Problem 18. B writes to C, "If you will extend the time which A has to pay you his debt, I will become surety for A's payment." C extends the time and takes from A a new note on three months' time. A does not pay. C sues B.

Problem 19. B and C were in dispute about a claim made by C upon B for an injury to goods which B was carrying for C. B finally agreed to give and C to take one half the amount C first claimed. C sues on B's promise. B answers that there was no consideration for his promise because he (B) was not liable at all to C for the injury to the goods.

Problem 20. C was a constable in A. B offered a reward of $100 for the arrest of X for a specified crime. C, knowing of the reward, arrested X in A, and now brings an action for the reward. What objection?

20. What is meant by a past consideration? Distinguish from an executed consideration. Illustrate. Effect of previous request? What is meant by waiving a legal bar to an action on a contract?

Problem 21. B says to C, "If you will look up certain of my debtors, I will pay you what is right." C does so. B then promises to pay C $100. How much may C recover?

21. What is meant by an illegal consideration? Illustrate.

22. What is the Statute of Frauds? Object? When first enacted? What sections deal with contracts? State the provisions of the fourth section. Of what may the memorandum consist? What must it contain? State the provisions of the seventeenth section. In what three ways may this section be satisfied? Is the seventeenth section in force in your state? If so, what contracts for personalty are within the statute? Problem 22. A memorandum of sale made by an auctioneer read as follows:

Oct. 9, 1866. This day sold B's house and land on Bartlett Street in Lewiston; was struck down to C for $1200, one third down. D. E., Auctioneer.

C sues B, alleging he (C) was to pay one third down, one third in one year, and one third in two years, and that B refused to carry out the contract. B pleads the Statute of Frauds.

Problem 23. B sells C by parol two standing trees for $10. Afterwards B refuses to allow C to cut the trees. C sues B for breach of contract. B pleads the Statute of Frauds. Result?

Problem 24. B. Ry. and C agree orally that if C will grade and lay a side track or switch, the Ry. will maintain the switch for C's benefit for shipping purposes as long as C may need it. C does his part. The B. Ry. refuses to perform its part. C brings an action for damages. Statute of Frauds. Which provision? Result?

The Ry. pleads the

23. What is a seal? What is a sealed contract? What is the effect of a seal? What statutory changes in the effect of a seal?

24. What contracts are usually declared by statute to be illegal? What is the effect of prohibiting an act? What is the effect of affixing a penalty to the doing of an act?

Problem 25. A statute prohibits any work, labor, or business on Sunday. C agrees with B to procure advertisements to be published in B's Sunday newspaper. Is this contract illegal?

Problem 26. Under a similar statute B makes and delivers a promissory note to C on Sunday. May C enforce the note?

25. Define wagering contracts. Were they illegal at common law? Explain wagers on the rise and fall of the market. In what sense are insurance contracts wagering contracts?

Problem 27. C, a broker, sues B, a customer, for moneys paid and expended by C in certain stock transactions. It was understood between C and B that the purchases and sales made by C for B should not result in an actual transfer of stocks, but that in each case the contract should be adjusted by the payment of money by B in case the transaction proved to be a losing one, or to B in case it was a winning one. C paid out for B more than he took in for him. Can C recover this amount?

26. Enumerate and illustrate contracts illegal at common law. What is a contract in restraint of trade? Are all such contracts illegal? What is the test?

Problem 28. B had a claim against the United States. C agreed with B to secure an act of Congress appropriating money for the payment of the claim, and B agreed to pay C 25% of whatever sum Congress might appropriate. C secured an appropriation in favor of B for $12,000. B refuses to pay C, who then brings an action against him for $3000.

Problem 29. C charges B with embezzlement. Upon C's agreeing not to prosecute B criminally, the latter gives C a promissory note for the amount. Is B liable upon the note?

27. What is an indivisible contract? What is the effect if any portion of it is illegal? What is a divisible contract? What is the effect if one part is illegal? If a party pays money upon an illegal contract, can he recover it?

Problem 30. C deposited $500 with B as a wager on a foot race, knowing it was to be a "bogus race," and intending to overreach some one. Before the race was run C became suspicious that he would be overreached, and demanded back his money. B refused to give it back, and finally paid it to A, the pretended winner of the race. C sues B for the amount. Result?

28. What is meant by reality of consent? What will prevent reality of consent? Distinguish between mutual and unilateral mistake. Name the classes of mutual mistake. Explain and illustrate each. Which will avoid a contract? When will unilateral mistakes avoid a contract?

Problem 31. Contract of sale of a lot of land on Prospect Street in Waltham. In an action against the buyer for the price he sets up that the land now tendered him is on another Prospect Street than the one he had in mind, and understood that the seller had in mind, when the contract was made. Is this a good defense?

Problem 32. C. Ry. prepares a rate sheet and by mistake prints the fare from A to D as $21.25 when it should be $36.70. B discovers the mistake and takes advantage of it by at once purchasing of a local agent a large number of tickets at the printed price. C. Ry. seeks to enjoin B from disposing of these tickets and to compel him to return them and receive back his money. Result?

29. Define fraud and its effect upon the contract. Distinguish innocent misrepresentation. Is this a tort? Will it avoid a contract? When does a representation become a warranty? What is the effect of a representation of opinion? What is fraudulent concealment ?

Problem 33. B had engaged S to teach school in District A in case she secured a certificate by a certain time. C applied for the same school, and on being informed of the contract with S, stated to B that there would be no examination for teachers in time for the opening of school. B then engaged C. Later S appeared with the necessary certificate and B refused to allow C to teach. C sues B for breach of contract. (a) In case C knew there would be an examination can he recover? (b) In case C believed there would not be an examination can he recover?

Problem 34. C sold B cattle knowing they had Texas fever, a disease not discoverable by examination, and concealing the fact. The cattle died, and C sues for the price.

30. Define duress. Need it be against the contracting party?

31. What is undue influence? Distinguish from duress. When is it presumed?

Draw a contract by which you agree to work for John Doe as clerk in his store for one year with a vacation of two weeks, for $10 a week payable weekly, and are to have at cost price such goods, not exceeding $100 in the aggregate, as you may choose to select from his stock.

Draw a contract by which Richard Roe guaranties the faithful performance of your part of the above contract.

Draw an assignment of your right to the goods.

CHAPTER III

OPERATION AND DISCHARGE OF CONTRACTS

I. LIABILITIES AND RIGHTS OF THIRD PARTIES.

32. Liability of third parties. The problem here is twofold: first, whether any one can be made liable upon a contract who is not a party to it; and second, whether one may be liable for interfering with the formation or performance of contracts.

(a) Contracts bind only the parties to them. A person cannot be made liable upon a contract to which he was not a party, for agreement lies at the basis of all true contracts. But an undisclosed principal may be liable on a contract made by his agent, although by its terms it is a contract between the agent and the other party; this is an exception to the general rule, and is treated later (see sec. 129).

Examples: 1. A contracts with B. In fact A is acting for an undisclosed principal P. When B learns this he may hold P liable on the contract.

2. But if A, as above, exceeds the authority P gave him, B cannot hold P. It is really P's consent that A may make the contract that renders P liable.

(b) Third persons may render themselves liable in tort by interfering with contracts, by inducing one party to a contract to commit a breach of it, or by using unlawful means to prevent a person from making a contract. A boycott is brought about by inducing persons not to deal with the one boycotted. If force or fraud is used, the boycott becomes unlawful.

Examples: 3. A engages B to sing at his theater for the season. X induces B to break this contract and sing at X's theater. X is liable to A for the damages caused by B's breach of contract.

4. A is negotiating with B to sing at his theater. X falsely tells B that A is insolvent and cannot pay the salary. B refuses to contract. X is liable in tort to A for inducing B, by false representations, not to enter into a contract with A.

5. Strikers threaten to assault workmen who are seeking their places, and thus prevent the employer from getting new workmen. The strikers are liable to the employer for preventing him by unlawful means (threats of violence) from making contracts with those who otherwise would apply. The strikers may also be enjoined from using unlawful means for this purpose. If the strikers also keep customers away by such means, there is an unlawful boycott of the employer's business.

33. Rights of third parties. In most of the United States, but not in England or Massachusetts, if a contract is made by A with B for the direct benefit of C, the latter may recover upon it, although A furnished the consideration and the promise of B was made to A. This is especially so whenever A owes C some duty which he is seeking to discharge by giving C the benefit of B's promise. So also an undisclosed principal may sue upon a contract made by his agent in his behalf.

Examples: 1. A lends B money and B promises A to repay it to C to whom A owes money. C may maintain an action against B upon the promise made for his benefit.

2. An incoming partner promises an outgoing partner to assume and pay the latter's obligations to the partnership creditors. The creditors may sue the incoming partner upon the promise made for their benefit.

3. A father agrees to name his child after B, in consideration of B's promise to pay the child $1000 when he is twenty-one. The father names the child after B. When the child is twenty-one he may compel B to pay him the money so promised.

4. A contracts with B, but is secretly acting for P, an undisclosed principal. P may hold B upon the contract.

II. ASSIGNMENT OF CONTRACTS

34. Assignment by act of the parties. A bilateral contract creates both liabilities and rights. The problem is whether either the liabilities or the rights may be assigned by a party to the contract to some other person.

1. Assignment of liabilities. A party to a contract cannot assign · or transfer his liabilities under it. The other party has a right to look to the person with whom he has contracted. One could assign his rights and delegate the performance of his duties, but would remain liable if they were not properly performed.