The Government Class Book Part 19

--2. Contracts are also distinguished as specialties and simple contracts. A _specialty_ is a contract under seal; as a deed, or a bond.

But we shall here consider chiefly that common cla.s.s of contracts called _simple contracts_, or _contracts by parol_. _Parol_ signifies by word of mouth. Applied to contracts, however, it not only means verbal contracts, but includes written contracts not under seal. Both are simple contracts; the distinction between them is in the mode of proof.

The mutual understanding of the parties to a verbal contract may be proved by parol evidence. But as the real intention of parties is more likely to be expressed in a written contract, the rule of law is, that parol evidence may not be admitted to contradict or vary the terms of a written instrument. It may however be admitted to explain what is doubtful, or to supply some deficiency.

--3. To make a valid contract, _the parties must be capable of contracting_. They must be of sound mind. Hence idiots and lunatics are generally incompetent to make contracts. Contracts by lunatics and idiots are not necessarily void, but only _voidable_; the validity or invalidity depending upon facts to be proved. To avoid a contract on the ground of mental imbecility, it must be proved that the party contracting was at the time incompetent. But if a general derangement is once established or conceded, the person is presumed to be incompetent; and the party seeking to enforce the contract must prove the other to have been sane. The general rule in the case of idiots is, that if the party is incapable of acting in the ordinary affairs of life, or in the particular contract, his idiocy will annul the contract.

--4. Drunkards also are incompetent to contract while in a state of intoxication, provided the drunkenness is such as to deprive them of reason for a time, and create impotence of mind. But for absolute necessaries, if the drunkard consumes them during his drunkenness, or keeps them after becoming sober, he is liable. Intoxication only renders a contract voidable, not void, as the party intoxicated may adopt it on recovering his understanding.

--5. Another requisition to a valid contract, is the _mutual a.s.sent of the parties_. A mere offer by one party not a.s.sented to or accepted by the other, const.i.tutes no contract. a.s.sent must also be given freely. A contract entered into under duress, or compulsion, is not binding; as where a.s.sent is extorted by threats of personal injury. a.s.sent must also be given with a knowledge of facts. A contract made under an injurious mistake, or ignorance of a material fact, may be avoided, even though the fact is not fraudulently concealed. But a mistake made through ignorance of the law, will not render a contract void.

--6. A _valuable consideration_ also is necessary to a valid contract. A _consideration_ is what is given or done, or to be given or done, as the cause or reason for which a person enters into an agreement. Thus, the money given or offered, for which a man agrees to perform certain labor, is the consideration of the agreement. So the money or other thing for which a promissory note is given, is the consideration. A valuable consideration is any thing that is either a benefit to the party promising, or some trouble or injury to the party to whom the promise is made.

--7. Mutual promises are sufficient considerations to make a contract binding; but they must be made at the same time. Such promises support each other. The promise of one party const.i.tutes a sufficient consideration for a promise by the other party. In case the parties are distant from each other, if the proposition is made in writing and sent by mail, and a letter of acceptance is written and put in the mail, the contract is complete, unless, before mailing the letter of acceptance, a second letter has been received containing a retraction of the proposal.

--8. Promises which are wholly gratuitous are void; because, being neither a benefit to the promiser, nor an injury to the promisee, they are not regarded in law as a valuable consideration. Hence, subscriptions to public works and charitable, literary, and religious inst.i.tutions, if they are merely gratuitous, can not be collected, unless they have operated to induce others to advance money, make engagements, or do other acts to their own injury.

--9. As gratuitous promises are void for want of consideration, so merely gratuitous services, as voluntarily a.s.sisting to save property from fire, or securing beasts found straying, or paying another's debts without request, afford no consideration upon which payment for their value can be lawfully claimed; there being no promise of compensation.

But if a person knowingly permits another to do certain work, as plowing his field, or hoeing his corn, although the work may have been commenced without his order or request, his consent will be regarded in law as an _implied promise_ to pay for the value of the labor, unless the circ.u.mstances of the case are such as to forbid the presumption.

--10. A consideration must also be _possible_, and in accordance with law, sound policy, and good morals. A contract founded upon an impossible consideration is void. No man can be lawfully bound to do what is not in the power of man to do. But it is otherwise, if the thing to be done is only at the time impossible in fact, but not impossible in its nature. Hence, inability from sickness to fulfill an agreement, or the impossibility of procuring an article of a certain kind or quality which a person has agreed to deliver, would not exempt him from liability in damages for the non-performance of his contract.

--11. A contract, the consideration of which is _illegal_ or _immoral_, may be avoided by either party. A man can not be held to an agreement to do acts forbidden by the law of G.o.d or by the laws of the state. But if an illegal contract has been executed; in other words, if the wrong has been done, the party in the wrong can not renounce the contract; for the general rule is, that no man can take advantage of his own wrong; and the innocent party alone has the privilege of avoiding the contract. If both parties are guilty, neither can, in ordinary cases, obtain relief on a contract that has been executed.

--12. The rule that a consideration is necessary to a valid contract applies to all contracts and engagements not under seal, except bills of exchange and negotiable notes after they have pa.s.sed into the hands of an innocent indorsee. (See Promissory Notes.) In contracts under seal, a consideration is necessarily _implied_ in the solemnity of the instrument.

--13. It is declared by the English statute of frauds, which prevails generally in the United States, that an agreement which is not to be performed within one year from the time of making it, shall not be valid, unless such agreement, or some memorandum or note thereof, is in writing, and signed by the party to be charged. The statutes of some of the states have adopted this provision of the English statute, and require further, that a special promise to answer for the debt, default, or misdoing of another person, and an agreement or promise upon consideration of marriage, (except mutual promises to marry,) shall likewise be void without such writing, in which the consideration shall be expressed.

Chapter LV.

Contracts of Sale.

--1. A Sale is a transfer of the t.i.tle to property to another person for a certain price; or the exchange of a commodity for its equivalent value in money. The exchange of one commodity for another, is _barter_.

Unless the absolute t.i.tle is conveyed, the contract is merely a mortgage. The same general principles of law which apply to contracts in general, are applicable to contracts of sale, viz.: the competency of the parties to contract; the sufficiency of the consideration; its legality and morality; the a.s.sent of the parties; and the absence of fraud.

--2. To make a sale valid, the thing to be sold must have an _actual or a possible existence_, and be _capable of delivery_. Thus, if A sells a horse or certain goods to B; and if, at the time of the sale, the horse is dead, or the good? are destroyed; the sale is void. If the goods are partially destroyed, the buyer may either take them at a proportionate reduction of the price, or abandon the contract.

--3. But, although the thing to be sold has no actual and present existence; yet if its future existence is possible, and if it is the product or increase of something to which the seller has a present right, it is the subject of sale. Thus, a man may sell the wool that may grow on his sheep, the fruit that may grow on his trees, or the future increase of his cattle. But he cannot sell the products of the sheep or cattle which he may hereafter buy. A man may, however, agree to procure goods which he has not, and to furnish at a future time, for a certain price; and his contract will be good; though this is not strictly a sale, but an agreement to sell.

--4. There can be no sale without a _price_; and the price must be fixed and definite, or susceptible of being ascertained by reference to some criterion prescribed in the contract, so as to render any further negotiation of the parties unnecessary. Thus, a man may agree to pay what shall be the market price at a particular time, or a price to be fixed by a third person. The price must also be payable in money or its negotiable representative, as notes or bills. One article given for another is merely _barter_. The same principles of law, however, govern in both cases.

--5. There must be a _mutual consent of the parties_, and the contract is binding when a proposition made by one party is accepted by the other.

The negotiation may be carried on by letter, as before stated. (Chap.

LIV, --7.)

--6. In contracts of sale which are not perfected at once by payment and delivery, certain formalities are to be observed. These forms generally are prescribed by what is called the English statute of frauds, which requires, (1.) that the buyer shall accept and receive part of the goods sold; or (2.) give something in earnest to bind the bargain, or in part payment; or (3.) that some note or memorandum in writing of the bargain shall be made and signed by the party to be charged, or by his authorized agent. These provisions, however, apply only to cases in which the price of the goods sold is ten pounds sterling, or more. The same rule prevails generally in this country, with slight variations in some states. The price of the goods sold, in cases to which the provisions of that statute apply, is fixed by law in many of the states, and varies from $30 to $200.

--7. To complete a contract of sale, and pa.s.s the t.i.tle to the property to the buyer, there must be a _delivery of the goods sold_. When the goods are such as cannot be manually or immediately delivered, or are not in the actual custody of the seller, the law does not require an actual delivery. But they must be placed in the power of the purchaser; or there must be such acts and declarations of the parties as imply a change of ownership. When the right of property has been transferred to the buyer, whether by an actual or only a constructive delivery, he immediately a.s.sumes the risk of the goods; so that if they shall be afterward injured or destroyed, he must bear the loss.

--8. When nothing is said at the sale as to the time of delivery, or the time of payment, the buyer is ent.i.tled to the goods on payment or tender of the price, and not other wise; for, though he acquires the _right of property_ by the contract of sale, he does not acquire the _right of possession_, until he pays or tenders the price. But if the seller delivers the goods absolutely, and without fraudulent contrivance on the part of the buyer, the buyer will hold possession of them.

--9. But when goods are sold on credit, and nothing is said as to the time of delivery, the buyer is immediately ent.i.tled to the possession.

If, however, it is ascertained, before the buyer obtains possession of the goods, that he is insolvent, or so embarra.s.sed as to disable him from meeting the demands of his creditors, the seller may stop the goods as a security for the price. But if they are stopped without good cause, or through misinformation, the buyer is ent.i.tled to the goods, and to damages which he may have sustained in consequence of their stoppage.

--10. In the sale of a chattel, if the seller has possession of the article, and sells it as his own, he is understood to _warrant the t.i.tle_. A fair price implies a warranty of t.i.tle; and the purchaser may have satisfaction from the seller, if he sells goods as his own, and the t.i.tle proves deficient. But if the possession is at the time in another, and there is no covenant or warranty of t.i.tle, the party buys at his peril. It is thought, however, if the seller affirms that the property is his own, he warrants the t.i.tle, though it is not in his possession.

--11. With regard to the _quality_ of the thing, the seller is not bound to make good any deficiency, except under special circ.u.mstances, unless be expressly warranted the goods to be sound and good, or unless he made a fraudulent representation or concealment concerning them. The rule is, if there is no express warranty by the seller, nor fraud on his part, and if the article is equally open to the inspection of both parties, the buyer who examines the article for himself, must abide by all losses arising from latent defects equally unknown to both parties.

--12. But this rule does not reasonably apply to cases in which the purchaser has ordered goods of a certain character, or in which goods of a certain described quality are offered for sale, and, when delivered, they do not answer the description. There being no opportunity of examining them, there is an _implied_ warranty of the quality. An intentional concealment or suppression of a material fact, when both parties have not equal access to means of information, is unfair dealing, and renders the contract void.

--13. As a general rule, each party is bound to communicate to the other his knowledge of material facts, provided he knows the other to be ignorant of them, and they are not open and naked, or equally within the reach of his observation. Surely the _moral law_ and fair dealing require, in all cases, a full disclosure of all defects within the knowledge of the contracting parties.

Chapter LVI.

Fraudulent Sales; a.s.signments; Gifts, &c.

--1. The t.i.tle to property is sometimes transferred with fraudulent intent. A debtor, to place his property beyond the reach of his creditors, sells or a.s.signs it to others by way of mortgage, under the false pretense of securing the payment of a debt; the property to remain in the possession and use of the a.s.signor.

--2. Any agreement which operates as a fraud upon third persons, is void.

It is a rule of common law, that all deeds of gift, and all transfers of goods and chattels made by any person to secure them for his future use, shall be void as against creditors; and that if property a.s.signed or sold remains with the seller or a.s.signor, the transaction is to be presumed fraudulent. But whether such conveyance of goods is only _prima facie_ (at first view) evidence of fraud, which the vendee or a.s.signee may rebut by proving the sale or a.s.signment to have been made honestly and in good faith; or whether the transaction is fraudulent in point of _law_, and void, is a question upon which the decisions of the courts in England as well as those in this country differ, and which, therefore, may be considered as not conclusively settled.

--3. Some have made a distinction between bills of sale and a.s.signments that are absolute and those that are conditional. The supreme court of the United States has affirmed the doctrine that an absolute and _unconditional_ bill of sale or conveyance, when the property is retained in possession, is of itself conclusive evidence of fraud; in other words, it is presumed to be fraud in point of law, whatever it may be in fact. It has been held by the same court, that a conveyance with a _condition_ that the property is to remain with the vendor until the condition shall be performed, or a conveyance in the nature of a mortgage or security, expressing an agreement between the parties, that the mortgager shall retain possession, is valid.

--4. In some states, the doctrine established by the courts is, that a continuance of possession is only _prima facie_ evidence of fraud; in which case the mortgagee or a.s.signee is allowed to show by proof, that the conveyance was made in good faith and for a valuable consideration.

In other states, the strict rule prevails, that, without a change of possession, the transaction is fraudulent _in law_; in which case the a.s.signee, or person claiming the property under the a.s.signment, is not permitted to show that, in point of _fact_, the transaction was _bona fide_, (in good faith.)

--5. The rule that holds every conveyance to be fraudulent unless the property immediately changes hands, often operates to inconvenience and even injury of honest debtors. A debtor may be obliged to part with property, however convenient or needful its present use may be to him, when, but for this stringent rule of law, he might borrow the money to pay a debt, or procure a postponement of payment, and retain the use of the property pledged.

--6. In many of the states, this perplexing question has been settled by statute. In the state of New-York, the law expressly declares, that a sale or an a.s.signment without immediate delivery and a change of possession, shall be presumed to be fraudulent and void as against creditors, unless the party claiming the property under the a.s.signment shall make it appear that the same was made in good faith, and without any attempt to defraud. Laws more or less similar to this, and securing to the a.s.signor the use of the mortgaged property, are believed to exist in a majority of the states. The instruments conveying the property are usually called _chattel mortgages_, and are required to be recorded as deeds; in New-York, and perhaps a few other states, only filed in the town or county clerk's office.

--7. In the sale of personal property, though there should be a judgment against the vendor, and the purchaser should have notice of it, that fact would not of itself render the sale fraudulent. But if the purchaser, knowing of the judgment, purchases with the view or purpose to defeat the creditor's execution, the transaction is fraudulent. The question of fraud depends upon the motive.

--8. a.s.signments are sometimes made by debtors for the benefit of their creditors. A person deeply indebted, or in embarra.s.sed circ.u.mstances, a.s.signs his property, in trust, to one or more persons, who are to dispose of it, and to apply the avails to the payment of his creditors, or a part of them; for the law does not forbid a debtor's giving a preference to one or more creditors over others, provided the a.s.signment is for a sufficient consideration. A debtor may directly a.s.sign or transfer all his property to a single creditor, and the a.s.signment be valid; but if the value of the property is manifestly excessive, and disproportionate to the debt which it is intended to cover, the other creditors have a right to the surplus.

--9. When an embarra.s.sed debtor agrees to pay his creditors a certain proportion of their claims in consideration of a discharge of their demands, if he privately agrees to give a better or further security to one than to others, the contract is void; because the condition upon which they agree to discharge the debtor is, that they shall share equally.

--10. A gift, or conveyance founded merely upon a consideration of affection, or blood, or consanguinity, may be set aside by creditors, if the grantor was in embarra.s.sed circ.u.mstances when he made it; for a man is bound, both legally and morally, to pay his debts before giving away his property. But if he is indebted to only a small amount in proportion to the value of his property, and wholly unembarra.s.sed, the gift is not rendered voidable by his indebtedness, even though he should afterwards become insolvent.