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Ratification.

bear in mind, that to entitle the company of which they are members to the protection which the law gives against unauthorized acts, it is always essential that it shall have acted with perfect fairness and good faith. Nothing must have been done which could deceive the contracting party into the belief that the transaction had been adopted by the company, or could induce him to delay proceeding against the partner by whom he had been misled. And in general it seems only fair, that as soon as the transaction comes to the knowledge of the company, intimation of its being unauthorized should be made to the opposite party (a).

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When a contract is invalid against the company by reason of the transaction having been ultra vires of the partner with whom it was entered into, and its having been known to be so by the party with whom the contract was made, it may generally be validated by rei interventus, homologation, or adoption on the part of the company (b). But it must always be considered whether the particular transaction be one within the limits of the company's powers. If it be not, no ratification however formal by any number of partners less than the whole will validate the transaction; for what a majority could not do originally, they cannot ratify by any subsequent act (c). If the transaction lie within the scope of the company's sphere of action, it will be validated by the ratification of any partner possessing the necessary agency, express or implied, or by its proceeds being in rem versam of the company, whether this have taken place by a partner having the requisite agency or not; for the mere fact that the firm has allowed the proceeds of the transaction to be so applied, is the best proof of its ratification (d). If again the transaction is invalid, as being beyond the company's sphere of action, the company, if they have taken the benefit of it, will be liable to indemnify the opposite party, and to restore him as far as possible to the position he occupied before entering into the transaction (e).

As to ratification by companies of acts done by their directors or other officials, see 'Powers of Directors.'

(a) Proprietors of Bo'ness Canal v. M Alpine and Co., 1791, Hume 751.

(b) Blaikie Brothers v. Aberdeen Ra. Co., 1851, 14 D. 66, House of Lords 1852.

(c) See Powers of Majorities, and Proudfoot v. Lindsay, 1825, 3 S. 310. (d) See Duncan v. Lowndes, 3 Camp. 478, 3 Ross L. C. 475.

(e) Lindley, S. App. 71.

Damages for Non-fulfilment of Contracts.

quasi contracts.

Damage, direct quential.

and conse

If a firm or company fail to fulfil an obligation arising from con- Contracts or tract or quasi contract, but without fraud or fault, it becomes liable in damages to the creditor for that which he has directly lost or has been prevented from gaining, coupled with the costs of the proceedings for obtaining reparation (a). The expression without fraud or fault' is here used to mark the distinction between liability for innocent breach of contract and liability for delict. The first measures the reparation by the direct damage merely; the second by the highest advantage which, but for the delict, would have been enjoyed. It is sometimes difficult to determine what is exactly meant by the expression direct damage, as opposed to that which is collateral or consequential. A few observations on this subject may not be out of place. In pecuniary obligations the damages take the form of interest; Loss of and when failure to implement has not arisen from delict, the interest is not to be measured by what the creditor might have turned out of the principal by embarking it in his trade or in some fortunate speculation, but at the rate of 5 per cent., which is still regarded as in such cases the legal rate of interest (b). Where, however, a special contract has been made to deliver a sum of money against a particular day in order to be employed in a particular manner, it seems fair that the company should be held liable in interest commensurate with the damages which in similar circumstances would arise from the non-delivery of goods.

interest.

practice.

When a breach of contract takes place from the non-delivery English of goods, it has been the custom in England to award damages according to the price at or about the day when the goods were contracted to be delivered; while, when the breach of contract arises from failure to return stock lent, the damages have been assessed at a higher rate, because in this case the borrower has the lender's goods in his hands (c).

(a) Stair i. 17, 16; Ersk. iii. 75, 86. See Smith on Reparation. It is essential, however, in all such cases, that the stipulation for breach of which damage is claimed plainly appears ex facie of the contract. Walker

v. Caledonian Ra. Co., 1858, 20 D.
1102.

(b) See Smith, 1857, 19 D. 267.
(c) Leigh, 8 Taunt. 540, Bell's Ill.
42; Gainsford, 2 Barn. and Cress.
624, do. 42.

Scotch practice.

When both parties are in fault.

Stipulated damages.

In Scotland this distinction does not appear to have been observed; but the practice seems to have been to take as the criterion of damage either the highest price which might have been got for the goods at any time after the date of the sale, or the average value between the stipulated time of delivery and that of raising the action. A list of the more important decisions bearing on this subject is given below (a).

As to damages arising from loss of profits, see cases noted below (b).

If the loss arises from the fault of both parties under a contract of sale, the general rule was that it must be borne equally by both (c). Latterly, however, it has been laid down that there is no fixed rule as to the particular time at which the difference in the price of goods ought to be taken for the purpose of fixing the amount of damage sustained by non-delivery in breach of contract, but that each case must be regulated by its own circumstances, and determined by the verdict of a jury (d).

Sometimes damages are stipulated in the contract, as exigible in the event of its non-fulfilment. If this be so, no inquiry into the actual damage seems competent (e). If, however, the obligation be merely fortified by a penalty, that is held the limit within which the jury may assess damages (ƒ).

Delict.

II. OBLIGATIONS ARISING FROM DELICT AND QUASI DELICT.

A delict is an offence committed with an injurious, fraudulent, or criminal purpose. Such an act involves all who are concerned in its commission in criminal penalties; but independently of these, it also subjects them in civil damages.

(a) Morrin, 1806, M. Damage App. 1, aff. 5 Paton 649; Shirra, Dec. 11 1807, F. C.; Robison and Co., 1808, 15 F. C. 74; Anderson, 1809, 15 F. C. 206; Dunlop, 1815, 18 F. C. 382; Bell v. Leighton, 1819, 2 Mur. 74; Strachan v. Paton, 1824, 3 S. 259, N. E. 184, aff. 3 W. and S. 19; Roberts, 1825, 4 Mur. 3; Watt v. Mitchell, 1839, 1 D. 1157; Dickson v. Henderson, 1849, 12 D. 306.

(b) Watson v. Kidston, 1 D. 1254

(1830); Mags. of Montrose v. Forsyth, 1834, 12 S. 429; Downe v. M'Kinlay, 1834, 12 S. 528.

(c) Reid v. Steele, 1824, 3 S. 141. See also Scott v. Selbie, 1836, 14 S. 574.

(d) Watt v. Mitchell, 1839, 1 D. 1157; Higgins and Sons v. Dunlop and Co., 1847, 9 D. 1407.

(e) Mortimer v. Millar, 1849, 11 D.

1218.

(f) See Bell's Prin. p. 17.

A quasi delict may be defined to be that gross negligence or Quasi delict. imprudence, less than actual fraud or malice, in the doing of something, either obligatory or lawful, by reason of which another

is injured in person, property, feelings, or character. This also involves all concerned in liability for reparation.

agency.

In order to understand in what manner firms and companies Doctrines of incur liability for delict or quasi delict committed by their members or agents, it is necessary to advert again to the doctrines of agency. A principal becomes liable for the delict or quasi delict of his agent, when—1st, he has authorized it to be done, either expressly or by implication; 2d, when he has adopted it, either during or after completion; 3d, when it has been done by the agent in the course of and as part of his employment.

But, on the other hand, the principal is not liable when he has neither ordered nor authorized the thing to be done, and especially when he has forbidden it; nor, again, is he liable for the act of his agent done maliciously, and not in the course of his employment or as part of his business.

to companies.

These rules, by which the liability of principals for the acts of Application their agents is determined, are equally applicable to companies and firms; it being borne in mind that the company or firm is the principal, and that the agents are either the partners or some other persons employed by the society to act on its behalf.

Some illustration will now be given of the application of these rules; and as it is quite the same whether the principal be an individual or the quasi person of a company, they will be taken indifferently from cases of both kinds.

by member of

If an agent receive money or goods on behalf of his principal, Embezzlement or in the course of the business in which he represents his company. principal, and embezzles or misapplies it, he renders the principal liable. A solicitor who was employed to recover the contents of a bill from a debtor, put it into the hands of a messenger to execute diligence, and to receive and remit the money. The messenger got the but failed to remit. The solicitor was found liable for it to his client (a). The same result would have followed if in this case the principal had been a company of solicitors instead of an individual, and the delict had been committed by one of their own number as

money,

(a) Brown v. Forsyth, 1790, Hume 318.

Money obtained in course of business.

Ignorance of partners does not avoid liability.

Money must have been

line of the com

agent for the firm. So, in the English case of Willet v. Chambers (a), a partner of a firm of solicitors having received money from a client to invest on mortgage, and misapplied it, the firm was found liable to the client. So, also, where one of a firm of solicitors fraudulently obtained money out of the Court of Chancery, but entirely without the knowledge of his partners, and handed it over to the client, the firm was found liable (b).

In like manner, when a firm has, in the ordinary course of its business, received money or property belonging to others, if any one of the partners misapplies it while in the custody of the firm, the firm is liable.

In Sadler v. Lee (c), the members of a banking company were authorized to sell out stock standing in the name of a customer. One of the partners did so, and the firm received the proceeds of the sale. Another partner afterwards misapplied them. The company was found liable.

It in no wise lessens the liability of the firm, that the money which was afterwards misapplied was originally placed in the custody of the firm by a fraud of one of the partners of which the others were ignorant, or even that they knew nothing of the money having ever been in their custody. If the funds were placed to the credit of the firm by its partner or known agent, the firm was bound to know that it had received such funds, and was bound to see that they were properly applied (d).

But in all such cases it is essential to ground liability against received in the the firm, that the money or goods shall have been received by the pany business. partner or agent, or placed by him in the custody of the firm, while engaged in the business of the firm. In other words, the act which raises the liability must have been done within the limits of his agency, express or implied. If this is not so, then no liability is incurred by the partnership, and the maxim applies, Culpa tenet auctores suos. Thus, if money were to be entrusted to the partner or agent of a concern, in order to be laid out on security, and it

(a) 2 Cowp. 814, 3 Ross L. C. 476.
(b) Brydges v. Branfill, 12 Sim.

369.

(c) 6 Beav. 324. See also Devaynes v. Noble, 1 Mer. 575; Vulliamy v. Noble, 3 Mer. 593; Blair v. Bromley, 2 Ph.

354; ex parte Biddulph, 3 De G. and Sm. 587; Devaynes v. Noble, 1 Mer. 611 and 624.

(d) Keating v. Marsh, 1 M. and A. 582, 2 Cl. and Fin. 250; Stone v. Marsh, 6 B. and C. 551.

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