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It has been the author's purpose to present to the profession, in the following pages, a complete and comprehensive discussion of the rules and principles governing the rescission of contracts and the cancellation of written instruments, and to illustrate these rules and their application to the multifarious transactions of modern business life by references to the many thousands of cases which have dealt with one or more aspects of the general subject.
The first part of the work, extending from Chapter I to Chapter XIV, contains a detailed examination of the various causes or grounds which justify the rescission or repudiation of a contract by one of the parties to it, or which warrant a court in ordering its annulment or cancellation. This has involved an exhaustive consideration of the more usual subjects of fraud, misrepresentation, and mistake, but the exposition of the grounds of rescission has also been made to include the subjects of want, failure, or inadequacy of consideration, deficiency in the quantity or quality of the subject-matter, failure, refusal, or impossibility of performance, duress and undue influence, insanity and intoxication, infancy, illegality or immorality in the subject of the contract, and the bankruptcy or insolvency of a party.
The second part of the book, including Chapters XV to XXVI, consists of a minute application of the general rules and principles to various classes of contracts. Here the discussion is not general but specific. The various kinds of contracts are taken up in succession, and their rescission or cancellation examined, with special reference to the inherent peculiarities and legal aspects of each. Thus are passed in review executed and executory contracts, the contracts of governments and municipal corporations, maritime contracts, contracts of brokerage and agency, of suretyship and guaranty, partnership agreements, engagements of marriage, the executed contract of marriage, subscriptions to corporate stock, subscriptions to charities and to business enterprises, contracts for work or hire of services, the tenure of public and private office, express trusts and settlements, licenses, contracts of release, compromise, and settlement, notes and bills, sales of personal property, the sale and exchange of real estate, judicial and other public sales, leases of realty, mining contracts and leases, policies of insurance, and gifts and donations.
The third division of the work, occupying Chapters XXVII to XLI, deals with the adjective or administrative law of rescission, or the general subject of when and how it may be effected. Herein are considered the effect of a reservation of the right to rescind, the manner of effecting a rescission by the mutual consent of the parties, the time within which a justifiable rescission must be claimed and the effect of laches or unreasonable delay, the grounds on which a defense of waiver, estoppel, or ratification may be set up, the persons entitled to rescind, the conditions precedent which they must observe, the circumstances which determine whether a rescission must be entire or may be partial, the subject of restitution or the restoration of the status quo, and the effect of intervening rights of third persons. Finally, the proceedings for rescission by the order or decree of a court are considered in detail, including the questions of jurisdiction, and of the justification for the interference of a court of equity, and also the parties to the action, the pleadings, practice, and evidence, the judgment or decree, and the operation and effect of a rescission thus brought about.
No major subject of the law can be said to have reached a stage of crystallization, with all its rules immutably set, at any given time. Necessarily the law must grow, by taking cognizance of new conditions and new problems, in keeping pace with the development of industrial and commercial life. But if its growth is to be real and vital, it must also expand from within. Gradually it must free itself from the shackles of convention, and bring its pronouncements into accord with the evolution of the social conscience and the progress of a new and more enlightened morality. The subject of rescinding and canceling contracts and other business engagements is no exception to this principle. On the contrary, it would not be easy to find a more perfect example of it than is afforded by the gradual but sure triumph of the humane and sensible doctrines of equity over the inflexible rules of the common law, as applied to contracts induced by fraud and falsity. In such cases, the Procrustean standard of the ancient law, which refused all relief to the unhappy suitor unless he could show that he had exercised “due care and diligence" to avoid being cheated, or that his conduct had been that of a "reasonably prudent man," was absurd, because it is precisely the credulous and unwary who are the easy victims of fraud and who need the protection of the courts. But now, fortunately, this outworn notion has almost everywhere given place to the better rule which we may venture to call the "doctrine of comparative intelligence,”—a doctrine which moves the courts to probe the circumstances of each particular case, instead of judging all by a hardand-fast rule, which allows no advantage to a trickster because of his superior cunning, and no disadvantage to a dupe because of his careless or confiding nature or his lack of experience or shrewdness, which exacts of a defrauded person no higher degree of care or prudence than he, as an individual, might fairly have been expected to exercise, and which severely discountenances the sharper's plea that the man he has wronged was negligent in failing to detect the trick,-a doctrine, in short, which teaches, as observed by the Supreme Court of Vermont, that "no rogue should enjoy his ill-gotten plunder for the simple reason that his victim is by chance a fool."