CHAPTER I. Discharge of Contract by Agreement. CONTRACT rests on the agreement of the parties: as it is their agreement which binds them, so by their agreement they may be loosed. And this mode of discharge may occur in one of three forms waiver; substituted agreement; condition subsequent. : § 1. Waiver. Forms of by agree discharge ment. A contract may be discharged by agreement between (1) Waiver. the parties that it shall no longer bind them. This is a waiver, or rescission of the contract. Such an agreement is formed of mutual promises, and the consideration for the promise of each party is the aban donment by the other of his rights under the contract. The rule, as often stated, that a simple contract may, before breach, be waived or discharged, without a deed and without consideration,' must be understood to mean that, where the contract is executory, no further consideration is needed for an agreement to rescind than the discharge of each party by the other from his liabilities.1 waiver of contract There seems to be no authority for saying that a Mere contract, executed upon one side, can be discharged before breach, without consideration; that where A has done all ual rights that he was bound to do and the time for X to perform 1 An agreement for rescission of contract requires all the elements of an agreement for formation of contract. Wheeler v. New Brunswick &c. R., 115 U. S. 29, 34. invalid. his promise has not yet arrived, a bare waiver of his claim by A would be an effectual discharge to X. [*274] *In fact, English law knows nothing of the abandonment of such a claim, except by release under seal, or for consideration. The plea of waiver' under the old system of pleading was couched in the form of an agreement between the parties to waive a contract, an agreement consisting of mutual promises, the consideration for which is clearly the relinquishment of a right by each promisee. Where a discharge by waiver is alleged as a defence in an action for breach of contract, the cases tend to show that the defendant must set up, in form or substance, a mutual abandonment of claims, or else a new consideration for the waiver.1 In King v. Gillett, the plaintiff sued for breach of a promise of marriage; the defendant pleaded that before breach he had been exonerated and discharged by the plaintiff from the performance of his promise. The court held that the plea was allowable in form; yet we think,' said Alderson, B., that the defendant will not be able to succeed upon it, . . . unless he proves a proposition to exonerate on the part of the plaintiff, acceded to by himself; and this in effect will be a rescinding of the contract.' Dobson sued Espie for non-payment of deposit money due upon a sale of land. Espie pleaded that, before breach of his promise to pay, Dobson had given him leave and license not to pay. The court held that such a plea was inapplicable to a suit for the breach of a contract, and that the defendant should have pleaded an exoneration and discharge; but it is difficult to see why the pleader should not have adopted the latter form of plea, unless it were that (according to the reasoning 1 Collyer v. Moulton, 9 R. I. 90, II. & W. 522; Alden v. Thurber, 149 Mass. 271, II. & W. 630; Kelly v. Bliss, 54 Wis. 187. of Alderson, B., in King v. Gillett) an exoneration means a promise to exonerate, which like any other promise needs consideration to support it. It is clear that in Dobson v. Espie the plaintiff was to obtain nothing for his alleged waiver: neither the relinquishment of a claim, nor any fresh consideration. Finally, we have the express authority of Parke, B., in Foster v. Dawber, for saying that an executed contract, i. e. *a contract in which one of the parties has performed all that is due from him, cannot be discharged by a parol waiver. [*275] 'It is competent for both parties to an executory contract, by mutual agreement, without any satisfaction, to discharge the obligation of that contract. But an executed contract connot be discharged except by release under seal, or by performance of the obligation, as by payment, where the obligation is to be performed by payment. But a promissory note or a bill of exchange appears to stand on a different footing to simple contracts.' 6 Exch. 851. ity of bills of ex This last sentence deals with an exception to the prin- Peculiarciple just laid down, for it was a rule of the law merchant imported into the common law that the holder of a bill of exchange or promissory note might waive and discharge his rights. Such waiver needed no consideration, nor did it need to be expressed in any written form.1 change and prom issory notes. The Bills of Exchange Act has given statutory force to this rule of common law, subject to the provision that the waiver must be in writing or the bill delivered up to the 45 & 46 Viet. acceptor. § 2. Substituted contract. c. 61. § 62. A contract may be discharged by such an alteration in (2) Substiits terms as substitutes a new contract for the old one: 1 No such exception is recognized in the United States unless the note or bill is surrendered. Bragg v. Danielson, 141 Mass. 195; Crawford v. Millspaugh, 13 Johns. (N. Y.) 87. The surrender of the note or bill operates by way of an executed gift. Slade v. Mutrie, 156 Mass. 19. See the matter of waiver discussed Daris, 124 N. Y. 164, H. & W. 187. at large in Jaffray v. tuted contract: may be an and this new contract may include an express waiver of the old one, or may imply a waiver, by the introduction of new terms or new parties.1 implied discharge; but the implica tion must be clear: not a postponement of performance. But the intention to discharge the first contract must be made clear in the inconsistency of the new terms with the old. A mere postponement of performance, for the convenience of one of the parties, does not discharge the contract. This question has often arisen in contracts for the sale and delivery of goods, where the delivery is to extend over some time. The purchaser requests a postponement of delivery, then refuses to accept the goods at all, and then alleges that the contract was discharged by the alteration of the time of performance; that a new contract was thereby created, and that the new contract is void for noncompliance with statutory requirements as to form. *But the courts have always recognized the distinction between a substitution of one agreement for L. R. 10C.P. another, and a voluntary forbearance to deliver at the request of another,' and will not regard the latter as affecting the rights of the parties further than this, that if a man asks to have performance of his contract postponed, he does so at his own risk. For if the market value of the goods which he should have accepted at the ealier date has altered at the latter date, the rate of damages may be assessed, as against him, either at the time when the performance should have taken place, and when by non-performance Hickman v. 606. Ogle v. Earl Vane, L. R. 2 Q. B. 275, & 3 Q.B. 272.a 279. · [*276] a Willes, J., in giving judgment in the Exchequer Chamber in the case of L. R. 3 Q. B. Ogle v. Earl Vane, holds that by the forbearance on the part of the plaintiff, at the request of the defendant, to insist upon delivery of the goods at and after the time for the performance of the contract, an agreement arose which, though for want of consideration for the forbearance it could not furnish a cause of action, was nevertheless capable of affecting the measure of damages. He calls it an accord without a satisfaction. As to the nature of accord and satisfaction, see Part V. ch. iii. § 4 (a). 1 McCreery v. Day, 119 N. Y. 1, H. & W. 524. The reader will remember that this is one of the grounds on which a promise to pay for the performance of an existing contract is sometimes enforced. Ante, p. 102, note 5. the contract was broken, or when he ultimately exhausted the patience of the vendor, and definitely refused to perform the contract.1 A contract may be discharged by substantial alteration Substi of its terms. tuted Thornhill v. 831. A undertook certain building operations for X, which were to be completed by a certain date, or a sum to be sc. B., N. 8. paid as compensation for delay. While the building was in progress an agreement was made between the parties for additional work, by which it became impossible that the whole of the operations should be concluded within the stipulated time. It was held that the subsequent agreement was so far inconsistent with the first, as to amount to a waiver of the sum stipulated to be paid for delay.2 A contract may be discharged by the introduction of Substinew parties. [*277] If A has entered into a contract with X and M, and these two agree among themselves that M shall retire from the contract and cease to be liable upon it, A may (1) insist upon the continued liability of M, or (2) he may treat the contract as broken and discharged, or (3) by continuing to deal with X after he becomes aware of the retirement of M he may enter into a new contract to accept the sole liability of X; he cannot then hold M to the original contract. 'If one partner goes out of a firm and another comes in, the debts of the old firm may, by the consent of all the three parties the creditor, the old firm, and the new firm - be transferred to the new firm,' and this consent tuted parties. ante, p. 235. Hart v. Alexander, 484. 2 M. & W. 1 "Where a fixed time has ceased to be an element in the contract, neither party can put the other in default without some notice or demand of performance." Lawson v. Hogan, 93 N. Y. 39, 44. |