is no more," to use the words of Abbott, C. J., " than an attempt to evade the provisions of a most beneficial act of parliament, and may produce great injustice; for what can be more unconscientious than that a party who is only damnified to the extent of 57. should, notwithstanding that fact, be permitted to recover 1007. ?" (d) It has accordingly been laid down as a principle of law, that "wherever the payment of a smaller sum is secured by a larger, the latter must always be considered as a penalty." (e) In questions influencing and affecting the personal feelings and affections and the enjoyment of property, the extent of the injury is so uncertain that a considerable latitude must and ought to be allowed to the parties in measuring it by a pecuniary standard and fixing the amount of damages; but even here there must be a limit which cannot in reason and truth be transgressed, and if the sum agreed upon plainly and palpably exceeds any injury that can by any possibility have resulted from the non-performance of the thing stipulated to be done, that sum is in reality and in principle a penalty. The stat. Wm. 3 is, as previously mentioned, remedial measure, intended to benefit defendants and moderate the rigour of the common law, and whenever a sum stipulated to be paid as a compensation for a breach of contract, far transcends anything that can reasonably be called a compensation, the defendant, who is called upon to pay the unconscionable demand, is justly entitled to the relief intended to be provided by the legislature. The French law, respecting the reduction and apportionment of penalties, is not unworthy of attention. Pothier, in his Treatise on the Law of Obligations, after telling us that, "la peine stipulé en cas d'inexcution d'une obligation peut, lorsqu'elle est excessive, être reduit et modéré par le juge,” (ƒ) remarks, that although a penalty or sum in solido is agreed to be paid for the very purpose of avoiding a discussion as to the amount of damages that have been sustained, yet being stipulated in lieu of damages, it is contrary to its nature to be carried beyond the limits which the law respecting damages prescribes, and as the (French) law does not permit them to exceed double the value of the subject matter of the contract, the judge ought to moderate an excessive penalty to which the one party has inconsiderately submitted, when the other has suffered no real injury, or one much below the amount stipulated to be paid. The party making default cannot (d) Abbott, C. J., Pinkerton v. Caslon, 2 B. & Ald. 706. (e) Chambre, J., Astley v. Weldon, 2 B. & P. 354. (f) Pothier, part 2, ch. 5, cinquième principe, ed. Dupin 1, p. 191. certainly, he observes, however excessive the sum agreed to be paid may be, dispute his having intended to oblige himself to the extent named, when the clause of the contract is express to that effect, for ubi est evidens voluntas, non relinquitur præsumptioni locus; but he may have entered into the contract, in the first instance, with the most perfect honesty of intention, and a firm determination to carry it fully and completely into effect, but with an erroneous confidence in his own powers of performance, and the equity which ought to prevail in all mutual contracts entered into for the common benefit of both parties, does not permit the one to make a profit and unconscientiously to enrich himself at the expense of the other. An excessive penalty or fixed sum, agreed to be paid in lieu of damages, ought therefore, he says, to be reduced to what the damages, resulting from the non-performance of the contract, amount to at the very highest. (g) If again, he observes, a penalty has been imposed, or a sum in solido agreed to be paid as the ascertained damage, resulting from a breach of contract, and such contract has been partially performed, the party ought not to receive the whole penalty, peine n'est due qu'a proportion, et quant a la parte pour laquelle l'obligation principale n'est pas executé." Ulpian decides that, although in strictness of law, the whole penalty has been incurred; nevertheless it is equitable that it should be so, only in proportion to the part of the principal obligation which remains to be performed, the true reason being that the penalty or liquidated sum being considered as a compensation for the non-performance of the principal obligation, the party seeking to enforce the contract cannot have both the one and the other. In omnibus, sive individuis, sive dividuis, pæna non committitur, nisi pro parte contraventionis efficacis, nec potest exigi cum principali; sed creditor non tenetur partem principalis, et partem pænæ accipere. (h) (g) Cette décision doit avoir lieu dans les contrats commutatifs, parce que l'equité, qui doit regner dans ces contrats, ne permettant pas que l'une des parties profite et s'enrichisse aux depens de l'autre, il serait contraire a cette èquité que le créancier s'enrichit aux depens du débiteur, en exigeant de lui une peine trop excessive et trop manifestement au dessus de ce qu'il a souffert de l'inexécution de l'obligation primitive. p. 192. (h) Dumoulin de divid. et individ., p. 3, n. 112. 183 CHAPTER VI. OF CONDITIONS PRECEDENT TO THE RIGHT OF ACTION EX CONTRACTU. SECTION I.-Deeds—Of conditional and qualified obligations and covenants-Mutual covenants inter partes-Contracts under seal founded upon a mutuality of obligation - When the entire performance of a covenant on the one side is a condition precedent to any liability on the other-Covenants for the performance of divers acts and duties-When they are divisible and apportionableEffect of part performance and of failure in the full and literal performance of them-Time the essence of the contract in what cases. SECTION II. Simple contracts.-The bonâ fide performance of an act forming the consideration for a promise, a condition precedent to the right of action upon such promise-Effect of a defective and insufficient performance of the consideration-If no beneficial service no pay-When the consideration is entire and indivisible, and the entire performance of it is a condition precedent-When it is divisible and apportionable, and a part performance of it will sustain an action-Proportional abatement of the claim and of the correspondent liability in such a case. SECTION III. Of mutual conditions, and dependent and independent covenants and promises—Of the time and manner of performance of mutual conditions and concurrent acts-Accomplishment of a condition by construction of law when its fulfilment in fact has been wrongfully prevented. SECTION I. OF CONDITIONS PRECEDENT TO THE RIGHT OF ACTION UPON DEEDS. Of conditional and qualified obligations.-An obligation by deed is sometimes absolute, the mere fact of the obligation appearing without any disclosure of surrounding circumstances, and sometimes qualified and conditional, being dependent upon the happening of some event, or upon the performance of some prior or precedent act. If a man covenants with a builder to pay him a certain portion of the contract price for a building, on receiving an architect's certificate of the approval of the work, the production of the certificate is a condition precedent to the builder's right of action for the money. (a) If a man covenants to spend a sum of money in the alteration and improvement of a house, under the direction of a surveyor, to be appointed by the covenantee, the appointment of the surveyor is a condition precedent to the covenantor's liability to expend the money. (b) If, by a charter party of affreightment, a shipowner agrees that his ship shall sail to a "safe port," to take in a cargo, the naming of a "safe port," is a condition precedent to the shipowner's liability to send out the vessel. (c) If the shipowner agrees that the vessel shall leave England on or before a particular day to bring back a cargo from a foreign port, the departure of the vessel at the time specified is a condition precedent to the freighter's liability to provide the cargo, and use the ship, and pay freight. (d) If, by the terms of an obligation under seal, it appears that the performance of some act by the obligee forms the groundwork or consideration for the obligation, the contract is conditional and qualified, and the liability upon it does not arise until the event has happened, or the precedent act has been performed. If the obligor, for example, binds himself to pay money, or to do certain things in consideration of a release from a debt, or other cause of action, to be granted him by the obligee, the execution of the release is a condition precedent to the obligor's liability upon the contract. If, upon the face of a deed poll, it appears that a sum of money is to be paid as the price of an article purchased of the obligee by the obligor, the liability of the latter upon the obligation is suspended until the subject matter of the sale has been delivered or tendered. (e) If the grant or conveyance of some estate or interest appears upon the face of a deed inter partes, to have formed the consideration or inducement for a covenant therein contained, the liability upon the covenant is dependent upon the passing of the estate or interest purported to be conveyed. Thus, where the plaintiffs pretending to have an exclusive right to a particular machine under a patent assigned part of that right to the defendant, and the latter covenanted not to use any (a) Morgan v. Birnie, 3 M. & Sc. 79; 9 Bing. 672, s. c. (b) Coombe v. Green, 11 M. & W. 480. (c) Rae v. Hackett, 13 Law J. N. S. (Excheq.) 216. (d) Glaholm v Hays, 2 Sc, N. R. 471. Shadforth v. Higgin, 3 Campb. 385. Lovatt v. Hamilton, 5 M. & W. 644. 8. C. (e) Lock v. Wright, 1 Str. 571; 8 Mod. 41, Ughtred's case, 7 Co. 10 b. other patent machine in his factory, and afterwards it was discovered that there was no such patent right, but that the defendant and everybody else might have used the machine without the license of the plaintiffs; it was held that the defendant was not bound by his covenant. (ƒ) If a lease be agreed upon, and the lessor does not execute his part, so that the term of years in the land bargained for is not created and transferred to the intended lessee, the covenants in the indenture, sealed by the latter, cannot be enforced, for "the foundation of the covenant failing, the covenant also fails." (g) If, however, the intended lessee has entered into possession of the land, and has had the use and enjoyment of the premises intended to have been demised to him, during the time that the breaches of covenant were committed, he will not be permitted to rely on the non-execution of the lease by the intended lessor as releasing him from liability; but he is bound to fulfil his covenant as an independent covenant. (h) If several persons covenant to abide by and perform an award, and the award when made turns out to be void, all the covenants dependent upon the award are so too; "for the foundation failing, everything built thereon must fall.” (i) When a covenant is founded upon a common liability, to be created by a deed inter partes, the contract must be executed by all the parties before any one of them can be made liable upon it. Thus, if a deed of submission of disputes and differences to arbitration does not bind all the parties thereto, it does not bind any, as the mutuality of engagement is the essence of the contract. "There must be the accession of all parties to the common agreement of all which is the consideration to each for entering into the contract," (k) and if a submission to arbitration, originally binding on all, becomes ineffectual and inoperative as to one by matter ex post facto, such as bankruptcy or insolvency, the deed is wholly and altogether void. (1) The defendant being possessed of a large stock in trade, covenanted with the plaintiff to assign the same to him, and another person at the end of a twelvemonth at a fair valuation, and the plaintiff covenanted (f) Hayne v. Maltby, 8 T. R. 442. Chanter v. Leese, 4 M. & W. 311. (g) Com. Dig. Cov. F., Cardwell v. Lucas, 2 M. & W. 111. (h) Bayley, J., Hodson v. Sharpe, 10 East, 354; Shep. Touch. ch. 54, p. 3. Cooch v. Goodman, 2 Ad. & E. N. S. 580; 2 Gale & Dav. 164. Fishmongers Co. v. Robertson, 6 Sc. N. R. 56. Doe v. Amy, 12 Ad. & E. 479. Pistor v. Cater, 9 M. & W. 320. Chanter v. (k) Ellenborough, C. J., Antram v. Chace, 15 East, 212. Ferrer v. Oven, 7 B. & C. 427. Marsh v. Wood, 9 B. & C. 665. (1) Kearsey v. Carstairs, 2 B. & Ad. 726. |