J Michols, PREFACE INCE “Ignorance of the Law excuses no one," it is prospective business man to begin his career with a well-grounded knowledge of those principles of law which apply especially to commercial transactions. The object of this book is to place these principles before the student in a form so simple and practical that they can be mastered within the short time given to a course of Commercial Study. With this object in view, the form of arrangement in consecutive questions and answers was chosen so that, answer and question being associated in the mind of the student, the one would always suggest the other. This makes the book especially valuable to the large number of teachers who desire to teach Business Law to classes by modern school methods, rather than by lectures. The preparation of the book has been the work of teachers of practical experience who are familiar with the needs of commercial students. It has also had the benefit of examination and revision by two eminent lawyers so that those who use the book may be sure it represents good law as well as practical sense. One of these lawyers, a well-known judge, has paid it the compliment of saying that beyond any similar book he has ever seen, it hits the mark, instead of shooting over the heads of those for whom it is intended. CONTRACTS "The very essence of a contract is intelligent assent.” Kinds of Contracts. 1. What is a contract? A contract is an agreement between two or more competent persons, for a sufficient consideration, to do or not to do, some lawful act. 2. What is said about the act to be performed? It must be neither illegal nor immoral nor impossible nor already enjoined by law. 3. What is meant by "enjoined by law?" These words mean already required by law. A contract to do what is already enjoined by law is void. 4. What are the two general classes of contracts? Formal and informal. Formal contracts include contracts of record and specialties; informal contracts are parol or simple. 5. What is meant by a contract of record? One made and entered of record before a judicial tribunal, such as a judgment. 6. What are the characteristics of contracts of record? They prove themselves; it is only necessary to produce them as evidence of their existence. They differ from other contracts in that they do not rest upon the consent of the party bound. 7. What is a specialty? Any written contract executed under seal. It is the seal that makes it a specialty. 8. What are the principal specialty contracts? Deeds, bonds, mortgages. 9. What was the use of the seal in olden times? When persons could not write, the seal was used for much the same purpose as the signature is used to-day. It was evidence of assent to the terms of a contract. 10. What is the use of the seal now? The seal is now used on important documents to distinguish them from those of less importance. II. What is the effect of a seal on a contract? It imports consideration. As to executed contracts the seal affords a conclusive presumption of consideration; but as to executory contracts the presumption is rebuttable. The sealed contract does not outlaw as soon as the simple one. 12. What is a parol or simple contract? It is any agreement not sealed; it may be oral or written. 13. What are some of the different classes of simple contracts? Express, implied, oral, written, executed, executory, joint, joint and several, several. 14. What is an express contract? An express contract is one, oral or written, whose terms are clearly, fully and openly stated. 15. What is an implied contract? An implied contract is one whose terms are not fully stated, but the circumstances indicate the intentions of the parties. Another definition.-An implied contract is one which reason and justice dictate and which, therefore, the law presumes that every man undertakes to perform. 16. What is an executed contract? An executed contract is one whose terms have been performed. It is a completed contract and is useful in proving what rights were acquired through a certain contract. 17. What is an executory contract? It is an agreement to perform some future act, a part of which may be completed, but there yet remains something to be done. 18. What is a joint contract? It is an agreement made by two or more parties as promisors with another party, the promisors being together responsible for the whole contract. 19. What is a several contract? It is an agreement made by two or more parties as promisors, each becoming responsible for the whole contract independently of the others. 20. What is a joint and several contract? It is an agreement made by two or more parties as promisors with another party, each one alone as well as all together being responsible for the entire contract. 21. What is an entire contract? An entire contract is one in which complete performance on the part of one party must precede performance by the other. 22. What is a divisible contract? It is one in which complete performance by one party is not necessary before anything can be required of the other. 23. What is a void contract? A void contract is one that the law will not enforce. 24. What is a valid contract? A valid contract is one that is enforceable by law. 25. What is a voidable contract? A voidable contract is one whose terms may be repudiated by one or more of the parties. 26. What is the rule if a void contract is executed? As a general rule the courts will not interfere in favor of either, but will leave the parties in the position in which they have placed themselves; but in certain cases the courts will interfere in favor of an innocent party when he was not at fault and the contract was unlawful as to the other party only. The Elements of a Contract. 27. What is meant by the elements of a contract? The elements of a contract are the essential things of |