§ 2. Svhstituted Contract

Substituted A contract may be discharged by an alteration in its

terms which, in effect, substitutes a new agreement for the

how differ- old one. The difiPerence between this and the first-mentioned

waiver ; mode of discharge by agreement lies in the fact that the first

is a total obliteration of the contract, the second is a sub-

stitution of a new bond between the parties in place of the

old one.

And it operates as a recission in this way, that if it does

not in terms express an intention that the original contract

should be waived, it indicates such an intention by the intro-

may be an duction of new terms or new parties. The change of rights

discharge; Ai^d liabilities, and consequent extinction of those which

before existed, forms the consideration on each side for the

new contract.

but the im- But the intention to discharge the original contract must

must be distinctly appetu:, from the inconsistency of the new terms

clear. ^j^jj ^jjg qJj ones. If there be a mere postponement of

performance, for the convenience of one of the parties, the

contract is not thereby discharged.

How differ- The question has often arisen in contracts for the sale and

postpone- delivery of goods, where the delivery is to extend over some

for^nce^^ time. The purchaser requests a postponement of delivery,

then refuses to accept the goods at all, and then alleges that

the contract was discharged by the alteration of the time of

performance ; that a new contract was thereby created, and

that the new contract is void for non-compliance with the

17th section of the Statute of Frauds.

But the Courts have always recognised Hhe distinction

between a substitution of one agreement for another, and

Chap. I. § a. BY AGREEMENT. 25 1

a voluntary forbearance to deliver at the request of another,' Hickman v.

•^ , ^ , ' Haynes, L. R.

and will not regard the latter as affecting the rights of the *° ^- ^- ^^

parties further than this, that if a man asks to have perform-

ance of his contract postponed, he does so at his own risk.

For if the market value of the goods which he should have

accepted at the earlier date has altered at the later date,

the rate of damages may be assessed, as against him, either

at the time when the performance should have taken place, o^iev.Eari

*^ '^ ' Vane, L. R.

and when by non-performance the contract was broken, LpRfa^fe.

or when he ultimately exhausted the patience of the vendor *^* '

and definitely refused to perform the contract.

The contract is discharged by alteration of its terms when

(a) what is to be done is so far altered as to be inconsistent

with it and to amount to a new contract, or (6) when a new

party is substituted for a previous one by agreement of all

three.

A good illustration of the first of these modes of discharge (a) Substi-

is afforded by the case of ThomhUl v, Neats. A undertook g ^ ^ ^^

certain building operations for JT, which were to be completed ^^''

by a certain date, or a sum to be paid as compensation for

delay. While the building was in progress an agreement

was made between the parties for additional work, by which

it became impossible that the whole of the operations

should be concluded within the stipulated time. It was

held that the subsequent agreement was so far inconsistent

with the first, as to amount to a waiver of the sum stipulated

to be paid for delay.

A contract may be discharged by the introduction of new (b) Substi-

parties into the original agreement, whereby a new contract ties.

^ Willes, J., in giving judgment in the Exchequer Chamber in the

case of Ogle r. Earl Vane^ holds that by the forbearance on the part of l. R. 3 Q. b.

the plaintiff, at the request of the defendant, to insist upon delivery of ^^

the goods at and after the time for the performance of the contnict,

an agreement arose which, though fur want of consideration for the for-

be<arance it could not furnish a cause of action, was nevertheless capable

of affecting the measure of damages. He calls it an Accord without a

Satisfaction. As to the nature of Accord and Satisfaction, see p. 306.

2^2 DlSCHARaE OF CONTRACT. Part V.

is created, in which the terms remain the same but the

parties are different.

This may be done either by express agreement such as

See Part III. was dcscribcd in a previous chapter, or by the conduct of

Cfl< 11» S« Z|

p- ^- the parties, indicating acquiescence in a change of liability.

If A has entered into a contract with X and J/, and

X and M agree among themselves that M shall retire from

the contract and cease to be liable upon it, A may either

insist upon the continued liability of Jf, or he may treat

the contract as broken and discharged by the renunciation of

his liabilities by one of the parties to it.

If however A, after he becomes aware of the retirement

of M from the contract, continues to deal with X as though

no change had taken place, he will be considered to have

entered into a new contract to accept the sole liability of X,

and will not be entitled to hold M to his original contract.

2 M. & w. 484. The case of Hart v. Alexander illustrates this rule. The

plaintiff employed the defendant with other members of

a firm as his bankers; the defendant retired; notice, in

various forms, of his retirement from the firm was shown to

have reached, or to have been accessible to, the plaintiff, who

nevertheless continued to employ the firm. Finally, the firm

became bankrupt : the plaintiff sued the defendant as liable to

him upon the original contract, as being one of the members

of the firm whom he had retained as his bankers. The jury

found that the defendant's retirement was sufficiently brought

to the notice of the plaintiff, and as the firm had nevertheless

been continuously employed by liim, the Court held that a

new contract had been formed between the plaintiff and the

firm of which the defendant was no longer a member. * I

apprehend the law to be now settled,' said Parke, B., * that if

one partner goes out of a firm and another comes in, the

debts of the old firm may, by the consent of all the three

parties — ^the creditor, the old firm, and the new firm — ^be

transferred to the new firm/ Thus a change of liabilities,

Chap. I. § 3. BY AGREEMENT. 2^^

accepted by the plaintiff, rcBcinded the original contract by

the creation of a new one to which the defendant was not

a party.