André opposes the theory. As he says, if a man contracts for the use of a carriage on the first Sunday in August and does not get it, yet is sued for the hire, it is immaterial to him whether the plaintiff would not or could not furnish the carriage.21 Decisions of the Reichsgericht, too, have refused to limit in this way the application of the defence even in cases where the plaintiff had performed a large part of what he had agreed. 22 The Civil Code, however, seems in part at least technically to have adopted the limitation. For though the general provision for the defence of unfulfilled contract is broad enough to include cases where the plaintiff's performance is not possible, 23 the later elaborate provisions for cases of burg, 21 Feb. 1885; Seuff. Arch. XL. 288, similar language is used and the plaintiff allowed to recover on a building contract, subject to the defendant's recoupment of damages for incomplete work, since the defendant had had the work completed, making completion by the plaintiff impossible. The same doctrine is applied by the Oberst L. G. f. Bayern, 21 Oct. 1867, Seuff. Arch. XLIII. 153, in an action for a balance of the price of an estate, which proved, contrary to the agreement, subject to an incumbrance. 21 André, 163. 22 R. G. 21 Jan. 1887, Seuff. Arch. XLII. 282. The plaintiff and the defendant entered into a contract by which the former sold and the latter bought 200 hundred-weight of wire nails at an agreed price. The plaintiff further agreed not to have a representative travel for trade through the surrounding towns. This action was for the price and the defence was that the plaintiff had allowed an agent to travel through the surrounding towns and had sold nails there. The court refused to allow recovery, holding the stipulation an essential part of the contract, and that the defendant's rights were not restricted to a counterclaim for damages. "Though the defence of unfulfilled contract is in its nature dilatory only, yet its effect is peremptory if the seller has by his own wrongful act made it impossible to fulfil the contract. . . . Even if the plaintiff had sent an agent through the forbidden territory only after the defendant was in default in taking the goods contracted for, still the suit should be dismissed, because if the plaintiff wished to require fulfilment she must on her part be ready to fulfil." R. G. 28 May, 1888, stated by Schall, in Arch. f. Civ. Praxis LXXIII. 429. The plaintiff sued for royalties promised annually for twelve years by the defendant in a contract by which the plaintiff on his part agreed (1) to teach the defendant a secret process, (2) to give him an exclusive license under a patent. The plaintiff taught the process, gave the license and received the royalties for some years, but before the expiration of twelve years the patent was declared void and as the defendant refused to pay further royalties, this action was brought. It was held that the plaintiff, though not liable in damages, and though the royalties were payment for something besides the license, could recover nothing, as there was no way to apportion the payments. 23 Art. 320. impossibility are presumably exclusive; 24 and only in case of total accidental impossibility is it stated that counter performance may be refused.25 Injustice to the defendant has been avoided as far as possible by enlarging and defining the right of the defendant to treat the contract as dissolved in this class of cases. 26 He is allowed to do so in any case where the plaintiff has not performed at all or where his performance is of no value to the defendant.27 But in case of partial accidental impossibility of performance by one party, apparently the exclusive right of the other is a reduction in price. § 917. Defence excluded by tender or prevention. The defence of unfulfilled contract is applicable to all bilateral contracts. 28 A proper offer of performance, though not accepted, excludes the defence of unfulfilled contract.29 It is customary to distinguish between "verbal" and "real" offers, and it is said that a bare oral offer is insufficient. There 24 Arts. 323, 325. 25 See Art. 323. 28 Where there has been no performance the difference between this affirmative right if allowed and the right of the exceptio non adimpleti contractus, is that the defendant must prove nonperformance in the first case, while the burden is upon the plaintiff in the second. Where there has been part performance a dissolution of the contract involves a return of whatever has been given by either party. In the case of the exceptio non adimpleti contractus such a return must be obtained, if at all, by independent proceedings. Besides these differences, the measure of damages in such a case as the first cited in supra, note 20, would be different. If the contract were dissolved any recovery would be based on unjust enrichment, not on the contract price. B. G. §§ 323, 325. See supra, § 910. * Dernburg II. § 21. It is not necessary that the stipulated performances are intended as an equivalent ex change. In Entsch. R. O. H. G. VIII. 423, 25 Jan. 1873, the buyer was allowed to retain the price of goods delivered because of the seller's failure to deliver all the goods, though the price was not a lump sum. But in a decision of the O. L. G. Hamburg, 2 Oct. 1891, Seuff. Arch. XLVII. 257, the principle was limited. The plaintiff had sold his business to the defendant, the latter agreeing among other things to pay annually for some years 2% of the amount of gross business, and to make statements of the business. The plaintiff sued for one of the promised statements. The defendant set up in defence that certain money was due him on the transaction. It was held that though this would have been a defence if the plaintiff had been suing for the 2%, it was not a defence to the merely "preparatory suit" for the statement. 29 Because it would be fraudulent to make use of the defence under such circumstances. The offer is technically matter for replication. are no fixed rules, however, as to what is necessary beyond that. The formality required by the French law for putting in default does not obtain, but the party offering to perform must be so prepared for performance that the other party has but to receive it, and this must be made manifest.30 It is immaterial whether refusal of the offer is due to wilful default or to impossibility from subjective causes. One who because of illness cannot use a room engaged in an inn, one who is prevented from taking a music lesson because of a lame hand, must none the less pay the stipulated price, less any saving made by the other party from being freed from performing.31 Preventing performance by the other party has the same effect as refusing to accept proffered performance. Indeed, the boundaries between an unconditional refusal to accept performance, that is, to coöperate in carrying out the contract, and a prevention of performance, are not always definite. 32 § 918. Acceptance of defective performance. As in the French law, mere receipt of performance does not necessarily imply such an approval of it as will prevent subsequent objection. Defects not apparent on ordinary examination, at least, are not thereby excused.33 Approval of performance also may indicate not an intention to treat the performance as full compliance with the contract, but merely to accept the performance as a partial or incomplete fulfilment 30 The Civil Code lays down some general rules which have been operative since 1900. §§ 284, 293-299. A verbal offer is made sufficient if the other party declares that he will not accept, or if his coöperation is necessary to make the performance effectual, as by calling for and taking goods. See further Windscheid, § 278. 31 André, 141, 144; Bürg. Gesetzbuch, § 325. 32 André, 142. 3 André, 175. Even defects which would be apparent on examination, it is said, are not excused, if not in fact discovered. Windscheid, II. 446, § 394. But the Handelsgesetzbuch (Art. 347) requires in the case of goods sent from another place, that the buyer shall make prompt examination and give immediate notice of any defects, and in case of failure to do so shall be regarded as having approved the goods, so far as concerns defects which would have been discovered by ordinary examination. Latent defects must be notified to the seller as soon as discovered, or will be regarded as waived. § 377 of the new Handelsgesetzbuch repeats these provisions, and extends them to sales in the same place. of the contract, with a reservation of the right to demand damages or diminution of the price because of any defects. In the latter case, any right to dissolve the contract, and also the right to set up the exceptio non adimpleti contractus, are lost, but not the right to an action or counterclaim for damages. In case of doubt André holds that as it is a question of the surrender of rights, the latter interpretation should be put upon the facts.34 § 919. Prospective breach. Where a party to a bilateral contract agrees to perform before the other, there seems to be recognized no general rule that the prospective inability or expressed intent not to perform by the other party excuses performance of the precedent obligation. The Civil Code provides 35 that the party bound to precedent performance may, if an essential impairment in the circumstances of the other party occurs after the conclusion of the contract, refuse performance unless the counter performance, or security for it, is given concurrently. This, however, does not apply when the irresponsible party was irresponsible when the contract was made. And the case of one whose prospective failure to perform is due to other causes than failing circumstances is not covered.3 34 André, 173. See a decision of the Reichsgericht, 12 June, 1885; Seuff. Arch. XLI. 15. 35 § 321. 34 The question does not seem to have been discussed. The following decisions show perhaps a tendency to allow prospective inability as a defence. R. G. 27 Apr. 1892, Seuff. Arch. XLVIII. 441. Plaintiff agreed to buy, defendant to sell, rice flour, to arrive by vessel at Hamburg, payment to be "cash on delivery of the bills of lading." The bills of lading when offered to the plaintiff had written on them, "bag sewings insufficient." The plaintiff refused to accept the bills and sued for damages. It was held that he was entitled to sue. Though he was bound to pay cash before delivery of the goods, and could not claim to hold the price till they were proved good, but must pay, and if they were bad sue to recover what he had paid, yet the bills of lading must at least give him the expectation that the goods were conformable to contract. R. G. 22 Apr. 1893, Seuff. Arch. XLIX. 191. In case of a similar contract, the goods had arrived at the time the bills of lading were offered. It was held that the buyer was entitled to examine the goods before making payment, and reject them if of defective quality. A party who has acquired a right of action on a contract may lose his right by his own subsequent breach of contract. § 920. Diminution of the price. In addition to the right to enforce specific performance, the right to treat a contract as dissolved, the right to damages either in a direct action or counterclaim, and the exceptio non adimpleti contractus, there is still another remedy in Germany, of occasional application, for breach of contract. This is "Preisminderung," an appropriate diminution of the price or performance to which the party in default would otherwise be entitled by the terms of the contract.37 In many cases this remedy is equivalent in its results to the ordinary right of a defendant to have any damages to which he is entitled because of the plaintiff's imperfect performance deducted from the contract price. But this is not always so. It may be that the imperfection of the plaintiff's performance was due to an accident for which neither he nor the defendant is responsible, and for which, consequently, the plaintiff is not liable in damages; yet the defendant ought not to be compelled to pay the full price. 38 A second case is where the imperfection of the plaintiff's performance, though wrongful, has not caused the defendant any damage. Further, loss of profits In R. G. 15 June, 1896, Seuff. Arch. LII. 144 (stated supra, § 908, n. 83, impossibility of performance by the defendant was held to excuse performance by the plaintiff, though at the time when the plaintiff's performance was due, the defendant's performance was continuing and had not become impossible. See also R. G. 21 Jan. 1887, Seuff. Arch. XLII. 282 (stated supra, n. 22). 37 This is derived from the actio Estimatoria or quanti minoris of the Roman law. In contracts of sale, at least, it was an alternative remedy to the actio empti and the actio redhibitoria. Hunter, Roman Law, 505; Salkowski, Roman Law, 602; Moyle, Sale in Civil Law, 194, 210-212. The remedy exists in France, Code Civ. Art. 1644, Aubry-Rau, IV. 389, 392, and presumably in other countries whose law is derived from Roman sources, see, e. g., McVeigh v. Lussier, 13 Lower |