Regular Contracts In Writing
( Originally Published 1918 )
Written Contracts should be expressed in plain everyday English such as any man would use hi the regular course of his business. People untrained in the law should not try to write in law phrases. Bear in mind that the whole purpose of a contract is to state a binding agreement that some lawful thing shall be done and something shall be paid for the doing of it within a given time. Anybody should be able to write down such an understanding.
Both parties should read the document carefully, and any question that may then arise should be settled, before signing. In that way litigation may be avoided.
Contracts That Must Be in Writing.—The English Statute of Frauds has been substantially copied in nearly all the States. It. provides that in the following cases no agreement shall be legally enforcible unless the same, or some memorandum thereof, be in writing, and subscribed by the party to be charged therewith: 1. Every special promise of an executor or administrator to answer damages out of his own estate. 2. Every agreement made upon consideration of marriage. This applies not to promises of marriage, but to promises to pay money, or to make a settlement of property, if the marriage is consummated. 3. Every agreement that by its terms is not to be performed within one year from the making thereof. 4. Every special promise to answer the debt, default, or misdoings of another.
5. Every contract for the sale of any goods, chattels, or anything for the price of ten pounds ($50. In Massachusetts, $500.) or more, unless: (a) the buyer shall accept and receive part of such goods; or (b) the buyer shall at the time pay some part of the purchase. money, or give something in earnest to bind the bargain.
6. Every contract for the sale of any lands, or any interest in lands.
Where a person has the benefit of another's services under a verbal agreement, and then successfully pleads the statute of frauds, the other party may recover so much as his services have been worth.
Interpretation and Construction.—In construing contracts, the intention of the parties must govern; words are to be taken in their natural and obvious sense; when the intention is doubtful the context may be resorted to to explain ambiguous terms; the whole of the instrument is to be viewed and compared in all its parts, so that every part of it may be made consistent and effectual. Where the language of an agreement is plain and unequivocal, there is no room for construction, and it must be carried into effect according to its plain meaning. The courts will generally hold that as a rule.
Ambiguities in deeds or other instruments are generally interpreted against the grantor.
Performance.—A person who undertakes to perform a job of work by special contract, must perform his contract before he is entitled to his pay. If a person is hired for six months, or other definite time, and leaves before the end of it, without reasonable cause, he loses his right to wages for the period he has served except in New Hampshire and a few other States which have followed the New Hampshire rule. But if he is dismissed without cause he can recover for the whole term at its expiration, less what he has been able to earn since dismissal, if anything; it is his duty to seek other employment and thus reduce the amount of damages. It is no sufficient cause for abandoning one's contract, that he was put upon work not contemplated at the time the contract was made, unless his contract calls for specific kind of work, but if he is prevented by sickness from laboring during the stipulated period, he may recover for his services as much as his services were worth, for the time he labored. But if the failure to perform was willful, he can-not collect.
The terms of the contract must be substantially complied with in the performance.
If the contract requires that the performance must be to the satisfaction of one of the parties, or in case of question, to the satisfaction of a third party, the judgment of that party must be taken as to whether or not the contract has been performed.
Refusal to Perform, or making it impossible for one's self to perform, is a breach of contract. In either case the other party may abandon the contract, and sue at once for damages.
Where a contract covers divisible performance, failure to perform one part does not excuse the other party from performance of the rest.
Where there is a breach of contract by failure to perform, the other party must show that he has performed his part before he is entitled to sue for damages.
Where the contract calls for work by instalments or delivery of goods by instalments, and there is a failure to perform any one of the parts as agreed on, the other party should take legal advice as to his rights. There is always a question whether a breach of contract is worth taking into court, considering the cost and uncertainty of a lawsuit.
Each of the states has a Statute of Limitations, specifying the time within which an action may be brought. These laws apply to contracts but they are not uniform in their application, and no recourse should be had to them except upon legal advice, in any of the states.
Specific Performance.—The law side of the court cannot enforce the specific performance of a contract. It can only allow damages for the failure to perform, or for breach. On the equity side of the court, certain contracts may be en-forced specifically. They most commonly relate to the sale of real property. A specific performance is only recognized where the damages would not make the party whole on his loss.
Rescinding.—In general, a contract cannot be rescinded, unless by consent of both parties, except in case of fraud. A party having a right to rescind a contract must exercise the right within a reasonable time.
Where parties agree to rescind a sale once made and perfected without fraud, the same formalities of delivery, etc., are necessary to revest the property in the original vendor, which were necessary to pass it from him to the vendee.
Where a contract was made for the benefit of a third party, it may not be rescinded after he has formally accepted it.
A later contract between the same parties and covering the same subject revokes a first con-tract so far as it is not in agreement with the first contract.
A written agreement, unsealed, revokes an oral agreement. A sealed agreement revokes an unsealed agreement.
Tender.—Where a party to a contract is prevented by the other party from carrying out his share of it, he may protect his rights by offering to perform. That is, by making "tender" of performance. This tender must be made to the other party direct, and at the time when the performance itself would be due. If that time be uncertain, the tender should be made a few days before. If the tender be declined, or the other party refuses to hear it, the tendor will on evidence of the facts be held to have made it.
This applies to performance or nonperformance of contract, to the purchase, sale or delivery of goods, and to debts.
A tender of payment does not bar nor extinguish a debt; for the debtor is still liable to pay it; but it bars the claim to subsequent damages, interest and costs of defense against the plaintiff. A debtor should tender the full amount of the debt with the interest and costs which have accrued. To be legal, a tender of money must be in United States treasury notes, gold coin or silver dollars. Five-cent pieces are legal tender up to 25 cents,. and silver dimes up to ten dollars. If in doubt of the exact amount, it is safer to tender a sum known to be in excess of the amount. Anything less than the exact amount would not be a tender.
If the party to whom the tender is made keeps the money for any time longer than is necessary to count and refuse it, his act constitutes acceptance of the tender.
A tender to be legal must be made without conditions. If a receipt be taken or change accepted, the tender is not good.
Damages.---The general rule of law respecting the measure of damages is, that where an injury has been sustained, for which the law gives a remedy, that remedy shall be commensurate with the injury sustained.
Contracts by More Than Two Parties.—These are known as Joint and Several Contracts.
A Joint Contract is one in which all the parties of one side agree to join equally in its liability, each one taking his part with the others.
A Several Contract is one in which each of the parties agrees to be liable for the whole contract.
A contract wherein the parties agree to join equally in the liability, and also agree separately to be liable for the whole, is called a joint and several contract.
In any contract in which there is more than one party on a side, it should be declared in the contract whether their obligation is joint or several, or whether the obligation is due them jointly or severally.
A joint contract must be enforced by all the parties who have assumed its liability.
In a several contract, all may be sued together or one at a time.
DATES, INSERTIONS AND ERASURES
Every Contract Should Be Dated, and care should be taken that the date be not a Sunday. In Pennsylvania and some other states a contract made and executed on Sunday will not be disturbed or annulled, and a contract made on Sun-day may be ratified another day and thereby made effective. A will dated on Sunday is not invalid. State and national holidays are lawful days of date in nearly all the states.
Interlineations or Erasures made in the body of a contract should be noted in the margin or at the bottom as having been made before the con-tract was signed. These notes should read in this manner: "Made before signing"; and must be signed with the full name of each party.
Any material alteration in the body of a contract after it is signed, made by one party with-out the knowledge and consent of the other, will invalidate the contract.
Assignment of Contract.—With two exceptions, any contract may be assigned. These exceptions are: Where a contract calls for personal service, because no one can be compelled to work for another without his own consent; and where, on the other hand, one might be compelled to accept the service of another whom he does not want. These are called contracts involving the personal element.
The simplest way to assign is to write an assignment on the back of the contract. There is no set form in which an assignment must be writ-ten. It need only say that the assignor's interest in the contract is transferred to the assignee; the assignor writing his name under.
Assignment carries with it all the rights and all the liabilities it conferred or laid upon the assignor. The assignee should immediately notify the other party to the contract that the interest has been assigned to him.
Novation.—Novation is the substitution of another party or parties for one of the original parties to a contract. For example: A agrees to buy from B a certain thing fora certain sum, and arranges that C, who owes money to A, shall make the payment in his stead, and B accepts the substitution and releases A. That would constitute a novation.
A novation, to be good, must be agreed to by all the parties. B must discharge A from his obligation, and take C's obligation instead of it; and A must agree with C to credit him with the sum paid to B in the settlement of C's debt to A.
Fraud.—Fraud will nullify a contract. If untrue representations have been made in the negotiations preceding a contract, or if a person has been prevented from making an investigation of facts or conditions concerned, or has been induced to enter into the contract through concealment of essential facts, or if advantage has been taken of his mistakes, the contract is void. But the party whom it would have defrauded must act promptly upon his discovery of the fraud, or by delay he may be held to be content. He must return anything he has received under it; or he may let it stand and sue for any loss it may have cost him or for damages.