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non-payment of a smaller specified sum, the Court will treat
the larger sum as a penalty, and, not as liquidated damages.
There is another exception to the rule, which is that if the
sum which the one party has agreed to pay is, with regard to
the matter in respect of which it is agreed to be paid, so large
that if it were intended to be payable by ivay of liquidated
damages it would amount to an absurdity, then the Court
would hold that such could, not have been the intention of
the parties, but would arrive at the conclusion that it was
to be paid 1 not as liquidated damages, but as a penalty.



DISCHARGE OF CONTRACT BY IMPOSSI-
BILITY OF PERFORMANCE.

Generally Impossibility of Performance is no defence to an Action
for Breach of Contract unless caused by Act or Default of
the other Party.

BUDGETT v. BENNINGTON. [1891]
(60 L. J. Q. B. 1 ; (1891) 1 Q. B. 35; 39 W. K. 131 ; 6 Asp. M. C.

592— C. A.)

The plaintiffs were the indorsees of a bill of lading which
incorporated the terms of a charter-party by which seven lay-
days were allowed for unloading the vessel, and ten days on



124 CONTRACT.

demurrage over and above the lay-days. By the charter-party
the master undertook to deliver the cargo, which was a cargo of
barley in bulk, from alongside, and, by the custom of the port
of discharge, the unloading of such cargo was the joint act of
the shipowner and the consignee. During the unloading, and
before the lay-days had run out, a strike occurred amongst the
labourers employed by the defendants, the shipowners, as well
as amongst those employed by the plaintiffs, with the result that
the unloading had to be discontinued for several days, and was
not completed until after the expiration of the lay-days. In an
action to recover back a sum paid by the plaintiffs to the
defendants under protest in respect of a claim for demurrage —

Held, that under the circumstances the plaintiffs were
liable to pay demurrage, as they had not been prevented
from discharging the vessel within the time allowed for un-
loading by any act or default of the defendants, or those for
whom they were responsible.



Generally Impossibility of Performance is no defence to an Action
for Breach of Contract, but where through no fault of either
Party the existence of a specific thing, the continued existence
of which is essential to the performance, is put an end to,
the Contract is thereby Discharged.

TAYLOR v. CALDWELL. [1863]

(32 L. J. Q. B. 164 ; 3 B. & S. 826 ; 8 L T. 356 ; 11 W. R. 726.)

The defendants agreed to let certain gardens and music hall
to the plaintiff on four specified days for the purpose of giving
a series of concerts at a specified rent for each of the said
days. The defendants were to provide a band of music and
certain specified entertainments, and to issue advertisements of
the entertainments. The plaintiffs were to pay 100/. in the



IMPOSSIBILITY OF PERFORMANCE. 125

evening of each day, to receive and take all the money paid by
persons entering the gardens, and to provide the necessary
artistes for the entertainments. After the agreement was
entered into, and before the day arrived for the first concert,
the music hall was accidentally destroyed by fire. This action
was brought to recover damages for the injury suffered by the
plaintiff.

Held, although there is no doubt that where there is a
positive contract to do a thing, not in itself unlawful, the
contractor must perform it or pa// damages for not doing
it, although in consequence of unforeseen accidents the per-
formance of his contract has become unexpectedly bur-
thensome or even impossible, yet where, from the nature of
the contract it appears that the parties must from the
beginning have known that it could not be fulfilled unless,
tvhen the time arrived, some particular specified thing con-
tinued to exist, so that when entering into the contract they
must have contemplated such continued existence as the
foundation of what was to be done ; there, in the absence of
any express or implied warranty that the thing shall exist,
the contract is not to be construed as a positive contract,
but as subject to an implied condition that the parties shall
be excused in case, before breach, performance becomes im-
possible from the perishing of the thing, without default of
the contractor.

N.B. — This principle was followed in the Coronation cases on
the basis that the contracts were on the implied condition that the
procession took place, e.g., Krell v. Henry, 72 L. J. K. B. 794 ;
(1903) 2 K. B. 740.



126 CONTRACT.



Legal Impossibility created by Operation of Law Exonerates
Promissor.

BAILY v. DE CRESPIGNY. [1869]
(38 L. J. Q.B. 98 ; L. R. 4 Q. B. 180; 19L.T. 681; 17VV.R. 491.)

In an action of covenant by a lessee against his lessor it was
alleged and admitted on the record that the defendant had
covenanted that neither he nor his " assigns " should or would,
during the term, permit to be built any messuage, &c. on a
paddock fronting the demised premises. The paddock had been
purchased by a railway company, and conveyed to them by the
defendant under the compulsory powers of their special Act, and
they had erected buildings on the ground contrary to the
covenant. It was also stated that the buildings, &c. were not
such as it was necessary for the company to erect on the land
in question.

Held, that as the company became assignees of the land,
not by the voluntary act of the former owner, but by compul-
sion o/ law, the defendant was not liable. The plaintiff
was, therefore, one of a class of persons injured by the con-
struction of the railway, for whom the legislature had
provided no compensation.

u There can be no doubt that a man may, by an absolute
contract, bind himself to perform things which subsequently
become impossible or to pay damages for their non-per-
formance, and this construction is to be put upon an
unqualified undertaking ivhere the event which causes the
impossibility was, or might have been, anticipated and
guarded against in the contract, or where the impossibility
arises from the act or deft nit of the promissor. But where
the event is of such a character that it cannot reasonably



IMPOSSIBILITY OF PERFORMANCE. 127

be supposed to have been in the contemplation of the con-
tracting parties when the contract was made, they will not
be held bound by general words which, though large enough to
include, were not used with reference to the possibility of the
particular contingency which afterwards happens. It is on
this principle that the act of God is, in some cases, said,
to excuse the breach of a contract It is on this prin-
ciple that it has been held that an impossibility arising from
an act of the legislature subsequent to the contract discharges
the contractor from liability"



Contract depending on Personal Skill is Discharged by Illness
or Death of Contractor.

EOBINSON v. DAVISON. [1871]
(40 L. J. Ex. 172 ; L. E. 6 Ex. 269 ; 24 L.T. 755 ; 19 W. E. 1036.)

The defendant agreed with the plaintiff that his wife, a
pianist of great renown, should perform for the plaintiff at a
certain concert. The day before the concert was to take place
the lady in question was taken so ill that it would have endan-
gered her life to attempt to play. An action was brought by
the plaintiff for breach of this agreement.

Held, tv here a contract is one dependent on the personal
skill of the person performing , and the performance is pre-
vented by the act of God, such as death or illness of the
person to perform it, no action will lie for the non-perform-
ance of the contract, for though no condition be expressed
in words, such a contract is based on the assumption of
sufficient liealth, and is subject to an implied condition that
if the part// to perform l>e, without his own default, dis-
abled by illness, he shall be excused.



128 CONTRACT.

Of course, the parties might expressly contract that in-
capacity should not excuse, and thus />reclude the condition
of health from being annexed to their agreement. Here
they have not done so ; and as they have been silent on that
point, the contract must be taken to have been conditional
and not absolute.



DISCHARGE OF CONTRACT BY OPERATION

OF LA W.



A Material Alteration of a Written Instrument avoids it.

SUFFEL v. BANK OF ENGLAND. [1882]

(51 L. J. Q. B. 401 ; 9 Q. B. D. 555 ; 47 L. T. 146 ; 30 W. E. 932 ;

46 J. P. 500— C. A.)

Certain notes had been obtained from Payne, Smith & Co.,
bankers in London, by a forged cheque ; these notes were
changed at the Bank of England for the notes sued upon in
this action, which notes were bought by the plaintiff, a banker
at Brussels, in the ordinary way of his trade. The numbers of
the notes had been erased and others substituted. Payment
of these notes had been stopped at the bank, and a notice
specifying their original number had been issued. An action
was brought by the plaintiffs as bond fide holders for value of the
notes, which were of the value of 500/., claiming payment
thereof.

Held, that a material alteration of a written instrument
avoids it, and that in this case the alteration by erasure of
the number and the substitution of another is a material
alteration which avoids the instrument, so that a bona fide
holder for value could not maintain an action upon such
notes.



DISCHARGE BY OPERATION OF LAW. 129

Discharge of a Bankrupt acts as a Release of all Debts even
though he subsequently promises to pay the Debts.

HEATHER v. WEBB. [1876]
(46 L. J. C. P. 89 ; 2 C. P. D. 1 ; 25 W. R. 253.)

The plaintiff had acted as solicitor for the defendant, and
there was due to him the sum of 15/. The following year the
defendant liquidated his affairs by arrangement under the Bank-
ruptcy Act, 1869, and a discharge was granted him. In spite
of this discharge the defendant promised to pay the amount
due, but changing his mind refused to pay, and this action was
accordingly brought.

Held, that a subsequent promise to pay a debt released
h) a discharge in bankruptcy is made for no consideration,
and no action can be brought upon it.



AGENCY.



The Husband is only liable for Debts contracted by his Wife as
his Agent. Secret Revocation of Authority to Wife to act
as his Agent renders Husband not liable to new Creditors,
although the Goods supplied are Necessaries, provided he
makes her a reasonable Allowance.

DEBENHAM v. MELLON. [1880]

(50 L. J. Q. B. 155 ; 6 App. Gas. 24 ; 43 L. T. 673 ; 29 W. R. 141 ;
45 J. P. 252— H L.)

Mrs. Mfdlon, the wife of the defendant, was living with her
husband at Bradford, where both were employed in managing a
hotel. The plaintiff supplied her with clothing for the use of
herself and the defendant's children to the value of 42/. The
goods were admitted to be necessaries in the sense that they

J. K



] 30 CONTRACT.

were suitable to the position in life of the defendant. Before
the wife began to deal with the plaintiff, tin- defendant had
agreed with her that he would make her an allowance, and that
she should not order goods upon credit, but no notice of that
agreement had been given to anyone.

Held, that where a husband and wife are living together,
the question of whether a husband is liable for the debts of
his wife is a question of whether she has the express or
ini plied, authority to pledge the credit of her husband as his
agent, and such a question is one of fact, and where such
authority has been once given in the case of certain trades-
men, such authority could only be revoked by express notice
to those tradesmen of the revocation. An authority to
pledge the credit if the husband to purchase necessaries
may be implied where the two are living together, but such
an implied authority is negatived where, as in this case, a
reasonable alloivance is made by the husband to the wife
sufficient to cover a proper expenditure for her own and the
children'' s clothing. And where, asm this case, the husband,
having given the wife a reasonable alloivance, has forbidden
the wife to buy goods on credit, without giving notice to
anyone of the fact, and he is ignorant of what his wife is
doing, he is not liable for the price of goods supplied to her
order by a tradesman with whom she had not previously
dealt before being forbidden to buy on credit, although the
goods consist of clothes for the wife and children suitable to
their position in life.



AGENCY. 131

Where Husband and Wife are separated through fault of Husband,
the Wife has an implied Authority to pledge Husband's
Credit, but where Separation is the fault of the Wife, there
is no such implied Authority.

WILSON v. GLOSSOP. [1888]

(57 L. J. Q. B. 161 ; 20 Q. B. D. 354 ; 58 L. T. 707 ; 36 W. E. 296 ;
52 J. P. 246— C. A.)

The defendant filed a petition for divorce on the ground of
his wife's adultery. At the trial it was found that the wife had
committed adultery with the connivance of her husband. After
the defendant had charged his wife with adultery, he turned
her out of doors without any means of support, and she went to
her mother, who supplied her with necessaries. The mother
then brought this action to recover 40/. for the maintenance of
the wife for forty weeks.

Held, the plaintiff ivas entitled to recover. A wife who
leaves her husband without cause and without consent,
carries no implied authority with her to maintain herself at
his expense. But if the husband ivrongfully compels his
wife to leave his home, as in this case, he is bound to main-
lain her elseivhere, and she has therefore implied authority
to pledge his credit elseivhere.



Where a Principal fraudulently keeps back the knowledge of a
defect in an Article from his Agent so that the Agent makes
an innocent Misrepresentation, the Principal is liable.

LUDGATEE v. LOYE. [1881]
(44 L. T. 694 ; 45 J. P. 600— C. A.)

The defendant's son, acting for the defendant, and with the
defendant's authority, represented that certain sheep which he

k2



132 CONTRACT.

sold to the plaintiff were all right. The defendant had fraudu-
lently concealed from his son that the sheep had the rot, and
fraudulently gave the son authority to sell them for the best
price, intending that the son should represent that they were
sound.

Held, that the defendant was liable in an action to
recover damages for fraudulent misrepresentation. Where
a principal employs an agent ignorant of the truth, in order
that such agent may innocently make a false statement
believing it to be true, and may so deceive the party with
whom he is dealing, the representation by the agent becomes
a misrepresentation by the principal so as to vitiate the
contract.

Note. — In the absence of fraud a principal is not liable for the
unauthorized statement of his agent : Cornfoot v. Fowke, 9 L. J. Ex.
297.



A Principal is liable for acts done within the apparent Authority

of his Agent.

PICKEEING v. BUSK. [1812]
(15 East, 38; 13 R. E. 364.)

Swallow, a broker, had purchased hemp on behalf of the
plaintiff which had been placed in Swallow's name at the request
of the plaintiff. Swallow subsequently contracted to sell hemp
to Hay ward & Co., and having none of his own to deliver, trans-
ferred the hemp of the plaintiff into the name of Hay ward & Co.
for which they paid him the value. Hayward & Co. shortly
afterwards became bankrupt, and the plaiutiff discovering these
circumstances demanded the hemp from the defendants, their
assignees, and upon their refusal to deliver up the hemp, the
present action was brought.

Held, that a broker may bind his principal within flic
limits of the authority with which he has been apparently



AGENCY. 133

clothed by the principal in respect of the subject-matter.
Strangers can only look to the acts of the parties and to the
external indicia of property ', and not to the private com-
munications which may pass between a principal and his
broker ; and if a person authorise another to assume the
apparent right of disposing of properly in the ordinary
course of trade., it must be presumed that the apparent
authority is the real authority.



The Master of a Ship is the Agent of the Owner to pledge his
Credit only in the case of Necessity, and the Owner is only
liable for Actual Necessaries.

THE "PONTIDA." [1884]
(53 L. J. P. 78 ; 9 P. D. 177 ; 51 L. T. 849 ; 33 W. E. 38 ; 5 Asp.

M. C. 330.)

The plaintiffs had advanced money on a bottomry bond to
pay off claims for repairs on the " Pontida." The defendants
refused to pay the full amount of the bottomry bond on the
ground that the master of the " Pontida " had exceeded his
authority, and that the repairs which had been carried out were
more than were necessary.

Held, the master of a ship is the agent of the owner to
pledge his credit only in the case of necessity, and to the
extent of that which is necessary to enable the ship to com-
plete her voyage, and he cannot by giving a bottomry bond
for an excessive amount fix the owner with liability for any-
thing beyond that which is necessary.



134 CONTRACT.

A Person making a Contract on behalf of a non-existent Principal,
is personally liable on it. Such a Contract entered into on
behalf of a Company before Incorporation, cannot be ratified
by it on its subsequent Incorporation.

KELNER v. BAXTER. [1866]

(36 L. J. C. P. 94; L. R. 2 C. P. 174 ; 12 Jur. (N. S.) 1016;
15 L. T. 213; 15 W. R. 278.)

The plaintiff and the defendants were desirous of starting a
company, to take the plaintiff's premises and stock-in-trade.
The plaintiff sent a written proposal to sell the premises, &c.,
which was directed to and accepted by the defendants "on behalf
of the proposed G. R. A. H. Co. (Limited)." The company
was not then in existence. The plaintiff brought his action on
this agreement.

Held, the defendants were liable, for if there be no
existent principal, a contract binds the persons professing
to contract as agents. The company being non-existent at
the time of the agreement no ratification was possible, and
the defendants were personally liable, and parol evidence
was not admissible to show a contrary intention.



If an Agent makes a secret Profit he must account for same to
his Principal.

MORISON v. THOMPSON. [1874]

(43 L. J. Q. B. 215 ; L. R. 9 Q. B. 480 ; 30 L. T. 869 ;

22 W. R. 859.)

The dpfendant having been authorized by the plaintiff to
purchase on his behalf a particular ship as cheaply as she could
be got, made an arrangement, without the plaintiff's knowledge,
with the vendors' broker, who had a right to retain the excess of
the purchase-money, over 8,5007., by which the defendant pur-



AGENCY. 135

chased the ship for 9,250/., and retained for his own use 225/.,
part of the excess.

Held, that the plaintiff was entitled to the amount so
retained by the defendant, inasmuch as it was a 'profit
acquired by an agent in connection with his agency without
the sanction of his principal, and Hud it could be recovered
in an action for money had and received.



An Agent to buy or sell a thing on behalf of his Principal may
not, without the consent of the Principal, sell to or buy from
himself even though he sells or buys at Current Prices.

EOTHSCHILD v. BBOOKMAN. [ 1829 ]

(7 L. J. Ch. (0. S.) 163 ; 5 Bligh (N. S.), 165 ; 2 Dow & CI. 188 ;

30 B. B. 147.)

The defendant, who was also a contractor for the Prussian
loan, being directed by the plaintiff to buy Prussian bonds,
represented that the purchase had been made, and advanced
money to the plaintiff on a deposit of the bonds. The plaintiff
having subsequently directed them to be sold, the defendant, in
settling accounts, gave him credit for the amount at the price
of the day. As a matter of fact no actual purchase or sale was
made by the defendant ; all he did when asked to buy was to
transfer his own bonds to the plaintiff, and when asked to sell
to re-transfer them to himself and credit the plaintiff with
their market value.

Held, that the plaintiff ought to be relieved from the
transaction, for where an agent is employed to buy or sell
stock on behalf of his principal, and does not at the time
communicate to his principal that he is the vendor or pur-
chaser, the transaction will not be permitted to stand.



136 CONTRACT.

An Auctioneer is the Agent of both Vendor and Purchaser to sign
the Memoran lum of Sale at the time of the Sale, but not
after, and he may not delegate this Authority to his Clerk.

BELL v. BALLS. [1897]
(66 L. J. Ch. 397 ; (1897) 1 Oh. 663 ; 76 L. T. 254 ; 45 W. E. 378.)

An auctioneer, in a conversation with the defendant just
before the auction, asked the defendant to give him a bid. A
certain property was put up for sale, and the defendant bid
£1,550, and the property was knocked down to the defendant
at that price. At the close of the auction the defendant left the
room. Upon his clerk calling the auctioneer's attention to the
circumstance that the defendant had not signed the memorandum
of agreement, a messenger was sent after him, and he returned and
was asked by the auctioneer to sign the memorandum, but refused
on the ground that he made the bid for the auctioneer, and in
compliance with his request, and not for himself. The auc-
tioneer's clerk had in the meantime filled up the memorandum
of agreement printed on a copy of the particulars and conditions
of sale, which was as follows, the words in italics being those
which were inserted in writing by the clerk in the printed
form : —

" I, Geo. Balk, of Brixton Hill, 8. IF., do hereby acknowledge
that I have this day purchased the property described in the
within particulars of sale for the sum of £1,550, and having
paid into the hands of Messrs. Herring, Son and Daw, the
auctioneers, the sum of £155 as a deposit and in part payment
of the purchase-money, I hereby agree and bind myself, my
heirs, executors, administrators, and assigns to pay the balance
of the said purchase-money, and complete the said purchase in
all respects according to the within conditions of sale, as witness
my hand this 25th day of November, 1895.

" Purchase-money - £1,550

" Deposit 155

" Balance - - - 1,395



AGENCY. 137

"As agents for the vendors, Peter Bell and William Dickson,
we hereby ratify this sale, and as auctioneers acknowledge to
have received the said deposit."

Neither the clerk nor the auctioneer signed the memorandum.
A week later, on December 2, 1895, the auctioneer, at the
instance of the vendors, filled up and signed in the name of his
firm, and as agent for the defendant, a memorandum of agree-
ment on another copy of the particulars and conditions of sale.

An action was brought by the vendors claiming specific per-
formance of an agreement for sale.

Held, the auctioneer is the agent of the purchaser as well
as of the seller, and has authority to sign a memorandum
of the sale so as to bind both parties. The signature of the
purchaser must, however, be ivritten at the time of and as
part of the transaction. The auctioneer 's clerk cannot, in
the absence of special authority from the purchaser, fill up
a memorandum on behalf of the purchaser so as to bind him,
and the exigencies of the case do not require that the auc-
tioneer should be held entitled to delegate to his clerk the
authority which he himself has to bind the purchaser by
writing down his name on a copy of the particulars and
conditions of the sale.

If the first memorandum on a copy of the particulars
had been filled up by the auctioneer with his oivn hand in
the same way as it was filled in by the clerk, it would have
been sufficient. The first memorandum being defective by
reason of not having been filled up by the auctioneer himself,
and the second by reason of the authority of the auctioneer
to sign for the purchaser having expired, there was no
memorandum to satisfy the Statute of Frauds, and the
action therefore failed.



138 CONTRACT.

An Agent for a Foreign Principal is personally liable on all
Contracts, and has no Authority to pledge the Credit of his
Principal.

DIE ELBINGEE, &c. v. CLAYE. [1873]
(42 L. J. Q. B. 151 ; L. E. 8 Q. B. 313 ; 28 L. T. 405.)

The plaintiffs, a German company, instructed their agents,
Seebeck & Co., to obtain certain wheels in England. They
placed the order with the defendants. The wheels not having
been supplied in time, the plaintiffs brought this action against
the defendants.

Held, that no action lay, for where a foreign person in-
structs his English agents to contract on his behalf, the
person contracting with the agent is not, in the absence of



Online LibraryPhilip Bertie PetridesStudent's cases : illustrative of all branches of the law → online text (page 12 of 29)