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Contracts made upon fraud and misrepresentation.

Equity. Where the contract is expressly or by implication forbidden by common or statute law, no Court will lend its assistance to enforce it (a). Illegality, however, is never presumed; on the contrary, everything must be presumed to have been legally done till the contrary be proved.

A contract made upon fraud and misrepresentation is avoidable; but that a collateral statement made at the time of entering into a contract, but not embodied in it, may invalidate the contract on the ground of its being a fraudulent statement, it must be shown not only to have been false, but to have been known to be so to the party making it, and that the other party was thereby induced to enter into the contract (b).

Implied contracts.

Contracts implied from the relation

of the parties

SECTION III.

IMPLIED CONTRACTS.

Where there is no express contract or obligation a contract is often implied. Implied contracts are such as reason and justice dictate, and which therefore the law presumes that every man undertakes to perform, as for instance where a man employs a person to do any business for him or perform any work, the law implies that he undertook or contracted to pay as much as his labour deserves (c). So if a person accept anything which he knows to be subject to a duty or charge, it is natural to conclude that he meant to take the duty or charge upon himself (d).

A contract may also be implied from the relation of the parties. A banker is bound by law to pay a cheque drawn by a customer within a reasonable time after he (the banker) has received sufficient funds belonging to the customer (e). So where there is an invariable usage the law implies it as the basis of the contract between the parties (f). And if there be a general usage applicable to a particular profession, parties employing an individual in that profession are supposed to deal with him according to that usage (g).

(a) Cope v. Rowlands, 2 M. & W. 149.

(b) Moens v. Heyworth, 10 M. & W. 147.

(c) 2 Bl. Comm. 443.

(d) Renteria v. Ruding, 1 Moore & M. 513.

(e) Marzetti v. Williams, 1 B. & Ad. 415.

(f) Raitt v. Mitchell, 4 Camp.

149.

(g) Sewell v. Corp, 1 C. & P. 393.

SECTION IV.

CONDITIONAL CONTRACTS.

either abso

lute or con

ditional.

A contract may either be absolute or conditional upon the Contracts happening of some event, or upon the performance of some prior or precedent act. Where the contract is conditional no liability arises till the event has happened, or the precedent act has been performed (a).

A contract may moreover be either mutual and dependent, or mutual and independent. A mutual and dependent covenant is one in which the performance of one depends on the prior performance of another, in which case neither party can call upon the other to perform his part of the contract till he himself has performed all that he has stipulated to do. Thus in a contract between the directors of a company and the subscribers to the capital thereof, if the directors do not execute the deed which is their obligation in the contract, the subscribers would not be responsible upon their covenant (b).

A mutual and independent contract is one in which either party may recover damages from the other for the injury he may have received by a breach of the covenants in his favour, and where it is no excuse for the defendant to allege a breach of the covenant on the part of the plaintiff. So where goods are sold to be paid for at any time after delivery, actual delivery is a condition precedent to the right of the vendor to sue for the price (c).

Whether the time appointed for the performance of a contract is to be held as a condition precedent to the liability of the other contracting party depends on the intention of the parties, manifested by the terms of the contract. If the contract is absolute, appointing the time for the doing of an act, the time so appointed is of the essence of the contract, and if the act is not performed on the day fixed the other contracting party may release himself from the contract. So where by a charter party the owner binds himself that the vessel shall sail by the next wind, such sailing by the next wind would be a condition pre

(a) Lock v. Wright, 1 Str. 571; Alder v. Boyle, 4 C. B. 635; Morgan v. Birnie, 3 M. & Sc. 76; Rae v. Hackett, 12 M. & W. 724.

VOL. I.

(b) In re Dover, Hastings, &c., 18 Jur. 52.

(c) Ripley v. M'Clure, 4 Exch. 359; Staunton v. Wood, 16 Q. B. 638.

T

Mutual and
dependent,
or mutual and
contracts.
independent

When time is precedent.

a condition

cedent to his right to recover the freight (a). If no time is mentioned for the performance of a contract the presumption is that it shall be performed within a reasonable time; and if the performance has taken place after an unreasonable delay, the other party will be released from his liability on the contract (b).

But whatever be the condition precedent, or however fixed the time of performance, if either party has waived his right to the fulfilment of it, the condition is at an end, and it is understood as if it had never been inserted in the contract at all (c).

Hindrance

to fulfilment

SECTION V.

PERFORMANCE OF CONTRACTS.

When the performance of a contract has been prevented by by the party. the party with whom such contract was entered, he is precluded from enforcing the fulfilment of the same. So when one party has refused to perform, or has rendered himself incapable of performing his part of the contract, he puts it in the power of the other party either to sue for a breach of it, or to treat the contract as rescinded or abandoned (d).

Impossibility of perform

ance no CXcuse.

Contract to be fulfilled

in a reasonable time.

Impossibility of performance by the act of God, or by circumstances over which the party had no control, is no excuse for the non-fulfilment of a voluntary contract, and will not release the party from the obligation of the same. Thus where a contract is made to deliver grain or to load a vessel at a foreign port, the party is not relieved from his obligation by the fact that a prohibition of exports, issued by the foreign Government since the contract was made, prevents the fulfilment of the contract, inasmuch as the casualty or accident might have been provided against by the contract (e).

When no time for the performance is specified, the law implies that it shall be done within a reasonable time. But when the time is appointed, it is frequently of the very essence of the

(a) Constable v. Cloberie, Palm. 397; Bornmann v. Tooke, 1 Camp. 377.

(b) Clipsham v. Vertue, 5 Q. B. 265. (c) Alexander v. Gardener, 1 Se. 640; Wing . Harvey, 23 L. J. Ch.

(d) Peters v. Opie, 2 Saund. 350; Collins v. Price, 5 Bing. 132; De Bernardy v. Harding, 8 Exch. 822.

(e) Sjoerds v. Luscombe, 16 East,

201.

formed in a

contract, so as to give an immediate right of action for the enforcement of the same. Although the party may perform Must be perthe contract in the manner most convenient to himself, the con- substantial tract must be performed in a substantial and bona fide manner, in accordance with the true meaning of the parties.

manner.

When one of the parties fails to perform the contract, the General damages. other may claim compensation in either general or special damages. General damages are those which are the direct result of the breach of contract, and special damages are those which result from acts done in connection with the contract, but which are not the necessary result of the breach of contract. Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be either such as may fairly and reasonably be considered as arising naturally, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it (a).

In some cases where compensation in damages is manifestly Specific insufficient, the Court of Equity and in some cases the Common performance. Law Courts also will compel specific performance, as for example

in case of agreements for the formation of a partnership (b), or for the sale of the goodwill of a trade (c), and of contracts to insure against loss by fire (d).

SECTION VI.

CONSTRUCTION OF CONTRACTS.

of contracts.

An express contract is construed according to its sense and Construction meaning, as collected in the first place from the terms used in it, which terms are themselves to be understood in their plain, ordinary, and popular sense, unless they have generally in respect to the subject matter, as by the known usage of the trade, or the like, acquired a peculiar sense distinct from the

(a) Hadley v. Baxendale, 23 L. J. Exch. 179.

(b) England v. Curling, 8 Beav.

129.

(c) Bryson v. Whitehead, 1 Sim. & Stu. 74.

(d) Story, Equity Jurisp. sec. 722; Addison on Contracts, p. 1165.

Construction of words.

popular sense of the same words, or unless the context evidently points out that they must in the particular instance, and in order to effectuate the immediate intention of the parties to that contract, be understood in some other special and peculiar sense (a). If a word has acquired a particular meaning in a certain trade that meaning will be applied to it in construing a written contract respecting that trade, but that the word has acquired that particular meaning must be distinctly proved, and parol evidence is admissible to that effect (b).

Contract decided by the law of the place where it is made.

the rule.

SECTION VII.

PRIVATE INTERNATIONAL LAW ON CONTRACTS.

The validity of a contract is to be decided by the law of the place where it is made. If valid there, it is by the general law of nations held valid everywhere by the tacit or implied consent of the parties (c). With this exception, however, that any Exceptions to fraudulent evasion of the laws of the country or of the rights and duties of its subjects (d), and any contracts against public morals, or against religion or against public rights (e), and contracts opposed by the national policy or national institutions, are null and void, even although they may be valid by the law of the place where they are made. Moreover, it is an established principle that no nation will regard or enforce the revenue laws of any other countries (f). All the formalities and proofs for the authentication of the contract which are required by the lex loci are indispensable to its validity everywhere else. So where the forms of a public instrument are regulated by the laws of a country they must be strictly followed, to entitle it to be held valid elsewhere (g).

Formalities and proofs regulated by the lex loci.

(a) Robertson v. French, 4 East, 135; Mallan v. May, 13 M. & W. 511.

(b) Taylor v. Briggs, 2 C. & P. 525; Myers v. Sarl, 30 L. J. Q. B. 9; Simpson v. Margitson, 11 Q. B. 23.

(c) 2 Kent Comm. pp. 457, 458; Cammell and others v. Sewell and others, 29 L. J. Exch. 350.

(d) Brook v. Brook, 3 Small & Giffard, Rep. 481. See Phillimore, International, Vol. 4, Comity; Biggs

v. Lawrence, 3 T. R. 454; Waymell v. Reed, 5 T. R. 599.

(e) Smith v. Stokesbury, 1 W. Bl. 204; Story on Conflict of Law, sec. 259.

(f) De Weitz v. Hendrichs, 9 Moore, 586; Thompson v. Powles, 2 Sim. 194; Pattison v. Mills, 1 Dow & Clarke, 342; Madrazo v. Willes, 3 B. & Ald. 353. (g) Story's Conflict of Law, ss. 259 to 261.

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