RESCISSION OR MODIFICATION OF CONTRACT. SECTION 51. MUTUAL CONSENT. The right to rescind or modify a contract of sale, the terms of which have previously been arranged, is always open to the parties whether the contract is executed, or executory merely. Mere abandonment of the sale, by mutual agreement, is sufficient to discharge an executory contract. A contract executed as to one of the parties only, can only be discharged by performance by the other party, or by release under seal, or by an agreement supported by a proper consideration to release the party who has not performed his part of the agreement. It is competent however, for the parties to substitute a new agreement in place of the original contract; the general rules as to the right to rescind the contract apply to the right to rescind in a contract of sale. SECTION 52. SELLER'S RIGHT TO RESCIND. In addition to the right of the seller to rescind the contract, where the contract by its terms gives the right, the seller may also rescind upon any of the grounds upon which contracts generally may be rescinded. This includes the right to rescind, on the ground of fraud, where the buyer obtains possession of goods by false representation, as to his solvency, or financial condition, or by other fraudulent representations, material to the contract,1 or by the buyer's concealment of his insolvency. It is true, also, that 1 Smith vs. Countryman, 30 N. Y., 655. what would ordinarily interfere with reality of consent, would likewise affect the contract of sale, so if the consent was given under a mistake of fact, or delivery made under duress, the seller may show these things as ground for relief. Mere insolvency of the buyer alone is not sufficient ground for rescission of a contract by the seller. Where the contract is executory, the seller may rescind where he learns that the buyer intends to use the goods for an illegal purpose. So, as long as the contract remains executory, any breach of contract by the buyer would ordinarily be sufficient to give authority to the seller to exercise the right to rescind, as for instance, a wrongful refusal of the buyer to accept the goods.3 As a proper condition for the exercise of the right to rescission, the law demands of the seller that he return the consideration received from the buyer, or offer to return the consideration. If the seller sees fit to avail himself of the right to rescind, the law demands that he act promptly, after notice of the fact that gives him the right to rescind, is brought home to him. SECTION 53. BUYER'S RIGHT TO RESCIND. The buyer may also exercise the right to rescind the contract of sale, in accordance with the original terms of the sale where the terms of the contract contain such a privilege. So the buyer may elect to rescind the contract of right, on discovery of fraud on the seller's part, in inducing the contract. The buyer may also reject the goods where they do not meet the conditions of the contract if the contract is still an executory one.* 2 Cowan vs. Milburn, L. R., 2 Exch., 230. 3 9 Flynn vs. Ledger, 48 Hun (N. Y.), 465. Wolf vs. Dietzsch, 75 Ill., 205. It is the general rule of law that the buyer may not rescind an executed sale for mere breach of warranty, but rescission is permitted even of an executed sale in some states for a mere breach of warranty, the latter holding is called the Massachusetts rule." The buyer may also rescind where there is a failure of consideration, or where the contract is made under a mistake of fact, or where to perform the contract would be to do something illegal. The general principles of contract law apply. Any act by the seller showing a repudiation of the contract would give the buyer the right to rescind. The buyer is, however, governed by the same rules that govern the seller in the exercise of the right to rescind the contract. The election of the right to rescind upon the part of the buyer is properly shown, by giving notice to the seller of the intention to rescind with an offer to return the goods, or by showing that the goods are held subject to the seller's orders. 'Bryant vs. Isburgh, 13 Gray, 607 • Hamilton vs. McAlister, 49 S. Car., 230. PROTECTION AFFORDED BONA FIDE PURCHASERS. SECTION 54. IN GENERAL. The general rule is, that where goods are sold by one who himself has no title to the same, or who has no authority to sell, as the agent of the owner, that the sale is invalid as against the right of the true owner.1 So where stolen goods are purchased the buyer can acquire no title from the thief, even if he buys in good faith, because the thief has no title to convey; the owner may, moreover, recover his property wherever he finds it. But there are cases where one who buys in good faith and as a bona fide purchaser, will be protected. Where the purchaser buys of an assumed agent, in good faith, and on the holding out of the owner that the agent is apparently possessed of authority to sell, the purchaser will be protected. This would be holding the principal on the ground of estoppel. So the law will protect the purchaser where the owner stands by, and in silence permits another to buy his property from some one who appears to be the owner, for to hold otherwise, in face of the conduct of the owner, would be to aid in perpetrating a fraud on the innocent buyer. One who fails to speak his rights, where silence on his part will tend to bring injury to one thereby, is precluded thereafter from asserting his own rights in the premises, as the law will then compel him to continue his silence." Ventress vs. Smith, 10 Pet., 175. Stewart vs. Munford, 91 Ill., 58. |