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to win and the other to lose upon a future event, which at the time of the contract is of an uncertain nature that is to say, if the event turns out one way A will lose, but if it turns out the other way he will win." (COTTON L.J. in Thacker v. Hardy (1879).)
Further, under the Gaming Act, 1892
'Any promise, express or implied, to pay any person any sum of money paid by him under or in respect of any contract or agreement rendered null and void by the Gaming Act, 1845, or to pay any sum of money by way of commission, fee, reward, or otherwise in respect of any such contract, or of any service in relation thereto, or in connection therewith, shall be null and void, and no action shall be brought or maintained to recover any such sum of money."
The combined effect of these two enactments is that while it is not an offence to make a wager, no such contract will be enforced by the courts; and, if the loser does not pay, the amount cannot be recovered at law. An agent employed to make bets cannot recover money paid in respect of a loss: but, if he has received money for bets made by him on behalf of his principal, he cannot retain it, as was decided in the case of De Mattos v. Benjamin (1894).
If negotiable instruments have been given in payment of bets or gaming, or for money knowingly lent for such a purpose, they are not void, but are deemed to have been given for illegal consideration and are not enforceable as between the parties. By the recent judgment of the House of Lords in Sutters v. Briggs (1921), confirming the decision in Dey v. Mayo (1920), it was ruled that if a cheque has been given for losses incurred at betting, the amount so paid may be recovered by the loser even though the cheque has been honoured when in the hands of a third party, as "Section 2 of the Gaming Act, 1835, was designed to preserve the right of the loser of a bet to recover the amount even when it was paid by means of a cheque, thenceforth made enforceable in the hands of a third party." It is thought that the Act of 1835 was by an oversight not repealed by the Act of 1845; and it is probable that the effect of this far-reaching decision will shortly be nullified by legislation. It will be noted that the Act of 1835 referred to in the judgment applies only to negotiable instruments, so that if a loser of a bet pays in cash he cannot recover the amount paid. A holder in due course may sue on a negotiable instrument and the giver of the instrument will be entitled to be indemnified by the payee.
Leeman's Act.-Under the provisions of the Act known as Leeman's Act (Banking Companies Shares Act, 1867), the sale of shares in a joint stock banking company is void unless the contract sets out in writing the numbers of the shares as stated
in the register of the company. It has been the custom of the London Stock Exchange to disregard this provision (u).
Moneylenders' Act, 1900.-Under this Act a transaction must not be carried out elsewhere than at the registered address of the moneylender, otherwise, as decided in Cornelius v. Phillips (1918), it is illegal and void. If the moneylender has not registered his name under the Act, or if he uses some name other than his registered name, contracts made under such circumstances are illegal. In such cases repayment of the money lent cannot be enforced. But the provisions of this Act are considered more fully hereinafter (v).
Registration of Business Names Act, 1916.-By Section 8 of this Act a person cannot enforce a contract made by him or on his behalf while he had not complied with the requirements of the Act; but it was held in the case of Daniel v. Rogers (1918) that the title to property of which he had acquired complete possession could not be affected.
Sale of Bread, Coal, etc.—Certain contracts in respect of the sale of game, intoxicating liquors, bread and coal are illegal unless carried out in accordance with particular regulations.
It was held in Taylor v. Bowers (1876) that a person who has paid money under an illegal contract can recover it, providing the contract has not been carried out; but in Kearley v. Thomson (1890) it was held that he cannot recover if it has been carried out even partly. This rule does not apply, however, to marriage brokage contracts, and in Hermann v. Charlesworth (1905) money paid was held to be recoverable even when the marriage had taken place. Where an instrument is illegal it cannot be afterwards confirmed, the legal maxim being Quod ab initio non valet in tractu temporis non convalescit. (What is bad at the commencement cannot be made good by passage of time.)
Contracts must not be impossible of Performance.
Contracts which are, at the time of making, impossible of performance are void for want of consideration, e.g., to perform a thing which is obviously impossible either legally or by the law of nature, such as to fly to the moon. There are, in all, three kinds of impossibility—
(1) Legal Impossibility-acts forbidden by the law of the land, e.g., to enter into a wagering policy of insurance.
(u) See post, p. 234.
(v) See post, p. 64.
(2) Absolute Impossibility-as exemplified above, to do an act physically incapable of performance.
(3) Actual Impossibility-where a contract has been entered into regarding subject matter which, without the knowledge of either party, is non-existent at the time of the contract being made. This is more properly considered in the following section under the heading of MISTAKE.
There are other contracts which, while possible of performance at the time of being entered into, subsequently become impossible. Such contracts will be more fully considered under the heading of IMPOSSIBILITY (w).
MISTAKE, MISREPRESENTATION, AND FRAUD Mistake in Contracts.
Where mistake affects a contract it makes it void, and any money paid under the contract can be recovered. The mistake may be made by one or both of the parties. If it is clearly shown that there has been a misapprehension on one side, the mistake will be allowed to nullify the contract only in certain strictly limited cases; but if the misapprehension is on both sides the contract will certainly be void, and any monies paid will be recoverable. As a rule, however, the fact that one of the parties was labouring under a misapprehension is not sufficient to release him from his agreement, as was decided in Smith v. Hughes (1871). It is obvious that, if such were the case, most people would endeavour to obtain release from contracts which had turned out in the result contrary to their expectations. The cases where mistake by one party would affect a contract
(1) Mistake as to parties-dealing with one person thinking him to be some one else. The lack of certainty invalidates the agreement.
(2) Mistake by one party as to the intention of the other, known to that other-the law will not allow a man to make or accept a promise which he knows the other party understands in a different sense from that which is in his own mind. There is, however, no need to correct a wrong impression-though obvious-as to the goods themselves, so long as there is no deceit in connection with the promise made.
The general rule is that if a person, whatever his intention, so conducts himself that another is reasonably led to believe
(w) See post, p. 69.
that he is consenting to the terms of a contract, then he will be bound by such contract. The few cases of mistake are exceptions to this rule. Generally, a mistake invalidating a contract is due to the act of a third party or the dishonesty of one of the parties; the cases of genuine mutual mistake are hard to find, but they usually take the following forms :
(3) Mistake as to the nature or existence of the contract-for
instance, an illiterate or infirm man signing a Bill of Exchange on an assurance that he was witnessing another signature. The mind of the person signing would not accompany the signature.
(4) Mistake as to subject matter-either as to its existence or identity.
The meaning of "mistake" as considered here is not the popular meaning of the term. It must be some fact, clearly established, which shows that the two parties were not in agreement in the same sense and on the same subject matter, that is, they were not ad idem. For instance, in the case of Couturier v. Hastie (1850), the two parties entered into a contract regarding a cargo which was supposed to be on the sea. It subsequently transpired that owing to the sinking of the ship that carried it, it had ceased to exist at the time of entering into the contract, and it was held that the contract was void. In the case of Raffles v. Wichelhaus (1864), the two parties bargained as to a cargo to arrive "ex ex Peerless from Bombay." It transpired that there were two ships answering to this description; A intended one and B the other, and it was held there was no contract. No ignorance of the law will be accepted as a mistake entitling a party to rescission of the contract-the maxim being Ignorantia juris neminem excusat (ignorance of the law excuses nobody)-so that no money can be recovered that has been paid in ignorance of the law; although, as held in Kitchin v. Hawkins (1867), if paid only under a mistake of fact it may be. But this rule will not be given effect to if it can be shown that there has been an absence of bona fides on the part of the other side. Thus, in Ward and Co. v. Wallis (1900), B was sued by A for work and labour done. By mistake A credited B with a sum as paid on account and claimed the balance due, B being aware of A's mistake. B thereupon paid the amount claimed and obtained a receipt for the whole amount due. Subsequently, on discovering the mistake, A brought another action to recover the amount credited in error as money had and received to his use. It was held that although the receipt had been given under compulsion of legal process, B could not rely on it as a defence, since he had not acted bona fide.
Where a party has made a mistake in his mode of expression
and has said or written something which, to the knowledge of the other party to the contract, is other than is really intended, such other party is not allowed to take advantage of the mistake, and if he attempts to enforce such a contract while it is still executory, the remedy is usually rescission: but the court may offer the one party the option of taking what the other intended to give and, if the offer be accepted, may rectify the agreement.
Misrepresentation in Contracts.
Mistake must not be confused with Misrepresentation. A representation is a statement made before or at the making of the contract by one party to the other.
It may or may not ultimately become embodied in the contract, but if it does become a term, it is then either a warranty or a condition according to whether it is a promise subsidiary to the main agreement or an undertaking vital to the existence of the contract.
There may, therefore, be misrepresentations :-
(1) In the negotiations prior to the contract, which have led the party to whom they have been made to enter into the contract;
(2) As to facts which, while not vital to the contract, have been incorporated therein by the parties;
(3) As to the main conditions on which the contract rests. These misrepresentations must again be classified as :(a) Innocent;
In the case of (2) above, the remedy is damages for breach of contract, and, in (3) damages and rescission; while, if fraud is present, the injured party can bring an action ex delicto for deceit. The question of breach is sufficiently dealt with under Breach," in the section "Discharge of a Contract."
We have here to consider misrepresentations made in the course of arriving at an agreement; and it is necessary to point out that:
(1) To affect the contract, the representation must be a
statement of fact, not of law;
(2) It must have led the other party to enter into the
Innocent Misrepresentation does not, as a rule, entitle the