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Under modern conditions of business the written memorandum of the contract of sale effected by the broker is usually to be found in a “contract note”; but the question whether, in the particular circumstances of each case, the contract note affords a sufficient memorandum in writing, depends upon a variety of considerations—e.g., whether the transaction is effected through one or through two brokers; whether the contract notes are rendered by one broker only, or by both; and, if the latter, whether exchanged between the brokers, or rendered by each broker to his own client; for under present practice any one of these methods may obtain, according to the trade in which the transaction is effected, and the nature of the particular transaction. Where one and the same broker is employed by both seller and buyer, bought and sold notes rendered in the old form provide the necessary memorandum of the contract. Where two brokers are employed, one by the seller and one by the buyer, sometimes one drops out as soon as the terms are negotiated, and the other makes out, signs, and sends to the parties the bought and sold notes. The latter thus becomes the agent of both parties for the purpose of signing the statutory memorandum, and the position is the same as if one broker only had been employed. On the other hand, if one broker does not drop out of the transaction, each broker remains to the end the agent of his own principal only, and neither becomes the agent of the other party for the purpose of signing the memorandum. In such a case it is the usual practice for the buyer’s broker to send to the seller’s broker a note of the contract,—“ I, acting on account of A. B. [or, “of my principal,”], have this day bought/rom you, acting on account of C. D. [or ‘ ‘ of your principal ”], ” —and to receive a corresponding note from the seller’s broker. Thus each of the parties receives through his own agent a memorandum signed by the other party’s agent. These contract notes, as they are called, are not “bought” and “sold” notes, as originally understood ; for the “ bought note ” proper was sent to the buyer, and ran:—“I have this day bought for you” and the sold note was sent to the seller, and ran—“ I have this day sold for you.” But they are usually known as, and serve the purpose of, ‘ ‘ bought ” and “sold’’notes. In all the above three cases the broker’s duty of compliance with all formalities necessary to make the contract of sale legally enforceable is performed, and both parties obtain a written memorandum of the contract upon which they can sue. But in certain Exchanges governed by a close association which excludes strangers from its market, all members of the association, whether brokers or merchants, are by the custom or rules of the Exchange treated as principals amongst themselves; and the bargains they make are enforced on the market by the governing body of the Exchange, whether legal formalities such as the signed memorandum are complied with or not; and it thus becomes, from the broker’s point of view, unnecessary to comply with legal requirements which are not insisted upon on the market. If he complies with the rules of the association he knows his contracts will be enforced. The domestic takes the place of the public forum. So the practice has arisen on certain Exchanges, at least in reference to certain classes of transactions, for the brokers making contracts on the market, instead of rendering to each other duly signed contract notes, merely to enter the bargain each in his own private market book. Such entries are usually checked by subsequent comparison, and bargains so made are enforced by the governing body. So long as the two brokers remain solvent, the contract is, as between them, performed on the market. In contracts for future delivery, at each periodical “settlement” up to the date of delivery, “ differences ” are paid, by one broker to other, through the clearing house of the exchange, Differences. ^the g ^ the difference between the contract price and the market price at the settlement, or between the last and the present settlement prices. When the date of delivery arrives, if the selling principal be a stranger to the market and fail to deliver, his broker is compelled by the rules of the Exchange to make good to the buying broker any loss due to a rise of the market. Similarly if the buying principal refuses to take delivery, and the market has fallen, the buying broker must make good to the selling broker the consequent loss. But when an agent receives money on his principal’s behalf, it is his duty to account for it, and the statutory requirement of a memorandum in writing does not apply to prevent a principal from suing his agent for money received to his use. Thus, so long as the two brokers remain solvent, the contract of sale, though by reason of the absence of any statutory memorandum, legally unenforceable by one principal against the other, is, in fact, indirectly enforced. But if the selling broker becomes insolvent, the seller must suffer loss ; for ex hypothesi the seller cannot enforce the contract directly against the buyer, and his remedy against his broker becomes a mere right of proof against an insolvent estate. Again, should the buying broker become insolvent, then, if the seller has employed his broker on the terms that all rules and customs of the market are to be read into the contract of employment (which question is dealt with below), the seller cannot complain that his broker has,

in conformity to those rules and customs, omitted to make for him a contract which he can enforce at law directly against the buyer; and his only right will be to recover from his broker the money which the latter receives on his account, viz., the dividends paid by the insolvent estate of the buying broker. On the principal markets it also very often happens in dealings in “futures” that one purchase may be made through several intermediate brokers, who sell first, and then buy against their contract of sale from another broker. In such a case, the first buying broker and the last selling broker are alone in direct relations with the two principals. The intermediate brokers act as principals towards each other according to the rules of the Exchange, and when their bargain is made, drop out of the transaction, usually at the next periodical settlement. Ultimately the position is precisely the same as if only two brokers had been employed from the start, and the remarks made above as to that position apply. When two brokers are employed, it is commonly the practice (except when one broker drops out, and the other signs bought and sold notes on behalf of both parties) for each broker to send to his principal a contract note, either in the form of the old bought and sold notes—“I have for you,”—or in a form which purports to make himself a principal instead of agent in relation to his client,—‘ ‘ I have this day from you-” These contract notes, though often so spoken of, are not really bought and sold notes ; for the buying broker is not the agent of the seller, and the selling broker is not the agent of the buyer, for the purpose of signing such notes. They are memoranda not of the contract of sale, but of the contract of employment, and contain the terms upon which the broker is employed by his principal. Sometimes they are accompanied by a detachable form, known as the “client’s return contract note, ” to be filled in, signed, and returned by the client; but even the “ client’s return contract note ” is retained by the client’s own broker, and is only a memorandum of the terms of employment. The following is a form of contract note rendered by a broker to his client for American cotton, bought on the Liverpool Cotton Exchange for future delivery. The client’s contract note is attached to it, and is in precisely corresponding form. American Cotton, Delivery Contract Note. Liverpool,

M Dear Sirs,

We have this day from you lbs American Cotton, net weight, to be contained in American Bales, more or less, to be delivered in Liverpool, during on the basis of per lb for on the terms of the rules, bye-laws, and Clearing House regulations of the Liverpool Cotton Association, Limited, whether endorsed hereon or not. The contract, of which this is a note, is made between ourselves and yourselves, and not by or with any person, whether disclosed or not, on whose instructions or for whose benefit the same may have been entered into. Yours faithfully, The contract, of which the above is a note, was made on the date specified, within the business hours fixed by the Liverpool Cotton Association, Limited. per cent, to us. Please confirm by signing and returning the contract attached. Primd facie, as already stated, it is the duty of a broker, employed to buy, to make with an actual seller, either direct or through another broker, a contract of sale which is QUSfom. legally enforceable at the instance of the buyer. And a usage. if the buyer did not consent to employ his broker on the terms that he should act according to the rules and customs of the market, the broker would be guilty of a breach of duty, if, in obedience to such rules or customs, he omitted to procure a statutory memorandum. Such consent may be given expressly by the client, before he instructs his broker to execute any order. He may say, “I consent to your following all the rules and customs of your Exchange and am willing to be bound by them.” In such a case the client could not complain if his broker did follow those rules and customs, and he would be bound by them, whether the rules and customs were expressed in extenso in the contract of employment, or incorporated by reference as in the above form of contract note for ‘1 delivery cotton. ” But it is also a rule of law, that trade contracts are to be construed subject to trade usages, and the contract of employment of the broker is therefore impliedly made subject to the usages of the broker’s trade, whether the client is already aware of these usages or not. This legal implication is, however, subject to the limitation,