§ 680. Contract for substituted performance.

Either prior to the time for performing a contract, or after its breach, the parties may agree that one or both of them shall do something different from the performance which the original contract specified. If the agreement is made after breach, it is an accord, and when executed it is an accord and satisfaction. 28 The new contract may be like the old except for the single particular of the time of performance. Thus, where, after failure to carry out a marriage contract at the agreed time, negotiations are begun to arrange for a subsequent date, whatever rights may have accrued from such failure are thereby discharged.29 If the new agreement is made when there has as yet been no breach of the original contract it is not technically an accord but the principles involved are the same, being merely those involved in the formation of any contract. Whether the agreement is made before or after breach, therefore, there must be consideration to support it. The instances where the word waiver is most commonly applied to such a substituted agreement are where the substituted performance agreed upon lacks some requisite of the original contract. 30

Thus where in sales of personal property, the buyer accepts as satisfactory goods which do not fulfil the requirements of the original bargain, perhaps because delivered too late, perhaps because different in quantity, perhaps because differing in kind or quality; the defect is often said to be waived. In contracts for the sale of real estate, similarly, the buyer may accept a deed which does not give him precisely the estate or the covenants for which he originally bargained. If in any case

Falls Ins. Co., 81 N. Y. 410; Metcalf

. Phenix Ins. Co., 21 R. I. 307, 43 Atl. 541; Webster v. State Mut. F. Ins. Co., 81 Vt. 75, 80, 69 Atl. 319.

"See infra, § 1837.

"Falk v. Burke, 93 Kan. 93, 143 Pac. 498, L. R. A. 1915 B. 279.

See, e. g., Bennie v. Becker-Franz Co., 14 Ariz. 580, 134 Pac. 280; California Raisin Growers' Assoc. v. Abbott, 160 Cal. 601, 117 Pac. 767; Mahoney v. Hartford Inv. Corporation, 82 Conn. 280, 73 Atl. 766.

31 So a stipulation in a building contract that on any disagreement as to the performance of any agreement or value of extra work the same shall be referred to arbitrators and a decision by a majority shall be final supersedes the provision for an engineer's final certificate as a condition precedent to the right of payment. Central Union Stock Yards Co. v. Uvalde Asphalt Paving Co., 82 N. J. Eq. 246, 87 A. 235.

the substituted performance given or agreed to be given is different from that originally contracted for, and is not merely less, the later agreement is supported by sufficient consideration,31 and is unquestionably binding. If, however, as matter of necessary reasoning from the terms of the bargain itself, and not simply from proof of its value in fact, the substituted performance is less than that originally bargained for, there is no sufficient consideration; 32 and if the agreement is enforced, it must be on principles not applicable to accord and satisfaction, but to one of the other classes of cases included under the broad and inaccurate name of waiver.33 A case analogous to that of a new substituted contract is presented by the so-called waiver by a servant when entering into a contract of employment to surrender the rights given him by an employers' liability law, or by the common law, for injuries. Such agreements are part of the contract of employment and do not lack consideration. They are, however, generally held to be opposed to public policy.34 Where statutes impose liability to creditors on the stockholders of a corporation, "A corporate creditor may, by express contract, when the debt is incurred, waive his right to collect from the stockholder debts which the corporation fails to pay. In the last two illustrations the so-called waiver is part of the original contract, but this involves no distinction in principle from cases where a second contract dispensed with some condition or promise in an earlier contract.

§ 681. A substituted contract need not be intended as a surrender of a right.

It is constantly stated in the books that waiver must be intentional or voluntary.36 So far as this means that waiver procured by fraud or duress is ineffectual, no fault can be found with the statement, but as it is ordinarily and naturally understood, more than this is meant. It seems to be asserted that the party waiving a right must have the intention of giving it

32 See supra, § 130.

33 Either class 5 or 6 under the classification in the previous section. 34 See 1 Mechem, Agency, § 1681. 35 Cook on Corporations, § 216, and

cases cited, quoted with approval in Bush v. Robinson, 95 Ky. 492, 26 S. W. 178.

36 See supra, § 678.

up in order to be deprived of it. Here as always when any statement is made about waiver, it is essential to consider the application of the statement to each of the various legal situations which go by that name. 37 It is obvious that if the socalled waiver is made by a substituted contract or accord based on valid consideration, the requirements of the law must be the same as for the formation of any contract. There must be an expression of mutual assent, but the actual mental intent is immaterial.38 When a case of surrendering a right by a substituted contract is presented where the apparent intent differs from the actual intent, the apparent intent controls. 39 But the expressions generally found in the cases are somewhat misleading, because they imply that the actual intent is the vital matter. It is only where words or actions are ambiguous and where more than one possible meaning might rightfully be ascribed to them by the party speaking or acting, that his actual intent becomes material. 40

§ 682. Knowledge of facts is not necessary for a substituted contract.

Not only is actual intent and even apparent intention to waive unimportant in some, at least, of the various things called waiver, but even knowledge of the facts may or may not be essential according as one or another of the kinds of obli

"See supra, § 679.

See supra, § 21.

"In West v. Platt, 127 Mass. 367, 372, the court said: "A waiver is indeed the intentional relinquishment of a known right; but the best evidence of intention is to be found in the language used by the parties. The true inquiry is, what was said or written, and whether what was said indicated the alleged intention. The plaintiff had a right to act on the natural interpretation of the correspondence, and the defendants' conduct in reference to it. The secret understanding or intent of the defendants or their agents could not affect his rights. Thus, when an attorney consented

that a deputy sheriff might take a receipt for goods attached, it was held erroneous to tell the jury that such consent should have been expressed with the intent of influencing or controlling the officer's conduct, and of assuming the risk. Wright v. Willis, 2 Allen, 191; Gould v. Norfolk Lead Co., 9 Cush. 338, 345, 57 Am. Dec. 50. A delivery, apparently unrestricted, of goods sold for cash, is a waiver of the condition that payment is to be made before the title passes, although the seller has an undisclosed intent not to waive the condition. Upton v. Sturbridge Cotton Mills, 111 Mass. 446."

40 See supra, §§ 94, 613.

gation or defence going under the name of waiver is under consideration. Knowledge of the facts is not essential for the formation of a valid contract, though mutual mistake of an essential fact may be an equitable reason for avoiding it.41 A contract to surrender a right or a defence must be subject to the same rules as other contracts in this respect. If both parties made the bargain under a mistaken assumption of essential facts relating to the existence or nature of the supposed right of action or defence their bargain should be voidable; and if one knowing the facts took advantage of the other's ignorance, it would likewise be voidable; and if an agreement were made to excuse a breach of condition, facts showing that unknown to the promisor there had already been a fatal breach thereof would doubtless be so essential as to afford ground for the application of the equitable principles. But the mere circumstance that the promisor was ignorant of important collateral facts would not be an excuse. Whether the facts of which the promisor was ignorant might have been learned had reasonable diligence been exercised, may also be a material circumstance.42

683. Election.

Election as a term in the law is properly applied to a case where a person has the choice of one or two alternative rights or remedies.43 In choosing the one, he necessarily surrenders the other. This principle is not inconsistent with the general rule that the surrender of a right requires a sealed release or consideration, because the choice made by election gives the one making it an advantage which he could not otherwise have had. Though he surrenders one right he gains or keeps by so doing another and inconsistent right. Thus where a contract

41 See infra, §§ 1535 et seq.

42 See infra, § 1596. Also see §§ 690 et seq. regarding sales of goods. Whether or not acceptance of defective goods operates as a discharge of the seller's liability for damages, if the defects were discoverable on inspection, certainly the defect ceases to operate as a breach of condition.

See also similarly in regard to contracts for the sale of real estate and for work and labor, §§ 712, 713.

43 A person may also contract to perform one of two alternatives, and thus have an election between duties. See infra, § 1407, but this is immaterial to the present discussion.

is broken in the course of performance the injured party has a choice presented to him of continuing the contract or of refusing to go on. If he chooses to continue performance he has doubtless lost his right to stop performance; but in the nature of the case he could not exercise the two inconsistent rights of which he had the choice.

It is to be observed that election involves no requirement of mutual assent. Where the question is one of a substituted contract or accord and satisfaction, such mutual assent is an obvious necessity. And there is much the same requirement for a waiver based on a promissory estoppel. Such an estoppel cannot arise unless the person claiming the benefit thereof knew of the promise and showed assent thereto by acting in reliance upon it. Even a promise unsupported by either estoppel or consideration whenever such a promise is binding, may be thought to require, if not an actual manifestation of assent by the promisee for its validity, at least a presumption of assent based on the beneficial character of the promise.44 One who elects one alternative is often said to waive the other; 45 but, unless "waive" is given a very broad meaning, the expression is inexact, since he could not have both. only right was to make a choice. In some cases involving election, the party having this right of choice may take no action for an indefinite period. Only exigencies of fact rather than any rule of law compel him to act. For instance, an infant who has entered an executory contract presumably may, with

"Mr. Justice Holmes, speaking for the Supreme Court of the United States in Bierce v. Hutchins, 205 U. S. 340, 346, 51 L. Ed. 828, 27 S. Ct. 524: "Election is simply what its name imports: a choice shown by an overt act, between two inconsistent rights, either of which may be asserted at the will of the chooser alone. Thus, 'if a man maketh a lease, rendering a rent or a robe, the lessee shall have the election.' Co. Litt. 145a. So a man may ratify or repudiate an unauthorized act done in his name. Metcalf #. Williams, 144 Mass. 452, 454, 11 N. E. 700. He may take the goods or

His

the price when he has been induced by fraud to sell. Dickson v. Patterson, 160 U. S. 584, 40 L. Ed. 543, 16 S. Ct. 373. He may keep in force or may avoid a contract after the breach of a condition in his favor. Oakes v. Manufacturers' F. & M. Ins. Co., 135 Mass. 248, 249. In all such cases the characteristic fact is that one party has a choice independent of the assent of anyone else."

45 See, e. g., State Bank v. Brown, 142 Ia. 190, 198, 119 N. E. 81; First Nat. Bank v. Exchange Nat. Bank, 179 N. Y. App. D. 22, 164 N. Y. S. 1092.