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Freight.

See Bills of LadingCarriersCharterparty.

Goods.

See Sale of Goods.

Goodwill (a).

Action on a contract of Sale of Goodwill, Stock, Lease of

Premises, &c. 1. On or about the

day of

1877, the defendant Claim for contracted with the plaintiff to purchase from him for £475

breach of

agreement the goodwill of a tobacco business then carried on by the to take and plaintiff at in the county of with the fixtures and pay for a

goodwill, fittings of the said business, and the lease of the premises. &c.

2. In pursuance of such contract the defendant then paid to the plaintiff the sum of £40 in part payment of the purchase money, and promised to pay the plaintiff on the 25th March

fraud to an action by the principal for the price of the picture was sustained. (Hill v. Gray, 1 Stark. 434.) Where, however, the agent in the course of negociations for letting a house to the defendant denied the existence of a nuisance of which he was ignorant, but which the plaintiff (the principal) knew of, the plea of fraud was held not supported. (Cornfoot v. Fowke, 6 M. & W. 358. See Misrepresentation, GuaranteeInsurance, Defences in Actions on.)

(a) “ The goodwill of a business comprises all the advantages that may be derived from the purchasers holding themselves out to the public as the persons interested in that business, which has been identified with the name of a particular firm. Therefore, though it is well settled that a sale of a goodwill does not imply a contract on the part of the vendor not to set up again in a similar business, he is not at liberty to hold out to the public that he is continuing the same business by using the name of the old firm, even though his own name may be the only one that appeared in that firm.” Wood, V.C. (now Lord Hatherley), in Churton v. Douglas, 28 L. J. Chan. 841. It is usual for the vendor of a goodwill specially to agree not to carry on a similar business within an agreed distance ; and this contract, though one in restraint of trade, can be enforced by action or injunction if it is based upon good consideration and made by deed.

pay for a

Action for last past the further sum of £435, being the balance of the
breach of said purchase money.
agreement
to take and 3. The defendant also agreed on the said 1877, to

purchase the stock-in-trade on the said premises at prices to
goodwill,
&c.

be thereafter agreed on by valuers, to be appointed by the plaintiff and defendant respectively, and to complete the purchase of the goodwill of the business and lease, and the said stock-in-trade aforesaid, on the 25th of March last past.

4. The defendant omitted to complete the said agreement at the time named, and refused subsequently to complete it at all.

5. In consequence of the default by the defendant, and his refusal as mentioned in the last paragraph, the plaintiff was compelled on the day of — 1877, to sell the goodwill of the said business, and lease of the said premises, and also the said stock-in-trade, for the sum of £425. The plaintiff also paid out of the said sum of £425 certain outgoing for gas and claims amounting to £63, which the vendee from the plaintiff on the said re-sale insisted and stipulated that the plaintiff

should pay.

6. All conditions were fulfilled, and all times elapsed, before this action necessary to entitle the plaintiff to be paid the sum of £150, the loss sustained by the plaintiff in consequence of the defendant's default to complete his said purchase, but the defendant has not paid the said £150 or any part thereof.

The plaintiff claims :

Statement of Defence. 1. The defendant does not admit he entered into the contract mentioned in the 1st paragraph of the statement of claim or any contract.

2. In answer to the 2nd paragraph of the claim, the defendant says that on or about 1877, he lent and advanced to the plaintiff the sum of £40 on an agreement that the same should be repaid on demand ; but save as aforesaid, the defendant denies the allegations contained in the 2nd paragraph.

3. The defendant denies each and every the allegations contained in the 3rd and 4th paragraphs of the claim.

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4. The defendant does not admit the allegations contained in Action for the 5th paragraph or any of them.

breach of

agreement 5. The defendant further says that if the said contract was to take entered into by him he was induced to enter into it by the and pay

for a goodfraudulent misrepresentations of the plaintiff.

will, &c. 6. The plaintiff, with intent to deceive the defendant, repre- Misrepresented to him that the takings of the said business had averaged

sentation. during the past year from £28 to £30 a week.

7. The takings of the said business had not averaged during the past year from £28 to £30 a week, or anything like that sum, as the plaintiff at the time of making the representation herein before stated well knew.

8. As soon as the defendant discovered the said misrepresentation, he avoided the said contract, and he has never received any benefit under the same.

And by way of counter-claim

The defendant repeats the allegations contained in the 2nd paragraph of the statement of defence, and claims

£40 as money lent to the plaintiff.

Guarantee (a'.

Action on a Guarantee to Indemnify Against Misconduct of a

Servant.

1. The plaintiffs are brewers carrying on their business Claim ou a at under the firm of N., G. and Co.

guarantee for honesty of a ser

vant. (a) A guarantee is a contract to answer for the payment of a debt, or the performance of a duty by another person.

Contract of The Statute of Frauds (29° Car. 2, c. 3), s. 4, provides inter alia that no guarantee action shall be brought whereby to charge the defendant on any special

must be promise to answer for the debt, default, or miscarriage of another person

evidenced unless the agreement on which such contract shall be brought or some

by writing. memorandum or note thereof shall be in writing, and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised.

It having been held in numerous cases that written and signed memoranda, purporting to be guarantees, were of no legal effect, in consequence of no consideration appearing either by express words or by necessary inference in writing, and from the nature of the contract such consideration having rarely appeared, it was, doubtless with a view to prevent

Claim on a

2. In the month of March, 1872, M. N. was desirous of guarantee entering into the employment of the plaintiffs as a traveller and for honesty

a servant. But the the frequent failures of justice arising from the cause just explained, at considera

length enacted by the 19 & 20 Vict., c. 97, s. 3, that no such promise tion need

should be deemed invalid by reason only of the consideration for such not appear promise not appearing in writing or by necessary inference from a on the

written document. writing.

There are some agreements which at first glance present features strongly resembling guarantees, but which do not really possess the essential character of that contract, which is, that there must be a third person

primarily liable, and then the guarantor promises the creditor that if the The essen

debtor will not pay he (the guarantor) will. Therefore, if the promise is tial charac

given in terms implying the acceptance of a sole liability, as where A. says teristic of

to a trader with regard to goods supplied to B., "I will see you paid,' the contract

and the price of the goods is charged to A., this is not a guarantee, as

would be a promise that if B. did not pay A. would. So where the proof guaran- mise involves an extinction of the original debt, or a transfer of it to tee.

the promissor. Thus, where before the partial abolition of imprisonment for debt, and when arrest on a ca.sa., followed by discharge of the debtor from prison, put an end to the claim against him, if a person promised the creditor that he would pay the debt if the debtor were discharged, this was no guarantee, because there was no person primarily liable after the promise was made. (Goodman v. Chase, 1 B. & Ald. 297.) The doc. trine is very clearly laid down in Mountstephen v. Lakeman (L. R. 7 Q. B. 196 (Ex. Ch.) affirming L. R. 7 H. L. 17). It is there, moreover, laid down that the fact of the original liability ceasing does not take away its character of a guarantee from the defendant's promise, and that it is sufficient to give it this character if the original or primary debtor continues liable during any time after the contract is made.

The promise must be made to the original creditor. (Eastwood v. mise must

Kenyon, 11 Ad. & E. 438 ; Reader v. kingham, 32 L. J. C. P. 108.) be made to Therefore a promise by A, to a County Court bailiff about to arrest B., a the original debtor, on a warrant of commitment, that if he would not arrest him he creditor.

would pay the creditor, or surrender B. on a given day, was held in the last-mentioned case not to be within the statute.

The agreement to be answerable for the payment of goods sold by a del credere agent to his customers is not within the above provision, for although it may eventuate in a liability to pay the debt of another, that is not the immediate object of his promise. (Coutourier v. Hastie, 8 Ex. 40; 22 L. J. Ex. 97.)

The names of both parties to the contract of guarantee must appear in the note, though the signature of the guarantor only is necessary. (Wil. liams v. Lake, 29 L. J. Q. B. 1.)

Though the consideration can now be shown by parol, yet the promise must appear in the instrument without reference to extrinsic facts or

arrangements. (Holmes v. Mitchell, 28 L. J. C. P. 301.) Guarantees By 19 & 20 Vict., c. 97, s. 4, no promise to answer for the debt, default, given to a or miscarriage of another made to a person, or two or more persons, or firm in- to one person trading under the name of a firm--and no promise to answer validated for the debt, &c., of such firm, persons, or person, so trading-shall be by any

binding on the maker in respect of anything done or omitted to be done change in after a change in any one or more of the firm or persons so trading, unless the firm, the intention that the promise shall continue to bind, notwithstanding

such change shall appear by express stipulation or by necessary implication from the nature of the firm or otherwise.

The pro

collector, and it was agreed between the plaintiffs and the de- Guarantee

for good fendants and M. N. that the plaintiffs should employ M. N.

conduct of upon the defendants entering into the guarantee hereinafter a servant. mentioned.

3. An agreement in writing was accordingly made and entered into on or about the 30th of March, 1872, between the plaintiffs and the defendants, whereby in consideration that the plaintiffs would employ M. N. as their collector, the defendant agreed that he would be answerable for the due accounting by

Defences.]—1. A denial that there was a binding contract.Such a defence should state on what ground the validity of the contract was impugned, as that there was no sufficient writing within the Statute of Frauds, as amended by 19 & 20 Vict. c. 97, or that there was no consideration for the promise.

2. Concealment of material particulars by the principal (i. e., semble the creditor) at the time the contract was made.—The duty of the prin. cipal, i. e., what he is bound to disclose, is always a question for the jury, subject to the direction of the judge. The duty of the creditor What the towards a surety in such circumstances is laid down by Lord Campbell, creditor is in Hamilton v. Watson (12 Cl. & F. 109). He says a surety is only bound to entitled to the disclosure of any arrangement that may exist between the communidebtor and creditor that may make his position different from what he cate. would reasonably expect; and hence, if a person undertakes to be responsible for a cash credit given to a customer of a banker, the banker is not bound voluntarily to communicate that the intention is to apply the credit to an old debt due to the banker by the customer. And see North British Insurance Co. v. Lloyd, 10 Ex. 523; 24 L. J. Ex. 14, in which the Court adhered to Lord Campbell's opinion, and laid down that the rule which prevails in assurances upon ships or lives that all material circumstances known to the assured must be disclosed, though there be no fraud in the concealment, does not extend to the case of guarantee. In the latter case the concealment to vitiate the guarantee must be fraudulent.

3. Alteration of the position of parties.-Any change by a binding The effect agreement in the relative position of the creditor and a principal of change debtor, whereby the latter is released or the remedy against him sus- in the posipended, or the risk of the surety is varied without his assent, will tion of the discharge the surety or guarantor. (Levis v. Jones, 4 B.& C. 506 and 515 debtor or n. ; Cragoe v. Jones, L. R. 8 Ex. 81; Wilson v. Lloyd, L. R. 16 Eq. 60.) But creditor. if the rights against the surety are reserved, the latter is not discharged. (Bateson v. Gosling, L. R. 7 C. P. 9.) The alteration of the liabilities of the principal debtor by statute has the same effect as by agreement between him and the creditor. (Pybus v. Gibb, 6 E. & B. 902 ; 26 L. J. Q. B. 41.) See enactment of 18 & 19 Vict. c. 79, s. 4, cited ante, p. 336, as to effect of change in a firm on liability of guarantor of debts due to or by them.

4. The parting with or loss of any security held by the creditor The loss against the principal debtor, even though the guarantor may not have by the known of its existence, and though it may have been made or given creditor subsequent to the contract of guarantee, will discharge the guarantor to of any the extent of the value of the security.

security. And neglecting to take advantage of a security will have the same effect as its loss in this respect as in the case of a bill of sale which the credi. tor neglects to register or enforce in the event of anticipated insolvency.

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