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chooses to stipulate for 5l. or 501. additional rent upon every acre of furze broken up, or for any given sum of money upon every load of wood cut and stubbed up, I see nothing irrational in such a contract; and it appears to me extremely difficult to apply, with propriety, the word ' excessive' to the terms in which parties choose to contract with each other. There is, indeed, a class of cases, in which courts of equity have rescinded contracts on the ground of their being unequal. It has been held, however, that mere inequality is not a ground of relief. The inequality must be so gross that a man would start at the bare mention of it. Necessity, in these cases, seems to have obliged the courts to admit a principle nearly as loose as that to which I have before alluded. But with respect to the case of Ponsonby v. Adams, the landlord
upon the residence of a particular tenant on his estate ; and why should he not upon that ground have stipulated, that if such tenant should cease to reside there, his rent should rise to 1508.? Both in Rolfe v. Peterson, and Ponsonby v. Adams, I should have said, that what was matter of contract, bottomed on a good consideration, should not be looked upon as a penalty, but should be considered as rent reserved, or liquidated damages. In Lowe v. Peers, it is quite clear that the breach of promise of marriage was to be compensated for in damages. It was a contract, that in case the party failed to perform his promise, he should pay the sum of 10001. The case of Fletcher v. Dyche, is very strongly to the present purpose. In that case, a bond in a penal sum was conditioned to perform certain work within a certain time, or to pay 101. for every week beyond that time. The 101. per week was secured by the penalty of the bond; and to have said that one term of a contract, secured by a penal sum, should also be a penal sum, would have been absurd. Indeed, Lord Hardwicke, in Roy v. the Duke of Beaufort, was of opinion, that a person who had entered into a bond, with a penalty of 1001, if he poached, must have paid the 1001, if he had committed any act which amounted to poaching. But suppose the Duke had taken a bond in a penalty of 1001., with condition that the obligor should not kill a partridge, or if he did, that he should pay 5l., in that case it is most clear that the 5l, must have been considered as liquidated damages. With respect to the case of Hardy v. Marlin, I do not understand why one brandy merchant who purchases the lease and good-will of a shop from another, may not make it matter of agreement that if the vendor trade in brandy within a certain distance, he shall pay 600l.; and why the party violating such agreement should not be bound to pay the sum agreed for; though if such agreement be entered into in the form of a bond, with a penalty, it may, perhaps, make a difference. I much wish that the principle laid down by Lord Somers, in Prec. in Chan. had been adhered to. Let us then see what this case amounts to. It was contended, at the trial, that the last clause is not in the form of a penal bond. It is thus : ' and lastly, it is hereby agreed that either party failing to perform their undertaking shall pay to the other 2001. Prima facie this certainly is contract, and not penalty; but we must look to the whole instrument. In consideration of the defendant's services, the plaintiffs undertake to pay her 11. 11s. 6d. per week, and also her travelling expences. It would be absurd to hold, that because the 1l. 11s. 6d. is a liquidated sum, therefore the plaintiff could not be called upon for more; and yet, that in consequence of his non-payment of the defendant's travelling expences, he should be liable to the whole sum of 2001., because those expences are not ascertained. Again, there are many instances of the defendant's misconduct, which are made the subjects of specific fines by the laws of the theatre. Are we then to hold, that if the defendant happens to offend in a case which has been so provided for by those laws, she shall pay only 2s. 6d. or 5s.; but if she offend in a case which has not been so provided for, she shall pay 2001.? I can find nothing in those articles which can satisfy my mind, judicially, that the 2001. is to be paid in one case, and not the other. The clause is general, and contains no exception. If that be so, the case of Fletcher v. Dyche is an authority strongly in point. It therefore does appear to me that the true effect of this agreement is, to give the plaintiff his option, either to proceed upon the covenants toties quoties, or, upon the first breach, to proceed at once for the 2001., out of which he may be satisfied for the damage actually sustained, and which may stand as a security for future breaches."
may have set a value
So, in the case of Smith v. Dickenson, (u) which was an action of assumpsit upon the following agreement : “ In consideration that the plaintiff would communicate to the defendant the nature of an invention, for which the plaintiff intended to take out a patent, the defendant undertook that he would not avail himself or take any advantage of such communication, under a penalty of 1000l. The Court were clearly of opinion, that the word “ penalty," used in the agreement, effectually prevented them from considering the sum mentioned as liquidated damages.
And in the case of Wilbean v. Ashton, (w) it was held, that under an agreement for a penalty, the jury cannot give damages beyond it, nor ought they to give the party more than a compensation for the loss he proves he has sustained.
But, in the case of Orr v. Churchill, (x) which was an action of debt on bond, it appeared that the defendant, together with Walter Cleland and Daniel Stewart, were jointly and severally bound in the penal sum of 44701. 2s. 2d. conditioned as follows: “ Whereas the above
(.2") 1 H.Bl. 227.
(u) 3 Bos. & Pul. 630. (w) i Campb. Rep. 78.
bounden Walter Cleland hath received from the above-named John Orr 6017 star pagodas, for which he has given to the said John Orr sets of his own private bills, upon Messrs. Baillie, Pocock, and Co., payable to the order of the said John Orr, in manner hereinafter mentioned ; that is to say, one set in triplicate, dated Calcutta, January 29th, 1787, for 20141. 35. 4d., payable 365 days after sight thereof; and the other set in triplicate, bearing even date with these presents, for 1901. 18s. 9d., payable four months after sight thereof; and to secure the due acceptance and payment of such bills respectively, they, the said Henry Churchill and Daniel Stewart, have proposed and undertaken to become bound, together with the said Walter Cleland; and that in the event of the said bills, or either of them, being protested for non-acceptance and nonpayment, that they, the said Walter Cleland, Henry Churchill, and Daniel Stewart, or one of them, shall and will, upon producing to them or either of them such bill, with its protest, well and truly pay to the said John Orr, or his order, if demanded in England, the full amount of such bill or bills which shall be so protested, together with interest thereupon, of 51. per centum per annum, from the day of the date or dates of such bill or bills, up to the day of such payment, by way of penalty.”
The Court held, that the plaintiff was entitled to recover no more than the amount of the bills, with interest from the time of their becoming due. And Lord Loughborough Ch. J. said, “I do not go on the denomination given by the instrument ; for whatever that may be in this case, that could not, by any possibility, have been an agreement for liquidated damages; which can only be where there is an engagement for the performance of certain acts, the not doing of which would be an injury to one of the parties, or to guard against the performance of acts, which, if done, would also be injurious. In such case an estimate of the damages may be made by a jury, or by a previous agreement between the parties, who may foresee the consequences of a breach of the engagement, and stipulate accordingly. But where the question is concerning the non-payment of money in circumstances like the present; the law having, by positive rules, fixed the rate of interest, has bounded the measure of damages; otherwise the law might be eluded by the parties. It may often indeed happen, that the damages sustained by a party contracting, by the non-payment of money at the time agreed on, may, by the particular arrangement of his affairs, be greater than the compensation recovered by computing the interest; but where money has a real rate of interest and value, the other party is not to be compelled to pay more than the law has declared to be such rate and value."
In the case of a penalty, though the plaintiff has his election to proceed either for the recovery of the penalty, or for general damages for breach of the agreement, yet having once made his election, and recovered the penalty, he is bound by it, and cannot bring any action to recover further satisfaction. (y) But a party cannot, by tendering the penalty, or stipulated sum, be let off from a specific performance of an agreement. Thus, in the case of Howard v. Hopkins, (z) where it appeared that articles for the purchase of an estate had been entered into, with a proviso, that if either side should break the agreement, he should pay the other 100l.; and one ground of argument, on behalf of the vendor, against a bill for a specific performance, was, that it was the intention of the parties, that upon payment of 1001. by either of them, the agreement should be absolutely void. Lord Chancellor Hardwicke said, “ As to the defence of the stipulated sum, I cannot consider that as a ground to let off either party when they please, it being no more than a common case with a penalty, which might be inserted by the vendee in order to be paid for his trouble of viewing and measuring the estate, &c. supposing the defendant should not be able to make out a title. In all these cases, where penalties are inserted in a case of non-performance, this has never been held to release the parties from their agreement, but they must perform it notwithstanding."
3. OF THE CANCELLING, RESCINDING, OR
PUTTING AN END TO A CONTRACT.
A contract may, by the consent and agreement of all parties interested, be cancelled or rescinded either in the whole or in part, provided it be done before a breach has been committed; but if done after the contract has been broken, such consent is not legally binding without a release or agreement under seal. If a contract is subject to a condition, of which one of the parties alone can take advantage, such party may rescind it without the consent of the other: as, for instance, upon a sale of goods conditioned that they may be returned if the seller does not like them, &c., the latter has the option of determining the contract by returning the goods within a reasonable time. (a) So, a contract may be put an end to, by the wrongful act or default of one of the contracting parties ; as, where the performance was made to depend upon a particular mode of measuring a certain quantity of coal to be supplied by one party from a seam or pit, and the other party, by some act done by himself, thereby wholly prevented that mode of measurement, and rendered such an estimate wholly impracticable; it was held, that the former was discharged, and the contract vacated.(6) So, where the performance of a contract is made to depend on something to be
(y) Bird v. Randall, i Bl. Rep. 373. 387.
(2) 2 Atk. 371.
(a) Towers v. Barrett, 1 T. R. 135. (6) 2 Taunt. Rep. 150.
done or furnished by one of the parties, but which is neglected to be done, either within the time specified, or, if no time is expressed, within a reasonable time; the other party may abandon the contract altogether. (c) So, where there is a partial failure in the consideration upon a sale of goods by sample, as where the goods do not correspond with the sample, they may be returned to the vendor, or notice thereof may be given to him to take them away if they be bulky. So, where a contract of sale is concluded by the payment of earnest, and the purchaser, on the goods being tendered, refuses to accept them, but requests the seller to sell them for him, which he agrees to do, this amounts to a waiver of the original contract. But if no such request be made, and the seller takes back the goods, he may avoid the contract, and sell them to another person after the lapse of a reasonable time, and request made to the vendor to accept them. (d) In all cases where a party has the power of rescinding a contract, and is desirous of doing so, he must exercise that power within a reasonable time. But if a specific time is given, as upon a sale of a horse, where a month's trial was allowed, the vendee may rescind the contract at the end of the month, though in the interim he was desired by the vendor to return the horse on his saying he disliked the price. (e) So, it has been held, that, if after a contract for the sale of goods made in the city of London by a broker, and where the goods are to be paid for by a bill of exchange, the seller is dissatisfied with the credit of the buyer, he has a right to determine and put an end to the contract within a reasonable time. (f) In order, however, to rescind a contract, and treat it as wholly determined, both parties must be placed in the same situation as they were before the contract was made; and therefore where a party wishing to put an end to the contract has derived any benefit from it to the detriment of the other party, he cannot rescind or treat it as wholly determined. (g)
After a contract has been rescinded by one party, in consequence of the total non-performance of it by the other party, he may recover back any money which he has paid under it, provided he has done nothing which can be considered as an execution of his part of the contract. And if money be paid on a consideration which happens to fail, it may be recovered back as money had and received. (h)
(c) 2 Taunt. Rep. 325. n. a.
(f) Hodgson v. Davies, 2 Campb. 530. (d) 7 East Rep. 571. But see 3 Campb. (g) 5 East Rep. 449. 496.
(h) Vid. the cases on this subject, tit. (e) i New. Rep. 257.
Money had and received, Part ii.