Perform the conditions imposed upon you at the proper time, because you have given the other party the right to expect that you will do as you agreed, and if he is disappointed he will probably sue you. The alteration of written contracts without the consent of all parties is perilous and the law is drastic and severe as to such offenses. Don't transact business with anyone in danger of bankruptcy, because, no matter how much he may wish to prefer you to his other creditors, it is the purpose of the bankruptcy law to treat all creditors alike. Don't make verbal contracts when you could as well make written ones. There is less opportunity for dispute later. REVIEW QUESTIONS 1. On February 2, 1914, Pope in New York agreed to sell and Hager in St. Louis to buy 300 tons of No. 1 Iron at a specified price. On January 8, 1915 the iron arrived in St. Louis and Pope offered to deliver it, but Hager refused to accept it. Pope then sued Hager for the agreed price, proving a tender on his part of the iron. Can he recover the price from Hager? Why? 2. The following is a copy of an agreement between two parties: "For value received, I promise to pay or deliver to Catharine Corbitt. $100 in such articles of merchandise, and at such times, as she may select. (Signed) L. Stonmetz. Accepted, Catharine Corbitt." Later Miss Corbitt wrote the following to Stonmetz: "I call upon you to perform your promise. Catharine Corbitt"; and he doing nothing further, she sued him. Was this proper without any further act on her part? What conditions did the contract impose on each party? 3. Ames contracted to build a woodshed for Bates for an agreed price, promising to complete it before June first. When the woodshed was half built on May first, Ames fell from the roof, breaking his leg and further disabling himself. He then employed Call, without Bates' consent, to complete the woodshed, and when it was completed, which was before June first, he sued Bates for the agreed price. Was this a proper performance on his part? Why? 4. Jones went to Black, a tailor, for a suit of clothes to be made to order. He selected the cloth from Black's stock and said to Black, "If I am not perfectly satisfied with these clothes in every respect, after they are finished and I have tried them on, I will not take them." Black replied, "All right." After the suit was finished and Jones had tried it on he refused to keep it on the ground that one shoulder did not suit him. Black sued him for the price and proved by other tailors that the shoulder was an excellent "fit," and that no one could do any better on account of the fact that Jones had a broken collarbone which had been improperly set. Under all these circumstances could Jones properly refuse to take the suit? Why? CHAPTER IX DISCHARGE OF CONTRACTS I. As to Consequences II. As to Time Continued a. Divisible Contracts 1. Money Damages b. Breach of Subsidiary terms 2. Discharge from further Performance 3. Specific Performance 1. Anticipatory Breach 86. Breach of Contract. The fifth method by which one's obligation, or duty, created by a contract, may be discharged, is by a wrongful act of the other party. A wrongful act which discharges the innocent party to a contract may be either the failure of the other party to do something which by the contract he has agreed to do, or the act of the other party in doing something which by the contract he has agreed not to do. Such omissions or acts violate the terms of the contract, and are called breaches of the contract. 87. Consequences of Breach. When there has been a breach of contract, the injured party is entitled to either (1) money damages, (2) discharge of his own obligation to perform, or (3) the right to enforce performance. Which of these rights he is entitled to depends upon the circumstances and the law covering the particular case. Whether the injured party is limited to damages, or whether he may also be excused from his own performance, depends on the nature of the terms which the other party has violated. The injured party will be discharged from the contract, in addition to having an action for damages, unless, 1. The contract is divisible, or, 2. The term which was violated was subsidiary to the main purpose of the contract. 88. Divisible Contract. A contract may consist of a number of promises to perform a series of acts, really a series of separate contracts. If this be true, the failure of one party to perform one of these acts does not discharge the other from the whole contract, or even entitle him to sue as for breach of the whole contract. A breach in such a contract operates only on that part of the contract which it affects, and no other. It is often difficult to determine whether a contract is entire or divisible, and each case must depend entirely upon its own facts. If, however, the contract be divisible, a breach gives rise only to an action for damages, and does not operate to discharge the contract. EXAMPLES 1. Under a contract Norrington agreed to sell to Wright "5000 tons of iron rails, for shipment from a European port, or ports, at the rate of about 1000 tons per month, beginning February, 1880, but the whole contract to be shipped before August first, 1880." Norrington shipped in February 400 tons, which Wright received and paid for, but when Wright learned that only 885 tons had been shipped in March he refused to receive them and cancelled the whole contract. The court declared the contract to be entire, and said that the failure to ship 1000 tons a month was a breach of the entire agreement as that was what had been contemplated. Norrington vs. Wright, 115 U. S. 188. 2. Cahen sold to Platt 10,000 boxes of glass to be delivered during the months of October, November and December, to be paid for on delivery. Cahen delivered 4000 boxes in October which were not up to specifications agreed upon in the contract and Platt cancelled the whole agreement. The court, however, interpreted this as a divisible contract and declared that a breach only affected a part of the contract and did not permit of cancellation of the whole. Cahen vs. Platt, 69 N. Y. 348. Note. The two examples above may seem very similar, but it will be observed that in the first example Norrington's failure to ship 1000 tons a month had already violated a principal clause of the whole contract, while in the second example Cahen still had plenty of opportunity during November and December to fulfil his contract, even though the first shipment of 4000 boxes was unsatisfactory. 89. Breach of Subsidiary Terms. It would be grossly unfair to allow a party to refuse to proceed with a contract because the other had violated, perhaps unintentionally, some term which was of little vital importance. The law has recognized this and does not permit such a result to follow. If the term which is violated does not go to the essence of the contract, it will merely give rise to an action for damages, but will not entitle the innocent party to cancel the entire agreement. 90. Specific Performance. Sometimes damages, which are always measured in money, will not compensate a person for the loss of benefit which he has suffered by reason of the violation of the terms of the contract by the other party. Such a condition often exists in case one has contracted to buy a house or farm, desiring, for some personal reason, to secure the particular house or farm for which he contracted. No other will satisfy him, and no amount of damages will entirely pay him for his loss. Recognizing this fact, courts of equity enable a party who has made a contract regarding real estate to compel the other party to do actually as he agreed. If he agreed to sell a farm, he will be compelled to convey it; and the rule works both ways, for the purchaser may be compelled to accept it and pay the price. This remedy is called specific performance and applies, with few exceptions, only to contracts for the sale and purchase of land. If, after one has been so ordered to perform his promise, he continues to refuse, the court of equity will declare him to be in contempt of court and order him punished. In contracts to buy or sell personal property it rarely happens that money damages will not suffice as compensation, but in rare instances, as where one has agreed to sell another an heirloom, or a patent right, which can be purchased of him alone, the innocent party may secure a decree of specific performance, as it is called, of a contract to sell personal property. EXAMPLES 1. Ames contracts to sell Blackacre to Bates for $5000, who agrees to accept it at that price, the contract being in writing. Later Ames refuses to perform his part. Bates makes a tender of the money, which is refused, and then sues Ames in a court of equity, which will, in the absence of fraud or mistake, order Ames to accept the money and convey the land. 2. Parker, a contractor engaged in building a court house, entered into a contract with Neal to buy 200,000 feet of pine boards to be cut from a specific tract of pine timber situated in Caroline county, known as the "Bennett Todd Tract." He desired this particular lumber in order to comply with the specifications for the court house, and no other lumber in the vicinity was satisfactory. When Neal broke the contract, the court declared that the circumstances were exceptional and would entitle Parker to have specific performance by Neal, even though it was a contract to sell personal property. Neal vs. Parker, 98 Md. 254. 91. Anticipatory Breach. Violations of a contract may occur before the time of performance. Ames, who has agreed to sell his house to Bates on the first of July, may have declared on the first of May that he repudiated his contract and refused to be bound by it, or he may have torn down his house. In either event, whether it be by express renunciation or by act, Ames is said to have committed an anticipatory breach of his contract, being a total violation of it before the time of performance. If such anticipatory breach be committed, the innocent party need not wait until the time of performance, holding himself always ready to perform his own part of the contract, but is at once discharged from his obligations, and may immediately sue the other party for his damages. This is subject to the limitation that except in mutual promises to marry, or similar contracts calling for continued steadfastness, the party committing such an anticipatory breach may repent and withdraw his repudiation, even against the other's protest, at any time before it is acted upon by the innocent party or has caused him damages. EXAMPLE Clark employed Marsiglia to clean paintings from a picture gallery, but before the latter began the work Clark countermanded his directions and refused to continue the contract. Marsiglia, however, proceeded with the work and when it was completed sued Clark for the entire contract price. The court decided that he could only recover the expenses which he had suffered at the time Clark repudiated the contract and the profits on the whole contract. He had no right to continue the work. It was his duty to keep the damages as low as possible. Clark vs. Marsiglia, 1 Denio (N. Y.) 318. 92. Damages for Breach of Contract. If the injured and innocent party to a contract which has been broken, sues for damages, he may recover the amount of loss which he has suffered. This loss is estimated in money, and is measured by the net value of the contract, or what he would have realized had the contract been performed. The net value includes the actual outlay and the profits which could have been reasonably anticipated. Remote and uncertain, or speculative, damages cannot be recovered, but only those which can be readily computed and ascertained. If no anticipated profits be proved, the injured and innocent party may recover the net expenses which he incurred in preparing to perform his part of the contract. |