C O N T R A C T are subject to the actual will of the parties, and are applied only for want of sufficient declaration of it by the parties themselves. A rule which can take effect against the judicially known wall of the parties is not a rule of construction or interpretation, but a positive rule of law. However artificial some rules of construction may seem, this test will always hold. In modern times the courts have avoided laying down new rules of construction, preferring to keep a free hand and deal with each case on its merits as a whole. There are certain rules of evidence which to some extent guide or restrain interpretation. In particular, oral testimony not allowed to vary the of an in agreeE vide ace. men j. is Thisterms is really aid re(juce(j to writing. of the parties’ deliberate intention, for the object of reducing terms to writing is to make them certain. There are apparent exceptions to the rule, of which the most conspicuous is the admission of evidence to show that words wrere used in a special meaning current in the place or trade in question. But they are reducible, it will be found, to applications (perhaps over-subtle in some cases) of the still more general principles that, before giving legal force to a document, we must know that it is really what it purports to be, and that when wre do give effect to it according to its terms we must be sure of what its terms really say. The rules of evidence here spoken of are modern, and have nothing to do with the archaic rule already mentioned as to the effect of a deed. Every contracting party is bound to perform his promise according to its terms, and in case of any doubt in the sense in which the other party would reasonably Perform- unqerstand the promise. Where the performance on one or both sides extends over an appreciable time, continuously or by instalments, questions may arise as to the right of either party to refuse or suspend further performance on the ground of some default on the other side. Attempts to lay down hard and fast rules on such questions are now discouraged, the aim of the courts being to give effect to the true substance and intent of the contract in every case. Nor will the court hold one part of the terms deliberately agreed to more or less material than another in modern business dealings. “ In the contracts of merchants time is of the essence,” as the Supreme Court of the United States has said in our own day. Certain ancient rules restraining the apparent literal effect of common provisions in mortgages and other instruments were in truth controlling rules of policy. New rules of this kind can be made only by legislation. Whether the parties did or did not in fact intend the obligation of a contract to be subject to unexpressed conditions is, however, a possible and not uncommon question of interpretation. One class of cases giving rise to such questions is that in which performance becomes impossible by some external cause not due to the promisor’s own fault. As to promises obviously absurd or impossible from the first, they are unenforceable only on the ground that the parties cannot have seriously meant to create a liability. For precisely the same reason, supported by the general usage and understanding of mankind, common social engagements, though they often fulfil all other requisites of a contract, have never been treated as binding in law. In all matters of contract, as we have said, the ascertained will of the parties prevails. But this means a will both lawful and free. Hence there are limits to the esa y ‘ ‘ force of the general rule, fixed partly by the law of the land, which is above individual will and interests, partly by the need of securing good faith and justice between the parties themselves against fraud or misadventure. Agreements cannot be enforced when their performance would involve an offence against the law.
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There may be legal offence, it must be remembered, not only in acts commonly recognized as criminal, disloyal, or immoral, but in the breach or non-observance of positive regulations made by the Legislature, or persons having statutory authority, for a great variety of purposes. It would be useless to give details on the subject here. Again, there are cases where an agreement may be made and performed without offending the law, but on grounds of 11 public policy ” it is not thought right that the performance should be a matter of legal obligation, even if the ordinary conditions of an enforceable contract are satisfied. A man may bet, in private at any rate, if he likes, and pay or receive as the event may be; but for many years the winner has had no right of action against the loser. Unfortunate timidity on the part of the judges, who attempted to draw distinctions instead of saying boldly that they would not entertain actions on wagers of any kind, threw this topic into the domain of legislation; and the laudable desire of Parliament to discourage gambling, so far as might be, without attempting impossible prohibitions, has brought the law to a state of ludicrous complexity in both civil and criminal jurisdiction. But what is really important under this doctrine of public policy is the confinement of “contracts in restraint of trade” within special limits. In the Middle Ages and down to modern times there was a strong feeling—not merely an artificial legal doctrine — against monopolies and everything tending to monopoly. Agreements to keep up prices or not to compete were regarded as criminal. Gradually it was found that some kind of limited security against competition must be allowed if such transactions as the sale of a going concern with its goodwill, or the retirement of partners from a continuing firm, or the employment of confidential servants in matters involving trade secrets, were to be carried on to the satisfaction of the parties. Attempts to lay down fixed rules in these matters were made from time to time, but they were finally discredited by the decision of the House of Lords in the Maxim-Nordenfelt Company’s case in 1894. Contracts “ in restraint of trade ” will now be held valid, provided that they are made for valuable consideration (this even if they are made by deed), and do not go beyond what can be thought reasonable for the protection of the interests concerned, and are not injurious to the public. (The Indian Contract Act, passed in 1872, has unfortunately embodied views now obsolete, and remains unamended.) All that remains of the old rules in England is the necessity of valuable consideration, whatever be the form of the contract, and a strong presumption—but not an absolute rule of law—that an unqualified agreement not to carry on a particular business is not reasonable. Where there is no reason in the nature of the contract for not enforcing it, the consent of a contracting party may still not be binding on him because not prautf given with due knowledge, or, if he is in a relation of dependence to the other party, with independent judgment, Inducing a man by deceit to enter into a contract may always be treated by the deceived party as a ground for avoiding his obligation, if he does so within a reasonable time after discovering the truth, and, in particular, before any innocent third person has acquired rights for value on the faith of the contract (see Fraud). Coercion would be treated on principle in the same way as fraud, but such cases hardly occur in modern times. There is a kind of moral domination, however, which our courts watch with the utmost jealousy, and repress under the name of “ undue influence ” when it is used to obtain pecuniary advantage. Persons in a position of legal or practical authority — guardians, confidential advisers, spiritual directors, and the like—must not abuse their
