CHAPTER VIII EFFECT OF CONTRACTS $57. Illegal Contracts What constitutes an illegal contract has been explained in § 39. The point to make is that no contract which is against the law or against public policy can be enforced. If the parties come into court, both are equally chargeable with knowledge of the law and therefore with guilt in breaking it; and the court will refuse to help either or to interfere at all. If one of them has been defrauded out of his property by inability to enforce the contract, that constitutes his punishment for entering into such a contract. Such a party cannot get his property back nor can he enforce the contract. There is a legal maxim to the effect that "ignorance of the law excuses no one." This seems harsh, but it is rigidly enforced. Therefore, if there is any doubt about the legality of a contract, the parties should assure themselves that it is in accordance with the law. Ignorance or good intentions will not excuse a man if he makes an illegal contract. (See also § 59.) Sunday Contracts. In almost every state contracts made or to be performed on Sunday are illegal, unless they are for some purpose of charity, necessity or mercy. To be necessary, however, the thing done must be something intended to preserve life, health or property. § 58. Effect of Mistakes There are two kinds of mistakes possible in making a contract: I. A mistake as to whom one is dealing with, what the agreement is about, or what is to be done under the contract. 2. A mistake as to the quality or the value of the subject the contract deals with, or its legal effect. A mistake under the first heading will mean that there is no contract. A party cannot be forced to observe a contract with someone with whom he did not intend to contract, or in regard to something he did not consider. The parties must be considering the same thing and must be agreed as to what is to be done about it, or there is no meeting of their minds and no contract. If, however, there was no mistake as to the parties, or as to what the contract was about or what was to be done, the fact that either or both of the parties believed that the subject of the contract was more or less valuable than it actually was will not make any difference as to its binding effect. An agreement has been made and they will be held to it even if it means loss to one of them. Neither will it make any difference if either or both of the parties did not realize that he would be bound by the contract or did not know just what he was required to do under the law to carry out his agreement. Every man is supposed to know the law, and it is his own fault if he failed to find out about it in the first place. If a person knows that the instrument he is signing is a contract, and fails to read it, he will be bound by it even though it is a contract to do something entirely different from what he intended. No one should ever sign contracts without reading them. In case, however, through the fault of some clerk in writing the contract an error of some sort gets into the written document so that it misrepresents the actual agreement be tween the parties, the court will order it rewritten to express what they really agreed upon. That is, a clerical error will be corrected. Note: I. The terms of a contract should be written down clearly and in simple language. Both parties should then read them over, and any questions that arise should be cleared up before signing. Much trouble and litigation would be saved if this course were followed in all cases. $59. Effect of Fraud If there is any fraud in inducing a party to enter into a contract, he may refuse to perform his share of the agreement. If the contract is already carried out, he may recover his property or its value. If he wants to annul the contract, however, he must return anything he has received under it unless it has been used up or destroyed at the time he discovers the fraud. If he prefers, he may let the contract stand and claim damages for any loss he may have suffered. What Constitutes Fraud. If any false representation is made by a person who knows it to be false or has no positive belief or adequate knowledge in regard to the matter, intending to induce action and to create a false impression in the other party's mind, or to prevent him from investigating to find out the truth about the transaction, it amounts to a fraud. Misstatements about unimportant matters, or mere expressions of opinion in recommending an article for sale, do not affect the contract. The buyer must be on his guard against overstatements of opinion by the seller as to the virtues of the article he is selling. Overstatements are to be expected everywhere. When a party relies on the opinion of an expert, however, or when he seeks advice from a person in whom he has a right to repose confidence, such as a father, a guardian, or an attorney, it is a different matter. Then an expression of opinion without sound grounds would amount to fraud. If the reading of a contract be dispensed with as the result of fraud, the injured party may refuse to live up to the terms of the contract, or he may claim damages for the injury sustained. This rule holds good also whenever the legal effect of the contract has been misrepresented or when a fraudulent value is placed on that which is being bought or sold. The injured party must act promptly as soon as he discovers the fraud. By delay he may lose his rights, since he will be considered to be content with the terms of the contract. Taking advantage of another person's mistake is fraud. In Shelton v. Ellis, Shelton & Co. learned of a mistake in the rate sheet of the Western and Atlantic Railroad Company by which the fare from Atlanta, Ga., to Rogers, Ark., was quoted as $21.25 when it should have been $36.70. They induced Garland, a traveling salesman, to buy a large number of tickets for them before the railroad company discovered the mistake. The court held that the tickets must be returned.1 If any part of the representations which induced the other party to enter into the contract was fraudulent and had any effect in inducing him to agree to it, the fact that most of the representations were honest will not make the contract good. But if the fraudulent representations referred to matters of no consequence and were not material to the contract they will not affect it. Also, if the other party relied on his own judgment in the matter, rather than upon what was told him, the fraudulent misrepresentations will make no difference. What Fraud Will Nullify a Contract. Fraud in any of the negotiations leading up to a contract will nullify it. If fraud has prevented the party from making an independent investigation, or if it has led him astray in regard to the facts, it will 1 70 Ga. 297. make the contract void. Fraud not connected with the immediate contract but with previous negotiations will not affect the present contract. Specious Schemes. Ordinary people of the salaried and the professional classes lose money running up into millions of dollars by investing in all sorts of specious get-rich-quick schemes. If they would study the prospectuses of these schemers, they would see how carefully they are written so as to avoid any positive statements but to give a strong impression by a series of carefully worded opinions, estimates, etc. Such phrases as, "it is estimated," "it is expected," "there is every reason to believe," "it is the opinion of old miners," are used again and again. It is astonishing how plausible a prospectus can be made without giving any positive statement, except as to comparatively immaterial matters. The important matters in deciding upon an investment are: I. The character and the experience of the manage ment. 2. The amount of capital there will be available. 3. The subject matter of the business. On these essential points there is rarely any positive information in prospectuses of this sort. Note: I. Consult your own lawyer or banker before investing $60. Duress money. A party must consent to a contract of his own free will. That is the essential element of an agreement. Consequently, if his will is overpowered by that of someone else, the result cannot be a contract that will hold him. There are two ways in which a person may induce another party to make a contract against his own free will. One is by |