CHAPTER IX. ON CONTRACTS. SECTION I. CONTRACTS BY DEED. BRITISH LAW. A CONTRACT is an agreement by which two parties mutually what is a promise and engage, or one of them only promises and engages contract. to the other, to give some particular thing, or to do or abstain from doing some particular act. A contract is bilateral when the obligation is mutual. It is unilateral when it binds one without producing a corresponding engagement in the other (a). press or implied. When it is express, it may be by deed or by A contract may be express or implied. An express contract May be exmay be by matter of record, by deed, or by simple contract. Contracts by matter of record are those acknowledged in open court before an officer of the court, and in the presence of the party making the acknowledgment. Contracts by deed are contracts in writing, signed, sealed, and delivered by the parties to them. Simple contracts are either made by parol or implied from the conduct or dealings of the parties, or put into writing, but not sealed and delivered (b). simple contract. A deed ought to be written, sealed, and delivered; but its Requisites of essentials are the sealing and delivery. A deed may, however, deeds. be delivered by words, without any formal act of delivery. So it may be printed or written on paper, or on parchment, and is valid, although it should mention, no time or date, or place of making (c). The difference between a deed and a simple contract is as follows:-A simple contract does not create an immediate obligation, but exhibits simply a mode of evidence, and cannot be enforced, unless it results from some valuable consideration (d). But a deed is good, even if voluntarily § 3. (a) Pothier's Traité des Obligations, (b) Addison on Contracts, p. 2. (c) Ibid, p. 5, Co. Litt. 36 A. (d) Chitty on Contracts, p. 5, Iron v. Smallpiece, 2 B. & Ald. 551. granted, when it is not obtained by fraud (a). A deed is supposed by law to express fully and absolutely the intention of the party, and he is bound to fulfil it, even in a Court of Equity, whether he received any consideration or not. A covenant founded on a deed cannot be varied, released, or discharged, except by an instrument of equal importance (b). Statute of frauds. Requisites of a simple contract. Parties to a contract. The assent. SECTION II. SIMPLE CONTRACTS. A simple contract may be either verbal or in writing. But no contract, sale of lands, tenements, or hereditaments, or any interest in or concerning them, and no agreement not to be performed within the space of one year from the making thereof, can be enforced, according to the provision of the Statute of Frauds, unless the agreement upon which the action is brought, or some memorandum or note thereof, be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorised (c). The requisites of an agreement are the capacity of the contracting parties, their mutual consent, and a valid and valuable consideration. The agreement must, moreover, be legal in itself, and founded on good faith. The parties to a contract must possess physical and moral power to deliberate upon a matter, and weigh its consequences. Persons of insane mind, drunkards, infants, married women, and persons under duress, are therefore incapable of contracting (d). The assent must be complete on both sides. Until the terms of the contract are mutually and finally agreed upon, either party may retract. So a proposal to sell goods, giving time to the purchaser to determine, does not render the seller liable in an action for non-delivery, for at the time of coming into the contract the engagement was all on the one side. Where however the offer is made, "receiving an answer by return of post," the contract is binding from the moment the offer is accepted (e). (a) Shears v. Rogers, 3 B. & Ad. (b) Littler v. Holland, 3 T. R. 590; (d) Gore v. Gibson, 13 M. & W. 623. (e) Adams v. Lindsell, 1 B. & Ald. 684. As to the consideration, it is enough if there be a considera- Consideration. tion for the bargain, and that such a consideration be a legal consideration and of some value. If there be any consideration, the Court will not weigh the extent of it. Inadequacy of consideration cannot impeach a contract even in equity (a). The sufficiency of the consideration may arise either by reason of a benefit resulting to the party promising, or to a third person by the act of the promisee, or by reason of the latter sustaining any loss or inconvenience, or subjecting himself to any charge or obligation, however small the benefit, charge, or inconvenience may be, provided such act be performed, or such inconvenience or charge incurred, with the consent, express or implied, of the promisee, or at his special instance and request (b). Forbearance of a debt for a given time is a good consideration. So the giving up of a suit instituted to try a question respecting which the law is doubtful (c). A mere moral consideration is not sufficient to support a contract. contracts. A contract is illegal where it is against public policy and Illegal contrary to public morals, or in contravention of special statutes, or where it interferes with the administration of justice. Amongst contracts against public policy are contracts creating monopolies (d). Contracts in general restraint of industry and trade (e), and contracts with foreign enemies (ƒ). Amongst those contrary to public morals are gaming contracts, wagers, lotteries, &c., &c. (g). And amongst contracts in contravention of special statutes are contracts by illegal weights and measures (h), contracts entered into on Sundays (i), and contracts made upon the truck system. In either case the contract is void, and it cannot be enforced in a Court of Law or (a) Smith v. Smith, 3 Leon. 88; Coles v. Trecothick, 9 Ves. 246; Low v. Barchard, 8 Ves. 133. (b) Semple v. Pink, 1 Exch. 74. (c) Longridge v. Dorville, 5 B. & Ald. 117; Jennings v. Brown, 9 M. & W. 501. (d) 3 Inst. 181, 21 Jac. 1, c. 3; East India Comp. v. Sandy, Skin. 169; The Case of Monopolies, 11 Co. 86; 6 Com. Dig. Trade, D. 4. (e) Thompson v. Harvey, 1 Show. ; 2 Com. Dig. Trade, 3; Gunmakers' Co. v. Fell, Willes, 389. (f) Potts v. Bell, 8 T. R. 548; (g) 8 & 9 Vict. c. 109; 10 & 11 (h) 5 Geo. 4, c. 74; 6 Geo. 4, c. 12; (i) 29 Car. 2, c. 71, s. 1, for Sunday Trading. 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). SECTION IV. CONDITIONAL CONTRACTS. either abso ditional. A contract may either be absolute or conditional upon the Contracts happening of some event, or upon the performance of some lute or conprior 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 Mutual and When time is precedent. a condition |