is  to  be  remembered  that  the  right  of  election,  and 
affirm.  *^®  possibility  of  having  the  contract  performed  with  com- 
pensation, does  not  exclude  the  option  of  having  the 
contract  wholly  set  aside.  "  It  is  for  the  party  defrauded 
to  elect  whether  he  will  be  bound  "  (o).  But  if  he  does 
affirm  the  contract,  he  must  affirm  it  in  all  its  terms. 
Thus  a  vendor  who  has  been  induced  by  fraud  to  sell 
goods  on  credit  cannot  sue  on  the  contract  for  the  price  of 
the  goods  before  the  expiration  of  the  credit :  the  proper 
course  is  to  rescind  the  contract  and  sue  in  trover  (p). 

(0  Oakea  v.   Turquand  (1867)  L.  (o)  JRavHnt  r.  Wickham  (1868)  8 

R.  2  H.  L.  846,  376-6.  De  G.  &  J.  304,  822,  28  L.  J.  Ch. 

(m)  Per  Komilly  M.  R.  in  PvU-  188. 

ford  V.  Richards  (1853)  17  Beav.  {p)  Fergtuon  v,  Carnnffton  {1S29) 

96,  22  L.  J.  Ch.  659.    Cp.  UnffUy  v.  9  B.  &  C.  59.     lliis  is  unimportant 

Vngley  (1877)  6  Ch.  Div.  887, 46  L.  in  English  practice  now  that  the 

J.  Ch.  854.  old  forms  of  action  are  abolished, 

(n)  Moore  and  De  la  Torre**  ca.  bat  it  is  retained  as  a  good  iUustra- 

(1874)  18  £q.  661,  43  L.  J.  Ch.  751.  tion  of  the  principle. 


ELECTION  TO  RESCIND.  559 

When  the  contract  is  once  aflfirmed,  the  election  is  com-  Y^* 
pletely  determined;  and  for  this  purpose  it  is  not  necessary  tennine 
that  the  affirmation  should  be  express.  Any  acts  or  •l®*^®"- 
conduct  which  unequivocally  treat  the  contract  as  sub- 
sisting, after  the  &cts  giving  the  right  to  rescind  have 
come  to  the  knowledge  of  the  party,  will  have  the  same 
effect  (q).  Taking  steps  to  enforce  the  contract  is  a  con- 
clusive election  not  to  rescind  on  account  of  anything 
known  at  the  time  (r).  A  shareholder  cannot  repudiate 
his  shares  on  the  ground  of  misrepresentations  in  the 
prospectus  if  he  has  paid  a  call  without  protest  or  received 
a  dividend  after  he  has  had  in  his  hands  a  report  showing 
to  a  reader  of  ordinary  intelligence  that  the  statements  of 
the  prospectus  were  not  true  (s),  or  if  after  discovering  the 
true  state  of  things  he  has  taken  an  active  part  in  the 
affairs  of  the  company  (t)  or  has  affirmed  his  ownership  of 
the  shares  by  taking  steps  to  sell  them  (u);  and  in  general 
a  party  who  voluntarily  acts  upon  a  contract  which  is  void- 
able at  his  option,  having  knowledge  of  all  the  facts,  cannot 
afterwards  repudiate  it  if  it  turns  out  to  his  disadvan- 
tage (x).  And  when  the  right  of  repudiation  has  once 
been  waived  by  acting  upon  the  contract  as  subsisting 
with  knowledge  of  fisujts  establishing  a  case  of  fraud,  the 
subsequent  discovery  of  further  facts  constituting  "  a  new 
incident  in  the  fraud  "  cannot  revive  it  (y).  The  exercise 
of  acts  of  ownership  over  property  acquired  under  the 
contract  precludes  a  subsequent  repudiation,  but  not  so 
much  because  it  is  evidence  of  an  affirmative  election  as 

(q)  ClougK  v.  Z.  A  N.  W.  Ry.  Go,  wm  a  case  not  of  xniB-stated  facts 

(1871)  (Ex.  Ch.)  L.  K.  7  Ex.  at  p.  but  of  material  departure  from  the 

84.  objects  of  the  company  as  stated  in 

(r)  Oray  v.  Fowler  (1873)   (Ex.  the  prospectus. 

Ch.)  L.  R.  8  Ex.  249,  280,  42  L.  J.  (x)  Ormea  v.  Beadd  (1860)  2  D. 

Ex.  161.  F.  J.  382,  386,  80  L.  J.  Ch.  1. 

(«)  Scholey  v.  Central  Ry.  Co.  of  (y)  CajnpbeU  v.  Fleming  (1884)  1 

Vmezuela  (1867-8)  9  £q.  266,  n.  A.  &  E.  40.     This  does  not  apply 

(t)  SharpUyy.  Louth  d' £cut  Coatt  where  a  new  and  distinct  canse  t>f 

Ry.  Co.  (1876)  2  Ch.  Div.  668,  46  rescission   arises :    Oray  v.   Fotoler 

L.  J.  Ch.  269.  (1878)  L.  R.  8  Ex.  249,  42  L.  J.  Ex. 

(u)  Ex  parte  Brings  (1866)  1  Eq.  161. 
488,  85  L.  J.  Ch.  820;  this  however 


560  THE  RIGHT  OF  RESCISSION. 

because  it  makes  it  impossible  to  replace  the  parties  in 
their  former  position ;  a  point  to  which  we  shall  come 
presently. 

When  the  acts  done  are  of  this  kind  it  seems  on 
principle  immaterial  whether  there  is  knowledge  of  the 
true  state  of  affairs  or  not,  unless  there  were  a  continuing 
active  concealment  or  misrepresentation  practised  with  a 
view  to  prevent  the  party  defrauded  from  discovering  the 
truth  and  to  induce  him  to  act  upon  the  contract;  for  then 
the  affirmation  itself  would  be  as  open  to  repudiation  as 
the  original  transaction.  Something  like  this  occurs  not 
unfrequently  in  cases  of  undue  influence,  as  we  shall  see 
in  the  next  chapter. 

Omission  to  repudiate  within  a  reasonable  time  is  evi- 
dence, and  may  be  conclusive  evidence,  of  an  election  to 
affirm  the  contract ;  and  this  is  in  truth  the  only  effect  of 
lapse  of  time.  Still  it  will  be  more  convenient  to  consider 
this  point  separately  afterwards. 
Bieotion         If  on  the  other  hand  the  party  elects  to  rescind,  he  is  to 

to  rascind  .     . 

moat  be     manifest  that  election  by  distinctly  communicating  to  the 
^'^IS? to^"  other  party  his  intention  to  reject  the  contract  and  claim 
other         no  interest  under  it.    One  way  of  doing  this  is  to  institute 
^^^^^'        proceedings  to  have  the  contract  judicially  set  aside,  and 
in  that  case  the  judicial  rescission,  when  obtained,  relates 
back  to  the  date  of  the  commencement  of  such  proceed- 
ings (z).     Or  if  the  other  party  is  the  first  to  sue  on  the 
contract,  the  rescission  may  be  set  up  as  a  defence,  and 
this  is  itself  a  sufficient  act  of  rescission  without  any  prior 
declaration  of  an  intention  to  rescind  (a).     For  the  pur- 

(z)  Beese  JRirer  Silver  Mining  Co,  enough  (Clegg  v.  Edmondton  (1857) 

v.  Smith  (1869)  L.  R.  4  H.  L.  78-5,  8  D.  M.  6.  787.  810)  refers  as  a 

89  L.  J.  Ch.  849.    What  if  proceed-  general  proposition   only    to    sub- 

ings  were  commenced  in  an  incom-  Btantive    original    rights.      In  the 

potent  court  ?    On  principle  there  particular  case  it  was  a  claim  to 

seems    no    reason   why    that  also  share  in  certain  partnership  profits, 

should  not  be  effective  as  an  act  of  As    to    shares    in    companies,  see 

rescission  in  pais.    The  proposition  below. 

that  in  equity  "  the  mere  assertion  (a)  Clough  y.  L.  A  N.  W,  Ry,  Co, 

of  a  claim  unaccompanied  by  any  (1871)  (Ex.  Ch.)  L.  B.  7  Ex.  86,  41 

act    to    give  effect  to  it"  is  not  L.  J.  Ex.  17. 


ELECTION  MUST  BE  COMMUNICATED.  5C1 

poses  of  pleading  the  allegation  that  a  contract  was 
procured  by  fraud  has  been  held  to  import  the  allegation 
that  the  party  on  discovering  it  disaflSrmed  the  contract  (6). 
Where  the  rescission  is  not  declared  injudicial  proceedings, 
no  further  rule  can  be  laid  down  than  that  there  should  be 
"  prompt  repudiation  and  restitution  as  far  as  possible  '*  (c). 
The  communication  need  not  be  formal,  provided  it  is  a  what 
distinct  and  positive  rejection  of  the  contract,  not  a  mere  ^J?"""*' 
request  or  inquiry,  which  is  not  enough  (d).  But  it  seems  anfficient. 
that  if  notwithstanding  an  express  repudiation  the  other 
party  persists  in  treating  the  contract  as  in  force,  then 
judicial  steps  should  be  taken  in  order  to  make  the  rescis- 
sion complete  as  against  rights  of  third  persons  which  may 
subsequently  intervene.  Especially  this  is  the  case  as  to 
repudiating  shares  in  a  company.  The  creditors  of  a  com- 
pany are  entitled  to  rely  on  the  register  of  shareholders 
for  the  time  being,  and  therefore  it  is  not  enough  for  a 
shareholder  to  give  notice  to  the  company  that  he  claims 
to  repudiate.  A  stricter  rule  is  applied  than  would  follow 
from  the  ordinary  rules  of  contract  (e).  "  The  rule  is  that 
the  repudiating  shareholder  must  not  only  repudiate,  but 
also  get  his  name  removed,  or  commence  proceedings  to 
have  it  removed,  before  the  winding-up ;  but  this  rule  is 
subject  to  the  qualification  4}hat  if  one  repudiating  share- 
holder takes  proceedings  the  others  will  have  the  benefit  of 
them  if,  but  only  if,  there  is  an  agreement  between  them 
and  the  company  that  they  shall  stand  or  fall  by  the  result 

[h)  Dawes  y.  Hamas  (1875)  L.  K.  4  Ch.  503,  ScoUish  Petroleum  Co. 
10  C.  P.  166,  44  L.  J.  C.  P.  194.  (1888)  28  Ch.  Div.  413.  But  if 
The  earlier  casee  there  dted,  there  are  several  repadiatiDg  share- 
especially  Deposit  Life  Assurance  holders  in  a  like  position,  proceed- 
Co.  V.  Ayscough  (1856)  6  E.  &  B.  ings  taken  by  one  of  them  and 
761,  26  L.  J.  Q.  B.  29,  are  not  tr^Kted  by  agreement  with  the  corn- 
wholly  consistent,  pany  as  representative  will  ensure 

(c)  Per    Bramwell   B.    B^dch^-  for  the  benefit  of  all  :  Pawl^s  ca. 

Plwm  Lead  Mining  Co,  v.  Baynes  (1867)  4  Ch.  497,  38  L.  J.  Ch.  318 ; 

(1867)  L.  B.  2  Ex.  826,  86  L.  J.  Ex.  MeNiOTs  ca.  (1870)  10  Eq.  503,  39 

183.  L.  J.  Ch.  822,  apparently  rests  only 

{dj  See  Ashley's  ca.  (1870)  9  Eq.  on  this  ground,  see  review  of  oases 

263,  39  L.  J.  Ch.  354.  per  Baggallay  L.  J.  28  Ch.  D.  at  p. 

{e)  Kent  v.  Freehold  Land,  <l«.  Co,  433. 
1868)  3  Ch.  493,  ffar^s  ca.  (1869) 

P.  0  0 


562 


THE  KIGHT  OF  BE8CIS8I0K. 


Bight  of 
reKiMion 


able  by 

Mid 

Against 

represen- 

tatifes. 


of  those  proceedings,  but  not  otherwise  "  (/).  Where  the 
original  contract  was  made  with  an  agent  for  the  other 
party,  communication  of  the  rescission  to  that  agent  is 
sufficient,  at  all  events  before  the  principal  is  disclosed  (g). 
And  where  good  grounds  for  rescission  exist,  and  the 
contract  is  rescinded  by  mutual  consent  on  other  grounds, 
those  grounds  not  being  such  as  to  give  a  right  of  rescis- 
sion, and  the  agent's  consent  being  in  excess  of  his 
authority,  yet  the  rescission  stands  good.  There  is  nothing 
more  that  the  party  can  do,  and  when  he  discovers  the 
facts  on  which  he  might  have  sought  rescission  as  a  matter 
of  right  he  is  entitled  to  use  them  in  support  of  what  is 
already  done.  In  Wo'ight'a  (h)  case  the  prospectus  of  a 
company  contained  material  misrepresentations.  The 
directors  had  at  a  shareholder's  request,  and  on  other 
grounds,  professed  to  cancel  the  allotment  of  his  shares, 
which  they  had  no  power  to  do,  though  they  had  power  to 
accept  a  surrender.  Afterwards  the  company  was  wound 
up,  and  then  only  was  the  misrepresentation  made  known 
to  him.  But  it  was  held  that  as  there  was  in  fact  a 
sufficient  reason  for  annulling  the  contract,  which  the 
directors  knew  at  the  time  though  he  did  not,  the  contract 
was  effectually  annulled,  and  he  could  not  be  made  a  con- 
tributoiy  even  as  a  past  meniber  (i). 

Inasmuch  as  the  right  of  rescinding  a  voidable  contract 
is  alternative  and  co-extensive  with  the  right  of  affirming 
it,  it  follows  that  a  voidable  contract  may  be  avoided  by  or 
against  the  personal  representatives  of  the  contracting 
parties  (k).  And  further,  as  a  contract  for  the  sale  of  land 
is  enforceable  in  equity  by  or  against  the  heirs  or  devisees 


(/)  Lindley  L.  J.  23  Ch.  D.  at 
p.  487. 

(o)  Maynard  v.  EaUm  (1874)  9 
Ch.  414,  48  L.  J.  Ch.  641. 

(A)  (1»71)  7  Ch.  65,  41  L.  J.  Oh. 
1.  Cp.  dough  V.  L,  d:  N,  W.  By. 
Co.  tufTOy  p.  651. 

(i)  But  WiokeoB  V.-C.  thought 
otherwise  in  the  conrt  beloir  (12 


Eq.  831)  and  the  oorrectness  of  the 
rerenal  is  doubted  by  Lord  Justice 
Lindley  (2.  1426). 

{k)  Including  aasigneeB  In  bank- 
ruptcy: Load  V.  Qrtm  (1846)  16  M. 
ft  W.  216,  16  L.  J.  Ex.  113; 
Donaldion  v.  FanoeU  (1876)  8  Otto 
(98  U.  S.)  681. 


LIMITS  OF  THE  RIGHT.  663 

of  the  parties,  so  it  may  be  avoided  by  or  against  them 
where  grounds  of  avoidance  exist  (l). 

A  party  exercising  his  option  to  rescind  is  entitled  to 
be  restored  so  far  as  possible  to  his  former  position.  This 
includes  a  right  to  be  indemnified  against  obligations 
incurred  under  the  contract,  but  it  is  doubtful  whether  it 
extends  to  liabilities  which  are  natural  consequences  of  the 
contract  but  are  not  created  by  the  contract  itself;  for  it 
may  be  said  that  an  indemnity  which  extended  so  far 
would  not  be  distinguishable  from  the  damages  recoverable 
in  an  action  for  deceit ;  and  the  remedy  of  rescission  is 
applicable  in  many  cases  where  deceit  is  not  in  question. 
It  has  not  yet  been  necessary  to  resolve  this  somewhat 
speculative  doubt  (m). 

B.  The  contract  cannot  be  rescinded  after  the  position  No  tetoM- 
of  the  parties  has  been  changed  so  that  the  former  state  of  JJ^jJJ^ 
things  cannot  be  restored.  be  restored 

This  may  happen  in  various  ways.  The  party  who  made  ^^otu' 
the  misrepresentation  in  the  first  instance  may  have  acted  Where  the 
on  the  faith  of  the  contract  being  valid  in  such  a  maimer  [JJJJ/j^ 
that  a  subsequent  rescission  would  work  irreparable  injury  acted  on 
to  him.  And  here  the  rule  applies,  but  with  the  important  of  ^the 
limitation,  it  seems,  that  he  must  have  so  acted  to  the  «»*»ct 
knowledge  of  the  party  misled  and  without  protest  from 
him,  so  that  his  conduct  may  be  said  to  be  induced  by  the 
other's  delay  in  repudiating  the  contract.     Thus  where  a 
policy  of  marine  insurance  is  voidable  for  the  non-disclosure 
of  a  material  fact,  but  the  delay  of  the  underwriters  in 

(2)  Cfredey  ▼.  MouiUy  (1861)  4  De  indemnity  to  liablliUee  created  l^ 

6.  &  J.  78  :  and  eee  caMi  cited  in  the  oontraet;  Cotton  and  Fry  L.  J  J. 

neit  chapter,  adJifL,  and  Charter  r.  inclined  to  a  larger  yiew ;  tmt  the 

Trevdyan  (1844)  11  CL  ft  F.  714,  reUel  aetoaUT  songrht  came  within 

where   the   partiei  on  both  lides  either  definition.    The  oaee  went  in 

were  ultimately  reprcflOPtatiTee,  and  1888  to  the  Houee  of  Lorda,  where 

ae  to  the  defendants  throngrh  more  it  tmnad  oat  that  in  the  droom- 

than  one  laooeeeion.  etancee  a  deciiion  npon  this  branch 

(m)  liiN'evolnggingY,Adam(\6B6)  of  the  case  was  not  reqnired,  and  no 

84  Ch.  Div.  582,  56  L.  J.  Oh.  275,  opinion  was  given  on  it :  18  App. 

Bowen  L.J.  proposed  to  limit  the  Ca.  808,  57  L.  J.  Ch.  1066. 

0  0  2 


564 


THE  RIGHT  OF  KESCISSIOK. 


CommoD 

dealingi 

with 

Bubject- 

mfttter  of 

oontract. 


repudiating  the  insurance  after  they  know  the  fiwjt  induces 
the  assured  to  believe  that  they  do  not  intend  to  dispute 
it,  and  he  consequently  abstains  from  effecting  any  other 
insurance,  it  would  probably  be  held  that  it  is  then  too 
late  for  the  underwriters  to  rescind  (n).  Or  the  interest 
taken  under  the  contract  by  the  party  misled  may  have 
been  so  dealt  with  that  he  cannot  give  back  the  same 
thing  he  received.  On  this  principle  a  shareholder  cannot 
repudiate  his  shares  if  the  character  and  constitution  of 
the  company  have  in  the  meantime  been  altered.  This 
was  the  case  in  Cla/rke  v.  Dickson  (o),  where  the  plaintiff 
had  taken  shares  in  a  cost-book  mining  company,  The 
company  was  afterwards  registered  under  the  Joint  Stock 
Companies  Act  then  in  force,  apparently  for  the  sole  pur- 
pose of  being  wound  up.  In  the  course  of  the  winding-up 
the  plaintiff  discovered  that  fraudulent  misrepresentations 
had  been  made  by  the  directors.  But  it  was  by  this  time 
impossible  for  him  to  return  what  he  had  got ;  for  instead 
of  shares  in  a  going  concern  on  the  cost-book  principle  he 
had  shares  in  a  limited  liability  company  which  was  being 
wound  up  (p).  It  was  held  that  it  was  too  late  to  repu- 
diate the  shares,  and  his  only  remedy  was  by  an  action  of 
deceit  against  the  directors  personally  responsible  for  the 
false  statements  (g).  As  Crompton  J.  put  it,  "  You  can- 
not both  eat  your  cake  and  return  your  cake  "  (r).  A 
similar  case  on  this  point  is  Western  Bank  of  Scotland  v. 
Addie  (a).  There  the  company  was  an  unincorporated 
joint  stock  banking  company  when  the  respondent  took 
his  shares  in  it.     As  in  Clarke  v.  Dickson,  it  was  after- 


(n)  Per  Cur.  Morrison  v.  Univer- 
»al  Marine  Insurance  Co,  (1873)  (Ex. 
Gh.)  L.  R.  8  Ex.  At  p.  205;  cp. 
Clough  V.  L,  A  N.  W.  Ry.  Co.  (1871) 
(Ex.  Ch.)  L.  R  7  Ex.  at  p.  85. 

(o)  (1859)  E.  6.  &  E.  148,  27  L. 
J.  Q.  R  228. 

(p)  Tbe  fact  of  the  winding-Tip 
baviDg  begun  before  the  repudiation 
of  the  sharefl  ib  of  itself  dedrive  ac- 


cording to  the  later  oaaes  under  the 
present  Oompanies  Act :  but  here 
the  point  was  hardly  made. 

{q)  Which  course  was  accordingly 
taken  with  success :  Clarice  v.  Dick- 
atm  (1859)  6  O.  B.  N.  S.  458,  28  L. 
J.  C.  P.  225. 

(r)  (1867)  E.  R  &  E.  at  p.  162. 

(«)  L.RlSc.&;P.145. 


WHERE  RESTITUTION  IMPOSSIBLE.  665 

wards  incorporated  and  registered  for  the  purpose  of  a 
voluntary  winding-up.  It  was  held  as  a  probable  opinion 
by  Lord  Chelmsford,  and  more  positively  by  Lord 
Cranworth,  that  the  change  in  the  condition  of  the  com- 
pany and  of  its  shares  was  such  as  to  make  restitution 
impossible,  and  therefore  the  contract  could  not  be 
rescinded  (t).  There  is  some  reason  to  think  that  where 
goods  or  securities  have  been  delivered  under  a  contract 
voidable  by  the  buyer  on  the  ground  of  fraud,  and  before 
the  repudiation  their  value  has  materially  fallen  through 
some  cause  unconnected  with  the  fraud,  this  is  such  a 
change  in  the  condition  of  the  thing  contracted  for  as  to 
make  restitution  impossible  in  law  (u).  The  case  is  simpler  Condaot 
where  the  party  misled  has  himself  chosen  to  deal  with  ^^^^ 
the  subject-matter  of  the  contract,  by  exercising  acts  of 
ownership  or  the  like,  in  such  a  manner  as  to  make  restitu- 
tion impossible ;  and  it  is  still  plainer  if  he  goes  on  doing 
this  with  knowledge  of  all  the  facts ;  if  the  lessee  of  mines, 
for  example,  goes  on  working  out  the  mines  after  he  has 
frill  information  of  the  circumstances  on  which  he  relies  as 
entitling  him  to  set  aside  the  lease  (w).  So  a  settlement 
of  partnership  accounts  or  a  release  contained  in  a  deed  of 
dissolution  (x)  cannot  be  disputed  by  one  of  the  parties  if 
in  the  meantime  the  concern  has  been  completely  wound 
up  and  he  has  taken  possession  of  and  sold  the  partnership 
assets  made  over  to  him  under  the  arrangement  (y) ;  and 
an  arrangement  between  a  company  and  one  of  its 
directors  which  has  been  acted  upon  by  the  company  so  as 
to  change  the  director's  position  cannot  afterwards  be 
repudiated  by  the  company  (0).     So  a  purchaser  cannot 

(0  It  would  Beem,  but  it  does  not  &  F.  562,  650. 

clearly  appear,  that  in  this  case  also  (x)  Urquhirt  v.  Macphertan  (1878) 

the  misrepresentations  were  not  dis-  8  App.  Ga.  831. 

covered  till  after  the  commencement  (y)  SkUbeck  y,  HUUm  (1866)  2  Eq. 

of  the  winding-up.  587 . 

(u)  WadddL  v.  Elockey  (1879)  4  Q.  (z)  ShtfflM  Niekd  Co,  v.   Unwm 

B.  Div.  678, 683,  48  L.  J.  Q.  B.  617,  (1877)  2  Q.  B.  D.  214,  46  L.  J.  Q. 

per  Thesiger  L.  J.  B.  299. 

(w)  Vipers  V.  POce  (1840-2)  8  01. 


566  THE  RIGHT  OF  RESCISSION. 

after  taking  possession  inaintAin  an  action  to  recover  back 
his  deposit  (a). 

The  right  to  recover  back  money  paid  under  an  agree- 
ment on  the  ground  of  mistake,  jGEulure  of  consideration,  or 
defstult  of  the  other  party  is  also  subject  to  the  same  rule. 
Thus  a  lessee  who  has  entered  into  possession  cannot 
recover  back  the  premium  paid  by  him  on  the  ground  of 
the  lessor's  de&ult  in  executing  the  lease  and  doing  repairs 
to  be  done  by  him  under  the  agreement  (6) :  nor  can  a 
party  recover  back  an  excessive  payment  after  his  own 
dealings  have  made  it  impossible  to  ascertain  what  was 
really  due  (c). 

No  re«ci»-       C.  The  contract  cannot  be  rescinded  after  third  persons 
ananst      ^^^^  acquired  rights  under  it  for  value, 
innooent        The  present  rule  is  altogether,  as  the  last  one  is  to  some 
^Haen  for  extent,  a  corollary  from  the  main  principle  that  a  contract 
value.        induced  by  fraud  or  misrepresentation  is  as  such  not  void 
but  only  voidable.      The  result  is  that  when  third  persons 
have  acquired  rights  under  the  transaction  in  good  fidth 
and  for  value,  those  rights  are  indefeasible.     The  rule  is 
also  stated  to  be  an  application  of  the  principle  of  conve- 
nience "that  where  one  of  two  innocent  parties  must  suffer 
from  the  fraud  of  a  third,  the  loss  should  fall  on  the  one 
who  enabled  the  third  party  to  commit  the  fraud  "  (d). 
Fraudu-         Thus  when  a  sale  of  goods  is  procured  by  fraud,  the 
property  in  the  goods  is  transferred  by  the  contract  (e), 
subject  as  between  the  seller  and  the  buyer  to  be  revested 
by  the  seller  exercising  his  option  to  rescind  when  he  dis- 

(a)  Blaekhwm  ▼.  SnM,  (1848)  2  B.  D.  at  p.  400. 

Ex.  788,    18  L.  J.  Ex.  187  ;  but  it  (e)  Load  v.  Grem  (1846)  16  M.  & 

was  al0O  held  that  apart  from  this  W.  216,  15  L.  J.  Kx.  118 ;   where 

the  objection  came  too  late  under  it  was  held  that  a  fraudulent  buyer 

the  conditions  of  sale  in  the  particu-  beooming    bankrupt  had    not   the 

lar  case.  goods  in  his  order  and  disposition 

(6)  Hwa  Y.  oak  (1804)   5  East  with  the  consent  of  the  true  owner ; 

449.  for  the  yendors   beoame   the  true 

(c)  Freeman  v.  Jtffrie$  (1869)  L.  owners  only  when  they  elected  to 

R.  4  Ex.  189, 197, 38  L.  J.  Ex.  116.  rescmd  and   demanded   the  goods 

{d)  Babeock  y.  Lawton  (1880)  4  Q.  from  the  assignees. 


lent 


RIGHTS  OF  THIRD  PERSONS.  567 

covers  the  fraud.  A  purchaser  in  good  faith  from  the 
fraudulent  buyer  acquires  an  indefeasible  title  (/)  unless 
the  goods  were  obtained  by  fraud  amounting  to  a  crime,  in 
which  case  the  true  owner  has  an  unqualified  right  to 
restoration  of  the  goods  by  statute  (g).  And  a  person  who 
takes  with  notice  of  the  fraud  is  a  lawful  possessor  as 
against  third  persons,  and  as  such  is  entitled  to  sue  them 
for  all  injuries  to  the  property,  unless  and  until  the  party 
defrauded  exercises  his  right  of  rescission  (h). 

The  same  rule  holds  good  as  to  possession  or  other  partial 
interests  in  property.  A.  sells  goods  to  B.,  but  resumes 
the  possession,  by  arrangement  with  B.,  as  a  security  for 
the  price.  Afterwards  B.  induces  A.  to  re-deliver  posses- 
sion of  the  goods  to  him  by  a  fraudulent  misrepresentation, 
and  thereupon  pledges  the  goods  to  C,  who  advances 
money  upon  them  in  good  faith  and  in  ignorance  of  the 
fraud.  This  pledge  is  valid,  and  C.  is  entitled  to  the 
possession  of  the  goods  as  against  A.  (i). 

It  must  be  carefully  observed  that  a  fraudulent  possessor  Distino- 
cannot  give  a  better  title  than  he  has  himself,  even  to  an  Jh^^*^ 
innocent  purchaser,  if  the  possession  has  not  been  obtained  ^^^'^^ 
under  a  contract  with  the  true  owner,  but  by  mere  false  ^re  m««ly 
pretences  as  to  some  matter  of  fact  concerning  the  true  ?^*^*^  . 
owner's  contract  with  a  third  person.     To  put  a  simple  lent  pre- 
case,  A.  sells  goods  to  B.  and  desires  B.  to  send  for  them.  ***"*^ 
C.  obtains  the  goods  from  A.  by  falsely  representing  him- 
self as  B/s  servant :  now  0.  acquires  neither  property  nor 
lawful  possession,  and  cannot  make  any  sale  or  pledge  of 
the  goods  which  will  be  valid  against  A.,  though  the 

(/)  WhUe  V.  Garden  (1851)  10  0.  note  (/). 

B.  919,  20  L.  J.  0.  P.  167 ;  SUven-         (t)  Peon  ▼.  Oloahec  (1866)  L.  R. 
ton  V.  Newnham  (1853)  (Ex.  Gh.)  13  1  P.  C.  219,  85  L.  J.  P.  C.  66.  The 

C.  6.  285,  803,  22  L.  J.  C.  P.  110,  dealings  were  in  fact  with  the  biU 
115  ;  cp.  12  App.  Oa.  at  p.  483.  of  lading  ;  bnt  aa  this  completely 

(g)  24  &  25  Vict  c.  96,  8.  100,  represented  the  goods  far  the  pnr- 

BmUey  y.   VUmont  (1887)  12  App.  poses  of  the  case  the  statement  in 

Ca.   471,  57  L.  J.  Q.  B.  18,  oyer,  the  text  is  simplified  in  oider  to 

rating  Moyce  y.  Netrington  (1878)  4  bring  out  the  general  principle  more 

Q.  B.  D.  32,  48  L.  J.  Q.  B.  125,  clearly.    A  later  case  of  the  same 

with  some  relaetanoe.  kind  is  Babeock  y.  Lawion  (1880)  5 

{h)  Slevetuan   y.    Newnham,   see  Q.  B.  Diy.  284,  49  L.  J.  Q.  B.  408  . 


568 


TitE  Riant  OP  RESCISSION. 


person  advancing  his  money  have  no  notice  of  the  fraud. 
The  result  is  the  same  if  A.  means  to  sell  goods  to  B.  & 
Co.,  and  0.  gets  goods  from  A.  by  falsely  representing 
himself  as  a  member  of  the  firm  and  authorized  to  act  for 
them  (i),  or  if  B.,  a  person  of  no  credit,  gets  goods  from  A. 
by  trading  under  a  name  and  address  closely  resembling 
those  of  C,  who  is  known  to  A,  as  a  respectable  trader  (I). 
It  is  also  the  same  in  the  less  simple  case  of  a  third  person 
obtaining  delivery  of  the  goods  by  falsely  representing 
himself  as  a  sub-purchaser ;  for  here  there  is  no  contract 
between  him  and  the  seller  which  the  seller  can  affirm  or 
disaffirm ;  what  the  seller  does  is  to  act  on  the  mistaken 
notion  that  the  property  is  already  his  by  transfer  from 
the  original  buyer.  This  was  in  effect  the  decision  of  the 
Exchequer  Chamber  in  Kingsford  v.  Merry  (m),  though 
the  case  was  a  little  complicated  by  the  special  considera- 
tion of  the  effect  of  delivery  orders  or  warrants  as  "  indicia 
of  title." 

The  decision  of  the  House  of  Lords  in  Oakea  v.  Tur- 
quand  (n),  which  settled  that  a  shareholder  in  a  company 
cannot  repudiate  his  shares  after  the  commencement  of  a 
winding-up,  proceeded  to  a  considerable  extent  upon  the 
"^rp^*^*  language  of  the  Companies  Act,  1862,  in  the  sections 
quand.  defining  who  shall  be  contributories.  But  the  broad  prin- 
ciples of  the  decision,  or  if  we  prefer  to  say  so,  of  the  Act 
as  interpreted  by  it,  are  these.  The  rights  of  the  company's 
creditors  and  of  the  shareholders  are  fixed  at  the  date  of 
the  winding-up  and  are  not  to  be  afterwards  varied.  The 
creditors  are  entitled  to  look  for  payment  in  the  first  in- 


Share- 
holder 
can't  re- 
pudiate 
after 
winding- 


(Jt)  ffardman  ▼.  Booth  (1863)  1 H. 
&  C.  808,  32  L.  J.  Ex.  105 ;  ffol- 
lint  V.  PowUr  (1874-6)  L.  R.  7  H. 
L.  757,  795. 

(0  Cundy  v.  Undtay  (1878)  8 
App.  Ca.  459,  47  L.  J.  Q.  R  481. 
Otherwise  where  the  fraud  stops 
short  of  personation,  and  is  only  a 
false  representation  of  the  party's 
condition  and  means  :  AUenborottgh 
V.  St,  Katharines  Dock  Co.  (1878)  3 
C.  P.  Div.  450,  47  L.  J.  Ch.  763,  rp. 


Edmtmds  v.  Mchts,  Deap,  Tranap.  Co. 
135  Mass.  283,  which  goes  farther. 

(m)  (1856)  1  H.  &  N.  503,  26  L. 
J.  Ex.  83  (see  per  Erie  J.  at  p.  88), 
revg.  s.  c.  in  Court  below,  11  Ex. 
577,  25  L.  J.  Ex.  166. 

(n)  (1867)  L.  R.2  H.  L. 825, 36  L. 
J.  Cb.  949.  This  principle  applies  to 
a  voluntary  as  well  as  a  compulsory 
winding-up:  Stone  v.  City  and  County 
Bank  (1877)  3  C.  P.  Div.  282,  47 
L.  J.  C.  P.  681. 


REPUDIATION  OF  SHAllBa 


56d 


stance  to  all  persons  who  are  actually  members  of  the 
company  at  the  date  of  the  winding-up.  And  this  class 
includes  shareholders  who  were  entitled  as  against  the 
company  to  repudiate  their  shares  on  the  ground  of  fraud 
but  have  not  yet  done  so.  For  their  obligations  under 
their  contracts  with  the  company,  including  the  duty  to 
contribute  in  the  winding-up,  were  valid  until  rescinded, 
and  the  creditors  in  the  winding-up  must  be  considered  as 
being,  to  the  extent  of  their  claims,  purchasers  for  value 
of  the  company's  rights  against  its  members.  They  are 
not  entitled  to  any  different  or  greater  rights :  no  share- 
holder can  be  called  upon  to  do  more  than  perform  his 
contract  with  the  company  (o). 

It  is  now  settled  law  that  the  same  rule  applies  to  joint- 
stock  companies  not  under  the  Companies  Acts.  And  the 
date  after  which  it  is  too  late  to  repudiate  shares  may  be 
earlier  than  the  commencement  of  the  winding-up.  Pro- 
bably the  actual  insolvency  of  the  company  fixes  this  date ; 
at  all  events  a  shareholder  cannot  repudiate  after  the 
directors  have  convened  an  extraordinary  meeting  to  con- 
sider whether  the  company  shall  be  wound  up.  For  thus, 
"  by  holding  out  to  the  body  of  creditors  the  prospect  of  a 
voluntary  winding-up,"  the  directors,  who  are  the  share- 
holder's agents  as  long  as  he  remains  a  shareholder,  stay 
the  hands  of  the  creditors  from  compulsory  proceedings  (p). 
And  the  rule  holds  even  if  there  are  no  unpaid  creditors. 
"  The  doctrine  is,  that  after  the  company  is  wound  up  it 
ceases  to  exist,  and  rescission  is  impossible  "  (5). 

On  the  other  hand,  persons  who  have  taken  any  gra-  Peraons 
tuitous  benefit  under  a  fraudulent  transaction,  though  Toiunteen 
themselves  ignorant  of  the  fiuud,  are  in  no  better  position  ^^„. 

(0)  WcUerJunueTi  Jamie9(m{l%70)  oeed.      Here   however    relief    waa 

L.  R.   2  Sc  &  D.  29.    In  ffall  y.  oUimed  agatnat  the  directors  per- 

Old  Talarffoch  Lead  Mining  Oo.(  1876)  BonaUy  aa  weU  aa  the  oompanj. 

3  Ch.  D.  749,  45  L.  J.  Ch.  775,  an  (p)  Tetment  y.   City  of  OUugaw 

action  for  resdwion  and  indomnlty  Bank  (1879)  4  App.  Oa.  615. 

oommenoed  by  a  Bharebolder  af ter  a  (q)  Burgest^i   oa.  (1880)  15    Ch, 

reflation    for   winding-np  bnt  in  D.    507,    509,    49  L.   J.  Oh.   541 

ignorance  of  it  was  allowej  to  pro-  (Jeasel  H.B.). 


670  THE  RIOHT  OF  RESCISSION. 

lent  con-  than  the  oricrinal  contriver  of  it.  Thus  where  a  creditor 
though  was  induced  to  give  a  release  to  a  surety  by  a  fraud 
^^J^**    practised  on  him  by  the  principal  debtor,  of  which  the 

no  better    ^  ,    i  -j       x- 

off  than  surety  was  ignorant,  and  the  surety  gave  no  consiaeration 
JJJtaSder.  f*^r  the  release,  it  was  held  that  this  release  might  be 
disaffirmed  by  the  creditor  on  discovering  the  fraud. 
But  third  persons  who  on  the  faith  of  the  release  being 
valid  had  advanced  money  to  the  surety  to  meet  other 
liabilities  would  be  entitled  to  assert  a  paramount 
claim  (r). 

Reioliilon      D.  The  contract  must  be  rescinded  within  a  reasonable 

within       time,  that  is,  before  the  lapse  of  a  time  after  the  true  state 

g^"*^^*^  of  things  is  known,  so  long  that  under  the  circumstances 

of  the  particular  case  the  other  party  may  fairly  infer  that 

the  right  of  rescission  is  waived 

Explana-        jt  ig  believed  that  the  statement  of  the  rule  in  some 

this :  the    such  form  as  this  will  reconcile  the  substance  and  language 

ISoTof      ^^  ^^  *^®  leading  authorities.     On  the  one  hand  it  is  often 

time  IB  not  said  that  the  election  must  be  made  within  a  reasonable 

aTevi.  ^    time,  while  on  the  other  hand  it  has  several  times  been 

dence  of    explained  that  lapse  of  time  as  such  has  no  positive  effect 

oenoe.        of  its  own.   The  Court  is  specially  cautious  in  entertaining 

Anthori-    charges  of  fruud  or  misrepresentation  brought  forward 

g^lJjS       after  a  long  interval  of  time ;  it  will  anxiously  weigh  the 

circumstances,  and  consider  what  evidence  may  have  been 

lost  in  consequence  of  the  time  that  has  elapsed  (a).     But 

time  alone  is  no  bar  to  the  right  of  rescinding  a  voidable 

transaction ;  and  the  House  of  Lords  in  one  case  set  aside 

a  purchase  of  a  principal's  estate  by  his  agent  in  another 

name  after  the  lapse  of  more  than  half  a  century,  the 

facts  having  remained  unknown  to  the  principal  and  his 

(r)  SckU^fidd  V.  TempUr  (1859)  Appeal  varfed  the  deone  by  making 

Johns.  155,  165,  4  De  G.  &  J.  429,  it  rimply  without  prejadioe  to  their 

28  L.  J.  Ch.  452.    The  Gout  below  rights,  4  De  G.  &  J.  435. 

endeaTonred  to  provide  for  the  pay-  {$)  Gp.  Bright  v.  LegerUm  (1861) 

ment.of  the  third  persons  in  ques-  2  D.  F.  J.  606,  617. 
tion,  Johns.  171,  but  the  Court  of 


ACQITIESCENCE.  571 

representatives  for  thirty-seven  years  (t).  In  a  later  case 
the  Lord  Justice  Turner  stated  expressly  that  "  the  two 
propositions  of  a  bar  by  length  of  time  and  by  acquiescence 
are  not  distinct  propositions."  Length  of  time  is  evidence 
of  acquiescence,  but  only  if  there  is  knowledge  of  the 
facts,  for  a  man  cannot  be  said  to  have  acquiesced  in  what 
he  did  not  know  (u).  Lord  Campbell  slightly  qualified  this 
by  adding,  that  although  it  is  for  the  party  relying  on 
acquiescence  to  prove  the  facts  from  which  consent  is  to 
be  inferred,  "  it  is  easy  to  conceive  cases  in  which,  from 
great  lapse  of  time,  such  &cts  might  and  ought  to  be 
presumed  "  (w). 

The  rule  has  been  laid  down  and  acted  upon  by  the 
Judicial  Committee  in  this  form :  "In  order  that  the  remedy 
should  be  lost  by  laches  or  delay,  it  is,  if  not  universally,  at 
all  events  ordinarily  .  .  .  necessary  that  there  should 
be  sufficient  knowledge  of  the  facts  constituting  the  title 
to  reUef "  {x). 

To  the  same  effect  it  has  been  said  in  the  Supreme 
Court  of  the  United  States:  "Acquiescence  and  waiver 
are  always  questions  of  feet.  There  can  be  neither  with- 
out knowledge."  And  the  knowledge  must  be  actual, 
not  merely  possible  or  potential :  "  the  wrongdoer  cannot 
make  extreme  vigilance  and  promptitude  conditions  of 
rescission  "  (y). 

Acquiescence  need  not  be  manifested  by  any  positive 
act ;  the  question  is,  whether  there  is  sufficient  evidence 
either  from  lapse  of  time  or  from  other  circumstances  of 
"a  fixed,  deliberate  and  unbiassed  determination  that  the 

(0   Charter  y.   Trevdyan  (1844)  tb»t  he  has  a  right  to  refoM :"  and 

11  Gl.  k  F.  714,  740.  per  Jeoel  M.R.  1  Oh.  I>.  528. 

(u)  Life  AiModoHon  ofSeodand  v.  (io)  8  D.  F.  J.  at  p.  77.    The  case 

8iddal  (1861)  8  D.  F.  J.  58,  72,  74 :  was  one  not  of  rescinding  a  contract 

on  the  point  that  there  cannot  be  bat  of  »  breach  of  trust;  bat  the 

acquiescence    without    knowledge,  prindplss  are  the  same, 

op.  Lloyd  y.  AUwood  (1858-9)  3  De  (x)  Lindsay  Peiroleum  Co,  T,ffurd 

G.  k  J.  614,  650,  29  L.  J.  Oh.  97;  (1874)  L.  R  5  P.  0.  241. 

per  Aldecson  B.  Load  y.  (7tie«f>(1846)  (y)  Pence  y.Langdon  (1878)  9  Otto 

15  M.  &  W.  at  PL  217  :  "A  man  (99  U.  S.)  at  p.  581. 
cannot  permU  who  does  not  know 


572  THE  RIGHT  OP  RESCISSION. 

transaction  should  not  be  impeached  "  (z).  In  estimating 
the  weight  to  be  given  to  length  of  time  as  evidence 
of  acquiescence  the  nature  of  the  property  concerned  is 
material  (a).  And  other  special  circumstances  may 
prevent  lapse  of  time  even  after  everything  is  known 
from  being  evidence  of  acquiescence;  as  when  nothing 
is  done  for  some  years  because  the  other  party's  aflfairs 
are  in  such  a  condition  that  proceedings  against  him 
would  be  fruitless  (6). 

If  a  party  entitled  to  avoid  a  transaction  has  precluded 
himself  by  his  own  acts  or  acquiescence  from  disputing  it 
in  his  lifetime,  his  representatives  cannot  come  forward  to 
dispute  it  afterwards  (c). 
BpeoUl  It  is  said  that  holders  of  shares  in  companies  are  under 

of  dill-      3.  special  obligation  of  diligence  as  to  making  their  election, 
^^^^     but  the  dicta  relate  chiefly  if  not  wholly  to  objections 
Bhare-        apparent  on  the  face  of  the  memorandum  or  articles  of 
^  "*•      association.     With  the  contents  of  these  a  shareholder  is 
bound  to  make  himself  acquainted,  and  must  be  deemed  to 
become  acquainted,  when  his  shares  are  allotted  (d).     But 
objections  which  can  be  taken  upon  these  must  proceed  on 
the  ground,  not  of  fraud  or  misrepresentation  as  such,  but 
of  the  undertaking  in  which  shares  are  allotted  being  sub- 
stantially a  different  thing  from  that  which  the  prospectus 
described  and  in  which  the  applicant  offered  to  take  shares. 
Nor  are  we  aware  of  any  case  in  which  the  rule  has  been 
applied  to  a  repudiation   of   shares   declared  before  a 
winding-up  and  on  the  ground  of  fraud  or  misrepresenta- 


(z)  Per  Turner  L.J.    WrigU  v.  8  Ch.  Div.  %t  p.  814,  47  L.  J,  Ch- 

VcmderpUink  (1855)  8  D.  M.  G.  188,  886. 

147, 25  L.  J.  Ch.  753.    The  epithets,  (a)  8  D.  M.  G.  at  p.  150. 

however,  are  more  spedally  appro-  (6)  SckoUfidd  ▼.   Templar  (1859) 

priate  to  the  particular  ground  of  4  De  G.  &  J.  429,  28  L.  J.  Ch.  452. 

rescission  (undue    influence)    then  (c)  ShoUowe  v.    WWiomu   (1861) 

before  the  Courf.    More  generally,  8  D.  F.  J.  535,  541. 

the  only  proper  meaning  of  aoqai-  {d)  Central  Ry,  Co.  of  Venezuela 

escence  is  quiescence   under  such  v.  Kieck  (1867)  Ij.  R.  2  H.  L.  at  p. 

circumstances  that  assent  may  be  125 ;  Oahe»  v.  Twrqwmd  (1867)  ih, 

reasonably  inferred  from  it :    per  at  p.  852 ;  and  see  Ch.  IX.,  p.  419, 

Cur.  in  Dt  Buesche  v.  Alt  (1877)  above. 


LAPSE  OF  TIME.  573 

tion  not  apparent  on  the  articlea  Still  it  seems  quite 
reasonable  to  hold  that  in  the  case  of  a  shareholder's 
contract  lapse  of  time  without  repudiation  is  of  greater 
importance  as  evidence  of  assent  than  in  most  other 
cases. 

The  authorities  thus  far  cited  have  been  from  courts  Same 
of  equity.     The  same  general  principle  was  laid  down  in  ^^^^ 
the  Exchequer  Chamber  in  1871.     "  We  think  the  party  ^^.  P«f 
defrauded   may  keep    the  question  open  so  long  as  he  Ex.  Ch. 
does  nothing  to  affirm  the  contract    ...     In  such  cases 
the  question  is,  has  the  person  on  whom  the  fraud  was 
practised,  having  notice  of  the  fr^ud,  elected  not  to  avoid 
the  contract  ?   or  has  he  elected  to  avoid  it  ?  or  has  he 
made  no  election  ?    We  think  that  so  long  as  he  has  made 
no  election  he  retains  the  right  to  determine  it  either 
way,  subject  to    this,  that   if  in   the  interval  whilst  he 
is  deliberating  an  innocent  third  party  has  acquired  an 
interest  in  the  property,  or  if  in  consequence  of  his  delay 
the  position  even  of  the  wrongdoer  is  affected,  it  will 
preclude  him  from  exercising  his  right  to  rescind    And ' 
lapse  of  time  without  rescinding  will  furnish  evidence  that 
he  has  determined  to  affirm  the  contract,  and  when  the 
lapse  of  time  is  great  it  probably  would  in  practice  be 
treated  as  conclusive  evidence  to  show  that  he   has  so 
determined  "  (e). 

The  French  law  treats  the  right  of  having  a  contract  Fixed 
judicially  set  aside  for  fraud,  &a,  as  a  substantive  right  of  Emiution 
action,   and  limits  a  fixed  period  of  ten  years,  running  ^^y  ^^' 
from  the  discovery  of  the  truth,  within  which  it  must  be 
exercised  (/). 


{e)  Per  Gar.  dough  ▼.  L,  ie  N.  W,  leyeral  judgments  in  tli*t  case. 
By.  Co,  (1861)  L.  R  7  Kx.  at  p.  34,  (/)  Code  Civ.  1804.    Theie  are 

repeated  in  Morri$on  ▼.  Universal  providons  of  similar  effect  in  the 

Marine  Imurance  Co.  (1873)  L.  R.  raooediire    codes    of  many  of  the 

8  Ex.  at  p.  208,  and  cited  by  Lord  United  SUtes.    The  Indian  limi- 

Blaokbnrn  in  Brianffer  v.  New  Son-  tation  Act  (XV.  of  1877,  Sched.  2, 

hrero  Photphate  Co.  (1878)  8  App.  No.  114)  fixes  a  period  of   three 

Ga.  tA  p.  1277.    See  the  renuurks  years, 
on  delay  and  aoqniesoence  in  the 


574  THE  RIQHT  OF  RESCISSION. 

Unfound-       One  or  two  points  remain  to  be  mentioned,  which  we 
of  fn^    have  reserved  to  the  last  as  being  matter  of  procedure,  but 
diiTOur-     '^hich  depend  upon  general  principles.     CJourts  of  justice 
parfeieB       are  anxious  to  discover  and  discourage  fraud  in  every 
JJ^^,^  shape,  but  they  are  no  less  anxious  to  discourage  and 
pay  ootti.  rebuke  loose  or  unfounded  charges  of  fraud  and  personal 
misconduct.     The  facts  relied  on  as  establishing  a  case  of 
fraud  must  be  distinctly  alleged  and  proved  (g).    Where 
such  charges  are  made  and  not  proved,  this  will  not 
prevent  the  party  making  them  from  having  any  relief 
to  which   he  may  otherwise  appear  to  be  entitled,  but 
he  must  pay   the   costs   occasioned   by  the   unfounded 
charges  Qi).    And  in  one  case,  where  the  plaintiff  made 
voluminous    and    elaborate   charges   of  fraud   and   con- 
spiracy, which   proved   to  be  unfounded,  the  Court  of 
Appeal  not  only  made  him  pay  the  costs  of  that  part 
of  the  case,  but  refrised  to  allow  him  the  costs  even  of 
the  part  on  which  he  succeeded.     It  was  held  that  he 
had  so  mixed  up  unfounded  and  reckless  aspersions  upon 
character  with  the  rest  of  the  suit  as  to  forfeit  his  title 
to  the  costs  which  he  otherwise  would  have  been  entitled 
to  receive  (t). 
Indepen-        The  special  jurisdiction  of  courts  of  equity  to  order  the 
d^on  of   cancellation  of  an  instrument  obtained  by  fraud  or  mis- 
equity  to    representation  is  not  affected  by  the  probability  or  practical 
inBtni-       certainty  that  the  plaintiff  in  equity  would  have  a  good 
Siwd  &a  <i®fe^ce  to  an  action  on  the  instrument,  nor  is  it  the 
less  to  be  exercised  even  if  the  instrument  is  already 
in  his  possession    He  is  entitled  not  only  not  to  have  the 


{g)  In  equity  pleading  ft  chtfge  of      (1878}  L.  R.  4  P.  C.  at  pi  697 1 
fraud  in  general  tenns  wonld  not      Clvnek    v.    PtMeneial 


rapport  a  bill  on  demnirer  :  CHXbert  (1868)  5  Eq.  at  p.  488,  88  II  J.  Cb. 

Y.  Lewii  (1862)  1  D.  J.  S.  at  p.  49,  1;  per  Lord   GaimB,    Thamwn  v. 

82  L.  J.  Gh.  847,  per  Lord  West-  EoMtwood  (1877)  2  App.  Oa.  at  p. 

bury.  248. 

(A)  HiUiardY,  Eiffe  (1874)  L.  R.  (t)  Pn/rher  v.  McKenna  (1874)  10 

7  H.  L.  89, 51, 52;  Ixmdm  Chartered  Cb.  96,  128, 125,  44  L.  J.  Ch.  425. 
Baixk   of  Autbralia   y.    Lempriere 


CANCELLATION.  575 

contract  enforced  against  him,  but  to  have  it  judicially 
annulled  Qc). 

(k)  landon  tb  Provincial  Inturafice  Diyision  if   the    action  b  in   the 

Co.  ▼.  Seymour  (1878)  17  Eq.  85,  Qaeen's  Bench  DiTiaion,  bnt  this  is 

48  L.  J.  Ch.  120 ;  and  see  Soare  v.  not  a  matter  of  conrse.    See  Storey 

Bremridge  (1872)  8  Ch.  22,  42  L.  J.  v.  WaddU  (1879)  4  Q.  B.  Diy.  289. 

Ch.  1,  there  explained  and  distin-  Where,  conversely,  a  purchaser  snes 

gnished.      Therefore  a    defendant  for  the  retnm  of  his  deposit,  and  the 

saed  on  an  instnunent  wliich  ho  vendor  coonter-olaims  for  specific 

alleges  to  he  yoidable  may  properly  performance,  a  transfer  to  the  Ch. 

add  to  his  defence  a  connter-daim  D.will  generally  be  ordered:  London 

for  the  cancellation  of  the  instra-  Land  Co,  v.  ffarrU  (1884)  18  Q.  B. 

ment.    It  may  also  be  proper  to  D.  540. 
ask  for  a  transfer  to  the  Chancery 


(    576    ) 


CHAPTER  XIL 

DuKESS  AND  Undue  Inflxtence. 

CoDtnuit  If  the  consent  of  one  party  to  a  contract  is  obtained 
oonsent  ^7  *^®  Other  under  such  circumstances  that  the  consent  is 
not  free,  not  free,  the  contract  is  voidable  at  the  option  of  the  party 
whose  consent  is  so  obtained-  It  is  quite  clear  that  it 
is  not  merely  void  (a).  The  transaction  might  indeed 
be  void  if  the  party  were  under  actual  physical  constraint, 
as  if  his  hand  were  forcibly  guided  to  sign  his  name ; 
or  perhaps  if  he  were  so  prostrated  by  fear  as  not  to  know 
what  he  was  doing  (6)  ;  but  this  would  be  not  because 
his  consent  was  not  free,  but  because  there  was  no  consent 
at  alL 

What  then  are  the  circumstances  which  are  held  by 
English  courts  to  exclude  freedom  of  consent  ?  The 
treatment  of  this  question  has  at  common  law  been 
singularly  narrow  and  in  equity  singularly  comprehensiva 

I.  Dv/res8  at  Common  Law. 

The  com-  At  common  law  the  coercion  which  will  be  a  sufficient 
^^J^^  cause  for  avoiding  a  contract  may  consist  in  duress  or 
of  Duress.  meTULce ;  that  is,  either  in  actual  compulsion  or  in  the 
threat  of  it.  In  modern  books  the  term  duress  is  used  to 
include  both  species.  It  is  said  that  there  must  be  some 
threatening  of  life  or  member,  or  of  imprisonment,  or  some 
imprisonment  or  beating  itself  Threatening  to  destroy  or 
detain,  or  actually  detaining  property,  does  not  amount  to 

(a)    Co.  2  Inst  482,  and    2nd  analogy  of  ifot^nm  v.  ^oxfer  (1878) 

reflolution  In  WhdpdaieM  oa.  5  Bep.  L.  R.  8  Ex.  182,  42  L.  J.  Ex.  78,  is 

119.  againfet  this. 

(&)Sa7ign7,S78t8.109.  Bat  the 


DURESS.  677 

duress  (c).     And  this  applies  to  agreements  not  under  seal 
as  well  as  to  deeds  (d).    The  reason  appears  to  be  that  the 
detainer  is  a  wrong  of  itself,  for  which  there  is  an  appro- 
priate remedy.     Should  the  party  choose  to  make  terms 
instead  of  pursuing  his  rights  (at  all  events  when  there  is 
nothing  to  prevent  him  fix)m  so  doing),  he  cannot  after- 
wards turn  round  and  complain  that  the  terms  were  forced 
upon  him  (e).     "It  must  be  a  threatening,  beating,  or 
imprisonment  of  the  party  himself  that  doth  make  the 
deed,  or  his  wife"  (c)  or  (it  seems)  parent  or  child  (/). 
And  a  threat  of  imprisonment  is  not  duress  unless  the  J^^iwe 
imprisonment  would  be  unlawful     This  is  illustrated  by  **»«  threat 
two  rather  curious  modem  cases,  in  both  of  which  the  of  some- 
party's  consent  was  determined  by  the  fear  of  confinement  f'^S^" 
in  a  lunatic  asylum.    In  Cv/nvming  v.  Ince  (g)  the  plaintiflF 
had  been  taken  to  a  lunatic  asylum  and  deprived  of  the 
title  deeds  of  certain  property  claimed  by  her.   Proceedings 
were  commenced  under  a  commission  of  lunacy,  but  stayed 
on  the  terms  of  an  arrangement  signed  by  counsel  on  both 
sides,  under  which  the   deeds  were   to  be   deposited   in 
certain  custody.     The  plaintiff  afterwards  repudiated  this 
arrangement  and  brought  detinue  for  the  deeds.     On  an 
issue  directed  to  try  the  right  to  the  possession  of  the 
deeds  as  between  herself  and  the  other  parties  the  Court 
held  that  in  any  view  the  defendants  were  wrong.     For  if 
their  own  proceedings  under  the  commission  were  justified, 
they  could  not  say  the  plaintiflF  was  competent  to  bind 
herself,  and  if  not,  the  agreement  was  obtained  by  the  fear 
of  a  merely  unlawful  imprisonment  and  therefore  voidable 
on  the  ground  of  duress.     And  it  made  no  diflference  that 
the  plaintiff's  counsel  was  party  to  the  arrangement.     His 
assent  must  be  considered  as  enforced  by  the  same  duress : 
for  as  her  agent  he  might  well  have  feared  for  her  the 

.    (e)  Shepp.  Tonob.  61.  (1879)  11  Otto  (101  U.  S.)  465. 

[d)  Atlee  Y.  Backhouse  (1888)  3M.  (/)  Bo.  Ab.  1.  687,  pi.  5  ;  Bac. 

k  W.  638  ;  SkeaU  ▼.  BeaU  (1840)  Ab.  Ihireis  (6). 

11  A.  &  E.  983.  ig)  (1847-8)   11  Q.  B.  112, 17  L. 

{e)  See  SiUiman  y.  UnUed  States  J.  Q.  B.  105. 

P.  P  P 


578  DUBBSS  AND  UNDUE  INFLUENCE. 

same  evils  that  she  feared  for  herself  In  Bifin  v. 
Bignell  (h),  on  the  other  hand,  the  defendant  was  sued  for 
necessaries  supplied  to  his  wifa  She  had  been  in  a  lunatic 
asylum  under  treatment  for  delirium  tremens,  and  on  her 
discharge  the  husband  promised  her  12d.  a  week  to  live 
apart  from  him,  adding  that  if  she  would  not  he  would 
send  her  to  another  asyluuL  The  wife  was  accordingly 
living  apart  from  the  husband  under  this  agreement.  It 
was  held  that  her  consent  to  it  was  not  obtained  by  duress, 
for  under  these  circumstances  "the  threat,  if  any,  was  not  of 
anything  contrary  to  law,  at  least  not  so  to  be  understood": 
consequently  the  presumption  of  authority  to  pledge  the 
husband's  credit  was  effectually  excluded,  and  the  plaintiff 
could  not  recover  (i). 
^•d  mid  ^^^  narrowness  of  the  common  law  doctrines  above 
droom-  stated  is  considerably  mitigated  in  practice,  for  when 
compnl-  Dioney  has  been  paid  under  circumstances  of  practical  com- 
sion  re-  pulsion,  though  not  amounting  to  duress,  it  can  generally 
back.  be  recovered  back.  This  is  so  when  the  payment  is  made 
to  obtain  the  possession  of  property  wrongfully  detained  (k) ; 
and  the  property  need  not  be  goods  for  which  the  owner 
has  an  immediate  pressing  necessity,  nor  need  the  claim  of 
the  party  detaining  them  be  manifestly  groundless,  to  make 
the  payment  for  this  purpose  involuntary  in  contemplation 
of  law  {I),  So  it  is  where  excessive  fees  are  taken  under 
colour  of  oflSce,  though  it  be  usual  to  pay  them  (vi) ;  or 
where  an  excessive  charge  for  the  performance  of  a  duty  is 
paid  under  protest  (n).  The  person  who  actually  receives 
the  money  may  properly  be  sued,  though  he  receive  it 


(A)  (1862)  7  H.  &  N.  877,  31  L.  {I)  Shaw  v.  Woodcock  (1827)  7  B. 

J.  Ex.189.  &C.  73. 

(i)    Qtt.  whether  in  uny  case  he  (m)  Dew  v.  Parwn*  (1819)  2  B.& 

oould  have  recovered  without  show-  AlH.  562  ;  Stedc  v.  WilUams  (1853) 

iDg  that  the  wife  had  repudiated  the  8  Ex.  625,  22  L.  J.  Ex.  225. 

arrangement.  (n)  Parker  v.  G.  W.  Ry.  Co.  (1844) 

{k)   Wakefield  v.   Nev^ton  (1844)  7  M.  &  Gr.  253,  292.  18  L.  J.  C.  P. 

6  Q.  6.  276,  280,  18  L.  J.  Q.  B.  258;  105.    And  see  other  aathorities  ool- 

Green  v.  DuckeU  (1888)  11  Q.  B.  D.  lected    in    notes    to     MarrioU    v. 

276,  52  L.  J.  Q.  B.  435.  Hampton  (1796)  2  Sm.  L.  C. 


PAYMENTS  UNDER  COMPULSION.  579 

only  as  an  agent  (o).     The  case  of  one  creditor  exacting    • 
a  fraudulent  preference  from  a  debtor  as  the  price  of  his 
assent  to  a  composition  (j:>)  is  to  a  certain  extent  analogous.  ^"*  onth* 
But  in  all  these  cases  the  foundation   of  the  right  to  not  of 
recover  back  the  money  is  not  the  involuntary  character  of  jj^Sf^^t* 
the  payment  in  itself,  but  the  &ct  that  the  party  receiving  of  fulme 
it  did  no  more  than  he  was  bound  to  do  already,  or  some-  ddenttion. 
thing  for  which  it  was  unlawful  to  take  money  if  he  chose 
to  do  it,  though  he  had  his  choice  in  the  first  instance. 
Such  payments  are  thus  regarded  as  made  without  con- 
sideration.    The   legal   effect   of  their  being  practically 
involuntary,  though  important,  comes  in  the  second  place ; 
the  circumstances  explain  and  excuse  the  conduct  of  the 
party  making  the  payment.    Similarly  in  the  kindred  case 
of  a  payment  under  mistake  the  actual  foundation  of  the 
right  is  a  failure  of  consideration,  and  ignorance  of  material 
fects  accounts  for  the  payment  having  been  made.     The 
common  principle  is  that  if  a  man  chooses  to  give  away  his 
money,  or  to  take  his  chance  whether  he  is  giving  it  away 
or  not,  he  cannot  afterwards  change  his  mind ;  but  it  is 
open  to  him  to  show  that  he  supposed  the  fects  to  be 
otherwise  or  that  he  really  had  no  choice.     The  difference 
between  the  right  to  recover  money  back  under  circum- 
stances of  this  kind  and  the  right  to  rescind  a  contract  on 
the  ground  of  coercion  is  further  shown  by  this,  that  an 
excessive  payment  is  not  the  less  recoverable  if  both  parties 
honestly  supposed  it  to  be  the  proper  payment  (q).     Wo 
therefore  dwell  no  farther  on  this  topic,  but  proceed  to 
consider  the  more  extensive  doctrines  of  equity. 

II.  The  equitable  doctrine  of  Undioe  Influence. 

In  equity  there  is  no  rule  defining  inflexibly  what  kind  ^'^.^j 
or  amount  of  compulsion  shall  be  sufficient  ground  for  doctrine 

(o)  St4}eU  y.  WWamt,  mpra,  Cb.  YIL,  p.  865. 

{p)  Atkiiuon  v.  JOenby  (1861)  6  H.  (9)  Dew  v.  Partons  (1819)  2  B.  & 

ft  N.  778,  80  L.  J.  Ex.  861,  in  Ex.  Oh  Aid.  562. 
7  ib.  934,  31  L.  J.  Ex.  362.  Supra, 

P  P  2 


680  DURESS  AND  UNDUE  INFLUENCE. 

^^^due  avoiding  a  transaction,  whether  by  way  of  agreement  or  by 
way  of  gift.  The  question  to  be  decided  in  each  case  is 
whether  the  party  was  a  free  and  voluntary  agent  (r). 

Any  influence  brought  to  bear  upon  a  person  entering 
into  an  agreement,  or  consenting  to  a  disposal  of  property, 
which,  having  regard  to  the  age  and  capacity  of  the  party, 
the  nature  of  the  transaction,  and  all  the  circumstances  of 
the  case,  appears  to  have  been  such  as  to  preclude  the 
exercise  of  free  and  deliberate  judgment,  is  considered 
by  courts  of  equity  to  be  undue  influence,  and  is  a  ground 
for  setting  aside  the  act  procured  by  its  employment. 
Gene-  "The  principle  applies  to  every  case  where  influence 

t£  prfai-  ^  acquired  and  abused,  where  confidence  is  reposed  and 
ciple.  betrayed  "(8).  Such  cases  are  thus  classified  by  Cotton  L.J. 
"First,  where  the  Court  has  been  satisfied  that  the  gift 
was  the  result  of  influence  expressly  used  by  the  donee  for 
the  purpose;  second,  where  the  relations  between  the 
donor  and  donee  have  at  or  shortly  before  the  execution  of 
the  gift  been  such  as  to  raise  a  presumption  that  the 
donee  had  influence  over  the  donor.  In  such  a  case  the 
Court  sets  aside  the  voluntary  gift,  unless  it  is  proved  that 
in  figtct  the  gift  was  the  spontaneous  act  of  the  donor 
acting  under  circumstances  which  enabled  him  to  exercise 
an  independent  will  and  which  justifies  the  Court  in 
holding  that  the  gift  was  the  result  of  a  free  exercise  of 
the  donor's  will.  The  first  class  of  cases  may  be  considered 
as  depending  on  the  principle  that  no  one  shall  be  allowed 
to  retain  any  benefit  arising  from  his  own  fraud  or  wrongfiil 
act.  In  the  second  class  of  cases  the  Court  interferes,  not 
on  the  groTmd  that  any  wrongftil  act  has  in  feet  been 
committed  by  the  donee,  but  on  the  ground  of  public 
policy,  and  to  prevent  the  relations  which  existed  between 
the  parties  and  the  influence  arising  therefix)m  being 
abused "  (t).     Yet  in  many  cases  of  the  second  class  the 

(r)  Willicms  v.  Bayley  (1866)  L.  v.  Kay  (1859)  7  H.  L.  O.  at  p.  779. 
R.  1  H.  L.  200,  210,  35  L.  J.  Gb.  {t)  AUcard  v.  Skinner  (1887)  86 

717.  Cb.  Div.  145,   171,  56  L.  J.   Cli. 

(«)  Per  Lord  KingsdowD,  Smith  1052. 


DOCTRINE  OF  UNDUB  INPLUENCR  581 

circumstances  might,  if  they  could  be  fully  brought  out, 
amount  to  proof  of  actual  compulsion  or  fraud  (u) ;  so 
that  it  may  perhaps  be  said  that  undue  influence  means 
an  influence  in  the  nature  of  compulsion  or  fraud,  the 
exercise  of  which  in  the  particular  instance  to  determine 
the  will  of  the  one  party  to  the  advantage  of  the  other  is 
not  specifically  proved,  but  is  inferred  from  an  existing 
relation  of  dominion  on  the  one  part  and  submission  on 
the  other  (v).  Given  a  position  of  general  and  habitual 
influence,  its  exercise  in  the  particular  case  is  presumed. 

But  again,  this  habitual  influence  may  itself  be  presumed  General 

<•!  i»«Ai        Illflll61106 

to  exist  as  a  natural  consequence  of  the  condition  of  the  praromed 
parties,  though  it  be  not  actually  proved  that  the  one  ^^^ 
habitually  acted  as  if  under  the  domination  of  the  other.  raUtioiifl. 
There  are  many  relations  of  common  occurrence  in  life 
from  which  "  the  Court  presumes  confidence  put "  in  the 
general  course  of  affairs  "and  influence  exerted"  in  the 
particular  transaction  complained  of  (x). 

Persons  may  therefore  not  only  be  proved  by  direct 
evidence  of  conduct,  but  presumed  by  reason  of  standing 
in  any  of  these  suspected  relations,  as  they  may  be  called, 
to  be  in  a  position  of  commanding  influence  over  those 
from  whom  they  take  a  benefit.  In  either  case  they  are 
called  upon  to  rebut  the  presumption  that  the  particular 
benefit  was  procured  by  the  exertion  of  that  influence,  and 
was  not  given  with  due  freedom  and  deliberation.  They 
must  "  take  upon  themselves  the  whole  proof  that  the 
thing  is  righteous "  (y).    A  stringent  rule  of  evidence  is 


{u)  Cp.  per  Lindley  L.J.  86  Gb.  see  note  (h),  p.  560,  if^ra. 

Diy.  at  p.  188.  {x)  Per  Lord  KiogBdown,  Smitk 

{v)    In     Boyse    v.    Botsborwigh  y.  Kay  (1859)  7  H.  L.  C.  750,  779. 

(1856-7)  6  H.  L.  C.  at  p.  48,  it  ii  (y)  Oibaon  v.  Jeyea  (1801)  6  Von. 

said  that,  taking  the  words  in  a  266,  276.    The  like  burden  of  proof 

wide  sense,  all  undue  influence  may  is  cast  upon  those  who  take  any 

be  resolved  into  ooeroion  and  fraud:  benefit  under  a  will  which   they 

but  tbe  case    there  considered   is  have   themselves  been  instrumentid 

that  of  a  will,  in  which  undue  in-  in  preparing  or  obtaining  :  FuUcn 

fluence  has  a  more  restricted  mean-  v.  Aiyirtw  (1875)  L.  R.  7  H.  L.  448, 

ing  than  in  transaotions  vnUr  vivos :  472, 44  L.  J.  P.  17. 


682  DURESS  AND  UNDUE  INFLUENCE. 

imposed  as  a  safeguard  against  evasions  of  the  substantive 
law. 

''Wherever  two  penons  stand  in  i^noh  a  relation  thai,  whUa  it  oon- 
tinnefl,  oon6denoe  is  necessarily  reposed  by  one,  and  the  infinenoe  which 
naturally  grows  out  of  that  oonBdence  is  posiosood  by  the  other,  and  thii 
conBdenoe  is  abuned,  or  the  inflnenoe  is  ezf^rted  to  obtain  an  advantage 
at  the  expenne  of  the  oonfiding  paity,  the  penon  eo  ayaQing  himself  of 
bis  position  will  not  be  permitted  to  retain  the  advantaee,  altbongh  the 
transaction  could  not  have  been  impeached  if  n  »  such  confidential  relation 
had  existed  "  (z). 

''  Nothing  can  be  more  important  to  maintain  than  the 
jurisdiction,  long  asserted  and  upheld  by  the  Court,  in 
watching  over  and  protecting  those  who  are  placed  in  a 
situation  to  require  protection  as  against  acts  of  those  who 
have  influence  over  them,  by  which  acts  the  person  having 
such  influence  obtains  any  benefit  to  himself.  In  such 
cases  the  Court  has  always  regarded  the  transaction  with 
jealousy  "  (a) — a  jealousy  almost  invincible,  in  Lord 
Eldon's  words  (6). 

"  In  equity  persons  standing  in  certain  relations  to  one  another,  irach  aa 
parent  and  child  (e),  man  and  wife  (d),  doctor  and  patient  (e),  attorney  and 
client  (/),  confessor  and  penitent,  guardian  and  ward  {g),  are  subject  to 

(z)  Per  Lord  Ohehnsford,  Tate  v.  as  to  persons  living    together    as 

WilliafMon  (1866)  2  Gh.  55,  61.  man  and  wife  thou^  not  lawfaby 

(a)  Lord    Hatherley,  Turner    v.  married.      In    all  these  cases  the 

CoUin$  (1871)  7  Gh.  829,  838.  burden  of  proof  wa^  held  to  be  on 

(6) //cUcAv.  ^atcA,9ye8.atp.296.  the   man  (as  holding  under  such 

(c)   Archer  v.   Hvdton  (1844)   7  circumstances    a   position    of    in- 

Beav.  551,  18  L.  J.  Gh.  380;  Tvmer  flnence)  to  support  the  transactioD. 

V.  CoUint  (1871)  7  Gh.  329,  41  L.  J.  It  m  .y  not  be  so  however  in  a  case 

Gb.  558.  of    mere    illicit    interoonrse  :    s«e 

{d)  Lord  Hardwicke*s  remarks  in  Parmer  v.  PcurmeT  (1848)  1  H.  L. 

Origby  v.  Cox  (1750)  1  Ve«.  sen.  517  G.  724,  752. 

(though  n'.t  the  decision,  for  it  was  (e)  Dent  v.  BennOt  (1889)  4  My. 

not  a  gift  but  a  purchase,  and  ap-  &  Gr.  269;  Ahea^me  v.  Hogan  (1844) 

parently  there  was  no  evidence  to  Dru.   310  ;    «.  v.  Blackie  v.   Clark 

bear  out  the  charge  of  collusion),  (1852)  15  Beav.  at  p.  608. 

and  the  deciiiion  in  Nedby  v.  Nedby  (/)  Oihton  v.  /eya  (1801)  6  Vee. 

(1852)  5  De  G.  &  Sm.  377,  seem  266  ;  ffUman  v.  Loynea  (1^54)  4  D. 

contra;   but  see   CobbeU  v.   Brock  M.    G.    270,  28   L.   J.   Gh.   529; 

(1855)  20  Beav.  524;  Page  v.  Home  Qredey  v.  Moudty  (1861)  4  De  G. 

(1846-8)  11   Beav.  227;  showing  &J.  78,  94. 

that  there  is  a  fiduciary  relation  {g)  ffatck  ▼.  Hattk  (1804)  9  Yes. 

between    persons    engaged    to   be  297  ;  MaiUand  v.  Irving  (1846)  16 

Haarried  ;    and  Oovlton  v.  AUUon  Sim,  437. 
(1860)  2  D.  F.  J.  621,  524,  the  lik^ 


PRESUMPTION  FROM  CONFIDENTIAL  RELATIONa  583 

oertain  preramptioDS  when  traniftciioDB  between  them  are  braoght  in 
qnestion  ;  and  if  a  gift  or  contract  made  in  favour  of  him  who  holHs  the 
portion  of  inflaence  is  impeached  by  hini  who  is  subject  to  that  influence, 
the  courts  of  equity  east  upon  the  former  the  burthen  of  proving  that  the 
tranfaction  was  fairly  conducted  as  if  between  strangers,  that  the  weaker 
was  not  unduly  impressed  by  the  natural  infloence  of  the  stronger,  or  the 
inexperienced  overreached  by  hhn  of  more  mature  intelligence  "  (A). 

This  and  all  similar  specifications  are  merely  illustra- 
tive— "  As  no  Court  has  ever  attempted  to  define  fit^ud,  so 
no  Court  has  ever  attempted  to  define  imdue  influence, 
which  includes  one  of  its  many  varieties  "  (i).  The  cases 
in  which  this  jurisdiction  has  been  actually  exercised  are 
considered  as  merely  instances  of  the  application  of  a 
principle  "  applying  to  all  the  variety  of  relations  in  which 
dominion  may  be  exercised  by  one  person  over  another"  (k). 
As  to  certain  well-known  relations,  indeed,  the  Court  is 
now  bound  by  authority  to  presume  influence.  As  to 
any  other  relation  which  the  Court  judges  to  be  of  a  con- 
fidential kind  it  is  fi-ee  to  presume  that  an  influence 
founded  on  the  confidence  exists,  or  to  require  such  proof 
thereof  as  it  may  think  fit. 

{h)  Per  Lord  Penzance,  ParfiU  v.  Phosphate  Co,  (1877)  3  App.  Ca^  at 

Lawlets  (1872)  L.  R.  2  P.  ft  D.  462,  p.  1230.     But  is  not  perKmal  con- 

468,   41   L.  J.  P.  68.    It  is  to  be  iidenoe  ecsential  to  make  the  present 

noted  that  this  does  not  apply  to  doctrine  applicable  ?    And  has  any 

wills,  as  to  which  nndae  influence  Ib  case  gone  the  length  of  casting  on  a 

never  presumed :  ib,  ;  Boyae  v.  JRoan'  promoter  the  burden  of  proving  in 

borovgh  (1856-7)  6  H.  L.  G.  2,  49  ;  the  first  instance  that  a  contract 

Hvndton  v.   WeatkeriU  (1854)  5  D.  between  him  and  the  company  was 

M.  G.  801,  811,  318  :  though  a  dis-  a  fair  one  ? 

position  by  will  may  be  set  aside  as  (i)   Lindley  L.  J.  in  AUca/rd  v. 

well  as  an  act  iiUtr  vivot  when  nn-  Skinner  (1887)  36  Ch.  Div.  at  p.  183. 

due  influence  is  actually  proved:  but  '      {k)  Sir  R.  RomiUy,  aiy.  ffuguenin 

then,  it  s-emf,  the  influence  must  be  v.    Bateley   (1807)    14    Ves.    285, 

such  as  to  *'  overpower  the  volition  adopted  by  Lord  Gottonham,  Dent 

without  convincing  the  judgment :"  v.  Bennett  (1839)  4  My.  ft  Gr.  269, 

HaU  V.  HaU  (1868)  L,  R.  1  P.  ft  D.  277 ;  BiUage  v.  Southee  (1852)  9  Ha. 

482,  87  L.  J.  P.  40.    See  Walker  v.  534,540.   Gp.D'Aguesfieau((Euvres, 

Smitk  (1861)  29  Beav.  394,  wbere  1.    299)    "Parceque    la  lais  n  de 

between  the  same  parties  gifts  by  Tordonnance  est  g^n^rale,  et  qu'elle 

frill  were  supported  and  a  gift  inter  comprend  ^galement  tons  ceux  qui 

vivM  »et  aside.     Lord  Pennnce  has  pea  vent  avoir  quelque  empire  sur 

added  to  the  list  of  suspected  rela-  I'e^prit  des  donateurs,  vos  arrdts  en 

Uons  that  of  promoters  off  a  company  ont  ^tendu  la  disposition  aux  mattres, 

to    the    company    which    is   their  aux  m^ecins,  aux  confesseurs," 
creature  :  EHanger  v.  Nti9  Sombrero 


684  DURESS  AND  UNDUE  INFLUENCE. 

It  has  even  been  said  (l)  that  in  every  case  where  "  one 
person  obtains,  by  voluntary  donation,  a  large  pecuniary 
benefit  from  another,"  the  person  taking  the  benefit  is 
bound  to  show  "that  the  donor  voluntarily  and  deliberately 
performed  the  act,  knowing  its  nature  and  eflfect ;  '*  that 
for  this  purpose  a  voluntary  donation  means  any  trans- 
action in  which  one  person  confers  a  large  pecuniary 
benefit  on  another,  though  it  may  be  in  form  a  contract  (tti); 
and  that  such  is  the  rule  whether  there  is  any  confidential 
relation  or  not.  But  these  dicta,  though  not  expressly 
contradicted  in  any  reported  case,  are  certainly  not  law. 
There  is  no  general  presumption  against  the  validity  of 
gifts  as  such  (n).  Where  grounds  of  unfevourable  pre- 
sumption exist,  it  is  easier  to  set  aside  a  mere  gift  than  a 
transaction  fix>m  which  the  plaintiff  has  derived  some 
benefit,  though  not  adequate  to  what  was  given  for  it;  and 
attempts  to  disguise  a  gift  as  a  dealing  for  value  are 
almost  always  fatal.  Beyond  this,  it  is  conceived,  the  law 
does  not  go. 

Borden  ol       In  the  absence  of  any  special  relation  from  which  in- 

where  no    A^^'^ce  is  presumed,  the  burden  of  proof  is  on  the  person 

special       impeaching  the  transaction  (o),  and  he  must  show  aflSr- 
matively  that  pressure  or  undue  influence  was  employed. 

Anxiliary       Having  thus  stated  the  fundamental  rules,  we  may  pro- 

do^nes    ^^^  ^^  ^y  Something  more  of — 

on  special       (1)  The  auxiliary  rules  applied  by  courts  of  equity  to 

^"^  voluntary  gifts  in  general : 

(2)  The  like  as  to  the  influence  presumed  from  special 
relations,  and  the  evidence  required  in  order  to  rebut  such 
presumption : 

(1)  By  Lord  RomUly  in  Cooke  v.  269,  273. 

LanioUe  (1851)  15  Beav.  234,  240,  (n)  If  there  were,  the  ekborate 

21  L.  J.  Gh.  371,  and  HoghUm  v.  disciuiion  which  took  place  &  ^.  in 

Hoghton  (1852)  15  Beav.  275,  298,  Alleard  v.  Skinner,  86  Gh.  Diy.  14fi» 

Gp.  per  Lord  Hatherley  in  PhUlipa  wonld  have  been  snperflaous. 

V.  MuUingB  (1871)  7  Oh.  244,  246,  (o)  BUbckU    v.   Clark    (1852)   15 

41  L.  J.  Gh.  211.  Beav.   695  ;  Toktr  v.  Toker  (1868) 

(i»)  E.  g.  Cooke  v.  LamotU  (1851)  31  Beav.  629,  8  D.  J.  a  487,  32  L. 

15  Beav.  234,  21  L.  J.  Gh.  371 ;  J.  Gh.  822. 
Dent  V.  BenneU  (1839)  4  My.  &  Gr. 


RULES  AS  TO  VOLUNTABY  SBTTLElCENTa  686 

(3)  What  are  the  continuing  relations  between  the 
parties  from  which  influence  has  been  presumed  : 

(4)  From  what  circumstances,  apart  frx)m  any  conjiinuing 
relation,  undue  influence  has  been  inferred :  and  herein  of 
the  doctrine  of  equity  as  to  sales  at  an  undervalue  and 
"  catching  bargains  "  : 

(5)  The  limits  of  the  right  of  rescission. 

1.  As  to  voluntary  dispositions  in  general.     (Cp.  Dav.  Volimtary 
Conv.  3.  pt.  1.  Appx.  No.  4.)  tioiugaie- 

A  voluntary  settlement  which  deprives  the  settler  of  the  "^^y* 
immediate  control  of  the  property  dealt  with,  though  it  be 
made  not  for  the  benefit  of  any  particular  donee,  but  for 
the  benefit  of  the  settlor's  children  or  fiunily  generally,  and 
fi^e  from  any  suspicion  of  unfair  motive,  is  not  in  a  much 
better  position  than  an  absolute  and  immediate  gift.  It 
seems  indeed  doubtful  whether  the  Court  does  not  consider 
it  improvident  to  make  in  general  indefinite  contemplation 
of  marriage  the  same  kind  of  settlement  which  in  contem- 
plation and  consideration  of  a  definitely  intended  marriage 
it  is  thought  improvident  not  to  make  (p). 

It  is  conceived  that  the  ground  on  which  such  disposi- 
tions are  readily  set  aside  at  the  instance  of  the  settlor's 
representatives  is  not  the  imprudence  of  the  thing  alone, 
but  an  inference  from  that,  coupled  with  other  circum- 
stances— such  as  the  age,  sex,  and  capacity  of  the  settlor — 
that  the  effect  of  the  act  was  not  really  considered  and 
understood  at  the  time  when  it  was  done  (g). 

The  absence  of  a  power  of  revocation  has  often  been  Am  to 
insisted  upon  as  a  mark  of  improvidence  in  a  voluntary  JJIJ^^^!*' 
settlement ;  and  it  has  been  even  held  to  be  in  itself  an  ti<m. 

ip)  EveriU  V.  SveriU  (1870)  10  Eq.  Div.  at  p.  281,  62  L.  J.  Ch.  661 ; 

405,  89  L.  J.  Gh.  777  ;  bat  here  Jama  y.  Couchtnan  (1885)  29  Ch.  D. 

some  of  the  nsniil  ]>roviBion8  were  212.    So  oommon  ignorance  or  mis- 

oinitt«icL  take  of  both  partieB  as  to  the  effect 

{q)  lb.  ;    Prideavx   v.    Lon»daU  of  aa  instnimtnt  may  sometimes  be 

(1868)  1  D.  J.  S.  438  :  this  ground  inferred  on  the  face  of  it  from  its 

is  strongly  taken  by  Jessel  M.  B.  in  nnreasonable  or  onnsoal  character  : 

DutUm  V.  Thompson  (188^)  28  Ch.  see  p.  481,  ivpra. 


686 


DUKESS  AND  UNDUE  INFLUENCE. 


almost  fatal  objection :  but  the  doctrine  now  settled  by  the 
Court  of  Appeal  is  that  it  is  not  conclusive,  but  is  only  to 
be  taken  into  account  as  matter  of  evidence,  and  is  of  more 
or  less  weight  according  to  the  other  circumstances  of  each 
case  (r). 

It  was  a  rule  of  Chancery  practice  that  a  voluntary 
settlement  could  not  be  set  aside  at  the  suit  of  a  de- 
fendant. The  person  impeaching  it  had  to  do  so  by  a 
substantive  proceeding  in  either  an  original  or  a  cross 
suit  (s).  Under  the  new  practice  he  will  proceed  by 
counter-claim  if  sued  on  the  deed. 


Special 
reUtioDs. 

Ago,  fta 
oot  ma- 
teriaL 


Inflnenoe 
prommed 
to  oon- 
tinne. 


2.  Auxiliary  rules  as  to  the  influence  presumed  from 
special  relationa 

The  principle  on  which  the  Court  acts  in  such  cases  is 
not  affected  either  by  the  age  or  capacity  of  the  person 
conferring  the  benefit,  or  by  the  nature  of  the  benefit 
conferred  (t). 

"Where  a  relation  of  confidence  is  once  established, 
either  some  positive  act  or  some  complete  case  of  abandon- 
ment must  be  shown  in  order  to  determine  it : "  it  will  not 
be  considered  as  determined  whilst  the  influence  derived 
from  it  can  reasonably  be  supposed  to  remain  (t). 

Where  the  influence  has  its  inception  in  the  legal 
authority  of  a  parent  or  guardian,  it  is  presumed  to  con- 
tinue for  some  time  after  the  termination  of  the  legal 
authority,  until  there  is  what  may  be  called  a  complete 
emancipation,  so  that  a  free  and  unfettered  judgment  may 
be  formed,  independent  of  any  sort  of  control  (u).  It  is 
obvious  that  without  this  extension  the  rule  would  be 
practically  meaningless.     It  is  said  that  as  a  general  rule 


(r)  ffaU  V,  ffaU  (1878)  8  Ch.  480, 
42  L.  J.  Gh.  444,  where  the  former 
cases  are  reviewed. 

(«)  Way*8  tr.  (1864)  2  D.  J.  S. 
865,  372,  84  L.  J.  Ch.  49  ;  BaU  v. 
EaU  (1873)  14  Eq.  866,  877. 

it)  Per  Tamer  L.  J.  Jthode$  ▼. 
^aU  (1866)  1  Ch,  252,  257,  260,  85 


L.  J.  Ch.  267 ;  Bclman  y.  Loyna 
(1854)  4  D.  M.  G.  270, 283,  23  L.  J. 
Ch.  529. 

(«)  Arckar  v.  Hudtm  (1844)  7 
Beav.  551,  560.  13  L.  J.  Ch.  880  ; 
Wright  V.  VanderpUmk  (1855)  8  D. 
M.  G.  138,  137,  146,  25  L.  J.  Ch. 
758. 


CONFIDENTIAL  RELATIONS.  687 

a  year  should  elapse  from  the  termination  of  the  authority 
before  the  judgment  can  be  supposed  to  be  wholly  emanci- 
pated:  this  of  course  does  not  exclude  actual  proof  of 
undue  influence  at  any  subsequent  time  (x).     With  regard  ^^^^ 
to  the  evidence  to  be  adduced  to  rebut  the  presumption  in  t©  rebut 
a  transaction  between  a  father  and  a  son  who  has  recently  §^"™^ 
attained  majority,  the  father  is  bound   "  to  show  at  all  mflaence. 
events  that  the  son  was  really  a  free  agent,  that  he  had  ^^«f 
adequate  independent  advice  .  .  .  that  he  perfectly  under- 
stood the  nature  and  extent  of  the  sacrifice  he  was  making, 
and  that  he  was  desirous  of  making  it." 

"So  again,  where  a  solicitor  purchases  or  obtaios  a  benefit  from  a  client,  Solicitor 
a  court  of  equity  expects  him  to  be  able  to  show  that  be  has  taken  no  ^^  ^'^^^ 
advantage  of  his  professional  poiiitian ;  that  the  client  was  so  dealing 
with  him  as  to  be  free  from  the  inflaence  which  a  solicitor  must  necessarily 
posMas,  and  that  the  solicitor  has  done  as  much  to  protect  his  client's 
interest  as  he  would  have  done  in  the  case  of  a  client  dealing  with  a 
stranger"  (y). 

He  must  give  all  the  reasonable  advice  against  himself 
that  he  would  have  given  against  a  third  person  (z).  And 
he  must  not  deal  with  his  client  on  his  own  account  as  an 
undisclosed  principal.  "  From  the  very  nature  of  things, 
where  the  duty  exists  that  he  should  give  his  client  advice, 
it  should  be  disinterested  advice ;  he  cannot  properly  give 
that  advice  when  he  is  purchasing  himself  without  telling 
his  client  that  he  is  purchasing  "  (a).  If  the  client  becomes 
bankrupt,  his  trustee  is  entitled  to  the  benefit  of  this 
special  duty  (6). 

The  result  of  the  decisions  has  been  thus  summed  up 
by  the  Judicial  Committee  of  the  Privy  Council     "  The 

(x)  See  per  Lord  Granworth,  7  solicitor. 

H.  L.  0.  at  p.  772.  (z)  Gibtan  v.  Jeyet  (1801)  6  Ves. 

iy)  Savery  v.  King  (1865)  5  H.  L.  266,  278.    As  to  solicitor's  charges 

C.  at  p.  655,  25  L.  J.  Gh.  482.   Caa-  see  Lyddon  v.  Mo8$  (1859)  4  Do  1>. 

borne  v.  Bunham  (1889)  2  Beav.  76,  &  J.  104. 

I  not  quite  consiBtent  with  this,  (a)  McPheraon    v,    WaU    (1877) 


bat  there  the  plaintiff  was  not  the  (8c.),  3  App.  Ga^  254,  272. 

client  himselr,  but  his  assignee  in  (6)    Lwddy*s    Trustee    v.    Peard 

insolvency,  and  the  dient's  owncTi-  (1886)  83  Gb.  D.  500. 
dence  w«s  rather  fayoi)rabl«  to  the 


688  DURESS  AND  UNDUE  INFLUENCE. 

Court  does  not  hold  that  an  attorney  is  incapable  of  pur- 
chasing jfrom  his  client ;  but  watches  such  a  transaction 
with  jealousy,  and  throws  on  the  attorney  the  onus  of 
showing  that  the  bargain  is,  speaking  generally,  as  good 
as  any  that  could  have  been  obtained  by  due  diligence 
from  any  other  purchaser"  (c).  He  is  not  absolutely  bound 
to  insist  on  the  intervention  of  another  professional  adviser. 
But  if  he  does  not,  he  must  not  be  surprised  at  the  trans- 
action being  disputed,  and  may  have  to  pay  his  own  costs 
even  if  in  the  result  it  is  upheld. 

^UiT^  **  ^^  ^^'^^^  principle  on  which  the  Coort  acU  in  cmcb  of  thii  deeorip- 
g^i^g^l^y  ^^'^"^  ^  ^^^^  wherever  there  ezitte  inch  »  confidence,  of  whatever  ebanwter 
that  confidence  may  be,  m  enablee  the  person  in  whom  confidence  or 
trait  U  repoeed  to  exert  inflnence  over  the  pereon  tnuting  him,  the  Oonrt 
will  not  allow  any  transaction  between  the  parties  to  stand  unless  there 
has  been  the  fullest  and  fairest  explanation  and  commnnication  of  er&cj 
particular  resting  in  the  breast  of  the  one  who  seeks  to  establiah  a  con- 
tract with  the  peison  so  trusting  him"  (d). 

In  other  words,  every  contract  entered  into  by  persons 
standing  in  such  a  relation  is  treated  as  being  uberriTnae 
fidei,  and  may  be  vitiated  by  silence  as  to  matters  which 
one  of  two  independent  parties  making  a  similar  contract 
would  be  in  no  way  bound  to  communicate  to  the  other  ; 
nor  does  it  matter  whether  the  omission  is  deliberate,  or 
proceeds  from  mere  error  of  judgment  or  inadvertence  (e). 

Thus  a  medical  attendant  who  makes  with  his  patient  a 
contract  in  any  way  depending  on  the  length  of  the  patient's 
life  is  bound  not  to  keep  to  himself  any  knowledge  he  may 
have  professionally  acquired,  whether  by  forming  his  own 
opinion  or  by  consulting  with  other  practitioners,  as  to  the 
probable  duration  of  the  life  (/).     Perhaps  the  only  safe 

(e)  PiMtU  V.  A.'O,  for  OtbraUar  end  of  this  chapter. 

(1874)  K  R.  6  P.  C.  616,  686,  640.  {d)   Per  Page  Wood  V.-C.  TcUe 

AoootdingtoMorganT,M%neU{lS77)  ▼.    WilUamaon  (1866)  1  £q.  at  p. 

6  Cb.  D.  638,  there  is  a  still  more  686. 

stringent  rule  as  to  g^ — an  abso-  (f )  Molony  v.  Keman  (1842)  2  Dr. 

lute  rule  of  law  '*  that  whHe  the  &  W.  at  p.  89. 

relation  of  solicitor  and  client  sub-  (/)  Popham  v.  Brooke  (1828)  5 

sists  the  Bolidtor  cannot  take  a  gift  Buss.  8. 
from  his  client"    Sed  qu.    See  at 


DUTY  ATTACHED  TO  FIDUCIARY  RELATIONa  689 

way,  and  certainly  the  best,  is  to  avoid  such  contracts 
altogether. 

In  Grosveruyr  v.  SherraM  (g),  where  a  mining  lease  had 
been  granted  by  a  young  lady  to  her  brother-in-law  (the 
son  of  her  father's  executor)  and  uncle,  at  the  inducement 
of  the  said  executor,  "  in  whom  she  placed  the  greatest 
confidence,"  it  was  held  that  it  was  not  enough  for  the 
lessees  to  show  that  the  terms  of  the  lease  were  fair ;  they 
ought  to  have  shown  that  no  better  terms  could  possibly 
have  been  obtained;  and  as  they  failed  to  do  this,  the 
lease  was  set  aside  (h). 

This  comes  very  near  to  the  case  of  an  agent  dealing  on 
his  own  account  with  his  principal,  when  "it  must  be 
proved  that  fiiU  information  has  been  imparted,  and  that 
the  agreement  has  been  entered  into  with  perfect  good 
feith."  Nor  is  the  agents  duty  altered  though  the 
proposal  originally  came  from  the  principal  and  the  prin- 
cipal shows  himself  anxious  to  complete  the  transaction  as 
it  stands  (i).  The  same  rules  apply  to  an  executor  who 
himself  becomes  the  purchaser  of  part  of  his  testator's 
estate  (k).  But  this  obligation  of  agents  and  trustees  for 
sale  appears  (as  we  have  already  considered  it,  p.  272, 
above)  to  be  incidental  to  the  special  nature  of  their  em- 
ployment, and  to  be  a  duty  founded  on  contract  rather 
than  one  imposed  by  any  rule  of  law  which  guards  the 
freedom  of  contracting  parties  in  general. 

The  duty  cast  upon  a  solicitor,  or  other  person  in  a  like 
position  of  confidence,  who  deals  on  his  own  account  with 


iff)  (I860)  28  Beav.  659,  668.  (b.  17,  illiwt.  a):  bnt  if  "  B.  is  A.*i 

(h)  This  is  an  extreme  case.  The  dangbter  and  is  just  oome  of  age, 

Indian  Contract  Act:,  s.  16,  dnee  not  here  the  relation  of  the  partis s  wonid 

■eem  to  go  80  far.     It  does  m^ke  tt  make  it  A. 'a  duty  to  tell  B.  if  the 

the  daty  of  a  contracting  party  in  horae  is  nneouod*'  {ib.  illust  6). 

2oeo  jxtrm^u  to  the  otber  to  diBclose  (t)  Dally  v.    Wimham  (1863)  33 

all   material    facts:   "A.  sdls  by  Beav.  154. 

auction  to  R  a  hone  which    A.  {k)  Baker  y.  Read  (1854)  18  Beay. 

knows   to    be   unsound.    A.    says  398;    where    howeyer    relief   was 

nothing  to  B.  about  the  horse's  un-  refused  on  the  ground  of  17  years' 

soundnf^fl.   This  it  not  fraud  in  A."  d«  lay. 


590  DUBESS  AND  UNDUE  INFLUENCE. 

his  client,  of  disclosing  all  material  circumstances  within 
his  knowledge,  does  not  however  bind  him  to  communicate 
a  "  speculative  and  consequential "  possibility  which  may 
affect  the  future  value  of  the  subject-matter  of  the  trans- 
action, but  which  is  not  more  in  his  own  knowledge  than 
in  the  client's  (l). 
Family  Jt  must  not  be  forgotten  that  the  suspicion  with  which 

mento  dealings  between  parents  and  children  presumably  still 
timSly  uJ^der  parental  influence  are  regarded  by  courts  of  equity 
fftvoured.  is  to  a  certain  extent  counteracted  by  the  favour  with 
which  dispositions  of  the  kind  known  as  family  arrange- 
ments are  treated.  In  many  cases  a  balance  has  to  be 
struck  between  these  partly  conflicting  presumptions. 
"  Transactions  between  parent  and  child  may  proceed  upon 
arrangements  between  them  for  the  settlement  of  property, 
or  of  their  rights  in  property  in  which  they  are  interested. 
In  such  cases  this  Court  regards  the  transactions  with 
favour.  It  does  not  minutely  weigh  the  considerations  on 
one  side  or  the  other.  Even  ignorance  of  rights,  if  equal 
on  both  sides,  may  not  avail  to  impeach  the  transaction  (m). 
On  the  other  hand,  the  transaction  may  be  one  of  bounty 
from  the  child  to  the  parent,  soon  after  the  child  has 
attained  twenty-one.  In  such  cases  this  Court  views  the 
transaction  with  jealousy,  and  anxiously  interposes  its  pro- 
tection to  guard  the  child  from  the  exercise  of  parental 
influence"  (n), 

(Q  Edwardi  y.   Mejfrick  (1842)  2  470  ;  Bdlamy  v.  SMne  (1835)  2  Ph. 

Haw  60, 74 ;  Holman  v.  Loynn  (1854)  425, 439;  Hoyhion  v.  H^hUm  (1852) 

4  D.  M.  G.  at  p.  280.  15  Beav.  278,  300  ;  and  on  the  doc- 

(m)  Perhaps  it  is  Baf«;r  to  say  that  trine  of    family    arrangement   not 

the  "  almost  inyinciUe  jealousy "  of  applying  when  a  son  without  oon- 

the  Court  Is  reduced  to  '*  a  reason-  siduration  gives  up  valuable  rights 

aUe  degree  of  jealou^: "  op.  Lord  to  his  father,  Saitery  v.  King  (1856) 

Eldon's  language  in  Hatch  v.  Hatch  5  H.  L.  G.  at  p.  657.     A  sale  by  a 

(1804)  9  Ves.  at  p.  296,  and  Twed-  nephew  to  his  [gr«at]  uncle  of  hia 

deU  Y.  Ttoedddl  (1822)  Turn,  ft  B.  reveraionaiy  ii<teiest  in  an  eatate  of 

at  p.  IS.    On  the  question  of  con-  which  the  uncle  is  tenant  for  life  is 

sideration  see  WilUanu  v.  WUliam*  not  a  fanjily  arrangement;  Talbol  v. 

(1866-7)  2  Ch.  294,  804,  86  L.  J.  Staniforth  (1861)   1  J.  &  H.  484, 

Oh.  200.  501.    As  to  the  amount  of  notice 

(n)  Bdktr  ▼.  Bradley  (1855)  7  D.  that  will  affect  a  purchaser,  Bam^ 

M.  G.  597,  620.    See  also  WaJllace  hrigge  v.  Brovne  (1881)  18  Oh.  B. 

V.  Wallaoe  (1842)  2  Dr.  ft  W.  452,  188,  50  L.  J.  Ch.  522. 


RELATIONS  WHENCE  INFLUENCE  PRESUMED.  591 

It  must  be  observed  that  the  rules  concerning  gifts,  or 
transactions  in  the  form  of  contract  which  are  substantially 
gifts,  from  a  son  to  a  fether,  do  not  apply  to  the  converse 
case  of  a  gift  from  an  ancestor  to  a  descendant :  there  is 
no  presumption  against  the  validity  of  such  a  gift,  for  it 
may  be  made  in  discharge  of  the  necessary  duty  of  pro- 
viding for  descendants  (o). 

3.  Relations  between  the  parties  from  which  influence  RoUtioiis 
has  been  presumed.  ^^^ 

It  would  be  useless  to  attempt  an  exact  classification  of  influence 
that  which  the  Court  refuses  on  principle  to  define  or 
classify :  but  it  may  be  convenient  to  follow  an  order  of 
approximate  analogy  to  the  cases  of  well-known  relations 
in  which  the  presumption  is  fully  established. 

A.  Relations  in  which  there  is  a  power  analogous  to  that  Cwea 
P  X  J-  analogoM 

ot  parent  or  guardian.  to  parent 

and  child 

Uncle  in  locopartnHB  and  niece ;  Archer  v.  Hudson  (1844)  7  Beay.  551, 
18  L.  J.  Ch.  880  ;  MaJUland  v.  Irving  (1846)  15  Sim.  487.  8tep-fatb«r  in 
loco  pourentU  and  step-daughter  ;  Kempton  y.  Ashhee  (1874)  10  Ch.  15,  44  L. 
J.  Ch.  195  ;  Etpey  v.  Lake,  10  Ha.  260.  Ezeoator  of  a  will  (apparently  in 
a  like  position)  and  the  testator's  daughter ;  Qronenor  y.  SkerraU  (1860) 
28  Beay.  659. 

Husband  of  a  minor's  sister  with  whom  the  minor  had  liyed  for  some 
time  before  he  came  of  age  :  Qriffin  y.  DeveuUU  (1781)  S  P.  Wms.  131,  n. 
But  the  mere  fact  of  a  minor  liying  with  a  relatiye  of  full  age  does  not 
raise  a  presumption  of  influence  ;  or  the  presuoiption,  if  any,  is  rebutted 
by  proof  of  business-like  habits  and  capacity  on  the  donor's  part :  Taylor 
y.  JohnHon  (1882)  19  Ch.  D.  603,  51  L.  J.  Ch.  879. 

Two  sisters  living  together,  of  whom  one  was  in  all  respects  the  head  of 
the  house,  and  might  be  considered  as  in  loco  parcjUis  towards  the  other, 
though  the  other  was  of  mature  years :  ffarvep  v.  MowU  (1845)  8  Beav. 
439.  Brother  and  sister,  where  the  sister  at  the  age  of  46  executed  a 
voluntary  settlement  under  the  brother's  advice  and  for  his  benefit:  Sharp 
V.  Leach  (1862)  31  Beav.  491. 

Husband  and  wife  on  the  one  part,  and  aged  and  infirm  aunt  of  the 
wife  on  the  other  :  Griffiths  v.  Robins  (1818)  3  Mad.  191. 

Difetant  relationship  by  marriage  :  the  donor  old,  infirm,  and  his  sound- 
ness of  mind  doubtful ;  great  general  confidence  in  the  donee,  who  was 

(o)  Beanland  v.  Bradley  (1854)  2  Sm.  &  6.  839. 


692  DUBESS  AND  UNDUE  INFLUENCE. 

treated  by  him  m  a  wm :  Steed  ▼.  OaOey  (1836)  I  Kee.  620.  This  rather 
than  the  donor's  insanity  aeems  the  true  groand  of  the  ease,  see  p.  644. 

Keeper  of  Lunatic  Asylom  and  reooTered  patient:  Wright  y.  Proud 
(1806)  18  Yes.  186. 

There  aie  also  cases  of  general  control  obtained  by  one  person  over 
another  without  any  tie  of  relationship  or  lawful  authority :  Bridgman  v. 
Qreen  (1755)  2  Yes.  Sr.  627,  Wilm.  58,  where  a  servant  obtained  complete 
control  over  a  master  of  weak  understanding :  Kay  v.  BmUK  (1856)  21 
Beav.  522,  affirmed  nom.  Smiik  v.  Kaif  (1859)  7  H.  L.  G.  750,  where  an 
older  man  living  with  a  minor  in  a  joint  course  of  extravagance  induced 
him  immediately  on  his  coming  of  age  to  execute  securities  for  bills 
previously  accepted  by  him  to  meet  the  joiiit  expenses. 

In  LUyyd  v.  Clark  (1843)  6  Beav.  309,  the  influence  of  an  officer  over 
his  junior  in  the  same  regiment  was  taken  into  account  as  increasing  the 
weight  of  other  suspicious  droumstances ;  but  there  is  nothing  in  the  case 
to  warrant  inclading  the  position  of  a  superior  efficer  in  the  general 
category  of  "suspected  relations." 

Gases  B.  Positions  analogous  to  that  of  solicitor. 


to  Bohcitor      Gertificated  conveyancer  acting  as  professional  adviser :  ShodM  v.  Bate 
and  dlent.  (i866)  1  Gh.  252,  85  L.  J.  Gh.  267.    Counsel  and  confidential  adviser  : 
Brovn  v.  Kennedy  (1863)  33  Beav.  133,  148,  4  D.  J.  S.  217. 

Gonfidential  agent  substituted  for  solicitors  in  general  management  of 
affairs  :  Hugiunin  v.  Bateley  (1807)  14  Yes.  273  {p). 

A  person  deputed  by  an  elder  relation,  to  whom  a  young  man  applied  for 
advice  and  assistance  in  pecuniazy  difficulties,  to  ascertain  the  state  of  his 
affairs  and  advise  on  relieving  him  from  his  debts :  Tale  y.  WUlia,m9im 
(1866)  1  Eq.  528,  2  Ch.  55. 

Tlie  relation  of  a  medical  attendant  and  his  patient  is  treated  as  a  con- 
fidential relation  analogous  to  that  between  solicitor  and  client :  Dent  v. 
Bennett  (1839)  4  My.  &  Cr.  269 ;  Billage  v.  Southee  (1852)  9  Ha.  534  ; 
Aheame  v.  Hogan  (1844)  Dru.  310  ;  though  in  BUiclde  v.  Clark  (1852)  15 
Bea.  595,  603,  somewhat  less  weight  appears  1o  be  attached  to  it.  It  does 
not  appear  in  the  last  case  whether  the  existence  of  **  anything  like  undue 
persuasion  or  coercion "  (p.  604)  was  merely  not  proved  ur  positively 
ditproved :  on  the  supposilion  that  it  was  disproved  there  would  be  no 

(p)  A  fortiori,  where  characters  Mclony  v.  Keman  (1842)  2  Dr.  k 

of  steward  and  attorney  are  com-  Vf.Z\\  LordS€lteyy.Rhoadei{\%2^) 

bined :  Harrie  v.  Tremenkeere  (1808)  2  Sim.  &  St.  41, 1  Bli.  1.  InRossiter 

15  Yes.   34.    A    flagrant    case  is  v.  Walsh  (1843)   4  Dr.  &  W.  485, 

Baker  v.  Loader  (1872)  16  Eq.  49,  where  the  transaction  was  between 

42  L.  J.  Gh.  113.     Cp.  Moxon  v.  an  agent  and  a  sab-agent    of   the 

Payne  (1873)  8  Gb.  8»1,  43  L.  J.  same  principals,  the  case  was  put  bv 

Gh.  240,  where  however  the  facts  the  biU  (p.  487),  but  not  decided,  on 

are  not  given  in  any  detail.    As  to  the    ground   of  fiduciary  relation, 

a  land  agent  purchasing  or  taking  a  S^^e  p.  589,  above, 
leape  from  his  principal,  see  also 


RKLA.TIONR  WHKNCE   iyFI.UKNCE  PRESUMED.  598 

iaoooflistenoy  with  tha  other  aathoriti«>fi.  For  another  unsnooMaful  attempt 
to  set  aside  a  gift  to  a  medical  attendant,  see  PraU  ▼.  Barlcer  (1826)  1  Bim. 
1,  4  Ross.  507;  there  the  donor  was  advised  by  hi^  own  solicitor,  who  gave 
positive  evidence  that  the  act  wa9  free  and  deliberate. 

C.  Spiritual  influence.  Spiritual 

inilaence 
mixed 
It  is  said  that  inflaenoe  woald  be  presnmed  as  between  a  clergyman  or  character 
apy  person  in  the  habit  of  imparting  religions  instmotion  and  another  ^^  ^^o 
person  placing  confidence  in  him  :   Dent  ▼.  Bennett,  7  Sim.  at  p.  546.  ^^^* 
There  have  baen  two  remarkable  modem  oases  of  spiritual  Inflaence  in 
which  there  were  claims  to  spiritual  power  and  extraordinary  gifts  on  the 
one  side,  and  implicit  belief  in  snch  claims  on  the  other;  it  was  not 
necessary  to  rely  merely  on  the  presumption  of  influence  resulting  there- 
from, for  the  evidence  which  proved  the  relation  of  spiritual  confidence 
also  went  far  to  prove  as  a  fact  in  each  case  that  a  general  influence  and 
control  did  actuaUy  result :  NoUidge  v.  Prince  (1860)  2  Giif.  246,  29  L.  J. 
Ch.  857  ;  Lyon  v.  Htme  (1868)  6  Eq.  655,  37  L.  J.  Ch.  674  (9).     In  the 
former  case  at  all  events  there  was  gross  imposture,  but  the  spiritual 
dominion  alone  would  have  been  sufficient  ground  to  set  aside  the  gift :  for 
the  Oourt  considered  the  influence  of  a  minister  of  religion  over  a  person 
under  his  direct  spiritual  charge  to  be  stronger  than  that  arising  from  any 
other  relation  (r).    There  seems  to  have  been  also  in  Norton  v.  Bdly  (1764) 
2  Eden,  286,  the  earliest  reported  case  of  this  class,  a  considerable  admix- 
ture of  actual  fraud  and  imposition. 

A  peculiar  case  is  AUcard  v.  Skinner  (1887)  36  Gb.  Div.  145,  56  L.  J. 
Ch.  1052.  The  plaintiff,  a  lady  of  fuU  age,  had  joined  a  religious  sister- 
hood, apparently  of  her  own  mere  motion  and  free  will.  Its  rules,  known 
to  her  before  she  applied  for  admission,  required  the  members  to  abandon 
all  their  individual  property ;  not  necessarily  to  the  sisterhood,  but  the 
common  practice  was  to  give  it  to  the  superior  for  the  purposes  of  the 
sisterhood.  Other  rules  required  strict  obedience  to  the  superior, 
restrained  comm-mication  with  "  extems  '*  about  the  affairs  of  the  oonyent, 
and  forbade  members  to  "seek  advice  of  any  extern  without  the  superior's 
leave.**  At  yariou^  times  after  entering  the  sisterhood  the  plaintiff  made 
transfers  of  considerable  sums  of  money  and  stock  to  the  superior,  in  fact 
**gave  away  practically  all  she  could.*'  After  some  years  she  left  the 
sisterhood,  a  id  after  nearly  six  years  more  she  claimed  the  return  of  the 
funds  remaining  in  the  superi  vb  liaud  p.  It  was  held  that,  having  regard 
to  the  position  of  the  plaintiff  as  a  member  of  the  sisterhood,  and  to  the 
rules  she  had  undertaken  to  obey,  especially  the  rules  against  communica* 


{q)  In  Ljfon  y.  ffome  the  evidence  conclusion  :   the  ca^te  is  therefore 

appears  to  have  been  in  a  very  un-  more  curious  than  inntructive. 

sattsfiiotoiy  condition,  and  on  minf  (r)  2  Qtff.  269,  270. 
particulars  to  have  led  to  no  deflnite 


594  DURESS  AND  UNDUE  INFLUENCE. 

tioa  with  "  exteras,*'  she  waa  not  %  free  agent  at  the  time  of  makiDg  the 
gifts.  Bat  the  majority  of  the  Gonrt  held  that  her  snbaequent  oondnoi 
amounted  to  oonfirmation. 

The  aathority  ot  Haguemn  v.  Boidey  (1807)  14  Ves.  273,  as  to  tbis 
particalar  Idad  of  influence,  is  to  be  foand  not  in  the  judgment^  which 
proceeds  on  the  ground  of  confidential  agency,  but  in  Sir  S.  Bomilly'B 
argament  in  reply,  to  which  repsated  jadicial  approval  has  given  a  weight 
scarcely  if  at  all  inferior  to  that  of  the  decision  itself. 

Undue  4,  Circumstances  held  to  amount  to  proof  of  undue  in- 

influenoe      ^  ^  .... 

without      nuence,  apart  from  any  contmumg  relation, 
n^tio^        In  a  case  where  a  father  gave  security  for  the  amount  of 
Securities  certain  notes  believed  to  have  been  forged  by  his  son,  the 
obuined    holders  cfivinc:  him  to  understand  that  otherwise  the  son 

by  pres- 

sure :  would  be  prosecuted  for  the  felony,  the  agreement  was  set 
r^S!yl^  aside,  as  well  on  the  ground  that  the  father  acted  under 
undue  pressure  and  was  not  a  free  and  voluntary  agent, 
as  because  the  agreement  was  in  itself  illegal,  sa  being 
substantially  an  agreement  to  stifle  a  criminal  prosecu- 
tion (s). 

In  Ellis  V.  Barker  (t)  the  plaintiff's  interest  under  a  will 
was  practically  dependent  as  to  part  of  its  value  on  his 
being  accepted  as  tenant  of  a  farm  the  testator  had  occu- 
pied as  yearly  tenant.  One  of  the  trustees  was  the  land- 
lord's steward,  and  in  order  to  induce  the  plaintiff  to  carry 
out  the  testator's  supposed  intentions  of  providing  for  the 
rest  of  the  fe-mily  he  persuaded  the  landlord  not  to  accept 
the  plaintiff  as  his  tenant  unless  he  would  make  such  an 
arrangement  with  the  rest  of  the  family  as  the  trustees 
thought  right.  Under  this  pressure  the  arrangement  was 
executed  :  it  was  practically  a  gift,  as  there  was  no  real 
question  as  to  the  rights  of  the  parties.  Afterwards  the 
deeds  by  which  it  was  made  were  set  aside  at  the  suit  of 
the  plaintiff,  and  the  trustees  (having  thus  unjustifiably 
made  themselves  partisans  as  between  their  cestuis  que 
trust)  had  to  pay  the  costs. 

(a)  Waiuimt  V.  Bayley  (1866)  L.  (<)  (1871)  7  Oh.  104,  41  L.  J.  Oh, 

R.  1  H.  L.  200,  85  L.  J.  Oh.  717  ;      64. 
cp.  p.  314,  above. 


UNDERVALUE.  695 

These  are  the  most  distinct  cases  we  have  met  with  of  a 
transaction  being  set  aside  on  the  ground  of  undue  in- 
fluence specifically  proved  to  have  been  used  to  procure 
the  party's  consent  to  that  particular  transaction  (u). 

In  Smith  v.  Kay  (x)  a  young  man  completely  under  the  Smith  v. 
influence  and  control  of  another  person  and  acting  under  ^' 
that  influence  had  been  induced  to  execute  securities  for 
bills  which  he  had  accepted  during  his  minority  without 
any  independent  legal  advice ;  and  the  securities  were  set 
aside.  There  was  in  this  case  evidence  of  actual  fraud ; 
but  it  was  distinctly  affirmed  that  the  decision  would  have 
been  the  same  without  it,  it  being  incumbent  on  persons 
claiming  under  the  securities  to  give  satisfactory  evidence 
of  fair  dealing  (y). 

This  comes  very  near  to  the  peculiar  class  of  cases  on 
"  catching  bargains  "  with  which  we  shall  deal  presently. 

Undue  influence  may  be  inferred  when  the  benefit  is  ^^^^ 

such  as  the  taker  has  no  right  to  demand  [i.  e.  no  natural  Btuioes 

or  moral  claim]  and  the  grantor  no  rational  motive  to  ^J^ 

give  (z),  undoe 

influence 
inferred. 

Inadequacy  of  the  consideration,  though   in  itself  not  Aa  to 
decisive,  may  be  an  important  element  in  the  conclusion  Yt^w! 
arrived  at  by  a  court  of  equity  with  respect  to  a  contract 
of  sale. 

The  general  rule  of  equity   in  this  matter  has  been  <^n«ral 
thus  stated  by  Lord  Westbury  :  "  It  is  true  that   there  dervaine 
is  an  equity  which  may  be  founded  upon  gross   inade-  ^/^^^ 
quacy  of  consideration.     But  it  can  only  be  where   the  effect 
inadequacy  is  such  as  to  involve  the  conclusion  that  the 


(tf)  Op.  Omua  V.  Beadd  (1860)  2  (^)  Pp.  761,  770.  The  secorities 
Giff.  166,  80  L.  J.  Gh.  1,  revd.  2  D.  given  were  for  an  amount  very 
F.  J.  883,  on  the  ground  that  the  much  exceeding  the  whole  of  the 
agreement  had  afterwards  been  suau  really  advanced  and  the  in- 
voluntarily acted  upon  with  a  terest  upon  them :  p.  778. 
knowledge  of  all  the  facts.  (2)  PureeU  v.  M*Namara  (1807) 

(s)  (1859)  7  H.  L.  C.  760.  14  Ves.  91, 11 5. 

g  Q  2 


596  DURESS  AND  UNDUE  INFLUENCE. 

party  either  did  not  understand  what  he  was  about  or  was 
the  victim  of  some  imposition  "  (a). 

The  established  doctrine  is  that  mere  inadequacy  of 
price  is  in  itself  of  no  more  weight  in  equity  than  at 
law  (6).  It  is  evidence  of  fraud,  but,  standing  alone,  by  no 
means  conclusive  evidence  (c).  Even  when  coupled  with 
an  incorrect  statement  of  the  consideration  it  will  not  alone 
be  enough  to  vitiate  a  sale  in  the  absence  of  any  fiduciary 
relation  between  the  parties  (d). 
But  But  if  there  are  other  circumstances  tending  to  show 

with  other  that  the  vendor  was  not  a  free  and  reasonable  agent,  the 
dream-      f^^^.  ^f  ^j^g  g^^j^  having  been  at  an  undervalue  may  be  a 


may  be      material  element  in  determining  the  Court  to  set  it  aside. 
™^yi.       Thus  it  IS  when  one  member  of  a  testator's  family  convej's 
denoe  that  his  interest  in  the  estate  to  others  for  an  inadequate  Con- 
or freedom  sideration,  and  it  is  doubtful  if  he  fully  understood  the 
ofooiMent,  extent  of  his  rights  or  the  effect  of  his  act  (e).    If  property 
wantiiig.     is  bought  at  an  inadequate  price  from  an  uneducated  man 
of  weak  mind  (/)  or  in  his  last  illness  (gr),  who  is  not  pro- 
tected by  independent  advice,  the  burden  of  proof  is  on  the 
purchaser  to  show  that   the   vendor  made   the  bargain 
deliberately  and  with  knowledge  of  all  the  circumstances. 
Nay,  more,  when  the  vendor  is  infirm  and  illiterate  and 
employs  no  separate  solicitor,  "  it  lies  on  the  purchaser  to 
show  affirmatively  that  the  price  he  has  given  is  the  value," 

(o)  Tenant  v.  TennetUti  (1870)  L.  it.'* 

R.  2  Sc  ab  D.  6,  9.     For  a  modem  (6)   Wood  v.  Abrtff  (1818)  3  Mad. 

instance  of  such  a  conclu^oa  being  417,  423  ;  Peacock  V.  Evaru  (1809) 

actnally  drawn  by  the  Court  from  a  16  VeF.  512, 517 ;  SHllwffl  v.  WtUnnM 

Bale  at  a  groei  nnderyaiae,  see  JRict  (1821)  Jac.  280,  282. 

V.  GordUm  (1847)  11  Beav.  265.  270;  (c)  CockcU  v.   Taylor  (1851)   16 

CD.  UnderhiU  v.  Horunod  (1804)  10  Beav.  105,  115,  21  L.  J.  Ch.  645. 

Yes.  at  p.  219 ;  Summers  v.  Oriffitkt  {d)  Harriwn  y.  Ouett  (1855)  6  D. 

(1866)  85  Beav.  27,   88,  and  the  M.  G.  424,  8  H.  L.  C.  481. 

earlier  dictum  there  referred  to  of  (e)    Stwrge  y.  Sturge  (1849)  12 

Lord  Thmrlow  in  Owynne  v.  Beaton  Beay.  229,  19  L.  J.  Gb.  17  ;  op. 

(1778)  1  Bro.  C.  C.  1,  9,  that  "to  Dunnage  v.  WhUe  (1818)  1  Swanst 

Bet  aside  a  conyeyance  there  mast  187,  150. 

be  an  ineqoalitj  so  strong,  grow,  (/)  Longmate  y.  Ledger  (1860)  2 

and  manifest,  that  it  must  bs  im-  Giff.  157,  163  (affirmed  on  appeal, 

possible  to  sUte  it  to  a  man  of  Me  4  D.  F.  J.  402). 

common   sense  without  producing  {g)    (Xark  y.  Malpaa  (1862)  81 

»n  exclamation  at  the  inequali^  of  Beay.  80,  4  D.  P.  J.  401. 


UNDERVALUE.  597 

and  if  he  cannot  do  this  the  sale  will  be  set  aside  at  the 
suit  of  the  vendor  (A).  In  1871  a  case  in  the  Court  of 
Appeal  was  decided  on  the  ground  that  "  if  a  solicitor  and 
mortgagee  .  .  .  obtains  a  conveyance  [of  the  mort- 
gaged property]  from  the  mortgagor,  and  the  mortgagor  is 
a  man  in  humble  circumstances,  without  any  legal  advice, 
then  the  onus  of  justifying  the  transaction,  and  showing 
that  it  was  a  right  and  fair  transaction,  is  thrown  upon  the 
mortgagee  "  (i").  Still  more  lately  the  poverty  and  ignor- 
ance of  the  seller  of  a  reversionary  interest  have  been  held 
enough,  without  infirmity  of  body  or  mind,  to  throw  the 
burden  of  proof  on  the  buyer  (k). 

Similarly  if  a  purchase  is  made  at  an  inadequate  price 
from  vendors  in  great  distress,  and  without  any  professional 
assistance  but  that  of  the  purchaser's  solicitor,  'Hhese  cir- 
cumstances are  evidence  that  in  this  purchase  advantage 
was  taken  of  the  distress  of  the  vendors,"  and  the  con- 
veyance will  be  set  aside  (I), 

It  has  even  been  said  that  to  sustain  a  contract  of  sale  *<  Bqnalifty 
in  equity  "  a  reasonable  degree  of  equality  between  the  ^jj^^ 
contracting  parties"  is  required  (th).     But  such  a  dictum  tmctfnfr^ 
can  be  accepted  only  to  this  extent :  that  when  there  is  a  P*"^^ 
very  marked   inequality  between   the   parties   in   social 
position  or  intelligence,  or  the  transaction  arises  out  of  the 
necessities  of  one  of  them  and  is  of  such  a  nature  as  to  put 
him  to  some  extent  in  the  power  of  the  other,  the  Court 
will  be  inclined  to  give  much  more  weight  to  any  suspicious 

(A)  Baker   v.    Monk   (1804)    38  (m)  Lomfmaie  v.   Ledger   (1860) 

Bmv.  419,  4  D.  J.  8.  888,  891.  2  Giff.  at  p.  168,  by  Stuart  V.O. :  op. 

(»)  Lord  Hatherley   C.  Prea  ▼.  the  same  judge's  remarks  in  Barrett 

Coke  (1870-1)    6    Gh.    645,    049 :  v.  HartUy  (1800)  2  £q.  at  p.  794. 

though  in  general  there  is  no  role  But  see  the  moregoaxded  statement 

aftainst  a  mortgagee  bayiog  from  in  Wood  v.  ^&rcy,  8  Mad.  at  p.  428. 

his  mortgagor  :  Emght  v.  Mmrjori'  "  A  oonrt   of   equity  will  inquire 

banke  (1849)  2  Mae.  ft  G.  10  ;  and  whether  the  parties  reaUy  did  meet 

nee  Ford  v.  Oltfan  (1867)  8  Eq.  461,  on  equal  tenns;  and  if  it  he  fownd 

86  L.  J.  Gh.  651.  that  ike  vendor  woe  in  dittireeted  eir- 

(k)  Fry  ▼.  Lam  (1888)  40  Gh.  D.  eumttaneee,  and  that  advantage  wa$ 

812,  68  L.  J.  Gh.  118.  iaken  of  thai  distreee,  it  will  avoid 

(l)  Wood  v.  Abrey  (1818)  8  Mad.  the  oontract" 
417,  424 


598  DURESS  AND  UNDUE  INFLUENCE. 

circumstances  attendicg  the  formation  of  the  contract,  and 
will  be  much  more  exacting  in  its  demands  for  a  satis&ctory 
explanation  of  them,  than  when  the  parties  are  on  such  a 
footing  as  to  be  presumably  of  equal  competence  to  under- 
stand and  protect  their  respective  interests  in  the  matter 
in  hand.  The  true  doctrine  is  well  expressed  in  the  Indian 
Contract  Act,  s.  25,  expl.  2.  "An  agreement  to  which  the 
consent  of  the  promisor  is  freely  given  is  not  void  merely 
because  the  consideration  is  inadequate;  but  the  inadequacy 
of  the  consideration  may  be  taken  into  account  by  the 
Court  in  determining  the  question  whether  the  consent  of 
the  promisor  was  freely  given."  A  sale  made  by  a  person 
of  inferior  station,  and  for  an  inadequate  price,  was  upheld 
by  the  Court  of  Appeal  in  Chancery,  and  ultimately  by  the 
House  of  Lords,  when  it  appeared  by  the  evidence  that  the 
vendor  had  entered  into  the  transaction  deliberately,  and 
had  deliberately  chosen  not  to  take  independent  profes- 
sional advice  (n). 

Can  Bpe-         It  is  not  SO  clear  however  that  a  decree  of  inadequacv  of 
dfic  per-  -J*  T-'Lj  t*        t 

formanoe    consideration  which  does  not  amount  to  evidence  of  fraud 

^  Sle"^  ^^^  ^^*  y^*  ^  *  suflBcient  ground  for  refusing  specific 

ground  of  performance.      The  general  rule  as  to  granting  specific 

value         performance,  so  far  as  it  bears  on  this  point,  is  that  the 

alone  ?        Court  has  a  discretion  not  to  direct  a  specific  performance 

in  cases  where  it  would  be  highly  unreasonable  to  do  so :  it 

is  also  said  that  one  cannot  define  beforehand  what  shall 

be  considered  unreasonable  (o).     On  principle  it  might 

perhaps  be  doubted  whether  it  should  ever  be  considered 

unreasonable  to  make  a  man  perform  that  which  he  has 

the  present  means  of  performing,  and  which  with  his  eyes 

open  he  has  bound  himself  to  perform  by  a  contract  valid 

in  law.     And  it  is  said  in  Watson  v.  Marston  (o)  that  the 

Court  "must  be  satisfied  that  the  agreement  would  not  have 

M.  G.  424.  8  H.  L.  C  481;  cp.  AwAer  4  D.  M.  G.  280.  289,  240,  and  dicta 
V.  TFiM.ain*(1876)20Eq.210,44L.  there  referred  ti.  ^'^*"'"^^'~ 
J.  Ch.  419. 


UNDERVALUE  AND  SPECIFIC   PERFORMANCE. 


599 


been  entered  into  if  its  true  eflfect  had  been  understood." 
Possibly  this  may  be  considered  to  overrule  those  earlier 
decisions  which  furnish  authority  for  refusing  a  specific 
performance  simply  on  the  ground  of  the  apparent  hardship 
of  the  contract.  The  question  now  in  hand  is  whether 
inadequacy  of  consideration,  not  being  such  as  to  make  tho 
validity  of  the  contract  doubtful  (p),  is  regarded  as  making 
the  performance  of  it  highly  unreasonable  within  the 
meaning  of  the  above  rule :  and  for  this  purpose  we  assume 
the  generality  of  the  rule  not  to  be  affected  by  anything 
that  was  said  in  Wat807i  v.  Marston. 

The  authorities  are  so  conflicting  that  the  best  course  Conflict- 
seems  to  be  to  set  them  against  one  another  and  leave  the  ri§JJ" 
matter  to  the  reader's  judgment.     Our  own  impression  is  «>u«cted. 
that  the  opinion  to  which  Lord  Eldon  at  least  inclined, 
and  which  was  expressed  by  Lord  St.  Leonards  and  Lord 
Romilly,  is  the  better  entitled  to  prevail.     The  weight  of 
American  authority  seems  to  be  on  the  same  side. 


In  favou/r  of  treating  inadequacy 
of  eoneideraiion  as  a  ground  fur 
refuting  gpec\/ic  performance. 

Youngy,  CW*  (1720)  Pre.  Ch.  688. 

SaviOe  v.  SavQU  (1721)  1  P.  Wms. 
745. 

Underwood  v.  Eitchcox  (1749) 
1  Ves.  Sr.  279. 

Other  cases  of  the  early  part  of 
the  18th  century  cited  from  MS.  in 
EoweU  y.  Oeorge  (1815)  1  Mad.  p.  9, 
note  (2). 

Day  V.  Newman  (1788)  2  Cox  77, 
see  p.  80,  and  ad  Jfn. ;  the  case  was 


Contra. 


Collier  V.  Brown  (1788)  1  Cox  428. 


Anon,  Cited  in  Ilfortim>ery.  Capper 
(1782)  1  Bpo.  C.  C.  158:  (sale  of  an 


{p)  Donbt  as  to  the  validity  of 
the  contract,  short  of  the  condnsion 
that  it  is  not  valid,  has  always  been 
held  a  soffident  ground  for  refusing 
spedfic  perfonnanoe.  Frot>ably  this 
arose  from  the  habit  or  etiquette  by 
which  courts  of  equity,  down  to 
recent  times,  never  dedded  a  legal 
point  when  they  could  hdp  it.   Now 


that  legal  and  equitable  jurisdiction 
are  united,  the  Court  will  consider 
the  question  of  damages  if  an  action 
for  spedfic  perfonnanoe  is  brought 
in  a  case  such  that  under  the  old 
practice  the  bill  mould  have  betn 
dismisfed  without  prejudice  to  an 
action :  Tamplin  v.  James  (1880)  15' 
Ch.  Div.  216. 


600 


DURESS  AND  UNDUE  IN7LUENCE. 


of  a  sale  at  a  great  over-value 
(nearly  double  the  real  value),  and 
there  were  croas  suitR  Ton  specific 
performance  and  for  resciBflion. 
There  was  nothing  to  show  fraud, 
but  it  was  oonridered  "too  hard  a 
bargain  for  the  Court  to  aasist  in." 
Both  bills  were  dismissed. 

WhiU  V.  Daman  (1802)  7  Ves.  80, 
before  Lord  Rosslyn. 


In  Wedgwood  v.  Adams  (1848)  tf 
Beav.  600,  606,  specific  performance 
was  not  enforced  against  trustees 
for  sale,  when  the  contract  (as  the 
Court  inclined  to  think,  but  with 
some  doubt  whether  such  could 
have  been  the  real  intention  of  the 
parties)  bound  them  personally  to 
exonerate  the  estate  from  incum* 
branoes,  and  it  was  doubtful 
whether  these  did  not  exceed  the 
amount  of  the  purchase-money. 
But  thiB  was  not  like  the  ordinary 
case  of  an  agreement  between  a 
purchaser  and  a  vendor  in  his  own 
right,  since  the  trustees  undertook  a 
personal  risk  without  even  the  chance 
of  any  personal  advantage. 

Fame  v.  Brown  (1750)  before 
Lord  Hardwicke,  cited  2  Ves.  Sr. 
307,  and  referred  to  by  Lord  Lang- 
dale  in  Wedgwood  v.  AcUimi,  was  a 
peculiar  case :  the  hardship  was  not 
in  any  inadequacy  of  the  purchase- 
money,  but  in  the  fact  that  the 
vendor  would  lose  half  of  it  by  the 
condiltion  on  which  he  was  entitled 
to  the  property. 

In  Falcke  v.  Oray  (1869)  4  Drew. 
651,  29  L.  J.  Ch.  28,  there  was 
something  beyond  mere  inadequacy: 
the  agreement  was  for  a  purchase 
at  a  valuation,  and  there  was  no 
valuation  by  a  competent  person. 
V.-C.  Kindersley  however  expressed 


allotment  to  be  made  by  Indosore 
Commissioners ;  value  unascertained 
at  date  of  oontract). 


White  v.  Damxm  (1802)  7  Ves.  30, 
84,  on  re  -  hearing  before  Lord 
Eldou  (bot  limited  to  sales  by 
auction). 

Coles  V.  Trtcoihiek  (1804)  9  Yes. 
234,  246,  per  Lord  Eldon :  "unless 
the  inadequacy  of  price  is  such  as 
shocks  the  conscience,  and  amounts 
in  itself  to  conclusive  and  decisive 
evidence  of  fraud  in  the  transaction, 
it  is  not  itself  a  suflScient  ground  for 
refuting  a  specific  performance." 


Western  v.  RuMseU  (1814)  8  Yes.  A; 
B.  187,  198. 

BoreU  v.  Dann  (1848)  2  Ha.  440, 
450,  per  Wigiam  V.-C. 


AhboU  V.  Sworder  (1852)  4  De 
G.  &  Sm.  448,  461 :  per  Lord  St. 
Leonards,  *'  the  undervalue  must  be 
such  as  to  shock  the  conscience" 
[/.  e.  ai  to  be  sufiident  evidence 
of  fraud,  cp.  Lord  Eldon's  dictum 


UNDERVALUE  AND  SPECIFIC  PERFORMANCE. 


601 


Lord  Justice  Fry,  writing  in  1858, 
considered  tiiii  to  be  ''tiie  well 
established  principle  of  the  Gonrt " 
(On  Specific  Performance,  §  281) ; 
and  this  is  repeated  in  the  second 
edition,  1881  (§  424,  p.  194),  not- 
withstanding the  case  of  Falcke  v. 
Graif,  which  is  said  to  "break  the 
recoLt  CO!  rent  of  aothorities.*' 

Hayvood  v.  Cope  (1858)  25  Bear. 
140,  153,  27  L.  J.  Cb.  468. 


a  distinct  opinion  that  specific  per- 
fOTmanoe  onght  to  be  refused  on  the 
mere  gronnd  of  inadequacy,  even  if 
there  were  none  other,  zelying 
chiefly  on  White  v.  Damon  ani 
-Day  V.  Newman. 

He  referred  also  to  Vaughan  v. 
Thona9  (1788)  1  Bro.  C.  C.  556  (a 
not  veiy  intelligibly  reported  case, 
where  the  agreement  was  for  the  re- 
pnrcbase  of  an  annoity  :  the  state- 
ment of  the  facts  raises  some  sus- 
picion of  fraud): — to  Heatkeole  v. 
Paignon  (1787)  2  Bro.  G.  C.  167  ; 
(but  this  and  other  cases  there  cited 
in  the  reporter's  notes  prove  too 
much,  for  they  are  authorities  not 
for  refusing  spedfio  performance, 
but  for  actually  setting  aside  agree- 
ments on  the  ground  of  undervalue 
alone,  which  we  have  seen  is  con- 
trary to  the  modem  law) : — and  to 
Kien  V.  Stukdey  (1722)  1  Bro.  P.  G. 
191,  where  specific  perfonnanoe  was 
refused  by  the  House  of  Lordf,  re- 
versing the  decree  of  the  Exchequer 
in  equity  (but  on  another  ground, 
the  question  of  value  being  "a  very 
doubtful  point  among  the  Lords," 
S.  0.  Qilb.  155,  notn.  Keen  v. 
ShuMey). 

The  decisions  in CottiganvMiietier 
(1804)  2  Scb.  k  L.  160,  and  HoweU 
V.  George  (1815)  1  Mad.  1  (tiiough 
the  dicta  go  farther),  show  only  that 
a  man  who  has  contracted  to  dispose 
of  a  greater  interest  than  he  has  will 
not  be  compelled  to  complete  his 
titie  by  purchase  in  order  to  perform 
the  contract. 

A  brief  notice  of  Continental  laws  as  to  sales  at  an 
undervalue,  and  of  the  French  law  on  the  head  o{  captation 
(partly  corresponding  to  our  Undue  Influence),  will  be 
found  in  the  Appendix  (g). 

(9)  Note  K. 


nooen. 


602  DURESS  AND  UNDUE  IKIXUKNCE. 

Kxoeo-  We  have  still  to  deal  with  an  important  exceptional 

cmMt  of  class  of  cases.  That  which  may  have  been  a  discretionary 
h*Er**d*  i^®^^^®  when  the  discretion  of  courts  of  equity  was 
MTer-  larger  than  it  now  is  has  in  these  cases  become  a  settled 
presumption,  so  that  fraud,  or  rather  undue  influence,  is 
"presumed  from  the  circumstances  and  condition  of  the 
parties  contracting"  (r).  The  term  fraud  is  indeed  of 
common  occurrence  both  in  the  earlier  (r)  and  in  the 
later  authorities :  but  ''  fraud  does  not  here  mean  deceit 
or  circumvention ;  it  means  an  unconscientious  use  of  the 
power  arising  out  of  these  circumstances  and  conditions"  («): 
and  this  does  not  come  within  the  proper  meaning  of  fraud, 
which  is  a  misrepresentation  (whether  by  untrue  assertion, 
suppression  of  truth  or  conduct)  made  with  the  intent  of 
creating  a  particular  wrong  belief  in  the  mind  of  the  party 
defrauded.  Perhaps  the  best  word  to  use  would  be  impo- 
sition, as  a  sort  of  middle  term  between  fraud,  to  which  it 
comes  nearer  in  popular  language,  and  compulsion,  which 
it  suggests  by  its  etymology. 

The  class  of  persons  in  dealing  with  whose  contracts 
the  Court  of  Chancery  has  thus  gone  beyond  its  general 
principles  are  those  who  stand,  in  the  words  of  Sir 
George  Jessel,  "  in  that  peculiar  position  of  reversioner 
or  remainderman  which  is  oddly  enough  described  as  an 
expectant  heir.  This  phrase  is  used,  not  in  its  literal 
meaning,  but  as  including  every  one  who  has  either  a 
vested  remainder  or  a  contingent  remainder  in  a  family 
property,  including  a  remainder  in  a  portion  as  well  as  a 
remainder  in  an  estate,  and  every  one  who  has  the  hope 
of  succession  to  the  property  of  an  ancestor — either  by 
reason  of  his  being  the  heir  apparent  or  presumptive,  or 

(r)  Lord  Hardwicke  in  CKetter-  phnwe  as  to  preBomptioii  Is  almost 

^dd  V.  Jannm  (1750-1)  2  Yes.  Sr.  UtenUj  repeated,  and  it  Is  obvious 

at  p.  125,  classifies  this  in  general  thst  these  oases  really  oome  under 

terms  as  "  a  third  kind  of  fraod :"  his  third  head, 

he  proceeds  (at  p.  157)  to  make  a  (s)  Per  Lord  Selbome,  iSM  of 

separate  head  of  catching  bargains,  Aylaford  v.   Morri»  (1878)  8  Ch. 

as  **  mixed  cases  oompoonded  of  aU  484,  491,  42  L.  J.  Ch.  540. 
or  several  spedes  of  fraad :"  but  the 


BXPECTANT  HEIRS  AND  REVERSIONERS. 

by  reason  merely  of  the  expectation  of  a  devise  or  bequest 
on  account  of  the  supposed  or  presumed  aflfection  of  his 
ancestor  or  relative.  More  than  this,  the  doctrine  as  to 
expectant  heirs  has  been  extended  to  all  reversioners  and 
remaindermen,  as  appears  from  TottenhaTn  v.  Eraraet  {t) 
and  Earl  of  Aylesford  v.  Morris  (u).  So  that  the 
doctrine  not  only  includes  the  class  I  have  mentioned, 
who  in  some  popular  sense  might  be  called  expectant 
heirs,  but  also  all  remaindermen  and  reversioners  "  (a?). 

The  Act  31  Vict.  c.  4  has  modified  the  practice  of  the  Motivee 
Court  of  Chancery  (which  now  continues  in  the  Chancery  o©ptional 
Division)  less  than  might  be  supposed:   it  is  therefore *"^*™*^** 
necessary  to  give  in  the  first  place  a  connected  view  of  the  g^i^JSon 
whole  doctrine  as  it  formerly  stood.    It  was  considered  that  of  fraud, 
persons  raising  money  on  their  expectancies  were  at  such  a 
disadvantage  as  to  be  peculiarly  exposed  to  imposition  and 
fraud,  and  to  require  an  extraordinaiy  degree  of  protec- 
tion {y) :  and  it  was  also  thought  right  to  discourage  such  2.  Pablio 
dealings  on  a  general  ground  of  public  policy,  as  tending  J|^^Jj^ 
to  the  ruin  of  families  {z)  and  in  most  cases  involving  "  a  of  f*«ni- 
sort  of  indirect  fi*aud  upon  the  heads  of  &milies  from  whom 
these  transactions  are  concealed  "  (a) 

Moreover  laws  against  \isury  were  in  force  at  the  time  g.  EvMlon 
when  courts  of  equity  began  to  give  relief  against  these  ?[  ^^"^ 
"catching  bargains"  as  they  are  called  (6);  any  transactions 

(0  (1866)  14  W.  R.  8.  124,  167. 

(u)  (1878)  8  Ch.  484,  42  L.  J.  (6)  In  Wiaemanv,  Bedke,  2yern. 

Ch.  646.  121,  it  appears  from  the  Btatement 

(z)  Bejfnon  v.  Cook  (1876)  10  Ch.  of  the  facts  that  twen^^  years  or 

891,  n,  thereabouts  after  the  Kestoration 

(y)  "A  degree  of  protection  ap-  this   JDrisdiction  was  regarded  as 

proaching  nearly  to  an  incapacity  a  novelty  :    for    the    defendant's 

to   bind  tbemf elves  by   any   con-  testator  "understanding    that    the 

tract :"  Sir  W.  Grant  in  Peacock  v.  Chancery  began  to  relieve  against 

Evans  (1809)  16  Yes.  at  p.  614.  snch  bargains"  took  certain  stepe 

(2)    TuideUm  v.    Griffith    (1716)  to  make  himself  safe,  bnt  without 

1  P.  Wms.  at  p.  81 2 ;  C<Se  v.  OMont,  success,  the  Court  pronouncing  them 

3  P.  Wms.  at  p.  298 ;  CTutterfidd  "a  contrivance  only  to  double  hatch 

V.  Janaten  (1760-1)  2  Yes.  Sr.   at  the  cheat.''     But  in  ArdgUme  v. 

p.  168.  Muachamp  (1684)  1  Yem.  288,  it 

(a)  Per  Lord   Selbome,  Sort  of  is  said  that  many  precedents  from 

AylufoTd  V.  Moms  (1878)  8  Ch.  Lord   Bacon's,    Lord    Ellesmere's, 

484,  '492,  42  L.  J.  Ch.  646;  CheKUr-  and   Lord  Coventiy's  times  wei^ 

/Ce^v./onsMn  (1760-1)  2  Yes.  Sr.  produced. 


604  DURESS  AND  UNDUE  INFLUENCE. 

which  looked  like  an  evasion  of  those  laws  were  very  nar- 
rowly watched,  and  it  may  be  surmised  that  when  they 
could  not  be  brought  within  the  scope  of  the  statutes  the 
Courts  felt  justified  in  being  astute  to  defeat  them  on  any 
other  grounds  that  could  be  discovered  (c). 
Exteniion  The  doctrine  which  was  at  first  introduced  for  the  pro- 
doctrine,  tection  of  expectant  heirs  was  in  course  of  time  extended 
to  all  dealings  whatever  with  reversionary  interests.  In  its 
finally  developed  form  it  had  two  branches : — 

1.  As  to  reveraionary  interests,  whether  the  reversioner 
were  also  an  expectant  heir  or  not : 

A.  The  rule  of  law  that  the  vendor  might  avoid  the  sale 
for  undervalue  alone  : 

B.  The  rule  of  evidence  that  the  burden  of  proof  was  on 
the  purchaser  to  show  that  he  gave  the  full  value. 

It  is  this  part  of  the  doctrine  that  is  changed  by  the 
Act  31  Vict.  c.  4. 

2.  As  to  "  catching  bargains  "  with  expectant  heirs  and 
remaindermen  or  reversioners  in  similar  circumstances, 
i,e,  bargains  made  in  substance  on  the  credit  of  their 
expectations,  whether  the  property  in  expectancy  or  re- 
version be  ostensibly  the  subject-matter  of  the  transaction 
or  not  (d)  : 

The  rule  of  evidence  that  the  burden  of  proof  lies  on 
the  other  contracting  party  to  show  that  the  transaction 
was  a  fair  one.  We  use  the  present  tense,  for  neither  the 
last-mentioned  Act  nor  the  repeal  of  the  usury  laws,  as  we 
shall  see  presently,  has  made  any  change  in  this  respect. 
Former  The  part  of  the  doctrine  which  is  abrogated  was  in- 

to nlet  of  timately   coimected   both    in   principle    and  in  practice 
reverdon-   ^^.j^  ^y^^^  which  remains ;  and  though  it  seems  no  longer 

[e)  The  reports  of  the  cases  on  the  poUqy  of  the  Conrt.     On  the 

this  head  anterior  to  Chutetfidd  v.  gradual  extension  of    the  remedy 

/onMen  are  imfortunately  so  meagre  cp.  the  remarks  of  Burnett  J.  in 

that    it    is    difficult   to    ascertain  Chuterjidd  v.  JaaiMtm  (1750-1)    2 

whether    the^    proceeded  on  any  Yes.  Sr.  at  p.  145. 

uniform  principle.    But  the  motives  {d)  Ewrl  of  Ayletfmrd  ▼.  Morris 

above  alleged  seem  on  the  whole  to  (187S)  8  Ch.  at  p.  497. 
have  been  those  which  determined 


REVERSIONARY  INTERESTS.  605 

necessaxy  to  go  through  the  authorities  in  detail,  it  may  "7  fa- 
still  be  advisable  to  give  some  account  of  the  manner  in 
which  it  was  applied  (e). 

The  general  rule  established  by  the  cases  was  that  the 
purchaser  was  bound  to  give  the  fair  market  price,  and 
to  preserve  abundant  evidence  of  the  price  having  been 
adequate,  however  diflBcult  it  might  be  to  ascertain  what 
the  true  value  was.  It  was  applied  to  reversionary  interests 
of  every  kind,  and  the  vendor  was  none  the  less  entitled 
to  the  benefit  of  it  if  he  had  acted  with  full  deliberation. 
The  presumption  originally  thought  to  arise  from  transac- 
tions of  this  kind  had  in  fact  become  transformed  into 
an  inflexible  rule  of  law,  which,  consistently  carried  out, 
made  it  well  nigh  impossible  to  deal  with  reversionarj^ 
interests  at  all.  The  modem  cases  almost  look  as  if 
the  Court,  finding  it  too  late  to  shake  off  the  doctrine, 
had  sought  to  call  the  attention  of  the  legislature  to  its 
inconvenience  by  extreme  instances.  Sales  were  set  aside 
after  the  lapse  of  such  a  length  of  time  as  19  years,  and 
even  40  years  (/).  A  sub-purchaser  who  bought  at  a 
considerably  advanced  price  was  held  by  this  alone  to  have 
notice  of  the  first  sale  having  been  at  an  undervalue  (g). 
In  one  case  where  the  price  paid  was  200Z.,  and  the  true 
value  as  estimated  by  the  Court  238i.,  the  sale  was  set 
aside  on  the  ground  of  this  undervalue,  though  the  ques- 
tion was  only  incidentally  raised  and  the  plaintiff's  case 
failed  on  all  other  points  (h). 

Finally  Parliament  found  it  necessary  to  interfere,  and  ^^  ^ 


by  the  "Act  to  amend  the  law  relating  to  sales  of  rever-  i^^iT^ 
sions,"  31  Vict.  c.  4  (7th  December,  1867),  it  was  enacted  ^^^^ 
(s.  1)  that  no  purchase  (defined  by  s.  2  to  include  every  nvi 


contract,  &c.,  by  which  a  beneficial  interest  in  property  may  ^^^^ 
be  acquired),  made  bona  fide  and  without  fraud  or  unfair 

(e)  Adig«8t  of  the  caseB  WMgtven  (185S)  26  Baiv.  161. 

in  the  first  ttro  editions  (p.  550,  {g)  Nesbitt  v.  Berridge  (1863)   82 

2ad  ed.).  Beav.  280. 

(/)  St.  Alban  V.  JSarding  (1869)  (4)  Jona  v.  Ridsettt  (1862)    81 

27  B«iv.   11 ;  Salter  v.  Bradshaw  Beav.  180,  31  L.  J.  Ch.  758. 


60^ 


DTJRESS  AND  UNDUE  INFLUENCE. 


Limited 
effect  of 
theAot^ 


General 
rales  of 
equity  m 
to  "catoh- 
inf^bar- 
gaiDB  '*  un- 
affected. 


dealing  of  any  reversionaiy  interest  in  real  or  personal 
estate,  should  after  January  1, 1868  (s.  3),  be  opened  or  set 
ajside  merely  on  the  ground  of  undervalua  Subject  only 
to  a  saving  of  pending  suits  (a  3)  this  act  is  retrospective, 
and  this  is  the  more  remarkable  inasmuch  as  the  right 
taken  away  by  it  from  any  vendor  of  a  reversion  who  might 
otherwise  have  set  aside  the  sale  on  the  ground  of  under- 
value alone  was  (as  in  the  case  of  a  sale  voidable  on  any 
other  ground)  not  a  mere  right  of  suit,  but  an  interest 
which  was  transmissible  by  descent  or  devise  (i). 

The  Act  is  carefully  limited  to  its  special  object  of 
putting  an  end  to  the  arbitrary  rule  of  equity  which  was 
an  impediment  to  fair  and  reasonable  as  well  as  to  uncon- 
scionable bargains.  It  leaves  undervalue  still  a  material 
element  in  cases  in  which  it  is  not  the  sole  equitable 
ground  for  relief  (fc). 

It  had  already  been  decided  (l)  that  the  repeal  of  the 
usury  laws  (m)  did  not  alter  the  general  rules  of  the  Court 
of  Chancery  as  to  dealings  with  expectant  heirs.  This 
decision  was  followed  in  MiUer  v.  Cook  (n),  and  adhered 
to  in  Tyler  v.  Yates  (o),  and  lastly  in  Earl  of  AyUaford  v. 
Morris  (p)  and  Beynon  v.  Cook  (g),  and  in  the  two  latter 


(i)  Chedey  v.  Moudey  (1861)  4  De 
G.  ft  J.  78,  93. 

(ifc)  Earl  of  Aylaford  v.  Morrii 
(1878)  8  Ch.  at  p.  490.  See  also 
(TRorke  v.  BoUngbroke  (1877)  2  App. 
Ga.  814;  Fry  v.  Lam  (1888)  40  Oh. 
D.  812,  68  L.  J.  Gh.  118. 

(I)  Orofi  V.  Qraham  (1868)  2  D. 
J.  S.  155. 

(i»)  17  &  18  Vict,  c  90.  But  be- 
fore this  complete  repeal  exceptions 
had  been  made  from  the  nsory  laws 
in  f  avoor  of  certain  bills  of  exchange 
and  loans  exoeedini;  102.  not  secnred 
on  land  :  8  &  4  Wm.  4,  c.  98,  s.  7, 
2  &  8  Vict.  c.  87>  s.  1,  and  comments 
thereon  in  Lame  v.  Sariock  (1855) 
5  H.  I>.  G.  480,  26  L.  J.  Ch.  268. 

(n)  (1870)  10  Eq.  641,  40  L.  J. 
Ch.  U. 

(o)  (1871)  11  Eq.  265,  6  Ch.  665, 
40L.  J.  Oh.  768. 

(p)  8  Oh  484;  this  may  now  be 
regarded  ae  the  leading  case  on  the 


subject  It  should  be  obeerved  that 
in  7)fler  v.  Yates  a  principal  and 
Boxety  made  themselves  U*ble  For  a 
bill  which  the  principal  had  accepted 
during  his  minority,  without  know- 
ing thai  there  wa<  no  existing  legal 
liabiUty  on  the  bill,  and  aU  the  sub- 
se<iuent  transactions  were  bound  up 
with  this  :  and  the  case  was  rested 
on  this  ground  in  the  Court  of  Ap- 
peal (pi  671).  Op.  on  this  point 
(hward  v.  ffughes  (1855)  1  K.  &  J. 
448,  where  a  widow  who  during  her 
husband's  Ufe  had  joined  as  surety 
in  his  pronussory  note  executed  a 
new  note  under  tiie  impression  thait 
she  was  liable  on  the  old  one,  and 
without  any  new  consideration,  and 
the  note  was  set  aside ;  see  Southall  v. 
Rigg  (1851)  and  Forman  v.  Wright 
(1851)  11  0.  B.  481,  20  L.  J.  C. 
P.  145. 
(^  (1875)  10  Oh.  889. 


"CATCHINO  BARGAINS."  607 

cases  it  has  been  clearly  laid  down  that  the  rules  are  in 
like  msuxner  unaflfected  by  the  change  in  the  law  concerning 
sales  of  reversions.  And  this  was  confirmed  by  all  the 
opinions  delivered  in  O'Rorke  v.  Bolinghroke  (r)  in  the 
House  of  Lords,  though  the  particular  transaction  in  dis- 
pute was  upheld. 

The  eflfect  of  these  rules  is  not  to  lay  down  any  pro- 
position of  substantive  law,  but  to  make  an  exception  from 
the  ordinsuy  rules  of  evidence  by  throwing  upon  the  party 
claiming  under  a  contract  the  burden  of  proving  not 
merely  that  the  essential  requisites  of  a  contract,  including 
the  other  party's  consent,  existed,  but  also  that  such 
consent  was  perfectly  free.  The  question  is  therefore,  C>°<*»*»<»« 
what  are  "  the  conditions  which  throw  the  burden  of  burden^of 
justifying  the  righteousness  of  the  bargain  upon  the  party  P"^^ 
who  claims  the  benefit  of  it "  (s).  Now  these  conditions 
have  never  been  fixed  by  any  positive  authority.  We 
have  seen  that  the  Court  of  Chancery  has  refrised  to 
define  fraud,  or  to  limit  by  any  enumeration  the  standing 
relations  from  which  influence  will  be  presumed.  In  like 
manner  there  is  no  definition  to  be  found  of  what  is  to 
be  understood  by  a  "catching  bargain."  This  being  so  we 
can  only  observe  the  conditions  which  have  in  fact  been 
generally  present  in  the  bargains  against  which  relief  has 
been  given  in  the  exercise  of  this  jurisdiction.  These 
are: — 

1.  A  loan  in  which  the  borrower  is  a  person  having  little 
or  no  property  immediately  available,  and  is  trusted  in 
substance  on  the  credit  of  his  expectationa 

Obt,  It  is  imiDftterial  whether  there  is  or  not  any  actual  dealing  with  the 
eatate  in  remalader  or  eipreesion  of  the  oontingen<^  on  which  the  faod  for 
payment  of  the  principal  advaooed  sabetantially  depends.  BaH  ofAfiaf(yrd 
T.  UwriM  (1878)  8  Oh.  at  p.  497.  It  is  also  immaterial  whether  any  par- 
tieolar  property  ia  looked  to  for  ultimate  paymenti    A  general  expectation 

(r)  (1877)  2  App.  Oa.  814  (1878)  8  Gh.  at  p.  492. 

(s)  Ewl  of  AyCuford   v,  Morris 


.608  DURESS  AND  UNPITE  INFT.UENCE. 

dariTed  from  ths  poritioa  in  loeiety  of  the  borrower's  fMiiily,  the  lender 
intending  to  trade  on  their  probable  fear  of  ezpoenre,  may  have  the  same 
effect  NevUi  v.  SneUin^  (1880)  15  Ch.  D.  ^7^^,  702.  49  L.  J.Ch.  777 
(Denman  J.). 

2.  Tenns  pri/ma  fads  oppressive  and  extortionate  {Le. 
such  that  a  man  of  ordinaiy  sense  and  judgment  cannot  be 
supposed  likely  to  give  his  free  consent  to  them). 

Ohs.  An  exoeerive  rate  of  interest  Is  in  iteelf  nothing  more  than  a  die- 
proportionately  large  oomidemtion  given  by  the  borrower  for  the  loan :  and 
it  is  not  rnfficient^  standing  alone,  to  invalidate  a  contract  in  equity : 
Webtter  t.  Cook  (1867)  2  Ch.  542,  where  a  loan  at  60  per  cent,  per  annnm 
was  npbeld.  StuaH  V.-C.  disapproved  of  the  oase  in  TgUr  v.  Yaies  (1871) 
(11  Eq.  at  p.  276)  but  on  another  point.  And  see  Parker  v.  Butcher  (1867) 
8  Eq.  762, 767,  86  L.  J.  Ch.  552. 

3.  A  considerable  excess  in  the  nominal  amount  of  the 
sums  advanced  over  the  amount  actually  received  by  the 
borrower. 

Oht.  This  appears  in  all  the  reoent  cases  in  which  relief  has  been  given  : 
deductions  being  made  on  every  advance,  according  to  the  common  practice 
of  professed  money-lenders,  under  the  name  of  discount,  commisaion,  and 
the  like.  The  result  is  that  the  rate  of  interest  appearing  to  be  taken 
does  not  show  anytbiog  like  the  terms  on  which  the  loan  is  in  truth 
made :  and  this  may  be  considered  evidence  of  fraud  so  far  as  it  argues 
a  desire  on  the  part  of  the  lender  to  gloze  over  the  real  terms  of  the 
bargain.  A  jury  could,  perhaps,  not  be  directed  so  to  consider  it  in  a 
trial  where  fraud  was  distinctly  in  issue  ;  though  no  doubt  snch  ctroum- 
stances,  or  even  an  exorbitant  rate  of  interest,  would  be  made  matter  of 
observation. 

4.  The  absence  of  any  real  bargaining  between  the 
parties,  or  of  any  inquiry  by  the  lender  into  the  exact 
nature  or  value  of  the  borrower's  expectations. 

Obx.  These  circumstances  are  relied  on  in  £arl  of  Aylnford  v.  Morri* 
(1873)  (8  Ch.  at  p.  496)  as  increasing  the  difficulty  of  upholding  the  trans- 
action :  cp.  NeviU  v.  Sndling  (1880)  15  Ch.  D.  at  pp.  702-8.  This  again  is 
the  usoal  practice  of  the  money-lenders  who  do  this  kind  of  biuine8i>. 
Their  terms  are  calculated  to  cover  the  risk  of  there  being  no  secniity  at 
all ;  moreover  the  borrower  often  wishes  the  lender  not  to  mske  any 
Inquiries  wliibh  might  end  in  the  matter  coming  to  the  knowledge  of  the 
aaoestor  or  other  person  from  whom  the  expectations  are  derived,    Tha 


"  CATCmNG  BAKaAINSw**  609 

oonoeAlment  of  the  tnuwaction  horn  fhe  aaoestor  was  held  by  Lord 
Brougham  In  King  t«  HamUt  (1885)  2  SI  &  K.  456,  to  be  an  indiBpensable 
condition  of  equitable  relief ;  but  this  opinion  ia  not  now  aooepted  (JEwri  of 
AyUrford  v.  Morr%$  (1878)  8  Gh.  at  p.  491).  The  dedaion  in  Kiavg  v.  ffamleC 
(affirmed  in  the  Honae  of  Lorda,  bat  withont  giving  any  reaaona,  8  GL  & 
F.  218)  can  be  anpported  on  the  ground  that  the  party  aeeking  relief  had 
himself  aoted  on  the  contract  he  impeached  so  as  to  make  restitatton 
impossible. 

It  seems  safe  to  assert  that  in  any  ease  where  these 
conditions  concur,  the  burden  of  proof  is  thrown  on  the 
lender  to  show  that  the  transaction  was  a  fair  one  :  it 
seems  equally  unsafe  to  assert  that  they  must  all  concur, 
or  that  any  one  of  them  (except  perhaps  the  first)  is 
indispensable. 

It  may  then  be  asked.  By  what  sort  of  evidence  is  the  Qu.  if 
lender  to  satisfy  the  Court  that  the  borrower  was  notjj^j^ 
imposed  on?    As  there  is  no  reported  case  in  which  it  was  can  in 
considered  that  the  burden  of  proof  lay  upon  the  lender,  J^/e^ 
and  yet  he  did  so  satisfy  the  Court,  it  is  impossible  to  give  <»e»te 
any  certain  answer  to  this  question.     It  is  evidently  most 
improbable  that  in  any  case  where  the  above-mentioned 
conditions  are  present,  any  satisfactory  evidence  should  be 
forthcoming  to  justify  the  lender  (t).    Practically  the  ques- 
tion is  whether  in  the  opinion  of  the  Court  the  transaction 
was  a  hard  bargain  (u) — ^that  is,  not  merely  a  bargain  in 
which  the  consideration  is  inadequate,  but  an  unconscion- 
able bargain  where  one  party  takes  an  unfair  advantage  of 
the  other  (x). 

An  account  stated  for  the  purpose  of  a  contract  of  this 
description  is  of  no  more  validity  than  the  contract  itself, 
and  a  recital  of  it  in  the  security  does  not  preclude  the 

(0  '*No  attempt  has  been  made  D.  at  p.  708. 

to  show  by  any  independent  eyi-  {x)  Per  Jeesel  M.R.  in  Middleton 

deoce  {if  wch  a  thing  could  he  con-  v.  Brown  (G.A.)  (1878)  47  L.  J.  Gh. 

ceived  pottibU)  that  the  terms  thus  411 ;  NeviU  v.  SndLing  (1880)  15  Gb. 

imposed  on  the  plaintiff  were  fair  D.  679,  49  L.  J.  Gh.  777,  where  the 

and  reasonable."  8  Gb.  496.  lender  ■ystematioally  took  advantage 

(«)  See  the  judgment  of  the  M.B.  of    a   mistaken    over-payment    of 

Beynon  v.  Cook  (1875)  10  Gh.  891,  n.,  interest  by  the  borrower, 
and  NeM  v.  SndXing  (1880)  15  Gh. 

P.  BR 


6ia  DURESS  AND  UNDUE  INFLUENCE. 

borrower  firom  re-opening  the  account  even  as  against  pur- 
chasers or  sub-mortgagees  of  the  original  lender  who  have 
notice  of  the  general  character  of  the  transaction.     For 
such  notice  is  equivalent  to  notice  of  all  the  legal  conse-. 
quences  (y). 
Termi  on       The  borrower  who  seeks  relief  against  a  contract  of  this 
Sef  i»  ""   description  must  of  course  repay  whatever  sums  have  been 
S»^«*-        actually  advanced,  with  reasonable  interest  (according  to 
the  usual  practice  of  the  Court,  5  per  cent.),  and  the  relief 
is  granted  only  on  those  terms.     Moreover  it  is  held  not 
unjust  that  he  should  obtain  it  at  his  own  expense,  since 
he  calls  in  the  assistance  of  the  Ck>urt  to  undo  the  con- 
sequences of  his  own  folly  {z):  and  accordingly  the  general 
rule  is  to  give  no  costs  on  either  side  (a). 
As  to  the       The  rule  of  evidence  casting  a  special  burden  of  proof 
B^Dron     ^^  ^^^  lender  being  peculiar  to  equity,  there  was  generally 
the  eon-     ^q  defence  at  law  to  an  action  brought  by  him  to  enforce 
a  contract  of  this  kind.     But  since  the  rule  of  evidence 
established  in  equity  now  prevails  in  every  branch  of  the 
High  Court,  it  seems  that  when  a  lender  of  money  sue9 
on  a  special  contract,  whether  the  contract  be  embodied 
in  a  negotiable  instrument  or  not,  and  the  borrower  proves 
facts  which  bring  the  contract  within  the  description  of  a 
"  catching  bargain  "  as  understood  by  courts  of  equity,  the 


{y)  ToUenkam  v.  Oreen  (1863)  82  unfounded  chArges  of  actual  fraud  : 

L.  J.  Ch.  201 :  a  case  decided  under  EdwanU  v.  BuH  (1852)  2  D.  M.  O. 

the  old   rule  as  to  dealingB   with  at  p.  65  :  Bromley  v.  Smith  (1859) 

reversionary  interests,  but  the  prin-  26  Beav.  at  p.  676,  and  costs  might 

ciples  seem  applicable  in  aU  cases  be  given  sgaanst  the  defendant  as  to 

where  the  burden  of  proof  is  still  on  any  transaction  in  which  there  had 

the  lender.  been  misconduct  on  his  part :  TU- 

(2)  Earl  of  AyUtforO  v.   MorrU  tenham  v.  Orten  (1868)  32  L.  J.  Ch. 

(1878)  8  Ch.  at  p.  499.  201,  206.  In  NevOl  v.  SndUng  (1880) 

(a)  In  the  cases  of  sales  of  rever-  the  plaintiff  having  offered  before 

sions  under  the  former  law  on  that  actioii  brought  to  repay  the  sums 

head  the  practice  was  for  some  time  actually  advanced  with  interest  at 

to  treat  the  auit  as  a  redemption  5    per   cent.,    the    defendant   was 

suit,  and  give  the  purchaser  his  costs  ordered  to  pay  the  costs  :  15  Ch.  D. 

as  a  mor^ragee :  but  the  later  rule  at  p.  705,  cp.  Btynon  v.  Cook  (18761 

was  to  give  no  costs  on  either  side,  10  Ch.  at  p.  393,  in  judgment  ot 

except  that  the  plaintiff  had  to  bear  Jesse!  M.R. 
such  as  were   occaaoned   by  any 


BBYBBSIONABY  INTEB1ST8.  611 

lender  must  prove  the  reasonableneBS  of  the  bargain  (b) ; 
and  if  he  £uls  to  do  so,  he  cannot  recover  on  the  special 
contract,  but  can  recover  his  principal  and  reasonable 
interest  as  on  a  common  count  for  money  lent.  It  must 
be  noticed  that  the  importance  of  this  class  of  cases  is 
much  diminished,  though  the  law  is  not  affected,  by  the 
In£Mits'  Relief  Act,  1874,  which  makes  loans  of  money  to 
in&nts  absolutely  void  and  forbids  any  action  to  be  brought 
on  a  promise  to  pay  debts  contracted  during  infancy.  See 
p.  60,  eiupra. 

The  same  principles  apply,  so  four  as  they  are  applicable  AppUoa- 
to  a  transaction  of  sale  as  distinguished  from  loan,  to  the  principles 
sale  of  reversionary  interests  by  persons  who  are  not  in  an  *®  ^^  ®' 

.  .  rever- 

independent  position,  as  when  the  sale  is  made  by  a  man  nonary 
only  just  of  age  in  pursuance  of  terms  settled  while  he  ^  pentm» 
was  still  an  infant.     Here  the  burden  is  on  the  purchaser  in  depen- 
to  show  the  fedmess  of  the  transaction.     He  is  not  bound  ^od. 
to  show  tiiat  the  prioe  given  was  absolutely  adequate ;  but 
he  is  bound,  notwithstanding  the  Act  of  1867  (31  Vict.  c.  4, 
p.  605  above),  to  show  that  it  was  such  as,  upon  the  facts 
known  to  him  at  the  time,  he  might  have  reasonably 
thought  adequate.     Moreover  he  ought  to  see,  where  prac- 
ticable, that  the  seller  has  independent  legal  advice.    These 
rules  seem  to  be  established  by  0*Rorke  v.  Bolingbroke  (c), 
which  is  remarkable  as  an  almost  singular  instance  of  an 
impeached  transaction  with  an  ''expectant  heir"  being 
upheld     There  a  father  and  son  negotiated  with  a  pur- 
chaser for  the  sale  of  the  son's  reversionary  interest  ex- 
pectant on  the  death  of  the  &bther.  The  sale  was  completed 
three  weeks  after  the  son  came  of  age.     The  price  was 
agreed  to  after  some   bargaining;   it  was  founded  on  a 
statement  of  value  furnished  by  a  third  person,  and  would 

(&)  Qtt.  is  this  »  question  for  the  (c)  (1877)  2  App.  Ga.  814.    Cp. 

jury  OP  for  the  Conrt?    Prima  facie  Fry  v.  Lane  (1888)  40  Ch.  D.  812, 

it  riiould  be  a  question  of  fact :  but  68  L.  J.  Gh.  113,  where  the  seller 

there  are  some  analogies  {e.g.  the  was  poor  and    ignorant,  and   the 

oases    on    restraint    of   trade)    for  same  solicitor  purported  to  act  for 

treating  it  as  a  question  of  law.  both  parties. 

EB2 


612  DUBE8S  AND  UNDU     INFLUENCE. 

have  been  adequate  if  the  fetther's  life  had  been  a  good 
ona  The  purchaser  did  not  know  and  had  no  reason  to 
believe  anything  to  the  contrary,  but  it  was  in  tact  a  bad 
lifa  The  young  man  took  no  independent  advice,  being 
"  penniless,  and  except  for  his  fether  friendless  "  (d).  The 
&ther  died  within  three  month  after  the  sale.  Four  years 
later  the  son  sued  to  have  the  whole  transaction  set  aside, 
but  fitiled  in  the  House  of  Lords  after  succeeding  in  the 
Court  of  Appeal  in  Ireland.  The  majority  of  the  Lords  (e) 
held  that  the  burden  of  proof  was  indc^  on  the  buyer, 
but  that  he  had  satisfied  it.  Lord  Hatherley  dissented, 
thinking  that  it  was  the  buyer's  absolute  duty  to  see  that 
the  yoimg  man  had  independent  advica 
'^orpriae"  Another  alleged  ground  of  equitable  relief  against  oon- 
ptori'        tracts,  founded  on  the  notion  of  an  inequality  between  the 


contracting  parties,  has  been  "  surprise,"  or  ''  surprise  and 
improvidence."  But  this  seems  to  be  only  a  way  of 
describing  evidence  of  fraud  or  of  a  relation  of  dependence 
between  the  parties. 
EyMu  V.  The  case  of  Evans  v.  Llewellyn  (/)  may  be  taken  as 
^^  ^  the  typical  instanca  The  plaintiff  was  a  person  of  inferior 
station  and  education  who  acquired  by  descent  a  title  in 
fee  simple  to  a  share  in  land  in  which  the  defendant  had  a 
limited  interest.  His  title  was  first  communicated  to  him 
by  the  defendant,  who  represented  to  him  (as  the  fact 
appears  to  have  been)  that  the  circumstances  of  the  family 
created  a  moral  obligation  in  the  plaintiff  not  to  insist  on 
his  strict  rights,  and  offered  to  purchase  his  interest  for 
a  substantial  though  not  adequate  consideration.  The 
defendant  suggested  to  the  plaintiff  to  consult  his  friends 
in  the  matter,  which  however  he  did  not  do.  Three  days 
intervened  between  the  first  interview  and  the  conclusion 
of  the  business  by  the  acceptance  of  the  defendant's  offer. 
It  was  considered  that  the  plaintiff  was  under  the  circum- 
stances not  a  free  agent  and  not  equal  to  protecting  him- 

{d)  Lord  Blackburn,  at  p.  837.  gan,  and  Lord  Gordon. 

(e)  Lord  Blackbom,  Lord  O'Ha-  (/)  See  following  note. 


"SUBPRI8E."  613 

self,  and  was  taken  by  surprise,  and  the  sale  was  set 
aside  {g).  The  case  seems  somewhat  anomalous,  but  it  has 
been  suggested  by  very  high  authority  that  it  would  still 
be  followed  in  setting  aside  a  contract  as  "  improvident 
and  hastily  carried  into  execution "  (A),  and  it  has  been 
distinctly  approved  in  the  Court  of  Appeal  in  Chancery  {i). 

It  is  submitted,  however,  that  there  is  no  intelligible  ^  *' . 
reason  for  treating  aurptdse  or  iTwprovidence  as  a  substan-  &a  imy 
tive   cause  for    setting    aside    contracts,  much   less  for  5****^' 

tlT6  CftDlO 

attempting  to  give  these  words  a  technical  signification,  for  avoid- 
Both  terms  are  in   feet   merely  negative  and  relative.  ^J^|^' 
Surprise  is  nothing  else  than  the  want  of  mature  delibera- 
tion :  improvidence  is  nothing  else  than  the  want  of  that 
degree  of  vigilance  which  a  man  of  ordinary  prudence  may 
be  expected  to  use  in  guarding  his  own  interest.  Now  one 
man's  deliberation   and   prudence  are  not  the   same  as 
another  man's,  nor  is  the  same  man  equally  deliberate  or 
prudent  at  all  times.     A  man  may  enter  into  a  contract 
with  less  deliberation  than  the  average  wisdom  of  mankind 
would  counsel,  or  than  he  himself  commonly  uses,  in  affairs 
of  the  like  nature,  and  yet  the  contract  may  be  perfectly 
valid.     But  if  it  be  disputed  whether  there  was  or  not  any  ^J^im- 
real  consent,  or  whether  consent  was  or  not  fireely  given,  •uncee  of 
then  circumstfimces  of  what  is  called  surprise  or  improvi-  n^y  be 
dence  may  be  very  material  as  evidence  bearing  on  those  material 
issues.    Unusual  haste  or  folly  in  entering  into  an  engage-  ina  the 
ment  is  a  circumstance  to  be  accounted  for :  and  the  best  ^  j^^^^ 
way  of  accounting  for  it  may  in  all  the  circumstances  of  a  groimds 
particular  case  be  to  suppose  that  the  party  did  not  know  i^g  the 

(g)  (1787)  2  Bro.  C.  0.  150 ;  1  {h)  Lord  St  Leonards  in  Curzon 

Ck>z  888,  a  fuller  report,  which  is  y.  Bdworthy  (1852)  8  H.  L.  G.  742  : 

here  followed ;  the  otiier  if  correct  there  the  appellant  relied  on  express 

would  reduce  it  to  a  plain  case  of  charges  of  fraud,  which  were  not 

fraud  or  at  aUerents  miarepresenta-  made  out :  but  Lord  St.  Leonards 

iion.  In  ffaygarikv.  Wearing  (1S71)  thought   he   might   possibly  have 

12  Eq.  820,  40  L.  J.  Ch.  577,  which  succeeded  if  he  had  rested  his  case 

to  some  extent  resembled  this,  the  on  the  ground  suggested, 

ground  of  the  decision  was  a  posi-  {%)  Per  Turner  L. J.  in  Baker  y. 

tive    misrepresentation    as   to  the  Monk  (1864)  4  D.  J.  S.  at  p.  892. 
yalue  of  the  T^/mpexty, 


614  DURESS  AND  UNDUE  INFLUENCE. 

^*fa*Sl.    ^^^^  ^^  ^^^^^^  about,  or  that  he  was  wrought  upon  by  oon- 
mental       duct  of  the  Other  party  of  such  a  kind  as  to  make  the 
J^^®'      contract  voidable  on  the  ground  of  fraud     Surprise  and 
improvidence,  therefore,  are  matters  fix)m  which  it  may 
be  inferred,  as  a  fact  in  particular  cases,  that  there  was  no 
true  consent,  or  that  the  consent  was  not  free.     But  it  is 
not  to  be  affirmed  as  a  general  proposition  of  law  that 
haste  or  imprudence  can  of  itself  be  a  sufficient  cause  for 
setting  aside  a  contract,  nor  even  that  there  is  any  par- 
ticular degree  of  haste  or  imprudence  fi^m  which  funda- 
mental error,  fiuud,  or  undue  influence,  will  be  invariably 
presumed.     "  The  Court  will  not  measure  the  degrees  of 
PoMible     understanding"  (k).      It    seems  to  follow  that  what  is 
tion  of       recorded  in  such  a  case  as  Evans  v.  Llewellyn  {I)  is  not  an 
]^]]J^'     enunciation  of  law,  but  an  inference  of  fiict.     Such  an 
inference  may  be  useful   in  the  way  of  analogy   when 
similar  circumstances    recur,  but    is   not   binding  as  an 
C^inioDs    authority.     The  view  here  taken  may  be  supported  by  the 
in  Earl  of  observations  of  the  judges  in  the  Earl  of  Ba4h  and  Movm^ 
M^u^   togru€'«  Case  (A.D.  1693)  (m).    In  that  case  Baron  Powel 
giie*8  caM.  said  (3  Ch.  C&  at  p.  56) : 

'  "It  is  said, This  is  a  Deed  that  was  obtained  by  Surprise  and  Oiroam- 

▼ention.  Now  I  peroeiye  this  word  Surprise  is  of  a  very  lan^e  and  general 
Extent  ...  I  hardly  know  any  Surprise  that  should  be  sofficieiit  to 
■et  aside  a  Deed  after  a  Verdict,  unless  it  be  mixed  with  Fraud,  and  that 
expressly  proved."  [i,  e,  the  yerdiot  in  fayoor  of  the  deed  predndee  the 
party  from  asserting  in  eqnity  that  he  did  not  know  what  he  was  about : 
for  he  should  have  set  up  that  case  at  law  on  the  plea  of  non  ettfactumy 
'' It  must  be  admitted  that  there  was  Deliberation,  and  Oonaideratkm  and 
Intention  enough  proved  to  make  it  a  good  Deed  at  Law,  otherwise 
there  would  not  have  been  a  Veidiot  for  it "  :  per  L.  G.  J.  Treby,  tft. 
at  p.  74. 

The  judgment  of  the  Lord  Keeper  Somers  is  even  more 
.decided,  and  points  out  clearly  the  difference  between  an 


(k)   Bridgman   v.    Oreen    (1755)         <m)  S  Ch.  Ca.  55*  C^  Stoiy,  Sq, 
Wilmot»  58,  61.  jTvisp.  §  251« 

(0  (1787)  I  CJox  888. 


"SURPRISE,"  ETC.  616 

instrument  which  is  void  both  at  law  and  in  equity,  and 
.  one  which  is  voidable  in  equity  (p.  108) : — 

<*It  k  true,  it  ii  ohftiged  in  «he  BiU  timt  this  Deed  wm  obtained  by 
Fmid  and  Smprize  .  .  Bot  whosoever  reads  over  the  Depositions  wiU 
see  that  the  End  they  aimed  at  wis  to  attack  the  Deeds  themselves  as 
false  Deeds  and  not  truly  execated  ;  bat  that  being  Tried  at  Law,  and 
the  Wni  and  Deeds  verified  by  a  Verdiot,  the  Coonsel  have  attempted  to 
make  nse  of  the  same  Evidence,  and  read  it  all,  or  at  least  the  greatest 
Part  of  it,  as  Evidence  of  Surprize  and  Ciromnvention 

'^  Now,  for  this  word  (Suprixe)  it  is  a  W<»d  of  a  general  Signification, 
so  general  and  so  uncertain,  that  it  is  impossible  to  fix  it ;  a  Man  is  snr- 
priz'd  in  every  rash  and  indiscreet  Action,  or  whatsoever  Is  not  done  with 
to  much  Judgment  and  Consideration  as  it  ought  to  be  :  But  I  suppose 
tlie  Grenttemen  who  use  that  Word  in  this  Case  mean  such  Surprize  as  is 
attended  and  accompanied  with  Praud  and  Circumvention  |  such  a  Sur- 
prize indeed  may  be  a  good  ground  to  set  aside  a  Deed  so  obtain'd  in 
Equity  and  hath  been  so  in  aU  times ;  but  any  other  Surprize  never  was, 
and  I  hope  never  wiU  be,  because  it  will  introduce  such  a  wild  Uncer- 
lidnty  in  the  Decrees  and  Judgments  of  the  Court,  as  wiU  be  of  greater 
Consequence  than  the  Belief  in  any  Case  will  answer  for.** 

Moreover  the  doctrine  thus  stated  is  exactly  analogous  Analogjr 

to  the  undoubted  law  concerning  inadequacy  of  considera-  ^g  ^  i^. 

tion.     The  value  of  the  subiect-matter  of  a  contract,  and  •^equacy 

,  .  of  consi« 

therefore  the  adequacy  of  the  consideration,  which  depends  deration. 

on  it,  is  in  most  cases  easier  to  measure  than  the  degree 
of  deliberation  or  prudence  with  which  the  contract  was 
entered  into.  "  Surprise  **  or  "  improvidence  "  represents 
Nothing  but  an  opinion  of  the  general  character  of  a  trans- 
action, founded  on  a  precarious  estimate  of  average  human 
conduct,  and  cannot  well  have  a  greater  legal  effect  than 
inadequacy  of  consideration,  which  generally  admits  of 
being  determined  by  reference  to  the  market  value  of  the 
object  at  the  date  of  the  contract. 

5.  Limits  of  the  right  of  rescission. 

The  right  of  setting  aside  a  contract  or  transfer   of'^^J^^ 
property  voidable  on  the  ground   of  undue  influence  isdonisUke 
analogous  to  the  right  of  rescinding  a  transaction  voidable  ^J^i"^! 
on  any  other  ground,  and  follows  the  same  rules  with  some  ''•wJ.  Ac- 
slight  modificatiQus  in  detail.  ^mSd^by 

flMne  rales, 


616  DURESS  AKD  UNDUK  INFLUENCE. 

What  is  said  in  the  last  chapter  of  rescinding  contractfi 
for  fraud  or  misrepresentation  may  be  taken  as  generally 
applicable  here.     We  proceed  to  give  some  examples  of 
the  special  application  of  the  principles. 
Kxampl^w.      The  right  to  set  aside  a  gifb  or  beneficial  contract  void- 
able for  undue  influence  may  be  exercised  by  the  donor's 
representatives  or  successors  in  title  {tC)  as  well  as  by  him- 
self, and  against  not  only  the  donee  but  persons  claiming 
through  him  (o)  otherwise  than  as  purchasers  for  value 
without  notice  (p).     But  the  jurisdiction  is  not  exercised 
at  the  suit  of  third  persons.   The  Court  will  not  refuse,  for 
example,  to  pay  a  fund,  at  the  request  of  a  petitioner 
entitled  thereto,  to  the  trustees  of  a  deed  of  gift  previously 
executed  by  the  petitioner,  because  third  parties  suggest 
that  the  gift  was  not  freely  made  (g). 
jnriidio-        On  the  other  hand  it  is  not  necessary  to  the  support  of 
confined  to  ^  claim  to  set  aside  a  contract  on  the  ground  of  undue  in- 
*^fl™^2    fl^eiice  to  show  that  the  influence  was  directly  employed 
pArty  to     by  another  contracting  party.     It  is  enough  to  show  that 
^J^"*"     it  was  employed  by  some  one  who  expected  to  derive 
benefit  from  the  transaction,  and  with  the  knowledge  of 
the  other  party  or  under  circumstances  suflScient  to  give 
him  notice  of  it.    The  most  frequent  case  is  that  of  an 
ancestor  or  other  person  in  loco  parentis  inducing  a 
descendant,  etc.,  to  give  security  for  a  debt  of  the  ancestor. 
But  if  the  other  party  does  all  he  reasonably  can  to  guard 
against  undue  influence  being  exerted  (as  by  insisting  on 
the  person  in  a  dependent  position  having  independent 
professional  advice),  and  the  precautions  he  demands  are 


(n)  B,g,  Ezecator :  HutUer  v.  AU  270,  23  L.  J.  Ch.  629. 

ftiiu  (1882)  3  M.  &  K  113  ;  CknOU  (o)  Hvffumin  v.  Batdey  (1807)  14 

y.    Acwwih    (1869)    8    Eq.    558.  Vee.    273,    289.     Gp.    MoUmg    f. 

Aflrignee  in  baokraptoy  :  Ford  v.  Keman  (1842)  2  Dr.  &  W.  31,  40. 

Oldm  (1867)  3  Bq.  461, 86  L.  J.  Ch.  {p)  ColfbeU  t.  Bndt  (1855)  20 

651.    Devisee  :  Grtde^  t.  Mou^  Beav.  524,  528. 

(1861)  4  De  a  &  J.  78.     Heir  :  {q)  MeUalf^i  tr.  (1864)  2  D.  J.S. 

Hclman  y.  Zoynei  (1854)  4  D.  M.  6.  122,  88  L.  J.  Gb.  80& 


CONFIBMATION  AND  AOQUnSCEKCE.  617 

satisfied  in  a  maimer  he  camiot  object  to  at  the  time,  the 
contract  cannot  as  against  him  be  impeached  (r). 

It  appears  to  be  at  least  doubtful  whether  a  contract  can  • 
be  set  aside  on  the  ground  of  influence  exerted  on  one  of 
the  parties  by  a  stranger  to  the  contract  who  did  not 
expect  to  derive  any  benefit  from  it  (s) :  except  where  the 
contract  is  an  arrangement  between  cestuis  que  trust 
claiming  under  the  same  disposition,  and  the  trustee  puts 
pressure  on  one  of  the  parties  to  make  concessions ;  the 
ground  in  this  case  being  the  breach  of  a  trustee's  special 
duty  to  act  impartially  (t). 

The  right  to  set  aside  a  contract  or  gift  originally  void-  Confirma- 
able  on  the  ground  of  undue  influence  may  be  lost  by  aoqni- 
express  confirmation  (u)  or  by  delay  amounting  to  proof* 
of  acquiescence  (x).    But  any  subsequent  confirmation  will 
be  inoperative  if  made  in  the  same  absence  of  independent 
advice  and  assistance  which  vitiated  the  transaction  in  the 
beginning  (y).     This  has  been  strongly  stated  in  the  judg- 
ment of  the  Lords  Justices  in  Moxon  v.  Payne  (z) :  "Frauds 
or  impositions  of  the  kind  practised  in  this  case  cannot  be 
condoned ;  the  right  to  property  acquired  by  such  means 
cannot  be  confirmed  in  this  Court  unless  there  be   full 
knowledge  of  all  the  facts,  full  knowledge  of  the  equitable 
rights  arising  out  of  those  &cta,  and  an  absolute  release 
from  the  undue  influence  by  means  of  which  the  frauds 

(r)  Ck>mparo    CoNteU   v.    Brock  8  D.  M.  6. 188,  147,  25  L.  J.  Gh. 

(1856)  20  Beav.  524,  with  Berdoe  v.  768  ;  Turner  v.  CoOint  (1871)  7  Ch. 

Dawson  (1865)  84  Beav.  608.   As  to  829,  41  L.  J.  Ch.  558  ;  Alloard  v. 

wh*t  amoants  to  notice,  Maiiland  Skinner  (1887)  86  Gh.  Div.  145,  see 

T.  Badkhouie  (1847)  16  Sim.  58;  especially    per   Lindley    L.J.    at 

Tottenham  ▼.  Oreen  (1868)  82  L.  J.  p.  187. 

Ch.  201.  (y)  Savery  t.  King  (1856)  6  H.  L. 

(«)  BenOey  y.  Madoay  (1869)  81  C.  at  p.  664,  25  L.  J.  Ch.  482. 

Beay.  143,  151.    On  principle  the  (z)  (1878)  8  Gh.  881,  885,  48  L. 

answer  should  clearly  he    in  the  J.  Gh.  240.    And  a  confirmation 

negatiye.  will  not  he  helped  hy  the  presence 

{t)  FlHt  y.  Barker  (1871)  7  Gh.  of  an  independent  adyiser  of  the 

104,  41  L.  J.  Gh.  64.  pvty  confirming,  if,  in  oonseqaenoe 

(«)  Stump  y.  Cfaby  (1852)  2  D.  of  the  continuing  influence  of  the 

M.  6.  628,  22  L.  J.  Ch.  852;  Morm  other  party,  his  adyioe  Is  in  fact 

y.  Boyal  (1806)  12  Yes.  855.  disregaided  :  ib. 

{x)  Wright  Y,Vanderplank{lS65) 


'i618  BTJBSSS  AKD  UNDUE  ISTLXTKBCR. 

were  practised.  To  make  a  confirmation  or  compromise  of 
any  value  in  this  Court  the  parties  must  be  at  arm's 
length,  on  equal  terms,  with  equal  knowledge,  and  with 
sufficient  advice  and  protection."  And  delay  which  can  be 
accounted  for  as  not  unreasonable  in  all  the  circumstances 
is  no  bar  to  relief  (a).  In  short,  an  act  ''  the  effect  of 
which  is  to  ratify  that  which  in  justice  ought  never  to 
have  taken  place  "  ought  to  stand  only  upon  the  clearest 
evidence  (6).  The  effect  of  delay  on  the  part  of  the  person 
seeking  relief  is  also  subject  to  a  special  limitation.  In  a 
case  between  solicitor  and  client,  or  parties  standing  in 
any  other  confidential  relation,  less  weight  is  given  to  the 
lapse  of  time  than  is  due  to  it  when  no  such  relation 
subsists  (c). 

In  the  case  of  a  deliberate  confirmation  after  the  rela- 
tion of  influence  has  ceased  to  exist,  it  need  not  be  shown 
that  the  donor  knew  the  gift  to  be  voidable  (d) :  other- 
wise where  the  alleged  confirmation  is  connected  with  the 
original  transaction  and  takes  place  under  similar  circum- 
stances (e). 

An  adoption  of  the  instrument  impeached  for  a  par- 
ticular purpose  (as  by  the  exercise  of  a  power  contained 
in  it)  may  operate  as  an  absolute  confirmation  of  the 
whole  (/). 
SembUj  It  seems  that  the  presumption  of  influence  arising  from 

im^on    confidential  relations  is  not  to  be  extended  to  cases  where 
^?^^    a  merely  trifling  benefit  is  conferred  (g).    This  is  more 

(a)  Kempton  v.  AMee  (1874)  10  advice,  and  there  wm  an  attempt  to 

Gh.  15,  44  L.  J.  Ch.  196.  conceal  the  real  character  of  the 

(6)  Mone  t.  Royal  (1806)  12  Vee.  traneaetioD.     But   the   oonaidered 

■%t  p.  874.  opinion  of  Kinderaley  V.-G.  on  the 

(c)  OrtdeyY.Mou9ley{lS61)4'De  general   principle   is   doabtleae    a 

G.  i  J.  78,  96.    Bat  even  in  a  case  weighty  one. 

between  aolioitor  and  oUent  a  delay  {e)  Kemp^on  ▼.  AMee  (1874)  10 

of  eighteen  yean  has  been   held  Ch.  15,  44  L.  J.  Gh.  195. 

fatal  5  Ckampum  v.  Rigby  (1880)  1  (/)  JarraU  ▼.  -4W»i»(1870)  9Eq. 

Bum.  ft  M.  589.  468,  89  L.  J.  Gh.  849. 

id)  MUcheU  y.  H<mfray  (1881)  {g)  Per   Tmner  L.J.  Bkodee  v. 

8  Q.  B.  Div.  587, 50  L.  J.  Q.  B.  460.  BaU  (1866)  1  Gh.  at  p.  258,  and 

In  Tomam  t.  Judge  (1855)  8  Drew.  lindley  L.J.  AUeard  y.   SkiMner^ 

800,  there   was   not   independent  80  Gh.  IMt.  at  p.  186. 


soucrroR  and  client.  619 

than  a  simple  application  of  the  maxim  De  miimais  rum  J*JJ?  *^ 
owrixt  lex,  for  the  transaction  brought  in  question  might  trifling, 
be  in  itself  of  great  magnitude  and  importance,  though 
the  advantage  gained  by  one  party  over  the  other  were 
not  large.  Indeed  the  case  to  which  this  principle  seems 
most  likely  to  be  applicable  is  that  of  a  transaction  not  of 
a  commercial  nature,  and  on  such  a  scale  that  the  parties, 
dealing  fairly  and  deliberately,  might  choose  not  to  be 
curious  in  weighing  a  comparatively  small  balance  of  profit 
or  loss. 

As  regards  the  relation  between  solicitor  and  client,  it  Special 
is  a  question  whether  there  is  not  an  inflexible  rule  of  J^^^n^ 
public  policy  against  the  solicitor  taking  a  gift  from  the  <^  MUcitor 
client,  irrespective  of  any  presumption  of  influence.     Such 
a  rule,  if  it  exists,  is  outside  the  law  of  contract  altogether. 
It  would  apply  only  during  the  actual  continuance  of  the 
relation :  and  the  mere  fact  that  A.  has  been  B.'s  solicitor 
would  not  raise  a  presumption  against  an  act  of  bounty 
from  B.  to  A.  after  that  relation  had  been  fuUy  deter- 
mined.    But  the  subject  has  never  been  authoritatively 
discussed,  with  regard  to  the  supposed  distinction,  in  a 
Court  of  Appeal ;  and  existing  authorities  (h)  can  hardly 
he  deemed  conclusive. 

(h)  Sm  Morgan  v.  MineU  (1877)  6  Gh.  D.  638. 


(    620    ) 


CHAPTER  Xin. 

Agreements  of  Imperfect  Obligation. 

Naton  of  Under  this  head  we  propose  to  deal  with  topics  of  a  mis- 
Jj^^***   cellaneous  kind  as  regards  their  subject-matter,  and  forming 
tumi.         anomalies  in  the  general  law  of  contract,  but  presenting  in 
those  anomalies  some  remarkable  uniformities  and  analo- 
gies of  their  own. 

Between  contracts  which  can  be  actively  enforced  by  the 
persons  entitled  to  the  benefit  of  them,  and  agreements  or 
promises  which  are  not  recognized  as  having  any  legal 
effect  at  all,  there  is  another  class  of  agreements  which 
though  they  confer  no  right  of  action  are  recognized  by 
the  law  for  other  purposes.  These  may  be  called  agree- 
ments of  imperfect  obligation.  Some  writers  (as  Pothier) 
speak  of  imperfect  obligations  in  the  sense  of  purely  moral 
duties  which  are  wholly  without  the  scope  of  law:  and 
what  we  here  call  Imperfect  Obligations  are  in  the  civil 
law  called  Natural  Obligations.  But  tins  term,  the  use  of 
which  in  Roman  law  is  intimately  connected  with  the  dis- 
tinction between  iu8  civile  and  iu8  gentium  (a),  would  be 
inappropriate  in  English. 
Howpco-  Where  there  is  a  perfect  obligation,  there  is  a  right 
coupled  with  a  remedy,  i,e,  an  appropriate  process  of  law 
by  which  the  authority  of  a  competent  court  can  be  set  in 
motion  to  enforce  the  right. 

Where  there  is  an  imperfect  obligation,  there  is  a  right 
without  a  remedy.  This  is  an  abnormal  state  of  things, 
making  an  exception  whenever  it  occurs  to  the  general  law 

(a)  Sayigny,  Obi  1.  22,  eqq.   For      Uw  see  ProC  Mnlrfaeftd'B  note  on 
a  Bommaiy  statement  of  the  effects      QnL  8. 119  <k 
of  a  natnxal  obligafeion  in  Roman 


DEBTS  BARBED  BT  STATUTE.  621 

expressed  in  the  maxim  Ubi  vas  ibi  remediwm.  And  it 
can  be  produced  only  by  the  operation  of  some  special  rule 
of  positive  law  (6).  Such  rules  may  operate  in  the 
following  ways  to  produce  an  imperfect  obligation : 

1.  By  way  of  condition  subsequent,  taking  away  a 
remedy  which  once  existed 

2.  By  imposing  special  conditions  as  precedent  to  the 
existence  of  the  remedy. 

3.  By  excluding  any  remedy  altogether. 

We  shall  now  endeavour  to  show  what  are  the  efifects  of 
an  imperfect  obligation  in  these  three  classes  of  cases. 

1.  Under  the  first  head  we  have  to  notice  the  operation  L  Ran«dy 
of  the  Statutes  of  Limitation,  so  fiEu:  as  it  illustrates  the  statutes  of 
present  subject  (c).     The  statute  of  limitation  of  James  L  J^*^ 
(21   Jac.   1,  c.  16,  &  3)  enacts  that  the  actions  therein 
enumerated — which,  with  an  exception  since  repealed, 
comprise  all  actions  on  simple   contracts  {d) — "  shall  be 
commenced  and  sued  "  within  six  years  after  the  cause  of 
action,  and  not  after.      By  the  modem  statute  3  &  4 
Wm.  4,  a  42,  s.  3  (c),  following  the  presumption  of  satis- 
faction after  the   lapse  of  twenty  years  which  already 
obtained  in  practice  {f),  it  is  enacted  that  {jMer  alia)  all 
actions  of  covenant  or  debt  upon  any  bond  or  other 

(6)  It  was  onoe  held  that  a  purely  this  point.    Bat  an  infant's  contract 

moral  obligatioD  might  give  ri»e  to  Is  in  its  inception  not  of  imperfect 

an  inchoate  right  whi<£  could  be  obliffation,  bat  rimply  voidable, 

made  binding  and  enforceable  by  an  (a)  As  to  the  extent  to  which 

express  promise.    And  if  this  were  the  statate  applies  to  proceedings 

so  the  statement  In  the  text  would  in  eqaitysee  Xnox  v.  6fjfe  (1871-2) 

not  be  correct :   but  the  modem  L.  R.  5  H.  L.  656,  42  L.  J.  Gh.  234. 

authorities  disallow  such  a  doctrine.  {e)  This  section  is  not  affected  by 

See  2  Wms.   Saond.   428  ;  fupm,  the  Real  Property  Limitation  Ac^ 

pp.  168-9.  1874,  except  that  proceedings  to 

(c)  Debts  contracted  by  an  infant  recover  rent  or  money  charged  on 

are  often  compared  to  debts  barred  land  now  have  to  be  taken  within 

by  the  statutes  of  limitation:  and  12  years  :  87  &  88  Vict  a   67, 

the  comparison  is  just  to  this  extent,  si.  1,  8. 

that  at  common  law  they  might  be  (/)  Bac.  Abr.  5.  226  (Limitation 

rendered  enforceable  in  much  the  D.  1)  ;  Roddam  v.  MorUy  (1856-7) 

same  manner,  and  practically  the  1  De  G.  ft  J.  17, 26  L.  J.  Ch.  488. 
authorities  are  interchangeable  on 


622  AOBBIMSMTB  OF  DfPmraCV  (mUOAXIOK. 

speciality  "*  shall  be  oommenoed  and  sued  "  within  twenty 
years  of  the  cause  of  action.  We  need  not  stop  to  consider 
the  exceptions  for  disability,  or  the  rules  as  to  the  time 
from  which  the  statutes  begin  to  run  :  for  the  object 
throughout  this  chapter  will  not  be  to  define  to  what 
cases  and  under  what  conditions  the  laws  under  considera- 
tion apply,  when  that  is  abundantly  done  in  other  treatises^ 
but  to  observe  the  general  results  which  follow  when  they 
do  apply. 
The  right  Now  there  is  nothing  in  these  statutes  to  extinguish  an 
gone,  ^ijjjgg^^i^u  Qjj^QQ  created.  The  party  who  neglects  to  en- 
force his  right  by  action  cannot  insist  upon  so  enforcing  it 
after  a  certain  time.  But  the  right  itself  is  not  gone.  It 
is  not  correct  even  to  say  without  qualification  that  there 
is  no  right  to  sue,  for  the  protection  given  by  the  statutes 
is  of  no  avail  to  a  defendant  unless  he  expressly  claims  it. 
Seijeant  Williams,  affcer  noticing  the  earlier  conflicts  of 
opinion  on  this  point,  and  some  unsatis&ctory  reasons 
given  at  different  times  for  the  rule  which  has  prevailed, 
concludes  the  true  reason  to  be  that  **  the  Statute  of  Limi- 
tations admits  the  cause  or  consideration  of  the  action  still 
existing,  and  merely  discharges  the  defendant  from  the 
remedy  "  (g).  This  alone  shows  that  an  imperfect  obliga- 
tion subsists  between  the  parties  after  the  time  of  limita- 
tion has  run  out.  In  the  case  of  unliquidated  demands  that 
obligation  is  practically  inoperative,  since  an  unliquidated 
demand  cannot  be  rendered  certain  except  by  action  or  an 
express  agreement  founded  on  the  relinquishment  of  an 
existing  remedy.  But  in  the  case  of  a  liquidated  debt  the 
continued  existence  of  the  debt  after  the  loss  of  the  remedy 
Beeulte.  by  action  may  have  other  important  effecta  Although 
^^JTof  *^^  creditor  cannot  enforce  pajmient  by  direct  process  of 
creditor     law,  he  is  not  the  less  entitled  to  use  any  other  means  of 

preBerred. 

ig)    2    Wins.    Saund.   168  ;   cp.  of  the  atfttate.     The  rule  continnM 

SemieUim  v.  Atcheaon  (1845)  7  Q.  under  the  new  pnMstioe,  Order  XIX. 

B.  »t  p.  878,  14  L.  J.  Q.  B.  at  p.  r.  16  [Na  211]. 
888,  on  the  tenhnical  effect  of  a  plea 


PSBT8  BABBED  BY  STATUTB.  628 

obtaining  it  which  he  might  lawfully  have  used  before. 
Thus  if  he  has  a  lien  on  goods  of  the  debtor  for  a  general 
account,  he  may  hold  the  goods  for  a  debt  barred  by  the 
statute  (A).  And  any  lien  or  express  security  he  may  have 
for  the  particular  debt  remains  valid  (i).  K  the  debtor 
pays  money  to  him  without  directing  appropriation  of  it 
to  any  particular  debt,  he  may  appropriate  it  to  satisfy  a 
debt  of  this  kind  (k) :  much  more  is  he  entitled  to  keep 
the  money  if  the  debtor  pays  it  on  account  of  the  particu- 
lar debt,  but  not  knowing,  whether  by  ignorance  of  fact  or 
of  law,  that  the  creditor  has  lost  lus  remedy.  So  an  exe- 
cutor may  retain  out  of  a  legacy  a  banned  debt  owing  fix)m 
the  legatee  to  the  testator  (Q.  He  may  also  retain  out  of 
the  estate  such  a  debt  due  from  the  testator  to  himself: 
and  he  may  pay  the  testator's  barred  debts  to  other  per- 
sons (m) :  and  this  even  if  the  personal  estate  is  insuffi- 
cient (n).  But  though  a  creditor  may  retain  a  barred 
debt  if  he  can,  he  may  not  resist  another  clcdm  of  the 
debtor  against  him  by  a  set-oflf  of  the  barred  debt :  for  the 
right  of  set-off  is  statutory,  and  introduced  merely  to  pre- 
vent cross  actions,  so  that  a  claim  pleaded  by  way  of  set- 
off is  subject  to  be  defeated  in  any  way  in  which  it  could 
be  defeated  if  made  by  action  (o).  This  reason  applies 
equally  to  all  other  cases  of  imperfect  obligations.  Herein 
our  law  differs  firom  the  Roman,  in  which  conypenmtio  did 
not  depend  on  any  positive  enactment,  but  was  an  equit- 
able right  derived  from  the  iua  gentivmi. 

Again,  the  creditor's  lost  remedy  may  be  revived  by  the  Acknow- 

Ih)  8pear$Y.  HarUy  (1800)  8  Esp.  J.  166  ;  Stahlsckmidt  v.  LeU  (1853) 

81.  1  Sm.  &  G.  415. 

(i)  Higffifu  v.  SeoU  (1831)  2  6.  &  (n)  Lowit  v.  Rumney  (1867)  4  £q. 

Ad.  418  ;  Seager  v.  Aston  (1857)  26  451.     This  is  a  pecaliar  rule.    It  is 

L.  J.  Ch.  809  (on  the  statate  of  3  &  otherwise  as  to  olaims  not  enforoe- 

4Wm.  4).  able  by  reason  of  the  Statate  of 

{k)  MUU  ▼.  Fowhet  (1839)  5  Binsr.  Frauds  :  Be  JUnnuon  (1885)  29  Ch. 

N.  O.  455 ;  Nath  v.  Hodgson  (1855)  Div.  358,  54  L.  J.  Ch.  950. 


6  D.  M.  O.  474,  25  L.  J.  Ch.  186.  (o)  The  defence  of  set-off  must 

[I)  Cowrtenay  v.   WUHafM  (1844) 
Ha.  589,  13  L.  J.  Ch.  461  ;  op. 
lo$e  y.  Oould  (1852)  15  Beay.  189. 
(m)  HUl  V.  Walker  (1858)  4  K.  & 


(I)  Cowrtenay  v.  WiUiajM  (1844)  be  speciallT  met  by  replying  the 
8  Ha.  589,  13  L.  J.  Ch.  461  ;  op.  sUtnte  of  limitotion,  «ee  1  Wms, 
Rote  y.  OouUt  (1852)  15  Beay.  189.       Sannd.  431. 


624  AGBKKICENTS  OF  mPERFECT  OBUGATION. 

b^bkr  **^*  ^^  *^®  debtor.  The  decisions  on  the  statute  of  James  L 
have  established  that  a  renewed  promise  to  pay,  or  an 
acknowledgment  firom  which  a  promise  can  be  inferred, 
excludes  the  operation  of  the  statute.  It  was  formerly 
held  that  the  statute  rested  wholly  on  a  presumption  of 
payment,  and  therefore  that  any  acknowledgment  of  the 
debt  being  unpaid,  even  though  coupled  with  a  refusal  to 
pay,  was  sufficient  But  this  opinion  has  long  since  been 
overruled  (p).  Again,  it  has  been  said  that  idthough  the 
original  remedy  is  gone,  the  original  consideration  remains 
as  a  sufficient  foundation  for  a  subsequent  promisa  But 
this  explanation  is  not  satisfying,  since  the  consideration 
for  the  new  promise  is  wholly  past,  and  therefore  insuffi- 
cient according  to  modem  doctrine  (g).  The  only  theory 
tenable  on  principle  seems  to  be  that  the  statute  is  a  law 
merely  of  procedure,  giving  the  debtor  a  defence  which  he 
may  waive  if  he  think  fit.  Nevertheless  it  is  held  that 
the  acknowledgment  operates  as  evidence  of  a  new  promise, 
and  therefore  is  not  effectual  unless  made  before  action 
brought  (r). 

WhjUji         The  modem  law  has  been  concisely  stated  by  Mellish  L. J. 

aoknow-     "  There  must  be  one  of  three  things  to  take  the  case  out  of 

*®^^«'*'^**  the  statute.  Either  there  must  be  an  acknowledgment  of 
the  debt,  from  which  a  promise  to  pay  is  to  be  implied;  or 
secondly,  there  must  be  an  unconditional  promise  to  pay 
the  debt ;  or  thirdly,  there  must  be  a  conditional  promise 
to  pay  the  debt,  and  evidence  that  the  condition  has  been 
performed  "  («).  The  promise  must  be  to  pay  the  debt  as 
eof  debito  inetitiae;  a  promise  to  pay  as  a  debt  of  honour 

(p)  2  Wma.  Sannd.  183, 184.  Itch  (1878)  3  G.  P.  1).  333,  in  C.  A., 

{q)  Qee  p.  170,  above.  4  C.  P.  Div.  63,  48  L.  J.  C.  P.  43, 

(r)  Bateman  v.  PintUr  (1842)  3  Q.  which  also  show  how  mnoh  difficulty 

B.  674, 11  L.  J.  Q.  B.  281.  there  may  be  in  determining  in  a 

(«)  MUcheWi  claim  (1871)  6  Gh.  paKioalar  case  whether  there  has 

at  p.  828.    And  see  Wilby  ▼.  Elgee  been   an    unconditional    promise  ; 

(1875)  L.  R  10  C.  P.  497,  44  L.  J.  Quincey  v.  Skarpe  (1876)  1  Ex.  D. 

G.  P.  254  ;    Choiemore   t.    Turner  72,  46  L.  J.  Ex.  847  ;  SkedT.Lind- 

(1874)  (Ex.  Gh.),  L.  R.  10  Q.  B.  600,  fay  (1877)  2  Ex.  D.  314,  46  L.  J. 

606,  610,  620,  46  L.  J.  Q.  B.  66,  aod  Ex.  249. 

the  later  case  of  Meyerhoff  y.  FrUh- 


STATUTES  OF  LIMITATION.  625 

is  insufficient,  as  it  excludes  the  admission  of  legal  lia- 
bility (t).  When  the  promise  is  implied,  it  must  be  as  an 
inference  of  hct,  not  of  law;  the  payment  of  interest  under 
compulsion  of  law  does  not  imply  any  promise  to  pay  the 
principal  (u). 

The  acknowledgment  or  promise,  if  express,  must  be  in 
writing  and  signed  by  the  debtor  (9  Geo.  4,  c.  14,  s.  1)  or 
his  agent  duly  authorized  (Mercantile  Law  Amendment 
Act,  1856,  19  &  20  Vict  a  97,  a  13).  But  an  acknow- 
ledgment may  still  be  implied  from  the  payment  of  interest, 
or  of  part  of  the  principal  on  account  of  the  whole,  without 
any  admission  in  writing  (x). 

The  more  recent  statute  which  limits  the  time  for  suing  Statutory 
on  contracts  by  specialty  contains  an  express  proviso  as  to  to»l>^ 
acknowledgment  and  part  payment  (3  &  4  Wm.  4,  c.  42,  knowledg- 
8.  5)  (y).     The  cases  as  to  acknowledgment,  &c.  under  the  gpedalty 
statute  of  James,  and  Lord  Tenterden's  Act,  are  not  applic-  ^*^ 
able  to  this  proviso.     Here  the  operation  of  the  acknow- 
ledgment is  independent  of  any  new  promise  to  pay,  and 
the  action  in  which  the  acknowledgment  is  to  be  operative 
must  be  founded  on  the  original  obligation  alone  (z). 

The  Act  for  the  Limitation  of  Actions  and  Suits  relating  Stat  of 
to  Real  Property  (3  &  4  Wm,  4,  a  27,  s.  34)  does  not  only  „  to  reaT* 
bar  the  remedy,  but  extinguishes  the  right  at  the  end  of  P?^'^' 
the  period,  of  limitation.     It  is  therefore  unconnected  with  well  as 
our  present  subject  tSen^ 

We  have  seen  that  by  the  operation  of  the  statutes  of  »way. 
limitation  applicable  to  contracts  the  right  itself  is  not  ^f  ^ 
destroyed,  but  only  the   conditions   of  enforcing  it   are  limitation 
aflFected.     The  law  of  limitation  is  a  law  relating  not  to  J^o«oug 
the  substance  of  the  cause  of  action,  but   to  procedure,  foreign 


laws 


(t)  Maecard  v.  OAome  (1876)   1  ing  (1781)  1  Sm.  L.  C. 

C.  P.  D.  668,  46  L.  J.  0.  P.  727  (on  (y)  See  Peon  v.  Laing  (1871)  12 

Lord  Tenterden's  Act).  £q.  41,  40  L.  J.  Oh.  226. 

<u)  Morgan  v.  JUywland$  (1872)  L.  (z)  Moddam  v.  Morley  (1856-7)  1 

B.  7  Q.  B.  498,  498,  41  L.  J.  Q.  K  Be  6.  &  J.  1,  26  L.  J.  Ch.  488, 

187.  opinion  of  Williams  and  Growder 

(a;)  2  Wms.  Sannd.  181, 187,  see  JJ.  at  p.  16. 
abo  the  notes  to  WhUcomb  y.  WhU- 

P.  S  S 


626  AGBBEBCBNTS  OF  IBCPERFBCT  OBLiaATION. 


pan  of 
lex  fori. 


»J®°^^  Hence  follows  a  oonsequence  which  is  important  in  private 
only,  international  law,  namely  that  these  enactments  belong  to 

treated  as  ^j^^  ^  /ori,  not  to  the  lex  contractus,  and  are  binding  on 
all  persons  who  seek  their  remedy  in  the  courts  of  this 
country.  A  suitor  in  an  English  court  must  sue  within 
the  time  limited  by  the  English  statute,  though  the  cause 
of  action  may  have  arisen  in  a  country  where  a  longer  time 
is  allowed  (a).  Conversely,  an  action  brought  in  an  Elnglish 
court  within  the  English  period  of  limitation  is  maintain- 
able  although  a  shorter  period  limited  by  the  law  of  the 
place  where  the  contract  was  made  has  elapsed,  even  if  a 
competent  court  of  that  place  has  given  judgment  in  favour 
of  the  defendant  on  the  ground  of  such  period  having 
expired  (6).  And  for  this  purpose  a  document  under  seal 
has  been  treated  by  an  English  court  as  creating  a  specialty 
debt,  though  made  in  a  country  where  our  distinction 
between  simple  contract  and  specialty  debts  does  not  exist, 
and  more  than  six  years  before  action  brought  (c). 

The  House  of  Lords,  as  a  Scotch  court  of  appeal,  has 
had  to  decide  a  similar  question  as  between  the  law  of 
Scotland  and  the  law  of  France.  It  was  held  that  the 
Scottish  law  of  prescription  applied  to  an  action  brought 
in  Scotland  on  a  bill  of  exchange  drawn  and  accepted  in 
France,  the  right  of  action  on  which  in  France  had  been 
saved  by  judicial  proceedings  there  (rf).  In  the  case  where 
the  shorter  of  the  two  periods  of  limitation  is  that  allowed 
by  the  foreign  law  governing  the  substance  of  the  contract, 

(a)  British   Linen  Co.    v.  Drumr         (c)    Alliance    Bank   of   Simla  v. 

numd  (1830)  10  B.  A  C.  903.  Carejf  (1880)  5  C.  P.  D.  429,  49  L. 

(6)  Ifuber  v.  Steiner  (1835)  2  Bing.  J.   O.  P.   781  (a  bond  execated  in 

N.  U.  202  (debt  barred  bj  French  Biittsh  India).    Possibly  the  nee  by 

law) :  ffarrii  v.  Quine  (1869)  L.  R.  Britiah  lubjects  of  an  English  form, 

4  Q.  B.  653,  38  L.  J.  Q.  B.  831  (debt  nnmeaning  at  the  place  of  execa- 

barred  by  Manx  law) :  in  the  latter  tion,  may  justify  the  inference  that 

case  Oockborn  C.  J.  expressed  some  they  at  the  time  intended  the  dooa- 

doubt  as  to  the  principle,  admitting  ment  to  operate  as  an  Bnglish  deed, 

however  that  the  rale  was  settled  by  Otherwise  the  deeision  seems  not 

authority  :    Savigny    too   (Syst.  8.  easy  to  snpport. 
273)  is  for  applying  that  law  which         {d)  Don  v.  Lippmann  (1837)  5  01. 

governs  the  substance  of  the  con-  A  F.  1.    See  also  2  Wms.  g^nnd. 

tract.  899. 


STATUTE  OP  FRAUDS.  627 

and  that  period  has  elapsed,  it  is  of  course  necessary  to 
ascertain  that  the  foreign  law  is  analogous  to  our  own  in 
its  operation,  and  merely  takes  away  the  remedy  without 
making  the  contract  void  at  the  end  of  the  time  of  pre- 
scriptioa  But  it  is  considered  that  an  actual  destruction 
of  the  right  would  be  so  inconvenient  and  unreasonable 
that  it  may  almost  be  presumed  that  such  is  not  the 
operation  of  the  law  of  any  civilized  state;  and  the 
English  courts  would  not  put  such  a  construction  on 
the  foreign  law  unless  compelled  so  to  do  by  very  strong 
evidence  (e). 

We  shall  presently  see  that  analogous  questions  con- 
cerning the  lex  fori  may  aiise  in  other  cases  of  imperfect 
obligations. 

2.  Under  the  second  head  fall  the  cajses  of  particular  2.  Condi- 
classes  of  contracts  where  the  law  requires  particular  acts  cedent  to 

to  be  done  by  the  parties  or  one  of  them  (in  respect  of  the  ^S^^' 

^    ,       -^  1  .     V  \.  .       ^  ,         A.  Statute 

form  of  the  contract  or  otherwise)  as  conditions  precedent  of  Frauds, 

to  the  contract  being  recognized  as  enforceable.  *"  * 

A.  The  most  important  of  the  enactments  thus  imposing 
special  conditions  on  contracts  is  the  fourth  section  of  the 
Statute  of  Frauds  (29  Car.  2,  c.  3).    . 

The  fourth  section  enacts  that  after  the  date  there  men- 
tioned 

"  no  action  sball  be  brought  whereby  to  charge  any  executor  or  adninii- 
Irator  upon  any  special  promise  to  answer  damages  out  of  bis  own  estate ; 
or  whereby  to  charge  the  defendant  upon  any  special  promise  to  answer 
for  the  debt,  default,  or  miscarriages  of  another  person ;  or  to  charge  any 
person  upon  any  agreement  made  upon  conidderation  of  marriage ;  or 
upon  any  contract  or  sale  of  lands,  tenements,  or  hereditaments,  or  any 
intf  rest  in  or  conc<-ming  them  ;  or  upon  any  agreement  that  is  not  to  be 
performed  within  the  space  of  one  year  from  the  making  thereof ;  unless 
the  agreement  upon  which  such  action  shall  be  brought  or  some  memoran- 
dum or  note  thereof  shall  be  in  writing,  and  sigoed  by  the  party  to  be 
cbargfd  therewith  or  some  other  person  thereunto  by  him  lawfully 
anthorized." 

{e)    Huber    v.    Steiner   (1885)  2      French  law  of  prescription  the  right 
Bing.  N.  C.  202,  where  it  was  in     was  absolutely  extinguished, 
vain  attempted  to  show  that  by  the 

S  S  2 


528  AGREEMENTS  OF  IKPERFECT  OBLIQATION. 

The  terms  of  the  l7th  section    (16th  in  the   Revised 
Statutes)  are  different.    It  does  not  only  prevent  contracts 
for  the  sale  of  goods  of  the  value  of  101  or  upwards  (Lord 
Tenterden's  Act,  9  Geo.  4,  a  14,  s.  7,  has  the  effect  of 
substituting  "value"  for  "price")  (/)  firom   being  sued 
upon  except  under  the  conditions  specified,  but  enacts 
that  they  shall  not  "be  allowed  to  be  good" :  and  it  has 
been  thought  that  where  the  conditions  are  not  satisfied 
the  agreement  is  absolutely  void  as  against  the  party  who 
has  not  signed  (g).     But  the  weight  of  recent  opinion  is 
in  favour  of  holding  that,  notwithstanding  the  difference 
of  language,  the  l7th  section,  like  the  4th,  is  only  a  law 
of  procedure  (A).     There  is  no  positive  decision  on  the 
point.     The  cases  of  part  acceptance  of  the  goods  or  part 
payment  of  the  price  are  expressly  provided  for,  either  of 
these  having  the  same  effect  as  a  duly  made  memorandum 
in  writing. 
Effect  of        We  now  return  to  the  fourth  section.     For  the  sake  of 
■ome  time  brevity  we  shall  use  the  term  "  informal  agreement "  to 
notBetfled.  signify  any  agreement  which  comes  within  this  section  and 
does  not  comply  with  its  requirements. 

For  some  time  it  was  not  fully  settled  what  was  the 
effect  of  this  enactment  on  informal  agreements.  There 
was  some  authority  for  saying  it  made  them  void.  It  was 
never  held  necessary  in  the  courts  of  law  for  a  defendant 
sued  on  an  informal  agreement  to  plead  the  statute 
specially,  as  in  the  case  of  the  statutes  of  limitation :  and 
it  has  been  held  (before  the  C.  L.  P.  Act)  that  a  special  plea 

(/)J7armanv.J2ctfw,  18C.B.  587,  p.   488;  Brett  L.J.  in  Britain  v. 

696,  25  T..  J.  C.  P.  267.  JRoniier  (1879)  11  Q.  B.  D.  at  p.  127, 

{g)  Where  one  party  has  signed  48  Ia  J.  Ex.  362.    Cp.  jadgment  of 

and  the  other  not,  the  contract  is  Williams  J.  in  Bailty  v.  Sweeting 

said  to  he  good  or  not  at  the  election  (1861)  9  C.  B.  N.  S.  843,  859,  SO  L. 

of  the  party  who  has  not  sisned —  J.  G.  P.  160,  164;  and  see  Anson, 

i.  e.  he  may  »ue  the  other  who  has  69,  and  an  article  in  9  Am.  Law 

signed,  thongh  the  other  cannot  sue  Bev.  486.    The  snpposed  distinctioD 

him.    Benjamin  on  Sale,  219.    This  between  the  two  sections  is  pointedly 

is  also  the  case  under  s.  4 :  Laythoarp  taken  in  Laythoarp  v.  Bryant  ( 1 836) 

T.  Bryant  (1836)  2  Bing.  N.  C.  736.  2  Bing.  N.  O.  736,  747,  and  Lerovx 

(h)  Lord  Blackbnrn  in  Madddeon  v.  Brimm  (1862)  12  C.  B.  801,  824, 

y.  AUienon  (1883)  8  App.  Ca.  at  826, 22  L.  J.  C.  P.  1. 


INFORlfAL  AGREEMENTS  UNDER  STATUTE  OF  FRAUDS.  629 

was  not  only  unnecessary  but  bad  as  an  "argumentative 
denial"  of  the  contract  declared  upon  (i).  Moreover  an 
action  cannot  be  maintained  when,  although  it  is  not 
brought  to  enforce  any  right  ex  contractu^  the  right  which 
is  the  foundation  of  the  plaintiff's  claim  depends  on  an 
informal  agreement.  In  Garrington  v.  Roots  (k)  the 
plaintiff  sued  in  trespass  for  seizing  his  horse  and  cart :  the 
defendant  pleaded  that  they  were  incumbering  and  doing 
damage  on  his  ground  :  the  plaintiff  replied  a  verbal 
agreement  that  the  defendant  should  sell  the  crop  and 
grass  growing  there  to  the  plaintiff,  and  that  the  plaintiff 
might  enter  with  his  horse  and  cart  to  take  them.  It  was 
held  that  this  agreement  was  for  the  sale  of  an  interest  in 
land  within  a  4,  and  that  the  plaintiff  could  not  set  it  up, 
though  it  might  have  been  available,  as  a  licence  only,  in 
answer  to  an  action  for  trespass  ({).  Both  here  and  in  the 
later  case  of  Reade  v.  Lawb  above  cited  the  judges  said 
distinctly  enough  that  informal  agreements  were  not  only 
not  enforceable  but  void.  And  so  Sir  W.  Grant  appears 
to  have  thought  in  Randall  v.  Morgan  (m).  These  dicta 
are  not  consistent  with  the  decisions  to  be  presently 
mentioned  in  which  the  existence  of  an  imperfect  obliga- 
tion is  implied.  And  there  had  also  been  judicial  expres- 
sions of  opinion  the  other  way.  But  it  is  not  necessary  to 
notice  these,  for  the  point  was  expressly  decided  by  the 
Court  of  Common  Pleas  in  Leroux  v.  Brown  (n),  where 
the  earlier  dicta  are  also  considered.  The  action  was  Beddon 
on  a  contract  not  to  be  performed  within  one  year,  and  ™Brow^: 

made  in  France,  where  by  the  French  law  the  plaintiff  ■«'®^'»* 

•^  ^  not  void, 

(»)  Seade  v.  Lamb  (1851)  6  Ex.  snbeequent  stage  of   the  prooeed- 

180,  20  L.  J.  Ex.  161.    Since  the  iDgs :  ib. 

Judicature  Acta  the  defence  of  the  {k)  (1887)  2  M.  &  W.  248. 

statute  most  always  be  distinctly  (l)  Cp.Cro9byy.Wadtwor^{lS06) 

raised  on    the  pleadings.      Order  6  East  602. 

XIX.  r.  16,  cp.  r.  20.    As  to  the  (m)  (1806)  12  Ves.  at  p.  78. 

former  practice  in  equity  see  John^  (n)  (1862)  12  G.  B.  801,  22  L.  J. 

oMon  V.  Banhote  (1876)  2  Ch.  Div.  C.  P.  1 5  and  see  per  Lord  Black- 

298,  46  L.  J.  Gh.  661.    Once  pro-  bum  in  Maddtton  t.  Aldenon,  uH 

perly  raised  the  defence  is  available  tup. 
without  further  repetition  at  any 


AGREEMENTS  OF  IMPERFECT  OBLIGATION. 

but  only  might  have  sued  on  it.  For  the  plaintiff  it  was  argued 
foroeaUfl.  that  &  4  of  the  Statute  of  Frauds  applied  to  the  substance 
of  the  contract,  and  therefore,  on  funeral  principles  of 
private  international  law,  did  not  Affect  contracts  which 
were  made  out  of  England,  and  which  as  to  their  substance 
were  to  be  governed  by  the  law  of  the  place  where  they 
were  made.  But  for  the  defendant  it  was  answered  that 
this  enactment,  like  the  Statute  of  Limitation,  only  affected 
the  remedy,  and  was  therefore  a  law  of  the  procedure  of 
the  English  courts,  and  as  such  binding  on  all  suitors  who 
might  seek  to  enforce  their  rights  in  those  courts  :  the 
agreement  might  be  good  enough  for  any  r'jher  purpose, 
but  the  plaintiff  could  not  sue  on  it  in  Eiigland.  And 
this  view  was  adopted  by  the  court.  Jervis  C.J.  said:  "ITie 
statute  in  this  part  of  it  does  not  say  that  unless  those 
requisites  are  complied  with  the  contract  shall  be  void,  but 
merely  that  no  action  shall  be  brought  upon  it.  .  .  . 
The  fourth  section  relates  only  to  the  procedure  and  not 
to  the  right  and  validity  of  the  contract  itself."  It  will  be 
observed  that  the  plaintiff  was  here  in  the  curious  position 
of  contending,  in  order  to  support  his  right  to  recover  on 
a  contract  made  in  France,  that  it  would  have  been 
absolutely  void  if  made  in  England  (o).  If  this  decision 
and  the  reasons  given  for  it  are  correct,  it  would  seem  to 
follow  that  a  foreign  or  colonial  court  ought  to  enforce  an 
English  agreement,  notwithstanding  that  it  was  informal 
under  s.  4  of  the  Statute  of  Frauds,  if  it  had  the 
genercJ  requisites  of  a  valid  contract  in  English  law, 
and  was  not  informal  according  to  the  local  law  of  pro- 
cedure. 

It  has  even  been  argued  that  the  words  "no  action 
shall  be  brought "  confine  the  operation  of  the  statute  to 
civil  process,  so  that  an  informal  agreement  for  service  not 

(o)   Leroux  v.  Brown  was  doubted  have  jnrt  seeA  that  the  assiimptioii 

by    WlUes    J.    in    WiUianu    app.  as  to  the  effect  of  s.  17,  which, 

Wheeler  reap.  (1860)  8  C.  B.  X.  S.  however,  is  not  neoessary  to  the 

299,  316.    Savigny,  Syst.    8.  270,  decision,  is  not  now  generally  ao- 

also  takes  the  opposite  view.    We  oepted. 


MONET   PAID  UNDER  INFORMAL  AGREEMENTS.  631 

to  be  performed  within  a  year  might  be  enforced  by  criminal 
process  under  the  Master  and  Servant  Act,  1867.  But  the 
Court  held  that  such  a  construction  would  be  too  unreason- 
able, and  the  statute  must  mean  that  informal  agreements 
are  not  to  be  enforced  in  any  way  (p). 

It  being  established  that  the  informal  agreements  we  'Romlu  of 
are  considering  are  not  void,  it  follows  that  they  give  rise  obligation 
to  imperfect  obligations.    We  will  now  indicate  the  resulta  "J^g^^!^ 
We  have  seen  that  neither  the  obligation  itself,  nor  any  of  Fraads. 
right  immediately  founded  on  it,  can  be  directly  enforced. 
But  it  is  recognized  for  the  purpose  of  explaining  anything 
actually  done  in  pursuance  of  it,  and  anything  so  done  may 
in  many  cases  be  a  good  consideration  for  a  new  obligation 
on  a  subsequent  and  distinct  contract,  or  a  sufficient  foun- 
dation for  a  new  obligation  quasi  ex  contractu, 

A.  Money  paid  under  an  informal  agreement  cannot  be  Aj  to 
recovered  back  merely  on  the  ground  of  the  agreement  paid, 
not  being  enforceable.  Thus  if  a  responsibility  has  been 
assumed  and  executed  under  a  verbal  guaranty,  the 
guarantor  cannot  recover  back  the  money  paid  by  him  (q). 
So  a  purchaser  cannot  recover  a  deposit  paid  on  an 
informal  agreement  for  the  sale  of  land,  the  vendor 
remaining  ready  and  willing  to  complete  (r).  And  not 
only  can  the  one  party  keep  money  actually  paid  to  him 
by  the  other,  but  if  money  is  paid  by  A.  to  B.  in  order  to 
be  paid  over  to  C.  in  pursuance  of  an  informal  agreement 
between  A.  and  0.  which  C.  has  executed,  then  C.  can 
recover  it  as  money  received  to  his  use.     In  Oriffith  v. 


ip)  Banks  v.  Orosaland  (1874)  L.  sabstantiye  offences  by  tbe  Con- 

R.  10  Q.  B.  97,  44  L.  J.  M.  C.  8.  spiracy  and  Protection  of  Property 

The   Act  iff  now  repealed  by  tbe  Act,  1875,  38  &  39  Vict.  c.  86. 

Employee  and  Workmen  Act,  1875,  (5)  Shaw  y.  Woodcock  (1827)  7  B. 

38  &  89  Vict.  c.  90.     Qu,  whether  &  C.  78,  83,  84.    Gp.   Sioeet  v.  Lee 

the  decision  be  applicable  to  the  (1841)  8  M.  &  6r.  452. 

malicions    breaches  of  contract  in  (r)  Thomoi  v.  Brown  (1876)  1  Q. 

particular   cases    which  are  made  B.  I).  714,  45  L.  J.  Q.  B.  811. 


632  AGREEMENTS  OF  IMPBRrECT  OBLIGATTON. 

Toung  (s)  the  plaintiff  was  the  defendant's  landlord.  The 
defendant  wished  to  assign  to  one  P.,  which  he  could  not 
do  without  the  plaintiff's  consent.  It  was  verbally  agreed 
that  P.  should  pay  the  defendant  1001.  for  goodwill,  out  of 
which  the  defendant  was  to  pay  40Z.  to  the  plaintiff  for 
his  consent  to  the  assignment  P.  knowing  of  this  agree- 
ment paid  the  1002.  to  the  defendant :  it  was  held  that 
the  defendant  was  liable  to  the  plaintiff  for  40i.  in  an 
action  for  money  received  to  his  use.  Lord  EUenborough 
said :  ''If  one  agree  to  receive  money  for  the  use  of  another 
upon  consideration  executed,  however  frivolous  or  void  the 
consideration  might  have  been  in  respect  of  the  person 
paying  the  money,  if  indeed  it  were  not  absolutely  im- 
moral or  illegal,  the  person  so  receiving  it  cannot  be 
permitted  to  gainsay  his  having  received  it  for  the  use  of 
that  other." 

On  the  same  principle,  if  on  the  faith  of  an  informal 
agreement  money  has  been  paid  in  advance  to  a  party  who 
afterwards  refuses  or  fails  to  perform  his  part  of  it,  or  has 
been  expended  on  his  account,  it  is  conceived  that  proof  of 
the  agreement  may  be  admitted  to  show  what  was  in  fiact 
the  consideration  which  has  failed  {t). 

But  an  executor  may  not  pay  or  retain  a  debt  which 
by  reason  of  the  Statute  of  Frauds  the  creditor  cannot 
enforce  (u). 

As  to  B.  The  execution  of  an  informal  agreement  may  be  shown 

2J^JJ2I?*  ^  ^  f^*»  ^^^  *^®  party  who  has  had  some  benefit  froia 
such  execution,  so  as  in  te^t  to  get  what  he  bargained 
for,  cannot  treat  the  bargain  as  a  nullity.  Thus  the 
deliveiy  of  possession  under  an  informal  agreement  for  the 
sale  of  land  is  a  good  consideration  for  a  promissory  note 
for  the  balance  of  the  purchase-money  (x).  It  was  held  in 
the  case  cited  that  the  bargain  was  for  a  future  convey* 

is)  (1810)  12  East  618.  Div.  868,  64  L.  J.  Ch.  960. 
(0  See  PuOroOsy,  Lawu  (1876)  (x)  /<me»  t.  Jmet  (1840)  6  M.  & 

1  Q.  K  D.  284,  45  L.  J.  Q.  B.  178.  W.  84. 
(u)  lie  Mawimm  (1886)  29  Ch. 


PAST  PERFORMANCE.  633 

ance,  and  that  the  defendant,  who  did  not  deny  the  plaintiffs' 
allegation  that  they  were  willing  to  convey,  had  got  all  he 
bargained  for. 

The  same  holds  of  an  account  stated.  In  Gocking  v. 
Ward  (y)  there  was  an  oral  agreement  by  an  incoming 
tenant  from  year  to  year  to  pay  lOOL  to  the  outgoing 
tenant :  it  was  held  that  the  agreement  was  within  s.  4 
of  the  statute,  and  the  outgoing  tenant  could  not  recover 
the  1002.  on  the  agreement  itself,  but  that  on  an  account 
stated  he  could. 

Again,  money  due  simply  under  an  informal  agreement 
from  the  plaintiff  to  the  defendant  cannot  of  course  be  set 
off;  but  the  performance  of  an  informal  agreement  by  the 
defendant  may  be  good  as  an  accord  and  satisfaction.  In 
Lavery  v.  Turley  {z)  the  plaintiff  sued  for  goods  sold, 
&a:  the  defendant  pleaded  an  equitable  plea  showing 
that  in  pursuance  of  an  agreement  between  the  parties 
(which  turned  out  to  be  verbal)  the  defendant  had  given 
up  to  the  plaintiff  possession  of  a  house  and  premises  in 
satisfection  of  the  causes  of  action  sued  upon.  The  plea 
was  held  good,  and  it  seems  it  was  good  enough  at  law 
(per  Bramwell  and  Channell  BB.).  Pollock  C.B.  said :  "It 
is  pleaded  as  a  fact  that  the  defendant  performed  the 
agreement  and  the  plaintiff  accepted  such  performance  in 
satis&ction.  The  objection  that  the  agreement  was  not 
in  writing  is  got  rid  of.  The  fourth  section  of  the  Statute 
of  Frauds  does  not  exclude  unwritten  proof  in  the  case  of 
executed  contracts "  (a).  This  of  course  does  not  mean 
that  the  agreement  itself  can  in  any  case  be  sued 
upon  (a). 

C.  It  is  a  well-known  doctrine  of  equity  that  one  who  A«  to  pait 
has  partly  performed  an  informal  agreement  for  the  pur-  J^^" 

equity. 

{y)  (1845)  1  C.  K  858, 15  L.  J.  (1846)  2  C.  B.  808, 814, 15  L.  J.  0. 
G.  P.  245.  P.  170,  and  remwlDB  on  the  diotam 

(s)  (1860)  6  H.  A;  N.  289, 80  L.  J.  there  in  Sandenon  t.  Oravet  (1875) 
Ex.  49.  L.  R.  10  Ex.  284, 288,  241, 44  L.  J. 

(a)  Cp^    South    V.    Straiu^ridge      Ex.  210. 


634  AGKEEHEHTS  OF  IMPERFECT  OBLIGATION. 

chase  or  hiring  of  land  (b)  is  entitled  to  and  can  sue  for  a 
specific  performance  at  the  hands  of  the  other  pai^y,  if  the 
acts  of  part  performance  have  been  done  on  the  fiedth  of  an 
existing  agreement,  and  have  been  of  such  a  kind  that  the 
parties  cannot  be  restored  to  their  original  position,  and  if 
the  existence  of  an  agreement  is  reasonably  to  be  inferred 
from  the  acts  themselves,  or  they  are  "  unequivocally 
referable  to  the  contract  "  (c).  This  seems  to  be  the  real 
meaning  of  the  distinctions  as  to  what  is  or  is  not  a  suffi- 
cient part  performance.  Payment  of  money  is  in  itself  an 
equivocal  act,  and  therefore  the  part  payment  of  purchase- 
money  is  not  a  sufficient  part  performance  (d).  But  pay- 
ment of  increased  rent  by  a  yearly  tenant  holding  over  has 
been  held  a  sufficient  part  performance  of  an  agreement  for 
a  lease  («).  Here  the  part  performance  consists  not  in  the 
payment  itself,  but  in  a  possession  which,  though  continuous 
in  time  with  the  old  possession  of  the  plaintiff  as  yearly 
tenant,  is  shown  to  be  in  fact  referable  to  some  new  agree- 
ment (/).  This  doctrine  of  part  performance  is  not  in 
direct  contradiction  of  the  Statute  of  Frauds.  It  would  be 
erroneous  to  say  that  a  court  of  equity  accepts  proof  of  an 
oral  agreement  and  part  performance  as  a  substitute  for 
the  evidence  required  by  the  statute.  The  plaintiff  s  right 
in  the  first  instance  rests  not  on  contract  but  on  a  principle 
akin  to  estoppel;  the  defendants  conduct  being  equivalent 
to  a  continuing  statement  to  some  such  effect  as  this :  It 

(6)  The  doctrine  U  not  extended  view,  and  oonld  not  accept  Nunn  v. 

to    other    transactions,   Britain  v.  Fabian,  10  Q.  K  Diy.  p.  160. 
Hasnter  (1879)  11  Q.  B.  Div.  123,  (/)  On   the    general    theory    oi 

131,  48  L.  J.  Ex.  862.  posAt-ssion  as  constituting  part  per- 

(c)  MaddUaon  v.  Aldenon  (1883)  formanoe  see  per  Jessel  &LIL 
8  App.  Ca.  at  p.  476;  BeU's  Prin-  Ungley  v.  UngUy  (1877)  6  Ch.  Div. 
ciples,  479,  cited  by  Lord  Selbonie,  at  p.  890 :  '*  The  reason  is  that 
»6.  at  p.  477.  possession  by  a  stranger  is  evidence 

(d)  Lord  Selbome,  8  App.  Ga.  at  that  there  was  some  contmct,  and  ia 
p.  479.  such  cogent  evidence  as  to  compel 

(e)  iViifin  V.  Fabian  (1865)  1  Ch.  the  Court  to  admit  evidence  of  the 
36,  85  L.  J.  Ch.  140.  See  explaoa-  terms  of  the  contract  in  order  that 
tion  of  that  case  by  Baggallay  L.  J.  justice  may  be  done  between  the 
in  Hum^reyi  v.  Oreen  (1882)  10  parties";  to  same  effect  Cotton 
Q.  R  Div.  at  p.  156,  52  L.  J.  Q.  L  J.  in  Britain  v.  Botgiler  (1879) 
B.  140  ;  Brett  L.J.  took  a  different  11  Q.  B.  Div.  at  p.  181. 


AGREEMENTS  IN  CONBIDEBATION  OF  KABRIAGE.  635 

is  true  that  our  agreement  is  not  binding  in  law,  but  you 
are  safe  as  far  as  I  am  concerned  in  acting  as  if  it  were. 
A  man  cannot  be  allowed  to  set  up  the  legal  invalidity  of 
an  agreement  on  the  faith  of  which  he  has  induced  or 
allowed  the  other  party  to  alter  his  position  (gr).  In  the 
law  of  Scotland  such  &cts  are  said  to  "raise  a  personal 
exception  "  (A).  The  same  principle  of  equity  is  carried 
out  in  cases  of  representation  independent  of  contract  (see 
p.  638,  below)  and  even  of  mere  acquiescence.  In  equity 
an  owner  may  be  estopped  by  acquiescence  from  asserting 
his  rights,  although  there  has  not  been  any  agreement  at 
all  (i).  This  also  explains  why  the  plaintiiF  must  show 
part  performance  on  his  own  side,  and  part  performance  by 
the  defendant  would  be  immaterial  (k).  When  the  Court 
is  satisfied  that  the  plaintiff  has  altered  his  position  on  the 
faith  of  an  agreement,  and  that  the  defendant  cannot  be 
heard  to  deny  the  existence  of  that  agreement,  it  proceeds 
to  ascertain  by  the  ordinary  means  what  the  terms  of  the 
agreement  were.  The  proof  of  this  is  strictly  collateral  to 
the  main  issue,  though  the  practical  result  is  that  the 
agreement  is  enforced. 

D.  The  case  of  an  agreement  in  consid3ration  of  marriage  Ante- 
presents  special  difficulties,  and  has  to  be  treated  in  an  agree- 
exceptional  manner.    This  subject  is  fully  discussed  in  Mr.  =>«»<»• 
Davidson's  volume  on   settlements   (Eav.   Con  v.   vol.   3, 
part   1,  appendix   No.   1,  to  which  place  the  reader  is 
referred   for  details).     It  is  thoroughly  settled  that  the 
marriage  itself  does  not  constitute  such  a  part  performance 

{ff)  Colon  r.  CkUon  (1865)  1  Cb.  however,  that  the  recent  aathorities 

at  p.  148,  35  L.  J.  Gh.  292,  ITorpAeet  do  not  exhibit  a  very  definite  or 

V.  Jimoj  1  SwanBt.  at  p.  181,  Dale  settled  theory. 
V.  HamHUm  (1846)  5  Ha.  at  p.  881 ;  (A)  Bell,  cited  by  Lord  Selbome, 

accordingly  the  cases  on  estoppel  at  8  App.  Gas.  476. 
law  are  rompared  by  Lord  Gran-  (t)  See  Ramtden  v.  Dywn  (1865) 

worth  in  Jordan  v.  M<mey  (1854)  5  L.  R.  1  H.  L.  129,  140, 168;  PowdL 

H.  L.  G.  185,  218,  28  L.  J,  Gh.  866,  t.  Thmnaa  (1848)  6  Ha.  300  ;  and 

and  by  Lord  GampbeU  in  PiggoU  ▼.  the  remarks  of  Fry  J.  in   WUhnoU 

Sirtakm  (1859)  1  D.  F.  J.  38,  49,  v.  Barber  (1881)  15  Gh.  D.  96,  105. 
^  L.  J.  Gh.  1.  It  most  be  admitted,  [k)  CkUan  v.  Vattm,  tupro. 


636  AOBEEMBNTS  OF  IMPERFECT  OBLIGATION. 

as  to  make  the  agreement  binding  in  equity  in  the 
manner  just  mentioned,  though  other  acts  may  have  that 
effect  (ly 
Eflfecfc  of  The  next  question  is,  what  is  the  effect  of  a  post-nuptial 
tion  by  "  Bote  or  memorandum  "  satisfying  the  requisites  of  the 
P***^,  statute  on  an  ante-nuptial  informal  agreement  ? 
writing.  The  authorities  are  not  very  clear  on  this  point.     It  is 

submitted  however  that  if  attention  be  given  to  the  actual 
decisions  rather  than  to  the  language  used  on  various 
occasions,  little  or  no  real  conflict  will  be  found.  It  is  not 
the  Statute  of  Frauds  alone  that  has  to  be  considered  in 
these  cases,  but  also  the  statute  of  13  Eliz.  c.  5,  and  the 
extensive  application  of  it  by  judicial  construction  to 
voluntary  dispositions  of  property.  Two  distinct  questions 
are  in  fact  raised:  namely  whether  an  informal  ante- 
nuptial agreement  can  after  the  marriage  be  rendered  valid 
as  against  the  promisor,  and  whether  a  post-nuptial 
settlement  can  be  made  to  relate  back  to  such  an  agree- 
ment so  as  to  be  deemed  a  settlement  made  for  valuable 
consideration    and    thus    be  rendered   valid   as  against 

^^^  •■     crediUrrs.     The  first  question  is  answered  in  the  affirma- 

fyrmwrt 

promiBor :  tive  by  the  decision  in  Barkworth  v.  Youvg  (m).   The  case 

B^worth  ^g^  decided  on  demurrer,  and  the  facts  assumed  by  the 

Court  on  the  case  made  by  the  plaintiff's  bill  were  to  this 

effect.     The   testator  against   whose  estate  the  suit  was 

brought  had  orally  promised  his  daughter's  husband  before 

and  in  consideration  of  the  marriage  that  at  his  death  she 

should  have  an  equal  share  of  his  property  with  his  other 

children.      After    the    marriage    the    testator  made  an 

affidavit  in  the  course  of  a  litigation  unconnected  with  this 

agreement,  in  which  he  incidentally  admitted  it     It  was 

held  that  the  affidavit  was  a  sufficient  note  or  memorandum 

of  the  agreement  within  the  Statute  of  Frauds,  and  that 


{I)  See  Lastmoe  v.  Tiemey  (1849)       675,  22  L.  J.  Ch.  419. 
1  Mm.  k  G.  551,  571 ;  Surcome  v.  (m)  (1856)  4  Drew.  1, 26  L.  J.  Oh. 

Pinniffer  (1853)  8  D.  M.  G.  571,       158. 


AGRBBMENTS  IN  CONSIDERATION   OF  MARRIAGE.  637 

as  such,  although  subsequent  to  the  marriage,  it  rendered 
the  agreement  binding  on  the  testator. 

The  second  question  in  practically  (though,  as  will  be  ^"l*! 
seen,  not  quite  decisively)  answered  in  the  negative  by  the  settlor's 
almost  contemporaneous  decision  in  Warden  v.  Jones  (n).  ^^g^g^^^ 
That  was  a  creditor's  suit  to  set  aside  a  post-nuptial  settle-  J<met. 
ment.      It  was  attempted  to  support  the  settlement  as 
having  been  made  pursuant  to  an  oral  ante-nuptial  agree- 
ment.    This  agreement  was  not  referred  to  in  the  settle- 
ment by  any  recital  or  otherwise.     It  was  held  both  by 
Bomilly  M.R.  and  by  Lord  Cranworth  C.  on  appeal,  that 
the  settlement  could  not  be  supported :  and  Lord  Cran- 
worth  inclined  to  think  (o)  that  if  the  settlement  had 
expressly  referred  to  the  agreement  it  would  have  made  no 
differenca 

The  result  of  this  and  of  Barkwarth  v.  Young  appears 
to  be  that  the  imperfect  obligation  arising  from  an 
informal  ante-nuptial  agreement  can  be  made  perfect  and 
binding  as  between  the  parties  by  a  post-nuptial  note  or 
memorandum ;  but  that  the  marriage  consideration  cannot 
in  this  way  be  imported  into  a  post-nuptial  settlement 
made  in  pursuance  of  the  agreement  so  as  to  protect  it 
from  being  treated  as  a  volimtary  settlement  and  subject 
to  the  consequent  danger  of  being  set  aside  at  the  suit  of 
the  settlor  s  creditors.  There  seems  to  be  no  ground  in 
either  case  for  drawing  any  distinction  between  promises 
made  by  one  of  the  persons  to  be  married  and  promises 
made  by  a  third  person  to  either  of  them.  These  doctrines 
appear  to  be  both  reasonable  in  themselves  and  not  incon- 
sistent with  one  another.  There  is  nothing  unexampled  in 
a  transaction  being  valid  as  regards  the  parties  to  it  and 
invalid  as  regards  the  rights  of  other  persons.  It  is 
difficult  to  see  why  a  writing  satisfying  the  requisites  of 
the  statute  should  in  this  case  be  deprived  of  its  effect  as 
against  the  party  to  be  charged  merely  by  reason  of  the 

in)  (1857)  23  Beav.  487,  2  De  G.  (o)  NotwithstMiding  Dundoi  v. 

&  J.  76,  27  L.  J.  Gh.  190.  JhOeM  (1790)  1  Yes.  jun.  199. 


638 


AOBERMENTS  OF  DfPEBVBCT  OBLIOATIOK. 


CaMBof 
equitable 
estoppel 
distin- 
guished. 


marriage  having  taken  place  between  the  dates  of  the 
original  promise  and  of  the  writing.  On  the  other  hand 
the  rights  of  creditors  would  be  in  serious  danger  if  a  mere 
reference  to  an  ante-nuptial  agreement,  of  which  there  was 
no  evidence  beyond  the  memory  of  the  persons  who  for 
this  purpose  would  have  a  conmion  interest  in  upholding 
its  existence,  were  to  be  admitted  to  make  a  post-nuptial 
settlement  unimpeachable  (p). 

There  is  yet  another  class  of  cases,  not  resting  on  con- 
tract or  agreement  at  all,  in  which  courts  of  equity  have 
compelled  persons  to  make  good  the  representations  con- 
cerning existing  facts  (q)  on  the  faith  of  which  they  have 
induced  others  to  act.  The  distinction  is  pointed  out  by 
Bomilly  M.R  in  Warden  v.  Jones  (r) :  and  the  extension 
of  the  doctrine  to  married  women  shows  very  forcibly  that 
it  has  nothing  to  do  yaih.  contract  or  capacity  for  contract- 
ing :  for  a  married  woman's  interest  in  property,  though 
not  settled  to  her  separate  use,  has  repeatedly  been  held 
to  be  bound  by  this  kind  of  equitable  estoppel  («). 


B.  "Slip" 

in  marine 

insuranoe  : 

Acts 

requiring 

stamped 

policy. 


B.  Another  curious  and  important  instance  of  an  im- 
perfect obligation  arising  out  of  special  conditions  imposed 
on  the  formation  of  a  complete  contract  is  to  be  foimd  in 
the  case  of  marine  insurance.  In  practice  the  agreement 
is  concluded  between  the  parties  by  a  memorandum  called 
a  slip,  containing  the  terms  of  the  proposed  insurance  and 
initialed  by  the  underwriters  (t).  It  is  the  practice  of 
some  insurers  always  to  date  the  policy  as  of  the  date  of 


(p)  Cp.  the  remarks  of  Sir  T. 
Plumer  M.R.  in  BaUersbee  t. 
FarringUm  (1818)  1  ISwanst.  106, 
113,  duubtiog  whether  a  recital  iu  a 
post-nuptial  settlement  of  ante- 
nuptial written  articles  would  of 
itstlf  as  against  creditors  be  suffi- 
cient evidonoe  of  the  existence  of 
such  articles.  And  see  Ma^  on 
Voluntary  and  Fraudulent  Aliena- 
tions of  Property,  Chap.  5,  p.  346, 

(9)  Per  Lord  Selbome,  CUieens* 


Bank  of  Louisiana  v.  Fint  National 
Bank  of  New  Orleana  (1878)  L.  K- 
6  U.  1..  352,  360,  43  L.  J.  Ch.  269, 
aud  Maddiaon  t.  AlderB(m  (1883)  8 
App.  Ca.  at  p.  478. 

(r)  (1857)  23  Beav.  at  p.  498  ; 
cp.  Yeomant  v.  WilUamM  (1865)  1 
£q.  184, 186,  86  L.  J.  Ch.  283,  and 
see  DaF.  Conv.  3.  640-646. 

(f)  Skarpe  v.  Foy  (1868)  4  Ch. 
86,  Luik'i  trusts  (1869)  ib,  691. 

(<)  For  the  form  of  this,  see 
L.  B.  8  Q.  B.  471,  9  Q.  K  420. 


"slip"  in  MA.EINE  INSURANCE.  639 

the  slip  (u).  At  common  law  the  slip  would  constitute  a 
binding  contract.  This  however  is  not  allowed  by  the 
revenue  laws.  By  the  Act  now  in  force  on  this  subject, 
30  Vict.  c.  23,  s.  7,  "No  contract  or  agreement  for  sea 
insurance  (other  than  such  insurance  as  is  referred  to  in 
the  55th  section  of  the  Merchant  Shipping  Act  Amend- 
ment Act,  1862)  [i,e.  against  the  owners  liability  for 
accidents  of  the  kinds  mentioned  in  s.  54  of  that  Act] 
shall  be  valid  unless  the  same  is  expressed  in  a  policy." 
And  by  s.  9  no  policy  can  be  given  in  evidence  or  admitted 
to  be  good  or  available  in  law  or  in  equity  unless  duly 
stamp^.  The  part  of  the  Act  which  gives  rise  to  the 
peculiar  results  we  are  about  to  consider  is  the  7th  section. 
The  9th  section  is  in  the  same  language  as  other  revenue 
enactments  relating  to  instruments  chargeable  vdth  stamp 
duties  {x) :  and  like  those  enactments,  it  does  not  affect 
any  rights  or  remedies  directly,  but  only  in  an  indirect 
manner  by  establishing  an  arbitrary  rule  of  evidence. 

The  earlier  statutes  on  the  matter  now  before  us  were 
differently  worded,  and  made  every  contract  of  insurance 
"  null  and  void  to  all  intents  and  purposes  "  which  was  not 
written  on  duly  stamped  paper  or  did  not  contain  the  pre- 
scribed particulars.  (35  Geo.  3,  c.  63,  ss.  11,  14;  54 
Geo.  3,  c.  144,  s.  3:  the  latter  statute  was  expressly  pointed, 
as  appears  by  the  preamble,  against  the  practice  ''  of  using 
unstamped  slips  of  paper  for  contracts  or  memorandums  of 
insurance,  previously  to  the  insurance  being  made  by 
regular  stamped  policies.")  It  was  settled  on  these 
statutes  that  the  preliminary  slip  could  not  be  regarded  as 
having  any  effect  beyond  that  of  a  mere  proposal  (y)  :  and 
it  was  even  held  that  the  slip  could  not  be  looked  at  by  a 
court  of  justice  for  any  purpose  whatever  (z).     The  change 

(u)  See  L.  R.  8  Ex.  199.  (1869)  4   Ch.    611,  88  L.  J.  Ch. 

[x)  See  the  Stamp  Act,  1870,  38  681. 

&  84  Vict  c.  97,  8.  17.  (s)    See    per    Blaokbam    J.    in 

(y)  See  per  V^illes  J.  in  Xenoi  ▼.  PUher  v.  Liverpool  Marine  Inmrance 

Wickham  (1866)  L.  R.  2  U.  L.  296,  Co.  (1873)  L.  R.  8  Q.  B.  469,  474, 

814,  36  JU  J.  C.  P.  318,  Smith*»  c».  43  L.  J.  Q.  B.  114. 


640  AGBEEMENTS  OF  IMPERFJECT  OBLIGATION. 

in  the  language  of  the  existing  statute  (which  repealed  the 
earlier  enactments)  has  given  the  Courts  the  opportunity 
of  adopting  a  more  liberal  construction  without  actually 
overruling  any  former  authorities. 
Modmi         Since  the  Act  of  30  Vict,  the  fact  has  been  judicially 
So?ol  the  recognized  that  the  slip  is  in  practice  and  according  to  the 
dip.  understanding  of  those  engaged  in  marine  insurance  the 

complete  and  final  contract  between  the  parties,  fixing  the 
terms  of  the  insurance  and  the  premium,  and  neither  party 
can  without  the  assent  of  the  other  deviate  firom  the  terms 
thus  agreed  on  without  a  breach  of  faitL  Accordingly, 
though  the  contract  expressed  in  the  slip  is  not  valid,  that 
is,  not  enforceable  at  law  or  in  equity,  it  may  be  given  in 
To  ezplAin  evidence  wherever  it  is,  though  not  valid,  material  (a).  In 
of^M^M  ^^^  ^^^^^  referred  to  the  slip  was  admitted  to  show  whether 
the  intention  of  the  parties  was  to  insure  goods  by  a  par- 
ticular named  ship  only,  or  by  that  in  which  they  might 
To  fix  true  be  actually  shipped,  whatever  her  name  might  be.  A  still 
ooDtnct  more  important  application  of  the  same  principle  was  made 
in  Cory  v.  Patton  (6),  where  it  was  held  that  the  time 
when  the  contract  is  concluded  and  the  risk  accepted  is 
the  date  of  the  slip,  at  which  time  the  underwriter  becomes 
bound  in  honour,  though  not  in  law,  to  execute  a  formal 
policy;  that  the  Court,  when  a  duly  stamped  policy  is  once 
before  it,  may  look  to  the  slip  to  ascertain  the  real  date  of 
the  contract ;  and  therefore  that  if  a  material  fact  comes 
to  the  knowledge  of  the  assured  after  the  date  of  the  slip 
and  before  the  execution  of  the  policy,  it  is  not  his  duty 
either  in  honour  or  in  law  to  disclose  it,  and  the  non- 
disclosure of  it  does  not  vitiate  the  policy.  This  holds 
though  after  the  completion  of  the  contract  by  the  slip  a 
new  term  be  added  for  the  benefit  of  the  underwriters  (c). 

(a)  Per  Cur.  lonidet  v.  Pacific  In-  Q.  B.  181. 

gurance  Co.  (1871)  L.  R.  6  Q.  B.  674,  {e)  Lithman  v.  Northern  Maritime 

686,  affd.  in  Ex.  Ch.  7  Q.  B.  617,  Insurance  Co,  (1876)  L.  R  8  C.  P. 

41  L.  J.  Q.  B.  88,  190.  216,  affirmed   in  Ex.  Ch.  10  C.  P. 

\Jb)  (1872)  L.  R  7  Q.  B.  804,  see  179,  44  L.  J.  C.  P.  185. 
further  8.  c  9  Q.  B.  677,  43  L.  J. 


•"  SLIP  "  IN  MARINE  INSURANCE.  64f 

The  same  doctrine  has  been  considered  and  allowed,  though  PjjJJ^**^ 
not  directly  applied,  in  other  casea  In  Fisher  v.  Liverpool  of  the 
Marine  Insurance  Co.  (d)  the  slip  had  been  initialed  but  *«*»">•• 
the  insurance  company  had  executed  no  policy.  In  the 
case  of  an  insurance  with  private  underwriters  it  is  the 
duty  of  the  broker  of  the  assured  to  prepare  a  properly 
stamped  policy  and  present  it  for  execution.  But  in  the 
case  of  a  company  the  policy  is  prepared  by  the  company, 
executed  in  the  company's  office,  and  handed  over  to  the 
assured  or  his  agent  on  application.  It  was  held  that 
there  was  no  undertaking  by  the  company,  distinguishable 
fix)m  the  contract  of  insurance  itself,  to  do  that  which  it 
would  be  the  duty  of  a  broker  to  do  in  the  case  of  private 
underwriters;  that  the  only  agreement  of  the  company 
with  the  assured  was  one  entire  agreement  made  by  the 
initialing  of  the  slip,  and  that  as  this  was  an  agreement 
for  sea  insurance,  the  statute  applied  and  made  it  im- 
possible to  maintain  any  action  for  a  breach  of  duty  with 
regard  to  the  preparation  and  execution  of  a  policy.  In 
Morrison  v.  Universal  Marine  Insurance  Co,  (c),  the 
question  arose  of  the  effect  of  delivering  without  protest  a 
stamped  policy  pursuant  to  the  slip  after  the  insurers  had 
discovered  that  at  the  date  of  the  slip  a  material  bet  had 
been  concealed  It  was  held  in  the  Exchequer  Chamber, 
reversing  the  judgment  of  the  Court  below,  that  the 
delivery  of  the  policy  did  not  preclude  the  insurers  from 
relying  on  the  concealment,  but  that  it  was  a  question 
properly  left  to  the  jury  whether  they  had  or  had  not 
elected  to  abide  by  the  contract  This  implies  not  only 
that  the  rights  of  the  parties  are  determined  at  the  date  of 
the  slip,  but  that  the  execution  of  the  stamped  policy 
afterwards  has  little  or  no  other  significance  than  that  of 
a  necessary  formality  (/).    In  the  case  of  a  mutual  marine  ^JP^^** 

id)  (1874)  L.B.  8  Q.B.  469  (Black.  Ch.  i&.  197,  42  L.  J.  Ex.  115. 
born  J.  dim.)  affd.  in  £x.  Ch.  9  Q.  (/)  See  the  judgment  of  CleasbyB. 

Bw  418,  48  L.  J.  Q.  B.  114.  in  the  Court  below,  L.  B.  8  Ex.  at 

(e)  (1878)  L^  E.  8  Ex. '40,  in  Ex.  pu  60. 

P.  T  T 


642 


AGREEMENTS  OF  IMPBJIFECT  OBLIGATION. 


winding* 


np: 
ance  com* 


sump 
dntiesln 

genenJ. 


Variation 
bjBubM- 
quent  on- 
»tamped 
agree- 
ment 


insurance  association,  a  letter  by  which  the  assured  under- 
took to  become  members  of  the  association  was  admitted 
as  part  of  one  agreement  with  the  stamped  jwlicy,  to  show 
that  the  assured  were  contributories  in  the  winding-up  of 
the  association  (g).  In  the  winding-up  of  another  such 
association  a  member  has  been  admitted  as  a  creditor  for 
the  £^mount  due  on  his  policy,  though  unstamped,  when  the 
liability  was  admitted  by  entries  in  the  minute  books  of  the 
association,  which  seem  to  have  been  considered  equivalent 
to  an  account  stated  (A). 

It  has  already  been  observed  that  the  general  revenue 
laws  as  to  stamp  duties  are  on  a  different  footing.  How- 
ever their  effects  may  in  one  or  two  cases  resemble  to 
some  extent  those  which  under  the  present  head  we  have 
attempted  to  exhibit.  Thus  if  an  unstamped  document 
combines  two  characters  (as,  for  instance,  if  it  purports  to 
show  both  an  account  stated  and  a  receipt),  and  if  in  one 
of  those  characters  it  requires  a  stamp,  and  in  the  other 
not,  it  may  be  given  in  evidence  in  the  second  character 
for  any  purpose  unconnected  with  the  first  (i). 

In  a  case  where  the  parties  to  an  agreement  in  writing 
had  afterwards  varied  its  terms  by  a  memorandum  in 
writing,  and  the  memorandum  was  not  stamped,  the 
plaintiff  joined  in  his  action  a  count  on  the  agreement  in 
its  original  form  and  another  on  the  agreement  as  varied : 
and  when  it  appeared  by  his  own  evidence  that  the  memo- 
randum did  materially  alter  the  first  agreement,  but  was 
unavailable  for  want  of  a  stamp,  it  was  held  that  he  could 
not  fall  back  on  the  agreement  as  it  originally  stood  (k). 
Neither  this  decision,  nor  the  earlier  authorites  on  which 
it  rested,  were  referred  to  in  Noble  v.  Ward  (I).     In  that 


{g)  Blyik  &  Co:%  ca.  (1872)  IS 
Eq.  529. 

(A)  MaHitCi  claim  (1872)  14  Eq. 
148,  41  L.  J.  Ch.  679. 

(t)  Maihaxm  v.  Ron  (1R49)  2  H. 
li.  G.  286,  and  see  Ghittv  on  Con- 
tracts, 125  (10th  ed.). 

(l)  Rnd  v:  Dtert  (1827)  7  B.  *^ 


C.  261. 

(0  (1P67)  L.  R.  1  Ex.  117,  in  Ex. 
Ch.  2  Kir.  135:  but  «>therwi8e  where 
the  mbdtituted  agreement  has  been 
execQted  in  part;  for  this  bIiowb 
that  the  old  one  is  gone :  Sandcntnk 
V.  Gravtt  (1875)  L.  R.  10  Ex.  234^ 
44  L,  J.  Ex.  21ft, 


UNSTAMPED  INSTRUMENTS.  643 

case  there  was  a  substituted  agreement  which  was  un- 
enforceable under  &  17  of  the  Statute  of  Frauds :  and  it 
was  held  that  as  the  parties  had  no  intention  of  simply 
rescinding  the  former  agreement,  that  former  agreement 
remained  in  force.  The  two  cases,  if  they  can  stand 
together,  must  do  so  by  reason  of  the  distinction  bcrtWe^n^ 
a  contract  the  record  of  which  is  unavailable  for  want  (ft  a 
stamp,  and  an  agreement  which  cannot  be  sued  on  at  all  if 
the  defendant  pleads  the  Statute. 

In  a  much  litigated  case  of  Evans  v.  Prothero  (m)  the  Attempt 
question  arose  whether  a  document  purporting  to  be  a  gumped  * 
receipt  for  purchase-money  on  a  sale  of  land,  but  insuf-  ^ocument 
ficiently  stamped  for  that  purpose,  can  be  admitted  as  different 
evidence  to  prove  the  existence  of  an  agreement  for  sale:      '**^' 
but  the  form  in  which  it  arose  was  unfortunately  ill  suited 
for  the  attainment  of  a  final  and  satis£Etctory  decision.  The 
existence  of  the  agreement  was  in  issue  on  a  trial  directed 
by  the  Court  of  Chancery:  the  document  above  mentioned 
was  tendered  as  proof  and  objected  to  :  the  jury  found  in 
favour  of  the  agreement,  and  a  new  trial  was  applied  for. 
This  was  granted  by  Lord  Cottenham  :  on  the  second  trial 
the  same  thing  happened  again:  Lord  Cottenham  sent  the 
case  back  to  a  third  trial,  holding  on  each  occasion  that 
the  document  was  inadmissible.     The  third  trial  took  the 
same  course  as  the  first  and  second     But  the  motion  for 
a  fourth  trial  came  before  Lord  St  Leonards,  who  took  a 
contrary  view  to  Lord  Cottenham*s  and  refused  it     The 
judges  before  whom  the  applications  came  in  the  Court  of 
Chancery  in  the  first  instance,  and  those  before  whom  the 
issues  were  tried  at  Cardiff  assizes,  were  also  divided  iu 
opinion.     The  point  must  therefore  be  regarded  as  still 
quite  unsettled,  though  the  analogy  of  other  authorities 
seems  to  favour  the  opinion  of  Lord  St  Leonards. 

C.  There  are  also  many  statutes  which  impose  special  C.  su- 

tiitoiy 

(m)  (1862)  2  Mac.  k  G.  819,  1  D.  M.  G.  572,  21  K  J.  Ch.  772. 

T  T  2 


644  AQREEM^INTS  OP  IMPERFECT  OBUtSATIOX. 

ooo^oas  conditions  on  the  exercise  of  piLrticular  professions  and- 
profea-       occupations  and  the  sale  of  particular  kinds  of  goods, 
tiont,  kc    jjf ost  of  thes6,  however,  ar6  so  framed,  or  have  been  so- 
construed,  as   to   have   an   absolutely  prohibitory  effect, 
that  is,  not  merely  to  take  away  or  suspend  the  remedy 
by  action,  but  to  render  any  transaction  in  which  their 
provisions  are  disregarded  illegal  and  void.     The  prin- 
ciples applicable  to  such  cases  have  been  considered  under 
the   head   of  Unlawful   Agreements.     In   a   few   cases, 
however,  there  is  not  anything  to  prevent  a  right  from 
being  acquired,  or  to  extinguish  it  when  acquired,  but 
only  a  condition  on  which  the  remedy  depends.     Of  this 
kind  are  the  provisions  of  the  Act  6  &  7  Vict  c.  73, 
with  respect  to  attorneys  and  solicitors,  and  of  the  Medical 
Act,  1858  (21  &  22  Vict,  c  90),  with  respect  to  medical 
practitioners. 
Attonieyt      By  the  6  &  7  Vict.  c.  73,  s.  26,  extended  by  37  &  38  Vict, 
ion.'costi  ^'  ^^'  ^^  ^  enacted  in  substance  that  ah  attorney  or  solicitor 
€i  onoer-    practising  in  any  court  without  having  a  stamped  certificate 
solicitor     then  in  force  (as  provided  for  by  ss.  22-25,  and  now  23  & 
aUow^     24  Vict.  c.  127,  ss.  18-23)  shall  not  be  capable  of  recovering 
his  fees  for  any  business  so  done  by  him  while  uncertifi- 
cated    This  however  does  not  make  it  unlawfril  for  the 
client  to  pay  such  fees  if  he  thinks  fit,  nor  for  the  solicitor 
to  take  and  keep  them.     It  has  been  held  that  a  defeated 
party  in  an  action  who  has  to  pay  his  adversary's  costs  is 
bound  by  any  such  payment  which  has  been  actually  made, 
and  cannot  claim  to  have  it  disallowed  after  taxation  (n). 
But,  since  the  Act  of  1874  at  all  events,  a  successful  party 
whose  solicitor  was  uncertificated  cannot  recover  costs  if 
the  objection  is  made  on  taxation  (o).     This  appears  to 
leave  untouched  an  earlier  case  (p)  where  it  was  decided 
that  items  for  business  done  by  a  solicitor  while  uncertifi- 

(n)  PuUdlove  v.  Parker  (1862)  12  Co.  (1879)  4  Q.  B.  D.  334,  iS  L.  J. 

C.  B.  N.  S.  246,  31  L.  J.  C.  P.  239,  Q.  B,  457. 
-     240.  (p)  Re  Jone»  (1869)  9  Eq.  63,  89 

(o)  Pomder  v.  MonmotUhhire  Canal  L.  J.  Gh.  83. 


COSTS  OF  UNCERTIFICATED  SOLICITORS.  '  6*5 

cated  must  be  allowed  as  against  the  client  in  a  taxation 
on  the  client's  own  application;  for  the  client  submits  to 
pay  what  shall  be  found  due,  not  only  what  the  solicitor 
might  have  sued  for,  and  the  debt  is  not  destroyed. 
Proceedings  taken  by  a  solicitor  who  has  not  renewed 
his  certificate  cannot  be  on  that  account  set  aside  as 
irregular  (q).  It  is  said  that  an  attorney  can-  have  no  lien 
for  business  done  by  him  while  tmcertificated  (r).  But 
the  case  cited  for  this  («)  was  on  the  earlier  Attorneys 
Act,  37  Geo.  3,  c.  90,  by  which-  the  admission  of  an  attorney 
neglecting  to  obtain  his  certificate  as  thereby  directed  was 
in  express  t^rms  made  void  (s.  31) :  it  was  held  that  under 
the  special  circumstances  of  the  case  (which  it  is.unnecessary  - 
to  mention)^  there  had  been  a  neglect  within  the  ineaning 
of  the  statute  so  that  the  attorney's  admission  was  void,  and 
that  he  must  be  regarded  as  having  been  ofT  the  roll  of 
attorneys.  He  was  therefore,  as  a  necessary  consequence, 
incapable  of  acquiring  any  right  whattever  as  an'at6)niey 
while  thus  disqualified  It  is  submitted  that  under  the 
modem  Act  there  is  no  reason  for  depriving  an  uncertifi- 
cated solicitor  of  his  lien,  at  any  rate  in  the  absence  of  any 
wrong  motive  or  personal  default  in  the  omission  to  take 
out  the  certificate. 

Apart   from  this,   a  solicitor  cannot  in  any  case  sue  At  io  time 
for  costs  till  a  month  after  the  bill  has  been  delivered  f^,,  ^j^^ 
(6  &  7  Vict.  c.  73,  s.  37),  unless  authorized  by  a  judge 
to   sue  sooner  on  one  of  certain  grounds  now  much  en- 
larged by  the  Legal  Practitioners  Act,  1875,  38  &  39  Vict. 
c.79<0. 

The  rights  of  medical  practitioners  now  depend  on  the  Medical 
Medical  Acts,  1858  and  1886,  and  (in  England  only)  th^  ^^^ 
Apothecaries  Act,  55  Geo.  3,  c.  194  (u)*  Before  the  Medical  common 

iq)   Sparfing  v.  Brtreton  (1866)  {t)  As  to  tpeclal  Agreements  be- 

2  Eq.  64,  35  L.  J.  Ch.  461.  tween   solioitor  and  client,  see  p^ 

(r)  GhiUj's    Aichbold's  Pr.  69,  651,  below, 

ed.  1866.  («)  This  is  still    in    force,    see 

(»)  Wiltofi  V.  Ch.mheri  (1837)  7  Iktries  v.  Makuna  (1885)  29  Ch. 

A.  &  E.  624.  tMv.  596,  54  L.  J*.  Ch.  1148. 


6.^  AGRKEMEMTO  OF  IlftPBRFEGT  OBLIOATIOK. 

law  M  to  Act  the  state  of  the  law,  so  &r  as  concerned  physicians  (but 
p  ynouni.  ^^^  gvugeons  or  apothecaries)  was  this.  It  was  presumed,  in 
acoordimce  with  the  general  usage  and  und^:standing, 
that  the  services  of  a  physician  were  honorary,  and  were 
not  intended  to  create  any  legal  obligation :  hence  do 
contract  to  pay  for  them  could  be  implied  from  his  ren- 
dering them  at  the  request  either  of  the  patient  or  of  a 
third  person.  But  this  was  a  presiunpticm  only,  and  there 
was  nothing  contrary  to  law  in  an  express  contract  to  pay  a 
physician  for  his  services,  which  contract  would  eflFectually 
exclude  the  presumption  (x), 

^MrfSl     ^^^  Medical  Act,   1886  (49  &  50  Vict,  a  48),  s.  6. 

Act,  1886.  enables  every  registered  medical  practitioner  to  recover  his 
expenses,  charges,  and  fees,  unless  restrained  by  a  prohibi* 
tory  bye-law  of  a  college  of  physicians  of  which  he  is  a 
fellow  (y).  Accordingly  there  is  no  longer  any  presumption 
of  honorary  employment  (z).  It  remains  competent  how-> 
ever  for  a  medical  man  to  attend  a  patient  on  the  under* 
standing  that  his  attendance  shall  be  gratuitous,  and 
whether  such  an  understanding  exists  or  not  in  a  disputed 
case  is  a  question  of  fact  for  a  juiy  (a). 

Apotfae-         By  the  Act  55  Geo.  3,  c.  194,  s.  21,  an  apothecary  can- 

55  Geo.  8.  i^ot  recover  his  charges  without  having  a  certificate  finom 
the  Apothecaries'  Society :  and  this  is  not  repealed  by  the 
Medical  Acts  (b). 
It  seems  that  a  practitioner  must  have  been  registered 

(x)  Veitck  ▼.  RuMuU  (1842)  8  Q.  (a)  Gibbon  v.  Budd,  last  note, 

B.  928, 12  L.  J.  Q.  B.  18.    No  rach  (6)  See  deobiaiifl  on  thie  Aot  col- 

gretumption  exiata  in  the  United  lec«ed,  1  Wms.  Sannd.  518-4.    S.  81 

totee ;  and  qu,  how  far,  if  at  all,  of  the  Medical  Aot  of  1858  enabled 

it  exists  in  English  colonies.  a  practitioner  to  sne  onlj  "aeoording 

(y)    Such    bye-laws   have   been  to  his  qnalifieation,''  and  a  qnaUli- 

made    by   the   Boyal   College    of  cation   in   one    capacity   did   not 

Physiclatts  in  London,  and  (though  entitle    him    to    sne    far   perrioes 

apparently  without  oompnlrory  force  rendered   in    another:    Lemam   ▼« 

under  the  Aot)  the  Royal  GoUegeof  Fletcher  (1878)  L.  B.  8  Q.  a  819, 

Surgeons  of  Enffland.  42  L.  J.  Q.  B.  214.   But  these  words 

(0  GiUon  v.  Bvdd  (1868)  2  H.  A  do  not  occur  in  the  Act  of  1888, 

0.  92,  82  L.  J.  Ex.  182  (on  the  which  on  the  other  hand  requires 

stmihurprovlbionof  the  Actof  1858,  all   practitioners  to   be   generally 

which  fi  repealed  by  the  Act  of  qualified. 
1886).    See  judgment  of  Martin  B, 


MEDICAL  PBACTITIONEBS.  647 

at  the  time  of  rendering  the  services  sued  for,  not  merely 
at  the  time  of  suing  (d),  decisively  and  at  all  events  as 
to  apothecaries;  for  an  unrepealed  section  of  the 
Apothecaries  Act  (55  Geo.  3,  c.  194,  s.  20)  expressly 
forbids  unqualified  persons  to  practise :  and  in  the  clear 
opinion  of  the  Court  on  the  construction  and  intention 
of  the  Medical  Act  also. 

In  Alvai^z  de  la  Rosa  v.  Prieto  (e)  the  plaintiflF  was  a 
Spanish  practitioner  domiciled  in  England  but  unregistered, 
and  he  had  agreed  with  the  defendant,  who  was  the  chief 
medical  officer  of  a  Peruvian  ship  of  war  lying  in  the 
Thames,  to  take  the  medical  charge  of  the  men  on  board 
for  a  fixed  monthly  sum  during  the  defendant  s  absence 
It  was  held  that  this  contract  fell  within  the  Act  and  the 
plaintiff  could  not  recover.  It  made  no  difference  that  the 
defendant  was  a  medical  man,  for  the  plaintiff  was  not  his 
assistant  but  was  acting  independently,  and  merely  looked 
to  him  for  payment  It  was  also  argued  that  the  contract 
should  be  governed  not  by  the  law  of  England  but  by  the 
law  of  Peru :  but  the  Court  held,  that  since  s.  32  of  the 
Medical  Act  was  part  of  the  lexfoH  of  the  country  where 
the  remedy  was  sought,  the  general  rule  that  the  lex  fori 
governs  the  remedy  must  be  applied.  Cp.  the  decision  on 
s.  4  of  the  Statute  of  Frauds  in  Leroiix  v.  Brown  (f). 

Similarly  an  agreement  by  a  qualified  practitioner  to 
assist  an  unqualified  one  is  bad,  though  perhaps  an 
unqualified  person  might  lawfully  carry  on  medical 
business  through  qualified  assistants  if  he  did  not  act  as  a 
practitioner  himself  (g). 

3.  We  now  come  to  the  cases  in  which  some  positive  3.  No 
rule  of  law  or  statutory  enactment  takes  away  the  remedy  '»n>«^y 
altogether.  ^^ 

id)  Leman  v.  ffoutdey  (1874)  L.  B.  L.  J.  C.  P.  263. 
10  Q.  B.  66,  44  L.  J.  Q.  B.  22  (not-        {f)  (1852)  12  0.  B.  801,  22  L.  J. 

withstaodioff      Turner    ▼.    RevnaU  0.  P.  1 ;  mtpra,  pp.  62^-680. 
0863)  14  C.  B.  N.  S.  828,  82  L  J.        {g)  Davie$v.  Makuna  (1886)  29 

C.  P.  164).  Ch.  Div.  696.  - 

{e)  (1864)  16  C.  B.  N.  S.  578,  33  •  . 


648  AGREEMENTS  OF  IMPBinCT  OBUGATIOX. 

The  only  cases  known  to  the  writer  in  which  livere  is  m 
rule  of  law  to  this  effect  independent  of  any  statute  are 
those  of  the  remuneration  of  barristers  engaged  as  advo- 
cates in  litigation,  and  (to  a  limited  extent)  of  arbitratorsu 
▲rbitni-  With  regard  to  arbitrators  the  better  opinion  appears  to 
be  that  they  are  in  the  same  condition  as  physicians  were 
at  common  law.  It  is  said  that  an  arbitrator  cannot  recover 
on  any  implied  contract  for  his  remuneration,  but  this  is 
by  no  means  certain.  There  is  no  doubt  that  he  can  sue 
on  an  express  contract  (&). 
Baimtan.      The  position  of  a  barrister  is  different 

The  opinion  was  indeed  not  untenable,  until  quite 
recently,  that  in  the  case  of  counsel,  as  in  that  of  a 
physician,  there  was  a  presumption  of  purely  honorary 
emplojrment,  derived  from  the  custom  of  the  profession, 
but  that  this  presumption  would  be  excluded  by  proof  of 
an  express  contract.  So  Lord  Denman  seems  to  have  been 
inclined  to  think  in  VeUch  v.  Ru88eUXi}\  and  a  modem 
case  of  Hobart  v.  Butter  in  the  Irish  Elxchequer,  though  it 
did  not  decide  the  point,  proceeded  to  some  extent  on  the 
same  assumption  (k). 
Noromedy  But  the  decision  of  the  Court  of  Common  Pleas  in 
Se^fai  Kennedy  v.  Broun  (I)  has  established  the  unqualified 
rMPfot  of  doctrine  that  '*  the  relation  of  counsel  and  client  renders 
lloi^]^  the  parties  mutually  incapable  of  making  any  legal  con- 
tract of  hiring  and  service  concerning  advocacy  in  litiga- 
tion." The  request  and  promises  of  the  client,  even  if 
there  be  express  promises,  and  the  services  of  the  counsel, 
**  create  neither  an  obligation  nor  an  inception  of  obliga- 
tion, nor  any  inchoate  right  whatever  capable  of  being 
completed  and  made  into  a  contract  by  any  subsequent 
promisa" 

(A)  Eoffgim  ▼.  (hrdtm  (1842)  8  Q.  Arbitrator's  wnien  might  wdl  1m 

B.  466, 11  L.  J.  Q.  B.  286 ;   VeUeh  impliecL 

▼.  RuMteU  (1842)  8  Q.  B.  928, 12  L.  (t)  See  last  note. 

J.  Q.  B.  18.  In  OramptoH  t.  RidU^  {k)  (1859)  9  Ir.  G.  L.  157. 

(1887)  20  Q.  B.  D.  48,  52.    A.  L.  (Z)  (1868)  18  a  B.  N.  &  <77,  82 

Smith  J.  thuaght  that  in  mercantile  L^  J.  O.  P.  187. 
arbitrations  a  promiM  to  pay  for  the 


counsel's  fees: fi49 

On  th6  other  hand  there  is  apparently  no  reason  to  DWnc- 
doafot  the  validity  of  an  express  contract  to  remunerate  n.  barrister 
barrister  for  services  which,  though  to  some  extent  of  a  "^J^J**^ 
professional  kind,  and  involving  the  exercise  of  professional  &o. 
knowledge,  do  not  involve  any  relation  of  counsel   and 
client  between  the  contracting  parties:  as  when  a  barrister 
acts  as  arbitrator  or  returning  ofl&cer  (wi).     The  want  of 
attending  to  this  distinction  has  led  to  such  cases  being 
cited  as  authorities  for  the  general  proposition  that  a    -. 
barrister  can  recover  fees  on  an  express  contract 

Moreover,  it  has  been  argued  that  an  express  contrax;t  EzpreM 
even  between  counsel  and  client  may  still  be  good  as  to  ^^«iMat 
non-litigious  business.     A  claim  of  this  sort  made  against  jj"  ^  ^^' 
an  estate  under  administration  was  disposed  of  by  Gi£fard  bodoefli : 
L.J.  on  the  ground,  which  was  sufficient  for  the  particular  9^ 
decision,  that  at  all   events  a  solicitor  has   no  general 
authority  to  bind  bis  client  by  such  a  contract:  but  he  also 
observed  that  such  applications  had  never  been  successful, 
and  expressed  a  hope  that  they  never  would  be  (n).    And 
it  must  be  remembered  that  although  the  rule  laid  down 
in  Kennedy  v.  Broun  is  in  its  terms  confined  to  litigation^ 
and  the  word  advocaie,  not  comiael,  is  studiously  used 
throughout  the  judgment,  yet  the  rule  is  founded  not  on 
any  technical  distinction  between  one  sort  of  business  and 
another,  nor  on  any  mere  presimiption,  but  on  a  principle 
of  general   convenience   supported  by  unbroken  custom. 
No  doubt  it  may  be  said  that  some  of  the  reasons  given 
for  the  policy  of  the  law  do  not  apply  in  their  full  extent 


{m)  Hogging  ▼.  Chrdm  (1842)  3  Q.  BmiUU  ▼.  HaU  (1850)  15  Q.  B.  1 71, 

B.  466,  11  Lb  J.  Q.  R  286 ;  Egan  18  L.  J.  Q.  B.  858,  sbotrs  odIv  tba* 

V.  QuirdiwM  of  KennngUm  Union  there  k  no  abeolate  rule  oi    law 

(1841)  8  Q.  B.  985,  n.  that  in  a  ciyil  canse  a  bamater  may 

(»)  i#<M<yny.i/bi<yn(1870)5Oh.  not  be  inttmcted  directly  by  the 

457,  459,  89  L.  J.  Gh.  780.    It  may  dient,  and  throws  no  Uffht  whatever 

be  well  to  warn  the  reader  that  the  on  any  question  oC  a  right  to  recover 

oaees  there  referred  to  in  argument  lees.   Mobari  v.  BuUer  wae  .relevant 

in  favour  of  the  oounael's  didm  are,  enough,  but  the  wrong  way  |  for  it 

with  the  sole  exception  of  Hobart  wae  really   a   decision    agiUnst   a 

V.  Suder  (1859)  9  Ir.  0.  L.  157,  similar  daim  and   on   an   ahncst 

irrelevant    For  instance,   Doe   d.  identical  point, 


^50  AOREEMENTS  Ot  UirmFECD  OBLIGATION. 

to  non-litigious  business  (o) ;  and  it  is  doubtful  whether 
they  a{^ly  even  to  those  English  colonies  where  the 
common  law  is  in  force  (p).  But  there  is  no  reason  to 
suppose  that  Elnglish  courts  of  justice  are  likely  to  narrow 
the  scope  of  a  decision  called  by  the  late  Lord  Justice 
Giffard  "  a  landmark  of  the  law  on  this  subject "  (q). 
Righto  of  There  is  no  express  authority  to  show  whether  a  barrister 
J^'jjv^^  can  or  cannot  contract  with  his  client's  solicitor  for  pay- 
•oiidtor;  ment  of  his  fees  any  more  effectually  than  with  the  client 
himself.  It  is  apprehended  that,  inasmuch  as  counsel's 
services  are  given  not  to  the  solicitor  but  to  the  client, 
there  would  be  no  consideration  to  support  such  a  contract 
unless  the  solicitor  had  actually  received  the  fees  from  the 
client.  In  that  case  it  is  difficult  to  see  on  what  ground 
of  principle  or  policy  the  barrister  should  not  be  legally 
entitled  to  them  as  money  received  by  the  solicitor  for  his 
use.  A  barrister  has  in  fact  been  admitted  to  prove  in 
bankruptcy  against  the  estate  of  a  firm  of  solicitors  for  fees 
(apparently  for  conveyancing,  not  litigious  business)  which 
had  been  actually  paid  by  clients  to  the  bankrupts  before 
the  bankruptcy  (r).  If  this  be  rights  it  is  also  difficult  to 
see  why  an  express  promise  by  the  solicitor  to  pay  su<^ 
fees,  or  an  account  stated  between  the  solicitor  and  the 
counsel  in  respect  of  them,  should  not  be  binding.  On 
the  other  hand  the  Court  of  Common  Pleas  has  refused  to 
exercise  a  summary  jurisdiction,  on  the  motion  of  the 
client,  to  compel  an  attorney  to  pay  to  counsel  fees  alleged 
to  have  been  paid  by  the  client,  or  else  to  return  them  to 

(o)   In   additloii  to  Kennedy  ▼.  the  oommenoement  of  the  liiigmtioD. 
Brouih  Me  MorrU  v.  Hunt  (1819)  1  (p)  Reg.  v.  Doutre  (1884)  9  App. 

Chitty,  544,  550,  554,  where  tbe  €•»  at  p.  751,  where  it  was  held  UiAt 

rnle  ie  pat  on  the  ground  that  the  the  caae  at  bar  was  governed  by  the 

remont  ration  of  the  ooonael  ooght  law  of  the  Province  of  Qaebeo :  in 

to  he  independent  of  the  reaidt  of  that  law  there  b  nothing  to  prevent 

the   OMife,  and  therefore  oonnael  an  advocate  from  soing   tor  pro- 

ahoold  vtAy  on  prepayment  alone.  feadonal  leivicefi. 
This    reason    would    however   be  {q)  Mottyn  v.  MoHyn^  mpra. 

equally  ioai<plicable  to  an  exprsM  (r)  lU  ffafl  (1856)  2  Jnr.  N.  9. 

atad  unconditional  oontsact  to  pay  1076. 
lets  for  advooaqy,  if  m^dfr  before 


CX>UNSEL's  FSB&  651 

the  client  («).  The  case,  however,  was  a  peculiar  one  and 
goes  but  a  very  little  way  towards  answering  the  general 
question.  In  the  argument  of  Hobart  v.  BuUer  (t)  two 
unreported  (presumably  Irish)  cases  were  cited  to  show 
that  a  banister  has  a  remedy  in  some  form,  it  does  not 
appear  what,  to  recover  fees  which  have  been  received  by 
the  solicitor.  The  Court  expressed  no  opinion  as  to  their 
authority. 

It  is  hardly  necessary  to  add  that  although  counsel's  J***^" 
fees  cannot  be  recovered  in  any  way  by  action,  except  comwers 
possibly  in  some  of  the  cases  which  have  been  mentioned  j!?!? 
as  still  doubtful,  the   propriety  of  paying  such  fees  isofoort«. 
judicially  recognized  by  the  constant  practice  of  the  courts 
in  the  taxation  of  costs :  and  the  solicitor  needs  no  autho^ 
rity  from  the  client  beyond  his  general  retainer  to  enable 
him  to  retain  and  pay  counsel  and  charge  the  fees  to  his 
client  (u).     The  payment  of  counsel's  fees  may  in  this 
manner  be  indirectly  enforced  either  against  the  client 
himself  or  against  an  unsuccessful  adversary  who  is  liable 
for  the  taxed  costs.     Notwithstanding  the  strong  expres* 
sions  used  by  the  Court  in  Kennedy  v,  Broim  (aj),  the 
judicial  notice  thus  taken  of  the  obligation  of  a  client  to 
pay  his  cotmsel  seems  to  show  that  it  is  in  the  nature  of  a 
legal  duty,  though  not  a  perfect  one^  and  is  on  a  different 
footing  from  a  mere  moral  obligation* 

The  Solicitors  Remuneration  Act,  1881  (y\  establishes  Solicitofi 
complete  freedom  of  contract  between  solicitor  and  client  as  ^J'^f*' 
to  conveyancing  and  other  non-contentious  business,  and  1881. 
to  that  extent  expressly  supersedes  the  earlier  Act  of  1870. 

By  the  Attorneys  and  Solicitors  Act,  1870  (38  &  34  SpeofU 
Vict,  c  28),  special  agreements  tor  remuneration  between  mento 
solicitor  and  client  were  made  lawfril  (s.  4)  and  in  a  qualified  J^iJ^ 
inanner  enforceable.    Agreements  under  this  Act  cannot  and  clioit 


(«)  lU  Angea  (1861)  29  L.  J.  a  Ohitty,  544. 
P.  227.  <ar>  (1868)  18  C.  R  N.  S.  677^  82 

(t)  (1869)  9  Tr.  C.  L.  167.  U  J.  C.  P.  187. 
(u)  See  Morrii  v.  Hunt  (1819)  I         (y)  44  ft  46  Vict.  o.  44. 


652  AGREEMENTS  OF  IMPERFECT  OBUOATION. 

o?i870^**  be  sued  upon  as  ordinaty  contracts,  but  the  procedure  w 
by  motion  or  petition,  when  the  Court  may  enforce  the 
agreement  if  it  appears  to  be  in  all  respects  fieur  and 
reasonable,  or  otherwise  set  it  aside.  In  the  last  case  the 
Court  may  direct  the  costs  of  the  business  included  in  the 
agreement  to  be  taxed  in  the  regular  way  (ss.  8,  9). 
Where  there  is  an  agreement  to  employ  a  .solicitor  on 
certain  terms  at  a  future  time,  this  does  not  prevent  the 
solicitor  from  suing  the  client  in  a  court  of  law  if  the 
client  refuses  to  let  him  transact  the  business  at  alL  The 
Act  applies  only  to  that  part  of  an  agreement  which  fixes 
the  mode  of  payment  for  work  done  {z). 
Voidable  Since  the  Infants  Relief  Act,  1874,  any  contract  of  an 
of  infftott  i^^t  voidable  at  common  law  and  affirmed  by  him  on 
»®™«*  attaining  his  majority  must  be  reckoned  as  an  imperfect 
obligation  of  this  class,  viz,  on  which  there  has  not  been 
and  cannot  be  any  remedy.  The  special  features  of  this 
subject  have  been  already  considered  C^),  and  there  is 
nothing  to  add  except  that  the  general  principles  set  forth 
in  the  present  chapter  seem  to  be  applicable  to  these  as 
well  as  to  other  agreements  of  imperfect  obligation. 

Oilier  There  are  sundry  other  cases  of  a  less  important  kind  in 

^jj^  ^j^^  which  the  remedy  naturally  attached  to  a  contract  is  taken 
tract  not  away  by  statute,  without  the  contract  itself  being  forbidden 
,«2edy      or  avoided 


•way  by 


By  the  Act  24  Geo.  2,  c  40,  &  12,  commonly  known  as 
^totiita^  the  Tippling  Act,  no  debt  can  be  recovered  for  spirituous 
Small  liquors  supplied  in  quantities  of  less  than  twenty  shillings' 
^J^'^y  worth  at  one  time  (6).  The  County  Courts  Act,  1867 
Tippling     (30  &  31  Vict.  c.  142),  s.  4,  similarly  enacts  that  no  action 


Act,  24 


(r)  ReesY.  WilUami  (1875)  L.  R  (6)  By  25  ft  26  Viet  c.  88,  an 

10  Ex.  200,  44  L.  J.  Ex.  116.    By  exception  h  made  in  favoiir  of  salei 

the  terms  of  the  Act  the  agreement  of  apirituous  Uqnor  not  to  be  con- 

mnat  be  in  writinff,  and  it  aeems  it  somed  on  the  prem^aee,  and  dell- 

miut  be  signed  by  both  parties :  Ex  yered  at  the  poichaiier's  residencs 

ftarU  Mnnro  (1876)  1  Q.  B.  D.  724,  in  quantities  of  not  Itss  than  a  re' 

45  Lu  J.  Q^  B.  816.  pated  quart. 

(a)  In  Chap.  II.,  above. 


TIPPLING  ACT  :  TRADE  UNION  AOREEMENm  553 

shall  be  brought  in  any  court  for  the  price  of  beer  or  other  9*®^» 
specified  liquors  ejuadem  generis  consumed  on  the  pre-  kc,hy  * 
mises.     The  Act  of  Geo.  2  applies  whether  the  person  to  ^^ 
whom  the  liquor  is  supplied^  be  the^  consumer  or  not  (c).  Act,  1867. 
As  these  enactments  do  not  make  the  sale  illegal/ money 
which  has  been  paid  for  spirits  supplied  in  small  quantities 
caimot  be  recovered  back  (d).    -A  debt  for  such  supplies 
was  once  held  to.  be  an  illegisil  consideration  for  a  bill  o£ 
exchange  (e)  :  but  this  decision  seems  dictated  by  an  ex- 
cess of  zeal  to  carry  out  the  policy  of  the  Act,  and  ia 
possibly  questionable. ,;  In  a  later!  oas^  at  Nisi  Prius  (/> 
Lord  Tenterden  held  that  where  an  account,  consisted, 
partly  of  items  for  sipiritiious  liquors  within  the  Tippling 
Act,  and  partly  of.  other  items,  and  payments  had  befen 
made  generally  in  reduction  of  thq  account,  the  vendor  was 
at  liberty  to  appropriate  these  payments  to  the  items  for 
liquor,  so  as  to  leave  a  good  cause  of  action  for  the  balance ; 
thus  treating  these  debts,  tike  debts  barred  by  the  Statute 
of  Limitation  of  James  L,  as  existing  though  not  recover- 
able. '  '  -      -  ■'. 

The  writer  is  not  aware  of  any  decision  on  the  modem 
enactment  as  to  beer,  &a,  in  the   County  Courts  Act, 

1867. 

By  the  Trade  Union  Act,  1871  (34  &  35  Vict.  c.  31),  ^^« 
s.  4,  certain  agreements  therein  enumerated  and  relating  agroe- 
to  the  management  and  operations  of  trade  unions  cannot  ^^^ 
be  sued  upon,  but  it  is  expressly  provided  that  they  are  Trude 
not  on  that  account   to   be  deemed   unlawful     In  this  acCwTI. 
enumeration  are  included  agreements  to  pay  subscriptions. 
It  has  also  been  decided  that  a  member  of  a  trade  union 
who  complains  of  having  been  wrongfully  expelled  caimot 
be  reinstated  by  the  Court,  though  this  may  be  done  in 
the  case  of  a  club  or  other  voluntary  association  holding 

ie)  Hughes    y,    Ihtu    or    DoaM  {e)  Scott    v.    OUlmare    (1810)    8 

<184J)  1  Q.  B..294,  10  L.  J.  Q.  B.  T*oiit.  226. 

65.     '  if)  Cruitkshankt  v.  Bote,  5  C.  &  pI 

\d)  PhU/poU  ▼.  /o»tt»  (1834)  2  a:  19. 

&  E.  41.  "  .     ^ 


664  AQREEmeNn  of  uh^erfect  obliqation. 

property  for  purposes  lawful  at  common  law,  on  the  ground 
of  the  expelled  member  being  deprived  of  a  right  of  pro- 
perty (g).     Practically  trade  union  suhsmptions  are  thus 
placed  on  the  same  footing  as  suhsmptions  to  any  club 
which  is  not  proprietaiy  (h\    So  fiir  as  we  are  aware  there 
is  nothing  in  principle  against  the  payment  of  subscriptions 
to  a  club  being  legally  enforced :  but  it  would  in  most 
cases  be  extremely  difficult,  if  not  impossible,  to  ascertain 
who  were  the  proper  persons  to  sue  (t).    The  same  diffi^ 
culty  exists  in  the  case  of  any  numerous  uninoorpraated 
associatioa     But  this  belongs  to  another  division  of  our 
subject  (i). 
^^^'^  ^        The  present  place  seems  on  the  whole  the  most  appro- 
impcrfaei   priate  one  for  mentioning  a  singular  case  which  may  be 
^^^       regarded  as  the  converse  of  those  we  have  been  dealing 
Bffeet  of    with.     A  valuable  consideration  is  given  in  the  course  of  a 
limy  Uwi  transaction  which  as  the  law  stands  at  the  time  is  wholly 
••*V^    illegal  and  confers  no  right  of  action  on  either  party, 
aiftde         Afterwards  the  law  which  made  the  transaction  illegal  is 
^^"^       repealed.     Is  the  Consideration  so  received  a  good  founda- 
tion for  a  new  express  promise  on  the  part  of  the  receiver? 
The  question  odme  before  the  Court  of  Exchequer  in  1863, 
some  years  after  the  repeal  of  the  usury  Iaw&  The  plaintiff 
sued  on  bills  of  exchange  drawn  and  accepted  after  that 

(9)    Bighy  ▼.   Qmnol  (1880)   14  in  CoUoffe  Breet  Ckmrdi  ▼.  KatdaU 

Ch.  D.  482,  49  L.  J.  Ch.  828 ;  cp.  (1877)  121  Utm.  528,  the  opiniuii 

Wolfe  ▼.  MaUhewt  (1882)  21  Ch.  D.  ezpreved  in  earii«r  dieta^  that  *'it 

194,  51  L.  J.  Ch.  888.  is   a   niflloisnt   oonndention  that 

(A)  In  the  case  of  a  proprietaiy  others  were  led  to  sobscribe  b>  the 

dab  the  proprietor  can  sue ;   see  Toy  safascriptimi  of  the  ddfendant,'* 

RaggtU  ▼.  BUkop  (1826)  2  C.  &  P.  was  ovemiled.   In  fome  cases,  how- 

843 ;  BaggtU  ▼.  Mtugrave  (1827)  •&•  ever,  where   expense  has  aetoally 

556.  been  incurred  on  the  faith  oi  tbd 

(»)  In  tome  of  the  United  States,  snbscriptioDS  promised,  it  may  be 
however,  the  stffl  more  difficnlt  held  on  the  facts  that  a  »nbsGnb«r 
attempt  has  been  made  to  enforce  is  liable  as  for  work  done,  money 
promises  to  subscribe  to  public  ptaid,  etc  at  his  request  by  the  plain- 
objects  in  which  the  subscribers  had  tiff:  see  Kedar  A  oik  BkaUaekarji 
a  common  interest:  and  in  Massa?  v.  Oorie  Mahomed  (1886)  I.  L.  R. 
chusetts  and  New  Yoi^  not  without  1 4  CaL  64  (snbscription  lor  boildhig 
•nocess:  Hilliard  on  Contracts,  1.  a  town  hall). 
259;  ParMns  on  Contracts,  1.  877;  <i^)  See  pp.  204,  228,  t^pra, 
Whaiton  en  Contracts,  §  528.    But 


EQUITABLE  LIABILITIEa  655 

repeal,  but  in  renewal  of  other  bills  given  before  the  repeal 
in  respect  of  advances  made  on  terms  which  under  the  old 
law  were  usurious.  The  former  bills  were  unquestionably 
void :  but  it  was  held  by  the  majority'  of  the.  Gourt  thab 
the  original  advance  was  agood  i3onsidemtiou  for  the  neiws 
bills.  The  question  'was  thus  stated  in  the  judgtaentoS 
the  majority : — '^Whether  ah  advance  of  money  under  such 
circumstances  as  to  create  no  legal  obligation  at  the  time 
to  repay  it  can  constitute  a  good  consideration  for  an 
express  promise  to  do  so."  And  the  answer  was  given 
thus : — "  The  consideration  which  would  have  been  suffi- 
cient to  support  the  promise  if  the  law  had  not  forbidden 
the  promise  to  be  made  originally  does  not  cease  to  be 
sufficient  when  the  legal  restriction  is  abrogated  •  .  •  A 
man  by  express  promise  may  render  himself  liable  to  pay 
back  money  which  he  has  received  as  a  loan,  though  some 
positive  rule  of  law  or  statute  intervened  at  the  time  to 
prevent  the  transaction  from  constituting  a  legal  debt "  (2). 
The  debt,  therefore,  which  was  originally  void  by  the  usury, 
laws,  seems  to  have  been  put  in  the  same  position  by  their 
repeal  as  if  it  had  been  a  debt  once  enforceable  but  barred 
by  the  Statute  of  Limitation*  But  the  decision  seems 
wrong,  for  the  consideration  was  wholly  past  at  the  time  o£ 
the  promise.  The  consideration  for  accepting  a  renewed  bill 
of  exchange  is  not  the  value  received  which  was  the  con- 
sideration of  the  original  bill,  but  the  abandonment  of  the 
right  of  action  thereon. 

There  is  one  other  analogy  to  which  it  is  worth  while  taTreftiment 
advert,  although  it  was  never  of  much  practical  import-  aUe*oba- 
ance,  and  what  little  it  had  has  in  England  been  taken  S***®***  ^ 

CODHDOA 

away  by  the  Judicature  Acta     Purely  equitable  liabilities  Uw, 
have  to  a  certain  extent  been  treated  by  common  law 
courts  as  imperfect  obligations.     The  mere  existence  of  ai 

{I)  Pfiffht  V.   Reed  (1863)  I  H.  &  that  tbe  bills  saed  on  were  anachial 

C.  703,  715,  716  ;  32  L.  J.  Ex.  265,  payment  of  tbe  usnrioas  Iomi.  Quod 

269.    Prof.  Langdell  (Snmmary,  $  nimium  subtilUer  dictum  ridelur, 
76)  supports  the  case  ou  the  ground 


666  AGREEMENTS  OF  IMPERFECT  OBLIGATION. 

liquidated  claim  on  a  trust  against  the  trustee  confers  oo 
legal  remedy.  But  the  trustee  may  make  Jumself  legally 
liable  in  respect  of  .such  a  claim  by  an  account  staited  (m)^ 
or  by  a  simple  admission  that  he  holds  as  trustee  a  certain 
sum  due  to  the  cestui  .que  trust  {n).  A  court  of  law  has 
also  held  that  a  payment  made  by  a  debtor  without  appro- 
priation may  be  appropriated  by  the  creditor  to  an  equit- 
able.debt  (o).  ..    ' 

Sommaiy       It  may  be  useful  to  sum  up  in  a  more  general  form  the 
results  which  have  been  obtained  in  this  chapter. 

An  imperfect  obligation  is  an  existing  obligation  which 
is  not  directly  enforceable.   .    - 

This  state  of  things  results  from  exceptional  rules  of 
positive  law,  and  especially  from  laws  limiting  the  right  to 
enforce  contracts  by  special  conditions  precedent  or  sub- 
sequent 

When  an  agreement  of  imperfect  obligation  is  executory, 
a  right  of  possession  immediately  founded  on  the  obligation 
can  be  no  more  enforced  than  the  obligation  itself 

Acts  done  in  fulfilment  of  an  imperfect  obligation  are 
valid,  and  may  be  the  foundation  of  new  rights  and 
liabilities,  by  way  of  consideration  for  a  new  contract  or 
otherwise. 

A  party  who  has  a  liquidated  and  unconditional  claim 
under  an  imperfect  obligation  may  obtain  satis£Btction 
thereof  by  any  means  other  than  direct  process  of  law 
which  he  might  have  lawfully  employed  to  obtain  it  if  the 
obligation  had  not  been  imperfect. 

The  laws  which  give  rise  to  imperfect  obligations  by 

-  imposing  special  conditions  on  the  enforcement  of  rights 

are  generally  treated  as  part  of  the  law  of  procedure  of  the 

forum  where  they  prevail  (p),  and  as  part  of  the  lex  fori 


(m)  TophoM  V.  Mcreenft  (1868)  (o)  BoBonquH  v.  Wray  (1816)  6 

8  K  &  B.   972,  983  ;   Howard  v.  Taunt.  697. 
BrownhiU  (1863)  23  L.  J.  Q.  B.  23.  (p)  Contra  Sftvlgny,  Syst.  8.  270. 

(n)  Roper  v.  Holland  (1836)  3  A.  273. 
&  E.  99. 


GENERAL  RESULTS.  667 

they  are  applicable  to  contracts  sued  upon  in  that  forum 
without  regard  to  the  law  governing  the  substance  of  the 
contract  (g) ;  but  on  the  other  hand  they  are  not  regarded 
in  any  other  forum. 

{q)  This  (it  is  conceived)  does  not  to  revenue  laws,  each  as  the  30 
apply  to  revenue  laws,  and  enact-  Vict.  c.  28,  s.  7»  as  to  marine  in- 
ments  which  are  merel/  ancillary      soranoeiu 


U  U 


(    658    ) 


APPENDIX. 


Note  A. 
Termmohgy  and,  Fundamental  Oonceptiom  of  Contract, 
SaTigny'B       In  the  first  two  editions  I  made  use  of  Savigny's  definition  of 
*^?^i?**'*""  Fiertra^  (which  can  only  be  translated  by  Agreement,  but  in  a  wider 
and  obUMi  Bense  than  is  known  to  any  English  writer).  It  now  seems  to  me  out 
toriteker      of  place  in  a  special  treatise  on  Contract.     In  the  third  volume  of 
Vertroff.     j^  System  Savigny  deals  in  the  most  general  way  with  the  events 
capable  of  producing  changes  in  rights  and  duties  in  the  field  of 
private  law.     Such  events  he  ceHs  jtiristische  Thataaehen;  an  expres- 
sion to  which  our  own  accustomed  "acts  in  the  law"  seems  well  fitted 
to  correspond.       (Acts  in  the  law  must  be  carefully  distinguished 
from  acts  of  the  law,  which  are  reaUy  neither  acts  nor  events,  but 
legal  consequences  of  events.  But  the  terms  are  not  common  enough 
for  any  serious  risk  of  confusion  to  ari^e).   To  speak,  as  some  writers 
do,  of  "juridical  facts,"  is  to  use  language  which  is  so  far  from  being 
English  that  it  becomes  intelligible  only  by  a  mental  re- translation 
into  German.     Greater  nicety  might  be  obtained,  if  desired,   by 
coining  the  term  "event  in  the  law"  for  jwristische  Thatsache  in  itA 
widest  sense,  and  reserving  "act  in  the  law  **  for  the  species  which 
Savigny  proceeds  to  mark  off  from  the  genus,  namely,  frHe  Handhtng^ 
or  better,  perhaps,  for  the  further  specified  kind  of  voluntary  acts 
which  manifest  an  intention  to  bring  about  particular  lef^  con- 
sequences.   Such  an  act  is  called  by  Savigny    WUleiiserhUirung. 
Specifying  yet  more,  we  distinguish  the  acts  in  which  the  will  of  only 
one  party  is  expressed  from  those  in  which  the  wills  of  two  or  more 
concur.    This  last  species  gives  the  conception  of  Vertrag,    Savigny 
defines  it  as  the  concurrence  of  two  or  more  persons  in  the  expression 
of  a  common  intention,  whereby  mutual  rights  and  duties  of  thoee 
persons  are  determined.     "  Vertrag  ist  die  Yereiniguog  Mehrerer  xu 
einerfibereinstimmendenWillenserklSrung,  wodurch  ihre  Recbtaver- 


TERMINOLOGY  OF  CONTRACT.  659 

hSltaiisse  beetimmt  werden."  (Syst  3.  309).  This  covers  a  mucli 
wider  field  than  that  of  contract  in  any  proper  sense.  Every  trans- 
action answering  this  description  includes  an  agreement,  hut  many 
transactions  answer  to  it  which  include  far  more  :  conveyances  of 
property,  for  example,  including  dispositions  inter  vivos  by  way  of 
trust  and  even  gifts,  and  marriage.  A  still  further  specification  is 
needful  to  arrive  at  the  notion  of  Contract  A  contract,  in  Savigny's 
way  of  approaching  it,  is  an  agreement  which  produces  or  is  meant 
to  produce  an  obligation  {ohliffatorUcher  Vertrag),  It  is  thus  defined 
in  his  Obligationenrecht  §  52  (voU  ii.  p.  8) :  "  Vereinigung  Mehrerer 
zu  einer  ilbereinstimmenden  WiUenserklarung,  wodurch  unter  ihnen 
eine  Obligation  entstehen  soil.''  Now  the  use  of  the  more  general 
notion  of  Vertrag^  as  Savigny  himself  explains,  is  cot  to  clear  up 
anything  in  the  learning  of  contracts.  It  is  to  bring  out  the  truth 
that  other  transactions  which  are  not  contracts,  or  which  are  more 
than  contracts,  have  in  common  with  them  the  character  of  consent 
being  an  essential  ingredient  Moreover  we  should  have  to  consider, 
before  adopting  this  terminology,  the  wider  question  whether  the 
retention  of  Obligations  as  a  leading  division  in  a  modern  system  of 
law  be  necessary  or  desirable. 

The  distinction  between  the  ideas  denoted  by  dominium  and 
obligatio  is  certainly  as  fundamental  in  England  as  anywhere  else  ; 
and  the  habit  of  using  "  obligation  "  as  a  synonym  of  **duty,"  though 
respectable  authority  may  be  found  for  it,  is  in  my  opinion  to  be 
deprecated.  But  to  apply  the  Roman  terminology  to  the  Common 
Law  would  be  as  violent  a  proceeding,  in  any  case,  as  to  ignore 
it  in  Roman  Law. 

For  these  reasons  Savigny's  definition,  admirable  as  it  is  for  its  own 
purposes  and  in  its  own  context,  and  instructive  as  his  work  is 
almost  everywhere  as  an  example  of  scientific  method,  is  now 
reserved  for  this  note.  The  reasons  for  which  I  am  no  longer 
content  to  adopt  the  Indian  Contract  Act  to  the  same  extent  as  in 
the  two  first  editions  have  been  sufficiently  explained  in  the  text 


NoTR  B,  (p.  36). 
Authorities  on  Contract  by  Correspondence. 

The  first  case  of  any  importance  is  Adams  v.  Lindsell,  1  B.  &  Aid.  Adams  v 
681  (1818),  Finch  Sel.  Ca.  109.    Defendants  wrote  to  plaintiffs,  "  We  Lindsell. 
now  offer  you  800  tods  of  wether  fleeces,  &c."  (specifying price  and  mode 
of  delivery  and  payment),  **  receiving  your  answer  in  course  of  poet" 
Here*  therefore,  the  mode  and  time  for  acceptance  were  prescribed. 

U  U  2 


660  APPENDIX. 

This  letter  waa  misdirected,  and  so  arrived  late.  On  receiving  it,  the 
plaintiffs  wrote  and  sent  by  post  a  letter  accepting  the  proposal,  bat 
the  defendants,  not  receiving  an  answer  when  they  should  have 
received  it  if  their  proposal  had  not  been  delayed,  had  in  the  mean- 
time (between  the  despatch  and  the  arrival  of  the  reply)  sold  the 
wool  to  another  buyer.  The  jury  were  directed  at  the  trial  that  as 
the  delay  was  occasioned  by  the  neglect  of  the  defendants,  they 
must  take  it  that  the  answer  did  come  back  by  course  of  post.  On 
the  argument  of  a  rule  for  a  new  trial,  it  was  contended  that  there 
was  no  contract  till  the  answer  was  received.  To  this  the  Ceurt 
replied : — 

"  If  that  were  so,  no  contract  could  ever  be  completed  by  the  post 
For  if  the  defendants  were  not  bound  by  their  offer  when  accepted 
by  the  plaintiffs  till  the  answer  was  received,  then  the  pLuntiflEB 
ought  not  to  be  bound  till  after  they  had  received  the  notification 
that  the  defendants  had  received  their  answer  and  assented  to  it ;  and 
80  it  might  go  on  ad  infiniUim,  The  defendants  must  be  considered 
in  law  as  making,  during  eveiy  instant  of  the  time  their  letter  waa 
travelling,  the  same  identical  offer  to  the  plaintiffs,  and  then  the 
contract  is  completed  by  the  acceptance  of  it  by  the  latter.  Then  as 
to  the  delay  in  notifying  the  acceptance,  that  arises  entirely  ftoni 
the  mistake  of  the  defendants,  and  it  therefore  must  be  taken  as 
against  them  that  the  plaintiff's  answer  was  received  in  course  of 
poet." 

As  far  as  the  case  goes,  it  seems  to  amount  to  this :  An  acceptance 
by  letter  is  complete  as  against  the  proposer  from  the  date  of  posting 
the  acceptance  if  it  arrives  within  the  prescribed  time,  if  any,  or 
otherwise  within  a  reasonable  time ;  but  if  the  communication  of 
the  proposal  is  delayed  by  the  fault  of  the  proposer,  and  the  com- 
munication of  the  acceptance  is  consequently  delayed,  such  delay  is 
not  to  be  reckoned  against  the  acceptor. 
Danmora  In  the  Scotch  case  of  Dunmore  v.  Alexander^  9  Shaw  &  Dunlop, 
A^t'}S!T'  1^^»  *^^  ^'^^^  ^^  ^^  ^29  (1830)  the  defendant  wrote  to  a  friend 
desiring  her  to  engage  a  servant  on  terms  which,  that  friend  had 
already  informed  the  writer,  would  be  agreeable  to  the  servant  A 
letter  revoking  this  was  written  the  next  day  ;  ultimately  they  were 
both  posted  and  delivered  to  the  servant  at  the  same  time.  It  was 
held  that  no  contract  was  concluded,  but  it  is  not  clear  whether  the 
majority  of  the  Court  meant  to  decide  that  an  acceptance  sent 
through  the  post  is  neutralized  by  a  revocation  arriving  at  the  same 
time  though  posted  later,  or  that  the  first  letter  was  only  a  proposal. 
Neither  is  it  clear  how  far  and  for  what  purposes  they  regarded  the 
intermediate  person  as  an  agent  for  either  or  both  of  tixe  parties.  No 
distinction  was  taken  between  postal  and  other  communications. 


der  (Sc). 


CONTRACT  BY  CORRESPONDENCE.  661 

The  French  Court  of  Cassation  had  held  in  1813  that  when  an  ac- 
ceptance and  the  revocation  of  it  arrive  together  there  is  no 
contract.  Merlin,  B^pertoire,  VmU,  §  1,  Art.  3,  No.  11  6m,  Langdell 
Sel.  Ca.  Cont.  166. 

In  Potter  v.  Sanders  (1846)  6  Ha.  1,  the  posting  of  a  letter  of  Potter  v. 
acceptance  is  said  to  be  an  act  which  "  unless  interrupted  in  its  Sanden. 
progress "  concludes  the  contract  as  from  the  date  of  the  posting. 
This  seems  to  imply  that  a  letter  not  received  at  all  would  not  bind 
the  proposer. 

Then  comes  Dunlop  v.  EiggvM  (1848)  1  H.  L.  C.  381,  Finch  Sel.  Danlop  v. 
Ca.  116,  a  Scotch  appeal  decided  by  Lord  Cottenham.  Here  the  ^^W'ns- 
proposal  did  not  prescribe  any  time,  but  the  nature  of  it  (an  offer  to 
sell  iron)  implied  that  the  answer  must  be  speedy.  The  acceptance 
was  posted,  not  by  the  earliest  possible  post,  but  in  business  hours  on 
the  same  day  when  the  proposal  was  received.  The  poet  was  then 
delayed  by  the  state  of  the  roads,  so  that  the  acceptance  was  received 
at  2  p.m.  instead  of  8  a.m.,  the  hour  at  which  that  post  should  have 
arrived.  The  decision  was  that  the  contract  was  binding  on  the 
proposer  ;  and  it  might  well  have  been  put  on  the  ground  that  the 
acceptance  in  fact  reached  him  within  a  reasonable  time.  Lord 
Cottenham,  however,  certainly  seems  to  have  thought  the  contract 
was  absolutely  concluded  by  the  posting  of  the  acceptance  (within 
the  prescribed  or  a  reasonable  time),  and  that  it  mattered  not  what 
became  of  the  letter  afterwards.  It  appears  to  have  been  so  under- 
stood in  Duncan  v.  Top/kwn  (1849)  8  C,  B.  225,  18  L.  J.  C.  P.  310, 
where,  however,  the  decision  was  on  other  grounds. 

The  later  cases  arose  out  of  applications  for  shares  in  companies  Hebb's  ca. 
being  made  and  answered  by  letter.    HtWs  case  (1867)  4  Eq.  9,  •^d  Reid- 
decides  only  that  an  allotment  of  shares  not  duly  despatched  will  not  ^    "  *^ 
make  a  man  a  shareholder  ;  for  the  letter  of  allotment  was  sent  to 
the  company's  local  agent,  who  did  not  deliver  it  to  the  applicant  till 
after  he  had  withdrawn  his  application.     But  the  same  judge  (Lord 
Romilly)  held  in  RMpaUi's  case  (1870)  11  Eq.  86,  40  L.  J.  Ch.  39, 
that  the  applicant  was  not  bound  if  he  never  leceived  the  letter. 

In  British  ai\d  American  Telegraph  Company  v.  Colson  (1871)  British  and 
L.  R.  6  Ex.  108, 40  L.  J.  Ex.  97,  it  was  found  as  a  fact  that  the  letter  ^®"*^*? 
of  allotment  was  never  received.  The  Court  (Kelly  C.  B.,  Pigott  B.,  Co.^^ 
and  Bramwell  B.)  held  that  the  defendant  was  not  bound,  and  Cokon. 
endeavoured  to  restrict  the  effect  of  Dunlop  v.  Higgins. 

In  Tf/ivnsends  case  (1871)  13  Eq.  148,  41  L.  J.  Ch.  198,  the  letter  Town- 
of  allotment  miscarried,  and  was  delayed  some  days  by  the  applicant's  '^   *  ^^ 
own  fault  in  giving  a  defective  address.    By  a  simple  application  of 
Adams  v.  Lindsell  (expressly  so  treated  in  the  judgment,  p.  154)  it 
waa  held  that  the  applicant  was  bound,  and  that  a  withdrawal  of  his 


662  APPENDIX. 

application,  poeted  (and  it  seemB  delivered,  p.  151)  before  heactoallj 
received  the  letter  of  allotment,  was  too  late. 
Hams*  oa.  In  Harris^  case,  7  Oh.  587,  the  letter  of  allotment  was  duly 
received,  but  in  the  meantime  the  applicant  had  written  a  letter 
withdrawing  his  application  on  the  ground  of  the  delay  (ten  days) 
in  answering  it.  These  letters  crossed.  The  Lords  Justices  (James 
and  Mellish)  held  that  the  applicant  was  bound,  on  the  authority  of 
Dunlop  V.  Hiijgins^  with  which  they  thought  it  difficult  to  reconcile 
British  and  Artur.  Telegraph  Co.  v.  Colson  (a).  On  this,  however,  no 
positive  opinion  was  given,  *' because  although  the  contract  is  com- 
plete at  the  time  when  the  letter  accepting  the  offer  is  posted,  yet  it 
may  be  subject  to  a  condition  subsequent  that  if  the  letter  does  not 
arrive  in  due  course  of  post,  then  the  parties  may  act  on  the 
assumption  that  the  offer  has  not  been  accepted  "  (per  Mellish  L.J. 
at  p.  697). 
WaJrs  oa.  In  WaWs  case  (1872)  15  Eq.  18,  42  L.  J.  Ch.  372,  Malins  V.-C. 
held  that  as  a  fact  the  letter  had  been  received,  inclining,  however, 
to  think  Harris  case  au  authority  for  the  more  stringent  construc- 
tion of  Dunlop  V.  Higgins — viz.,  that  the  contract  is  absolute  and 
unconditional  by  the  mere  posting.  This  construction  was  held  by 
the  Court  of  Appeal  m  Household  Fire  Insurance  Go.  v.  Orant  (1879) 
4  Ex.  D.  216,  48  L.  J.  Ex.  677,  p.  36,  above,  to  be  the  correct  one. 
American  The  American  case  of  Tayloe  v.  Merchants  Fire  Insurance  Co,,  9 
Mth^*^  How.  S.  C.  390  (1850)  is  of  less  importance  to  English  readers  than 
rities.  it  was  a  few  years  ago,  the  ground  being  now  fully  covered  by  our 

own  decisions.  But  it  may  still  be  useful  to  give  some  account  of  it. 
The  insurance  company's  agent  wrote  to  the  plaintiff  offering  to  insure 
his  house  on  certain  terms.  The  plaintiff  wrote  and  posted  a  letter 
accepting  these  terms,  which  was  duly  received.  The  day  after  it 
was  posted,  but  before  it  was  delivered,  the  house  was  burnt  The 
objection  was  made,  among  others,  that  there  was  no  complete  oon- 
tract  before  the  receipt  of  the  letter,  an  assent  of  the  company  alter 
the  acceptance  of  the  proposed  terms  being  essentiaL  But  the  Court 
held  that  such  a  doctrine  would  be  contrary  to  mercantile  nsage  and 
understanding,  and  defeat  the  real  intent  of  the  parties.  This 
decides  that  a  contract  is  complete  as  against  the  proposer  by  posting 
a  letter  which  is  duly  delivered.  It  may  be  nseful  to  cite  part  of  the 
judgment : — 

**  The  fallacy  of  the  argument,  in  our  judgment,  consists  in  the 
assumption  that  the  contract  cannot  be  consummated  without  a 
knowledge  on  the  part  of  the  company  that  the  offer  has  been 

(a)  It  seems  not  to  have  been  was  in  fact  sent  within  a  reasonable 
disputed  that  the  letter  of  allotment      time. 


CONTRACT  BY  CORRESPONDENCE.  663 

accepted.  This  is  the  point  of  the  objection.  But  a  little  reflection 
will  show  that  in  all  cases  of  contracts  entered  into  between  parties 
at  a  distance  hj  correspondence  it  is  impossible  that  both  should  have 
a  knowledge  of  it  the  moment  it  becomes  complete.  This  can  only 
exist  where  both  parties  are  present  .  .  It  is  obvionsly  impossible 
ever  to  perfect  a  contract  by  correspondence,  if  a  knowledge  of  both 
parties  at  the  moment  they  become  bound  is  an  essential  element  in 
making  out  the  obligation.  .  .  It  seems  to  us  more  consistent 
with  the  acts  and  declarations  of  the  parties  to  consider  it  complete 
on  the  transmission  of  the  acceptance  of  the  offer  in  the  way  they 
themselves  contemplated,  instead  of  postponing  its  completion  till 
notice  of  such  acceptance  has  been  received  and  assented  to  by  the 
company. 

^'  For  why  make  the  offer,  unless  intended  that  an  assent  to  its 
terms  should  bind  them  ?  And  why  require  any  further  assent  on 
their  part  after  an  unconditional  acceptance  by  the  party  to  whom 
it  is  addressed  ?  "  (Pp.  400,  401.)  See  also  7  American  Law  Review, 
433,  "Contract  by  Letter,"  where  American  and  French  opinions 
are  collected  ;  and  for  modem  German  theories  on  the  subject, 
Vangerow,  Pand.  §  603,  Windscheid,  Pand.  §  306.  The  German 
writers  are  driven  to  strange  shifts  to  find  semblances  of  authority 
in  the  Quellen  on  these  modem  controversies. 

Mr.  Langdell  (Summary,  §§  6,  14, 16)  holds  that  in  unilateral  con- 
tracts (where  a  promise  is  offered  in  consideration  of  an  act)  the 
performance  need  not  be  notified,  but  that  in  a  bilateral  contract 
(i,e.  by  mutual  promises)  the  acceptor's  promise  must  be  actually 
communicated.  I  cannot  find  support  for  this  ingenious  distinction 
in  the  ratio  decidendi  of  any  of  the  English  authorities. 

There  seems  to  be  a  fair  consmtus  of  authority,  such  as  there  is,  Place  of 
for  holding  that  the  place  to  which  a  contract  made  by  correspon-  ^"*™<^*  , 
dence  should  be  referred  is  that  whence  the  acceptance  is  despatched,  ^i^q  y^y 
Savigny,  Syst.  8,  253,  257  ;  Newcomb  v.  De  Boos  (1859)  2  £.  &  £.  oorrespon- 
270,  29  L.  J.  Q.  B.  4.     Conversely,  where  an  offer  to  buy  goods  is  ^^^^ 
made  by  a  letter  posted  in  the  City  of  London,  and  accepted  by 
sending  the  goods  to  the  writer's  place  of  business  in  the  city,  the 
whole  canse  of  action  arises  in  the  city.     Taylor  v.  Jones  (1875)  1 C. 
P.  D.  87,  45  L.  J.  C.  P.  110.     So  in  criminal  law  a  fialse  pretence 
contained  in  a  letter  sent  by  post  is  made  at  the  place  wh^re  the 
letter  is  posted.     Beg,  v.  Holmes  (1883)  12  Q.  B.  D.  23,  53  L.  J.  M. 
C.37. 

The  Grerman  Commercial  Code  has  the  following  provisions  on  Grerman 
this  subject:-  dSa3"e. 

818.  When  a  commercial  contract  is  proposed  between  parties 


664  APPENDIX. 

present  at  the  same  time,  the  acceptance  must  be  immediate ;  other- 
wise the  proposer  is  no  longer  bound  to  his  proposal-t 

319.  When  a  proposal  is  on  foot  between  parties  at  a  distance,  the 
proposer  remains  bound  until  the  time  at  which  he  may  iiedilj 
expect  an  answer  to  reach  him  if  despatched  in  ordinary  course  aod 
in  due  time.f  In  estimating  this  time  he  may  assume  that  his 
proposal  was  duly  received  [surely  not  if,  as  in  Adams  y,  Lind»U  (o), 
it  was  delayed  by  his  own  negligence  7] 

In  the  event  of  an  acceptance  despatched  in  due  time  not  arriving 
till  after  such  time  as  aforesaid,  no  contract  is  concluded  if  the 
proposer  has  given  notice  of  revocation  in  the  meantime,  or  gives 
it  forthwith  (ohne  Verzug)  on  receiving  the  acceptance. 

[The  clauses  marked  f  eeem  only  to  say  in  a  rather  elaborate  waj 
that  a  proposal  is  revoked  by  the  lapse  of  a  reasonable  time  without 
acceptance  ;  &  319,  however,  tacitly  involves  the  important  proposi- 
tion— now  negatived,  as  we  saw  in  the  text,  by  English  law— thai 
an  answer  which  never  arrives,  whether  sent  by  post  or  otherwise, 
cannot  conclude  a  contract] 

320.  When  the  revocation  of  a  proposal  reaches  the  other  paitf 
before  or  at  the  same  time  with  the  proposal  itself,  the  proposal 
is  deemed  null  and  void  (ist  fur  nicht  geschehen  zu  erachten). 

In  like  manner  the  acceptance  is  deemed  null  and  void  if  the 
revocation  has  been  communicated  to  the  proposer  before  the 
acceptance  or  at  the  same  time  with  it. 

321.  Where  an  agreement  has  been  concluded  between  parties  at 
a  distance,  the  conclusion  of  the  agreement  is  to  be  dated  from  the 
time  at  which  the  communication  of  the  acceptance  was  delivered 
for  despatch  [out  of  the  acceptor's  control  ?J  (in  welchem  die  E^ 
klSrung  der  Annahme  Behufs  der  Abeendung  abgegeben  ist). 

322.  An  acceptance  subject  to  conditions  or  reservations  is  equi- 
valent to  a  refusal  coupled  with  a  new  proposal. 

The  subject  is  dealt  with  by  the  Swiss  Federal  Code  of  Obligations 
(in  force  since  January  1,  1883),  on  the  same  lines,  but  rather  more 
fully,  in  Articles  1 — 8.    We  subjoin  the  French  text 

I.   Des  Obligations  Hi^ultavt  d'un  Contrat. 
De  la  conclimon  des  corUrats, 

Article  premier,  II  n'y  a  contrat  que  si  les  parties  ont  manifeste 
d'une  mani^re  concordante  leur  volont6  r^iproque.  Cette  manifes- 
tation pent  dtre  expresse  ou  tacite. 

2.  Si  les  parties  se  sont  mises  d'accord  sur  tons  les  points  easen- 

(a)  1  B.  A;  Aid.  681. 


CONTRACT  BY  CORRESPONDENCE.  665 

tiels,  elles  sont  pr^umdes  avoir  entenda  a'obliger  definitivementy 
encore  qu'elles  aient  r^erv6  certains  pointA  secondairea. 

A  defaut  d'accord  sur  ces  points  secondairea,  le  juge  lea  r^gle  en 
tenant  compte  de  la  natnre  de  Taffaire. 

II  n'est  pas  pr^jug^  par  les  pr^sentes  dispositions  aux  regies  con* 
cernant  la  forme  des  contrat^. 

3.  Toute  personne  qui  propose  k  une  autre  la  conclusion  d'un 
contrat  en  lui  fizant  un  d^lai  pour  accepter,  est  li6e  -par  son  offre 
jusqu'^  Pexpiration  du  d61ai.  EUe  est  d6gag6e,  si  Tacceptation  ne 
lui  est  paa  parvenue  avant  le  terme  fix^. 

4.  Lorsque  Toffre  a  6t^  faite  k  une  peraonne  pr^sente  sans  fixation 
d'un  d61ai  pour  Pacceptation,  I'auteur  de  I'ofifre  est  d6gag6  si  I'ac- 
cepUition  n'a  pas  lieu  sur-le-champ. 

5.  Lorsque  I'offre  a  6t6  faite  sans  fixation  de  d^lai  h  une  per- 
aonne non  pr^ente,  I'auteur  de  Toffre  reste  li6  jusqu'au  moment 
oii  il  peut  s'attendre  k  I'arriv^e  d'une  r^ponse  qui  serait  expedi^  k 
temps  et  r^gulidrement  II  a  le  droit  d'admettre,  pour  le  calcul  k 
6tablir,  que  le  destinataire  a  re^u  Tofire  en  temps  voulu. 

Si  Tacceptation  exp6di^e  k  temps  parvient  taidivement  k  Tauteur 
de  I'offre  et  que  celui-ci  entende  ne  plus  dtre  li6,  il  doit,  sous  peine 
de  dommages  et  int^rdts,  en  informer  imm6diatement  I'acceptant. 

Lorsque,  k  raisonde  la  nature  sp6ciale  de  I'affaire  propos6e,  Tauteur 
de  I'offre  devait  ne  pas  s'attendre  k  une  acceptation  exprease,  le 
contrat  est  r6put6  conclu  si  I'offre  n'a  pas  ktS  refus^  dans  un  d^lai 
convenable. 

6.  L'auteur  de  I'offre  n'est  pas  1]6  lorsqu'il  a  fait  k  cet  ^rd  des 
reserves  formelles  (par  exemple,  par  Tadjonction  des  mots:  '^aans 
engagement "),  ou  si  son  intention  de  ne  pas  s'engager  r^ulte 
ncceasairement  soit  des  circonstances,  soit  de  la  nature  sp^ale  de 
raffaire  propo86e. 

7.  L'offre  est  consid^r6e  com  me  non  avenue,  si  le  retndt  en  par- 
vient k  I'autre  partie  avant  I'offre  ou  en  mdme  temps. 

De  mdme,  I'acceptation  est  consid6r6e  comme  non  avenue,  si  le 
retrait  en  parvient  k  l'auteur  de  I'offre  avant  I'acceptation  ou  en 
mdme  temps. 

8.  Lorsqu'un  contrat  est  intervenu  entre  absents,  il  d6ploie  ses 
effets  k  dater  du  moment  oii  I'acceptation  a  6t6  exp^i^. 

Lursqu'une  acceptation  exprepse  n'est  pas  n^cesaaire,  les  effets 
du  contrat  commencent  k  dater  de  la  reception  de  I'offre  non 
refns^e. 

The  Italian  Commercial  Code  in  force  since  Jan.  1, 1883,  takes  a  ItaUan 
somewhat  different  line,  to  the  following  effect  (Art,  36); —  Com- 

A  contract  made  by  correspondence  is  complete  only  if  the  accept-  SS?*^ 


666  APPKNBIX. 

ftnce  is  received  by  the  proposer  within  the  time  prescribed  by  him 
(if  any),  or  otherwise  a  reasonable  time.  But  the  proposer  may 
ratify  an  overdue  acceptance  by  forthwith  giving  notice  to  the 
proposer. 

Where  the  proposal  is  such  that  acceptance  involves  immediate 
action,  and  a  previous  acceptance  in  terms  is  not  required  by  the 
terms  of  the  proposal  or  by  the  usage  of  business,  the  contract  is 
concluded  by  the  acceptor  acting  on  the  proposal. 

Both  proposal  and  acceptance  are  revocable  before  the  conclusion 
of  the  contract  But  if  Uie  acceptor  has  begun  to  act  on  the  pro- 
posal before  receiving  notice  of  its  revocation,  the  proposer  is  liable 
to  him  for  resulting  damage. 

Those  rules  apply  only  to  bilateral  contracts.  Unilateral  promises 
become  binding  as  soon  as  they  come  to  the  knowledge  of  the 
promisee. 


NOTB  C.  (p.  84). 
History  of  the  JSquitaUe  Doctrine  of  SepctraU  Estate, 
Separate         When  the  practice  of  settling  property  to  the  separate  use  of 


married  women  first  became  common,  it  seems  probable  that  neither 
alienation.  *^®  persons  interested  nor  the  conveyancers  had  any  purpose  in  their 
minds  beyond  excluding  the  husband's  marital  right  so  as  to  secure 
an  independent  income  to  the  wife.  The  various  forms  of  circum- 
locution employed  in  all  but  very  modem  settlements  to  express 
what  is  now  sufficiently  expressed  by  the  words  "  for  her  separate 
use,"  will  at  once  suggest  themselves  as  confirming  thia  In  coarse 
of  time,  however,  it  was  found  that  by  recognizing  this  separate  use 
the  Court  of  Chancery  bad  in  efiect  created  a  new  kind  of  equitable 
ownership,  to  which  it  was  impossible  to  hold  that  the  ordinary 
incidents  of  ownership  did  not  attach.  Powers  of  disposition  were 
accordingly  admitted,  including  alienation  by  way  of  mortgage  or 
specific  charge  as  well  as  absolutely ;  and  we  find  it  laid  down  in 
general  terms  about  a  century  ago  that  a  feme  covert  acting  with 
respect  to  her  separate  property  is  competent  to  act  as  a  fem/$  §oU  (a). 
Nevertheless  the  equitable  ownership  of  real  estate  by  means  of  the 

(a)  Hidme  v.  Tenant  (1778)  1  Wb.  to  the  recognition  of  separate  pto- 

&  T.  L.  C.    In  Peacock  v.   Monk  perty  by  C^rts  of  Common  Law 

(1750-1)    2    Vea.    Sr.    190,     there  roe  Dwncan  v.  Caehin  (1875)  L.  K. 

referred  to  by  Lord   Thurlow,  no  10  C.  P.  554,  44  L.  J.  C.  P.  895. 
sudb  general  role  is  expressed.    As 


SEPARATE  ESTATE.  667 

separate  use,  carrying  as  incidents  the  same  full  right  of  disposition 
by  deed  or  will  that  a  /eme  sole  would  have,  was  fully  recognized 
only  by  much  later  decisions  (a).  From  a  mortgage  or  specific  charge 
on  separate  property  to  a  formal  contract  under  seal,  such  as  if  made 
bjr  a  person  sui  iuris  would  even  then  have  bound  real  estate  in  the 
hands  of  his  heir,  we  may  suppose  the  transition  did  not  seem 
violent ;  and  instruments  expressing  such  a  contract  to  be  entered 
into  by  a  married  woman  came  to  be  regarded  as  in  some  way 
binding  on  any  separate  property  she  might  have.     In  what  way  Power  to 
they  were  binding  was  not  settled  for  a  good  while,  for  reasons  g^^^j^^^ 
best  stated  in  the  words  of  V.-O.  Kindersley's  judgment  in  Vaughan  estate  by 
V.  Vanderst^gm  (6).  'o™»^  '^^ 

"The  Courts  at  first  ventured  so  far  as  to  hold  that  if"  a  married  hU*ori<»l  * 
woman  "  made  a  contract  for   payment   of  money  by  a  written  riew  given 
instrument  with  a  certain  degree  of  formality  and  solemnity,  as  by  tey*^' 
a  bond  under  her  hand  and  seal,  in  that  case  the  property  settled  to  j^-^ 
her  separate  use  should  be  made  liable  to  the  payment  of  it ;  and 
this  principle  (if  principle  it  could  be  called)  was  subsequently  ex- 
tended to  instruments  of  a  less  formal  character,  as  a  bill  of  exchange 
or  promissory  note,  and  ultimately  to  any  written  instrument     But 
still  the  Courts  refused  to  extend  it  to  a  verbal  agreement  or  other 
assumpsit,  and  even  as  to  those  more  formal  engagements  which  they 
did  hold  to  be  payable  out  of  the  separate  estate,  they  struggled 
against  the  notion  of  their  being  regarded  as  dehtSy  and  for  that 
purpose  they  invented  reasons  to  justify  the  application  of  the  separate 
estate  to  their  payment  without  recognizing  them  as  debts  or  letting 
in  verbal  contracts.     One  suggestion  was  that  the  act  of  disposing  of 
or  charging  separate  estate  by  a  married  woman  was  in  reality  the 
execution  of  a  power  of  appointment  (c),  and  that  a  formal  and 
solemn  instrument  in  writing  would  operate  as  an  execution  of  a 

power,  which  a  mere  assumpsit  would  not  do Another 

reason  suggested  was  that  as  a  married  woman  has  the  right  and 
capacity  specifically  to  charge  her  separate  estate,  the  execution  by 
her  of  a  formal  written  instrument  must  be  held  to  indicate  an 
intention  to  create  such  special  charge,  because  otherwise  it  could 
not  have  any  operation." 

Both  these  suggestions  ore  on  the  later  authorities  untenable,  as  Earlier 
indeed  V.-C.  Kindersley  then  (1853)  judged  them  to  be  (d) ;  the  doctrines 

(o)  Taylor  v.  Meads  (1865)  4  X>.  (1793)  2  Ves.  at  p.  149. 

J.  S.  697,  34  L.  J.  Ch.  203  ;  Pride  {d)  Op.  Murray  v.  BarUe  (1834) 

v.  Bubb  (1871)  7  Ch.  64,  41  L.  J.  8  M.  &  K  209,  where  the  argu- 

Qh.  106.  ments    show    the    history    of    the 

(6)  (1853)  2  Drew.  165, 180.  doctrine,  Owwm  v.  Bickenaon  (1840) 

(c)  E.g.  puke  of  BoUon  v.  WilUam  1  Cr.  &  Ph.  48, 63,  where  the  notions 


668  APPENDIX, 

now  Ha-      theoiy  of  specific  cbarge  was  reyived  in  the  lateit  case  of  ShatUKk  ▼. 

tenable.      Shattock  (a\  but  this  must  be  conridered  as  overruled  (b\     One  or 

two  other  suggestions— such  as  that  a  married  woman  should  have 

only  such  power  of  dealing  with  her  separate  estate  as  might  he 

expressly  given  her  by  the  instrument  creating  the  separate  use — 

were  thrown  out  about  the  beginning  of  this  century  (c),  during  a 

period  of  reaction  in  which  the  doctrine  was  thought  to  have  gone 

too  fEur,  but  they  did  not  find  acceptance ;  and  the  dangers  which 

gave  rise  to  these  suggestions  were  and  still  are  provided  against 

in  another  way  by  the  device  of  the  restraint  on  anticipation,  as 

curious  an  example  as  any  that  English  law  presents  of  an  anomaly 

grafted  on  an  anomaly  (cQ. 

Jadgment      The   modern   locui   elaggicus  on  the  subject  is  the  judgment  of 

ofTittiier    Turner    L.J.    in    Johnson   v.    Gallagher  {e\  which   had    the    full 

JobnBon  r.  s-PPro^al  of  the  Judicial  Committee  in  London  Chartered  Hank  of 

GaUagher.  Aiutralia  v.  Lempriire  (f).     It  had  already  been  distinctly  followed 

in  the  Court  of  Appeal  in  Chancery  as  having  placed  the  doctrine 

upon  a  sound  foundation    (g).      The  general  result  was  to   this 

effect: 

**Not  only  the  bonds,  bills,  and  promissory  notes  of  nuurried  women, 
but  al^o  their  general  engagements,  may  affect  their  separate  estates'* 
(3  D.  F.  J.  514)  :  and  property  settled  to  a  married  woman's  separate 
use  for  her  life,  with  power  to  dispose  of  it  by  deed  or  will,  is  for 
this  purpose  her  separate  estate  (h). 

These  ''general  engi^ments "  are  subject  to  the  forms  impoeed 
by  the  Statute  of  Frauds  or  otherwise  on  the  contracts  made  in 
pari  materia  by  persons  competent  to  contract  generally,  bat  not 
to  any  other  form  :  there  is  no  general  rule  that  they  must  be 
in  writing. 

A  ''general  engagement"  is  not  binding  on  the  separate  estate 
unless  it  appear  "  that  the  engagement  was  made  with  reference  to 
and  upon  the  faith  or  credit  of  that  estote  "  (3  D.  F.  J.  bib), 

"Whether  it  was  so  made  is  a  question  of  fact  to  be  determined 
on  all  the  circumstances  of  the  case :  it  is  enough   "  to  ahow 

of  power  and  charge  are  both  dis-  (cQ  See  Lord  Cottenham's  jndif- 

miflied  as  inapplicable    by     Lord  ment  in  Tuttett  v.  Armttrong  (1838) 

Gottenham.  4  M.  &  Cr.  398,  405. 

(a)  (1866)  2  Eq.  182, 193,  36  L.  {t)  (1861)  3  D.  F.  J.  49i,  509  aqq. 

J.  Oh.  509.  80  L.  J.  CL  298. 

(6)  Bobifwm  V.   Pickering  (1881)  (/)  (1873)  L.  R.  4  P.  C.  572,  42 1*. 

16  Oh.  Div.  660,  50  L.  J.  Ch.  527.  J.  P.  C.  49. 

(c)  See  J<mee  ▼.  Harris   (1804)  {g)  Pioard  ▼.  ffine  (1869)  5  Ch. 

9  Yes.  486,  497;  Parkes  v.   White  274. 

(1804-5)   11  Yes.   209,    220    eqq.;  (A)  iray(2y.i^ieU(1876)3  Cb.  T>. 

and  collection  of  oaMS  5  Yes.  17,  587,   598,  45  L.  J.  Cb.  600,  s.  ▼. 

note.  Rcper  v.  Doncatter,  below. 


SEPARATE  ESTATE.  669 

that  the  married  woman  intended  to  contract  so  as  to  make 
herself— that  is  to  say,  her  separate  property— the  debtor  "  (L.  R 
4  P.  C.  697). 

Sach  intention  is  presumed  in  the  case  of  debts  contracted  by  a 
married  woman  living  apart  from  her  husband  (3  D.  F.  J.  521). 
(This  tallies  with  the  rule  of  common  law,  which  in  this  case 
excludes  even  as  to  necessaries  the  ordinary  presumption  of  authority 
to  pledge  the  husband's  credit :  see  notes  to  Mariby  v.  Scott  in 
2  Sm.  L.  C.) 

The  like  intention  is  inferred  where  the  transaction  would  be 
otherwise  unmeaning,  as  where  a  married  woman  gives  a  guaranty 
for  her  husband's  debt  (a)  or  joins  him  in  making  a  promissory 
note  (6). 

The  ''engagement"  of  a  married  woman  differs  from  a  contract, 
inasmuch  as  it  gives  rise  to  no  personal  remedy  against  the  married 
woman,  but  only  to  a  remedy  against  her  separate  property  (c).  But 
it  creates  no  specific  charge,  and  therefore  the  remedy  may  be  lost  by 
her  alienation  of  such  property  before  suit  (3  D.  F.  J.  515,  519, 
520-2)  (d).  On  the  same  principle  the  exercise  by  a  married  woman 
of  a  general  testamentary  power  of  appointment  does  not  make  the 
appointed  fund  liable  to  her  engagements,  for  it  is  never  her  separate 
property ;  and  it  would  seem  the  Act  of  1882  makes  no  difference  on 
this  point  («). 

In  cases  where  specific  performance  would  be  granted  as  between 
parties  sui  iuris,  a  married  woman  may  enforce  specific  performance 
of  a  contract  made  with  her  where  the  consideration  on  her  part  was 
an  engagement  binding  on  her  separate  estate  according  to  the  above 
rules ;  and  the  other  party  may  in  Uke  manner  enforce  specific  per- 
formance against  her  separate  estate  (/). 

(a)  MarreUy,  Cowan  (1877)  6  Cb.  527,  which  decided  that  a  creditor 

D.  166  (reversed  7  Cb.  Dvi.  151, 47  of  a  married  woman  on  the  faith  of 

L.  J.  Cb.  73,  bat  only  on  the  oon-  her  separate  estate  is  not  thereby 

struction  of  the  dooament),  where  no  entitled  to  a  charge  on  her  separate 

attempt  was  made  to  dispnte  that  property,   or  to  an   injunction   to 

the  guaranty,  though  not  expressly  restrain  her  from  dealing  with  it. 
referring  to  the  separate  esUte,  was  {e)  Roper  v.  DonctuUr  (1888)   89 

effeotaal  to  bind  it.  Ch.  D.  482,  58  L.  J.  Ch.  31  ;  qu, 

(6)  Davia  V.  Jenkitu  (1877)  6  Ch.  how  far  ooosiBtent  with  Mayd  v. 

D.  728.  Fidd,  note  (h)  above. 

(e)  Hence,  before  the  Act  of  1882,  (/)  The  cases  cited  in  Sag  .y.&  P. 

the  married  womao,  not  being  a  real  200,  so  far  as  inconsistent  with  the 

debtor,waanot  sabjeot  to  thebank-  modem  authorities   (see  Picard  v. 

mptoy  law  in  respect  of  her  separate  Hine  (1869)  5  Ch.  274,  where  the 

estate:  ExparUJonu  (1879)  12  Ch.  form  of  decree  against  the  separate 

Div.  484,  48  L.  J.  Bk.  109.  tsUte  is  given,  Pridev.Bvbb  (1871) 

(d)  Ace    Robimon    v.    Pickering  7  Oh  64,  41  L.  J.  Ch.  105),  must  be 

(1881)  16  Ch.  Div.  660,  50  L.  J.  Ch.  considered  as  overruled. 


670 


APPENDIX. 


The 

rateettate 
mquati 
MTtifidal 
penon. 


Applicft- 
tioDS. 


Effect  of 
oeflMtioxi 
of  oover- 
tare. 


LiabDity 
of  separate 
estate  for 
debto 
before 
marriage. 


The  language  of  the  Judicial  Committee  we  have  cited  as  to  the 
married  woman's  intention  of  making  herself — that  w,  her  MpansU 
property — the  debtor,  suggests  that  the  separate  estate  may  be  re- 
garded as  a  sort  of  artificial  person  created  by  Courts  of  Equity,  and 
represented  by  the  beneficial  owner  as  an  agent  with  fall  powers^ 
somewhat  in  the  same  way  as  a  corporation  sole  is  represented  by  the 
person  constituting  it  for  the  time  being.  As  a  contract  made  b^^  the 
agent  of  a  corporation  in  his  employment  can  bind  nothing  but  the 
corporate  property  (a),  the  engagement  of  a  married  woman  can  bind 
nothing  but  her  separate  estate.  This  way  of  looking  at  it  is  no 
doubt  artificial,  but  may  possibly  be  found  to  assist  in  the  right 
comprehension  of  the  doctrine. 

Some  instances  of  ordinary  contracts  which  may  be  incidental  to 
the  management  and  enjoyment  of  separate  estate,  so  that  it  would 
be  highly  inconvenient  if  the  separate  estate  were  not  bound  by 
them,  are  given  in  the  judgment  of  the  Judicial  Committee  above 
referred  to  (L.  R.  4  P.  C.  at  p.  694). 

A  married  woman's  engagement  relating  to  her  separate  property 
will  have  the  same  effect  as  the  true  contract  of  an  owner  siU  iuris  in 
creating  an  obligation  which  will  be  binding  on  the  property  in  the 
hands  of  an  assignee  with  notice  (6). 

If  a  married  woman  becomes  sui  iuris  by  the  death  of  the  husband, 
judicial  separation  or  otherwise,  what  becomes  of  the  debts  of  her 
separate  estate  1  It  appears  that  they  do  not  become  legal  debts : 
for  this  would  be  to  create  a  new  right  and  liability  quite  different 
from  those  originally  created  by  the  parties  ;  but  that  the  creditor's 
right  is  to  follow  in  the  hands  of  the  owner  or  her  representatives 
the  separate  estate  held  by  her  at  the  time  of  contracting  the  engage- 
ment, and  still  held  by  her  when  she  became  sui  turis^  but  not  any 
other  property.  Property  subject  to  a  restraint  on  anticipation 
cannot  in  any  case  be  bound  (c).  A  kindred  and  still  open  question 
is  this  :  Can  the  separate  estate  of  a  woman  married  before  January 
1,  1883,  be  held  liable  for  her  debts  contracted  before  marriage  1 
Apart  from  recent  legislation  it  seems  no  less  difficult  to  hold  that 
the  coverture  and  the  existence  of  separate  property  enable  the 
creditor  to  substitute  for  a  legal  right  a  wholly  different  equitable 


(a)  Unlesfi,  of  conrse,  he  coDtracts 
in  BQch  a  way  as  to  make  it  also  his 
own  persooal  contract. 

(6)  Per  Jtssel  M.R.,  Wame  v. 
RouUedge  (1874)  18  Eq.  600,  43  L. 
J.  Cb.  604. 

(c)  Pike  V.  Fitzgibbon  (1881)  17 
Ch.  Uiv.  454,  60  L.  J.  Ch.  894. 
Earlier  cases  are  indeciuye.    For 


the  view  taken  in  the  Court  below 
in  Johnson  v.  Gallagher^  where  Uie 
bill  was  filed  after  the  death  of  the 
husband,  see  3  D.  F.  J.  495,  and 
the  decree  appealed  from  at  p.  497. 
The  Act  of  1882  gives  no  power  to 
tonch  such  property:  DraycoU  v. 
BarrUon  (1886)  17  Q.  B.  D.  147. 


SEPABATE  ESTATK  671 

light)  than  to  hold  that  the  cesBation  of  the  coyertuie  tmiifl  that  sort 
of  eqnitahle  right  into  a  legal  deht  It  has  been  held  that  after  the 
husband's  bankruptcy  the  wife's  separate  estate  is  liable  in  equity  to 
pay  her  debts  contracted  before  the  marriage  (a) ;  but  Malins  V.-O. 
seems  to  have  decided  this  case  partly  on  the  ground  that  the  bank- 
ruptcy was  evidence  that  the  settlement  of  the  property  to  the  wife's 
separate  use  was  fraudulent  as  against  her  creditors.  Before  the 
Debtors  Act,  1869,  when  a  married  woman  and  her  husband  were 
sued  at  law  on  a  debt  contracted  by  her  before  the  marriage  and 
either  the  husband  and  wife  or  the  wife  alone  had  been  taken  in 
execution,  the  wife  was  entitled  to  be  discharged  only  if  she  had  not 
separate  property  out  of  which  the  debt  could  be  paid  (6) ;  and  an 
order  for  payment  can  now  be  made  under  p.  5  of  the  Debtors  Act 
on  a  married  woman,  and  the  existence  of  suflScient  separate  estate 
would  justify  commitment  in  default  (c).  But  the  practice  of  the 
Courts  in  the  exercise  of  this  kind  of  judicial  discretion  does  not 
throw  much  light  on  the  question  of  a  direct  remedy. 

On  principle  it  should  seem  that  a  married  woman's  engagement  How  far  is 
with  respect  to  her  separate  estate,  while  not  bound  by  any  peculiar  •  nj^n^^cd 
forms,  is  on  the  other  hand  bound  in  every  case  by  the  ordinary  «  engage- 
forms  of  contract ;  in  other  words,  that  no  instrument  or  transaction  ment^ 
can  take  effect  as  an  engagement  binding  separate  estate  which  could  J?'"'li^^ 
not  take  effect  as  a  contract  if  the  paity  were  8^ii  iuris.     That  is  to  qj^  forms 
say,  the  creditor  must  first  produce  evidence  appropriate  to  the  of  con- 
nature  of  the  transaction  which  would  establish  a  legal  debt  against  ***** * 
a  party  sui  ivris,  and  then  he  must  show,  by  proof  or  presumption  as 
explained  above,  an  intention  to  make  the  separate  estate  the  debtor. 
There  is,  however,  a  decision  the  other  way.  In  McUenry  v.  Dames  {d\  MpHenry 
a  married  woman,  or  rather  her  separate  estate,  was  sued  in  equity  ^*  1^*^®** 
on  a  bill  of  exchange  indorsed  by  her  in  Paris.    It  was  contended  ^"°^  ' 
for  the  defence,  among  other  things,  that  the  bill  was  a  French  bill 
and  informal  according  to  French  law.    Lord  Eomilly  held  that  this 
was  immaterial,  for  all  the  Court  had  to  be  satisfied  of  was  the 
general  intention  to  make  the  separate  estate  liable,  of  which  there 

(a)  Chubh  V.  Stretch  (1870)  9  Eq.  J.  Ex.  176. 
565,  39  L.   J.  Ch.    329,  following  (c)  BUlon  v.  Cunningham  {1S72) 

BUcoe  V.  Kennedy    (1762)    briefly  L.  R.  8  Ex.  23,  42  L.  J.  Ex.  11, 

reported  in  marginal  note  to  Hulme  Here  the  married  woman  had  been 

T.   Tenant  (1778)  1   Bro.  C.  O.  17.  sued  alone,  and  there  wm  no  plea  of 

The  decision  of  the  0.  A.  in  Pike  v.  coverture:  but  probably  the  same 

PUzgihbon  (1881)  throws  great  donbt  course  would  be  taken  in  the  case  of 

on  this.  %    judgment  against  hnsband  and 

(6)  JveM  V.  BtiOer  (1867)  7  E.  &  wife  for  the  wife's  debt  dum  $ola. 
B.  169,  26  L.  J.  Q.  B.  145  ;   Jay  v.  (d)  (1870)  10  Eq.  88. 

Amphlett  (1862)  1  H.  &  0.  637,  32  L. 


67*  APPENDIX. 

was  no  doubt    Thia  reasoning  is  quite  intelligible  on  the  aasiunption 
that  engagements  bind  separate  estate  only  as  specific  charges ;  the 
iact  that  the  instrument  creating  the  charge  simulated  more  or  leas 
successfully  a  bill  of  exchange  would  then  be  a  mere  accident  (o). 
The  judgment  bears  obvious  marks  of  this  theory ;  we  have  seen 
indeed  that  it  was  expressly  adopted  by  the  same  judge  in  an  earlier 
case  (6),  and  we  have  also  seen  that  it  is  no  longer  tenable.     Take 
away  this  assumption  (as  it  must  now  be  taken  away)  and  the 
reasoning  proves  far  too  much  :  it  would  show  that  the  indoraer  nti 
ivT%$  of  a  bad  bill  of  exchange  ought  to  be  bound  notwithstanding 
the  law  merchant^  because  he  has  expressed  his  intention  to  be 
bound.    The  true  doctrine  being  that  the  "  engagement "  differs 
from  a  contract  not  in  the  nature  of  the  transaction  itself,  bnt  in 
making  only  the  separate  estate  the  debtor,  it  follows  that  in  all  that 
relates  to  the  transaction  itself  the  ordinary  rules  and  limitations  of 
contract  apply*     In  Johnson  v.  OcUlagher  it  is  assumed   that  a 
married    woman's  engagements   concerning  her   separate   interest 
in   real  estate   must   satisfy   the   conditions   of   the   Statute    of 
Frauds  (e).    An  engagement  which  if  she  were  sui  iwris  would  owe 
its  validity  as  a  contract  to  the  law  merchant  must  surely  in  like 
manner  satisfy  the  forms  and  conditions  of  tiie  law  merchant     It  is 
submitted,  therefore,  that  McHenry  v.  Davies  (d)  is  not  law  on 
this  point 
Statute  of      It  is  now  held  that  the  Statute  of  Limitation,  or  rather  its  analogy, 
^^^^       applies  to  claims  against  the  separate  estate  (e). 

It  is  said  that  a  married  woman's  separate  estate  cannot  be  made 

liable  as  on  a  contract  implied  in  law  (qtMn-cantraci  in  the  proper 

be     sense),  as  for  instance  to  the  repayment  of  money  paid  by  mistake 

jP^®  or  on  a  consideration  which  has  wholly  failed  (/).    But  the  decisions 

quati-wm-  ^  ^^^  effect  belong  (with  one  exception)  to  what  we  have  called  the 

tnot  t         period  of  reaction,  and  are  distinctiy  grounded  on  the  exploded  notion 

that  a  "general  engagement,*'  even  if  express,  is  not  binding  on  the 

separate  estate. 

The  exception  is  the  modem  case  of  Wri^fJu  v.  Chard  (g\  where 

(a)  Note,  however,  that    in   the  (d)  (1870)  10  Eq.  88. 

case  of   parties  nti  iuris  a  bill  of  {e)  Re  Lady  Hculinga  (1887)  35 

exchange  cannot  be  treated  as  an  Cb.  Div.  94. 

equitable    aasignment :    Shand   v.  (/)  3  D.  F.  J.  512,  514,  referring 

Dtt    BuiMon    (1874)    18  £q.  283,  io  DukeofBoUony.WiOiams  {ll^Z) 

48  L.  J.  Ob.  508.     Nor  a  cheque :  2  Vee.  138;  Jones  v.  Harris  (1804) 

Mopkinson  v.  Foster  (1874)  19  £q.74.  9  V*  8.  493,  and  AuuHar  v.  AguUar 

(6)  Shattock   V.   ShaUock    (1866)  (1820)  5  Madd.  414. 

2  Eq.  182,  35  L.  J.  Cb.  509:  supra,  {g)  (1859)  4  Drew.  673,  685  :  on 

p.  668.  appeal,  1  D.  F.  J.  567,  29  L.  J.  Ch. 

<c)  (1861)  8  D.  F.  J.  at  p.  514.  82,  but  not  on  this  point 


tion. 

Can  the 
separate 


APPENDIX    (NOTE   D).  673 

y.-C.  Kindenley  held  tbat  a  married  woman's  separate  estate  was 
not  liable  to  refund  rents  which  had  been  received  by  her  as  her 
8ei>arate  property,  but  to  which  she  was  not  in  fact  entitled.  But  the 
language  of  the  judgment  reduces  it  to  this,  that  in  the  still  transi- 
tional state  of  the  doctrine,  and  in  the  absence  of  any  precedent  for 
making  the  separate  estate  liable  in  any  case  without  writing  (this 
was  in  1859,  Johnson  v.  Gallagher  not  till  1861),  the  V.-C.  thought  it 
too  much  for  a  court  of  first  instance  to  take  the  new  step  of  making 
it  liable  ''in  the  absence  of  all  contract '\*  and  he  admitted  that 
**  the  modem  tendency  has  been  to  establish  the  principle  that  if 
you  put  a  married  woman  in  the  position  of  a  feme  sole  in  respect  of 
her  separate  estate,  that  position  must  be  carried  to  the  full  extent, 
short  of  making  her  personally  liable.'*  The  test  of  liability  would 
seem  on  principle  to  be  whether  the  transaction  out  of  which  the 
demand  arises  had  reference  to  or  was  for  the  benefit  of  the  separate 
estate. 

The  spirit  of  the  modem  authorities  is,  on  the  whole,  in  the  direc-  Tenilency 
tien  of  holding  that  a  married  woman's  "  engagement "  dififers  from  ^yt|^^„^y* 
an  ordinary  contract  only  in  the  remedy  being  limited  to  her  separate  aud  ]egi»- 
property.    And  on  this  view  the  Married  Women's  Property  Act  of  l*tlon. 
1882  is  framed. 


Not*  D.  (p.  J.26,  above). 

Authoritiee  on  limits  of  corporate  powers. 

The  citations  here  given  are  intended  to  show  how  the  three 
distinct  topics  of  the  powers  of  corporations  as  such  (a),  and  the 
application  to  them  of  {p)  the  rules  of  partnership  and  (7)  the  prin- 
ciples of  public  policy,  have  been  treated  by  our  Courts,  sometimes 
together  and  sometimes  separately.  They  are  arranged  in  an  order 
approximately  following  that  in  which  these  topics  have  been  men- 
tioned, according  as  one  or  the  other  is  most  prominent :  a  precise 
division  would  be  impossible  without  breaking  up  passages  from  the 
same  judgment  into  many  fragments,  but  the  indicating  letters  (apy) 
are  used  to  call  attention  to  the  presence  of  the  above-mentioned 
special  claases  of  considerations  respectively.  It  may  be  observed 
that  some  of  those  dicta  which  seem  most  strongly  to  adopt  on  the 
first  head  the  theory  of  limited  special  capacities  occur  in  the  imme- 
diate neighbourhood  of  statements  coming  under  one  or  both  of  the 
other  heads,  which  in  all  probability  have  had  an  appreciable,  though 
it  may  be  an  undersigned  operation  in  modifying  the  form  of  their 
expression. 

P.  XX 


674  APPENDIX. 

Oii|NwitiM      OapaeUiti  incident  to  ineorparatian  ffeneraUy,    Beeolution  of  Sx. 

iDcideDtto  Ch.  in  the  case  of  button's  Jffojpitoi,  10  Co.  Rep.  30  6  :— 

tionlsat-     **  When  a  corporation  is  duly  created  all  other  inddenta  are  tadU 

ton's  Hos-  annexed    ....    and  therefore  diven  claases  saheeqnent  in  the 

pital  cMe.  charter  are  not  of  necessity,  but  only  declaratory,  and  might  well 

have  been  left  oat     As,  1.  by  the  same  to  have  anthoii^,  ability, 

and  capacity  to  purchase ;  but  no  clause  is  added  that  thej  maj  alien, 

kc,  and  it  need  not,  for  it  is  incident    2.  To  sue  and  be  sued, 

implead  and  be  impleaded.    3.  To  have  a  seal,  &c.  ;  that  is  also 

declaiatoiy,  for  when  they  are  incorporated  they  may  make  or  use 

what  seal  they  will    [So  Shepp.  Touchst  57  :  'although  it  be  a 

corporation  that  doth  make  the  deed,  yet  they  may  seal  with  any 

other  seal  besides  their  common  seal,  and  the  deed  never  the  worse.'] 

4.  To  restrain  them  from  aliening  or  demising,  but  in  a  certain  fonn ; 

that  is  an  ordinance  testifying  the  King's  desire,  but  it  is  bat  a 

precept  and  doth  not  bind  in  law." 

This  resolution  does  not  seem  to  have  been  very  material  to  the 
decision  of  the  case,  but  anything  reported  by  Coke  is  by  inveterate 
custom  exempt  from  critidsm  of  this  kind ;  moreover  it  is  supported 
by  the  opinion  of  Hobart  C.J.,  who  says  that  a  power  to  make 
by-laws,  though  given  by  a  special  clause  in  all  incorporatiaafts,  is 
needless ;  ''for  I  hold  it  to  be  included  by  law  in  the  very  act  of 
incorporating,  as  is  also  the  power  to  sue,  to  purchase,  and  the  like.' 
(Hob.  211,  pi.  268.)  This  very  positive  statement  was  all  but  lost 
sight  of  in  modem  cases  (a)  till  it  was  cited  by  Blackburn  J.  in 
Biche  V.  AMury  By.  Carnage  Co,  (1874)  L.  R.  9  Ex.  263-4  :— 

*<  This  seems  to  me  an  express  authority  that  at  common  law  it  is 
an  incident  to  a  corporation  to  use  its  common  seal  for  the  purpose 
of  binding  itself  to  anything  to  which  a  natural  person  could  bind 
himself,  and  to  deal  with  its  property  as  a  natural  person  might  deal 
with  his  own.  And  further,  that  an  attempt  to  forbid  this  on  the 
part  of  the  King,  even  by  express  negative  words,  does  not  bind  at 
law  (6).  Nor  am  I  aware  of  any  authority  in  conflict  with  tiiis 
case  ....  I  take  it  that  the  true  rule  of  law  is  tliat  a 
corporation  at  common  law  has,  as  an  incident  given  by  law,  the  same 
powOT  to  contract,  and  subject  to  the  same  restrictions,  that  a  natmnJ 
person  has.  And  this  is  important  when  we  come  to  construe  the 
statutes  creating  a  corporation.'' 


(a)   It  is  cited  by  Erie  J.    in  yiolation  of   the  conditions  of   the 

Boetock  V.  iV.  StaJ^wdehxre  Ry.  Co.  charter  is  not  void,  bat  the  Crown 

(1855)  4  £.  Ai  R  798,  819,  24  L.  J.  haa  a  remedy  by  proceeding  by  mC 

Q.  B.  225.  fa.  for  the   repeal   of   the  lettare 

(6)  That  b,  a  oorpor»te  aot  ia  patent,  lee  «6.  p.  264. 


LIMITS  OF  COBPOBATE  POWERS.  675 

We  will  now  shortly  trace  the  growth  of  the  doctrine  of  tpeoial  Growth  of 
eapacUies  in  Colmm  v.  Eastern  CourUie$  Ry.  Co.  (1846)  10  Beav.  1,  ^^^J^^ 
16  L.  J.  CIl  73,  and  similar  cases.    The  subject  was  novel,  m^ny-  trine  in 
sided,  and  embarrassing  ;  Parliament  was  caUed  on  to  make  and  the  modem 
Courts  to  construe  statutory  powers  and  provisions  the  like  of  which  *™^ 
had  seldom  if  ever  been  made  or  construed  in  earlier  times  ;  and  so 
many   new   points   arose   for  legislative  precaution  and  judicial 
discussion,  and  it  took  so  much  time  and  labour  to  disentangle  them, 
that  it  never  occurred  to  anybody  to  think  that  the  common  law 
could  have  anything  of  importance  to  say  to  the  matter.     To  speak 
plainly,  it  is  clear  enough  that  Parliament  had  forgotten  all  about 
the  8tUton*s  Hospital  case,  and  perhaps  it  is  not  surprising  that  the 
Courts  did  not  remember  it. 

In  Oolman  v.  E.  C,  By.  Co,,  the  suit  was  by  a  shareholder  to  Oohnan  v. 
restrain  the  company  and  its  directors  from  applying  its  funds  in  cl)  ilod 
promoting  a  steam-packet  company  in  connection  with  the  railway,  other 
Injunction  granted.    Lord  Langdale,  in  the  course  of  his  judgment,  in  equity, 
spoke  of  the  exercise  of  a  railway  company's  powers  as  a  matter 
affecting  public  rights  and  interests,  and  therefore  to  be  looked  into 
with  more  vigilance  than  the  conduct  of  an  ordinary  partnership, 
and  observed  how  desirable  it  was  that  the  property  of  railway  com- 
panies should  be  secure  from  being  pledged  to  unauthorized  specula- 
tions, so  that  investments  in  them  m^ht  be  prudent  [7].     He 
further  expressed  his  clear  opinion  *Hhat  the  powers  which  are 
given  by  an  Act  of  Parliament,  like  that  now  in  question,  extend 
no  farther  than  is  expressly  stated  in  the  Act,  or  is  necessarily  and 
properly  required  for  carrying  into  effect  the  undertaking   and 

works  which  the  A.ct  has  expressly  sanctioned They 

[the  company]  have  the  power  to  do  all  such  things  as  are  necessary 
and  proper  for  the  purpose  of  carrying  out  the  intention  of  the 
Act  of  Parliament,  but  they  have  no  power  of  doing  anything 
beyond  it.* 

Salomons  v.  Lainff  (1849)  12  Beav.  339,  aldo  beforo  Lord  Langdale, 
was  a  suit  by  a  shareholder  to  restrain  the  London,  Brighton  and 
South  Coast  Ry.  Co.,  which  was  already  lawfully  posse8;3ed  of  many 
shares  in  the  Direct  London  and  Portsmouth  Co.,  from  taking  up 
moro  shares  in  that  company  and  otherwise  assisting  it  out  of  the 
South  Coast  Co.'s  funds.  The  M.  B.  said  :  "A  railway  company 
incorporated  by  Act  of  Parliament  is  bound  to  apply  all  the  moneys 
and  property  of  the  company  for  the  purposes  directed  and  provided 
for  by  the  Act,  and  for  no  other  purpose  whatever."  He  went  on  to 
lay  that  any  surplus,  after  the  purposes  of  the  Act  are  fulfilled, 
belongs  to  the  sharoholders  as  dividend,  and  cannot  be  disposed  of 
against  the  will  of  any  shareholder [^].    ''Any  application  of  or 

xx2 


67«  APPENDIX. 

dealing  with  ....  any  fonds  or  money  of  the  company 
.  .  .  .  in  any  manner  not  distinctly  authorized  by  the  Act»  ii 
in  my  opinion  an  illegal  application  or  dealing"  (p.  358).  In  a  later 
Btage  of  the  case  (pp.  377, 382),  he  spoke  of  the  arrangement  between 
the  two  companies  as  **  fraud  against  the  legislature,  who  gave  them 
their  powers  for  purposes  entirely  different "  [7].  The  case  of  Cokm 
y.  WUkinton  12  Beav.  125,  138  ;  1  Mac.  &  G.  481,  which  arose  oat 
of  the  same  series  of  transactions,  decided  that  a  railway  company  is 
bound  not  only  to  make  nothing  different  from  what  Parliament 
intended  it  to  make,  but  to  mi^e  nothing  less  than  the  whole : 
abandoning  a  material  part  of  the  scheme  is  in  fact  equivalent  to 
Bubetitating  a  different  scheme  (cp.  Hodgton  v.  Earl  of  Powis  (1851) 
1  D.  M.  G.  C). 

In  Boffihaw  v.  East  Union  Ry.  Co,  (1849)  7  Ha.  114  it  was  laid 
down  that  capital  raised  under  an  Act  of  Parliament  for  a  spedfie 
pnipoee  defined  by  the  Act  cannot  be  applied  by  directors  (and 
probably  not  by  the  unanimous  assent  of  the  shareholders)  to  any 
other  purpose  than  such  as  the  company's  general  funds  might  be 
applied  to  [7]  :  in  the  Court  of  Appeal  (2  Mac  &  Q.  389)  the  case 
was  put  more  on  the  ground  of  the  individual  shareholder's  right  to 
have  his  money  applied  only  to  the  specific  purpose  for  which  he 
adyanced  it  [/9]. 

In  the  subsequent  caf^es  of  Beman  v.  Bufford  (1851)  1  Sim.  N.  S. 
550  (Lord  Cranworth  V.-O.)  and  G,  N.  Railway  Co,  y.  E,  C  RaUmay 
Co.  (1861)  9  Ha.  306,  21  L.  J.  Cb.  837  (Turner  V.-C),  the  point  is 
that  the  statutory  incorporation  of  a  railway  company  imposes  on  it, 
with  reference  to  the  iLterests  of  the  public  [7],  a  positive  duty  of 
maintaining  and  working  its  line,  and  it  must  not  enter  into  any 
agreement  that  amounts  to  a  delegation  or  abandonment  of  this 
duty  (a) ;  in  Beman  v.  Ruford^  however,  the  strong  expression  occnzs 
that)  ^  on  the  principle  that  has  been  so  often  laid  down,  this  Court 
will  not  tolerate  that  parties  having  the  enormous  powers  which 
railway  companies  obtain  [7]  should  apply  one  farthing  of  th»r 
funds  in  a  way  which  differs  in  the  slightest  degree  from  that  in 
which  the  legislature  has  provided  that  they  shall  be  fcpplied" 
(p.  566).  The  remarks  of  the  Lord  Justice  Turner  in  the  later  case 
of  Bhfrew^tAvry  db  Binmngham  Ry,  Co.  v.  L.  4t  N.  W.  By.  Co.  (1853) 
4  D.  M.  G.  116, 138,  22  L.  J.  Cb.  682,  are  less  strong  ;  in  Simpwn 
T.  WtstmnsUr  Palaee  HoUl  Co.  (1860)  2  D.  F.  J.  141,  a  dissenting 


(a)  Ai  a  lease  of  the  ttoderti^klng,      and  control  of  the  line  to  another 
or  grant  of  exdMtive  ronning  powers      company. 


LIMITS  OF  CORPORATE  POWERS. 


677 


shareholders'  suit,  he  seems  to  confine  himself  to  the  power  of  a 
meeting  to  bind  the  minority  on  partnership  principles  [/9]. 

We  have  dwelt  so  far  on  these  decisions  in  this  place  (though  one  Enst 
or  two  of  them  do  not  even  in  their  language  really  postulate  the  AngliMi 
doctrine  of  limited  special  capacities)  because  they  had  much  weight  Qi^g^^^^ 
in  Eoit  Anglian  Bailuoays  Co.  v.  E,  C.  Railway  Go.  (1851)  11  C.  B.  atoomiLCB 
775,  21  L.  J.  C.  P.  23,  which  for  some  time  was  treated  as  a  leading  1a^« 
case,  and  was  the  chief  obstacle  to  the  restoration  of  the  common 
law  doctrine  of  ^  general  capacity."  Lord  Bramwell  has  expressed  a 
distinct  opinion  that  it  was  wrongly  decided  :  11  Oh.  D.,  at  p.  501 : 
it  is  here  cited,  however,  for  its  importance  in  the  history  of  the 
subject.  It  was  in  efifect  the  case  of  an  agreement  by  one  railway 
company  to  promote  the  undertaking  of  another.  The  Court  said  : 
**  It  is  clear  that  the  Defendants  have  a  limited  authority  only,  and 
are  a  corporation  only  for  the  purpose  of  making  and  maintaining 
the  railway  sanctioned  by  the  Act,  and  that  their  funds  can  only  be 
applied  for  the  purposes  directed  and  provide  1  for  by  the  statute." 
(Nor  does  it  matter  that  an  application  of  funds  not  authorized  by 
the  Act  is  expected  to  be  for  the  profit  of  the  line.)  *'  They  are  a 
corporation  only  for  the  purpose  of  making  and  maintaining  the 
Eastern  Counties  Bailway.  Every  proprietor  when  he  takes  shares 
has  a  right  to  expect  that  the  conditions  upon  which  the  Act  was 
obtained  will  be  performed  .  .  .  the  public  also  has  an  interest 
in  the  proper  administration  of  the  powers  conferred  by  the  Act  [7]. 
.  .  .  If  the  company  is  a  corporation  only  for  a  limited  purpose, 
and  a  contract  like  that  under  discussion  is  not  within  their 
authority,  the  as^nt  of  all  the  shareholders  to  such  a  contract  \p\ 
though  it  may  make  them  all  personally  liable  to  perform  their 
contract,  would  not  bind  them  in  their  corporate  capacity  or  render 
liable  their  corporate  funds."  This  was  followed  by  Macgregor  v. 
D(wer  and  Deal  BaUway  Co.  (in  Ex.  Ch.),  18  Q.  B.  618,  22  L.  J. 
Q.  B.  69.  The  plaintiff  in  error,  the  Chairman  of  the  South 
Eastern  Railway  Co.,  had  undertaken  that  his  company  should 
guarantee  certain  parliamentary  expenses  of  the  Dover  and  Deal 
Company.  Held,  on  the  authority  of  the  last  case,  that  the  agree- 
ment was  void  as  an  attempt  to  bind  the  S.  E.  Company  to  do 
an  act  which  to  the  knowledge  of  both  parties  would  be  illegal ; 
^  not  merely  an  act  which  they  have  no  power  to  do,  but  an  act 
contrary  to  public  policy  and  the  provisions  of  a  public  Act  of 
Parliament "  [y\ 

In  Hart  v.  Eastern  Union  By.  Co.  (1852)  7  Ex.  246,  21  L.  J.  Ex. 
97,  in  Ex.  Ch.  8  Ex.  116,  22  L.  J.  Ex.  20,  it  was  even  contended, 
but  without  success,  that  when  a  company  was  empowered  by  its 
Act  to  borrow  money  on  debentures,  there  was  no  right  of  action  on 


678  AFPEHBDL 

etjch  debentures  becanee  the  Act  bad  no  worda  expreaal j  giTiog  it^ 
and  provided  anotber  vpecial  remedy  in  certain  eyents.  Cp.  Siasrk 
y.  HighgaU  Archway  Co.  (1814)  5  Taunt  792. 

Beaction        But  tbia  doctrine  did  not  long  p«u  unquestioned.    The  theory  of 
!»  Sontt      general  capacity  was  upheld  in  S.  Torhkvrt  By.  4t  River  Ihm  Co.  v. 
I^Cd  r*  fl^.  ^'  -Ry-  Cb.  (1853)  9  Ex.  55,  22  L.  J.  Ex.  305.    The  action  was  on 
G.  N.  B.     an  agreement  that  the  defendant  company  should  have  the  nee  of 
^^  t^^  *^®  plaintiff  company's  line  for  carrying  coal  for  21  years,  payii^ 
Parke  B.     ^^  ^^  ^  scheme  framed  to  secure  to  the  plaintiff  company  a  divideiid 
▼arying  with  the  quantity  of  coal  carried.    The  defendant  company 
pleaded  that  the  agreement  was  unauthorized  and  void.     The  argu- 
ments turned  a  good  deal  on  the  question  whether  theee  payments 
were  such  ^  tolls  "  as  contemplated  by  the  Railways  Clauses  Con- 
solidation Act,  and  on  that  ground  the  decision  in  favour  of  the 
agreement  was  affirmed  in  the  Exchequer  Chamber  (9  ESx.  642X 
nothing  being  said  on  the  general  doctrine.    In  the  Court  below, 
Parke  fi.  afterwards  Lord  Wensleydale,  expressed  his  opinion  ^lat 
as  a  corporation  the  defendants  had  power  to  do  all  things  connected 
with  the  management  of  the  concern  unless  prohibited  by  the  Act  of 
Parliament  (9   Ex.  67)   and  that  the   contract   was  prima  fade 
binding,  and  must  be   enforced  if  it  could  not  be  made  out  that 
it  was  forbidden  by  the  Act  (9  Ex.  68,  22  L.  J.  Ex.  315).     The 
classical  passage  of  his  judgment^  as  it  may  now  fairly  be  called,  is 
as  follows : 

^'  CeneraUy  speaking,  all  corporations  are  bound  by  a  covenant 
under  their  corporate  seal  properly  affixed,  which  is  a  legal  mode  of 
expressing  the  will  of  the  entire  body,  and  are  bound  as  much  as  an 
individual  is  by  his  deed.  Contracts  with  partnerehips  stand  upon 
a  different  footing.  They  relate  to  the  power  of  one  member  of  a 
partnership  to  bind  another,  and  constitute  a  branch  of  the  law  of 
principal  and  agent  In  partnerships,  where  all  the  members  do 
not  concur  in  a  contract  (as  often  they  do  not)  one  partner  may 
bind  the  other  in  all  contracts  within  the  scope  of  their  ordinaiy 
partnership  dealings.  In  those  beyond,  the  individual  partners 
making  the  contract  are  bound,  not  the  other  partners.  But  cor- 
porations, which  are  creations  of  law,  are,  when  the  seal  is  properly 
affixed,  bound  just  as  individuals  are  by  their  own  contracts,  and 
as  much  as  all  the  members  of  a  partnership  would  be  by  a  contract 
in  which  all  concurred.  But  where  a  corporation  ia  created  by  an 
Act  of  Parliament  for  particular  purposes  with  special  powers,  then 
indeed  another  question  arises.  Their  deed,  though  under  their 
corporate  seal,  and  that  regularly  affixed,  does  not  bind  them  if  it 
appears  by  the  express  provisions  of  the  statute  creating  the  corpora- 


LIMITS  OF  CORPOBATE  POWERS.  879 

tioDy  or  by  necessary  or  reasonable  inference  from  its  enactments^ 
that  this  deed  was  ultra  vires — that  is,  that  the  legislature  meant  that 
SQch  a  deed  should  not  be  made." 

This  is  adopted  by  Blackburn  J.  in  his  judgment  in  ^^^<^  v- 2"  T!^i 
Chichater  dk  Midhurd  Baaicay  Co,  (1867)  L.  R  2  Ex.  366,  383,  39  L.  J^JS- 
J.  Ex.  217.  In  the  Exchequer  Chamber  Blackburn  aud  WiUee  JJ.  qaent 
were  a  dissenting  minority :  the  decision  of  the  majority  was  reversed  «■■*•• 
in  the  House  of  Lords,  L.  R.  4  H.  L.  628,  but  on  the  ground  that 
the  agreement  then  in  question  was  clearly  within  the  company's 
ordinary  and  proper  business,  so  that  no  shareholder  could  have 
objected  to  the  directors  entering  into  it,  and  thus  the  more  general 
question  was  left  at  large.  The  judgments  of  the  dissenting  judges 
below  remain  entitled  to  considerable  weight :  and,  at  all  events,  in 
the  words  of  Blackburn  J.  "Lord  Wensley dale's  mode  of  stating  the 
proposition  has  been  adopted  as  expressing  the  true  doctrine,  by 
the  Court  of  Queen's  Bench  in  Chcmibers  ▼.  Manchester  «§  Mil/ord 
Railway  Co.  (1864)  5  B.  &  S.  588  ;  33  L.  J.  Q.  B.  268  ;  by  the  Court 
of  Common  Pleas  in  South  Wales  RaUtoay  Co,  v.  Redrfumd  (1861)  10 
C.  B.  N.  S.  675  [see  per  Erie  C.J.  at  p.  682];  by  the  Court  of  Ex- 
chequer in  Baieman,  v.  Mayor j  dc,  of  A  shton-under-Lyne  (1858)  3  H. 
&  N.  323 ;  27  L.  J.  Ex.  458  [where,  however,  one  member  of  the 
court  could  not  get  over  the  East  Anglian  Railways  case,  though 
personally  not  approving  it] ;  by  Lord  Cranworth  C.  in  delivering 
the  judgment  in  the  House  of  Lords  in  Shrewsbury  4t  Birmingham 
Badujo/y  Co,  v.  N,  W,  Railway  Co.  (1853)  6  H.  L.  C.  113." 

Lord  Cran worth's  remarks  must  be  specially  cited. 

"  Prima  facie  corporate  bodies  are  bound  by  all  contracts  under  State- 
their  ccHumon  seal.    When  the  Legislature  constitutes  a  corporation  ^^i^^^ 
it  gives  to  that  body  prima  facie  an  absolute  right  of  contracting,  to  nme 
But  this  prima  facie  right  does  not  exist  in  any  case  where  the  ^^^^^^ 
contract  is  one  which,  from  the  nature  and  object  of  the  incor-  ^o^, 
poration,  the  corporate  body  is  expressly  or  impliedly  prohibited 
from  making  :  such  a  contract  is  said  to  be  ultra  vires  (a).    And  the 
question  here,  as  in  similar  cases,  is  whether  there  is  anything  on 
tiie  face  of  the  act  of  incorporation  which  expressly  or  impliedly 
forbids  the  making  of  the  contract  sought  to  be  enforced"  (6  H.  L. 
C.  at  p.  136). 


(a)  This  term,  if  restricted  to  the  has  become  so  ambiguous  by  less 
definition  bore  given  of  it,  is  harm-  accorate  usage  that  we  have  pre- 
leM  and  possibly  oonvenient ;  but  it      f erred  to  avoid  it. 


680  APPCNDIX. 

The  actual  groimd  of  dedmon  was  that  in  this  caae,  whetliertk 
contract  was  valid  or  not,  the  time  had  not  arrived  at  which  it  m 
to  take  effect 

Moreover  Lord  Wendeydale  was  enabled  to  repeat  his  opbion 
even  more  distinctly  in  the  House  of  Lords :  SeoUuh  N.  K  Bmtni 
Co.  V.  Stewart  (1869)  3  Macq.  382,  415  (and  see  per  WiUes  J.  L  & 
2  Ex.  390-1). 

"  There  can  be  no  doubt  that  a  corporation  is  fully  cspable  of 
binding  itself  by  any  contract  under  its  common  seal  in  En^ 
and  without  it  in  Scotland,  except  when  the  statutes  by  which  it  ii  i 
created  or  regulated  expressly  or  by  necessary  implication  piohiUt 
such  contract  between  the  parties.  Prima  facie  all  its  contnets  an 
valid,  and  it  lies  on  those  who  impeach  any  contract  to  niake  oit 
that  it  is  avoided.'' 

Lord  St  Leonards  took  the  same  view  in  E.  0.  JBy.  Co.  v.  SoAt 
(1855)  in  the  Court  of  Chancery  (see  1  D.  M.  Q.  737,  752, 759^), 
and  still  more  clearly  in  the  House  of  Lords  (5  H.  L.  C.  231). 

"  The  appellants  as  a  corporation  have  all  the  powers  incident  t0 
a  corporation  except  so  far  as  they  are  restrained  by  their  act  of  is* 
corporation.    Directors  cannot  act  in  opposition  to  the  porpoBS  f» 
which  their  company  was  incorporated  [y\  but  short  of  thattbey 
may  bind  the  body  just  as  [the  proper  officers,  &c.  of]  coipontkni 
in  general  may  do "  (p.  373).    Again,  ''  the  safety  of  men  in  tkir 
daily  contracts  requires  that  this  doctrine  of  ultra  virss  should  be 
confined  within  narrow  bounds"  (p.  371).    He  farther  stated  the 
effect  of  this  and  other  shortly  preceding  decisions  of  the  HooR  d 
Lords  (which  however  do  not  much  illustrate  our  particular  ab- 
ject), as  being  to  "  place  the  powers  and  liabilities  of  directon  and 
their  companies  in  making  contracts  and  in  dealing  with  third 
parties  upon  a  safe  and  rational  footing.    They  do  not  aathoi* 
directors  to  bind  their  companies  by  contracts  foreign  to  the  pv^ 
poses  for  which  they  were  established,  but  they  do  hold  oompaiuv 
bound  by  contracts  duly  entered  into  by  their  directors  for  purpoiee 
which  they  have  treated  as  within  the  objects  of  their  Acta,  and 
which  cannot  clearly  be  shown  not  to  fall  within  them"  (p.  381, 
and  see  L.  R.  9  £x.  389).    This  case  is  the  more  important  iaaf- 
much  as  it  was  one  of  specific  performance  of  a  contract  to  pnichiae 
land  and  pay  a  sum  of  money  as  compensation  and  damages,  aad 
the  contract  was  enforced,  notwithstanding  that  in  the  reaolt  tbe 
land  was  not  wanted  by  the  company. 
^>pini<m  of     The  doctrine  was  also  discussed  by  Erie  J.  in  Mayor  of  Ne^viA 
Erie  J.       ^  Norfolk  Ry.  Co.  (1866)  4  E.  &  B.  397, 24  L.  J.  Q.  R  106  (a  case 
where  there  was  an  extraordinary  division  of  opinion  in  the  Court  on 
the  questions  actually  before  them,  and  espedally  whether  the  pa^ 


LIMITS  OF  CORPORATE  POWERS.  681 

ticular  contract  was  or  waa  not  unlawful  in  itself:  see  p.  263  above). 
He  thought  the  true  view  to  be  that  corpoiationB  were  prohibited 
by  implication  only  ^m  using  their  parliamentary  powers  in  order 
to  defeat  the  purposes  of  incorporation,  and  criticized  the  judgment 
in  the  Eoit  Anglian  case  as  too  wide  (4  K  &  B.  415,  24  L.  J.  Q.  B. 
112):  and  he  carefully  pointed  out  the  danger  of  overlooking  the 
differences  between  a  dissenting  shareholder's  suit  in  equity  and  an 
action  by  a  stranger  against  the  corporate  body  (4  E.  &  B.  419,  24 
L  J.  Q.  B.  113).  The  same  learned  judge  further  said  in  Bostock 
V.  y.  Staffordshire  Ry.  Co,  (1866)  4  K  &  B.  798,  819,  24  L.  J.  Q.  B. 
226,  231  (this  however  was  not  a  case  of  contract),  citing  the  Svitan's 
Hospital  case,  "  By  common  law  the  creation  of  a  corporation  con- 
ferred on  it  all  the  rights  and  liabilities  in  respect  of  property, 
contracts,  and  litigation,  which  existence  confers  on  a  natural  subject, 
modified  only  by  the  formalities  required  for  expressing  the  will  of 
a  numerous  body.  .  .  Those  of  its  rights  and  liabilities  which 
are  unaffected  by  statute  exist  as  at  common  law." 

Turning  to  the  later  cases  in  courts  of  equity,  we  find  marked  I^tor 
signs  of  an  abandonment  of  their  earlier  view,  and  adhesion  to  the  ^^^- 
doctrine  of  general  capacity.  In  considering  the  power  of  building 
societies  (which  were  statutory  quasi-corporations ;  see  now  the  Act 
of  1874,  37  &  38  Vict.  c.  42)  to  borrow  money,  the  question  has  been 
treated  on  all  hands  as  being  not  whether  the  borrowing  of  money 
was  expressly  or  necessarily  permitted  by  the  statute,  but  whether  it 
was  forbidden  or  clearly  repugnant  to  the  constitution  and  objects 
of  the  society:  Laing  v.  Reed  (1869)  5  Ch.  4  ;  Ex  parte  JVtlliamson 
(1869)  ib.  309  (notwithstanding  the  wording  of  the  head-note  in  the 
latter  case,  see  p.  312). 

And  in  Exparte  Birmingham  Backing  Co,  (1870)  6  Ch.  83,  40  L. 
J.  Ch.  190,  the  Court  of  Appeal  held  without  hesitation  that  an 
incorporated  company  can  prima  facie  mortgage  any  part  of  its 
property,  and  this  as  well  for  an  existing  debt  as  for  a  new  loan. 
The  articles  of  association  authorized  borrowing  on  mortgage,  but 
the  Lords  Justices  did  not  stop  to  discuss  whether  this  would  or 
would  not  include  a  mortgage  to  secure  pre-existing  debts  (a), 
resting  this  part  of  their  decision  on  the  general  power  of  a  body' 
corporate  to  **  hold  property  and  dispose  of  it  as  freely  as  an  indi- 
vidual, unless  it  is  speciaUy  prohibited  from  so  doing  **  (James  L.  J. 
at  p.  87).  One  may  also  refer  to  the  view  taken  by  Turner  L.  J. 
that  the  affirmative  provisions  of  the  Companies  Clauses  Act  do  not 

(a)  As  to  which  mo  Inns  of  OouH  Botd  Co.  (1868)  6  Eq.  82,  87  L.  J. 
Ch.  692. 


tSt  APPENDIX. 

ezdnde  other  modes  of  contractiog :  WiUon  y.  WettHaMepoA  B§.  Gb. 
(1864-5)  2  D.  J.  S.  475,  496,  34  L.  J.  Ch.  841.  In  BaJQC^  €&  (1878) 
8  Ch.  Diy.  334,  ^7  L.  J.  Ch.  601,  the  C.  A.  was  unanimonslj  of 
opinion  thai  a  coipoTation  or  qnad-corporate  association  has  as  an 
incident  to  its  existence  the  eame  power  of  compromising  claiiDi 
against  it  that  a  natural  person  has. 

Bkbov.  Lastly,  we  have  the  doctrine  of  general  capacity  delibezately 
^ij^^^^  adopted  by  the  whole  Court  of  Exchequer  Chamber  in  Bichi  y. 
Ex.  Gb.  Ashbury  By.  Carriage  Co,  (1874)  L.  R.  9  Ex.  254,  sqq.  The  diTision 
of  the  Court  was  confined  to  the  questions  (i)  whether  a  company 
formed  under  the  Companies  Act,  1862,  is  forbidden  to  undertake 
business  substantially  beyond  its  objects  as  defined  in  the  memo- 
randum of  association  and  (ii)  whether,  apart  from  this,  an  assent  of 
all  the  shareholders  could  in  this  case  be  inferred  in  fact  T^ 
dedsion  of  the  House  of  Lords  (L.  R  7  H.  L.  653)  disposes  of  these 
questions  without  touching  the  general  doctrine.  See  further 
Baroness  Wenfoek  y.  Biver  Dee  Company  (No.  1,  1885)  10  App.  Oa. 
854,  and  (No.  2,  1888)  36  Ch.  D.  674,  38  Ch.  Div.  534. 

For  later  unsuccesefnl  attempts  to  extend  the  so-called  doctrine 
of  vltra  vires,  see  A.-G.  v.  0.  E,  By,  Co,  (1880)  5  App.  Ca-  473, 
49  L.  J.  Ch.  545  \  L.d:N,  W.  By.  Co.  v.  Price  (1888)  11  Q.  B.  D. 
485,  52  L.  J.  Q.  K  754. 

A  corporation,  if  it  lawfully  carries  on  itn  business  in  a  foreign 
country,  is  treated  by  the  Courts  of  that  countiy  ''  as  a  creature  of 
the  law  of  its  own  country,  and  subject  to  all  the  legielatiye  control 
and  direction  that  may  be  properly  exercised  over  it  at  the  place  of 
its  creation :"  and  persons  dealing  with  it  are  bound  by  whateyer  is 
duly  done  under  the  laws  of  that  place  in  respect  of  its  powers  and 
obligations  :  Canada  Southern  By,  Co.  v.  Gebhard  (1883)  109  U.  S. 
(2  Dayis)  at  p.  537. 

AppUcaiion  of  doctrines  of  partnership  and  agency. 

Appfica-         A  case  in  which   this  yiew  appears  most   clearly,  and  indeed 

~^J^      exdusiyely,  is  Simpson  y.  Denison  (1852)  10  Ha.  51.    The  suit  wis 

ship  law  :   instituted  by  dissentient  shareholders  to  restrain  the  carrying  out  of 

Simpson  V,  an  agreement   between  their  company  (the  Great  Northern)  and 

^*     another  raUway  company,  by  which  the  Great  Northern  was  to  take 

oyer  the  whole  of  that  company's  traffic,  and  also  to  restrain  the 

application  of  the  funds  of   the  Great    Northern   Company  for 

obtaining  an  Act  of  Parliament  to  ratify  such  agreement    Tlie 

y.-O.  Turner  treated  it  as  a  pure  question  of  partnership :  '*  How 

would  this  case  have  stood,"  he  says  in  the  first  paragraph  of  the 

judgment,  "  if  it  had  been  the  case  of  an  ordinary  limited  partne^ 


LDOTS  OF  COBPOBATE  FOWEBa  fiSS 

shipf    The  Bailways  ClaiueB  Oonsolidfttion  Act  became  in  Uub 
view  a  statntory  form  of  paitneiBbip  articles,  to  which  every  ehare- 
holder  must  be  taken  to  have  assented  :  and  the  general  ground  of 
the  decision  was  that ''  no  majority  can  authorize  an  application  of 
partnership  fmids  to  a  purpose  not  warranted  by  the  partnership 
contract"  For  the  purpose  of  the  case  before  the  Court  this  analogy 
was  perfectly  legitimate  ;  and  the  dissent  expressed  by  Parke  B.  (in 
South  Yorkshire,  4bt,  Co.  v.  Q.  N.  R  Co.  (1863)  9  Ex.  88,  22  L.  J.  Ex. 
316),  must  be  considered  only  as  a  warning  against  an  unqualified 
extension  of  it  to  questions  between  the  corporate  body  and  strangers. 
The  rule  comes  out,  if  possible,  even  more  clearly  in  Pickering  v.  Statomeat 
Stephensm  (1872)  14  Eq.  322,  340,  41  L.  J.  Ch.  493,  where  it  is  thus  ®L*^ . 
set  forth  by  Wickens  V.-C. — "  The  principle  of  jurisprudence  which  J^  pi,£t\^ 
I  am  asked  here  to  apply  is  that  the  governing  body  of  a  corporation  ing  v. 
that  is  in  fact  a  trading  partnership  cannot  in  general  use  the  funds  ^^hcn- 
of  the  conmiunity  for  any  purpose  other  than  those  for  which  they 
were  contributed.     By  the  governing  body  I  do  not  of  course  mean 
exclusively  either  directors  or  a  general  council  (a),  but  the  ultimate 
authority  within  the  society  itself,   which  would  ordinarily  be  a 
majority  at  a  general  meeting.    According  to  the  principle  in  ques- 
tion the  special  powers  given  either  to  the  directors  or  to  a  majority 
by  the  statutes  or  other  constituent  documents  of  the  association, 
however  absolute  in  terms,  are  always  to  be  construed  as  subject  to 
a  paramount  and  inherent  restriction  that  they  are  to  be  exercised 
in  subjection  to  the  special  purposes  of  the   original   bond  of 
association." 

It  is  to  be  observed  that  this  passage  contains  no  indication  of 
opinion  on  the  extent  to  which  a  corporation  may  be  bound  by 
the  tmanimous  assent  of  its  members. 

Any  dissenting  shareholder  may  call  for  the  assistance  of  the  Court  Bights  of 
to  restrain  unconstitutional  acts  of  the  governing  body,  but  he  must  diaienting 
do  so  in  his  proper  capacity  and  interest  as  a  shareholder  and  partner,  f^?^ 
If  the  Court  can  see  that  in  fact  he  represents  some  other  interest, 
and  has  no  real  interest  of  his  own  in  the  action,  it  will  not  listen  to 
him ;  as  when  the  proceedings  are  taken  by  the  direction  of  a  rival 
company  in  whose  hands  the  nominal  plaintiff  is  a  mere  puppet,  and 
which  indemnifies  him  against  costs :  Forrest  v.  Manchuter,  dbe.  Ry. 
Co.  (1861)  4  D.  F.  J.  126 :  so  where  the  suit  was  in  fact  instituted  by 
the  plaintiff's  solicitor  on  grounds  of  personal  hostility,  Robson  v. 


(a)  Baferring  to  the  pecoUar  constitation  of  the  company  then  in 
questioiL 


^684  APPENDIX. 

Dodda  (1869)  8  £q.  301,  38  L.  J.  Ch.  647.  But  if  he  has  any  leiJ 
interest  and  is  proceeding  at  liia  own  riak,  he  is  not  disqualified  from 
suing  by  the  Uct  that  he  has  collateral  motives,  or  is  acting  on  the 
suggestion  of  strangers  or  enemies  to  the  company,  or  even  has 
acquired  his  interest  for  the  purpose  of  instituting  the  suit :  ColfRon 
▼.  E,  C.  Ry.  Co.  (1846)  10  Beav.  1,  16  L.  J.  Ch.  73 ;  SeaUmw.  GratU 
(1867)  2  Ch.  459,  36  L.  J.  Ch.  638 ;  Bloxam  v.  Metrop,  By.  Co.  (1868) 

Pariiasto   3CL337.   For  full  collection  of  cases,  see  Lindley  on  Companies,  597. 

^  •  As  a  rule  the  plaintiff  in  actions  of  this  kind  sues  on  behalf  of  himself 
and  all  other  shareholders  whose  interests  are  identical  with  his  own ; 
but  there  seems  to  be  no  reason  why  he  should  not  sue  alone  in 
those  cases  where  the  act  complained  of  cannot  be  ratified  at  all,  or 
can  be  ratified  only  by  the  unanimous  assent  of  the  shareholden : 
HooU  ▼.  Q.  W.  Ry,  Co.  (1867)  3  Ch.  262.  There  is  another  class  of 
cases  in  which  abuse  of  corporate  powers  or  authorities  is  complained 
of,  but  the  particular  act  is  within  the  competence  o^  and  may  be 
afllrmed  or  disafl&rmed  by,  ''the  ultimate  authority  within  the 
society  itself"  (in  the  words  of  Wickens  V.-C.  just  now  cited^  and 
therefore  the  corporation  itself  is  prvma  facie  the  proper  plainti£ 
See  Lindley  on  Companies,  574  sqq.  Gray  v.  Lewis  (1869)  8  Cfa.  1035, 
1051 ;  Ma<;Dou^  y.  (?ar<f ifMf  (1875)  10  Ch.  606,1  Ch.  D.  13, 21 ; /^usmB 
▼.  Wak^fidd  Waterworks  Co.  (1876)  20  Eq.  474, 44  L.  J.  Ch.  496.  "The 
majority  are  the  only  persona  who  can  complain  that  a  thing  which 
they  are  entitled  to  do  has  been  done  irregularly ''  (a).  The 
exception  is  when  a  majority  have  got  the  government  of  the 
corporation  into  their  own  hands,  and  are  using  the  corporate  name 
and  powers  to  make  a  profit  for  themselves  at  the  expense  of  the 
minority;  then  an  action  is  lightly  brought  by  a  shareholder  on 
behalf  of  himself  and  others,  making  the  company  a  defendant : 
Mmier  v.  Hooper's  Telegraph  Works  (1874)  9  Ch.  350,  43  L.  J.  Ch. 
330  ;  Mason  v.  Harris  (1879)  11  Ch.  Div.  97,  48  L.  J.  Ch.  589.  We 
mention  these  cases  only  to  distinguish  them  from  those  with  which 
we  are  now  concerned. 

Limited         With  regard  to  the  doctrine  of  limited  agency,  and  to  its  peculiar 

agcnoy  of   importance  in  the  case  of  companies  constituted  by  public  documenti, 

JP™^"'    all  persons  dealing  with  them  being  considered  to  know  the  contents 

of  tiiose  documents  and  the  limits  set  to  the  agent's  authority  by  them, 


(a)  MeUishL.J.  1  Ch.  D.  at  p.  25.  (1877)  6  Ch.  D.  82,  46  L.  J.  Ch. 

As  to  a  shareholder's  right  to  use  407 ;  Silber  Light  Co.  v.  SOber  (1879) 

the  company's  name  m  plaintiff,  see  12  Oh.  D.  717,  48  L.  J.  Ch.  386 ; 

Pender  r.LushingUm{lS77)eGh.'D.  Barben   v.  i>Aitt^  (1882-3)  28  Ob. 

70,  46  L.  J.  Ch.  817;  DudeeUr,  Cover  D.  14,  29,  88. 


LIMITS  OF  CORPORATE  POWERS.  9S& 

it  may  be  usefal  to  give  Lord  Hatherley's  concise  statement  of  the 
law  (when  V.-C.)  in  Fountaifie  v.  Carmarthen  Ry.  Co.  (1868)  6  Eq. 
316,  322,  37  L.  J.  Ch.  429. 

''  In  the  case  of  a  registered  joint-stock  company,  all  the  world 
of  course  have  notice  of  the  general  Act  of  Parliament  and  of  the 
special  deed  which  has  been  r^stered  pursuant  to  the  provisions 
of  the  Act,  and  if  there  be  anything  to  be  done  which  can  only 
be  done  by  the  directors  under  certain  limited  powers,  the  person 
who  deals  with  the  directors  must  see  that  those  limited  powers 
are  not  being  exceeded.  If,  on  the  other  hand,  as  in  the  case  of 
Royal  British  Bank  v.  Turquand  (a),  the  directors  have  power  and 
authority  to  bind  the  company,  but  certain  preliminaries  are  re- 
quired to  be  gone  through  on  the  part  of  the  company  before  that 
power  can  be  duly  exercised,  then  the  person  contracting  with  the 
directors  is  not  bound  to  see  that  all  these  preliminaries  bave  been 
observed.  He  is  entitled  to  presume  that  the  directors  are  acting 
lawfully  in  what  they  do.  That  is  the  result  of  Lord  Campbell's 
judgment  in  Royal  British  Bank  v.  Turqiuind,"  For  fuller  exposition 
see  Lindley  on  Companies,  166  sqq. 

The  contrast  of  the  two  classes  of  cases  is  well  shown  in  Ray<U  Royal 
British  Bank  v.  Twrquand  (supra)  and  Balfour  v.  Ernest  (1869)  6  C.  BritUi 
R  N.  S.  601, 28  L.  J.  C.  P.  170.    In  the  former  case  there  was  power  xJ^'^JI^ia, 
for  the  directors  to  borrow  money  if  authorized  by  resolution :  and  it  fto. 
was  held  that  a  creditor  taking  a  bond  from  the  directors  under  the 
company's  seal  was  not  bound  to  inquire  whether  there  had  been  a 
resolution.    Jervis  C.J.  said  in  the  Exchequer  Chamber  (the  rest  of 
the  Court  concurring)  : — 

'*We  may  now  take  for  granted  that  the  dealings  with  these 
companies  are  not  like  dealings  with  other  partnerships,  and  that 
the  parties  dealing  with  them  are  bound  to  read  the  statute  and  the 
deed  of  settlement.  But  they  are  not  bound  to  do  more.  And  the 
party  here  on  reading  the  deed  of  eettleinent  would  find  not  a 
prohibition  from  borrowing,  but  a  permission  to  do  so  on  certain 
conditions." 

The  same  principle  has  been  followed  in  many  later  cases  (Ex 
paHe  Eagle  Inmrance  Co,  (1868)  4  K.  &  J.  549,  27  L.  J.  Ch.  829  ; 
CampheU's  ca.  dx.  (1873)  9  Ch.  1,  24,  43  L.  J.  Ch.  1  ;  ToUerdell  v. 
Fareham  Bride  Co.  (1866)  L.  R.  1  0.  P.  674,  35  L.  J.  C.  P.  278 ;  Re 
County  Life  Assce.  Co.  (1870)  5  Ch.  288,  39  L.  J.  Ch.  471,  a  very 
strong  case,  for  the  persons  who  issued  the  policy  were  assuming  to 
carry  on  business  as  directors  of  the  company  without  any  authority 
at  all ;  Romford  Canal  Co.  (1883)  24  Ch.  D.  86,  62  L.  J.  Ch.  729), 

(a)  6  E.  &  B.  248,  6  ibid.  287,  24  L.  J.  Q.  B.  827, 26  ibid.  827. 


688  APPKNDIX. 

and  it  was  decudvely  aflSrmed  by  the  Hoiue  of  Lords  in  Mahomif  t. 
East  Holt/ford  Jiwing  Co.  (1875)  L.  B.7H.L.869.  Inthatcase 
a  bank  had  honoured  cheques  drawn  by  persons  acting  as  directon 
of  the  company,  but  who  had  never  been  properly  appointed ;  and 
these  payments  were  held  to  be  good  as  against  the  liqnidator,  the 
dealings  haying  been  on  the  face  of  them  regular,  and  with  ds  fado 
officers  of  the  company.  Shareholders  who  allow  persons  to  asBome 
office  and  conduct  the  company's  business  are,  as  against  innocent 
third  persons,  no  less  bound  by  the  acts  of  these  de  facto  officers  than 
if  they  had  been  duly  appointed.  It  is  for  the  shareholders  to  see 
that  unauthorized  persona  do  not  usurp  office,  and  that  the  busineM 
is  properly  done  (a). 

In  Balfowr  v.  Eme$t  the  action  was  on  a  bill  given  by  directors  of 
an  insurance  company  for  a  claim  under  a  policy  of  another  company, 
the  two  companies  having  arranged  an  amalgamation ;  this  atteiiq>ted 
amalgamation,  however,  had  been  judicially  determined  to  be  void : 
Ernest  v.  NieholUy  6  H.  L.  C.  401,  revg.  S.  Q.  nom.  Pofi  of  I/mitm 
Go's  case  (1654)  5  D.  M.  G.  465.  The  directors  had  power  by  the 
deed  of  settlement  to  borrow  money  for  the  objects  and  businesB  of 
the  company  and  to  pay  claims  on  policies  granted  by  the  company, 
and  they  had  a  power  to  make  and  accept  bills,  &c.  which  was  not 
restricted  in  terms  as  to  the  objects  for  which  it  might  be  exerdaei 
It  was  held  that,  taking  this  with  the  other  provisions  of  the  deed, 
they  could  bind  the  company  by  bills  of  exchange  only  for  iti 
ordinary  purposes,  and  not  in  pursuance  of  a  void  scheme  of  amalga- 
mation, that  the  plaintiffs  must  be  taken  to  have  known  of  their  want 
of  authority,  which  might  have  been  ascertained  firom  the  deed,  and 
that  they  therefore  could  not  recover.  <<This  biU  is  drawn  by 
procuration,"  said  Willes  J.,  ''and  unless  there  was  authority  to 
draw  it  the  company  are  not  liable  (&)...  this  is  the  bare  caae 
of  one  taking  a  bill  from  Company  A.  in  respect  of  a  debt  due  Iran 
Company  B.,  there  being  nothing  in  the  deed  (which  must  be  taken 
to  have  been  known  to  the  plaintiflb)  to  confer  upon  the  directon 
authority  to  make  it." 

The  connexion  with  ordinary  partnership  law  is  brought  out  in 
the  introductory  part  of  Lord  Wensleydale's  remarks  in  En^  t. 
NiekoUs  (1857)  6  H.  L.  C.  401,  417  :— 

^  The  law  in  ordinary  partnerships,  so  £ar  as  relates  to  the  powen 
of  one  partner  to  bind  the  others,  is  a  branch  of  the  law  of  principal 
and  agent.    Each  member  of  a  complete  partnership  is  liable  for 

-  (a)  Opfaiion  of  judges,  at  pc  880 ;  by  two  direotors  on  the  oonq^y'a 
per  Loid  Hatherley,  at  pp.  897-8.  cashier,  and  sealed  with  the  oob- 

\h)  In  form  it  was  a  tnll  drawn      pany's  aaaL 


LDOTS  OF  OOBPOaATE  POWERS.  687 

himself,  and  as  agent  for  the  rest  binds  them  upon  all  contracts 
made  in  the  oonise  of  the  oidinaiy  scope  of  the  partnership  bnsinesSi 
....  Any  restriction  upon  the  authority  of  each  partner, 
imposed  by  mutual  agreement  among  themselves,  could  not  affect 
third  persons,  unless  such  persons  had  notice  of  them ;  then  they 
could  take  nothing  by  contract  [sc  as  against  the  firm]  which  those 
restrictions  forbade.  [The  law  in  this  form,  i«.,  the  presumption  of 
every  partner  being  the  agent  of  the  firm,  being  obviously  inapplicable 
to  jointrstock  companies],  the  legislature  then  devised  the  plan  of 
incorporating  these  companies  in  a  manner  unknown  to  the  common 
law,  with  special  powers  of  management  and  liabilities,  providing  at 
the  same  time  that  all  the  world  should  have  notice  who  were  the 
persons  authorized  to  bind  all  the  shareholders  by  requiring  the  co- 
partnership deed  to  be  registered  .  .  and  made  accessible  to  alL" 
The  continuation  of  the  passage,  however,  goes  too  £Eur ;  in  fact^  it 
disregards  the  distinction  established  by  Royal  BrUiah  Bank  v. 
Turquand,  and  the  Oourts  have  distinctly  declined  to  adopt  it  (A^r 
V.  AiheruBum  Life  Assce.  Soc  (1858)  3  C.  R  N.  S.  725,  27  L.  J.  C.  P. 
95  ;  Prince  of  Wales  Auce.  Go.  v.  Harding  (1857)  K  B.  &  £.  183,  27 
L.  J.  Q.  B.  297).  The  List  case  of  this  class  is  Chapleo  v.  Brwuwick 
BwOding  SodUy  (1881)  6  Q.  B.  Div.  696,  50  L.  J.  Q.  B.  372. 

We  now  pass  on  to  the  cases  which  show  how  far  transactions  in  Batifioa- 
the  conduct  of  a  company's  afihirs  which  in  their  inception  were  ^""^v 
invalid  as  against  any  dissenting  shareholder  may  nevertheless  be  ^Sm^ 
made  binding  on  the  partnership  and  decisive  of  its  collective  rights  tloDs  by 
(at  all  events  as  between  the  company  and  its  own  past  or  present  *J?tu* 
members)  by  the  subsequent  assent  of  all  the  shareholders,  though  a^^ 
such  assent  be  informal  and  shown  only  by  acquiescence.    The  boMera 
leading  examples  on  this  head  are  given  by  the  well-known  cases  in    ^ 
the  House  of  Lords  which  arose  in  the  winding-up  of  the  Agri-  ^  oon- 
culturists'  Cattle  Insurance  Company.  liderad. 

They  have  been  relied  on  as  authorities  for  the  proposition  that 
the  unanimous  assent  of  shareholders  may  bind  a  company  in  its 
corporate  capacity  to  anything :  but  since  the  decision  of  the  House 
of  Lords  in  AMwry  Rjf,  (Carriage  db  Iron  Oo.  v.  Bithe  (1875)  L.  B. 
7  H  L.  653,  44  L.  J.  Ex.  185,  this  view  is  untenable.  <'  In  no 
one  of  those  cases,"  observed  Lord  Cairns,  "  was  there  any  question 
as  to  whether  the  power  of  the  whole  company  had  been  exceeded" 
(L.  R  7  H.  L.  674).  The  whole  matter  was  one  of  the  internal 
constitution  and  a£Eairs  of  the  company,  and  there  was  no  occasion 
to  consider  to  what  extent  or  in  what  transactions  the  assent  of 
shareholders  was  capable  of  binding  the  company  as  against 
strangers.     Moreover,  the  irr^;ular  act  which  was  ratified  was 


688  APPENDIX. 

QnAUthorized  as  to  the  manner  and  fonn  of  it,  bnt  belonged  to  an 
anthorized  clasp,  as  pointed  oat  by  Lord  Romilly  (L.  R.  3  H.  L. 
S44-5)  (a).  The  general  nature  of  the  faeta  was  thus  :  At  a  minting 
of  the  company  an  arrangement  waa  agreed  to,  afterwards  called  the 
Chippenham  amngement,  by  which  ahaieholders  who  elected  to  do 
8o  within  a  certain  time  might  retire  firom  the  company  on  specified 
terms  by  a  nominal  forfeiture  of  their  shares.  The  deed  of  settlement 
contained  provisions  for  forfeiture  of  shares,  but  not  such  as  to 
warrant  this  arrangement.     It  was  held — 

In  Evans  ▼.  SmaUeambe  (1868)  L.  R  3  H.  L.  249,  that  the 
Chippenham  arrangement  could  be  supported  (as  having  become 
pert  of  the  internal  regulations  of  the  company)  only  by  the  assent 
of  all  the  shareholders,  but  that  in  fact  there  was  knowledge  and 
acquiescence  sufficiently  proving  such  assent  A  shareholder  who  had 
retired  on  the  terms  of  the  Chippenham  arrangement  was  therefore 
not  liable  to  be  put  on  the  list  of  contributories.  (Cp.  Brotherhood'* 
ca.  (1868)  4  D.  F.  J.  566,  an  earlier  and  similar  decision  in  the  same 
winding-up.) 

In  Spademan  v.  Evam  (1868)  L.  B.  3  H.  L.  171,  34  L.  J.  Oh.  321, 
that  a  later  and  distinct  compronuse  made  with  a  smaller  number  of 
dissentient  shareholden  had  not  in  fact  been  communicated  to  all 
the  shareholders  as  distinct  from  the  Chippenham  arrangement,  and 
could  not  be  deemed  to  have  been  ratified  by  that  acquiescence  which 
ratified  the  Chippenham  arrangement ;  and  that  a  shareholder  who 
had  retired  under  this  later  compromise  was  therefore  rightly  made 
a  contributory. 

In  Eouldsworth  v.  Evans  (1868)  L.  R  3  H.  L.  263,  that  time  was  of 
the  essence  of  the  Chippenham  arrangement,  so  that  when  a  share- 
holder was  allowed  to  retire  on  the  terms  of  the  Chippenham  arrange- 
ment after  the  date  fixed  for  members  to  make  their  election,  thia,  in 
fact,  amounted  to  a  distinct  and  special  compromise,  which  ought  to 
have  been  specially  communicated  to  all  the  shareholders  :  this  case 
therefore  followed  Spaekman  v.  Evans  (6).  Cp.  Stewards  ca.  (1866) 
1  Ch.  611. 

The  question  of  the  shareholders'  knowledge  or  assent  in  each  case 
involved  delicate  and  difficult  inferences  of  fact,  and  on  these  the 
opinions  of  the  Lords  who  took  part  in  the  decisions  were  seriously 
divided.  It  may  perhaps  also  be  admitted  that  on  some  inferences 
of  mixed  fact  and  law  there  was  a  real  difference  ;  but  it  may  safely 


{&)    See   also   the  judgment  of  {h)  (1868).  See  also  L.  R.  7  C.  P. 

Arohibald  J.   in  Jtiehe  ▼.  Ashbur^  51-2,  and  note  the  remaik  of  Willea 

R^.  Carriage  Co.  (1876)  L.  R  9  Ex.  J.  p.  68,  84  L.  J.  Ch.  821. 
289,  48  L.  J.  Bx.  177. 


LIMITS  OF  CORPORATE  POWERS.  689 

be  affirmed  that  on  any  pure  qnestion  of  law  there  was  none  (a). 
These  cases  appear  to  establish  in  substance  the  following  propositions : 
(I).  For  the  purpose  of  binding  a  company  as  against  its  own  share- 
holders, irregular  transactions  of  an  authorized  class  may  be  ratified 
by  the  assent  of  all  the  individual  shareholders.  (2).  Such  assent 
must  be  proved  as  a  fact.  Acquiescence  with  knowledge  or  full 
means  of  knowledge  may  amount  to  proof  of  assent,  and  lapse  of 
time,  though  not  conclusive,  is  materiaL  The  converse  proposition 
that  the  assent  of  a  particular  shareholder  wiU  bind  him  to  an 
irregular  transaction  as  against  the  company  is  likewise  well 
established,  but  does  not  fall  within  our  present  scope.  See  Camp- 
hdUs  ca.,  &c.  (1873)  9  Ch.  1,  43  L.  J.  Ch.  1. 

The  later  case  of  Phosphate  of  Lime  Co.  v.  Green  (1871)  L.  R.  7  Pho^hate 
C.  P.  43,  was  of  much  the  same  kind  though  in  a  different  form.  qL^™* 
The  action  was  by  the  company  against  past  shareholders  for  a  debt,  Groen. 
and  the  defence  rested  on  an  accord  and  satisfaction  which  had  been 
effected  by  an  irregular  forfeiture  of  the  defendant's  shares,  and 
which  in  the  result  was  upheld  on  the  ground  of  the  shareholder's 
acquiescence.  There  is  nothing  to  throw  any  light  on  the  question 
whether  in  the  case  of  a  trading  company  formed  under  the  Com- 
panies Act,  1862,  there  is  any  class  of  acts  which  not  even  the 
unanimous  assent  of  shareholders  can  ratify :  it  was  not  necessary 
to  consider  the  existence  of  such  a  distinction,  nor  was  it  brought 
to  the  attention  of  the  Court.  Note  that  the  difficulty  as  to  in- 
ferences of  fact  was  much  less  than  in  the  cases  before  the  House  of 
Lords,  as  the  Court  had  to  say,  not  whether  there  had  been 
acqidescence,  but  whether  there  was  evidence  from  which  a  jury 
might  reasonably  have  found  acquiescence  (see  pp.  61,  62)  (6). 

Doctrine  of  public  policy. 

In  E.  a  By,  Co.  v.  Hawkes  (1855)  6  H.  L.  C.  331,  24  L.  J.  Ch.  PubUo 
601,  Lord  Cranworth,  who  as  we  have  seen  was  a  decided  upholder  e^c^r 
of  the  prima  facie  unlimited  capacity  of  corporations,  after  citing  v.  Hawluw. 
Coknan  v.  E.  C.  By.  Co,^  Sahmone  v.  Laing^  Bagshato  v.  B.  Union 
By.  Co.  (see  above,  pp.  675, 676, 684),  expressed  himself  as  follows  :— 
**  It  must  be  now  considered  as  a  well  settled  doctrine  that  a  company 
incorporated  by  Act  of  Parliament  for  a  special  purpose  cannot 
devote  any  part  of  its  funds  to  objects  unauthorized  by  the  terms 
of  its  incorporation,  however  desirable  such  an  application  may 
appear  to  be."    In  this  case  the  disputed  contract  was  held  good, 
and  the  distinction  was  pointed  out  between  an  act  which  is  for- 

(a)  See  ptr  Willes  J.,  L.  R.  7      ratification  by  companies,  Lindley 
C.  P.  60.  on  Oompanies,  175-181. 

{h)  See  further  on  the  subject  of 

P.  y  y 


690  APPENDIX. 

bidden  or  illegal  in  itself,  e,  g^  obstrncting  a  navigable  river  by 
building  a  bridge  acroes  it,  as  in  Mayor  of  Norvfkh  v.  NofrfM  Ry- 
Co.  (1855)  4  E.  &  B.  397,  24  L.  J.  Q.  B.  105,  and  an  act  which  ia 
merely  unauthorized  ae  between  directors  and  Bharebolders.  A 
Taylor  v,    pretty  full  account  of  this  case  is  given  in  the  jndgment  of  Black- 

to  ftTc  ^^^  ^'  ^^  ^^y^^  ^'  ^*^«*«*'  <^  Midhura  Ry.  Co.  (1867)  L.  IL  2 
'  ^  Ex.  356,  386—9,  39  L.  J.  Ex.  217  ;  and  the  effect  of  the  doctrine  of 
public  policy  in  imposing  restrictions  on  corporate  action  which  are 
beyond  and  independent  of  the  rights  of  individual  sihareholdei^ 
and  which  therefore  their  assent  is  powerless  to  remove,  is  explained 
in  a  subsequent  passage  of  the  same  judgment,  which  points  out 
that  in  incorporating  a  company  the  legislature  has  two  distinct 
purposes,  the  convenience  of  the  shareholders  and  the  benefit  of  the 
public  Every  shareholder  has  rights  against  the  corporation  analo- 
gous to  those  of  partners  between  themselves,  and  may  object  to  nn- 
authorized  acts  being  done.  These  individual  rights  however  miy 
be  waived.  But  if  the  legislature  actually  forbids  the  company  to 
enter  upon  certain  transactions,  then  no  assent  will  make  such 
transactions  binding.  Whether  such  a  prohibition  exists  depends  in 
each  case  on  the  construction  of  the  statute  (pp.  378>9). 
Ashbniy  How  far  the  Court  should  be  guided  in  the  construction  of  such 
^^  Oo  statutes  by  the  consideration  of  the  general  policy  of  such  legislation 
V.  Bache.*  is  A  question  on  which  there  has  been  much  difference  of  opinion. 
Policy  of  We  have  already  referred  shortly  to  Ashbury  By.  Carriage  Co.  v. 
COTDpanies  jj^c/itf.  In  this  case  the  distinct  question  arose  (for  the  first  time  it  i« 
believed),  whether  the  Companies  Act  of  1862  does  or  does  not 
forbid  a  company  formed  under  it  to  bind  itself  by  contract  to  an 
undertaking  beyond  the  purposes  specified  in  the  memorandum  of 
association.  The  12th  section  of  the  Act  says  that  a  company  shall 
not  alter  its  memorandum  of  association  except  in  certain  particu- 
lars as  to  capital  and  shares  (a) ;  the  Exchequer  Chamber  was 
equally  divided  as  to  the  effect  of  this.  Blackburn,  Brett  and 
Gro^e  J  J.  were  of  opinion  that  it  did  not  amount  to  making  com- 
panies incapable  of  binding  themselves  to  anything  beyond  the 
scope  of  the  memorandum ;  Archibald,  Keating  and  Quain  JJ.  held 
that  it  did.  They  thought  it  to  be  *^  the  policy  as  well  as  the  tme 
construction  "  of  the  Act  ''  to  ignore  (so  to  speak)  the  existence  of 
the  corporation  and  the  power  of  the  shareholders,  even  when 
unanimous,  to  contract  or  act  in  its  name  for  any  purpose  substan- 
tially beyond  or  in  excess  of  its  objects  as  defined  by  the  memoian- 
dum  of  association"  (p.  291).    Admitting  that  a  corporation  bai 

(a)  Extended  by  the  Act  of  1867,  sb.  9,  aqq.,  21,  bat  only  to  other 
matters  of  the  like  sort 


APPENDIX  (note  E.)  691 

prima  facie  as  incident  at  Common  Law  the  large  powers  laid  down 
in  the  SfUtan*8  HagpUal  case,  10  Co.  Bep.  30  h^  and  citing  the  state- 
ment of  the  law  by  Lord  Cranworth  in  Shrewsbury  and  Birmingham 
By.  Co.Y.L.SN.  FT.  i?y.  Co.  (given  above,  pp.  676,679),  the  judgment  of 
Archibald  J.  (L.  R.  9  Ex.  pp.  292-3),  proceeds  to  say  that  '<  the  pre- 
sumption of  a  prima  facie  general  authority  to  contract "  is  rebutted 
by  the  '^  express  provision  that  the  scope  and  objects  of  the  company 
as  originally  declared  by  its  memorandum  of  association  shall  be 
unchangeable."  The  corporation  may  be  regarded  as  non-existent 
for  the  purpose  of  contracts  beyond  these  objects ;  and  if  so,  the  in- 
dividual assents  of  all  the  shareholders  cannot  give  the  ideal  legal 
body  of  the  corporation  a  capacity  of  which  the  legislature  has 
deprived  it,  so  as  to  render  an  agreement  substantially  beyond  the 
defined  objects  **  a  contract  of  the  ideal  legal  body,  which  exists  only 
as  a  corporation  and  with  powers  and  capacity  which  are  thus  ad- 
mittedly exceeded." 

This  opinion  was  confirmed  by  the  unanimous  decision  of  the 
House  of  Lords,  L.  R  7  H.  L.  653,  which  proceeds  not  so  much  on 
any  one  section  as  on  the  intention  of  the  Act  appearing  from  its 
various  provisions  taken  as  a  whole.  The  existence  and  competence 
of  the  company  are  limited  by  the  memorandum  of  association, 
which  is  ''  as  it  were  the  area  beyond  which  the  action  of  the  com- 
pany cannot  go"  (Lord  Cairns,  at  p.  671).  This  being  the  funda- 
mental instrument,  a  provision  in  the  articles  of  association  which 
has  the  efiect  of  applying  the  capital  of  the  company  to  a  purpose 
not  within  the  scope  of  the  memorandum  is  invalid  (Guinness  v. 
Land  Corporation  of  Ireland  (1882)  22  'Ch.  Div.  349).  Precisely 
analogous  questions  are  not  likely  to  arise  very  often,  but  the  deci- 
sion lays  down  with  sufficient  clearness  the  lines  that  must  hence- 
forth be  followed  in  the  treatment  of  the  law.  As  to  when  the 
Attorney-General  is  entitled  to  interfere,  see  A.-O.  v.  O,  E.  B,  Co, 
(1880)  1 1  Ch.  Div.  449,  49  L.  J.  Ch.  545. 

In  1883  Bowen  L.J.  expressed  the  opinion  that  in  the  case  of  a 
statutory  corporation  there  is  no  presumption  at  all :  it  *^  may  or 
may  not  be  meant  to  possess  all  or  more  or  less  of  the  qualities  with 
which  a  corporation  at  common  law  is  endowed'' :  Baroness  Werdoch 
V.  Bvver  Dee  Co.^  reported  in  a  note,  36  Ch.  D.  at  p.  685. 


NoTB  E. — History  of  Consideration, 
We  may  first  note  the  diflFerence  between  our  Consideration  and  Oauu  in 
its  nearest  Continental  analogies ;  a  difference  not  always  realized  (a),  ^^^ 

(a)  See  the  arguments  la  ThmM  v.  Thmas  (1842)  2  Q.  B.  851,  Finch  ^*^' 
Sel  Ca.  263. 

Y  y2 


692  APPENDIX. 

and  inBtnictive  enough  to  he  worth  dwelling  npon  a  little.  We  read 
in  the  French  Code  Ciyil,  following  Pothier :  "L'obligation  sans  catue, 
on  BUT  une  fansBe  cause,  on  but  nne  canse  illidte,  ne  pent  avoir  ancnn 
effet ''  (a).  Looking  at  this  text  alone,  nothing  would  at  first  sight  seem 
more  natural  to  an  English  lawyer  than  simply  to  translate  cau$e  by 
eonnderation.  But  let  him  turn  to  a  French  commentary  on  the  Code, 
and  he  finds  no  distinct  and  comprehensive  definition  of  cause  as  a 
legal  term  of  art,  but  a  scholastic  discussion  of  efficientj  final  and 
impulnve  causes  (6).  €k)ing  on  to  see  what  is  in  fact  included  in 
the  cause  of  the  French  law,  we  find  it  wider  than  our  Oonaideratian 
in  one  way  and  narrower  in  another.  On  the  one  hand  the  exist- 
ence of  a  natural  [i.  e.  moral]  obligation,  or  even  of  a  real  or  supposed 
duty  in  point  of  honour  only  (c),  may  be  quite  enough.  Nay,  the 
deliberate  intention  of  conferring  a  gratuitous  benefit,  where  such 
intention  exists,  is  a  sufficient  foundation  for  a  binding  unilateral 
promise  :  '*  Dans  les  contrats  de  himfaisancey  la  Iib6ralit6  que  I'nne 
des  parties  veut  exercer  envers  Tautre  est  une  cause  suffiaante  de 
Tengagement  qu'elle  contracte  envers  elle."  (Pothier,  Lc)  (d).  The 
meaning  of  sans  cause  seems  accordingly  to  be  confined  to  cases  of 
what  we  should  call  total  failure  (as  distinguished  from  mere 
absence)  of  consideration  (e).  On  the  other  hand  there  is  this  limi- 
tation, that  the  promisee  must  have  an  interest  in  the  subject-matter 
of  the  promise  which  is  apparent  and  capable  of  estimation  (Pothier 
§§  54,  55,  60).  This  doctrine  seems  to  have  arisen  from  a  doubtful 
extension,  if  not  a  misunderstanding,  of  the  technical  rules  which 
governed  the  Roman  Stipulation.  Of  course  a  contract  between  A. 
and  B.  cannot  as  a  rule  give  a  right  of  action  to  C,  but  the  thoyiwi 
Alteri  stipulari  nemo  potest  (/)  is  relied  on  by  French  jurisprudence 
as  equivalent  to  the  wider  general  proposition  that  a  promise  by  A. 
to  B.  to  do  something  for  C.'s  benefit  gives  no  right  of  action  to  any 
one.  Pothier  puts  this  case :  The  owner  of  a  wall  opposite  my  friend's 
window  promises  at  my  request  to  whitewash  it  so  as  to  give  my 


(a)  Code  Civ.  1131,  Pothier  ObL  (/)  D.  45.  1  de  v.  a  88,  §  17  : 
§  42.  T.  S.  19,  §  4.  The  rule  oonld  always 

[b)  Demolombe,  Gonrs  du  Code  be  escaped  by  insertiDg  a  liquidated 
Nap.  24.  329.  penal  siun  payable  to  Uie  stipulator: 

{c)  "  D6flir  de  satisfaire  aux  lois  a  Stipulatioii  thus  framed,  Will  yon 

de  rhoimeur  et  de  la  d^licateesa"  pay  so  much  to  J.  S.  on  anch  a  day! 

Sirey  and  Gilbert,  Codes  Axmot^B,  would  be  naught,  but  if  it  ran.  Will 

ad    loc. ;   Bemolombe,  op.   cit.  p.  you  pay  so  much  to  me  if  yon  do 

886.  not  pay  J.  S.?  it  was  good  enoagb. 

{d)  The  same  in  the  modem  law,  It  is  not  quite  dear  from  BractoD*B 

see  extract  from  Bogron  in  Lang-  language  (fo.  100  a-b)  whether  he 

dell's  SeL  Ca.  on  Cont.  169.  meant  to  contradict  the  rule  of  the 

(e)  Demolombe,  op.  dt.  p.  842.  dvil  law. 


CONSIDERATION.  693 

friend  more  light :  I  caimot  sue  him  for  not  doing  it,  though  I  had 
promised  to  pay  him  for  it  and  should  have  been  liable  to  pay  for 
the  work  if  done.  In  English  phrase  the  rule  would  seem  to  come 
to  this : — there  can  be  no  contract  where  the  nature  of  the  agree- 
ment is  such  that  the  promisee  could  recover  only  nominal  damages 
for  a  breach  of  it  But  it  seems  the  doctrine  is  not  much  favoured, 
and  slight  circumstances  are  laid  hold  of  to  exclude  its  application^ 
e.  g.  a  contingent  legal  liability  of  the  promisee  in  respect  of  the 
subject-matter.  The  Code  (Art  1119)  expresses  no  more  in  terms 
than  the  Latin  maxim,  but  is  of  course  construed  in  the  same 
way  (a).  In  the  Civil  Code  of  Lower  Canada,  however,  we  find  the 
English  coTuideraiion  introduced,  professedly  as  a  synonym  of 
cause  (ss.  984,  989) :  it  would  seem  therefore  that  the  English  juris- 
prudence on  this  point  has  been  there  introduced  by  English  lawyers, 
and  has  in  effect  supplanted  the  French  by  its  greater  convenience 
and  simplicity.  For  the  intermediate  mediaeval  usage  see  Codex  LL. 
Normannicarum  (about  a.d.  1250),  ap.  Ludewig,  Reliq.  MSS.  vii. 
313.  (De  pactis).  .  .  ex  promisso  enim  nemo  debitor  constituitur, 
nisi  causa  legitima  precesserit  promittendi  .  .  .  nee  eciam  pro- 
miasio  aliquem  facit  debitorem  nisi  causa  promittendi  fuerit  pre- 
monstrata. 

Thus  the  Roman  theory  whether  in  its  classical  or  in  its  modem 
shape  falls  short  of  the  completeness  and  common  sense  of  our  own ; 
but  only  one  step  seems  wanting  (6).  If  the  Roman  lawyers  or  the 
civilians  in  modem  times  had  ever  fairly  asked  themselves  what 
were  the  common  elements  in  the  various  sets  of  facts  which  under 
the  name  of  catua  made  various  kinds  of  contracts  actionable,  they 
could  scarcely  have  failed  to  extract  something  equivalent  to  our 
Consideration.  The  fact  that  they  did  not  take  that  step  is  much 
more  difficult  to  account  for  than  the  fact,  if  a  fact  it  be,  that  we 
did. 

The  actual  history  of  the  English  doctrine  is  obscure.    The  most  History 
we  can  affirm  is  that  the  general  idea  was  formed  somewhere  in  the  ^  |-^l 
latter  part  of  the  fifteenth  century  ;  that  at  the  same  time  or  a  little  conoep- 
later  nudum  pactum  lost  its  ancient  meaning,  (viz,  an  agreement  tioii. 
not  made  by  specialty  so  as  to  support  an  action  of  covenant,  or 
falling  within  one  of  certain  classes  so  as  to  support  an  action  of 
debt)  and  came  to  mean  what  it  does  now ;  and  that  the  vx>rd  Con- 
sideration in  the  sense  now  before  us  came  into  use,  at  least  as  a 
settled  term  of  art,  still  later.    It  la  hardly  needful  to  mention  that 

(a)  Codes  Airnot^  ad  loc  ;  De-  allquod  "  comes  near  to  takiog  it  : 
molombe,  op.  cit  p.  198.  D.  10.  5.  de  praescr.  verlns,  15. 

(6)  Ulpian's  ''habet  in  se  negotimn 


694  APPENDIX. 

in  the  early  writers  connderare^  connderatio  always  mean  the  jadg- 
ment  of  a  court ;  this  usage  was  preserved  down  to  our  own  time 
in  the  judgments  of  the  common  law  courts  in  the  form  ''  It  is 
considered,"  wantonly  altered  to  <<  It  is  adjudged"  under  the  Judi- 
cature Acts. 
Case  in  87  The  early  cases  of  actions  of  assumpsit  show  by  negative  evidence 
H.  VL  which  is  almost  conclusive  that  in  the  first  half  of  the  15th  centoiy 
the  doctrine  of  Consideration  was  quite  unformed.  The  phrase  gvti 
pro  quo^  which  was  appropriate  in  debt,  not  in  assumpsit^  is  earlier, 
see  10  Ed.  III.,  23  (a).  But  in  1459  we  find  a  great  advance  in  a  caae 
to  which  we  have  already  referred  as  showing  that  an  action  of  deli 
would  then  lie  on  any  consideration  executed.  The  case  was  this : 
Debt  in  the  Ck)mmon  Pleas  on  an  agreement  between  the  plaintiff 
and  defendant  that  plaintiff  should  marry  one  Alioe,  the  defendant's 
daughter,  on  which  marriage  defendant  would  give  plaintiff  100 
marks.  Averment  that  the  marriage  had  taken  place  and  the  de- 
fendant refused  to  pay.  Danvers  J.  said :  ^'  The  defendant  liss 
Quid  pro  quo :  for  he  was  charged  with  the  marriage  of  his  daughter 
and  by  the  espousals  he  is  discharged,  so  the  plaintiff  has  done  what 
was  to  be  paid  for.  So  if  I  tell  a  man,  if  he  will  carry  twenty 
quarters  of  wheat  of  my  master  Prisot's  to  Q.,  he  shall  have  40i., 
and  thereupon  he  carry  them,  he  shall  have  his  action  of  debt  against 
me  for  the  408. ;  and  yet  tke  thing  is  not  done  for  m^  hit  only  5y  fiiy 
oomrMmd:  so  here  he  shows  that  he  has  performed  the  espousals, 
and  so  a  good  cause  of  action  has  accrued  to  him :  otherwise  if  he 
had  not  performed  them  "  (6).  Moile  J.  agreed  :  Prisot  G. J.  and 
Danby  J.  thought  such  an  action  not  maintainable  except  on  a 
specialty,  and  an  objection  was  also  taken  to  the  jurisdiction  on  the 
ground  of  marriage  being  a  spiritual  matter :  the  case  was  adjourned 
and  the  result  is  not  stated.  It  is  pretty  clear  however  that  Danven 
at  any  rate  had  grasped  the  leading  and  characteristic  point  of  the 
modem  learning  of  Consideration — ^namely,  that  when  a  thing  is 
done  at  a  man's  request,  the  law  does  not  ask  whether  it  is  for  his 
apparent  benefit,  but  takes  it  as  against  him  to  be  of  the  value  he 
has  himself  chosen  to  put  upon  it.  The  word  is  not  here  used,  but 
the  thing  is  expressed  by  (iuid  pro  quo :  so  it  is  in  an  interesting 
case  of  the  same  year,  where  a  bond  given  for  an  assignment  of 
debts  was  decreed  in  Chancery  to  be  cancelled,  for  the  reason  that 
no  duty  (c)  was  vested  in  the  assignee  by  the  assignment^  so  that  he 

(a)  So  far  M  I  know,  and,  what  (c)  Sic  in  the  booV :  the  word  ii 

IB  much  more,  bo  far  as  Du  Gange  here   and  elsewhere   used  with  a 

knew,  quid  pro  quo  does  not  occur  double  aspect,  like  ohUjaUo,  as  ddt 

in  Continental  documents.  still  is. 

(6)  M.  87  H.  VI.  8,  pi.  18. 


CONSIDERATION.  695 

bad  not  Qtiid  pro  quo  for  his  bond.  (An  aaaignment  of  debts  not  being 
by  way  of  satiafaction  or  Becority  for  an  existing  debt  was  not  tben 
recognized  as  valid  even  in  equity)  (a).  In  an  earlier  case  of  assumpsit 
for  not  building  a  mill  as  promised  (6),  the  objection  was  taken 
that  it  did  not  appear  what  the  builder  was  to  have  for  his  work. 
But  here,  probably,  the  idea  is  not  that  there  must  be  quid  pro  quo 
to  support  the  promise,  but  that  without  reward  there  can  be  no 
relation  of  hiring  and  service  to  found  the  duty  of  doing  the  work 
properly.  Some  time  later  we  find  the  principle  expressed  thus:  If 
I  promise  J.  S.  a  certain  sum  for  the  commons  [board]  of  J.  D. 
an  action  of  debt  lies  for  this,  ^  car  la  ley  intend  que  J.  S.  est  un 
tiel  per  que  service  jeo  aie  advantage"  (c).  In  the  Doctor  and 
Student  (a.d.  1530)  we  find  substantially  the  modem  doctrine, 
though  tlus  last  point  is  not  particularly  mentioned.  The  following 
passage  shows  that  the  notion  of  nudum  pactum  was  then  completely 
transformed : — 

'<  And  a  nude  or  naked  promise  is  where  a  man  promiseth  another  Doctor 
to  give  him  certain  money  such  a  day,  or  to  build  an  house,  or  to  do  ^ 
him  such  certain  service,  and  nothing  is  assigned  for  the  money,  for     ^  ^ 
the  building,  nor  for  the  service  ;  these  be  called  naked  promises 
because  there  is  nothing  assigned  why  they  shoulii  be  made  ;  and  I 
think  no  action  lieth  in  those  cases,  though  they  be  not  performed." 
(Dial  2,  a  24.) 

Not  many  lines  below  this  passage  the  word  Consideration  is  used,  Argu- 
but  by  the  Doctor,  %.e,  the  canonist,  and  it  seems  doubtful  whether  ?,f°^  "^ 
it  is  used  as  a  technical  tenn.    So  far  as  we  know,  the  first  full  t<m«:    ' 
discussion  of  Consideration  by  that  name  is  in  Plowden's  report  of  Strotton, 
Sharifigton  v.  Strotton  (Mich.  7  &  8  Eliz.)  (d).    The  question  in  the  J^  ^  * 
case  was  whether  natural  love  and  affection  was  a  good  consideration 
to  support  a  covenant  to  stand  seised  to  uses.    The  action  was  tres- 
pass, and  the  defendants  justified  as  servants  entitled  under  the 
covenant    The  argument  for  the  plaintiffs  insists  on  ''  value  or 
recompense"  as  the  essence  of  Consideration,  and   shows  a  full 
understanding  of  the  law  in  its  modem  sense.    Among  other  cases 
manying  the  promisor's  daughter  at  his  request  is  put  as  a  good 
consideration.    The  argument  for  the  defendants  is  long  and  desul- 
tory, and  goes  into  much  irrelevant  matter  about  Aristotle,  the 
utility  of  marriage,  and  the  Law  of  Nature :  and  the  notion  is  brought 

(a)  Hil.  87  H.  VI.  18,  pL  8.  See  (c)  1  Rol.  Ab.  698,  pL  7,  dtmg  17 

p.  701,  below.  E.  IV.  5  (axg.);  and  Bee  other  cases 

(6)  8  H.  VI.  ZO,  pL  88  (p.  142,  and  dicU  there  collected, 

above).  {d)  Plowd.  298,  802. 


696  APPENDIX. 

in  that  the  consideration  for  a  promise  must  show  some  apparent 
benefit  to  the  promisor :  it  is  said  that  a  promise  to  pay  money  in 
consideration  of  marriage,  such  as  above  mentioned,  would  be  rwdum 
pactum  but  for  regard  to  Nature.    It  is  also  said  that  every  deed 
imports  a  consideration,  vu.,  the  will  of  him  that  made  it    But  this 
seems  a  desperate  argument.    For  it  must  be  remembered  that  the 
common  law  rule  of  a  deed  wanting  no  consideration  at  all  was  in- 
applicable (a).     Before  the  Statute  of  Uses  a  merely  gratuitous 
agreement  or  declaration  of  uses  without  any  transfer  of  legal  "poa- 
session  was  iueffectual  to  create  a  use  even  if  made  by  deed:  and  the 
Statute  executes  a  legal  estate  only  where  before  the  Statute  there 
would  have  been  a  use  enforceable  in  equity.    In  the  result  the 
Court  held  that  the  covenant  was  effectual  to  transfer  the  use,  natural 
love  and  affection  being  a  sufficient  consideration  to  support  it.     It 
does  not  appear  whether  they  were  prepared  to  go  the  whole  length 
of  the  argument  for  the  defendants  and  hold  natural  love  and  affection 
a  good  consideration  for  contracts  of  all  sorts. 
Saggested      As  is  well  shown  by  this  case,  the  question  of  Consideration  was  of 
^V^         importance  in  the  learning  of  Uses  before  the  statute  (6).    And  the 
doctrioe      reflection  is  obvious  that  both  the  general  concep  tion  and  the  name  of 
in  equity*    Consideration  might  have  had  their  origin  in  the  Court  of  Chancery 
and  the  law  of  uses,  and  have  been  thence  imported  into  the  law  of 
contracts  rather  than  developed  by  the  common  law  courts.    On  this 
hypothesis  a  connexion  with  the  Roman  caiua  may  be  suggested  with 
some  plausibility  (c).    But  it  may  be  answered  that  in  the  Chancery 
itself  the  idea  was  an  innovation.    Sharington  v.  StrotUm  was  argued 
on  principle  without  any  reference  to  precedents.    Mr.  Ames  even 
thinks  the  borrowing  was  the  other  way  ((2). 
Connexion      Judge  O.  W.  Holmes  has  again  put  forward  a  quite  different  theory 
®'  ^^JP*^  of  the  origin  of  Consideration,  which  he  regards  as  nothing  else  than 
action  of    ^  generalization  from  the  technical  requirements  of  the  action  of  debt 
debt  in  its  earlier  form  (The  Common  Law,  chapter  on  History  of  Oontract, 

pp.  253,  sqq.;  Early  English  Equity,  L.  Q.  R.  i.  162).  One  mode  of 
proving  a  debt  was  by  the  oath  of  sufficient  men,  as  one  mode  of 
defence  was  by  the  corresponding  process  of  compurgation,  which 
under  the  name  of  wager  of  law  survived  into  the  present  century. 
These  men  are  the  '*  good  suit "  of  our  mediaeval  practice :  inde  pro- 
id)  The  passage  is  cited  in  some  still, 
modem  books  as  an  illustration  of  or  [c)  This  was  formerly  my  own 

authority  for  that  rule,  but  mani-      view,   and  has  lately  been  main- 
f estly  |)er  tnottnam.  tained    with    fresh    reasons    and 

(5)   Only   the   precautions  long      authorities  by  Mr.  Salmond  in   I^ 
embodied  in  the  jpractice  of  con-      Q.  R.  iii.  160. 
veyanoen  prevent  it  from  being  to  {d)  EEarvMd  Law  Rev.  iL  18* 


CONSIDERATION.  697 

ducit  seetam  is  the  common  style.  How  this  may  be  connected  with 
the  modem  doctrine  of  simple  contracts  is  beet  told  in  Mr.  O.  W. 
Holmes's  own  words  : — 

'*The  mle  that  witnesses  could  only  swear  to  facts  within  their 
knowledge,  coupled  with  the  accident  that  these  witnesses  were  not 
used  in  transactions  which  might  create  a  debt,  except  for  a  par- 
ticular fact,  namely,  the  delivery  of  property,  together  with  the  further 
accident  that  this  delivery  was  quid  pro  qrio^  was  equivalent  to  the 
rule  that  when  a  debt  was  proved  by  witnesses  there  must  be  quid 
pro  quo.  But  these  debts  proved  by  witnesses  instead  of  by  deed  are 
what  we  call  simple  contract  debts,  and  thus  beginning  with  debt, 
and  subsequently  extending  itself  to  other  contracts,  Ib  established 
our  peculiar  and  most  important  doctrine  that  every  simple  contract 
must  have  a  consideration.  This  was  never  the  law  as  to  debts  or 
contracts  proved  in  the  usual  way  by  the  defendant's  seal,  and  the 
fact  that  it  applied  only  to  obligations  which  were  formerly  estab- 
lished by  a  procedure  of  limited  use  goes  fax  to  show  that  the 
connection  with  procedure  was  not  accidental. 

''The  mode  of  proof  soon  changed,  but  as  late  as  the  reign  of 
Queen  Elizabeth  we  find  a  trace  of  this  original  connection.  It  is 
said,  'But  the  common  law  requires  that  there  should  be  a  new  cause 
(i.e,  oonsideration),  whereof  the  country  may  have  intelligence  or 
knowledge  for  the  trial  of  it,  if  need  be,  so  that  it  is  necessary  for 
the  public  weal'  (a).  Lord  Mansfield  showed  his  intuition  of  the 
historical  grounds  of  our  law  when  he  said, '  I  take  it  that  the 
ancient  notion  about  the  want  of  consideration  was  for  the  sake  of 
evidence  only ;  for  when  it  is  reduced  into  wrikvng^  as  in  covenants, 
specialties,  bonds,  &c.,  there  was  no  objection  to  the  want  of  con- 
sideration '  (&). 

^  If  it  should  be  objected  that  the  preceding  argument  is  necessarily 
confined  to  debt,  whereas  the  requirement  of  consideration  applies 
equally  to  all  simple  contracts,  the  answer  is,  that  in  all  probability 
the  rule  originated  with  debt,  and  spread  from  debt  to  other  con- 
tracts."   (The  Common  Law,  pp.  268,  269.) 

Some  of  the  steps  in  the  process  thus  sketched  out  are  conjectural, 
and  it  is  not  dear  that  the  proof  per  sectam  had  not  become  of  little 
account,  in  the  King's  Court  at  all  events,  before  the  constructive 
epoch  of  the  Common  Law  had  fedrly  set  in.  (Ghinv.  X.  c.  17 ; 
Bracton,  fo.  400  &,  §  9  ;  see  Mr.  Holmes's  remarks  on  these  passages, 
pp.  267,  262  of  his  book.)  There  may  have  been — ^I  am  fortified  by 
Mr.  Ames's  conclusion,  after  a  much  more  exhaustive  research  than 

{a)  SJwringkm  v.  Strotton,  Plow-  (6)  PtUane  v.  Van  Mierop  (1765) 

den,  298,  at  p.  302,  M.  7  &  8  Bliz.  8  BnrrowB,  1663,  1669. 


698  APPENDIX. 

my  own,  in  thinking  there  was — greater  complication  of  influences 
than  we  can  now  trace  in  detail.  It  is  certain,  on  any  yiew,  that  it 
was  long  before  assumpsit  got  clear  of  its  early  association  with 
trespass  and  was  understood  to  be  in  substance  an  action  of  contnct* 
On  the  other  hand  the  apparently  indefinite  rax^  of  assumpati 
when  once  the  gulf  between  misfeasance  and  mere  nonfeasance  was 
bridged,  must  have  reacted  on  the  idea  of  Consideration,  whenoe- 
soever  it  had  come,  by  making  the  need  for  its  application  more 
sharply  felt  Again,  the  action  of  assumpsit  was  a  special  kind  of 
trespass  on  the  case,  an  action  for  damages  incurred  by  the  plaintiff 
through  the  defendant's  fedlure  in  a  duty  voluntarily  **  assumed  "  by 
him ;  and  one  kind  of  action  on  the  case  which  contributed  to  the 
development  of  assumpsit  was  the  action  of  deceit^  founded  expressly  on 
the  plaintiff's  actual  damage  incurred  through  the  defendant's  fraud. 
Here  we  have  already  the  germ  of  the  ''  detriment  to  the  promisee  " 
— ^the  loss  of  at  least  some  legal  advantage  of  position,  as  distin- 
guished from  the  mere  disappointment  of  an  expectation — which  is 
now  accepted  as  being  the  essence  of  Consideration.  Judge  Biffe  in 
his  treatise  on  Contracts,  and  Mr.  Ames  in  the  Harvard  Law  Beview, 
have  insisted  with  much  force  on  this  aspect  of  the  history. 

On  the  whole  it  would  appear  that  the  quid  pro  gtu>  of  Debt 
remained,  in  strictness,  what  it  was  before,  but  for  all  practical 
purposes  was  merged  in  the  wider  generalization  derived  from 
Assumpsit ;  and  that  the  "  detriment  to  the  promisee "  which  is 
essential  to  Assumpsit  was  independently  developed  as  the  criterion 
of  a  duty  arising,  in  its  original  conception,  not  from  a  promise  at 
alL  The  exact  influence  of  civilian  usage,  or  the  Romanizing 
theories  of  a  few  such  students  as  Bracton,  must  be  left  as  a  matter 
of  feeling  rather  than  of  proof.  For  my  own  part  I  have  found 
myself,  as  time  goes  on,  rather  less  than  more  disposed  to  make 
Romanist  elements  bear  up  any  substantial  part  of  the  structure  of 
the  Common  Law. 


Note  F.  (p.  206). 
Early  Authorities  on  Assignments  of  Ohoses  in  AcUon, 

1.  Oases  In  Mich.  3  Hen.  lY.  8,  pL  34,  is  a  case  where  a  grantee  of  an 
^direct  annuity  from  the  king  sued  on  it  in  his  own  name.  No  question 
assign-  seems  to  have  been  raised  of  his  right  to  do  sa 
ment  only  i^  Hil.  37  Hen.  VI.  13,  pi.  3  (see  p.  676  above),  it  appears  that 
tion.^'**'  by  the  opinion  of  all  the  justices  an  assignment  of  debts  was  no 
consideration  (quid  pro  quo)  for  a  bond,  forasmuch  as  no  duty  was 
thereby  vested  in  the  assignee  :  and  the  Court  of  Chancery  acted  on 


ASSIGNMENTS  OP  CHOSES  IN  ACTION.  699 

tbat  opinion  by  decreeing  the  bond  to  be  delivered  up.  It  may 
be  noted  in  passiDg  that  the  case  is  otherwise  interesting,  as  it 
shows  pretty  fiilly  the  relations  then  existing  between  the  Court  of 
Chancery  and  the  Courts  of  Common  Law,  and  the  cardinal  doctrine 
that  the  jurisdiction  of  equity  is  wholly  personal  is  stated  with 
emphatic  clearness. 

In  £01.  21  Ed.  lY.  84,  pL  38,  the  question  was  raised  whether  an 
annuity  for  life  granted  without  naming  assigns  could  be  granted 
oyer  ;  and  the  dictum  occurs  that  the  right  of  action,  whether  on  a 
bond  or  on  a  simple  contract,  cannot  be  granted  over. 

Mich.  39  Hen.  YI.  26,  pL  36.  If  the  king  grant  a  duty  due  to 
him  from  another,  the  grantee  shall  have  an  action  in  his  own  name: 
"  et  isswU  ne  prjkit  nuL  oMtre  /aire." 

So  Mich.  2  Hen.  YIL  8,  pL  26.  "i«  Roy  poU  ^ranter  m  acoian  au 
diOH  qui  gUt  en  accion  ;  et  isaifU  ne  pak  ntd  auier  person.** 

In  Roll  Abr.  Action  sur  Case,  1.  20,  pi.  12,  this  case  is  stated  to 
have  been  decided  in  B.  B.,  42  Eliz.,  between  Mowse  and  Edney,  |>er 
curiam :  A.  is  indebted  to  B.  by  bill  (t.e.,  the  now  obsolete  form  of 
bond  called  a  single  bill),  and  B.  to  C.  B.  assigns  A.'s  bill  to  C. 
Forbearance  on  C.'s  part  for  a  certain  time  is  no  consideration  for  a 
promise  by  A.  to  pay  C.  at  the  end  of  that  time  («.  v.  contra,  ib,  29, 
pi.  60) :  for  notwithstanding  the  assignment  of  the  bill,  the  property 
of  the  debt  remains  in  the  assignor. 

In  none  of  these  cases  is  there  a  word  about  maintenance  or  public 
policy.  On  the  contrary,  it  appears  to  be  assumed  throughout  that 
the  impossibility  of  effectually  assigning  a  chose  in  action  is  inherent 
in  the  legal  nature  of  things.  Finally,  in  Termee  de  la  Ley,  tit. 
Chose  in  Action^  the  rule  is  briefly  and  positively  stated  to  this  effect: 
Things  in  action  which  are  certain  the  king  may  grant,  and  the 
grantee  have  an  action  for  them  in  his  own  name  :  but  a  common 
person  can  make  no  grant  of  a  thing  in  action,  nor  the  king  himself 
of  such  as  are  uncertain.    No  reason  is  given. 

The  exception  in  favour  of  the  Crown  may  perhaps  be  derived 
from  the  universal  succession  accruing  to  the  Crown  on  forfeitures. 
This  would  naturally  include  rights  of  action,  and  it  is  easy  to 
understand  how  the  practice  of  assigning  over  such  rights  might 
spring  up  without  much  examination  of  its  congruity  with  the  legal 
principles  governing  transactions  between  subjects. 

Before  the  expulsion  of  the  Jews  under  Edward  I.  they  were 
treated  as  a  kind  of  serfs  of  the  Crown  {ta/yU<ibles  au  Boy  come  Us 
soens  serfs  eta  nul  avJtre:  Statutes  of  Jewry,  temp,  incert.,  dated  by 
Prynne  3  Ed.  I.),  and  the  king  accordingly  claimed  and  exercised  an 
arbitrary  power  of  confiscating,  releasing,  assigning,  or  licensing  them 
to  assign,  the  debts  due  to  them.    Cp.  charter  of  Frederick  II.,  Pet. 


700  APPENDIX. 

de  Vineis  Epist  lib.  6,  no.  12  :  <<  omnes  et  singuli  ludaei  degsata 
nbiqne  per  terras  noetrae  iurisdictioni  subiectas  Christianae  l^ia  et 
Imperii  praerogativa  servi  sunt  nostrae  Camerae  speciales."   And  see 
on  this  subject  T.  B.  33  Ed.  I.  pp.  xli,  355,  and  Plynne's  "Short 
Demurrer  to  the  Jews,"  &c.  (Lond.  1656,  a  violent  polemic  against 
their  re-admission  to  England),  passim, 
2.  Cams         In  Hil.  9  Hen.  YI.  64,  pi.  17,  Thomas  Bothewel  sues  J.  Fewer  for 
^^kT  f^  maintaining  W.  H.  in  an  action  of  detinue  against  him,  Bothewel, 
Mngnee^  for  **un  box  ove  charters  et  muniments."    Defence  that  W.  H.  bad 
to  nw  hi     granted  to  Fewer  a  rentcharge,  to  which  the  muniments  in  question 
^\h*"^^    related,  and  had  also  granted  to  Fewer  the  box  and  the  deeds,  then 
i^gn^      being  in  the  possession  of  Bothewel  to  the  use  of  W.  H.,  wherefore 
was  in        Fewer  maintained  W.  H.,  as  he  well  might.    To  this  Faston,  one  of 
qoestioo.     ^j^g  judges,  made  a  curious  objection  by  way  of  dilemma.    It  was  not 
averred  that  W.  H.  was  the  owner  of  the  deeds,  but  only  that  Botbewel 
had  them  to  his  use  ;  and  so  the  property  of  them  might  have  been 
in  a  stranger  :  '*  et  issint  eeofiUt  chose  en  acdon  et  istint  tout  void  "  : 
the  precise  meaning  of  these  words  is  not  very  clear,  but  the  general 
drift  is  that,  for  anything  that  appeared,  W«  H.  had  no  assignable 
interest  whatever  ;  and  it  looks  as  if  the  strong  expression  tout  void 
was  meant  to  take  a  higher  ground,  distinguishing  between  a  trans- 
action impeachable  for  maintenance  and  one  whoUy  ineffectual  £rom 
the  beginning.    But  if  W.  H.  was  the  true  owner.  Fasten  contuined, 
then  the  whole  property  of  the  deeds,  &c.,  passed  to  Fewer,  wbo 
ought  to  have  brought  detinue  in  his  own  name  (a).     Babington 
C.J.  and  Martyn  J.,  the  other  judges  present,  were  of  a  contrary 
opinion,  holding  that  any  real  interest  in  the  matter  made  it  lawful 
to  maintain  the  suit    The  attempt  to  assign  a  chose  in  action  is 
here  compared  by  the  counsel  for  the  plaintiff  to  the  grant  of  a 
reversion  without  attornment ;  showing  that  the  personal  character 
of  the  relation  was  considered  the  ground  of  the  rule  in  both  cases. 

In  Mich.  34  Hen.  YI.  30,  pi.  15,  Bobert  Horn  sued  Stephen 
Foster  for  maintaining  the  administrators  of  one  Francis  in  an  action 
against  him,  B.  Horn  :  the  circumstances  being  that  Horn  was 
indebted  to  Francis  by  bond,  and  Francis  being  indebted  to  Stephen 
in  an  equal  sum  assigned  the  debt  and  delivered  the  bond  to  him, 
authorizing  him,  if  necessary,  to  sue  on  it  in  his  (Francis*)  name, 
to  which  Horn  agreed ;  and  now  Francis  had  died  intestate,  and 
Stephen  was  suing  on  the  bond  in  the  name  of  the  admiDistrators 

(a)  Another  argament  put  by  the  rent  and  the  deeds  relating  to   it^ 

plftiDtiff's  oounsel,  though  not  veiy  yet  he  had  none  in  the  l»x,  and 

material,  Ib  too  qooint  to  be  passed  therefore  in  respect  of  the  box,  at 

over :    Whatever   interest   Fewer  all    events,    there    was   nnlawfnl 

might  have  had  by  the  grant  of  the  maintenance  on  his  part 


APPENDIX  (note  G.)  701 

wiih  their  CQnBent  And  this  being  pleaded  for  the  defendant,  was 
held  good.  PriBot,  in  giving  judgment,  compared  the  case  of  the 
cestui  qvs  use  of  lands,  whether  originally  or  claiming  by  purchase 
through  him  to  whose  use  the  feoffment  was  originally  made,  taking 
part  in  any  suit  touching  the  lands.  On  this  Fitzherbert  remarks 
(MayntenaurUj  14)  "  Nota  icy  que  per  ceo  U  eemhle  que  un  du/ite  putt 
estre  aseigne  pour  eatisfactionJ^  So  it  is  said  in  HiL  15  Hen.  YII.  2, 
pL  3,  that  if  one  is  indebted  to  me,' and  deliver  to  me  an  obligation 
in  satisfaction  of  the  debt,  wherein  another  is  bound  to  him,  I  shall 
sue  in  my  debtor's  name,  and  pay  my  counsel  and  all  things  incident 
to  the  suit ;  and  so  may  do  he  to  whom  the  obligation  was  made,  for 
each  of  us  may  lawfully  interfere  in  the  matter. 

Brooke,  Abr.  140  5,  observes,  referring  to  the  last- mentioned  case : 
'*  Et  sic  vide  que  chose  in  acdon  pod  estre  assigns  oustre  pur  loyal 
caussj  come  iust  det,  mes  nemy  pwr  maintenance/*  This  form  of 
expression  is  worth  nothing,  as  showing  that  assignment  of  a  chose 
in  action  meant  to  the  writer  nothing  else  than  empowering  the 
assignee  to  sue  in  the  assignor's  name.  He  was  at  no  pains  to  explain 
that  he  did  not  mean  to  say  the  assignee  could  sue  in  his  own  name; 
for  he  did  not  think  any  one  could  suppose  he  meant  to  assert  such 
a  plainly  impossible  proposition. 

It  was  long  supposed  (as  is  implied  in  Fitzherberf  s  and  Brooke's 
language)  that  Ihe  assignment  of  a  debt  by  way  of  sale,  as  opposed 
to  satisfaction  of  an  existing  liability,  was  maintenance.  Even  under 
the  Restoration  the  Court  of  Chancery  would  not  protect  the  assign- 
ment of  any  chose  in  action  unless  in  satisfeustion  of  some  debt  due 
to  the  assignee :  Freem.  0.  0.  145,  pi.  185,  see  Pro£  Ames  in  Harv. 
Law  B<Bv.  i  6,  note. 

This  evidence  seems  su£Blcient  to  establish  with  reasonable 
certainty  the  statement  in  the  text,  and  to  convert  what  was  a  not 
improbable  conjecture  a  priori  into  historical  fact  The  historical 
difficulty  is  one  which  extends  to  the  whole  of  our  law  of  contract, 
namely,  that  of  tracing  any  continuity  of  general  principles  in  the 
interval  between  the  Romanized  expositions  of  them  in  Bracton  and 
Britton  and  their  first  appearance  in  a  definitely  English  form. 


NoTB  G.  (p.  286). 
Occupations^  dealings^  dbc,  regulated  or  restrained  by  statute. 

(The  Hst  here  given  is  probably  not  complete.  A  certain  number 
of  the  references  have  been  taken  from  the  Index  to  the  Revised 
Statutes  without  further  verification.  The  occasional  asterisks 
mean  that  further  remarks  on  the  Act  or  matter  thus  denoted  will 
be  found  in  the  chapter  on  Agreements  of  Imperfect  Obligation.) 


702  APPENDIX. 

Apothecaries.    55  Gea  3,  c.  194 ;  37  &  38  Vict,  a  34. 

AtUyrneye.     See  SoUcitore, 

Bankere.  3  &  4  Wm.  4,  c  98  ;  7  &  8  Yict  &  32  ;  8  &  9  Tict 
c.  76  ;  17  &  18  Vict.  c.  83.    See  Lindley  on  Fartnership,  95. 

Brewere.  Inland  Revenue  Act^  1880,  43  &  44  Yict  c  20,  Part  2, 
48  &  49  Vict  c.  51. 

Brokers.  6  Ann.  c.  68  (Rev.  Stat) ;  57  Gea  3,  c  Ix. ;  rep.  in 
part,  33  &  34  Vict  c.  60.  SmM  v.  lAndo  (1858)  4  0.  B.  N.  S.  395, 
5  lb.  587  ;  27  L.  J.  C.  P.  196,  385. 

BuUding,    See  Metropolitan. 

Cattle.    (Sale  in  London)  31  Geo.  2,  c  40. 

Chain  Cables  and  Anchors.  (Sale  forbidden  if  not  tested  and 
stamped)  34  &  35  Vict  c.  101,  b.  7  ;  37  &  38  Vict  c  51. 

Chemists.    See  Poisons  (Sale  of). 

Chimney  Sweepers  must  take  ont  a  certificate,  and  are  liable  to 
penalties  if  they  exercise  their  business  without  one  :  38  &  39  Tict 
c.  70. 

Clergy.  Charging  benefices  forbidden,  13  Eliz.  c  30 ;  Ex  parte 
Arrowtmith  i^dn^)  8  Oh.  D.  96,  47  L.  J.  Bk.  46.  Trading  forbidden, 
1  &  2  Vict  c.  106.    Swpra,  pp.  282,  283. 

Coals.    (Sale  in  London)  1  &  2  Vict  c.  clL 

Coal  Mines  Regulation  Act,  1887,  50  &  51  Vict,  c  58,  Part  1. 

Companies.  (Formation  of:  partnerships  of  more  than  ten  per- 
sons for  banking,  or  twenty  for  other  purposes,  must,  if  not  otherwise 
privileged,  be  registered  under  the  Act)  Companies  Act,  1862,  a.  4. 
As  to  what  is  an  association  for  the  acquisition  of  gain  within  that  a, 
see  Smith  v.  Anderson  (1880)  15  Ch.  Div.  247,  50  L.  J.  Ch.  39,  over- 
ruUng  Sykes  v.  Beadm  (1879)  11  Ch.  D.  170,  48  L.  J.  Ch.  522. 

Conveyancers.    33  &  34  Vict  c.  97,  s.  60.    Supra,  p.  283. 

Dangerous  Goods  (importation,  manufacture,  sale,  and  carriage). 

Nitro-glycerine,  &c.    Explosives  Act,  1875, 38  Vict  c.  17. 
Petroleum,  &c  34  &  35  Yict  a  105. 

Generally :  Explosive  Substances  Act,  1883,  46  Yict  c.  3  (but 
this  has  only  a  remote  bearing  on  any  contract). 

Excise.  General  regulations  as  to  trades  and  businesses  subject  to 
laws  of — 

7  &  8  Geo.  4,  c.  53.  4  &  5  Yict  c.  20. 

4  &  5  Wm.4,  c.  51.  26  &  27  Yict  c.  33,  s.  15. 

3  &  4  Yict.  c.  17.  30  &  31  Yict.  c  90,  s.  17. 

48  &  49  Yict  c.  51,  ss.  7-10.     50  &  51  Yict  c.  15,  s,  4. 

Game  (sale  oQ.  1  &  2  Wm.  4,  c.  32.  P(ymtt  v.  Baker  (1865)  10 
Ex.  759. 

Gaming  Seeurities.    5  &  6  Wm.  4,  c.  41. 

Goldsmiths.    17  &  18  Yict  c  96  (and  several  earlier  Acts). 


6TATUT0BY  BESTRTCTIONS  OK  CONTRACT. 

Gunpowder  (manufacture  and  keeping).  Exploeives  Act,  1875, 
38  &  39  Vict.  c.  17. 

Insurance  (Life).  Assured  must  have  interest,  14  Geo.  3,  c.  48. 
The  statute  is  a  defence  for  the  insurers,  but  if  they  choose  to  pay 
on  an  insurance  without  interest  the  title  to  the  insurance  moneys 
as  between  other  persons  is  not  affected  :  Worthington  v.  Curtis 
(1875)  1  Oh.  Div.  419,  45  L.  J.  Ch.  259,  see  p.  363,  supra, 

(Marine).  The  like :  insurances  of  goods  on  British  ships, 
"  interest  or  no  interest,  or  without  farther  proof  of  interest  than 
the  policy,  or  by  way  of  gaming  or  wi^ering,  or  without  benefit  of 
salvage  to  the  assurer,"  are  made  void  ly  19  Geo.  2,  c.  37.  See  notes 
to  Ooram  v.  SweeUng,  2  Wms.  Saund.  592-7.  The  prohibition  of 
this  statute  extends  to  policies  on  profit  and  commission  :  AlUdns  v. 
Jupe  (1877)  2  C.  P.  D.  375,  46  L.  J.  C.  P.  824. 

*  Requirement  of  stamped  policy,  30  &  31  Vict,  c  23. 
Intoxicating  Liquors,    Licensing  Acts,  1872-1874,  35  &  36  Vict. 

c.  94,  and  37  &  38  Yict.  c.  49  (and  several  earlier  Acts)L 
Landlord  and  Tenant.    Property  Tax  :  5  &  6  Vict.  c.  35,  a.  103. 

Lamb  v.  Brewster  (1879)  4  Q.  B.  Div.  607,  48  L.  J.  Q.  B.  421. 

Ground  game  :  43  &  44  Vict  c  47,  s.  3. 
Lotteries.    Forbidden  by  10  Wm.  3,  c.  23  (Rev.  Stat. :  al  17)  and 

a  series  of  penal  statutes,  of  which  the  last  is  8  &  9  Vict  c.  74. 
Marine  Store  Deaths.  Public  Stores  Act,  1875, 38  &  39  Vict  c.  25, 

SB.  9-11. 

*  Medical  Practitioners.  21  &  22  Vict  c.  90,  22  Vict.  c.  21,  23  & 
24  Vict  cc.  7,  66,  49  &  50  Vict  c  48. 

Metropolitan  Buildings.    18  &  19  Vict  c.  122,  25  &  26  Vict  c.  102. 

Money.  Contracts,  &c.,  must  be  made  in  terms  of  sotm  currency. 
Coinage  Act,  1870,  33  Vict  c.  10,  s.  16. 

Old  Metal.  (Minimum  quantities  to  be  bought  at  one  time  by 
dealer  in)  Prevention  of  Crimes  Act,  1871, 34  &  35  Vict  c.  112,  s.  13. 

Pawnbrokers.    35  &  36  Vict  c  93.    Supra,  p.  283. 

Poison  (sale  of).  31  &  32  Vict  c.  121,  s.  17,  and  see  32  &  33  Vict 
c.  117,  8.  3.  Berry  v.  Henderson  (1870)  L.  R  5  Q.  B.  296,  39 
L.  J.  M.  C.  77. 

Postage  Stamps.  47  &  48  Vict  c.  76,  s.  7,  makes  it  an  offence  to 
deal  in  or  sell  any  fictitious  stamp  (including  imitations  of  colonial 
and  foreign  stamps). 

Pnnting.  32  &  33  Vict  c  24.  Bensley  v.  Bignold  (1822)  5  B.  & 
Aid.  335,  supra,  p.  279. 

Public  Office  (sale  forbidden).  5  &  6  Edw.  6,  c  16 ;  3  Geo.  1, 
c.  15  ;  49  Geo.  3,  c.  126  ;  53  Geo.  3,  c.  54 ;  1  &  2  Geo.  4,  c  54  ;  see 
Gr<eme  v.  Wroughton  (1855)  11  Ex.  146,  24  L.  J.  Ex.  265 ;  and 
Benjamin,  507. 


703 


704  APPENDIX. 

Edigious  Opinums  (expression  of).  9  Wm.  3,  c.  36  (Bev.  Stat : 
oL  c  32).  See  Cowan  v.  MUbaum  (1867)  L.  R.  2  Ex,  230,  36 
L.  J.  Ex.  124. 

Seamen,  Sale  of  or  charge  upon  wages  or  salvage  invalid,  17  &18 
Vict.  c.  104^  8.  233. 

Shipping  (passenger  steamen).  Voyage  without  Board  of  Trade 
certificate  unlawful,  Merchant  Shipping  Act,  1854  (17  &  18  Vict 
c.  104X  B.  318.  Dudgeon  v.  Pembroke  (1874)  L.  R  9  Q.  B.  681,43 
L.  J.  Q.  B.  220. 

Sinumy.  Purchase  of  next  presentation,  13  Ann.  c  11  (Bev. 
Stat :  al,  12  Ann  Stat  2,  c.  12).  The  purchase  of  a  life  estate  in 
an  advowson  is  not  within  the  statute,  and  the  purchaser,  if  a 
derk,  may  offer  himself  for  admission  on  the  next  avoidance :  WM 
V.  Bishop  of  Lincoln  (1875)  L.  R  10  0.  P.  518,  44  L.  J.  C.  P.  244. 

Slave  Trade,  llle^  and  contracts  relating  to  avoided,  6  Gta  4^ 
c  113,  6  &  7  Vict,  c  8a  As  to  construction  of  the  statutes  on  con- 
tracts made  abroad,  Santos  v.  lUidge  (1860)  6  C.  B.  N.  S.  841, 28  L 
J.  C.  P.  317,  in  Ex.  Ch.  8  C.  B.  N.  S.  861,  29  L.  J.  C.  P.  348. 

Solicitors,  23  &  24  Vict  c.  127.  Unqualified  persons  are  few- 
bidden  to  practise,  and  a  solicitor  omitting  to  take  out  annnal 
certificate  cannot  recover  costs.  Special  agreements  in  writing 
between  solicitor  and  client  as  to  remuneration  are  now  valid,  33  & 
34  Vict  c  28,  ss.  4-16,  if  not  in  the  nature  of  champerty,  a  11 : 
*  they  cannot  be  sued  upon,  but  may  be  enforced  or  set  aside  in  a 
discretionary  manner  on  motion  or  petition,  ss.  8,  9.  See  Bees  t. 
WiUiams  (1875)  L.  R.  10  Ex.  200,  44  L.  J.  Ex.  116.  A  piomifle  to 
charge  no  costs  at  all  in  the  event  of  losing  the  action  is  good  apart 
from  the  statute,  and  is  not  touched  by  s.  11.  Jennings  v.  Johnson 
(1873)  L.  R  8  C.  P.  425.  As  to  non-contentious  business,  this  Act 
is  superseded  by  the  Solicitors'  Bemuneration  Act,  1881, 44  &  45 
Vict  c.  44. 

Spmte,  <fcc.  (sale  of).  *  In  small  quantities,  24  Geo.  2,  c  40,  a.  12 
(Tippling  Act)  ;  25  &  26  Vict  c.  38 ;  30  &  31  Vict  c  142,  s.  4.  To 
passengers  on  ship  during  voyage,  18  &  19  Vict  c.  119,  s,  62. 

Spirits  (methylated).  As  to  making,  warehousing,  sale,  &c. :  18 
&  19  Vict  c.  38  (and  several  later  Acts). 

Svmday,  Work  in  ordinary  callings  by  tradesmen,  &c,  and  public 
sales  by  any  person  on  Sunday  forbidden,  29  Car.  2,  c  7.  See 
BeDJamin  on  Sale,  537-9. 

Tobacco,  Growing  tobaoco  is  forbidden  by  12  Car.  2,  c,  34, 1  &  2 
WilL  4,  c.  13  (extending  the  prohibition  to  U.K.) :  and  the  tobacco 
trade  is  further  r^;ulated  by  a  great  number  of  Customs  and  Exdae 
Acts. 

*  Trade  Union  Gontracts.  34  &  35  Vict  c  31,  s.  4. 


APPENDIX  (note  H.).  706 

JJwiry,  The  various  slatntes  'whicli  fixed  (with  suncliy  exceptions) 
a  maximum  rate  of  lawful  interest  were  all  repealed  by  17  &  18 
Vict  c.  90.  It  would  be  perhaps  needless  at  such  a  distance  of 
time  to  mention  this,  were  it  not  that  by  an  extraordinary  oversight 
the  last  edition  of  Story  on  Contracts  (§  722)  represents  the  statute 
of  Aune  (12  Ann.  stat.  2,  c.  16)  as  still  regulating  the  law  of  interest 
iu  England.  *As  to  securities  given  after  repeal  of  usury  laws  for 
mouey  lent  on  usurious  terms  before  the  repeal,  FHghi  v.  lUed 
(1863)  1  H.  &  0.  703,  32  L.  J.  Ex.  265. 

Wagtfn.  8  &  9  Yict.  c.  109,  wupra^  p.  286.  Benjamin  on  Sale,  435. 
As  to  the  extent  of  the  exceptions,  Partons  v.  Alexcmdtr  (1855)  5  K 
^S;  B.  263,  24  L.  J.  Q.  B.  277  ;  Coombes  v.  DibbU  (1866)  L.  R.  1  Ex. 
248,  35  L.  J.  Ex.  167  ;  DiggU  v.  Higgs  (1877)  2  Ex.  Div.  422,  46  L. 
J.  Ex.  721  ;  Trimble  v.  HiU  (appeal  to  J.  C.  from  New  S.  Wales  on 
colonial  statute  in  same  teimsX  5  App.  Ga.  342,  49  L.  J.  P.  0.  49. 
Forbearance  of  proceedings  to  enforce  payment  of  racing  debts  by 
purely  conventional  sanctions  is  not  an  unlawful  consideration: 
qu.  whether  or  not  a  good  consideration ;  Bvibb  v.  Yehetion  (1870) 
9  Eq.  471,  39  L.  J.  Ch.  428. 

Wsiges,  Payment  otherwise  than  in  money  forbidden,  1  &  2  Wm. 
4,  c.  36  (Truck  Act),  in  the  trades  enumerated  in  s.  19.  CvtU  v. 
Ward  (1867)  L.  R.  2  Q.  B.  357,  36  L.  J.  Q.  R  161.  The  stoppage 
of  wages  for  frame  rents,  &c.,  in  the  hosiery  manufacture  is  for- 
bidden, and  all  contracts  to  stop  wages  and  contracts  for  frame 
rents  and  charges  are  made  illegal,  null,  and  void,  by  37  &  38  Vict, 
c.  48.  See  WiUit  v.  Thmf  (1876)  L.  R  10  Q.  B.  383,  44  L.  J.  Q.  B. 
137;  8mih  v.  WalUm  (1877)  3  C.  P.  D.  109,  47  L.  J.  M.  C.  46. 

WtighU  andMeamres,  Standards  defined,  and  use  of  other  weights 
and  measures  forbidden.  5  Geo.  4,  c.  74 ;  5  &  6  Wm.  4,  c.  63 ;  18 
&  19  Vict.  c.  72  ;  22  &  28  Vict  c.  56.  The  use  of  the  metric  system 
is  legalized  by  27  &  28  Vict  c.  117.  Sales  by  customary  weights 
or  measures  which  are  well  known  multiples  of  standard  weight  or 
measure  are  not  unlawful :  Hughes  v.  Humfhreye  (1854)  3  K  &  B. 
954,  23  L.  J.  Q.  B.  356 ;  Janee  v.  Giles  (1854)  10  Ex.  119,  23  L.  J. 
Ex.292. 


NOTB  H.  (p.  480). 
Bradon  en  FuaidamenkU  Brror, 


De  acquirendo  remm  dowimOf  fo.  166,  16: — ''Item  non  valet 
donatio,  nisi  tarn  dantis  quam  accipieatis  coneurrat  mutnus  consensus 
P.  IS 


706  APPENDIX. 

«t  TolnntMy  Bcilioet  quod  dosator  habeat  animnm  donandi  et  dcma- 
tariiu  animiHn  redpiendi.  Nnda  enim  donatao  (a)  et  nuda  pactio 
Don  obligant  aliquem  nee  faciant  aliqnem  debitorem ;  ut  ai  dicom. 
Do  tibi  talem  rem,  et  non  babeam  (&)  animnm  donan  di  nee  tradendi 
nee  a  traditione  indinam,  non  Talet,  at  n  dieam.  Do  tibi  istam  icm, 
et  illam  nolim  (e)  tradere  vel  (e)  snatinere  qnod  illam  tecom  fens 
▼el  arboiem  datam  saocidas,  non  Talet  donatio  quia  donator  plene 
non  eonsentit  Item  oportet  qnod  non  sit  error  in  re  data,  quia  si 
donator  aenserit  de  una  re  et  donatarins  de  alia,  non  valet  donatio 
propter  diMensom  :  et  idem  erit  si  dissentio  fiat  in  genere,  nxunero, 
et  qnantitate  .  .  .  [Then  follow  instances.]  Et  in  fine  notan- 
dom  qnod  si  in  corpus  qnod  traditnr  sit  consensnm,  non  nooet, 
qnamvis  drca  causam  dandi  atqne  redpiendi  sit  dissentio :  nt  si 
pecuniam  nnmeratam  tibi  tradam,  vel  quid  tale,  et  tn  earn  quasi 
creditam  (d)  aodpias,  constat,  ad  te  propiietatem  transire." 


Note  L  (p.  501). 
Mistake  in  WUU. 


Properly  speaking,  there  ia  no  jniisdiction  in  any  oonrt  to  rectify 
a  will  on  the  ground  of  mistake.  The  Court  of  P^bate  may  rgect 
words  of  which  the  testator  is  proved  to  have  been  ignorant,  whetiier 
inserted  by  the  fraud  or  by  the  mistake  of  the  person  who  pre- 
pared the  will  (0).  But  it  has  no  power  to  remedy  a  mistake  *'by 
modifying  the  language  used  by  the  draughtsman  and  adopted  hf 
the  testator  so  as  to  make  it  express  the  supposed  intention  of  the 
testator.  .  .  Such  a  mode  of  dealing  with  wills  would  lead  to 
the  most  dangerous  consequences,  for  it  would  convert  the  Court  of 
Probate  into  a  court  of  construction  of  a  very  peculiar  kind,  whose 

(a)   ratio    MS.    Hobhouae,  Lin-  Iim,  Camb.  Univ.,  Brit.  Mua.,  BftbL 

ooln's  Inn.  Nat.  Paris)  and  is  eyidently  iiequinwi 

{b)  hahuero  MS.  Hobh.  by  the  sense.    Bnoton  ia  quoting 

(e)  MS.  Hobh.:  edd.  nciui,  eL  from  the  Digest,  41. 1.  de  aoq.  i«r. 

((f)  Traditam  ed.  1569,  followed  douL  86 :  cp  Guterbock,  Henr.  de 

without  remark  by  Sir  T.  Twisa,  Bracton,  p.  86,  who  aasmned,  with- 

1878,  who  also  gives  bv  a  misprint,  out  cause  as  the  MSS.  now  riiow, 

and    translates,    tali   for  taU   im-  that    Bracton    miBonderatood    the 

mediately  above.      (See    on    the  passage.    The  cormptioiiy  however, 

general  character    of    this  edition  is  an  easy  and  early  one. 
"The  Text  of  Bracton,"  by  Plot  (e)  S.  g,  MorrOl  v.^JforraK,  7  P. 

Paul  Vinogradoff,  L.  Q.  R.  I  189.)  D.  68,  61  L.  J.  P.  49,  foUowiag 

But  creditam  is  the  reading  of  a  FtiUom  v.  Andrew  (1876)  K    JEL  7 

majority  of  good  MSS.    (Linoohi's  H.  L.  448,  44  L.  J.  P.  17.  - 


APPENDIX  (KOTE  K.).  707 

duty  it  would  be  to  ahape  the  will  into  conformity  with  the  snp- 
poeed  intentions  of  the  teetatoi "  (a).  Exactly  the  same  rule  has 
been  laid  down  in  equity  (5). 

The  caaes  in  which  it  is  said  that  the  Court  will  interfere  to  cor- 
rect miBtakes  in  wills  may  be  claaeified  thus ; 

1.  Gases  purely  of  construction  accordixig  to  the  general  intention 
collected  from  the  will  itself  (c). 

2.  Cases  of  equivocfd  description,  of  words  used  in  a  special 
habitual  sfoise  {if^  or  of  a  wrongly  given  name.which  may  be  cor- 
rected by  a  sufficient  description  (cQ. 

3.  Cases  of  dispositions  made  on  what  is  called  a  fake  cause  (e\ 
i.  e,f  on  the  mistaken  assumption  of  a  particular  state  of  facts 
existing,  except  on  which  assumption  the  disposition  would  not 
have  been  made.  These  are  analogoua  to  the  cases  of  contract 
gpyemed.  by  CotUurier  v.  Hadie  (J) :  ^nd  just  as  in  those  cases,  the 
express^  intention  is  treated  a^  having,  been  dependent  on  a  con- 
dition which  has  failed. 

But  the  true  view  of  all  these  cases  appears  to  be  not  that  the 
words  are  corrected,  but  that  the  intention  when  clearly  ascertained 
is  carried  out  notwithstanding  the  apparent  difficulty  caused  by  the 
particular  words. 


Note  K.  (p.  507> 

.  On  the  mppoeed  equitable  dodrine  of  "  making  repreientationB  goodJ^ 

This  once  frequently  alleged  head  of  equity,  in  so  far  as  it  Original 
purports  to  establish  any  rule  or  principle  apart  from  the  ordinary  J^J^S™*"* 
rules  as  to  the  formation  ot  contracts  on  the  one  hand,  and  the  menley  v 
principle  of  estoppel  by  assertion  as  to  existing  fistctb  on  the  other,  De  Beil. 
seems  to  be  imaginary.    In  the  principal  class  of  cases  the  "repre- 
sentation ''  is  of  an  intention  to  make  a  provision  by  will  for  persons 
about  to  marry,  in  reliance  on  which  representation  the  marriage 

(a)   ffarter  y.  ffarter  (1878)  L.  maybeezplaiBed,bat  anamewhich 

&  8  P.  ft  D.  11,  21,  44  L.  J.  P.)l.  mpptim  to  only  one  person  may  be 

followiiig  Ouardkoute  v.  Blackburn  oorreoted  by    a   dasoription   raffi- 

(1866)  L.  B.  1  P.  ft  Di  109,  86.  L.  oiently  showing  that  another  persozi 

J.  P.  116.  is    intended ;    Ohairter    v.    Charter 

(h)  Newtmrgk  v.  Newburgh  (1820)  (1874>  L.  &  7  H.  L.  864. 
6  Madd  864^  (e)  CamfbO.  ▼.  FrwcK  (1797)  8 

(e)  See  HawUna  on  Constnifitioiv  Yea.  321. 
of  Wills,  Introdnotion.  (/)  (1866)  6  H.  I«.  a  673,  26  L. 

(d)  Not  only  an  equivooal  name  J.  Sz.  268.    Su^ra^  pp.  899, 470. 

zz2 


708  APPINDDL 

takes  place.  The  leading  authoritj  ia  Hamnurdey  v.  De  BeH  (aX 
decided  by  the  Hoose  of  Loida  in  1846  on  appeal  from  the  Couit 
of  Ghanceiy.  In  the  Coort  below  (b)  Lord  Oottenham  bad  laid 
down  the  propoaition  that  **  a  lepiesentation  made  by  one  party  for 
the  pnipoee  of  influencing  the  conduct  of  the  other  party,  and  acted 
on  by  him,  will  in  general  be  sofficient  to  entitle  him  to  the  aasifit- 
anoe  of  the  Court  for  Hke  puipoee  of  realizing  such  repreBentation,* 
This  appears  to  be  the  source  of  all  the  similar  statementa  which 
have  since  been  made  (c).  Taken  with  its  context,  however,  it 
need  not  mean  more  than  that  an  exchange  of  proposals  and  state- 
ments by  which  the  conduct  of  parties  is  determined  may,  as  con- 
taining all  the  requisites  of  a  good  agreement,  amount  to  a  contzact, 
though  not  to  a  formal  contract  To  Mr.  Justice  Stephen  Lord 
Cottenham's  words  "appear  to  mean  only  that  oontracts  of  this 
nature  may  be  made  like  other  contracts  by  informal  documents^  or 
partly  by  documents  and  partly  by  conduct "  (<Q.  And  in  tliis  sense 
the  rule  seems  to  have  been  understood  in  the  House  of  Lords  both 
in  the  same  and  in  subsequent  caae&  Lord  Brougham  and  Locd 
Campbell  speak  of  the  transaction  in  plain  terms  as  a  contract  Li 
the  Rolls  Court  it  had  also  been  dealt  with  on  that  footing  («)l  Still 
more  pointed  is  the  remark  made  by  Lord  St  Leonards  in  1854 : — 
Subte-  ''  Was  it  merely  a  representation  in  Hcmm/trdty  v.  De  BeU  f  Waa  it 
quent  ex-  not  a  proposal  with  a  condition  which,  being  accepted,  was  equivalent 
S^^r  *°  *  contract  ?»  (/).  In  the  terms  of  the  Indian  Contract  Act^  it 
of  Lordfl.  was  the  case  of  a  proposal  accepted  by  the  performance  of  the  con- 
ditions. The  statement  "  I  will  leave  you  10,000£.  by  my  will  if 
you  many  A./'  if  made  and  acted  on  as  a  promise,  becomes  a  binding 
contract  (the  marriage  undertaken  on  the  faith  of  that  promise  being 
the  consideration),  and  so  does  a  statement  in  less  plain  langoage 
which  amounts  to  the  same  thing.  On  the  other  hand  the  statement 
^  If  you  marry  A.  I  think,  as  at  present  advised,  I  shall  leave  joa 
10,0002.,"  is  not  a  promise  and  cannot  become  a  contract :  neither 
can  it  act  as  an  estoppel,  for  it  cannot  matter  to  the  other  par^r^ 
interest  whether  the  statement  of  an  intention  which  may  be  re- 
voked at  any  time  is  at  the  moment  true  or  false.    And  the  same  ia 


(a)  (1846)  12  a  ft  F.  46.  (<Q  AJden(m  v.  iroddtm  (1880) 

(6)  12  CL  ft  F.  at  p.  62.  6  Bz.  D.  298,  209,  60  L.  J.  Q.  B. 

(c)  The  torn   of  language  Is  in  466. 

itself  not  novel    It  seems  to   be  (e)  Nom.   £k   BeU   v.    Tkommm 

modeUed  on  that  which  had  long  (1841)  8  Beav.  469. 

before  been  used  in  cam  of  a  dif-  (/)  Mamuett   ▼.    ffedgm    WkiU 

ferent  class  and  for  a  different  par-  (1864)  4  H.  L.  C.  at  p.  1051 ;  op.  n. 

pose.    See  Bvan»  ▼.  BiekneU  (1801)  1069.                                                 ' 
8Vefcl74. 


"  REPRB3EKTATI0NS/'  709 

tnie  of  any  less  explicit  statement  which  is  held  on  its  fair  oonstrnc- 
tion  to  amount  to  this  and  no  more.    Such  was  the  resnlt  of  the 
case  where  Lord  St  Leonards  put  the  question  just  cited  (a).    And 
in  that  case  the  true  doctrine  was  again  distinctly  affirmed  by  Lord 
Cranworth  (b), 

**  By  what  words  are  you  to  define  whether  a  party  has  entered 
into  an  engagement  as  distinct  from  a  contract,  but  which  becomes  a 
contract  by  another  person  acting  upon  it  t  Where  a  man  engages 
to  do  a  particular  thing,  he  must  do  it ;  that  is  a  contract ;  but 
where  there  are  no  direct  words  of  contract,  the  question  must  be, 
what  has  he  done  ?  He  has  made  a  contract,  or  he  has  not ;  in  the 
former  case  he  must  fulfil  his  contract ;  in  the  latter  there  is  nothing 
that  he  is  bound  to  fulfil."  Again  :  ''There  is  no  middle  term,  no 
terUwn  qwid  between  a  representation  so  made  as  to  be  effective  for 
such  a  purpose,  and  being  effective  for  it,  and  a  contract :  they  are 
identical." 

He  proceeded  to  comment  on  HammmUy  v.  De  Beil^  and  to 
express  a  decided  opinion  that  the  language  there  used  by  Lord 
Cottenham  was  not  meant  to  support,  and  did  not  support,  the  notion 
that  words  or  conduct  not  amoimting  to  a  true  contract  may  create 
un  equitable  obligation  which  has  the  same  effect  ''The  only 
distinction  I  imderstand  is  this,  that  some  words  which  would  not 
amount  to  a  contract  in  one  transaction  may  possibly  be  held  to  do 
so  in  another."  In  the  case  of  Jordan  v.  Money  (c\  which  came 
before  the  House  of  Lords  some  months  later,  it  was  held,  first,  that 
the  statement  there  relied  on  as  binding  could  not  work  an  estoppel, 
because  it  was  a  statement  not  of  fact  but  of  intention  ;  secondly, 
that  on  the  evidence  it  did  not  amount  to  a  promise,  and  therefore 
could  not  be  binding  as  a  contract  Lord  St  Leonards  dissented 
both  on  the  evidence  and  on  the  law.  His  opinion  seems  on  the 
whole  to  come  to  this  :  "  My  inference  from  all  the  facts  is  that  this 
statement  was  a  promise  :  but  if  not,  I  say  it  is  available  by  way  of 
estoppel,  for  I  deny  the  existence  of  any  rule  that  equitable  estoppel 
can  be  by  statement  of  &ct  only  and  not  of  intention."  On  this 
point,  however,  the  opinion  of  the  majority  (Lord  Cranworth  and 
Lord  Brougham)  is  conclusive  (<Q.  Nor  is  the  contention  of  Lord  St . 
Leonards  altogether  well  paired  with  what  he  had  himself  said  not 
long  before  in  MaunaeU  v.  Hedffe$  WhUe  (e)  :-^ 


(a)   Mamadl   y.    ffedga    WkUe  is  given  by  Stephen  J.  5  Ex.  D.  at 

(1854)  4  H.  L.  O.  1089.  p.  801. 
(6)  At  pp.  1055-6.  {d)  Aod  see  Mr.  Jostioe  Stephen's 

(c)  (1854)  5  H.  L.  0.  185,  28  L.  critlolsin,  5  Ex.  D.  at  p.  80S. 

J.  Ch.  865.   A  pretty  faU  sammary  (e)  (1854)  4  H.  L.  0.  at  p.  1059. 


710  APPENDIX. 

*^I  do  not  dispute  the  general  principle  that  what  ie  called  a 
lepieeentation,  idiich  ia  made  as  an  inducement  for  another  to  act 
upon  it,  and  is  followed  by  his  acting  upon  it,  will,  especially  in 
such  a  case  as  marriage,  be  deemed  to  be  a  contract" 
Cmm  in  In  a  much  earlier  case  of  the  same  class  before  Lord  Eldon  (a)  the 
^^J^J  language  used  is  indecisive:  "arrangement"  and  "engagement" 
Opfadon  '  6eem  preferred  to  "  agreement"  In  two  later  ones  decided  bj  Sir 
of  Stnart  John  Stuart  (6),  an  informal  statement  or  promise  as  to  a  settlement 
•  on  a  daughter's  marriage,  and  an  informal  promise  to  leave  property 
bj  will  to  an  attendant  as  recompense  for  services,  were  held  to  be 
enforceable.  The  Vice-chancellor  certainly  seems  to  have  adopted 
the  opinion  that  a  '*  representation"  short  of  contract  had  somehow 
a  binding  fotce.  He  appears  further  to  have  held  that,  inasmuch  as 
these  were  not  properly  cases  of  contract,  it  was  immaterial  to 
consider  whether  the  Statute  of  Frauds  apf^ed  to  them,  and  tahave 
thought  that  the  opinion  of  Lord  CranworUi  in  Jordm  v.  Money  was 
inconsistent  with  the  decision  in  Hcnwrnenley  v.  De  Beil  (e).  Bat 
these  opinions  are  inconsistent  with  the  true  meaning  and  effect  of 
the  cases  in  the  House  of  Lords  which  have  already  been  cited  :  and 
one  of  them  is  now  expressly  overruled  (d).  It  must  be  admitted 
that  later  judicial  expressions  are  to  be  found  which  in  some  degree 
countenance  them  ;  but  these  have  been,  without  exception, 
unnecessary  for  the  decision  of  the  cases  in  which  they  occurred 
Nor  could  they  in  any  event  outweigh  declarations  of  the  law  made 
(as  I  venture  to  think)  with  sufficient  clearness  in  a  Court  which  not 
only  gives  the  law  to  all  others  in  England,  but  disclaims  any  power 
of   reconsidering   its   own  decisions.    It  is  remarkable  that  Hit 


{a)  Ludeny.Andeif  (1799)  iVm,  made,  a  lepresentatioii  of  fonigB 

601.  law,  Mid  thdrsfore  Moivalsnt  to  a 

(b)  ProU  y.  Soady  (1859)  2  Giff.  representation  of  fact  And  thm 
1 ;  £o^  y.  Maw  (1862)  8  Qiff.  the  decsiaion  may  have  been  right 
692  (1862).  Id  Lpfu$  v.  Mtm  there  oa  the  groand  of  ertoppeL  Bat  it 
is  a  snggestioii  that  the  '^repre-  is  fer  from  ea^r  to  diaoow  on  what 
sentation"  affects  the  upedfic  pro-  groand  it  really  proceeded.  The 
perty  as  an  eqmtable  charge.  case  went  to  the  Appeal  Court,  biit 

(c)  lqffu$  y.  ifaio  (1862)  8  Giff.  was  compromieed  i  see  1  Ch.  14& 
at  pp.  603-4.  In  ProU  v.  Soady,  a  The  still  later  ease  of  Skidmon  v. 
strange  and  entangled  case,  no  point  Bradford  (1869)  8  Eq.  134,  decided 
was  made  on  the  Statute  of  Frauds.  by  the  same  judge  in  1869,  may  be 
But  there  it  appears  to  have  been  and  has  been  rmrded  as  a  caae  of 
eRtablished  as  a  fact  that  the  wife's  true  oontraot:  Fiy  on  Specific  Per- 
father  represented,  to  the  .intended  formanoe,  §  299,  p.  18S,  2nd  ed. 
husband,  an  Engliahman,  that  a  {d)Lqfutv,Maiw  (18(52)  iB6kt»ilj 
certain  trust  disposition  of  Scotch  disapproved  by  Lord  Selbome  and 
land  hi  the  proper  Soottish  form  Lord  O'Hagan  in  Maddimm  v.  Ai- 
waa  irrevocabla  This  was,  as  re-  derton  (1888)  8  App.  Oa.atpp.  47S, 
gard«  the  person  to  whom  it  was  483. 


of 


"representations/  711 

authoritatiye  explanation  of  Hammersley  v.  De  Beil  (a)  given  in 
MawueU  v.  Hedges  White  (6)  has  in  almost  all  the  recent  cases  been 
left  unnoticed. 

Gavo'dals  v.  Eastwood  (1872)  (c)  was  a  case  of  precisely  the  same 
type  as  Hammersley  v.  De  Beil.  Bacon  V.-C.  decided  it  on  the 
ground  that  the  transaction  amounted  to  a  contract,  and  so  it  was 
expressed  in  the  decree.  But  he  also  thought  that  there  existed,  and 
was  applicable  to  the  case  in  hand,  "this  larger  principle,  that  where 
a  man  makes  a  representation  to  another,  in  consequence  of  which 
that  other  person  contracts  engagements,  or  alters  his  position,  or  is 
induced  to  do  any  other  act  which  either  is  permitted  by  or  sanctioned 
by  the  person  making  the  representation,  the  latter  cannot  withdraw 
from  the  representation,  but  is  bound  by  it  conclusively.*'  Coles  v. 
PUkington  (d)  (1874,  before  Melius  Y.-C.)  was  a  case  of  a  verbal 
agreement  to  allow  the  occupation  of  a  house.  This  had  been  acted 
on  by  the  plaintifl^  and  thus  was  enforceable  notwithstanding  the 
Statute  of  Frauds  under  the  rule  of  equity  as  to  part  performance  : 
but  a  difficulty  was  raised  about  want  of  consideration,  and  the 
supposed  doctrine  of  "  representations "  was  invoked,  in  a  manner 
previously  unheard  of,  to  supply  a  kind  of  moral  consideration.  But 
the  plaintiff  had  agreed  to  pay  the  ground  rent  and  rates  and  taxes 
during  the  occupation;  which  surely  was  consideration  enough. 
In  Be  Badcock  (1880)  (e)  the  same  judge  treated  the  cases  on  marriage 
settlements  as  depending  on  actual  contract  (see  at  p.  366).  Then 
in  Dashwood  v.  Jermyn  (f)  (1879),  which  was  another  marriage 
case,  Bacon  Y.-C.  held  that  the  connection  between  the  statement 
relied  on  as  a  promise  and  the  marriage  alleged  to  have  taken  place 
on  the  faith  of  it  was  not  sufficiently  made  out  He  stated  the 
general  rule  thus  :^-"  If  a  man  makes  a  representation  on  the  faith 
of  which  another  man  alters  his  position,  enters  into  a  deed,  incurs 
an  obligation,  the  man  making  it  is  bound  to  perform  that  represen- 
tation, no  matter  what  it  is,  whether  it  is  for  present  payment  or  for 
the  continuance  of  the  payment  of  an  annuity,  or  to  make  a  pro- 
vision by  will  That  in  the  eye  of  a  Court  of  Equity  is  a  contract, 
an  engagement  which  the  man  making  it  is  bound  to  perform. '^ 
This  appears  to  qualify  to  some  extent  the  dicta  of  the  same  judge  in 
Ooperdale  v.  Eastufood.  Here  we  read  no  longer  of  two  distinct  kinds 
of  obligation,  by  contract  and  by  "  representation,"  but  of  one  kind 
of  obligation,  and  that  a  contractual  one,  arising  from  the  representa- 
tions made  by  one  pasrty  with  the  intent  that  they  should  be  acted 

(«)  (1845)  12  a.  &  F.  45.  178,  44  L.  J.  Oh.  881. 

(6)  (1864)  4  H.  L.  G.  1089.  (e)  17  Oh.  D.  861. 

{e)  15  Bq.  121,  42  L.  J.  Oh.  118.  (/)  (1879)  12  Oh.  D.  776. 
(d)  (1874)  19  Eq.  174,  see  at  pu 


712  AFPKEa>IZ. 

opoDy  and  the  coodiiet  of  tlie  otiier  wIia  does  act  upon  them. 
FiiieUy  we  baye  Aldmm  v.  Maddimm  (1880)  (aX  whae  thoe  wat 
an  agnement  to  leaTe  property  by  will  as  a  lewafd  for  aervioM. 
Here  Stephen  J.  set  forth^aa  we  haye  seen  in  the  text»  tiie  view  tliat 
it  muflt  be  a  contract  or  nothing ;  and  he  held  that  a  oontraeft  wat 
proved  by  the  facts  of  the  case.  The  dedsion  was  lerened  by  the 
Coort  of  Appeal  on  the  groond  that^  the  case  being  within  the 
Statate  of  Frauds,  there  was  no  soffident  part  performaDce  ;  and 
the  same  view  was  taken  by  the  House  of  Lords.  No  encourage- 
ment whatever,  to  say  the  least,  was  given  to  the  doctrine  of 
^  representation." 

Cmcs  of  ^  So  fsr  the  authorities  as  to  direct  enforcement  of  ^  rcprceenU- 
tions."  We  do  not  count  among  them  PiggoU  v.  SinMon  {b\ 
decided  by  the  Coort  of  Appeal  in  1859,  in  which  Lord  Oampbell 
incidentally  took  a   minimiring  view  of  the  eflfect  of  Jorden  v. 

contnictl  ^^^"^  (^J)"  That  case,  so  far  as  it  did  not  proceed  on  express 
covenant,  was  one  of  equitable  estoppeL  MiU»  v.  Fox  (1887)  (d) 
was  also  decided  expressly  on  the  ground  of  estoppel  by  represen- 
tation of  fact  The  representation  was  not  of  intention  at  all, 
but  that  a  certain  state  of  facts  with  its  legal  consequences 
existed  and  would  continue  to  exist.  But  another  claos  of 
decisions  now  calls  for  mention.  These  lay  down,  or  seem  to  lay 
down,  a  rule  to  the  effect  that  where  a  contract  has  been  entered 
into  upon  the  representations  of  one  party  that  he  will  do  some- 
thing material  to  the  other  party's  interest  under  it,  and  he  do*-s 
not  make  good  that  representation,  he  cannot  enforce  specific  per- 
formance of  the  contract :  and  in  one  case  the  contract  has  even  been 
set  aside  at  the  suit  of  the  party  misled  It  is  difficult  in  these  casee 
to  see  why  the  so-called  representation  does  not  amount  to  a 
collateral  agreement,  or  even  to  a  term  in  the  principal  contract 
itsel£  In  the  first  set  of  cases,  where  specific  performance  was 
refused,  a  vendor  or  lessor  had  represented  that  he  would  do  some- 
thing for  the  purchaser's  or  leasee's  benefit,  either  in  the  way  of 
repair  or  improvement  on  the  property  itself  (e),  or  by  executing 
works  on  adjoining  property  as  part  of  a  geneml  plan  (/).  In  the«e 
casee  it  has  been  thought  immaterial,  since  the  remedy  of  specific 

(a)  5  Ex.  D.  298,  7  Q.  B.  Div.  (1878)  L.  B.  6  H.  L.  at  p.  860,  43 

174,  8  Appi  Ca.  467,  60  U  J.  Q.  B.  L.  J.  Ch.  269. 

466.  (d)  87  Ch.  D.  168,  67  L.  J.  Ch. 

(6)  1  D.  F.  J.  88,  29  L.  J.  Oh.  1.  66. 

(c)  At  p.  61.    Bat  Lord  Selbome  (e)  Lamare  ▼  Dixtm  (1878)  L.  R. 

■eemi  to  adopt  the  opinion  of  Lord  6  H.  L.  414,  48  L.  J.  Gi.  208. 

Granworth    to  its  fall   extent  in  if)  Beaumont  v.  Duhet  (1822)  Jae. 

Oitiaem*  Bamk  of  LouUiana  ▼.  Firti  422 ;  Myen  y.  Waimm  (1861)  1  Sim. 

Nmtional  BavOt    qf   New    OHnm  N.  &  628. 


''BEPRESEirrATIONS."  713 

perfamumce  ib  "  not  matter  of  abeolate  right,"  to  consider  whether 
the  collateral  **  independent  engagement "  could  or  conld  not  have 
been  aned  on  as  a  contract  or  warranty  (a).  In  the  one  case  which 
goes  further  the  contract  was  a  partial  re-insnrance  effected  by  one 
insurance  society  (A.)  with  another  (B.)  for  one-third  of  the  original 
risky  the  secretary  of  society  A.  stating,  when  he  proposed  the 
re-insurance,  that  one-third  was  to  be  re-insured  in  like  manner 
with  another  office  C,  and  the  remaining  one^third  retained  by  A., 
the  first  insurers.  This  last  one-third  was  afterwards  re-insured 
by  A.  with  0.  without  communication  with  B.  It  was  held  that 
society  B.  was  entitled  to  set  aside  the  policy  of  re-insurance  given 
by  it  on  the  Mth  that  society  A.  would  retain  part  of  the  liability. 
And  it  was  said  to  make  no  difference  that  such  an  intention  was 
really  entertained  at  the  time  :  for  the  change  of  intention  ought  to 
have  been  communicated.  *'  If  a  person  makes  a  representation  by 
which  he  induces  another  to  take  a  particular  course,  and  the  cir- 
cumstances are  afterwards  altered  to  the  knowledge  of  the  party 
making  the  representation,  but  not  to  the  knowledge  of  the  party  to 
whom  the  representation  is  made,  and  are  so  altered  that  the 
alteration  of  the  circumstances  may  affect  the  course  of  conduct 
which  may  be  pursued  by  the  party  to  whom  the  representation  is 
made,  it  is  the  imperative  duty  of  the  party  who  has  made  the 
representation  to  communicate  to  the  party  to  whom  the  repre- 
sentation has  been  made  the  alteration  of  those  circumstances  "  (&). 

This  case,  decided  by  the  Lords  Justices  in  1864,  is  that  which 
gives  rise  to  most  difficulty.  No  reason  appears  why  the  retaining 
of  the  specified  part  of  the  risk  by  the  le-insuring  office  should  not 
have  been  deemed  a  term  or  condition  of  the  contract  Indeed  it 
seems  to  have  been  an  integral  part  of  the  proposal,  and  evidence 
was  offered  that  by  the  constant  usage  of  Insurance  offices  it  was  so 
understood.  The  judgments,  however,  certainly  do  not  proceed  on 
that  footing.  Possibly  it  might  be  said  that  the  representation  in 
this  case,  being  of  something  to  be  done  not  in  a  more  or  less  distant 
future,  but  at  the  same  time  with  and  as  part  ef  the  proposed  trans- 
action, was  in  the  nature  of  a  representation  of  fact.  It  might  be 
put  thus:  <*We  are  re-insuring  one-third  with  0.;  one-third  of  the 

(a)  Lord  Orsnworth,  1  Sim.  N.  S.  at    his    opjnions    in    MaunaeU    v. 

629  (this  WM  in  1851,  and,  coming  Bedge$  White  and  Jcrdrnv, Mtmey)', 

to  the  Vioe-ChanoeUor^s  Conrt  from  Lord  Oaims,  L.  R.  6  H.  L.  428. 
the  Exchequer,  he  probably^  took  (5)  TraiU  ▼.  Baring  (1864)  4  D. 

dootrines  of  equity  oorrent  in  the  J.  S.  818,  829,  pc^r  Tamer,  L.  J. 

books  as  he  found  them :  it  may  be  appr  ived  by  Fry  L.  J.  SwUUh  Ft- 

a  qnestion  if  he  would  have  ad-  tixlcvm  Oo.  (1888)  28  Oh.  Div.  at 

hered  to  this  later,  when  we  look  p.  486. 


7l4  APPENDIX. 

risk  we  keep;  will  yon,  B.,  take  the  other  third  t "  And  thus  pat, it 
might  be  regarded  as  an  alternative  case  of  contract  or  estoppel,  in 
which  (for  some  reason  not  evident  from  the  report)  the  Court  pre- 
ferred the  leas  simple  course. 

In  the  other  cases  it  is  by  no  means  clear  that  the  existence  of  a 
tnie  collateral  agreement  or  warranty  is  excluded ;  in  at  least  one 
similar  case  (a)  the  question  is  treated  as  one  of  agreement  entirely. 
In  the  latest  ot  the  kind,  Lamare  v.  Dixon  (6^  which  came  before  the 
House  of  Lords  in  1873,  the  principal  agreement  was  for  a  lease  of 
cellars  to  be  used  as  wine  vaults.  During  the  negotiations  the  lesaor 
assured  the  lessee  either  that  he  had  already  taken,  or  that  he  would 
forthwith  take,  sufficient  measures  to  keep  the  cellars  dry  and  fit  for 
a  wine  merchant's  use.  It  seems  most  natural  to  r^ard  this  as  a 
warranty:  still,  so  far  as  it  related  to  anything  already  done,  it 
might  be  regarded  as  a  pi^sitive  sta'iement  of  fact  ''  You  will  fiad 
the  cellars  dry,'*  or  any  speech  to  that  effect,  might  mean  either:  *^  I 
undertake  to  make  the  cellars  dry/'  or,  '<  That  has  been  d<me  which 
is  known  by  competent  experience  to  be  sufficient  to  ensure  dryness.' 
The  line  between  warranty  and  estoppel  is  here  a  fine  one^aad 
perhaps  not  worth  drawing,  but  still  it  is  possible  to  draw  it :  aod 
when  Lord  Cairns  said  **  I  quite  agree  that  this  representation  is  not 
a  gnarantie,''  he  may  have  meant  that  he  preferred  to  regard  it  as  a 
statement  of  fact  operative  by  way  of  estoppel.  There  certainly  does 
run  through  these  cases,  however,  the  idea  that  specific  performance 
is  so  £ar  a  discretionary  remedy  that  it  may  be  refused  to  a  party 
seeking  it  on  grounds  which  do  not  affect  his  legal  rights  under  the 
contract  But  it  seems  a  tenable  position  that  equity  judges  have 
taken  a  needlessly  narrow  view  of  what  is  a  binding  agreement  on 
the  principles  of  the  common  law  (c).  In  fact  agreements  collatenl 
to  leases,  and  not  in  writing,  have  of  late  years  been  enforced  without 
doubt  In  the  last  case,  which  was  in  1875  (d),  the  lessor's  under- 
taking was  to  repair  and  furnish  the  house  demised.  In  all  of  them 
the  facts  appear  undistinguishable  in  their  character  from  those  which 

(a)  Peacock  y.  Penton  (1848)  11  The  others  are  Morgan  v.  Ori^k 

Beav.  855.  (1871)  L  R.  6  Ex.  70,  40  L.  J.  El 

(6)  L.  R.  6  H.  L  414,  48  L.  J.  46  ;  Brtkine  v.  Adeane  (1873)  8  Oh. 

Oh.  208.  756,  42  L.  J.  Oh.  835.    The  ground 

(e)  It  would  be  oarioos  to  know  taken  as  to  the  Statute  of  Fraodf 

in  what  proportion  of  cases  under  kb  that  the  collateral  agreement  k 

the  old  practice  a  party  left  bv  the  not  a  *'  contract  or  sale  of  landi," 

Court  of  Chancery,  as  the  phrase  &c. :  the  effect  of  the  Statute  being 

was,  to  make  what  he  could  of  it  at  as  it  were  exhausted  by  the  prin- 

law,  derived  substantial  or  any  profit  oipal  contract ;    with   which    the 

from  that  liberty.  collateral  one  must  oi   oooxse  be 

{d)  AngtU  v.  Duke  (1875)  L;  R.  connstent 
10  Q.  B.  174,  44  L.  J.  Q.  B.78. 


"REPRBSBNTATIONS."  715 

have  been  treated  in  the  Court  of  Chancery  as  establishing  a  right  to 
relief  on  the  ground  of  *'  representation.'' 

There  remaina  a  class  of  cases  in  equity  in  which  it  has  been  held  ^f*^ 
that  a  statement  made  to  a  person  intended  to  act  upon  it  by  one  ^^^  ^, 
who  knows  it  to  be  false,  or  is  recklessly  ignorant  whether  it  is  true  pMsenta- 
or  false,  may  create  in  the  person  who  acts  on  it  to  his  injury  a  **<»*  isf^^^ 
substantive  right  to  compensation.    Here  the  statement  is  a  wrong,  JI^B^^bsl^. 
and  the  remedy  is  precisely  analogous  to,  and  before  the  Judicature  tive  right 
Acts   was  concurrent  with,  that  which  was  given  at  law  by  the  ^^  actioiL 
action  of  deceit,  or  action  on  the  case  in  the  nature  of  an  action 
of  deceit  (a).    It  will  be  sufficient  to  give  references  to  a  few  of 
the  decisionB  (&). 

A  rule  established  by  some  of  these,  of  which  Slim  v.  Oroticher  (b) 
is  an  instance,  is  that  a  man  in  whose  peculiar  knowledge  a  fact  must 
have  been  cannot  be  heard  to  say  that  when  he  afterwunls  positively 
asserted  the  contrary  of  the  fact  he  had  forgotten  the  true  state  of 
things.  Whether  courts  of  common  law  would  have  refused  to  admit 
this  rule,  or  whether,  even  if  not  affirming  it  as  a  rule  of  law^  they 
would  not  have  acted  on  it  in  practice  as  a  rule  of  evidence,  is  now  a 
question  of  no  importance  (c). 

It  is  worth  remark  that  not  unfrequently  a  difficulty  occurs  in 
drawing  the  line  between  contract  or  warranty  and  fraud,  as  we 
have  already  seen  that  there  does  between  contract  and  estoppel. 
**  Most  of  the  cases  .  .  .  when  looked  at,  if  they  do  not  absolutely 
amount  to  contract,  come  imcommonly  near  it  ...  If  you 
choose  to  say,  and  say  without  inquiry, '  I  warrant  that,'  that  is  a 
contract  If  you  say  *I  know  it,'  and  if  you  say  that  in  order  to  save 
the  trouble  of  inquiring,  that  is  a  false  representation — ^you  are  saying 
what  is  fedse  to  induce  them  to  act  upon  if'  (d).  Thus  cases  are 
possible,  as  has  been  mentioned  in  the  text,  in  which  the  legal  effect 

(a)  "  It  is  predaely  analogous  to  estoppel,  see  per  Lord  Selbome,  5 

the  oommon  law  action  for  deceit  **;  App.  Oa.  at  p.  935);  Peek  v.  Ourney 

Lord  Ohehnsford,  L.  R.  6  H.  L.  at  (1878)  L.  R.  6  H.  L.  877,  48  L.  J. 

p.   890.     "It  ia  in  the  nature  of  Ch.  19. 

an  action  or  proceeding  ex  ddicto  " :  (e)  Lord  Chelmsford  seems  to  have 

Lord  Cairns,  Und.  at  p.  402.  thought  the  equitable  remedy  was 

(6)  Evan$  v.  BickruU  (1801 )  6  Yes.  more  eztensiye  than  the  legal  ( L.  R. 

174  (wliere.  Lord  Eldon  comments  6  H.  L.  390), but  in  the  case  of  iSf^my. 

at  large  on  the  danger  of  similar  Oraucher  Lord  Campbell  recognized 

actions  in  courts  of  law,  the  defend-  no  distinction.      Qu,  whether  this 

ant  being  then    unable    in    those  point  was  duly  attended  to  in  Z>erry 

courts  to  give  evidence) ;  Slim  v.  v.  Peek  (H.  L  July  1,  1889). 
Cfnmeher  (1860)  1  D.  F.  J.  518,  29  {d)  Lord  Blackburn.  BraumUe  v. 

L.  J.  Ch.  278  (where,  as  to  the  con-  Campbell  (1880)  (So.)  5  App.  Ca.  at 

current  jurisdiction,  see  per  Lord  p.  952:  the  whole  passage  should 

Campbell  at  p.  628 :  bat  the  case  be  studied, 
might  also  be  considered  as  one  of 


716 


APPENDIX. 


of  the  facte  may  equally  be  conndered  as  wanantyy  estoppel,  or  dntj 
ex  delicto.  And  since  equity  judges,  dealing  with  fiBU5tB  and  law 
together,  were  not  bound  to  distinguiBh  with  piedrion,  and  often  did 
not  distinguish,  on  which  of  two  or  more  possible  grounds  they  rested 
their  decisions,  it  is  not  surprising  that  a  good  deal  of  ambiguity  has 
gathered  round  the  subjects  discussed  in  this  note.  It  appears,  how- 
eyer,  that  the  doctrine  of  <*  making  representations  good"  has  not  at 
any  time  taken  root  in  America. 


before 
Revolu- 
tion. 


NoTS  L.  (p.  601). 

Foreign  laws  on  undue  influence  and  allied  iubjeeis, 

Frenoh  French  jurisprudence  has  sometimes  been  cited  in  our  OouitB 

wl!!^^^  as  affording  useful  analogies  in  cases  where  it  was  sought  to  set 
aside  gifts  on  the  ground  of  undue  influence,  especially  spiritud 
influence.  ((Euvres  d'Aguesseau,  1.  284,  5.  614,  ed,  1819 ;  Lyon  t. 
Home^  6  £q.  671.)  Without  denying  the  instruetiyenees  of  the 
comparison,  it  may  be  pointed  out  that  these  French  cases  proceeded 
on  rather  different  grounds.  Charitable  bequests  in  general  were 
unfavourably  looked  on  as  being  **  inofficious "  towards  the  natand 
successors.  This  principle  is  strongly  brought  out  by  D'AguesBean 
iu  the  case  of  the  BeUgieutes  du  Sa/inl-Saeremenl  ((Euvree,  vol  1. 
p.  295)  :— 

**  Ces  dispositions  universelles,  contraires  auz  droits  du  sang  et  de 
la  nature,  qui  tendent  k  frustrer  les  h^ritiers  d'une  succession  legitime, 
sont  en  elles-mdmes  peu  favorables;  non  que  ce  seul  moyen  soit 
peut4tre  suffisant  pour  an^antir  un  tel  legs :  mais  lorsqull  est 
soutenu  par  les  circonstances  du  iait  .  .  .  lorsque  la  donation 
est  immense,  qu'elle  est  excessiye,  qu'elle  renferme  toute  la  suoces- 
sion  .  .  .  dans  toutes  ces  circonstances  la  justice  s'est  toujouTB 
iley6e  contre  ces  actes  odieuz ;  elle  a  pris  les  h6ritiers  sous  sa  pro- 
tection ;  elle  a  cassd  ces  donations  inofficieusea,  excessivee  et  contraires 
k  Futility  publique." 

In  modem  French  practice  a  will  may  be  set  aside  for  capUOion  or 
euffgedion.  But,  as  with  us,  the  burden  of  proof  is  on  the  objector 
to  show  that  the  testator's  will  was  not  free,  and  something 
amounting  to  fraudulent  practice  must  be  proved.  **  La  suggestion 
ne  saurait  dtre  86par6e,''  says  Troplong,  ^'  d'un  dol  subversif  de  U 
Ubre  volont^  du  testateur  ...  On  a  toujouxs  M  tr&s-diffidle 
en  France  k  admettre  la  preuve  de  la  suggestion  et  de  la  captation.** 
(Droit  civU  ezpliqu6,  Des  donations  entre-vifs  et  dee  testoments, 
art.  492.) 


Modern 
law  of 
eapUUion. 


TTKBERYALUE  IN  FOREIGN  LAW.  717 

On  the  other  hand  the  Code  Civil  (art  907,  909-911)  containa 
expren  and  aeyere  restrictionB  on  dispoaitionB  hy  wards  in  favour  of 
their  gnardianB,  and  by  pexaons  in  their  last  illneas  in  favour  of  their 
medioal  or  spiritual  adviseiB.  These  apply  alike  to  wilk  and  to 
ffStB  inter  vivot. 

The  Continental  enactments  as  to  the  effect  of  inadequacy  of  con-  Continm- 
sideration  on  a  sale  are  derived  from  the  rule  of  Roman  law,,  namely  ^^^^ 
that  a  sale  for  less  than  half  the  true  value  may  be  set  aside  in  favour  ^^  under- 
of  the  seller  unless  the  purchaser  elects  to  make  up  the  deficiency  in  value, 
the  purchase-money  :  Cod.  4.  44.  de  resc.  vend.  2.     "  Rem  maioris  Otvil  law. 
pretii  si  tu  vel  pater  tuus  minorispretii  distraxerit,humanum  est  at 
vel  pretium  te  restituente  emptoribus  fandum  venditum  recipias, 
vel,  si  emptor  elegerit,  quod  deest  iusto  pretio  recipiaa.  Minus  autem 
pretium  esse  videtur,  si  nee  dimidia  pars  veri  pretii  soluta  sit"    A 
less  undervalue  was  not  of  itself  a  sufficient  ground  :  C.  eod.  tit  8, 
16.    The  old  French  law  adhered  to  this  rule ;  Pothier,  ObL  §  33.  S^  , 
"  On  estime  communtoent  inorme  la  l^on  qui  excdde  la  moiti6  du  ^^ 
juste  prixe/'  id.  Contr.  de  Yente,  §  330,  sqq.    Pothier  however  goes 
on  to  say  that  this  does  not  apply  to  sales  of  reversionary  interests 
(contrat  de  vente  de  droits  successifiB)  nor  to  other  speculative  con- 
tracts (contrats  al^atoires),  on  account  of  the  difficulty  of  fixing  the 
true  value ;  nor  to  sales  of  moveable  property :  cp.  id.  de  Yente, 
§  341.    Thus  the  rule  and  the  exception,  as  touching  immoveable 
property,  were  just  the  reverse  of  our  own  law  as  it  stood  before 
1868.    The  modem  French  code  fixes  the  undervalue  for  which  a  Cod«CiviL 
sale  (of  immoveable  property  only)  may  be  set  aside  at  7-12th8.    It 
adds  this  important    limitation,    that  a   general  presumption  of 
undervalue  must  be  raised  by  the  circumstances  alleged  on  behalf 
of  the  seller  before  evidence  of  the  actual  existence  and  amount  of 
the  inadequacy  can  be  admitted.    There  are  also  certain  precautions 
as  to  the  kind  of  proof  to  be  allowed.     If  undervalue  to  the  pre- 
scribed extent  is  established  the  buyer  has  the  option  of  submitting 
to  a  rescission  of  the  sale  or  paying  up  the  difference.    (C!ode  Civ. 
1674-1686.)    Nothing  is  said  about  sales  of  reversionary  interests, 
but  it  has  been  decided  in  accordance  with  the  older  law  that  the 
section  does  not  apply  to  them :  Codes  Annot^  1.  798.    **  Ne  sont 
pes  sigettes  &  la  resdsion  pour  IMon  les  ventes  suivantes    .... 
[inUr  aUa]    La  vente  de  droits  sncceasifig,  encore  qu'elle  soit  faite  k 
un  6tianger."    And  the  provision  applies  in  fiivour  of  the  seller  only 
(art  1683).    Any  waiver  of  the  seller's  possible  rights  on  this  score, 
however  express,  is  inoperative  (1674).    There  are  exceptional  provi- 
sions for  the  case  of  partage  fait  par  I'ascendanf'  (1079)  and  in 
favour  of  minors  (1306,  sqq.X 


718 


▲msKBiz. 


Code. 

PrmImi 
Oode. 


Ausferiaii 
Code. 


Obtenrft- 

tiOBBMld 


The  proTisions  of  the  Italian  Code  aie  in  snbetance  the  same  m 
thoee  of  the  Code  Napol6on  (Codice  Civile,  1529-1637). 

The  provieione  of  the  Prvs^ian  Code — ^Allgem.  Landrecht,  pattL 
Tit  II.  §§  58,  59  («Von  der  Verletznng  iiber  die  Hfilfte''}-aie 
substantially  as  follows. 

The  objection  that  the  purchase-money  is  disproportionate  to 
the  value  of  the  thing  sold  does  not  of  itself  suffice  to  avoid  the 
contiuct 

'^But  if  the  disproportion  is  so  great  that  the  purchase-money 
exceeds  double  the  value  of  the  thing  sold,  then  this  raises  a  legtf 
presumption  (rechtliche  Yermuthung),  of  which  the  huyer  may  take 
advantage,  of  an  error  Buch  as  to  avoid  the  contract" 

The  huyer  may  by  his  contract  waive  the  benefit  of  these  proviEdoDB 
(§  65)  ;  and  the  seller  cannot  in  any  case  dispute  the  contract  on  the 
ground  of  undervalue. 

The  reason  of  this  appears  to  be  that  the  judicial  presumption  is 
not  of  fraud,  but  of  error,  and  that  the  vendor  cannot  be  prefumed 
to  be  in  error  as  to  the  value  of  his  own  property. 

The  Austrian  Code  (§§  934, 935^  following  the  extended  interpreta- 
tion of  the  Roman  rule  sanctioned  by  the  prevailing  modem  opinion 
in  Germany,  see  Yangerow,  Pand.  §  611  (3.326X  enacts  that  inadequacy 
of  consideration  to  the  extent  of  more  than  one-half  in  any  hilatenl 
contract  gives  the  party  injured  a  right  to  call  upon  the  other  to 
make  up  the  deficiency  or  rescind  the  contract  at  that  other's  option. 
This  right  may  be  waived  beforehand,  and  the  rule  does  not  apply  to 
judicial  sales  by  auction. 

Thus  the  French  Code  follows  the  rule  of  the  Roman  law,  giving 
the  remedy  to  the  seller  only,  but  adds  a  qualifying  rule  of  evidence 
which  limits  the  remedy  to  cases  where  there  is  some  ground  of 
suspicion  besides  the  undervalue  itself.  The  Prussian  Code  revenes 
the  civil  law  by  giving  the  remedy  only  to  the  buyer,  and  the  Austrian 
Code  extends  it  to  both  parties,  and  to  every  kind  of  contract  for 
valuable  consideration.  These  discrepancies  seem  to  favour  the  con- 
clusion that  the  course  our  own  law  has  always  taken  with  respect  to 
property  in  possession,  and  now  takes  (since  the  Act  31  Yict  c  4) 
with  respect  to  property  in  reversion,  is  on  the  whole  the  wisest  It 
is  worth  while  to  observe  that  the  Civil  Code  of  Lower  Canada  has 
altered  the  law  of  that  province  in  the  same  direction,  and  deeJaies 
without  exception  that  persons  of  full  age  ^'  are  not  entitled  to  raUef 
from  their  contracts  for  cause  of  lesion  only"  (§  101  2)l  On  the  other 
hand  the  question  was  considered  in  framing  the  Italian  Code,  and 
the  rule  of  the  civil  law  was  deliberately  adhered  to.  (Masioni 
Diritto  Civile  Italiano,  3.357.) 


OBSEBYATIONS  AND  STTMHABY.  719 

The  differf-nt  enactments  we  have  mentioned  may  be  thns  re- 
capitulated : — 

Bxtentof 
Nature  of  Property.  InadaqoMy 

of  oonmdwr 


To  wbioh 

purty. 

In  nvenion.    (Before  1868) 

Any. 

SeUer. 

(Since  1868) 

None. 

rin  poBseesion.       7-12th8 

Seller. 

(coupled  with 

thereon   (fol- 

circoniBtances 

lowed  by 
Italian  (3ode). 

of  presump- 
tion). 

V,In  revennon.         None. 

Pnwaian  Code.                No  distinction.                Over  1-2. 

Anstrian  Code.                No  distinotbn.                Over  1-2. 

Either  party 

in  any  con- 

tract for 

yalnaUe 

INDEX. 


ACCEPTANCE  : 

of  propooal,  general  but  not  universal  form  of  agreement,  5,  6. 

express  or  tacit,  10. 

by  performing  conditions  of  proposal,  13. 

when  in  time,  25. 

double,  of  same  proposal,  80. 

most  be  oommnnioated,  82. 

when  the  contract  is  made  by  correspondence  :  difficulties  of  the 

subject,  88,  84. 
theories  in  English  authorities,  34. 
by  post,  effectual,  but  never  delivered,  37. 
will  not  relate  back  to  date  of  proposal,  88. 
mast  be  unqualified,  89. 
examples  of  insufficient  acceptance,  40. 

of  sufficient  acceptance,  41. 
with  inmiaterial  or  ambiguous  addition,  41. 
by  conduct  as  well  as  by  words,  must  be  certain,  47. 
by  receiving  document  with  special  conditions,  47. 
of  misunderstood  proposal,  effect  of,  460,  4'i2,  468,  464. 

ACCIDENT  :  destroying  subject-matter  of  contract,  effect  of,  388,  390, 
895. 

ACCOUNT  :  action  of,  189. 

ACCOUNT  STATED  :  with  infant^  not  void  but  voidable,  59. 

ACKNOWLEDGMENT  of  debt  barred  by  Statute  of  Limitation,  170,  623, 
624,  625.    /See  Limitation. 

ACQUIESCENCE  : 

cannot  exist  without  knowledge,  427. 
as  a  bar  to  rescinding  contract,  570. 
lapse  of  time  as  evidence  of,  570,  571 . 
in  cases  of  undue  influence,  617. 

*'  ACT  OF  (tOD  "  :  meaning  of  :  no  general  definition  posable,  394. 

ACTION:  assignment  to  creditor  of  bankrupt's  right  of,  held  justitiable, 
326. 
P.  AAA 


722  INDKX. 

ADVERTISEMENT  : 

contract  by,  14,  »qq, 

raoh  oontmctA  not  exempt  from  Statute  of  Fraada,  28. 

AGENCY  : 

general  theory  of,  61,  212. 

pontionB  of  actual  or  professed  agent  as  regards  principal,  95. 

contraets  made  by  agents,  95,  $qq, 

contract  by  anthoiized  agent  known  to  be  such,  96. 

when  agent  is  personally  liable,  97. 

how  agent's  liability  may  be  exclnded  or  limited  when  he  contracts 
in  his  own  name,  98. 

contract  by  anthorised  agent,  bat  not  known  to  be  such,  99. 

rights  of  undisclosed  principal,  100. 

rights  of  other  contracting  party,  101. 

election  to  sue  principal  or  agent,  102. 

position  of  profesed  agent  wbo  has  no  authority :  where  a  re- 
sponsible principal  is  named,  108. 

implied  warranty  of  authority,  105. 

where  no  responsible  principal  is  named,  106. 

when  professed  agent  may  disclose  himself  as  real  principal,  108. 

effect  of  death  of  principal  on  subsequent  contracts  of  agent  before 
notice,  95. 

sub-agent  appointed  without  authority  is  not  agent  of  principal,  454 . 

AGENT : 

authority  of,  its  constitution  and  end,  95. 

corporation  liable  for  wroogs  of,  inc  mrse  of  employment,  118. 

contract  of,  Is  contract  of  principsl,  192. 

must  not  deal  secretly  on  his  own  account  in  business  of  agency, 

272. 
must  not  sell  to  or  buy  from  himself,  273. 
must  not  pro&t  by  his  o^m  negligence,  274. 
must  account  to  principal,  notwithstanding  collateral  illegality    in 

the  transaction,  862. 
knowledge  of,  is  knowledge  of  principal,  97,  n.,  101. 
statements  of,  how  far  binding  on  principal,  552. 
always  liable  for  his  own  wrong,  554. 

AGREEMENT : 
deaned,  2,  8. 
Toid,  what,  8, 8. 
consent,  how  expressed,  5. 
analysis  of,  as  accepted  proposal,  6. 
See  AooiPTANCi ;  Proposal. 
with  third  person,  as  subject  of  promise,  46. 
no  contract  unless  the  terms  are  certain,  44. 
no  contract  where  the  promise  Is  illusory,  45. 


INDEX,  723 

AGREEMENT— ometntMvi 

of  Lunatic  not  so  found  by  inqtusition  (which  $ee)  not  void,  bnt 
voidable,  92. 

Unlawful  {which  tee).  Oh.  VII. 
evidence  whether  a  document  is  or  is  not  record  of,  288. 
collateral,  evidence  of,  289. 
onlawfnl,  the  different  classes  of,  260. 

See  Unlawful  Aorumbnts. 
against  PuBuo  Policy  {which  tee),  298,  eqq. 

See  alto  Ohampsbtt  ;  Mabbiaob  ;  RnrRAiHT  of  Tbadi. 
Impobbiblb,  850,  tq<i, 

/8^  Impossiblb  Aqbskminto. 
conditions  affecting  validity  of  consent,  418. 

See  MiBTAKi,  fta 
where  there  may  bd  an  appareot,  but  no  real  ooosent  and  no  oon- 

tract»489. 
election  to  adopt,  where  originally  void,  479. 
parol  addition  to  or  variation  in  terms  of —effect  as  regaida  specific 

performance,  491. 
informal,  execution  of,  may  be  good  consideration  or  accoid  and 
satisfaction,  682. 
effect  of  part  performance,  683. 

anti-nuptial,  how  far  made  binding  by  post-nuptial  settle  - 
ment,  636. 
Savign/s  definition  of,  considered,  658. 

AGREEMENTS  OF  IMPERFBOT  OBLIGA.TION  : 
their  nature  and  effects,  620,  tqq» 

conflict  between  lex  fori  and  lex  corUraetutt  626,  629,  647. 
general  results  as  to,  656. 

ALIEN: 

wife  of,  when  she  can  contract  Mfeme  tole,  81. 

enemies,  disabled  from  suing  here  but  not  from  contracting,  95. 

ANNUITY :  agreement  to  give,  charged  on  land,  implies  personal  cove- 
nant for  repayment,  226. 

APOT  SBC  ARIES  :  cannot  recover  charges  unless  properly  qualified  at 
time  of  services,  646,  647. 

ARBITRATION  : 

agreements  for  reference,  now  practically  enforceable,  818. 
right  of  action  may  be  conditional  on  award,  819. 

ARBITRATOR  :  can  recover  remuneration  on  exprass  contract,  648. 

ARTIFIOIAL  PERSON : 
» of,  109. 

AAA2 


724  INDEX. 

ARTIFICIAL  PERSON— conlinaed. 

pArtnenhips  aad  other  bodies  treated  am,  by  coBtom  though  not  by 

law,  110. 
separate  estate  of  married  woman,  analogous  to,  670. 
And  tee  CoBFOBATioir. 

ASSIGNEE  : 

rights  of,  onder  contract,  206,  tqq, 

takes  snbject  to  equities,  21 1. 

role  may  be  ezdoded  by  agreement,  218. 

ASSIGNMENT : 

of  GOHTBAOT  (which  See)  206,  $qq.,  452,  454. 
of  pensions,  &a  voiJ,  314. 
eqnitable,  of  debt,  209. 

ASSUMPSIT  :  action  of,  its  introduction,  141. 

ATTORNEYS  AND  SOLICITORS.    See  Solicitor. 

AUCTION  ; 

sale  by,  formation  of  contract  in,  14. 
where  sale  without  reserve,  17. 
effect  of  misleading  particulars  at,  524. 
employment  of  puffers  at,  539. 

AUCTIONEER  :  liability  of  to  purchaser,  97,  n. 

AWARD  : 

whether  stranger  can  be  bound  by,  193. 

mistake  in,  can  be  rectified  only  by  the  Court,  431. 

BAILMENT  :  without  reward,  consideration  for,  172. 

BANKRUPTCY  : 

loan  obtained  by  infant  under  pretence  of  full  age,  provable  in,  77. 
anomalous  effects  of,  on  contractual  rights,  197. 
secret  agreements  with  particular  creditors  void,  266. 
laws,  attempts  to  evade,  282. 

BARRISTER : 

fees  of,  for  advocapy  not  recoverable  from  client,  648. 

for  non-litigioui  business,  qu,,  649. 

fees  paid  by  client  to  solicitor,  whether  recoverable  by  counsel, 

650. 
judicial  notice  of  counsel's  fees  in  taxing  costs,  651. 

BILL  OF  EXCHANGE : 

infant's,  not  void  but  voidable,  59. 
is  not  an  equitable  assignment,  672,  n. 
is  an  unconditional  order  in  writing,  156. 
acceptance  of,  must  be  in  writing  and  signed,  156. 


INDEX.  726 

BILL  OF  EXCRANGE—^xmHnued, 
eheqoe  b  a»  219. 

Indoner  not  a  larety  during  cnrrenoy  of,  272. 
drawn  in  hostile  oonntry  in  time  of  war,  806. 
AndtuNtaoTiASUt  Inbtbumditb. 

BILL  OP  IJIDING : 

transfer  of  oontraot  by  indorsement  of,  224. 

is  not  properly  negotiable,  227. 

effect  of  misdescription  of  goods  in,  515. 

BILLS  OF  SALE,  163. 

BOND: 

of  infant,  voidable,  not  void,  54. 

with  unlawful  condition,  void,  856. 

is  absolute  if  the  condition  is  impossible  at  the  time,  but  dis- 
charged if  it  subsequently  becomes  impossible,  414. 

with  alternative  conditions,  where  one  impossible,  416. 

of  foreign  government  treated  as  negotiable  instrument  by  English 
law,  221. 

statutes  as  to,  489,  n, 

BRACTON :  his  theory  of  fundamental  error.  Note  H. 

BBOKEBS  :  statutes  affecting,  702. 

unlicensed,  in  dty  of  London,  cannot  recover  comnussion,  283. 

CANADA  (LOWER) :  Civil  Code  of,  693. 

CANCELLATION  of  instrumente  by  courts  of  equity,  574. 

CABGK) :  sale  of,  when  previously  lost,  400. 

"CATCHING  BARGAINS": 
rules  of  equity  as  to,  606. 
^  what  are  marks  of,  607. 

on  what  terms  boirowed  relieved,  610. 

CAUSA: 

in  Roman  law  of  contract,  183. 

its  relation  to  eau9e  in  modem  French  and  consideration  in  English 
law,  186,  691. 

CHAMPERTY: 

definition  of,  820. 

what  amounts  to,  822.  > 

bargains  to  find  means  for  litigation  and  share  property  recovered 

323. 
solicitor  cannot  purchase  subject-matter  of  the  suit  from  his  client 

824. 


726  INDEX. 

GHAMPEBTT— contintMti 

purchMe  of  subject-matter  of  litigation,  not  in  itself  unlawful,  325. 

statute  of  Henry  VIII.  against,  327. 

proceedings  in  lunacy  exceptional,  329. 

not  justified  by  kinship,  330. 

rules  against,  whether  applicable  to  agreements  made  abroad,  873. 

CHARTER-PABTIES : 

express  exceptions  in,  401. 
conditions  in,  510,  511. 

CHEQUE: 

is  a  bill  of  exchange,  219. 

effect  of  croflsing  with  words  *'not  negotiaUe,"  222. 

CHILDREN: 

right  of,  to  enforce  provisions  for  their  benefit  in  settlements,  188 

199. 
custody  of,  agreements  as  to,  381,  373. 

CHOSE  IN  ACTION : 

why  formerly  not  assignable,  206. 

early  authorities  on  assignment  of,  Note  F. 

CIVIL  DEATH  : 

meaning  of,  80,  n. 

wife  of  person  dvilly  dead  can  sue  alone,  81. 

COERCION : 

contracts  entered  into  under,  voidable  in  equity,  420. 

money   paid  under,  recoverable,  though  the  transaction  otherwise 

unlawful,  365. 
and  though  circumstances  do  not  amount  to  duress,  578. 

COMPANIES  ACT,  1862  :  company  under,  cannot  bind  itself  by  contract 
for  purposes  foreign  to  the  memorandum  of  association,  126,  690. 

COMPANY : 

general  powers  of  incorporated,  118. 
limited  by  special  purpose  of  incorporation,  122. 
has  primd  Jade  power  to  mortgage  its  property,  681. 
powers  of  directors,  &c.  limited  by  principles  of  partnership^  120 
rights  of  dissenting  shareholders,  122. 

how  far  third  persons  are  bound  to  know  limits  of  directors'  au- 
thority, 121,  684. 
ratification  of  irregular  transactions  by  assent  of  shareholders,  687. 
under  Act  of    1862,    incapable  of  contracting  for  puiposes  not 

within  memorandimi  of  association,  126,  690. 
when  bound  by  negotiable  instrimients,  126,  128. 
A  nd  see  Corporation. 


INDEX.  727 

COMPANY— eonHnuecL 

when  bound  by  promoters'  agreements,  192. 

oninoorporated,  power  of,  to  sue  by  pnblic  officer,  199. 

transferable  debentures,  &&  issued  by,  214. 

transfer  of  shares  in,  164,  223. 

purchase  of  shares  in  order  to  sue  company  or  directors  at  one's 

own  risk  is  not  maintenance,  827. 
contract  to  take  shares  in,  not  void,  but  only  voidable  on  ground 

of  error,  Ac.,  461. 
sale  of  shares  in,  avoided  by  petition,  for  winding-up  unknovoi  to 

parties,  470. 
duty  of  directors,  &c.  to  state  facts  truly  in  prospectus,  530. 
duty  of  promoters  to  make  full  disclosure,  681. 
transfer  of  shares  invalid   when  directors'  consent   obtained   by 

baud,  640. 
when  bound  by  statements  ol  directors,  kc,  553. 
statements  of  prospectus  addressed  only  to  original  shareholders, 

556. 
repudiation  of  shares  in,  when  too  late,  461,  n.,  564,  568. 
(winding-up  of)  secret  agreement  to  delay  proceedings  void,  817. 

COMPENSATION : 

for  misdescription  on  sale  of  land,  519. 
purchaser  can  recover  after  completion,  521. 
See  dpioiino  Pibformamcb. 

COMPOSITION  : 

with  creditors,  consideration  for,  179. 
avoided  by  concealed  preference,  266. 

COMPROMISE : 

consideration  for,  181. 
of  criminal  proceedings  when  lawful,  315. 
of  civil  proceedings,  void  when  improperly  procured,  317. 
cannot  be  set  aside  for  mistake  or  oversight  as  to  particular  points 
of  law,  435. 

CONDITIONS : 

special,  on  ticket,  ^.,  how  far  binding  on  party  taking  the  docu- 
ment, 47. 

in  restraint  of  marriacfe,  836. 

to  be  performed  by  stranger,  must  be  performed  at  obligor's  peril, 
884. 

impossible  or  necessary,  412. 

treatment  of  impossible  conditions  in  bonds,  414. 

alternative  conditions  where  one  becomes  impossible,  416. 

representations  amounting  to,  their  nature  and  effect,  509,  510. 


728  INDEX. 

CONDITIONS  OF  SALE  :  e£feet  of,  on  right  to  oompenflatioii,  520. 

CONFIRMATION  :  of  infant's  marriage  settlement,  58. 
Andaee  Aoqutbsoknos. 

CONFLICT  OF  LAWS  : 

as  to  lawfulness  of  agreement,  867,  tqq. 

how  far  foreign  law  will  be  admitted  to  decide  lawfulness  of  agree- 

ment  made  abroad,  369. 
effect  of  change  of  law,  375. 
as  to  existence  of  remedy,  626,  629,  647. 

CONSENT  r 

for  legal  agreement,  requisites  of,  3. 

ways  of  declaring,  5. 

to  contract,  questions  affecting  validity  of,  419. 

CONSIDERATION : 

general  character  of,  9,  166. 

gradual  formation  of  the  doctrine,  167. 

in  contracts  in  writing,  168. 

promises  founded  on  moral  duty,  169. 

past  consideration,  169. 

adequacy  not  material,  171. 

for  gratuitous  baiknent,  172. 

doubt  as  to  contingent  consideration,  174. 

reciprocal  promise  as  consideration,  174. 

promise  must  be  enforceable,  175. 

how  far  promise  to  perform  existing  duty  can  be  considc-ration,  176. 

how  far  required  for  discharge  of  contracts,  178. 

for  variation  of  contracts,  180. 

abandonment  or  forbearance  of  rights,  180. 

forbearance  must  be  definite  and  of  a  really  diluted  right,  181. 

application  of  the  doctrine  in  equity  to  contracts  under  seal,  183. 

specific  performance  of  voluntary  agreement  not  granted,  183. 

external  evidence  of,  184. 

gaming  and  money  lent  for  betting,  an  illegal,  286. 

illicit  cohabitation,  if  future,  an  unlawful  consideration ;  if  past,  no 

consideration,  288. 
for  agreement  for  separation,  293. 
for  agreement  in  partial  restraint  of  trade,  sufficient  if  of  some 

value,  342. 
unlawful,  makes  whole  agreement  void,  349. 
failure  of,  the  true  ground  for  recovering  back  compulsory  paymentSf 

579. 
inadequacy  of,  as  evidence  of  fraud,  595. 
execution  of  informal  agreement  as,  632. 


INDEX.  729 

CONSIDERATION-  ctmHnued. 

forbearanoe  to  enforce  raolng  debts  in  conventional  fonun,  whether 

a  good,  705. 
history  of  the  doctrine  of,  Note  E. 

CONSTRUCTION : 

rales  of,  general  intent  prevails,  248. 
mles  of,  their  anziliaiy  character,  244. 
of  contract  not  altered  by  mistake  of  parties,  480. 
peculiar  roles  of,  in  equity,  245,  488,  sqq. 
See  Intzbfbitation. 

CONTRACT: 

general  nature  of,  1. 

definition  of,  2,  8. 

voidable,  what,  8,  9. 

tacit,  distinct  from  quasi-contract,  11. 

by  performance  of  conditions  of  public  offer  or  advertisement,  18-24 

legal  theory  of  such  contracts,  14. 

effect  of  Statute  of  Frauds  on  contracts  by  advertisement,  28. 

by  letter,  when  concluded,  36. 

conclusion  of,  may  be  postpoii|d  until  execution  of  formal  instm- 

ment|  42. 
with  third  person,  promise  to  make,  46. 
acceptance  of  special  conditions,  when  implied,  47. 
capacity  of  parties  to,  50,  tqq. 

See  IN7ANT8 ;  Mabbied  Women  ;  Lcnatio  ;  CoBPOSAnoN 
form  of,  131. 

See  FoBXAL  Contbaots. 
procedure  upon,  in  mediaeval  English  law,  188. 
consideration  for  discharge  or  variation  of,  178. 
persons  affected  by,  186,  aqq. 

parties  must  be  ascertained  at  time  of  contract,  187, 190. 
third  persons  not  bound,  191. 
third  persons  not  entitled  by  the  contract  itself,  200. 
third  person  cannot  sue  at  law  on  contract  made  for  his  benefit,  201. 
stranger  cannot  sue  for  damage  by  non-performance  of,  201,  n. 
authorities  in  equity,  202. 

attempts  to  enable  a  stranger  to  sue  for  convenience  of  parties,  204. 
assignment  of  contract,  206. 

under  Judicature  Act,  by  rules  of  equity,  or  by  special  statutes,  207. 
rules  of  equitable  assignment :  notice  to  debtor,  209. 
what  is  meant  by  assignments  being  subject  to  equities,  211. 
assignment  may  be  free  from  equities  by  agreement  of  parties,  213. 
instruments  may  be  made  transferable,  214. 
but  not  negotiable  except  by  law  merchant  or  statute,  217. 
nature  of,  in  partnership  with  transferable  shares,  222. 


730  INDEX. 

CONTBACrr— continued . 

in  bill  of  Udiiig,  tnnaferable  by  indonement,  224,  227. 
entire  or  divisible,  249,  253. 
Unlawful,  Ch.  VIL 

See  Agbsimsnt  ;  Unlawvol  Aobbdcints. 
agreement  to  commit  breach  of,  void,  265. 
forbidden  by  statute,  697. 
makim prohibitum  and  malum  in  te,  279. 
agreement  may  be  not  void  though  forbidden,  284. 
In  restraint  of  trade,  337. 

to  make  disposition  by  will,  good  by  English  law,  387. 
unconditional,  not  excvsed  by  performance  being  in  fact  impossible, 

386. 
when  held  conditional  on  perfoimanoe  being  or  remaining  possible, 

395,  iqq. 
construction  of  certain  exceptions  providing  for  aocidents,  401. 
dissolution  of,  by  subsequent  impossibility  does  not  affect  acquired 

rights,  407. 

See  Impossiblb  Aobbxmsnts. 
effect  of,  not  altered  by  mistaken  construction  acted  on  by  party,  480. 
ambiguous,  construction  acted  upon  by  parties  will  be  adopted,  431. 
effect  of  including  property  in,  by  mistake,  458. 
satisfaction  by  stranger,  whether  a  bar  to  subseqiient  action  upon, 

452. 
personal,  cannot  be  assigned,  453. 
representations  of  intentii  n,  not  amounting  to,  can  have  no  effect, 

507. 
requiring  stamp,  variation  of,  by  subsequent  unstamped  agreement, 

642. 
C0I4  VICTS  :  disabilities  of,  as  to  contracting,  94. 

COPYHOLD  :  sale  of,  as  freehold,  voidable,  527. 

COPYHOLDER  :  infant,  must  pay  fine,  64. 

COPYRIGHT:  assignments  of,  163. 

CORPORATION  : 

sole  and  aggregate,  117. 

can  act  only  by  agent,  112. 

cannot  incur  strictly  personal  liabilities,  113. 

but  may  be  liable  ex  ddieto  for  acts  of  its  agents,  113. 

consequences  of  the  distinction  of  it  from  its  existing  members, 

115. 
what  is  the  presumption  of  common  law  as  to  general  competenoe 

of,  117. 
limited  power  of  statutory  corporations,  119. 
powers  of,  how  modified  by  rights  of  dissenting  members,  120 


INDEX.  731 

CORPOBATION— «on«»fi««2. 

by  coDBideratioDS  of  public  policy  m  to  purposes  of  iDOOiporation, 
122. 

and  as  to  the  interest  of  the  public  as  investors,  124. 

cannot  bind  itself  by  negotiable  instruments,  126. 

unless  by  special  provisions  or  as  a  necessary  part  of  its  business 
128. 

bound  by  estoppel,  &c.,  129. 

contracts  formerly  required  to  be  under  stal,  145. 

exception  as  to  oontracts  in  course  of  trade,  147. 

in  case  of  non-trading  corporations  as  to  contracts  incidental  to 
purposes  of  incorporation,  150. 

contracts  of  municipal  corporations,  151. 

appointments  to  offices,  151. 

may  sue  upon  executed  contract  though  not  originally  bound,  153. 

liable  on  contract  implied  in  law,  154. 

statutory  forms  of  contract,  154. 

summary  of  law  as  to  form  of  corporate  contracts,  155. 

whether  seal  equivalent  to  signature  for  making  negotiable  instru- 
ments, 220. 

modem  authorities  on  powers  of,  Note  D. 

capacities  incident  to  incorporation  generally,  674. 

created  for  special  purposes  :  meaning  of  ultra  vires,  678. 

rights  of  dissenting  shareholders  to  restrain  action  of,  688. 

power  of  officers  to  bind  by  apparently  regular  acts,  684. 

how    far  iiregulsr  transactions    may  be  ratified  by  assent  of  all 
members,  687. 

CORRESPONDENCE : 

contract  by,  32,  tqq. 

complete  by  posting  acceptance,  86. 

authorities  on,  Note  B. 

COUNSEL.    See  Baebisteb. 

COVENANT : 

relating  to  real  property,  person  not  party  may  take  benefit  of,  200. 

when  covenants  run  with  land,  226. 

restrictive,  how  enforced  in  equity,  228. 

to  pay  money  under  unlawful  agreement,  void  though  distinct  from 

the  original  agreement,  551. 
to  exercise  power  by  will,  whether  good,  837,  n. 

CREDITOBS  :  agreements  in  fraud  of,  266. 

CUSTODY  OF  CHILDBEN  :  agreemento  as  to,  how  far  valid,  831. 

CUSTODY  OF  INFANTS'  ACT :  332. 


732  IKDEX. 

CUSTOM: 

some  oontraets  of  InfantB  bindipg  by,  72. 

of  oonntry  or  trade,  terms  added  to  contract  by,  242. 

modem,  may  add  to  the  law  merchant,  220. 

CUSTOMS  OF  LONDON  : 

as  to  infant  apprentice,  72. 

as  to  married  women  trading  alone,  81. 

certain  securities  taken  by  chamberlain  go  to  snccessor,  112. 

DEAtH : 

reyooation  of  proposal  by,  88. 

of  prin  dpa),  revocation  of  agent's  anUioiity  by,  95. 

dTil,80. 

DEBENTURES :  transferable,  rights  of  holder  of,  214. 
cannot  be  made  negotiable  at  comm<  n  law,  216. 

DEBT  : 

action  of,  138, 139. 
assignment  of,  209. 

DECEIT,  ACTION  OF : 

may  lie  against  corporation,  118. 

what  is  ground  for,  537. 

snits  in  former  equity  practice  analogous  to,  715. 

DEED  : 

peculiarity  of  promises  made  by,  7,  49. 

of  agent,  principal  not  liable  on,  98. 

treated  by  early  English  writers  as  equiyalent  to  Roman  Stipulation, 

187. 
why  it  cannot  be  written  on  wood,  143. 
whether  within  Statute  of  Frauds,  162. 
executed  in  error  as  to  its  contents,  not  binding,  441. 
executed  in  favour  of  wrong  party,  whether  void,  451. 

DEPOSIT  :  reoovecy  of.    See  Monit  Paid. 

DETINUE,  action  of,  188. 

DIRECTOBS  : 

of  public  companies,  extent  of  their  autbority  presumed  to  be  known, 

121,  684. 
power  of,  to  bind  company  by  statements,  558. 
how  far  third  persons  are  bound  to  know  whether  particular  acts 
are  authorized,  685,  686. 

DISCLOSURE  :  no  general  positive  duty  of,  508. 
but  duty  implied  in  special  oases,  508. 


INDEX.  733 

DISENTAILING  DEED,  mt^j  be  rectified  by  the  Court,  500. 

DOMIGIL  :  effeot  of  law  of,  on  yalidity  of  marriage,  277. 

DRUNKENNESS  : 

effeot  of,  on  capacity  of  contracting,  same  as  of  insanity,  49,  87. 
contract  of  drunken  man  yoidable,  not  void,  98. 

DURESS: 

what  is,  at  common  law,  576. 

when  it  consists  in  threats  the  threat  most  be  of  something  an- 

Uwful,  577. 
recovery  of  money  paid  under  compulsion,  578. 

EABEMENTS  :  new  kinds  cannot  be  created,  229. 

ECCLESIASTICAL  LAW :  infiuenoe   of,    on  legal    view   of  morality 
287. 

ELECTION  : 

to  avoid  contract  made  in  infancy,  60. 

to  charge  principal  or  agent,  102. 

to  adopt  agreement  void  for  mistake,  479. 
And  tee  Riboission. 
*•  ENGAGEMENT.*'    See  Sbparatr  Estate. 

EQUITIES  : 

undisclosed  principal  must  take  agent's  contract  subject  to^  100. 
assignment  of  contract  subject  to,  211. 
but  may  be  excluded  by  agreement  of  parties,  213. 
attaching  to  negotiable  instrument,  222. 

EQUITY: 

treatment  of  infants'  marriage  settlements  in,  58. 

no  specific  performance  of  infant's  contract,  59,  62. 

liability  of  infant  in,  on  false  representation  of  full  age,  74. 

adopts  rule  of  law  as  to  acts  of  lunatic,  &c.,  92. 

what  is  good  consideration  in,  183. 

treatment  of  voluntary  covenants  and  imperfect  gifts  in,  183, 184. 

who  may  be  bound  by  or  may  enforce  contract  in,  192,  202. 

assignment  of  contract  in,  207. 

notice  to  debtor  required,  209. 

assignee  takes  subject  to  '*  equities,"  211. 

assignment  "free  from  equities,"  218. 

agrees  with  common  law  as  to  negotiable  instruments,  219. 

doctrine  of,  as  to  covenants  running  with  land,  229. 

does  notadndt  parol  evidence  on  questions  of  pure  construction,  237. 

will  not  protect  copyright  of  seditious  or  immoral  publications,  296. 

rules  of,  as  to  custody  of  infants,  881. 


734  IKDKK. 


EQUnT- 

doctrin«  of,  as  to  imUwfal  agreementB  wliere  putiflB  not  in  pari 

delicto,  865. 
ftppMrent  difference  from  common  law,  as  to  repayment  of  money 
paid  under  contract  when  further  performance  beoomee  impoa- 
sible,  407. 
contracts  voidable  in,  on  gronnd  of  frand,  ko,,  420. 
role  of,  as  to  purchase  for  value  without  notice,  424. 
will  not  deprive  purchaser  for  value  of  anything  he  has  actually 

got,  425  n. 
agrees  with  law  as  to  recovering  back  payments  made  by  mistake, 

487. 
as  to  fundamental  error  avoiding  agreement,  444. 
dedsions  in,  on  sales  of  land  where  parcels  included  by  mistake, 

458. 
on  porohase  of  a  party's  own  property  by  mistake,  472. 
oral  waiver  of  written  contract  in ,  488  n, 
restricted  construction  of  general  words  in,  461. 
when  time  is  of  essence  of  contract  in,  486. 
relief  against  penalties  in,  488. 

admission  of  oral  eridenoe  as  defence  against  specific  performance 
of  contract  in  writing,  490. 

RBonriOATiov  of  insteuments  in  (which see),  492  aqq. 
supposed  former  doctrine  of  "  making  representations  good,"  606, 

9qq. 
Agrees  with  law  as  to  creditor's  duty  to  surety,  515. 
rules  of,  as  to  specific  performance  and    compensation  on  sales  of 

land,  519,  $qq. 
suits  analogous  to  action  of  deceit  in,  588. 
former  difference  of,  from  law  as  to  sales  by  auction,  589. 
rules  of,  as  to  loss  of  remedies  by  acquiescence,  570. 
jurisdiction  of,  to  cancel  instruments,  574. 
doctrine  of,  as  to  undue  influence,  579,  tqq. 
as  to  voluntary  settlements  generally,  585. 
as  to  supposed  requirement  of  equality,  597. 
as  to  refusing  specific  performance  on  ground  of  undervalue 

598. 
as  to  '*  expectant  heirs,"  602. 
as  to  "  catching  bargains,"  606. 
as  to  part  performance  of  informal  agreement,  633. 
as  to  estoppel  by  representation  or  acquiescence,  684,  638. 
liabilities  in,  incidentally  recognized  at  common  law,  655. 

BSOROW  :  writing  delivered  as,  238. 

ESTOPPEL : 

corporations  bound  by,  180. 

of  holder  of  instrument  dealing  with  it  as  negottable,  S21. 


INDEX.  786 

ESTOPPEL— coniimierf. 

of  party  who  has  indooed  a  f  andamental  error  by  znisrepreeeatation 

476. 
of  one  party  to  instroment  who  acts  aa  other*8  agent  in  preparing 

it,  497. 
by  negligence,  whether  applicable  to  deeds,  443,  n. 
statements  binding  by  way  of,  505. 

EVIDE^JCE  : 

extrinsic,  always  admissible  to  show  illegality  of  agreement,  856. 
subsequent  conduct  of  parties  may  be  evidence  of  original  unlawful 

intention,  857. 
parol,  not  admitted  to  vary  written  contract,  236. 
of  document  being  agreement  or  not,  admissible,  238. 
of  oral  variation,  admitted  as  defence  to  specific  performance  of 

written  agreeoient,  but  not  to  obtain  performance  of  agreement 

as  varied,  491. 
oral,   inaimisaible  to  rectify  instrument  where  there  is  previous 

agree  nent  in  writing,  494. 
but  adnaissible,   if  uncontradicted,    where  there    i^   no    previous 

written  agreement,  494. 

EXOISE  :  statutes  regulating  trades,  &a,  subject  to  laws,  702. 

KXBOUTORS  : 

general  right  and  liability  of,  on  contracts  of  testator,  191,  n.,  206. 
cannot  sue  or  be  sued  on  contracts  of  personal  service,  189,  896, 

402,  403. 
or  on  contract  to  marry,  406,  n. 

EXPECTANCY  :  sale  of  ;  not  unlawful,  329. 

EXPECTANT  HEIRS :  protection  of,  by  courts  of  equity,  602. 

FELONS :  convicted,  disability  of,  94. 

FIDI7CIARY  RELATION  : 

between  contracting  parties,  effect  of,  656. 
faistances  of,  559,  569. 

FORBEARANCE  TO  SUE  :  as  consideration  for  promise,  181. 

FOREIGN  LAW : 

foreign  revenue  laws  said  to  be  disregarded,  808. 
as  to  stamps,  effect  of,  309. 

agreements  lawful  by,  but  not  by  law  of  forum,  treatment  of,  867. 
subsequent  prohibition  by,  deemed  to  make  performance  of  con- 
tract not  unlawful  but  impossible,  875. 
contract  rendered  impossible  of  performance  by,  not  discharged 

890. 
as  to  form  of  oonteaot,  165. 


736  INDBX. 

FOREIGN  hSLW-^ooiUinued. 

on  undue  influence,  kc,  Note  L. 

And  see  Conflict  of  Laws. 

FORFEITURE :  relief  againBt,  in  equity,  486,  489. 

FORMAL  CONTRACTS  : 

their  importance  in  ancient  law,  182. 

position  of  formal  and  informal  contracts  in  Roman  law,  133. 

in  old  English  law,  137. 

requirements  of  form  now  the  exception,  143. 

contracts  of  record,  143. 

cases  where  form  specially  required,  144,  sqq. 

See  CoRPOBATioNs  ;  Fbauds  (Statute  of). 

FRAUD: 

of  agent,  corporation  liable  for,  113,  553. 

on  third  party,  makes  agreement  void,  266, 269. 

on  creditors  in  oompositionB,  9lo.,  266. 

settlements  in  "  fraud  of  marital  right,"  275. 

dissimulation  of  unlawful  purpose  by  one  party  to  contract  is,  364. 

delivery  of  goods  to 'wrong  person  obtained  by,  passes  no  property, 

448,  Ik,  567. 
constructive  or  legal,  what  is,  503. 
ralation  of,  to  estoppel  and  warranty,  505. 
how  distinguished  from  misrepresentation,  533. 
passive  acquiescence  in  self-deception  of  other  party  is  not,  467. 
what  is  fraudulent  representation  or  concealment,  536. 
reckless  assertions,  537. 
silence  when  equivalent  to  falsehood,  538. 
negligent  ignorance,  588. 
special  doctrine  as  to  sales  by  auction,  539. 

marriage  not  avoided  by,  540. 
transactions  voidable  when  consent  of  third  person  obtained  by, 

540. 
rules  as  to  rescinding  contract  for,  how  far  the  same  as  for  simple 

misrepresentation,  544. 
contract  incidentsl  to  a  fraud  is  itself  fraudulent,  550. 
imfounded  charges  of,  visited  with  costs,  527,  574. 
And  see  BssoissiON. 

FRAUDS,  STATUTE  OF : 

contracts  by  advertisement  not  exempt  from,  23 

as  to  special  promise  by  executor,  156. 

as  to  guaranties,  157. 

as  to  agreements  in  comdderation  of  marriage,  158. 

as  to  interests  in  land,  159. 

as  to  agreements  not  to  be  performeii  within  a  year,  159. 


INDEX.  737 

FRAUDS,  SrATUTB  OT— continued. 

as  to  the  note  or  memorandum,  160. 

effect  of  note  signed  by  one  party  only,  9. 

memorAndum  must  exist  at  the  time  of  action  broaght,  162. 

whether  applicable  to  deeds,  162. 

foraign  laws  analogous  to,  165. 

on  assignment  of  trust,  207. 

effect  of,  where  writing  does  not  represent  the  real  agreement,  492. 

informal  agreements  within  s.  4  and,  temble,  within  s.  17  not  yoid,  630. 

effects  of  informal  agreements,  681. 

relation  o^  to  equitable  doctrine  of  part  performance,  683. 

ante-nuptial  agreements  confirmed  by  post-nuptial  writing,  686. 

FRAUDULENT  PREFERENCE:  agreements  with  particular  creditors 
by  way  of,  266,  267. 

GAMING : 

securities  for  money  won  at,  286. 

treatment  of  gaming  debts  oontracted  abroad  and  not  unlawful  by 
local  Uw,  871. 

GAVELKIND :  conyeyanoe  by  infant  tenant  in,  72. 

GENERAL  WORDS :  restrained  by  context  or  by  intention  aipearing 
from  external  eyidence,  488. 

GERMAN  COMMERCIAL  CODE: 
on  formation  of  contracts,  668. 
extends  rule  of  market  oyert,  425,  n. 

GIFT: 

imperfect,  not  idded  in  equity,  184 

acceptance  of,  as  loan,  effect  of,  447. 

from  client  to  solicitor,  how  far  yalid,  588,  n.,  619. 

GOODS  : 

order  for  deliyery  of  may  be  assignable  free  from  equities,  but  can- 
not be  negotiable,  220,  n. 
contract  cannot  run  witb,  224. 
effect  of  misdescription  of,  in  bill  of  lading,  515. 
deliyery  of,  to  wrong  person  by  mistake  or  fraud  does  not  pass 
property,  567. 

Andiee  Salb  of  Goods. 

GUARANTY  : 

within  Statute  of  Frauds,  157. 

yoidable  for  misrepresentation  or  dif simulation  to  surety,  515. 

HORSES  :  sale  of,  in  market  overt,  163. 

P.  B  B  B 


738  INDEX. 

HUSBAND  AND  WIFE.    See  Marbivd  Womev  ;  Siparatb  Ebtatx  ; 
Skparatb  Pbopertt  ;  Sspabation  Desds;  Custodt  of  Childbcn. 

IGNORANCE  : 

of  Iaw,  may  be  material  as  ezdndiog  specific  tmlawful  intention, 

358,  875. 
does  not  in  general  exclude  civil  liabflity,  423. 
reckless  or  negligent,  carries  responsibilities  of  knowledge,  538. 

See  oho  Mistake. 

lONORANTIA    JURIS:   meaning   of,   explained    by   Lord    Westbory 
473. 

ILLEGALITY :  alleged,   of  contracts  by   companies  tending  to  defeat 
purposes  of  incorporation,  123. 
And  »ee  Unlawful  Aoreemsntb. 

IMMORAL  AGREEMENTS  : 

void  ;  what  are  sucb,  and  what  is  immoral  consideration,  287. 
agreement  immoral  turf  gentium  cannot  be  justified  by  any  local 
law,  872. 

IMMORAL  PUBLICATIONS:  punishable  by  criminal  law,  and  there- 
fore no  ground  of  civil  rights  296. 

IMPOSSIBLE  AGREEMENTS : 

general  statement  of  law  as  to,  379. 

agreement  impossible  in  itself  void  :  what  is  meant  by  impossibility 

for  this  purpose,  380. 
"  practical  impossibility  "  not  equivalent  to  absolute  impossibility, 

882. 
repugnant  promiMT,  &c.,883. 
promisor's  not  having  means  of  performance  is  not  impossibility 

384. 
warranty  of  contingent  acts  or  events,  884. 
agreement  impossible  in  law,  void,  385. 
promisor  excused  when  performance  becomes  impossible  by  law 

performance  being  imporaible  in  fact,  no  excuse  in  absolute  con* 

tract,  388. 
impossibility  by  foreign  law,  no  excuse,  390. 
effect  of  accidents  subsequent  to  contract :  analogy  of  contract  to 

pay  rent,  when  premises  accidentally  de^itroyed,  391. 
exception  of  accidents  not  contemplated  by  contract,  893,  9qq. 
where  performance  depends  on  existence  of  specific  thing,  395. 
where  subject-matter  destroyed  without  fault  on  either  side,  896. 
state  of  things  at  date  of  agreement  not  contemplated  by  partie>, 

398. 
sale  of  cargo  lost  at  date  of  contract,  400. 


INDEX.  739 

IMPOSSIBLE  AGREEMENTS— <»n<tntt«A 

constmctioii  of  ooveouits  ia  mining  leaees,  400. 
expreu  exceptions  in  ooromercial  Gontracts,  401. 
where  performance  of  servicea  contracted  for  depencU  on  life   or 

health  of  promiBor,  implied  condition  that  life  or  health  shall 

continue,  402. 
anomalous  treatment  of  contract  to  marry,  405. 
impoaaibili^y  caused  by  default  of  promisor,  equivalent  to  broach  of 

contract,  408. 
by  default  of  promisee,  discharges  promisor,  and  he  may  recover  lost 

or  rescind  the  contract,  408. 
alternative  contracts  where  one  thing  is  or  becomes  impossible, 

410. 
conditional  contracts  where  the  condition  is  or  becomes  impossible, 

412. 
where  condition  of  bond  impossible,  obligation  ia  absolute,  415. 
otherwise  whc-re  the   condition   subsequently  becomes  impossible, 

416. 
alternative  conditions  in  bonds  where  one  is  or  becomes  impossible, 

416. 
Indian  Contract  Act  on  impossible  agreements,  417. 

INDIAN  CO  ATTRACT  ACT: 

on  contracts  of  persons  of  unsound  mind,  38. 

on  promises  for  past  consideration,  171,  n. 

on  discharge  of  contracts,  179. 

on  knowledge  of  agent  being  knowledge  of  principal  97,  n. 

makes  wagers  void,  299,  n. 

does  not  adopt  English  rule  of  market  overt,  425,  n. 

on  material  common  mistake  avoiding  agreement,  469. 

on  time  being  of  easenca  of  contract,  487. 

abolishes  distinction    between    penalty  and    liquidated    damages, 

490,  n. 
un  sales  by  auction,  589. 
on  inadequacy  of  consideration,  598. 

INFANTS: 

generally  cannot  bind  themselves  by  contract,  52. 
contracts  of,  voidable  at  common  law  :  no  real  authority  for  hold- 
ing them  in  any  case  void,  53. 
bonds,  54. 

trading  contracts,  55. 
contracts  of  service,  5.5. 
leases,  56. 
sales  of  land,  56. 
partnership,  57. 
marriage,  58. 

B  B  B  2 


740  INDEX. 

INFANTS— corUinued. 

marriage  lettlementB,  58. 
Degotiahle  instraments  and  aooonntt  stated,  59. 
infant  cannot  have  specific  performance,  59. 
at  what  time  he  may  avoid  his  contracts,  60. 

See  Ikfamts  Rkuxf  Act. 
liable  on  obligations  incident  to  property ;  leases  and  railway  shares, 

65. 
liable  when  contract  for  his  benefit,  66. 
liable  for  necessaries,  67. 
what  are  necessaries,  how  ascertained,  68. 
liability  for  necessaries  on  simple  contract  only,  71. 
what  contracts  infants  can  make  by  custom  or  statnte,  72. 
not  liable  for  wrong  when  the  cause  of  action  is  labstantially  on  a 

contract,  78. 
whether  liable  on  contract  implied  in  law,  74. 
liable  in  eqnity  for  representing  himaell  as  of  fuU  age,  74. 
bat  not  to  prejudice  of  subsequent  valid  contract,  77. 
agreements  between  parents  aa  to  custody  or  education  o^  381. 

INFANTS  BELIEF  ACT : 

makes  certain  agreements  of  infants  void,  60. 
does  not  make  ratification  wholly  inoperative,  61. 
effect  of  section  1  . .  63. 

effect  dnoe  the  Act  of  aflirming  agreement  voidable  at  oommoik 
law,  652. 

INSANITY.    See  Lunatic. 

INSTALMENTS : 

default  in  dellveiy  or  payment  of,  254. 

INSURANCE :  contract  of,  libetaUy  oonstmed  in  favour  of  true  inten. 
tion,  497. 

INSURANCE  (FIRE) : 

contract  of  imnirers  to  reinstate  is  nnoonditional  after   election 

made,  38& 
effect  of,  as  between  landlord  and  tenant,  392. 
implies  condition  that  property  is  correctly  described,  514. 

INSURANCE  (UFE) :  duty  of  ditdoeure  by  assured,  513. 

INSURANCE  (MARINE) : 

must  be  expressed  in  policy,  163. 

seamen's  wages  not  insurable  at  common  law,  338. 

where  voyage  illegal  to  knowledge  of  owner,  void,  852. 

voidable  for  material  misrepresentation  or  non-dlsdosuxe,  512. 

stamped  policy  required  by  statute,  689. 


INDKX.  741 

INSI7KAN0E  (MARINE)— continued. 

the  *'  slip  "  neverthelen  rao>gnized  for  collateral  porposM,  640. 
the  rights  of  the  parties  determined  at  the  date  of  the  slip,  641. 
statntory  provisioDS  as  to,  703. 

INTERPRETATION  : 
necessity  of,  283. 
of  promise  in  general,  284. 
of  terms  used  in  special  tense,  289. 
prevalence  of  general  iotentioo,  243,  248. 
d  matnal  promises  as  regards  order  of  performance,  248. 
of  ambigaous  terms  by  conduct  of  parties,  481. 

KNOWLEDGE : 

how  far  material  on  qnestion  of  nnlawfolness  of  agreement,  376. 

means  of,  as  affecting  right  to  rescind  contract  for  misrepresenta- 
tion, 546. 
LAND: 

Statute  of  Frauds  as  to  sale  of  interest  in,  159. 

what  covenants  run  with,  224,  225. 
And  Met  Salb  or  Land. 
LANDLORD  AND  TENANT : 

covenants  running  with  tenancy  or  reversion,  224. 

lessor  cannot  resume  possession  actually  delivered  on  discovering 
unlawful  purpose  or  fraud  of  lessee,  851,  585. 

but  may  rescind  if  possession  has  not  been  delivered,  temble,  852, 

rent  payable  though  premises  accidentally  destroyed,  891. 

lessor  is  not  bound  to  inform  lessee  of  state  of  premises,  528. 

statutes  affecting  contracts  between,  703. 

LAW  BIERCHANT : 

peculiarities  of,  as  to  negotiable  instruments,  218. 

not  invariable,  220. 
LEASE: 

of  infant  at  common  law,  voidable,  55. 

statutory  powers  of  infants  to  renew  and  make,  72. 

covenants  in,  when  they  run  with  land,  224. 

Statute  of  Frauds  as  to,  159. 

of  tenements  for  unlawful  purpose,  no  action  on  covenants,  851. 

for  lives,  effect  of  contract  for  sale  of,  474. 

LBX  LOCI: 

marriage  of  domiciled  British  subjects  wherever  celebrated,  governed 

by  English  Uw,  277. 
requirement  of  stamp,  how  treated  in  foreign  court,  809. 
by  what  local  law  the  lawfulness  of  an  agreement  is  determined 
867. 

LICENSING  ACTS :  attempts  to  evade,  282. 


742  INDKX. 

LICENSED  PREMISES  : 

effect  o(  omiidon  to  paint  leller's  uune  on,  283. 

LIlilTATION,  STATUTES  OF : 

promise  or  ackooirledgment  bj  married  woiiuui  cannot  revive  bMred 
debf:,  79. 

promiBe  to  paj  debt  barred  by,  164. 

debts  not  extinguished,  622. 

money  paid  by  debtor  without  particular  directions  may  be  impro- 
priated to  satisfy  barred  debt,  628. 

executor  may  pay  barred  debt  of  testator,  623. 

barred  debt  cannot  be  set  off,  628. 

but  statute  must  be  pleaded,  623,  n. 

right  of  action  restored  by  subsequent  acknowledgment,  624. 

acknowledgment  operates  as  new  promise  in  case  under  statute  of 
James,  624. 

otherwise  of  specialty  debt  under  stat  of  William  IV.,  625. 

applied  according  to  lex  fori,  not  lex  eontraclue,  626. 

LIQUIDATED  DAMAGES  :  distinction  of,  from  penalty,  490. 

LONDON  L 

custom  of,  as  to  infant  apprentice,  72. 
as  to  married  women  trading  alone,  81. 

LUNATIC : 

marriage  of,  void,  87. 

so  found  by  inquisition,  incapable  of  acts  in  the  law,  87. 

liable  for  necessaries,  88. 

contracts  in  lucid  intervals  and  contracts  prior  to  lunacy  good, 

87,  88. 
history  of  different  doctrines  on  the  subject,  88 — 93. 
contract  of  (not  so  found  by  inquisition),  in  general  voidable  not 

void,  92. 
contract  of,  why  only  voidable  though  he  has  no  agreeing  mind, 

446. 

MAINTENANCE : 

attempts  to  oppose  equitable  assignments  on  ground  of,  206. 

definition  of  ;  it  includes  champerty,  820. 

what  amounts  to,  822,  829. 

statute  of  Henry  VIII.  against  buying  pretended  titles,  827 

what  dealings  are  within  the  statute,  828. 

no  maintenance  without  unlawful  intention,  829. 

may  be  justified  by  kindred  or  affinity,  880. 

MAJORITY :  abuse  of  corporate  powers  by,  684. 

MALUM  PROHIBll  UM  and  malum,  in  *?,  279. 


INDEX.  743 

MARITAL  RIGHT  :  aettleinent«  in  fraud  of,  275. 

MARKET  : 

Bale  of  hones  at,  overt,  163. 
I  overt,  proviiiioiu  of  German  Code  ae  to,  425,  n. 

MARRIAGE: 

of  infanta,  58. 

promise  of,  infiuit  may  sae  but  U  not  liable  on,  58. 
I  of  lunatics,  void,  87. 

agreements  in  consideration  of,  158,  177,  188, 199. 

within  prohibited  degrees,  void,  276. 

whether  valid  in  England  if  invalid  by  law  of  party's  domidl, 

277. 
of  members  of  Royal  Family,  Act  regulating,  277. 
agreements  in  general  restraint  of,  void,  834. 
conditions  in  restraint  of,  336. 

polygamous,  not  recognised  by  English  Divorce  Court,  369. 
illness  unfitting  for,  does  not  avoid  contract  to  marry,  405. 
contract  to  many  not  uherrinuB  fidei,  532. 
not  rendered  invalid  by  fraud,  533,  540. 

informal  agreements  in  consideration  of,  how  far  made  valid  by  post- 
nuptial settlement,  636. 

MARRIED  WOMEN  : 

at  common  law  cannot  contract,  77. 

acquisition  of  things  in  action  by,  79. 

renewed  promise  by,  cannot  revive  barred  debt,  79. 

exceptions  to  incapacity  :  queen  consort,  80. 

wife  of  person  civilly  dead,  80. 

„  of  alien  who  has  never  been  in  England,  81. 
custom  of  London  as  to  sole  trader,  81. 

effect  of  Act  of  1882  thereon,  82,  n. 
exceptional  contracts  with  husband  as  to  separation,  82. 
statutory  exceptions,  judicial  separation,  &c.  83. 
equitable  doctrine  of  separate  estate  (which  seej,  84. 
Married  Women's  Property  Act,  1882  .  .  84. 
•  equitable  enforcement  of  contracts  in  oases  not  within  Act,  87. 

as  to  debts  contracted  during  coverture,  qu.,  86. 
settlements  of,  in  fraud  of  marital  right,  275. 
interests  of,  may  be  bound  by  equitable  estoppel,  638. 
And  see  Sbpasati  Estate  and  Sivasatb  Pbopebtt. 

MAXIMS: 

ut  res  magis  valeat  quam  pereat,  107. 

in  pari  delicto  potior  est  condioio  defendentis,  360. 

locus  regit  actum,  874. 

non  videntur  qui  errant  consentire,  421. 


744  INDEX. 

MAXIxMS— coniffittffi. 

nulla  volantas  trnmtifl  est,  427. 
ignonnti»  iaii«  hand  ezcusat,  473. 
expreesio  nzdus  est  exdnsio  alterius,  483. 
alteri  stipulari  nemo  potest,  692. 

MEDICAL  PRACTITIONERS  : 

regulations  of  Medical  Act  as  to  their  right  t.f  remaneratbn,  646. 
conditions  precedent  to  recovering  charges,  646,  647. 
presamption  of  inflaence  in  gift«,  &&,  from  patients,  592. 

MINES  :  construction  of  unqualified  covenants  to  work,  400. 

MISREPRESENTATION  : 

producing  fundamental  error,  effect  of,  465. 

fraudulent  or  non- fraudulent,  502. 

non-fraudulent,  conditions  under  which  it   can  affect  validity  of 

contract,  505,  507. 
distinction  of  it  from  mere  non  disclosure,  508. 
special  rules  as  to,  in  contracts  of  insurance,  512. 
in  contract  of  suretyship,  515. 
in  contract  for  sale  of  land,  518. 

rules  of  equity  as  to  performance  with  compensation,  519. 
duty  of  vendor  to  describe  property  correctly,  524. 
in  family  settlements,  529. 
in  partnership  and  contract  to  take  shares,  629. 
in  contract  to  many,  632. 
mhen  it  is  an  actionable  wrong,  587. 
where  party  misled  has  means  of  knowledge,  546. 
immaterial,  in  cases  of  active  representation,  unless  he  uses  hiB  means 

and  acts  on  his  own  judgment,  546. 
rights  of  party  misled,  557. 
Andue  RiscissiON. 

MISTAKE  : 

correction  of  obvious,  by  ordinary  construotion,  244. 

distinction  of  from  Fraud,  419. 

in  private  law  has  not  as  such  any  univenal  consequences,  420. 

does  not  as  a  rule  avoid  liability,  422. 

certain  exceptions  to  this  for  protection  of  persons  acting  under 

judicial  process,  424. 
sometimes  a  condition  of  title :  purchase  for  value  without  notice,  425. 
does  not  as  a  rule  alter  existing  lights  of  the  party  or  of  other 

persons  :  instances  of  misdelivery  of  goods  and  payments  to  wrong 

persons,  428. 
mistake  in  construction  by  parties  does  not  alter  contract,  480. 
special  cases  where  it  is  of  real  importance,  432. 
mistake  of  fact  and  of  law,  438. 


INDEX.  745 

MIS  TAKE— continued 

the  diBtinction  is  really  t  f  limited  application,  431. 

cases  of  compromise,  &c.,  485. 

the  didtinGtion  does  apply  inflexibly  to  recoyering  back  money  p  dd 
by  mistake,  437. 

and  in  equity  as  well  as  at  law,  439. 

mistake  ezolnding  true  consent,  439. 

different  kinds  <  f  fundamental  error,  440. 

as  to  nature  of  transaction,  441. 

as  to  its  legal  character  (as  whether  sale  or  gift),  4 1 7. 

mistaken  delivery  of  money,  &&,  '448,  ». 

as  to  person  of  the  other  party,  448. 

as  to  subject-matter  of  the  contract,  454. 

herein  as  to  the  specific  thing,  457. 

as  to  nature  of  company  in  which  shares  are  taken,  460. 

or  as  to  kind,  462. 

as  to  quantity  or  price,  463. 

or  other  material  attribute  of  subject-matter,  464. 

when  error  must  be  common  to  avoid  agreement,  466. 

of  buyer  not  induced  by  seller,  inoperative,  467. 

as  to  existence  of  subject-matter,  469. 

agreements  to  purchase  or  pay  rent  for  property  really  one's  own, 
472,  473. 

where  fundamental  error  produced  by  misrepresentation,  465, 
476. 

rights  and  remedies  of  parties,  where  agreement  vjoid  for  funda- 
mental error,  478. 

election  to  adopt  agreement,  479. 

mistake  in  expression  of  true  consent,  480,  nqq. 

restriction  of  general  wordp,  482,  483. 

in  expression  of  contract,  a  bar  to  specific  performance,  490. 

RsOTiFiOATiON  of  instruments  on  ground  of  [which  tee),  492. 

Bracton's  treatment  of  fundamental  error,  Note  H. 

MONEY  PAID : 

by  infant  under  voidable  contract,  cannot  be  recovered  after  con- 
tract executed,  60. 

under  Unlawful  Aorbskint  {ichich  gee)  when  it  can  be  recovered 
back,  359,  »qq, 

in  actual  ignorance  of  fact  though  with  means  of  knowledge, 
recoverable,  437. 

with  knowledge  of  facts,  though  under  mistake  of  law,  not  recover- 
able (except  mistaken  payment  by  officer  of  court),  438. 

as  deposit,  on  purchase  of  land,  when  recoverable,  523. 

cannot  be  recovered  back  whtre  former  state  of  things  cannot  be 
restored,  566 

under  compulsion,  recoverable,  578. 


746  INDEX. 

MONEY  PAID— (»ii^n««d. 

under  iBfomiAl  agreement  within  ■.  4  of  Statnte  of  Fraudi,  not 

recoverable,  608. 
for  small  debts  within  Tippling  Act,  not  reooverable,  662. 

MONEY  RECEIVED  :  action  for,  lies  against  oorporation,  154. 

MORTGAGES: 

treatment  of,  in  eqoity,  488. 

the  Coort  will  treat  nonunal  sale  as,  if  suoih  is  troe  intention,  489. 

NECESSARIES : 

liability  of  infant  for,  67,  sqq. 

the  liability  is  on  simple  contract  only,  71. 

what  are,  a  question  ol  mixed  fact  and  law,  68. 

existing  supply  how  far  material,  69. 

i4[yparent  means  of  buyer  not  material,  70. 

not  confined  to  goods,  70. 

liability  of  lunatic  for,  SS. 

NEGLIGENCE: 

of  agent,  corporation  answerable  for  as  well  as  natural  persoo,  118. 

estoppel  by,  extent  of,  448,  n. 

agent  must  not  profit  by  his  own,  274. 

does  not  exclude  light  to  rescind  for  misrepresentation,  546. 

NEGOTIABLE  INSTRUMENTS : 
must  be  in  writing,  156. 
of  infants,  voidable,  59. 
may  be  payable  to  treasurer,  &c.,   of  a  society  for  time  being,  by 

Bills  of  Exchange  Act,  205. 
peculiar  qualities  of,  217. 
what  can  be  admitted  an,  220. 

bonds  of  foreign  goyemment  treated  as  such  by  English  law,  221 . 
how  they  cease  to  be  so,  221. 
corporations  in  general  cannot  issue,  128. 
in  what  cases  they  can,  129. 
principal  bound  by  acceptance  of  agent  though  not  in  principal's 

name,  98. 
the  holder  of,  cannot  make  title  through  forged  indorsement,  426. 
signature  of,  in  error  as  to  nature  of  instrument^  not  binding,  442. 

And  tee  Bill  of  Exohanob. 

NOTICE: 

assignee  of  married  woman's  separate  property  with,  bound  by 

engagement  affecting  it,  670. 
to  debtor,  of  assignment  of  contract,  188,  209. 
purchase  for  value  without,  227,  425. 


INDEX.  747 

NOVATION :  its  nature  explained,  193. 

NUDUM  PACTUM: 

in  Roman  law,  135. 

change  in  the  meaning  of  the  term  in  English  use,  695. 

OFFENCE : 

agreement  to  commit,  void,  263. 
compounding  of,  815. 

OFFER :  See  Proposal. 

OFFICES  : 

appointments  to,  by  corporations  must  be  under  seal,  151,  152. 
sale  of,  unlawful,  31 3. 

PAR  DELICTUM: 

doctrine  of,  360. 

qualifications  of  and  exceptions  to  it,  361,  365. 

PARCELS  :  misUke  as  to,  in  sales  of  land,  458. 

PAROL  VARIATION  :  of  written  agreement,  role  against,  233. 

PART  PERFORMANCE:  equitable  doctrine  of,  129,  638. 

PARTIES : 

to  contract,  rules  as  to,  186. 

to  action  on  contract  made  by  agent,  95,  $qq, 

PARTNERSHIP: 

contract  of  shareholder  in  company,  a  modified  contract  of,  120. 
shares  in,  transferable  at  common  law,  222. 

release  in  deed  of  dissolution  cannot  be  disputed  by  party  after 
concern  completely  wound  up,  565. 

PENALTIES : 

imposition  of,  by  statute,  implies  prohibition,  280. 
relief  in  equity  against,  489. 
and  liquidated  damages,  490. 

PERFORMANCE  of  mutual  promisee,  248,  $qq. 

PERSONAL  CONTRACTS  : 

implied  condition  in,  as  to  life  or  health  of  party  continuing,  402 
not  assignable,  453. 

PERSONATION,  efiEect  of,  451. 

PHYSICIANS  : 

rights  of,  as  to  payment  for  services  at  common  law,  646. 
under  Medical  Act,  646. 


748  INDEX. 

POST  OFFICE  :  whether  o(»mmoii  agent  of  partieB  in  oorrt  sposdeooe  by 
letter,  U,  429. 

PRICE  :  error  as  to^  463. 

PRINCIPAL  AND  A6£NT  : 

principal  when  Uable  on  contracts  made  by  agent,  96,  tqq. 

rights  of  undisclosed,  99. 
right  to  countermand  nnexecoted  authority,  363. 
snb-agent  not  agent  of  prindpal,  454. 
prhicipal  not  liable  if  exdosiye  credit  given  to  agent,  102. 
sgent*s  anthority  determined  by  death  of  principal,  95. 
when  professed  agent  may  declare  himself  as  real  principal, 

108. 
principal  when  answerable  for  representations  of  agent,  552. 
agent  always  liable  for  his  own  personal  frand,  554. 
And  tee  Aokncy. 

PROMISE  : 

definition  of,  2,  7. 

express,  tacit,  implied,  10. 

by  advertisement  or  general  announcement,  nature  and  limits  of, 

14. 
by  deed,  binding  without  acceptance  in  English  law,  7. 
illusory,  44. 

inferred  in  fact  or  implied  by  law,  11. 
as  consideration,  167. 
founded  on  moral  duty,  not  binding  without  valuable  consideration, 

168. 
to  pay  for  past  services  rendered  on  request,  169. 
too  vague  to  be  enforced,  175. 
how  far  promise  to   perform  existing  duty  can  be  consideration, 

176, 178. 
to  several,  whether  one  can  sue  on,  204. 
effect  and  interpretation  of,  284. 

See  AorSFTANCE ;   Agreement. 

PROMISES : 

mutual,  order  of  performing,  247. 
dependent  and  independent,  249. 
in  same  instrument,  where  some  lawful  and  some  not,  348. 

PROMOTERS  : 

agreements  of,  when  binding  on  company,  192. 
statements  of,  may  become  statements  of  company,  553. 
fiduciary  position  of,  as  regards  company,  583,  n, 

PROPOSAL  : 

generally  elemeut  of  contract,  1,  5. 


INDEX.  749 

T^OTOSAL—eontinxted, 
express  or  tocit,  10. 
distingaished  from  invitation  of,  14. 
Addressed  to  aU  to  whom  it  comes,  14. 
when  it  may  be  revoked,  24. 
conditions  of,  as  to  time,  &c.,  26. 
revocation  mnst  be  oommnnicated,  27. 

is  revoked  by  death  of  proposer  before  acceptance  (under  I.  0.  A. 
only  if  known  to  other  party),  38. 

PBOSECUTIOIf  :  agreements  to  stifle,  814. 

PRUSSIA  :  provisions  of,  as  to  undervalue,  718. 

PUBLIC  OFFICE  :  statutes  agunst  sale  of,  708. 
And  tee  Office-*. 

PUBLIC  POLICY : 

corporate  powers  must  not  be  used  to  defeat  purposes  of  incorpora- 
tion, 122. 

doctrine  of,  IniitanoeB  of  its  application  to  corporate  acts,  689. 

agreements  contrary  to,  298. 

the  doctrine  extended  in  order  to  discourage  wagers,  299. 

opinions  in  Ejferton  v.  Bronmlow,  and  e£Fect  of  the  decision,  800. 

rules  not  to  be  arbitrarily  extended,  804. 

trading  with  enemies,  804. 

aiding  hostilities  against  friendly  nations,  807. 

as  to  foreign  revenue  laws,  808. 

agreements  for  corrupt  or  improper  influence,  810. 

sale  of  offices,  ftc.,  818. 

compounding  offences,  814. 

agreements  for  reference  to  arbitration,  817. 

maintenance  and  champerty,  820,  tqq. 

agreements  as  to  custody  of  children,  381. 

as  to  agreements  limiting  freedom  of  individual  action,  884. 

agreements  in  restraint  of  marriage,  884. 

agreements  to  influence  testator,  887. 

agreements  in  Kestraint  of  Trade  {which  see),  887,  tqq. 

agreements  against  interests  of  State  where  sued  upon  cannot  be 
supported  by  any  local  law,  867,  378. 

PUBLICATIONS  :  immoral,  &c.,  cannot  be  ground  of  civil  rights,  296. 

PUBLISHER  :  contract  of  with  author,  not  atslgnable,  454. 

QUASI-CONTRACTS : 

distinguished  from  tacit  but  real  contracts,  11. 
appear  as  fictitious  contracts  in  Engl'sh  law,  12. 
are  dealt  with  separately  in  Indian  Contract  Act,  13. 


750  INDEX. 

RAILWAY  COMPANY : 

agreements  for  running  powers,  Ac.,  678. 
liability  of,  as  to  correctness  of  time-table,  15. 
purchase  of  shares  in  or  promotion  of,  by  another  railway  company, 
679. 

RATIFICATION  : 

of  infant's  contract :  effect  of  Infants'  Relief  Act,  61,  62. 

of  irregular  acts  by  assent  of  shareholders,  121,  687. 

of  agenVs  acts,  relates  back,  96. 

must  be  by  one  who  might  have  been  originally  bound,  106. 

RECORD : 

contracts  of,  143. 

RECTIFICATION  OF  INSTRUMENTS: 
jurisdiction  of  the  court  in,  498,  $qq. 
oral  evidence  how  far  admissible,  494. 

a  common  intention  of  all  parties  different  from  the  expressed  inten- 
tion must  be  shown,  496. 
proof  of  one  party's  intention  will  not  do,  496. 
possible  exception  where  one  party  acts  as  other's  agent,  497. 
special  rules  as  to  settlements,  498. 
at  whose  suit  granted,  499. 
option  to  rectify  or  set  aside  in  certain  cases,  500. 
new  oonveyanoe  not  required,  501. 
no  jurisdiction  to  rectify  wills,  Note  I. 

RELEASE  : 

restricted  construction  of,  in  equity,  484. 

in  deed  of  diasolutioD,  cannot  be  disputed  by  party  after  concern 
completely  wound  up,  565. 

REPRESENTATION : 

of  full  age  by  infant,  liability  on,  74. 

must  be  shown  to  have  misled  the  other  party,  76. 

of  disooverture  by  married  woman,  78. 

of  agent's  authority  must  be  of  matter  of  fact,  105. 

fraudulent  or  innocent,  502. 

innocent,  not  necessarily  harmless  to  person  making  it,  505. 

the  supposed  equitable  doctrine  of  "making  representations  goo  /* 

506. 
as  term  of  contract,  506. 

of  the  future,  operates  as  coolract,  if  at  all,  507. 
amounting  to  warranty  or  condition,  510. 
when  silence  is  equivalent  to,  536  538. 
what  conditions  it  must  satisfy  to  be  relied  on  for  rescinding  contract, 

542,  sqq, 
it  must  generally  be  of  fact,  542. 


INDEX.  751 

REPRESENTATION— con<i»ii«f. 

not  of  mere  motive  or  intention,  543. 

it  must  in  fMt  have  indnced  the  oontract,  546. 

mnst  be  made  by  a  party  to  the  contract,  551 . 

of  agent,  when  principal  liable  for,  652. 

mnat  be  made  as  part  of  same  transaction,  555. 

REPUDIATION :  See  Shabiholdib. 

RESCISSION : 

right  of,  on  discovering  unlawf al  purpose  of  other  contracting  party 

851. 
but  a  completely  executed  transfer  of  property  cannot  be  rescinded, 

852. 
of  contract  for  misrepresentation,  543,  tqq, 
for  frand  or  misrepresentation,  not  allowed  unless  (in  general)  the 

representation  was  of  fact,  543. 
and  in  fact  indnced  the  contract,  546. 
and  was  part  of  same  transaction,  555. 
option  to  afBrm  or  rescind  oontract  for  fraud,  &c.,  557. 
election,  hew  determined,  559. 
treating  contract  as  subsisting,  559. 
election  to  rescind  must  be  communicated,  560. 
what  communication  suifioient,  561. 
by  or  against  representatives,  562. 

not  allowed  where  former  position  cannot  be  restored,  563. 
where  party  entitled  to  rescind  has  done  acts  of  ownership,  &&,  564. 
not  allowed  against  purchasers  for  value,  566. 
of  contract  to  take  shares  too  late  after  winding-up,  568. 
must  be  within  reasonable  time,  for  length  of  time  is  evidence  of 

acquiescence,  570. 
for  undue  influence,  616. 

RESTRAINT  OF  TRADE : 

agreements  in  unlimited  restraint  of  trade ;  void,  337. 

limited  restraints  admitted,  339,  341. 

what  conditions  such  agreements  must  utisfy,  342. 

whether  a  limit  in  space  indispensable,  343. 

table  showing  what  restrictions  have  been  held  reasonable  in  recent 

cases,  844. 
distances  how  meanure'^,  347. 

contract  to  serve  for  life  or  for  exclusive  service  may  be  good,  but 
must  be  mutual,  347. 

REVENUE  LAWS  :  treatment  of  foreign,  308. 

REVERSION,  sale  of :  when  rent  or  covenanU  run  with,  224,  225. 
See  Sale  op  Rrvbbsion. 


752  INDEX. 

REVOCATION: 

of  general  offer,  19,  21. 

of  proposal,  when  in  time,  24,  tqq. 

commnnieation  of,  28. 

KOYAL  MARRIAGE  ACT,  277. 

SALE: 

of  mere  expectancy,  valid  by  English  law,  otherwise  by  dvil  law, 
829. 

of  future  sptdfic  product,  contract  discharged  by  failure  of  pro- 
duce, 898. 

SALE  BY  AUCTION : 

when  warranted  without  resenre,  17. 

voidable  for  employment  of  puffer,  if  without  reserve,  589. 

SALE  OF  GOODS: 

to  infant,  not  necessaries,  void  by  Infants'  Relief  Act,  60. 
Statute  of  Frauds  as  to,  160. 

deliverable  in  instalments,  effects  of  default  upon,  255. 
of  goods  for  unlawful  purpose,  price  not  recoverable,  851. 
how  affected  by  mistake,  448,  449,  465,  467. 
warranty  or  condition  upon,  466. 
by  sample  ;  rule  as  to  secret  defects  in  sample,  476. 
purchase  by  one  not  meaning  to  pay  is  fraud,  584. 
fraudulent,  effect  of,  558,  566. 

distinction  where  delivery  is  obtained  by  false  pretences  without 
any  contract,  567. 

SALE  OF  LAND : 

by  or  to  infant,  voidable,  57. 
Statute  of  Frauds  as  to,  159. 
effect  of  mistake  as  to  parcels,  458. 

„  price,  463. 

misdescription  of  thing  sold  distinguished  fr jm  fnadamental  error, 

468. 
mistaken  purchase  or  tenancy  of  property  really  one's  own  472. 
with  option  of,  or  agreement  for  repurchase,  488. 
effect  of  misdescription  on,  518. 
specific  performance  with  compensation,  519. 
cases  where  compensation  inapplicable,  521. 
duty  of  vendor  to  give  correct  description,  524. 
like  duty  of  purchaser  in  special  circumstances,  525. 
effect  of  special  conditions  as  to  title,  526. 
non-disclosure  of  latent  defect  of  title,  526. 
by  auction,  employment  of  puffer  at,  589. 
Jn<2  «ee  Spkcifio  Pebformamok. 


INDEX.  753 

SALE  OF  OFFICES :  nnlawfol,  813. 

SALE  OF  BEVSRSION : 

under  old  law,  Toldable  for  underralue,  604. 

the  development  of  the  doctrine  by  dedflions,  605. 

itB  abrogation  by  31  Vict.  c.  4  . .  605. 

by  person  in  dependent  position,  present  mle  as  to,  611. 

SATISFACTION: 

by  stranger,  whether  a  bar  to  subsequent  action  on  contract,  452. 

SEAL: 

necessity  of,  in  early  English  law,  137. 

misapplication  of,  138. 

necessity  of,  in  contracts  of  corporations,  145,  sqq. 

companies,  Aw.,  required  by  statute  to  use  their  proper  seal,  146. 

corporation  may  use  any  seal  at  common  law,  146,  674. 

of  corporation,  whether  equivalent  to  signature,  220. 

SEAMEN :  wages  of,  not  insurable  at  common  law,  333. 
SEDITIOUS  PUBLICATIONS :  See  Ikmobal  Publtcations. 

SEPARATE  ESTATE : 

origin  of  separate  use,  666. 

earlier  doctrines  as  to  power  of  binding  separate  estate,  667. 

rules  as  to  "  general  engagements,*'  668. 

specific  performance  against,  669. 

effect  of  cessation  of  coverture  on,  670. 

whether  liable  for  debts  contracted  before  marriage,  670. 

whether  "engagement"  must   comply  with    ordinary    forms    of 

contract,  671. 
whether  analogy  of  Statute  of  Limitation  applies  to  claims  against, 

79,  672. 
whether  liable  on  quasi-contracts,  672. 
equitable  doctrine  of,  84,  Note  C. 

SEPARATE  PROPERTY: 

what  is,  by  Act  of  1882..85. 

married  woman  may  bmd  herself  and  be  made  bankrupt  in  respect 

of,  77,  85,  86. 
contract  made  as  to,  binds  after^acquured  property,  86. 
is  liable  for  ante-nuptial  debts,  86. 

whether  debts  contracted  during  coverture  with  respect  to^  become 
personal  debts  on  termination  of  coverture,  86. 
And  tee  MARHTrn)  Women. 

SEPARATION :  judicial ;  effect  on  wife's  capacity  of  contracting,  83. 
P.  C  C  C 


754  INDEX. 

SEPARATION  DEEDS: 

AgreementB  for,  between  husband  and  wife  alona,  82. 

when  parties  not  lawfully  married,  proviso  for  reconcHUtion  Toid» 

290. 
validity  of,  292. 
effect  of,  on  special  points,  298. 
avoided  by  reooncili*tion,  291. 
agreement  for  fotare  separation  void,  295. 
provisions  for  costody  of  children  in,  832. 

SERVICE :  infant's  contract  of,  66,  72. 

SETTLEMENTS  : 

*'  in  frand  of  marital  rights"  275. 
reformation  of,  according  to  previous  articles,  498. 
daty  of  fall  disclosure  in  negotiations  for,  529. 
poet-nuptial,  how  far  supported  by  informal    ante-nuptial  agree- 
ment, 636. 
And  iee  Invahtb  and  Yoluhtabt  Gm  OB  Ssttlemiht. 

SHAREHOLDER  : 

infant  may  be,  57. 

and  is  liable  for  calls  if  shares  not  disclaimed,  65. 

right  of,  to  restrain  company  from  acts  not  warranted  by  its  con- 
stitution, 120,  688. 

ratification  by  assent  of,  128,  687. 

cannot  treat  contract  as  void  by  reason  of  variance  between  pro- 
spectus and  memorandum  of  association,  461. 

right  of,  under  Companies  Act,  1867,  s.  38.  582. 

only  original  shareholders  are  entitied  to  rely  on  prospectus,  556. 

cannot  repudiate  shares  after  acts  of  ownership,  559. 

cancellation  of  shares  on  other  grounds  equivalent  to  repudiatiuo, 
562. 

cannot  repudiate  after  change  in  constitution  of  company,  564. 

cannot  repudiate  after  commencement  of  winding-up,  568. 

must  be  diligent  in  repudiation,  572. 

SHARES: 

transfer  of,  164,  223. 

invalid  when  directora'  conient  obtained  bj  frand, 

540, 541. 
repudiation  of,  461,  n,^  564,  568, 
error  in  numbers  of,  not  material,  461. 
sale  of,  after  winding-up,  not  enforceable,  470,  474. 

SHIPS :  transfer  of,  168. 

SIMONY :  purchase  of  next  presentation,  704. 


INDEX.  756 

SLAVERY : 

Amerioan  opudans  am  to  effect  of  abolition  of,  on  prior  oontraoto, 

297. 
oontraot  for  sale  of  davee  in  alaye  conntry,  not  void  in  England,  871. 
rtatntes  against  dave  trade,  704. 

'*  SLIP : ''  in  marine  insurance,  effect  of,  164,  689. 
statntory  enactments  relating  to,  689. 
recognised  for  collateral  pnrposes,  640. 

SOCIAL  DUTY :  whether  agreement  against,  void,  888. 

SOLIOrrOB : 

what  agreements  with  dient  are  bad  for  champerty,  822. 

pnrohase  of  snbject-matter  of  snit,  by,  822. 

pnrduMe  by,  from  cUent,  587. 

costs  of  uncertificated  solicitor  not  recoverable,  644. 

how  soon  cosfei  may  be  soed  for,  645. 

special  agreement  with  dient,  651. 

stafentes  affecting,  704. 

SOUOITOB  AND  CLIENT  (contracts  between) : 

how  affected  by  the  rules  of  law  against  champerty,  822. 

aUowed  by  statute,  651,  589. 

presumption  of  influence  in  contracts  between,  587. 

SOLICITOBS'  BEMUNEBATIGN  ACT :   as  to  agreements  between 
solidtor  and  dient,  651. 

SPECIFIC  PEBFOBMANCE : 

not  granted  at  suit  of  infant,  59. 

nor  since  Infants'  Bdief  Act  of  any  contract  made  during  infancy, 
61. 

against  married  woman's  separate  estate,  669. 

of  contract  by  railway  company  to  purchase  land,  680. 

refused  against  purchaser  who  bid  for  wrong  lot,  458. 

refused  in  certain  cases  where  contract  ambiguous  or  description 
excusably  misunderstood,  460. 

refused  where  instrument  sued  on  does  not  express  the  real  agree- 
ment, 490. 

with  compensation,  on  sale  of  land,  519. 

at  suit  of  dther  party  where  misdescription  not  substantial,  519. 

at  purchaser's  option  where  substantial  and  capable  of  estimation, 
619. 

where  misdescription  substantial  and  not  capable  of  estimation, 
option  only  to  resdnd  or  to  affirm  unconditionally,  621. 

when  vendor  can  make  good  his  description,  528. 

whether  it  can  be  refused  for  undervalue  alone,  598. 


756  INDBX. 

SPEGIFIO  PERFORMANCE— «o»«»ued. 

whether  not  enforceable  where  ooUateial  repreeentation  not  being  a 
term  of  the  contract  or  amoanting  to  a  distinot  contract  haa  not 
been  folfiUed,  712. 

SPIRITS  :  statntes  affecting  sale  of,  704. 

SPIRITUAL  INFLUENCE : 

its  relation  to  undue  influence,  598. 
treatment  of,  by  French  law,  Note  L. 

STAMPS  : 

effect  of  foreign  lawi  as  to,  809. 

unstamped  document  when  admissible  as  evidence,  642. 

variation  of  contract  by  subsequent  unstamped  agreement,  612. 

STATUTE  OF  FRAUDS.    See  Frauds,  Statuti  op. 

STATUTE  OF  LIMITATION.    See  Lucitation,  Statutbs  of. 

STATUTES : 

construction  of  prohibitory,  278. 
what  is  meant  by  policy  of,  280. 
particular  occupations,  &&,  regulated  by,  Note  H. 

"STIFLING  PROSECUTION,"  816. 

STIPULATION  :  in  Roman  Uw,  188. 

STRANGER : 

to  contract,  cannot  sue  on  it,  204. 

satisfaction  of  contract  by,  whether  it  bars  action,  452. 

SURETY: 

when  discharged  by  subsequent   dealings   between  creditor  and 

debtor,  270. 
entitled  to  benefit  of  securities  271. 
discharged  by  misrepresentation  or  concealment  on  part  of  creditor, 

515. 
but  creditor  not  bound  to  volunteer  information,  517. 

«  SURPRISE  " :  whether  a  groand  of  relief  against  contracts,  618. 

SWISS  FEDERAL  CODE  :  on  contract  by  oorrespondeoce,  664. 

TESTATOR:  agreement  to  influence,  void,  337. 

TALLIES:  use  of,  14a 

THIRD  PARTIES: 

cannot  sue  on  contract,  201. 

apparent  exceptions  to  this  rule,  202,  $qq. 


INDEX.  767 

THIRD  PARTIES— «w«nued 

fraad  on,  vitiAtet  oontnct»  265. 

wrong  to,  not  preromedi  269. 

instroment  not  reotified  against  intereits  of,  497. 

TIME: 

when  of  enence  of  contract  in  equity,  485. 
may  be  made  so  by  ezprees  agreemsnt,  486. 

TIME-TABLE :  effect  of  statement  in,  15. 

TIPPLING  ACT  :  nnall  debts  for  epirite  made  not  recoverable  by,  652. 

TORT :  **  founded  on  contract*',  infant  not  liable  for,  73. 
liability  of  ooiporations  in,  118. 

TRADE: 

contracts  of  corporations  in  course  of,  need  not  be  under  seal,  147. 
agreements  in  restraint  of.    Set  Rbstbaiht  ov  Tbadb. 

TRADE  UNIONS : 

agreement  for  strike  not  enforceable,  838. 
but  since  Act  of  1871,  not  punishable,  n,  838. 
oertidn  agreements  of,  lawful  but  not  enforceable,  653. 

TRADING  WITH  E. DEMIES  : 

without  licence  from  crown,  illegal,  804. 
contracts  dissolved  or  suspended  by  war,  305. 
neutral  trade  with  belligerents  not  unlawful,  307. 

TRESPASS  :  agreement  to  commit,  void,  265. 

TRUSTEES : 

notice  of  assignment  to,  210. 

must  account  to  cestnis  que  trust  notwithstanding  collateral  ill  i- 

gality,  362. 
must  be  impartial  as  between  cestuis  que  trust,  594. 

TRUST  : 

how  far  in  the  nature  of  contract,  197. 

assignment  of,  207. 

agreement  to  conmdt  breach  of,  void,  266. 

UNDERVALUE : 

does  not  itself  avoid  contract,  but  may  be  evidence  of  fraud,  &c., 

595,  596. 
whether  specific  performance  can  be  refused  for,  598. 
treatment  of  in  foreign  law.  Note  L. 

UNDUE  INFLUENCE : 
what  is,  579,  9qq, 
presumed  from  certain  relations,  581. 


758  INDEX. 

UNDUE  INFLUENCE— ootKiniittl. 

borden  of  proof  in  sabh  omoj,  588. 

presomption  does  not  •xtend  to  wIUb,  588,  n. 

■apposed  gonenl  role  as  to  Tolnntaiy  donstionn^  584. 

TolnntAry  settlements  when  set  aside,  585. 

influence  once  shown  presumed  to  oontinue,  586. 

purchases  by  solicitor  from  client,  587. 

duty  of  persons  in  fiduciary  relations,  588. 

Indian  Oontract  Act  on  duty  of  party  oontraoting  in  loco  paraUit 

589,  n. 
no  presumption  against  "  family  anangwaents,"  590. 
particular  relations  where  influence  presumed,  591. 
relations  analogous  to  parent  and  child,  591. 

„  „  solidtor  and  client^  592. 

spiritual  hifluence,  598. 
apart  from  fiduciary  relation,  594. 
undervalue,  how  &r  material,  595,  iqq, 
protection  of  expectant  heirs,  ftc.,  602,  iqq, 
rules  of  equity  as  to  **  catching  bargains,"  606. 
sales  of  reversionaiy  interests  by  persons  in  dependent  position,  611 
**  surprise,"  &&,  as  evidenoe  of,  612. 
rescission  of  contract  for,  615. 

whether  material  if  exerted  by  stranger  to  the  ooQtraot»  617. 
effect  of  confirmation  or  delay,  617. 
by  foreign  laws,  716. 
doctrine  of  captation  in  French  law,  Note  P,  717. 


UNLAWFUL  AGREEMENTS : 
general  classification  of,  261. 
to  commit  offence,  fta,  268. 
to  commit  civil  wrong,  265. 
in  fraud  of  creditors,  266. 
for  marriage  within  prohibited  degrees,  276. 
BO  made  by  prohibitory  statutes,  277. 
agreements  contrary  to  Public  Poliot  {which  9ee),  298. 
general  rules  as  to  treatment  of  them,  847,  tqq, 
where  promises  are  independent,  the  lawful  ones  enforceable,  848. 
unlawful  consideration  avoids  whole  agreement,  849. 
where  immediate  object  unlawful,  agreement  void,  850. 
ulterior  unlawful  intention  of  both  parties,  or  of  one  known  to  the 

other,  makdfl  agreement  void,  850. 
effect  of  intended  unlawful  use  of  subject-matter  of  contract^  851. 
innocent  party  may  rescind  on  discovering  unlawful  intention  of  the 

other,  851. 
agreements  v<nd  as  part  of  unlawfol  scheme,  though  subsequent, to 

the  unlawfol  act,  858. 


INDEX.  759 

UNLAWFUL  AGBEEMENTS— eoniintitti 

aeenrifeUfl  subieqaently  given  for  payment  of  money  under  nnlftwf ol 

agreementa,  yoid,  864. 
Illegality  may  always  be  shown  by  extrinsic  evidence*  856. 
where  immediate  object  not  nnlawfal,  unlawful  intention  must  be 

shown  to  have  existed  at  date  of  agreement,  857. 
the  parties'  knowledge  or  ignorance  of  the  law  may  be  material  for 

this  purpose,  859. 
unlawful  intention  not  to  be  presumed,  859. 
when  payments  imder,  can  be  recovered,  860. 
rule  that  party  in  pari  deUcto  cannot  recover,  860. 
collateral  illegality  does  not  affect  duty  of  agents  to  account  to 

principals,  862. 
money  recoverable  where  agreement  not  executed,  868. 
unless  manifestly  repugnant  to  jastioe  or  morality,  864. 
where  payment  not  voluntary,  or  parties  otherwise  not  in  pari  ddicU>, 

865. 
conflict  of  laws  as  to  lawfulness :  what  local  law  governs,  867. 
contract  for  sale  of  slaves  made  and  to  be  performed  in  a  slave  state 

is  recognized  in  English  courts,  871. 
oonfliot  of  laws  in  time :  contract  dissolved  by  perfoimanoe  becom- 
ing unlawful,  875. 
whether,  in  absence  of  original  unlawful  intention,  an  agreement 

may  become  valid  by  performance  becoming  lawful,  875. 
statutes  forbidding   or   regulating  particular  contracts  collected, 

NoteO. 

USURY  LAWS: 

repeal  of,  has  not  altered  doctrine  of  "  catching  bargains^'*  606. 
its  effect  on  subsisting  loans,  654. 

VABIATION :  oral,  of  written  contract,  available  for  defendant  but  not 
for  plainti£^  491. 

VENDOR  AND  PURCHASER.    See  Salb  ot  Land  ;  Spsoino  Pxb- 

VOBMANOS. 

VIS  MAJOR :  meaning  of,  894. 

VOID  AND  VOIDABLE: 

distinction  between  these  terms,  8. 
confusion  between  the  terms,  54. 

contracts  of  infants  at  common  law  voidable,  not  void,  59. 
contracts  of  lunatics,  when  void  or  voidable,  87,  92. 
agreement  may  be  void  without  being  forbidden,  or  vice  versa,  284. 
deed  void  in  part  by  statute,  not  necessarily  void  altogether,  849. 
contract  depending  on  personal  skill,  &c.,  made  void,  not  voidable 
by  subsequent  disability,  408. 


760  INDEX. 

VOID  AND  VOIDABLE-«m/t»ti«i 

in  some  omw  agreement  may  be  Toid  tm  against  third  penons  bat 
Toidable  aa  between  the  parties,  476,  477. 

VOLXTNTARY  COVENANT :  speoiao  performance  of,  not  granted,  184. 

VOLUNTARY  DEED  :  not  rectified  against  grantor,  499. 
And  $ee  Uvduie  Influbhoi. 

VOLUNTARY  GUT  OR  SETTLEMENT: 

question  as  to  burden  of  proof  on  donee,  584. 

readily  set  aside,  585. 

power  of  revocation  not  necessaiy  to  validity  of,  585. 

WAGERS: 

▼oid  by  sUtate,  but  not  illegal,  285. 

former  treatment  of  them  at  common  law,  299. 

parties  repudiating,  may  reoover  deposit  from  stakeholder,  863. 

authorities  as  to,  705. 

WAGES :  statutoiy  enactments  as  to  payment  of,  705. 

WARRANTY: 

implied,  of  agent's  authority,  105. 
implied  in  contract  to  many,  106,  n. 
effect  of,  as  distinguished  from  condition,  510. 
express,  on  sales  of  goods,  510. 

WEIGHTS  AND  MEASURES:  stotutcB  regulating,  705. 

WILL: 

covenant  not  to  revoke,  not  broken  by  subsequent  marriage,  835. 
contract  to  make  disposition  by,  lawful,  337. 
execution  of  wrong  document  as,  wholly  inoperative,  444,  n, 
presumption  of  undue  influence  never  applied  to,  583,  n. 
cannot  be  rectified,  but  general  intention  may  take  effect  agunst 
particular  worda,  Note  L 

WINDING-UP: 

secret  agreement  for  conduct  of,  void,  317. 
right  to  proceed  with  creditor's  petition  for,  not  saleable,  326. 
shares  cannot  be  repudiated  after,  461,  568. 
of  insurance  companies,  application  of  prohibitory  stamp  laws  to 
poUcies,  641,  642. 

WRITING : 

contracts  in,  not  a  special  class  in  English  law,  168,  n. 
agreements  in,  not  varied  by  parol  evidence,  236. 
but  may  be  construed  by  evidence  of  special  meaning  of  terms,  239. 
or  supplemented  by  customary  terms,  241. 

V 

W.  I.  BIOHAaDSOH,  PBIimB,  4  AHD  6,   OBBAT  QUBSR  BTRBET,  LOZTSOV,  W.a  ^    - 


«p 


iwr 


CZAPSFApe 

^  lOf 


3  6105  044  216  120 


■^