adopted, if it can consistently and reasonably be done, as will render the whole contract operative.""

Thus, where the contract is evidenced by several writings they will be read together and each construed with reference to the others.8 "Greater regard is to be had to the clear intent of the parties than to any particular words which they may have used in the expression of their intent."" Where the clear intent of the parties was not to use words in their literal meaning such intent will be followed. Thus, where a policy of fire insurance on a stock of retail merchandise provided that it should be null and void "if the said property shall be sold or conveyed," it was held that the intent of the parties was clearly not that sales over the counter should render the policy void though the terms used would have had that effect if given their literal meaning.10 Certain subsidiary rules of construction are: (1) The courts will construe doubtful words most strongly

against the party who used them on the ground that he is responsible for such ambiguity. Therefore, a deed is construed against the grantor, an insurance policy against the insurance company, and a promissory note against the maker.

(2) The court will restrict the meaning of general terms to the more specific and particular descriptions of the subject matter. Thus, where a release is clearly intended to cover a particular obligation, general words of release will not operate to release another obligation not in the minds of the parties at the time.

(3) Words wholly inconsistent with the obvious intent of the parties will be disregarded.

(4) Where the intent is doubtful the circumstances sur

rounding the parties at the time their contract was made and the manner in which it has been executed by one or both parties, will be considered.

7 Hayes v. O'Brien, 149 Ill. 403, 37 N. E. 73.

8 Wood v. College, 114 Ind. 320, 16 N. E. 619.

Ford v. Beech, 11 Q. B. 852, 866, 116 Eng. Rep. Re. 693.

10 Hoffman v. Insurance Co., 32 N. Y. 405, 88 Am. Dec. 337.

(5) Where a particular word or the whole contract is susceptible of two meanings, that should be adopted which will render the contract valid and lawful.

(6) Where both printed and written words are used, the written words will govern if there is a conflict between them. Thus, where an unqualified acceptance was written on a letterhead at the top of which was printed "All sales subject to strikes and accidents", it was held the words formed no part of the contract.11

(7) Courts will disregard obvious mistakes in grammar and punctuation if the intent of the parties is otherwise clear. Rules of punctuation and grammatical construction may be used to assist in determining the intent of the parties, but will never be used to upset the plain meaning of the contract.

11 Summers v. Hibbard Co., 153 Ill. 102, 38 N. E. 899, 46 Am. St. Rep. 872.

CHAPTER IX

DISCHARGE OF CONTRACT

BY AGREEMENT

It now remains to consider the modes in which the parties to a contract may be freed from their rights and obligations.

Since a contract is the result of agreement of the parties, it naturally follows that the contract may be discharged in the same manner. This may be done (1) by a waiver, cancellation, or rescission, or (2) by a substituted agreement, or (3) by the happening of a condition subsequent in the contract itself.

§ 117. Waiver, Cancellation, or Rescission. Where there are mutual promises by the respective parties to a contract executory on both sides, to forego performance, consideration for the promise of each is found in the abandonment by the other of his rights under the contract.1 This agreement to cancel, waive, or rescind the old contract is itself a contract and, therefore, must possess all its essential elements. If only one party agrees to forego performance, his promise is void for want of consideration, and the same is true where the contract is still executory only on one side. Of course a consideration would be unnecessary if a release under seal were given. Rights under negotiable instruments may be released without consideration by surrendering or destroying the instruments. Otherwise consideration is also necessary.

§ 118. Substituted Agreement. A contract may be discharged by such an alteration in its terms as substitutes a new contract for the old one. The new contract may include an express waiver of the old or an implied waiver

1 Rollins v. Marsh, 128 Mass. 116.

2 Collyer v. Moulton, 9 R. I. 90, 98 Am. Dec. 370.

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from the introduction of new parties or terms. But the intention to substitute a new contract must be clear where it arises from implication. Thus, if parties who have contracted for the sale and delivery of certain goods agree upon a change in the quality, price, and time of delivery, a new contract consisting of certain new terms and the unchanged terms of the old contract would thus be substituted and the old contract impliedly waived. If the purchaser had merely requested to have the time of performance postponed, it would be clear that there was no intention to make a new contract and no defense could be based thereon.

The form of the substituted agreement is sometimes important. In general the new agreement must be in the same form as the old. Thus, if the original contract was under seal, it could only be discharged by an agreement under seal. This rule seems subject to the exception that if a parol agreement rescinding or modifying a contract under seal has been executed and the position of the parties thus changed, it may be shown in defense, as where a lease under seal has been terminated by a parol agreement under which the tenant has vacated the premises. If the original contract was in writing but not required to be by statute, the new agreement in substitution or discharge may be either oral or written. If the original contract was required by statute to be in writing, a new contract in substitution should also be in writing, though the original contract might be discharged by word of mouth.

Substitution of New Party. A contract is frequently discharged by the substitution of a new party, the terms remaining unchanged. This is called a novation. Thus, if A owes B $10 and B owes C $10, there is a change of parties and a discharge of B's obligation to C where all three meet and agree that A shall pay the $10 to C. Consideration is found for A's promise in C's releasing B's debt, for B's discharge in the extinguishment of his debt to C, and for C's discharge of B in the promise of A. All three parties

must consent to a novation, although it will sometimes be implied from conduct of the parties indicating an acquiescence in a change of liability. Thus, where one of two partners retires and the firm debts are assumed by the remaining partner, acquiescence in this by a creditor of the old firm and acceptance of the sole liability of the new firm will frequently be implied from subsequent dealings with the new firm indicating that the creditor looks to them. alone.3

§ 119. Condition Subsequent. A contract may contain provisions, express or implied, for its discharge upon the happening of some event or contingency. These provisions are called conditions subsequent. Such a provision may be that the non-fulfillment of a certain term in the contract will give one of the parties a right to treat it as discharged. Thus, if a chattel is sold under an agreement that the purchaser may return it within a specified time if it does not fulfill certain requirements, "the effect of the contract is to vest the property in the buyer subject to a right of rescission in a particular event when it would revest in the seller."4 Again, the parties may provide for the termination upon the happening of a certain event. A fidelity bond expressly conditioned upon an agent's duly accounting for all of his employer's funds received by him, is an example of such a contract. So also the obligation of a common carrier to safely deliver goods intrusted to him, which is impliedly defeasible upon injury resulting from act of God, or the public enemy or defects inherent in the thing carried. Within this classification also come agreements which provide that either party has the option to terminate the same upon certain terms, such as contracts of employment terminable by either party on thirty days' notice or upon reasonable notice where the time of employment is not expressly limited."

3 York v. Orton, 65 Wis. 6, 26 N. W. 166.

4 Head v. Tattersall, L. R. 7 Exch. 7, 14; Ray v. Thompson, 12 Cush. (Mass.) 281, 59 Am. Dec. 187.

5 Coffin v. Landis, 46 Pa. 426.