stitution, and the power of the States to legislate upon those subjects ceases as soon as Congress has exercised its authority. In general the ordinary subjects of commercial law do not come within the power of Congress, but remain within the jurisdiction of the separate States. We shall therefore have occasion but seldom to refer to National law.

9. Uniformity. One would suppose that since each State has its own system of law, these systems would differ greatly. But this is not so. In the main principles, such as this book treats of, they are uniform. The differences are in minor matters. One reason for this uniformity is that all the law has the same historical origin; viz., the common law of England.*

10. Ignorance of Law.-It is a universal principle that IGNORANCE OF THE LAW EXCUSES NO ONE. Every one is presumed to know all the law. Though he does something which he would not have done if he had known what the law was, yet he must bear all the consequences just as if he had done it knowingly. The only reason for this rule is the present impossibility of having any other. But practically a person must often act without exact knowledge of the law. His only feasible course in such cases is to act according to what his common sense teaches him is just and moral, for in the main law is only common justice and morality.

11. Contents of Book.-The purpose of this book is to state the chief principles of law in the United States governing the ordinary transactions of commercial life. Part I. will contain general principles applicable to all kinds of commercial transactions; viz., the general principles of contracts, of partnership, of agency, and some others. Part II. will take up in order the ordinary kinds of transactions,

* Except with regard to Louisiana, whose original law was Spanish,

such as sales, notes, drafts, transportation, insurance, etc.; will show how the general principles stated in Part I. apply to each case; and will also state some additional principles applicable to each. We shall consider first the law of contracts, for it is the foundation of all commercial law.

SOURCES OF LAW

in every State, arranged in the order of their relative authority.

I. THE UNITED STATES CONSTITUTION;

II. THE LAWS OF CONGRESS,

upon subjects named in the U. S. Constitution;

III. THE PARTICULAR STATE CONSTITUTION;

IV. THE STATUTES OF THE STATE;

V. THE COMMON LAW.

[In the above scheme each one is of higher authority than all below

it: where they conflict the former must prevail.]

PART I.

GENERAL PRINCIPLES APPLICABLE TO ALL CASES.

DIVISION I.

GENERAL PRINCIPLES OF CONTRACTS.

CHAPTER I.

DESCRIPTION OF CONTRACTS: THEIR BINDING FORCE.

1. A Contract is an agreement made between two or more parties. It may also be defined as a promise made by one and accepted by another; but the words contract and agreement are rather broader than promise.* Generally a commercial transaction between two parties consists of more than one promise, each party promising something, but the idea of a contract is best obtained if we think of each promise as a separate contract. Thus where one agrees to do certain work, and the other agrees to pay for

*Contract and agreement may relate to either the present or future: promise means only an agreement to do or not to do a particular thing at some future time. E.g., a sale of goods by me to you, which is an agreement that they shall immediately cease to be mine and become yours, is a contract, but cannot be called a promise, because there is nothing to be done in the future. It executes itself. Another distinction is that one person may make a promise: it takes two or more to make a contract or agreement. In other words, a promise is not a contract until the one to whom it is made accepts or assents to it.

it, we have two contracts, (1) the agreement that one shall work, and (2) the agreement that the other shall pay; and each party agrees to both agreements. But in common language where all the separate agreements make part of the same transaction, or are embodied in a single paper, we speak of it as one contract.

2. The Importance of the Subject of contracts is very great. As we shall see throughout the book, every kind of business is a system of contracts, and its law is in great part only the law governing all contracts. Nearly every act in mercantile life is either the making or fulfilling of some agreement. Thus every sale of goods, and every note, draft, or indorsement, is a contract: every act done by a clerk, or other agent, in his business, is but the carrying out of the contract originally made with his employer: every act of a partner is only a fulfilling of the contract made between the partners when the firm was formed.

3. Freedom to Contract.-One great principle of our law is that EVERY ONE IS FREE TO MAKE ANY CONTRACT HE CHOOSES TO MAKE, except such as are forbidden by law.* It is the theory of our system of government to allow everything except what is forbidden; not to forbid everything except what is allowed. The latter might be the theory of a parental or despotic government. Consequently if we wish to know whether a thing is lawful or not we examine the law to see whether it is forbidden, and if it is not forbidden it is lawful. The kinds of contracts forbidden by law are very few, but on the other hand lawful contracts are very numerous and of every conceivable kind.

4. The Fundamental Rule of law in regard to contracts is that EVERY ONE MUST FULFILL EVERY AGREEMENT HE MAKES, unless some new agreement has changed or abro

*See chapter on Illegal Contracts," p. 24.