contracts in a single day. Accordingly these two topics of the law are those with which the business man should be especially familiar. He needs to know what constitutes a binding contract, what obligations arise upon its completion, and what steps are necessary to its legal performance. While he can hardly hope to know technically about torts, he ought, if an employer of workmen, to know what obligations he undertakes as concerns their safety, and what liabilities he incurs by failing to use due care to have the instrumentalities of his business in a safe condition. It will be the object of this work to state some of the more important legal rules connected with these subjects.

We shall first consider the formation of contracts, that is, what constitutes a binding and enforceable agreement. This will be followed by a discussion of the operation of contracts, that is, the rights arising from them, and the discharge of contracts, that is, how they are ended and the rights under

them terminated.

These general principles will be followed by a discussion of the particular contracts concerning personal property,—namely, the sale, bailment, carriage, and insurance of goods, and the particular contracts concerning credit, that is, contracts creating debts, contracts of guaranty, and contracts contained in commercial paper.

Agency, the means by which one makes contracts through an employee, follows the discussion of contracts and their special forms. Here also is an excursus upon the subject of master and servant.

Business associations, such as partnerships and corporations, are next discussed.

Finally, there is a concise treatment of the subject of property, real and personal, in order to bring together some topics not treated under the head of contract.

REVIEW QUESTIONS

SECTION 1. With what is business concerned? What is included in the term business? Enumerate all the different kinds of business conducted on a specified block of a business street in your city or village.

2. Define law; common law; statute law. Who declares the common law? Where is it found? What is it based upon? What is the force of precedents? What are the two objects of statute law? Why is the law more difficult to state in America than in England?

3. Explain "business law." From what branch of the law is it mainly taken ?

4. Name two main divisions of the law. What does public law include ? What does private law include?

5. What is property? What objects and rights constitute property? What is real property? Is an estate for years real property? Is a mortgage? What two kinds of personal property? What three kinds of personal chattels? With what two kinds of property is business chiefly concerned?

6. What are legal obligations? How do they arise? Distinguish between contract obligation and tort obligation. Illustrate. Name and illustrate some torts. Explain and illustrate quasi-contracts. Explain and illustrate trusts. Explain the meaning of the term "trust" in economic discussions.

7. What is a court? a trial court? an appellate court? Describe three kinds of trial courts. Name the federal courts. What are equity courts? Do they have a jury? What is equity? What are admiralty courts? What cases do they hear? What is the United States admiralty court?

8. Describe the steps in bringing a case before a court and to trial and judgment. Explain the process of an appeal. How is a judgment enforced? What are exemptions?

PART I

THE PRINCIPLES OF CONTRACT

CHAPTER II

FORMATION OF CONTRACTS

10. Definition of contract. A contract is an agreement between two or more persons for the breach of which a court of law will give damages. There are many agreements for the breaking of which no damages can be had, either because the agreement contemplates no legal relations or because it ends in a legal relation that is enforceable only in a court of equity.

Examples: 1. B agrees to sell a watch to C for $25, and C agrees to pay B $25 for the watch. This is a contract. If B refuses to deliver the watch, C has an action at law against B for damages. If C refuses to take the watch and pay the $25, B has an action at law against C for damages. 2. D and E mutually agree that they will meet each other at a designated place and go to a football game together. This is not a contract. It contemplates social, not legal, relations.

3. F agrees with G to take G's property and invest it, receive the income, pay the income to G during his life, and divide the principal among G's children after G's death. This creates a trust. If F failed to pay over the income, G's remedy would be by suit in equity for an accounting, not at law for damages. Since the agreement is not enforceable at law, it is not a contract.

The agreement may give one party the right to demand that the other do something (affirmative contract), or it may give one party the right to demand that the other forbear from doing something (negative contract), or the same agreement may give both rights.

Example 4. B sells his dry goods business to C for $5000, and agrees not to engage in that business again in the same city. C acquires two rights: first, the right to have B transfer to him the business, and second, the right to have B forbear to enter into competition with him. For the breach of either of these terms C has an action at law for damages. (For the breach of the second he might also secure an injunction in equity, because the damages he would suffer from B's competition are so uncertain that the legal remedy is deemed inadequate; but since he may have damages at law, the agreement is a contract. Equity courts sometimes specifically enforce contracts.)

The persons making the agreement may be two or more, but they are so divided as to constitute two groups of persons.

Example 5. B sells his horse to C and D. C and D resell the horse to E, F, and G. In the first contract B is on one side and C and D jointly on the other. In the second contract C and D are on one side and E, F, and G on the other.

In some cases three parties make among them three contracts, which constitute what is called a novation.

Example 6. A owes B $100. B owes C $100. The three meet and agree that A shall pay C. B's claim on A is extinguished. B's obligation to C is extinguished. A new obligation from A to C is created. Thus there are, in effect, three contracts.

11. Essentials of enforceable contract. In order that a contract shall be enforceable, that is, one for the nonperformance of which the law will give damages, the following elements must be present: (1) an agreement; (2) by competent parties; (3) upon sufficient consideration; (4) in some cases, evidenced in a particular form; (5) for a legal object; and (6) made without mistake, fraud, undue influence, or duress.

I. AGREEMENT

12. Contracts begin in agreement. All true contracts begin with an agreement. By agreement is meant the meeting of the minds of the contracting parties in a common assent to the same definite conclusion. But the state of the mind of a party must be judged by what he says and does. He cannot definitely agree to a thing and afterwards escape upon the plea that he