Page images
PDF
EPUB

come succeeded by the new, and novation of parties whereby a new party is substituted for another. Novation of parties differs from assignment in that in novation there is a complete substitution of one party for another by agreement of all concerned. As where A makes a contract with B, and subsequently A, B and C agree that C shall be substituted in B's place.)

§ 173. (Contracts, Sec. 141.) Discharge by merger. (Note: A contract may be discharged because it becomes merged in to another later agreement or form of obligation. Thus oral agreements become merged in later written agreements intended to succeed them. Contract rights become merged in judgments obtained upon them.)

§ 174. (Contracts, Sec. 142.) Discharge by agreement.

(Note: The parties to a contract may discharge it by agreement. It was a rule of the common law, still followed in some jurisdictions, that a contract under seal could not be changed or modified by writing not under seal, although if the modification had been acted upon the Court would not overthrow the executed act.)

§ 175. (Contracts, Sec. 143.) Discharge in bankruptcy.

(Note: Bankruptcy discharges money indebtedness, mature or immature, provided the bankrupt obtains his Discharge in Bankruptcy. Bankruptcy operates as a breach of executory contracts where the bankruptcy makes the performance impossible, even though time of performance has not yet arrived at the term of bankruptcy.)

§ 176. (Contracts, Sec. 144.) Discharge by statute of limitations.

(Note: The policy of the law is to discourage stale claims. If one has a claim he ought to assert it while the evidence is available and the witnesses obtainable. This policy is set forth in statutes called 'statutes of limitations.' Such statutes are good defenses, regardless of the merits of the case. The statute, however, must be affirmatively pleaded. A new promise in writing may operate to start the statute running from the

date of the new promise. So keeping up interest on payments or partial payments prevents the running. The statute runs not from the inception of the contract but from the time when right to sue exists.)

CHAPTER 22

REMEDIES OF THE PARTIES

A. Action for damages.

B. Bill for specific performance.

C. Injunction against breach.

§ 177. In general.

A. Action for Damages.

§ 178. Kinds of damages in contract cases.

§ 179. Rules for computing damages in contract cases.

§ 177. (Contracts, Sec. 145.) In general.

(Note: This is usually the only relief afforded a party for breach of contract by the other. Whether he has any other possibility of relief, he always has this one, and generally he has no other.)

§ 178. (Contracts, Sec. 146.) Kinds of damages in

contract cases.

(Note: Damages are nominal, and compensatory. Nominal damages are awarded when breach is proved, but no actual damages.)

§ 179. (Contracts, Sec. 147.) Rule for computing damages in contract cases.

Case 188. Hadley v. Baxendale, 9 Exch. R. 341. Facts: Plaintiffs sued defendant as a common carrier for the breach of a contract to carry a crankshaft which was broken, and which the plaintiffs were sending to a certain person to be repaired. Breach alleged: unjustifiable delay in carrying the shaft; damages claimed: loss of profits for several days occasioned by not having the crankshaft. There was no evidence that defendant

was informed or knew that loss of profits would follow its failure to carry the goods in proper time. The judge sent the case to the jury without instructing them whether or not or upon what basis they could allow the loss of profits, and the jury returned a verdict for £50, which is £25 more than defendant admits he is liable to pay. Defendant appeals.

Point Involved: The rule of damages to govern the assessment thereof upon breach of contract. Specifically, whether, in this case, the defendant under a contract to carry plaintiffs' goods was liable, on breach of that contract, for loss of profits sustained by plaintiffs in not having such goods according to contract, defendant not being informed that loss of profits would follow.

66*

ALDERSON, B.: Now we think the proper rule in such a case as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i. e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of a breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from

such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them. Now the above principles are those by which we think the jury ought to be guided in estimating the damages arising out of any breach of contract. It is said, that other cases, such as breaches of contracts in the non-payment of money, or in the not making a good title to land, are to be treated as an exception from this, and as governed by a conventional rule. But as, in such cases, both parties must be supposed to be cognizant of that well-known rule, these cases may, we think, be more properly classed under the rule above enunciated as to cases under known special circumstances, because there both parties may reasonably be presumed to contemplate the estimation of the amount of damages according to the conventional rule. Now, in the present case if we are to apply the principles laid down, we find that the only circumstances here communicated by the plaintiffs to the defendants at the time the contract was made, were, that the article to be carried was the broken shaft of a mill, and that the plaintiffs were the millers of that mill. But how do these circumstances show reasonably that the profits of the mill must be stopped by an unreasonable delay in the delivery of the broken shaft by the carrier to the third person? Suppose the plaintiffs had another shaft in their possession put up or putting up at the time, and that they only wished to send back the broken shaft to the engineer who made it; it is clear that this would be quite consistent with the above circumstances, and yet the unreasonable delay in the delivery would have no effect upon the intermediate profits of the mill. Or, again, suppose that, at the time of the delivery to the carrier, the machinery of the mill had been in other respects defective, then, also, the same results would follow. Here it is true that the shaft was actually sent back to serve as a model for a new one, and the want of a new

« PreviousContinue »