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A later chapter will deal with some of the provisions usually found in contracts for constructing buildings or public works, or for the erection of structures of various kinds.
STATUTE OF FRAUDS Statute of Frauds. While most contracts are preferably in writing, partly to secure certainty of performance, partly from the standpoint of evidence, nevertheless, an oral contract is in general sufficient. In the case of certain contracts, however, it is provided by law that they or a memorandum of them must be in writing. Under an old English statute entitled “ An Act for the Prevention of Frauds and Perjuries," written evidence must be presented in order to enforce certain specified classes of contracts.
Statement of English Statute. This Act is commonly known and referred to as the “Statute of Frauds.” The reading of Section 4 of the statute is as follows:
"No action shall be brought:
1. whereby to charge any executor or administrator upon any special promise to answer damages out of his own estate;
2, or whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriage (misdoing) of another person;
3. or to charge any person upon any agreement made in consideration of marriage;
4. or upon any contract or sale of lands, tenements, or hereditaments, or an interest in or concerning them;
5. or upon any agreement that is not to be performed within the space of one year from the making thereof; unless the agreement upon which such action shall be brought, or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.”
This statute has been adopted or re-enacted and frequently enlarged so that it is in force in all of the States of this country in substantially this form.
It is further provided in section 17 that
“No contract for the sale of any goods, wares, or merchandise for the price of £10 sterling or upwards shall be allowed to be good, except the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the bargain, or in part payment, or that some note or memorandum in writing of the said bargain be made and signed by the parties to be charged by such contract, or their agents thereunto lawfully authorized.”
This section also has been re-enacted and has become the law in many but by no means all of the States, and where in force, the price (instead of
£10 sterling) varies in different states from $30 to $2500; an amount not uncommon is $500.
GOODS, WARES, OR MERCHANDISE Labor and Materials. A very troublesome question, sometimes, under this Section 17, is to determine whether a contract is for goods in completed form, or for the labor and materials that go to make them in which case writing is not necessary. An order to a manufacturer is sometimes clearly for labor and materials. The decisions in the different States show considerable divergence of view, and a later chapter on sales gives some attention to this matter.
Contracts Unenforceable. With relation to both sections of the Statute of Frauds, the proper view to take is that they do not declare the contract unlawful or void; the moral obligation is in no degree lessened by this statute; the only effect is to withdraw the aid of the courts in enforcing a contract specified by it unless made in writing; they will lend no aid to compelling its fulfilment. The statute is in the interest of morality and wise public policy, and further serves to relieve the courts of much undesirable litigation.
Obligation of Another. Under the second clause, if a purchaser is accompanied by a friend, and the friend says “if the purchaser does not pay you, I will,” the contract is unenforceable unless in writing; if the friend says “deliver the article to this man and send the bill to me,” it is his own debt and not another's, and writing is not required.
Interest in Lands. The fourth provision touching interest in lands, is definitely of importance to engineers. It is sometimes difficult to determine what is an interest in land under the statute. Growing crops are “goods,” not an “interest in land.” Standing timber, however, is part of the land and a sale would require writing. A sale after cutting does not involve an interest in the land. A contract to cut timber from the land and deliver after cutting need not be in writing. A sale of the timber after cutting might require a writing in view of the price being in excess of $50; the contract to cut and deliver would clearly be a contract for labor and materials. How easy it would be, however, for a misunderstanding to occur from lack of perfect memory as to the form in which the agreement was actually made, and how important might be the question as to where the burden of proof rests; how desirable, therefore, the writing is, whether necessary or not under the Statute of Frauds.
Interest, or License, or Easement. During construction a contractor needs to use private lands for a temporary track, or for the diversion of a stream. Does the permission constitute a lease or an easement in the land and require a writing; or is it merely a license or permit which needs no writing? A permanent diversion of the stream would doubtless require a writing; the use of a temporary construction track for a short time would
Not Within a Year. The fifth provision is as to contracts not to be performed within a year. To come within this statute the agreement must be such in its terms or in its nature, that performance within the year is impossible. A contract to sell your services for a year from next Monday cannot be performed in a year. The year dates from the making the contract and not from the time of entering upon the work or the duties required by the contract.
Kind of Writing. As to the nature of the writing in these cases, it need not be a complete contract; it need not, according to the statutes in most States, have the consideration expressed. A letter, a memorandum of any sort is sufficient, if it shows the parties to the agreement (or enables them to be determined), sets forth the agreement with sufficient certainty, and is signed by the party to be charged; this satisfies the Statute. The signature need not be in full; initials will serve, or an unusual signature (even an assumed name) provided it can be established that the party wrote it, that it is his signature. Even printed initials on the back of an account book have been held to be a sufficient signature.
DISCHARGE OF CONTRACT Discharge. A contract once made is considered to remain in force until discharged. There are several modes of terminating or discharging a contract; 1. performance, 2. breach, 3. impossibility of performance, 4. agreement or consent, 5. operation of law.
Performance. Performance is clearly the method contemplated in entering upon the contract; the simplest case is where performance is complete on both sides. In some cases one party only has performed his part, and in that case he only is discharged from further obligation. A modification of the performance, if accepted, is sufficient, and a substantial performance made in good faith will be sufficient in spite of slight and trivial imperfections, and will justify the enforcement of payment.
Completion. Whether the contract has been completed on either side is what is called a mixed question of law and fact. What any agreement means is a question of law (for the judge); what are the facts as to satisfying that agreement is for the jury; sometimes under undisputed facts a question arises as to the legal effect of these facts, and this is for the judge to decide.
Money Payment. Often a money payment by one party discharges that party; if payment is made otherwise than by cash, the question may arise as to whether a check or draft or note is good, and whether this payment satisfies the contract; a check may be good if cashed to-day, bad if presented to-morrow after the bank has failed. When a note is given in payment, there may be a question of fact whether the contract was discharged by the payment of the note, or whether the party accepted it as a new obligation or contract whose performance by payment would then discharge the original contract. A check bad at the time issued will not discharge the man who drew the check. It may be worth while to accept it as evidence of the debt even if there is some suspicion that it is not good, provided nothing better can be secured at the time.
Tender. In some cases one of the parties refuses to accept the money payment offered, or he obstructs the performance by the other party of his contract obligations. The second party is thus forced to make a “tender” of the money or of his services, or of goods, or whatever the contract calls for. Tender may be defined as attempted performance. Tender must observe exactly the terms of the contract as to time, place, and mode of payment. Money tender must be in legal tender, and change cannot be insisted upon, nor a receipt demanded; the tender must be unconditional.
Effect of Tender. A tender of goods, of services, of labor and materials, if refused, relieves the party making it of further obligations, and suffices either to allow him to prosecute or to defend the suit, as the case may be; evidence of the tender is of course essential. The tender of money does not release a debt or obligation, but does secure exemption from paying either interest or costs of suit, the various court costs, the latter being often a large item in a long contested suit, which is true also of interest. The lawyer's charges are not a part of the cost of suit; each party pays his own lawyer.
Reasonable Time for Performance. As to the performance of a contract other than by money payment, a reasonable time will be allowed unless the time is specified, and even then, unless time is of the essence of the contract, rigid requirements may not be enforced. In a later chapter special attention will be given to the question of liquidated damages, or penalty, for non-performance as to time.
Breach of Contract. A breach of contract may be either positive or negative, that is by repudiation or by failure. The repudiation or renunciation must be unequivocal and absolute, and must be acted upon by the other party, in which case the breach is complete and releases the innocent party from further performance. The repudiation must affect the entire performance, or the essential features of the contract. Any positive act which renders performance impossible by the other party to the contract has the general character of repudiation.
Failure from Negligence. The breach may be, however, in the nature of a failure, the result of negligence or incompetence. The case here is less simple; sometimes the effect is to release the innocent party; sometimes it simply gives him the right to sue for damages after performance of his own part of the agreement. Through the action of law, bankruptcy of one of the parties is equivalent to a breach, and allows the other party to cancel the contract.
Impossibility. Impossibility of performance, which may serve as a discharge, may proceed from the act of the other party; if this be intentional, directly or by implication, it is a breach of contract. If the impossibility results without the fault of one party and through some failure or neglect of the second party, not deliberate, not intentional, nevertheless it will act as a discharge. Similarly, if impossible of lawful performance, whether through later legislation or a change in conditions affecting the legal status, as through some judgment of a court affecting the parties or the subject matter, this serves as a discharge.
If a thing essential to the performance (the subject matter) has ceased to exist, even though neither party is at fault, an impossibility is again created. When services are definitely personal, the death of the person renders the contract impossible, and frequently sickness or disability will work the same result.
Discharge by Agreement. A contract may be discharged by agreement between the parties. Sometimes a provision contemplating this contingency is made a part of the original contract. Sometimes a new contract is made which by its terms supersedes the old. Sometimes the contract is set aside by a direct agreement that it shall cease to bind either. Sometimes a new contract is substituted for the old, or a modification of its terms is agreed upon.
New Agreements. Whenever an additional agreement of any sort is entered into, great care should be exercised that such new agreement does not fail for lack of consideration. An agreement to receive less in payment than the contract specified, is void because without consideration; so is an agreement to receive an inferior quality of work or of goods. However, if less money, or a different quality of goods or work has already been accepted, it will not render the contract void.
Sometimes provision is made in the contract that the contract shall cease to remain in force if, or whenever, one of the parties shall do a certain specified act, or shall fail to do some act, or on the occurrence of an event, or even at the option of one of the parties, provided that the option be not so sweeping as to make the contract altogether unenforceable against the other.
Discharge in Writing. It is evident that it is wise to have a written agreement if a contract in writing is to be discharged; the evidence should