Molton v. Camroux) that it was only voidable, and the replication therefore good. The special doctrine of our Courts with regard to partnership (which is a continuing contract) is quite in accordance with this: it has long been established that the insanity of a partner does not of itself operate as a dissolution of the partnership, but is only a ground for dissolution by the Court (a). American authority seems to agree with the recent conclusions of our own Courts (b). of rule as The law may be said then on the whole to be now Statement settled to the following effect: A contract made by a now person who is drunk or of unsound mind so as to be in- settled. capable of understanding its effect is voidable at that person's option, unless the other contracting party did not believe and had not reasonable cause to believe that he was drunk or of unsound mind. delusions It is to be noted that the existence of partial delusions Partial does not necessarily amount to insanity for the purposes of compatible this rule. The Judge or jury, as the case may be, must with in every case consider the practical question whether the for conparty was incompetent to manage his own affairs in the tracting. matter in hand (c). capacity The Indian Contract Act treats these cases somewhat Indian differently, making the agreement void (s. 12): "A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it, and of forming a rational judgment as to its effect upon his interests. A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind. A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind. (a) Lindley, 1. 224. (b) Hilliard on Contracts, 1. 311. (c) Jenkins v. Morris (C. A.), 14 Ch. D. 674; compare remark of Contract Disability of convicts. Alien enemies. Extension of powers. Illustrations. (a) A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals. (b) A sane man who is delirious from fever, or who is so drunk that he cannot understand the terms of a contract or form a rational judgment as to its effect on his interests, cannot contract whilst such delirium or drunkenness lasts." This however must be read in connexion with s. 65:— "When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it." The possibility of hardship to persons who have dealt in good faith with a lunatic who was apparently sane is, it would seem, disregarded by the Indian Act as being in practice exceedingly small: and the liability of a lunatic to pay for necessaries is laid down in the chapter “Of certain Relations resembling those created by Contract," s. 68. IV. CONVICTS, ETC. At common law convicted felons (as also outlaws) could not sue, but remained liable to be sued, on contracts made by them during outlawry or conviction (a). Since the Act to abolish forfeitures for treason and felony, convicts are incapable of suing or making any contract, except while they are lawfully at large under any licence (b). Alien enemies, as we have seen above, are disabled from suing in an English Court, but not from binding themselves by contract during war between their country and England, nor from enforcing such a contract after the war has ceased (c), unless meanwhile the right of action has been barred by the Statute of Limitation. We now come to the extensions by special institutions (a) Dicey on Parties, 4. (b) 33 & 34 Vict. c. 23, ss. 8, 30. N. 178, 25 L. J. Ex. 343: note (a), p. 81, above. of the ordinary power of making contracts. agency. I. Agency. And first of Agency. We have not here to do with the relations created between principal and agent by agency regarded as a species of contract, but only with the manner in which rights and duties accrue to the principal through the dealings of the agent. We must also distinguish cases of real agency from those where the agency is apparent only, and we shall further notice, for the sake of completeness, the position of the true or apparent agent as regards third persons. A person who contracts or professes to contract on behalf of a principal may be in any one of the following positions: 1. Agent having authority (whether at the time or by subsequent ratification) to bind his principal. (A) known to be an agent (a) for a principal named; (B) for a principal not named. (B) not known to be an agent (a). 2. Holding himself out as agent, but not having autho rity to bind his principal. (A) where a principal is named (a) who might be bound, but does not in fact authorize or ratify the contract; (B) who in law cannot be bound. (B) where the alleged principal is not named. 1. We shall not here dwell on the creation or determi- Authority nation of an agent's authority. As a rule an agent may its constiof agent, be appointed without any special formality; though an tution and agent to execute a deed must himself be appointed by tion. (a) Since the cases of Calder v. Dobell, Fleet v. Murton, and Hutchinson v. Tatham (see following notes) it may perhaps be considered that the true leading distinction is whe- termina 1. Agent deed, and in certain cases the appointment is required by the Statute of Frauds to be in writing. Revocation of an agent's authority takes place either by the principal's actual withdrawal of his will to be represented by the agent (which may be known either by express declaration or by conduct manifesting the same intention) or by his dying or ceasing to be sui iuris, and thus becoming incapable of continuing it (a). In these last cases the authority is said to be revoked by the act of the law. "The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them" (b). It is held in England, but anomalously, that this rule does not apply to revocation. by the death of the principal (c). It does apply in the case of the principal becoming insane, and it may perhaps yet be decided that in the case of death the principal's estate is liable to the other party for the actual loss incurred by the principal's representation-which, as regards him, was a continuing one at the date of the contract-that the agent was authorized (d). In all cases where there is an authorized agent dealing for existing on behalf of a real principal, the intention of the parties principal. determines whether the agent, or the principal, or both, are to be liable on the contract and entitled to enforce it. The question is to whom credit was really given (e). And the general rules laid down on the subject furnish only provisional answers, which may be displaced (subject to the rules as to admissibility of evidence) by proof of a contrary intention. (a) On the whole subject see at large Story on Agency, SS 474, sqq. (b) I. C. A. 208; cp. Story on (c) Blades v. Free, 9 B. & C. 167. Kent, Comm. 2. 646. (d) Drew v. Nunn (C.A.), 5 Q. B. D. 661: see per Brett, L. J. at p. 668. (e) Story on Agency, $$ 279, sqq. 288. Thomson v. Davenport, in 2 Sm. L. C.; Calder v. Dobell, L. R. 6 C. P. 486. agent: con A. When the agent is known to be an agent, a contract A. Known is made, and knowingly made, by the other party with the to be an principal, on which the principal is the proper person to tract with sue and be sued. principal ab initio. a. Princi agent does not And when the principal is named at the time, then pal named: there is prima facie no contract with the agent: but prima facie when the principal is not named, then prima facie the contract agent, though known to be an agent, does bind himself in person. personally, the other party not being presumed to give pal not credit exclusively to an unknown principal (a). B. Princi named: agent prima facie tract in intention But when the agent would not prima facie be a con- does contracting party in person he may become so in various person. ways. Thus he is personally liable if he expressly under- Evidence takes to be so (b): such an undertaking may be inferred of contrary from the general construction of a contract in writing, (a). and is always inferred when the agent contracts in his own name without qualification (c), though the principal is not the less also liable, whether named at the time or not (d), or if he himself has an interest in the subjectmatter of the contract, as in the case of an auctioneer (e). And when the agent is dealing in goods for a merchant (a) But one who deals with an agent known to be such cannot set off against the principal's claim a debt due to him from the agent. If he has employed an agent on his own part, that agent's knowledge is for this purpose treated as the em ployer's own: and this even though the knowledge was not acquired in the course of the particular employment: Dresser v. Norwood, Ex. Ch., 17 C. B. N. S. 466, 34 L. J. C. P. 48, revg. s. c. 14 C. B. N. S. 574, 32 L. J. C. P. 201. The Indian Contract Act has followed the view of the C. P. in preference to that of the Ex. Ch. See s. 229. And perhaps the question may deserve to be reconsidered if it ever comes before a court of last resort. (b) Story on Agency, § 269. Smith, Merc. Law, 158. (c) See Fairlie v. Fenton, L. R. 5 Ex. 169, Paice v. Walker, ib. 173. The latter case, however, goes too far; see note (e), next page. (d) Higgins v. Senior, 8 M. & W. 834: the law there laid down goes to superadd the liability of the agent, not to take away that of the principal, Calder v. Dobell, L. R. 6 C. P. 486. As to when directors of companies are personally liable on documents signed by them, see Lindley, 1. 346-352, and in addition to authorities there collected, Dutton v. Marsh, L. R. 6 Q. B. 361. (e) 2 Sm. L. C. 399. As to an auctioneer's personal liability for non-delivery to a purchaser of goods bought at the auction, Woolfe v. Horne, 2 Q. B. D. 355. |