In the first of these cases the complete nullity of the contract prevents any rights arising under it if the mistaken party choose to avoid it. In the second there is a contract, and one capable of creating rights, and the person defrauded has but a limited right to set it aside. Next we must distinguish that which is voidable from Contracts that which is unenforceable. The contract of an infant under § 2 of the Infants' Relief Act may be said to be voidable, though it has not all the features of a voidable contract. The infant may sue but cannot make himself liable. The difference between that which is voidable and that which is unenforceable is a difference between substance and procedure. 'Unenforceable' is a term used of a contract which has no flaw of substance, is not affected by the fraud or incapacity of one of the parties, or the mistake or the unlawful object of both. The contract is good but it cannot be proved either by reason of lapse of time, or want of written form, or the affixing of a stamp. The Statute of Limitations may bar the remedy, or the Statute of Frauds affect the proof, but the deficiency can be satisfied by acknowledg ment of the right affected by lapse of time, or by writing where the Statute of Frauds is in question, or by the supply of the missing stamp: the infant cannot make himself liable. T unenforce able. PART III. THE OPERATION OF CONTRACT. WE Come now to deal with the effects of a valid contract when formed, and to ask, To whom does the obligation extend? Who have rights and liabilities under a contract? And then this further question arises, Can these rights and liabilities be assigned or pass to others than the origi, nal parties to the contract? In answer to these questions we may lay down two general rules. (1) No one but the parties to a contract can be bound by it or entitled under it. (2) Under certain circumstances the rights and liabili ties created by a contract may pass to a person or persons other than the original parties to it, either (a) by act of the parties, or (B) by rules of law operating in certain events. These two rules seem at first to look like one rule subject to certain exceptions, but they are in fact distinct. The parties cannot, by their agreement, confer rights or impose liabilities, in respect of the agreement, upon any but themselves. But they may by certain methods and under certain circumstances drop out of the obligation so created, and be replaced by others who assume their rights or liabilities under the contract. Thus (1) If John Doe contracts with Richard Roe, their contract cannot impose liabilities or confer rights upon John Styles. (2) But there are circumstances under which John Doe or Richard Roe may substitute John Styles for himself as a party to the contract, and there are circumstances under which the law would operate to effect this substitution. CHAPTER I. The Limits of the Contractual Obligation. cannot confer THE general rule that a person who is not a party to a Contract contract cannot be included in the rights and liabilities which the contract creates - cannot sue or be sued upon it is an integral part of our conception of contract. A contract is an agreement between two or more persons, by which an obligation is created, and those persons are bound together thereby. If the obligation takes the form of a promise by A to X to confer a benefit upon M, the legal rights relations of Mare unaffected by that obligation. He was not a party to the agreement; he was not bound by the vinculum juris which it created; the breach of that legal bond cannot affect the rights of a party who was never included in it. ties on a third Nor, again, can liability be imposed on such a third or liabiliparty. It is an essential feature of contract as opposed to other forms of obligation, that the restraint which it party. imposes on individual freedom is voluntarily created by those who are subject to it that it is the creature of agreement. The relation of principal and agent may from one point of view be held to form an exception to these rules. It needs at any rate a separate chapter. and cestui que trust. A trust has this in common with contract, that it Trustee originates in agreement, and that among other objects it aims at creating obligations. If we could place a trust upon the precise footing of contract we might say that it formed a very real and substantial exception to the general rule which we have laid down. Doubtless the creator of a trust and the trustee do, by agreement, [*225] (1) Con tract can not impose liability upon a third party. (i) Paying another's debt. Durnford v. bring rights into existence which a third party, the cestui que trust, may enforce. But we will set aside trusts from the discussion, and with reason. For contract differs from other forms of agreement in having for its sole and direct object the creation of an obligation. The contractual obligation differs from other forms of obligation mainly in springing from the voluntary act of the parties obliged. A trust and the obligations resulting from a trust correspond to neither of these characteristics. The agreement which creates a trust has many other objects besides the 'creation of obligations, and these objects may include conveyance, and the subsequent devolution of property. The obligation which exists between trustee and cestui que trust does not come into existence by the act of the parties to it. It is better therefore, having noted the similarities between the contractual and the fiduciary obligation, to dismiss the latter altogether from our inquiries. § 1. A man cannot incur liabilities from a contract to which he was not a party. This proposition is a part of a wider rule to the effect that liability ex contractu or quasi ex contractu cannot be imposed upon a man otherwise than by his act or consent. A cannot by paying X's debts unasked, make X his debtor; a man cannot, of his own will, pay another man's debt without his consent and thereby convert himself into a creditor.' And in like manner A and M cannot, by any contract into which they may enter, thereby impose liabilities upon 1 South Scituate v. Hanover, 9 Gray (Mass.), 420. But the debtor may plead the payment as an estoppel against the creditor. Crumlish's Adm'r v. Central Improvement Co., 38 W. Va. 390, H. & W. 412; cf. Muller v. Eno, 14 N. Y. 597, 605-6. Though if he does so, it seems he thereby ratifies the payment as one made in his behalf and becomes liable to the one paying. Neely v. Jones, 16 W. Va. 625. X. The Messrs. Thomlinson employed X, a firm of brokers, to transport goods from London to Amsterdam. X agreed with Schmaling to put the whole conduct of the transport into his hands; he did the work and sued the Messrs. Thomlinson for his expenses and commission. It was held that they were not liable, inasmuch as there was no privity between them and Schmaling; that is to say, that there was nothing either by *writing, words, [*226] or conduct to connect them with him in the transaction. X had been employed by them to do the whole work, and there was 'no pretence that the defendants ever authorised them to employ any other to do the whole under them the defendants looked to Xonly for the performance of the work, and X had a right to look to the defendants v. Thomlinfor payment, and no one else had that right.'1 Schmaling son, 6 Taunt. 147. does a contract duty on third par A contract cannot impose the burdens of an obligation (ii) But upon one who was not a party to it; yet a duty rests upon persons, though extraneous to the obligation, not to inter- impose a fere, from interested or malicious motive, with its due. performance. I speak of duty as that necessity which ties? Inrests upon all alike to respect the rights which the law sanctions; and reserve the term obligation for the special contract. tie which binds together definite, assignable members of the community. ducing breach of 216. In Lumley v. Gye, the plaintiff, being the manager of E. & B. an opera house, engaged a singer to perform in his theatre and nowhere else. The defendant induced her to break her contract. Lumley sued Gye for procuring this breach, and the questions raised took the following form. It was 1 An agent cannot render his principal liable to a sub-agent, or the sub-agent to the principal, unless the principal has authorized the appointment of a sub-agent. Fairchild v. King, 102 Calif. 320. It is often a nice question as to whether there is such authority to create a contract for the principal with the sub-agent. Exchange Nat. Bk. v. Third Nat. Bk., 112 U. S. 276; Guelich v. National State Bank, 56 Iowa, 434; Dun v. City Nat. Bk., 58 Fed. Rep. 174; Huffcut on Agency, $$ 92-95. |