Points On Contracts

( Originally Published 1918 )

Where reference to any business custom is made, it is advisable to name or mention that custom, to show that both parties understand that it is to be a part of the contract.

A Subscription to a Church or a charity is generally a promise without a consideration and can-not be enforced against the subscriber if he declines to fulfil it. But if he has signed a subscription paper in which the subscription of each per-son is made the consideration to the others, it becomes a valid contract, and he may be compelled to pay.

If a contract contains a clause in which one party agrees with the other upon an amount to be paid in case of a breach of contract, that agreement becomes binding if a breach occurs. Such sums are called "liquidated damages."


If a letter containing an offer is answered by another letter accepting it, the two together constitute a contract.

A written offer by one party containing an offer and addressed at the top to another, be-comes a contract when or if the other party writes at the bottom "Accepted," and signs his name.

A contract may be effected by exchange of telegrams.

All contracts become operative from the time of their acceptance, without regard to the time at which they were proposed. An offer accepted by telegram becomes operative at the time the acceptance is filed for transmission. An offer accepted by letter becomes operative when the letter is delivered.

Silence on the part of one to whom an offer has been made cannot be construed as an acceptance, except in cases of tender.

A court will void a contract which it cannot interpret. Therefore all contracts must be definite in terms. Both parties must understand the same thing in the same sense.

If during the life of a contract a material change is agreed to by both the parties, the contract as originally executed becomes void and a new con-tract must be made, embodying the change. For example : An employer contracts to pay an employee $100 a month. Later he offers the employee $200 a month. If the employee accepts the raise, the old contract is void, and the employee may at any time be discharged unless a new contract is drawn and signed at the increased rate of pay.

Loss of a contract does not relieve the parties from its obligations.

An offer is revoked if either party dies before acceptance. But acceptance before the death of the party making the offer, makes it binding upon his estate.

An offer by a partnership falls to the ground if the partnership is dissolved before acceptance.

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