The German Civil Code contains a provision effecting this result.7 § 1979. Impossibility in the Civil law. The Civil law starts from a principle opposite to that of the Common law. While the Common law regards a promise as binding according to its terms, even though it proves impossible of performance, unless the promisor can show that it falls within an excepted clause or that there is an "implied condition," the Civil law regards impossibility as an excuse unless it can be shown that the promisor assumed the risk of possibility. Though the fundamental principle is thus stated in diametrically opposite ways in the two systems of law, it is probable that the decisions on actual cases do not greatly vary. The German law prior to the enactment of the Civil Code has been stated substantially as follows: ' 9 Impossibility of performance is divided into original and supervening impossibility. if the employment of the ship by the Admiralty is of a more extensive character and more onerous to the owner than that authorized by the charter party, the hire paid by the Admiralty for the use of the ship, whether it be more or less than the charter party hire, is divisible between the owner and the charterer in proportion to their respective interests in the ship. 7 Civ. Code, Sec. 281, provides: "If the debtor in consequence of the circumstance, which makes performance impossible, obtains a compensation or a right to compensation for the thing to which he is entitled, the creditor may require delivery of the compensation or assignment of the right to compensation." See also Sec. 323, supra, § 910. 8 The provisions of the French Civil Code stating the general principle and some particular applications of it are contained in Arts. 1148, 1302, 1647, 1733, 1929, 1954. These provisions have been largely copied in the codes of other countries: Italy, Arts. 1226, 1298, 1504, 1589, 1845, 1868; Spain, Arts. 1105, 1182 et seq., 1487, 1488, 1563, 1766, 1784; Portugal, Arts. 705, 717, 1608, 1422, 1436; Holland, Arts. 1282, 1480, 1546, 1601, 1745, 1748; Chili, Arts. 1556, 1670-1680, 1862, 1947, 2242, 2230; Mexico, Arts. 1463-1465, 1442 et seq., 2878, 2975, 2976. See also La. Rev. C. C. Art. 1933; Eugster v. West, 35 La. Ann. 119, 48 Am. Rep. 232; Romero v. Newman, 50 La. Ann 80, 23 So. 493. The provisions of the German Civil Code, and of the Swiss Code of Obligations are different in form, but are based on the same general principle that impossibility is prima facie an excuse. See German Civil Code, Secs. 265, 275, 280 et seq., 285, 287, 291, 323, 425, 815. Swiss Code of Obligations, Arts. 97, 119, 163, 378, 379, 392. The statement is a paraphrase of §§ 264, 315, of Windscheid's Lehrbuch des Pandektenrechts. 1. Original impossibility is divided into a. Objective, which is a defence, though the obligor knew of the impossibility. b. Subjective, in which case the obligor must pay a money equivalent though he did not know of the impossibility when he entered into the contract. In case of objective impossibility, however, the obligor is bound to make good to the obligee, if the latter did not know of the impossibility when the contract was made, all damage which the latter has incurred by acting on the assumption that the contract was valid; and in such a case if the obligor knew of the impossibility he is bound to make good the whole performance. Subsequent termination of the impossibility makes the contract valid only if such termination was founded in the nature of the impossibility—not if it was accidental. 2. Supervening impossibility. It is not important whether it is subjective or objective, but only whether it has happened because of any fault of the obligor. If not, he is free, and need only perform whatever may remain still possible, or give up instead of the object due whatever the event causing the impossibility may have given him. If the impossibility was due to the obligor's fault, he is bound to pay a money equivalent, less any gain the obligee has made by the impossibility. It is further to be observed: a. The obligor may by express contract or by statute be liable for impossibility, i. e., take the risk. b. If performance is possible only at a disproportionate sacrifice, the obligor is bound only for the real value of the performance. If the question is whether the supervening impossibility is due to the fault of the obligor, the main rules are: 1. If the impossibility is due to the obligor's fraud, he is always chargeable. 2. If due to his gross negligence, he is also chargeable. 3. If due to ordinary negligence, he is chargeable if he is accustomed to use greater care in his own affairs. 4. Aside from the cases included under (3) it is the rule that the obligor is chargeable if the impossibility is due to ordinary negligence, but this rule is subject to exception. The Indian Contract Act adopts the broad general principles of the Civil law.10 10 Sec. 56 of the Act provides: "An agreement to do an act impossible in itself is void. A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise." Contingent debts under early bankruptcy laws in the United State. 1990 Contingent claims against sureties under the Federal Bankruptcy Act of Application of principles to parties to negotiable instruments. . 1995 Bankruptcy can here be considered only so far as it operates as a discharge of a contractual obligation. It may do this in two ways. Bankruptcy may preclude the bankrupt from enforcing a right and may also free him from liability. It has previously been seen that insolvency or bankruptcy may operate as an excuse for giving credit to the insolvent or bankrupt. But insolvency or bankruptcy does not necessarily involve the loss of the bankrupt's contractual rights; for unless the contract is personal "it may be finally and fully performed by others who may be acting, for instance, as trustee or as successors or purchasers of the bankrupt's property and rights involved therein or affected thereby." 2 1 See supra, § 880. 2 In re Morgantown Tin Plate Co., 184 Fed. 109, citing Carey v. Nagle, Fed. Cas. No. 2,403; Lester v. Webb, If the bankrupt's contractual right is personal, as an ordinary contract of service, or a contract to marry, it is possible that he may still be capable of performing it, or it may be of such a character that the loss of credit by the bankrupt precludes any further right on his part to require further continuance of the contract. Such for instance is the nature of the right of a publisher,3 unless his contract with the author permits assignment by the publisher, and the same principle is applicable to all contracts too personal for voluntary assignment, or survival to an executor, or administrator.5 4 The effect of bankruptcy in discharging contractual obligations of the bankrupt is due to the statutory discharge freeing a bankrupt from liability upon claims provable against his estate. A discharge was first granted to a bankrupt in the reign of Queen Anne, and since then the granting of a discharge has been an important feature of English and American Bankruptcy statutes. Until recently, unless at least the debtor's estate paid a certain percentage of his debts, the consent of a majority or of a larger fraction of his creditors was requisite in order to entitle him to a discharge. The present statute in the United States makes no such requirement; and, unlike any previous bankruptcy statute, permits a discharge not only of a natural person, but of a corporation." § 1981. State and Federal jurisdiction. The Constitution of the United States gives Congress power to "establish . . . uniform laws on the subject of bankruptcies throughout the United States." 8 Under this power four bankruptcy acts have been enacted by the United States, the Act of April 4, 1800, repealed December 19, 1803; 10 the Act of August 19, 1841,11 repealed March 3, 1843; 12 the Act of 5 Allen, 569; Vandegrift v. Cowles Engineering Co., 161 N. Y. 435, 444, 55 N: E. 941, 48 L. R. A. 685. See supra, § 1327, for criticism of the statement that bankruptcy amounts to an anticipatory breach. 3 Griffith v. Tower Publishing Co., [1897] 1 Ch. 21; In re McBride, 132 Fed. 285. See also Pulte v. Derby, 5 McLean, 328. 4 See supra, § 413. See supra, § 1945. 4 and 5 Anne, c. 17. In re Marshall Paper Co., 102 Fed. 872, 43 C. C. A. 38. 8 Art. 1, Sec. 8. |