CHAPTER XII

ACTIONS ON CONTRACTS-GENERAL RULES

§ 73. Introductory

Besides the particular provisions of the law of the state where the action is brought, there are certain general rules which apply to actions anywhere.

Assigned Contracts. Where a contract, or a cause of action arising out of a contract, has been assigned, the party to whom it has been assigned must bring the action in the name of the party to the contract from whom he received it, unless there is a law allowing him to sue in his own name. This is the rule of the common law, but now in most states the party who has the actual interest in the contract is allowed to sue in his own name.

Joint Contracts. Where there is a joint contract, all the parties to it must be brought into the action; that is, if other parties are jointly interested with the party suing, he must join them with himself as plaintiffs. If, however, they refuse to join as plaintiffs, the law in many cases provides that they may be joined as defendants, in which case the party so joining them must explain that they refused to be joined as plaintiffs and mention the statute by which he is allowed to join them as defendants.

If several parties are jointly obligated to the plaintiff by the same contract, when he sues he must include them all as defendants. If any of the parties to the contract are left out of the suit, they are released from all obligations under it, unless they agreed in the contract to be liable individually for the whole contract apart from all the others.

Assumption of Legality. The law always assumes that a contract is legal and proper; therefore the person who asserts that it was illegal, or the result of fraud, undue influence, duress, etc., must prove the fraud or other allegation.

Notes:

I.

The law of the place where the contract is made governs its interpretation unless the contract explicitly specifies otherwise.

2. The law of the place where suit is brought governs the right to bring action on it, and the defenses. which may be made.

3. Where the Statute of Limitations of the place where the contract was made takes away the right of action, no action may afterwards be brought on the contract in any state.

4.

In suing on a joint contract, all the parties must be joined, either as plaintiffs or as defendants.

$74. Specific Performance

There are some cases where damages do not repay the party for what he lost on the contract, as, for instance, if the contract was to buy some valuable work of art which he could not duplicate elsewhere. In contracts for the delivery of goods, where it is possible for the party to go out and purchase other goods of the same nature, his loss can easily be computed and covered by damages; but where it is impossible to compute the damages, or where the property purchased is a work of art, an heirloom, or something else which cannot be duplicated or easily purchased elsewhere, so that damages do not compensate him for his loss, the court will compel the other party to perform the contract. This is known as "specific performance," and is granted by what is termed a court of equity.

Land, with everything relating to it, is always regarded as having a peculiar value; so that a contract for the sale of land may always be specifically enforced.

In cases where the contract is for personal services, or cannot be carried out because the other party has disposed of the property involved, or for any other cause, the court will refuse to make a useless decree. In the case of personal services, it is not considered that any services which the other party might perform in order to escape imprisonment would be worth much. If, however, the other party has disposed of the property or otherwise put it out of his power to perform the contract after the suit in equity has been begun, the court of equity, contrary to its usual custom, will award damages.

Requirements of Courts of Equity. The party who brings a suit in equity must show that he has not been careless or negligent regarding his rights, but has insisted on them and promptly taken action to protect them. This carelessness and negligence are known in legal parlance as "laches," and, unless there is some excuse for them, will prevent the delinquent party from recovering in a suit.

The party who brings such a suit must also be able to show that he has been in all respects just and fair himself, and he cannot ask the court to enforce any contract which is in the slightest degree unfair to the other party. He must show, too, that he has done everything in his power to fulfil the contract on his own part, and, if the other party has prevented him from performing it, he must show the court that he was and is able and willing to do all that was required on his part.

A court of equity will not enforce an illegal contract, or one that has been obtained by duress, fraud, or undue influence. Nor will it enforce a contract that is unconscionable, or where an unfair advantage has been taken of another

party's ignorance or inexperience. (See Chapter IV, “Law and Equity.")

Notes:

I. No court will enforce a contract which is illegal or

improper.

2. Specific performance is granted only where damages would not compensate the party for his loss.

3. Courts of equity will see justice done as nearly as possible, and therefore, the party who seeks their aid must be prepared to do justice himself.

$75. Rules of Evidence

Certain rules have grown up with regard to the admission of evidence before a court. Some of these rules have been dictated by convenience, in order not to take up the time of the court unnecessarily; others for the sake of being fair to both parties. Some of the rules of evidence particularly concern contracts.

An oral contract must be shown by testimony. The testimony of the parties themselves, and of any witnesses who were present and heard the transaction, is competent; but anything in their conversation or relations which has no bearing on the contract will be excluded. It often happens that contracts are agreed upon between the two parties, and each remembers only the part that favors himself, and in such a case a court cannot give any relief, because the evidence balances. Where it is not possible to prove the making of the contract itself satisfactorily, evidence that the party in some way acknowledged or ratified it, or that he has partly performed it, may be introduced to show that there was such a contract.

Competent evidence is that which is admissible.

Material evidence is that evidence which applies directly to the point at issue.

Relevant evidence is evidence relating to the matter in dispute. "Whatever naturally and logically tends to establish a fact in issue is relevant and that which does not answer requirements is not." Irrelevant evidence lacks close connection with the fact to be proved: is collateral to the issue.

The general rule that hearsay evidence is excluded, is based on the principle that a witness may testify under oath as to what he himself has seen or heard, but that there is no value in a man's taking oath as to what another, not under oath, has told him.

The Burden of Proof. The burden of proof is always on the party who makes an assertion; thus many cases fail, not because the party is in the wrong, but because he cannot prove his case. Judges and juries can act only on evidence brought before them, and if a case is good but there is no evidence to prove it, a court cannot give relief, and the law should not be blamed for it. This is why written contracts are so important. (See §§ 42, 43.)

The Parol Evidence Rule. The meaning of this rule is that other evidence will not be admitted to vary the terms of a written contract, because the contract itself is the best evidence of what its terms are. Oral evidence may always be introduced to support the contract. Necessarily, the performance of the contract, or a breach of it, will have to be shown by oral testimony. The same is true of abandonment of the contract; and anything which would show adequate motive may be introduced as tending to support the proof of the abandonment.

There are exceptions to the parol evidence rule. Where the contract is not clear in itself, it becomes necessary to resort to parol evidence to explain it. Any other paper or matter to which the contract refers may be proved in connection with it, and, if such paper shows on its face that the

1 Jones on Evidence, Vol. I, Sec. 135.