OF THE

ENGUSH UW OF CONTRACT

BY

SIR WILLIAM R. ANSON, Bart., M.A., B.C.L.

OF THB IirirBS TBMPLB, BABBISIBB AT LAW

YIlfBBIAJr BBADBB OB BNGLISH LAW

FBLLOW OP ALL SOULS* COLLBG-B, OXBOBD

AT THE CLARENDON PRESS

1879

[All rights reserved]

PEEFACE.

This book is an attempt to draw such an outline of the

principles of the law of Contract as may be useful to students,

and, perhaps, convenient to those who are engaged in the

teaching of law. To some of those who are so engaged it

has seemed that there is need of an elementary treatise which

should deal with the subject of Contract in its entirety; and

the existence of such a need is my excuse for the production

of the present work.

The main object with which I have set out has been to

delineate the general principles which govern the contractual

relation from its beginning to its end. I have tried to show

how a contract is made, what is needed to make it binding,

what its effect is, how its terms are interpreted, and how it is

discharged and comes to an end.

In thus sketching the history of a contract, I have striven

to maintain a due proportion in my treatment of the various

parts of the subject, and to avoid entering into the detail of

the special kinds of contract. The history and antiquities

of the subject have, of necessity, been dealt with only so

far as was absolutely necessary to explain existing rules, and

I have placed in Appendices what I have to say on two

matters the treatment of which seemed to be unavoidable and

yet out of place in any part of a merely general outline.

One of these is the 'contract implied in law/ or quasi-

contract. The effect of this legal relation has been fully

explained by Hr. Leake (part i. c. i. s. 2), and it seemed to

VI PBEFACE.

be only necessary to point out the general character of the

obligation which it creates, and to sketch the liistory of the

mode in which, for the convenience of pleading, it figured

for a while in the outward form of contract.

The other subject is the special contract of Agency : this

too I regarded as a matter alien to a general discussion of

the principles of contract, but the constant recurrence of the

relation of Principal and Agent made it needful to give a

brief outline of the chief rules regarding Agency.

On one or two points, interesting in themselves, or open

to discussion, I have dwelt at a length disproportionate

perhaps to my general plan. The somewhat slender authority

for some of the often-quoted rules relating to past considera-^

tion, the various effects of innocent misrepresentation, the

questionable validity of a bare waiver of contractual rights,

are points to which I have called the attention of the reader.

The intricate subject of the discharge of contract by breach,

and its effects, together with the kindred subject of con-

ditional and independent promises, would seem to need a

fuller analysis than it has yet received in the books on Con-

tract. Conditions are usually dealt with in connection with

the promise when made, whereas their fiill effect can only be

ascerteined when they are regarded as affecting the promise

when broken.

Another object which I have striven to attain is that of

inducing the student to refer to the cases cited in illustration

of the rules laid down, and to form for himself a clear notion

of the law as it has been expounded from the Bench. The

law of contract so far as its general principles go has been

happily free from legislative interference : it is the product

of the vigorous common sense of English Judges ; and there

can hardly be a healthier mental exercise than to watch the

J

PREFACE. vil

mode in which a judicial mind of a high order applies legal

principles to complicated groups of fact.

The student, to whom a text-book is not, as it is to the

practising barrister, a repository of cases for reference, but a

collection of rules and principles which he desires to learn,

is too apt to take these upon trust unless the cases from

which they are drawn are thrust upon his notice. For this

reason I have avoided the citation of numerous cases, I have

endeavoured to select such as form the most vivid illustrations

of the rules which I have laid down, and I have placed the

references to those which I have cited — where I thought they

would be most conspicuous — in the margin. This is my

excuse for a departure from the ordinary arrangement of

references in foot-notes.

To the able Treatise of Mr. Pollock and the exhaustive

Digest of Mr. Leake I have made frequent references, but

these do not express the extent of my obligations to those

learned authors. Their books must needs enter largely into

the composition of such a work as mine professes to be.

I have also occasionally referred the reader to works of a

more special character, and in particular to the great work

of Mr. Benjamin for all points connected with the contract of

Sale of Personalty. But for the reason which I stated above

I have avoided the accumulation of a mass of authority, and

have often run the risk of seeming to dogmatise lest a

numerous collection of references should disincline the stu-

dent to the process of verification.

W. R A.

I Bbick Coubt, The Temple.

TABLE OF CONTENTS.

PART I.

PLACE OF C0NTRAC3T IN JUBISPRUDBNCE.

PAGE

Outline of subject . i

Analysis of Agreement 2

Distinction of Contract from Agreement 3

Analysis of Obligation 4

Distinction of Duty from Obligation 6

Forms of Obligation • . 7

PAET II.

FOBMATIOX OF CONTBACT.

CHAPTER I.

Proposal and Aooeptanoe.

Agreement traceable to Question and Answer . . . .11

Forms in which Contract may originate 12

Bequirements in Proposal 14

Requirements in Acceptance 14

Proposal inoperative till accepted 15

Under what circumstances may Proposal be revoked . . • 1 7

How Proposal may lapse otherwise than by revocation . . 22

Contract may arise from Conduct 23

Proposal by Advertisement 24

Representation of Intention as distinct from Proposal . • 26

CHAPTER II.

Form and Consideration.

Form or Consideration necessary marks in a valid Contract . . 29

Historical outline of the subject . 29

Classification of EngUsh Contracts 36

X CONTENTS.

PAGE

Formal Contracts.

Gpntract of Record . * 37

Contract under Seal 39

How made 39

Its characteristics 40

When a Deed is essential to validity of a Contract . . 44

Simple Contract

Simple Contracts required to be in writing ... 46

The Statute of Frauds 47

The Fourth Section 47

Its requirements as to form , ^ .... 48

The Contracts included under it ' 53

The effect of a breach of its provisions . . . • 56

The Seventeenth Section of the Statute of Frauds . 57

Its requirements as to form 58

Nature of Contract specified ....... 58

Effect of a breach of its provisions . . . 60

Consideration.

Definition of Consideration 61

Consideration necessary to validity of every Simple Con-

tract . .63

Consideration need not be adequate to the promise . . 63

In what Consideration may consist 65

Mutual promises . . . « i* . .66

Contingent or conditional promises . . 66

Forbearance to sue .... ... 67

Compromise of suit .68

Bailment . . 70

Consideration which has been held unreal . • 7i

]^6tive . ... 71

Impossibility and Vagueness 74

Performance or promise to perform existing legal duty . 75

Apparent exceptions, composition with creditors . 79

Promise' to perform existing contract . . . . 80.

Shadwell v. Shadwdl discussed 80

Legality of Consideration 81

Executory and executed Consideration . . . .82

Past Consideration is no Consid^tion . . . '85

First alleged exception to this rule. Consideration exe-

cuted upon request 85

The rule in Lampleigh v. Braithwait discussed . 86

CONTENTS.

XI

Second exception, revival of Fromifle .... 90

Third alleged exception, voluntary dischaige of another's

legal liability 92

Beview of cases 93

CHAPTER in.

Capacity of Parties.

1. Political or Professional Status 97

2. Infuicy. Batification at Common Law .... 98

Ratification of Infant's Contract as a£fected by Statute . 10 1

Infant's Belief Act loi

Effect of first section of In&nt's Belief Act . . 102

Of second section 103

Necessaries, what they are, and how asoertaiued .104

liability of Infant for wrong arising firom Contract . .105

Or apart firom Contract 106

3. Married Women 106

Their Contracts void as a general rule .106

Exceptions 106

4. Corporations . .111

Necessary limits to their capacity to Contract . . .111

Express limitations 113

5. Lunatics and Drunken Persons 113

Their Contracts voidable, not void 113

CHAPTER IV.

Beality of Conaent.

1. Mistake of intention as distinct from expression

as to nature of transaction . , . .

as to persons with whom the contract is made

as to subject-matter of Contract, generally in

operative

as to existence of subject-matter

as to identity of subject-matter

as to extent of promise as to subject-matter

Effect of Mistake is to avoid contract

2. Misrepresentation ; difficulty attending its discussion

Misrepresentation as distinguished from fraud

Innocent Misrepresentation is inoperative

tf

a

n

tf

it

tt

116

116

118

120

121

122

123

127

128

129

13a

Xll

CONTENTS.

4-

5-

PAOB

Unless it be a term in the contract 132

Or occur in contracts uberrimae fidei . . . •133

If a term in the contract, it is then a form of discharge . 138

Contracts ubenrimcLe fidei 139

Marine and fire insurance . • • . .140

Sale of land 141

Prospectus inviting purchase of shares . . .142

Contract of suretyship is not uberrimae fidei . . '143

In its inception, but becomes so when made . . • 144

Expressions of opinion are not representations . * 144

Nor are commendatory expressions 144

Pravd, Its essential features 145

It is a false representation 145

It is a representation of fa^ 147

Intentionally Mse, or reckless 148

Intended to be acted upon by the person injured . 151

It must actually deceive 152

Its effect, it gives rise to action ex ddido . . -153

,f it makes contract voidable . . . '154

„ limits of right to afi&rm and avoid . • •154

De^reM, its nature and effect 155

ZZne^ue /ri/Wfice, how distinct from Fraud . . •156

Circumstances under which it is presumed . . • '57

Suggested by personal influence 158

Or by the circumstances and relations of the parties . 160

Its effect; how different from that of Fraud . . .161

CHAPTER V.

Legality of Object.

I. Nature of illegality

Contra<!t8 in "breach of Statute ; effect of penalty

Wagering contracts ....

A wager defined and described .

History of legislation on the subject

Contracts in breach of rules of Common Law

Agreements to commit a crime or wrong

Contracts in breach of the policy of the law

Public policy; its general application .

Agreements tending to injure public service

164

164

165

166

168

172

173

174

174

175

CONTENTS.

Xlll

*t

n

99

ff

Agreements tending to pervert the course of justice

tending to encourage litigation

contrary to good morals

in restraint of marriage

' in restraint of trade

2. Effect of illegality ....

Where the contract is divisible .

Where the contract is indivisible

Where direct object is unlawful but intention innocent

Where direct object is innocent but intention unlawful

Where the unlawful intention is on one side only

Securities given for money due on illegal transactions

Distinction between illegal and void contracts .

Effect of parties not being in pari delicto .

Effect of locus poeniterUiae while the contract is

executory

PAOB

176

177

178

179

179

180

181

i8a

182

183

186

186

187

189

191

PAKT III.

THE OPERATION OP CONTRACT.

CHAPTER I.

The Iiiniits of the Contractual Obligation.

A contract only affects the legal relations of the parties to it

Agency and Trust no real exceptions to this rule

1. Contract cannot impose an obligation on a third party

Can it impose a duty t Lumley v, Oye discussed

2. Contract cannot confer rights on a third party

Though expressed so to do by the contracting parties

195

196

197

198

199

199

CHAPTER n.

The Assignment of Contract.

I. Assignment by act of the parties ...... 204

Liabilities cannot be assigned 204

Bights may be assigned at Common Law only by sub-

stituted agreement in case of debt 206

Or by custom of merchants » . 206

Rights may be assigned in Equity 208

XIV CONTENTS.

FAGB

But notice must be given to persons liable .... 20S

And the assignment ' is subject to equities ' . . . . 209

Bights may be assignecl by Statute in certain cases . .211

Negotiability, its characteristics 212

Illustrated by bills of exchange and promissory notes .213

Illustrated by bills of lading 216

2. Assignment by operation of law . . . . .217

Obligations assigned on transfer of interests in land . .218

In the case of leasehold interests 218

In the case of freehold interests 218

Obligations of wife assigned by marriage . .221

Obligations assigned by death 222

Obligations assigned by bankruptcy or liquidation . . .223

PART IV.

THE INTBBPRETATION OF CONTEACT.

CHAPTER I.

Bules relating to Evidence.

Provinces of Court and Jury 226

Difference in proof of fonnal and simple contract . . .227

I. Proof of document purporting to be a contract . .228

2. 'Evidence as to fact of agreement 230

3. Evidence as to terms of contract 233

Collateral promise 234

Explanation of terms 235

Usage' 237

Equitable rules as to rectification and avoidance . '239

CHAPTER n.

Bules relating to Construction.

G-eneral rules . , 241

Rules as to Time and Penalties 242

CONTENTS. XV

PART V.

DISGHABGE OF CONTRACT.

FAOB

Modes in which it may take place 246

CHAPTER I.

Discharge of Contract by Agreement.

1. Waiver as a mode of discharge 247

Only applicable to executory contracts 248

And to bills of exchange and promissory notes • . « 2i^9

2. Substituted contract :

How different from postponement of rights .... 250

Substituted terms 251

Substituted parties 252

3. Provisions for discharge 253

(i) Promise subject to right of rescission in a certain event . 253

(2) Conditions subsequent 244

Excepted risks . 254

ActofGrod 255

(3) Provisions making contract determinable at option . . 256

Form of discharge by agreement 257

In case of contract under seal 257

In case of jJoroZ contract 258

CHAPTER n.

Discharge of Oontraot by Performance.

Performance when a complete discharge 261

Payment as a discharge 262

Tender as a discharge 264

CHAPTER ni.

Discharge of Contract by Breach.

Breach of Contract always give a right of action, not always a

discharge 266

I. Position of party discharged by Breach 267

He is exonerated from further performance .... 267

May sue as upon a contract arising from conduct . . 268

Even if his performance be only partial — ^a quantum meruit . 269

XVI CONTENTS.

PAGE

2. Forms of Discharge by Breach 270

Benundation before performance is due . . . .271

Impossibility created by one party before performance is due 273

Benunciation in the course of performance . . . •274

Impossibility created by one party in the course of per-

formance 279

Failure of performance, when a discharge . . . •277

Independent promises of three kinds . . . . •277

(i) Absolute promises 278

(2) Promises admitting of more or less complete per-

formance 281

(3) Subsidiary promises 284

Conditional promises— nature of conditions . . . .286

Suspensory conditions 287

Conditions which detennine discharge 288

(i) Concurrent conditions 289

(2) Virtual failure of consideration 290

(3) Conditions precedent 294

How distinguished from Warranty 295

Acquiescence in breach of a condition turns it into a War-

ranty ex post facto 297

But not if the breach be of an essential term .... 299

3. Remedies for Breach 300

Damages, rules governing their application . . . .301

Specific performance, when decreed 304

By what Courts administered 305

4. Discbarge of Bight of Action arising from Breach . . . 306

By consent of parties. Beleaae 306

By consent of parties. Accord and Satisfaction . . . 307

By judgment 307

By lapse of time 308

Bevival of barred right of action . . . . . .310

CHAPTEB IV.

Disoliarge of Contract by Impossibility of Ferformanoe.

Phases of Impossibility of Performance 312

Difficulties presented by CKjford ». Watts 313

Subsequent Impossibility as a rule is no discharge . . .314

Unless it be created by law of England . . . . .315

§1. Place op contract in jurisprudence. 3

of English law we may take it, as a test of this reference to.

I^al relations, that the intention of the parties must have

to do with * something which is of some value in the eyes of

the law,' something which can be assessed at a money value.

5. The consequences of Agreement must affect the parties

themselves. Otherwise the verdict of a jury or the decision

of a Court sitting in banc would answer the foregoing re-

quisites of agreement.

Agreement then is the expression by twa or more persons

of a common intention to affect the legal relations of those

persons.

But this would clearly include much more than Contract. Agreement

a wider

Under the definition of Agreement at which we have arrived term than

would fall— ^°^^^^'-

(i) Agreements which pass property from one of two par-

ties to another simultaneously with the expression of their

common consent. Such are conveyances, and gifts, where as to «jifts,

the agreement of the parties operates at once as a transfer ^^^^ ^

of rights in rem, and leaves no obligation subsisting between

them.

(2) Agreements which effect a change of status immedi-

ately upon the expression of the consent of the parties,

such as Marriage, which, when consent is expressed before

a competent authority, alters at once the legal relations of

the parties in many ways,

(3) Agreements which, though intended to affect legal re-

lations, are nevertheless not enforceable at law. Such would

be a gratuitous promise to transfer property.

It would seem then that Agreements the effect of which

is immediate in creating rights in rem, or in effecting a change

of status, are not such as we ordinarily term Contracts. Nor,

again, are Agreements to be called Contracts which, though

intended to affect legal relations, fail to do so, because they

do not fulfil some requirements of the positive law of the

country in which they are made.

B 2

4 INTBOPUCTION. Part I.

Agreement being a term of wider meaning than Contract,

we have to ascertain the characteristic of Contract as distin-

guished from other forms of Agreement.

A promise We are always in the habit of considering that an essential

sm essentisil

feature in a feature of a contract is a promise by one party to another,

contract. ^^ |jy ^^^ parties to one another, to do or to forbear from

Jurisprudence, doiug somo Specified acts. Austin in fact speaks of a con-

tract as a promise, meaning thereby an accepted promtee, as

distinguished from that which he caHs a pollicitation, an

unaccepted promise, or offer.

A promise which a man is legally bound to perform creates

an obligation or right in personam against him in favour of

the party to whom the promise is made. It follows there-

fore that we should consider the nature of Obligation and

try to distinguish the contractual from other forms of Obli-

gation.