and good conduct of the person employed, the contract is in the nature of an insurance against risk; but the same rule does not prevail as in insurances on ships and other property. A person who takes a guarantee for the solvency or conduct of another is not bound to disclose all material facts and circumstances within his knowledge respecting the transaction guaranteed; and the reticence or misstatement on his part respecting such facts and circumstances, in the absence of fraud, does not affect the validity of the guarantee (a). So, in contracts of indemnity, reticence or misstatement must be accompanied by fraud in order to vitiate the contract (h).

But where, upon a proposed contract of guarantee "the creditor describes to the proposed sureties the transaction proposed to be guaranteed (as in general a creditor does) that description amounts to a representation, or, at least, is evidence of a representation that there is nothing in the transaction that might not naturally be expected to take place between the parties to a transaction such as that decribed; and if a representation to this effect is made to the intended surety by one who knows that there is something not naturally to be expected to take place between the parties to the transaction, and that this is unknown to the person to whom he makes the representation, and that, if it were known to him, he would not enter into the contract of suretyship, it is evidence of a fraudulent representation on his part "(c).

Where it had been agreed between the vendor and vendee of goods that the latter should pay at a rate above the market price, which extra sum was to be applied in liquidation of an old debt due to the vendor, and a guarantee was taken for the payment of the goods to be supplied, without communicating to the surety the bargain as to the price, it was held that there was a fraud on the surety

(a) North British Ins. Co. v. Lloyd, 10 Ex. 523; 24 L. J. Ex. 14; and see Owen v. Homan, 3 Mac. & G. 378; 20 L. J. C. 314; 4 H. L. C. 997; Smith v. Bank of Scotland, 1 Dow. 272; Railton v. Mathews, 10 Cl. & F. 934; Hamilton v. Watson, 12 ib.

109; Lee v. Jones, 17 C. B. N. S. 482; 34 L. J. C. P. 131.

(b) Way v. Hearne, 13 C. B. N. S. 292; 32 L. J. C. P. 34.

(c) Per Blackburn, J., Lee v. Jones, 17 C. B. N. S. 482, 503; 34 L. J. C. P. 131, 138.

of guarantee.

Contracts which rendered the guarantee void (a). Where a guarantee was taken by a bank for the good behaviour of an agent, it was held that the fact that the bank knew that the principal had misconducted himself in his office, which was not communicated to the sureties, was material as evidence of inaccurate representation that he was trustworthy, and ought to have been admitted to proof (b). The mere taking of a security for a banker's cash account, without communicating that the principal had already overdrawn his account, was held to be no evidence of a representation that he had not, as under such circumstances it might reasonably be supposed that he had (c).

Relief in
Equity

against
fraud.

The plaintiff, a coal-merchant, had employed an agent to sell coals upon the terms that he was to be answerable for the price of the coals sold by him and to pay for them monthly, and also upon a guarantee for the due performance of his engagement to the amount of £300; afterwards the agent becoming indebted on the coal account above £1300, the plaintiff required further security, and an agreement was made for that purpose between plaintiff and the defendant, which recited the terms of the engagement of the agent and the former guarantee, and provided that the defendant should give a continuing guarantee to the plaintiff for three years to secure the amount of any balance that might at any time during the three years be due from the agent to the plaintiff; the plaintiff did not inform the defendant that any debt was then due from the agent; it was held by a majority of the Court of Exchequer Chamber that there was evidence to support a verdict that the agreement was obtained by fraud (d).

The Courts of Equity exercise a jurisdiction to rescind contracts obtained by fraud or fraudulent concealment, such as would be sufficient to avoid the contract in a court of law; and the Court of Chancery will in some cases set aside

(a) Pidcock v. Bishop, 3 B. & C. 605.

(b) Smith v. Bank of Scotland, 1 Dow. 272.

(c) Hamilton v. Watson, 12 C1. &

F. 109; see North British Ins. Co. v.
Lloyd, 10 Ex. 523.

(d) Lee v. Jones, 17 C. B. N. S. 482; 34 L. J. C. P. 131; Bramwell, B., and Pollock, C.B., dissentientibus.

an agreement as obtained under fraudulent circumstances, where the circumstances would not be sufficient to entitle the party in law to avoid the agreement on the ground of fraud. The Court of Chancery will in some cases refuse the remedy of specific performance of an agreement on account of the fraudulent or suspicious character of the transaction although it would not set aside the agreement (a).

fraud at

law upon

grounds.

The fraud, upon which a court of equity would rescind Pleading the contract altogether, would, in general, be sufficient ground for avoiding the contract at law, and would be matter equitable for a legal pleading. But there are cases where a court of equity would rescind a contract for a misrepresentation made without any fraudulent intention, in which the contract could not be avoided in law; and in such cases a plea on equitable grounds might be applicable. The fraud, which merely disentitles a party in equity to the remedy of specific performance, and is not sufficient ground for rescinding the contract, leaves the party his legal rights and remedies upon the contract, and is not matter for a pleading at law upon equitable grounds. Where the circumstances are such that a court of equity would rescind the contract for a misrepresentation, but upon terms of restitution, the equity, being conditional, is not a proper equitable ground for a pleading at law (b).

AN agreement apparently complete and sufficient to create Duress. a contract, may be vitiated by duress, as it is called in English law; that is, where one of the parties to the agreement was induced to consent by fear and intimidation, imposed by the violence or threats of the other party, he may avoid the agreement.

(a) See Story Eq. Jur. §§ 184, 796; Cor v. Middleton, 2 Drew. 209.

(b) See Gorsuch v. Cree, 8 C. B. N. S. 574; 29 L. J. C. P. 308.

Duress to the person.

Duress by

threats.

Duress of goods.

The duress recognized in law, as producing a sufficient degree of fear to vitiate an agreement induced by it, may consist in actual violence to the person, or in threats thereof (a). Duress by actual violence may consist in illegal imprisonment; but a legal imprisonment will not constitute duress. In commenting on duress by imprisonment Lord Coke lays down as follows:-" Every restraint of the liberty of a freeman is an imprisonment, although he be not within the walls of any common prison."-" If a man be imprisoned by order of law, the plaintiff may take a feoffment of him or a bond for his satisfaction, and for the deliverance of the defendant, notwithstanding that imprisonment, for this is not by dures of imprisonment, because he was in prison by course of law; for it is not accounted in law dures of imprisonment, but where either the imprisonment or the dures that is offered in the prison or at large is tortious and unlawful, for executio juris non habet injuriam” (b).

Duress may also consist of threats of personal violence, which is called dures per minas. According to Lord Coke, in order to entitle a person to avoid his own act as induced by fear imposed by threats, "The fear must concern the safety of the person of a man, and not his houses or goods; for if he fear the burning of his houses or the taking of or spoiling of his goods, this is not sufficient, because he may recover the same, or damages to the value, without any corporal hurt. Again, if the fear do concern the person, yet it must not be a vain fear, but such as may befall a constant man. Talis enim debet esse metus qui cadere potest in virum constantem, et qui in se continet mortis periculum et corporis cruciatum.-Fear of imprisonment is sufficient, for the law hath a special regard to the safety and liberty of a man” (c).

In the case of Skeate v. Beale (d) the distinction between duress of the person and duress of goods, as affecting agreements, was explained in the judgment of the Court as follows:-"We consider the law to be clear, and founded on

(a) 1 Blackst. Com. 131.

(b) 2 Inst. 482; and see Smith v. Monteith, 13 M. & W. 427, 442.

(c) Co. Lit. 253 b; 2 Inst. 183;

Bracton, 1. 2, fo. 16b; per Lord Ellenborough, C.J., R. v. Southerton, 6 East, 126, 140.

(d) 11 A. & E. 983, 990.

good reason, that an agreement is not void because made under duress of goods. There is no distinction in this respect between a deed and an agreement not under seal; and, with regard to the former, the law is laid down in 2 Inst. 483, and Sheppard's Touchstone, p. 61, and the distinction. pointed out between duress of, or menace to the person, and duress of goods. The former is a constraining force, which not only takes away the free agency, but may leave no room for appeal to the law for a remedy; a man, therefore, is not bound by the agreement which he enters into under such circumstances: but the fear that goods may be taken or injured does not deprive any one of his free agency who possesses that ordinary degree of firmness which the law requires all to exert." Accordingly, where the plaintiff had seized the defendant's goods as a distress for rent, claiming more than was due, and the defendant, in consideration of plaintiff withdrawing the distress, promised to pay the arrears claimed, the agreement was held not to be voidable on the ground of the duress of the defendant's goods (a).

But where money is paid to release goods or property from Money ob. tained by duress and upon no other consideration, it is considered as duress of an involuntary payment, and may be recovered (b). The goods. distinction between the cases of money obtained by duress of goods and an agreement obtained by the same means is pointed out by Parke, B., in his judgment in the case of Atlee v. Backhouse (c). "There is no doubt that if goods. are wrongfully taken, and a sum of money is paid, simply for the purpose of obtaining possession of these goods again, without any agreement at all, especially if it be paid under protest, that money can be recovered back; not on the ground of duress, because I think that the law is clear, although there is some case in Viner's Abridgment to the contrary (d), that in order to avoid a contract by reason of duress, it must be duress of a man's person, not of his goods; and it is so laid down in Sheppard's Touchstone (e): but the ground is, that it is not a voluntary payment. If my goods have been wrongfully detained, and I pay money simply to

(a) Skeate v. Beale, supra.

(b) See ante, p. 52-54.

(c) 3 M. & W. 633, 650.

(d) Vin. Abr. Duress, (B), 3; 1

Roll. Abr. 687.

(e) P. 61.