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given under such circumstances of (a) mistake, (b) misrepresentation, (c) absence of consideration, (d) fraud, and the like, as really to amount to no contract at all, or (6) was given for or upon a consideration which was illegal, so that there was no contract in law.

$ 800. How classified here.— Without attempting to go into all of the subjects here suggested, consideration will be given to the most important of them, as follows: I. Rescission of the contract in accordance with the agree

ment of the parties.
II. Avoidance of the contract for failure of consideration.
III. Avoidance of the contract for mistake.
IV. Avoidance of the contract for innocent misrepresentation.
V. Avoidance of the contract for fraud -

(a) Upon the seller.
(6) Upon the buyer.
(c) Upon the seller's creditors.

(d) Upon subsequent purchasers.
VI. Avoidance of the contract for illegality.

674

CHAPTER II.

OF AVOIDANCE OF THE CONTRACT BY CONSENT AF PARTIES.

$ 801, 802. In general.

L TERMINATION OF CONTRACT BY

SUBSEQUENT MUTUAL CONSENT. 803. Contract may be discharged

by agreement. 804. Executory contracts. 805. Executed contracts. 806. Substitution of a new con.

tract. 807.

Intention must be clear. 808. Introduction of new parties. 809. Formalities of rescission - De

livery.
810, 811. One party alone cannot

rescind-Breach of contract
acquiesced in, as a rescis-
sion.

813. Right may be reserved to

terminate for any cause. 814. Or may be limited to par

ticular cause or event. 815. Or may be limited as to

time and manner. 816-819. Usually no rescission of

executed sale for mere breach of warranty - Al

lowed in some States. 820. May be rescission for fraudu

lent warranty. 821. Contract may provide for re

scission for mere breach of

warranty. 822. Rescission for breach of

warranty on sale of imple

ments. 823. Form. 824. Conditions. 825. Unless waived,conditions

precedent. 826, 827. Rescission for non-pay

ment of price.

II. TERMINATION OF THE CONTRACT

IN PURSUANCE OF THE ORIGI

NAL AGREEMENT. 812. Parties may stipulate for sub

sequent termination.

$ 801. In general.- Assuming that a contract of sale has been entered into, it is, in general, just as competent for the parties to it to unmake it as to make it in the first instance. That which exists by their consent may equally, in general, cease to exist by the same consent.

- The consent of the parties that their contract shall come to an end may be given either (1) after the contract is fully completed and as a new and separate agreement, or (2) there may have been incorporated in the contract itself, at the time of its formation, some term or stipulation in pursu

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ance of which the contract might subsequently be terminated by either or both of the parties to it. Each of these forms requires some consideration. And as much of the matter relates to the elements of contracts, the subject may, perhaps, best be shown by using largely the language of elementary writers upon contracts. Thus

I.

TERMINATION OF CONTRACT BY SUBSEQUENT MUTUAL CONSENT.

$ 803. Contract may be discharged by agreement.—“A contract may be discharged,” says Sir William Anson, “ by agreement between the parties that it shall no longer bind them.' This is a waiver or rescission of the contract.” This agreement, however, like the original one, must exhibit the necessary incidents of contract. The parties must be competent, they must still retain their interest in the contract, and their agreement must be founded upon sufficient consideration. With respect of the consideration required, a distinction must be made between those contracts which remain wholly executory and those which have been executed by one or both of the parties.

§ 804.

Executory contracts.- In the case of the executory agreement, “ the consideration for the promise of each party is the abandonment by the other of his rights under the contract. The rule, often stated, that'a simple contract may, before breach, be waived or discharged without a deed and without consideration,' must be understood to mean that, where the contract is executory, no further consideration is needed for an agreement to rescind than the discharge of each party by the other from his liabilities.”

2

1 Anson on Contract (7th ed.), p. 273. writers as to the manner in which a ? Anson on Contract, p. 273. simple contract may be annulled.

In Collyer v. Moulton (1868), 9 R. I. We think the rule is, that so long 90,98 Am. Dec. 370, it is said: “There and so far as the contract remains is some apparent inconsistency in the executory and before breach, it may language used in the reports and text- be annulled by agreement of all

$ 805. Executed contracts. — “ “There seems to be no authority,” continues Sir William Anson, “for saying that a contract, executed upon one side, can be discharged before breach, without consideration — that where A has done all that he was bound to do and the time for X to perform his promise has not yet arrived, a bare waiver of his claim by A would be

parties; but that when it has been rescind the contract, the other party broken, and a right of action has ac- need not object, and if he permits it crued, the debt or damages can only to be rescinded it will be done by be released for a consideration; and mutual consent. Nor need this pureven so far as it remains executory pose of rescinding be expressly deit may be said that the agreement to clared by the one party in order to annul on one side may be taken as give to the other the right of conthe consideration for the agreement senting, 'and so rescinding. There to annul on the other side. Dane, 5, may be many acts from which the 112; Johnson v. Reed, 9 Mass. 78, 6 opposite party has a right to infer Am. Dec. 36; Cummings v. Arnold, that the party doing them would re3 Metc. (Mass.) 486-489, 37 Am. Dec. scind.' 2 Parsons on Cont. (7th ed.) 155; Richardson v. Hooper, 13 Pick. 678. At all events, mere loose con(Mass.) 446; Blood v. Enos, 12 Vt. 625, versations will not be sufficient proof 36 Am. Dec. 363."

of waiver of a contract by agreement In a valuable note to Bryant v. (Moore v. Crofton, 3 Jo. & La T. 438); Isburgh, 74 Am. Dec. 657, it is said: nor will negotiations for abandon"All executory contracts may be re- ment or rescission constitute a rescinded by the parties to them, if scission, unless such was the evident they continue interested until the intention of the parties. Robinson agreement to rescind is made. John- v. Page, 3 Russ. 114; Murray v. Harson v. Reed, (supra); Blood v. Enos, way, 56 N. Y. 337. So an offer to re(supra). It has been said that courts scind, which is not accepted, will not require as clear evidence of waiver have such effect. Fripp v. Fripp, of contract by mutual assent as of the Rice's Ch. 84." contract itself. Carolan v. Brabazon, 1 Anson on Contract, pp. 273, 274. 3 Jo. & Lat. 200; Dial v. Crane, 10 He quotes Parke, B., in Foster v. Tex. 444; Quincy v. Tilton, 5 Greenl. Dawber, 6 Exch. 839, as follows: “It 277. On the other hand, it is said is competent for both parties to an that an agreement to rescind may be executory contract, by mutual agree. shown by such circumstances, or by ment, without any satisfaction, to such a course of conduct, as clearly discharge the obligation of that conevidences the intention of the parties tract. But an executed contract canthat it shall so operate. Wheeden v. not be discharged except by release Fisk, 50 N. H. 125; Green v. Wells, 2 under seal or by performance of the Cal. 584; Robinson v. Page, 3 Russ. obligation, as by payment, where the 114; Murray v. Harway, 56 N. Y. 337. obligation is to be performed by payAnd Parsons says further, that “if ment." either party, without right, claims to

an effectual discharge to X. In fact, English law knows nothing of the abandonment of such a claim, except by release under seal, or for consideration. The plea of waiver’ under the old system of pleading was couched in the form of an agreement between the parties to waive a contract, an agreement consisting of mutual promises, the consideration for which is clearly the relinquishment of a right by each promisee. Where a discharge by waiver is alleged as a defense in an action for breach of contract, the cases tend to show that the defendant must set up, in form or substance, a mutual abandonment of claims, or else a new consideration for the waiver."

$ 806. Substitution of a new contract.— Instead of simply terminating the old contract the parties may substitute another for it, in whole or in part. This has been well stated by Professor Harriman as follows: “Any valid alteration of the terms of the original contract will amount to the substitution of a new contract and the discharge of the original contract. The new contract will be identical with the old, except so far as the terms have been altered. A written contract may be rescinded by a subsequent oral contract; and this though the original contract is within the statute of frauds. But if the new contract is itself within the statute of frauds, it must expressly rescind the old. If the second contract is within the statute of frauds as well as the first, and is not in substitution for the first, the first contract remains in force. The distinction between the substitution of a new contract for the old, by which the old is entirely discharged, and the substitution of a new mode of performance must be kept carefully in mind. Although the second contract may not be in substitution for the first, the performance of the second contract may be ac

1 Harriman's Elements of the Law 4 Citing Noble v. Ward, L. R. 2 Ex. of Contracts, p. 284.

135; Moore v. Campbell, 10 Ex. 323. 2 Citing Taylor v. Hilary, 1 C. M. & 5 Citing Moore v. Campbell, supra; R. 741.

Whittier v. Dana, 10 Allen (Mass.), 3 Citing Goss v. Lord Nugent, 5 B. 326. & Ad. 58; Cummings v. Arnold, 3 Metc. (Mass.) 486.

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