s. 1. Assignment of Contract. No assignment of personal contracts. British Waggon Co. v. Lea. CH. XXVI. In British Waggon Co. v. Lea (y) the rule is stated to be "that where a person contracts with another to do work or perform service, and it can be inferred that the person employed has been selected with reference to his individual skill, competency or other personal qualification, the inability or unwillingness of the party so employed to execute the work or perform the service is a sufficient answer to any demand by a stranger to the original contract of the performance of it by the other party, and entitles the latter to treat the contract as at an end, notwithstanding that the party tendered to take the place of the contracting party may be equally well qualified to do the service." In that case, however, the Court not only held the particular contract before them -for repair of waggons-to be assignable, but intimated an opinion in favour of extending rather than narrowing the assignability of contracts. Assignment of "benefit of pending contracts." Assignability by old to new company. case. Under a purchase of the full benefit of all pending contracts and engagements and of all other property to which the vendors are or may be entitled in connection with a journal, it has been held that the purchasers took the burden of pending contracts, and did not merely acquire an option to take the benefit of the contracts (z). A contract for the supply of 750 tons of chalk for 50 years, or for 35 years at least if the supply should fail, is an The Tolhurst assignable contract; so that if a company so contracted with transfers its business to a new company, such new company is entitled to the benefit of the contract, although the business of the company contracted with was very small, and the business of the new company very large (a). So it was held by the House of Lords in Tolhurst v. Portland Cement Manufacturers (a). Continuing liability of assignor of unbroken contract. Without a novation as described below, it is conceived that the liability of the assignor of an unbroken contract continues notwithstanding the assignment. Take for instance the common case of a contract to supply goods or materials on the one hand over a certain period at fixed dates and to pay for them on the other, and an assignment by sale by the supplying party of his whole business including that contract to a limited company. From Tolhurst v. Portland Cement Co., it appears that the mere assignment has the effect of binding the party contracting for the supplies to take them from the company and to pay the company 12 Q. B. 310. The Scots law is simi- (y) British Waggon Co. v. Lea (1880), (z) Bowater v. Mirror of Life: Topical Times Co., Third Parties (1902), 50 (a) Tolhurst v. Portland Cement Manufacturers, [1903] A. C. 414, affirming [1902] 2 K. B. 660, C. A., and reversing Mathew, J., [1901] 2 K. B. 811. s. 1. Assignment of Contract. for them instead of the assignor, with whom he originally con- CH. XXVI. tracted. But can the assignor go a step further, and maintain that by assignment all his liability is gone, and the contract, quá him, discharged, so that in event of default by the assignee company (which may possibly have gone into liquidation) the original contractor cannot sue the assignor? The law seems to be clear that the assignor cannot thus get rid of his contractual obligations (b). SECT. 2.-Novation. There is no doubt that with the consent of both contracting Novation. parties all contracts of any kind may be transferred, and the term "novation" has been introduced from the Roman Law to describe this species of transfer. Novation is where the two contracting parties agree that a third shall stand in the relation of either of them to the other. Most, if not all, the instances of it in English Law have arisen, either out of the amalgamation of insurance companies, or of changes in partnership firms, the questions being whether as a matter of fact the assured or the party contracting with a firm accepted the new company or the new firm as their debtor in the place of the old company or the old firm (c). This acceptance, which is the essence of novation, may be inferred from acts and conduct, but ordinarily it is not to be inferred from conduct without some distinct request (d). Where a firm consisted of two partners, and one died, the acceptance by a customer from the surviving partner in a bank, of a fresh deposit note for a balance of a debt due from a firm, has been held not sufficient evidence of novation to discharge the estate of the deceased partner (e). In regard to life insurance, it is enacted by sect. 7 of the Life Life policies. Assurance Companies Act, 1872, 35 & 36 Vict. c. 41, that Requirement of writing. where a life insurance company transfers its business to another company, no policy-holder shall be deemed to have abandoned his claim against the transferor company, or to have accepted in lieu thereof the liability of the transferee company, unless such abandonment and acceptance have been signified by some writing signed by him or by his agent lawfully authorised." (b) See per Lord Lindley in Tolhurst v. Portland Cement Manufacturers, [1903] A. C., at p. 424. (c) See Wilson v. Lloyd (1873), L. R., 16 Eq. 60; Bouvier's Law Dict., tit. "Novation"; Buckley on Companies. 66 (d) European Assurance Association Society Arbitration Acts, In re, Conquest's case (1875), 1 Ch. D. 334. (e) Head, In re, Head v. Head, [1893] 3 Ch. 426, per Chitty, J. CH. XXVI. s. 3. Devolution. Devolution on executors. No devolution of personal contracts. Devolution on bankruptcy. SECT. 3.-Devolution. Under devolution or assignment by operation of law to executors or administrators, a larger number of contracts pass to a party not originally contracting than under assignment with notice without consent or novation with consent during the lives of the contracting parties. No notice or consent is required; the executors or administrators of a party are bound as a general rule, so far as his assets will extend, to perform all his contracts though not named therein (ƒ), and they can also sue the party with whom he contracted. They are personally liable on the contracts of a lessee to repair, but not on his contract to pay rent (g). A tenancy from year to year devolves upon them, and they must give or receive notice to quit at the end of the current year of the tenancy (after the expiration of which notice, and not until then, they will be freed from the obligations of the tenant), or else they will be considered to be continuing tenants (h). Personal contracts, however, do not devolve upon executors. Of this nature are-a contract to marry, a contract of service, and a contract for the exercise of personal skill, as to write a book, or paint a picture (i). The devolution of contracts in case of the bankruptcy of either of the parties by sect. 50, sub-sect. 5, of the Bankruptcy Act, 1883, to which we have already referred (ante, p. 721 et seq.), is subject to further elaborate provisions under sect. 55 of the same Act for the "disclaimer" of onerous contracts in the manner therein mentioned. (f) Williams v. Burrell (1845), 1 C. B. 402; Wills v. Murray (1850), 4 Ex. 843, at p. 865; and see Ch. IX., sect. 10. (g) See Woodfall, L. & T., Ch. VII., sect. 10, and ante, p. 285. (h) See Doe v. Wood (1845), 14 M. & W. 682. (i) See Farrow v. Wilson (1869), L. R., 4 C. P. 744, and ante, p. 504, where it was held that a contract to serve as farm bailiff at weekly wages with certain bonus and a residence in a farm house, the service to be determinable by six months' notice or payment of six months' wages, was held not to be enforceable against the personal representative of the employer. CHAPTER XXVII. THE RECTIFICATION OF CONTRACTS. mistake. IT has long been an established rule of equity, that where a Rectification contract has by reason of a mistake common (a) to the contracting of contract on ground parties been drawn up to an effect militating against the intentions of common of both, the Court will rectify the contract so as to carry out such intentions (b). It is essential that the extent of the rectification should be clearly ascertained and defined by evidence contemporaneous with or anterior to the contract (c). The mistake may be proved by oral, in the proved absence of written evidence (d), and the burden of proof is on the party seeking rectification (e). contract must be shown. Sea policy not rectified into with "slip." accordance A plaintiff must show that there was an actually concluded con- Concluded tract, which is inaccurately represented to be the instrument purporting to be made in pursuance of it (ƒ). "Courts of equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pursuance of the terms of contracts." Therefore, in Mackenzie v. Coulson, James, V.-C., declined to rectify a policy of marine insurance (by inserting the words "free from particular average in lieu of the words " recoverable as customary") so as to make it accord with "a thing called a slip, which was a piece of paper on which something was written, pending a negotiation for the effecting of a policy of insurance" (g). average Mackenzie v. Coulson. be of fact. As a general rule, the mistake must be one of fact not law (h), Mistake must or of construction of the contract sought to be rectified (i), but this rule does not apply to a mistake as to title or private right (k). Where the mistake is that of one party only, the remedy, if Cancellation grantable, is cancellation, not rectification; but the convenient where mis (a) Fowler v. Fowler (1859), 4 De G. & J. 250; Duke of Sutherland v. Heathcote, [1892] 1 Ch., at p. 486, C. A. (b) See Cooper v. Phibbs (1867), L. R., 2 H. L. 149; as to disentailing deed enrolled under the Fines and Recoveries Act, see Hall-Dare v. Hall-Dare (1885), 31 Ch. D. 251, C. A. (c) Bradford (Earl) v. Romney (Earl) (1862), 30 Beav. 431. (d) Lackersteen v. Lackersteen (1860), 30 L. J., Ch. 5. (e) Tucker v. Bennett (1887), 38 Ch. D. 1, C. A. (f) See Seton on Decrees, Vol. II., Pt. 1, p. 1342, citing Mackenzie v. Coulson, infra; Bentley v. Mackay (1862), 31 L. J., Ch. 697, 709, App. (g) Mackenzie v. Coulson (1869), L. R., (h) Midland G. W. Rail. Co. v. Johnson (k) Cooper v. Phibbs (1867), L. R., 2 take of one party only. CH. XXVII. course may be adopted in such a case of decreeing cancellation Rectification with an option to the defendant to accept rectification instead. of Contracts. This course was taken by Bacon, V.-C., in Paget v. Marshall (1), Cancellation with option of in which the defendant by mistake had offered and demised to the rectification. defendant, four floors of three houses, whereas he had intended to Paget v. reserve for his own use the first floor of one of the houses. Marshall. Corrections of clerical errors. Other instances of rectification. Parties must be restored to former position. Rectification barred by payment of money under judgment. Effect of passing over without attention one of many clauses. It had previously been taken in a case where it was laid down that the rule that a mistake must be mutual to enable the Court to rectify, is subject to the exception that the Court will interfere where one party being at the time cognizant of the fact of the error, seeks to take advantage of it. This was in Garrard v. Franckel (m). There the defendant agreed to take from the plaintiff a lease of a house at the rent of 230l., and in the lease drawn up in pursuance of the agreement, the rent was stated to be 130. Lord Romilly, M.R., considered that the error was the plaintiff's, but that the defendant must have perceived it, and held that though the plaintiff was not entitled to have the lease reformed the lessee ought to have the option of taking the reformed lease or of rejecting it. The reader has been already referred (ante, pp. 86, 97) to a series of cases in which the Courts of Common Law have corrected clerical errors; and also (ante, pp. 86, 97) to cases in which parol evidence has been admitted to explain latent ambiguities. The Court has rectified a bill of exchange (n), a transfer of shares wrongly numbered (o), a bill of quantities (p), and very frequently marriage settlements (q). Rectification will be refused if the parties cannot be restored to the same position which they occupied prior to the contract sought to be rectified; but this rule will not be applied so strictly as to include an exact restoration (r). After money has been paid under a judgment founded on the construction of an agreement, an action to rectify the agreement on the ground that such construction was contrary to the intention of all parties is barred (8). It may frequently happen in the course of a protracted negotiation over a series of clauses, that one of them, put forward by one party, may be technically assented to by the other without any consideration whatever, but the single fact of there being no discussion (1) Paget v. Marshall (1884), 28 Ch. D. 255. (m) Garrard v. Franckel (1862), 30 Beav. 445. (n) Druiff v. Lord Parker (1858), L. R., (0) Ind's case (1872), L. R., 7 Ch. 485. 17 W. R. 871. (g) See Bold v. Hutchinson (1855), 5 D. M. & G. 568; Seton on Decrees, Vol. II., Pt. 1, p. 1233. (r) Beauchamp (Earl) v. Winn (1873), L. R., 6 H. L. 223. (s) Caird v. Moss (1886), 33 Ch. D. 22, C. A. |