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V.I

Selections from Leake's Elements of the

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SKLKCTIONS

LEAKE'S ELEMENTS OF THE LAW OF CONTRACTS

FINCH'S CASES ON CONTRACTS

ARRANGED AS A TEXT-BOOK FOR LAW STUDENTS

BY

WILLIAM A. KEENEK,

Pbofessob of Law, and Dean of the Facultt of Law in Columbia Coilboe.

VOLUME I.

NEW YORE: BAKER, VOORHIS & COMPANY.

1891.

COPYEIGHT, 1891

By BAKER, VOOKHIS & Ca

LAW LiBRAk-^

TABLE OF CONTENTS.

CHAPTER I. The Fokmation of Contracts.

701. I.— PAGE

Section I. Simple contracts arising from agreement 1

II. Contracts under seal 26

III. Contracts of record 36

IV. The statute of frauds :

§ 1. Contracts within the statute 43

§ 2, Forms and conditions required by the statute of frauds 56 § 3. The effect of the statute of frauds 73

CHAPTER II.

The Matter of Contracts.

Section I. The consideration 80

II. Impossible contracts 97

CHAPTER III. Offer and Acceptance (Cases) H3

CHAPTER IV.

Form of Contract (Cases).

Section I. Contract under seal 278

II. Statute of frauds 301

CHAPTER V.

Conseoebation (Cases).

Section I. Description of consideration 363

II. Necessity of consideration 369

III. Adequacy of consideration 381

IV. Compromise and forbearance.. . - 400

V. Unreal consideration 423

VI. EKecutory consideration 461

VII. Executed consideration 471

iv TABLE OP CONTENTS.

CHAPTER VI. Pakties to Contbacts. ,,

'■ , VOL. 1.— PAGE

Section I. Ot parties in general 600

II. Capacity of parties 512

CHAPTER VII.

Capacott of Parties (Cases).

Section I. Infants 533

II. Lunatic and drunken persons 553

III. Married women 567

CHAPTER VIIL

Hibtak:e, Pbaud and Dubess.

Section I. Mistake 583

IL Fraud 593

in. Duress 613

CHAPTER IX. Reality of Consent (Cases).

TOIi. II.— PAGE

Section I. Mistake 617

n. Misrepresentation 655

in. Fraud 759

rV. Undue influence 793

CHAPTER X. iLLESAi Contbacts 816

CHAPTER XI. Unzawfui. Aqeebments {Cases) 846

CHAPTER XIL The Pbomise 864

CHAPTER XIII.

1"hb Discharge op Contracts.

Section I. Discharge of contracts by agreement. 884

II. Alteration of written instrument 893

ni. Performance of contract 902

IV. Tender 914

V. Breach of contract 92i

VI. Accord and satisfaction 926

VII. Payment 930

TABLE OF CONTENTS. V.

VOL. n.— PAGE

Section VIII. Release 951

IX. Merger and estoppel 95S

X. Arbitration and award 965

XI. Statutes of limitation 970

XII. Set-off 989

XIII. Bankruptcy 998

CHAPTER XIV.

DiSCHABGB OF CONTBACT (Coses).

Section I. By agreement 1005

II. By breach 1052

CHAPTER XV. Damages 1089

CHAPTER XVI. Remedies fob Bbeach of Conteact (Cases) 1119

CHAPTER XVII.

Assignment of Conteacts.

Section I. Assignment by act or agreement of the parties 1146

II. Covenants annexed to estates in land 1157

III. Assignment of contracts by marriage 1169

IV. Assignment of contracts by death 1174

V. Assignment of contracts by bankruptcy 1181

TABLE OF SELECTED CASES.

Adams v. Lindsell 225 Agra and Mastennan's Bank, In re. Ex parte Asiatic Banking Cor- poration 135 Alderson v. Maddison 691 Alliance Bank ». Broom 413 Anonymous, Year Book, 8 Edw.IV. 1119 " " 3 Hen. VII. 1120 "21 Hen. VII. 1120 Attwood V, 409

Bailey ». Sweeting 356

Bainbridge ». Firmstone 383

Bannerman ». White 680

Bayley v. Merrel 759

Behn v. Burness 655

Bettini ». Gye 1084

Bidwell V. Catton 400

Bilborough v. Holmes 1027

Bingham v. Bingham 640

Birkmyr v. Darnell 331

Bolton V. Madden 384

Boone ». Eyre, cited at length 1060

Boulton v. Jones 633

Brett). J. S. and Wife 382

Britain b. Eossiter 348

Brooks ». Haigh 386, 392 Burke v. South Eastern Hallway Co. 181

Burnard v. Haggis 549

Butler ». Butler 576

Byrne v. Van Tienhoven 226

Callisher v. Bischoffsheim 415

Carpenter ». Heriot 793

Carter v. Boehm 716

Cherry v. Heming 344

Clermont v. Tasburgh 783

Collen B. Wright 1134

Collins B. Blantern 846

Cooke B. Oxley 201

Couturier b. Hastie 635

Cundy v. Lindsay 625

Dent B.Bennett 802 Deposit Life Assurance b. Ayscough 787

Dickinson B. Dodds 215

Dunlop B. Hlggins 231

Dunmore, Countess of, b. Alexander 244 Dutton B. Thompsoii 810

Eastwood B. Kenyon

427

Edwards b. Weeks

1005

Edwards b. Wickwar

740

Eliason b. Henshaw

153

England b. Davidson

472

Eelthouse b. Bindley

148

Fenton b. Emblers

341

Fetherston b. Hutchinson

846

Fisher B. Richardson

400

Fitch B. Sutton

443

Flight ». Booth

734

Flight B. Keed

488

Foakes b. Beer

450

Foster b. Dawber

1011

Foster b. Mackinnon

617

Foster b. Redgrave

n. 539

Fowle B. Freeman

302

Franklin ». Miller

1058

Freeman b. Cooke

706

Freeth ». Bun-

1061

Frost B. Knight

1067

Glaholm b. Hays

668

Goddard b. O'Brien

441

Good B. Cheesman

445

Goss B. Lord Nugent

1015

Gray b. Gardner

1033

Great Northern Railway Co. b.

Witham

396

Hadley b. Baxendale 1123

Haigh B. Brooks 386 Harris u. Great Western Railway Co. 165

Harris ». Nickerson 118

Harris's Case 251

Harrison b. Cage 461

Hartley b. Ponsonby 436

Harvey b. Youns 759

Hebb's Case 248

Henderson b. Stevenson 156

Hoadly b. M'Laine 465

Vlll

TABLE OF SELECTED CASES.

Holman v. Johnson Household Insurance Co. v. Grant Huguenln v. Baseley, Sir S. Bomil- ly's reply n.

Hyde v. Wrench Hylton V. Hylton

Imp. Land Co. of Marseilles, In re

Jennings V. Rundall Jones V. Ashburnham

Kaye v. Button Kibble, Ex parte King V. Gillett Kingston v. Preston

Lampleigh v. Brathwait Langden v. Stokes Laythoarp v. Bryant Leask v. Scott Lee V. Jones Lees V. Whitcomb Lilley v. Doubleday London Assurance v. Mansel Loyd V. Lee

Matthews v. Baxter Mavor v. Pyne May V. King Mayne's Case Medina v. Stoughton Molton V. Camroux Montefiori v. Montefiori Morton v. Lamb Mountstephen v. Lakeman Moyce v. Newington

National Savings Bank Association,

In re 248

Nichols V. Rayubred 461

Nugent V. Smith 1040

849

Pordage v. Cole

1074

259

Proof V. Hines

799

Pybus V. Smith

568

807

-

199

Raffles V. Wichelhaus

642

796

Ramsgate Victoria Hotel Co. o.

Goldsmid

213

251

Ramsgate Victoria Hotel Co. v.

Montefiore

213

546

Rann v. Hughes

379

401

Reuss V. Picksley

313

Risney v. Selby

761

479

Roberts ». Watkins

574

53.3

Robinson v. Harman

1121

1008

Roscorla v. Thomas

474

1076

Routledge v. Grant

207

Ryder v. Wombwell

537

477

1005

Sanky v. Grolding

567

305

Scotson V. Pegg

457

418

Shardlow v. Cotterell

324

741

Sidenham v. Worlington

471

463

Slim V. Croucher

709

1143

Smith V. Hughes

644

727

Smith V. Reese River Co.

778

401

Spencer v. Harding

116

Sturlyn v. Albany

381

566

1054

Tarrabochia ». Hickie

676

1006

Taylor v. Brewer

195

1052

Taylor ». Hilary

1020

761

Taylor v- Laird

140

553

Thomas v. Cook

338

702

Thomas v. Thomas

363

1078

Tweddle v. Atkinson

423

332

789

Victors V. Davies

486

Offord I). Davies

202

Parker v. Ibbetson

1035

Payne v. Cave

114

Pearce v. Brooks

853

Pickardi). Sears

703

Fillans v- Van Mierop

369

Pinnel's Case

440

Plevins v. Downing

1022

Polhill 1). Walter

771

Ward V. Hobbs 762

Ware v. Chappel 1073 Warlow V. Harrison 121, 129

Watkins v. Rymill 185

Week V. Tibold 195

Welford v. Beazely 301 Wennall v. Adney, note to n. 496

Williams v. Carwardine 113

Williams v. Jordan 321

Winn V. Bull 196

Withers v. Reynolds 1055 Wolverhampton Banking Co., Ex

parte 859

Xenos 0. Wickham jJ7ft

SELECTIONS ON CONTRACTS.

VOL. I.

CHAPTER I.

THE FORMATION OF CONTRACTS.

Section I. Simple Ookteacts arising from Ageeemext.*

Agreement 1

Promise 2

Consideration 3

Form of Simple Contracts by

Agreement 4

Offer and Acceptance of Terms . . 5 Contracts upon Executed Consi- derations 13

The different kinds of contract.— Contracts in the English law are generally divided into three kinds, distinguished by their different modes of formation, namely, Simple Contracts, Contracts imder Seal, and Contracts of Record. It is proposed to treat of them in the above order, commencing with Simple Contracts, because the rules and principles relating to the formation of contracts of that kind are of a less technical and more elementary character than those relating to the other kinds of contract.

Simple contracts may be divided into two classes, according to the sources or causes from which they arise, ^namely, simple contracts arising from agreement, and simple contracts arising independently of agreement, the latter of which classes is commonly known as contracts implied in law (a).

Agreement. Agreement consists in two persons being of the same mind concerning the matter agreed upon. The state of mind or intention of a person, being impalpable to the senses, can be ascer- tained only by means of outward expressions, as words and acts. Ac- cordingly, the law judges of the state of mind or intention of a per- son by outward expressions only, and thus excludes all questions con- cerning intentions unexpressed. It imputes to a person a state of mind or intention corresponding to the rational and honest meaning of his words and actions ; and where the conduct of a person towards another, judged by a reasonable standard, manifests an intention to

(a) Compare the terms ex contractu 3, t. 3, " Des contrats ou des obligations and quasi ex contractu in the civil law; conventlonnelles " and t. 4, "Des en- see 3 Austin's Jur 133, 233 Maine's ^agements qui se ferment sans conven- Ancien' Law, 344, also Code Civil, 1. tion. '

Vol. I— 1 * Ch. I, Sect. I, t? 1, Leake.

2 CHAP. I. FOEMATIOK OF CONTRACTS.

agree in regard to some matter, that intention is established in law as a fact, whatever may be the real but unexpressed state of his mind on the matter (a). Agreement further imports that there should be a mutual communication between the parties of their intentions to agree. Consequently the law judges of an agreement between two persons exclu- sively from those expressions of their intentions which are communicated between them ; and an intention not so communicated though expressed by other means, as by communication to a thu'd person, is immaterial to the question of agreement (b). In judging of intention from a per- son's words and conduct, where his acts are inconsistent with his words, the former are in general accepted as a more reliable guide to the intention than the latter; and the conduct may in some cases determine the intention even in opposition to the words, according to the maxim, " non quod dictum sed quod factum est inspicitur" (c).

Agreement, as a juridical fact, has a varied and extensive effect in creating, modifying, and extinguishing rights throughout all branches of law ; and in the law of contracts it is efficacious not only in creat- ing simple contracts, but also in varying and rescinding them. Agree- ment is also an element in the formation of contracts under seal, though it appears therein only through certain prescribed formalities.

Promise. In an agreement as the source of a legal contract, the matter agreed upon must import that the one party shall be bound to the other in some act or performance, which the latter shall have a legal right to enforce. The signification of an intention to do some act, or observe some particular course of conduct, made by the one party to the other, and accepted by him, for the purpose of creating a right to its accomplishment is called a promise {d). The parties to a promise are respectively called the promiser and promisee, which expressions also serve to designate the parties to a contract founded on an agree- ment containing a promise. When an action is brought upon such a contract the promisee and promiser appear respectively in the posi- tions of the plaintiff and the defendant and are commonly referred to in those characters.

Promissory expressions reserving an option as to their performance do not constitute a promise, and are not sufficient to create a contract. Thus, where an employer engages a servant upon the terms of paying

(a) Cornish v. Abington, 4 H. & N. Browne v. Hare, 3 H. & N. 484, 495;

549; 28 L. J. Ex. 262; Alexander v. 27 L. J. Ex. 372, 376.

Worman, 6 H. & N. 100, 112; 30 L. J. (c) Co. Lit. 36a; Croft v. Lundey 6

Ex. 198, 202; Van Toll v. South-East- H. L. C. 672, 722; 27 L. J. Q. B. 321,

em By. Co., 12 C. B. X. S. 75; 31 L. J. 337; In re Steer, 3 H. & N. 594; 28 L.

C. P. 241 ; Polhill v. Walter, 3 B. & Ad. J. Ex. 22.

114; Pickard v. Seers, 6 A. & E. 469; (d) 1 Austin's Jur. 279; Maine's An-

Freeman v. Cooke, 2 Ex. 654. cient Law, 323; Pothier, Obi. §§ 3, 4;

(6) See Cox v. Troy, 5 B. & Aid. 474; Code Civil, § 1101. ' V. Marie, 8 E. & B. 410;

SECT. I. SIMPLE CONTKACTS ARISING PROM AGREEMENT. 3

the servant such remuneration as the employer shall please, the employer is not bound in law to pay anything («). A person, in answer to a suitor for his daughter, wrote, " I shall aUow her the interest on £2000, whether she remains single or marries ; if the lat- ter, I may bind myself to do it, and pay the principal at my death to her and her heirs." This was construed not to import an intention to give a binding promise, and consequently was held not to create a con- tract (b). Upon the principle that expressions not intended to be bind- ing do not constitute a promise, it is held that commendatory expres- sions concerning the quality of goods made upon a negotiation for sale, without intending to warrant the quality, do not create a contract of warranty; according to the maxim of the civil law, simplex com- mendatio non obligat (c).

Consideration. It is further necessary in the English law that an agreement, in order to create a legal contract, should include in the matter agreed upon, besides a promise, what is called a consideration for the promise. The consideration may be described generally as some matter agreed upon as a return or equivalent for the promise made, showing that the promise is not made gratuitously. A gratuitous promise, or one agreed upon without any consideration for it, unless made with ceatain formalities to be noticed presently, is void of legal effect {d).

The object of requiring a consideration for a promise, as a condition of creating a legal contract by agreement, seems to be to secure a test that the parties have the intention of making a binding engagement, and are not usiag promissory expressions without any serious inten- tion of engaging themselves to a contract. The fact of bargaintag and giving an equivalent for the promise serves to show that the parties act with deliberation, and in the expectation that the transaction shaE be binding.

Gratnitons promises. Gratuitous promises, which are excluded by this rule from becoming contracts by mere agreement, are not altogether prohibited by English law. They may be made legally binding by using proper formalities, prescribed with the same view of securing dehberation and certainty, as will be seen in treating of con- tracts under seal, to which the doctrine of consideration does not

(a) Taylor v. Brewer, 1 H. & S. 290; Morehouse v. Colvin, 15 Beav. 341. Roberts v. Smith, 4H. & N. 315; 28 L. (c) Chandelor v. Lopus, Cro. Jac. 2; J. Ex. 164; and see Bryant v. Flight, 5 1 Smith's L. C. 5th edit. 160; and see M. & W. 114; Parker v. Ibbetson, 4 C. Ormrod v. Ruth, 14 M. & W. 651; as to B. N. S. 346; 27L. J. C. P. 236. fraudulent representations see post,

(b) Randall V. Morgan, 12 Ves. 67; Chap. VIII, Sect. 11, "Fraud."

and see similar examples in Maunsell v. (a) Plowden, 308; Pillans v. Mierop,

White, 4 H. L. C. 1039; Money v. Jor- 3 Burr. 1670. dm, 15 Beav.- 372; 5 H. L. C. 185;

4 CHAP. I. FORMATION OF CONTKACTS.

apply. In the case of PiUans v. Mierop (a) the question was raised whether mere writing was a sufficient solemnity to create a valid con- tract without a consideration, and was decided in the negative.

Executed and executory consideration. The consideration of a promise may be executed ov executor^/. An executed consideration is some act performed or some value given at the time of making the promise and in return for the promise then made. An executory consideration is a promise to do or give something in return for the promise then made. The contract with an executory consideration con- sists of a promise given for a promise, and comprises two promises. the one promise forming the consideration for the other, and con- versely. With respect to such contracts it is only necessary at present to observe, that either promise may be regarded for the time being as the consideration for the other (S).

An agreement satisfying the above-mentioned conditions, that is to say, containing a promise made by the one party for a valid considera- tion and agreed to by the other party, creates a contract by force of the mere agreement without other formality. The contract so created is a simple contract.

Form of simple contracts by agreement. ^A simple contract is not required by law to be made in any particular form or with any particular solemnities, except in a few instances to be noticed presently where writing and signature are required ; but it is left open to proof by any facts which are admissible and sufficient to establish the agree- ment according to the general rules of evidence and procedure. Hence the words and acts of the parties, which are the evidences of their agreement, constitute in general the onljform in which the contract created by the agreement appears. Some distinctions and observa- tions, however, of a general character have been made respecting the formation of agreements, which require here to be noticed.

Express and implied contracts. Simple contracts created by agreement are sometimes distinguished, according to the manner in which the agreement is formed, as express and implied. The only difference between an express and implied agreement is in the mode of substantiatuig it. An express agreement is proved by express words, written or spoken, stating an actual agreement; an implied

(o) 3 Burr. 1670. himself to the other, as in a loan of (6) Contracts of these two kinds are money; in the latter each of the con- respectively distinguished in the civil tracting parties binds himself to the lav? by the names unilateral and bilat- other, as in the contract of sale. Po- eral or synallagmatic. In the former thier, Obi. par. 9; Code Civil, § 1102, only one of the contracting parties binds 1103; 1 Austin's Jnr. 297.

SECT. I. SIMPLE CONTRACTS ARISING FROM AGREEMENT. 5

agreement is proved by circumstantial evidence showing that the parties intended to contract (a). Agreements may also be of a mixed character in respect of the mode of making them, that is to say, partly expressed in words and partly implied from acts and circumstances. No distinction, except in the nature of the proof, arises from agree- ments being express or implied.

It is necessary here to notice that the term implied in law is used to denote the class of simple contracts raised by law from facts and circumstances independent of agreement, and in which an agreement or promise, if implied at all, is an implication of law only, and has no existence in fact (5). In the above passages the term "implied" is used to describe an agreement which has an actual existence in fact, but which appears from circumstantial evidence and not in express terms.

Contracts in writing. Simple contracts arising from agreement are frequently expressed in writing, and are in some instances required by law to be expressed in writing. They do not on that account con- stitute a distinct kind of contract, but are subject to the same rules of law as other simple contracts. The fact of their being written, how- ever, renders them subject also to the rules of evidence relating to written documents ; and the discussion of those rules in their bearing upon written contracts as a class, including therein other contracts besides simple contracts, is of sufficient importance to require treat- ment in a separate space.

Offer and acceptance of terms. An agreement must necessarily be made in the form, or what is equivalent to the form, of an offer of the matter or terms of the agreement on the one side, and an assent to or acceptance of those terms on the other side, as in the following examples : ^At a sale by auction each bidding is an ofEer of a price for the article put up for sale ; and these biddings may be successively made until one is accepted by the fall of the hammer, when the agree- ment is complete (c) . The sending an order for goods to a merchant or tradesman is in effect an offer to purchase ; and the sending the goods is an acceptance of the offer, and creates a contract of sale (d). The publication of an advertisement offering a reward for information respecting a loss or a crime is an offer to any person who is able to give the information asked ; and the acceptance of it by giving such information creates a valid contract (e). The time tables published

(a) See Marzetti v. Williams, 1 B. & (c) Payne v. Cave, 3 T. R. 148.

Ad. 415, 423, 428; and see 1 Austin's (d) See Harvey v. Johnston, 6 C. B.

Jur. 356, 377; Maine's Ancient Law, 295, 304; and see Levy v. Green, 8 E. <fc 344. B. .575, cited post, p. 8.

(6) See ante, p. L (e) Williams v. Carwardine, 4 B. &

Ad. 621.

6 CHAP. I. FORMATION OF CONTRACTS.

by a railway company are a promise tliat the trains will run as adver- tised, offered to all persons who apply in a regxdar manner to be carried by them (a).

A correspondence between two parties by letter may contain an agreement which will produce a contract as bindtag as if drawn up in articles and signed by the parties as such ; but there must be found in the correspondence a proposal of terms, met by such final accept- ance as imports a consent of both parties. The same construction must be put upon a letter, or a series of letters, that would be applied to the case of a formal instrument, the only difference between them being, that a letter or a correspondence is generally more loose and in- accurate in respect of terms, and creates a greater difficulty in arriv- ing at a precise conclusion (b).

Offer unaccepted. An offer imaccepted, or, what amounts to the same thing, of which the acceptance is not communicated to the party making it, does not constitute an agreement (c). The defendant sent to the plaintiff a letter offering to guarantee to the plaintiff the debt? of a third party, and the plaintiff, though he gave credit to the third party on the faith of such guarantee, did not communicate his accept- ance of it to the defendant ; it was held that there was no contract, and that the plaintiff could not maintain an action upon the letter (d). A person wrote a letter to another offering to purchase of him a horse, and stating that if he received no answer he should assume that his offer was accepted, to which letter no answer was returned ; it was held that the letter unanswered did not constitute an agreement, and that a person in making an offer has no right to put upon another the burden of notifying his refusal by letter or otherwise (e).

The contract arising from an agreement dates from the acceptance, and not from the offer of the terms. Accordingly, under a contract of sale passing the property in the goods sold, the title of the purchaser' dates, not from his offer to purchase, but from the acceptance of the offer ; and therefore he cannot sue for a conversion of the goods com- mitted before the acceptance though after the offer (/).

Variance between the terms offered and accepted. Where there is a variance between the terms offered and the terms accepted there is no agreement, or consensus ad idem, without which there can

(o) Denton v. Great Northern By. {d) M'lver v. Richardson, 1 M. & S.

Co., 5 E. & B. 860; 25 L. J. Q. B. 134. 557; Mozley v. Tinkler, 1 C. M. & R.

(6) Kennedy v. Lee, 3 Mer. 441, 451; 692.

and see Thomas v. Blackman, 1 Coll. (e) Felthouse v. Bindley, 11 C. B. N.

301; The Bop Lead Mining Co. v. Man- S. 869; 31 L. J. C. P. 204.

tague, 10 C. B. N. S. 481, 491; 30 L. J. (/) Felthouse v. Bindley, supra; and

C. P. 380. see Stockdale v. Dunlop, 6 M. & W.

(c) Bussell v. Thornton, 10 Ex. 323; 224. 4H. & N. 788; 30 L. J. Ex. 69.

SECT. I. SIMPLE CONTRACTS ARISING FROM AGREEMENT. 7

be no contract. As in the following cases : The defendant offered to purchase the plaintiff's house, with possession on the 25th July, and the plaintifif accepted the offer with possession on the 1st August (a). The defendant offered by letter to buy a mare of the plaintiff upon his giving a warranty of her being quiet in harness, and the plaintiff wrote in answer agreeing to sell the mare and warranting her quiet in double harness (5). The defendant offered by letter to sell the plaintiff a certain quantity of "good" barley, the plaintiff by letter accepted the offer for "fine" barley, and it appeared that by the usage of the trade the expressions good and fine meant different qualities of barley (c). The defendant offered to purchase the lease of a house of the plaintiff on certain terms, and the plaintiff consented on the same terms to grant the plaintiff an under-lease (d). Upon a treaty for an underlease a memorandum of terms proposed by the lessee stipulated that it should contain all usual covenants and also the covenants in the leases of the ground- landlord, and the proposed lessee wrote on the memorandum that he agreed thereto, subject to there being nothing unusual in the lease of the ground-landlord (e). In all the above cases it was held that there was no binding agreement, because of the variance between the terms proposed and accepted. The plaintiff applied by a letter in the prescribed form to the pro- visional committee of a railway company for an allotment of shares, undertaking to accept the shares and to pay when required the depo- sit thereon ; the company informed the plaintiff by letter that they had allotted him the shares upon condition that the deposit was paid on a certain day, in default of which the allotment would be forfeited ; it was held that the letter of allotment not being an unconditional acceptance of the offer made by the letter of application, the two did not constitute a valid contract (/"). So, where to a similar letter of appUcation an answer was sent by a letter allotting the shares, but the letter was headed " not transferable," it was held that this term qualified the acceptance of the defendant's offer, and that there was no contract (ff). Wbere to a similar application an answer was returned that the shares had been allotted, and that the memorandum and articles of association must be signed, and in default thereof the shares and deposit would be forfeited, it was held that there was no complete contract to take the shares (h).

(a) BoutledgeY. Grant, 4 Bing. 660. (g) Duke v. Andrews, 2 Ex. 290; and

(6) Jordan v. Norton, 4 M. & W. see Chaplin v. Clarke, 4 Ex. 403.

155. {h) Oriental Inland Steam Co. v.

(c) Rutchiaon v. Bowker, 5 M. & W. Briggs, 31 L. J. C. 241; and see Moore

535. V. Garwood, 4 Ex. 681. In re Leeds

<d) Holland v. Myre, 2 S. & S. 194. Banking Co. (Howard's case), L. Rep.

ie) Lucas v. James, 7 Hare, 410. 1 Ch. Ap. 561; 36 L. J. C. 42; In re

(/) Wontner v. Shairp, 4t C. B. 404, Boiling Stock Co. of Ireland {Shackle-

441; and see AddinelVs Case, 1 L. R. ford's case), L. Rep. 1 Ch. Ap. 567; 36

Eq. 225; 35 L. J. C. 75. L. J. C. 818.

8 CHAP, I. FORMATION OF C0NTEACT8.

In contracts of sale conducted through a broker as the agent of both buyer and seller, if the bought and sold notes delivered by the broker to the respective parties vary in their terms, they will not serve to establish a contract (a), as where the two sale notes varied in the description of the goods (d), and where they varied as to the mode of payment, the one stating it to be by ready money and the other by bill (c). In a case where the bought and sold notes varied in several expres- sions, evidence was admitted of the mercantile meaning of the ex- pressions in order to reconcile the two notes (d).

The defendant sent a written order for goods addressed to a person with whom he had been in the habit of dealing, and the plaintifiE, who had succeeded that person in the business, executed the order without giving notice to the defendant that the goods were not supplied by the person to whom the order was addressed ; it was held that there was no contract with the plaintiff, because the defendant had never in- tended to contract with him (e). An order was sent for certain goods, and goods were sent agreeing with the order, together with other goods not ordered, in one parcel and with one invoice ; the court was equally divided upon the question whether, under the circumstances, there was a blading contract to pay for the goods ordered, or whether the purchaser might refuse the whole of the goods sent, and not merely those not ordered (/).

A variance between the offer and acceptance may be caused by the matter containing a term of ambiguous meaning, and the two parties accepting it with different meanings. There is then an apparent agreement ; but each party in fact mistakes the meaning of the other, and it is open to each party to explain the meaning with which he ac- cepted the term, in order to show that there was no real agreement between them (g).

Preliminary negotiations. Terms offered and representations made during the negotiation for a contract, which are not compre- hended in the matter of the final agreement, are excluded from the contract. The defendant represented to the plaintiff that a horse which he was about to sell by auction was sound, and the next day the plaintiff, relying on the representation, purchased the horse at the auction at which it was put up for sale, without a warranty ; it was

(a) Grant v. Fletcher, 5 B. & C. 436; (e) Boulton v. Jrniea, 2 H. & N. 564;

and see Sieveviright v. Archibald, 17 Q. 27 L. J. Ex. 117; and see Hardman v.

B. 103. Booth, 1 H. & C. 803; 32 L. J. Ex. 105;

(6) Thornton v. Kempster, 5 Taunt. Schmaling v. Thomiinson, 6 Taunt. 147.

786. (/) Levy v. Green, 8 E. & B. 575; and

(c) Gregaon v. Ruck, 4 Q. B. 737. see Levy v. Green, In the Exchequer

(d) Bold V. Rayner, 1 M. & W. 343; Chamber, 28 L. J. Q. B. 819.

see post, Chap. 1, Sect. IV, "Contracts ( a) See post. Chap. VIII, Sect. I,

and see Kempton v. Boyle, 34 L. J. Ex. "Mistake."

191.

SECT. I. SIMPLE CONTRACTS ARISING FROM AGREEMENT. 9

held that the representation of the defendant formed no part of the contract. According to Maule, J., "the contract commenced when the horse was put up for sale, and ended when he was knocked down to the highest bidder," and thus excluded the representation, which was not made pending the contract (a). Upon the negotiation for a sale of goods a sample was exhibited, but a contract was afterwards made in writing describing the goods by kind and quality without referring to the sample ; it was held to form no part of the contract that the goods should agree with the sample (b). Upon treaty for the sale of a ship it was represented as copper-fastened, but in the written contract of sale it was not so described ; it was held that no warranty to that effect could be implied from the previous representa- tion (c).

But fraudulent representations made with the intention of induc- ing the other party to enter into the agreement may become material, as giving groimd for avoiding the contract or for an action of fraud ; and such representations, though not absolutely fraudulent in law, may be material in equity, as affecting the right of the party making them to specific performance of the contract, or as founding a claim against him to make them good (d).

Continuance of offer. The offer of a contract necessarily pre- cedes the acceptance by some interval of time ; and, as it must con- tinue open untU the acceptance, it is sometimes necessary to deter- mine how long it continues open, and how it may be put an end to.

An offer may in expiess terms limit its own continuance, and it then comes to an end by mere lapse of time. Thus, an offer by letter is sometimes made conditionally upon receiving an answer by return of post (e). Offers not expressly limited are in general made upon the implied condition that they shall be accepted within a reasonable time (/), and if not accepted within a reasonable time may be treated as at an end (gr). Application having been made for shares in a com- pany in accordance with their published prospectus on the 8th of June, no allotment was made in answer to the application untU the following 23rd of November ; it was held that the allotment was not made within a reasonable time, and therefore that the applicant was not bound to accept the shares allotted, although he had not expressly withdrawn his application (h) .

(a) Hopkins v. Tanqueray, 15 C. B. (/) See per Lord Eldon, Kennedy v.

1.30; 23 L. J. C. P. 162. Lee, 3 Mer. 441, 454; Thornbury v. Be-

(6) Tye v. Fynmore, 3 Camp. 462; vill, 1 Y. & C. Ch. 554; Meynellv. Sur-

Meyer Y. Everth, 4 Camp. 22. tees, 1 Jur. N. S. 737; 25 L. J. C. 257,

(c) Pickering v. Dowson, 4 Taunt. 259.

779; Kain v. Old, 2 B. & C. 627; Free- (g) Williams v. Williams, 17 Beav.

man v. Baker, 5 B. & Ad. 797. 21-3. . ,

id) See vost. Chap. I, Sect. VI, (/() Ramsgate Victoria Hotel Co. T,

"Fraud." Goldsmid, 1 L. Rep. Ex. 109.

(e) Adams v. Lindsell. 1 B. & Aid. 681; Dunlop v. Higgins, 1 H. L. C. 381.

10 CHAP. I. FOEMATION OF CONTEACTS.

Offer by letter. An offer by letter or other communication be- tween distant parties continues open until the arrival of the letter or other communication in due course at its destination (a). If the delivery of the letter of offer is delayed by the default of the sender, the offer is extended until its arrival. The defend- ants by letter offered to sell certain goods to the plaintiffs, receiving an answer by return of post ; the letter was delayed in con- sequence of the defendants having addressed it incorrectly, and the letter of the plaintiffs by return of post accepting the offer did not arrive xmtil later than it would have done if the letter of offer had been correctly addressed ; in the meanwhile the defendants not hear- ing from the plaintiffs had sold the goods to another person ; it was held that there was a binding contract, the Court sajdng that as the delay in notifying the acceptance arose entirely from the mistake of the defendants, it was to be taken as against them that the plaintiffs' answer was received in course of post (b). Where an offer was made by letter without requiring an answer by return of post, it was held that a notification of acceptance sent by post on the day of the receipt of the offer, though not by the next post, was sufficient (c).

Acceptance by letter. ^Where the proposal sent by letter is ac- cepted by letter, the contract is complete on the posting of the letter of acceptance. In the case of Adams v. lAndsell (d), the defendants having written to the plaintiffs a letter offering a sale of wool, after the letter of acceptance was posted and before its delivery, sold the wool to another person. In an action for not delivering the wool, it was contended on behalf of the defendants that there could be no binding contract until the answer was actually received, and before then the defendants had retracted their offer by selling the wool to other persons. But the Court said, that if that were so, no contract could ever be completed by the post. For if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it. And so it might go on ad infinitum. The defendants must be considered in law as making, during every instant of the time their letter was travelling, the same identical offer to the plaintiffs ; and then the contract is completed by the acceptance of it by the latter. In the case of Potter v. Sanders (e) the vendor of an estate accepted an offer made by letter for the purchase of it by a let- ter posted on one day and delivered the next. On the latter day the

(o) See Adams v. Lindsdl, cited in- (d) 1 B. & Aid. 681 ; and see per

fra. Wilde, C. J., Harvey v. Johnston, 6 0.

<b) Adams v. Lindsell, 1 B. & Aid. B. 295, 804.

681. (e) 6 Hare, 1.

(c) Dunlop V. Higgins, 1 H. L. C. 381.

SECT. I. SIMPLE CONTRACTS ARISING FROM AGREEMENT. II

same estate was sold by an agent of the vendor to another party. Upon the question of priority between the two purchasers Vice Chan- cellor Wigram decided that it was unnecessary to inquire whether the letter of acceptance was delivered before the other contract was made. The delivery of the letter, he said, was merely the completion of an act by which the vendor had bound himself the day before ; and the vendor, when he put into the post-office the letter to the plaintiff, did an act which, unless it were interrupted in its progress, concluded the contract between himself and the plaintiff.

The acceptance is complete and the contract valid upon the due posting of the letter of acceptance, notwithstanding delay, or even en- tire failure in arriving at its destination, provided such delay or failure has not been occasioned by a wrong address of the letter, or other de- fault in the party sending it (a). In a case on appeal to the House of Lords against a decree of the Court of Session, it appeared that a letter was sent offering a sale of goods, which was accepted by a letter duly posted for that purpose ; but the letter of acceptance not arriv- ing in regular course of post by reason of delays in the post-office, not occasioned by any default in the sender,