THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
LOS ANGELES
V
c~~y\ -^/V
I V
THE
EGYPTIAN LAW
OF
OBLIGATIONS.
A COMPARATIVE STUDY WITH SPECIAL REFERENCE
. . TO THE FRENCH AND THE ENGLISH LAW. . .
BY
FREDERICK PARKER WALTON,
ADVOCATE OF THE SCOTTISH BAR, K.C. (QUEBEC), B.A. (OXON.), LL.B. (EDEN.),
LL.D. (ABERDEEN AND MCGILL) ; HON. MEMBER AMERICAN BAR ASSOCIATION ;
DIRECTOR OF THE SULTANIA SCHOOL OF LAW, CAIRO; FORMERLY DEAN OF
THE LAW FACULTY, MCGILL UNIVERSITY, MONTREAL.
AUTHOR OF
" Handbook of Husband and Wife according to the Law of Scotland " ;
"Scotch Marriages, Eegular and Irregular"; "Historical Introduction to
the Roman Law" ; " Scope and Interpretation of the Civil Code of Lower
Canada" ; " Workmen's Compensation Act, 1909, of the Province of Quebec,
with a Commentary," &c.
IN TWO VOLUMES.
Vol. II.
LONDON :
STEVENS AND SONS, LIMITED,
119 & 120, CHANCERY LANE,
f ato Publishers.
1920
( in )
//?
TABLE OF CONTENTS.
VOLUME II.
OHAPTBE I.
TAGE
EFFECTS OF CONTRACTS 1 — 47
Confusion in the French Code between effects of contracts and
effects of obligations 1
Effects of contracts as between the parties 2
Contracts make the law between the parties 2
Modification of charitable foundations 3
Contract changes legal situation of parties 3
Interpretation of contract is question of fact 4
Exceptio non adimpleti contractus 4
Modification of contract by parties 5
Effect of modification or cancellation of contract as between the
parties 7
Effect of modification or cancellation as regards third parties ... 7
Renewal of contract 8
Exceptions to rule that contracts can be modified or revoked
by parties 9
Certain contracts can be revoked by one party or one party may
be released owing to change of circumstances 9
Effect of' contracts as between the parties and as against third
parties 11
Who are the parties to a contract? 13
Representation in contract 13
When is an agent a party ? 13
Factors and brokers 14
Involuntary representation 15
Summary 16
Heirs and successors 16
Meaning of Ayants cause 17
Universal and particular Ayants cause 18
Rule that obligations transmit to universal successors only 18
Particular representatives 19
Analogous rule in English law 23
Leases 23
Creditors 23
a 2
iv TABLE OF CONTENTS.
CHAPTER I — continued.
PAGE
Summary
Exceptions to the rule that contracts do not benefit or prejudice
third parties -°
Protection given to third parties -'
Rule does not mean that contract may not be proved by third
parties as a fact 29
Translatory and non-translatory contracts 30
Effect of contracts in transferring property between the parties... 30
Roman law and old French law as to effect of contract to transfer. 32
Modern Erench law 33
Two conditions of rule 34
Rule that property passes at once is not law of public order 35
Effect of contracts in transferring property as regards third
par ties "'
Exceptions to the rule that the real right first registered is
preferred 39
Effect of alienation of corporeal moveables as against third parties. 43
Incorporeal moveables .* 4b
The effect of non-translatory contracts with regard to third
parties 4b
CHAPTER II.
CONTRACT OF PORTE-FORT 48 — 52
Distinction between contract of porte-fort and suretyship 50
Porte- fort promises on his own account 50
If the contract is ambiguous is there a presumption that a party
binds himself as a porte-fort? 50
The ratification and its effect 51
Utility of contract of porte-fort 51
English law as to person who professes to be an agent though he
has no authority 52
OHAPTEE III.
STIPULATIONS FOR THE BENEFIT OF THIRD PARTIES OR THE
STIPULATION POUR AUTRUI 53 — 91
History of the stipulation pour autrui 53
Modern applications of the stipulation pour autrui 55
Public subscriptions 58
Many other cases '. °*
ight of the third party for whom a benefit is stipulated 60
(1) Theory of the offer 62
(2) Theory of implied assignment 64
TABLE OF CONTENTS. V
CHAPTER III— continued.
PAGE
Eight of the third party for whom 1 a benefit is stipulated— continued.
(3) Theory of negotiorum gestio 65
(4) Theory of the droit propre 66
Theory of droit propre accepted in German Code 68
Characteristics of the third party's right 69
2 Effects of assent 72
How may the third party declare his assent ? 73
If the legal representative of the third party is the stipulator
himself, can he give the necessary assent for the third
party ? ^3
Assent does not need to be intimated to stipulator 74
JWno can be a beneficiary under the stipulation? 75
Determinate persons 75
Indeterminate or future persons 76
Cases where beneficiary is indeterminable at date of contract ... 78
Future persons 80
Matter dealt with in many countries by legislation 86
Eights of creditors in the case of insurance for a third party ... 87
What is the effect of the rescission of a contract in which a
benefit was stipulated for a third party who has assented
to it? 87
Comparison with English law 89
Common law as to the persons affected by contract 89
American law less rigorous as to relativity of contracts 91
CHAPTER IV.
OF THE EXERCISE OF THE DEBTOR'S RIGHTS AND ACTIONS BY
HIS CREDITORS -. 92 — 104
Whatever is recovered by the action falls into the patrimony of
the debtor 98
Any defence which is good as against the debtor himself is good
as against the creditor 99
Can the creditor sue for an amount greater than his own claim
against the debtor? 100
What are the rights and actions which creditors can exercise ? ... 100
Eight of creditors of incapable person to bring action on the
ground of incapacity 102
Eight to exercise a choice 103
Eights purely personal are exceptional 104
VI TABLE OF CONTENTS.
CHAPTER V.
PAGE
THE PAULIAN ACTION 105—123
History of the Paulian action 106
Conditions of Paulian action 107
The act challenged must have caused prejudice 109
Property alienated must have formed part of debtor's estate 110
Debtor's estate must be diminished Ill
Only prior creditors have a right to the Paulian action 112
Proof of fraud in onerous transactions 113
Onerous grantees preferred to gratuitous grantees 114
Is the contract onerous or gratuitous ? 115
Effect of Paulian action as to sub-purchasers 116
Effect of the Paulian action as among the creditors 120
Prescription of Paulian action 123
CHAPTER VI.
THE ACTION TO DECLARE A DEED SIMULATE 124 — 139
Different kinds of simulation 124
Rules as to actes deguises 125
Rules of evidence 12'
(1) When the action is between the parties to the deed ... 127
(2) When the action is by a third party 128
Effect of simulation as between the parties 129
Effect of simulation as regards third parties 131
Conflict between the ayants-cause of the apparent owner and the
creditors of the party who has granted a contre-lettre... 134
Distinction between the action en simulation and the Paulian
action 137
Distinction between the action en simulation and the indirect
action 1 39
CHAPTER VII.
OBLIGATIONS RESULTING FROM AN ACT 140—162
Nul ne doit s'enrichir injustement au prejudice d'autrui 142
Quasi-contracts 142
Criticism of the term quasi-contract 143
German Code avoids term quasi-contract ' 145
Distinction between quasi-contract and implied contract 146
Proof of quasi-contracts 146
Negotiorum gestio or gestion d'affaires 148
Analogy between gestion d'affaires and mandate 149
TABLE OF CONTENTS. VII
CHAPTER VII.— continued.
PACE
Conditions of gestion d'affaires 150
Is gestion confined to the doing of juridical acts ? 151
Is it essential that the gestion shall be unknown to the maitre? ... 152
Egyptian law 153
Knowledge of incapable person is immaterial 153
Must be intention to act on behalf of another and benefit re-
sulting 154
Benefit does not need to be subsisting at date of action 155
Who may be sued by third party 155
What is included under reimbursement? 155
Does the maitre need to have contractual capacity? 157
Does the gerant need to have contractual capacity? 158
Examples of negotiorum gestio 159
Assistance to ship in distress 160
Egyptian jurisprudence 162
CHAPTER VIII.
ACTIO DE IN REM VERSO 163 — 186
Special applications of principle in French and Egyptian Codes. 166
The name actio de in rem verso 168
Miscellaneous illustrations from the French jurisprudence 169
Improvement on immovable held in indivision 172
Doctrine of general average or avaries communes 172
Is principle of avaries communes confined to maritime law? ... 173
Egyptian jurisprudence 174
Attempt to determine the principles governing the matter 175
Confusion between action de in rem verso and action on gestion
d'affaires 176
Theory that source of obligation is delictual 177
Theory that source of obligation is the creation of value 178
Conditions of the action de in rem verso as determined by the
French jurisprudence 179
(1) The enrichment 180
(2) The enrichment must be a direct consequence of the
prejudice suffered by the plaintiff 181
(3) The defendant must not have a just cause for retaining
the enrichment without payment 182
(4) The enrichment must be subsisting 184
The action de in rem verso is a subsidiary action 185
Comparison with other laws 185
Vlll TABLE OF CONTENTS.
CHAPTER IX.
PAGE
THE QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE ...187—200
Repetition when there was no error 188
Payment made in error 189
Destruction of the title • 190
Onus of proof 191
(1) Payment 192
(2) No debt 192
(3) Error 193
English law as to quasi-contracts 196
Theory of implied contract 197
English illustrations of claims not arising from contract 198
Wrongs 200
CHAPTER X.
OF OBLIGATIONS RESULTING FROM THE LAW SOLELY ...201 — 205
Alimentary provisions 201
Other obligations arising by law 202
Obligation of alimony in Egyptian codes 203
Analysis of Article 155 203
Comparison with the Mohammedan law 203
Analysis of Article 156 204.
Comparison with the Mohammedan law 204
Code speaks only of ascendants, descendants and spouses 205
Egyptian jurisprudence 205
CHAPTER XI.
PUTTING IN DEFAULT — MISE EN DEMEURE 206 — 218
Mise en demeure 207
When a date has been fixed for performance 207
Mise en demeure in commercial matters 207
How the debtor is put in default 208
Where no mise en demeure is necessary 210
(a) Performance impossible 211
English law as to this 2^.2
Putting in default presupposes possibility of performance... 2l2
(b) Law may declare mise en demeure unnecessary 213
(c) Stipulation may make mise en demeure unnecessary ... 214
Waiver of right to claim without mise en demeure 214
(d) No mise en demeure necessary when action based on
wrong-doing 215
Effects of putting in default 215
Mise en demeure in other codes 217
No mise en demeure required in English law 218
TABLE OF CONTENTS. IX
CHAPTER XII.
PAGE
REMEDIES FOR BREACH OF CONTRACT 219—243
(1) The action for rescission or resolution of the contract 221
The tacit resolutory condition 221
The exceptio non adimpleti contractus 222
Court has discretion to refuse resolution 222
(2) Maintenance of contract partially executed and damages for
inexecutei part 224
(3) Substituted performance 224
(4) Specific performance 224
(5) Damages -'-'^
Want of precision of the codes 224
(a) Obligation to pay or to deliver a specific thing 226
(b) Obligation to do or not to do 227
(3) Substituted performance 227
(c) Cases where judgment takes place of performance 227
(4) When can specific performance be claimed 229
Can creditor always insist on demolition of
buildings ? 229
Fait personnel cannot be specifically enforced 230
Illustrations of cases where specific performance of
the contract may be demanded 231
Specific performance of obligation to grant a servi-
tude ■ 232
Specific performance of contract of lease of thing ... 233
Specific performance of promise to grant deed .... 233
In previous cases personal intervention of debtor is
not necessary 233
Cases where specific performance cannot be de-
manded 234
Astrein tes 2o4
May the court order specific performance subject to payment of
a penalty ? 234
Extension by the jurisprudence of the principle of astreintes ... 236
Illustrations from the jurisprudence 238
Criticism of the jurisprudence 241
Astreintes in Egyptian jurisprudence 241
Enforcement of specific performance in other laws 243
CHAPTER XIII.
DAMAGES FOR BREACH OF PECUNIARY OBLIGATION ...244—249
Special damages in case of bad faith 246
German and Swiss laws as to this 246
Exceptions to rule that only legal interest is due 247
Compound interest 248
English law as to interest on money-debts 249
TABLE OF CONTENTS.
CHAPTER XIV.
PAGE
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT NOT BEING
A CONTRACT TO PAY A SUM OF MONEY 250 — 260
If the loss sustained is a moral loss only, can the creditor claim
damages ? 252
English law 255
Direct and immediate consequence 255
Distinction based on absence of fraud 256
Damages for that which could have been foreseen 257
Illustrations of the rule as to damages which might have been
foreseen 258
Distinction in other laws 259
Clause of penalty 260
CHAPTER XV.
STIPULATIONS OF EXONERATION FROM LIABILITY ...261—285
Restrictive interpretation 261
Debtor cannot stipulate against his own dol or faute lourde 261
Stipulations of exoneration for fault of prepose 263
Stipulations of immunity for one's own ordinary negligence or
the ordinary negligence of one's prepose 264
Concurrence of faute contractuelle and faute delictuelle in other
systems of law 266
Is it a universal rule of the French law that a man by contract
cannot relieve himself from liability for a quasi-delict ? ... 267
Egyptian cases in contract of carriage 270
Special reasons of public policy in regard to contracts of carriage. 271
Different rule in England as to gratuitous passengers 273
Public policy as to carriage of goods 273
The question ought to be one of reasonableness 274
English law 274
Clauses of exoneration in maritime law 275
Laws of other countries 276
Post-office and telegrams 276
Post-office letters 276
Telegrams sent by private companies 277
Telegrams sent by public service 278
Egyptian law 278
Contracts by which a workman renounces beforehand his right
to claim damages for personal injuries 279
Other cases in which advantage has been taken of a position
of superiority 280
In other cases freedom of contract should be allowed 280
Tendency of recent French jurisprudence 281
TABLE OF CONTENTS. XI
CHAPTER XY.— continued.
PAG]
Clauses of non-responsibility in other laws 282
(1) English law 282
(2) American law 284
(3) German law 284
(4) Swiss law 285
CHAPTER. XVI.
.NON-PERFORMANCE OF CONTRACT WITHOUT FAULT OF
DEBTOR 286 — 327
(1) Exceptional cases 286
(a) Express stipulation of warranty 286
(b) Implied warranty 286
(c) Warranty of carrier and hotel-keeper against theft ... 287
(2) General rule that damages are due 287
Supervening impossibility of performance 287
Force majeure in law of responsibility and in law of prescription. 290
Cas fortuit and force majeure include both objective impossibility
and subjective impossibility 290
Attempted distinction between the legal effects of force majeure
and those of cas fortuit 291
Criticism of new theory : 293
Essential characteristics of fortuitous event 293
Event founded upon as force majeure must not have been brought
about by any act of the debtor 294
Event must be impossible to foresee 294
Impossibility must be absolute 296
The impossibility must continue 296
Debtor who foresees the inexecution must do his best to minimise
its effects 296
Debtor not bound to take an altogether unusual precaution 297
Force majeure a question of fact 298
Illustrations of force majeure ' 298
(a) Events due to the forces of nature 298
Destruction of specific thing to be delivered 299
Alteration of physical conditions rendering performance
impossible 299
Fire as force majeure 299
Presumption against lessee in French law 300
No presumption against lessee in Egyptian law 301
Rule in Egyptian law 301
Sickness or epidemic as force majeure 302
(b) Events caused by the act of man 303
Special rule as to paid depositary 304
Special liability of hotel-keeper not to be extended by
analogy 305
Xll TABLE OF CONTENTS.
CHAPTER XVI.— continued.
PAGE
Illustrations of force majeure — continued.
War, invasion, &c 306
Fait du prince 306
Force majeure must create an impossibility 307
War as force majeure 307
Criticism of the jurisprudence and proposals to change the
law 313
Strikes 314
Onus of proof of fortuitous event 315
Effect of fortuitous event 316
Fortuitous event in contract of lease 317
Right to rebut defence of force majeure may be lost by acquies-
cence in non-performance 318
Acquiescence in non-performance 318
Comparison with other laws 318
Swiss Code 318
German Code 318
English law as to impossibility of performance 320
Extension of this principle 321
English law as to supervening incapacity to render personal
servi ces 323
Impossibility of performance does not cause the contract to be
rescinded ab initio 323
In English law war does not in itself necessarily create impossi-
bility of performance 324
Statutory power to avoid contracts 325
Force majeure, compared with "Act of God" 326
CHAPTER XVII.
CONDITIONAL OBLIGATIONS 328 — 349
Different kinds of obligations 328
Suspensive condition 329
Resolutive condition 329
(1) Event must not have already occurred 329
(2) Event future but certain 330
(3) Event impossible 331
(4) Event unlawful 331
(5) Event left to free choice of promisor 332
Effects of the condition 335
Conditional right is not mere hope 335
Nothing yet due pending the condition 336
Conditional creditor may do conservatory acts 337
Conditional creditor's right protected if conditional debtor is
insolvent .'. 337
Conditional seller mav revindicate if condition fails 338
TABLE OF CONTENT*. Xlll
CHAPTER XVII .— continued.
PAGE
The fulfilment and the failure of conditions 338
Conditions strictly interpreted 339
Condition that act shall be performed by particular person 340
What if no time is fixed for performance ? 340
Fraudulent prevention of fulfilment 341
Comparison with other laws 343
The effects of the failure of the condition 345
The effects of the fulfilment of the condition 345
Discussion as to retroactivity 347
The risk 348
CHAPTER XVIII.
OBLIGATIONS WITH A TERM 350—360
Repetition of debt paid before the term arrives 351
Presumption that term is in favour of the debtor 353
Computation of the term 354
The risk during the term 354
Loss of right to claim the term 355
Does the insolvency of a non-trader produce the same effect as
the bankruptcy of a trader? 356
How is insolvency to be determined ? 357
Does it need to be declared by a judgment ? 357
Diminution of securities by the debtor 359
ff /I
CHAPTER XIX.
OBLIGATIONS IN WHICH THERE ARE SEVERAL OBJECTS AND
SEVERAL SUBJECTS 361—377
Obligations simple and composite 361
Obligations simple and multiple 362
Alternative obligations 362
Alternative obligation distinguished from conjunctive or facul-
tative obligation 363
In an alternative obligation who has the choice? 363
Refusal to exercise the option 364
German Code as to this 365
Can the French or the Egyptian Courts transfer the choice to
the other party ? 365
Transmissibility of the option 366
How is the option to be declared ? 366
Does the alternative obligation operate an immediate transfer
of the property ? 368
XIV TAHLE OF CONTENTS.
CHAPTER XIX.— continued.
PAGE
Retroactive effect of the choice .' 368
Obligation may appear to be alternative without really being so. 370
Effect of the impossibility of executing one of the alternatives ... 371
(a) When the option belongs to the debtor 373
(b) When the option belongs to the creditor 376
CHAPTER XX.
FACULTATIVE OBLIGATIONS 378 — 380
■Jfr
Definition 378
Distinction between the facultative obligation and the alternative
obligation 378
Examples of facultative obligations 379
Practical consequences of the distinction between facultative and
alternative obligations 379
CHAPTER XXI.
OBLIGATIONS WITH A PENAL CLAUSE 381 — 402
Definition 382
Where should this subject be placed? 382
No form prescribed for clause of penalty 382
Purpose of clauses of penalty 383
Clause of penalty strictly construed 383
Clause of penalty cannot defeat legal restrictions on rate of
interest 383
Position in the Egyptian Code 384
Obligation with penal clause distinguished from facultative
obligation 385
Obligation with penal clause distinguished from conditional
obligation , 385
Accessory character of the penal clause 386
(1) Must be valid principal obligation 386
(2) The nullity of the penal clause does not involve the
nullity of the principal obligation 388
(3) Creditor may claim performance of principal obligation... 389
(4) The penalty comes in place of the damages 389
Penalty for delay 389
Doubt as to whether penalty is for delay or for non-performance. 390
Penalty not due unless debtor is in fault or in default 391
Can the court fix a delai de grace? 392
Can damages be claimed in excess of the penalty stipulated or
can the penalty be reduced if excessive? 392
Cases where amount of penalty may bo varied 394
TABLE OF CONTENTS. XV
CHAPTER XXI— continued.
PAGE
Can the creditor claim the penalty if the debtor prove that no
damages have been suffered ? 397
Conflicting opinion "no damages no penalty" 399
Penal clause in other legal systems 401
Indivisibility as applied to obligations with a clause of penalty. 402
CHAPTER XXII.
JOINT AND JOINT AND SEVERAL OBLIGATIONS 403—430
(a) Joint and several creditors 404
Release 406
Interruption and suspension of prescription 406
(b) Joint and several debtors 407
Presumption against joint and several liability 409
Does the presumption against joint and several liability apply
to commercial matters ? 409
Joint and several liability by law 410
Conventional joint and several liability 413
Effects of joint and several liability among the debtors 414
(a) Effects of principle that each debtor is liable for whole
debt 414
(b) Effects of theory that each debtor has mandate 415
Consequences of theory pf mandate 416
Exceptions which a joint and several debtor may plead
against the creditor 417
Personal exceptions 417
Exceptions common to all the debtors 418
Exceptions personal to another debtor 418
" Personal exception " does not mean same thing here as
in case of surety 418
Confusion 419
Compensation 419
Chose jugee 420
Release 422
What is the effect of the release from the solidarity if one of
the co-debtors becomes insolvent? 424
Is the effect of a release from the solidarity to oblige the
creditor to deduct the share of the debtor released ? . . . 427
Release of the debt 428
Alleged imperfect solidarity 428
Two debtors may be liable each for the whole debt without any
solidarity 429
Effects of joint and several liability as among the co-debtors
themselves 429
XVI TABLE OF CONTENTS.
CHAPTER XXIII. PAGE
DIVISIBLE AND INDIVISIBLE OBLIGATIONS ,431 — 442
(1) Obligations indivisible by nature 432
(2) Obligations indivisible by agreement 434
English law as to this ....(^ 435
Indivisibility on one side only 435
The effects of indivisibility ' 437
Comparison between indivisibility and joint and several liability. 442
CHAPTER XXIV.
EXTINCTION OF OBLIGATIONS 443 — 557
(1) Performance or payment 444
By whom performance may be made 445
Person paying must have capacity 448
To whom payment must be made 449
Performance made to the person holding the right to claim
execution of the obligation 450
Payment cannot prejudice seizures 451
Performance must be of thing due and cannot be made in
part 451
Place of performance 452
Expenses of payment . > 454
Proof of payment 454
Payment with subrogation 455
Special points of difference between Erench and Egyptian
laws 457
Conventional subrogation 458
Legal subrogation 460
Purchaser of immoveable who pays price to hypothecary
creditors 461
Persons liable with or for the debtor 462
Effects of subrogation 463
Various theories of subrogation 464
Practical consequences of the difference of theory 465
Has Egyptian Code adopted new theory? 466
Imputation of payments 466
Debtor cannot injure rights of creditors 467
Exception to rule that debtor can make imputation 467
Imputation by the creditor 468
Legal imputation 469
Comparison with other laws 470
Effect of the impossibility of finding the creditor in order to pay
him or of the refusal by the creditor to take payment ... 470
Tender and payment into court 470
Obligation to pay a sum of money or to deliver a specific
corporeal thing 471
Tender at bar of court v 474
Action to have tender declared valid 474
Obligation to do or not to do 474
TABLE OF CONTENTS. XV11
CHAPTER XXIV.— continued,
PAGE
(1) Performance or payment — continued.
Obligation to deliver an immoveable 475
Obligation to deliver an indeterminate thing 475
(2) Dissolution by the performance of the obligation becoming
impossible 470
Contract may imply that risk was to be on seller 478
The loss of thing due an instance of impossibility of per- '
formance 478
Application of rule against unjust enrichment 479
Theory of risk in the Egyptian law 480
(3) Novation 482
(1) Simple novation 484
(2) Delegation 484
Expromission 484
(3) Novation by change of creditor 485
Parties to novation must be capable 485
Novation not presumed 486
Must be valid debt to novate 488
New debt must be substituted 488
Effects of novation 488
Transfer of securities to new debt 489
No transfer of securities to property of new debtor 490
Is the old debtor's consent necessary to transfer securities ? ... 490
Protection of third parties 491
Novation in case of joint and several debt or debt secured
by a surety 491
Delegation 492
Meaning of express discharge 493
Delegation distinguished from novation 493
Distinction between perfect delegation and imperfect
delegation 494
Indication of person to pay or to receive payment 495
Distinction between novation by change of creditor and
assignment of a claim 495
(4) Release 496
Release may be tacit 497
(5) Compensation. 499
(a) Legal compensation 500
Can court declare compensation ex officio? 500
Compensation first pleaded in appeal 501
What debts can be compensated 501
(1) The debts must be reciprocal 501
(2) The debts which are compensated must be of the
same kind, or be fungible 503
(3) The two debts must both be demandable 504
w. — VOL. II. b
XV111 TABLE OF CONTENTS.
CHAPTER XXIV.— continued.
PAGE
(5) Compensation — continued.
What debts can be compensated — continued.
(4c) The debts must be liquidated 504
Debt uncertain 505
Debt not liquid 505
(5) The debts must be payable in the same place 50(5
Exceptional cases in which legal compensation is not per-
mitted 507
Eule not necessary in case of loan for use 500
Debt not liable to seizure 510
Effects of legal compensation 510
Imputation 511
Compensation not to prejudice third parties 511
Assignment 512
Arrestment '. 513
Bankruptcy 513
Eight to renounce compensation 514
(b) Facultative compensation 515
Compensation in other laws 515
(6) Confusion 516
Confusion usually caused by succession 517
No confusion when benefit of inventory 518
Extinction of principal debt by confusion extinguishes acces-
sory debt ' 518
French law as to confusion does not apply in the case of
Mohammedan successions 520
(7) Prescription 521
Acquisitive prescription and extinctive prescription 521
Law of prescription based upon public policy 522
Full explanation of acquisitive prescription belongs to law
of property '522
Rules common to acquisitive and extinctive prescription ... 523
The delays of prescription 523
Long prescription 523
Prescription of five years 524
Restitution of fruits not governed by five years' prescription. 524
The five years* prescription applies to moratory interest .... 525-
Prescription of 360 days 527
Debtor must be put upon his oath 528
Difference between French and Egyptian law 528
ferment de credulite 528
Prescription may be pleaded at any stage of the proceedings. 529
The judge cannot ex officio give effect to prescription 530
Calculation of prescriptive period 530
Point of departure of extinctive prescription 532
Conditional debt 532
Action in warranty 533
Debt subject to term 533
TABLE OF CONTENTS. XIX
CHAPTER XXIV— continued.
PAGE
(7) Prescription — confinmed.
Prescription does not run till debt is exigible 534
When the debt is divided into fractions or into separate
items 534
Doubt with regard to sums due to physicians 536
French law 53fi
Egyptian law 530
What rule would apply in the Native Courts 537
Retroactive effect of prescription 538
According to what calendar is the prescriptive period
reckoned ? 539
Renunciation of prescription 540
Renunciation in advance is contrary to public policy 541
Is the rule prohibiting renunciation an absolute one? 542
Is an agreement to suspend prescription a renunciation in
advance ? 543
Renunciation of acquired prescription 543
Renunciation during the course of prescription 544
Renunciation may be tacit 544
Tacit renunciation must be en connaissance de cause 540
Renunciation of prescription is not an alienation 547
Renunciation of the right to claim acquisitive prescription
requires capacity to alienate 548
Capacity for renunciation of extinctive prescription 548
Right of creditors and other third parties to revoke a pre-
scription which has been renounced 549
Can parties other than creditors sometimes invoke prescrip-
tion which has been renounced ? 550
Interruption of prescription 551
Acts of interruption 551
Acts of acknowledgment 552
Effects of interruption 553
Suspension of prescription 553
Causes of suspension 554
May there be other causes of suspension? 554
Other modes of extinction 556
(1) Expiration of the time limited by the parties for its
duration 556
(2) Death of the creditor and debtor in certain cases 550
Concordance 559
Inprx 571
ci/fc.
CHAPTER I.
EFFECTS OF CONTRACTS.
Confusion in the French Code between effects of contracts
and effects of obligations.
The French Code, after dealing with the interpretation of con-
tracts, has a section which is headed Of the effect of contracts
in regard to third parties. (C. C. F. 1165.)
And the Egyptian codes, following the same order, give
articles of a similar nature. (C. C. N. 141 — 143; C. C. M.
202—204.)
* But the French Code contains in another place a chapter headed
Of the effect of obligations, of which the first article is awkwardly
placed. (C. C. F. 1134.)
It would have been more natural to put this article in the
same section with articles 1165 — 1167.
In this respect the Civil Code of Quebec has improved upon the
arrangement by having one section, Of the effect of contracts,
in which the effects are given as between the parties themselves 1 ,
and two other sections which discuss the effects of contracts in
regard to third persons, including la stipulation pour autrui, the
indirect action by creditors, and the Paulian Action. (C. 0. Q.
1022—1040.)
The Egyptian Code, meagre as it is, seems to intend to reproduce
the French law. (See Halton, I, p. 333.)
We must distinguish between the effects of contracts and the
effects of obligations.
The effect of a contract is to create obligations. The contract
brings into existence a legal relation between the parties. If it
is a synallagmatic contract it produces obligations on both 6ides,
whereas if it is a unilateral contract it produces one obligation
only. It must also be remembered that some contracts operate
w.— vol. n. 1
2 THE LAW OF OBLIGATIONS.
also a transfer of property, as when the owner of a corps certain
pells it. (C. C. E. 91/145.)
The effect of an obligation is to give the creditor the right
to enforce the performance. With this we are not just now 1
concerned.
Effects of contracts as between the parties.
The French Code says Agreements legally formed take the
place of Jaw as between the parties.
They cannot be revoked except by their mutual consent or for
causes which the law authorises. They must be executed in good
(a; lit. (C. C. F. 1134.)^
This article of the French Code is headed Of the effect of
obligations, but this is a mistake. The article deals entirely with
the effect of contracts. In saying that the agreement takes the
place of law between the parties, the Code means merely that the
agreement becomes a sort of private law to which the parties
have voluntarily subjected themselves, and that when the courts
are satisfied that the agreement was legally entered into and is
not such an agreement as is prohibited by law the courts must
enforce it. (Bufnoir, Propriete et Control, p. 744. Supra, I,
p. 361.)
The Code of Quebec expresses the law better by saying Con-
tracts produce obligations and sometimes have the effect of
discharging or modifying other contracts . They have also the
effect in some cases of transferring the right of property.
They can be set aside only by the mutual consent of the parties
or for causes established by law. (C. C. Q. 1022.)
Contracts make the law between the parties.
Neither the Code of Quebec nor the Egyptian Code has repro-
duced this provision of the French Code; probably because it
seemed to be too theoretical for a code.
The German Code, however, lias a somewhat similar declara-
tion. It says: Contracts aire to be interpreted in the manner
required by loyalty and reciprocal confidence taken in connection
with the usages recognised in business (art. 157).
This does not mean that the court can set up an ideal contract
and substitute it for the will of the parties. On the con-
trary, it is the will x of the parties which must be discovered and
to which effect must be given.
EFFECTS OF CONTRACTS. 3
But the court is entitled to assume that neither of the parties
intended to take advantage of the other, and that each of them
Iiad a right to expect that the other would honestly and fairly
fulfil his obligation.
The broad principle that contracts make the law between the
parties and that they are to be executed in good faith, although
not stated in the Codes of Quebec or of Egypt, is just as much a
part of those laws as it is of the French law. (Of. supra, I,
p. 358 and p. 361.)
It is a general principle laid down in the Roman law on the
subject, and it has been held in France that it applies to contracts
anterior to the Code. (Dig. 16. 3. 1. 6; Cass. 6 mars 1876,
D. 76. 1. 193.)
In saying that a contract makes the law between the parties,
we mean (1) that it overrides any general provision of law, not
being a law of public order, and (2) that the court is bound to
give effect to the contract as it stands and is not entitled to modify
it in order to make it more equitable. (Cass. 19 mare 1913, D.
1916. 1. 238; supra, I, p. 358 and p. 361.)
Modification of charitable foundations.
The interesting and difficult question as to the power of the
courts to "vary r ' charitable foundations when a change of cir-
cumstances makes it impossible or inexpedient to carry out the
original purpose, is a question which can only be noted in this
place. (See Demogue, E., in Rev. Trim. 1907, p. 287.)
The English courts exercise a power of this kind. It is spoken
of as the principle or rule of cy-pres — that is, of carrying out the
original purpose as nearly as possible. {Moggi'id-ge v. Thackwell,
1792, 7 Vesey, 36, 2 R. R. 140; Jarman on Wills, 6th ed. 1,
p. 233; Halsbury, Laws of England, vo. Charities, n. 333; Snell,
Equity, 17th ed. 95.)
Contract changes legal situation of parties.
Under any system of law which recognises freedom of contract
the parties who have made a contract are allowed to modify their
legal relations.
They make a law for themselves as regards the particular
matter with which they are dealing, and this exercise of their free
will is permitted by the law.
1 (2)
4 THE LAW OF OBLIGATIONS.
But, as Ave have already seen, this is subject to the limitation
thai they cannot contract themselves out of a law of public order,,
or, in other words, their contract must not be one which is for-
bidden.
Interpretation of contract is question of fact.
The rule that the contract forms the law between the parties
does not mean that the interpretation of a contract is a question
of law.
On the contrary, it is a question of fact; the court has to dis-
cover the intention of the parties in each particular case.
This is in France an important distinction, because the Cour
de Cassation has no power to review a judgment as to facts. It
can only correct errors of law into which the lower courts have
fallen . In the construction of contracts it is not always easy to
say what is fact and what is law, and in France somewhat fine
distinctions have been drawn. (B.-L. et Barde, 1, n. 336; Hue,
7, n. 88.)
With these we are not concerned, because with us, in civil
matters, there is an appeal both as to facts and law. In criminal
appeals the Courts of Appeal in Egypt are courts of cassation in
the French sense. (C. Crim. Proc. N. art. 229; Code Crim.
Invest. M. art. 153. See C. A. Alex. 17 janv. 1906, B. L. J.
XVIII, 95.) In saying that agreements are to be performed in
good faith the French Code means to declare that it rejects the
distinction of the Roman law between actions stricti juris and
actions bonce, fidei. (Hue, 7, n. 90; Fand. Frwiq. vo. Oblig..
n. 7915; supra, I, p. 358 and p. 361.)
Exceptio non adimpleti contractus.
This article might also be used to support the doctrine which,
undoubtedly forms a part of the French law, that in every
synallagmatic contract the party asking for the execution of the
contract will not be entitled to a judgment unless he has performed
his own part of the contract or is ready to perform it. (See
Planiol, 2, n. 949; Cassin, B,., De I'Exception tiree de Vlnexecu-
tion, p. 440; Cass, 1 mai 1889, D. 90. 1. 470.)
This rule has been alreadjr explained in discussing the character-
of bilateral contracts. (Supra, I, p. 88.)
EFFECTS OF CONTRACTS. 5
Modification of contract by parties.
It hardly needs to be stated that the parties to a contract may, C\
as a general rule, put an end to it or modify it by a second contract.
They were free to make it and they are equally free to unmake it
or to change it. So long as the contract which modifies or dis-
charges a previous contract between the parties is not contrary to
public order or good morals it will receive effect . Nor does the law
require in all cases that the consent to modify or discharge a con-
tract shall be made in express terms. The parties may show by
their conduct that they have so agreed.
In other words, the consent to modify may be either tacit or
expressed .
Thus in a contract for the sale of coal, where the seller intimated
to the buyer that, owing to the outbreak of war, and Government
regulations in consequence thereof, he could not supply the coal,
and to this intimation the buyer made no reply, it was held that
he had acquiesced in the resiliation of the contract. (C. A. Alex.
11 avril 1917, B. L. J. XXIX, 358.)
In a series of French cases it has been held that clauses of a
policy of insurance to the effect that the premium should be
portable, that is to say, that it should be the duty of the insured
to take the premiums to the company's agent, had been modified
by tacit agreement. ••*->
The uniform practice of the agent to call and collect the pre-
miums when they fell due had been assented to by the insurer, and
by this tacit agreement the premium had become querable, that is,
it must be called for, and, accordingly, it was not in arrears until
demanded. (Cass. 4 nov. 1891, D. 92. 1. 313; D. N. C. C. IV,
p. 875, n. 1113, and p. 910, n. 158.)
And there are many cases in which the courts hold that a party
who was at first entitled to enforce a certain condition of a contract
has by his conduct waived his right to do so. The original con-
tract has been modified. (See Cass. 27 juillet 1892, D. 92. 1.
462.) So when the price is to be paid by instalments, it may be
stipulated that if any instalment is not paid at the time agreed
upon, this shall give the vendor the right s at once to demand pay-
ment of the whole balance due.
But if a vendor has on two occasions allowed the purchaser to
pay an overdue instalment, it may be held that he cannot on the
third occasion insist on his right to take nothing but the whole
balance. (C. A. 17 April 1912, O. B. XIII, n. 114. For an
6 THE LAW OF OBLIGATIONS.
interesting example of a modification of a contract by implied
assent to a new condition, see Douai, 9 nov. 1899, D. 1901. 2. 46.)
But the renunciation of a right is never presumed, and, though
the renunciation of the right to enforce the contract — the waiver,
to use the technical term of the English law — -may be implied, it
•will not be implied unless the circumstances clearly indicate the
imtention not. to insist on the right in question.
AyA^ In insurance policies it is not uncommon to find clauses pro-
viding how certain conditions may be waived. For example, it
may be a condition of a fire policy that the assured must send
particulars of the loss within a certain number of days, and it
may be provided that this condition is not to be waived except in
writing and by the company's manager. An assurance company
has a large number of agents scattered over the country, and if
they were to be allowed to waive conditions made in favour of
the company it would be difficult to carry on the business of
insurance at all.
Most of these agents are merely agents for canvassing, whose,
business it is to persuade people to insure with the company, and to
collect and forward the premiums. Such agents do not dictate the
form of the contract or its terms, and it would be unreasonable that
they should have power to waive conditions which the company
has made.
Where no such condition is expressed in the policy the assured
does not forfeit his rights to the indemnity by failure to make the
declaration of the loss within the delay named, if his failure to do
so was at the request of the company's agent. Xancy, 8 dec.
1894, D. 95.2. 165.)
The rules as to this loss of contractual rights by waiver or
acquiescence form an important chapter in the law. It happens
frequently that a contract is modified in this way by the conduct
of the- parties, and that when one of them attempts to get it en-
forced by the courts it is held that he has no title to do so, because
he has shown by his conduct his intention not to insist upon his
legal rights under the contract, or, it may be, not to insist upon a
certain particular right which was thereby given to him.
The principle that the conduct of one of the parties may modify
the contract is illustrated in the case where the inexecution by
one party justifies the other party in refusing to execute the
>> ''' "^ contract on his side. (See supra, I, p. 88; Cass. 4 fevr. 1889,
D. 90. 1. 121.)
As a rule it is perfectly competent for a party to surrender a
EFFECTS OF CONTRACTS. 7
right given to him by contract, but we must remember that ho
caiiiKj] surrender a right which is given to him by a law of public
order; so that, for instance, it could not be maintained that aQp^
husband had by his conduct renounced any of the rights which the
law gives to him as a husband, or that a man who was a party to
a contract which was contrary to public policy or to good morals
had lost by his conduct the right to challenge its validity, for, as
has already been explained, it is a fundamental rule of the law
that one cannot by a private agreement modify a law of public
order and good morals.
This rule applies equally to a private agreement made in express
terms or to an agreement manifested by the conduct of parties.
(C. C. F. 6; C. C. Q. 13; Decree of Reorg. Native Courts, art.
28.) When a contract is contrary to public order the court is
bound ex mero motu to refuse all effect to it, and there can bo
no question of the party being barred by his conduct from
challenging the contract. (Larombiere, art. 1338, nos. 8 and 25;
D. N. C. C. art. 1338, n. 31; B.-L. et Barde, 3, n. 1933.)
Effect of modification or cancellation of contract as between
the parties.
When the parties modify their contract either expressly or by
implication they may do so in any way which suits them, pro-
vided they do not infringe the laws of public order. And, in like
maimer, when they agree to cancel their contract, they may deter-
mine what rights .each of them is to have.
The presumption is that when they cancel the contract they
intend the rights to be those existing at the date of the cancella-
tion, for till then the contract was in force, and unless the parties
have stated that they intended the cancellation to be retroactive,
it will not be presumed that they intended it to be so.
This has an important consequence in regard to the amount of
damages. If the parties have cancelled the contract, reserving
their respective right to damages, the presumption is that this
means the damages as at the date when the contract was cancelled.
"6
Effect of modification or cancellation as regards third parties, p.
Although the parties can, as between themselves, determine that
their contract shall come to an end, and even that it shall be as if
it had never existed, that is, that the cancellation shall be retro-
8 THE LAW OF OBLIGATIONS.
active, the}' cannot. modify or extinguish rights which third parties
have acquired under the contract while it existed.
If the contract produced a transfer of property, the party who
by the contract became owner may have granted hypothecs or
created servitudes over the property, and the subsequent
revocation of the contract cannot affect the parties who have
acquired these rights.
Moreover, if there are by the fiscal law, dues to be paid on every
transfer of property, the contract which revoked the former one
is regarded as being a now transfer of property. (Planiol, 2,
n. 1166.)
This principle will be explained more fully presently in speak-
ing of the effect of contracts as regards third parties, for the
modification of a contract is, in fact, a new contract.
Renewal of contract.
When a contract expires the parties are free to renew it upon
the same or upon different conditions. For instance, when a
lease expires, or a contract of fire insurance terminates at the end
of the year for which it was effected, if the parties agree to renew
it they do not continue to be subject to the old contract, but they
make a new one. But there are some contracts, such as those of
life-assurance, or of membership of a club, or of a trades-union,
which stand in a different position. So long as the party assured
pays the premium when it is due, or so long as the member of the
club or of the union pays his dues and satisfies the conditions of
membership, he is entitled to the continuance of the old contract,
unless, in the membership case, he lias been removed from the list
in accordance with the rules to which he submitted himself.
The contract in these cases is not renewed annually, it is kept
in force.
One of the parties is not free to modify it at the end of a year
without the consent of the other or without a change in the rules.
(See D. Rep. Pratique, Associations, n. 98; Aix, 23 nov. 1904,
D. 1905. 2. 121, and note by Planiol; Civ. 23 juin 1860, D.
60. 1. 243; Cass. 19 mars 1901, D. 1903. 1. 329; D. Rep. Prat.
Assurances, n. 259.) And it m&y be remarked in passing that
the distinction between these two classes of contracts is an impor-
tant one in the case where a statute declares that it is not to apply
to contracts existing at its date. For a contract of this type
continues to exist if it is kept in life in the manner provided.
EFFECTS OF CONTRACTS. 9
Exceptions to rule that contracts can be modified or revoked
by parties.
Although the article in the French Code, now under considera-
tion (C. C. F. 1134), which we are taking in connection with
C. 0. F. 1165, says in general terms that contracts can be revoked
by the mutual consent of the parties, there are, nevertheless, excep-
tions to this rule.
There are some contracts, though not many, which in the French
law cannot be discharged or modified by the parties. Marriage
is a contract, or, perhaps, it would be more correct to say, it is
entered into by a contract; for by their contract, manifested in
the way which the law requires, the parties effect a change in
their status. As it has been well expressed, " Marriage is a status
of which the gate is a contract."
But, although the parties enter into this status by a contract,
they cannot by a contract put an end to it, for the French law does
not admit divorce by consent, nor can the parties modify the rights
of status which the law gives them. So also, the marriage-cove-
nants bj r which the patrimonial rights of the consorts are fixed
before the marriage, if they do not leave them to be regulated by
the general law, become irrevocable at the celebration of the mar-
riage, in such a way that the parties cannot surrender any of the
rights so given to them, or modify the marriage-covenants in
any way after the marriage. (C. C. F. 1395: C. C. Q. 1260.)
We do not attempt to explain the Mohammedan law on these
points.
Certain contracts can be revoked by one party or one party
may be released owing to change of circumstances.
It is clear that, as a general rule, a contract cannot be set aside
by one party only. There would be no virtue in contracts if
either party could resile from them at will. As the contract
takes two to make it, so it will take two to unmake it. (See the
interesting article in Rev. Trim. 1907, p. :245, on Modifications
aux oontrats par volonte unilaterale, b}^ M. Rene Demogue.) It
can be set aside without such mutual consent for certain causes,
viz., fraud, error, violence, and, in some cases, lesion.
Or it may be declared to have never existed for want of two
consenting minds or for lack of an object or of a lawful cause.
The law as to these matters has already been explained. But.
when there is a valid contract not tainted with any vice, the rule
10
THE LAW OF OBLIGATIONS.
hat it stands good, unless both parties agree to discharge or
to vary it. This rule, however, is subject to certain exceptions
created by special provisions as to particular contracts. So a
mandate may be revoked, or, subject to certain conditions as to
damages, it may be renounced. (C. C. X. 52j2j 529; C. C. M.
640, 650; C. C. F. 2003, 2007: C. C. Q. 1755, 1759. Sec
B.-L. et Wahl, Mandat, n. 812; Demogue, in Eev. Trim. 1907,
p. 271.) So, likewise, the person who has given a thing to a
carrier for transport to A may, in some circumstances, forbid the
carrier to deliver the thing to A. (Cass. 15 now 1893, D. 94. 1.
273; Lyon-Caen et Renault, Traite de Droit Commercial 3, n.
584; Thaller, Traite EUm. n. 1165; Demogue, in Rev. Trim.
1907, p. 270.) The qualifications and details do not belong here.
And a partnership, unless for a fixed period, can be dissolved
at the will of any one of the partners, provided this renunciation
on his part is in good faith and is not made a contretemps,
that is at a moment when the dissolution would be unfair to the
other partner or partners. (C. C. E. 445/542; C. C. F. 1865;
C. C. Q. 1895: C. A. Alex. 3 dec. 1890. B. L. J. Ill, 43.;
So, likewise, a man who ha- let work to another to be done by
contract for a fixed price— -memihe a forf ait— or even, in the
Egyptian law, for a price settled according to the time occupied
or the work done, can at any time cancel the contract if he pays
the contractor his expenses' and damages according to the circum-
stances of the case. (C. C. E. 407/495; C. C. F. 1794; C. C. Q.
1691; C. A. Alex. 18 mars 1909; B. L. J. XXI, 254.)
Such a provision is necessary, for it might easily happen that
a man began to build a house, and then found that he had not
enough money to finish it, and, this being the reason, it does not
seem to make any difference whether the materials are supplied
by the owner of the building or by the contractor. (Cass. 5 janv.
1897, D. 97. 1. 89. See Demogue, in Rev. Trim. 1907, p. 267.)
But these cases are specially provided for in the code and are
exceptions to the rule. The French article also states that a
contract may be revoked for causes which the law authorises.
This is not at all a happy expression, but it means that there are
cases in which owin g to the conduct of the other party, or to some
changj of circumstances, the party acquires a right to Be relieved
of his contract. This is so when its performance becomes im-
possible by a fortuitous event, or when a party gets a contract
I dissolved on the ground of the non-fulfilment by the other party
of what he had promised. C. C. F. 1184; C. C. Q. 1065.)
EFFECTS OF CONTRACTS. 11
Another example is the case of the lender of an article who
Bnds he has an urgent need for the article himself. By the French
law the lender can put an end to the contract by asking for the
return of the thing. (C. C. F. 1889; C. C. Q. 1774.)
And probably the Egyptian law is the same, though the code
is silent upon the point. (Grandmoulin, Contrats, p. 270. Cf.
German Code, art. 605; Stat. Keel. art. 804.
It has been suggested that it would be equitable to give the
courts a wider power to vary contracts, especially contracts of
long duration, when owing to some unexpected change of eircum- ^
stances, their literal performance becomes very burdensome to one
party. (See Demogue, R., in Rev. Trim. 1907, p. 247 and
p. 309.)
It is probable, however, that such a change of the law would
do more harm than good, and would encourage undesirable liti-
gation. It is highly in the public interest that the security of
contracts should be maintained. (See supra, I. pp. 105 and 361.)
There is, notwithstanding, one important case in which there
is much to be said in favour of giving the courts power to modify
a contract. This is when the unexpected outbreak of war makes
its performance not impossible but extremely onerous for one of
the parties. (See under War as Force majeure, infra, p. 307.)
Effect of contracts as between the parties and as against third
parties.
In considering this subject it is necessary to distinguish con-
tracts of which the effect is to transfer property or real rights,
that is contracts which are at the 'same time conveyances, from
contracts which have not this effect. And it will be convenient
to divide the subject thus: (1) the effect of contracts in trans-
ferring property between the parties; (2) the effect of contracts
in transferring property in regard to third parties; and (3^ the
effect of non-translatory contracts with regard to third parties.
But before dealing with these questions there are certain pre-
liminary matters which have to be disposed of. We have to
determine to begin with who are the parties to a contract and
who are third parties.
LThe broad rule is laid down in the codes that contracts have
effect only between the contracting parties. They cannot pre-
judice third parties, nor can they benefit them except in cases
12 THE LAW OF OBLIGATIONS.
specially provided for. (C. C. N. 141, 142: C. C. M. 202, 203.
See C. C. F. 1165; C. C. Q. 1023.)
This is the principle sometimes spoken of as that of the rela-
tivity of contracts. The articles in the Egyptian Code are as
follows: —
Agreements cannot enure to the benefit of third persons, other
than the creditors of the contracting party, who can, in virtue of
the general right which they have over the property of their
debtor, exercise, in the name of such debtor, all such rights of
action as accrue to him from contracts or from any other source
of obligation, save only such rights of action as are purely per-
sonal. (C. C. E. 141/202.)
Agreements cannot prejudice third persons, as against whom
they cannot be set up unless they have a legally established date.
(C. C. E. 142/203.)
With these articles may be conveniently considered the article
of the French Code which declares that a man cannot, in general,
bind anybody but himself by a contract, or bind another to a third
party by a contract. This is a free translation of the famous
rule,
On ne pent, en general, s 'engager, ni sti/puier en son propre norm,
que pour soi-meme. (C. C. F. 1119.)
This broad rule is qualified by the two articles which follow it
in the French Code, in which it is declared: (1) that a man can
guarantee that a third party shall do something, in this sens©
that the promisor binds himself to pay damages if the third party
will not take over the obligation; and (2) that a man may stipulate
for the benefit of a third party when this is a condition of a stipu-
lation which he makes for himself, or of a gift which he makes,
and that where he has made such a stipulation for the benefit of
a third party, and the third party has declared his intention of
taking advantage of it, the stipulation can no longer be revoked.
(C. C. F. 1120, 1121; C. C. Q. 1028, 1029. Cf. C. C. E.
137/198.)
But, as will be pointed out later, the rule that contracts cannot
affect third parties is subject to other exceptions. These two
cases which the French Code gives as exceptions to the rule,
namely, the contract se porter fort and the stipulation pour autrui,
will need to be considered when we have first examined what are
the effects of contracts between the parties and as regards third
EFFECTS OF CONTRACTS. 13
parties, apart from these two particular cases which are specially
provided for.
r
Who are the parties to a contract?
The parties to a contract are, primarily, those who have per-
sonally consented to it. But other persons may be parties to the
contract although they did not appear in it by themselves. If
I give to a man authority to act as my agent, and, in the execution
of his functions as agent, he makes a contract in my name, I am
a party to the contract just as much as if I had given the consent
'myself. I have, in fact, given the consent myself, although I
have given it indirectly by authorising my agent to act for me
in the matter. Qui f/ctolt per alium facit per se. (Aubry et Eau,
4th ed. 4, p. 650; Cass. 5 juin 1898, D. 98. 1. 559; D. N. C. ('.
art. 1998, n. 1.)
Representation in contract.
When is an agent a party?
When my agent in making the contract declares that he is
acting in my behalf he does not bind himself personally at all.
Through his instrumentality I acquire a direct right of action
against the party with whom my agent made the contract, and
this party acquires a direct right of action against me, while the
agent himself drops out as soon as the contract is made. (Pothier,
Oblig. n. 87; B.-L. et Wahl, Contrats Aleatoires, n. 800.)
Nor does the ag^ent bind himself when he has exceeded the
authority which I gave him, if he gave the part}- with whom he
contracted a sufficient communication of his powers. (C. C. E.
524/643; C. C. F. 1997; C. C. Q. 1717; C. A. Alex. 19 fevr.
1903, B. L. J. XV, 155.)
If my agent shows to the other party the written authority
which I gave him, or explains the position in which he stands to
me, and that he is acting on my behalf, it is for the other party
to satisfy himself that the agent is acting within the limits of his
authority. He knows that the agent is not adting for himself,
and he knows, also, that the agent does not guarantee that he has
authority to make the contract, for by communicating the extent
of his authoritj*, the agent throws upon the other party the re-
sponsibility of judging whether he has power to make this parti-
cular contract. (B.-L. et Wahl, Control* Aleatoires, n. 806. A
14 THE LAW OF OBLIGATIONS.
It is only when he exceeds his powers and does not disclose
the extent of his authority, that the agent binds himself personally,
for, in this case, he cannot be acting- as an agent, seeing that what
he does is outside the scope of the agency. 'C. A. Alex. 16 nov.
1905, B. L. J. XVIII, 15.)
Unless the principal chooses to ratify what the agent who
exceeds his authority has done, he is not a party to the contract ,
or, perhaps a more correct way of expressing the law is to say that
the principal, although not a party to the contract when it is
made, if the agent exceeded his powers, is given by law the option
of coming into the contract afterwards. (C. C. E. 527/648;
C. C. F. 1998; C. C. Q. 1720; Aubry et Rau, 4th ed. 4,'p. 651;
B.-L. et Wahl, Controls Aleatoires, n. 785; C. A. Alex. 1 fevr.
1899, B. L. J. XI, 116.)
When an agent acts in his own name the situation is entirely
different. It may be, and generally is, perfectly well understood
that he is not contracting on his own behalf.
He is really an agent because he is doing business for another .
But by acting in his own name, he binds himself personally,
and becomes the direct debtor or creditor of the person with whom
he contracts, although he still is an agent vis-a-vis of the jjerson
on whose behalf he was acting. (B.-L. et Wahl, op. cit. nos. 880,
900; Cass. 3 mai 1893, D. 93. 1. 567; C. C. Q. 1716. See Code
Comm. E. 82/86; C. A. Alex. 3 mai 1905, B. L. J. XVII, 235.)
Factors and brokers.
Certain kinds of agents, such as factors — commissionnaires—or
brokers — courtiers — habitually act in this way.
Their principals are not named and do not appear in the trans-
action.
A commissionn-aire or an agent de change always and neces-
sarily acts as an intermediary.
He cannot, for example, sell his own goods to his clients unless
he discloses the fact that they are his. He cannot be the contre-
partie as well as the broker. Otherwise the client -can get the sale
annulled. (Req. 28 mars 1904, D. 1905. 1. 65; Lyon-Caen et
Renault, Traite de Droit Commercial, 3, n. 414; Manuel de Droit
Commercial, 11th ed. n. 480, and n. 828.)
Stockbrokers are subject to somewhat different rules from other
brokers. The courtier, according to Egyptian usage, may sell his
EFFECTS OF CONTRACTS. 15
own shares to his client if ho sells them at the market-price.
(C. A. Alex. 24 jam. 1906, B. L. J. XVIII, 101; C. A. Alex.
8 mail907, B. L. J. XIX, 239.)
The rule is that factors and brokers contract a* principals, and
the other party to the contract looks to the eommissionnairt alone
or the courtier. He has nothing to do with the person for whom
the commissionnaire is acting.
If I buy shares on the stock exchange through a stockbroker,
the ordinary course of business is for me to buy them from the
broker.
In order to get the shares for me the broker has to buy them
from somebody else, generally from another broker who is acting
for the actual holder of the shares. Between me and this actual
holder no contractual relation exists. I have an action against
the broker on my contract with him, and the shareholder who sells
his shares has an action against his own broker, while each of the
brokers has rights of action against his client and against the other
broker, but the new shareholder and the old shareholder have no
action against each other. (Authorities in preceding note; C. A.
Alex. 3 mai 1905, B. L. J. XVII, 235.) So much has been said
in order to explain that there are numerous cases in which a man
is a party to a contract, although he did not personally appear in
it. He is a party because he was represented in the contract by
his agent.
Involuntary representation.
Besides this representation to which he has consented there are,
however, cases in which a man becomes bound by a contract in
which he was represented, though, as a matter of fact, he did not
authorise the representation. These are the cases in which there
is what may be called an " involuntary representation," or a re-
presentation created by law and not by agreement.
So, the minor is bound by the contract which his tutor makes
on his behalf so long as the tutor is acting within his legal
authority .
So also, if a man does something for my benefit in such circum-
stances as to make him my negotioriom gestor, according to the
principles which will be explained more fully later, I become
bound by contracts into which my negotiorum gestor entered in
my name although I knew nothing about them. And the parties
with whom he dealt may, in certain circumstances, have a direct
16 THE LAW OF OBLIGATIONS.
action against me. (Laurent, 20, n. 332; Dissertation of M.
Planiol, in note to I). 91. 1. 49; infra, p. 155.)
Or, to take an example from the commercial law, if a trader
has been declared insolvent, and a concordat or scheme of settlement
has been agreed to by the majority of the creditors, who repre-
sent moreover three-fourths of the debts, and this composition is
confirmed by the court, it becomes binding upon all the creditors,
even those who were not present at the meeting or those who were
present and opposed the scheme. (See C. Com. N. 328; C. Com.
M. 338; C. A. Alex. 8 mai 1895, B. L. J. VII, 247.)
For the law declares that the majority of the creditors, provided
certain other conditions are fulfilled, shall represent the minority.
This is another case of involuntary representation.
Summary.
The parties to a contract include therefore, in addition to those
consenting to it in person, (a) those who consented through an
agent; and (b) those whom the law binds to the contract because
it was made by their legal representatives.
Heirs and successors.
In most contracts, besides the parties originally entitled or
bound, there is a possibility of other persons becoming entitled or
bound afterwards, because they succeed to the rights or debts of
the original parties.
The presumption is that a person who stipulates for something
to be paid to him intends that it is to be paid to his heirs if
he dies before the contract is executed.
And, in like manner, there is a presumption that a man who
binds himself to make a payment intends that if he does not pay
it in his lifetime it is to be paid by his heirs.
As the French Code expresses it: On est cense avoir stipule
pour soi et pour ses heritiers et atjants^Qfluse, a moins que le
contraire ne soit exprime ou ne resulte de la nature de la conven-
tion. (C. C. F. 1122; C. C. Q. 1030. Cf. German Code, art.
1967.^
The Egyptian Code has no article to this effect, but the law
is the same. The rule is that obligations transmit both actively
and passively, but there are certain exceptions to the rule. For
the present purpose it is sufficient to point out that the aycmts
EFFECTS OF CONTRACTS. 17
cause who succeed to the rights of a party to a contract arc. not
to be considered as third parties.
This is not for the reason that they had any part in the contract
when it was made, but because they have stepped into the shoes
of those who made it. It would be absurd to say that the rule
that third parties could neither benefit nor be prejudiced by con-
tracts applied to the ayants cause. If I make a contract which
my heir has to fulfil, he is just as much prejudiced by it as if
he had made it himself.
It is not necessary here to discuss the nature and the extent of
the liability of heirs and whether, and in what cases, an heir can
be liable in excess of the amount to which he has succeeded, or to
refer to the difficulties of the Mohammedan law on this subject.
(See, on the last matter, VEgypte Contemporaine, 5, p. 14,
article by Abd El Hamid Bey Badawi.)
Under any system of law the heir cannot be a third party in
the sense under consideration.
Meaning of "ayants cause."
The term ayant cmi&e^ is a more convenient one than any
corresponding English expression. It is often translated by the
word " representative," but this word suggests too much the idea
of agency which is quite a different thing.
By ayant cause is meant for our present purpose a person who,
without having consented to a contract either personally or
through a representative, has succeeded to one of the parties to
the contract or to a person who had rights or liabilities under it,
or has acquired from another a right under the contract.
The person to whom the ayant cause succeeds and in whose
place he comes, or the person from whom he acquires the right is
called his author.
It would not be sufficient for the definition to say that the
ayant cause succeeds to one of the parties. This is so in the case
of succession to a deceased person when the heir of the creditor,
or of the debtor, as the case may be, succeeds to him. But it is
possible for a man to succeed as an ayant cause to a right or to
a liability under a contract although his author was not himself
a party to the contract. This may happen when there is an
assignment of a debt.
The original creditor may assign the debt, in which case the
assignee succeeds to him as a party, but if the assignee in his
W.— VOL. II. 2
18 THE LAW OF OBLIGATIONS.
turn assigns the debt, the second assignee is the ay ant cause of
the first, but he does not succeed directly to either of the parties
to the debt. The person who acquires under a contract a right of
property, may be correctly said to succeed to the right of property
which his author had, but the person in whose favour a hypothec
is created does not succeed to his right, for it is created for the
first time by the contract.
But he is, none the less, the ayant cause of the owner who
creates the hypothec, because he derives his right from him. (See
B.-L. et Barde, 1, n. 211.)
Universal and particular ayants cause.
Ayants cause are of two kinds, denoted in the French law by
the terms ayants cause a titre universel, and ayants cause a titre
particulier.
The first are those who succeed to the whole estate of the author,
or to an aliquot share of it, such as a half or a quarter. These
will, generally, be heirs of a deceased person, because people do not
as a rule transmit their estate, or an aliquot part of it, in this way
during their lifetime.
But a man's creditors are also, in a sense, ayants cause uni-
versels, because such rights as they have are over the whole patri-
mony of their debtor. The position of creditors is, however,
different from that of other ayants cause universels, and I shall
consider it separately.
The ayants cause a titre particulier are those who succeed to
their author in some particular right or acquire some particular
right from him. The buyer, for instance, succeeds the seller as
owner of the thing bought. A person to whom a thing is left as
a legacy succeeds the ancestor as owner of this particular thing.
The creditor in whose favour a hypothec is created acquires from
the debtor a special and determinate right against the property
hypothecated, and so on. (Planiol, 1, n. 303; B.-L. et Barde,
1, n. 211; Bufnoir, Propriefe et Contrat, p. 753.)
Rule that obligations transmit to universal successors only.
The general rule is that it is only the ayants cause universels
who succeed to the rights or to the liabilities of their author, and
the presumption is that the ayants came of this class do succeed
to both the claims and the debts. There are cases, however, in
which the obligation does not pass even to them. For (a) the
EFFECTS OF CONTRACTS. 19
contract may provide that the right <or the debt shall not transmit,
as if, in buying- a house, I stipulate for myself that I shall have
a delay of ten years to pay the price, but that on inv death, if
that occurs within the ten years, the price shall be instantly pay-
able by my heirs.
In this case if I had not expressly deprived my heirs of the,
delay, they would have succeeded to so much as remained of it at
my death, as being a right which was vested in me.
(b) The contract may be of such a nature that it cannot pass
to heirs, as where I stipulate for myself a right of usufruct.
Or, (c) the contract may be one which the law declares shall
terminate at the death of the parties.
Thus the French and Egyptian Codes declare that the contract
of lease and hire of work comes to an end by the death of the
workman, though the Code of Quebec, with greater reasonableness,
says that this shall only be so in cases wherein the skill and ability
of the workman were an inducement for making the contract,
and then only at the option of the other party . (C . C . E . 41 1/502 ;
C. C. F. 1795; C. C. Q. 1692; B.-L. et Barde, 1, nos. 214
seq.)
Particular representatives.
The general rule as to particular representatives, or, as they are
otherwise called, singular successors, is the opposite of that with
regard to universal representatives. Eights and debts do not pass
as a rule to ayants cause a titre particulier.
If I sell a house to you, that does not make you in any way-
liable for my debts, or entitle you to enforce claims due to me;.
But in a certain limited sense you succeed to my debts and claims,
namely, to such of them as before the sale affected the right of
property in the house. For instance, if before the sale I had.
granted to my neighbour a servitude of running his drain under
the backyard of my house, you take the house subject to that
servitude .
Or, conversely, if, before the sale to you, I had stipulated for
a servitude in favour of this house over my neighbour's land, you
will take it with the servitude attached to it.
Or again, if I possess an estate composed of several farms, and
I have a dispute with my neighbours concerning the property of
certain parcels of land, or concerning servitudes, and the dispute
is terminated by a contract of compromise, in which I admit the
right of my neighbours to some pieces of land, or to some servu-
2 (2)
20 THE LAW OF OBLIGATIONS.
tildes, and, in return, I obtain from them an admission of my
rights as to other disputed points, and, thereafter, I sell the estate
to a third party, this third party takes the estate subject to the
terms of this compromise.
He can claim the rights for which I stipulated, and he is subject
to these real rights which I created.
But in all the preceding cases, as will be explained presently,
an innocent purchaser for value is protected by the rules as to
transcription. (B.-L. et Barde, 1, n. 223; Planiol, 2, n. 1180;
C. A. Alex. 13 janv. 1908, B. L. J. XX, 58, and cases in
B. L. J. Table* Decennales, vo. Transcription.)
But these cases are only apparent exceptions to the rule that
rights and debts do not transmit to singular successors. It is
not because the singular successor as such succeeds to the claim or
to the debt, but it is because he takes the thing- transferred in the
condition in which his author had it.
The singular successor is not as such directly bound by the
personal obligations of his author, even when these obligations
were relative to the thing which forms the object of the trans-
ference. If, for example, an owner makes a contract with a man
to do certain work on his property, and he afterwards sells the
property, the buyer has nothing to do with the contract which
the seller made. (See Cass. 23 dec. 1891, D. 92. 1. 409; Cass.
21 mars 1894, D. 94. 1. 240; Cass. 16 nov. 1896, D. 97. 1. 483.)
Bui if before the sale, the seller had done something which
restricted or modified the right transferred, as where he has created
a real right over it, or he has made a compromise concerning it.
the successor takes the property so modified or restricted. This
is an application of the rule nemo plus juris transferre potest
quam-ipse habet. Even in this case, as regards property, or real
rights less than property, the practical application of the rule is
much restricted by the provisions which require transcription or
registration.
A particular successor by onerous title, whose own right has
been made real by transcription, is not subject to real rights
created by his author even before the sale unless these real rights
were transcribed before his. (C.C.N. 611—615; C. C. M. 737
—742; Loi du 23 mars 1855; Planiol, 1. n. 2619; Grandmoulin.
Suretes personnelles, etc., p. 249.)
But a particular successor by gratuitous title, such as a donee
. or legatee, is liable to find that property given or bequeathed to
him is subject to real rights created by his author in favour of
EFFECTS OF CONTRACTS. 21
thud parties, although these third parties have not complied with
the law requiring transcription.
But, in order to be so preferred, the third parties must them-
selves have acquired by onerous title and by a title that had
acquired a dale certaine before the particular successor's right
w~as tranaoriBed. (C. C. E. 617/744. Sec C. A. Alex. 9 fevr.
1905, B. L. J. XVII, 117; C. C. Q. 2098; Grandmoulin, op. tit.
p. 255.)
For it is certainly more equitable that the person who wishes
to avoid a loss— cert at d,e damno evitando, as the old lawyei-s
said, should be preferred to one who seeks to realise a gain— certat
de lucro captando .
Under the French law it is disputed whether a donee is to be
assimilated in this respect to a legatee. Many writers contend
that under the terms of the French legislation a donee is entitled,
like a successor by onerous title, to set up the want of transcrip-
tion against third parties. (D. N. C. C. v. 4, p. 1741, n. 49, and
authorities cited; Colin et Capitant, 1, p. 952.)
But the Egyptian Codes make it clear that the donee and the
legatee are in the same position as far as this matter is concerned.
(C. C. E. 617/744.)
Neither of them can set up the default of transcription as
against the third parties above indicated.
Subject however to the limitations created by the law which
requires transcription of real rights in order to make them effectual
against third parties, among whom we must for this purpose
include a particular successor of the creator of the real rights, the
rule undoubtedly is that the particular successor takes the pro-
perty as it was in the possession of his author, that is subject to
rights which that author had created oyer it, and, on the other
hand, that he is entitled to claim rights over it for which his
author had stipulated.
Can we go a step forther? Undoubtedly we can. We must
assimilate to stipulations creating real rights which transmit pleno
jure to aymts cause a titre particular such stipulations, as, without
neating a real right, have produced, in the direct interest of the
thing transferred, rights which have become identified with this
thing in such a way that one may say they have become accessories
to it, or in a certain sense qualities of it. (Demolombe, 24,
nos. 283 and 284; B.-L. et Barde, 1, n. 223; Aubry et Rail,
. 5th ed. 2, p. 97; D. N. C. G. art. 1122, n. 94. See C. A.
Alex. 9 fevr. 1905, B. L. J. XVII, 117.)
22 THE LAW OF OBLIGATIONS.
So a person, to whom a debt is assigned which is secured by a
surety or by a hypothec, succeeds to these accessory rights which
pass with the debt to which they belong. (Authorities in pre-
ceding note.)
And upon this principle, it is held in France that when an
immoveable has been resold by the purchaser, the sub-purchaser
succeeds to the right to bring the action in guarantee or warranty
against the original vendor, even in the case when the sub-pur-
chaser, as a successor by gratuitous title, would not have had any
such recourse against his immediate author. (Aubry et Rau,
oth ed. 2, p. 98, and 5, p. 88.)'
The action in guarantee passes from purchaser to purchaser as
an accessory of the property sold. (B.-L. et Saignat. Vente,
n. 359; Aubry et Rau, 5th ed. 5, p. 88; D. Supp. vo. Vente,
n. 426; D. N. C. C. art. 1626, n. 306 seq.)
And the same principle applies in regard to the sub-purchaser
of moveables. (Cass. 12 nov. 1884, D. 85. 1. 357.) So, also,
the purchaser of a house is subrogated de plein droit in the recourse
which the vendor had against the architect and contractor if the
building perishes in whole or in part within ten years from its
completion, owing to defect in construction, or even to the un-
favourable nature of the ground. (B.-L. et Wahl, Louage, 2,
nos. 3925 and 3958; Rennes, 9 avr. 1870, D. 72. 2. 110; C. C. E.
409 500; C. C. F. 1792; C. C. Q. 1688.) The jurisprudence
upon this point in Quebec is in the same sense. (McGuire v.
Fraser, 1908, R. J. Q. 17 K. B. 449. 40 Canadian Supreme
Court Reports, 577.) Contrast the curious French case in which
it was held that the successive owners of a picture are not bound
by a declaration of the original vendor as to its authorship,
'■ (Cass. 23 dec. 1891, D. 92. 1. 409.)
And, in France, it has been held that when the vendor of
business-premises binds himself in the contract of sale not to
carry on any business of the same kind in the same town, this
obligation can be enforced by a sub-purchaser of the business-
premises. Cette obligation prohibitive, se rattachant par sa
nature el son objet a V etablissement lui-meme,'le suit dans quelques
mains qxCil passe. (Paris, 21 fevr. 1900, D. 1900. 2. 476; D.
Svpp. vo. Industrie et Commerce, n. 118. Supra, 1. p. 169.)
EFFECTS OF CONTRACTS. 23
Analogous rule in English law.
So, in England it is held that the benefit of a covenant by a
vendor of a business, or of the covenant of a servant who has been
engaged in the business, that he will not trade in competition
with the purchaser or employer, as the case may bo, is part of the
goodwill of the business and is assignable with it. (Jacoby v.
Whitmore, 1883, 49 Law Times, 335; Baines v. Geary, 1887,
35 Oh. D. 154, 56 L. J. Oh. 935; Bemwell v. Inns, 1857, 24 Beav.
307, 116 B. E. 131. See Encyc. of Laws of Eng. vo. Restraint
of Trade, p. 268.)
In such contracts it is not necessary that the stipulation should
be expressly in favour of assigns. This is inferred from its
character.
Leases.
Moreover, there is another important case where a singular
successor succeeds to an obligation entered into by his author.
This is when the owner sells an immoveable which is leased.
The purchaser is bound to respect the lease and cannot turn out
the lessee, unless the lease contained a special stipulation to the
effect that the owner can put an end to the lease if he sells tho
property .
But in the French and Egyptian law it will only be when the
lease had a date certaine anterior to the sale that it can be thus
opposed to the purchaser. (C. C. E. 389/474. See C. A. Alex.
9 mai 1902^ B. L. J. XII, 242.) The purchaser is a third party
as regards any lease which had not a fixed date before the acqui-
sition of the property by him. And a lease of more than nine
years can only be opposed to him for nine years, unless it was
transcribed. (C. C. E. 613/740.)
There are on this subject certain differences of detail in the
provisions of the codes which do not need to be considered here.
(C. C. E. 389/474; C. C. F. 1743; C. C. Q. 1663. Cf . German
Code, arts. 571, 579. See Grandmoulin, Contrats, p. 152; Halton,
2, 134; Bufnoir, Propriete et Contrat, p. 767.)
Creditors.
We are concerned here only with the chirographic creditors,
that is, with ordinary creditors who have no special guarantee by
having a real right such as a pledge or a hypothec. The creditors
who have such a real right can never be affected by the subsequent
24 THE LAW OF OBLIGATIONS.
contracts of their debtor. (Planiol, 2, n. "2318; Aubry ct Rail,
5th ed. 2, p. 102.)
But the chirographic creditors are in a different situation.
They are not strictly speaking the ay ant S cause of their debtor,
because they have not acquired any property from him, or suc-
ceeded him in any right, but they are in a situation similar in somo
respects to that of the ayants cause by virtue of the provision of
law that the property of a debtor is the common pledge of his
creditors. (C. C. F. 2093; C. C. Q. 1981. Of. C. C. E.
141/202.) They look for payment of their debt to the property
of their debtor if he will not pay .the debt voluntarily, but as they
have no real security, and as the debtor is left in the administra-
tion of his property, this property which forms their common
pledge is continually being modified by the acts of their debtor..
If he acquires a new right this increases his assets, and the security
of his creditors becomes by so much the greater.
On the other hand, if he alienates anything, or becomes liable
for a new debt, their common pledge suffers a corresponding
diminution. It is therefore very manifest that the contracts made
by the debtor do in fact benefit or prejudice his creditors, and
that they are not to be regarded as among those third parties who
cannot be affected by a contract in which they had no part. Seeing
that the creditors are affected by the contracts of the debtor they
are frequently described as being among the ayants cause
universels.
We may say, if we like, that the debtor in making a contract
represents his creditors. We may speak of this as "constructive
representation " because there is no conscious representation. The
debtor does not regard himself as acting on behalf of the creditors,
but by operation of law his acts do affect them as if he represented
them! (Planiol, 1, n. 305; 2, n. 1174. See C. A. Alex. 11 nov.
1903, B. L. J. XVI, 7.) It is because the debtor represents his
creditors that when, to their prejudice, he refuses to exercise a
right which he has. they can claim to act for him, or in other
words, can avail themselves of the indirect action which will
be explained later. As he will not act for them they claim to
act for themselves.
But, though from this point of view, the chirographic creditors
are ayants cause of their debtor, this is only in the sense which
has been explained that they must endure the competition — subir
le concows — of other creditors, even of later date, so that they
may see their common pledge diminished by an alienation made
EFFECTS OF CONTRACTS. 25
1)\ theii' debtor. But the creditors are not ayants cause in the
sense that they are ever bound personally and directly by the
obligations contracted by their debtor. (Bufnoir, Propriete et
Contrat, p. 766.)
Moreover, the chirographic creditors themselves are in certain
respects considered as third parties and are, in this character,
protected against the acts of their debtor.
It is only while the debtor is acting in good faith that he is
regarded by the law as representing his creditor. He may
squander his property and they will have no right to complain.
But it is otherwise if an insolvent debtor acts with the fraudulent
intention of diminishing the pledge of his creditors, for when he
acts in bad faith he ceases to represent them. The creditors can
in this case bring the direct action, otherwise called the Paulian
Action, to annul the contract which the debtor has made.
When they do this they are exercising a right which belongs
to them; they are in the position of third parties who claim they
cannot be affected by the contract. This action will be fully
explained later. So, we see that the creditors appear some-
times in the position of ayants cause universels who are affected
by the contracts of their debtor, and, on the other hand, they
appear sometimes as third parties who can challenge these con-
tracts.
(Planiol, 1, n. 305. See Cass. 29 oct. 1890, D. 91. 1. 475.)
Summary.
To sum up what has been said: (1) persons are not third parties
to a contract in the sense under discussion if they were repre-
sented in the contract by persons authorised to do so by the law.
(2) Further, the ayants cause universels of the contracting parties
are not third parties as to the contracts to which their author was
a party. (3) Ayants cause a titre particulier of the parties, such
as purchasers or donees from them, are not third parties as regards
contracts made by their author prior to the transference to them,
if such contracts augmented or diminished their author's rights
over the thing transferred, but they are third parties as to all
other contracts made by their author. (4) Lastly, chirographic
creditors are in a certain sense ayants cause universels and are,
therefore, affected by their author's contracts. But they have
special rights given to them by law for the protection of their
26 THE LAW OF OBLIGATIONS.
interests, and when they are exercising these rights they may
properly be considered as third parties.
(B.-L. et Barde, 1, n. 581; D. N. C. 0. art. 1165, nos. 9 seq.)
In the preceding cases we have been considering the case of
persons who are affected by a contract because they are not in a
legal sense third parties as far as this contract is concerned.
But besides these there are cases where persons who are un-
questionably .third parties to a contract may be affected by it,
nevertheless.
It is these cases which have now to be explained.
f i . ]ut
Exceptions to the rule that contracts do not benefit or
prejudice third parties.
The most important exception to the rule is the one expressly
made in the French Code. (C. C. F. 1165; C. C. Q. 1028.)
This is the case of the stipulation pour autrui, under which a,
person not a party to the contract, nevertheless, acquires a direct,
right under it.
This will be explained later. It may be remarked that the
Egyptian codes ought to have made this exception in the corre-
sponding article. (C. C. E. 141/202.)
The Egyptian Code expressly recognises the stipulation
pour autrui although in terms which are somewhat obscure,
(art. 137/198), and we must conclude that the broad rule, stated
in article 141/202, is intended to be subject to this exception.
But besides the stipulation pour autrui there are undoubtedly
other oases where a contract benefits or prejudices third parties.
(1) The rule that contracts do not affect third parties does not
apply except as to personal rights.
If the effect of the contract has been to transfer property or
real rights, the new owner of the property or the creditor in tho
real right can set up his right not only against his author but
against third parties, such as particular successors of his author.
It is of the very essence of the real rig-ht that its owner can
defend it against all comers. (Dcmolombe, 25, n. 45; B.-L. et
Chauveau, Biens, n. 246; Cass. 20 fevr. 1900, D. 1900. 1. 250;
Req. 21 mars 1894, D. 94. 1.240; D. N. C. Cart. 1165, n. 67.)
If moveables have been transferred to me by a contract the rule
possession vaut titre is, in most cases, enough to protect me
against any claims, and if I have acquired a real right over an
EFFECTS OF CONTHACTS. 27
immoveable I am protected also against claims by third parties,
at least if I have satisfied the formalities which the law requires.
Protection given to third parties.
Under the law governing- transcription or registration of real
rights over immoveables, it may be that I enjoy this protection
only if I have registered my right before my opponent has got his
right registered.
The effect of publicity by means of transcription or inscription
in the register will be explained later. (C. C. E. 611/737;
C. C. Q. 2098; Loi du 23 mars 1855, D. 55. 4. 26.)
And, in any case, if I am to be allowed to set up my right
against third parties, I must be able to give it a legally ascer-
tained date which shows that my right is prior to theirs.
(C. C. E. 142/203; C. C. F. 1328. Cf. C. C. Q. 1225; Cass.
9 janv. 1901, D. 1901. 1. 449.) For instance, if I have bought
a Held from B and it turns out that B was a non-dominus and
that A was the owner, then, if A revindicates the field from me,
I maj' be entitled to defend myself by the plea of prescription.
But in order to be allowed to do so, I must have a deed of
sale which has a date certains. (See Planiol, 2, n. 74; Halton, 1,
p. 419.) By the laws which prescribe registration of real rights,
and refuse to allow a private writing to prove its own date, third
parties dealing in good faith are in most cases safe, but it
cannot be denied that in principle contracts which transfer
propert}' may affect third parties.
(2) Contracts which affect the status of the contracting parties,
or which regulate their property after a change of status, may
benefit or prejudice third parties. Thus the effect of marriage
may be, as it is in the French law, that the wife cannot make-
certain contracts without the authorisation of her husband, or the
contract of ma,rriage may give to the husband certain special rights
over the wife's property.
In either case, third parties may be affected by the change in
the wife's status, or by the rights given to the husband by the
marriage-contract, for example, the right of administration of the
property comprised in the community. (D. Rep. Oblig. n. 290;
Cass. 17 dec. 1873, D. 74. 1. 145; Beudant, Contrats, p. 572.)
(3) Again, the fact that two persons have entered into a part-
nership, seriously affects third parties who deal with them, and
this is why the law provides that a partnership agreement, or, at
28 THE LAW OF OBLIGATIONS.
any rate, one which creates a commercial partnership, must be
published to the world in such a manner as to give third parties
sufficient notice of it if they are to be affected by it. (C. Comm.
E. 48/54; Lai du '24 juill. 18G7, arts. 55 — 61, abrogating C.
Comm. F. 42 seq. See Thaller, Traite EUm. cle Droit Commer-
cial, 4th ed. n. 359.)
(4) A contract in virtue of which a person enjoys a monopoly
affects third parties.
If the exclusive right to run tramcars within a certain area is
given to one company this affects possible competitors. (See Civ.
18 oct. 1910, D. 1912. 1. 233.)
(5) There is, further, considerable French authority for a pro-
position which greatly narrows the application of the general rule
that contracts affect only the parties to them.
This is that when the execution of a contract would have re-
sulted in a direct benefit to a third party, and the contract is
wilfully or fraudulently broken, the third party may sue the party
who has broken the contract for reparation of the loss caused to
him b}" the breach.
For example, A orders from B goods manufactured by C, and
B fraudulently supplies other goods; C has an action against B
for damages.
In several cases the wrong alleged was the substitution of one
brand of wine or liqueur in place of another one which was
ordered.
The claim is delictual, being founded on fault, but if the cases
are well decided, they strike a serious blow at the relativity of
contracts.
It will be observed that they do not fall under the principle of
the stipulation pour autrui, as there is ho intention on the part
of A to stipulate a benefit for C.
(Paris, 8 juin 1904, D. 1905. 2. 270; Heq. 30 dec. 1912, S.
1913. 1. 156; Rev. Trim. 1913, p, 622.)
(6) Moreover, although a third party cannot incur any con-
tractual liability from the breach of a contract to which he was
no party, yet nevertheless, if he conspires with one of the parties
to break the contract he will be liable in damages to the other
party to whom prejudice is thereby caused.
This is what is called la responsabiUte du tiers complice*, and,
like the last case, belongs to the law of responsibility. (Cass.
27 mai 1908. I). 1908. 1. 459; Nancy, 4 avril 1906, S. 1906. 2.
EFFECTS OF CONTRACTS. 29
241; Ilev. Trim. 1912, p. 167. See Pierre Hugueney, Respon-
sabilite Civile du Tiers Complice, These, Dijon, 1910.)
(7) Another exception is that which is created by the rule that
novation by substitution of a new debtor can be made without
the consent of the first debtor. (C. C. E. 1ST 251; C. C. F.
1274; C. C. Q. 1172.)
(8) Lastly, the rule that the payment of a money debt may be
made by a third party instead of by the debtor is, in a sense, an
exception to the rule under discussion.
The third party has a right to come in and take the debtor's-
place, at least, for this important purpose. (C. C. E. 160/223;
0. C. P. 1236; C. C. Q. 1141; Bufnoir. Propriete et Contrat,
p. 752; infra, p. 445.)
In fact, when we consider all the various exceptions which have
to be made, it becomes clear that the scope of the rule is much
narrower than at first appears.
It does not follow that it is not an important rule. It is,
however, hardly necessary to furnish many examples of its
application. Two may be given. If one of two co-proprietors
contracts with a third party, the contract does not bind the other
co -proprietor. Again, the owner of land is not bound by contracts
made by the possessor. (Bufnoir, Propriete et Contrat, p. 749.)
A labourer employed by a farmer on shares has no direct action
for his wages against the owner of the land. (Cass. 18 ocjt.
1898, D. 99. 1. 105. For other interesting illustrations, see
Cass. 8 aout 1883, D. 84. 1. 81; Paris, 21 oct. 1902, D. 1903.
2. 121; C. A. Alex. 18 mai 1911, B. L. J. XXIII, 330.)
These illustrations may suffice.
Rule does not mean that contract may not be proved by
third parties as a fact.
The rule that agreements cannot affect third parties means that
third parties cannot acquire rights or incur liabilities under them.
It does not mean that a contract may not throw light upon the
rights of a third party. He does not claim that any right is given
to him by the contract to which he was not a party, but he claims
that the contract throws light upon his position, and that it may,
therefore, be proved as a fact in support of the case which he
submits to the court. Un contrat petit etre invoque dans une
contestation contre un tiers, a Vappui d'une affirmation de fait,
pour etahlir la situation exacte des parties oontractantes Vunc
30 THE LAW OF OBLIGATIONS.
vis-a-vis de Vautre. (Cass. 3 fevr. 1879, D. 79. 1. 308; Cass.
27 juin 1892, D. 92. 1. 379.)
For example, take the case where a landowner, on whose property
there is a mine, has given to another the right to work the mine
subject to payment to him of a certain sum for every ton (or other
unit) extracted. The landowner, in other words, instead of
realising a fixed rent is to-be paid in the form of what is called
a "royalty." Now, if a railway company by placing its line
where it is, has restricted the working of the mine, and the question
is what compensation must be paid to the landowner, the proof
of the value of this royalty will naturally be found in the agree-
ments between him and the person who has the mining concession.
The contract which he made with this other person cannot give
the landowner a right against the railway company, but it may
materially help to show the extent of the loss caused to him by
the construction of their line. (Cass. 3 janv. 1853, D. 53. 1.
133.)
Translatory and non-translatory contracts.
Having now explained what we mean when we speak of the
parties to a contract, and who are meant by "third parties," we
are in a position to discuss the effect of contracts as between tha
parties in the first place, and in the second place as against third]
parties.
For this purpose it is necessary to distinguish between trans-
latory contracts and non-translatory contracts.
Effect of contracts in transferring property between the
parties.
This is dealt with in the French Code in a number of articles,
of which the most important are articles 938, 1138, and 1583.
(Cf. C. C. Q. 795, 1472, 1596.) In the Egyptian codes the
corresponding articles are as follows: —
An obligation to transfer a thing transfers ipso facto the
ownership thereof, when the thing in question is a specific cor-
poreal thing whereof the party bound is owner.
An obligation to create a real right iff like manner transfers
such right, except in the case of rights of privilege, hypothec
mid retention. (C. C. E. 91, 92/145, 146. Cf. C. C. E.
48/70; C. C. N- 357.)
The former of these articles is in the section devoted to the
obligation de donner, and it declares that this obligation makes
.♦Mr
^ A/^ijJba*.
EFFECTS OF CONTRACTS. 31
the creditor owner of the thing even before delivery. The phrase
obligation de donner is the consecrated expression in France for
an obligation the object of which is to effect transfer of properly.
(B.-L. et Barde, 1, n. 344; Planiol, 2, n. 159.)
It is bore a translation of the Latin word dare, which, in this'
technical sense, must be carefully distinguished from donare, as
it in no way implies the intention to make a gift. (Bufnoir,
Propriete et Contrat, p. 43; supra, I, p. 17.)
The same principle is laid down in the French Code in dealing
with the separate contracts by which property may be transferred,
such as gift, sale, and exchange. (C. C. F. 938, 1583, 1703.)
The Civil Code of Lower Canada states the same principle more
clearly in a general article:
.4 contract for the alienation of a thing certain and determinate
medics the purchaser owner of the thing by the consent (done of
the parties, although no deliver;/ be made. (C. C. Q. 1025.)
And it, likewise, contains articles of a corresponding kind in
dealing with the separate contracts.
The Egyptian Code makes it clearer than the other codes that
the obligation to constitute a real right is likewise translatory as
between the parties and their ayants cause. An obligation to
create a real right in like manner transfers such right, except in
the case of rights of privilege, hypothec, and retention.
(C. C. E. 92/146. See C. A. Alex. 13 dec. 1905, B. L. J.
XVIII, 37, as to the effect of a promise to constitute a hypothec.)
Thus, for example, a right of usufruct, or a servitude, is created
as between the contracting parties by the contract itself.
(Bufnoir, Propriete et Contrat, p. 40.)
The rule, that in a translatory contract the property passes at
once by the mere consent of the parties, is subject in the Egyptian
law and in the law of Quebec to an important exception. A
ship cannot be sold in whole or in part, except by a document
executed in a certain way, and a transfer which does not comply
with the prescribed forms does not convey any title to the pur-
chaser. (Code of Maritime Commerce, E. art. 3; C. C. Q. 2359,
2362.)
In France the particular form is required ad probationem, but
its absence does not make the contract null. (Code Comm. F.
195; Loi du 23 nov 1897; B.-L. et Saignat, Vente, n. 19; D. N.
C. C. art. 1582, n. 225.)
It may be observed in passing that the French Code deals with
the question of the transfer of the risk in connection with the
52 THE LAW OF OBLIGATIONS.
transfer of the property. The obligation to deliver the thing
rend le creancier propi'ietaire et met la chose a ses risques des
V instant oil elle a du etr.e livree, encore que la tradition nen ait
point etc. faite, a moins que le debiteur ne soit en demeure de la
Hirer. (C. C. F. 1138.)
The Egyptian Code does not treat of the risk in this place, but
does so in dealing with the law of sale, where, unfortunately, the
texts are very difficult to reconcile with one another. (Arts.
266/336 and 297/371.)
This is not the place to discuss this subject. (See Halton, 2,
p. 26; Grandmoulin, Contrats, p. 24. See infra, pp. 476 seq.)
The only point with which we are now concerned is the main
provision that the property in a res certa passes by the mere consent
of the parties to alienate it.
Roman law and old French law as to effect of contract to
transfer.
As a matter of theory, this is one of the most important changes
introduced by the modern law. It was a cardinal principle of
the Roman law that a contract could not transfer the right of
property; all that it could do was to give to the creditor a personal
right to enforce' the transfer.
In the earlier period of the law, there- were certain formal
methods of transferring property, viz., in jure cessio and man-
cipatio. But, in the later law, it had become a settled principle
that to effect a change of property there must be delivery of the
thing.
Traditionibus et usueapionibus dominia rerum, non nudis pactis
transjeruntur. (Code, 2. 3. 20; Girard, Manuel, 5th ed. p. 293.)
The old French law retained this principle. As regards im-
moveables, however, actual delivery in course of time came to be
no longer required. Its place was taken by what was called
"fictitious delivery " — tradition feinte, or, sometimes, "legal de-
livery" — tradition de droit. (Argou, Institutions au Droit
Francais, 11th ed. 2, p. 197; Pothier, Vente, n. 313; Beaunr.
Droit Coutumier Francois, Las Contrats, pp. 141 seq.)
This fictitious delivery consisted of a clause in the contract hy
which the person conveying the property declared that he divested
himself of his possession and gave delivery to the other party.
It was called the clause of dessaisine-saisine or vest et devest.
It usually ran thus: (the seller) s 'en est dessaisi et devest a et
en a smsi et vestu le dit .
EFFECTS OF CONTRACTS. . 38
(Viollet, Hist, du Droit Fr«w^«,2nded. p. (J09; Argou, I. c.)
As regards moveables the old French law si ill required actual
delivery. -
Modern French law.
This necessity was abolished by the Code Napoleon which placed
moveables and immoveables on the same footing in this respect .
Delivery, either fictitious or actual, was no longer required as
a pre-requisite to the passing of the property. The article of
the French Code intended to introduce this change is obscurely
expressed, and there are certain difficulties as to its interpretation
with which we do not need to concern ourselves. The Egyptian
Code is quite clear, and it merely gives effect to what the French
Code, in all probability, meant to say. (See Colmet de Santerre,
5, n. 55, bis, III; B.-L. et Barde, Oblig. 1, n. 366.)
As a matter of abstract theory, the rule that consent passes the
property is an important innovation. But from the practical
point of view it makes much less difference than might at first be
supposed, when we are considering the effect of the contract as
between the parties only. When third parties are concerned, how-
ever, there is no doubt that the change is important.
Its importance has, notwithstanding, been exaggerated by some
writers, such as Larombiere, who says that the Civil Code has
nowhere else introduced a change so grave or so fruitful in con-
sequences (art. 1138, n. 3).
Other writers go to the opposite extreme. M. Bonnier says,
" The new principle is one of those superfetations, one of those
puerile subtleties— idola fori— which ought to be banished from
serious legislation.'" (Cited by Hue, 7, n. 98.)
The truth lies between these extreme views. The old law reso-
lutely refused to regard a man as owner till he had got possession.
But this was chiefly in order to protect, third parties who dealt
with the actual possessor in the belief that he was the owner.
The modern law protects them also, but in a different way, viz.,
by requiring registration in the case of immoveables, and by the
rule possession vaut titre in the case of moveables. The great
"purpose of the law has been to protect innocent third parties from
the risks to which they would be exposed by transfers of property
without their knowledge. It is impossible to deal safely with
immoveables if buyers and lenders cannot rely upon tho public
registers, and they must be protected against changes of owner-
W. — VOL. II. «*
34 THE LAW OF OBLIGATIONS.
ship which do nut appear there. This is the main object of
modern systems of registration.
And, in regard to moveables, as to which it would be impossible
to require registration in order to give notice of change of owner-
ship, the innocent third party is protected by the rule possession
vaut litre. He can deal with the man who is in possession of the
moveables without enquiring how he got them.
[f he acquires the moveables from him by a just title and in
good faith, or if he takes them as a pledge in good faith, and lends
money upon them in the ordinary way of business, he will be
protected. (C. C. E. 46/68, 87/116; C. C. F. 2279, 2280. See
C. A. Alex. 17 avr. 1900, B. L. J. XII, 213.)
Even when the moveables have been stolen or lost the honest
buyer is protected if he buys from a dealer in similar articles, or
in a public market.
If the owner revindicates such things the buyer can recover
what he paid for them.
But when we are concerned with the parties themselves, there
is no reason why their agreement to transfer the property should
not produce, its full effect at once without requiring delivery or
any other external act.
Two conditions of rule.
The rule that the mere consent of the parties to a translator^
contract passes the property is subject to two conditions: (1) that
the transferor is the owner of the thing to be transferred; and
(2) that the thing to be transferred is determinate.
(1) The Egyptian Codes, speaking of sale, say: The sale of
a determinate object which is not the property of the vendor is
invalid (art. 264 333. Cf. C. C. F. 1599; C. C. Q. 1487.)
In the ease of the sale of a thing belonging to another, the
disti net ion between sale as a contract creating obligations and
sale as a conveyance effecting an immediate transfer of property
becomes of great importance.
Although a man cannot sell what does not belong to him with
the effect of making the buyer at once the owner of the thing sold,
it is perfectly possible, and very common, for a man to sell a'
thing which is not his, with the understanding that he is to procure
it and then to transfer it to the buyer.
If the buyer and the seller both understand that this is what
they are doing, there is a valid contract in such a case, although
there is not, nor cannot be, an instantaneous change of property.
EFFECTS OF CONTRACTS. 35
Strictly speaking, it is not a contract of sale according to the
definition of the Egyptian Codes.
It is an innominate contract, because the Egyptian Codes con-
fine the term " sale " to the translatory contract. But it is in fact
a sale in the sense of the Roman law and that of the old French
law.
The contract of sale in the Roman law was not translatory.
It was a contract which bound the vendor to deliver, and to
warrant, &c, and bound the purchaser to pay the price. (See
Girard, Manuel, 5th ed. p. 535; Grandmoulin, Cmitrats, n. 42;
De Hults, V ente, n. 16.)
Such a contract is of the commonest at the present day .
It occurs, for example, when a man sells shares which he does
not own, or when a retail dealer sells goods which he has to procure
from a wholesale dealer or from a manufacturer.
(2) Unless the thing is a res certa there can be no instan-
taneous transfer of the property.
The question as to what is a determinate thing has already
been discussed in speaking of the object of contracts, and the full
discussion of it, as well as of the rule that the seller must be the
owner, belongs to the law of sale.
(C. A. Alex. 2 dec. 1903, B. L. J. XVI, 27; C. A. Alex. 23
mars 1904, B. L. J. XVI, 167; C. A. Alex. 28 fevr. 1912,
B. L. J. XXIV, 166. Supra, I, pp. 73 seq.)
Rule that property passes at once is not law of public order.
Although the natural effect of sale under the modem law is to
pass the property at once, this is not one of the essentials of the
contract. It may be stipulated that the property is not to pass
until some future time, or such a stipulation may be implied from
the circumstances. If a man gives a commission for the paint-
ing of a picture, or for the building of a machine, the time at
which the property is to pass will depend upon the intention of
the parties.
In general, the intention will be that the property is not to
pass till the thing has been completed and has been accepted by
the buyer. And the fact that instalments of the price have been
paid does not indicate that the property has passed to the buyer.
(Guillouard, Vente, I, n. 35; Cass. 14 mars 1900, D. 1900. 1.
497; Cass. 16 mai 1876, D. 78. 1. 97.)
3 (2)
■"S
36 THE LAW OF OBLIGATIONS.
The English law is the same. It is a question of interpretation.
The fact that instalments of the price are to be paid at certain
specified periods of construction does not in itself imply that the
property in ihe completed part passes to the purchaser.
(Laing & Sons, Ltd. v. Barclay, Curie & Co., 1908, A. C.
35, 77 L. J. P. C. 33; Benjamin on Sale, 5th ed. pp. 358, 363;
Williston on Sales of Goods, s. 275.)
And one common form of sale is that in which the price of the
article is paid by instalments, and the buyer is not to become the
owner of the thing until all the instalments are paid. (D. N.
C. C. art. 1583, nos. 37 seq.)
In France the legality of this clause is disputed. (Thaller,
Traite Elem. de Droit Commercial, 4th ed. n. 1947.) But the
French jurisprudence is in favour of the legality, and it is for
the court to decide whether the particular contract is a sale or a
lease. (Cass. 22 dec. 1909, D. 1910. 1. 63; Req. 29 janv. 1902,
S. 1902. 1. 168; Rouen, 17 juin 1911, D. 1912. 2. 149; D. N.
C. C. art. 1582, nos. 21 seq.; Hardouin, Vente a temperament,
these.)
The German Code authorises it (art. 455).
Its legality is admitted in England. (Helby v. Matthews,
1895, A. C. 471, 64 L. J. Q. B. 465; Benjamin on Sale, 5th ed.
' p. 327.)
There is no doubt in the Egyptian law that the clause is lawful.
(C. A. Alex. 3 nov. 1910, B. L. J. XXIII, 4; C. A. Alex.
30 avril 1913, B. L. J. XXV, 350; Gaz. Trib. Ill, p. 160;
C. A. 27 juin 1916, Gaz. Trib. VI, p. 183; Trib, Comm. Alex.
15 dec. 1913, Gaz. Trib. IV, p. 41; Trib. Somm. Caire, 31
oct. 1916, Gaz. Trib. VII, p. 8. Same rule in Quebec, Banque
d'Hochelaga v. Waterous Engine Co., 1877,27 Canadian Supreme
Court Reports, 406, R. J. Q. 5 Q. B. 125.)
Contracts of this kind are becoming very common, both in
regard to immoveables and to moveables, and they no doubt present
certain clangers to creditors, and also tend to encourage people
J.o bur things when they have not the money to pay for them.
In Franco there has been much abuse of this method in offering
shares and stocks to buyers who were only to become owners of
them after they had paid the instalments in full. Sales of this
kind are called ventes a temperament, and by the loi du 12 mats
1900, an attempt is made to prevent the abuse of this method of
sale. (See Lyon-Caen et Renault, Manuel, 11th ed. n. 847, bis.)
Another common form of such a sale is that in which it is
EFFECTS OF CONTRACTS. 37
onmhi np.fi with leas e. It is sometimes called location-vent e, and
sometimes, perhaps more correctly, it is described as a contrat
innommc. (See Trib. Somm. Alex. 28 mars 1914, Gaz. Trib.*
IV, p. 127.)
A moveable article, such as an automobile or a piano, is trans-
ferred, subject to the condition that the transferee is to pay so much
a month for the use of the article for a certain period, and when
the prescribed number of monthly payments have been made he is
to become the owner of the article. The monthly payments here
may be regarded as partly instalments of price.
The parties may call it a lease, but if the court considers that
it has the characteristics of a sale, they will give effect to the
intention of the parties. (Cass. 22 dec. 1909, D. 1910. 1. (53;
Rouen, 17 juin 1911, D. 1912. 2. 149.)
It is evident that such contracts are apt to deceive creditors. -
They may believe that the automobile or the piano belongs to
their debtor, and may give credit to him on the strength of his
being the owner.
On thi& account some French authorities hold that such a form
of sah) is null as contrary to public policy. (Thaller, I.e.)
But the validity of these sales is, as we have seen, recognised
by the jurisprudence in France, England, Quebec and Egypt, and
it seems too late to maintain that they should be considered as
null in principle, though stipulations of this kind will be inter-
preted strictly. (Trib. Civ. Cairo, 2 mai 1916, Gaz. Trib. VI,
p. 183.)
Moreover, the very frequency of such contracts largely pre-
vents their being a trap for creditors.
Before people give credit to a debtor on the strength of his
possession of an automobile or a piano, they have learnt by experi-
ence to enquire upon what terms he holds it.
In some of the American States such sales must be registered
to give notice to the public of the seller's title. (See Willi ston,
Sales of Goods, s. 327.^; .,,.-
Effect of contracts in transferring property as regards
third parties.
The Code Napoleon contained almost nothing on this subject.
The French law now rests upon the Joi du23 Mars 1855.
(See B.-L. et Barde. 1, n. 374. Of. C. C. E. 611 737; C. C. Q.
1027.)
38 THE LAW OF OBLIGATIONS.
By the Roman law, ai we have seen, the property did not pass
even as between the parties without actual delivery, and, there-
fore, a fortiori it did not pass as against third parties.
This system had some great advantages: —
(1) The creditors could rely on the property in the possession of
their debtor being available for the satisfaction of their claims.
So long as it remained in the debtor's hands they oould seize it.
They were not liable to find that the debtor had alienated his
property though he remained in possession of it.
(2) A purchaser who obtained delivery was safe. He could
not be evicted by another purchaser who produced a prior title.
(Code, 2. 3. 20; Inst. 2. 1. 41.)
\m the old French law, as regards immoveables, the clause of
dixsaisine-saisine effected transfer both as between the parties and
as against third parties. (Supra, p. 32; Pothier, Vente, n. 321.)
Where there were two purchasers that one was preferred whose
title was prior to the other, provided that this title had a certain
date. (76.) But some of the coutumes in France required an
investiture or formal taking of saisine, or possession, and a record
of this investiture was registered.
The hi du 20—27 septembre 1790 abolished the necessity for
this formal taking of saisine, and provided that registration of
the title should have the same effect.
This law applied only to the provinces in which investiture had
been required.
But the advantages of the system of registration having been
demonstrated, the law was extended to the whole of France by the
law of 11 brumaire <k Van VII. (Viollet, Hist, dm Droit Civ.
Francais, pp. 608 seq.; Beaune, Droit Coutumier, Les Contrats,
pp. 152—159; B.-L. et Barde, 1, nos. 368 seq.)
Under this law, of two successive purchasers of an immoveable,
that one is to be preferred whose title is first registered. As
between the parties the clause of dessaisine-saisme was enough
to transfer the property.
But this was not to be allowed to prejudice a later purchaser
whose title was registered before the other.
The compilers of the Code Napoleon, after much hesitation
and difference of opinion, abolished this law, and introduced the
broad rule that consent transfers property even as against third
parlies. (B.-L. et Barde, 1. n. 372; Hue. 7, n. 121.) This
opened a wide door to fraud. A purchaser of an immoveable or a
EFFECTS OF CONTRACTS. 39
lender upon hypothec, could never be sure that he -would not be
c\ icted by some one who appeared with a prior title.
The loi du 23 mars 1855, returned to the system of the lc*i du
11 brumaire de Van VII, and the Codes of Egypt and of Quebec)
are, as to this matter, based upon the lot du 23 mars 1855..
(C. ('. E. 611/737; C. C. Q. 2098 sea. ; Grandmoulin, Suretes
personnelles, n. 835.) The purchaser of an immoveable must
now register his right before he is secured in it .
According to one view in France, until the purchaser has regis-
. . .
tered his title he has no security that the property will not be
seized by the creditors of the seller. ' In a question with third
parties, registration is made an essential element of the contract
of sale. As to third parties, the seller remains the proprietor ^>-o j
until the registration of the deed of sale, and, consequently, his
creditors may validly seize the immoveable as the property of
their debtor. But this opinion does not appear to be sound.
...
The creditors are not third parties who have real rights over . .
the immoveable. It is this second view which has been followed
in Egypt. The details cannot be discussed in this place. (See t
C. A.' Alex. 16 juin 1910, B. L. J. XXII, 368; Grandmoulin/
Suretes, dc. n. 874; Bufnoir, Propriete et Cmtrat, p. 113; D. N.
C. C. 4, p. 1742, n. 60.)
But there is no doubt that a purchaser who has not registered his
title may be evicted by a subsequent purchaser from the same
vendor whose title gets on the register before his. In like manner,
a purchaser who has not registered his title may have to suffer the
burden of hypothecs or other real rights agreed to by his author
after the alienation to him, but registered before it. So long as
both sales are unregistered the earlier in date has the preference.
(C. A. Alex. 23 mai 1912, B. L. J. XXIV, 354. Cf. C. A.
Alex. 23 mars 1915, B. L. J. XXVII, 235.)
Exceptions to the rule that the real right first registered is y
preferred. x> {
(1) It is only a purchaser by onerous title, and when we say a
purchaser we mean the acquirer of a real right as well as a pur-
chaser of property, who can secure his right by getting it regis- .>\^t.j
tered, and is preferred to a purchaser of earlier date whose right is
not registered. When the conflict is between a purchaser by
onerous title whose right is not registered and a subsequent pur-
40 THE LAW OF OBLIGATIONS.
chaser by gratuitous title whose right is registered, the purchaser
by gratuitous title will have to give way, though, according to the
Egyptian law, this will be so only when the title of the first
' purchaser had acquired a date certaine before the transcription
made bv the purchaser by gratuitous title. (C. C. E. 617/744 ;
C. A. Alex. 21 mai 1902, B. L. J. XIV, 303. Cf. 0. C. Q.
2098.) In France, according to the prevailing view, a donee
whose right is registered enjoys the same preference as a purchaser
by onerous title. (D. N. C. C. vol. 4, p. 1741, n. 49.)
But this is not so by the Egyptian law, which in this respect is
much more equitable than the French law. And the law of
Quebec agrees with the Egyptian law.
(2) In order to avail himself of the preference given by first
registration, it is certainly essential that the second purchaser shall
not have acquired his right by a fraudulent agreement entered
into between him and the vendor in order to defeat the right of
the. first purchaser — fraus omnia rwmpit. The Court of Cassation
founds its decision to this effect on the general idea that fraud 1
X creates an exception to all rules, and that the law of 1855 was
• not intended to provide a convenient means for cheating innocent
third parties. (Cass. 27 nov. 1893, D. 94. 1. 343; Cass. 21
juill. 1885, S. 1887 1. 175; Pand. Frang. vo. Transcription,
u. 944. Contra, Mourlon, Transcription, 2, n. 453.)
The same result is reached by some of the writers by another
method .
The second purchaser has caused damage to the first purchaser
by his fault, and is, therefore, liable to make reparation on the
general principle of responsibility for fault . If the property which
he lias wrongfully acquired is still in his hands the restitution of
' it to the first purchaser will be the appropriate reparation. It
only came into his hands by fraud, and lie receives the property
subject to the duty of restoring it. (Lyon -Caen in note to S. 94.
1. 343; B.-L. et Barde, 1, n. 396; C. A. Alex. 12 fevrier 1908,
B. L. J. XX, 89.) But does the mere knowledge by the second
purchaser that the seller to him had already alienated the pro-
perty to another, or had agreed to the constitution of a real right
over it, without any fraudulent collusion with him, prevent his
acquiring the property if his title is first ' registered ? This is a
disputed question in France, but it is generally answered in the
nes-ative. Neither the toi du 23 mars 1855 nor the Civil Code of
Lower Canad,. says that the second purchaser needs to be in good
EFFECTS OF CONTRACTS. 4t
, faith in order to have his title preferred. C. C. Q. 2080, 2098.)
(The French Code, in dealing with deeds by which a gift is made
to a person — the greve— subject to a charge of restoring it at his
death to a substitute — the appele— prescribes that the deed must
be registered to have effect against creditors or third parties; and
it goes on to say that these third parties may plead the want «f
registration, although they may have had knowledge of the gift.
(C. C. F. 1071.)
Their private knowledge is not to be equivalent to the official
intimation, made to them by registration^ According to the pre-
vailing view in France, the principle here laid down applies also
to the case under consideration. (Authorities in preceding note;
Aubry et Rau, 5th ed. 2, p. 459; Mourlon, Transcription, 2,
n. 452; Pandectes Frrnigaises, vo. Transcription, n. 939; and
D. N. C. C. 4, p. 1744, n. 121.) It is true that the law of
registration is devised to protect the interests of third parties in
good faith, but in order to secure this protection a general scheme
has been framed which in fact protects all those who in dealing-
wit h the transferor find that the forms have not been complied
with. In order to make the law effective it has to be general, and.
being general, it may occasionally benefit a person not specialh"
intended to be covered. -And it may, further, be argued that a
third party who has mere private knowledge is not really in bad
faith. The law says to him, " You are not bound to know of any
alienation which is not registered." (See Eevue Pratique, 31,
p. 244; Bufnoir, Propriete et Contrat, p. 122.)
Whether the last argument is sound or not, there is nothing in
the French loi du 23 mars 1855 to prevent the second purchaser
of the immoveable, who has private knowledge of a prior aliena-
tion which has not been registered, from registering his own title.
and then founding on the want of registration by the first pur-
chaser.
Such a second purchaser can hardly be described as being " in
good faith," but he has complied with the provisions of the law,
and the benefit given by the law to the owner whose title is first
registered is not restricted to owners who acquire in good faith.
The language of the Egyptian Code is different. According
to that code it is only as regards third persona irh<> hare aeted
in good faith, laho have a just title and who have proiechd their
rights by observing the forms prescribed' by lair, that the o\\
ship is transferred by transcription. (270/341.)
IHT-
42 THE LAW OF OBLIGATIONS.
A proposal to alter the Egyptian law on this point and to
bring it into conformity with the French law, was made in the
course of the discussion as to the institution of Litres Fonciers
in Egypt.
A clause was proposed: Le simple connaissance de V existence
cCun acte portant sur un des droits mentionnes aux arts. 14 et 15
ne suffit pax pour constituer les tiers en mauvaise foi. But this
clause was struck out by the majority and does not appear in
the report of the commission. {Rapport du Comite de la Com-
mission Internationale de 1904 sur les Livres Fonciers, p. 17,
and p. 14 of the Rapport de la Sous-Commission.) The difficulty
of maintaining that a person who has acquired an immoveable
knowing that his author had previously sold it to another can be
held to have acted in good faith is insuperable. But in spite
of this the jurisprudence has fluctuated in an extraordinary
manner.
During the first period the Mixed Court of Appeals held that
" o'ood faith'' meant here the absence of simulation; mere know-
ledge of a prior alienation would not create bad faith. Qu'anx*
termes de Varticle 341 du Code Civil, le creancier qui oppose le
defaut de transcription doit etre de bonne foi, metis en ce sens que
son litre doit etre sincere et non pas en ce sens qu'il doit avoir
ignore V alienation de Vimmeuble. (C. A. Alex. 30 avr. 1890.
B. L. J. II, 406. In same sense, C. A. Alex. 19 fevr. 1896,
B. L. J. VIII, 121: C. A. Alex. 12 janv. 1898, B. L. J. X, 95.)
In 1903 begins a second period during which the jurisprudence
gives to good faith its natural interpretation: Qu'evid eminent
la bonne foi doit s 'entendre non dans le sens de la fraude qui
donne lieu a V action paulienne, mais, conformement an sens stride
des termes, du simple fait que le second acquereur connaissait
V existence de la premiere vente.
Que cette interpretation, deja admise ailleurs legislativeimnt
sous Vempire d'une legislation prevoijant li V absence du fraude"
(Laurent, XXIX. n. 191), doit etre rationnellement et a fortiori
admise sous Vempire du texte plus large de la legislation egyp-
tienne. (C. A. Alex. 24 nov. 1903, B. L. J\ XVII, 25.)
During a third period the jurisprudence frankly follows the
French law, and considers that the second purchaser cannot be in
bad faith unless there had been a concert frauduleux between him
and the vendor.' (C. A. Alex. 12 fevr. 1908, B. L. J. XX, 89.
In same sense. C. A. Alex. 23 mai 1912, B. L. J. XXIV, 354;
EFFECTS OF CONTRACTS. 43
C. A. Alex. 6 mai 1913, B. L. J. XXV, 365; ('. A. Alex. 23
avr. 1914, B. L. J. XXVI, 342; C. A. Alex. 2 dec. 1914,
B. L. J. XXVII, 42; C. A. Alex. 17 dec. 1914, B. L. J. XXVII,
68; C. A. Alex. 8 fevr. 1917, B. L. J. XXIX, 205.)
But during this period the jurisprudence is not uniform, and
there are cases in which mere knowledge of the prior alienation
has been considered to constitute bad faith. (C. A. Alex. 27 avr.
1915, Gaz. Trib. V, n. 336, p. 129; C. A. Alex. 24 avr. 1917,
Gaz. Trib. VII, n. 370, p. 123; C. A. Alex. 4 juin 1918, Gaz.
Trib. VIII, p. 296.)
Finally a fourth period has begun with the decision of 18
janv. 1919 (R. G. 581^3 A. J. ;, in which the Court of Appeal
returns to the view that mere knowledge of a prior alienation puts
the second purchaser in bad faith. This result is criticised severely
by a recent writer to whose analysis of the jurisprudence I am
indebted. From the legislative point of view there is much to
be said for not requiring that the purchaser should not be in good
faith*. But as the Egyptian codes now stand, it seems to me
impossible to arrive at this conclusion in spite of the learned
argument of this writer. (See De L'influence de la Mauvaisi
Foi en mature de Transcription, par M. Stair os Cademenos*
L'Egypte Contcmponune, 1919, p. 388.)
Effect of alienation of corporeal moveables as against
third parties.
It would obviously be impossible to preserve by registration
evidence of the ownership of moveables. Moveables have no fixed
situation, and their owner can remove them from one place to
another or from one country to another. Moreover, the interest
of commerce requires that the circulation of moveables shall be as
easy and rapid as possible, and to require formalities for their
transfer would render business impracticable. Accordingly, the
rule in regard to them is that a contract for their alienation trans-
fers the property as regards third parties as well as against the
parties themselves. If I sell my horse to A, and, afterwards, I
sell it over again to B, the second sale will carry nothing to B, for
A has already become the owner of the horse. But, although
the mere contract to transfer a moveable makes the transferee
the owner of it, a transferee who has not obtained the possession
is in a very insecure position on account of the operation of another
rule of the law. This is the fundamental rule— en fait de meubles
44 THE LAW OF OBLIGATIONS.
la possession Witt Hire (C. C. F. 2279.; The Egyptian Code
and the Code of Quebec create a presumption of lawful title and
of good faith in favour of the possessor of the moveables. (C. E.
608/734; C. C. Q. 2268.)
The French law is really the same, for, although the French
Code says that possession is equivalent to title, its interpretation
has always been in accordance with the traditional view that if
the possession is proved to have "begun in bad faith the title fails.
La regie " en fait de meubles possession vaut litre " ne p-otege
(jae In possession aninio domini, et nan mile qui est precaire ou
dont Vorigine est equivoque ou obscure. Cette regie ne peut etre
invoquee que par le tiers acquereur ou possesseur de bonne foi.
(Nancy, 30 dec. 1891, D. 92. 2. 441. The full discussion of
this subject belongs to the law of property. (B.-L. et Tissier,
Prescription, 3rd ed. n. 871; Bufnoir, Propriete et Contrat,
p. 343; Aubry et Bau, 5th ed. 2, p. 143; D. N. C. C. art. 2279,
nos. 54 seq.; Req. ler fevr. 1893, D. 94. 1. 278; Beq. 22 mai
1906, D. 1906. 1. 351: De Hults, vo. Possession, nos. 41 seq.;
Halton, 1, p. 216.)
The theoretical justification of* the rule is not very easy, and
there has been a long controversy about it, but the practical con-
siderations in its favour are overwhelming . There would be no
security for commerce, if the purchaser in good faith of a corporeal
moveable who obtained possession of it was liable to be evicted
by some one with a prior title. An honest buyer who obtains
delivery ought to know that he is safe.
The necessities of commerce have also led to the extension of
this rule to negotiable instruments payable to bearer, such as
bank-notes, promissory notes, and the like. These arc, strictly
speaking, incorporeal moveables, being, in one form or another,
promises to pay a sum of money to the bearer, but business requires
that thej shall pass freely from hand to hand, and that the actual
holder of them shall be able to exact payment independent of the
title of his author. (See B.-L. et Tissier. Prescription, 3rd ed.
n. 841; Paris, 26 nov. 1886, D. 87. 2. 110: D. X. C. C. art. 2279,
n. 258.)
The application of the rule in favour of the lawful possessor
of a corporeal moveable, including the special class of incorporeal
moveables just referred to, is to give to the purchaser who has got
delivery of the thing an enormous advantage over the purchaser
who has not been put in possession. To return to the previous
example, if I sell my horse to A, and subsequently sell it to B,
EFFECTS OF CONTRACTS. 4-3
who is unaware of the previous sale, and B obtains delivery of it,
B, and not A, will be the owner of the horse. (C. ('. E. 46 688;
C. C. F. 1141; C. C. Q. 1027; Aubry et Rau, 5th ed. 2, p. 79;
Halton, 1, p. 140.)
We have, here, an important exception to the general rule that
a man cannot transfer to another any right that he lias not him-
self. By my sale of the horse to A, I have devested myself of
the property in it, and yet I am able by a subsequent sale to >B
to make him the owner. So much does the law favour the honest
buyer who obtains delivery, that even if the horse has been stolen
or lost, and it is afterwards bought from a horse-dealer or in a
public market, the buyer who is called upon to give it up to its
real owner is not obliged to do so except upon receiving from
him the price which he paid for it. (C. C. F. 2280; C. C. Q.
2268; B.-L. et Tissier, Prescription, 3rd ed. n. 906.
This, at any rate, is clear in the French law and in the law
of Quebec. The Egyptian codes say, "he can recover the price
paid," but they do not say that he has a right of retention till
he has received it. (C. C. E. 87/116; see Halton, 1. p. 220.
Does the same principle apply to the creditor who has in good
faith received an article in pledge and lent money upon it? The
prevailing view is that he is to be treated as a possessor in good
faith, except in a question with the owner of a thing which has
been stolen or lost. Although the thing did not belong to the
debtor, the creditor who has got possession is protected up to the
amount of the debt. (B.-L. et Barde, 1, n. 415; Aubry et Rau,
5th ed. 2, p. 159; B.-L. et Tissier, Prescription, n. 908, bis;
Req. 12 mars 1888, D. 88. 1. 253; C. A. Alex. 17 avr. 1900,
B. L. J. XII; 213; D. N. C. C. art. 2279, n. 154.) But accord-
ing to the jurisprudence of the Cour de Cassation, the creander-
gagiste does not enjoy the advantage given expressly to a buyer
by article 2280. The article creating an exception must be restric-
tively interpreted. ■ If the thing has been lost or stolen- the
creancier-gagiste has no protection. (Cass. 11 mai 1898, S. 98.
1. 481; Aubry et Rau, 5th ed. 2, p. 159, note 36.) This con-
clusion is doubted by some authorities. (Note by M. Tissier to
S. 98. 1. 481; B.-L. et Tissier, Prescription, n. 908, bis.)
46 THE LAW OF OBLIGATIONS.
Incorporeal moveables.
The rule that the property of moveables is transferred by eon-
tract even against third parties does not apply to incorporeal
moveables except negotiable documents. The sale of a debt as
against third parties requires certain formalities which cannot
here be explained. (See B.-L. et Tissier, Prescription, n. 840;
C. C. F. 1690; C. C. Q. 1571; Halton, 2, p. 87; Beudant,
Contrats, p. 202.)
The effect of non-translatory contracts with regard to
third parties.
We have now discussed the ways in which those contracts which
are at the same time conveyances may benefit or prejudice persons
who were not parties to such contracts. We have now to consider
the contracts which do not effect any instantaneous change of
property, but merely generate obligations^ In such contracts a
third party may be introduced either in the character of a debtor
or in that of a creditor. Or, at any rate, if these terms are open
to criticism, we may say that the intention is that the third party
shall, in the one case, subsequently take over a liability under the
contract, and in the other case, that the third party shall have the
right to take a benefit under it. For, strictly speaking, the parties
to a contract cannot make a third party either a debtor or a creditor
under it.
The French Code states the general rule thus: —
On ne peut, en general, s engager ni stipuler en son propre
nom, que pour soi-meme. (C. C. F. 1119.) And it then pro-
ceeds in the two following articles to state as exceptions to this
general rule: (1) that a person may make a contract in his own
name for a third party if he does so in the character of a porte-
fort, a term to be presently explained; and, (2) that a man may
stipulate for the benefit of a third party subject to certain condi-
tions. (C. C. F. 1120-1121.)
The contract of porte-fort, as will be explained later, is in-
correctly treated by the code as an exception to the broad rule
that a man can by contract bind no one but himself. But the
stipulation pour autrui is in reality so important an exception to
the rule that a party to a contract can stipulate only for himself,
as completely to overshadow the rule itself. We cannot make the
EFFECTS OF CONTRACTS. 47
third party a creditor, but we can stipulate a benefit for him.
This is a different thing from making him a creditor, but, never-
theless, it makes the rule of little importance. In saying that a
person can bind himself only the code means himself and his
ayants cause. And the Code of Quebec states the rule with
accuracy in this respect, and avoids the error into which the French
Code falls of treating the contract of porte-fort as an exception to
it, by saying, A person cannot, by a contract m Ms oivn name,,
bind any one but himself and his heirs and legal representatives ;
but he may contract in his own name that another shall perform
an obligation, and in this case he is liable in damages if such
obligation be not performed by the person indicated. (C. C. Q.
1028.)
48 THE LAW OF OBLIGATIONS.
CHAPTER II.
CONTRACT OF PORTE- FORT.
The Egyptian codes are entirely silent as to the contract of poi'te-
fort, though it is perfectly well recognised by the jurisprudence.
(C. A. Alex. 7 juin 1900, B. L. J. XII, 313; C. A. Alex. 13
mai 1908, B. L. J. XX, 214.) On pent se porter fort pour un
tiers, <>n promettant le fait de celui-ci.
Such a contract is in fact useful and valid, and there is no abso-
lute necessity for an article in the code to authorise it in express
terms, though it would have been better if the Egyptian Code
had contained such an article. The rule that a person cannot by a
contract in his own name bind any one but himself must now be
explained.
In saving " iji hisjrwn name " the French Code intends to
exclude the case where the party to the contract acts in the name
of another and as representing him, for example, as his agent or
his tutor.
The rule has no application to such a case in which the third
party is bound because he was represented. (Planiol, 2, n. 1019.
Supra, p. 13.)
Nor does it apply either to the analogous case of gestion
d'affaires, where the law regards the negotiorum gestor as, in a
sense, the agent for the person for whom he acts, although this
person gave him no authority.
/ Here also the negotiorum gestor does not act in his own name in
the sense of intending to bind himself personally.
He contracts in the name and on account of the maitre. (See
infra, p. 155.)
This is so even where he may have been compelled to incur a
provisional liability. If you are in Europe, and have left your •
house in Egypt empty, and with no one in charge of your affairs,
and a wall shows signs of giving way, I, your neighbour, may
call in a builder to prevent the collapse.
If he agrees to do the necessary work, relying upon your paying
him for it, he has an action against you and no action against me.
CONTRACT OF PORTE-FORT. 49
(See D. Rep. Obligations, a. 5462; note by M. Plaaiol to I). 91 .
1. 49; and infra, p. 155.)
But the builder may refuse to do his work unless I make myself
responsible. In this case, according to what seems to be the better
opinion, the builder will not have a direct action against you, for
it was with me that he contracted, and on my credit that he relied.
But I have bound you by my contract with the builder to
indemnify me if my. interferenjoe was justifiable, for the contract
which I made with the builder was on your behalf, though literally
it may have been made in my name. (B.-L. et Barde, 1, n. 129,
and 3, nos. 2814 seq.)
The rule stated in C. O. F. 1119, does not refer at all to the
case of agency or to negotiorum gestio.
What is contemplated is a case where A, not being the agent of
B, and not acting as a negotiorwm gestor on B's behalf, neverthe-
less promises that B shall perform an obligation .
This promise is declared to be ineffectual. It cannot bind A,
for A, ex hypothesi, did not promise anything on his own account.
And it cannot bind B, for the simple reason that he never con-
sented to be bound.
But nothing prevents A, if he chooses, from binding himself to
pay damages if B does not assume liability for the contract, or,
in other words, if B does not ratify the engagement which A has
made for him.
Or, A may go further, and undertake to pay damages if B does
not, firstly, assume liability, and, secondly, does not duly execute
the contract.
The obligation of the porte-fort in the strict sense is limited to
this, that he undertakes to procure the ratification of a contract
that he makes on behalf of another.
If this is the nature of the contract, — and the words se porter
fort are not sacramental, — the liability of the promisor is at an
end when the third party has ratified. What the porte-fort pro-
mised was a rapporter la signature of the third party, without in
any way guaranteeing that, when the third party had ratified, he
would faithfully fulfil, the contract.
If the porte-fort promises this in addition, he is a surety —
caution — as well as a porte-fort. (Demolombe. 24. n. 222: B.-L.
et Barde, 1, n. 132.)
■ Whether the obligation is of this wider nature, or whether it is
limited to that of the porte-fort in the strict sense, is purely a
w. — VOL. II. 4
50 THE LAW OF OBLIGATIONS.
matter of interpretation. (Aubry et Rau, 5th ed. 4, p. 512;
Laurent, L5, n. 544; I). N. C. C. art. 1120, n. 19.)
Distinction between contract of porte-fort and suretyship.
The contract of the porte-fort must then be carefully distin-
guished from that of a surety. The obligation of the latter is an
accessory obligation to guarantee the fulfilment of a principal
obligation. But the obligation of the porte-fort is a principal
obligation, viz., to obtain the ratification of another or to pay
damages, and it is fulfilled if the ratification is obtained, although
the third party may afterwards fail to fulfil the contract. (B.-L.
et Barde, tU sup.; C. A. Alex. 13 dec. 1900, B. L. J. XIII,
41; C. A. Alex. 9 mai 1901, B. L. J. XIII, 292.)
Porte-fort promises on his own account.
From what has been said already it is clear that the porte-fort
binds himself and not another. He binds himself to perform an
act, viz., to procure the ratification; not to do his best to procure
it, but to procure it. It is not enough for him to prove want of
negligence as an excuse for non-fulfilment. He can be excused
only by proof of force majeure which prevented him from obtain-
ing the ratification. (B.-L. et Barde, 1, n. 132; Aubry et Rau,
5th ed. 4, p. 514, note 14, ter.)
In short, the obligation of the porte-fort is simply an illustration
of a contract to do. And it is therefore incorrect to treat it, as
the French Code does, as being a promise which binds or intends
to bind anybody but the promisor.
If the contract is ambiguous is there a presumption that a
party binds himself as a porte-fort?
If the contract is ambiguous, in this sense, that it might mean
either, on the one hand, that the promisor promised that a third
party would do something, or, on the other hand, that he promised
to secure the ratification of the third party, is there any presump-
tion in favour of the latter interpretation?
This is a point upon which there has been much controversy.
According to some writers, we should apply here the rule of
interpretation that when a clause is susceptible of two meanings
it must be understood in that sense which would make it produce
some effect, rather than in that sense which would make it produce
no effect at all. (C. C. F. 1157. Supra, I, p. 372.)
CONTRACT OF PORTE-FORT. 51
Now the mere promise by A thai. B will do something, if A has
no authority to represent B, is entirely worthless, and it is argued',
therefore, that the presumption is against the parties having agreed
to a contract which was perfectly futile.
On the other hand, if we are to presume that in every case where
A appears to promise that B will do something A must have
meant that he would secure B's ratification or pay damages, what
becomes of C. C. F. 1119£
We deny practically all effect to the statement that a person
cannot by a contract in his own name bind any one but himself,
by saying that in every case where he appears to be seeking to bind
another he is really binding himself. The sound view appears
to be that a man will not be bound as a porte-fort unless the inten-
tion to bind himself in this way sufficiently appears, though such
an intention .may be inferred from the circumstances, or from
the whole effect of the contract without being expressed in technical
language as an obligation se porter fort. (Laurent, 15, n. 533;
Aubry et Eau, 5th ed. 4, p. 511; D. N. C. C. art. 1120, n. 6;
C. A. Alex. 23 mars 1905, B. L. J. XVII, 173.) For example,
if in the sale of a house the seller promises that a neighbour shall
cut down certain trees which block the view, it is a fair presump-
tion that this means that he undertakes to procure this neighbour's
consent .
The buyer was not likely to have contented himself with a
promise of no value at all. (Bufnoir, Propriete et Contrat,
p. 565.)
The ratification and its effect.
The ratification of the third party does not need to be in any
special form and it may be implied. As between the parties, the
ratification retroacts to the date of the contract, but as reg v ards
third parties the ratification takes effect only from its date, and
then only if it has a dale <-crhilne, or, if it is a contract subject to
registration, only when this formality has been complied with.
(Larombiere, art. 1120, n. 7; B.-L. et Barde, 1, n. 142 (1).
See, however, Cass. 18 dec. 1875, D. 76. 1. 97. and the note.)
Utility of contract of porte-fort.
It is principally where incapable persons, and especially minors,
are concerned, that the contract of porte-fort is very convenient.
For example, co-heirs desire to sell the property which they hold
in undivided ownership, and among them there are minors. In
4 (2)
52 THE LAW OF OBLIGATIONS.
order to- avoid the expense and delay of legal proceedings, the-
co-heirs who have attained majority sell on their own behalf, and
at the same time se portent fort for the minors, that is guarantee
that these will ratify the sale when they come of age, or that, if
they refuse to do so, the co-heirs will pay the damages. This is
the common case, but a person may, if he chooses, undertake to
secure the ratification by any third party, whether capable or
incapable, of a contract made on behalf of this person. (B.-L.
et Barde, 1, n. 134; Planiol, 2, n. 1022.)
There is a certain analogy between the position of a porte-fort
and that of a person who professes to act as an agent, though he
has no authority, or of one who, being an agent, exceeds his
authority, without having given to the other party a sufficient
knowledge of the limits of his authority. The agent in such a
case binds himself. (C. C. E. 524/643; C. C. F. 1997; Douai,
25 janv. 1897, D. 97. 2. 319; C. A. Alex. 16 nov. 1905, B. L. J.
XVIII, 15.)
It may happen that a person contracts both for himself and
also as porte-fort for another. In that case, he has a direct and
personal right to sue for execution of the contract, and it is no
answer to plead that the third party for whom he contracted had
no legal existence, being, for example, an unincorporated society.
(Cass. 27 juillet 1903, D. 1904. 1. 36.) And a contract may
be made by which A promises that B will do something, or, if B
fails to do it, that he will do it himself. (Beaubien v. Ekers,
1902, K. J. Q. 24 S. C. 199.)
Such a contract must not be confused with the contract of
porte-fort .
English law as to person who professes to be an agent though
he has no authority.
The principle of the English laAv is that if the alleged agent
honestly believed that he had authority he is liable on an implied
warranty of his authority. (Storkey v. Bank of England, 1903,
A. C. 114, 72 L.J. Ch.402.)
If he knew he had no authority he is liable for deceit. (Polhill
v. Walter, 1832, 3 B. & Ad. 114, 37 R. R. 344; Anson, Contracts,^
14th ed. 415; Pollock, Contracts, 8th ed. p. 113.)
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 53
CHAPTER III.
STIPULATION FOR THE BENEFIT OF THIRD PARTIES,
OR THE STIPULATION POUR AUTRUI.
We now pass from promises made on behalf of a third party to
the converse case of stipulations made for the benefit of a third
party. ' We have seen that, without consent, the third party cannot
be made a, debtor. In like manner, he cannot be made a creditor,
or, at any rate, he cannot be compelled to take a benefit under the
•contract, though he may be given an opportunity of doing so.
The article in the French Code reads: A party may, in like
manner, stipulate for the benefit of a third party, when such a
stipulation is the condition of a contract which he makes far
himself, or of a gift which he makes to another, and he who makes
the stipulation cannot revoke it if the third party have signified
his unsh to take the benefit thereof. (C. C. F. 1121.)
The Civil Code of Quebec is to the same effect. (C. C. Q.
1029.)
The article on this subject in the Egyptian codes is more meagre,
but it, no doubt, intends to lay down the same principle: When
a person has stipulated on behalf of a third party ivithout his
mandate, such third party hm the option of ratifying the con-
tract or of refusing to recognise it. (C. C. E. 137/198.)
History of the stipulation pour autrui.
The article of the French Code states in brief form the law of
the subject as given by Pothier. (Oblig. nos. 70—72.) But,
to understand it, it is necessary to go back to the Roman law, and
to the old French law which was based upon it. The general rule
of the Roman law is expressed very roundly thus: Alteri stipidari
nemo potest. (Inst. 3. 19. 19.)
The reason given for this is that the stipulator has no interest.
If I stipulate that you shall pay a certain sum to Paul, I cannot
enforce the contract unless I can show an interest. If, however,
I have stipulated that, in the event of your failing to pay to Paul
54 THE LAW OF OBLIGATIONS.
the sum agreed upon, you shall pay mo a penalty, this removes the
difficulty, because then I have an interest. And, in this case,
the principal obligation is that you snail pay me a penalty in a
certain event. This gets over the objection sometimes urged that
the clause of penalty is accessory, and, therefore, if the principal
obligation is null the accessory obligation falls Avith it. (Pothicr,
Obliq. n. 70. But, even in the Roman law, there were several
j> oases in which a stipulation in favour of a third party was held
to he effectual, though the stipulator had no pecuniary interest, and
though no penalty had been stipulated. The principal one was
where a donor in making a donation stipulated that it was subject
to the charge that the donee should pay something to a third
party. This was called a donatio sub modo. (Code, 8. 55. 1;
Dig ^24. 3. 45. SeeGirard, Manuel, 5th eel. p. 946; and, for
other less important cases, Windscheid, Pandekten, 2, s. 316.)
The glossators, or mediaeval commentators on the Roman law,
extended this principle to all cases where something had been
delivered to a party, where there had been a dation, whether upon
the title of donation or upon any other title such as sale. This
was accepted law in Pothier's time, and some of the old French
writers before then had gone a step further, in saying that, when-
ever in a contract A promised something to B, or delivered some-
thing to B on condition that B should confer a benefit on C, the
stipulation for C's benefit was valid. (See, for the history, Lam-
bert. E., Du Contrat en faveur de Tiers, n. 8 and n. 56; Planiol,
2, nos 1212 seq.)
The code adopted this view, for the general principle of the
modern law is that mere consent is enough to bind, and it is
inconsistent with this principle that any dation or delivery should
be required to make the contract complete.
Prom this review, it will be seen that the rule that one can
stipulate only for oneself becomes of very limited application. If
I stipulate merely that you shall give something to A, this is not
binding unless I have a pecuniary interest, in which case, in spite
of appearances, I am really stipulating for myself as well as for
A. But if, in a contract agreed to by you, I promise you any-
thing, or give you anything, and I stipulate as a condition that you
shall give something to A, this is a valid contract which I, the
stipulator, can enforce. And, in this latter case, it is not necessary
for me to have a pecuniary interest; it is enough if I have a
moral interest, such as the mere desire to confer a favour upon the
third party.
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 55
l'-.-L. el Barde, 1, n. 149; Cass. 30 avril 1888, D. 88. 1.
291.)
IF a pecuniary interest were require d, the utility of the stipu-
lation pour autrui would be greatly dimi nisli«il . If I insure my
life for the benefit of a third party I have no pecuniary interest;
for nothing- will be paid to me, and the money when it is paid will
nol form part of my succession, but my moral interest is sufficient
to make the contract valid. (Cass. 6 fevrier 1888, D. 88. 1.
193; Cass. 16 .Janvier 1888, D. 88. 1. 77.)
Modern applications of the stipulation pour autrui.
In the Roman law, and in the old French law, the stipulation
p&ur autrui played a comparatively small part. But in the
modern law it forms one of the most important chapters. No
principle of the Law has been found to be more flexible, or more
capabh of being- applied to new sets of circumstances. It has
been employed, as Planiol says, a realiser des operations qui
seraienl Impossibles on, tout au moins, plus difficiles avec tous les
autres principes du droit. (2, n. 1216.)
The whole law of life-insurance, when the capital is to be paid
to third parties, and -the law of accident-insurance by an employer
for the benefit of his workmen, are two only of the many applica-
tions of this principle, and new cases to which it can be applied
are continually occurring. (See Lambert, Control en faveur de
Ti<rs } n. 198; Planiol, 1. c.) If a lessee assigns his lease, as
he may do unless there is a stipulation to the contrary, the assign-
ment is another example of the stipulation pour autrui. The
assignment of a lease is a different contract from the granting of a
sub-lease. (See C. C. E: 366/449; C. C. F. 1717; C. C. Q.
1638. A The sub-lease is a new contract of lease intended to pro-
duce effects only between the original lessee and the sub-tenant,
and not to give the original lessor any direct action against the
sub-tenant. (See C. A. Alex. 21 mars 1912, B. L. J. XXIV,
222.)
The assignment of a lease, on the other hand, is the sale of an
incorporeal right — transport de oreance — the object of which is
to transfer to the assignee or cessiownmre all the rights which the
assignor had under the lease.
It does not relieve the original lessee of his obligations to his
lessor, unless the lessor chooses to release him. but it gives to the
original lessor a second debtor, independent of any acceptance.
56 THE LAW OF OBLIGATIONS.
He can, it' he chooses, bring a direct action against the assignee
to make him fulfil all the obligations of the lease. (B.-L. et
Wahl, Louage, 1, u. 1140; D. N. C. C. art. 1717, n. 80; Lam-
bert, op. cit. n. 233; Halton, 2, p. 136. Cf. in Quebec, Authier
v. Driscoll, 1912, K. J. Q. 42 S. C. 52; Mignault, Droit Civil
Cemadien, 7, p. 318.)
The assignor has, therefore, made a valid stipulation for the
benefit of his landlord.
- In France, the principle of the stipulation pour autrui has been
applied in the ease of charitable foundations, made in the form of a
charge or condition attached to a legacy . If, for example, a legacy,
is left to the maire of a conVmune for the benefit of the poor of that
commune, the testator stipulates for the benefit of people unknown
to him and for generations unborn. (See Bordeaux, 27 fevr.
1905, D. 1905. 2. 327.)
It has been made possible in this way to give a right to persons
independent of their acceptance, and to future persons as well as to
persons already existing. If we treated such charitable bequests
as cases either of donation or of legacy, both of these results appear
to be excluded by the article of the French Code which says that,
in order to be capable to receive emtre-i'ifs, a donee must have been
'conceived at the moment of the donation, and, in order to be
capable of receiving under a will, the beneficiary must have been
conceived at the date of the testator's death.
('. G. F. 906; C. G Q. 765, 838; Lambert, Du Contrat en
javeur de Tiers, n. 328; D. N. C. C. art. 906, n. 64;. Caen,
15 nov. 1906, D. 1907. 2. 265, and dissertation by M. Planiol;
and, for the interesting analogy between such cases and what are
called in English law '■trusts,'' see the dissertation by M. Levy-
Ullmann in note to Cass. 12 mai 1902, S. 1905. 1. 137; am«d
Paris, 18 fevr. 1909, D. 1909. 2. 273; and the dissertation by
M. Planiol in note to Cass. 14 fevr. 1906, 1). 1907. 1. 313.)
In Egypt the capacity to receive depends on the personal law,
and the institution of the Wakf to a great extent prevents those
difficulties arising which have led to so much discussion in France.
„ Other interesting and important applications of the stipulation
pour autrui are found: (1) in contracts made by a department
of the government, or by some public body in which stipulations
are contained for the benefit of third parties.
When, for example, a municipality invites tenders for the con-
struction of public works, it frequently inserts conditions for the
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 57
benefit of the workmen to be employed. Such clauses are called
cahiers des charges d 1 adjudication. It may say, for instance, that
although the contractor shall be entitled to sub-let part of the
contract, he shall remain liable to compensate all the workmen
employed who are the victims of an industrial accident. (Paris,
6 fevr. 1908, D. 1908.2. 185.)
Or, it may be made a condition that the workmen shall be paid
a minimum wage, or that the working hours shall not exceed a
certain number per day.
(2) In contracts of public utility, that is, in contracts made
between the government or a public body for the performance of
some public service, such as the supply of water, gas, electric light
and power, and the like, there are frequently stipulations for the
benefit of the public within the municipality or other area in
question. And if the intention appears to be to confer upon
members of the public a direct right, any one of these members of
the public within the area can sue for the execution of the contract,
or for damages caused by its breach. (C. Cass. Beige, 21 juill.
1888, S. 89. 4. 9, and note by M. Labbe; Lambert, Contrat en
faveur de Tiers, n. 319; Planiol, 2, n. 1216. Cf. in Quebec,
Markham v. Montreal Gas Co., 1908, R. J. Q. 34 S. C. 10.)
And so, in an Egyptian case, where the government made a
contract with a water company at Alexandria to supply water to
the city on certain terms, it was held that this gave any citizen of
Alexandria a direct action against the water company. (0. A.
Alex. 20 dec. 1894, B. L. J. VII, 46. Cf. 0. A. Alex. 3 juin
1896, B. L. J. VIII, 313.)
But the government, or any other public authority, may, and
often does, make contracts in the public interest which are, never-
theless, not intended to give any rights of action to members of
the public.
It is a question of interpretation. (See C. A. Alex. 17 mai
1905, B. L. J. XVII, 283.) Perhaps, as M. Planiol contends,
the public authority, when it contracts for the benefit, of members
of the public, does so as their mandatory. The public is not autrui
for the authority which it has put in power to act on its behalf.
(Planiol, 2, n. 1216, note 4.)
58 TH"E LAW OF OBLIGATIONS.
Public subscriptions.
Difficult ;iiul delicate questions arise in regard to the law of
public subscriptions. 1 1 a newspaper publishes that it will receive
subscriptions for the benefit of those who have suffered from an
earthquake, or if a committee is organised to receive subscriptions
for a monument to Lord Kitchener, what are the legal relations
which exist between (a) the subscriber and the organiser; (b) the
Subscriber and the beneficiary; and (c) the organiser and the
beneficiary?
The French authors' throw little light upon these problems,
but so far as there can be said to be any accepted view, it would
seem to be that organisers of public subscriptions are to be regarded
as the mandataries of the subscribers. (Hue, 8, n. 376; Paris,
21 oct. 1902, D. 1903. 2. 121; Cass. 6 fevr. 1888, D. 88. 1.
79, and the note; Bourges, ler mai 1900, D. 1900. 2. 425, and
the note; Cass. 3 mars 1885, S. 85. 1. 168, IX 85. 1. 411. See
D. N. C. C, Addition*, 1913, arts. 1105 and 1106, nos. 29—2
seq.)
The difficulty of the case arises from the fact that there are
three parties whose interests have to be considered. If we are
to look upon it as a mandate given by the subscribers to the com-
mittee or to the organisers of the fund, it is not possible to give
a. direct right of action to the beneficiaries ./'And, in other ways,
the relation if it is mandate is mandate of a very special kind.
. ,ln mandate the mandator can at any time revoke, and the manda-
tary can claim his expenses from the mandator, and it is the
mandator's business which the mandata/y is charged to do.
Are any of these things true here?/ A more satisfactory way
of regarding the transaction is to say, with M. Claro, that a
public subscription is at the same time a gift and a commutative
contract. The relation of the subscriber to the beneficiary is that
of donor and donee. But there is, at the same time, a oommutative
contract between the subscriber and the organiser of the sub-
scription.
The subscriber stipulates with the organiser of the subscription
for the benefit of the beneficiary.
The manner in which the subscriptions have been collected and
the other circumstances vary greatly in different cases, and the
legal situation is not always the same.
In the ordinary case, at any rate, it would seem that the sub-
scribers will have a right to claim the return of their subscription
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 59
if from a cause independent of their will, it becomes impossible
to carry out the end which they had in view.
And if the subscription was begun without the knowledge of
the beneficiary, he has a right to put a stop to it if he likes, and
he has an interest in insisting on the subscribers being informed
that he is opposed to taking the benefit proposed. (Paris, 21 oet.
1902, D. 1903. 2. 121.)
It would be intolerable if people could put up a statue of a,
man against his will. (See the notes of M. Claro to Paris, 22 oet.
1902, and Bourges, ler mai 1900, ut sup. Cf. Queinnec, A., Be
la Nature des Souscriptions organisees, Caen, 1904, These.)
These are by no means the only illustrations which might be
given of the application of the principle of stipulation pour autrui.
It is mainly by the application of this principle that the French
jurisprudence has contrived to find a way out of some difficulties
which in the English law are solved more satisfactorily by the
equitable doctrine of the trust.
Many other cases.
There are many other eases in which it may be found that there
was a stipulation for the benefit of another.
In a recent French case an employer of labour made a contract
with a doctor for medical attendance upon his employees, and a
deduction was made from their wag'es in consequence.
• The question was whether this gave one of them a direct right
of action against the doctor under the contract.
The court held that an employee had a direct action against
the doctor for neglecting or refusing without justification to attend
him. (Pau, 30 juin 1913, D. 1915. 2. 49. )
Stipulation pour autrui is not presumed.
Exceptions to the rules of law are not to be admitted unless
there is a clear indication that they were intended by the parties.
And the stipulation pour autrui is such an exception. Thus
in an Egyptian case it was said: La disposition de V article 198
du Code Civil Mixte etablit une exception au principe general
quon ne peut s 'engager ni stipuler en son prop-e nom que pour
soi-meme ; mais elle doit etr.e restrictivement interpretee et pour
receuoir son application suppose necessairement et comme condition
sine qua nou qn'il u a une stipulation expresse on formelle au
profit d'un tiers. (Alex. 22 janv. 1910; Savour, Rep. n. 792.)
«0 THE LAW OF OBLIGATIONS.
Right of the third party for whom a benefit is stipulated.
Does the third party acquire a right of action, and if so, of
what nature is his right, and upon what principle can it be
explained?
To these questions the codes return a very inadequate answer.
The French Code says he who makes the stipulation cannot
revoke it if the third party has signified his assent to it.
The Egyptian Code does not even say so much as this, but
merely that the third party has the choice of confirming the con-
tract or of refusing to recognise it.
It is clear, at any rate, that the third party cannot be compelled
to take a benefit.
But, subject to this qualification, is it possible to give to the
third party a direct right of action, and, if so, upon what theory
may this be defended?
Further, is it the intention of the law that the third party,
should have an immediate right from the date of the contract,
although such a right is declared b}^ the French Code to be re-
vocable by the stipulator at any time before the third party has
signified his assent to it, or is there no right acquired 'until the
assent is signified, just as in an ordinary contract the offeree has
no right before acceptance?
These questions have led to great discussion, and, although an
agreement has been reached with regard to some of the results,
there are still many differences of opinion as to the principle upon
which these results rest.
It is now generally agreed both in the doctrine and the jurispru-
dence that an inchoate right in the third party is created by the
contract itself. His assent is not needed to create the right; the
right is already created for him to take it or leave it, although at
present it is revocable.
(Dupuich, Assurance sur la Vie, n. 47; Colin et Capitant,,
2, p. 340; Beq. 20 dec. 1898, D. 99. 1. 320; B.-L. et Barde,
1, n. 154; D. N. C. C. art. 1121, n. 50; Capitant, in Livre du
Centenaire, 1, 535. Contra, Laurent, 15, n. 559.)
The question is of great practical importance. If no right vests
in the third party till his assent is signified, and if he dies before
giving such assent, the right will never come into existence, for
it is only vested rights which are transmissible to heirs. But
the view which tends to prevail in France is that the right of the
third party is acquired by the contract, and, consequently, is trans-
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 61
«
mil ted to his heirs who can assent to it unless it has been revoked.
(B.-L. el Barde, 1, n. 154(1); Aubrv el Rau, 5th ed. 4, p. 523;
Cass. 8 fevr. 1888, D. 88. 1. 193; D. N. C. C. art. 1121, n.53.
Cf. same rule in Quebec, Robitaille v. Trudel, 1899, R. J. Q.
16 S. C. 39. ^Moreover, it is generally agreed that if the stipu-
lator dies before the third party has signified his assent, this
does not deprive the third party of his right to signify his assent
afterwards. (B.-L. et Barde, 1, n. 154 (1); D. N. C. C. art. 1121,
n. 74; Cass. 22 juin 1891, D. 92. 1. 205; C. A. Alex. 18 janv.
1917, B. L. J. XXIX, 163.) And, lastly, it is generally agreed
that, unless a contrary intention appears, the heirs of the stipu-
lator succeed him in the right to revoke the benefit at any time
before the third party has assented to it. (Planiol, 2, n. 1250;.
B.-L. et Barde, 1, n. 171; Bordeaux, ler avr. 1897, D. 98. 2.
169; D. N. 0. C. art. 1121, n. 80.)
The rights on both sides are looked upon as rights transmissible
to heirs according to the general rule, though, as we shall see,,
this is subject to an important exception.
Assuming that these points are settled in practice, it remains
to consider upon what principle they are to be explained. This
may, perhaps, appear to be an illogical method.
It may be said that we ought to "begin by stating what we
conceive to be the sound theory, and then give the practical illus-
trations of it* But in this case, there is a convenience in following
the reverse method, because the theory itself has been shaped and
rendered precise in order to meet certain practical needs, parti-
cularly in regard to life insurance.
To make the contract of life insurance useful, it is absolutely
necessary that the beneficiary shouldd have an independent right
— a droit propre — that he shall be able to accept this right after
the death of the assured, and that, if he accepts it, the money shall
be"regarded as coming to him directly from the insurance company,
and not from the succession of the deceased.
If the money were to be considered as coming out of the succes-
sion, and the deceased died insolvent, his creditors would be able
to claim it, and this is one of the possibilities which the assured
desires to exclude. In addition to this point, there are other
considerations important for a person who insures his life, such as
the possibility of insuring for the benefit of unborn children,
which may yet lead to further modifications of the theory. (See
Lambert, Du Contrat en favew die Tiers, n. 251; Dupuich, P.,
Assurance sur la Vie, n. 74; Lefort, J., Assurance sur la Vie, 2,.
62 THE LAW OF OBLIGATIONS.
p. 258; C. A. Alex. 11 few. 1900, B. L. J. XII, 111; C. A.
Alex. 28 now 1901, B. L. J. XIV, 27. Cf. C. A. Alex. 30 mai
1894, B. L. J. VI, 308; C. A. Alex. 25 avril 1895, B. L..J.
VII, 263.)
Upon what principle, then, may we justify the result at which
the courts have arrived? There are four theories on the subject.
Let us take for the sake of clearness the example common in
practice of a donation subject to a charge in favour of a third
party. This is, in fact, the classical example of the Roman law.
For instance, I give you my farm subject to the charge that you
pay an annual allowance to my son. What is the nature of" such
a contract?
(1) Theory of the offer.
The first theory, which is called the theory of the offer, is that
such a contract as I have mentioned may be analysed into two
parts .
There is (1) a contract completed between you and me, and
there is also (2) an offer by me to my son of the sum stipulated
for, and this offer becomes a contract if my son accepts it. (Colmet
de Santerre, 5, n. 33, bis, IV. See Saleilles, Theorie Generate de
VObligaiirm, 3rd ed. n. 248.)
But this explanation of the contract seems to be contrary to the
true intention of the parties. In any ordinary contract it is the
person who makes the offer who is bound to execute the contract
if his offer is accepted.
But here, according to this theory, I make the offer, and. yet,
if my son accepts it, it is you who must execute the contract.
Accordingly, another variant of this theory is that the matter may
be analysed thus: I make an offer to you and you accept it, and
it is a term of your acceptance that you in turn should make an
implied offer to my son.
(Larombiere on art. 1121, n. 7; Thaller, in note to Besaneon,
2 mars 1887, D. 88. 2. 1.)
This is even more artificial. Is it likely that I intend my sons
right to be dependent on your choosing to make the offer? And,
^U even if we admit that you are bound to make the offer, still no
right could possibly vest in my son until the offer is made. Until
that time, the right must be vested in me. Now, this is precisely
what I desire to avoid. I want a right to vest in my son at once.
(See Colin et Capitant, 2, p. 341; Dupuich, Assurance sur la Vie,
n. 216.;
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 63
Moreover, my intention in the ordinary ease is not to give m\
son the right to bring an action against me, but only against yon.
How can this be contingent on your choosing to make him an
offer? (See B.-L. et Barde, Oblig.\, n. 158; Cass. (J juin 1888,
D. 89. 1. 55; D. N. C. C. art. 1121, n. 141.)
Take the common case of life-assurance. For instance, I insure
my life for my son's benefit.
It is, surely, a very false explanation to say that the insurance
company is to make an offer to my son. Moreover, whether we
regard the case as one of an offer by the stipulator or by the
promisor, the theory is open to a fatal objection. An offer, accord-
ing to the principles of contract, falls to the ground if the offeror
dies, or loses capacity, before it is accepted. And it falls to the
ground, likewise, if the offeree dies before accepting it. He had
no vested right, and could transmit no right to his heirs.
For, in neither of these cases, is there that meeting of the two'
minds— that consensus in idem — which the law requires for the
formation of a contract. But, we have seen, that in practice the
law is settled that in a stipulation for the benefit of a third party,
the assent of the third party may be given after the death of the
stipulator, and, that if the third party dies before assent, his
heirs, can assent in his place. So that, clearly, the jurisprudence
does not treat this as being a case of the acceptance of an offer.
If it did, life-insurance for the benefit of a third party would
lose much of its value. If a man insured his life for his wife's
benefit, it would not be until he died that she would have any right .
and, if the case were treated as being an offer made by the assured,
the offer which the husband made would fall at his death, so that
she could no longer accept it.
It would certainly seem a strange thing if the law were to
make impossible, or, at the least, were to hamper at every turn, a
contract so eminently desirable as a life-insurance for the benefit
of the family of the assured, and yet, if we adopt the theory of the
offer, this would be the result.
But, in fact, the theory of the offer has nothing to recommend
it. It was not the theory of the old French writers; it is not
implied in the language of the code, and it leads to practical
results of a most unsatisfactory kind.
As regards the language of the code, the French Code studiously
avoids calling the assent of the third party "acceptance.
It says celui qui a fait cette stipulation ne pent la rrroqnrr si
le tiers a declare vouloir .en profiter, which the Code of Quebec
■
64 THE LAW OF OBLIGATIONS.
translates by: " If the third person have signified his assent to it."
(C. C. F. 1121; C. C. Q. 1029.)
This rather roundabout phrase is used apparently in preference
to " acceptance,' in order to indicate that it is not a mere offer
which is made to the third party, but that an inchoate right ha®
been created in his favour, if he chooses to take it. (B.-L. eti
Barde, 1, n. 154; C. C. F. 1121; C. C. Q. 1029.)
In the recent French jurisprudence the theory of the offer may
be said to have been definitely rejected.
(Saleilles, Theorie gen. de V Obligation, p. 278; Lambert, Con-
trat en javehtr de Tiers, n. 15; Caiss. 24 fevr. 1902, D. 1903. 1.
433, and note by M. Dupuich; Dupuich, Assurance sur la Vie,
n. 14.
In Egypt, the Mixed Court of Appeal, in one case at leasts
seems to have accepted this theory. (C. A. Alex. 25 avr. 1895,
B. L. J. VII, 263.)
(2) Theory of implied assignment.
The second theory is that in the stipulation pour autrui there
is concealed an implied assignment or cession de creance.
It is said that if I insure my life for your benefit, I acquire a
right against the insurance-company, which I then by implication
assign to you . But in that case at my death, the insurance money
would form part of my succession, and would be available for
my creditors before you came in, if I were to die insolvent.
And if, as in the ordinary case, I have the right to revoke the
insurance in your favour during my lifetime, and I became in-
solvent, my creditors would be entitled to revoke in* my stead.
This result would destroy one of the objects of insurance, viz.,
to provide a fund secured from the creditors of the assured. This
difficult}' can be got over only by ruling that the insurance-money
is not to be regarded as stipulated by the assured for himself, and
then, afterwards, ceded by him to the third party, but that, on
the other hand, the third party acquires an immediate right to it
under the contract of insurance itself.
As the French and the Egyptian courts both take this view,
they clearly reject the theory of implied assignment. (Cass. 1
27 mars 1888, S. 88. 1. 121, D. 88. 1. 193; Paris, 10 mars
1896, D. 96. 2. 465; Rouen, 6 avr. 1895, D. 95. 2. 545. See
article by M. Wahl in Rev. Trim. 1, p. 24; Lefort, Assurance
sur to Vie, 2, p. 225; and M. Thaller's note to Besangon, 2 mars
1887, D. 1888. 2. 1.)
4<L
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 65
Tho Mixed Court of Appeal has followed the French jurispru-
dence in admitting the droit proprs of the beneficiary, and in'
holding that the insurance-money never enters the patrimony of
the stipulator. (C. A. Alex. 18 janv. 1917, B. L. J. XXIX,
163; C. A. Alex. 28 nov. 1901, B. L. J. XIV, 27. Cf. Wind-
scheid, PandeMen, 8th ed. 2, s. 316, a.)
(3) Theory of negotiorum gestio.
The third theory to explain how the third party comes into the
contract is the theory of gestion d'affaires. It is maintained that
if I make a donation to you, subject to the charge that you pay a
sum to my son, I am acting as a negotiorum gestor for my son,.
When he signifies his assent, he ratifies what I have done. This
theory has been supported by very eminent French writers, and
has been adopted by the courts in many cases. The case of col-
lective insurance of his workmen by an employer has been treated
as an example of gestion d'affaires. (See Lambert, Du Contrat en
favour de Tiers, n. 280; Montpellier, 5 mai 1888, D. 88. 2. 292;
Demolombe, 24, nos. 236 seq. ; Labbe, in Note to Douai, 14
fevr. 1887, S. 88. 2. 49; Planiol, 2, n. 1222; Douai, 24 dec.
1889, S. 91. 2. 113; D. N. C. C. art. 1121, nos. 28 seq.)
It does not seem to be a satisfactory explanation. It is true
that, as Planiol says, a man who makes a contract for the benefit
of another may be a negotiorum gestor. If I find your horse
straying twenty miles away from home, I may contract with a
railway company to carry it back home, and, though I make th^
contract in my own name, I make it as a negotiorum gestor for
you.
But does such a case really resemble a donation subject to a
charge or an insurance for the benefit of a third party? Is it
analogous to the ease of my insuring my life for the benefit of
my son?
The principle underlying negotiorum gestio is that the law
does not allow unjust enrichment. If, out of kindness, I step in
voluntarily to do something for your benefit, and in so doing, I
put myself to expense, the law will not allow you to take the
benefit without paying me what I am out of pocket. In acting
as I do. I know that I shall have a claim for reimbursement,
and you cannot choose whether you will ratify or not, if your
affairs have been well managed by me; or, in other words, if a
benefit to vou has resulted. But if I insure my life for my son's
w. — VOL. II.
66 THE LAW OF OBLIGATIONS.
benefit, I am not looking to him for any reimbursement, nor has
my act laid him under any legal liability to me.
Ho is perfectly free to take the assurance-money or to leave it,
but what I have secured for him is a right to claim it. It seems
to me t hat nothing can be more strained than to treat this as a case
of gestion d'affaires. (Aubry et Rau, 5th ed. 4, p. 518; Laurent,
15, n. 557; Pond. Frang. Oblig. n. 7450.)
(4) Theory of the droit propre.
The fourth theory is that by the contract itself a direct and
immediate right is given to the third party. This is called by
the French writers the theory of the droit propre or the droit
direct. (Dupuich, Assurance sur la Vie, n. 14; Lambert, Contrat
en faveiir de Tiers, n. 122; note by M. Dupuich to Trib. Civ.
de Toulouse, 21 fevr. 1902, D. 1902. 2. 329; Colin et Capitant,
2, p. 342.)
The contract itself affects the third party, contrary to the general
rule that the contract can affect only the parties to it. It is an
exception to this rule, and is stated to be so in the French Code
itself. (C. C. F. 1165; C. C. Q. 1029; Bufnoir, Propriete et
Contrat, p. 577.) It is true that to say that we have here an
exception to the general rule of contract is to state the fact without
explaining it, but if the law recognises the possibility of a contract
affecting a third party, subject to certain conditions, we are bound
to accept this whether we can bring it under some more general
rule of the law or not . Pothier was content to say that, though a
contract could not propria virtute give a right to a third part}-,
yet e'est Vequite naturelle qui forme cet engagement. {Oblig.
n. 72.)
We may say, at any rate, by way of explanation, that we have,
to begin with, a valid contract between the stipulator and the»
promisor. Now what is the act to which the promisor binds
himself? It is to hold himself bound to the third party unless the
stipulator changes his mind. The object of the contract is this
obligation in favour of the third party.
This object is not impossible or illicit, and it springs out of a
completed contract between the stipulator and the promisor. (See
Saleilles, Theorie Generate ch V Obligation, 3rd ed. p. 275.) As
Ave have seen, the courts in France and in Egypt have now de-
finitely accepted the view that an immediate right, or droit propre,
can be given to the third party in this way provided that the
- "...
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 67
third party is sufficiently determined. (Cass. 28 avril 1903, D.
1904. 1. 150; C. A. Alex. 28 nov. 1901, B. L. J. XIV, 27;
C. A. Alex. 18 janv. 1917, B. L. J. XXIX, 163.)
In the last case the Mixed Court of Apipeal said: Le droit du
tiers au benefice d'une assurance est repute prendre naissance a
son profit au moment meme ou le contrat se for'me entre le stipu-
lant et le promettant, sous la seule condition de sa ratification
ulterieure .
The theory of the droit propre is now very generally accepted
by la doctrine in France. (B.-L. et Barde, 1, n. 161; Lambert,
Contrat en fawur de Tiers, n. 117; Bufnoir, Propriete et Contrat,
p. 576; Lefort, Assurance sur la Vie, 2, p. 225, and authorities
there given.)
Nor is there any weight in the argument sometimes advanced
that it is contrary to legal principles that a man should acquire a
right resulting from a contract to which he was not a party and
made without his knowledge. It happens, commonly enough,
that a man acquires a right without his knowledge, and without
his participation, in the case of delicts and quasi-delicts. If a
man wrongfully injures my property, in my absence and without
my knowledge, I acquire a right of action against him which is
transmissible to my heirs. Why should there be any greater
difficulty when two persons without my knowledge agree to give
me a right of action?
One person alone could not give me such a right, because there
would be no contract, and, according to the principles of the French
law, a purely unilateral declaration of will, not being a testament,
cannot create either a right or a,n obligation. But, when there is
a contract under which two parties agree to give a right to a third
party, why is this not sufficient? And even the most rigorous
supporters of strict legal principle, if they do not admit that
the parties to a contract could give such a right to a third party
without an express provision of law, can hardly deny that the
law can give to them such a power.
The French Code distinctly does this when it says that agree-
ments produce effects only between the parties and do not benefit
a third party, except in the case of a stipulation pour autrui.
(C. C. F. 1165.)
It would be difficult to find a clearer way of saying that under
the stipidation pour autrui the contract itself, contrary to the
general rule, does affect, directly a person who was not a party to
it. (Bufnoir, Propriete et Contrat, p. 583.)
«) St - 5 ^ :; "
V
68 THE LAW OF OBLIGATIONS.
The Egyptian Code lias no such precise statement, but it is
quite improbable, that any change in the law was intended.
Theory of droit propre accepted in German Code.
The matter is dealt with admirably in the German Code in a
series of articles.
By contract a performance in favour of a third party can be
stipulated for, with this effect that the third party acquires a
direct right to enforce the performance.
In default of a special provision as to this point, the court must
determine from the circumstances, and particularly from the pur-
pose of the contract, whether the third party acquires such a
right, and in this case if the right was intended, to arise imme-
diately or only after certain antecedent conditions have been ful-
filled, and also whether the parties to the contract have reserved
to themselves the power to revoke or modify the right of the
third party without his consent (art. 328).
//, by a contract, one of the parties binds himself to pay a
creditor of the other party, without however assuming the debt,
it is presumed, in case of doubt, that the creditor does not acquire
the right to sue this party directly for payment (art. 329).
// in a contract of life insurance, or for the constitution of a
life-rent, the payment of the capital insured or that of the life-
rent has been stipulated for the benefit of a third party, it is
presumed, in case of doubt, that the third party acquires directly
the right to sue for the prestation. There is the same presumption
when, in a disposition by gratuitous title, the beneficiary has been
charged with a prestation in favour of a third party, or when, by
a deed of transmission of a patrimony or of a transfer of a pro-
perty, a prestation in favour of a third party has been promised
by a transferee by way of family arrangement for the purpose of
rendering an equivalent (art. 330).
When the prestation to be made to a third party is to take place
upon the death of the person to whom the promise is made, the
third party is presumed, in case of doubt, to acquire a right to the
prestation upon the death of the person who received the promise.
If this person should die before the birth of the third party,
the promise to make a prestation to the third party specially
designed cannot be modified or revoked unless power to do so has.
been specially reserved (art. 331).
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 69
// the person who has received the promise has reserved to him-
self the power to substitute, without the consent of the promisor,
another person in place of the third person designated in the
contract, he may, likewise, in case of doubt, make this substitution
in a mortis causa disposition (art. 332).
// the third party intimates a repudiation of the right vested
in him under the contract the right is considered as not acquired
(art. 333).
Legal defences arising from the contract are available to the
promisor against the third party as well as against the stipulator
(art. 334).
The person who has received the promise may, likewise, unless
the contracting parties have manifested in the contract a contrary
intention, demand the execution of the prestation to the third
party, even when the right to this prestation belongs to the latter
(art. 335).
That is, the German Cade fully accepts the practical results
acquired by the jurisprudence, which are so important for the
business of insurance, but it does not attempt any theoretical
explanation of them, and it leaves the court a large discretion to
interpret the particular contract according to the intention of the
parties.
(See Windscheid, Vaivdekten, 8th ed. 2, s. 316, a.)
The language of the Egyptian codes rather suggests that the
legislator looked upon the stipulation pour autrui as a kind of
gestiou d'affaires. (137/198.) But it is not so definite as to
oblige the courts to accept this theory.
Characteristics of the third party's right.
The French Code and the Code of Quebec state expressly that
the right of the third Rarty is revoc able j>g_the stipulator until
it has been assented to by the third party. (C. C. F. 1121:
C. C. Q. 1029.)
The Egyptian Code is silent upon this important point, but it
is safe to assume that the legislator did not mean to depart from
the French law on the subject. In France, it is held that the
exercise of this right of revocation is not subject to any particular J
form and may be implied. It is sufficient that the stipulator has
shown his intention to revoke. (B.-L. et Barde, 1, n. 169; Agen,
8 mars 1893, in note to Cass. 10 dec. 1894, D. 1895. 1. 329.)
The revocation does not need the consent of the promisor, and
70 THE LAW OF OBLIGATIONS.
its effect will usually be that the promisor is bound to make
payment to the stipulator instead of to the third party.
But this will not be so when the promisor can show that pay-
ment to the stipulator would be more onerous to him than payment
to the third party. For example, it is clear that if I give you
a farm on condition that you pay a life-rent to my father, my
revocation of the stipulation in his favour could not oblige you to
pay the life-rent to me for any period longer than my father's life.
The period must continue to be the length of my father's life
and not that of mine. (Aubry et Rau, 5th ed. 4, p. 523; B.-L.
et Barde, 1, n. 170; D. N. C. C. art. 1121, n. 66. See Grenoble,
6 avril 1881, D. 82. 2. 9.)
fa And cases are conceivable in which the stipulation in favour of
a third party is o f so person al a Wind that it could not be rendered
to any one else. The substitution of the stipulator for the third
party would be clearly contrary to the original intention of the
parties. In such a case the revocation by the stipulator simply
relieves the promisor from the burden. (Aubry et Rau, 5th cd.
4, p. 523; B.-L. et Barde, 1, n. 170; D. N. C. C. art. 1121,
n. 68. See Guerette v. Ouellet, 1905, R. J. Q. 27 S. C. 45.)
If the stipulator dies before the third party has intimated his
assent, the heirs of the stipulator can exercise his right of re-
vocation unless this appears to be contrary to the intention of the
parties. The inchoate right of the third party created in his
favour without any participation by him can disappear in the
same manner and by the same procedure as that by which it came
into existence.
The right which the stipulator has to revoke the benefit which
his will has called into existence is an ordinary personal right,
which, on general principles, passes to his heirs. (Aubry et Rau,
5th ed. 4, p. 524; B.-L. et Barde, 1, n. 171; Douai, 10 dec.
1895, D. 96. 2. 417, and note by M. Dupuich; Bordeaux,
ler avril 1897, D. 98. 2. 169, and note by M. de Loynes.)
Some writers dispute this, and argue that the right of revocation
is essentially personal and is to be assimilated to the right to
revoke a gift on the ground of ingratitude, which by the French
law does not pass to the heirs of the donor. (C. C. F. 957;
Lambert, Contrat en faveur de Tiers, n. 90.)
But the weight of authority is in the other sense, and there
does not appear to be any reason why we should regard this right
as essentially personal. As M. Barde says, le Hers doit etre, au
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 71
regard des hSritiers du stipulant, dans la si inn lion ou il se trouvait
au regard du stipulant hd-meme; il conserve son droit, main, a
defaut d' acceptation, ce droit demeure aussi fragile qu'avant la
mort du stipulant. (B.-L. et Barde, 1, n. 171.)
This, however, is a question of interpretation. In the case of _*>
life-assurance for the benefit of a third party, it is presumably
contrary to the intention of the assured that his heirs should have
the right to revoke the stipulation. The desire of the assured
is that the insurance-money shall not be a part of his succession,
and, although he reserves to himself the right to change its destina-
tion, he does not intend his heirs to have the same right. By
not exercising his right of revocation he has indicated that he does
not wish this money to go to his heirs. To allow them to revoke,
and in this way to secure for themselves what was meant for others,
would be to make the contract produce an effect entirely contrary
to what was intended. (B.-L. et Barde, 1, n. 197; Aubry et Kau,
5th. ed. 4, p. 527; Dupuich, Assurance sur la Vie, n. 230;
D. N. C. C. 4, p. 928, n. 750.)
And although the heirs of the stipulator succeed to the right
to revoke the stipulation, except in the case of life-assurance, or >
where, in other cases, a contrary intention appears, this will not
be so when the stipulator in his will has confirmed the benefit
given to the third party, for this amounts to an interdiction of
the heirs from revoking the liberality. (Grenoble. 6 avril 1881,
D. 1882. 2. 9.)
The right to revoke the stipulation is however strictly personal
in the sense that if the stipulator does not choose to exercise it,
it cannot be exercised for him by his creditors. At any rate, this
is so in the case of insurance. The benefit conferred on the third
party is presumably conferred from motives of affection or family
interest.
The parties did not contemplate its revocation on purely
pecuniary grounds. It might be revoked for family considera-
tions and of these the stipulator was to be the sole judge. (Aubry
et Bau. 5th ed. 4, p, 212, note 48, Us; Dupuich, Assurance sur
la Vie, n. 212, Paris, 10 mars 1896, D. 96. 2. 465; note to D. 95.
2. 155, column 2, in fine. Contra, Douai, 10 dec. 1895, D. 96.
2. 417.)
The application of the rule is sufficiently clear in this case. It
may be less clear in other cases, but, although the question is one
of intention, it would seem that the right of revocation of a
benefit stipulated' for a third party is not as a general rule to be
72 THE LAW OF OBLIGATIONS.
considered as being primarily a pecuniary claim or asset of the
stipulator's estate, such as his creditors are entitled to collect by
an action. (See the note by M. Dupuich to D. 96. 2. 417.)
Effects of assent.
>• tjf-S O It is generally agreed that the consequence of the assent is to
give to the third 'party a direct right of action against the promisor.
(Pothier, Oblig. n. 72; Demolombe, 24, n. 255; Aubry et Rau,
5th ed. 4, p. 529; Cass. 24 fevr. 1902, D. 1903. 1. 433;
D. N. C. C. ait. 1121, n. 122; C. A. Alex. 14 fevr. 1918.
B. L. J. XXX, 221.)
This is. after all, a matter of interpretation, and if considera-
tion of the contract leads to the conclusion that the parties never
intended to give a direct action to the beneficiary, there is no reason
why the court should refuse effect to this intention.
(B.-L. et Barde, 1, n. 164; Cass. 20 dec. 1898, D. 99. 1. 320.)
The German Code leaves it for the court to decide if the third
party has a direct right (art. 328), and the Swiss Code says le tiers
ou ses ayants droit peuvent aussi reclamer personnellement
Vexecution, lorsque telle a ete Vintention des parties ou que tel
est Vusage. (Code Fed. des Oblig. art. 112.)
The stipulator has also an action to compel the promisor to
execute the stipulation in favour of the third party who has assented
to it, for it must not be forgotten that the promisor makes a direct
contract with the stipulator. (Demolombe, 24. nos. 232, 233:
B.-L. et Barde, 1, n. 154; D. N. C. C. art. 1121, n. 144: Cass.
10 avril 1894, D. 99. 1. 270.)
It is because the stipulation for the third party is an integral
part of the contract that the third party enjoys the benefit of
all the guarantees, such as hypothecs, furnished by the promisor.
Whether the third party enjoys the privilege of the vendor is a
disputed point, which cannot here be adequately discussed. Many
writers deny it. But it seems reasonable to say with the
editors of the last edition of Aubry et Rau, une pareille charge
forme, en effet, partie du prix, dont Vintegralite se trouve gar an tie
par le privilege du vendeur, aux droits diiquel le beneficiaire de
oette charge se trouve virtuellement subroge. (Aubry et Rau,
5th ed. 4, p. 531, note 30; B.-L. et de Loynes, Nantissement,
n. 583; Caen, 24 avril 1902, D. 1904. 2. 425. Contra, B.-L.
et Barde, 1, n. 166.) Where an immoveable was sold subject
to a price in money and also to payment of an annuity to a :
(6
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 73
third party it was held by the court of Caen that this right to
the annuity was protected by the vendor's privilege. (Caen,
24 avril 1902, id su/p.) 'As a rule the stipulator does not bind
himself to any performance in favour of the third party. Accord-
ingly, the third party will have no action against him unless, in
the particular ease, he has specially bound himself. (B.-L. et
Barde, 1, n. 159; Cass. 6 juin 1880, D. 89. 1. 55.)
How may the third party declare his assent?
It is plain that since no form is prescribed, the assent may be
expressed or implied, and it is better to avoid the word "accept-
ance," though it is used in many of the cases, because it suggests
the theory which we have rejected that the third party is in the
position of a party to whom an offer is made. The rule that the
assent may be implied is supported by all French writers and by
many decisions. For instance, in a French case, where a sum
was to vest in a daughter either at her marriage, or on her setting
up a business, it was held that her assent was shown by her
commencing a business. (B.-L. et Barde, 1, n. 172; Cass. 30
juill. 1877, D. 78. 1. 342. Cf. Bordeaux. 1 avril 1897, D.
98. 2. 169; D. N. C. C. art. 1121. n. 94.)
In particular, the bringing of an action by the beneficiary in
which he claims the execution of the stipulation is a sufficient in-
dication of his assent to it. (D. Rep. Oblig. n. 297; D. N. C. C.
art. 1121, n. Ill; Dupuich, Assurance sur la Vie, n. 50; C. A.
Alex. 18 jam. 1917, B. L. J. XXIX, 163.)
f 1
If the legal representative of the third party is the stipulator
himself can he give the necessary assent for the third
party?
If a father insures his life for the benefit of a minor son, can
he, as his son's tutor, assent to the' stipulation for the son? Or
may we say that the assent is implied in the stipulation itself
which the father makes? It is not easy to answer affirmatively.
There are conflicting French decisions on this point. The view
of the Cow de Cassation is that the father may, in such a case/
assent to the stipulation, but as this is a renunciation by him of
his right to revoke, his intention must be unequivocally shown.
It will not be implied from the mere fact of his signing the
policy in his own name and not on behalf of the son. (Cass. 25'
avril 1903, D. 1904. t. 150. But see Besangon, 11 nov. 1898,
74 THE LAW OF OBLIGATIONS.
D. 99. 2. 81; note by Labbe, S. 89. 1. 290; B.-L. et Colin,
Donations, 1, n. 1293; Laurent, 12, n. 249; D. N. C. C. 4,
p. 922, n. 525; Dupuich, Assurance sur la Vie, n. 51; Lefort,
Assurance sur la Vie, 2, p. 106.) As M. Lambert says, this-
cannot be justified on the theory of the offer. It is, in effect,
saying that the acceptance by one of the parties of the offer made
by the other is sufficient to create a right not only in favour of
the stipulant but in favour of the third party. It is a subtilty
to attribute to the beneficiary an assent which really emanates
from the stipulator. (Contrat en faveur de Tiers, n. 97.)
A Quebec case is a good illustration. A sold a farm to B,
subject to a charge of a payment by B to C, who Avas a minor
child of A.
It was held no other assent was necessary.
The person who could have assented would have been A him-
self, as tutor for his minor child, and his assent was implied from
his making the stipulation. {Dostaler v. Dupont, 8 Quebec Law
Reports, 365.)
But if the stipulation by the father for the benefit of the 60ii
were assimilated to a donation, the father could not be both the
offeror and the acceptor. There would be no concourse of two
wills. (Laurent. 12, n. 249; B.-L. et Colin, Donations, 1, n.
1293.) And, unless we have the courage to say that in this case
no assent is required, it is difficult to justify such decisions.
(Lambert, 1. c.)
Assent does not need to be intimated to stipulator.
It is not necessaiy that the assent of the third party should be
intimated to the stipulator, or even to the promisor, in order to
render the third party's right irrevocable. (Aubry et Rau,
5th ed. 4, p. 528.)
It follows from what has been said that even when the stipula-
tion for the benefit of the third party is in effect a gift to him,
it does not need to be made or accepted in authentic form.
If the stipulation for the third party is the condition of an
onerous contract which one makes for oneself, the stipulation is
not subject to the formal rules applicable to ordinary gifts. The
stipulation for the third party is accessor}- to a contract which
does not need to be made in any special form. (B.-L. et Barde, 1,
n. 167; Req. 30 juill. 1877, D. 78. 1. 342.)
The German Code requires no assent on the part of the
>
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 75-
beneficiary. Unless he repudiates the benefit the right is acquired
(art. 333).
And the French jurisprudence is so liberal in admitting the
evidence of implied assent as almost to reach the same result.
(See Dupuich, Asmrance sur t la Vie, p. 129.)
Who can be a beneficiary under the stipulation?
There are three possible cases: (1) The third party who is to
benefit under the stipulation is a person individually designed
and actually living; [2 the stipulation is for the benefit of persons
who are living but indeterminate; (3 the stipulation is for the
benefit of future persons.
Determinate persons.
The person to benefit here is either mentioned by name in the
contract, or is indicated jii such a way as to leave no doubt as to
his identity. In the case of life-assurance, at any rate, it is
established in France that when the assured reserves, as he
generally does, the right to alter the beneficiary by an avenant or
annex to the policy, the position of the third party who is named
in this way is just the same as if he had been named in the policy
itself . The right of the beneficiary retroacts to the date of the
contract. (Cass. 19 nov. 1907, D. 1908. 1. 129, and Dissertation
by M. Dupuich; Lefort. Assurance sur la Vie, 2, p. 234.)
And, similarly, the beneficiary may be named in the course of
the life of the assured by an endorsement of the policy. (Cass.
4 mai 1904, D. 1905. 1. 165; "D. N. C. C. 4, p. 918, nos. 408
seq. and ib. Additions, 1913, p. 231, nos. 398 seq.)
Thus, to give an example: A husband insured his life for the
benefit of his wife. Subsequently the husband became bankrupt,
and a syndic or trustee for his creditors was appointed; thereafter
the assured died. The syndic claimed the insurance-money as
part of the bankrupt's estate. The Court of Appeal of Paris
held: (1) That the Avidow could accept the offer after her husband's
death; (2) That her acceptance retroacting to the date of the
insurance, she was vested in a personal and direct right against
the insurance-company which never formed a part of the estate
of the husband, and could only have entered into that estate if he
had used the right of revocation; and (3) That this right of
revocation, being a right strictly personal to the husband, could
76 THE LAW OF OBLIGATIONS.
not be exercised by the syndic in his name. (Paris, 10 mars
1896, D. 96. 2. 465.)
And, according to the jurisprudence of the Cour de Cassation,
the result would have been precisely the same if the assurance had
been originally in favour of the assured and his heirs, and the
wife, or any other determinate person, had been substituted by
the assured in place of the heirs by an avenant to the policy.
(Cass. 7 aout 1888, S. 89. 1. 97, D. 88. 1. 118: B.-L. et Barde,
1, n. 200; Lefort, Assurance sur la Vie, 2, p. 234.)
Indeterminate or future persons.
Can a stipulation validly be made for the benefit of a person
not named, or even of a person not yet in existence? We have
seen that the prevailing theory now is that, under a stipulation
for the benefit of a third party, a right vests in the third party by
the effect of the contract.
Practical considerations make it eminently desirable to come
to this conclusion. But if the third party is as yet undeter-
mined, or does not yet exist, how is it possible to say that any
right is inherent in him? Can we conceive of a right which is
not inherent in any person, a right, that is to say, which no one
is entitled to enforce? In considering this question it is best to
distinguish indeterminate persons from future persons.
By indeterminate persons we mean those persons who are not
actually named or designated in the contract, but who, neverthe-
less, can be determined at the date when the contract is to take
effect for their benefit. A stipulation for the benefit of persons
who are not only indeterminate but indeterminable will certainlv
not be valid. But if, at the time when the contract is to take
effect, it is possible to make the determination, wlrv should we deny
effect to the stipulation? But assuming that the third party is
determinable, at the time when payment is demanded, although
not determinate at the date of the contract, is it possible to give
to this indeterminate person a droit propre from the date of the
contract itself? It is generally agreed that a legacy may be made
in favour of indeterminate persons if they are capable of being
made determinate later.
There is, of course, no difficulty when the legacy is made to a
determinate person in the first place, subject to the charge that
lie shall pay a certain sum to a person whom he shall select out of
a class named by the testator. (D. Snpp. vo. Dispositions enfrr
vifs, n. 842; D. N. C. C. art. 1002, n. 222.)
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 77
For instance, if a yum is bequeathed to provide a dowry each
year for a poor and honest girl of a certain town, the girl' to bo '
selected by the bishop, there is sufficient determination of the
legatee. (Caen, 9 juill. 1894, D. 95. 2. 236.)
And a legacy directly in favour of chacune des viugl villes de
France ayant le plus d'ouvrieres pauvres has been held to be valid
because, by inquiry, it could be determined which twenty towns
satisfied the condition. (Amiens, 26 fevr. 1879, S. 81. 2. 136;
Journal du Palais, 81, p. 708.)
If these results are correct, why should a different rule be applied
to the stipulation pour autrui? (Lambert, Contrat en favour de
Tiers, n. 133; Planiol, 2, n. 1236.)
But in the case of a legacy no right vests in the legatee until •
the death of the testator, whereas in the case of the stipulation'
pour autrui it is desired to find some means by which the right
can vest at once in the beneficiary, for, otherwise, it will be exposed
to the action of the creditors of the stipulator. Suppose, for
example, a man insures his life for the benefit of himself if he
survives a certain date, or of his heirs if he predeceases that date.
His heirs are not determinate at the date of the assurance, but
they will be determinate when he dies.
In the meantime, however, does any right vest in them? If it
does not it must vest in the assured himself and form part of his
patrimony . And if he dies insolvent his creditors will be entitled
to take the sum paid by the insurance-company.
The French authorities are in favour of the right of the creditors
in this case. (Lyons, 9 avril 1878, D. 79. 2. 158; Besangon,
14 mars 1883, D. 83. 2. 129; Cases in note to Paris, 8 juill.
1904, D. 1906. 2. 13, and in D. N. C. C. 4, p. 919, nos. 427
seq. ; Cass. 20 d&6 : . 1876, D. 77. 1. 504; Dupuich, Assurance sur
la Vie, n. 194.) Other expressions which have been held to denote
personnes indeterminees are mes parents, mes cousins, and even
mes enfants nes ou a naitre. (As to the last see infra, p. 82 seq.,
and Dissertation by M. Dupuich in D. 1906. 2. 13; Lefort, Traite
du Contrat d'Assuranae sur la Vie, 2, p. 138.)
But why is it necessary to come to this conclusion? It is
presumably contrary to the intention of the parties.
The assured may be presumed to have intended that the
insurance-money should not form part of his succession. At least
such a presumption is reasonable when, at the date of the in-
surance his heirs are his wife and children, and, in an Egyptian
78 THE LAW OF OBLIGATIONS.
case, the Mixed Court of Appeal has held that in this case it is
possible to g-ive effect to his intention.
En cos de predeces de Vassure, la somme appartient done aux
heritiers naturels et ne pent pas etre consideree comme line depend-
ance de sa succession soumise a V action des creanciers ; il importe
pen que les beneficiaires eventuels de Vassurance n'aient pas ete
nommement designes dans le contrat, du moment que tant au
moment du contrat qa'a celui du deces, les heritiers naturels de
Vassure se trouvaient etre sa femme et ses en f ants tons nes au
moment du contrat et v'wants lors du deces. (C. A. Alex. 28 nov.
1901, B.L.J. XIV, 27. Cf . C. A. Alex. 27 avril 1904, B.L.J.
XVI, 217. See Cass. 2 juillet 1884, D. 85. 1. 150; and the note
to Paris, 8 juillet 1904, D. 1906. 2. 13; and see infra, p. 82.)
In the case decided by the Court of Paris the expression in the
policy was heritiers directs, and the court held that the assured
intended by this phrase to denote his minor children existing at
the date of the contract.
The Mixed Court in Egypt and the Court of Paris recognise
that persons actually existing at the date of the insurance may_
acquire a direct right, though they are not named in the policy,.
But can we go further and say that such a direct right can be
created in favour of a person actually indeterminate and indeter-
minable at the date of the contract? 'There is no doubt that this
result would best satisfy the requirements of business, but the
difficult}" is to find a satisfactory legal ground upon which to rest
it. It is perhaps possible to accept the solution adopted by some
French writers.
Cases where beneficiary is indeterminable at date of contract.
But before stating this- theory it is well to point out that there
are several cases in which it is generally admitted that a stipula-
tion is valid, though at the date of the contract it is not possible
to sslj who the third party is for whom the benefit is stipulated.
The jurisprudence in France has in these cases clearly recognised
the possibility of a valid stipulation for an indeterminate person.
Thus, in marine-insurance, the usual form of policy is pour le
compte de qui il appartiendra.
The assurer is -bound not only to the present owner of the goods
but also to any future owner. L' assurance pour compte de qui il
appartiendra cree un lien de droit, non settlement entre les parties
demommees au contrat, mais encore entre Vassureur et les pro-
prietmres presents et futurs de la chose assuree.
,r
■
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 79
The person in right of the bill of lading is entitled to claim the
benefit of the contract. (Cass. 27 juin 1899, S. 1903. 1. 502;
Amiens, 10 juin 1887, D. 89. 2. 177: Cass. 5 mars 1888, D.
88. 1. 366, S. 88. 1. 315; Lyon-Caen et Renault, Trcdie de
Droit Commercial, 4th ed. 6, n. 1192. Cf . Arnould on Marine
Insurance, 7th ed. 2, s. 1279.)
One cannot say at the date of the contract who will have the
right of suing the "underwriter," as the marine insurer is called.
The English form is that the assured makes the contract " as
well in his own name as for and in the name and names of all
and every person or persons to whom the same doth, may, or
shall appertain." (Arnould on Marine Insurance, 7th ed. 1,
s. 12.)
Again, before the French loi du 9 avril 1898. which gave to
workmen in industrial occupations a right to compensation for
death or bodily injury caused by accidents during their work,
without proof of fault on the part of the emplo} r er, it was common
for the employer to insure his workmen against industrial acci-
dents. Such contracts took various forms, but the most usual was
the form called in France assurance-collective. Under this form
of contract the employer insured his workmen against the pro-
fessional risk collectively and without their participation, and
made a deduction from their wages towards the payment of the
premiums. According to the prevailing jurisprudence in France,
this gives to an injured workman or to the representatives of a
workman who has been killed by an accident during the work a
direct right of action against the insurance-company. (D. N.
C. C. 4, p. 935, nos. 82 seq.; Lambert, Du Contrat en fare/ti-
de Tiers, n. 280. Cf. Pau, 30 juin 1913, D. 1915. 2. 49.)
In many cases this result has been justified upon the ground
that the employer acts as negotiorum gestor for the workmen,
and that they ratify his acts by agreeing to the deduction from
their wages to meet the premiums. It is this which creates the
lien de droit between the workmen and the insurance-company.
(Paris, 22 juill. 1897, D. 98. 2. 94; Trib. Civ. de Morlaix. 2
juin 1915, D. 1916. 2. 29.)
But a more correct view appears to be that this is an example
of stipulation pour autrui. The employer continues bound to
pay the premiums; he does not intend to contract in the name of
the workmen who vary from day to day, and he has no intention
to offer to them the right to take over the engagement which he
has mad.'. There is no real analogy between this case and that of
80 THE LAW OF OBLIGATIONS.
gestion d'affaires. (Lambert, op. <il. n. 289; Douai, 11 juill.
1895, D. 97. 2. 369; and note by M. Dupuich.
But if this is the correct solution, it is clear that we have here
another example of a right being created in favour of a person
not determinate at the date of the contract. Nothing can be
more variable or uncertain than the personnel of an industry.
The employer does not know at the date of the insurance how
many of the men whom he has at that moment in his employment
will be there six months hence. The workmen who may be in-
jured during the course of the year may have been in the employ-
ment at the date of the policy, or may have entered the employ-
ment at any time during its course, and perhaps on the day before
the accident. This is immaterial to the employer and to the
insurance-company. It is the group of workmen, generally
defined as not exceeding a certain number, which is insured.
Nothing tan be more indeterminate . And it is the same when an
employer contracts with a doctor to give medical attendance to
his workmen. (Pau, 30 juin 1913, D. 1915. 2. 49.)
Similarly, the clauses made in favour of the workmen in a
contract between a public authority and a contractor, are in favour
of persons as yet entirely indeterminate, and, nevertheless, a direct
right is given to the workmen. (Paris, 8 fevr. 1908, D. 1908. 2.
185.)
And the same applies to contracts of public utility where they
are considered to give direct rights to the inhabitants of a parti-
cular locality, and to the beneficiaries under a charitable founda-
tion created by an acte entre vifs to be administered by a muni-
cipality or other moral person. (See Planiol, 2, n. 1237.)
Future persons.
From what has been said, it is clear, that there is no great
difficulty in holding that a right may be created in favour of a
person not determinate if that person was actually existing at
the date of the contract- Is it possible to apply the same rule to
"future persons," that is to say, to persons who did not exist at
the date of the contract? This is a much more difficult question.
It is clear that I cannot make a contract with a poison not yet in
existence, but can I in a contract which I make with another,
stipulate a benefit for a person who is not yet in existence?
If we were to accept the theory of the offer as the explanation
of the stipulation pour autrui the answer would clearly need to
be in the negative, for it is impossible to make an offer to a person
;-
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 81
not in existence. We have, however, rejected the theory of the
offer, and this difficulty does not stand in the way, but how is.it
possible that a right can exist which is not inherent in any subject,
that is to say, which no one is entitled to enforce? Must not
every droit have a titulatie and belong to some patri m omc ? Can
there be a right which is, so to speak, floating in the air? These
questions have been keenly discussed by French writers.
The question is a very practical one. If a man insures his life
for the benefit of his wife and children he does not know how many
children may be born to him. Nor, as a rule, if he has children
already, does he mean to make any distinction between these
children already born at the date of the policy and those who
may be born afterwards.
But if the law does not allow a stipulation for the benefit of a
future person, he cannot in this way provide for the unborn chil-
dren. By a legal technicality we defeat a most laudable intention.
The French courts have in fact gone so far as to hold that when
the insurance is in favour of enfants nes et a naitre neither the
children already born nor the children subsequently born acquire
a droit propre at the date ( of the policy. (Besangon, 23 dec. 1891,
D. 92. 2. 111.) And the Court of Cassation holds that it is a
question of interpretation whether the father intended in the same
disposition to assure an equal sum to his children born or unborn,
and if the Court of Appeal has found that this was his intention
the Court of Cassation must accept this finding. (Cass. 7 mars
1893, D. 94. 1. 77; D. N. C. C, 4, p. 920, nos. 476 seq.)
As it would be shocking to create inequality among the children
whom the father intended to benefit equally, and as the unborn
children could acquire no droit propre at the date*of the policy,
equality is to be restored by giving a right to none of them. The
result is that where the policy is in these terms no right vests
in any of the children; the claim to the insurance money is part
of the father's succession, and if he dies insolvent the capital goes
to his creditors. (Amiens, 19 juin 1901, D. 1903. 5. 58.)
It is no wonder that the writers in France struggle against a
conclusion so inequitable. (Dupuich, Assurance sur la Vie, n. 74;
Lambert, Du Contrat en favour de Tiers, nos. 138 seq.; Lefort,
Assurance sur la Vie., 2, pp. 250, 256.)
Is it to be admitted that the law forbids a father to provide
for his unborn children, and that a man can by an insurance on
his life make a provision for a complete stranger, whose only
merit is that he is already existing, while he cannot provide for
\V — VOL II 6
7 eW;
82 THE LAW OF OBLIGATIONS.
his own children? A> M. Lambert says: on ne pent pas ne pas se
defter de V exactitude et de la legalite d'un principe qui conduit
a de pareils resultats. (Op. c-it. n. 139, in fin. And M. Labbe
says: le legislateur doit se hater de modifier ime legislation pen
hospitaliere pour une institution aussi morale, aussi bienfaisante
que I'o >sn ranee sur la vie, surtout quand elle est contract ee, avec
une abnegation genereuse, par une personne au profit direct de
ses enfants nes et a uaiire.) (Note to Cass. 2 juill. 1884, S. 85.
1 . 8, in fine. Cf. M. Labbe in note to Douai, 6 dec. 1886, S. 88.
■J. J97. And. lastly. M. Lefort says: It convient, dans rinteret
meme du developpement de Vassurance sur la vie, de lutter avee
energie pour I 'iw iter les cas ou V attribution devra etre consideree
faite en faveur de tiers indetermines. 11 importe d'obtenir que
Von an.gmente le cas ou le droit propre pourra etre reconnu, afin
de. permetirv pour la farniUe la constitution d'une reserve a Vabri
des vicissitudes causees par la mort de son chef. Assurance sur
J a Vie, 2. p. 256.,
This last writer is afraid that it is too late to maintain in France
that a stipulation merely in favour of heritiers ou an ants droit
should be interpreted as conferring a vested right in the sum
promised. The term " heirs " suggests that the assured was think-
ing of the beneficiaries in the light of his legal successors wh&
continue his personality. It is true he m.ay have been thinking of
those persons who when he made the contract happened to be his
heirs presumptive, and as events turned out were his heirs and
his only heirs at the time of his death.
On the other hand, he may have been thinking of the benefi-
ciaries as those persons at present unknown to him who at his
death would be his heirs.
But in either case the result will be the same, for it is precisely
in their character of heirs that the beneficiaries will be entitled to
claim the insurance money. They will take it jure hcereditario
and not jure sub. It seems to me that in the first of the.e two
eases M. Lefort admits too 'much. If at the date of the policy the
heirs presumptive of the assured were his wife and childrn, and
the insurance is for himself if he is living at a certain date, or
otherwise for his heirs, is it not a reasonable presumption that
when he speaks in the policy of his " heirs " he is thinking of his
wife and children as individuals and not of a group of persons who
may happen to be his heirs at his death?
As we have seen, this view lias been taken by the Mixed Court
of Appeal m one ease. ;C. A. Alex. 23 nov. 1901, B. L. J.
XIV, 27; supra, p. 77. in fine.) 1 \
*
STIPULATION FOB THE BENEFIT OP THIRD PARTIES. 83
But even if we are to admit that whore the stipulation is for
the benefit of "heirs"' or ayants cause, no droit propre is created,
at any rate, unless there are very special reasons for supposing thai
the word "heirs" -was meant to describe particular individuals,
it is surely unnecessary to go as far as the French courts have
gone in denying the creation of a droit propre when tho stipula-
tion is for the benefit of "children.
If a father insures his life for the benefit of his children, it is
entirely unreasonable to presume that he intended the insurance
money to go to his heirs as such, and therefore, possibly, to. his
creditors, seeing that the object of the insurance in almost every
case is precisely to create a distinct fund for the benefit of the
persons named which shall not be a part of his succession and shall
be protected from the creditors.
If the assured had not intended to create such a fund why should
lie insure for the benefit of " children " at all? The result would
have been the same if the insurance had been for his own benefit
alone.
In France the jurisprudence has become so established that
some writers think it is vain to contend for the validity of a stipu-
lation in favour of future persons. They admit with regret that
an insurance for the benefit of enfants a nmtre cannot give these
a vested right, because the jurisprudence is quite settled in the
contrary sense. All that they fight against is the jurisprudence
to the effect that when the stipulation is for the benefit of enfants
ties et a naitre it should be invalid as regards the children existing
at the date of the contract. (Lefort, Assurance sur la Vie, 2,
p. 258.)
But in countries, like Egypt, which have a law based upon the
French system, but where the courts are not bound to follow the
French jurisprudence, we may certainly go further, and maintain
that, upon the principles of the French law, there is no impossi-
bility in giving a droit propre to a future person. It is necessary,
therefore, to examine the grounds upon which the French juris-
prudence rests. They appear to be mainly two: (1) A person
not yet born or conceived cannot succeed as an heir whether on
intestacy or by will, and cannot receive a gift, and the same reasons
prevent a future person from taking a benefit in this way under
a stipulation. (2) It is impossible to conceive of a right not
inherent in any subject.
As regards the right of succession the reason why the French
6 (2)
84 THE LAW OF OBLIGATIONS.
law excludes future persons is because it accepts the principle
laid down as to saisine in the old adage le mort misit le : vii.
(Planiol, 3, n. 1931; Colin et Capitant, 3, pp. 444 seq.)
There must be an immediate and direct transmission of the
succession from the deceased to the heir.
We must seek for a man's heirs at the moment when the suc-
cession opens, and we cannot admit into the class of heirs any
person who is not there at that date. (C. C. F. 725.). As regards
the capacity to take a gift, a future person is excluded for the
plain reason that a gift is a contract, and that a contract requires
two parties. As the future person, ex hypothesi, has no existence
ho cannot accept a gift, nor. can any one accept on his behalf .
(C. C. F. 906.)
But the French law has always admitted that when there was
a direct gift to one person subject to a charge in favour of another
person, this second person did not need to be in existence at the
date of the contract; in fact any other rule would make charitable
foundations impossible. (Caen, 15 nov. 1906, D. 1907. 2. 265.
See Planiol, 3, nos. 3330 seq.) But by the French law, where
there is a direct gift, it must be to some person having capacity,
and not to a group of persons not recognised as having legal
personality such as, for example, an association like a peace society
which has no corporate existence. (Paris, 18 fevr. 1909, D.
1909. 2. 273.)
And the whole law of substitutions, so important in France
before the Code Napoleon so greatly restricted their use, rests
upon the principle that it is not necessary that the substitute should
exist at the time of the gift, if he exists and is capable of taking
when the substitution opens in his favour. (C. C. F. 896, 1048;
Pothier, Traite des Donations entre Vifs, n. 105.)
But when, instead of a gift to A for the benefit of B, we have
a direct gift to B, and B is a future person, is it possible to say
that a right in favour of B is created by the contract? This leads
to the consideration of (2) which is the crux of the problem.
The French courts which deny this possibility have no doubt
been influenced by the theory of the offer. If the stipulation
pour autrui is regarded as an offer to the third party, it is essential
that the offer shall be to an existing person. (Lambert, Du
Contrat en faveur de Tiers, n. 140.)
But, rejecting the theory of the offer, is it still impossible to
give a right to a non-existing person? Seeing that the assent of
the third party is not necessary to create the right why is it neces-
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 85
sary that he should exist in order that the right should be created?
The stipulation cannot give the third party before his conception
a vested right, but it is not necessary that the contract should
produce its effect immediatelj' . The third party finds when he
is born an expectancy or eventual right which was only waiting
for his birth in order to take shape.
The promisor is bound to the beneficiary when he is born, just
as in the case of collective insurance the insurance-company is
bound to the workman of whose existence it had no knowledge at
the date of the contract, or the gas-company, or water-company,
in the case of the contracts of public utility, is liable to the house-
holder whether he was born or not at the date of the contract. In
support of this argument an analogy may be drawn from the law
of sale. There can be a valid contract of sale of a future thing
though the sale can produce no immediate effect, and will indeed
never produce any effect unless the future thing conies into
existence .
The operation of the contract is suspended until we see if there
w.as in fact any object sold, and, if it turns out that there was, the
sale is valid.
If there can be, as in this case, a valid contract before we know
whether there is an object, why can there not be a valid contract
before we know whether there is a subject? This analogy was
already made by Ranchin who died in 158f3. Et sicuti spes rei
qua speratur facit valere stipulationem ; ita spes persona qua
speratur facit valere talem donationem. (Sur la question 267 de
Guy-Pape.)
It has been approved of by many writers. (Lambert, Du
Contrat en faveur de Tiers, n. 189; Lefort, Assurance sur la Vie,
2, p. 254; Planiol, 2, n. 1242.)
The question is so delicate that I will, at the risk of repetition,
quote the language of M. Lambert, which M. Lefort adopts.
Assurement la stipulation ne pent pas confer er an tiers avant
sa conception un droit defvnitivement acquis ; mms ce tiers trouve,
le jour ou il vient au monde un droit eventuel qui nattendait
que sa naissance pour prendre corps, ti qui pouvait tenir debout
sans son intervention, parceqiCil sortait d'un contrat valablemerit
forme entre deux autres personnes. On pent stipuler au profit
d'une personne future comme on pent stipuler une chose future.
(Lambert, I.e.)
Although the merit of simplicity can certainly not be claimed
for this theory, and difficult as it is to conceive of a right, which is,
86 THE LAW OF OBLIGATIONS.
so to speak, floating in the air until some person comes into
existence entitled to claim it, this is, nevertheless, perhaps the
only theory upon which the decisions of the courts can be sup-
ported. As we have seen, there are quite a number of cases in
which the courts have consistently found that a droit propre was
created by the contract, although it was impossible at its date to
say who the beneficiary was, and, as a matter of fact, the benefi-
ciary might not be at that time in existence.
In tlu i case of a contract of public utility, such as that between
a municipality and a gas-company, the right created in favour of
the householders does not seem to depend on their existence at the
date of the contract.
Many owners of property within the municipality may be
children who were born after the date of the contract, but their
right to enforce the contract would seem to be as good as that of
anv other of the inhabitants.
Matter dealt with in many countries by legislation.
As regards insurance for the benefit of unborn children there
has been in many countries legislation.
Thus in England, by the Married Women's Property Act y
1882, the husband or wife may insure for the benefit of his or
her children. 45 & 46 Vict. c. 75, s. 11. See Laws of England,
vo. Husband and Wife, v. 16, p. 399. Cf. Revised Statutes,
Quebec, art. 5581; and, for a note of similar legislation in other
countries, see Lefort, Assurance sur la Vie, 2, p. 227; Code Comm.
Ital. art. 453; Giorgi, Obbligazioni, 3, p. 577.
In the English law such a policy creates a trust in favour of
the objects therein named, and so long as any object of the trust
remains unperformed, the moneys payable under the policy do
not form part of the estate of the insured. The term "wife"
includes a second wife, and the term "children" includes the
children of a second marriage unless a contrary intention appears
in the policy. [Parker's PoUcies, In re, 1906, 1 Ch. 526, 75
L. J. Ch. 297: Griffith's Policy, In re, 1903, 1 Ch. 739, 72
L. J. Ch. 330.)
The difficulty at present in the French law arises from the
language of the code. If the law were amended by an express
provision declaring that a direct right could be given to a third
party even though indeterminate or unborn, there would be no
further difficultv. This ought to be done.
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 87
Rights of creditors in the case of insurance for a third party.
If a third party has acquired a droit pmprc upon the principles
which have been explained, the creditors of the assured, even if
he dies in a state of insolvency, cannot claim the insurance-money,
because, according to the theory, it never formed a part of his
estate. (Grenoble, 11 d6c. 1894, D. 96. 2. 97; Cass. 2 aout
1909, D. 1910. 1. 328; Dupuich, Assarai/rr sur la Vie, n. 222. y
Nor can the creditors, as a general rule, claim that the third
party shall restore to them the amount of the premiums -which the
assured paid.
They_can do so only when they can show that the payments were
in fraud of their rights. C. ('. E. 143 204: C. C.F. 1107.
If they can show that the payment of the premiums was a
fraudulent alienation of the kind challengeable by the Paulian
action, they can claim their return from the beneficiary, but this
will not often be the case. So long as the management of his
affairs has not been withdrawn from the debtor, he can deal freely
with his income, and it is only alienations of capital which his
creditors can challenge. [Dissert ait on by M. Boistel, in note to
Nancy, 17 janv. 1888, D. 89. 2. 157; Paris. 10 mars 1896, D.
96. 2. 465; Lefort, Assurance sur la Vie, 2, p. 241. Cf. Cass.
2 aout 1909, D. 1910. 1. 328.)
What is the effect of the rescission of a contract in which a
benefit was stipulated for a third party who has assented
to it?
If the contract between the stipulator and the promisor was
null or is rescinded, does the third party who assented to the
benefit lose his right? JWj^ep the contract was null ah initio,
there can be little doubt that he does. The right of the third
party flows from the contract, although he was not a party to it,"
and if there was no valid contract from the beginning he could
have no right under it. Accordingly, if the contract is declared
to be void on account of the want of capacity of the promisor, or
on account of defect of form, the right of the third party must
fall with it. And, further, if the contract was valid ab initio
but is afterwards annulled at the instance of the promisor on the
ground of force, or error, or fraud, the third party will likewise
lose his right.
For example, in a Canadian case, a policy of life-assurance was
effected for the benefit of a creditor, of the assured.
88 THE LAW OF OBLIGATIONS.
The policy was afterwards declared null and void on the ground
that the assured had made false representations as to his state of
health. It was held that the nullity could be invoked against the
third party who was named as the beneficiary under the policy.
(Venner v. Life Insurance Company, 1889, 17 Canadian Supreme
Court Reports, 394. See Pmd. Franc, vo. Oblig. n. 7354.)
But if the stipulator himself brings an action for the resolution
or revocation of the contract and is successful, does this deprive
the third party of his droit acquis ? This is a controversial
question. Suppose I sell you a. farm for a certain price, and
stipulate in addition that you shall pay an annuity to my father.
My father assents to the stipulation for his benefit. You fail
to pay the price. Under the French and Egyptian codes in the
sale of immoveables as well as of moveables the unpaid vendor
has the right of action in dissolution of the sale. (C. C. E.
332/413; C. C. F. 1654; Halton, 2, p. 56.)
Accordingly, I bring an action for dissolution of the sale and
get judgment in my favour. Has my father any claim against
me or against you or does his right simply fall to the ground?
It is generally agreed that if when you are sued you do not have
my father rmsjm^cause, the judgment cannot affect him, according
to the rule res inter alios acta aliis non nocet. (Aubry et Rau,
5th ed. 4, p. 531; Demolombe, 24. n. 258; Pond . Franc. Oblig.
nos. 7525—7530; Cass. 6 juin 1888, D. 89. 1. 55.)
But we will suppose that my father has been made a party to
the action. According to the view supported by most of the
French writers, even in this case, my father's claim to the annuity
is still good. They contend that by his assent to the stipulation
in his favour he acquired an irrevocable right of which the
stipulator cannot deprive him by obtaining the rescission of the
contract.
But the French writers do not agree as to whether my father's
right in the case supposed would be against me or against you.
According to one system when (lie contract is rescinded, you,
the promisor, have no further liability, but I, the stipulator, am
bound in favour of my father because I allowed him to acquire a
vested right. (Aubry et Rau, I.e.)
According to another system, you, the promisor, are still bound
to my father, but you will have a right of indemnity against me,
the stipulator. (B.-L. et Bardc, 1, n. 174.)
>^ Another view which has less support is that the effect of the
rescission of the contract is to restore the parties to the status
i
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 89
in quo ante, and that the right of the third party must fall with
the contract out of which it flows. His right is accessory in
character, and its existence depends upon the validity of the con-
tract. By calling it irrevocable the French Code only means that
the stipulator has lost his right to revoke it so long as the prin-
cipal contract is still in existence. He cannot maintain the
contract for himself, and revoke it as regards the third party.
But if the contract itself is rescinded, there is no basis on which
the right of the third party can rest. Consequently, neither the
promisor nor the stipulator is bound to the third party, and if
the promisor has already paid him anything he can claim repeti-
tion of it, for otherwise, the restitutio in integrum would not be
complete. (Larombiere, art. 1121, n. 10.)
This latter view that the third party's right depends on a valid
contract has been adopted by the German Code, and it seems to
me to be more logical than the opinion which has found greater
favour in France.
Les moyens de defense resultant du control appartiennent au
promettunt egalement a Vencontre du tiers,.
(art. 334. See Windscheid, Pandekten, 8th ed. 2, s. 316 a,
p. 287.)
Comparison with English law.
Common law as to the persons affected by contract.
Leaving out of sight the relation of principal and agent and
the rights and liabilities of heirs and successors, the common law
adheres very strictly to the rule that a person who is not a party
to a contract cannot either sue or be sued upon it. (Pollock on
Contracts, 8th ed. p. 208; Anson on Contracts, 14th ed. p. 272.)
A contract between A and B cannot impose a liability upon C
except in the sense that if C, out of malice, induces A or B to
break the contract he commits a tort. But this is not an obliga-
tion under the contract. (See, as to this last point, Quinn v.
Leathern, 1901, A. C. 495, 70 L. J. P. C. 76; Boiven v. Hall,
1881, 6 Q. B. D. 333, 50 L. J. Q. B. 305; and cf. in France,
Paris, 24 nov. 1904, S. 1905. 2. 284.)
Nor can a contract confer a right on a third party to enforce the
contract, though the parties expressly declare that it shall do so.
{Tweddle v. Atkinson, 1861, 1 B. & S. 393, 30 L. J. Q. B. 265.
124 K. K. 610; Leake on Contracts, 6th ed. p. 296; Pollock on
Cmtr acts, 8th ed. p. 222.)
90 THE LAW OF OBLIGATIONS.
In the English law there is no exception to these rules, which
are regarded as flowing from the mere conception of contract,
unless it is correct to regard as an exception the rule of equity by
which unborn children may acquire rights under a marriage settle-
ment as being, in the language of the English law, ''within the
consideration of marriage." (See Gale v. Gale, 1877, 6 Ch. D.
144, 46 L. J. Ch. 809; Be Cameron and Wells, 1887. 37 Ch. D.
32, 57 L. J. Ch. 69.
But a marriage settlement has much of the nature of a trust,
and, probably in all systems of law, different rules apply to it from
those which apply to ordinary contracts.
The rigorous doctrine of the common law is to some extent
mitigated by certain statutory exceptions, especially by the
Married Women's Property Act, 1882, already referred to, which
allows a husband or wife to insure for the benefit of children,
and gives to the beneficiary a direct action. (45 & 46 Vict. c. 70.
s . 11; supra, p . 86 .
And the inconveniences of the doctrine are considerably miti-
gated by the law of trusts. A trust in the sense of the English
law of equity means that one person who is called the trustee has
lights which he is bound to exercise upon behalf of another, or
for the accomplishment of some particular purpose. When, as
is usually the case, the trust is created by an agreement between
the truster and the trustee, we have a situation analogous to the
stipulation pour autrui.
Some English authorities, indeed, are inclined to regard a trust
as a real exception to the rule of the relativity of contracts. It
is true that the majority of trusts, though not all of them, arise
out of a contract between the creator of the trust and the trustee.
But the better opinion is that trust and contract are quite
distinct things. A contract has for its sole object to create obliga-
tions, whereas a trust may have many other objects. (See Mail-
land, Equity, p. 53; Snell, Equity, 17th ed. p. 44; Pollock,
Contracts, 8th ed. p. 219; Anson. Contracts, 14th ed. p. 272.)
The English trust has been described as "perhaps the most
distinctive achievement of English lawyers," and it has many
peculiarities which distinguish it from a contract. (See Maitland,
op. cit. p. 23: Anson, I.e.
And, although no formal words are necessary for the creation of
a twist, nevertheless, if a trust is to lie created in favour of a third
party, it is not enough that one of the parties should promise to
STIPULATION FOR THE BENEFIT OF THIRD PARTIES. 91
pay money to a third party, there must be words amounting to a
declaration of a trust. An imperfect gift is not a declaration of
trust.
Cf. Richard* v. DelbrUge, 1874, L. P. 18 Eq. 11, 43
L. J. Ch. 459; Murray v. Flavell 1883, 25 Ch. D. 89. 53
L. J. Ch. 185. See Maitland, op. ait. p. 74.;
American law less rigorous as to relativity of contracts.
It is interesting to notice that in the United States there is a
decided tendencj' to moderate the rigour of the English law as
to the relativity of contracts, and to approach more nearly to the
French law of stipulation pour autrui. For example, in many
States a beneficiary of a life-insurance policy is given a right to-
enforce the policy, and that without the aid of any statute, and
there are other illustrations of the same tendency which cannot
here be referred to. (See the chapter by Mr. S. Williston on
" Contracts for the Bonefit of a Third Person in the United States."'
in Pollock, Contracts, 3rd American ed. pp. 237 seq.)
The English trust has many advantages, and. as Maitland says.
"seems to us almost essential to civilization.'" The want in the
civil law of anything which answers quite the same purpose
appears to English lawyers to be the greatest defect of that system .
(See the remarks of F. W. Maitland in 'Collected Papers," in
index under "Trust.")
$2 THE LAW OF OBLIGATIONS.
CHAPTER IV.
OF THE EXERCISE OF THE DEBTORS RIGHTS AND
ACTIONS BY HIS CREDITORS.
The French Code, after laying down the broad rale that agree-
ments cannot affect anybody but the parties to them, with the
exception of the case where there has been a stipulation pour
autrui, proceeds to give, as further exceptions or qualifications of
the general rule:
(1) That, nevertheless, creditors may exercise all the rights and
-actions of their debtor, with the -exception ofmichas are exclusivehj
attached to the person ; and
(2) That creditors may also in their own name attack the acts
executed by their debtor in fraud of their rights. (C. C. F.
1166—1167.)
In the first case the creditors bring what is often called the
oblique or indirect action, and in the second they bring the direct
auction, or, as it is generally called, the Paulian action. As a
matter of arrangement this is unsatisfactory. When creditors act
in the debtor's place they act in his name and on his account, and
cannot, therefore, properly be regarded as third parties. And when
they bring the Paulian action and attack their debtor's contract,
they are not third parties either, or, at any rate, they are third
parties only in a very special sense. It may be said that in
attacking their debtor's contract they maintain that by making
it the debtor exceeded his powers of administration of an estate
in which they have an interest, and that, although, in general, he
could diminish his estate to their prejudice, he could not do so
fraudulently.
They claim, therefore, to be third parties as regards this con-
tract, but it is precisely on that account that they attack the
contract. And if they succeed in their challenge the result is
that the contract does not affect them at all. Neither the oblique
action, therefore, nor the Paulian action is a true exception to the
OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 93.
mile that contracts do not, affect third parties. (Laurent, 16,
n. 382; B.-L. et Barde, 1, n. 587; Demolombe, 25, n. 46.)
The Egyptian Code falls into the same error of arrangement,
so far as the indirect action is concerned, when it says: Agree-
ments cannot enure to the benefit of third persons, oilier than the
creditors of the contracting 'party., who can, in virtue of the general
right which they haoe oyer the property of their debtor, exercise,
in the name of such debtor, all such rights of action as aceriu
to him from contracts or from any other source of obligation y
savesfinly such rights of action as are purely per son ah (141/202.
But neither the Egyptian Code nor the Code of Quebec in any
way suggests that the Paulian action is looked upon as an excep-
tion to the rule that contracts do not affect third persons. They
have profited by the criticism to which the French article has-
been subjected.
All the codes are very scanty as regards the oblique action .
The Egyptian Code in the article just cited says that when the
creditors exercise a right belonging to their debtor they do so
in his name, a point not mentioned by the French Code nor by
the Code of Quebec. (C. C. Q. 10310
On the other hand, the Code of Quebec says that Creditors
may exercise the rights and actions of their debtor, when to their
prejudice he refuses or neglects to do so; with the exception of
those rights which are exclusively attached to the person.
(C. C. Q. 10310
Neither the French nor the Egyptian Code has anything corre-
sponding to the words stating that there must be a refusal or
neglect on the part of the debtor to take proceedings himself, but
these words correctly express the law of France and Egypt as well
as of Quebec. The reason why the action 'by the creditor is called
the oblique action or the indirect action is because the creditor
represents not himself but the debtor or the debtor's estate
(Planiol, 2, n. 2950
As we have said, all the codes are very meagre about it, and
leave many questions completely unanswered. Moreover, the
history of this right of creditors is somewhat obscure. It is,
therefore, not surprising that upon many points there has been
great difference of opinion. Even now there is far from being an
agreement upon all of them, but most of the important points are
pretty well settled in practice. It is generally admitted that the
foundation of the creditor's right is the principle that the pro-
94 THE LAW OF OBLIGATIONS.
perty of a debtor is the common pledge of his creditors. (C. C. E.
555/679; C. C. F. 2093; C. C. Q. 1981.
It is, therefore, not as third parties but as the ayants cause of
the debtor, that they are given the right of exercising rights and
actions in his name. The debtor's rights of action form a part
of his property, and are included under the general right of pledge
which his creditors enjoy by law. A debtor who is embarrassed
or insolvent may feel indifferent as to his estate, and may not care
to take the trouble to prosecute claims which, if successful, will
benefit his creditors rather than himself.
Accordingly, the creditors, or any one of them, may prosecute
such a claim if its success would increase the debtor's estate, and
if the debtor refuses or neglects to prosecute it himself. And,
in principle, the creditors may exercise in this way any right of
action which belongs to their debtor. The French Code saj\s tons
les droits et actions, and the Egyptian Code says All such actions
as accrue to him from contracts or from any other source of obli-
gation, but always subject to the exception that the action must
not be one oi-s^-^pm^ly. -personal" kind. C. C. F. 1166:
C. C. E. 141/202.)
The expression in the French Code and the Code of Quebec
droits et actions is a pleonasm; it means only rights of action,
and the Egyptian Code is more correct in speaking of "actions"
onlv. (Douai, 13 nov. 1852, D. 56. 2. 21; Planiol, 2, n. 232.,
But it is important to remember that the right given to the
creditors is in the most general terms, and that the article ought
to be interpreted in a liberal sense, as authorising them to bring
any action unless it is strictly personal to the debtor. (Dijon,
17 fevr. 1897, D. 98. 2. 31.)
It is for them to decide if they will bring the action or not.
(Cass. 26 juin 1912, D. 1914. 1. 307.) What actions are re-
garded as strictly personal will .be explained later. If the
creditors' right is in virtue of their general pledge over all the
property of the debtor it will follow:
(1) That the creditors must sue in the debtor's name and not
in their own name, as indeed the Egyptian Code expressly states.
(B.-L. et Barde, 1. n. 637; Garsonnet et Cezar-Bru, Traite de
Procedure Civile, 3rd ed. 1, n. 373.)
(2) That the action being really the debtor's, any defence
which is good as against him will be good as against the creditors
who represent him and sue in his name; and
(3) That the effect cf the action if successful is to realise an
OF THE EXERCISE OF THE DEBTORS RIGHTS. 95
asset of the debtor's estate. What is recovered does not belong
to the individual creditors who bring the action.
The right given in this article is to be classed with the other
rights which creditors have of preserving the estate of their debtor,
such as intervention in suits to which he is a party, executing
seizures to preserve rights when this is permitted, or executing
arrestments of money due to their debtor in the hands of a third
party. (See C. C. P. E. 668/760, 674 764; Anbry et Rau,
5th ed. 4, p. 196.) And it is because this last right of saisiej
arret or arrestment is so simple and convenienl when the claim
is for a sum of money, that the right given to the creditors in this
article is not more often exercised. (C. C. Pro. E. 410/471;
Planiol, 2, n. 283.)
But there are many actions which are not simple claims for
a liquid sum of money, and it is only in these last that arrestment
is competent. The debtor may, for instance, have a claim of
damages, or a claim to revindicate property, or to exercise a right
of redemption, or to challenge, the validity of a will under which
he is deprived of a succession which would otherwise come to him
by law. And these are merely a few examples out of many which
might be given.
The right of the creditors to exercise the actions belonging to
their debtor is a right which can be traced back to the Roman law,
though it has undergone very considerable modification. See.
for the history, article by M. Labbe in Revue Critique, 1856,
IX, p. 208, references in Garsonnet et Cezar-Bru, Traite dc Pro-
cedure Civile, 3rd ed. 1, s. 373; Dig. 42. 5. 14.
In the Roman law and in the old French law the creditor who
wished to exercise an action belonging to his debtor, had to begin
by getting a judgment against the debtor himself. And it has
been maintained that this is the modern law also. It is argued
that the history of the right shows that the exercise by a creditor
of his debtor's action is a sort of execution upon his property.
M. Labbe says: "It is laying hands on one of his assets; it is
beginning the prosecution or compulsory execution.
It is an attack on the freedom which a chirographic creditor
is bound to leave to his debtor until he is in fault. It is a way
of realising a pledge no less than by seizure and sale." Conse-
quently, M. Labbe contends that the creditor must have an
executory title, either a notarial deed prepared at the creation of
the debt, or a judicial acknowledgment of a private writing, or a
judgment. (Op. cit. p. 218.) But this opinion is almost univer-
«? i
96 THE LAW OF OBLIGATIONS.
sally rejected. (B.-L. et Barde, l,n. 632; D. N-.C. C. art. 1166,
n. 223; Cass. 8 juillet 1901, D. 1901. 1. 498.)
It is introducing a condition which is not found in the code.
The action is not a form of execution, and its immediate effect
is to increase the debtor's estate by realising one of his outstanding
debts.
Still less is it necessary that the creditor should first have
obtained a judgment subrogating him in the right of his debtor,
although this view formerly prevailed among the French writers.
(Labbe, op. cit. n. 21; B.-L. et Barde, 1, n. 634; Garsonnet et
Cezar-Bru, Traite de Procedure Civile, 3rd ed. 1, s. 373; Bourges,
7 nov. 1900, D. 1902. 2. 124; D. N. C. C. art. 1166, n. 236;.
Dijon, 17 fevr. 1897. D. 98. 2. 31. But see Aubry et Rau, 5th
ed. 4, p. 199.)
Why should we impose upon the creditor the necessity of
bringing one action in order to get judicial authority to
bring another?
The code does not make any such requirement and we cannot
add it. It may be regarded as settled in the jurisprudence that •
no judicial subrogation is needed. The effect of the article is
that the creditor is by law subrogated in the debtor's rights.
Nor is it essential that the debtor shall have been mis en cause
though in practice this is almost always done, because if it is
omitted the judgment will not be opposable to the debtor. (B.-L. .
et Barde, 1, n. 635; Garsonnet, op. cit. n. 374; D. N. C. C.
art. 1166, n. 248; C. A. Alex. 20 dec. 1899, B. L. J. XII, 47;
C. A. Alex. 25 janv. 1917, B. L. J. XXIX, 179.)
Nor is it even essential to the action that the debtor should
have been mis en demeure. It is sufficient if the creditor proves
that owing to the fraud or negligence of his debtor, there is a risk
of his suffering prejudice. We cannot insert conditions which
the code does not make.
/ But, notwithstanding this principle, it is an implied condition
of the exercise of the right that the creditor should have an
interest, for interest is the measure of actions, and the creditor
cannot show this necessary interest if the debtor is acting in his
own behalf. It is only when the debtor is refusing or neglecting
to exercise his own rights, that there is any justification for the
creditor's claim to act in the debtor's name. (Aubry et Rau,
5th ed. 4, p. 196; B.-L. et Barde, 1, n. 628.) Upon this point
the Code of Quebec is more explicit than the French or the
Egyptian Code, because it says that the creditors may exercise
OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 97
the actions of their debtor ivhen to their prejudice he refuses or
neglects to do so. (C. C. Q. 1031.) But the law of France and
Egypt is the same.
A judgment of the Mixed Court of Appeal states the rule
thus:
L' article 202 C. C. M. ne fait dependre Vexercice de la faculte
accordee au creancier de faire valoir les droits et actions de son
debiteur ni de la preuve de Vin&olvabiUte du debiteur ni de toute
autre condition, mais le creancier ne pent exercer les actions de
son debiteur s'il ne justifie pas qu'il a un interet serieux et quit
courra.it le risque de voir sa creance compromise s'il ne faisait pas
usage de cette faculte.
(C. A. Alex. 9 mars 1895, B. L. J. VII. 171.)
The creditor has not the necessary interest when the result, if
the action were successful, would not be to increase the estate of
the debtor. (C. A. Alex. 10 juin 1903, B. L. J. XV. 343.)
When the debtor is prosecuting the claim himself, although not
very energetically — even mollement — it appears that his creditors
cannot act in his name. Their right is limited to intervening
in the action by their debtor in order to prevent collusion and
to protect their rights. (Garsonnet et Cezar-Bru, 3rd ed. 1, s. 373,
note 1; B.-L. et Barde, 1, n. 628; Cass. 30 juillet 1900, D.
1901. 1. 317; D. N. C. C. art. 1166, n. 253.)
And if the creditor brings an action and the debtor thereupon
proceeds to sue on his own account, it appears that the action
raised by the creditor will fall to the ground as having no longer
any foundation. (Amiens, 6 aout 1901, D. 1903. 2. 21.)
It is, further, an implied condition that the right of the creditor
should be exigible. For it is a general rule that a creditor whose
right is not due, or is conditional, cannot take any actions except
such as are of a merely conservatory nature. (C. C. F. 1180.)
The action we are now discussing is, it is true, conservatory, but
it is also something more, because it is intended to bring about
an increase of the debtor's realised assets.
Its object is to realise an unrealised asset. As M. Labbe says,
it would be strange if a creditor who could not sue his debtor
because the debt was not yet exigible, or if a creditor whose right
depended on the fulfilment of a condition, should be entitled to
interfere with his debtor's freedom. (Rev. Crit. IX, p. 218;
B. r L. et Barde, 1, n. 629; D. N. C. C. art. 1166, n. 220.) As
the Mixed Court of Appeal expresses it, the creditor must have
w. — VOL. II. 7
98 THE LAW OF OBLIGATIONS.
ii-n titre certain et prealablement acquis contre son debiteur.
(C. A. Alex. 4 avril 1894, B. L. J. VI, 273.)
But it is in no way necessary that the creditor's own claim
should be anterior in date to the debt which he is seeking to enforce
by the indirect action.
A man who contracts debts thereby pledges his whole future
estate as well as that which he has at the date when the debt was
contracted. Otherwise, when a man became insolvent, there would
be inextricable confusion.
Eaeh of his creditors would have a preference over that portion
of his estate which belonged to him then, and had also belonged
to him at the date when the debt to this particular creditor was
contracted .
It is clear, therefore, that in the application of this right the
date of the creditor's claim is immaterial. (B.-L. et Barde, 1,
n. 630; Laurent, 16, n. 396; Cass. 4 juillet 1854, D. 54. 1.
403.) From what has been said it is evident that the only con-
ditions of the right of the creditors to bring actions are: —
(1) That their claims are exigible.
(2) That they have an interest in the result of the action.
(3) That this interest is imperilled by the inaction of the
debtor; and
(4) That the action is not strictly personal to the debtor.
Whatever is recovered by the action falls into the patrimony
of the debtor.
The exercise of the action in the debtor's name by a creditor
does not confer any privilege upon the creditor who has taken the
initiative.
The creditor who sues does so for the benefit of his co-creditors
as well as on his own behalf. The action being based upon the
principle that the debtor's property is the common pledge of his
creditors, whatever is gained by it must be likewise their common
pledge. The creditor who uses it is exercising a right which
belongs to his debtor, and the effect of the action if successful is
to bring back what is recovered into the debtor's estate.
(Laurent, 16, n. 407; Garsonnet et Cezar-Bru, Trait''; de Pro-
cedure Virile, 3rd ed. 1, s. 375; Demolombe, 25, n. 131; B.-L.
et Barde, 1, n. 644: D. N. C. C. art. 1166, n. 286; C. A. Alex.
25 janv. 1917, ^B. L. J. XXIX, 179.)
But if one creditor sues alone, the other creditors must take
OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 99
care of their own rights, either by intervening in the action or
otherwise, or else the successful plaintiff who recovers an asset of
his debtor's estate may get paid in full, while the other creditors-
have to bo content with a dividend. (Planiol, 2, n. 294. ) As
the Mixed Court of Appeal has expressed it: Toutefois, l& oon-
cours des autres creanciers n'a lieu qu'autant qu'ils montrent eux-
mew.es une certaine diligence et qu'ils se presentent en temps
utile, faute de quoi le poursuivant etcmt seul en cause, garde pow
lui la valeur obtenue a concurrence de ses droits, par application,
quant a ce, a I 'action oblique'des princip&s qui regissent la saisier
arret. (C A. Alex. 25 janv. 1917, B. L. J. XXIX, 179.
Any defence which is good as against the debtor himself is
good as against the creditor.
It must be kept steadily in view that the action belongs to the A
debtor although his creditor is allowed to prosecute it.
The defendant must be in the same position as if the action
wore being brought by the debtor himself.
From this it follows that any defence which would be good
against the debtor must likewise be good against the creditor \vho
sues in the debtor's name. (Req. 22 juin 1909, D. 1909. 1. 527.)
And this is true not only of defences founded upon a causes
prior to the raising of the action, but also of such defences as have
arisen since the action was introduced.
This last point is not always admitted. It is clear, for instance,
that if the debtor had an interest in challenging a certain deed, and
his creditors bring an action to challenge it, it will be a complete
defence that before the raising of the action the debtor had ratified
the deed in question. (Cass. 8 mars 1854, D. 54. 1. 191.)
But is it equally true that if after the action is raised the
defendant has paid the debtor himself, or lias made a compromise
with him, this will put an end to the suit by the creditors? This is
less obvious, but it would appear to be the sound conclusion.
It is not, however, accepted by all authorities.
The argument which some of them use is that the action by
the creditors is analogous to an arrestment. The creditor who
is the plaintiff is in a similar position to a creditor executing a
seizure, and the effect of the action is to prevent the debtor dis-
posing of the debt in any way which would prejudice the plaintiff.
(Demolombe, 25, n. 120; Labbe, in Rev. Crit. IX, p. 221. See
Aubry et Rau, 5th ed. 4, p. 201 .)
7 (2)
100 THE LAW OF OBLIGATIONS.
But this view is not supported by any satisfactory reason, and
it has been rejected by the Cow de Cussatvm..
That Court lias held that the debtor can compromise the action
brought by his creditors unless the compromise is fraudulent.
(Cass. 23 juin 1903, D. 1903. 1. 454.)
The doctrine is now chiefly in the same sense. (B.-L. et Barde,
1, n. 639; Laurent, 16, n. 402; D. N. C. C. art. 1166, n. 269.)
So long as there has been no actual seizure of the debtor's)
property he can never be deprived of the right of dealing with it
according to his own judgment.
But if the creditor is afraid of the debtor dealing with the
right, during the course of the action, it would appear that he may
demand that measures be taken for the conservation of his right,
and the court may make an order for that purpose. (Dijon, Id
fevr. 1902, D. 1902. 1. 283.) / I
( rUkou" * ■(*■***»■
Can the creditor sue for an amount greater than his own
claim against the debtor?
Seeing that he is exercising a right of the debtor, and seeking
to realise an asset which will be available for all the creditors,
there does not seem to be any reason why his action should be
incompetent, merely because, if he is successful, the amount re-
covered would more than satisfy his own claim.
But as the creditor's interest is limited to the amount of his
own claim, the defendant can put an end to the action by paying
that amount and the costs, for a creditor cannot refuse to take
payment of his debt. (Laurent, 16, n. 406; Planiol, 2, n. 292.)
What are the rights and actions which creditors can
exercise?
(1) They must be rights which, if exercised, would increase the
debtor's estate to their benefit, for, otherwise, his inaction cannot
have been to their prejudice. (See C. A. Alex. 10 juin 1903.
B. L. J. XV, 343.)
(2) They must not be rights which are purely personal, a-
the Egyptian codes express it, or exclusively attached to the
person, in the language of the French Code and the Code of
Quebec. (C. C. E. 141/202; C. C. F. 1166; C. C. Q. 1031.)
It is clear that, seeing that the whole object of the action is to
realise an asset belonging to the debtor, and thereby to increase h$s
estate in order that his creditors may benefit thereby, they will
have no right to sue if the result of the action would not be to
OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 101
increase the debtor's estate. So they cannol sue to recover pro-
perty, which, if recovered, would be unseizable, for they would
have nothing to gain by the success of the aetion. (Grenoble, 30
dec. 1896, D. 97. 2. 238.)
Nor can they sue in the debtor's name for an alimentary allow-
ance to which he is entitled, or for a right of use or of habitation
of a house, rights which by the French law are incapable of being
assigned. (Laurent, 16, n. 418; Demolombe, 25, n. 74.) Nor
can they bring an action which belongs to their debtor as Nazir
of a Wakf. (C. A. Alex. 7 mai 1896, B. L. J. VIII, 270.;
Nor can they, as a general rule, bring an action of which the
object is to determine or modify status. For instance, the creditors
of a husband cannot bring an action of separation or divorce.
Nor can the creditors of a husband or of a wife bring an action
to annul the marriage on the ground of a relative nullity, such as
fraud, want of consent of parents, where that is required, or the
like.
It is true that in these cases the result of the action might affect
the pecuniary position of their debtor, but they are all actions
which have primarily a moral rather than a pecuniary foundation.
(B.-L. et Barde, 1, n. 593; Aubry et Rau, 5th ed. 4, p. 207.)
|5ut when a marriage is absolutely null because the parties were
within the prohibited degrees, or because it was not contracted
in the forms prescribed by law, the action to declare the nullity
may be brought, according to the French Code, by all those who
have an interest, and this would include the creditors of one of the
parties. (C. C. F. 187, 191; C. C. Q. 155, 156.)
But, here, if the creditors bring such an action, they do so in
their own right as persons having an interest, and in their own
names, and not in the name of and as representing their debtor.
(Cass. 30 juill. 1900, D. 1901. 1. 317; Aubry et Rau, 5th ed.
4, p. 207, note 31.)
And, on the ground that the interest is moral rather than pecu-
niary, if the debtor has made a gift which he is entitled to revoke
on account of the ingratitude of the donee, his creditors cannot
claim to exercise this right of revocation. A wife may prefer
to live with her husband in spite of his faults, or a donor may be
willing to overlook the ingratitude of a donee. In both cases
there is a moral as well as a pecuniary interest .
But the creditors, if they were allowed to sue, would consider
the question solely from the pecuniary point of view, and, there-
fore, the law considers such actions as purely personal to the
102 THE LAW OF OBLIGATIONS.
debtor. Upon the same principle, that when the basis of the action
is primarily moral it cannot be brought by the creditors, il is
agreed that creditors cannot bring an action for damage wilfully
caused to the body or reputation of their debtor. (Sourdat, 5th ed.
1, n. 73, bis; B.-L. et Barde, 1, n. 625.)
The question whether creditors can sue for injury caused to
the body of their debtor by a quasi-delict belongs to the law of
responsibility.
Right of creditors of incapable person to bring action on the
ground of incapacity.
It is generally agreed by the writers that the creditors of an
incapable person are entitled to bring, in their debtor's name, an
action to annul a contract on the ground of his incapacity.
Tin' minor, the interdict, or, in France, the married woman, has
the right of challenge, but the other party to the contract has no
such right. The incapacity is relative.
Although the incapacity may be relative, this does not mean that
the right to plead it is strictly personal to the incapable person
in the sense under consideration.
Tt means only that the other party to the contract cannot take
the objection.
The right to take the objection belongs solely to the incapable
person, but it is a pecuniary right, and, therefore, his creditors
should be allowed to exercise it. (B.-L. et Barde, 1, n. 616;
Aubry et Rau, 5th ed. 4, p. 211; Laurent, 16, n. 420; D. N.
C. C. art. 1166, n. 138; Ball. Supp. vo. Obligations, n. 310.)
But in France the jurisprudence is divided. (In favour of
creditors having the right: Paris, 14 nov. 1887, D. 88. 2. 225;
Bastia, 30 aout 1854, D. Rep. vo. Obligations, n. 930, Ire espece.
Against this view, Req. 6 mars 1878, D. 78. 1. 316; Alger,
22 fevr. 1899, 1). 1901. 2. 33. See Cass. 18 oct. 1910, D.
1912. 1. 233.)
The argument which has in some cases prevailed with the courts
is that the incapable person ought to be allowed to judge whether
he will avail himself of the plea of incapacity.
If he thinks himself bound in honour and conscience by the
contract, are his creditors to be allowed to interfere with his
discretion ?
But although there is some force in this argument, the better
view appears to be that creditors ought to be allowed to found
upon such incapacities. The basis of the action is purely pecu-
OF THE EXERCISE OF THE DEBTOR'S RIGHTS. 103
niaiv and not moral, and if the incapable person refuses to act,
this is presumably because, being insolvent or embarrassed, he
feels no interest in the result.
What might be gained would go to his creditors and not to
him, and he leaves them to sue for it if they think fit to do soi.
Right to exercise a choice.
When the debtor's right is to make a choice or to exercise a
faculty, can this be exercised by his creditors? Some writers
answer this (absolutely in the negative. (Laurent, 16, n. 424;
Hue, 7,n. 195.)
But others make a distinction which seems justifiable. ' When
no right has vested in the debtor, but a mere offer has been made
to him which he may or may not accept, theroTs no right which
his creditors can exercise. If, for example, an offer has been
made to him to sell or to give him something, this is a mere
pollicitation which may be withdrawn at any time. Nothing
has vested in the debtor. On the other hand, when a succession
has opened in favour of the debtor, there is a right, and the ques-
tion is if his creditors may exercise it.
The debtor has the right to renounce the right or to accept it,
and his right is founded upon a pecuniary interest. It would
seem, therefore, that the creditors should be allowed to exercise
the right, but in France the question is controversial. (B.-L.
et Barde, 1, n. 601; B.-L. et Wahl, Successions, 3rd ed. 2, n. 995:
Aubry et Eau, 5th ed. 4, p. 214.)
A similar controversy exists as to the acceptance or repudiation
of a legacy which has vested in the debtor. The grounds here for
disputing the creditor's right are perhaps stronger. When one
accepts a succession he takes what the law gives him and comes
under no obligation to any one, but when one accepts a legacy he
takes what the testator gives him. Some writers maintain that
the legatee may have had conscientious reasons for refusing the
legacy and that his conscience ought not to be forced. (B.-L.
et Barde, 1, n. 622.) And. others say the creditors cannot exer-
cise the right, simply because it is an option. (Laurent, 16,
n. 426.):
But the more general, and, in our opinion, the more reasonable
view is that the creditors may exercise the right in this ease also.
(Demolombe, 25, n. 59; Fund. Franc. Oblig. n. 2639.)
It is generally agreed that in the ease of a stipulation for the
104 THE LAW OF OBLIGATIONS.
benefit of a third party the right of the third party to declare his
assent is strictly personal and cannot be exercised by his creditors.
He may have conscientious reasons against accepting the benefit.
(B.-L. et Barde, 1, n. 623; Aubry et Rau, 5th ed. 4, p. 209,
note 39; Dupuich, Assurance sur la Vie, n. 224; Trib. Civ. de
Quimper, 2 ma i 1893, D. 95. 1. 156.)
Rights purely personal are exceptional.
The general principle is that the creditors may exercise the
rights of their debtor. To exclude them it is necessary to show
that the right is purely personal to the debtor.
The Egyptian Code, in speaking of actions purely personal,
means the same as the French Code does by the expression " exclu-
sively attached to the person."
In Egypt it was contended in one case that by " actions purely
personal" the code meant all personal and moveable actions. If
this contention had prevailed it would have limited the rights of
the creditors to a very narrow field, but the argument was rightly
rejected. (C. A. Alex. 25 fevr. 1891, B. L. J. Ill, 244.)
The classification of those actions which are exclusively attached
to the person is not at all easy, but most of the actions of this
description have been enumerated.
We see that the ground for excluding the creditors is either that
the action is not of a pecuniary kind, or that, although it may have
a pecuniary element, it involves a moral element also, and that the
debtor ought to be left free to decide acr-ording to his conscience.
THE PAULIAN ACTION. 105
CHAPTER V.
THE PAULIAN ACTION.
The action generally called by French writers action Paulienne,
from its Roman name Actio Pauliana, is sometimes called the
direct action, or the action revocatmre. It is dealt with in the
French and in the Egyptian codes in a single article.
The French Code, speaking of creditors, says: lis peuvent aussi,
en leur nom personnel, attaquer les actes faits par lews debitews
en fmudc de lews droits. (C. C. F. 1167.)
And the Egyptian Code says: Creditors can always procure
the avoidance of acts effected in fraud of their rights, and of gifts
and abandonments of rights to their prejudice. (Art. 148/204.)
Neither the Egyptian nor the French Code says that the debtor
must be insolvent before the act, or be rendered insolvent by the
act itself, but this is implied. A solvent debtor can deal with
his estate as he chooses. His creditors are not prejudiced if he
throws half of it into the Nile, provided that the half which
remains is enough to pay his debts. (B.-L. et Barde, 1, n. 650;
Aubry et Ran, 5th ed. 4, p. 219; D. N. C. 0. art. 1167, n. 97.)
The Code of Quebec is much fuller, and its provisions may be
given because upon most points they state the rules which are
settled by the French jurisprudence. The only changes which
that code makes are in regard to the period of prescription, and as
to the effect of a payment by an insolvent debtor to a creditor
knowing his insolvency, both points which will be referred to
later. Creditors may in their own nmne impeach the acts of their
debtors in fraud of their rights, according to the rides provided
in this secticm. A contract cannot be avoided unless it is made
by the debtor with intent to defraud, and will have the effect of
injuring the creditor. A gratuitous contract is deemed to be
made with intent to defraud, if the debtor be insolvent at the time
of making it. An onerous contract made by an insolvent debtor
with a person who Tcnoivs him to be insolvent is deemed to be made
with intent to defraud,. . . .
106 THE LAW OF OBLIGATIONS.
An onerous contract made with intent to defraud on the part
of the debtor, but in good faith on the part of the person with
whom he contracts is not voidable; saving the special provisions
applicable in cases of insolvency of traders.
No contract or pay mad can be avoided by reason of anything
contained in this section, at the suit of a subsequent creditor,
unless he is subrogated in the rights of an anterior creditor.
(C. C. Q. 1032—1039.)
History of the Paulian action.
The Paulian action was taken over from the Roman law, and the
reason the French Code says so little about it is that the rules
applying to it were settled by tradition. When the legislator says
creditors may attack acts in fraud of their rights he does not
explain what acts are to be so considered.
The old French writers found the explanation in the Roman
law, and the French Code intends to refer to the traditional rules.
As Planiol says, the Paulian action thus offers us a remarkable
example of the conservation of legal institutions, and, of all those
institutions which are in operation in our day, it is perhaps the
one which has been best preserved through the centuries. (2,
n. 298. Cf. B.-L. et Barde, 1, n. 646; Colin et Capitant, 2,
p. 49. See an interesting study of the history of the Paulian
action by M. Jean Acher in Rev. Trim, de Droit Civ., 1906,
p. So.
The Code of Quebec states in explicit terms the rules which are
implied in the French and Egyptian codes by this reference to
tradition.
There is, however, one important difference at least between
the Roman action and the modern action, if we adopt the theory
commonly accepted in France.
In the Roman law the action was brought by the curator
bitimrum or syndic for the creditors as a body, and the property
recovered fell back into the general estate of the debtor. It Was
a collective action. In the modem law it is an individual action
brought by any one of the creditors, and the property recovered
does not, at least according to the prevailing view in France,
full hark into the general mass. (See for the Roman law, Dig. 42.
S. and -22. 1. 38; Girard, Manuel, 5th ed. p. 428; Roby, Romm
Private Law, 2, 273.)
In the French and in the Egyptian law, unfortunately, the
creditors have no way of acting collectively except in the case of
- -z).
THE PAULIAN ACTION. 107
a oomtnergant. When a eornmerqctnt has been declared bankrupt?
his creditors can bring a collective action to have gifts and pa} -
ments made by him declared void, subjeel to the conditions stated
in the Commercial Codes. (C. Com. F. 446; C. Com. E. 227,
228/235, 236.)
But in the case of a non-trader there can be no faillite, but only
a deconfiture. There is no trustee or syndic, and every creditor
preserves his individual freedom of action; the race is to the
swift. (See Thaller, Turite Elementaire de Droit Commercial,
n. 1709; B.-L. et Barde, ObUg. 1, n. 682.)
Conditions of Paulian action.
If the act of the debtor which is challenged was gratuitous, the
only facts which the creditor has to establish are: —
(1) That the debtor was insolvent at the time of the act, or
was rendered insolvent by the act itself, subject to what is said
later as to this point, and
(2) That the act has caused prejudice to the creditor. But as it
cannot have caused him prejudice if he had no rights at the time,,
the creditor must prove that he was a creditor before the date of
the alienation which he challenges. When the act challenged was
onerous, there is a further condition, viz.:—'
(3) That there was fraudulent collusion between the debtor and
the other party to the contract.
These points will require a little explanation. (1) The debtor
must have been insolvent. It is essentia l that the debtor was
insolvent at the time of making the contract or that the effect of
the contract itself was to render him insolvent. (Aubry et Rau,
5th ed. 4, p. 219; Cass. 25 juin 1895, D. 1895. 1 . 486; Ohambery,
lOjuill. 1911,1). 1914.2.74; C. A.Alex. 14 mai 1903, B. L. J.
XV, 297; C. A. Alex. 15 mai 1915, B. L. J. XXVII, 328.)
If the insolvency resulted from something which happened after
the act challenged, the creditor's action is not well founded.
(Ohambery, 10 juill. 1911, D. 1914. 2. 74.) When the act chal-
lenged is merely the carrying into execution of an agreement made
at a time when the debtor was solvent, there is no fraud and no
prejudice. On the other hand, there are cases where a debtor
does a series of acts the effect of which taken together is to render
him insolvent. If the court is satisfied that all the deeds are part
of the same fraudulent scheme they may all be annulled, although
108 THE LAW OF OBLIGATIONS.
the first of them may not in itself have rendered the debtor insol-
vent. (See C. A. Alex. 29 mai 1917, B. L. J. XXIX, 454.)
As rho Roman law expressed it, there must be both consilium
fraudis et eventus damni. But when the debtor was insolvent at
the time of the act, or was thereby rendered insolvent, the fraudl
is presumed in the ease of a gratuitous act, whether the other party
av;i> aware of the insolvency or not. And when the act is onerous,
fraud is likewise presumed when it is proved that the other party
knew of the insolvency if prejudice is caused. This distinction
between gratuitous and onerous acts is not expressed in the French
Code, though it is in the Code of Quebec and in the Egyptian
codes.
But the distinction was made by the Roman law, and has
always been followed by the jurisprudence in France. (Girard,
Manuel, 5th ed. p. 426.)
The French writers say that fraud on the part of the debtor
must always be proved, but it is sufficient evidence of fraud in the
case of gratuitous contracts that the debtor knowingly and volun-
tarily caused to his creditors the prejudice of which they complain.
The debtor who is insolvent, and knows himself to be so, has no
right to give away the assets which ought to go to his creditors,
and if he does so this is a fraud upon them. It is not at all
necessary to prove that the debtor acted with the motive of injuring
his creditors, it is enough that he knew that he was causing them
prejudice. (B.-L. et Barde, 1, n. 657; Aubry et Rau, 5th ed. 4,
p. 223; D. N. C. C. art. 1167, n. 126.) Fraude au sens de
Taction Paulimne, tie signifie que ceci, prejudice came en con-
naissance de cause. (Bufnoir, Propriete et Contrat, p. 438.) In
the language of the Mixed Court of Appeal in a case as to an
onerous alienation:
En matiere d'action Paidienne, la fraude ne suppose pas neces-
sairement des manoeuvres dohsims, mais consiste essentiellement,
■pour ce qui concerne le debiteur, dans le fait que, le sachant et le
voulant, 11 consent un acte qui le rend vnsolvable et porte prejudice
a ses creanciers en leur enlevant lew gage, et, pour ce qui concerne
le tiers, dans le fait d'awir eu oonnaiswnce de la fraude du debi-
teur, et a" avoir neanmoins ooncouru a Vacte. (C. A. Alex. 15
mai 1915, B. L. J. XXVII, 329.)
Some illustrations will be given later of what is required by
the courts -as amounting to "fraud'' when the act challenged
is an onerous act.
The Egyptian codes remove any possibility of doubt in the
THE PAULIAN ACTION. 109"
case of gratuitous alienations by- saying that the creditors may
procure the avoidance of gifts and abandonments of rights agreed
to by their debtor to their prejudice. The codes do not use the
word "fraud'' at all in regard to these gratuitous alienations.
(C. C. E. 143/204; C. A. Alex. 12 fevr. 1896, B. L. J. VIII,
116; 0. A. Alex. 20 janv. 1916, B. L. J. XXVIII, 122.)
So the constitution of a wakf by an insolvent debtor is a fraud
on his creditors, and may be attacked by them after they have
discussed his free estate. (0. A. Alex. 20 janv. 1916, B. L. J.
XXVIII, 118; C. A. Alex. 25 fevr. 1915,' B. L. J. XXVII,
182.)
By the law of Egypt and by the law of Quebec it is absolutely
clear that a g-ratuitous contract is in fraud of creditors by the
mere fact that the debtor was insolvent at its date, while in the
French law it is at least necessary to prove that the debtor was
aware of the insolvency. What amounts to insolvency is of course
a question of fact; the onus of proving it is on the creditor, and
unless the insolvency has been proved, the third party who has
profited by the alienation challenged may demand that the other
property of the debtor be first discussed. (Aubry et Rau, 5th ed.
4, p. 220.)
The act challenged must have caused prejudice.
What amounts to prejudice is a question of fact, but in order
to annul an act as in fraud of creditors, it is a primordial condition
that the creditors have suffered prejudice. (Req. 17 mars 1909,
D. 1909. 1. 341; C. A. Alex. 28 dec. 1904, B. L. J. XVII, 47.)
It is essential to the action that prejudice should be caused to*
the creditor by the very act which is challenged. (Req. 17 mars
1909, D. 1909. 1. 341.) An insolvent person may contract new
debts, and the fact that the new creditor knew him to be insolvent
is not conclusive proof of fraud. It is so only when the effect of
the contract is to cause prejudice to the old creditors.
An insolvent debtor must live, and if he buys necessaries and
pays a reasonable price for them, this does not cause prejudice to
his old creditors. But, even further, by the French and the
Egyptian law, a preferential payment, or the grant of a security
made by the debtor to one of his creditors, even though this
creditor knows of the insolvency, is not challengeable by the
Paulian action. In the case of traders such preferential payments,
if mado within the periode suspecte, are liable to attack under the
HO THE LAW OF OBLIGATIONS.
Commercial Codes, but the same rule does not apply to non-
traders! (B.-L. et Barde, 1, n. 663; Aubry et Hau, 5th ed. 4,
p. 231; Cass. 7 juill. 1896, D. 96. 1. 519. Cf. C. Com. F. 446; •
C. Com. N. 227; C. Com. M. 235—238.)
As the Mixed Court of Appeal expresses it, un nm-corrwrwf-
gant en Stat d'insolvabilite pent donner ses biens en paiement a
Vun de ses creanciers par preference a taus les autres, a moins qu'il
riexiste un concert frauduleux entre debiteur et creancier dans
le but de causey un prejudice illicite aux autres creanciers ; la seule
connaissance de Vinsolvabilite du debiteur, dans Vimpossibilite
de satisfaire, apres la dation en paiement, les autres creanciers ne
suffit pas. (C. A. Alex. 17 avril 1912, B. L. J. XXIV, 287.)
The onerous payment cannot be challenged unless there is actual
collusion in order to prejudice other creditors, as where, for
example, the debtor sells for a price far below the true value, or
to persons closely related to or connected with him. (See C. A.
Alex. 26 fevr. 1902, B. L. J. XIV, 158; C. A. Alex. 9 mars
1905, B. L. J. XVII, 164.)
Upon this matter the Code of Quebec has made an important
improvement by placing traders and non-traders upon the same
footing.
Under that code: Every payment by an insolvent debtor to a
creditor knowing his insolvency, is deemed to be made with intent
to defraud, and the creditor may be compelled to restore the
amount or thing received or the value thereof, for the benefit of
the creditors according to their respective rights. (C. C. Q.
1036. See Mignault, Droit Civil Canadien, 5, p. 299, and the
jurisprudence cited there.)
Property alienated must have formed part of debtor's estate.
It is clear that the creditors are not prejudiced when the property
never formed part of the estate of their debtor, so as to fall under
their gage fiommun. It is on this principle that in the case of
life-assurance for the benefit of a third party, it is held that the
creditors of the assured cannot challenge a disposition made by
the assured of the insurance-money to be realised on his death.
This sum never belonged to the debtor's estate if the beneficiary
had a droit propre, upon the theory explained in discussing the
Stipulation pour autrui, and, therefore, it never formed any part
of the common pledge of his creditors. (Cass. 8 fevr. 1888, D.
88. 1. 193. Supra, p. 61.)
THE PAULIAN ACTION. Ill
And when the assured has reserved the power of altering the
name of the beneficiary, the substitution by him of one person in
place of another does not prejudice his creditors.
Even if he substitutes one of his creditors for a beneficiary
originally named in the policy, this causes no prejudice to the other
creditors, for the assurance-money did not form a part of their
debtor's patrimony. (Cass. 3 mai 1904, Journal cles Assurances,
1904, p. 305. Cf . Peachy v. Riverin, 1895, R. J . Q. 7 S. C. 51.)
Debtor's estate must be diminished.
There must be a diminution of the debtor's estate. According
to the Roman law the Paulian action was not admissible when
the debtor had merely neglected to augment his estate; he must
have actually diminished it. (Dig. 42. 8. 6. 2; Girard, Manuel,
5th eel. p. 425.)
So if the debtor repudiated a succession or refused a legacy, his
creditors could not challenge the act, for the heir, unless he was
what was called a hceres necessarius, did not become owner until
he accepted, and the right of the legatee was not considered to be
definitely acquired till the heir's entry upon the succession.
(Girard, I.e. and pp. 870, 926.)
The French law maintains the same principle that there is no
prejudice unless the estate of the debtor has suffered diminution,
but there has been an important change in the law of succession.
In the modern law the property vests from the date of the
deatli in the heir or legatee, subject to the right on his part to
renounce it.
There is, therefore, a diminution of his estate if he makes the
renunciation, and it is, accordingly, quite logical that his creditors
should be entitled in these cases to the Paulian action, though by
the Roman law they were not. But, under the modern law, as
well as under the Roman law, it is probably otherwise with the
refusal to accept a gift. If a gift is offered to a debtor it does
not belong to him unless he chooses to accept it, and there is no
diminution of his estate if he refuses to do so. (B.-L. et Barde,
1, n. 656; Colin et Capitant, 2, p. 55. See, however, Aubry
et Ran, 5th ed. 4, p. 222, and note 16.)
The Egj'ptian Code is upon the point of renunciations clearer
than the other codes, because it says the creditors can challenge
abandonments of rights, or, in the French version, renoneiations,
to their prejudice.
112 THE LAW OF OBLIGATIONS.
Only prior creditors have a right to the Paulian action.
In principle, the attack can be made only by a creditor whose
debt is anterior to the act challenged. For subsequent creditors
could not be prejudiced by an act done before they had any rights
at all. (C. A. Alex. 15 mai 1915, B. L. J. XXVII, 328.)
The priority, of the debt to the act challenged may be proved
by any evidence. (See Bourges, 18 juill. 1892, D. 92. 2. 609.)
But the rule that a posterior creditor has no right to the action
must not be carried too far. It is sufficient if his debt existed en
principr, although it was not liquidated al the date of the act
challenged. (Laurent, 16, n. 461; Hue, 7, n. 219; B.-L. et
Barde, 1, n. 688; Aubry et Rau, 5th ed. 4, p. 220, note 14.)
And the law goes a step further. When the object of the act
challenged is to defraud certain determinate future creditors, the
existence of whose claims is foreseen by the debtor, the act may-
be annulled. But it must appear that the fraud was specially
directed against these future creditors; it must, to use the language
of the Cow de Cassation, be done pour nuire a Vexercice d'un
droit dont V ouvertwe Unit dejd prevue. (Cass. 5 janv. 1891,
D. 91. 1. 331. Cf. Paris, 31 mars 1896. D. 96. 2. 280; Req.
30 mai 1905, D. 1905. 1. 408; Alger, 1 mars 1906, D. 1908.,
5. 32.)
If, for instance, a man, foreseeing that a judgment will be
obtained against him, fraudulently sells his property in order to
prevent its seizure by the creditor who obtains the judgment,
this might be attacked by the creditor.
In a French case, a husband, whose wife had left him on account
of his cruelty, anticipating that she would bring an action of
separation, sold his property to his brother so as not to have any
property with which to satisfy the pecuniary condemnation in
his wife's favour which he foresaw*. The sale was annulled.
(Cass. 5 janv. 1891, D. 91. 1. 331. Cf. Paris, 31 mars 1896,
D. 96. 2. 280: Req. 30 mai 1905, D. 1905. 1. 408.)
Similarly, where a man who had been arrested on a criminal
charge, and foresaw the probability of a pecuniary condemnation
in favour of a certain creditor, .made a gift to his children of all
his property, the deed was set aside. (Nimes, 2 mai 1892, Pond.
Frrmg. Oblig. n. 2789.)
And in Egypt the same principle has been applied in a case
where a debtor constituted a wdkf in order to put his property
beyond the reach of certain definite future creditors— en vue de
THE PAULIAN ACTION. U3
Vavenir, et pour nuire a Vexercice de droits dout Vouverture Hait
deja preme. (C. A. Alex. 25 mai 1916, B. L. J. XXVIII,
870.) -
Proof of fraud in onerous transactions.
When the Paulian action is directed against a gratuitous act
of the debtor, it is sufficient to prove the insolvency of the debtor
and the prejudice caused to the creditor by the act challenged.
But when the act challenged is an onerous act, it is not sufficient
for the plaintiff to show that it caused him prejudice, and that
the debtor was insolvent at its date, or was rendered insolvent by
the acte meme, but he must prove in addition that there was a
fraudulent conspiracy between the debtor and the other party to
the contract to cause him this prejudice.
According to the French and Egyptian codes, as we have already
seen, the mere fact that a creditor knows his debtor to be insolvent
does not make it fraudulent on the part of the creditor to take
payment of his debt, or to take a security which gives him an
advantage over the other creditors, unless, the debtor is a trader,
and the act was in the periode suspecte. 'By the more reasonable
rule of the Code of Quebec preferential payments by an. in-
solvent debtor, although a non-trader, are considered to be
fraudulent if the payee is aware of the insolvene^. But
under the other codes it is not so, and there must be proof of
the conce rt ira uduleux. So long as the creditor is merely pro-
tecting his own rights he is not doing anything fraudulent.
(B.-L. et Barde, 1, n. 663; Aubry et Rau, 5th ed. 4, p. 231;
Cass. 7 juill. 1896, D. 96. 1. 519; Dijon, 19 dec. 1897, D.
1900. 2. 364; Req. 6 janv. 1913, D. 1914. 1. 40; C. A. Alex.
26 fevr. 1902, B. L. J. XIV, 158; C. A. Alex. 14 mai 1903,
B. L. J. XV, 297; C. A. Alex. 30 mai 1895, B. L. J. VII,
316. See Beni-Souef, 22 mai 1900, O. B. 2, p. 31.)
But there are many cases of alienation, in which the fact that '
the other party knew of the debtor's insolvency is sufficient to
raise a presumption that there was a concert frauduleux . (C. A.
Alex. 15 mai 1915, B. L. J. XXVII, 329; C. A. Alex. 27 nor.
1913, B. L. J. XXVI, 60.) If, for instance, the debtor sells
his property to a man who knows him to be insolvent, the buyer
is bound to inquire if the object of the transaction is not to defeal
the creditors. And this will be even more clear when the sale
is by the debtor to his wife, or to some person closely connected
with him and privy t© his affairs. In this last case it may ver\
w. — vol.. ii. 8
114 THE LAW OF OBLIGATIONS.
well be thai the sale was inerelj simulated. See C. A. Alex.
11 Jcv. 1913, B. L. J. XXVI, 87; C. A. Alex. 18 mars 1915,
B. L. J. XXVII, 227; Dijon, 4 juill. 1904, D. 1906. 2. 164.;
But, even if this be not the case, such a buiyer, thoroughly
aware ol* the state of the debtor's affairs, could not say that he
was in good faith because he preferred not to inquire what the
insolvent debtor was intending to do with the price. (Aubry
et Rau,'5th ed. 4, p. 226; B.-L. et Barde, 1, n. 662: C. A.
Alex. 11 mars 1897, B. L. J. IX, 309; C. A. Alex. 15 mat
1915, B. L. J. XXVII, 328.
What amounts to knowledge of insolvency is of course a ques-
tion of fact. It is difficult to prove by direct evidence a person's
state of mind, and fraud is never presumed. The mere knowledge
by the third party that the debtor is in failing circumstances, or
that there are suits pending against him, is not enough to put him
upon his inquiry. Many men do not pay their debts who are
perfectly solvent. Much depends on the relation between the
third party and the debtor and the extent of their business
intimacy. If the third party has been doing business with the
debtor for years and has an intimate knowledge of his affairs, and
knows that, he has failed to meet a number of bills of exchange,
this will probably be a sufficient proof of his knowledge of the
insolvency. It is always a question of circumstances.
Onerous grantees preferred to gratuitous grantees.
The distinction which the law makes between onerous acts and
gratuitous acts as regards the Paulian action is not made expressly
by the French or the Egyptian codes, though it is by the Code of
Quebec, but it is thoroughly established in the French law. It
is one of those traditional rules which the code intended to keep
in force. It is usually supported by the following equitable
considerations. Between two parties one of whom is endeavour-
ing to make a profit and the other merely to avoid a loss, it is
equitable to give the preference to the latter. Suppose that, for
instance, the debtor has made a gift of a part of his property, and
the creditors challenged the gift, the creditors ccriant de dcmvno
mtando, as the old lawyers said, that is, they are seeking to avoid
a loss, whereas the donees certant de lucro captondo, that is, they
are trying to make a clear gain. We must certainly give the pre-
ference to the creditors.
On the other hand, suppose the deed challenged is a sale; the
debtor has sold part of his property to take it out of 'the common
THE PAULIAN ACTION. 115
pledge of his creditors, and the conflict arises between the pur-
chaser and the creditor. Here both of them are on an equal
footing - , they are both .seeking to avoid a loss- certant de damno
vitondo .
The purchaser who paid the price in good faith has an equal
right with the creditor to the protection of the law.
If a preference is to be given to either party it must be upon
some other ground. And this other ground is found in tin fad
of possession.
In pari causa possessor potior haberi debet. B.-L. et Barde,
1, n. 660: Beudant. Contrats et Obligations, n. 532; Aubry et
Ran. 5th ed. 4. p. 224. note 18: Halton, 1. p. -'343.
Is the contract onerous or gratuitous?
As mentioned elsewhere, it is sometimes a delicate question to
decide whether a contract is gratuitous or onerous. (Supra, 1,
p. 97; add Trib. Civ. de Langres, 15 mars 1900. D. 1900. 2. 422,
and the note. - )
. I datum 'if payement is an onerous transaction unless the thing
given in payment is worth much more than the sum due for which
it is substituted. "(C. A. Alex. 15 juin 1916, B. L. J. XXVIII,
433.)
In France there has been much discussion of certain cases,
particularly those of provisions made in marriage-contracts. If
an insolvent debtor gets married, and makes a provision by the
marriage-contract in favour of the wife, it can hardly be contended
that this is onerous in a question with his creditors. No doubt
marriage is in a sense an onerous contract, because the parties to
it incur new responsibilities.
But the law does not allow an insolvent debtor to withdraw his
estate from his creditors in order to face these responsibilities
which he can avoid by abstaining from the marriage.
And the good faith of the wife will not avail to make the
contract secure from attack. The law does not allow an insolvent
person to place his property out of the reach of his creditors, if he
has the good fortune to find a woman ignorant of his circumstances
who will marry him. (Aubry et Rau, 5th ed. 4, p. 230; B.-L.
et Barde, 1, n. 679; D. N. C. C. art. 1167, n. 216. ) <
But if, instead of the gift being made by one of the future
consorts to the other, it is made hy the father of one of the future
consorts, or by a third party, is such a gift onerous or gratuitous?
8 (2
116 THE LAW OF OBLIGATIONS.
It is maintained that when a father makes a provision for his
daughter in her marriage-contract, the son-in-law undertakes the
responsibilities of marriage on the faith of this provision. If he
is in good faith, and unaware of the insolvency of his father-in-
law, the provision is onerous quoad him, and the bad faith of the
daughter will not entitle the creditors to obtain revocation. The
French jurisprudence is in this sense. (Paris, 9 juill. 1895, S.
1898. 2. 17; Req. 16 nov. 1910, D. 1911. 1. 500, S. 1912. 1.
101, 2mc. arret. See Colin et Capitant, 2, p. 53; B.-L. et Barde r
1, n. 675.)
But this jurisprudence is criticised by most of the writers, and
it does not appear to be supported by any sufficient reasons.
A father who makes a provision for his daughter on her marriage
is not, under the French law, fulfilling a legal obligation, though
by the Roman law it was otherwise. And the equitable reasons
are so strong against allowing a father to make matrimonial pro-
visions for his children instead of paying his creditors, that there
appears to be a reaction in France in some of the Courts of Appeal
against the jurisprudence of the Court of Cassation, and the
authors are almost unanimous against the theory that such, gifts are
onerous. (Aubry et Rau, 5th ed. 4, p. 229; B.-L., Le Courtois
et Surville, Du Contrat de manage, 1, n. 244; Godefroy, E.,
De VExercice de V action Paulienne a VEgard des Donations faites
par Contrat de Manage, Revue Critique, 1887, p. 731; Orleans,
8 juin 1898, D. 98. 2. 284; and, for a full list of authorities, see
the note by M/Sarrut to Cass. 18 doc. 1895, D. 98. 1. 193.)
Effect of Paulian action as to sub-purchasers.
If a third party has acquired a right of property or some lesser
right over property from the creditor will the annulling of the
contract as fraudulent affect the third party? A has sold a house
to B; B grants a hypothec over the house to C; the creditor
succeeds in getting the sale by A to B annulled. Does this affect
C's hypothec? It is clear that the judgment cannot affect C unless
he has been made a party to the action.
It will be res inter alios acta. But if C has been mis en cause
will the judgment of nullity affect C as well as B?
In the first place it must be admitted that the registration by C
of his right will not affect the question. If C's title was bad the
registration cannot make it good. Registration by the Egyptian
law is merely a means of giving publicity to deeds; it does not
cure any vices of title.
THE PAULIAN ACTION. 117
La transcription pur elle-meme n' a joule Hen a la vaiidite du
droit auquel elle s 'applique: elle sert seulement a eonsolider el
a rendre publics dcs droits, a la condition que. ces droits existent
et aient ete valablement acquis. (C. A. Alex. 21 fevr. 1901,
B. L. J. XIII, 171. See Halt on, 2, p. 340.)
It is further true, that by the Egyptian Mixed Civil Code, the
fact that a contract which transfers property is void does not
affect the rights of registered mortgage creditors when they have
acted in good faith. (C. C. M. 197.) There is no similar pro-
vision in the Native Code. (See De Hults, Rep. vo. Action en
Nullite, nos. 30 seq.)
But this article, as interpreted by the Mixed Court of Appeal,
refers only to the cases of relative nullity which are dealt with in
the articles which precede it. If the title of the owner who
■created the hypothec is challenged on the ground that he acquired
the property from a person who was incapable of transferring it,
or transferred it under a mistake, or in consequence of duress or
fraud, the annulling of his title is not to affect the rights of
hypothecary creditors. The contract by which he acquired his
title was voidable, not void ah initio. So long as his title was
unchallenged he was the true owner and could grant valid rights
over the property. (C. A. Alex. 6 nov. 1901, B. L. J. XIV, 3.)
In France, even in this case, the nullity affects the third party,
upon the general principle that the author could not transmit any
better right than he had himself, and that if his right was subject
to rescission his successor must be in the same position. (B.-L. •
et Barde, 1, n. 126; Bufnoir, Propriete et Contrat, p. 618.)
But, in this respect, the Egyptian Mixed Code has undoubtedly
amended the French law.
The question, however, still remains whether the Paulian action
is an action of nullity similar to the action to set aside a contract
•on the ground of a vice of consent, or if it stands in a different
position.
According to earlier judgments of the Mixed Court .of Appeal,
the rule stated in C. C. M. 197 does not apply here.
If the Paulian action is successful, and a judgment of nullity
is pronounced, this affects third parties, even though they may
have acted in good faith.
L'annidativn de la vente d'un hnmvuble prononcee pour fraude
aux droits des creanciers du vendeur, emporte nultite de la revente
qui a pu etre faite par Vacquereur ainsi depourvu de litre* ralables,
meme en javeur de tiers de bonne foi.
] 18 THE LAW OF OBLIGATIONS.
,('. A. Alex. L3 mai 1908, B. L. J. XV, 292; C. A. Alex.
6 iiov. 1901. B. L. .J. XIV, 3. In the same sense, Haute Cour
des Pays Bus (Hollande), 28 mars 1884, S. 85. 4. 9; Laurent,
1G, a. 465. )
Bui a Later decision of the Mixed Court of Appeal is in the
opposite sense: Attendu qu'il est generalement admis, tant en
doctrine qu'en jurisprudence, que V 'action paulienne ue saurait
atteindre un sous-acquereur a litre onereux, a moins qu'il n'ait
participe a la fraude. (C. A. Alex. 22 janv.. 1914, B. L. J.
XXVI, 170.)
In the Native Courts there is a judgment of the tribunal of
Beni-Souef in the same sense. (Trib.-App. Beni-Souef, 31 dee.
1899, 0. B. 1, p. 331.)
These decisions are in aecordanoe with the traditional theory
of the French law, which is accepted as sound in France by a
majority of the writers and by the jurisprudence. According
to this theory, the question whether third parties are affected
by the judgment in the Paulian action must be answered by
making the following distinctions: —
(1) If the third party was in bad faith the judgment will affect
him.
(2 If he was in good faith and acquired gratuitously, the judg-
ment will likewise affect him, in the sense that he must return the
property, or, at least, the amount by which lie is enriched. But
ho may keep the fruits which he has percepted as a possessor in
good faith.
(3) If the third party acquired onerously and in good faith, the
judgment will not affect him.
In other words, the rule may be stated thus: the Paulian action
will be admissible against the sub-purchaser in those cases only
in which it would have been admissible against him if ho had been
the original purchaser. (B.-L. et Barde, 1, n. 667; Aubry et
Rau, 5th ed. 4, p. 226; 1). N. C. C. art. 1167, n. 164 seq.
It is true that this appears to be creating an exception to the
rule thai a man cannot transfer to another any greater right than
he has himself— resoluto jure- dmtis resolmtw jus accipientis, and
nemo plus juris transferre potest quam ipse haberet. But the
answer is that the Paulian action is not an action of nullity in the
full sense of the term.
The judgment does not invalidate the contract in its essence;
it leaves ii still subsisting as between the parties, and revokes it
merely in so far as it is in fraud of the rights of the creditor.
THE PAULIAN ACTION. 119
it is, as we shall see presently, a disputed question if the judgment
revokes the contract as regards all the creditors, or if its effect is
limited to those creditors who bring the action.
But, without anticipating this question, it may, at least, be
said that the Paulian act ion is not an action to annul the contract
altogether.
The strongest arguments in favour of these views are:
(1) That it is the solution given by the Roman law, and thai
the intention of the codes is to accept the traditional theory, as is
shown by their disposing of the matter in a single article. (Dig.
42. 8. 9; Girard, Manuel, 5th ed. p. 426.)
(2) Following the principle of the Roman law, the courts, us
we have seen, have always made the distinction for the purpose of
the Paulian action between onerous and gratuitous purchasers. .
and have consistently held that an onerous purchaser was not to
be deprived of the property unless he had been guilty of fraud.
On the other hand, as regards the gratuitous purchaser, no proof
of fraud is necessary. There is nothing in the texts of the French
or Egyptian codes to create this distinction, but the courts have
made it in deference to the traditional view which they believed
the codes intended to maintain, and also from considerations of
equity.
It is the general policy of the law to protect onerous purchaser^
in good faith. But these arguments apply with no less force- to a
sub-purchaser than they do to a purchaser. If the sub-purchaser
acquired gratuitously, the creditors ought to be preferred to him.
for, otherwise, he would be enriched at their expense; he is trying
to make a gain — cert at cle lucro captando. But if the sub-pur-
chaser acquired onerously, why should he not have the advantage
of the rule in pari causa possessor potior haberi debet, that is. that
between two persons whose rights are otherwise equal, he is to be
preferred who is in possession.
And, in the case of immoveables, if we are entitled to look at
equitable considerations, there is much to be said in favour of the
sub-purchaser. A party dealing for value and in good faith ought
to be entitled to rely upon the register. If his vendor or mort-
gagor- appears on the register as owner, and there is nothing on
the face of his title to show that his ownership is conditional, the
other party ought to be able to deal with him safely, and then.
as soon as the sale or hypothec is registered, the purchaser s or
mortgagee's title will be secure.
In Quebec the Court of Appeal lias gone so far as to hold that
faJUk
120 THE LAW OF OBLIGATIONS.
if an owner of property grants a hypothec in favour of a creditor
in good faith, even after an (action has been raised to revoke the
grantor's title on the ground of fraud, the hypothecary creditor
is protected.
La revocation d'une uente faite en fraude des creaneiers du
vendeur ne prejudicie pas a Vhypotheque consentie par Vacheteur,
mime pendant Vinstance en revocation, en faveur d'un tiers de
bonne foi qui lui a avwwe des fonds, le jugemwit sur Vaction
pauUenne n'ayant pas Vautorite de chose jugee a Vegard de ce
cre.ancier .
(Barsalou v. Royal Institution, 1896, R. J. Q. 5 Q. B. 33.
But. see, in Egypt, C. A. Alex. 22 janv. 1914, B. L. J. XXVI,
170.)
And in France the theory that the Paulian action affects only
the author or accomplice in the fraud when the act challenged is
an onerous one, and does not affect sub-purchasers who have ac-
quired by onerous title in good faith, is thoroughly established.
(B.-L. et Barde, 1. n. 667; Aubry et Rau, 5th ed. 4, p. 227;
D. N C. C. art. 1167, nos. 164 seq. ; Paris, 9 aout 1898, D. 99.
2. 485.)
Effect of the Paulian action as among the creditors.
Does the annulling of the act challenged result to the advan-
tage of all the creditors, or of those only who bring the Paulian
action? This is still a controversial question.
According to one view, the effect of the action, if it is success-
ful, is to bring back into the estate of the debtor the property
which, according to the judgment, he had no right to alienate.
This property, being restored, now forms the common pledge of all
the creditors, whether their claims are prior to or posterior to the
alienation which is annulled. The action is revocatory, and the
creditor who brings the action has not on that account a preference.
This was the Roman law and the old French law, and, in a
matter governed so largely by traditional rules, this is a strong
argument in its favour. (Dig. 42. 8. 1. 1; Girard, Manuel, 5th
id. p. 428; Domat, Lois Civiles, liv. 2, Tit. 10, s. 1, para. 1, 4, 7;
Voet, Comm. Ad. Pand. 42, 8, 11.)
The tendency of the jurisprudence in Quebec is in this sense.
{Chevalier v. Mart el, 1905, R. J. Q. 27 S. C. 356.)
The question is somewhat clearer in Quebec owing to the pro-
vision of the code in regard to preferential payments by an in-
solvent debtor.
THE PAULIAN ACTION. 121
The Civil Code of Quebec says dial the creditor who received
such a payment knowing 1 of the insolvency may be compelled to
restore it for the benefit of the creditor* according to their
respective rights. (C. C. Q. 1036.)
These words would certainly cover all the creditors who had
rights at the time of the alienation, though, perhaps, they would
not cover subsequent creditors.
And it is maintained with some plausibility that the rule stated
in this article is an illustration of the broader rule that whatever
is recovered by the Paulian action goes to all the creditors. (C.
C. Q. 1036. See Mignault, Droit Civil Cantadien, 5, p. 296.)
On the other hand, the opinion which is now supported by almost
all the French authorities, is that the judgment in the Paulian
action is merely for the benefit of the creditors who are plaintiffs
in it. The other creditors cannot profit by the action to which
they wore not parties, and cannot, therefore, seize property which,
as a result of the action, is brought back into the debtor's estate, or
share with creditors who brought the action in the proceeds of the
sale of such property.
In fact, as regards them, the alienation made by the debtor is
still valid, and the property alienated has passed out of his patri-
mony. (B.-L. et Barde, 1, n. 715; Colin et Capitant, 2, p. 59;
Aubry et Rau, 5th ed. 4, p. 235; Bordeaux, 2 juill. 1890, D.
92. 2. 440, and authorities in D. N. C. C. art. 1167, n. 367.)
The French jurisprudence, though more hesitating, is mostly
in the same sense. (See Cass. 30 juin 1903, D. 1904. 1. 623,
and the note; Bourges, 18 juill. 1892, D. 92. 2. 609; Lyon, 22
fevr. 1893, D. 94.2.490.)
In a recent case the Mixed Court of Appeal has adopted this
view : —
La nullite qui resulte de faction paulienne n'est pas una
nullite absolue :
L'acte franduleux n'est annule que dans Vinteret du creancier
fraude et reste debout avec toutes ses consequences a, regard de
toutes autres personnes. (C. A. Alex. 20 janv. 1916, B. L. J.
XXVIII, 122.)
This conclusion is supported by the French authorities mainly
upon two arguments: —
(1) The French Code, in the single article which refers to the
Paulian action, does not speak of it as an action of nullity, or use
the word " annul," but says creditors may attaquer Us actes faits
par lew debit eur. (C. C. F. 1167.)
/
.
122 THE LAW OF OBLIGATIONS.
But, whatever weight may be given to this argument on the
interpretation of the French Code, and it does not appear to be
very great, it has no application under the Egyptian Code or the
Cod. 1 of Quebec.
The Code of Quebec speaks of "avoiding" the contract
(C. C. (,). 1033), and the Egyptian Code says the creditors can
faire annider Irs aetes. (C. C. E. 14:3/204.)
'2) A much more substantial argument is that to allow all
lli.' creditors to benefit by a judgment pronounced at the instance
of one of them is contrary to the elementary principles of law in
ivgiird lo the effects of judgments.
As to the creditors who did not sue, the judgment is res inter
alios acta. As the codes lay down very clearly, the authority of
the chose jugee is strictly limited to the parties. (C. C. F. 1351;
C. C. Q. 1241; C. C. E. 232/297; Colin et Capitant, 2, p. 60;
I). X. C. C. art. 1351, n. 1172.
In answer to this, some writers say that tin.' judgment in the
Paulian action is not res inter alios acta as regards the creditors who
were not parties to it, because the creditors who brought the action
must, be considered as suing on behalf of the general body of
creditors.
The creditors who sue are mandataries or gerants d'affaires for
the others. (Colmet de Santerre, V. n. 82, bis, XIV.) .
But it is difficult to see how they can be mandataries without
any agreement between them and the other creditors, and their
position does not resemble that of gerants d'affaires, because they
are not interfering to protect the interests of others, but are con-
eemed solelj with the preservation of their own rights, and would
no doubt prefer to retain the spoil for themselves. In spite, how-
ever, of these considerations, and of the great volume of authority
in favour of the view that no person can profit by the Paulian
action except those who are parties to it, I venture to think that
it is not sound. The following arguments appear to me to he
decisive: —
(1) The Paulian action in the Roman law, ami in the old French
law, was regarded as an action of nullity in the sense that if the
alienation challenged was set aside, the property alienated returned
into the patrimony of the debtor, or, more correctly, was held
never to have passed out of it.
As Voei puis it, adeoque omnia perinde revocantur restauran-
twrque, ac si neque ali<'ii<iH<>, neque liberatio facta, aut quid aliud
gestum esset. (Comm. ad. Pand. 42. 8. 11.) . •
|
■
THE PAUUAN ACTION. L23
This means thai there is a complete restoration of things to
the position as il was before the deed.
The creditor or creditors who bring the action may nol intend
to aci or behalf of the other creditors, bu1 they cannot help
doing- so.
The whole property of the debtor formed the common pledgx
for the creditors, and if a creditor succeeds in having an alienation
by the debtor set aside, the property of the debtor is thereby
increased, or, if we prefer to say so, it is shown that the diminution
due to the debtor's aci was only apparent. As Laurent Hays,
the creditors who sue represent the other creditors par la nature
memc de Vactian, for to demand the annulling of an act which
was in fraud' of all the creditors is a demand which interests thorn
all. And when the other creditors benefit by the action they do
so indirectly .
They do not invoke the rule of chose jugee, they simply find in
the debtor's estate a thing which forms part of the common pledgx
of themselves as of all other creditors. (16. n. 488. But I must
admit that even M. Siville, who edits the supplement to Laurent,
rejects his argument upon this point. Supp. v. 4, n. 674.)
Whatever conclusion we accept upon this point, it is clear that
the situation is different when the debtor has been made a bank-
rupt . A f aillite presents the indivisibility which mere decovftture
lacks, and the action by the syndic is a collective action for the
benefit of all the creditors. And even if the action is brought,
after the faillite, not by the syndic, but by individual creditors,
the benefit of the action goes to the masse. (Req. 29 juill. 1908,
D. 1910. 1. 409, note by M. Percerou, S. 1909. 1. 345, note
by M. Lyon-Caen.)
Prescription of Paulian action.
In the French law it is settled that the Paulian action prescribes
only by the long period of prescription, which in France is thirty
years, there heing no provision of the code fixing a shorter period
in this case. (B.-L. et Barde, 1, n. 729; Aubry et Rau, 5th
ed. 4, p. 237.) For the same reasons in Egypt the action will be
subject to the fifteen years' prescription. (C. C. E. 208/272.)
The Code of Quebec, with greater reason, provides that the
action' must be brought within one year from the time that the
creditor obtains knowledge of the fraud. Or, if the suit be by
assignees or representatives of the creditors collectively, it must
be brought within a year from the time of their appointment.
(C. C. Q 1040.)
124 THE LAW OF OBLIGATIONS.
CHAPTER VI.
THE ACTION TO DECLARE A DEED SIMULATE.
This action is known in the French Law as V action en declaration
de simulation. It is generally treated of by the French writers
as an appendix to the Paulian action. (B.-L. et Barde, 1, n. 731;
Aubry et Rau, 5th ed. 4, p. 239; Colin et Capitant, 2, p. 61.)
Like the Paulian action, it may be brought by the creditors of a
party to the deed, but, as we shall see later, the action to declare a
deed simulate is quite distinct from the Paulian action and is
governed by very different rules. It will be well to begin explain-
ing the expression a "simulate deed." I will adopt the definition
of M. Planiol: "There is simulation when the parties make an
ostensible agreement, the effects of which are modified or entirely
destroyed by another agreement contemporary with the first and
intended to remain secret." (2, n. 1186.)
The definition presupposes that there is identity of parties and
of objects between the ostensible deed and the secret deed. The
secret deed which modifies or contradicts the ostensible deed is
called a <mitre-lettre.
This is an old French term dating from the time when lettre
was equivalent to acte. Battler lettres was to give a written
acknowledgment. (In Scots law the term "back-letter" is em-
ployed in the same sense as Gontre-lettre.) As stated in a recent
French case, un acte ne peut avoir le caractere d'une contre-lettre
sans effet a regard, des tiers, qu' aidant quit a pour objet de dis-
simuler une convention vraie et d'y substituer ostensiblement,<pour
tons autre* que pour \es parties elles-vnemes, Une convention pure-
ment fiefh-e. (Douai, 15 few. 1876, D. 78. 1. 430.)
Different kinds of simulation.
The simulation may be made in three different ways: —
(1) The apparent transaction may be intended by the parties
as a mere pretence which is not to produce any effect at all, except
that of concealins: the true state of matters. For instance, an
THE ACTION TO DECLARE A DEED SIMULATE. 125
insolvent debtor executes a sale in favour of a friend, it being
understood between the parties that the apparent sale is a fiction,
the object of which is to remove the property beyond the reach
of the seller's creditors. The simulation is here absolute, and
the simulate deed is called by French writers an arte firtif .
(2) The parties have intended to do something; their contract
is meant by them to receive effect, but it is not what they hold it
out to be. For example, A purports to sell property to B for a
certain price, but it is agreed that no price is to be paid, and the
contract is in reality donation, not sale. French writers call this
an arte dequise. (Bedarride, Traite du Dol, 3, nos. 1258 seq.
A common example of this kind of simulation is when a testator
attempts to evade the law of succession and to deprive his heirs
of the shares to which they are entitled by law, by making dis-
guised gifts to persons whom he wishes to favour.
In countries like England where a man is free to bequeath his
whole estate to strangers, or Quebec which has adopted the English
rule on this matter, there is no temptation to this kind of fraud
upon the law. (See, as te donations deguisees, B.-L. et Colin.
Donations, 1, n. 1236.)
(3) The parties enter into a genuine contract, and do not con-
ceal its nature, but they wish to keep secret the name of the real
creditor .
The simulation consists in representing A as the buyer or the
donee, or whatever it may be, whereas in truth A is acting merely
on behalf of B. A in this case is called by the French writers a
personne interposee, or a prete-nom. (See Req. 11 mars 1890.
D. 98. 1. 369.)
Rules as to actes deguises.
In regard to simulation which consists in dissembling the true
cause of the contract, the following rules may be noted: —
(1) The simulation itself is not a cause of nullity of the deed
when the parties have executed under a fictitious form what they
were entitled to execute under another form, and when, in spite of
the cause stated in the deed, there exists a real and lawful cause
for the obligation. For instance, an acknowledgment of debt
may say that it is for goods received, and it may be proved that no
goods were ever delivered. When a deed is proved to be simulate
in this sense that the cause stated therein is proved not to be the
true one, the person seeking to support the deod has the onus of
126 THE LAW OF OBLIGATIONS.
showing- what the peal ami Lawful cause was. (Req. 9 nov. 1891,
I). 92. 1 . 151; Auhrv et Hau, 5th ed. 4, p. 057; C. A. Alex. 20
mai 1908, B. L. J. XX, -240; C. A. Alex. 13 mai 1903, B. L. J.
XV, 27!): C. A. Alex. 23 mars 1915, B. L. .1. XXVII, 237.)
This shifting of the burden of proof is quite logical. It is not
necessary that the debtor should state the cause of the obligation,
and if he does not state any cause it is presumed that a lawful
cause exists.
But when he lias made, or allowed to be made, a false statement
as to the cause, this presumption that there is a lawful cause
ks displaced.
Why should he state a cause which is not the true one unless the
true one is unlawful? Accordingly, there is now a presumption
that the cause which has been concealed is unlawful, and if the
creditor wishes to enforce the payment he must rebut this presump-
tion. (B.-L. et Barde, 1, n. 391; Aubry et Rau, 5th ed. 4,
p. 557; Bufnoir, ProprieU et Contrat, p. 507; D. N. C. C.
art. 1131, n. 153; Cass. 5 dec. 1900, D. 1901. 1. 192.
2 Although an authentic writing makes complete proof of the
facts stated therein until it has been set aside by the procedure of
improbation — inscription en. faux — it is competent to prove with-
out an improbation that the acts stated to have been done were
simulate and not genuine.
For such proof does not show that the official stated in the
document anything that did not take place in his presence. The
parties do not challenge the accuracy of what is stated in the
deed; what they seek to show is that their declarations made to
the notary were not sincere.
It is only when the good faith of the notary or public official is
called in question, that the expensive process of improbation is
necessary, and in Egypt,- improbation is not only expensive, but
involves the risk of penalty, for if the plaintiff fails to prove his
•case he is liable to a fine of 2,000 piastres. (C. C. Pro. 291/332.)
For instance, a document may state that A paid to B a sum of
money in presence of the notary.
It is not competent to prove without an improbation that no
money was handed by A to B, for this would be challenging the
accuracy of a statement made by the notary of a fact within
his personal knowledge.
But it may be proved that the money handed to B belonged to
him all the time, and that the payment was merely simulate.
(Aubry el Hau, 4th ed. 8, p. 351; Laurent, 19, n. 159, and 16,
THE ACTION TO DECLARE A DEED SIMULATE. 127
n. 171: Pond. F'rcmg. Oblig. a. 7755; Dall. Supp. Oblig. n.
1'382; Paris, 15 nov. 1892, D. 93. 2. 291.)
-1 Winn the real intention of the parties is donation, bui tins
cloaJj that intention under the guise of an onerous contract, we h&ve
explained earlier that the- gift is not mill for want of authentic
form. (Supra, 1. p. 54. ,
,4 When the deed professes to he a sale and the buyer declares
therein that he has received the price, and gives ;) discharge thereof,
it is for the creditor who attacks the deed to prove that no price
was ever paid. (C. A. Alex. 12 mars 1914, B. L. J. XXVI.
282.)
We turn now from the discussion of the ease of simulation for
the purpose of dissembling the true cause of the contract, to con-
sider the general rules as to the effect of simulate deeds, hut,
before doing so, it is necessary to consider certain rules of evidence
which are well established.
Rules of evidence.
As regards the method of proof that a deed is simulate, there is
an important distinction between the case where one of the part iee
seeks to prove the simulation, and the case in which such proof is
offered by a third party.
(1) When the action is between the parties to the deed.
Seeing that, as between the parties, the secret agreement is the
true, agreement, the party seeking to prove it must do so by such
■ evidence as is competent to establish a contract of that kind.
There was nothing to prevent the parties from having written
evidence of the simulation, and, therefore, when the value is above
P. T. 1,000, the party seeking to prove the simulation must do so
by written proof, or at least by a commencement of proof in
writing, supplemented by testimony. (Req. 5 juill. 1897. D.
97. 1. 468; Aubry et Rau, 4th ed. 8, p. 351; B.-L. et Barde,
1, n. 737; C..A. Alex. 9 nov. 1898, B. L. J. XI, 290; C. A.
Alex. 26 mars 1914, B. L. J. XXVI, 301.)
Proof by witnesses is not admissible to contradict, or vary a
written contract . But this principle does not apply to cases where
the true cause of the contract was immoral or unlawful, or was,
as it is often expressed, a fraud on the law, and the simulation
consisted in giving a false cause, for here the party claiming could
128 THE LAW OF OBLIGATIONS.
not procure proof in writing, seeing that it would have rendered
the contract nugatory from the first. If, for instance, a man
pays a gaming debt by a note in which he states that the money
due is for goods received, it is impossible for him to get at the
same time a written acknowledgment from the creditor that the
debt is, in spite of appearances, a gaming debt. (Aubry et Eau,
4th ied. 8, p. 351; B.-L. et Barde, 1, n. 737; Bedarride, Traite
du Dol, 3, n. 1294; Cass. 5 aout 1902, S. 1903. 1. 319; Dijon,
4 juill. 1904, D. 1906. 2. 164, and authorities in note.)
And it is the same when the consent of the party who attacks a
contract as being simulate was extorted from him by violence or
obtained by fraud. He may prove his want of genuine consent by
any method of proof. The rule was thus stated by the Mixed
Court: A party to a deed cannot prove by witnesses or presump-
tions that the deed was simulate a moins que son consentement
nc lui ait ete earache par violence on surpris par dol ou encore
que la simulation co)icertee nlait eu pour objet de couvrir line
Iraude a la loi. (C. A. Alex. 24 janv. 1894, B. L. J. VI, 242.)
The rules of evidence which apply as between the parties apply
to their ay ants-cause, except that we must not include for this
purpose a creditor among the ay ants-cause. (See C. A. Alex.
14 mai 1903, B. L. J. XV, 300.)
(2) When the action is by a third party.
It is universally agreed that when the action en simulation is
brought by a third party, and particularly by a creditor, seeing
that he could not procure written proof, he can prove the simula-
tion by witnesses, or by simple presumptions. (B.-L. et Barde,
1, n. 737; Aubry et Rau, 4th ed. 8, p. 350; C. A. Alex. 5 fevr.
1891, B. L. J. Ill, 175; C. A. Alex. 20 dec. 1893, B. L. J.
VI, 72; C. A. Alex. 9 mars 1916, B. L. J. XXVIII, 191.)
But the presumptions must be weighty. (C. A. Alex. 30 dec.
1913, B. L. J. XXVI, 108.)
Although fraud is not presumed, it is frequently easy to establish
it by proof of the circumstances. If the contract alleged to be
simulate was made between near relations, or between husband
and wife, this is a suspicious circumstance, and if a debtor who,
according to the ostensible deed, alienated part of his property, is
proved to have remained in possession of it after the date of the
deed, this is strong evidence that the transaction was not a genuine
one. And the fact that the grantees did not register the deed for
THE ACTION TO DECLARE A DEED SIMULATE. 129
a long time may be a suspicious fact . (C. A. Alex. 29 mai 1917,
B. L. J. XXIX, 454. See the oases in D. N. G. 0. art. 1167,
nos. 389 seq.)
A vente a remere made when the debtor was insolvent, may
easily be found to have been simulate, and when a deed purports to
be onerous and it is proved that no price was paid or consideration
given, this will afford strong presumption of simulation.
But the relationship between the parties, the fact that the vendor
remained in possession of the property sold, or other suspicious
circumstances, are not in themselves conclusive.
(See 0. A. Alex. 11 dec. 1913, B. L. J. XXVI, 87; 0. A.
Alex. 9 mars 1905, B. L. J. XVU, 164; C. A. Alex. 11 nov.
1915, B. L. J. XXVIII, 21.) .
There is a. presumption against the genuineness of alienations
made when the debtor was insolvent or in embarrassed circum-
stances in favour of a wife or of a near relation, but this presump-
tion may be rebutted. (C. A. Alex. 26 mai 1914, B. L. J.
XXVI, 300: C. A. Alex. 8 janv. 1914, B. L. J. XXVI, 137.)
Simulation is a matter of fact, and it is for the court to decide
in each particular case whether the contract was or was not a
genuine one. (D. N. C. 0. art. 1167, n. 465; Dijon, 4 juill.
1904, 1). 1900. 2. 164; O. A. Alex. 28 janv. 1903, B. L. J.
XV, 110; C. A. Alex. 15 mai 1907, B. L. J. XIX, 254; C. A.
Alex. 9 nov. 1898. B. L. J. XI, 5; C. A. 28 mai 1003, O. B.
XV, n. 7.)
In judging whether the deed was simulate we must have regard
to the situation of the debtor at the date of the deed.
His situation may have changed afterwards. (C. A. Alex.
15 juin 1916, B. L. J. XXVIII, 433.)
Effect of simulation as between the parties.
Provided always that the secret agreement or counter-letter does
not embody an unlawful agreement, it will as between the parties
to it have full force and effect. For it is the counter-letter or
secret, agreement which expresses the genuine agreement of the
parties, whereas the ostensible contract is a mere cloak, and, as
the law seeks to give effect to the real intention of the parties to a
contract, when that intention is not unlawful, it will allow them
to prove the secret agreement. The simulation is not in itself
a cause of nullity, but is so only in so far as it constitutes a fraud
w.— VOL. II. 9
1.'30 THK LAW »)K OBLIGATIONS.
upon tin law or upon the rights of third parties. (C. A. Alex,
ler tVvi. 1905, B. L. J. XVII, 95.)
Under the French Code this principle is stated expressly in an
article which declares, Counter-letters have effect between the
■partiex to them only, the// do not make proof against third
person. (C. C. F. 1321; C. C. Q. 1212.)
fin in is no corresponding article in the Egyptian Code, but the
rule expressed in the first part of this article that counter-letters
have effect between the parties, is fully recognised by the juris-
prudence. For example, in a deed of sale the price is stated to be
L. E. 10.000, but there is a counter-letter by which the buyer
acknowledges that he owes L. E. 5,000 more.
Or. in a lease the rent is said to be L. E. 100, but there is a
counter-letter saying that in reality it is only L. E. 80. Or
there is an apparent deed of sale, but in a counter-letter it is
stated that the apparent buyer is not to pay the price named,
and is to reconvey the property to the seller at a certain date or on
demand.
In such cases, it is in the counter-letter that the real agreement
is to be found, and the parties seeking to enforce it may prove it,
subject to the rules of evidence which will be stated presently.
One of the parties to the simulate deed can bring an action to
prove the simulation, in order to prevent the other party from
taking a wrongful advantage of the ostensible contract contrary
to the secret agreement between them.
For one of the parties to the simulation cannot take advantage
of it to the prejudice of the other party. For instance, A sells to
B a certain property, and B by a counter-letter admits that the
sale is a mere pretence. B thereafter, in spite of the counter-
letter, proposes to sell the property, or to deal with it otherwise, in
a manner contrary to the intention of the parties as declared in the
counter-letter. A can sue to prove the simulation, that is, he
can prove the counter-letter, and he cannot be met by the plea
that in so doing he is founding upon his own fraud, for that plea
means that he had deceived the defendant, whereas here ex
hypothesi, B was a party to the fraud. (Aubry et Rau, 5th ed. 1,
p. 176: B.-L. et Barde, 1, n. 731; Bedarride, Traite du Dol, 3,
n. 1-286: Cass. 25 avril 1887, S. 87. 1. 149, D. 87. 1. -397;
C. A. 21 dec. 1909, O. B. XI, n. 33.)
A Quebec case is a good illustration of this rule. X, against
whom several actions were pending of the issue of which he was
apprehensive, made a cession of a part of his property to a friend.
THE ACTION TO DECLARE A DEED SIMULATE. U31
Ho afterwards sued for a retrocession of thejpropeii \ . alleging that
the deed was simulate, and that the defendant had agreed to rei urn
the property upon demand. The Court of Appeal sustained the
tiction and repelled the plea that X was founding on his own fraud.
{Dor ion v. Dorian, 1883, 3 Dor. Q. B. 376.,
Similarly, if one of the parties seeks to enforce the ostensible
contract against the other, the defendant may plead that the
ostensible contract was merely simulate, and that the real contract
is to be found in the counter-letter. (B.-L. et Barde, 1, n. 731;
Aix, 25 janv. 1871, D. 71. 1. 53; D. N. C. C. art. 1167, n. 415:
€. A. Alex. 9 nov. 1891, B. L. J. XI, 290.)
The effect of the simulation as regards third parties is con-
sidered in the following paragraph.
Effect of simulation as regards third parties.
By the French Code and the Code of Quebec it is declared that
•counter-letters have no effect against third persons. (C. C. F.
1321; C. C. Q. 1212. And see the lot dn 27 few. 1912, art. 7.)
There is no corresponding article in the Egyptian codes. But
without such an article the courts have power to declare that an
apparent alienation made by a debtor is fictitious, and that the
property purported to be alienated still forms a part of his
patrimony.
An action to obtain a judgment of this kind may be brought
by third parties who can qualifj an interest. (C. A. Alex. 27
mars 1902, B. L. J. XIV, 232: C. A. Alex. 19 mars 1903,
B. L. J. XV, 203.") It is agreed in France that by third parties
in this article we must understand two classes of persons to be
designated: (1) persons who have acquired real rights from the
parties subsequent to the simulate deed; and (2) the creditors of
the parties.
It has alread}' been explained that in some cases the expression
"third parties" would not include creditors; they are in many
cases regarded as ay ants-cause.
But here it is more particularly the creditors of the parties
whom the law desires to protect. By "third parties," in short,
is here meant all parties, who, not having figured in the counter-
letter, have an interest in invoking the dispositions of the osten-
sible and simulate deed in order to protect rights which they hold
from the contracting parties. (B.-L. et Barde, 4, n. 2406, ib. 1,
n. 740; Aubry et Rau, 4th ed. 8, p. 267: D. N. C. C. art. 1321,
( i*\A «* **^*~ tf ^ (2)
132 THE LAW OF OBLIGATIONS.
1106. 91, 126; Limoges, 14 oct. 1910, D. 1911. 2. 393, and
dissertation by M. Magnol.)
The expression third parties here does not mean either the
pmitus extrmei, that is to say, persons who stand in no legal
relationship at all to the parties, nor does it mean on the other
hand the universal successors of the parties.
But that simple chirographic creditors are tiers in the sense of
C. C. F. 1321 is perfectly established in the French law. (Aubry
et Rau, 4th ed. 8, p. 268; B.-L. et Barde, 4, n. 2409: Req.
15 avr. 1897, D. 97. 1. 247; Req. 15 juill. 1896. D. 97. 1. 460:
D. N. C. C. art. 1321, n. 126.;
Perhaps the clearest way of explaining the meaning of tiers
in this article is to say with M. Bufnoir les tiers, an sens de Vart.
1321, ser.ont les ayants-cause auxQuels la convention serait oppos-
able, si cette convention ne se produisait pas sous la forme d'une
contre-lettre. (Propriete et Contrat, p. 774.)
And he gives this illustration. The parties make an agree-
ment, and, as regards them, this agreement will be, not necessarily
what it is in appearance, but what the parties wished it to be in
reality. And, accordingly, they can invoke a counter-letter if
one exists, to prove their real intention.
But it is not the same with third parties, that is, with those
persons who had the right to count upon the ostensible agreement,
and would have been able to invoke it.
They must be protected against frauds of a nature to cause
them prejudice.
And so, as regards them, it is the appearance which must prevail
over the reality. The parties, in making an apparent deed
destined to be made public, are considered by that very fact to
have bound themselves to carry out the deed according to its terms,
in so far as is necessary to protect third parties who have relied
upon the deed.
Suppose, by way of illustration, that in order to facilitate the
sale of an immoveable, the vendor produces a lease from which
it appears that the immoveable is let for L. E. 1000.
There is a counter-letter by which the lessor acknowledges that
the rent is to be L. E. 800. If X purchases the immoveable
relying upon the ostensible lease, and claims the rent of L. E. 1000
from. the lessee, the lessee cannot defend himself by producing
the counter-letter showing that by the secret agreement the rent
was to be only L. E. 800.
THE ACTION TO DECLARE A DEED SIMULATE. 133
The purchaser is a third party from the point of view of the
counter-letter, and it cannot be invoked against him.
Or, suppose, a man has signed a partnership deed as a partner,
out the other partners have given him a counter-letter stating
that he is not to be called upon to pay the amount of his share.
This will not be opposable to the creditors of the partnership.
(Civ. 11 mai 1853, D. 53. 1. 297.)
Or, again, suppose a deed of sale of an immoveable states that
the price has been paid, but a counter-letter declares it has not
been paid. The counter-letter is not opposable to a second pur-
chaser. (D. Rep. Oblig. n. 3204—2.)
It should be remarked that there are many cases in which third
parties are protected against the effect of the contre-lettre quite
apart from article 1321. The purchaser of moveables from an
apparent owner is protected by the rule en fait de meubles la
possession vaut titre, and the purchaser of an immoveable from
an apparent owner is protected if he reg^ersjhis_title before the
counter-letter which qualities or destroys his author's right has
been registered. This protection is given in France by the Loi
du 23 mars 1855, and in Quebec and Egypt by the codes them-
selves. (Planiol, 2. n. 1197; D. N. C. C. art. 1321, n. 109.
See note to D. 97. 1. 505; C. C. E. 615/742; C. C. Q. 2098.)
The counter -letter not registered cannot be set up against such
a purchaser. But there are other cases in which article 1321 is
very necessary to protect the tiers.
The protection given by the laws of registration against the
effects of oontre-lettres extends only to persons who have acquired
real rights and have registered them.
When the conflict is between two purchasers of the same.
immoveable, the second purchaser if he was in good faith and has
registered his title, will be preferred to the first purchaser whose
title is not registered. (Planiol, 1, n. 2619.)
But this rule has no application to the case we are about to
consider, in which the person who challenges the effect of the
counter-letter has no right which can be registered. The chiro-
graphic creditors of the owner of the property who has alienated
it. or has restricted his rights by a counter-letter, are in this
position.
They have no rights capable of registration, and if they are
entitled to challenge the counter -letter it must bo in virtue of the
principle consecrated in C. C. F. art. 1321, and not in virtue of
any rules of registration. (Aubry et Ban. 4th ed. 8. p. 268:
j;;4 THE LAW OF OBLIGATIONS.
B.-L. et Barde, 4, n. 2409. See Cass. 18 mai 1897, D. 97. 1.
505, and the note by M. de Loynes.)
Conflict between the ayants-cause of the apparent owner and
the creditors of the party who has granted a contre-
lettre.
Suppose X, the owner of the property, sells it by a fictitious and
simulate deed. The purchaser creates a hypothec over the pro-
perty in favour of a creditor who is in good faith, that is who
believes that the simulate deed in favour of his author was genuine.
The creditors of X bring an action to have it declared that the
sale by him was simulate and that the property in question never
passed out of his patrimony.
If they obtain a judgment to this effect does this destroy the
right of the hypothecary creditors?
This is in France a question which is still controversial, but
the better opinion appears to be that the hypothecary creditor is.
protected. (B.-L. et Barde, 1, n. 740; Planiol, 2, n. 1199;
Aubrv et Rau, 5th ed. 4, p, 242; Orleans, 10 fevr. 1876, D. 77.
2. 113, S. 76. 2. 321, Pal. 1876, p. 1240. But see Colin ; et
Capitant, 2, p. 63; Limoges, 20 janv. 1905, D. 1905. 2. 127.)
The authorities who hold that the' right of the hypothecary
creditor is destroyed support this conclusion by the following
arguments : —
(1) The action en declaration de simulation differs from the
Paulian action in respect that its aim is not to bring back into
the patrimony of the debtor a property which has been alienated,
but to declare that the property never passed out of his patrimony.
The action must therefore be assimilated to an action of nullity or
resolution of the contract, of which the consequence is to declare-
the act annulled inexistent even in the past.
The judgment finds in short that the apparent deed never had
any reality from the beginning, and that no rights could be
conveyed by it.
(2) The purchaser, never having acquired any right himself,
could not convey any right to a hypothecary creditor upon the
general principle nemo plus juris transferre potest quam ipse
habuerit .
(3) The codes declare that those who have over an. immoveable
a right suspended by a condition or resoluble in certain cases, or
subject to rescission, can only grant hypothecs upon it which are
THE ACTION TO DECLARE A DEED SIMULATE. 135
subject to the same conditions or to the same rescission . (C . C . F .
2125: C. C. Q. 2038.)
(4; Although the contre-lettre is not opposable to the hypo-
thecary creditor as conclusive proof of his author's want of title,
nevertheless, it does not prevent those who have an interest in
proving the simulation from proving it by any legal evidence,
and the contre-lettre will be a commencement of proof in writing.
(See Laurent, 16. n. 407; Dijon, 4 juill. 1904, D. 1906. 2.
164.)
But the sufficient answer to the three first arguments appears
to be that the intention of article 1321 of the French Code, which
declares that counter-letters do not make proof against third
persons, is to protect bond-fide purchasers who rely upon an osten-
sible title in favour of their author against this danger of simula-
tion. And to the fourth argument we may reply that, if the third
parties are to be protected against the simulation by the rule thai
the counter-letter cannot be set up against them, this clearly
implies that they must be protected against any other proof of
the simulation, and it would be strange indeed to hold that while
the law prohibits the use of the best evidence it permits evidence
of a weaker character. (Aubry et Rau, 5th ed. 4, p. 242; B.-L.
et Barde, 1, n. 740; Caen, 17 mai 1873, S. 74. 2. 46; note to
Dijon, 4 juill. 1904, ut supra. Cf. Limoges, 15 juill. 1899, sou*
Req. 12 juin 1901, D. 1902. 1. 55.
The policy of the law is to encourage the security of bond-fide
purchasers. Moreover, in a conflict between the creditors wh
wish to prove the simulation and the hypothecary creditor, the
latter has the advantage of possession. Accordingly, I accept
the view of those who hold that under the French Code, he is tt>
be preferred in the case under discussion. And this solution ma\
be regarded as settled in the law of Quebec, where the language of
the code on this matter is practically identical with the French
Code. (Barsaloii v. Royal Institution, 1896. R. J. Q. 5 Q. B.
383; Desmarais v. Leveille, 1905, R. J. Q. 14 K. B. 382; Dorian
v. Dorion, 1883, 3 Dorion Q. B. 376.)
In Egypt the latest jurisprudence of the Mixed Court of Appeal
is in the same sense. La simulation d'un arte d 'acquisition n<
reflechit pas forcemeat contre le sous-acquereur de bonne foi qui
a traite avec Vacquereur fictif. (C. A. Alex. 20 juin 1918,
B. L. J. XXX, 482. Cf. C. A. Alex. 16 mars 1915, B. L. J.
XXVII, 219.)
That this result is desirable in the interests of security of deal-
1 1
..,«A».
lJjtf THE LAW OF OBLIGATIONS.
ing in;i\ be admitted. But it is extremely doubtful if we are
entitled to reach it upon a fair interpretation of the Egyptian
codes. The latest decision of the Mixed Court does not distin-
guish between the Paulian action and the action en simulation.
The authorities cited in the judgment support the proposition
that the sub-pure ha sol- is protected against the effect of the Paulian
action. This has been discussed above. But the question here is
different. It is simply whether we can regard the judgment in an
action of simulation as anything else than a declaration that the.
property in question has always remained in the patrimony of the
debtor.
It is only by invoking C. C. F. 1321 that some French autho-
rities hold that the sub-purchaser can be protected. In the
Egyptian codes there is no article corresponding to article 1321
of the French Code, and it is a strong piece of construction to
import it. Without an express article the creditors may show that
a certain asset of their debtor was never alienated in spite of
appearances. But we cannot without an express text of the code
introduce an exception to the rule nemo pins juris transferre potest
quam itpse habuerit.
Whether the Paulian action is an action of nullity in the true
sense may be open to question, as we have seen.
But in the case of simulation there is hardly room for argument;
the judgment is essentially one which finds that the apparent deed
had no reality ab initio. As the grantee under it took nothing,
there was nothing which he could convey to another. Nor does
article 197 in the Mixed Code, protecting in certain cases regis-
tered mortgage-creditors, affect the question, because according
to the interpretation given to this article by the courts, it protects
only creditors whose author's title was voidable and not void.
C. A. Alex. 6 nov. 1901, B. L. J. XIV. ■!.
And it has recently been held by the Native Court of Appeal
that the judgment in an action to declare a deed simulate affects
sub-purchasers.
A fictitious contract of sale had been entered into between the
husband and wife with the object of prejudicing the husband's
creditors .
The contract was set aside at the instance of the creditors as
being simulate, and it was held that the nullity might be enforced
by the creditors against a hond-fide purchaser from the wife.
His only remedy was an action against her for damages. C. A.
28 mai 1913, O. B. XV, n. 7.)'
Jr A^C
THE ACTION TO DECLARE A DEED .SIMULATE. 137
1 1 may be remarked in conclusion that even the French autho-
rities in favour of protecting sub-purchasers do not go the length
of protecting a purchaser by gratuitous title. The judgment
finding a deed simulate will always affect sous-acquereurs by
gratuitous title, because they could not be allowed to enrich them-
selves at the expense Of the creditors of their author. (Aubrv
et Ran, 5th ed. 4. p. 242. note 53.
Distinction between the action en simulation and the
Paulian action.
The action to declare a deed simulated has some analogies with
the Paulian action, and it is usually treated of by legal writers in
connection with that action. But. the rules which apply to the
two things are different, though, unfortunately, the two actions
have not always been clearly distinguished from one another.
This is not surprising, because the two actions are frequently
combined. The deed is challenged both as fraudulent and as
simulate, but the two things are distinct, and the grounds of
action arc alternative. (C. A. Alex. 3 nov. 1910, B. L. J.
XXIII, 3: C. A. Alex. 18 avr. 1916, B. L. J. XXVIII, 259;
C. A. Alex. 13 juin 1916, B. L. J. XXVIII, 433; C. A. Alex.
6 fevr. 1917, B.' L. J. XXIX, 198.)
The rule has been thus laid down: quoique les conditions
de Vexercioe de Taction paulienneet de V action en simulation soient
differentes, les arguments on motifs a Vappui de Vune ou de V autre
out line grande analogie et sont quelquefois identiques, V inter esse
se trowvant le phis souvent dans Vimpossibilite de preciser et etant
par suite force de proposer les deux actions alternativement.
II serait done tres dane/ereux pour la bonne administration de
la jmtici de s'inspirer d'un formalisme rigoureux et de s'attadier
plufot a la lettre qu'a V esprit des conclusions des creanciers dans
la qualification de V action exercee par eux en vac de faire annuler
les actcs par lesquels des debiteurs pen scrupuleux se concertent
avec des tiers pour les frusirer dans Vexercice de lews droits.
(C. A. Alex. 22 juin 1915, Gaz. Trib. V. p. 168.)
Pr, as it is expressed in a later ease. Rien riempecheun,
creancier de transformer Faction paulienne en action de simula-
tion lorsque les elements de la cause etablissent la fictivite de
Facte attaquee, Get acte ne pouvant amir aucune force probante
par lui-meme. 0. A. Alex. 29 mai 1918. B. L. J. XXIX,
454.)
Where the deed is merelv fraudulent, there is a genuine aliena-
tion which is intended to remove the property out of the patrimony
138 THE LAW OF OBLIGATIONS.
of the grantor in fraud of his creditors. But, where the deed is
simulate, there uever was any alienation at all, but merely the
pretence of one.
The object of the action is to fix the true amount of the debtor's
estate, and to show that curtain things belong- to it which the
debtor is trying to conceal by pretending that he has parted with
them in favour of another.
They have not been alienated; he has only made a pretence
of alienating them. (C. A. Alex. 22 janv. 1914, B. L. J.
XXVI, 170.)
The Paulian action is an action solely for the benefit of creditors,
wherea s the action en simulation may be brought by one of the
parties to the simulate deed, or by any person having an interest.
(Aubry et Rau, 5th ed. 1, p. 176; B.-L. et Barde, 1, n. 731;
Cass. 25 avr. 1887, D. 87. 1. 397.
According to the Egyptian jurisprudence, the parties to the
deed must always be mis en cause. Pour juger de la simulation
(J 'mi aete, it faut que tons ceux qui y ont participe et qui ont
interet a soutenir sa validite soient mis en cause: si toutes les
parties ne sont pas assignees, la demande est ir re rex able.
(C. A. Alex. 3 mai 1899, B. L. J. XI, 203; C. A. Alex.
22 mars 1900, B. L. J. XII, 172. Contra, in Quebec, Desmarais
v. Leveille, 1906, R. J. Q. 14 K. B. 382.)
It is, however, in the case where the action en simulation is
brought by the creditors of the grantor, that there is a risk of
confusing it with the Paulian action. The following are the
main points of difference between the two actions: —
(1) The creditors do not need to prove that the simulation was ,
in fraud of their rights, and still less that there was complicity
between the debtor and the third party. They need only to show
that they have an interest in proving the simulation. It is clear
that if the other property of the debtor is insufficient to pay their
claims they are entitled to prove that the property in question
forms a part of the debtor's assets irrespective of the motive which
has induced the debtor to conceal that fact. (Planiol, 2, n. 1203;
Cass. 31 juill. 1872, D. 73. 1. 340.;
But the creditors do not need to prove the insolvency of the
debtor; they simply ask the court to fix what is the estate over
which their common pledge exists. And the creditor has a right
to choose among the assets of his debtor those which he will seize
in execution. (Colin et Capitant. 2, p. 62: B.-L. et Barde, 1,
n. 733; Aubry et Rau, 5th ed. 4, p. 240.)
2 In ordf^fo b^ng the. action en simulation it is not neoes-
■ rJL.-
THE ACTION TO DECLARE A DEED SIMULATE. 139
sary that the debts due to the creditors should be anterior to the
simulate alienation.
For, although the debts due to them may have been incurred bj
the debtor at a date later than the alienation, nevertheless, but foj
the alienation, or rather the pretended alienation, the property in
question would have been available for the creditors. (B.-L. et
Barde, 1, n. 733; Aubry et Rau, 5th ed. 4. p. 240; Dijon. 4
juillet 1904, D. 1906. 2. 164; C. A. Alex. 8 mars 1899. B. L. J.
XI, 150; C. A. Alex. 12 mai 1898, B. L. J. X, 271.
(3) It is not necessary to prove that the debtor was insolvent
at the date of the deed, except in so far as proof of insolvency
may be held to establish its fictitious character. (Aubry et Rau.
5th ed. 4, p. 240; B.-L. et Barde, 1, n. 733; D. N. C. C.
art. 1167, n. 446; C. A. Alex. 23 Janvier 1890, B. L. J. II,
106.)
__,. According to one view the action en simulation is imprescrip-
tible, because an act which is inexistent cannot become existent
by any lapse of time. (Colin et Capitant, 2. p. 63.
But the prevailing opinion is that this action is subject to the
ordinary long prescription which is in France 30 years, and in
Egypt 15 years. (Aubry et Rau, 5th ed. 4, p. 458; Limoges.
15 mars 1895, sous Civ. 12 janv. 1897. D. 97. 1. 273.
Distinction between action en simulation and the
indirect action.
Nor must the action en simulation be confounded with the
indirect action by creditors in the name of their debtor. Creditors
would no doubt be entitled to sue on behalf of their debtor for the
restitution of property belonging to him. But that action would
be less to their advantage than the action which we are consider-
ing. If they were suing on behalf of their debtor, they would
have to sue under the conditions which would apply to an action
by him.
(1) They would have to prove that the secret agreement was
the true contract between the parties, and this would mean in most
cases the necessity of having a commencement of proof in writing,
whereas, when they bring the action en simulation, on the other
hand, all methods of proof are open to them.
(2) They might be met by any defence which might be made
against the debtor himself. (B.-L. et Barde. 1. n. 734: supra,
p. 99.)
-
140 THE LAW OF OBLIGATIONS.
CHAPTER VII.
OBLIGATIONS RESULTING FROM AN ACT.
We have now concluded our examination of obligations arising
from an agreement, and we come to discuss those obligations'
which arise not from any agreement but from certain acts. An
act which creates an obligation may be: —
(1) Benefit-producing; or
(2) Causing damage.
The first head covers what are called in the French law quasi-
contracts, and the second what are called in the French law delicts
and quasi-delicts.
We shall first deal with the quasi-contracts, or those obligations
which result from benefit-producing acts.
The French Code explains the law as to two of these: —
(1) Negotiorum gestio, and
(2) Repetition of a \payment not due.
(C. C. F. 1371 seq.; C. C. Q. 1043 seq.)
But these are by no means the only benefit-producing acts,
and the Egyptian Code, in spite of its brevity, makes it clearer
than the French Code that an obligation arises when one party
has intentionally procured a benefit for another. The broad prin-
ciple underlying the whole matter is nut ne doit s'enrichir injuste-
ment au prejudice d'autrui. Both negotiorum gestio and le paie-
ment de Vindu are illustrations of this general rule, and there are
other applications of it which cannot be brought under either of
these, and which Planiol aptly designates as quasi-contrats in-
nommes. (2, nos. 813, 933. Cf. Cass. 18 oct. 1904, D. 1905.
1. 119; B.-L. et Barde, 4, n. 2789.)
The Egyptian codes state the rule broadly. The single article
dealing with unjust enrichment says: the act of one person in-
tentionally procuring a benefit for another 'binds that other person
to account for any expenses and losses incurred bif the former up
tt^M
OBLIGATIONS RESULTING FROM AN ACT. 141
to an amount equal to the profit so obtained. (C. 0. E. 144/
200.!
The article in the Egyptian codes probably intends to lay down
a general rule which will give a claim to any person who has acted
as a negotiorum gestor, though it does not use the expression
gestion d'affaires.
In the jurisprudence, however, this expression is frequently
used in cases in which this article has been interpreted, as where
the Mixed Court says, La gestion d'affaires consiste purement et
simplement a faire sans mandat V affaire d'autrui et a lui procurer
a son insu une utilite directe et von occasionmelle . (C. A. Alex.
9 fevr. 1905, B. L. J. XVII, 118. Cf. C. A. Alex. 17 dee.
1902, B. L. J. XV, 64.)
But in other cases the Mixed Court has spoken of the action by
the gestor as the action de in rem verso, although in the French
law this name is given, as will be explained later, to an action
which is distinguished from the action arising from gestion
d'affaires. (C. A. Alex. 21 dec. 1892, B. L. J. V, 85.)
According to the French jurisprudence, the actio de in rem
verso lies in certain eases against a person who has been enriched,
although the party claiming reimbursement did not intend to
create the benefit. But the Egyptian Code by using the word
"intentionally" may be thought to have excluded the claim in
such cases. On the other hand, in the French law where there
has been a gestion d'affaires, the claim of the gerant is not limited
to reimbursement for the profit still subsisting at the date of the
action, whereas the Egyptian Code lias been interpreted as limit-
ing the claim to this amount. But this decision seems doubtful.
It will be referred to later. (C. A. Alex. 13 fevr. 1895, B. L. J.
VII, 122. Cf. Pand. Franc, vo. Affaires, Gestion d', n. 317;
D. Rep. Oblig. n. 5467.
If this decision is correct the Egyptian codes, in attempting
to state a broad rule, have somewhat narrowed the French law as
to gestion d'affaires, and it is not certain that they have left
room for any claim such as is allowed by the modern French law
in the oases where there has been an unintentional enrichment.
(See infra, pp. 163 seq.)
It is probable, however, that the courts will hold that such a
claim exists upon general principles of equity, and that the code
intends to recognise the broad principle above cited.
;'■■'
] 42 THE LAW OF OBLIGATIONS.
Nul ne doit s'enrichir injustement au prejudice d'autrui.
This principle receives recognition in a number of articles in
the code. (SeeC. ( . E. gp/90; 1:31/191; 344/430. ,
As regards the quasi-contract of gestion d'affaires, it is pro-
bably safe to assume that the Egyptian codes intend to retain
the rules established in the French law, except in so far as article
144/205 has made any change. I will, therefore, state the French
rules upon this subject, and explain also the actio de in rem verso
in the sense of the French writers, though as already stated there
is a doubt if, under the Egyptian legislation any such action is
available where the enrichment has been unintentionally procured.
But before doing so it will be well to explain shortly what is
meant in the French law by the term quasi-contract, although the
Egyptian Code, perhaps wisely, avoids the use of that term
altogether. -
Quasi-contracts.
The French Code does not give any enumeration of the sources
of obligations. But in the arrangement of that work obligations
are divided into two groups, viz.: (1) contracts or obligations
arising from the agreement of parties which are dealt with in
title three of book throe; and (2) obligations which arise without
agreement, or as they are styled, engagements, which are dealt
with in title 4 of the same book.
This is the scheme of Pothier. He devotes two sections to the
sources, or, as he calls them, the "causes" of obligations. The
first he heads " Of Contracts," and the second " Of the other causes
of obligations."
The sub-divisions of the second group are quasi-contracts,
■delicts, quasi-delicts, and the operation of the law in certain cases.
(Oblig. n. 2.)
The Code of Quebec simply enumerates five sources of obliga-
tions, contracts, quasi-contracts, offences, quasi-offences and the
operation of the law solely. (C. C. Q. 983.)
The Egyptian Code, without giving any enumeration, divides
obligations into three kinds: —
(1) Contracts.
(2) Obligations created by an act or event.
3 Obligations created by law. (Title II. chapters II.,
III.. IV.
But the twofold division of the French Code and of Pothier is
OBLIGATIONS RESULTING FROM AN ACT. 143
really more philosophical. The fundamental distinction is be-
tween obligations which arise from the agreement of parties and
those which arise without any such agreement. All non-con-
tractual obligations are obligations created by Law. In these the
liability was created without consent. It is a liability which the
party must bear merely because the law says he must bear it. In
a contract on the other hand, the party has surrendered voluntarily
a portion of his freedom. He is now bound to pay the debt, or if
the contract is of a kind of which the actual performance is not
enforced, he will be bound to pay damages, if he does not perform
his promise.
But when a man is found liable on account of a delict or of a
quasi-delict, or on account of a quasi-contract, he has never con-
sented to be bound at all.
Nay, more, there are certain cases in which the law fixes him
with liability although his will has not intervened at all. He
has neither done anything nor has he taken a benefit from any
act done on his behalf by another.
He is liable purely and simply because the law saj^s a man in
his position shall be liable. These are the anomalous cases such
as the obligation to pay aliment, which the codes describe as
obligations resulting from the law. But it is simpler and better
to say that all obligations are created by the law. except those
which the parties create for themselves by agreement.
Criticism of the term quasi-contract.
It is to be observed that the term quasi-contract does not belong-
to the Roman law. The Roman lawyers said only that in certain
circumstances there was an obligation which arose quasi ex con-
tractu, but the noun quasi-contr actus was coined by the later
civilians.
It was used, however, at least as early as 1480. (Gloss, ad
Inst. 3. 21.)
Prevot de la J amies, a French lawyer whose work was pub-
lished in 1750, speaks of quasi-contracts in a way that suggests
that it was not in his day a recognised term of the French law.
He says, on les nomme qiuasPconirats dans le droit Romain.
On pourrait parmi nous Irs appeler conventions presumecs.
(Principes de la jurisprudence francaise, 2, p. 354.)
But the term quasi-contrat and the analogous term quasi-delit
were in familiar use before the compilation of the Code Napoleon.
144 THE LAW OF OBLIGATIONS.
/ They were adopted in that work and arc constantly employed
by French writers. It would be pedantic to take exception to a
terminology so long- accepted, were it not that it is really mis-
leading-. (Sec Holland, Jurisprudence, 10th ed. p. 238, note 2. )
But the fact is that there is no true analogy between a contract
and a so-called quasi-contract. The essence of contract is consent.
How can a relation in which the parties are bound without
consent bear any resemblance to a contract? The traditional
explanation was that in the quasi-contract the consent was pre-
sumed by a legal fiction, just as Prevot de la Jannes, in the
passage just cited, calls the quasi-contracts conventions presumees.
But this is clearly unsound; the law cannot go the length of pre-
suming an impossibility. And it surely cannot say that a person
is bound upon the fiction that he has consented, when he would
not have been bound if he had in fact consented. If the law says,
as it does, that a person incapable of giving consent can be bound
by the quasi-contract, it is idle to say that the liability arises
from presumed contract. If I prop up the house of a lunatic he
must reimburse me, though he could not have bound himself by
contract to do so. The term quasi-contract, as used in the French
law, denotes the eases in which the obligation arises from a lawful
and voluntary act. (C. C. F. 1371; C. C. Q. 1041.)
Les quasi-contrats sont les faits purement volontaires de
Vhom'me, dont il resulte un engagement quelomique envers un tiers,
et quelquefois un engagement reciproque des deux parties.
(C.C. F. 1371; C. C. Q. 1041.)
The French article says it is a voluntary act which creates the
obligations.
And another article says that there is. in a quasi-contract always
a fait personnel. Neither of these statements gives us a satis-
factory criterion. (C. C. F. 1370; C. C. E. 144/205.)
It is not because the act is voluntary that the obligation arises.
Otherwise, how can we explain the fact that in many cases it is
not the person who does the voluntary act who is bound, but
another person who does nothing at all ?
In the quasi-contract of gestion d'affaires the person who inter-
venes and does something for th'e benefit of another incurs certain
liabilities, and we may say, if we like, that they arise from his
voluntary act in interfering in somebody else's business. But
wo cannot explain in this way the obligation of the person for
whom he has acted. There has been no voluntary act on his part.
OBLIGATIONS RESULTING FROM AN ACT. 145
and to say that ho is bound by the voluntary act of another to
whom he has given no authority to art for him, is merely to say
that the obligation is created by law. (See Planiol, 2, n. 811.;
There might be some convenience in the use of the term quasi-
contract if it could be made to cover all the obligations which
arise without: —
(a) agreement, or
(b) fault.
But it is in fact impossible to make this term cover all the
cases, as is shown by the fact that the oodifiers have felt themselves
obliged to form an additional group of obligations described as
resulting from the law solely.
This is unavoidable, because there are cases in which an obliga-
tion arises without any fait personnel.
The term quasi-contract is not at all a happy one, because it
suggests an analogy with contract where no analogy exists, and
because it conceals the fact that the liability arising from the
so-called quasi-contracts is, after all, created by the law solely.
But the term is so firmly established in the French law that it
would be pedantry to avoid it, and no serious difficulty can arise,
from its use if we bear in mind the foregoing criticism.
Although the Egyptian Code does not use the term, the courts
employ it, and in this they merely follow the universal usage.
(See C. A. Alex. 1 dec. 1902, B. L. J. XV, 64.)
German Code avoids term quasi-contract.
The German Code, like the Egyptian Code in this respect, does
not use the term quasi-contract at all. It gives no express classi-
fication of the sources of obligations.
But' its plan is to divide obligations into three groups accord-
ing as they arise —
(a) From contract, or
(b) From an unlawful act, or
(c) From unjust enrichment and from certain other special
causes. (Arts. 305, 823, 812, 122, 307. See Saleilles, Thearie
Generate cle VObligation, 3rd ed. p. 449; Schuster, German CivU
Law, p. 350.)
w. — vol. ii. -^
146 THE LAW OP OBLIGATIONS.
Distinction between quasi-contract and implied contract.
A quasi-contracl must not be confounded with an implied con-
trad. By an implied or tacit contract is meant a contract in
which the consent of one party or of both of them has not been
expressed in words, but is inferred from conduct.
As we have seen in speaking of the formation of contract, there
are many cases in which a party is held to have given his consent,
although he has not said so in express terms.
In regard to mandate, for instance, such cases are particularly
i ommon. If a man stands by, and allows another to do something
on his behalf, without making any protest, this implies as a rule
that he accepts this other as his agent in that regard, and it would
be a fraud upon the public to allow him to turn round and re-
pudiate his liability. (See C. A. Alex. 29 dec. 1898, B. L. J.
XI, 77.)
So in France the husband is held, in the general case, to have
given to his wife a mandate to purchase necessaries for the house-
hold, because he usually leaves to her the duty of buying things for
the family. (Planiol, 3, nos. 1099 seq. ; Colin et Capitant, 1,
p. 625; B.-L., Lc Courtois et Surville, Contrat du Manage, 1,
n. 078: U. N. C. C. art. 1420, n. 21.) There is not the same
presumption among Mohammedans, seeing that the purchasing
for the household is commonly done by the husband.
But in all such cases where we say that there is an implied
contract, the parties have given their consent, and the difference
between the implied contract and the express contract is merely
a difference as to the manner in which their consent has been
manifested. But in' a quasi-contract the obligation does not arise
from consent at all. A party may become liable without his
knowledge, and even '-without having the capacity to give consent
if he had wanted to do so.
Proof of quasi-contracts.
Tin Egyptian Code does not contain any separate rule as to the
proof of quasi-contracts; it merely has the general rule laid down
in C. C. E. 215 280.
The French Code appears to say that proof by witnesses is
always admissible as to obligations arising from quasi-contracts,
for the reason that it was impossible for the creditor in such cases
to procure proof in writing. (C. C. F. 1348.)
OBLIGATIONS RESULTING FROM AN ACT. 147
This article seems at first sight to lay down this rule as appli-
cable to every case of obligation arising- from quasi-contract, and,
in this respect, to place the proof of quasi-contract in the same
position as the proof of quasi-delict or of delict. For it says
proof by writing is not to be required when it was impossible to
procure it, and then it goes on to say, Cette exception s applique
mix obligations qui naissent des quasi-contracts et des delits on
qaiisi-cUlits.
But it is generally admitted in the French law that the article
must not be interpreted to mean that proof by witnesses of an
obligation arising from a quasi-contract is competent when the
party might have procured proof in writing. It is a question,
therefore, of circumstances.
Seeing that the obligations here arise simply from facts, it is
natural that the facts should be capable of being proved by wit-
nesses. In the case of gestion d'affaires, for example, the person
whose affairs have been managed cannot obviously be expected
to procure proof in writing of the acts done by the geramt, nor
can the gerant be expected to have proof in writing of all that
he has done. If he has rendered personal services, he can prove
these by witnesses, although the amount claimed is above 1,000
P. T. " (C. A. Alex. 23 fevr. 1889, B. L. J. XI, 133- Req.
2 mai 1892, D. 93. 1. 316; B.-L. et Barde, 4, n. 2623.)}
On the other hand, when the gerant has dealt with third parties
and has paid sums of money to them, or has made contracts with
them, there is nothing to prevent him from obtaining receipts and
proof in writing of the obligations which he has contracted, and
accordingly in such cases he will not be allowed to make proof by
witnesses. (Demolombe, 30, n. 156; B.-L. ,et Barde, 4, n. 2624;
D. N. C. C. art. 1348, n. 55; Cass. 6 fevr. 1878, D. 78. 1. 167.)
This conclusion has been criticised by Canadian writers on the
ground that receipts by the third parties with whom the gerant
has dealt would not in any case be proof in writing against the'
person on whose behalf it is alleged the gestion was made.
It would only be proof of payment by the gerant, and would
not prove on whose behalf he made it. (Mignault, Droit Civil
Canadien, 6, p. 74 in fine.)
But this criticism does not appear to be well founded. The
receipt or other proof in writing which the gerant might procure
does not make complete evidence of the debt due to him by the
person for whom he has acted, but it establishes certain fails
juridiques which need to be proved as the basis of his claim for
10 (2)
148 THE LAW OF OBLIGATIONS.
reimbursement. A.8 lie has not been hindered by circumstances
from procuring a writing, the prohibition of proof by witnesses
applies to this case. In the case of the quasi-contract arising
from a payment not due it is admitted on all hands that proof by
witnesses is not competent, for the person paying ought to have
got, and could have got. a receipt. (Aubry et Rau, 4th ed. 8.
p. 345.)
In the Egyptian law the ease is clearer, because the code does
not mention quasi-contracts as being an exception to the rule,
and says merely that the parties must prove by writing " provided
they have not been prevented by circumstances from obtaining a
document." (C. C. E. 215/280.)
Negotiorum gestio or gestion d'affaires.
The French Code explains this quasi-contract in some detail,
and it will be best to begin by giving the French articles on the
subject, and then to examine how far they have been retained or
modified in the Egyptian Code.
Lorsque volontairement on gere Vaffaire d'autrui, soit que la
proprietaire connaisse la gestion, soit qu'il V ignore, celui qui gere
contracte V engagement Incite de continues la gestion qu'il a com-
mencee, et <le Vachever jusqu'd ee que le proprietaire soit en flat
d'y pourvoir Vni-meme; il doit se charger egalement de toutes
les dependances tl< cette meme affaire.
II se soumet a toutes les obligations qui resulteraient d"un
mandat expres que lui await donne le proprietaire.
II est oblige de continue)- sa gestion, encore que le mailre vienne
a mourir avant que Vaffaire soit consommee, jusqu'd ee que
Vheritier ail pu en prendre la direction.
II est tenu d'apporhr a in gestion de I' affaire tons les soins d'un
bon pere de famille.
Neanitvoins les circonstances qui Von conduit a se charger <l<
Vaffaire, peuvent autoriser le juge a, moderer les dommages el
interets qui resulteraient des fautes ou de la negligence du
gerant.
Le maitre dont Vaffaire u ete Men aelministree, doit rempiir les-
engagements que le gerant a oontractes en son nom, Vinclemniser
de tons les engage minis personnels qu'il a pris, et lui remboursei
toutes les depenses utiles <>n necessaires qu'il a faites. (C. C. F.
arts. 1372, 1373. 1374, 1375. Cf. C. C. Q. 1043—1046.)
OBLIGATIONS RESULTING FROM AN ACT. 149
The French Code calls the person whose business is managed
by the other le maltrc or le pmprietaire, as the Roman law called
him the (Umiiiiux ret, because the typical case of gestion d'affaires
was that of the man who takes in hand the management of pro-
perty belonging to another, and in this way confers a benefit
upon its owner.
The person who interferes in another's business, and in that
way acquires a claim as well as incurring obligations, is called by
the French law the gerant, and these terms le maUre and le gerant
.are more eonvcni('nt"~than -any corresponding expressions in
English.
Analogy between gestion d'affaires and mandate.
The quasi-contract of gestion d'affaires bears a somewhat close
resemblance to the contract of mandate, and is in fact sometimes
spoken of as a sort of spontaneous mandate. (Beudant, Controls
et Obligations, n. 1127.)
The gerant acts without a mandate as if he had 0110; he behaves
as an agent, though in fact he has no authority as such. .And
the close connection between mandate and gestion d'affaires is
shown by the fact that one of them can easily be transformed into
the other. If the maitre becomes aware of what is being done
on his behalf by the gerant, and approves of it, the gerant becomes
from that time forward no longer a gerant but a mandatary.
(D. Rep. Oblig. n. 5434; B.-L. et Barde, Obligations, 4,
n. 2795; Cass. 25 janv. 1904, D. 1904. 1. 601, note 7.)
And, conversely, when a mandatary exceeds the limit of his
mandate, or continues to act after the mandate has expired, he
will, in many cases, be regarded as a gerant d'affaires, if he acted
for the benefit of his principal. (B.-L. et Barde, 4, n. 2797;
D. N. C. C. art. 1372, n. 37; C. A. Alex. 15 nov. 1900,
B. L. J. XIII, 13.)
But in spite of the similarity in many respects between mandate
and gestion d'affaires there are, notwithstanding, important,
differences between them. The gerant has interfered in some
business which did not concern him.
He was not selected by the other to act as his agent and,
although such interference may be in some eases laudable, this
will only be so where there was an urgent need for it, and where,
in fact, it resulted in a benefit.
150 THE LAW OF OBLIGATIONS.
.Accordingly, the law deals more strictly with the gerant
a affaires than with the mandatary in the following respects: —
(1) The mandatary can resign the mandate, but the gerant
who hafi begun to act must continue his management until the
business is completed, or until the maitre can take charge of it
himself.
(2) The unpaid mandatary is not answerable for his faute
legere, according to the Egyptian Code, and, according to the
French law his responsibility in regard to faults is less heavy
than that of a paid mandatary. (C. C. E. 521/638; C. C. F.
1992.) But the gerant is bound to tons le$ soins (Vun bon pere
de fmnille.
(3) The mandatary's powers and liabilities are strictly limited
to the terms of the mandate, but the gerant is bound to take charge
of all the accessory operations — il doit se charger egalement de
toutes les dependences de cette meme affaire. (C. C. F. 1372.)
There may be matters, not falling strictly within the business,
which ho began to do, which are nevertheless to be considered as
a necessary complement of it. (See Dall. Sapp. Oblig. n. 2266.)
(4) The mandatary may according to the contract be entitled
to a salary or to a commission, whereas the gerant has never a
right to remuneration, except, perhaps, in the very limited sense
which will be explained later.
(5) The obligations made by the mandatary in the name of the
mandant do not bind the mandatary but bind the mandant, unless-
the mandatary exceeded his authority. But the obligations
entered into by the gerant bind the maitre only if the business
done by the germt was well done — si V affaire a ete bien adminis-
tree. (Infra, p. 154.)
(6) The mandatary can always recover his expenses from the
mandant unless there was fault on his part, whether the business
was successful or not. But the right of the gerant to recover his-
expenses is limited to the amount by which the maitre was
benefited.
Conditions of gestion d'affaires.
There is a gestion d'affaires whenever one man voluntarily does
some business for another without a mandate. The classical case
is that of the man who repairs his neighbour's house which is
standing empty, there being an urgent need for the interference,
.Hid no means of communicating with the owner. But it is not
OBLIGATIONS RESULTING FROM AN ACT. 151
necessary to the conception of gestion d'affaires that it should
consist in an intervention to protect property abeadj belong ing
to the maitre.
An interference to acquire a right for the third party, as in
the case of stipulation pour autnii, is also a kind of grsfion
d'affaires.
But it has certain rules peculiar to it which have been already
explained. (See B.-L. et Barde, 4, n. 2791: Planiol. 2.
n. 2274. Cf. Poitiers, 19 mars 1906, S. 1907. 2. 161: Rev.
Trim. 1907, p, 811.)
Is gestion confined to the doing of juridical acts?
The language of the French Code, and the general principles
applicable to the case, indicate clearly that by gestion is meant
the administration of some business.
M. Planiol says it means always the accomplishment of a
juridical act. (2, n. 2273, and see his note to Req. 20 dec.
1910, D. 1911. 1. 377.)
But this restriction is not made in the French' Code, and we
have no right to make it, nor is there any equitable reason for it .
In the Roman law the acte a\e gestion might just as well be a
material act, such as the repairing of a wall or the extinction
of a fire, as a juridical act, such as paying another's debt or
binding oneself to pay for work done on his property. (Girard.
Manuel de Droit Boynain, 5th ed. p. 625.)
And the French jurisprudence supplies examples of gestion
d'affaires consisting in the doing of a material act. For instance,
an innkeeper who takes in a workman injured by an accident
has a claim as a mgotiorum gestor against the employer if the
employer was responsible for the accident. (Req. 28 fevr. 1910.
D. 1911. 1. 137, and note by M. Dupuioh.) A person succeeds
in securing for an interdicted lunatic a greater degree of material
comfort and attention. (Aix, 20 dec. 1888. S. 90. 2, 25, and
note by M. Naquet.) A man stops a horse which is running
away in the public road and is a danger to the public . In so doing
the man suffers an injury. He has an action for indemnity
against the owner of the horse. (Trib. comm. Seine, 3 janv.
1900, S. 1902. 2. 217, and note by M. Perreau. In this sense,
Colin et Capitant, 2, p. 712. So, likewise, in the German law.
Cosack, Lehrbuch, 6th ed. 1, p. 635.)
In Egypt there is no room for the contention that gestion
152 THE LAW OF OBLIGATIONS.
implies a juridical act. The French Code by speaking of (jest ion
and of affaire lends some support to this view, though it ought in
my opinion to be rejected in the French law also.
But the Egyptian Code does not employ these terms gestion or
affaire at all. It says merely "the act of one person." and this
must cover material acts as well as juridical acts.
Is it essential that the gestion shall be unknown to the
maitre?
It would seem to be so. This was the theory of the Roman
law and of the old French law, and the reasons given are satis-
factory. The Roman law said semper qui non prohibet pro se
intervenire, mandare creditur, that is to say in every case where.
one does not prohibit another from interfering in one's affairs
one is taken as having given him a mandate. (D. 50. 17. 60;
17. 1. 6. 2, and the texts collected in Maynz, Court de Droit
Romain, 2, p. 476.;
Pothier says, il faut pear le quasi-contrat negotiorum gestorum
que celui qui a fait I 'affaire de quelqu'un, Vait faite a son insu.
Sans cela il u'/j a pas lieu, au quasi-co.ntr.at negotiorum gestorum;
oar, lor&que vous avez fait Vaffavre de quelqu'un a son vu ef a son
su, ou il Va souffert ou il s'y est oppose. S'il Va souffert, il est
cense, en soufframt que vous fissiez pour lui cette affaire, eons.
avoir donne im mandat tacite de la faire, et s'est le cas du contrat
de mandat et non celui du quasi-contrat negotiorum gestorum.
(Du Quasi-contrat, Negotiorum Gestorum, Appendice au contrat
de mandat. n. 180.)
It is hard to see how it can be otherwise.
The Quebec Code expressly follows the old rule: He ivho of
his. own accord assumes the management of any business of
another, without the knowledge of the latter, etc. (C. C. Q.
1043
The French Code, for very obscure reasons, changed the law by
saying: Lorsque volontairement on gere Vaffaire d.autrui, soit
que h proprietaire connaisse la gestion, soil qu'il V ignore.
(C. C. F. 1372. To justify the innovation thus made by the
French Code, the writers are .driven to draw a very fine distinction
between knowledge and approval. If the maitre becomes aware
of the gestio and has time and opportunity to stop it, but he
chooses to let it go on, there is a tacit mandate thereafter.
If, however, the facts lead to the conclusion that, though he
OBLIGATIONS RESULTING FROM AX ACT. 153
knows of the gestio lie submits to it, rather than approves of it,
the operation continues to be gestion d'affaires.
(B.-L. et Barde, Oblig. 4, n. 2795; B.-L. et Wahl, Contrats
Aleatoires, n. 483; Dissertation by M. Pie, in note to Alger,
6 mai 1896, I). 99. 2. 412. Cf. Laurent, 27, n. 384.)
Egyptian law.
The Egyptian Codes do not say expressly, as does the Quebec
Code, that the gestion must be without the knowledge of the
maitre. (C. C. E. 144/205.)
On the other hand, they leave out the words of the French Code,
soit que le proprietaire connaisse la gestion, soil qu'il Vignore.
Looking to the history of the point, and to the want of favour
which these words have found in France, it may well be that the
Eg yptian legislator omitted them intentionally, and meant to go
back to the old law.
In a recent case the Mixed Court of Appeal spoke of gestion
d'affaires as being always a Vinsu du maitre. (C. A. Alex.
9 fevr.,1905, B. L. J. XVII, 118.) But it was not necessary to
decide the point in that case.
Knowledge of incapable person is immaterial.
There is certainly one case where knowledge is consistent with
negotiornm gestio, namely, when the person benefited is incapable
of giving the mandate. (Planiol, 2, n. 2273; infra, p. 157.)
It is frequently immaterial to decide whether the case is one of
negotiorum gestio or of tacit mandate.
But it may be material to decide which it is on account of the
difference in the rules of evidence. Mandate, unless it is of a
commercial nature, is not capable of being proved by witnesses,
whereas necpi iontm gestio can be so proved.
(Guillouard, Mandat, n. 61; Douai, 11 nov. 1891, D. 92. 2.
352.
And there are certain other cases in which the distinction may
be important, some of the special rules as to mandate not ap]>lying
to negotiorum gestio. The claim of a mandatary against the
mandator does not depend on the business being successfully
accomplished, as the claim of the gestor does. And, again, the
gestor cannot throw up the management of the affair on the death
of the person for whom he is acting, whereas the mandatary is only
obliged to complete business which is urgent. C. C. F. 1373,
1991; C. C. Q. 1044, 1709.)
154 THE LAW OF OBLIGATIONS.
Must be intention to act on behalf of another and benefit
resulting.
In negotiorum gestio there is always an intentional interference
with another's business, the result of which is that the person inter-
fering acts and incurs liabilities as if he were an agent, though in
fact he has no authority. The man who acts not in order to benefit
another but in his own interest, may have a claim against the other
by the actio cle in rem tversp, as will be explained later, but he
is not a riegotiorum gestor. (Baudry-Lacant. et Barde, Oblig.
4, n. 2794; Paris, 26 avril 1892, D. 93. 2. 175.)
It isnot inconsistent, however, with negotiorum gestio that the
interference should have been partly for the benefit of the person
interfering, and partly for the benefit of the third party. (D.
Bep. Oblig. n. 5404; Cass. 20 dec. 1910. D. 1911. 1. 377;
C A. Alex. 2 avr. 1903. B. L. J. XV, 227.)
.But there is no claim if the alleged gestor at the time of the
interference had no intention to seek reimbursement but intended
to make a gift. (Baudry-Lacant. et Barde, Oblig. 4, n. 2798;
infra, p. 159.) In most respects the gestor is treated as an agent,
but in some respects lie is more favourably considered. If his
interference was called for by circumstances and was well meant,
the fact that, through his want of skill, some loss resulted, will
not make it obligatory on the court to find him liable in full
damages. (C. C. F. 1374: C. C. Q. 1045.)
The whole foundation of the claim by the negotiorum gestor is
that the business has been well managed and that the expenses
were necessary or useful.
This is a condition of the action whether it is brought against
the maitre by the gestor or by third parties. (D. Supp. Oblig.
n. 2284; B.-L. et Barde, 4, n. 2818.)
There must have been some urgency calling for the inter-
ference, and the action taken must have been something which the
person himself might reasonably have done if he had been on the
spot and had acted as a bonus paterfamilias.
If the neighbour repairs a house which was not worth repairing,
or Avhich the absent owner was intending to pull down, the money
has not been usefully spent.
OBLIGATIONS RESULTING FROM AN ACT. 155
Benefit does not need to be subsisting at date of action.
On the other hand, under the French law, if the money was well
spent at the time it makes no difference that the house was burnt
down the day afterwards. (Pothier, N,eg. Gest. n. 221 : Larom-
biere, art. 1375, n. 9; Planiol, 2, n. 2280.)
It is not likely that the Egyptian legislator meant to alter the
French law on this point.
The French Code allows the gerant to claim for his depenses
utiles ou necessaires. And, as we have seen, this is taken to mean
utiles or necessaires at the date of the expenditure . The Egyptian
Code says the maitre must account to. the gerant for his expenses
and losses up to an amount equal to the profit so obtained. (C.
C. E. 144/205.)
I should be inclined to think this means the profit 'obtained"
when the money was ispent. (In this sense, De Hults, Gestion
d' Affaires, n. 22.) The contrary decision would tend to prevent
gestion d'affaires and the law desires to encourage it .
Who may be sued by third party.
When the gemnt contracted with the third party in the name
of the person benefited, it is this person whom the third party
must sue.
For it was upon his credit and not upon that of the gerant
that the plaintiff relied. (D. Swpp. Oblig. n. 2286; note by
Planiol to D. 91. 1. 49; B.-L. et Barde, 4, n. 2814.
But when the gerant contracted in his own name, the action is
against him, and he has a recourse against the person benefited.
(Demolombe, 31, n. 192; Laurent, 20, n. 332; Douai. 9 avr.
1900, D. 1901. 2.1, and note. Cf . in Quebec, Societe de Pompes
Funebres v. Lefebiwe, 1908, R. J. Q. 33 S. C. 296.
What is included under reimbursement?
The person benefited must indemnify the gestor for all the per-
sonal liabilities which he has assumed, and must account to him
for any expenses and losses incurred by the gestor up to the amount
of the profit obtained, in the sense which has been explained above.
(C. C. E. 144/205.) Does this include in suitable cases a reason-
able remuneration for the gestor' S loss of time?
It would appear that his loss of time is a Mpense, and that he
is entitled to a reasonable remuneration for it. (Demolombe. 31,
n. 174; Baudrv-Laoantinerie et Barde. 4, n. 2821.)
156 THE LAW OF OBLIGATIONS.
But we cannot go further. If mandate is presumably
gratuitous, this is true a fortiori of gestion d'affaires. A man
cannot create a claim for his own remuneration by an interferenee
which was purely spontaneous. It has been held in a Quebec
case, that the fact that the services rendered by the gestor involved
danger to him, did not entitle him to a larger indemnity. In
that case armed burglars had broken into a bank, and carried off
a thousand pounds in gold. The plaintiff, who was neither a
servant of the bank nor a policeman, took part in the pursuit of
.the burglars who were captured after a desperate struggle, and
eight hundred pounds of the booty was recovered. It was held
that the plaintiff had a legal claim only to reasonable compensation
for his loss of time, which was valued at one pound.
The facts that he risked his life and that his services resulted
in a large benefit were irrelevant. (Wark v. People's Bank, 1900,
E. J. Q. 13 S. C. 486.) This case also illustrated the rule that
the remuneration which the gestor can claim is not to be measured
by the value of the benefit procured, except in the sense that he
can never claim more than the value of this benefit. If, at a small
expense to himself, he renders a great service, he can claim only,
to be remunerated for his small expense.
If the gerant is killed or injured in rendering the service, is
there a claim for reparation against the maitre 1 This is a
doubtful question. There is some French authority for the
affirmative. M. Boistel says tons les sacrifices faits par le gerant
d'affaires sont compris dans le sens general des mots " depenses
utiles ou necessaires" d,e Tart. 1375, du moment qu'une repara-
tion pecimiaire en est possible. Le devouement aux interets du
patron, qui a ete pousse jusqu'au sacrifice de la vie merite a ce
point de vue la qualification de depense utile ou necessaire. (Note
to Req. 28 oct. 1907. D. 1908. 1. 483, in fin. See B.-L. et Wahl,
Con/rats Aleatoires, n. 720.) The victim in that case had been
killed by the great volcanic eruption of 1902 in Martinique, where
he was acting on behalf of the defendant. The arret iste considers
him as a gerant, but he was regarded by the Court as a mandatary.
And in several French cases it has been held that a man who
stopped a runaway horse and was injured in so doing, had an
action against its owner as a negotiorum gestor. (Trib. Comm.
de la Seine, 3 janv. 1900, S. 1902. 2. 217, and cases cited in
note.)
Tin- language of the Egyptian Code, depenses et pertes subies,
seems equally wide. (C. C. E. 144/205.)
r
OBLIGATIONS RESULTING PROM AN ACT. 157
The codes say that the gestor subjects himself to all the obliga-
tions which result from an express mandato. (C. ('. F. 1372;
C. C. Q. 1043.) They do not say that he has all the rights ol a
mandatary. Nevertheless, it would appear that he has a righl
of retention, and cannot be compelled to give up property of the
person benefited which is in his possession in connection with the
gestio, until he has b^en reimbursed.
For a right of retention is not restricted to cases in which it is
expressly given. It is an equitable right which exists whenever
there is a contractual or a quasi-contractual relation between the
two parties, and a debt connected with the thing retained has
arisen. But there must be a connection between the debt and
the thing retained. 1 (Guillouard, Trait e de la Retention, n. 47;
Aubry et Rau, 5th ed. 3, p. 189; Orleans, 23 juin 1898, D.
99. 2. 63; Grandmoulin, Suretes Rersormelles, etc., n. 821.'
On the other hand, it would appear that the gestor has no
privilege, for privileges are stricti juris and not to be extended
by analogy. He has no right to sell the thing and pay himself
out of the proceeds. (Guillouard, op. cit. n. 25.)
Does the maitre need to have contractual capacity?
In a quasi-contract the obligation is not based on the consent
of the parties. A party may become liable even without his
knowledge, as in the case of negotiorum gestio, and, seeing that
consent is not necessary, it is immaterial that the party bound had
not contractual capacity. When the liability arises from the party
having received a benefit at the expense of another, the fact that
the party benefited is incapable, is no reason why he should not
be bound to pay for the benefit.' The principle against unjust
enrichment applies as well to a pupil or a lunatic as to a person
of full capacity.
A person altogether devoid of reason cannot by his act make
himself liable, for reason, at any rate to some extent, is required
to commit a delict or a quasi-delict.
But a man does need to be fully capable in order to bo liable
for delicts or quasi-delicts. A minor below the age of full capa-
city may have intelligence enough for this purpose. (Sourdat,
Responsabilite, 5th ed. 1, n. 17; Cass. 21 oct. 1901, D. 1901. 1.
524; D. N. C. C. art. 1382, nos. 37 seq.)
Nor can an incapable person by his act bind himself towards
158 THE LAW OF OBLIGATIONS.
another by becoming a party to a contract, or as being a
negotiontm gestor. But when the obligation arises from the act
of another the person rendered liable does not need to possess
reason. The Code of Quebec expressly states: A person in-
capable of contracting may, by the quasi-contract which results
from tin art of cmother, be obliged towards him. (C. C. Q.
1042.
And though the French and the Egyptian codes do not say so,
there is no doubt that the law is the same. (Aubry et Rau,
4th ed 4. s. 441, p. 723; B.-L. et Barde, 4, n. 2800; Guenee,
De la capacite de s'obliger dans les quasi-contrats, Rev. Crit.
v. 16, 1887. p. 337; Chambery, 13 aout 1891, D. 93. 2. 316;
D. N. C. C. art. 1372, n. 93.)
The principle of the liability of an incapable person to pay
for benefits which he has received without contract will be illus-
trated in speaking of the action- in rem verso.
Does the gerant need to have contractual capacity?
It is maintained by some writers that it is not necessary that
the gerant should have capacity to contract. (Guenee, Rev.
( riL. 16, 1887, p. 327 ; Larombiere, on art. 1374, n. 9 ;
D. N. C. C. art. 1372, n. 100.;
But this opinion does not seem to be sound. A jDerson who
cannot bind himself by contract cannot bind himself any more by
a quasi-contract resulting from a voluntary act on his part.
The gerant is a sort of mandatary without a mandate; if for
want of capacity, he could not have accepted a mandate, or have
been obliged to execute it, he cannot any the more bind himself
by a gestion d'affaires which puts him in the same position as
that which would have resulted from the mandate. An incapable
person, therefore, who has acted as gerant, is not bound to continue
his management. But he will have a claim against the maitre by
the actio de in remverso, subject to the conditions to be explained
immediately, because this liability arises from the enrichment.
And if the gestion has resulted in the gerant receiving money or
money's worth, the other party will have an action against him
for repetition. Or if in his gestion, the incapable person has
committed a delit or a quasi-delit, and he possesses enough in-
telligence to be responsible, he will be responsible for his fault;.
'Bufnoir. Proprieteet Con.trat. p. 794: B.-L. et Barde, 4, n. 2799;
OBLIGATIONS RESULTING FROM AN ACT. 109
Aubn el Rau, 4th ed. 4, p. 722; Planiol, 2, u. 2278: Colin
et Capitant, 2, p. 713; D. N. C. C. art. 1372, n. 104.)
Examples of negotiorum gestio.
A third party who furnishes necessaries to a person whom
another was bound to aliment is &negotiorwm gestor for that other.
He pays another's debt, and is entitled to be indemnified. If the
furnishing was made without the knowledge of the person
primarily liable, the claim is strictly one of negotiorum gestio.
If it wa.s made with the other's knowledge, the person benefited,
that is, the person legally bound to aliment the other, will be
liable upon the theory that the person whom he was bound to
aliment was authorised to contract debts for necessaries upon his
credit. (See Pand. Frang. vo. Aliments, nos. 586 seq.; Demo-
lombe, 4, n. 74; Laurent, 3, n. 54; Dijon, 4 fevr. 1888, D. 89.
2. 243.)
But it must be borne in mind that in such cases there is no
ground for repetition, if the person who incurred the expenses or
furnished the necessaries did so from motives of affection or in-
terest, and without any intention of reserving a claim to be repaid.
It will be for the court to decide according to the circumstances,
whether there was the intention to reserve a claim.- (Pothier,
Quasi-Contrat, Neg. Gest. n. 196; Dall. Rep. vo. Oblig. n. 5400;
Dall. Supp. Oblig. n. 2257; Fuzier-Herman, Code Civ. Ann.
art. 1375, n. 73; C. A. Alex. 24 dec. 1902, B. L. J. XV, 75.)
So, where a grandmother who had supported a granddaughter
for a number of yea,rs, and had paid for her education, afterwards
sued the child's father for repetition of these expenses, it was
held that the facts showed that the grandmother had acted from
mere affection, and animo danandi, and that she had no claim for
repetition either against the father or against the child herself.
(Cass. 25 juin 1872, D. 74. 1. 16. Cf. Paris, 26 avr. 1892,
D. 93. 2. 175; Baudry-Lacant. et Barde, Oblig. 4, n. 2798;
Baudry-Lacant. et Houques-Fourcade, Personnes, 3, n. 2084.)
On the same principle, if necessaries have been supplied by a
person who with others is under a legal obligation to supply them,
the facts may indicate that in supplying the necessaries he did
not intend to reserve a right of recourse against the other persons
liable, for their shares. (Paris, 26 avr. 1892, D. 93. 2. 175.)
Moreover, it must not appear that the goods were supplied on
the credic of the person to whom they were actually given, or there
will be no recourse.
■ 160 THE LAW OF OBLIGATIONS.
Another ease of negotiorum gestio is that where a person pays
the i'uneral expenses of another, and claims a recourse against the
person legally bound to pay such expenses.
Primarily, the succession of \\w deceased was liable. But if
tin' succession is unable to defray the expenses, there will be a
claim againsl the surviving consort, the parent or the children of
the deceased. (Pand. Franc, vo. Aliment*, n. 290. Cf., in
England, Bradskaw v. Beard, 1862, 12 C. B. N. S. 344, 133 E . R.
360. See American cases in Keener, Quasi-Contracts, p. 344;
Scott's Cases on Quasi-Contracts, pp. 292 seq. ; infra, p. 199.)
The following are miscellaneous examples of applications of
the principle which have been made by the Mixed Courts in
Egypt.
The Con sci I Sanitaire et Quarantenaire provided for the re-
patriation of certain pilgrims who had been shipwrecked and dis-
embarked at the quarantine camp. The Conseil was held entitled
to recover its expenses from the owners and charterers of the ship.
(C. A. Alex. 25 avril 1900, B. L. J. XII, 217.) ■
The occupant a iitre gratuit ' of an immoveable belonging to
the State was held entitled to recover the plus-value arising from
the improvements which he had made at his own expense. (C. A.
Alex. 2 avril 1903, B. L. J. XV, 227. Cf . C. A. Alex. 13 fevr.
1895, B. L. J. VII, 122; C. A. Alex. 15 mai 1912, B. L. ,J.
XXIV, 342, for other illustrations.)
Assistance to ship in distress.
The important and common case, in which the captain of a ship
is called upon to give assistance to a vessel in distress, is dealt
with in the French jurisprudence in a manner difficult to reconcile
with principles.
The French law applies to this case the technical name of
assistfmoe. It does not use here fhe term SM Mefyi ge, because the
matter of sauvetage is regulated bv art. 27 de VOrdonnance de
1681.
This ordormance gives the salvor a right to one-third of the
effects salved, but in order to enjoy this right there must have
been a salvage in tin Btrid sense of the term. One of the essential
conditions is that the vessel must have been found after it had
been abandoned by its crew. It has been held that even the
presence of one sailor on board is enough to exclude the idea of
OBLIGATIONS RESULTING FROM AN ACT. 161
salvage. (Dall. Repertoire Pratique, vo. Droit Maritime, n.
1303.)
Assistance is a different case from this. It consists in render-
ing aid to a vessel in peril. This aid may be rendered, of course,
after an agreement as to the remuneration, and the question
whether this remuneration can be reduced if it is extortionate has
been discussed under the head of violence. {Supra, I, p. 302.,
The case with which we are now concerned, however, is where no
agreement has been made as to the amount to be paid.
If we adopt the view that mandate is not confined to the per-
formance of juridical acts, we may say that the captain who gave
the assistance is a mandatary if his aid was asked for, or was
tacitly agreed to. But, as will be explained presently, it is gene-
rally held that mandate implies representation. Where the cir-
cumstances do not indicate any agreement, even tacit, we may
say that the captain who "assists" is a person who confers a
benefit in circumstances such as give him a claim by the actio de
in rem verso.
But whether the case is one of mandate or of gestion d'affaires
he will be entitled to recover his depenses utiles. But this limit
of the right does not satisfy the equities of the situation. The
rendering of services of this kind is frequently a hazardous opera-
tion. It may be necessary to run great risk, and, after all, the
operation may be unsuccessful. If it were the law that the salvor
could recover only depenses utiles it would give little encourage-
ment to captains to render such services, whereas, it 'seems that
the law ought to do what it can to encourage them.
The French jurisprudence is more liberal in cases of assistance
en mer than the strict rules of gestion d'affaires would permit.
In the first place, it allows the payment of a remuneration as well
as of expenses. Le muveteur qui, a defaut des conditions pre-
scrites par Vart. 27 de Vordonnance de 1681, ne peut, conforme-
ment a celle-ci, reclamer le tiers des effets sauves, a neanmoin*
le droit, s'il a assiste un navire en peril, de reclamer, outre le
remboursement de ses depenses, une indemnite pour assistance et
perle de temps. (Rennes, '26 juillet 1906, D. 1908. 2. 237.)
In the second place, French courts award a remuneration
although the assistance may have turned out to be useless, owing
to circumstances for which the captain of the salving vessel was
not responsible. (Dall. Hep. Pratique, vo. Droit Maritime, n.
1323.)
If, for example, the ship had been taken in tow, and had after-
w.— VOL. II. 11
162 THE LAW OF OBLIGATIONS.
wards broken loose and sunk, it would be hard to see on the prin-
ciple of negotiorum gestio that any benefit had been procured.
The Convention of Brussels of 23 Sept. 1910, formulated a
number of rules upon the subject, and a projet de loi was depose
on 26 juillel 1913, to embody these rules in the French law.
But this matter does not concern us here. (See Lyon-Caen et
Renault, Traite de Droit Commercial, 4th ed. 6, n. 1066; Dall.
Rep. Prat. vo. Droit Maritime, nos. 1317 seq.;. Vermond, Manuel
de Droit Maritime, 4th ed. p. 368; and for the closely analogous
rules applied in the English law, see Kennedy, Law of Civil
Salvage, 2nd ed. p. 31 ; Carver, Carriage of Goods by Sea, 5th ed.
s. 333.) But in the English law the rule is "No success, no
salvage," unless, in the circumstances, it is possible to imply a
promise to pay. (The Benlarig, 1888, 14 P. D. 3, 58 L. J.
A dm 24; Kennedy, I.e.; Carver, I.e.)
Egyptian jurisprudence.
There is very little Egyptian jurisprudence upon the subject,
but it appears that so far the courts have applied the letter of the
law strictly.
En droit mixte, la question du sauvetage et de la prime due
au sauveteur, ne pent etre reglee, vu le silence de la loi sur la
matiere, que d'apres Vart. 205 du code civil, aux termes duquel
le fait d'une persanne qui a procure intentiomiellement un benefice
a uup autre personne oblige cette derniere a tenir compte des
depmses et pertes subies par la premiere jusqiid concurrence du
profit obtenu. (C. A. Alex. 12 mai 1892, B. L. J. IV, 235.)
If we can regard the relation between the salvor and the captain
of the ship in peril as one of tacit mandate there would be no
difficulty. The Egyptian law allows the judge to control the
remuneration of a mandatary, and the court has power enough to
deal in an equitable way with a case which can be considered as
one of mandate. (C. C. E. 514/628.)
But the prevailing view in France is that a mandatary is a
person who represents another for performing juridical acts only.
(B.-L. et Wahl, Contrats Aleatoires, n. 361, and n. 363; Planiol,
2, n. 2231; dissertation of M. Labbe to Req. ler fevr. 1891,
S. 1893 1. 497; D. N. C. C. art. 1984, n. 17. Cf., in Egypt,
Grandmoulin, Contrats, n. 913.) There is, however, a reaction
against this view which makes it impossible to consider certain pro-
fessional men such as doctors and architects as being mandataries.
(See B.-L. et Wahl, op. cit . n. 363; Colin et Capitant, 2,
p. 699; Agen, 4 mars 1889, D. 90. 2. 281, note by M. Glasson.)
ACTIO DE IN REM VERSO. 163
CHAPTER VIII.
ACTIO DE IN REM VERSO.
One of the most famous maxims of the Roman law is Jure
naturre cequum est neminem cum alterius detrimento et iniuria
fieri locupletiorem. (Dig. 50. 17. 206.) That is to say, it is
contrary to the law of nature and equity that one man should be un-
justly enriched to the prejudice of another. And this maxim, in its
French form: Nul ne doit s'enrichir injustement aux depens
d'autrui, is frequently cited toy French writers and French judges
as an indisputable principle of the French law. The older writers
were content to speak of it as a rule of natural equity which the
courts had the power to apply in the absence of another remedy.
(See Beaumanoir, Coutumes de Beauvoisis, ed. Salmon, ch. 20,
p. 302, and other writers cited by M. Loubers in Rev. Crit. 1912,
p. 399.)
For example, Pothier, in explaining that a married woman
who has contracted a loan without the authorisation of her husband
is bound to repay it if it has. turned to her profit, says that, in
this case, the contract of loan is null, because in the French law,
the material authorisation is indispensable, but that son obliga-
tion est done produite par la loi naturelle seule, qui ne permet
pas qu( quelqu'un senrichism aux depens d'autrui. (Oblig.
n. 123.)
And the same writer, in another place, deals with' the difficulty
which arises when A has done something for the benefit of B
contrary to the formal injunctions of B. In this case, Pothier
says that A cannot have an action as a negotiorum gestor, but
that, nevertheless, he will have an action for repayment of that
which has turned to the profit of B, because in the French law
natural equity is in itself sufficient foundation for an action.
Or, brsque vous profitmz d'wqe affmp que fai frnte, quoique
contre votre demise, pour vous faire du bien malgre vous, requite
naturelle, qui ne permet pas de s'enrichir aux depens d'autrui,
11 (2)
164 THE LAW OF OBLIGATIONS.
vous oblige a niindonniser de ce qiiil men a coute, jusqu'a con-
currence du profit que vous en retirerez. (Pothier, Du Quasi-
contrat negotiorum gestorum, n. 182.)
Modern authorities, likewise, state the broad rule against unjust
enrichment as being a rule of natural equity which must be con-
sidered to form part of the French law. (B.-L. et Barde, 4,
n. 2849 ; 11; Aubry et Rau, 4th ed. 6, p. 426; Cass. 15 juin
1892, D. 92. 1. 596.)
In the case cited the Chambre des Requites stated the principle
very broadly indeed. Speaking of the action de in rem verso
they said: Attendu que cette action derivant du principe d'equite
qui defend de s'enrichir au detriment d'autrui, et n' ay ant ete
reglementee par aiicun texte de nos lois, son exercice n'est soumis
a aucune condition determinee ; — Qu'il suffit, pour la rendre re-
ceivable, que le demandeur attegue et offre d'etablir V existence d'un
avantage qu'il await, par un sacrifice ou un fait personnel, pro-
cure a celui contre lequel il agit. . ■
But it is undeniable that there are many cases in which one
person derives a benefit from the action of another without being
thereby placed under any legal obligation to pay for it. If there
is in front of my house a neglected piece of vacant land which
belongs to me, the dirty and disorderly condition of this land,
and the uses made of it by the public, may be a cause of annoyance
to my neighbours, although not to such a degree as to give them 1
a right to claim damages against me. And if I should take this
land into my garden, so that the windows of my neighbours'
houses enjoy a beautiful instead of a disagreeable prospect, the
value of their property might be considerably increased. But,
even if this were so, I should not have any action against my
neighbours to compel them to pay me for the benefit which they
had received.
If a new railway is constructed in a district which before then
was far removed from any market for its produce, the property
of the farmers in this district may be doubled in value. But
the railway-company cannot make them pay for this benefit.
If, in order to prevent inundations, I execute works on the
bank or in the bed of a river which borders my property, this may
benefit my neighbours as well as myself, but I cannot make them
pay their share, unless there is some special law which says so.
(Dall. Rep. Oblig. n. 5403.)
If a third party does work which improves a property hypothe-
cated in favour of A, this increases the value of A's security, but
ACTIO DE IN REM VERSCK 165
it does not give the third party an action against A. (So hold in
a Quebec case, Wallbridge v. Far well and Ont. Car Ct/., 1890,
18 Canadian Supreme Court Reports, 1.)
In the same way, it is not enough for a person who has lent
money to show that the loan has indirectly benefited a third person.
The lender has dealt only with the borrower, and he has not
directly augmented the estate of the third party. (Douai, 9 avril
1900, D. 1901. 2. 1.)
A sister keeps her brother's house for 10 years, and thereby
saves him the expense of a house-keeper. She had no intention
to make a claim for her services. If she changes her mind, and
sends in a bill for them, the brother is not legally bound to pay
it. (See infra, p. 182.)
The lessee of a house makes improvements in it. At the end
of the lease the lessor is not bound to pay for the plus-value. A
person buys a quantity of wine for which he does not pay. He
gives the wine to a third party. The wine-merchant cannot sue
the third party. (Trib. Seine, 22 fevr. 1913; Gaz. Pal. 29 mai
1913; Colin et Capitant, 2, p. 409.)
Such illustrations might be multiplied, but they are enough to
show that we cannot say that every person who has received a
benefit from another without contract must pay for it. If it is
the rule of the law that he must pay for it in some cases, we
must find some criterion for distinguishing these cases from the
others. This is by no means an easy thing to do. Many attempts
to formulate the principle upon the subject have been made in
recent years, both by the doctrine and in the jurisprudence. But
numerous points are still controversial. (See, especially, Loubers,
H., in Revue Critique, 1912, p. 396, and p. 462; Ripjort et Teis-
seire, Essai d'une theorie de V enrichissement sans cause en Droit
Francois, Revue trim, de droit civil, 1904, p. 727; Bartin, E.,
in Aubry et Rau, 5th ed. 9, p. 354, notes 7 seq.; Vergniaud, E.,
L' enrichissement sans cause, Paris, 1916; and see the bibliography
there; B.-L. et Barde, Oblig. 4, nos. 2849, 11 seq.; note of
Bourcart, G., to Cass/ 8 fevr. 1909, S. 1911. 1. 313, with the
references; Colin et Capitant, 2, p. 403; and the references in
Sirey, Table, 1901—1910, vo. Obligations en general, nos. 64
seq.)
166 THE LAW OF OBLIGATIONS.
Special applications of principle in French and
Egyptian Codes.
Neither the French nor the Egyptian Code contains a single-
article dealing expressly with the rule against unjust enrichment.
But the codes make numerous special applications of the principle.
He who receives that which is not due to him is bound to
restore it. (C. C. E. 145/206; C. C. F. 1376; infra, p. 187.)
If a man builds, with his own materials, upon another's land,
and the owner of the land elects to retain the buildings, he must
pay for them, subject to certain conditions. (C. C. E. 65/90-
C. C. F. 555.)
If a debtor pays his debt to a creditor who has not the neces-
sary capacity to receive the payment, the debt is extinguished so
far as the payment enures to the benefit of the creditor . (C . C . F .
1241. See C. C. E. 166/229.)
If a contract is rescinded by an incapable person on the ground
of his want of capacity, the incapable person must account for the
profit which he has received. (C. C. E. 131/191; C. C. F.
1312; Cass. 23 fevr. 1891, D. 92. 1. 29; Paris, 20 janv. 1904,
D. 1906. 2. 25.)
One important application of this rule is when a contract made
by a moral person is rescinded, because it was outside the powers
of the moral person. (See supra, I, p. 350.)
A corporation exists only for certain purposes, and it can no
more enter into a contract beyond its powers than if it had no
existence. Indeed, with respect to such contracts, the corporation
may be said to have no existence.
This principle is called in the French law the principle of
speciality.
A. toutes personnes morales la capacite juridique n'est concedee
qu'en vue d'une destination precise st dans les limites de la sphere
d'action qui lew est assignee par les his, les reglements ou les
statuts. (Ducrocq, Droit Administratif, 7th ed. 6. n. 2197;
Michoud, Persotmalite Morale, 2, pp. 142 seq., 177. See for the
same principle in the English law, Halsbury, Laws of England,
Contracts, p. 391; ibid,., Corporations, p. 359; Ashburu Rail way
Co. v. Uiche, 1875, L.B.7H.L. 653, 44 L. J. Ex. 185.)
But this rule is not intended to enable corporations to cheat
the public. The corporation may plead that it is not bound by
its contracts, and that the other party had himself to blame and
was bound to know the capacity of those with whom he contracted.
ACTIO DK IN REM VERSO. 167
But if the corporation repudiates the transaction, it must account
for the benefits it has received, or give back what it has obtained
from the other party eo far as this is in its hands, or so far as
it has been applied for any beneficial purpose for which the cor-
poration might have come under liability by contract.
This has been applied in cases where a municipality has ordered
things without proper authorisation. (Chambery, 13 aout 1891,
D. 93. 2. 31.6; D. N. C. C. art. 1372, n. 96; Laurent, 20,
n. 339 Cf. Cass. 31 juill. 1895,©. 95. 1. 391; supra, I, p. 352.)
The details do not belong to this place. (See in the common law,
Keener, Quasi-Contracts, p. 272; and American cases in Pollock,
Contracts, 3rd American ed. p. 142.)
If a partner in a partnership contracts in his own name with a
third person, he does not bind the other partners, but under the
Egyptian Code, the third person has a right of action against each
of them for the amount of his share in the profits arising from the
operation. (C. C. E. 444/541.)
Upon this point the French law is different. (C. C. F. 1864;
B.-L. et Wahl, Societe, n. 334; D. N. C. C. art. 1864, n. 24.)
And, seeing that the other party relied upon the personal credit
of the partner, the French rule is reasonable enough. If a partner
contracts in the name of the partnership, but without authority
to do so, and a benefit_r-esults to the partnership, the otheX-partners
are liable each for his share,'to the extent of this profit, to the third
person who contracted with the partner. (C. C. E. 444/541:
De Hults, Rep. vo. Societe, n. 71; C. C. F. 1864; Cass. 12 mars
1850, S. 1850. 1. 257, D. 1850. 1. 86.)
If the depositary has spent money for the preservation of the
thing deposited, the depositor must repay him. (C. C. E.
488/596; C. C. F. 1948.)
In the mercantile law general average losses are supported by
contribution in the manner explained later. (Egyptian Code of
Maritime Commerce, 237; C. Com. F. 400; infra, p. 172.)
The principle against unjust enrichment is recognised in other
articles of the codes, but these will suffice, and, although no general
rule is found in the code, it is commonly admitted that the prin-
cipl underlying the provisions Jabove cited is a general one, and
must be applied by the courts in analogous cases. (Aubry et Ban,
5th ed. 9, p. 355; B.-L. et Barde, Oblig. 4, n. 2849, 11.)
It underlies many articles in the codes. For example, we may
base upon this principle the right which a sub-contractor has to
bring a direct action against the employer of the principal con-
168 THE LAW OF OBLIGATIONS.
tractor. (C. C. E. 414/506. See C. A. Alex. 30 mai 1901,
P.. L. J XIII, 313: C. A. Alex. 27 mars 1901, B. L. J. XIII,
'•2 1*3: Grandmoulin, Controls, n. 634.)
The French Code is wider than the Egyptian. (C. C. F. 1798.
See Solus, H., L' Action Direete, these, 1914, p. 228, where the
case is treated as an example of enrichissement sans cause.)
In the Egyptian law, as already mentioned, some difficulty is
created by the codes containing only a single article stating a rule
which may be interpreted in a sense which does not quite agree
either with the rules of the French law as to gestion d'affaires or
with those of the action de in rem verso. (C. C. E. 144/205;
supra, p. 141.)
But, in all probability, the Egyptian legislator did not intend
to change the French law as to gestion d'affaires, and in saying
nothing about the action de in rem verso, he merely follows the
example of the French Code.
The name actio de in rem verso.
The action by which the plaintiff, whose allegation is that the
defendant has been justly enriched at his expense, sues for resti-
tution, or, if that be impossible, for payment of the value of that
which has passed from him to the defendant, is commonly spoken
of in the French law as the action de in rem verso. But the
action which goes b} r that name in the French law has a much
wider scope than the actio de in rem verso of the Roman law. In
the Roman law, the actio de peculio et de in rem verso was the
action against a paterfamilias brought by a person who had con-
tracted with a filiusfamilias, when the filiusfamilias had acted
without authority express or implied. The liability of the pater-
familias was limited in this case to the amount of the pecidium,
unless the plaintiff could show that the paterfamilias had himself
benefited by the contract, in which case he was liable to the extent
of this benefit , and this amount which had turned to his profit was
spoken of as having been in rem versum. (Dig. 15. 3; Girard,
Manuel, 0th ed. p. 669.)
But the action in the Roman law which bears the closest analogy
to the French action is the remdictio sine causa, and this must
certainly be regarded as the source of the French action de in rem
verso. See, as to the Roman action, Girard, Manuel, 5th ed. p.
614: Girard, L'histoire de la condictio, d'apres M. Pernice, Nou-
ACTIO DE IN REM VERSO, 169
velle Revue Historique, 1895, p. 408. Cf. Colin et Oapitant,
2, p. 404; Aubry et liau, 5th ed. 9, p. 304, note 7.)
Miscellaneous illustrations from the French jurisprudence.
Seeing that the codes do not help us to define the limits of the
action to prevent unjust enrichment, and seeing also that there is
so much controversy among recent writers as to the principles
which govern the matter, it may be convenient first to give a
number of illustrations from the jurisprudence, both of cases in
which the claim has been admitted, and of cases in which it has
been rejected by the courts. We will afterwards endeavour to
extract the principles from them.
A married woman by the French law cannot contract a loan
without the authorisation of her husband. But if she does so she
cannot demand rescission of the contract when the money has
turned to her profit, and the creditor can sue her by the actio de in
rem verso up to that amount. fCass. 26 avril 1900, S. 1901.
1. 193.)
According to the French law, a wife has a tacit mandate to
purchase necessaries for the household. But this mandate may be
withdrawn by the husband, and according to most French autho-
rities, it is withdrawn if the husband gives the wife a regular
allowance for the expenses of the household. (B.-L. et Wahl,
'Mcmdat, n. 484, and authorities in Sirey, Table Dec&nnah, 1901 —
1910, s. v. Autorisation de femme mariee, n. 12.)
But, assuming that this view is correct, and that the mandate
has been withdrawn, either in this way or in another, the husband
will still be liable to third parties who have contracted with the
wife to the extent to which he has profited by the things which
they have supplied. (B.-L. Le Courtois et Surville, Control de
Mariage, 3rd ed. 1, n. 502; D. Rep. Control de Manage, n. 1014,
note 3; Paris, 30 nov. 1899, D. 1900. 2. 105. See Trib. Seine,
10 dec. 1901, et 6 janv. 1902, D. 1904. 2. 238, and the note.)
And the same principle applies in the case where the wife had a
tacit mandate but exceeded the mandate by purchasing things
which were not necessary. (Aubry et Rau, 4th ed. 5, s. 509,
note 55; D. N. C. O. art. 1420, n. 27.)
Under recent French legislation, a commune is entitled to charge
a rent for the priest's house or presbyter e. And where, after the
passing of the law, a priest lived in the house for some time without
a lease, it was held that the commune could claim an indemnity
170 THE LAW OF OBLIGATIONS.
upon the principle de in rem verso. (Trib. de Besangon, 16
juillet 1908, S. 1909. 2. 1; Siiej . Table, 1901— 1910, s. v. Cultes,
nos. 98 seq.)
A commune obtains certain goods under a contract which is not
valid because it has not been approved by the prefet. The com-
mune is liable to the extent of the benefit which it has received.
(Conseil d'Etat, 28 juillet 1911, S. 1914. 3. 53. See the exten-
sive jurisprudence as to irregular contracts made by communes
cited in the note to this case; Hauriou, Droit Administratif , 8th
ed. p. 479; and the note by M. Bartin in Aubry et Rau, 5th ed.
9, p. 363, note 13 ter.)
A genealogist, who makes it a business to discover heirs and to
inform them of their rights to a succession, has a right to bring an
action for his expenses iand for remuneration for his services, if
the information given by him has resulted in a profit. (Poitiers,
2 dec. 1907, D. 1908. 2. 332.)
If the defendant has enjoyed the use of a moveable or of an
immoveable which belongs to the plaintiff, and this has not been
in virtue of any contract, he must pay for the benefit. (Req.
9 nov. 1904, D^ 1905. 1. 489; Besangon, 9 dec. 1908, S. 1909.
2.1.)
If the plaintiff has spent money on the preservation or ameliora-
tion of property, moveable or immoveable, belonging to the defen-
dant, and this has been done without any contract and was not
intended as a gift, the defendant must pay to the extent of the
benefit ho has received. (Rouen, 25 juin 1904, D. 1906. 2. 191;
Paris, 6 aout 1850, D. 1854. 5. 483; Req. 16 juillet 1890, S.
1894. 1. 19; Bordeaux, 7 aout 1900, D. 1902. 2. 375.)
The plaintiff furnished a quantity of chemical manures to a
farmer who was a lessee of the defendant, and the farmer did not
pay for the manure. Subsequently, the lease was resiliated, and the
crop was abandoned by the lessee to his lessor, the defendant in
this case; the lessor thus profited by the manure which had pro-
duced the crop. This is enough, according to a decision which
has been much canvassed, to make him liable to the plaintiff.
(Req. 15 juin 1892, D. 92. 1. 596, S. 93. 1. 281.)
It is true that the French Code contains an article which does
not occur in the Egyptian Code: Les fruits produits par la chose
n'appartiennent au proprietaire qu'd la charge de rembourser les
frais des labours, travaux et semences faits par des tiers. (C. C.
F. 548.)
But this article is meant to refer to the case where the owner of
ACTIO DE IN REM VERSO. 171
an immoveable rev indicates it from a person who has been in pos-
session of it without right. (B.-L. et Chauveau, Biens, n. 291.)
The article is not meant to apply to such a case as this one, and
the court expressly found that the plaintiff's right did not depend
upon this article, but upon the general principle, nul ne pent
s'enrichir cm detriment cVautrui.
It is difficult to reconcile this decision with a later case decided
by the Chambre des RequeUs. A farmer exercised his right under
the lease of subletting his farm . Before that time the farmer had
managed the farm very badly, and had deteriorated its value.
The sub-lessee, on -the other hand, executed useful works which
diminished the deteriorations caused by his lessor.
The sub-lessee brought an action against the owner of the farm
for the value of the ameliorations which he had made. This action
was rejected by the court, and the Chambre "des Requites rejected
a pourvoi. The reason relied upon in the judgment was that,,
after giving credit to the lessee for the improvements made upon
the land by the sub-lessee, there was still a sum due by him to the
lessor.
If the lessee had himself paid for the improvements made by
the sub-lessee upon the land, and he had sued the lessor for re-
imbursement, the lessor could have pleaded in compensation the
claim which he had against him for the deteriorations which had
resulted from his bad administration.
It was inequitable that the lessor should be deprived of this
right by admitting the action of the sub-lessee against him. (Req.
23' nov. 1908, S. 1910. 1. 425. See the Note of M. Naquet.)
This case and the preceding one will need to be referred to again.
Another interesting group of oases in which the principle de
in rem verso has been applied is when, in time of war, the invading
army of The enemy has made requisitions upon private individuals
for food or other necessaries. It has repeatedly been held that the
commune is bound to reimburse the private person upon whom
such requisitions have been made. (Req. 23 fevr. 1875, S. 1875.
1. 267, P. 1875. p. 636; Nancy, 22 mars 1873, D. 73. 2. 141.
See other cases collected in M. Bartin's note to Aubry et Rau r
.. ^ 5th ed. 9, p. 365.)
The credit fonder, in paying off a irypothecary creditor before
making their loan, neglected to stipulate that they should be sub-
rogated in the rights of this creditor. The result was that the
hypothec of the credit fonder was postponed to the legal hypothec
of certain minors of the same immoveables. The minors thus
■
172 THE LAW OF OBLIGATIONS.
gained a benefit by the action of the credit foncier, but in spite of
this, the Cow de "Cassation refused to admit that the credit foncier
had a claim based upon the principle de in rem verso. (Cass. 11
juill. 1889, D. 89. 1. 393, and note by M. Petiton, S. 90. 1. 97,
and note by M. Labbe.)
In a fire-insurance policy there was a clause providing that, in
the event of the buildings being damaged or destroyed, the com-
pany might, instead of paying the indemnity, have the buildings
repaired or rebuilt at its expense. The company having exer-
cised this option, claimed from the insured the difference in value
between the new buildings and the old. The claim was rejected
on the ground that the company a exerce ce droit d'option dans
son interet exclusif, a ses risques et perils. (Req. 21 juill. 1903,
D. 1904. 1. 181.)
Improvement on immoveable held in indivision.
One of several owners of an immoveable held in indivision has
works executed upon it which enure to the benefit of all the owners.
The others are legally bound to contribute, according to their
shares, in the cost of these works. (Req. 20 dec. 1910, D. 1911.
1. 377, and dissertation by M. Planiol.)
Doctrine of general average or avaries communes.
The important doctrine of the commercial law known as con-
tribution to general average losses, or the reglement des avaries
comwrmnes, rests on the same principle. In the maritime law the
matter is dealt with in the codes. (C. Com. P. 400; C. Com.
Mar E. 237.)
As defined by AIM. Lyon-Caen et Renault: —
L'avarie commune est nn dommage materiel cause volontaire-
ment par le capitaine, soit au navire, soit a des merchandises de
la cargaison, ou une depense extraordinaire faite par iui dans
V interet eonvmun du navire et de la cargaison, dommage ou depense
qui a eu un resultat utile. (Traite de Droit Commercial, 4th ed.
6, n. 877.)
If goods are thrown overboard to lighten the ship, and by this
means the vessel itself and the rest of the freight are saved, it
would not be fair that the owner of the goods jettisoned should be
the only person to suffer. He ought to bear his share, but not
ACTIO DE IN REM VERSO. 173
more than his share, of a loss incurred in the interests of the ship-
owner and of the cargo-owners generally.
So if, without the fault of the captain, the coal of a steamer runs
out, and it is necessary in order to feed the fires to hum the wood
of one of the cargo-owners, there must he contribution to this as
an arvarie commune. (Trib. Superieur hanseatique, 18 juin 1909,
D. 1911 2. 28.)
Or if legal proceedings have to be taken to liberate a ship which
has been seized as a prize, this is a general average loss. (Cass.
18 janv. 1909, D. 1909. 1. 245. For the English law, see Marine
Insurance Act, 1906 (6 Edw. 7, c. 41), s. 66; Carver, Carriage
of Goods by Sea, oth eel. nos. 361 seq., Stevens, Mercantile Law,
5th ed. p. 438.) And so, also, though there is controversy here,
if the captain of a ship which is attacked by an enemy decides to
right, and the ship is damaged but escapes, the cargo-owners must
contribute. (Lyon-Caen et Eenault, Traite de Droit Commercial
6, n. 926.)
Such cases are not examples of gestion d'affaires. It is not a
case of a man spending his own money for another's benefit, but
of a man, who is an agent for several people, sacrificing the goods
of one of them for the benefit of his other principals and for his
own benefit.
The essential feature is a deliberate sacrifice made in the common
interest. (Cf. C. A. Alex. 31 janv. 1906, B. L. J. XVIII,
100.,
How are we to explain the principle?
Some say that it is an implied term of the contract of affreight-
ment. But this is a forced explanation, and, if it were the true
one, wo could not understand how the owner of the goods sacrificed
should have a direct action against the other cargo-owners who
have made no contract with him. It is much sounder to say that
the obligation to contribute to such avarivs communes is not con-
tractual, but quasi-contractual, and rests upon the general rule of
equity — nul ne doit s'enrichir injustement, cm prejudice d'autrui.
(Lyon-Caen et Renault, Traite de Droit Commercial, 6, n. 870.)
Is principle of avarie commune confined to maritime law?
This being so, the principle ought to apply on land as well as
on sea, and in cases not covered by the commercial codes, though
some authorities do not admit this.
In a curious case, a diligence was attacked by four masked
174 THE LAW OF OBLIGATIONS.
robbers who called on the driver to hand over the money-bags
which were visible at his left hand. He threw them two bags,
•one of which contained 2,400 francs and the other 1,500 francs,
and the robbers made off with their plunder. In another place in
the diligence were bags worth 28,000 francs which were saved.
The Court of Paris refused to make the owners of the money
saved contribute to the loss, and gave as a reason that the doctrine
of avaries communes is confined to the maritime law. (Paris, 17
janv. 1862, D. 1862. 2. 30.) MM. Lyon-Caen et Renault
approve of the decision, but not upon this ground.
They say the saving of the 28,000 francs was not due here to
the sacrifice of the other bags, but to the ignorance of the robbers.
It was by cas fortuit that the money was saved. (Traite de Droit
Commercial, 6, n. 871.)
This seems too refined. If the driver had not given up the
bags which the robbers could see, they would have ransacked the
eoacli and discovered the other bags.
I prefer the view that the decision was wrong. It was a true
example of avarie commune, and the court has power to apply the
principle to cases which happen on land, though, naturally, the
maritime cases are more common.
Egyptian jurisprudence.
The Egyptian jurisprudence in regard to the action de in rem
verso is meagre, and sometimes the courts apply the name action
de in rem verso to mean the action resulting from gestion
d'affaires. (C. A. Alex. 21 dec. 1892, B. L. J. V, 85.)
The following are illustrations of the action de in rem verso
in the sense which is used in the French jurisprudence: —
Where there is a secret partnership, or, as it is called, an asso-
ciation en participation, the partnership has no personality, and
third parties who contract with a partner have no action against
any one of the other partners except upon the principle de in rem
verso, and to the extent of the benefit which he has received.
(C. A. Alex. 19 fevr. 1903, B. L. J. XV, 157; C. A. Alex. 17
mai 1900, B. L. J. XII, 253. As to the character of association
en participation, see Lyon-Caen et Renault, Manuel de Droit
Commercial, 11th ed. n. 325.)
The purchaser of an immoveable who has been evicted can claim
from the owner, by the action de in rem verso, reimbursement of
his outlays necessary or beneficial, to the extent which they benefit
ACTIO DE IN REM VERSO. 175
the owner. (C. A. Alex. 16 mars 1899, B. L. J. XI, 162. Cf.
C. A. Alex. 13 fevr. 1895, B. L. J. VII, 122.)
The following cases also illustrate the rule: — The Administra-
tion of Ports and Lighthouses made use without consent of a plan
of the harbour of Alexandria made by one of their engineers, but
made unofficially and in his leisure hours. It was held that the
Egyptian Government was liable to him to the extent of the
benefit. (C. A. Alex. 26 mai 1910, B. L. J. XXII, 337.)
A clandestine pipe was placed in a house in such a manner as to
carry water from the pipe of the water-company without affecting
their meter. The pipe performed this service for a number of
years before it was discovered. The defendant, who occupied
the house with his family, was prosecuted at the instance of the
water-company for stealing the water, but acquitted for want of
proof of his knowledge of the position of the pipe. In a civil
action, however, he was held liable to pay L. E. 20 for the water
which he had consumed in good faith to the detriment of the
company. (C. A. Alex. 21 mars 1900, B. L. J. XII, 170.)
Attempt to determine the principles governing the matter.
It being admitted that there are many cases in which one person
is benefited by the action of another, without being thereby placed
under a legal duty to pay for the benefit, while there are, on the
other hand, certain cases in which the person 'is bound to pay, is
it possible to find a criterion to distinguish the one class of cases
from the other?
Some of the French writers who enjoy the highest reputation
explain the action de in rem v&rsQjis a kind of abnormal gestion
d'affaires. It is available in such a case, for example, as when a
man, acting in his own interest, and not intending to benefit
another, does, nevertheless, confer a benefit upon this other.
fraction de in rem verso, quoique se trouvant en dehors des con-
ditions du quasi-contrat de gestion d'affaires, nen doit pas moins
pourtant etre considSree comwie une action en quelque sorte auxili-
aire de V action negotiorum gestorum, lorsque, par une circonstance
quelconque, le fait juridique, qui s'est 'produit, ne reunit pas toutes
les conditions requises pour constituer le quasi-contrat de gestion
d'affaires. Tel a tou jours ete, en effet, son caractere, dapres les
traditions les plus andennes ; et cest la, certes, un argument con-
siderable dans un sujet qui est entre, tout entier, dans nos lois
modernes avec le cortege des regies romaines. (Demolombe, 31,
n. 49.)
176 THE LAW OF OBLIGATIONS.
Liiuiviit is to the same effect: La jurisprudence confond, en
gefZeral, V action de in rem verso avec Vacticm de gestion d'affaires ;
ccld n'est pas juridique en un sens, puisque les deux actions dif-
ferent ; mats la confusion s'expiique t en ce sens que les deux actions
procedent de la meme cause, \et qiielles ne different que quant a
I'etiemdm dies obligations du maitre. (Laurent, 20, no. 338.
Cf . Larombiere, art. 1375, n. 14.)
But if this is the explanation, why is it that the conditions of
the two actions are not the same? Why is it that, when the action
is upon gestion d'affaires, the gestor can claim reinbursement for
his outlays if they were beneficial at the time they were made,
whereas, when the action is de in rem verso, the plaintiff can claim
only for the benefit existing at the date of the action, or, at any
rate, for a profit which the other party has actually received and
enjoyed? Is not the essence of gestion d'affaires a voluntary
interference for the benefit of another in cases of urgency, whereas,
in many of the cases of de in rem verso these elements are entirely
lacking?
Most French authorities now agree that this explanation, at
any rate, must be rejected. (Loubers, in Rev. Crit. 1912, p. 400;
Ripert and Teisseire, in Rev. Trim. 1904, p. 741; Bartin, in
Aubry et Rau, 5th fed. 9, p. 355, note 9.)
In fact it would be much truer to say that, instead of the action
de in rem verso being a special and abnormal case of gestion
d'affaires, gestion d'affaires itself is a special application of the
broad rule that a man is not allowed to enrich himself at the
expense of another. (See M. Planiol's note to Req. 16 juill.
1890, D. 1891. 1. 49. Cf. Cass. 18 mai 1873, D. 1874. 1. 269.)
Confusion between action de in rem verso and action on
gestion d'affaires.
In some of the French cases there is an absolute confusion
between the action de in rem verso and the action by the negotio-
rum gestor. Thus, in one arret of the Cour de Cassation, we read
les obligations reciproques qui peuvent resulter d'un quasi-con-
trat de gestion d'affaires naissent du fait meme de la gestion et
de la loi, et non de Vintention des parties; il importe pen que
celui qui a fait Vacte de gestion ait entendu agir tout a la fois
dams son interet personnel, et dans V interet d'un tiers, si en realite
ce tier* etait interesse a facte de gestion et en a profile. (Cass.
18 juin 1872, D. 72. 1. 471.)
ACTIO DE IN REM VERSO. 177
And, in another arret, the Cow de Cassation said: quand un
tiers fait vn aMe dont profile un proprietaire, il_gere reellement,
quoiquc inroloi/hi/remeut, et a son insu, V affaire de ce proprie-
taire. (Cass. 10 juill. 1890, S. 94. 1. 19, 1). 91. 1. 49, and
the note of M. Planiol, who draws attention to the confusion.
See, for other illustrations in the administrative law of the same
confusion, Eipert et Teisseire, in Rev. Trim. 1904, p. 736.)
But, by definition, there is not any gestion d'affaires, in the
proper sense of the term, unless there is an intentional interference
in the business of another, or, as the Egyptian Code expresses it
still more clearly, unless it is the act of one person intentionally
iprocuring a benefit for another. (C. C. F. 1372; C. C. E.
144/205.)
The person who interferes in this way is, in a sense, specially
favoured by the law, because he can recover what he has spent if
it was expended beneficially at the time, although owing to some
fortuitous event, the benefit may have disappeared before the date
of action. The right of the plaintiff in the action de in rem verso
is more limited, as will be explained later, and it is absolutely
necessarv to keep the two actions entirely distinct.
Theory that source of obligation is delictual.
Another explanation is that of Planiol, that the cause of the
obligation to reimburse is delictual. The person benefited has not
received the benefit by a fait illicite done by him, but it would be
a fait illicite on his part to retain the benefit without paying for
it. Planiol, 2, n. 812, and n. 937.) M. Ernest Vergniaud in
his excellent monograph accepts the theory of M. Planiol. (L'en-
richissement sans cause, p. 162.)
But this explanation also appears to be very forced. In many
cases the parson benefited has remained entirely passive.
There is no act of his which we can regard as fault. To say
that he commits an unlawful act if he retains the benefit without
paying for it is a statement equivalent merely to saying that the
law obliges him to pay for the benefit. It does not afford any
reason. We might with equal truth say that the debtor in a
contractual obligation commits an unlawful act if he does not pay
his debt. But, just as in this case, it is the contract which gene-
rates the obligation, so in the case of enrichment, we must look
for some legal reason which makes it unlawful for the defendant
to retain it without paying for it. The explanation of M. Planiol
W.— VOL. II. 12
17S THE LAW OF OBLIGATIONS.
explains nothing as to this. And if in spite of these arguments,
we are to regard the defendant's obligation as delictual, why are
we not to follow the ordinary rule, and make the offender liable
for all the loss suffered by the plaintiff?
Why is the measure of the offender's liability to be the "amount
of the enrichment? (See Ripert et Teisseire, p. 758; Bartin,
in Auln\ el Ivan, -3th cd. 9, p. 355, note 9/)
One cannot but feel as to M. Planiol's theory, that the eminent
writer is carried away by his desire of simplification. Nothing
is gained by extending the traditional theory of the nature and
consequences of ;i wrong. A fait iUicite renders the wrong-doer
responsible for all the damages directly caused thereby to another.
But, in this case, even if, by a stretch of language, we were to
call the person enriched a wrong-doer, it is manifest that the
damage suffered by the person who has procured the enrichment
was caused to himself by his own act and not by any act of the.
other.
Theory that source of obligation is the creation of value.
A still bolder attempt to place the action de in rem verso upon
a new foundation is that made by MM. Ripert et Teisseire.
JEssai d'une theorie de V ' enrichissement sans cause en droit civil
francais, Rev. Trim. 1904, p. 727.)
These writers, after criticising with much force the theory
that the rule against unjust enrichment can he regarded either as
an abnormal case of negotiorum gestio, or as being founded upon
quasi-delict, proceed to give a theory of their own which may be
thus summarised. The traditional theory that responsibility is
based upon fault must, they say, be abandoned in favour of the
theoiy of objective responsibility, namely, that the person, who
for his profit has created a risk, must pay for the damages caused
by his act, whether there was fault in the traditional sense or not.
(This subject belongs to the law of Responsibility.)
Accepting the new doctrine of the risque cree, these writers
say there must be a corresponding theory of profit cree : La
notion d'une responsabilite da simple fait repose tout entiere suf
cette idee qu'il est juste, quit est bon, de faire supporter a chaque
act i rite les dommages qu'elle cause. Les memes raisons, les memes
considerations doirrnt faire trouver bon et juste que chaque activite
puisse revendiquer pour elle les resultats utiles qui sont son muvre.
Cette deuxieme proposition est t'exacte contrepartie de la pre-
ACTIO DE IN REM VEKSO. 179
miere, elle en est le complement necessaire, et torn les raisonne-
ments que Von pent faire valoir a Vappui de Vune doivent pouvoir
servir a la justification de V autre.
Qui n. ctjl Ip risque, dit-ou. doit le supporter. Qui a cree le
profit, doit en beneficier. SHI y a line theorie du risque cree, il
faut qu'il y ait une theorie correspondante du profit cree. (Rev.
Trim. 1904, p. 756.)
But in spite of the ingenuity with which this theory is pre-
sented by its authors, it must be rejected without hesitation.
The theory of objective responsibility has not been accepted
as a general principle of the French law and has, certainly, no
place in the Egyptian law.
Moreover, if the theory of MM. Ripert et Teisseire were to be
accepted, it would lead to results inconsistent . with the jurispru-
dence. If the sufficient basis of the plaintiff's claim were, merely,
that he had by his act procured an enrichment, it would be im-
material whether he had done so without suffering any prejudice
himself, or whether the enrichment had ceased to exist at the
date of the action.
According to the French jurisprudence, on the other hand, the
plaintiff has no right unless he has suffered a prejudice, and his
claim is limited to the enrichment subsisting at the date of the
.action, or, at any rate, to an enrichment of which the defendant
has reaped the benefit. (Cass. 18 oct. 1904, D. 1905. 1. 119;,
Lyon, 11 janv. 1906, D. 1906. 2. 132; Loubers, Rev. Crit. 1912,
p. 413, and p. 474: Aubry et Rau, 5th ed. 9, p. 363.
Conditions of the action de in rem verso as determined by
the French jurisprudence.
The action de in rem verso is not available unless four condi-
tions are fulfilled: —
(1) The defendant must have been enriched;
(2) This enrichment must have been directly caused by a pre-
judice suffered by the plaintiff;
(3) The enrichment must have been unjust, or, as it is other-
wise expressed, the defendant must not have a just cause for
retaining the benefit without payment.
(4) The enrichment must be still existing at the date of the
action, or, at any rate, the defendant must have reaped the full
benefit of it. (B.-L. et Barde, 3rd ed. 4, n. 2849. XVI; Colin
12 (2)
180 THE LAW OF OBLIGATIONS.
et Capitant, 2, p. 406. Cf . Ripert ct Teisseire, Rev. Trim. 1904 r
}). 727 ; Loubers, Rev. Crit. 1912, p. 396; note by Xaquet to Cass.
23 now 1908, S. 1910. 1. 425; Solus, H., L' Action Directe, these,
Paris, 1914, p. 242; Bouche-Le Clerc, L' Action de in rem verso
en droit prive, these, Paris, 1913.)
These conditions require some explanation.
(1) The enrichment.
It must appear that the patrimony of the defendant has been
increased by money or by money's worth. It is not enough, in
all cases, that money has passed to the defendant, for this may
not have enriched him. If, for instance, money has been paid
to a lunatic, and he has, thereupon, thrown it into the Nile, there
is no enrichment of his patrimony. (See Cass. 2 janv. 1901,
S. 1901. 1. 192; Demolombe, 29, n. 172.)
The following is an example of a case which failed for want
of proof of enrichment.
A company which operated a railway between Aries and Pont-
vieille, had a contract with the city of Aries by which the city
granted it a subvention. This contract was annulled, and the
company sued the city of Aries by the action de in rem verso.
The claim was rejected because there had not been any trans-
mission de valeur. The property of the city had not been en-
riched, although the inhabitants had derived an advantage from
the existence of the railway. (Cass. 31 juill. 1895, S. 96. 1. 397,
D. 95. 1. 391.)
This case has sometimes been misunderstood as laying down
a rule that there must in every case be a material transmission of
/^value from the plaintiff to the defendant. The claim will lie for
personal services rendered by the plaintiff, for example, services
of a domestic kind, just as much as for reimbursement of actual
money spent. (Poitiers, 2 dec. 1907, D. 1908. 2. 332.) It is
enough that there is I'existence d'un (wantage qu'il aurait, par
un sacrifice ou un fait personnel, procure a celui contre lequel il
agit. (Cass. 15 juin 1892, S. 93. 1. 281, D. 92. 1. 596; Loubers,
Rev. Crit. 1912, p. 472.)
Nay more, there may have been an actual transmission de
valeur from one patrimony to another, and, yet, the court may
hold that there has been no enrichment.
The court of Amiens refused to consider a partnership as en-
riched by a sum of 100,000 francs, which had been lent to one of
the partners in his own name, because, although the society had
ACTIO DE IN REM VERSO. 181
benefited by the loan, the partner was a debtor bo the firm after
making allowance for the sum by which it had profited. (Amiens,
16 fevr. 1901, sous Cass. 26 janv. 1903, D. 1904. 1. 391. CI'.
Paris, 21 fevr. 1905, smts Cass. 9 et 10 nov. 1909, D. 1911. 1.
169.)
(2) The enrichment must be a direct consequence of the'
prejudice suffered by the plaintiff.
The rule has been thus formulated by the Cow de Cassation:
pour que Taction d)e in rem verso soit recevable, il ne suffit pas
que le defendeur ait recueilli un advantage prenant sa source dans
un acte du demandeur, il faut que cet uvautage result e d'une
depense faite par le second dans Vinteret du premier. Cass.
18 oct. 1904, D. 1905. 1. 119.)
It is the application of this rule which excludes the claim when
the plaintiff acted in his own interest, and involuntarily shared
the benefit with the defendant. This is so when, for example,
the plaintiff has improved his immoveable, or has brought about
the suppression of a nuisance, and has thus indirectly benefited
his neighbours as well as himself. (Loubers, in Revue Critique,
1912, p. 412. See Cass. 31 juill. 1895, S. 96. 1. 397.
In some of the cases in which the rule has been applied, there
has been in addition another reason for rejecting 1 the claim, namely,
that the plaintiff has been guilty of negligence, and that the loss
was caused by his own fault. This was so in the case mentioned
above, where the credit -fonder paid off a hypothec without taking
the precaution of obtaining subrogation. (Req. 11 juill. 1889,
S.90. 1. 97, supra, y. 171.)
The prejudice suffered by the plaintiff is one measure of his
claim. He can never recover more than enough to make up for his
loss, and he cannot recover always even so much as this, because
part of the benefit may be no longer subsisting at the date of the
action. (Lyon, 11 janv. 1906, sous Cass. 18 oct. 1904, S. 1907.
1. 465. Cf. Paris, ler dec. 1910, Gaz. Trib. 1911. 2. 165,
D. 1911. 5. 1; Rev. Trim. 1911, p. 434; Aubiy et Ran, 4th ed.
6, p. 246; Loubers, Rev. Crit. 1912, p. 479; Colin et Capitant,
2, p. 409.)
The enrichment of the defendant must be the consequence of
the impoverishment of the plaintiff. It ,is universally agreed that
there must be a connexity between the enrichment of the one and
the impoverishment of the other, but some authors deny that
there must be a relation of cause and effect between them. (See
182 THE LAW OF OBLIGATIONS.
Labbe, note to Req. 11 juill. 1889, S. 90. 1. 97; Vergniaud, E.,
L'Enriehissement sans cause, p. 201.)
M. Bartin prefers to say that, in order to succeed in his claim,
the plaintiff must prove an indivisibility of origin between the
enrichment of the defendant and his own impoverishment. They
are two aspects of the same fact . (Aubry et Ran, 5th ed. 9, p . 358,.
note 9, septies.)
(3) The defendant must not have a just cause for retaining
the enrichment without payment.
This is the most difficult point, and the one upon which there
is the greatest controversy.
When is the defendant in a position to say, " I have a just cause
for keeping the enrichment"?
(a; Animus donandi.
In some cases this defence is easy . If he can show, for example,
that the benefit he received from the plaintiff was intended as a
gift, he will not have to pay for it because the plaintiff has after-
wards changed his mind. (Of. C. A. Alex. 24 dec. 1902, B. L.
J. XV, 75.)
But the proof in such cases of the plaintiff's state of mind may
be difficult. This question arises not infrequently in cases where
the claim is for domestic sendees. If a grown-up son has been
in the habit of doing certain work for his father, or if a sister has
kept her brother's house and saved him the expense of a house-
keeper, it may be evident that the defendant has reaped a pecuniary
advantage.
But if the understanding of the parties was that these services
were rendered out of affection, and with no idea of making a
pecuniary claim', the action will not lie. And in such a case where
the services are rendered by one member of the family to another
residing in the same household, the presumption will be that they
were meant to be gratuitous. (See Domat, Lois Civiles, liv. 11.
titr. IV. s. 2, nos. 9 and 10; Trib. de Paix de Lille, 1895, D.
1897. 2. 187; Ripert et Teisseire, Rev. Trim. 1904, p. 793; and
compare many interesting American cases collected in Keener,
Quasi-Contracts, p. 315 scq.)
(b) Contractual right to take benefit.
A lessee makes repairs upon the house let of the kind which by
the French law he was bound to make. The lessee does not pay
for them. The contractor who has made the repairs cannot claim
ACTIO DE IN REM VERSO. 183
from the owner of tin; house the plus-value given to it 1>\ tie
repairs, for the lessor gets nothing to which he was not entitled.
(C. C. E. 370/453; C. C. E. 378/463; Paris, 26 juin 1899.
S. 1901. 2. 167; B.-L. et Barde, 4, n. 2849, XXIV. Contrast
such a case as Iieq. 16 juill. 1890, D. 91. 1. 49, where the owner
got constructions to which he was not entitled.)
So witli other contracts. If the defendant can show that be
has a right by contract to take the benefit, it will be the contraot
which will determine whether he has any correlative duty to paj .
The same principle applies when the claim is against a third party
who is enriched as an indirect consequence of the performance of
a contract to which he was not a party.
A farmer who farms another's land in virtue of a lease, employs
labourers for the harvest . They have no action against the owner
of the farm for their wages. On ne peut consider er le pro-
prietaire qui a regu le prix du fermage ou set part de la recolte
conformement aux stipulations du bail, commie s'etant, sans cause
legitime, enriohi au detriment de I'ouurier. (Cass. 18 oct. 1898,
S. 99. 1. 165, D. 99. 1. 105.)
And, in general, when the person enriched, received the benefit
in payment of a contract with him, the third party who has
indirectly procured the enrichment has no action de in rem verso.
There is no direct relation between the person who is prejudiced
and the person who is enriched. (See Cass. 8 fevr. 1909, S.
1911. 1. 313, and note of M. Bourcart.)
The case which has been above referred to, where the claim was
by a man who had supplied manure for a crop which the owner
of the land had reaped, has been much debated. By some writers
it has been interpreted as affirming the proposition that, when
there has been a transmission of value from the plaintiff to the
property of the defendant, the action de in rem verso is admis-
sible. But this proposition is too wide and its application would
lead to results which are inequitable. If it were sound, any person
who had done work which had increased the value of premises in
the hands of a lessee would have two rights of action, an action
on the contract against the lessee, and an action on the quasi-
contract against the lessor. And he would enjoy the benefit of
the second action although the lessee had failed to pay his rent,
or, otherwise, to fulfil his contract with the lessor.
There is no reason why, in this case as in others, the creditor
184 THE LAW OF OBLIGATIONS.
who has relied upon the credit of his debtor should not take the
risk of his debtor's insolvency.
In the rase of the supplier of the manure there were special
circumstances. The owner of the land had no right to the crop,
bill when the lease was resiliated the crop was abandoned to him
in part-payment of the rent. A value was put on the crop sur-
rendered in this way, and from this value was deducted the price
of the manure. The owner of the land had, in effect, taken the
crop upon condition that he should pay for the manure. The
ease must accordingly be considered as a decision d'espece, and
not as laying down any general principle. (Cass. 15 juin 1892,
S. 93. 1. 281, D. 92. 1. 596; Aubry et Rau, 5th ed. 9, p. 360;,
Ripert et Teisseire, in Rev. Trim. 1904, p. 795. Contrast, Req.
23 nov. 1908, S. 1910. 1. 425, and, specially, the criticism of
M. Naquet at the foot of p. 426, col. 2.)
(4) The enrichment must be subsisting.
It is the generally accepted view that the action de in rem verso,
being a kind of action for restitution, the defendant can never
have to pay more than the amount by which he is enriched at the
date of the action .
We have seen in explaining the law of negotiorum gestio, that
the measure of the gestor's claim is the benefit he conferred at
the time when he incurred the expense. If the gestor had repaired
a roof, his claim against the owner of the house would not be
destroyed by the fact that the house had been burnt down directly
afterwards by a fortuitous event, and that, in consequence, the
benefit which he had conferred upon its owner had been lost.
But when the conditions of negotiorum gestio are not present,
and the claim is under the action de in rem verso, the subsequent
loss of the benefit would be fatal. (B.-L. et Barde, Oblig. 4,
n. 2849, XXVI; Aubry et Rau, 4th ed. 6, p. 247; 5th ed. 9,
p. 363; Lyon, 11 janv. 1906, D. 1906. 2. 132; D. Swpp. Oblig.
n. 2287: Laurent, 20, n. 340; D. X. C. C. art. 1375, n. 79.
Contra. Ripert et Teisseire, Rev. Trim. 1904, p. 787.)
Bui in saying that the defendant cannot be liable for more than
his enrichment at the date of the action, it is not intended to
exclude his liability to pay for services rendered to him of which
he has received the full advantage. If the plaintiff has rendered
domestic or professional services to the defendant, and these were
ACTIO DE IN KKM VERSO. 185
not intended to be gratuitous, the defendant's liability will not be
excluded by the fact that the services had been completed before
the date of the action. (Poitiers, 2 dec. 1907, D. 1908. 2. 332.)
The action de in rem verso is a subsidiary action.
The action de in rem vei'so is an equitable remedy which is not
available when the plaintiff has another remedy at his disposal.
If he has a remedy by way of an action on contract, he is tied
up to this remedy. (Cass. 8 fevr. 1909, S. 1911. 1. 313, and
note of M. Bourcart; Loubers, in Rev. Crit. 1912, p. 482.)
The remedy is available only when the plaintiff has no other
right of action to obtain the restitution or its value either against
the person benefited or against the third party, based either upon
contract, quasi-contract, delict or quasi-delict. (Aubry et Rau,
5th ed. 9, p. 361.)
Comparison with other laws.
The principle underlying the action de in rem verso has been
formulated in several of the more recent codes. Under the Ger-
man Code, Quioonque, par prestation faite par une autre per-
sonne ou de toute autre maniere, fait une acquisition sans cause
juridique aux depens de cette autre personne, est oblige vis-a-vis
d'elle a restitution. Cette obligation existe egalement lorsque la
cause juridique disparait ulterieuremxmt cm que le resultat pour-
suivi au moyen d'une prestation, tel qu'il ressort du contenu de
facte juridique, ne se realise pas.
Est egalement consideree comme prestation la reconnaissance
contractuelle de Vexistence ou de la non-existence d'un rapport
d'' 'obligation (art. 812, where see note by M. Saleillas).
The Swiss Code says, Celui qui, sans cause legitime, s'est
enrichi aux depens d'autrui, est tenu a restitution.
La restitution est due, em particulier, de ce qui a ete recu sans
cause valable, en vertu d'une cause qui ne s'est pas realisee ou
d'une cause qui a cesse d'exister.
(Code Fed. Oblig. art. 62.)
And the Morocco Code of Obligations which does not contain
any special articles upon gestion d'affaires has the following
articles: —
Art. 66. — Celui qui a recu ou se trouve pmseder wne chose,
186 THE LAW OF OBLIGATIONS.
ou autre wleur appurtenant a autrui, sans une cause qui justifie
oet enrichiss&ment, est tenu die la restituer a celui au depens duquel
il s'est enridhi.
Art. til— Celui qui, de bonne foi, a retfce un profit du
travail ou de la chose d'autirui, sans une cause qui justifie ce profit,
est tenu d'indemniser celui aux depens duquel il s'est enrichi dans
la me sure oil il a profile de son fait mi de sa chose.
(For the English law, see infra, p. 197.)
QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 187
C
I JulU-
j^n^*-
CHAPTER IX.
THE QUASI-CONTRACT RESULTING FROM A PAYMENT
NOT DUE.
The Egyptian codes deal with this matter in lour articles. lie
who receives that which is not due to him is bound to restore it.
If he received in bad faith, hie is liable for loss, interest and fruits.
Nevertheless, if a payment is voluntarily made in discharge of an
obligation, restitution is not due even where such obligation is not
enforceable by law.
Restitution is not due, if one person has by mistake paid the
debt of another to the creditor of such other person, provided that
such creditor acts in good faith, and thai the document of tith
has been destroyed ; but this provision is without prejudice to the
right of recourse which the person who has paid the debt has
against the real debtor. (C. C. N. 145—148; C. C. M. 205—
209.)
These articles reproduce with slight modifications those of the
French Code, omitting however three articles which state rules
consequential on those previously given.
Except in one. or two points of detail, which will be noticed,
there is no doubt the Egyptian legislator intends to preserve the
French law on the subject. (C. C. F. 1376-1381; C. C. Q.
1047-1052..)
The codes state the conditions attaching to the action called
in the French law the action en repetition de Hindu, which is
sometimes denoted also by its Roman name conflict io indebiti.
If there is no debt to extinguish, the payment has been made
without a cause, unless the intention was to make a gift? and a
payment made without a cause can be recovered. Such a payment
is said to have been made indument. It may be that the debt never
existed, or it may be that it existed at one time, but has subse-
quently ceased to exist.
If the payment has been made by a mandatary, the action of
188 THE LAW OF OBLIGATIONS.
repetition may be brought either by him or by the person for
whom he made the payment. (Req. 24 avril 1907, D. 1907. 1.
502.)
Repetition when there was no error.
In three oases proof of error is not required: —
(1) The first case is that in which by the Roman law the action
•condictio causa data causa non secuta was available. (Girard,
Manuel, 5th ed. p. 622.)
The payment is made in view of some future consideration
which has not been realised. It is. in fact, a conditional
payment, and the condition, not having been fulfilled, there is an
action for its recovery. For example, a relative of one of the
spouses has paid a dowry before the marriage, or made a donation
to one of the spouses in the marriage-contract, and the marriage
fails to oome off; the money paid can be recovered. (C. C. F.
1088; B.-L. et Barde, 4, n. 2839; B.-L. Le Courtois et SurviUe,
Contrat de manage, 1, n. 196.)
In oases of this kind there is no necessity to prove error on the
part of the person making the payment. The basis of the action
is not a payment in mistake. It is a payment made in view of a
future cause which has not been realised.
(2) The same principle applies when the contract under which
the payment was made has been annulled. If the buyer has paid
the price and the contract of sale is annulled, he has a right to
repetition of the price. For instance, a house which is hypo-
thecated is seized and sold by creditors. The purchaser pays the
money to the hypothecary creditor, and he is subsequently evicted
from the property by a third party who turns out to be the true
owner. The purchaser can recover the price from the creditor 1
whom he has paid. The sale to him turns out to have been null, .
therefore he paid what was not due. (Planiol, 2, n. 844; Cass.
28 dec. 1885, D. 86. 1. 433; D. N. C. C. art. 1376, n. 64;
C. A. Alex. 23 nov. 1899, B. L. J. XII, 27. Cf. C. A. Alex.
17 janv. 1912, B. L. J. XXIV, 92.)
(3) Does the same principle apply when the payment was made
in discharge of an unlawful or immoral contract? Here, too,
it is not a question of error, but simply of money paid for an
unlawful cause. The action Avas called in this case in the Roman
law condictio oh fur pern causam. (Girard. Manuel, 5th- ed.
p. 622.) '
QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 18i>
The question whether repetition is allowable in this case has-
been discussed earlier in speaking- of the nature of cause. {Supra,
I, p. 175.)
Payment made in error.
The articles upon repetition in the Egyptian Code and those in
the French Code upon which they are based, are probably not
intended to deal with the case where money has been paid for a
consideration which has failed, or for an unlawful cause. In the
former of these cases the right to repetition undoubtedly exists,
but it can be founded upon other provisions of the code and
specially upon that which says that an obligation must have a
lawful cause. (Cf. C. C. E. 94/148; C. C. F. 1131; B.-L.
et Barde, 4, n. 2837; D. N. C. C. art. 1376, n. 1-55. See, however,
Colin et Capitant, 2. p. 400.)
The articles under consideration have in view the payment
made in error where the error is the only cause of the payment.
There is a complete absence of any obligation between the person
paying who is commonly called the solvens, and the person who
receives the payment who is known as the accipiens. The action
is available only to the person who has made the payment or to
his assignees or persons subrogated to him. (Cass. 17 nov. 1914,
D. 1917. 1. 61. The error may take one of three forms:
(1) There never was airy obligation between the parties. The
person who paid did not owe anything, and there was nothing due
to the person who received the payment. For example, a wife,
as heir of her husband, pays a bill which she believes to be signed
by him, whereas the signature is a forgery. (Cass. 19 janv.
1886, D. 86. 1. 88.) A person pays a tax which he does not owe,
because the tax was not imposed according to the law. (Req.
10 nov. 1908, D. 1909. 1. 392; Req. 2 juill. 1908, D. 1909. 1.
175.)
(2) There is a debt, but the debtor pays it to a person who-
is not the creditor.
(3) There is a debt, and it is paid to the creditor but by a
person other than the debtor. (B.-L. et Barde, 4, n. 2833.)
And, in this last case, we must remember that the law permits
one man to pay the debt of another, and that if he does so
voluntarily — en connaissance de cause— he has no right to repeti-
tion. It is only when he is under the mistaken impression that
he is paying his own debt that this right exisl>. C. A. Alex.
190 THE LAW OF OBLIGATIONS.
20 jum 1895, B. L. J. VII, 351; C. A. Alex. 20 avril 1911,
B. L. J. XXIII, 274.;
1 1 is not necessary that the accipiens should be in error but it
is nece ssary that the solvens should be so. If the accipiens knew
he was receiving what was not due to him, his bad faith will
cause him to be more severely dealt with. The error of the solvens
<loes not need to be an error of fact, it may equally be an error
of law. So, if a man pays an illegal tax, believing that he is
legally bound to pay it, he pays in error and has a right to repeti-
tion/ (Beq. 10 nov. 1908, D. 1909. 1. 392; Req. 21 juiU.
1908, D. 1909. 1. 175; C. A. Alex. 7 mai 1908, B. L. J.
XX, 202; C. A. Alex. 20 fevr. 1913, B. L. J. XXV, 187.)
In such a case, it is not necessary to prove that the payment
was made under compulsion or violence morale.
Destruction of the title.
There is one case where a payment in error cannot be repeated
from the payee. This is the case which is thus stated in the
Egyptian Native Code: Restitution is not due if one person
has hy mistake paid the debt of another to the creditor of such
other person, provided that such creditor acts in good faith, and
that the document of £Ule has been destroyed; but this provision
is without prejudice to the right of recourse which the person who
has paid the debt has against the real debtor. (C. C. N. 148;
C. C. M. 209/, The article is based on the French Code.
(C. C. F. 1377.')
A man who believes himself to owe a certain debt, although
this is an error on his part, pays the debt to the creditor.
The creditor, receiving- the payment in good faith, and think-
ing that his title or document of debt is now unnecessary, destroys
the title. If the debtor who had paid by mistake could recover
from the creditor what he had paid, when he had discovered his
error, the creditor would be in a helpless position. He would
have no title by which to establish his claim against the real
debtor. Accordingly, the law says that he may keep the money,
and the man who has paid the other's debt by mistake will be
left with his recourse against the real debtor. This is in fact
an illustration of a general principle that when the law has to
choose which of two innocent parties is to suffer a loss, if there
has been any negligence on the part of one of them, it is this
one who is made the victim.
^QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. l!)l
The creditor who got what was due to him in good faith has
committed no fault however slight. But the person who paid
ought to have made sure that he owed the debt. It is generally
held in France that the words supprime son litre ought not to be
strictly construed, and that the same principle should apply to
the case where the creditor in consequence of the payment lias
released a security or has allowed the debt to prescribe.
For here, also, if he had to restore the money, he would be
helpless and exposed to the risk of losing his money by no fault
of his own. (B.-L. et Barde, 4, n. 2836; Aubry et Rau, 4th ed.
4, p. 733; D. N. C. C. art. 1376, n. 262; Caen, 20 mars 1891,
D. 92. 2. 177, and the note; Cass. 27 nov. 1912, D. 1913. 1.
96.)
The same considerations would apply to the expression in the
Egyptian Code: the doeument of title has been destroyed.
(C.*C.N. 148.)
But the point is not very clear, because it is a general rule of
construction that exceptions are not^to be extended by analogy.
(Eeq. 4 aout 1895, D. 95. 1. 362; B.-L. et Barde, 4, n. 2836.)
The Code of Quebec removes the doubt b}' saying that there is no
right to repetition "when the title has in good faith been can-
celled or has become ineffective in consequence of the payment. - '
(C. C. Q. 1048.)
Onus of proof.
The principal difficulties in questions of repetition are in regard
to the onus of proof. The plaintiff, according to general prin-
ciples, must prove all the facts necessary to support his claim.
Now there are three essential conditions applying to the action
of repetition in the oases dealt with here in the code:
(1) A payment.
(2) No debt.
(3) An error.
It falls upon the plaintiff to prove these three facts. (B.-L.
et Barde, 3rd ed. 4, n. 2832; Dail. Supp. vo. Oblig. n. 2324;
Cass. 25 nov. 1901, D. 1903. 1. 549.)
But in regard to the manner of proof and to the presumptions
of fact which may exist in certain cases there is a considerable
difference of opinion. It will be best to take the three facts
in order.
192 THE LAW OF OBLIGATIONS. %
(1) Payment.
The plaintiff must prove the payment according to the ordinary
rules of evidence, that is to say, by writing unless the cases fall
within one of the exceptions given in the code. (C. C. E. 215 ; —
222/380 — 387.) It is not enough to say that seeing that the
obligation arises from quasi-contract, the proof can be made by
parole.
A person who makes a payment can easily obtain a receipt for
it, and it is reasonable to expect him to do so. It is only in one
of the oases stated in the code, or where there is a commencement
of proof in writing, that parole proof of the payment is admissible.
(Laurent, 20, n. 366; B.-L. et Barde, Oblig. 4, n. 2625; Hue,
8, n. 296; Colin et Capitant, 2, p. 245; D. N. C. C. art. 1348,
n. 39.)
Upon this point the Egyptian Code is clearer than the French
Code, which appears to say that any quasi-contract may be proved
by witnesses. (C. C. F. .1348.) But the authors are agreed
that what is intended is that such proof is admissible only when
the party could not have procured written proof. This is not
the case here. (Supra, p. 146.)
(2) No debt.
The plaintiff must prove that no debt, civil or natural, existed,
in satisfaction of which the payment was made. Or, to use the
language of the Egyptian Code, he must show that it was not the
payment of a civil debt or a voluntary payment in virtue of a
duty even not sanctioned by law . (C . C . E . 147/208 . See C . A .
Alex. 6 janv. 1903, B. L. J. XV, 79; C. A. Alex. 1 avril 1903,
B. L. J. XV, 220.;
This does not mean that he must range over all possible sources
of obligation and show negatively that he owes nothing to the
plaintiff under any of these heads. Such proof would be impos-
sible, for the sources would never be exhausted.
The plaintiff must prove that the payment was made in respect
of some particular debt and that this debt did not exist. In
many cases the receipt will indicate the supposed debt. In other
cases, the parties are agreed about it, and differ only as to its
existence or non-existence. When this is not so the plaintiff has
the onus of proving that the payment was on account of such
and such a debt. In most cases this is not very burdensome.
QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 193
(3) Error.
As a rule the plaintiff must j)rove positively that he paid the
debt owing to an error. (Req. 9 mars 1909, D. 1910. 1. 103;
D. N. C. C. arts. 1376—1377, n. 200.)
But the kind of proof necessary varies very much according"
to the circumstances. It is urged by some writers that if the
plaintiff shows that no debt existed and that he made a payment,
a presumption thereupon arises that the payment was made in
error. It is for the defendant then to prove that the payment
was made voluntarily and in the knowledge that no debt existed.
There is a presumption against donation, hi re obscura melius
est favere repetitioni quam a3ventitio lucro. (D. 50. 17. 41;
Larombiere, on art. 1376, n. 31; Demolombe, 31, n. 286.)
But it is very doubtful if this is not too absolute a statement.
No doubt there is a presumption of fact that a man does not
throw his money away, but this makes it the more probable that
if there was a payment there was a debt. If the plaintiff denies
this, as he must, it is for him to prove why_Jie made the mistake.
(Laurent, 20, n. 368; Hue, 8, n. 389, 394; Cass. 25 nov. 1901.
D. 1903. 1. 549.)
Generally, this is not difficult. The two facts are so closely
involved that in proving the one he proves the other also. For
instance, a man is sued for a tradesman's account which he has
paid already. He cannot find the receipt, and he pays over again
in order to avoid execution on his property.
Subsequently, he finds the receipt and sues for repetition. The
production of the receipt and the proof of payment establish at
once the two points, viz.: (1) no debt; and (2) error. Payment
not having been pleaded in the first action the plaintiff cannot
be met with the plea of res judicata. (Aubry et Rau, 4th ed. 8,
s. 769, p. 402; B.-L. et Barde, 4, n. 2840.)
Or, suppose A, as his father's heir, pays a legacy to B, and
discovers afterwards that his father had revoked the legacy by a
codicil. He sues for repetition. When he has proved the pay-
ment and has to prove the non-existence of the debt, he produces
the codicil and this makes the proof of error very simple.
But cases are conceivable where, though the plaintiff proves that
no debt existed, and that, nevertheless, he made a payment,- these
facts do not raise any presumption of error. The presumption
may be that he made the payment to satisfy his conscience. A
W.— VOL. II. 13
194 THE LAW OF OBLIGATIONS.
good example of this case is when the payment was of a debt
which had prescribed. But it is not necessary that there should
be a natural obligation.
The payment is not made in error if it is made to repair a
loss caused to another, or from the desire not to enrich oneself
at the expense of another. And such a payment does not require
for its validity the form prescribed for gifts. (Aubry et Rau,
4th ed. 4. p. 731; Colin et Capitant, 2, p. 399.)
Moreover, when an account is presented and paid without
protest, the payer cannot recover merely by proving that the account
was excessive. He must show that there was error on his part.
So in a case in Quebec, where a certain quantity of stone was
to be delivered to a contractor by a fixed day, and a penalty of
so much a day was stipulated for delay after that time, it was
held that the contractor who had paid the price without deducting
the penalty which had been incurred could not recover the amount
of the penalty.
He had paid more than he really owed, but he had done so
voluntarily and without error. (Wighton v. Hitch, May 17,
1913, not reported.)
A payment made in the belief that a civil obligation exists may
be repeafed although there is a natural obligation. When the
code speaks of the voluntary discharge of an obligation it means
a payment made in the knowledge that no civil liability exists.
(Laurent, 17, n. 26; Demoloinbe, 27, n. 47; B.-L. et Barde,
Oblig. 2, n. 1674.) Upon this point the Arabic version of
C. C. E. 147/208 is puzzling. It says, "nevertheless, he who
willingly gives anything to another thinking himself bound to
pay has not the right to recover it." But probably this means
"thinking he is naturally' but not. civilly bound to pay."
Article C. C. E. 148/208 does not cover the case where a
person knowingly pays the debt of a third party. Here the
creditor does not receive what is not due to him and does not
enrich himself unjustly, and, therefore, if the person who has
paid fails to indemnify himself as a negotiorum gestor from the
real debtor, he cannot repeat from the creditor what he has paid
him. (Laurent, 20, n. 359; Larombiere, on art. 1377, n. 7;
C. A. Alex. 20 avril 1911, B. L. J. XXIII, 274.)
Where the payment is dishonest but is received in good faith,
as whcn ; for example, an agent for two parties pays money which
belongs to one of them into the bank-account of the other, the
QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 195
party defrauded cannot recover from the "bank, because the payment
of money to a bank and the mixture of it with its other funds
according to the ordinary course of business, is equivalenl to the
consumption -which is sufficient to exclude the right to repeat
money or other fungibles. (C. C. F. 1238; C. C. Q. 1143;
Giraldi v. La Banque Jacques Cartier, 1884, R. J. Q. 9 Lower
Canada Reports, 597.) . . .
The other points in these articles are quite simple.
(1) The person receiving in good faith is a possessor in good
faith and, therefore, he is entitled to take the fruits during his
possession. He cannot be called upon to pay interest for the
money he has used. (C. A. Alex. 23 nov. 1899, B. L. J. XII,
27.) If the person receiving the payment was in bad faith he is
liable for interest on the money from the date at which he received j j
it. (C. C. F. 1378; Cass. 11 dec. 1900, D. 1901. 1. 257; Req.
17 nov. 1908, D. 1909. 1. 379.)
(2) It is not necessary first to put him in default; the liability
arises ipso jure from his taking the payment in bad faith. (C.
Alex. 19 nov. 1896, B. L. J. IX, 18; C. A. Alex. 8 fevr. 1898,
B. L. J. X, 127.)
For, if the person taking was in bad faith he is a possessor in
4>ad faith and must account for the fruits. The article in the
Quebec Code says that he must account for the profits which the
sum "ought to have produced from the time of receiving it, or
from the time that his bad faith began." (C. C. Q. 1049.)
The French Code and the Egyptian Code are silent as to this but
the law is the same. This is only according to the principle.,
(Larombiere, on arts. 1378, 1379, n. 11.)
If the receiver is in bad faith the risk of the thing is with him.
But, probably, we may apply by analogy the principle stated in
C. C. F. 1302. If so, there is one case in which he can escape
his liability although he cannot return the thing, and that is if
he can show that it would equally have perished if it had been
in the possession of the owner.
If, for instance, the thing- which he had received was a horse
which had died of a disease, it might be easy to prove that it
would equally have died if it had remained in its owner's care.
(Aubry et Ran, 4th ed. 4, p. 736; B.-L. et Barde, 4, n. 2844.
Contra, Planiol, 2, n. 852. See, infra, p. 478. D. N. C. C.
art. 1379, n. 13.)
If the person who got the thing was in good faith he has no
liability for its loss, unless it perished by his fault.
13 2)
196 THE LAW OF OBLIGATIONS.
(3) Likewise if he was in good faith, and he alienates the thing 1
while his good faith continues, he is liable, in any event, only
for the price. (C. C. F. 1380; Demolombc, 31, n. 401; Aubry
et Rau, 4th ed. 4, p. 736; D. N. C. C. art. 1380. n. 19.)
(4) According to the general rule, whether the person receiving
the thing was in good or in bad faith, he is entitled to repeat
the money he has spent for the preservation of the thing, and
even those outlays which have increased its value. But as regards
the depenses utiles, the owner will be compelled to pay only to
the amount by which he is enriched.
For if the thing had been in the possession erf his owner, the,
neoesisary expenses would have been incurred, and the ameliora-
tions would have increased its value, so that, if the possessor could
not claim for them, the owner would be enriched at his expense.
(B.-L. et Barde, Ohlig. 4, n. 2847; Aubry et Rau, 4th ed. 4,
p. 737.)
English law as to quasi-contracts.
In its treatment of quasi-contracts, the common law takes a
narrower view than the civil law. The term quasi-contract is
just coming to be recognised in England, and in America it hasl
long been familiar. (See Pollock, Contracts, 8th ed. p. 14.) The
general principle underlying the doctrine of negotiorum gestjo
is not. accepted in the common law. That law does not allow a
man by a voluntary rendering of service to make another man
liable to him.
In the language of Lord Justice Bowen: " The general principle
is, beyond all question, that work and labour done or money
expended by one man to preserve or benefit the property of another
does not, by English law, create any lien upon the- pro-
perty saved or benefited, nor even, if standing alone, create any
obligation to repay the expenditure. Liabilities are not to be
forced upon people behind their backs any more than you can
confer a benefit upon a man against his will.
Thero is an exception to this proposition in the maritime
law.
With regard to salvage, general average, and contribution, the
maritime law differs from the common law.
That has been so from the time of the Roman law downwards."
(Falcke v. Scottish Imperial Insurance Co., 1886, 34 Ch. D.
QUASI-CONTRACT RESULTING FROM A PAYMENT NOT DUE. 197
249, 56 L. J. Ch. 707, 713. As to conferring- a benefit see infra,
p. 447.)
And so it has been held that if one tenant-in-common of real
property expends money on its repair or improvement, the other
tenant is not liable to repay any portion of the money, merely
because he enjoys the benefit of the outlay while the tenancy-in-
common continues. {Leigh v. Dickeson, 1885, 1-5 Q. B. D. 60,
54 L. J. Q. B. 18.) The rule was stated by Brett, M.R., in that
case: " If one pays money voluntarily for another in such circum-
stances that the other is at liberty to accept or reject the advantage,
then if he adopts and ratifies that which was done for him he
becomes liable, although the payment was a voluntary payment.
But if the money is voluntarily expended in such circumstances
that the other is obliged to reap the advantage of it, the mere
fact of his having' accepted that which he was not at liberty to
refuse is no evidence of his adoption or ratification of the payment,
and the one who has made such voluntary payment must suffer
for his generosity." (See the notes to Lampleigh v. Brathivait,
in Smith's Leading' Cases, 11th ed. 1, 141.)
But although the doctrine of negotioriim gestio is not received
in the common law, there are, notwithstanding, certain classes
of cases in which a principle is accepted analogous to that which
is the basis of the action de in rem verso. In these cases the law
admits the right to claim the restoration of a benefit conferred
by the claimant but unjustly retained by the defendant, or to
claim its pecuniary equivalent.
Theory of implied contract.
The traditional way of explaining such cases is to say that a
contract is implied by law in the circumstances. (Blackstone,
Commentaries, III, 161.) The rule applicable when money has
been paid for another is stated thus: "Where a person has paid
money for another under circumstances and upon occasions which
make it just and equitable that it should be repaid; a debt or
promise to pay is then implied in law, without any actual agree-
ment to that effect." (See, per Maule, J., in Lewis v. Campbell,
1849, 8 C. B. 545, 79 R. R. 623. Cf. cases in Leake on Con-
tracts, 6th ed. p. 42.)
This introduction of a fictitious promise is artificial and
unnecessary, and when incapable persons are concerned the theory
breaks down. It is to be hoped that the English law will come
198 THE LAW OF OBLIGATIONS.
to accept the term quasi-contract, or will find a better expression
to indicate that the obligation is created by law, and will abandon
the theory of implied contract in this kind of case. (See Pollock,
Contracts, 8th ed. p. 12.)
English illustrations of claims not arising from contract.
The following- examples ma} r suffice: —
In the maritime law one who saves or helps to save a vessel to
which he is a stranger from danger at sea is entitled to a reward
for his services, and the same rule applies to one who saves cargo
or other property, either while it is in the ship which is in peril
or after it has been thrown or washed out of her. The reward
paid to the salvors is called salvage. (See Gas Float Whit ton.
No. 2, 1896, P. 42, 65 L. J. P. 17; Carver, Carriage by Sea,
5th ed. s. 322.)
When a ship and cargo are exposed to a common danger of
damage or destruction and to avert it part of the cargo of the ship
is voluntarily sacrificed, this loss is divided equitably among the
owners of the property saved in proportion to the value of their
property which is saved. The loss is called a general-average
loss. (Whitecross Wire Co. v. Samll, 1882, 8 Q. B. D. 653,
51 L. J. Q. B. 426; Carver, Carriage by Sea, 5th ed. s. 361;
Halsbury, Laics of England, vo. Shipping and Navigation, p.
322.)
If one person be secondarily and another primarily liable for a
debt in respect of property in the enjoyment of the latter, and
the former has to pay, he is to be indemnified by the latter.
(Per Willes, J., in Roberts v. Crowe, 1872, L. R, 7 C. P. 629,
41 L. J. C. P. 198.)
" Where money is paid to another under the influence of a
mistake, that is upon the supposition that a specific fact is true
which would entitle the other to the money, but which fact is
untrue, and the money would not have been paid if it had been
known to the payer that the fact was untrue, an action will lie to
recover it back." (Kelly v. Solar i, 1841, 9 M. & W. 54, 60 R. ft.
666, per Parke, B.)
So also, it would seem that when an obligation is imposed upon
a person in the interest of the public and he fails to perform it,
another person who perforins the obligation with the expectation
of receiving compensation is entitled to recover what he has paid.
This has been repeatedly held in claims for repayment of funeral
QUASI-CONTRACT RKSULTING FROM A PAYMENT NOT DUE. 199
expenses. So where the defendant who was possessed of a large
estate in Jamaica left his wife in England where she died, and
her father paid for her funeral expenses, it was held that the
father could recover from the husband. {Jenkins v. Tucker, 1
H. Bl. 90. Cf . Bradshm v. Beard, 1862, 12 C. B. N. S. 344,
133 R. R. 360; Keener, Quasi-Contracts, p. 341.)
The same principle applies when necessaries are supplied to a
person whom the defendant is bound by law to support but
neglects to do so, for instance, when necessaries are supplied to
defendant's wife who is living apart from her husband from no
fault of her own. (Baseley v. Forder, 1868, L. R. 3 Q. B. 559,
37 L. J. Q. B. 237; Johnston v. Sumner, 1858, 3 H. & N.
261, 117 R. R. 679. See Keener, Quasi-Contracts; p. 22.)
Another case is when necessaries have been supplied to a person
who is incapable of binding himself by contract.
The law implies an obligation on the part of a lunatic to pay
for necessaries supplied to him. {In re Rhodes, 1890, 44 Ch. D.
94, 59 L. J. Ch. 298.)
Cases of claims for services rendered by a housekeeper without
contract have been referred to above. (Supra, p. 182.)
In some of these cases the facts may point to an implied con-
tract, but in others the liability, if it exists at all, is quasi-con-
tractual. This must be so at all events when the defendant is a
lunatic or is otherwise incapable. (See In re Rhodes, ut supra.)
It is not necessary to explain here that peculiar kind of quasi-
contract of the common law which arises where there is what is
called a " waiver of tort." This happens in cases in which a person
has been injured by a tort by the commission of which the wrong-
doer has been enriched.
In some cases the (plaintiff instead of suing for damages sues to
recover the value of that which has been tortiously taken or is
being tortiously used by the defendant. He is allowed to "waive
the tort," as it is called, and sue in contract instead. But this
waiver of a tort is not allowed in every kind of case in which the
defendant has by his tort acquired a profit, and the limits of the
right to waive the tort are at present ill-defined. (Salmond,
Torts, 4th ed. p. 162; and, see, for illustrations, Scott, Cases on
Quasi-Contracts, pp. 106 seq. See, generally, on the subject of
quasi-contract i in the common law, Keener, Quasi-Contracts, New-
York, 1893; Scott, Cases on Quasi-Contracts, New York, 1905;
Salmond. Jurisprudence, 5th ed. 432; Encyelopcedia of Laws of
200 THE LAW OF OBLIGATIONS.
England, s. v. Quasi-Contracts, ,and s. v. Negotiorum gestio ;
Beven, Negligence, 3rd ed. 2, p. 768; R. Campbell, Principles
of English Law, p. 408.)
Wrongs.
The obligations created by -wrongful acts and the remedies
provided by the law in cases of delict or quasi-delicts, as well as
the discussion upon, the nature of " fault " in the legal sense consti-
tute the law of responsibility, which is not covered in these volumes.
OF OBLIGATIONS RESULTING FROM THE LAW SOLELY. 201
CHAPTER X.
OF OBLIGATIONS RESULTING FROM THE LAW SOLELY.
Like the French Code and the Code of Quebec, the Egyptian
Code forms a separate class of those obligations which result solely
from the operation of the law and independently of the will of
either of the parties, and are, moreover, not created by any act or
fait personnel. C. C. N. 154-157; C. C. M. 216—219; C. C,
F. 1370; C. C. Q. 1057.)
In a quasi-contract it is a lawful act which creates the obliga-
tion, and in one of them— ne got iorum gestio — we have seen that
the lawful act of the gerant creates various obligations by the
gerant himself as well as by the maitre or person benefited.
In a delict or in a ^quasi-delict there is a personal act,- and it js
this fait personnel of the wrong-doer which generates the obliga-
tion.
But in the case under consideration there is no personal act
which can be viewed as the source of the obligation. It is the
law, and only the law, which creates the liability. It has been
pointed out earlier that this classification of the sources of obliga-
tions is eminently unsatisfactory. It is much more scientific to
say that all obligations arise either from contract or from some
provision of the law. (See supra, p. 142. Planiol, Rev. Critique,
1904, 53, p. 224; B.-L. et Barde, Oblig. 4, n. 2787; Saleilles,
Theorie Generate de VObligation, 3rd ed. p. 449.)
Alimentary provisions.
In the Egyptian codes the only example mentioned of obliga-
tions resulting from the law solely is the obligation to pay an
alimentary provision to certain persons who are unable to support
themselves. This obligation is thrown by law upon certain
persons on account of their relationship by blood or by marriage to
those in need of the provision.
The French Code does not give this example in the general
202 THE LAW OF OBLIGATIONS.
article on the .subject, but mentions instead certain obligations
of owners of adjoining properties, and the obligations of tutors
and other administrators who cannot refuse the office thrust upon
them by law. (C. C. F. 1370.) But in the French law, as in
the Egyptian, the duty to pay alimony is one of the most important
of the obligations resulting from the law solely. (Planiol, 2,
n. 828; D. N. C. C. art. 1101, n. 13.)
With the special rules of alimony under the French Code we
are not here concerned. (See Aubry et Rau, 5th ed. 9, p. 153.)
Other obligations arising by law.
Before referring to the Egyptian rules on the subject, a word
may be said as to the examples given by the French Code of
obligations arising from the law solely.
If the tutor could choose whether he would accept or not, and
he accepted, his liability would be created by his voluntary act
of acceptance, but if the law compels him to act we may say that
the law makes ^him liable independently of any act of his. The
obligations which arise between neighbouring owners indepen-
dently of their will are really legal limitations of the powers of
an owner. If the law says that a man cannot open a window
having a direct view over his neighbour's land within less than a
metre of the neighbour's boundary, we may say, if we like, that
this is an obligation created by the law, or, " an obligation of
vicinity." But in the Egyptian Code these obligations are dealt
with under the head of servitudes,, and therefore they do not need
to be discussed here. (C. C. N. 30 seq.; C. C. M. 51 seq.)
It is not, perhaps, very scientific to call them servitudes, but
that is not a question which concerns us just now. Its discussion
belongs to the law of property. (See B.-L. et Chauveau, Biens,
n. 818; Hue, 8, n. 374; L'Egypte Contemporaine, VII, 184.)
All the obligations arising from status also result from the law,
because the consequences which flow from the possession of a
certain status are determined by the law irrespective of the will
of parties. It is true that a man may choose whether he will be
married or not, though he cannot choose whether he will be born
or not, and we may say that the obligations resulting from mar-
riage are not incurred without his will. But he is obliged to take
them as he finds them in the law. It is not his will which created
the obligations, although it depends on his will whether by getting
married he will accept the legal obligations of a married man or
not.
OF OBLIGATIONS RESULTING FROM THE LA.W SOLELY. 203
Obligation of alimony in Egyptian Codes.
As regards the obligations of alimony the articles in the
Egyptian codes are very unsatisfactory for two reasons: —
(1) They are expressed in very vague language: and,
(2) They are on some points in conflict with the Mohammedan
law upon the subject, and yet alimony is a matter which must be
governed by the personal law.
The articles in the codes are as follows:—
(/ Descendants and persons connected by marrmge in the degree
of descendants, while the marriage lasts, are bound to make
alimentary provision for their ascendants or the p ersons connected
with them by marriage in the degree of ascendants. C. C. E.
155/217.)
The like obligation rests on ascendants as regards their des-
cendants or persons connected with them by marriage in the degree
of descendants, and on husband and wife as regards one (mother.
(C. C. E. 156/218.)
The amount of the alimentary provision is to be calculated
with regard to the needs of the party entitled and the resources of
the party liable. It is payable by the month and in advance.
(C. C. E. 157/219-220.
Analysis of article 155.
Article 155 of the Civil Code.
The following conclusions can be drawn from this article: —
(1) That the descendants are bound to make alimentary pro-
visions for their ascendants;
(2) That the descendants are bound to the wives of their ascen-
dants ;
(3) That the wives of the descendants are bound to their hus-
bands' ascendants so long as the marriage lasts;
(4) That the descendants' wives are bound to their ascendants'
waives .
Comparison with the Mohammedan law.
(1) This is true in the Mohammedan law. The jurists
(Alfokaha) have specified that the descendant is bound to his
ascendant on condition that the former be wealthy, without regard
to the latter's incapacity to earn his living provided he be poor.
(El Ahwal El Shakhssia, art. 408.)
204 THE LAW OF OBLIGATIONS.
(2) This is also true in the Mohammedan law. The jurists
have stated that the descendant is bound to the wife of his ascen-
dant, provided that the ascendant be in a state of illness which
necessitates that a wife should look after him. So if the ascendant
is connected by marriage with more than one person, the obligation
rests on the descendant to only one of his ascendant's wives. {Op.
cit. art. 409.)
(3) This is contrary to Mohammedan law, no jurist having
said that the wife of the descendant is bound to her husband's
ascendant. And, likewise, if the descendant be a woman, her
husband is not bound to her ascendants, even while, in both cases,
the marriage is still subsisting.
(4) This, again, is contrary to Mohammedan law. No jurist
has ever said that the wife of the descendant is bound to the wife
of the ascendant.
Analysis of article 156.
Article 156 of the Civil Code.
The following conclusions can be drawn from this article: —
(1) That the ascendants are bound to the descendants;
(2) That the ascendants are bound to the descendants' wives;
(3) That the wife is bound to her husband;
(4) That the husband is bound to his wife.
Comparison with the Mohammedan law.
(1) This is in accordance with the Mohammedan law. The
jurists have said that ascendants are bound to their descendants
provided the latter be poor. If the descendant is a man his ascen-
dants are bound to him until he is able to earn his living, and, if
the descendant is a woman, her ascendants are bound to her until
she gets married. But if before the woman marries, she is earn-
ing her living by a profession, no like obligation rests on her
ascendants. (Op. cit. arts. 395 and 396.)
(2) According to Mohammedan law, an ascendant is not bound
to his descendant's wife unless the descendant is poor, incapable
of earning his living and in a state of illnes6 in which he is in
need of assistance. {Op. cit. art. 409.)
(3) There is no such rule in the Mohammedan law. "How-
ever large the fortune of the woman may be she is not held liable
to contribute to the expenses incumbent on the husband." (Kadri
Pasha, Mohammedan Personal Law, s. 206.)
OF OBLIGATIONS RESULTING FKOM THE LAW SOLELY. 20-5
(4) This is true in the Mohammedan law. The jurists have
agreed that a husband is bound to his wife even if she is rich.
Among- persons entitled to alimony, the wife alone has a right to
it even if she is rich. (Kadri Pasha, s. 160.)
Code speaks only of ascendants, descendants, and spouses.
In addition to the discrepancies above referred to between the
rules given in the civil code as to the obligation to make an alimen-
tary provision, and those of the Mohammedan Personal Law,
there is in the articles of the code a singular omission. The code
speaks only of the obligation as regards ascendants and descen-
dants, and husband and wife. But by the Mohammedan Personal
Law, Maintenance is due to every relative with whom marriage
is prohibited, when he is without means and in need oj receiving
charity, from his presumptive heir, even if a minor, in proportion
to his share of inheritance. (Kadri Pasha, s. 415.)
The meaning of the section is that the duty of maintenance,
exists between persons who are within the degrees in which mar-
riage is prohibited, whether these persons are of the same sex or
of different sexes. And the Mohammedan law lays down precise
rules as to the effect upon this obligation of a difference in religion
between the relatives, and as to the extent of the duty when there
are several relatives in the same prohibited degree. (Sections
416 — 418.) And further, "The distant kindred, with whom
marriage is not prohibited, are discharged of the obligation of
maintenance when there is a relative with whom marriage is pro-
hibited." (Sect. 417.)
Upon all this the code is quite silent. (For this comparison
with the Mohammedan law I am largely indebted to my colleague
Sheikh Mohammed Zeid El Ibiani, Bey.)
Egyptian jurisprudence.
The conflict between the law stated in the code and the Moham-
medan Personal Law creates in practice no difficulty, owing to
the fact that the articles in the code are treated as a dead letter.
Questions of maintenance where Egyptians are concerned come,
before the courts having jurisdiction in matters of personal status,
and these courts apply the Mohammedan law without reference
to the provisions of the code.
200 THE LAW OF OBLIGATIONS.
CHAPTER XI.
* PUTTING IN DEFAULT— MISE EN DEMEURE.
Before the debtor in a contract is liable in damages three con-
ditions must be fulfilled: —
(1) The non -performance must have caused prejudice to the
creditor, and this prejudice must be an immediate and direct
result thereof;
(2) The non -performance must be due to the fault of the debtor 1 ;
and,
(3) The debtor must have been put in default.
And under the term' non-performanoe we must include the
partial as well as the complete failure to execute the obligation at
the proper time. Whether the failure is complete or partial there
is non-performanoe in the legal sense. (C. O. E. 119, 120/177,
178; C. C. F. 1146, 1147; C. C. Q. 1067, 1070.)
It is with the third of these conditions that we are now con->
cerned. The failure to execute the obligation or the delay in its
performance must be established in a legal way. It must be, as
the old French writers said, un retard officiellement constate et
vmputable an debiteur. (Bourjon, Droit de la France, 2, Liv.
6, Tit. 1, ch. 7, s. 7, p. 445; Saleilles, Theorie Generale
de V Obligation, 3rd; ed. p. 24.) The fact that the debtor
has failed to fulfil his obligation in due time cannot as a general
rule be established until there has been a formal demand made
upon him by the creditor to execute his obligation. It is this
formal demand which is called " putting him in default " or a
mise en demeure. (C. C. E. 120/178 says broadly damages
are not recoverable so long as the debtor is not in default.)
This broad statement requires, however, as will be seen, consider-
able qualification. But, undoubtedly, the general principle of the
law is that until the creditor has -put the debtor in default the
presumption is that the creditor considers that the delay in per-
formance does not cause him any prejudice, and that he consents
PUTTING IN DEFAULT— MISE EN DEMEURE. 207
to it. (B.-L. et Bardc, Oblig. 1, n. 408; Planiol, 2, n. 168;
Eteq. Ler dec. 1897, D. 98. 1. 289, and note by M. Planiol;
1). N. C. C. art. 1139, n. 1; C. A. Alex. 17 mars 1898, B. L. J.
X, 203; C. A. Alex. 15 avril 1906, B. L. J. XVIII, 200.)
Mise en demeure.
When a date has been fixed for performance.
When no time for the performance of the obligation has been
fixed expressly or by implication, it is natural to hold that the
debtor is not in default. (Colin et Capitant, 2, p. 14.) But
even when a date for its performance has been expressly stipulated
the mise en demeure is still necessary unless the case falls under
one of the exceptions to be presently explained. (B.-L. et Barde,
Oblig. 2, n. 1001; Aubry et Rau, 5th ed. 4, p. 150; C. A. Alex.
18 avril 1906, B. L. J. XVIII, 200.)
The necessity for a mise en demeure is a traditional rule of the
old French law. The old French commentators on the Roman
law, notably Cujas and Doneau, believed that the Roman law
was to the opposite effect, and that under it when a term for pay-
ment had been fixed, the expiration of this term put the debtor
in default without any formal demand by the creditor. The
glossarists expressed this by saying dies inter pellat pro homine.
This does not appear to be a correct interpretation of the Roman
texts. In the Roman law the rule was" that a mise en demeure
or interpellatio was necessary in this case also, unless upon the
interpretation of the contract there was evidence of a contrary
intention. (Girard, Manuel, 5th ed. p. 648; B.-L. et Barde,
Oblig. 2, n. 1001;- Saleilles, Theorie Generale de V Obligation,
p. 24.)
Mise en demeure in commercial matters.
In the French law and the law of Egypt the rule that the debtor
must be put .in default before damages are due applies to com-
mercial as well as to civil contracts. But in commercial matters
the mise en demeure, as explained later, may be made in a less
formal manner. So in Egypt it has been held that demurrage—
surestaries — does not begin to run until after there has been a.
mise en demeure. Surestaries are the sums to be paid for detain-
ing a ship while loading or unloading for a longer period than
was specified. (Lyon-Caen et Renault, Manuel de Droit Com-
mercial, n. 935; C. A. Alex. 9 mai 1906, B. L. J. XVIII, 237.)
208 THE LAW OF OBLIGATIONS.
The same rule that it is necessary to put the debtor in default
applies to the sale of merchandise unless the contract can be
brought under one of the excepted cases.
The law is thus stated in the head-note of a recent decision
by the Mixed Court of Appeals:
Ce n'est qu'a litre d'exception que le vendeur pent se trouver
en demeure par le seid fait de respiration du delai fixe pour la
livraison, lorsque les cir Constances de la cause rendent evident e
Vintention des parties de faire, de V observation du delai, hme obli-
gation essentielle du vendeur: il en est ainsi notamment lorsque
le plus leger retard est de nature a causer un prejudice important.
Autrement, la regie generate qui impose la necessite d'une mise en
demeure reprend son empire, et elle est d'autant plus facile a
suivre, en matiere commercials, qu'un simple telegramme suffit
pour y satisfaire. (C. A. Alex. 12 fevr. 1913, B. L. J. XXV,
170.)
How the debtor is put in default.
The Egyptian Code is completely silent as regards the manner
of putting the debtor in default; it is, however, settled by the
jurisprudence that the French rules on the subject are followed
in Egypt. The French Code says that unless there is an agree-
ment to the contrary the debtor is put in default soit par un-e
sommation ou par autre acte equivalent. (C. C. F. 1139.) And
it is a question of fact if the acte addressed to the debtor is
expressed in sufficiently formal terms to constitute a mise en
demeure. (Cass. 25 avril 1893, D. 93. 1. 350; B.-L. et Barde,
Oblig. 1, n. 427.)
A writ of summons is such an acte and so is the commande-
ment, or monition of execution, by which a creditor having an
executory title declares in a formal way his intention to execute
a seizure after the legal delay. (Planiol, 2, n. 169. See C. Pro.
E. 384/437; Lusena, Procedure Civile, 2, p. 19. Cf. Cass. 6
juill. 1909, D. 1909. 1. 510.)
But without the commencement of any legal procedure the
creditor can put his debtor in default by a formal demand served
upon him by a bailiff calling upon him to execute his obligation.
And it is this sommation par exploit d.liuissier which is the con-
secrated form of putting a debtor in default. In fact the only
safe course is always to begin by an extrajudicial demand, for,
if the creditor begins with a judicial demand, and then the debtor
at once consents to the performance of the obligation the debtor is
PUTTING IN DEFAULT — MISE EN DEMEURE. 209
entitled to payment of the costs of the action. In civil matters,
apart from agreement to the contrary, the debtor cannot be put
in default by a letter, for a letter cannot be an acte equivalent to
a sommation. (B.-L. et Barde, Oblig. 1, n. 427.)
There is an arret of the Chambre des Requites in a civil case
which refused to find that the judges of the court below had erred
in admitting the sufficiency of mise en demeure by a letter. But
this judgment has been adversely criticised and remains isolated.
(Req. 5 dec. 1883, D. 84. 1. 130; Hue, 7, n. 117; Planiol, 2,
n. 169; Colin et Capitant, 2, p. 15.)
A fortiori, a verbal demand in a civil matter cannot effect a
mise en demeure, (C. A. Alex. 21 dec. 1911, B. L. J. XXIV,
59.)
But in commercial matters by usage the French law has greatly
relaxed the rule which requires that the mise en demeure shall
be by a formal acte. It is settled that in commercial matters the
debtor may be put in default by a letter and even by a telegram.
(Cass. 28 oct. 1903, S. 1908. 1. 422; Bordeaux, 17 dec. 1895,
D. 97. 2. 507; Thaller, Traite Elementaire de Droit Commercial,
4th ed. n. 1052; Lyon-Caen et Renault, Traite de Droit Com-
mercial, 4th ed. 3, n. 32.)
This may be supported as a matter of construction of the French
Code by the argument that in 'commercial matters the parties
have agreed to be governed by business usages, so that the mise
en demeure, although not made by an acte, is made in a manner
contemplated by the parties.
Under the Egyptian Code there is no difficulty in admitting
this practice, seeing that the code does not prescribe any .form for
the mise en demeure. And it is settled by the jurisprudence in
Egypt that in commercial matters the debtor may be put in
default in this way. (C. A. Alex. 12 fevr. 1913, B. L. J.
XXV, 170; C. A. Alex. 13 dec. 1899, B. L. J. XII, 40.)
And in commercial matters, according to some French autho-
rities, even a verbal demand may be sufficient to put the debtor
in default. (Planiol, 2, n. 169.) Probably this may be a matter
of usage. In certain businesses a verbal demand may be recog-
nised in practice. But unless there is clear proof of such a custom
in a particular trade it does not seem that such a manner of putting
a debtor in default ought to be recognised by the court. (See
Demolombe, 24, n. 525; C. A. Alex. 21 dec. 1911, B. L. J.
XXIV, 59; C. A. Alex. 16 mars 1916, B. L. J. XXVIII, 333.)
W.— VOL. II. I J
210 THE LAW OF OBLIGATIONS.
Iu one important case which frequently occurs, it has been held
in Quebec that a party may be put in default by a notice in a
newspaper. This is where a notice by a ship's agent is placed in
a newspaper published in the port of destination of a ship, signi-
fying the arrival of the ship and calling upon the consignees to
take delivery within a certain delay of the goods consigned to
them.
After the lapse of this delay, if the goods have not been re-
moved, the contract of carriage is at an end by the default of the
consignees to take delivery in due time, and the carrier from
that time holds the goods as a warehouseman, and is not liable
for their loss by theft, etc. without proof of fault. (Grothe v.
Canada Line, 1912, R. J. Q. 42 S. C. 443.)
In places where such advertisements are recognised by com-
mercial usage this conclusion seems to be in accordance with
principle.
In the case of a bill of exchange or of a promissory note which
has not been paid at maturity, the protest of the bill made by a
bailiff is a mise en demeure of the parties liable on the bill if the
holder exercises his recourse within the legal delays. (See C.
Comm. E. 162/169; Thaller, Trait e Elementaire de Droit Com-
mercial, 4th ed. n. 1545.)
Where no mise en demeure is necessary.
The Egyptian Code throws no light upon this subject. There
are, notwithstanding, a number of important cases, in which on
the principles of the French law it is clear that no mise en demeure
is required. Several of these are stated or implied in articles of
the French Code, and there is no doubt that upon this matter
the law of Egypt is the same.
These cases may be thus classified: —
(a) When it is no longer possible to fulfil the obligation.
(b) When there is a text of the law which says that the debtor
shall be in default without any mise m demeure.
(c) When there is a (stipulation express or implied dispensing
the creditor from the necessity of putting his debtor in default .,
(Planiol, 2, n. 170; B.-L. et Barde, 1, n. 469.)
(d) When the obligation has its source in a delict or in a
quasi-delict. (Req. 4 fevr. 1868, D. 68. 1. 271; Colin et Capi-
tant. 2, p. 16.) >
PUTTING IN DEFAULT — MISE EN DEMEUKE. 211
These cases will be considered in order.
(a) Performance impossible.
(1) In the case of an obligation not to do something it would
be futile to require the creditor to call upon the debtor to keep
his contract after he had already broken it. This rule is expressly;
stated in the French Code. (C. C. F. 1145.) It must be under-
stood to be implied in the Egyptian Code. If a man has con-
tracted not to build a wall, or not to sing at a theatre, and he
has broken his contract, a mise en demeure could serve no purpose.
(Demolombe, 24, n. 541; Laurent, 16, n. 240; B.-L. et Barde,
Oblig. 1, n. 444; D. N. C. C. art. 1145, n. 2.)
(2) When the thing which the debtor was bound to give or to
do could only be given or done within a certain time which he has
allowed to expire, no mise en demeure is required. (C. C. F.
1146.) Here the mere delay in the execution of the obligation
amounts to an impossibility of executing it. (See the note by
M. Planiol to Cass. 11 janv. 1892, D. 92. 1. 257.) They are
cases in which, as English lawyers express it, " time is of the
essence of the contract."
Although no time is stipulated the matter is obviously one which
can only be done within a certain delay. It is a matter of urgency
and this is understood by both parties. If I instruct my advocate
to appeal from a judgment, he knows that the appeal must be
entered within a certain delay, and if he fails to do so the fulfil-
ment of the contract becomes impossible. (Pothier, Oblig. n. 147;
B.-L. et Barde, 1, n. 469; Aubry et Rau, 5th ed. 4, p. 151.)
If a merchant undertakes to send goods to be shipped by a
certain vessel, he cannot fulfil his contract by sending them after
the ship has sailed. If a florist undertakes to send flowers for
the bridesmaids at a wedding, he cannot fulfil the contract the day
after the ceremony. In commercial matters, especially, there are
many cases in which a delay in the performance may amount to
an impossibility of performing the obligation according to the
intention of the parties.
We may in these cases explain the rule that no mise en demeure
is necessary by saying that there is a tacit agreement dispensing
the creditor from the necessity of putting the debtor in default.,
(Demolombe, 24, nos. 513, 542; Aubry et Rau, 5th ed. 4, p. 151;
Planiol, 2, n. 170; Req. 30 janv. 1911, D. 1912. 1. 48; D. N.
C. C. art. 1139, n. 45.)
14 2)
212 THE LAW OF OBLIGATIONS.
(3) When one of the parties to a contract has repudiated it,
and declared that he does not consider himself to be bound by it,
it is not necessary for the other party to put him in default...
(C. A. Alex. 14 juin 1900, B. L. J. XII, 350.; And in like
manner, when a party has intimated to the other party that ho
finds it impossible to fulfil his obligation, no mise en demeure is
necessary. This has been held recently in a case where the debtor
had undertaken to supply a cargo and he intimated that he was
unable to do so, and begged the shipowner to procure a cargo
elsewhere. (C. A. Alex! 28 janv. 1918, B. L. J. XXX, 168.)
(4) It is not necessary to put the debtor in default when he
has broken his contract not merely by not having fulfilled it
within the time specified, but by having done something which
makes its performance impossible. So where the seller of a corps
certain notifies the buyer that he has sold and delivered the thing
to another there is no need to put him in default. (C. A. Alex.
23 mars 1904, B. L. J. XVI, 167.)
And in a Quebec case, where a man had contracted to construct
a baker's oven and had performed the -work in an unscientific
way and was unable to put it right, it was held in an action of
damages for the expense of rebuilding the oven that no mise en
demeure was necessary. (Vermette v. Parent, 1910, R. J. Q.
20 K. B. 156.)
English law as to this.
So, likewise, in the English law, when there is an express-
promise to do a thing and the party by his own act makes it
impossible that he should perform his promise, there is a breach,
of contract from that moment. [Ogdens. Ltd. v. Nelson, 1905,
A. C. 109; 74 L. J.. K. B. 433.
Putting in default presupposes possibility of performance.
The previous cases illustrate the general principle which may
be stated thus: —
Putting in default presupposes that it is still possible to per-
form the obligation.
It is a formal demand upon the debtor to perform his contract
without further delay accompanied by an intimation that the
creditor will hold the debtor responsible for the damage caused
by the delay. Such a demand has no meaning when it has already
become impossible to perform the contract, and that owing to
PUTTING IN DEFAULT — MISE EN DEMEUKE. 213
the fault of the debtor, as, for example, if he has by his negligence
permitted the destruction of the thing which he was bound to
deliver, or if he has done something which he has bound himself
not to do.
Where putting in default is required it is because the law pro-
ceeds upon the view that until the debtor has received the formal
notification he is not in default. But such a position is untenable
when there has been an actual fault on the part of the debtor which
makes it impossible for him to fulfil his contract. (Baudry-
Lacantinerie et Barde, Oblig. 3rd ed. 1, n. 472; Planiol, 2,
n. 227.)
(b) Law may declare mise en demeure unnecessary.
There are a number of cases in which the French Code says
that a debtor shall be liable for loss caused even by cas fortuit,
or that interest shall run against him from a certain date de plein
droit, and in these cases no mise en demeure is necessary. (B.-L.
ct Barde, 1, n. 469; Aubry et Rau, 5th ed. 4, p. 151; D. N.
C. C. art. 1139, n. 61.)
The principal cases are :—
(1) When a thing stolen is destroyed in the hands of the thief
or of a person who has received it knowing it to have been stolen,
the thief or the receiver is liable to restore the value without any
mise en demeure. (C. C. P. 1302; C. C. Q. 1200.) The Egyp-
tian codes have no similar provision, but, probably, the same rule
would be followed. For the obligation is not here contractual,
and the policy of the law is to discourage thieves and receivers
of stolen goods. ;B.-L. et Barde, 3, n. 192-5. Cf. C. A. Alex.
19 nov. 1896, B. L. J. IX, 18.)
(2) Any one who has received in bad faith what is not due to
him is responsible for its restitution or for its value if it has been
lost, and for the interest and fruits. He cannot say his liability
is only from the date of the mise en demeure. (C. C. E. 145,
146/206, 207; C. C. F. 1378; C. A. Alex. 19 nov. 1896, B. L.
J. IX, 18.)
(3) The mandatary who has employed for his own use money
which he has received on account of the mandator owes the interest
from the date when this improper use began. (C. C. E. 526/646;
C. C. F. 1996.)
(4) The borrower who has employed the thing for a use not
contemplated by the lender, or for a time longer than was con-
templated, is under the French Code liable for the loss of the
214 THE LAW OF OBLIGATIONS.
thing even though this is caused by a fortuitous event. (C. C. F.
1881.)
No mise en demeure is needed to create this liability.
The Egyptian codes do not contain the statement that the bor-
rower in such a case bears all the risks, and it is difficult to imply
such a provision. (C. C. E. 470/572.)
(c) Stipulation may make mise en demeure unnecessary.
No misfi en demeure is required when it was stipulated in
the contract that the mere failure of the debtor to execute the
contract should put him in default. The clause usually runs
il sera repute en demeure sans qa'il soit besoin d'acte et par la
seule echeance du terme.^ (B.-L. et Barde, Ohlig. 1, n. 469:
Aubry et Rau, 5th ed. 4,p. 151; D. N. C. C. art. 1139, n.j33.)
But no terms are sacramental, and the court may find that other
expressions used by the parties sufficiently indicate their intention
to dispense* with any mise en demeure. (B.-L. et Barde, ib.\
Cass. 6 juill. 1908, D. 1909. 1. 510; Req. 18 fevr. 1853. D.
56. 1. 260; C. A. Alex. 6 janv. 1901, B. L. J. XIII, 125.) So,
in the sale of merchandise, when a time has been fixed for delivery,
and it is stipulated that the buyer shall have the right to refuse
any goods not sent en temps utile, no mise en demeure is necessary.
(C. A. Alex. 29 mai 1912, B. L. J. XXIV, 368; Gaz. des Trib.
2, p. 193. Cf . C. A. Alex. 30 janv. 1901, B. L 1 . J. XIII, 125.)
And where there are no express terms dispensing the creditor from
a mise en demeure the court may find that such a stipulation was
implied. (B.-L. et Barde, I.e.; D. N. C. C. art. 1139, n. 45.)
But the evidence of intention to dispense with the mise en demeure
must be plain. When there is a clause in a contract rendering
the whole debt immediately payable on failure to pay any one
of the instalments, such clause can only be enforced after default
resulting from formal demand, unless there is an express provi-
sion to the contrary., (Trib. Somm. Kafr el Sheikh, 28 mai
1918,0. B. XX, n. 10.)
Waiver of right to insist on mise en demeure.
Even when there is an express stipulation in the contract that
the debtor shall be put in default by the mere expiration of the
term, it may be found that the creditor has by his conduct waived
his right to found upon the default. In policies of fire insurance
a clause is generally inserted to the following effect: En defaut de
PUTTING IN DEFAULT — MISE EN DEMEURE. 215
paiement de la prime dan- !>■ delai fixe, et sans quHl soit besoin
d'aucune mise en demeure, V assure n'a droit, an cas de sinistre,
a aucune indemnite.
In many cases it has been held in France that the infliirajobei-
company could not take advantage of this stipulation when they
had been in the habit of sending their agent or collector to the
domicile of the assured to collect the premiums. In spite of the
clause in the policy, there was no default until this demand had
been made; because the company had given the assured a right
to expect it. (Paris, 2 mars 1893, D. 93. 2. 256; D. N. C. C.
IV, p. 875, nos. 1108 seq. But the fact that an insurant -
company collected some of its premiums in this way from other
persons would not prevent the clause in the policy from producing
its effect in the case of an assured who had always taken his
premiums to the company. (B.-L. et Barde, Oblig. 2, n. 1511;
Cass. 4 nov. 1891, D. 92. 1. 313.
(d) No mise en demeure necessary when action based on
wrong-doing.
It would be unreasonable to allow a person who had eaufi d
damage to another by his wrong-doing to be free from liability
until he had received a formal demand. His liability is directly
created by the law and it exists from the moment of the wrong.
.(Aubry et Rau, 5th ed. 4, p. 149. note 1: B.-L. et Bard©, 1,
n. 4730
Effects of putting in default.
Except in the special cases which have been referred to. the law
presumes that although the debtor has not fulfilled his obligation
at the proper time the delay does not cause any damage to the
creditor. It is presumed that the creditor is allowing the debtor
to take his time for performing his obligation. But when the
creditor puts the debtor in default this is a clear indication that
he considers himself to be suffering prejudice by the delay.
The effects of putting the debtor in default are: —
(1) Damages become due. The Egyptian codes state clearly
that they are not recoverable as long as the debtor is not in default.
(C. C. E. 120/178.) The amount of the damages will need to
be ascertained or liquidated by the court unless it has been stated
by the parties that in case of inexecution a certain fixed amount
is to be'paid. In this case the judge cannot modify the amount
216 THE LAW OF OBLIGATIONS.
of the damages so stipulated. (C. C. E. 123/181; C. C. F.
1152; C. C. Q. 1076.)
But when the damages have not been fixed in this way by the
parties, and have to be liquidated by the court, they must be
calculated not from the time of the breach of contract, but from
the date of the mise en demeure.
The creditor is presumed to have waived his right to claim
damages suffered before the mise en demeure, and, as M. Barde
expresses it, au point de vue legal, le prejudice anterieur a la mise
en demeure n'existe pas. (B.-L. et Barde, Oblig. 1, n. 468;,
Aubry et Rau, 5th ed. 4, p. 150; Cass. 11 janv. 1892, D. 92.
1. 257; C. A. Alex. 9 mai 1906, B. L. J. XVIII, 237.)
Mr. Halton is of opinion that the Egyptian law differs from
the French law upon this point. He says of the view that pre-
judice anterior to the formal demand in the eyes of the law has
no existence: ".It seems to be untenable in Egypt on account of
the word employed ' recoverable,' which seems to imply that the
right to damages was already in existence." (1, p. 270.)
But with all respect, it does not appear that any such stress
can fairly be laid upon this word which is used in the English
version of C. C. N. 120. No word equivalent to "recoverable"
occurs in the Arabic version.
The French version simply says les dommages-interet* ne sont
dus taut que le debiteur nrtmt pas en dem.eure, and the view that}
damages anterior to the mise en demeure can be recovered is
inconsistent with general principles.
When the object of an obligation is the payment of a sum of
money the damages consist of the legal interest unless there is a
stipulation to the contrary or some special provision of law.
And the damages or interest for the breach of a money obliga-
tion are not due even from a mise en demeure. There must be
a commencement of legal proceedings — demande en justice.
(C. C. E. 124/182.)
This question will be considered in speaking of the measure of
damages. '
<;2) The second effect of putting in default is that a change
takes place in regard to the risk. When the debtor is in default
he is in fault, and, if owing to his default, a thing in his care
is lost or damaged the liability will fall upon him. Qui in mora
est culpa nan meat. For instance, if a man has sold a horse,
and is in default in not having delivered it, and the stable is burnt
PUTTING IN DEFAULT — MISE EN DEMEUKE. 217
down and the horse killed, the loss will fall on the seller, though
if the fire was not due to the negligence of the seller or his sell ants,
the loss would in the French law have been on the buyer but for
the default.
But in such a case, the debtor will escape his liability although
he is in default, if he can show that the loss was not due to his
default. Thus, in the illustration given, the seller would be excused
if his stable adjoined that of the buyer, and both stables had been
burnt down in the lire by which the horse perished, so that even
if the horse had been delivered at the proper time it would have
perished just the same. (C. C. E. 178/241; C. C. F. 1302;
C. C. Q. 1200; Pothier, Oblig. n. 664; Vente, n. 58; Hue, 8,
n. 182.)
Unless this defence is available the seller bears the loss, because
he cannot say that the thing sold perished without his fault.
(C. C. E. 178/241.)
But upon this matter of risk in sale the Egyptian law is,
probably, different. It is hard to reconcile the articles of the code
on the subject, but the better opinion is that the risk is on the
vendor, even though he is not in default. (C. C. E. 266/336;
297/371; Grandmoulin, Contrats, n. 58; De Hults, Rep. vo.
Bisques, n. 13; and Vente, n. 118, and n. 133; Halton, 2, p. 27.
Infra, 2, p. 481.)
If this view is correct, the default does not, in the Egyptian
law, change the risk in this case. It does, however, change it in
the following case: —
When the purchaser has been put in default to take delivery
and, thereafter, the thing sold perishes without the fault of the
seller the loss falls on the purchaser. The seller can claim the
price. (C. C. E. 297/371; C. C. F. 1624; Pothier, Vente, n. 55;
Laurent, 16, n. 249.)
Mise en demeure in other codes.
It is very doubtful whether the French law has done well to
retain the rule that when a term of performance is fixed by the
contract, and it has expired without the contract being fulfilled,
there is still no breach unless the debtor has been put in default.
It is significant that most modern codes have dispensed with the
necessity for a mise en demeure when the contract has fixed a date
of performance. According to the German Code, no mise en
demeure is necessary when the time of performance is fixed for
218 THE LAW OF OBLIGATIONS.
a certain day according- to the calendar, such as " on the fifth'
May 1913 "; "at Christmas, 1913 "; "in November of this year,"
etc. (art. 284. See Cosack, LehrbucJi d&s Deutseheji burger-
lichen Rechts, 6th ed. 1, p. 421.)
The Swiss Federal Code of Obligations is to a similar effect
(art. 102), and so is the Italian Civil Code (art. 1223). The
Code of Quebec distinguishes between civil and commercial con-
tracts. In civil contracts there must be a mise en demeure,
though it does not need to be by an acte d'huissier, but in all
contracts of a commercial nature in which the time of performance
is fixed, the debtor is put in default by the mere lapse of such time.
(C. C. Q. 1069.)
And in commercial cases the courts hold that, though no time
has been expressly fixed in the contract for the performance, the
law implies that the contract shall be performed in a reasonable
time, and if this time has elapsed without performance the debtor
is in default.
No mise en demeure required in English law.
In the English law there is no rule requiring the plaintiff to
make a formal demand upon the defendant to perform his contract.
The right of action for damages arises directly from the breach
of the contract. (See Anson, Contracts, 14th ed. p. 344.)
REMEDIES FOR BREACH OF CONTRACT. 219
CHAPTER XII.
REMEDIES FOR BREACH OF CONTRACT.
The general rules on this subject are thus given in the Egyptian
Native Code: —
When the debtor refuse* to perform in its entirety whqi he is,
bound to perform, the creditor has the choice either of demanding
the rescission of the contract together with damages, or of de-
manding damages for the unperformed part.
Nevertheless, the creditor may, if the cwcumstcmces of the.
case permit, obtain leave of the court to execute, at the expense
of the debtor, that which such debtor was bound to perform, or to
undo that ichitili has been done contrary to the agreement .
When, the obligation is to transfer a specific corporeal thing
the creditor may have himself put in possession thereof, provided
such thing urns owned by the debtor at the time when the obliga-
tion came into existence or since that time, and provided that no
third person has acquired a real right over it (arts. 117. 118).
The Mixed Code is to the same effect, but it contains, in addi-
tion, a separate article: The rescission of a contract, whereby the
ownership of immoveables is transferred, does not prejudice the
rights of registered mortgage er editors. ( (C. C. M. 173 — 176.)
With these articles of the Egyptian Code we must compare the
corresponding articles of the French Code. These are the follow-
ing:—
La condition resolutoire est toujours sous-entehdue dans tes
controls synallagmatiqaes, pour le cas oil Tune des deux parties
ne satisfera point a son engagement.
Dans oe cas, le control riest point resolu de plein droit. La
partie envers laquelle V engagement na point ete execute, a le
cihoix oude forcer Vautye a V execution de la convention lorsqu'elle
est possible, ou d'eoi demander la resolution aver dommages et
interets.
La resolution doit etre demandee en justice, et il pent etre
accorde au defendeur un delai selon les circonstanoes (art. 1184).
220 THE LAW OF OBLIGATIONS.
Toute obligation de faire ou de ne pa* faire 8e resout en dom-
mages et interets, en cm d'inexecution de la part du debiteur.
Neanmoins U oreander a le droit de dcmander que ce qui
await ete fait par contravention a I 'engagement, soit detruit ; et
il pent se faire autoriser a le detruire aux depens du debiteur,
sans prejudice des dommages et interets s'il y a lieu.
Le creancier pent aussi, en cas aVinexecution, etre autorise a
faire executer lui-meme Vobligation aux depens du debiteur
(arts. 1142—1144. Cf. C. C. Q. 1065, 10(56).
The rules on the subject are traditional and they are not ex-
pressed in the codes by any means in a scientific manner. It is
clear, however, from perusal of the articles that the right of a
creditor, when there has been a breach of the contract, varies
according to circumstances. There are a number of remedies, but
they are not all available in each case.
Every obligation renders the debtor liable to damages in case
of a breach of it on his part. In some cases, but not in all, the
creditor has, in addition, the right to demand specific performance,
and, in some cases, the judgment of the court will place him in the
same position as if the debtor had specifically performed the con-
tract. When, before the time for the performance arrives, one
party absolutely and definitely repudiates the contract, the other
party is entitled either to wait till the time of performance arrives
and then to bring his action, or he may at once treat the contract
as broken and sue for rescission of it and for damages.
So, for instance, in a contract of employment, if the employer
has wrongf ully dismissed the servant, the servant may please him-
self whether he will treat the contract as continuing and tender
his services, and sue for the wages as they would become payable,
or else, on the other hand, whether he will treat the contract as
definitely broken and demand immediate payment of a lump sum
for such damages as he can prove. (See Paris, 21 juin 1883,
D. 85. 2. 46; Agen, 23 nov. 1903, D. 1907. 2. 48.)
The various remedies are: —
(1) Rescission;
(2) Maintenance of contract partially executed, and damages
for inexecuted part;
(3) Substituted performance, or judgment having effect of per-
formance ;
(4) Specific performance;
(5) Damages.
These various remedies must be explained in more detail.
REMEDIES FOR BREACH OF CONTRACT. 221
(1) The action for rescission or resolution of the contract.
It is a general rule that where there are reciprocal obligations
and one of the parties to the contract has performed or is willing
to perform his part, whereas the other party has failed to perform
his part, the first party may demand that the contract may be set
aside, and this without prejudice to his claim for damages.
(Planiol, 2. n. 1307.)
The tacit resolutory condition.
The traditional rule, ojLtlioJLarW -of- sale that if the price was not
paid within the stipulated delay the seller could sue for the dis-
solution of the sale was gradually extended in the French law to
all synallagmatic contracts. (Planiol, 2, n. 1310; Cassin, De
V exception tiree de Vmexecution, p. 162; Picard et Prudhomme,
De la resolution judiciaire pour inexecution des obligations, Rev.
Trim. 1912, p. 61.)
It is commonly spoken of as the tacit resolutory condition.
(C. C. F. 1184; B.-L. et Barde, 2, n. 901; Cassin, op. cit.
p. 94. See Req. 5 dec. 1906, D. 1907. 1. 249.)
The action for resolution of the contract is competent irre-
spective of the reasons which may have prevented the other party
from performance, and even though he was prevented by force
majeure. (Lyon, 10 mars 1908, S. 1910. 2. 49, and note by
M. Raynaud; Req. 19 oct. 1897, D. 97. 1. 576.) Nay more,
the partial inexecution of the contract, though it was caused by
force majeure, may justify the resolution of the contract at the
instance of the other party. (Cass. 26 juill. 1909, S. 1910.
1.71.)
Tho basis of the claim is the reciprocity of the obligations.
The one party performed his part on the implied condition that
the other party would make the counter-performance. Obviously,
the plaintiff must begin by showing that he is not to blame, that
he has done or is ready to do what he promised. He cannot be
allowed to break the contract and then to complain of the breach.
He is stopped or barred from (invoking his own non-execution of
the contract as a ground for its rescission. (Cassin, op. cit.
p. 739; Laurent, 17, n. 125; Cass. 26 juin 1912, D. 1914. 1.
307.)
But the court has power to rescind the contract although there
are faults on both sides. (Req. 22 dec. 1902, D. 1903. 1. 149.
Cf. Req. 31 dec. 1900, D. 1901. 1. 135.)
222 THE LAW OF OBLIGATIONS.
The Mixed Court of Appeal has expressed the rule thus: —
Le droit <i< resolution, quand il ng a pas de condition, resolu-
toire expresse, nest pas un droit absolu, mats subordowne a Vap-
precudion des cir Constance s ; lorsqu'il y a des torts reciproques
de la part de chacime des parties contractantes, cest aux tribunaux
de les peser et les circonstances peuvent etre telles que la resilia-
tion ne doive pas etre pronon-cee et qu'une condemnation a des
dommages-interets soit une reparation suffisante. (C. A. Alex.
3 fevr. 1904, B. L. J. XVI, 120. Cf. C. A. Alex. 31 mai
1914, B. L. J. XXVI, 403.)
The exceptio non adimpleti contractus.
This is the name usually given to the defence that the plaintiff
in the action of resolution has not fulfilled his own part. The
exceptio non adimpleti contractus is implied. (B.-L. et Barde,
Oblig. 2, n. 963.)
The defence has been thus defined in a recent work: L' exception
non adimpleti contractus est un mmjen de defense de bonne foi
offert a quiconque est oblige en mrtu d'un rapport synallagma-
tique sans etre tenu d'executer le premier, et qui consiste a refuser
la prestation due jusqua Vaccomplissement de la contre-pre sta-
tion incombant a V autre partie. (Bene Cassin, De V except ion
tiree de I 'inexecution, p. 440.)
So, the buyer of an article for a price payable at once cannot
enforce delivery without payment or tender of the price, for it
is a general rule that the party who claims specific performance
by the other must have first executed his part of the contract.
The one party cannot refuse to perform his obligation and treat
the contract as at an end until he has put the other party in
default. (Beq. ler dec. 1897, D. 98. 1. 289, and note by M.
Planiol.) But this will not be so when the circumstances show
that both parties had agreed to dissolve the contract. (Req. 5
nov. 1901, D. 1904. 1. 356; C. C. E. 279/350; C. C. F. 1612;
B.-L. et Saignat, Vente, n. 305. See, on the exceptio non adim-
pleti contractus in the German law, German Code, arts. 320—324;
Saleilles, Theorie Generate de V Oblig atirrn, 3rd ed. p. 187.)
Court has discretion to refuse resolution.
Even in a case where the plaintiff has not broken the contract
at all, and he demands its resolution on the ground of breach by
the defendant, the court is not bound independently of the eir-
REMEDIES FOR BREACH OF CONTRACT. 223
cumsta noes to accede to the demand. Resolution cannot be
claimed: (1) unless the inexecution is definite, and (2) unless it
is of a serious nature. The action for resolution will be admitted
only, as a recent writer expresses it, lorsque I'inexecution totale
ou partielle des engagements aVune partie est sufjisamment grave
pour detruire cm detriment de I 'autre, Vequilibre de situation in- .
dispensable, ou pour rendre a, celle-ci impossible la realisation du
but poursuivi par elle en contractant. (Cassin, op. cit. p. 405.
See Cass. 18 avril 1904, S. 1904. 1. 144.)
It may be that the breach committed by the defendant is not
of very great importance, and the court may believe that even if
the plaintiff had foreseen the breach, he would still have entered
into the contract. It is by no means uncommon for a man who
is at first satisfied with his contract but afterwards becomes dis-
satisfied with it, to discover breaches of contract by the other
party which before then had not caused him any trouble. If
the court thinks the case is one of that kind it is entitled to refuse
the demand for resolution. As the Mixed Court expressed it,
la resolution d'un contrat ne doit pas etre necessairement or-
donnee pour toute inexecution, meme partielle, et quelle que soit
V importance des obligations assumees par les parties ; il appartient
au juge de decider d'apres les cir Constances, s'il y a ou non lieu a
resolution. (C. A. Alex. 1 avril 1915, B. L. J. XXVII, 258.)
In that case resolution was demanded on the ground that the
vendor of an immoveable had not delivered the titles to the pur-
chaser. The purchaser had taken and occupied the property for
seven years and had suffered no inconvenience from the want of
the titles, and the vendor now offered to deliver them. There
had undoubtedly been a breach of the contract, but the court
held that it was not such a breach as to entitle the other party
to rescission. There is some difference of opinion in the French
doctrine with regard to the absolute right to demand rescission
in such a case, but the weight of authority is in the same sense
as the judgment just cited. If the prestation is divisible, and
there has been a partial prestation which has been of serious
advantage to the creditor, the court may maintain the contract
and order damages for the portion of the prestation which remains
unperformed. (Cass. 7 aout 1894, D. 95. 1. 108; Req. 15 fevr.
1904, D. 1904. 1. 335; Planiol, 2, n. 1321; B.-L. et Barde,
Oblig. 2, 912; Req. 26 juill. 1909, D. 1911. 1. 55; Lyon, 10
mars 1908, D. 1909. 2. 33; Colin et Capitant, 2, p. 137. See
D. N. C. C. art. 1184, nos. 27 seq.)
224 THE LAW OF OBLIGATIONS.
According to another opinion, it is only in cases of partial
performance of an obligation not to do that the court has discre-
tion to refuse resolution. If the obligation is a positive one to do
or to transfer, and there has been a partial performance only,
the court has not any such power to refuse resolution. (Aubry
ct Rau, 5th ed. 4, p. 126, and note 80. See note to Cass. 2 fevr.
1904, D. 1904. 1. 271; D. N. C. C. art. 1143, n. 36.)
But this distinction does not seem to be justified, and the ten-
dency of the jurisprudence is for the courts to claim a wider
discretion to accord or to refuse resolution according to the equities
of the particular case. (See the instances collected by MM. Picard
and Prudhomme in Rev. Trim. 1912, p. 61.)
(2) Maintenance of contract partially executed and damages
for inexecuted part.
When there has been a partial performance of the contract, the
creditor is not obliged to demand the rescission of the contract;
he may prefer to maintain the contract so far as it has been
performed, and to demand damages for the unperformed part.
For, it is clear that there is no reason to compel the creditor
to ask for the rescission of the contract if he would rather keep
what he has got and take damages for what he has not got. So,
by way of illustration, if a debtor has sold a collection of a hundred
ancient coins each of them different from any other, and before
delivery he has carelessly lost five of them which cannot be re-
placed, the creditor may prefer to keep the ninety-five coins which
he has got and ask for damages in respect of the failure to deliver
the other five.
And, as we have already seen, if the creditor exercises his option
of demanding the rescission of the contract, the court has, in some
cases at any rate, discretion to refuse this demand and to compel
him to take damages instead for the loss which he has sustained
by the partial non- performance.
(3) Substituted performance, (4) specific performance, and
(5) damages.
Want of precision of the codes.
The codes do not explain in a satisfactory manner the relation
between these various remedies, though the Egyptian codes are
not so misleadinsr as the French Code is.
REMEDIES FOR BREACH OF CONTRACT. 225
The French Code says roundly: Toute obligation de fawe ou
de ne pas faire se resold en dommages et interets, en cas d'in-
execution de la part du debitew (art. 1142).
This, if taken literally, would mean that when the obligation
is to do or not to do, and the debtor fails for any reason to make
the performance, even though this should be merely because he
does not choose to do so, the creditor must always be satisfied
with damages. The article is no doubt qualified to some extent
by the two articles which follow, but the three articles taken
together do not state with sufficient clearness the fundamental
principle which governs the whole matter. It is not every obliga-
tion to do or not to do which the courts decline to enforce specifi-
cally. It is only when the obligation involves an act or an
abstention of a personal kind on the part of the debtor, — when
that which he owes is a fait personnel, — that the court will refuse
to enforce it literally.
Specific performance will be ordered unless this is physically
impossible or involves an invasion of personal freedom.
The true principle is that specific performance is the natural
and proper remedy, and that the court will compel the debtor to
do the very thing which he has promised unless there is a valid
reason against it. /One such valid reason will be, no doubt, that
physical performance of the contract has become impossible. If,
for instance, the debtor has bound himself to deliver a specific
thing and this thing has been irretrievably lost, a judgment order-
ing specific performance would be illusory.
But it is a different reason from this which the French legis-
lator had mainly in view, when he stated in terms which are
much too absolute, that specific performance of an obligation to
do or not to do will not be compelled. The legislator had in mind
the class of cases in which the promised performance was a per-
sonal act, the literal performance of which could hardly be brought
about by force to any useful purpose, and where, if force were
exerted, it would involve an invasion of the bodily freedom of the
debtor. The law is not so foolish as to allow a debtor to refuse-
to perform his obligation unless there is some substantial reason
for according him this freedom. But there are many cases where
if a debtor refuses to perform a fait personnel to which he has
bound himself, the creditor would have little to gain by a judg-
ment ordering specific performance. If, for instance, a painter
has contracted to paint a picture and he refuses to complete it, a
w.— vol. ir. 15
226 THE LAW OF OBLIGATIONS.
judgment ordering him to be imprisoned until he finished his
picture would not be likely to produce a great work of art.
To compel manu militwi acts or abstentions of such a personal
kind as this is hardly practicable.
The general principle has been clearly formulated by the Mixed
Court of Appeal in a recent case:
L' execution directe est la regie pour toute espece a" obligations
aussi bien de faire que de donner, et cette regie ne regoit £ excep-
tion pour Irs obligations de fairs— en ce sens que Vinexecution se
resold en donvmages in I, 'rets— que lorsque I 'intervention personnelle
du debiteur est necessaire pour V execution : dans tons les autres
cas, le creancier a le droit de demander V execution directe si elle
est possible, comme tel est le cas lorsqu'il sagit, par exemple de
contraindre le debiteur a payer a un tiers le prix delegue d'une
vente, fait qui aura pour resultat d'entrainer le degrevement force
par ce tiers dhm immeuble a lui hypvtheque. (C. A. Alex. 17
fevr. 1916, B. L. J. XXVIII, p. 162.)
But the tendency of the French jurisprudence is to go further
than formerly in the direction of compelling specific performance
of contracts where that is physically possible, and a satisfactory,
result can be thereby attained. It will be explained later that by
the method of imposing an astreinte, the French courts are often
able to put great pressure upon a debtor to induce him to make
a literal performance of his promise. The rules applied by the
courts in France and in Egypt in regard to substituted perform-
ance and specific performance will appear more clearly from the
illustrations which follow. (See on the subject generally, Aubry,
et Rau, 5th ed. 4, pp. 62 seq.: B.-L. et Barde, 1, nos. 432 seq.; :
Colin et Capitant, 2, pp. 16 seq.)
The following cases must be distinguished: —
(a) Obligation to pay or to deliver a specific thing.
Where the obligation is to pay a sum of money a judgment can
be obtained under which the property of the debtor can be seized
and sold to produce the money. When the obligation is to deliver
a determinate thing— a corps certain— the judgment ordering the
delivery will be enforced by the officers of the court if that be
possible, but if the thing cannot be found the only remedy will
be damages. (B.-L. et Barde, Oblig. 1, n. 434; Aubry et Rau,
5th ed. 4, n. 62.)
REMEDIES FOR BREACH OF CONTRACT. 227
(b) Obligations to do or not to do:
(3) Substituted performance.
The rule is that actual performance by the debtor of an obliga-
tion to do or not to do cannot be enforced whenever the obligation
requires the personal intervention of the debtor.
But in many cases the obligation is one which can be per-
formed equally well by another person as by the debtdr, and
the creditor may prefer to have it performed at the debtor's
expense rather than to claim damages for the inexecution. The
code says he may obtain leave of the court to do this if the
circumstances of the case permit. (C. C. E. 117/173.) Iti
gives the choice to the creditor to ask the one remedy or the other.
This means that the court must decide whether according to
law or according to the intention of the parties it is essential that
the debtor shall perform in person that which he has promised.
If this is not the case, specific performance by another at the
expense of the debtor may be ordered. When this is feasible
and it is demanded by the creditor it is the view of many French
writers that the court is bound to grant a judgment to this effect.
The creditor is given the option. (B.-L. et Barde, Oblig. 1,
n. 436; Demolombe, 24, n. 505; D. X. C. C. arts. 1143-1144,
n. 37.)
If he is satisfied with the substituted performance he has a
right to it. But he is in no way compelled to accept it. He can
always ask for dissolution of the contract and damages. But
according to another system, when the plaintiff demands this sub-
stituted performance the court has discretion to refuse this form
of remedy and to give damages instead, and this is the view
adopted by the jurisprudence. (Aubry et Eau, 5th ed. 4, p. 65;
Req. 18 juin 1883, D. 84. 5. 353; D. N. C. C. arts. 1143—1144,
ji. 28.)
Under the Egyptian Code the addition of the words " if the
circumstances of the case permit " seems intended to make it
clear that the court has full discretion. (C. C. E. 117/173.)
(c) Cases where judgment takes place of performance.
Further, there are certain cases in which the judgment of tho
court will be in itself equivalent to performance of the contract
by the debtor. This is so when the debtor has bound himself to
sign a deed and has not executed his promise. But it is only where
15 (2)
228 THE LAW OF OBLIGATIONS.
the contract requires no special form that the rule applies. In
accordance with these principles the Mixed Court of Appeal held
in one case that it is not every obligation to do which necessarily,
resolves itself into damages in the event of inexecution on tho
part of the debtor, for in puch obligations to do as are susceptible
of being executed without the participation and material con-
course of the debtor the creditor may be authorised to get the
obligation performed at the expense of the debtor.
Accordingly, when a third party had bound himself to guarantee
the repayment of a loan by obliging himself jointly and severally
with the borrower in an acte authentique it was held that the
lender could force the third party to execute his promise or in
default could demand that the judgment should be equivalent—
valoir acte de garantie et titre executoire a son encpntre. (C. A.
Alex. 15 nov. 1899, B. L. J. XII, 10.)
It is important to notice that the authentic form was not essen-
tial to make the contract of suretyship binding. {Infra, p. 234.)
Where a man has promised to sell property, but has not exe-
cuted a deed of sale, the judgment may order him to execute the
deed, and in default of his so doing, it may be declared that the
judgment itself shall be held to be equivalent to the deed of sale.
(C. C. F. 1589; C. C. Q. 1476; B.-L. et Saignat, Vente, n. 66;
D. N. C. C. art. 1589, n. 41; C. A. Alex. 9 mai 1895, B.L.J.
VII, 268.)
In regard to a promise to sell, the Code of Quebec contains an
express provision to this effect. (C. C. Q. 1476.) This is in
accordance with the interpretation given by the French jurispru-
dence to the rule stated in the code as to la promesse de vente .
And, although there is no corresponding article in the Egyptian
Code, there is no doubt that the law is the same, and there is a
considerable body of jurisprudence in this sense. (C. A. Alex.
20 dec. 1894, B. L. J. VII, 56; C. A. Alex. 23 janv. 1896,
B. L. J. VIII, 99. See, as to the effect of a promise of sale
in a question with third parties, Table Decennale, 2, n. 4285.)
Tho same rule applies to a lease. When the lessee has under-
taken to sign a lease and refuses to do so, the lessor may bring an
action to have him condemned to sign the lease, and in default
of his so doing to have it ordered that the judgment of the court
shall serve as such lease. (B.-L. et Wahl, Louage, 1, n. 43;
D. N. C. C. art. 1709, n. 198.)
But this rule would not apply to such a case as the obligation
to grant a hypothec. The court could not issue a judgment order-
ing the defendant to grant a hypothec and declaring that, failing
REMEDIES FOR BREACH OF CONTRACT. 229
his doing so, the judgment should avail as a hypothec. The
reason is that a hypothec can only be granted by an acte aiithen-
tique, and this requires the personal act of the parties which cannot
be enforced. (B.-L. et de Loynes, Privileges et II//pofhrques,
2, n. 1407.)
And the same is the case where the obligation is to deliver an
indeterminate thing which requires to be made determinate by
the act of the debtor.
In this case the only remedy is by way of damages.
(4) When can specific performance be claimed?
In regard to obligations to do or not to do we must draw the
important distinction above stated. If the acl necessary can be
done by another as well as by the debtor, the obligation may be
specifically performed, and that whether the obligation is one of a
positive or of a negative character.
The creditor may get the thing done and charge the debtor
with the expense, or in some cases, it may be ordered to be done
by the officers of the court. For instance, a mason contracts with
me to build a wall.
If he refuses to do it, I can get it built by another mason and'
charge the debtor with the cost and with damages in addition, if
any. Or, if I choose, I can set aside the contract and sue the
debtor for damages.
So if a man has contracted with me not to build a wall and
has built it, I can get an order of the court authorising me to get
it pulled down at his expense, and I can claim, in addition, any
damages. See Req. 14 mars 1899, D. 99. 1. 445.)
Can creditor always insist on demolition?
When the creditor wishes to destroy works which have been
executed by the debtor contrary to his obligation, it is clear that
the creditor cannot take the law into his own hands and pull
down the works without any authorisation.
But if the creditor asks the -authorisation of the court to destroy
the works, and proves that they have been erected contrary to the
obligation, is the court bound to grant him the authorisation to
destroy them, or has it a discretion to refuse this remedy and to
give him damages instead if this appear to be the more equitable
solution? This is a disputed question in France. According to
some writers, the court has no discretion in the matter and must
230 THE LAW OF OBLIGATIONS.
order the destruction of the building if the creditor claims this
remedy, although this may be to cause to the debtor a loss much
greater than the damages sustained by the creditor.
If the debtor suffers a serious loss it is due to his own fault,
and he must bear it. (B.-L. et Barde, Oblig. 1, n. 438.)
But, according to other writers, the court has a discretion to
refuse the remedy asked by the creditor and to give him damages
instead. (Aubry et Ran, 5th ed. 4, p. 65.)
The French jurisprudence is in the sense of the second opinion.
It has been hold in many cases that the court ought to refuse to
order the destruction or alteration of buildings erected contrary
to contracts where this would involve a loss to the debtor dispro-
portionate to the prejudice caused to the creditor by the con-
struction not being in conformity with the contract.
Such questions are apt to occur in cases where a contractor has
erected a building which is not in accordance witli the plans and:
specifications. (Cass. 2 fevr. 1904, D. 1904. 1. 271; Req. 18
fevr. 1903, D. 1903. 1. 487; Req. 31 oct. 1906, D. 1907. 1.
135, and the note; Req. 23 mars 1909, D. 1910. 1. 343/,
Under the Egyptian Code it seems clear that the court has
complete discretion. The French Code says "the creditor has
the right to demand that that which has been done in breach of the
contract should be destroyed." (C. C. F. 1143.) And even
under these terms the courts hold that his right is not absolute.
But the Egyptian Code merely says, " The creditor may, if
the circumstances of the case permit, obtain an authority from the
court to undo," etc. (C. C. E. 117/173.) It would seem that
this leaves to the court full discretion in the matter.
Fait personnel cannot be specifically enforced.
If the obligation is to do something which can be done only
by the debtor in person the creditor cannot get him compelled to
do it. For example, I contract with a painter for a portrait, or
with an actor to perform at my theatre. In such cases where the
object of the contract is a fait personnel damages only and not
specific performance can be claimed. It is to these cases thaC
the maxim is applicable. Nemo potest cogi prcecise ad factum.
But, in some cases, as will be explained presently, though the
debtor is not compelled by force to perform his contract, consider-
able pressure may be put upon him by the imposition of an
astreinte.
In refusing to enforce a fait personnel our law follows the
REMEDIES FOR BREACH OF CONTRACT. 231
Roman. So in a case against the celebrated painter Rosa
Bonheur, it was held that the artist could not be compelled to
complete a picture. (Paris, 4 juill. 1865, D. 65. 2. 201.)
And the same rule applies where the obligation is not to do
something. If an actor undertakes not to perform at any other
theatre but one during a certain period, and he attempts to break
his contract, he cannot be dragged off the stage by force, and an
order cannot be obtained to prevent his breaking the contract.
For, according to the view of the Roman law and the French law,
this would affect the liberty of the subject. (Laurent, 16, n. 198;
Colin et Capitant, 2, p. 18; D. N. C. C. art. 1143-1144, n. 19.)
In a case in Quebec a celebrated hockey player had engaged
to play with a certain team for the season and had bound himself
not to play with any other team.
He broke his contract and an injunction was applied foi- to
prevent his continuing to play with the team which he preferred.
The court held such an injunction could not be granted. He was
only liable in damages. (Pitre v. L' Association Athletique,
1910, R. J. Q. 20 K.OB. 41.)
Illustrations of cases where specific performance of the
contract may be demanded.
It is only when the performance of the obligation requires the
personal act of the debtor that the creditor must content himself
with damages, subject, however, to what will be said later as to
the power of the court to pronounce an astreinte. Where a per-
sonal act has been promised substituted performance is excluded,
for the act of another will not produce the same result as the act
of the debtor. If A will not paint the picture which he has
promised, nobody else can paint it. A picture by another artist
might be as good, but it would not be the same thing, and to
compel A, manu miUtari, to paint the picture, even if the law
permitted it, would not be likely to produce a valuable result.
But, in every case, when the obligation can be executed by a
third party without the debtor being put under any personal
restraint so as to be an invasion of his individual liberty, the
creditor can ask for the specific performance of the obligation to
be enforced even manu militwi. (Hue, 7, n. 135; D. X. C. C.
art. 1142, n. 48.)
The obligation to deliver a corps certain can always bo spceifi-
232 THE LAW OF OBLIGATIONS.
cally enforced unless a third party has acquired a real right to
the thing.
Whenever the debtor has bound himself to deliver a deter-
minate thing, and its delivery is physically possible, the debtor
cannot liberate himself from his contract by offering to pay the
value of the thing and the damages. The creditor has the right
to refuse this, and to force the debtor to make the actual delivery,
and the judgment which orders the debtor to do this can be
enforced manu militari. (Demolombe, 24, n. 399; Laurent, 16,
n. 194; Aubry et Kau, 5th ed. 4, p. 62; D. N. C. C. art. 1136,
n. 13.)
But a judgment ordering the debtor to make the actual delivery
cannot be obtained if, between the date of the contract and the
action, a third party has acquired a real right to the thing. These
rules are clearly stated in the Egyptian Code: When the obliga-
tion is to transfer a specific corporeal thing the creditor may have
himself put in possession thereof, provided such thing was owned
by the debtor at the time .when the obligation came into existence
or since that time, and provided that no third person has acquired
a real right over it. (C. C. E. 118/175.) When the contract
is a translatory contract its effect, as we have seen earlier, is to
make the creditor at once the legal owner of the thing, although
his right as owner to revindicate the thing is liable to be defeated,
if the thing was an immoveable, by a later grantee whose title is
registered before his, or if the thing was a moveable, if the later
grantee has obtained possession of it. But, unless a third party
has in this way a< quired a right which is protected by the law 1 ,
the creditor in an obligation de donner can claim the thing as
owner by the real action en revendication, and the delivery can
I nforced if necessary mailu militari.
Specific performance of obligation to grant a servitude.
It is not necessary in order to entitle the plaintiff to specific
performance that he shall have become owner of the thing under
an obligation de donner. It is sufficient that the debtor had
bound himself by the contract to deliver the thing to the creditor.
Ii the debtor has bound himself to create a servitude, the creditor
can bring an action en revcndication and obtain specific perform-
ance. (Demolombe, 24, n. 400; D. N. C. C. art. 711, n. 103;
D. Rep. vo. Propriete, n. 661.)
REMEDIES FOR liKKACH OF CONTRACT. 233
Specific performance of contract of lease of thing.
The lessee of a thing has merely a personal right, and if the
lessor is in default to deliver the thing, the lessee's claim to be put
in possession is not in virtue of his having any real right. (See
Aubry et Rau, 5th ed. 5, p. 287. ) Nevertheless, according to
the French law, if the lessor, having possession of the thing v
wrongfully refuses to deliver it, he can be condemned to specific
performance, and the judgment can be enforced manu militari.
(B.-L. et Wahl, Louage, 1, n. 308; Laurent, 25, n. 102; D. N.
C. C. art. 1719, nos. 45, 54.)
And, conversely, if at the end of the lease the lessee refuses
to give up the possession he can be compelled to do so manu
militari. (B.-L. et Barde, 1, n. 439; Aubry et Rau, 5th ed. 4,
p. 62; D. N. C. C. art. 1142, n. 50.)
Specific performance of promise to grant deed.
As we have seen, where there has been a promise by a debtor
to execute a conveyance and he has not fulfilled his promise, the
creditor may ask the court to declare the existence of the contract.
Such a declaration in the judgment is equivalent to the convey-
ance, and may be registered as such where this is necessary ta
protect the creditor's right. If, for instance, a transferor has sold
actions nominatives, that is to say, shares which can be transferred
only by entry in the books of the company upon a declaration of
transfer signed by the transferor, and the transferor refuses to
sign the transfer, the transferee can obtain a judgment which will
do instead. "(Lyon-Caen et Renault, Traite de Droit Commercial,
2, n. 605. See C. Com. F. art. 36; Thaller, Traite Elementaire
de Droit Commercial, n. 601.)
In previous cases personal intervention of debtor is not
necessary.
In all the previous cases the view of the law is that the contract
can be executed specifically without the personal intervention of
the debtor. If he is ordered to deliver a thing he is not bound to
hand it over personally; he can do this by another. The only
* restraint that is put upon him is that he is not to interfere with
the creditor's obtaining possession. He is not, in a word, com-
pelled to execute the contract but only to abandon his opposition
234 THE LAW OF OBLIGATIONS.
to its execution. (B.-L. et Barde, Oblig. 1, n. 439; Meynial,
Revue Pratique de Droit Frangais, 56. p. 401.)
Cases where specific performance cannot be demanded.
All obligations de donner can be specifically enforced where that
is materially possible, and so can obligations de faire, unless the
compulsory execution is either physically impossible or would be
incompatible with the personal freedom of the debtor. (B.-L.
et Barde, Oblig. 1, n. 433; D. N. C. C. art. 1142, n. 52.)
Obligations de faire include, as already explained, all obligations
to deliver which do not make the creditor the owner of the thing or
give him a real right in it. (Aubry et Rau, 5th ed. 4. p. 60,
note 3; supra, I, pp. 18, 19.)
Where the contract is to do something which requires the exer-
cise of technical skill or artistic power it would be impossible to
compel the actual performance in any profitable sense. But even
when this element is not present, the French courts hold that if
the personal intervention of the debtor is made indispensable to
the performance of the act the remedy of specific performance is
excluded .
The debtor who has promised to grant a hypothec cannot be
compelled to execute his promise because the personal presence
of the grantor is essential for the creation of the acte authentique*
and without this there can be no conventional hypothec. (B.-L.
et de Loynes, Privileges, 2, n. 1407. See, for some other illustra-
tions, article on Specific Performance in French Law, by M. S.
Amos, Law Quarterly Review, 1901, p. 372.)
Astreintes.
May the court order specific performance subject to payment
of a penalty?
In the case of the breach of an obligation to do or not to do the
creditor may, as we have seen, demand the resolution of the con-
tract with damages, or where the obligation has been partially
executed, he may accept partial execution pro tanto and claim .
damages for the part which has not been executed. And, in
certain circumstances, the creditor who prefers to have the con-
tract performed rather than to take damages may obtain authority
to execute it at the expense of the debtor or to destroy what the *
debtor has done contrary to the contract. (C. C. E. 117/173,
174.)
REMEDIES FOR BREACH OF CONTRACT. 235
But these may not be the only remedies available The creditor
may be entitled to claim specific performance upon the principles
just explained. Or, if the case is one in which specific perform-
ance cannot be enforced directly, there may be a means of enforc-
ing such performance indirectly by putting pressure upon tin-
debtor. If the creditor prefers to have the contract specifically
performed by the debtor, can he ask for a judgment ordering the
debtor to perform it within a certain delay subject to the payment
of a sum fixed by the court in advance in the event of non-
execution? It is universally admitted in the French law that
within certain limits the courts have power to issue a judgment
in this form, and the penalty fixed beforehand in the event of
non-execution has acquired the technical name of an astreinte of
astreinte penale.
There is, however, a serious conflict between the doctrine and
the jurisprudence in regard to the limits of this power. (See
B.-L. et Barde, Oblig. 1, n. 478; Aubry et Rau, 5th ed. 4, p. 65;
Planiol, 2, n. 208; D. N. 0. C. art. 1149, n. 51, and art. 1351,
nos. 1740 seq. ; Dissertation by M. Glasson in note to D. 99. 1.
393; Rev. Trim. 1903, p. 5, art. by A. Esmein; Jacques Berryer.
Des Astreintes, These, Paris, 1903; Garsonnet et Cezar-Bru,
Traite de Procedure Civile, 3rd ed. 4, nos. 9 seq. ; Cass. 20 janv.
1913, D. 1913. 1. 357.)
When the court has before it the necessary elements for cal-
culating the amount of damages which will be caused to the
plaintiff by the delay, the judgment may order the defendant to
pay a certain sum for each day or week, or other unit of time
during which the delay continues, unless he prefers to execute
his obligation. Or the court may, if it prefers to do so, order
the payment of a lump sum by way of damages if performance is
not made within the delay.
So long as the judgment is confined within these limits it is
fully covered by the discretionary power of the court to estimate
the damages. (Demolombe, 24, n. 495 ; B.-L . et Barde, 1, n. 477;
Aubry et Rau, 5th ed. 4, p. 64, and note 12; D. N. O. C. art.
1149,n. 52.)
But this is, according to the jurisprudence, subject to two
conditions: —
(1) That the execution of the obligation is still possible. For
if it is no longer possible, a judgment ordering the debtor to
perform it would be futile, and there is no reason why the damages
should not be ascertained at once. (Cass. 11 mai 1898, D. 99.
1. 310.)
236 THE LAW OF OBLIGATIONS.
2) That there has not been a definite and final breach, of the
contract, for the theory of astreintes is only applicable to the case
of delay in the execution and not to non-performance in the
proper sense. (Donai, 9 juill. 1906; Rev. Trim. 1906, p. 910;
Req. 26 juill. 1804, D. 54. 1. 297. See, however, Req. 25 mars
1857, D. 57. 1. 213.)
And, according to many writers, we must add a third condition,
viz.: —
(3) That if the obligation is one the execution of which re-
quires the personal act of the debtor, he can always claim that
the effect of the judgment fixing damages at so much a day shall be
stayed, by declaring that he cannot or will not execute the obliga-
tion and by demanding that a definite sum shall be fixed for the
damages. (Aubry et Eau, 5th ed. 4, p. 67; Demolombe, 24,
n. 497; Garsonnet et Cezar-Bru, Traite de Procedure Civile, 3rd
ed. 4, n. 8.) But, as we shall see, this opinion is contrary to that
generally adopted by the French courts.
Extension by the jurisprudence of the principle of astreintes.
The French jurisprudence has greatly extended the principle of
astreintes. Within the limits above indicated we may say that
the court does not fix a penalty, but merely ascertains beforehand
what the damages would have been in the event of non-perform-
ance, and gives the debtor the choice of executing the obligation
specifically, or of paying the damages so ascertained.
In the latter case, theoretically, at any rate, he is not called
upon to do more than to make reparation for the prejudice which
he has caused to the creditor. It is true that the amount of the
prejudice may be liberally estimated by the court, but this is
within its discretion. But if a debtor can be ordered to make
execution where that is possible, subject to payment of damages if
he refuses or fails to do so, why should the court not fix the
damages at such an amount as may be sufficient to overcome the
resistance, although this amount may be disproportionate to the
loss actually caused to the creditor? In other words, may the
fixing of an astreinte be employed by the courts as a. threat to
overcome the resistance of a recalcitrant debtor?
The astreinte will then be more than damages, it will be a
veritable penalty. And, further, if the court fixes such a penalty
and the debtor, even after the delay, performs his obligation, or
makes a partial performance of it, is the penalty fixed by the
judgment definite and irrevocable, or has the court power to modify
REMEDIES FOR BREACH OF CONTRACT. 237
it ? Upon these points there is a large and not entirely consistent
body of jurisprudence in France. (See D. 91. 1. 31, and the
note; Req. 6 fevr. 1900, D. 1900. 1. 167: and for a list of the
hading cases, Aubry et Rau, 5th ed. 4, p. 66; D. N. C. C.
art. 1149, n. 63.)
In this extended sense, the astreinte is not properly an allocation
of damages, it is an indirect method of compelling an obstinate
debtor to fulfil his obligation. The only damages of winch the
code speaks are damages which consist in the amount of the loss
sustained by the creditor and of the gain which he has failed to.
make. (O. C. E. 121/179.)
But, according to the French jurisprudence, an astreinte may
be pronounced even when no prejudice results to the creditor
from the delay. (Req. 6 avril 1900, D. 1900. 1. 167.)
And, where an actual prejudice has been sustained, the astreinte
may be out of all proportion to this prejudice. Moreover, when
the court has liquidated the damages for the non-performance of
an obligation, and has pronounced a judgment for the amount,
this is chose jugee, and the court has no power afterwards to alter
the amount of damages so fixed.
Whereas, in the case of the astreinte, it is the settled juris-
prudence in France that the court may afterwards reduce the
amount or may even relieve the debtor from the penalty altogether.
(Cass. 25 nov. 1884, D. 85. 1. 399; Req. 7 nov. 1888, D. 89. 1.
259; Toulouse, 30 juin 1909. S. 1909. 2. 272; D. N. C. C.
art. 1149, n. 71; Sirey, Table DeCennale, 1901—1910, vo. Dom-
■mages-lnterets, n. 66.)
It is, therefore, with good reason that M. Planiol places his
discussion of astreintes not under the head of damages, but under
the head of execution forcee, as one of the' means of compelling
the execution of an obligation. '2, n. 210.) Damages in the
proper and legal sense are paid not to compel performance, but
to compensate the creditor for the loss he has suffered by the
non-performance .
The astreinte, on the other hand, is the threat of a penalty to
induce execution. In its extended sense it is always oomminatory
and provisional, whereas damages are neither the one nor the
other. The astreinte is well defined by M. Berryer: —
On appelle astreinte une condemnation pecuniaire ai/anf an
caractere provisoire, destinee a.obtenir indirectement I'execution
en nature d'une obligation, par la menace d'une peine susceptible
238 THE LAW OF OBLIGATIONS.
de vaincre la resistance du debiteur. (Des Astreintes, These,
Paris, 1903, p. 20.)
According to the French jurisprudence, the courts may pro-
nounce a judgment ordering damages at the rate of so much a day
for delay in execution, intending this judgment to be a final
liquidation of the damages, and, if this is the intention, there can
be no subsequent revision of the amount fixed by the court which
has pronounced the judgment; the judgment is chose jugee.
On the other hand, the astreinte may be intended to be eom-
minatory, in which case it is subject to revision, and it is a pure
question of interpretation whether the judgment falls in the one
class or the other. Req. 7 nov. 1888, D. 89. 1. 259. See
Req. 3 fevr. 1909, D. 1909. 1. 120.)
Illustrations from the jurisprudence.
The method of attempting to overcome the resistance of the
debtor by an astreinte has been frequently employed when the
debtor has got possession of a document and refuses to produce it.
(Cass. 28 dec. 1824, S. 25. 1. 65; Journal du Palais, 1824,
p. 1269.)
Or, again, when one of the consorts has been ordered by a
judgment to give to the other consort the custody of the children
of the marriage. For example, in the famous Banff remont case,
the wife was ordered to give up the children subject to an astreinte
of 500 francs a day, which was afterwards raised to 1,000 francs
a day, and under this order the Princesse de Bauff remont incurred
a liability of more than a million francs. Paris, 7 aout 1876,
D. 78. 2. 125. See Paris, 4 janv. 1876, D. 78. 2. 68; and Cass,
de Belgique, 19 janv. 1882, D. 82. 2. 81.) Such cases of im-
posing heavy astreintes to enforce obedience to orders of the court
as to the custody of children are less likely to occur in future in
France, as by the Loi du 5 dec. 1901, refusal to obey such an order
is made a delict, and article 357 of the Code Penal is amended in
that sense. ;See for an account of this Loi, Berryer, op. cit.
p. 320.;
Tb.3 greater part of the French decisions imposing astreintes
have probably been pronounced in cases of this last class where
the debtor was in default to perform a duty arising from the law,
such as one of the reciprocal duties between husband and wife,
or parent and child, and it has been suggested that the method
is particularly appropriate to such cases, because for the breach of
REMEDIES EOR BREACH OE CONTRACT. 239
such duties it is not possible to fix damages in money which shall
really be equivalent.
It is i n the public inj tcivst that such_jiufae«-&hG-ukL_b e specifically
performed. See Esmein, Rev. Trim. 1903, p. 21, for a criti-
cism of this argument, and B.-L. et Barde, 1, n. 478.) But
the French courts have by no means confined astreintes to such
cases. They have applied an astreinte to enforce obligations to
do and_obli ffations notJ o__dp_ even when flwTact which was the
object of the obligation was an act of a personal kind. For
instance, the Tribunal de la Seine condemned Mile. Rachel, the
actress, to pay 200 francs a day so long as she refused to play a
role in a certain play, this refusal being contrary to the terms of
her engagement with Legouve, the author. (Trib. Seine, 21 oct.
1854, D. 54. 3. 80.)
And in the affaire Coquelin, the Court of Appeal of Paris con-
firmed a judgment condemning Coquelin to, pay 500 francs a day
up to thirty days for every contravention of his engagement not
to appear on any stage except that of the Comedie Franchise.
After thirty days the court was to take up the question anew.
(Paris, 21 avril 1896, D. 97. 2. 177. Cf. Cass. 8 janv. 1901,
D. 1901. 1. 277.) And the principle that the astreinte may be
comminatory is excellently illustrated in the case where an electric-
light company which had contracted to supply electric-light to
an hotel in Paris, and refused! to fulfil its contract, was condemned
to pay 100 francs a day, a sum which was raised afterwards to
10,000 francs a day, till it supplied the light. (Cass. 1 dec. 1897,
D.98. 1.289.)
But when a contract is in its nature terminable at the will of
eitherjaarty, such as the contract, of lease of services when no
,/triod is fixed, the court will not employ the method of astreintes
to compel the employer to take back the employee.
In the French law the unjustifiable dismissal of the employee
gives him a right to damages, but it does not give him a right to
be reinstated in the employment. (Civ. 18 juill. 1916, D. 1916.
1.286.)
A question which has been much disputed is whether when there
is an appeal from a judgment imposing an astreinte and the judg-
ment is confirmed, the astreinte should run from the date of the
first judgment, or from the date of the judgment by the Court of
Appeal. According to the view of the Cour de Cassation, when
the judgment of the Court below is confirmed, the position is the
240 THE LAW OF OBLIGATIONS.
same as if the parties had accepted the first judgment as final.
(Cass. 15 nov. 1881, D. 82. 1. 134.)
But most of the French courts of appeal and of the courts of
first instance do not accept this view. They argue that the party
who appeals makes use in so doing of a right given to him by the
law. He cannot determine the length of time which will be
occupied before his case is decided on appeal, and he ought not to
be penalised by being made to pay so much a day during a delay
to which he is entitled. Upon this theory the astreinte should run
only from the date of the second judgment. (Trib. de Sens, 15
juill. 1909, D. 1911. 2. 303; Paris, 12 fevr. 1908, D. 1909. 2.
113, and the note; Eev. Trim. 1911, p. 800.) This second theory
appears to be preferable to that of the Oour de Cassation. It has
been adopted in Egypt by the Court of Appeal of the Mixed
Courts and by the Native Court of Appeal. C. A. Alex. 16
janv. 1879, R. O. IV, 97; C. A. 22 janv. 1907, O. B. VIII,
n. 77, p. 58.)
According to the French jurisprudence, where the astreinte is
purely comminatory, it can be modified afterwards by the court
which pronounced it if the case comes again before this court for
final determination. (Montpellier, 1 avril 1862, D. 62. 5. 112;
Bordeaux, 5 mai 1870, D. 70. 2. 208; Req. 8 nov. 1864, D. 65.
1. 389; C. A. Alex. 16 janv. 1879, R. O. IV, 97.)
In one case the Court of Paris expressed the opinion that the
court of first instance which had pronounced an astreinte had no
power to vary the amount though a court of appeal might do so.
(Cass. 1 dec. 1897, D. 98. 1. 289. See C. A. 22 janv. 1907,
O. B. VIII, n. 77, p. 58.)
This opinion is supported in the note to the case by M. Planiol.
It is submitted, however, that it is not sound. If the judgment
fixing the astreinte was intended to be a liquidation of the
damages it will be final and not subject to any reduction. But if
the judgment is purely comminatory it is not chose jugee, but
is of a provisional character, and the question whether the judg-
ment is of this kind or not is a question of interpretation. (Req.
9 janv. 1889, D. 91. 1. 128; Toulouse, 30 juin 1909, S. 1909.
2. 272; D. N. C. C. art. 1351, n. 1756; Observations du ccm-
sciller -rapporteur, in Cass. 7 nov. 1888, D. 89. 1. 261. See
C. A. Alex. 16 janv. 1879, R. O. IV, 97.)
REMEDIES FOR BREACH OF CONTRACT. 241
Criticism of the jurisprudence.
The French doctrine with few dissentient voices rejects alto-
gether the comminatory astreintes. It is argued that the courts
have no power to fix penalties arbitrarily. II nest pas de peine
sans texte. Further, it is said that no court can alter a judgment
it has once pronounced. (B.-L. et Barde, Oblig. 1, n. 479;
Dissertation of M. Glasson, in note to Cass. 5 juill. 1898, D. 99.
1.393.)
The best defence of the legality of astreintes is that by M.
Esmein. His argument is that we must distinguish between judg-
ments and injunctions or orders of the court, between judicia
ordinatoria and judicia decisoria, a distinction made by the Cour
de Cassation in an arret of 22 nov. 1841 . (S. 42. 1 . 170; Journal
du Palais, 1842, tome 1, p. 322.) The astreinte is an order by
the court, compliance with which is enforced by a threat. If and
when the order has been executed to the satisfaction of the judge
he withdraws the threat.
He may, according to his discretion, reduce the amount payable
even if the order made by the judgment has not been complied
with. .Every judge who is seized with a suit has power to issue-
orders connected with the suit and to enforce compliance with
them. In issuing such an order he is not exercising his juris-
diction, but his imperium or power of making a command.
This power has been recognised in France at all times and was not
taken away by the codes. (See Heinrion de Pansey, de V 'Autorite
Judiciaire, These, Paris, 1910, p. 101.) Article 1036 of the
French Code of Procedure as a recognition of this power. (Rev.
Trim. 1903, p. 5.) And M. Esmein's view is accepted by M.
Planiol (2, nos. 208 seq.).
Astreintes in Egyptian jurisprudence.
In Egypt, in spite of the criticism of the French writers, the
legality of astreintes does not seem to have been called in question.
The Egyptian courts have not hesitated to follow the French
jurisprudence, and to condemn a recalcitrant debtor to pay the
plaintiff a fixed sum for every day's delay, and, as in France,
it is considered a question of interpretation whether the sum' bo
fixed is intended to stand in place of damages or to be purely corn-
minatory. When the judgment contains no clause of execution —
titre executoire — it will certainly be regarded as merely commina-
w.— VOL. ii. 16
242 THE LAW OF OBLIGATIONS.
tory . This has been held to be the case where the Nazir of a Wakf
was ordered to render an account and to pay two pounds for each
day's delay; where a defendant had violently seized land belong-
ing to the plaintiff and had been condemned to pay a sum by way
of damages, and also P. T. 500 for each day's delay in returning
the land; and also where a defendant was ordered to deliver goods
and to pay ten pounds a day during the delay. (Native Court of
Appeal, 12 janv. 1904, Al Hocouk, XX, p. 133; C. A. 16 janv.
1879, R O. IV, 97; C. A. 10 janv. 1901, R. O. XXIV, 130. Cf.
Trib. Zagazig, 4 fevr. 1909, O. B. X, n. 90.)
The Mixed Court of Appeal recently declined to impose an
astreinte to enforce payment of a sum of money, and observed that
an astreinte ne pent etre> en tout cas decretee que quand elle est
destinee a obtenir du debiteur V execution d'une obligation clef aire.
(C. A. Alex. 3 avrill913, B.L. J. XXV, 286.)
Judgments imposing astreintes have become common form in
actions demanding the rendering of accounts. Where an astreinte
has been imposed, and the case has been carried to appeal, the
Egyptian courts have held that the appeal suspends the astreinte,
contrary to the jurisprudence of the Cour de Cassation which has
been referred to above. (C. A. 22 janv. 1907, O. B. VIII, n. 77,
p. 58; C. A. 16 janv. 1879, R. O. IV, 97.)
Both the Native and the Mixed Courts have found no diffi-
culty in considering astreintes as purely comminatory, leaving to
the court the power to revise the judgment afterwards, and to
modify the astreinte, and even to relieve the defendant altogether
from the payment of it if he had a legitimate excuse for the inexe-
cution. La condemnation a des dommages-interets a raison de
tant par jour de retard dans I'executian nest definitive que s'il
est possible an juge de determiner le dommage reel et exact qui
resulterait du retard .
horsquelle ria que le car act ere d'une tnesure coercitive destinee
a assurer Vexecution de la decision, pareii'te condemnation estpure-
ment comminatoire et pent etre modifiee ulterieurement. (C. A.
11 jum 1917, O. B. XVIII, n. 114, p. 69; also Mixed Court;
C. A. Alex. 12 dec. 1895, B. L. J. VIII, 39; Native Court of
Appeal, 12 janv. 1904, Review El-Mahakem, 16, p. 3481; C. A.
16 janv. 1879, R. O. IV, 97; C. A. 10 janv. 1901, R. O. XXVI,
130.)
In the last case the principle is clearly stated que par la con-
damnation precitee les premiers juges n'ont pas adjuge des dom-
mages-interets deja acquis, ou tout an moins des dommages-
REMEDIES FOR BREACH OF CONTRACT. 24-3
interets futurs, proportionnes a un prejudice a encourir, qu'ih
n'ont fait qu'edicter une peine en rac de donner sanction a leur
decision usant de la menace d'une condantnation comme d'un
moyen de contrainte.
But the Egyptian courts have sometimes failed to carry the
principle to its logical conclusion by refusing to enforce the penaltjy
even though the debtor remained recalcitrant, and holding that
the plaintiff could recover only the actual damage suffered. Que
les condemnations de cette sorte ne sont que purement com'mina-
ioires, et quelles ne peuveuf sortir a effet que dans la memrr du
prejudice reellement smffert. (C. A. 10 janv. 1901, R. O. XXVI,
130; Trib. Ap. Ind. Caire, 8 mai 1906, O. B. VII, n. 115, p. 79.)
It is submitted that this view of the matter is erroneous. The
court has power to modify the amount of the astreintes, but it has
also power to overcome the resistance of the defendant by making
him pay a larger sum than the loss which he has actually caused to
the plaintiff. A threat which can never be enforced is a bra lam
fulmen and not likely to be very efficacious.
Enforcement of specific performance in other laws.
In Belgium, the courts after some hesitation have accepted the
system ,of astreintes as developed by the French jurisprudence.
(Gand, 22 juin, 1907, Pasicrisie, 1909, 1, 309; Rev. Trim. 1911,
p. 201; C. Cass, de Belgique, 23 juin 1887, D. 88. 2. 311.
Contra, Cass, de Belgique, 19 janv. 1882, D. 82. 2. 81.)
In England, specific performance is enforced in appropriate
v cases by a judgment ordering specific performance or by an injunc-
tion, disobedience in either case rendering the defendant liable
to imprisonment. (See Halsbury, Laws of Eng. s. v. Injunction,
Specific performance . )
In Germany, the matter is regulated by the new Code of Proce-
dure. (Civil Prozessordnung, arts. 887,888.) If the act promised
can be done by a third party the creditor has the right to a judg-
ment authorising him to get it done at the debtor's expense. If
it cannot be done by the third party the court may condemn the
debtor to fines up to the amount of 1,500 marks, and even to
imprisonment; and the creditor may recover damages in addition.
16 (2)
244 THE LAW OF OBLIGATIONS.
CHAPTER XIII.
DAMAGES FOR BREACH OE A PECUNIARY OBLIGATION.
This matter is thus dealt with in the Egyptian Native Code:
When the object of an obligation is the payment of a sum of
money, interest is due thmeon, but only from the day on- which
legal 'proceedings are commenced., unless in particular cases the
agreement, commercial custom, or the law provides otherwise.
Subject to any agreement $o the contrary, the rate of interest
shall be five per cent, 'in civil causes, and seven per cent, in com-
mercial causes.
The interest fixed by agreement may never exceed nine per
oent. Compound interest may never be charged or claimed upon
less than one year's interest.
Nevertheless, the rate of commercial interest upon current
accounts may vary accordiaig to the rate on Exchange, and the
interest shall be capitalized in such current accounts in accordance
with commercial custom. (C. 'C. N. 124—127.) The Mixed
Code is the same in effect . (C . C . M . 182— 187 .)
These articles 'are based upon the French Code. (C. C. F.
1153.) They lay down three rules: —
(1) The rule that interest is due from the commencement of
legal proceedings. This creates an exception to the rule that
damages are due from a mise en demeure. Instead of a mise en
demeure, in this case, the Egyptian law requires a demande en
justice.
The French Code was to the same effect until it was amended
by the hoi du 7 avril 1900. As the French Code now stands,
interest runs from the date of a demand by the creditor — somma-
tion de payer. The reason why the old law required a demande en
justice in this case and not in others is not very clear. Demolombe
said it was because the law desires in the interest of the debtor
that the creditor should manifest categorically and energetically
his determination to cause interest to run; categorically, that is
IWf-
DAMAGES FOR BREACH OF A PECUNIARY OBLIGATION. 245
in clear unequivocal language; energetically, that is to say by a
document so threatening as to leave the debtor no illusions. (24,
n. 625.) But, as Laurent says, why should the debtor be under
any illusion, if the creditor, instead of bringing an action, makes a
clear and definite extra-judicial demand? (16, n. 319.)
Probably, as Hue says, the rule is a survival of the disfavour
attaching to usury on account of the facility with which the accu-
mulation of interest increases the debt. (7, n. 156; B.-L. et
Baa-de, Oblig. 1, n. 511.)
The retention of the rule that the demande en justice is neces-
sary is explicable in Egypt upon religious grounds. The taking
of interest is contrary to the religious belief of Mohammedans,
and it is, therefore, not unreasonable that if money has been lent
without interest, and the lender wishes to claim interest when
payment is not made at the time agreed upon, he should be obliged
to declare this determination in a very formal manner.
The dies a quo from which the interest is to be calculated is
that of the service of a writ of summons. (Cass. 8 juillet 1907,
D. 1908Trf452 ; Cass. 21 juill. 1909, D. 1910. 1. 25.)
The court is without power to grant damages by way of interest
on a money-debt from any earlier period than that of the demande
en justice unless there is an agreement to the contrary or the
case is one in which interest runs de plein droit. These cases'
are referred to later. (See Cass. 21 dec. 1909, D. 1911. 1. 316.)
( w 2) The damages are to consist always of the interest on the
money due. They are moratory damages and not compensatory
damages ; it is simply the delay in payment which creates the
liability.
(3) The creditor does not need to prove that he has suffered
prejudice. The French Code says expressly ces dommages et
interets srnit dus sums quch cremcier soit- term de justifier d-cmcuma
perte. (C. C. F. 1153.) The Egyptian Code says simply
les interets sont dus. (C. C. E. 124.)
But this is sufficient, because the code does not say that any
prejudice must have been suffered before the interest can run.
The reason for this difference between money-debts and others
is doubtless that a person who counts upon getting his money at
a certain date may reasonably be presumed to suffer prejudice if
it is not duly paid. Under modern conditions, it is taken for
granted that the creditor would not have allowed his money to
remain idle. On the other hand, it would be difficult for the
creditor to prove what use he would have made of the money if
fcJW A*"
. W4 JU Wv WW
246 THE LAW OF OBLIGATIONS.
it had been paid when it was due. It is to cut short all inquiries
of this kind that the law says the damages shall be assumed to
be the interest at the legal rate unless there is an agreement to
the contrary. (See Cass. 10 juill. 1895, D. 96. 1. 119.)
When damages are sought merely for delay in the payment of a
money-debt it is not competent to award the creditor damages
over and above the lawful interest on the ground that being
deprived of his money has caused him special damage, except only
in the case of bad faith. (Cass. 30 juin 1898, 2e. espece, D.
1900. 2. 300.) And, on the other hand, the court has no power
to refuse the creditor the legal interest from the demand, what-
ever may have been the original character of the debt, if its
execution consists in the payment of a sum of money. (Cass.
10 juill. 1894, D. 96. 1. 119.)
Special damage in case of bad faith.
According to a settled jurisprudence in France, if the creditor
could show that in consequence of the bad faith of the debtor
in not paying his debts he had suffered a prejudice over and
above that resulting from delay, he was entitled to recover separate
damages upon this head. They were not damages for delay in
payment but for the fault of the debtor.
And it was agreed by the French writers that this jurisprudence
was consistent with art. 1153. (B.-L. et Barde, Oblig. 1,
n. 507; Aubry et Rau, 5th ed. 4, p. 177, and note 50, ter ;
Planiol, 2, n. 270; 1 Req. 15 mars 1881, D. 81. 1. 368, note 2;
Cass. 3 mai 1897, S. 97. 1. 319; Cass. 23 nov. 1903, D. 1906. 1.
64.)
By the amendment made by the Loi du 7 avril 1900 to art. 1153
of the French Code a clause was added stating the law in the
sense of the jurisprudence. Le crea.ncier auquel son debiteitr en
retard a came par sa mauvaise foi, un prejudice independent de
ce retard, pent obtenir des dommages-interets distincts des interets
momtoircs de la creance. (See Cass. 14 fevr. 1911, D. 1911.
1. 216.) This addition to the code merely declared the existing
law in France, and the Egyptian law is the same.
German and Swiss laws as to this.
The German Code goes somewhat further. But this may be
partly because the legal rate of interest is only four per cent.
The creditor is allowed to claim damages in excess of the interest
DAMAGES FOR BREACH OF A PECUNIARY OBLIGATION. 217
on the money if he can show that ho has suffered prejudice by the
delay, and he does not need to prove fault or bad faith on the
part of the debtor (art. 288).
It would be sufficient, for instance, if he showed that by the
delay he had lost the opportunity of a good investment at six
per cent., in which case the debtor would be bound to pay the
difference between four and six per cent, during the delay.
(Cosack, Lehrbuch des Deutschen burgerlichen Rechts, 6th ed. 1,
p. 423.) The Swiss Federal Code of Obligations also makes
the debtor liable to pay supplementary damages if any have been
caused, unless he proves that the delay was without his fault
(art. 106).
Exceptions to rule that only legal interest is due.
The French Code says the rule that damages for delay in
payment of an obligation of this kind consist only of the
legal interest is sanf les regies particulieres cm commerce et
cm cauticmnement . (C. C. F. 1153.) The Egyptian Code is
silent upon this point but elsewhere two exceptions to the rule
are stated. The recognised exceptions in the French law are:
(1) The right of the surety who has paid the debt to recover
from the principal debtor not only the amount which he has paid
and the interest from the date of payment, but also any damages
which he may have sustained. (C. C. F. 2028. Cf. C. C. E.
505/617.)
It is somewhat surprising that the Egyptian Code should
abandon the traditional principle of the French law that a surety
who has rendered a service in this way is entitled to complete
reimbursement as having acted in the character of a mandatary.
(Planiol, 2, n. 2356; B.-L. et Barde, 1, n. 501; D. X. C. C.
art. 1153, n. 21.)
But in a matter of this kind, the courts are bound to give a
strict interpretation to the code. If there were any doubt as to
what the code meant it would be interpreted in favour of the
debtor. We must, therefore, conclude that in the Egyptian law
the surety can claim only what he has paid and the interest upon
this amount. (Grandmoulin, SiireUs Personnelles, p. 16; Halton,
1, p. 275.)
(2) A partner who fails to pay his contribution to the assets
of the firm— his apport — is liable to pay damages as well as interest
for the delay. (C. C. F. 1816; C. C. E. 426/518.)
<248 THE LAW OF OBLIGATIONS.
(3) When a bill of exchange is not paid at maturity the holder
may by means of a cross-bill— retraite— recover from the drawer
or one of the indorsers not only the principal amount of the bill
and the legal interest but also the cost of the re-exchange.
C. Cm,,,. F. 177 -186; C. Com. E. 180/187.)
Compound interest.
The compounding or capitalization of interest— anatoclsme—
has always been regarded by the law with great suspicion. The
agreement by the debtor that instead of paying the interest on his
debt the interest shall be added to the capital is dangerous to
society for two reasons: —
(a) It is extremely tempting to an impecunious man because
he ^ets his money in this way for the time being without having
to pay anything for it.
(b) It leads to an increase in the principal debt much greater
than the debtor is likely to have anticipated. Money lent at five
per cent, doubles in about fourteen years. But this fact is as a
rule much more clearly present to the mind of the money-lender
than it is to that of the borrower. For these reasons, the com-
pounding of interest was absolutely forbidden in the later Roman
law. 'C. 4. 32. 28.) The prohibition was maintained in the
old French law as a part of the policy of preventing usury.
(B.-L. et Barde, 1, n. 525; Aubry et Ran, 5th ed. 4, p. 180.) It
is forbidden also by the German Code (art. 289), and by the Swiss
Code of Obligations (art. 314).
It is, however, allowed by the French and Egyptian codes
subject to certain conditions. (C. C. F. 1154; C. C. E.
126, 127 186, 187.)
1 By the Egyptian codes the capitalization or adding of the
interest to the principal is to be made only at the end of each
year, except in the case of current accounts. (2) In regard to
current accounts— comptes couremts — the capitalization may be
made according to commercial custom. The nature and the legal
effect of current accounts are matters which belong to the com-
mercial law. (See Thaller, Tralte Elementair e de Droit Com-
mercial, nos. 1656 seq.) A common example of such an account
is that between the banker and the customer.
In that case the capitalization of the interest generally takes
place at the end of the year, and interest is due upon every sum
advanced from its date, and so, likewise, upon every sum received
DAMAGES FOR BREACH OF A PECUNIARY OBLIGATION. 249
to credit. But current accounts are also kept between traders,
and it has been held in Egypt that according to the usage of
commerce the capitalization was at the end of every three months.
(C. A. Alex. 14 mars 1906, B. L. J. XVIII, 147. See Comptes
Gourants in Table Decennale, 1898 — 1908.}
English law as to interest on money-debts.
The old rule of the law was that interest cannot be claimed
unless there is evidence of an agreement to pay interest. But
there are important statutory exceptions. A jury may allow
interest by way of damages when the debt was a fixed sum pay-
able by virtue of a written instrument, or if not so payable, when
payment had been demanded in writing with notice that interest
would be claimed from the date of the demand. And interest
may be claimed in an action on a dishonoured bill of exchange.
(3 & 4 Will. IV. c. 42, ss. 28, 29; Bills of Exchange Act, 1882,
s. 57; Anson on Contracts, 14th ed. p. 366. In the English
law the compounding of interest is not prohibited, but the Money-
lenders Acts, 1900 and 1911, enable the court to grant relief
against harsh and unconscionable contracts of loan. (See Anson,
Contracts, 14th ed. p. 220.)
4/ *V*1 Ur kk* /Wr ' ^
250 THE LAW OF OBLIGATIONS.
CHAPTER XIV.
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT
NOT BEING A CONTRACT TO PAY A SUM OF MONEY
This subject is dealt with in the Egyptian Code in articles which
axe substantially identical with the articles in the French Code.
(C. C. E. 121—123/179—181; C. C. F. 1149—1153.)
After stating that damages are not due unless the non-per-
formance or delay is due to the fault of the debtor, and that they
are not recoverable so long as .the debtor is not in default, the
code proceeds to lay down the rules as to the measure of damages.
It is customary to divide damages into two kinds: (1) compen-
satory, and (2) moratory. By compensatory damages is meant
the value in money of the interest that the creditor had in the
execution of the obligation. It is this sum which he is to receive
now that the obligation cannot be performed. He gets the money
value of the performance instead of the performance itself. By
moratory damages is meant the damages which the creditor suffers
by delay in the (execution. (B.-L. et Barde, Oblig. 1, n. 470:
Aubry et Rau, 5th ed. 4, p. 157, note 19; D. N. C. C.
art. 1147, n. 1.)
The main importance of this distinction is that when the object
of an obligation is the payment of a sum of money the only
damages are moratory damages. There is no question of ascer-
taining the value of the execution itself for it is always the pay-
ment of the sum of money stipulated. And, in consequence of
the difficulty of estimating in each particular case the loss caused
to the creditor by delay, the law fixes, as we have just explained, a!
universal rule for these damages, viz., the legal rate of interest
during the delay, and no other damages can be awarded. It is,
accordingly, convenient to deal separately as we have done with
the case where damages are sought for the breach of an obligation
to pay a sum of money. When the obligation is not one of this
kind the code says that, apart from the case of agreement to the
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 251
contrary, the damages consist in the amount of the loss sus-
tained by the creditor and of the profit which la- has failed I"
make, provided that the prejudice suffered is the direct and
immediate consequence of the non-performance.
Nevertheless, in the absence of fraud cm the part of I he debtor }
the damages recoverable "re only for that which could reasonably
have been foreseen at the time m the contract was mud'.
(C. C. E. 121, 122 179, 180. From these articles we see that
the general rule is that the creditor can claim damages under two
heads: (1) loss suffered — damnum emergens ; and (2) loss of profit
— lucrum, cessans. •
The French term dommages-interets is often said to allude to
these two elements. This is, perhaps, not historically correct, but
at any rate the term serves to remind us of the two elements.
(Laurent, 16, n. 283; Planiol, 2, n. 247.) But the rule that
the creditor can claim for the actual loss and the loss of profit is
subject to three clarifications: —
(1) Unless there was fraud on the part of the debtor, the
creditor can recover only the damages which could reasonably
have been foreseen at the date of the contract. (2) In any case,
even when there was fraud, the damages comprise only those which
are the direct and immediate consequence of the non-perform-
ance; and (3) if the parties have fixed beforehand by a penal
clause in the contract what the amount of the damages shall be
taken to be, this agreement is final. It is for the creditor who
claims damages under both these heads to prove his actual lo.-s
and also the failure of expected profit. But as the second element
is more or less problematical, the court has to estimate it from the
evidence before it. If a, public singer breaks his contract with an
impresario, the impresario can claim for expenses of the hall hired
for the performance, the advertising, and so forth, that is for money
actually out of pocket, and also for the loss of the profits which
he would have derived from the concert. What these profits would
have been it is impossible to determine with mathematical pre-
cision, but that is no reason why the court should not do its best
to. fix such a sum as will make good the loss. In a commercial
sale, at any rate for articles for which there is a regular market,
the seller who breaks his contract must make good to the purchaser
not only the value of the goods but the profit which he might have
made by -a resale. (B.-L. et Barde, 1, n. 475; Pand. Franc, vo.
Oblig. n. 2092.)
If the vendor fails to deliver and the purchaser has to buy the
.
252 THE LAW OF OBLIGATIONS.
goods elsewhere at a higher price, the vendor is liable to pay the
difference. (Req. 27 fevr. 1894, D. 94. 1. 216.) It may be
that the price has gone down instead of up, in which case the
purchaser who can buy the goods for less than he promised will
have suffered no damages. (See C. A. Alex. 31 janv. 1901,
B. L. J. XIII, 134; C. A. Alex. 8 avril 1908, B. L. J. XX,
165; C. A. Alex. 2 fevr. 1916, B. L. J. XXVIII, 135.)
The appreciation of the actual loss suffered or the loss of profit
and the amount of damages to be awarded must be left to the
discretion of the court. (Req. 28 oct. 1903, D. 1904. 1. 14.)
If the loss sustained is a moral loss only can the creditor
claim damages?
This is a very controversial question. Where damages are
claimed for delict or quasi-delict they are constantly given in cases
where only moral prejudice has been sustained. (C. A. Alex. 28
nov. 1917, B. L. J. XXX, 66.) For instance, the person who has
suffered from a libel can claim damages without proof of pecuniary
loss. C. A. Alex. 12 juin 1902, B. L. J. XIV, 351.)
The father of a child killed by the fault of another person may
not have sustained any pecuniary loss by the death of his child,
but he can claim for the moral j)rejudice. (C. A. Alex. 17 mai
1905, B L. J. XVII, 280; C. A. Alex. 12 juin 1918, B. L. J.
XXX, 469; C. A. 47 mars 1910, O. B. XI, n. Ill, p. 80. Cf.
Alger, 22 juin 1900, S. 1902. 2. 128. Does a different rule apply
in contracts? The French doctrine is divided. Some writers
deny that moral damages can be awarded in any case whether of
delict or of contract. (Baudry-Lacantinerie et Barde, Oblig. 1,
n. 480; 4, n, 2871.)
The principal arguments urged by the writers who support this
view are that the code contemplates only the reparation of material
loss which can be estimated in money. The use of the words
pertes el gains — " loss and -profit " — shows that it was the loss
of money only which the legislator had in mind. (C. C. F. 1149;
»'. C. E. 12L179.)
To make a defendant pay for a loss which w r as not pecuniary,
would be in effect to inflict a penalty upon him, and this Cannot
be done without an express text. These writers maintain that
the French jurisprudence is in this sense. The question seldom
presents itself squarely for decision, because in. most cases in which
i
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 253
moral prejudice has been caused by breach of contract there is
pecuniary loss also. For example, if a banker wrongfully refuses
to honour a cheque of a customer who has funds at his credit, the
loss of reputation caused by the dishonouring' of the cheque nm\
affect the business of the drawer as well as cause him humiliation.
(Rouen, 27 mai 1844, D. Rep. Oblig. n. 777.)
And, in many cases, as we have seen, the courts compensate th
plaintiff for moral prejudice in an indirect manner by imposing
an astreinte upon the defendant.
But there are, undoubtedly, cases in which the French courte
have held that moral prejudice alone is not a ground for damages
in cases of breach of contract.
In one case where it was the duty of the defendant to deliver
to the plaintiff certain family portraits of no intrinsic value, and
there was a breach of this obligation, the court refused to award!
damages, giving as a reason, that the defendant's breach of contract
had not caused to the plaintiff any damage which was appreciable
in money. (Paris, 27 mars 1873, sous Req. 17 fevr. 1874, S.
74. 1. 477, D. 74. 1. 360, Journal du Palais, 74, p. 1218.)
And the opinion which prevails in the French doctrine is to
distinguish between breach of contract and delict or quasi-delict.
In the case of delict or quasi-delict, damages may be recovered
for moral prejudice, but in the case of breach of contract, the
only damages recoverable are for pecuniary loss. (Laurent, 16,
n. 281; Hue, 7, n. 147; Aubry et Rau, 5th ed. 4, p. 170, note
39, ter; D. N. C. C. art. 1149, n. 29.)
But, although the French jurisprudence is conflicting, the
tendency is not to make the distinction for which these writers
contend. The most common case in France, in which damages
for moral prejudice are awarded, is that of the unjustifiable breach
of a promise of marriage. But, seeing that the promise to marry
is not enforceable, the French law considers the ground of action
here as delictual and not contractual. (Sourclat, Responsabilite,
1, n. 446, bis ; Aubry et Rau, 5th ed. 7, p. 41, note 26; Mantelet,
A., La Reparation du Prejudice Moral, These, Paris, p. 165;
Cass. 12 nov. 1901, S. 1902. 1. 237; Grenoble, 24 mars 1908,
D. 1910. 2. 134, and the note. Cf. the English Law, infra,
p. 255.) But there are not a few cases in which damages have
been awarded for moral prejudice caused by breach of contract
which cannot be explained by saying that the fault is delictual.
Thus, in the famous case against the painter Whistler for refus-
ing to deliver a portrait which he had contracted to paint, the
254 THE LAW OF OBLIGATIONS.
defendant, although he was not compelled to deliver the picture,
was ordered to return the price paid and to pay in addition a
thousand francs by way of damages. (Paris, 2 dec. 1897, D.
1898. 2. 465. Cf. Paris, 4 juillet 1865, D. 65. 2. 201, S. 65.,
2. -233: Journal du Palais, 65, p. 937.)
And in cases of wrongous dismissal of an employee, it is
quite common to award damages for the moral prejudice as well
ls for the pecuniary loss caused by the dismissal. (Req. 22 mars
1904, D. 1904. 1. 449, and note by M. Planiol.) So, likewise,
it has been held that if a theatre-manager entrusts a role to an
actor, this implies a promise not to withdraw it if the actor plays
The part well. Where a. manager withdrew a part capriciously
be was held liable in damages for the moral prejudice. (Paris,
1 10 janv. 1863, Pand. Franc, vo. Acteurs, nos. 387, 388.)
The sound view appears to be that both in cases of breach
of contract and in cases of delict, moral prejudice is an element
which the court is entitled to take into account in estimating the
damages. It is perfectly settled that in cases of delict or quasi-
delict damages may be recovered for moral prejudice, and there
is no logical reason for refusing to apply the same rule in cases of
breach of contract. The language of the code does not render
such an interpretation impossible. There is no difference of nature
between that kind of fault which is a breach of contract and the
kind of fault which consists in the breach of a legal duty. As
M. Planiol says: La nature de V obligation violee reste sans
influence sur la laute. (2, n. 877. Cf. Saleilles, Theorie
-Generale de V Obligation, 3rd ed. n. 308; C. A. Alex 13 dec
1916, B. L. J. XXIX, 107.)
The objection often made, that if this theory is adopted the
court will have no sure basis for an estimation of the damages, is
by no means conclusive. It applies just as much in cases of delict
as in cases of contract, and in the former class of cases the courts
have not hesitated to appreciate moral damage. Why may they not
do the same in cases of breach of contract? Such an estimate may
be rough, but it must be left to the good sense of the courts. In
such a case as the one referred to above, where the duty was to
restore a family portrait, it is inadmissible to hold that if the
obligation arises from a contract, the debtor is entitled to say,
" I will throw the picture into the fire and pay you 25 piastres,
which is the market value of the picture." If the defendant had
destroyed the picture wrongfully, in a case where he was uncon-
nected by contract with the other party, he would have had to
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 255
pay for the moral prejudice, and there is no valid reason for not
coming to the same conclusion when the liability is contractual.
(In this sense, Chausse, M., De Vlnteret d" Affection, Rev. Crit.
1890, 430; Planiol, 2, n. 252; Mantelet, A., La Reparation du
Prejudice Moral, These, Paris, 1907, p. 103.)
English law.
Damages for breach of contract cannot by English law include
any compensation for loss which is not pecuniary. {Addis v.
Gramophone Co., 1909, A. C. 488, 78 L. J. K. B. 1122. But
actions for breach of promise form an exception to this rule.
Such an action, it has been said, is one which is based on the
hypothesis of a broken contract, yet it is attended with some of
the special consequences of a personal wrong, and in which damages
may be given of a vindictive and uncertain kind, not merely to
repay the plaintiff for temporal loss, but to punish the defendant
in an exemplary manner. (Pollock, Torts, 10th ed. p. 583. See
Finlay v. Chirney, 1888, 20 Q. B. D. 494, 57 L. J. Q. B. 247.)
Direct and immediate consequence.
In no case are the damages to exceed compensation for such
prejudice as is the direct and immediate consequence of the non-
performance. (C. C. E. 121/179; C. C. F. 1151.) The article
of the French Code upon which this rule is based is undoubtedly
founded upon a passage in Pothier, and all the French authorities
accept Pothier's discussion of the subject of damages as the best
commentary on the French Code.
Pothier explains that the line has to be drawn somewhere, and
that the debtor cannot be made to pay damages for losses not
necessarily connected with his act and which may have other
causes. And he gives as an illustration, the sale of a cow infected
with a contagious disease and known to be so by the seller. If
the purchaser puts the cow with his other cattle and they contract
the disease and die, this is a direct consequence of the fraudulent
concealment by the seller. But if the purchaser, having no stock
left on his farm, neglects to cultivate his land and becomes unable
to pay his debts, and his property is seized and sold at a low price
by his creditors, and in consequence of his misfortunes he commits
suicide, all these things are not the direct and immediate conse-
quences. (Oblig. n. 167. Cf . B.-L. et Barde, 1, n. 488; Colmet
de Santerre, 5, n. 67 bis.) If a lessor fails to fulfil the pro-
256 THK LAW OF OBLIGATIONS.
visions of the lease and the lessee has to remove, the cost of removal
is a direct consequence. But if the lessee removes to a house in
which there has been smallpox and his child dies of it, this is not
a direct consequence of the lessor's fault.
If a reaping-machine is damaged in course of carriage, the
farmer who had bought it can claim damages from the carrier for
being deprived of its use during the time taken in repairing it or
in getting another, provided he uses due diligence. But he cannot
claim in addition damages for the loss of revenue which he might
have derived from the hire of his machine to neighbouring farmers,
for this loss is too indirect and problematical. (Cass. 3 mars
1897, D. 98. 1. 118.' If a part of a machine is sent to be
repaired and is lost in carriage, its owner cannot wait for months
and then claim for the loss he has suffered in having been deprived
of the machine during the whole season. He ought to have got
a new piece of the machine when he found the one sent to be
mended had been lost. (Thwuvilk v. Canadian Express Co.,
1908, R. J.Q.33S.C.403.)
It is by no means easy in all cases to distinguish between those
consequences which are direct and those which are indirect, but
it is a matter for the appreciation of the court in the particular
case. •
One or two illustrations of what the courts regard as damages
which could have been foreseen will be given later. A recent
writer criticises the law, and maintains that the courts find it
impossible to fix a satisfactory criterion for distinguishing between
direct and indirect damages. (Pierre Marteau, La Notion de
la Causalite, These, Aix, 1914.)
Distinction based on absence of fraud.
In the absence of fraud the debtor does not necessarily have to
pay even for all the loss which is the direct consequence of his act.
He needs to pay only for that which could reasonably have been
foreseen at the time the contract was made. By " fraud " in this
connection the code does not mean the practising of any artifices
such as those which vitiate consent; it means merely bad faith.
The debtor who wilfully breaks his contract is guilty of fraud
in this sense, for he dishonestly cheats the expectation of the
creditor. (B.-L. et Barde, Oblig. 1, m 483.) Where the debtor
has behaved in this way there is no reason why he should not be
made to pay for all the loss directly caused by his voluntary act.
wXju^*
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 257
Damages for that which could have been foreseen.
But when the debtor has behaved honestly his liability is
more limited; he must pay damages only for that "which
could reasonably have been foreseen." (C. C. E. 122/180.)
The Egyptian Code is upon this point clearer than the French.
It adds the word "reasonably." And it does not say that the
damages must have been capable of being foreseen. The French
Code says the debtor is liable only for the damages which were
foreseen or which might have been foreseen at the time of
the contract. (C. C. F. 1150.) There is a controversy as to
the exact meaning of these words. If the damages are due to
a cause which might have been foreseen, but they are greater
than was to have been expected, then according to one view in,
France, the debtor would be liable only for such damages as*
might have been expected to result from that cause. Damages
of a kind not to be expected though they arise from this cause*
are not covered. To hold otherwise, as the editors of the work
of MM. Aubry et Rau say, would be to amend the Frendh
article and to read it as if it ran: Le debiteitr nest teniu que
des dommages-interets dont la cause a ete prevue ou qui a pu
Vetre. The other view is that if the cause of the damage was
foreseen, or might have been foreseen, loss produced by that
cause must be paid for, although this loss could not have been
anticipated. For example, if in consequence of the lessor's breach
of his contract, the lessee has to remove and to take another house,
the lessor would have to pay for the cost of removal, for this is a
loss which might have been anticipated. But, if during the
occupation of the lessee, there has been an unexpected rise of rents
in the locality so that the lessee cannot get a similar house except
at a much higher rent, the lessor, according to the first view, would
not have to pay for this damage which could not have been anti-
cipated. (C. C. F. 1150; Aubry et Rau, 5th ed. 4, p. 171.
note 41 . Contra, B.-L . et Bairde, Oblig. 1, n. 486 . Cf . C . C . F.
1633; C. C. E. 307/381. See Pau, 11 aout 1903, D. .1904.
2. 302.) But under the Egyptian Code there will be no difficulty;
in making the lessor liable because the damages are to be for
that which could reasonably have been foreseen. (C. C. E.
122/180.) And the cause of the damage, namely, the necessity
of taking another house, was clearly something which might have
been anticipated.
Where there has been no fraud, in the sense explained above.
17
W. — VOL. II.
258 THE LAW OF OBLIGATIONS.
on the part of the debtor, the question whether damages could or 1
could not have been reasonably foreseen is of course one of fact.
But the law desires to excuse a debtor from, having- to pay
damages which he could not have contemplated when he made the
contract. He is, it is true, in fault or he would not have to pay
damages at all. But he has not intended to cause injury to the
creditor, and, therefore, the law treats him with a certain indul-
gence. He is more favourably regarded than the man who has
caused damage by an unlawful act, who has committed a delict
or a quasi-delict, as distinguished from a breach of contract. The
author of an unlawful act is liable to pay all the damages directly
caused by his act whether he could have foreseen these damages or
not. He must repair the damage. (C. C. E. 151/212.) This
distinction between the measure of damages for breach of contract
without "fraud" as opposed to that for wrongful acts is not,
perhaps, very logical. It is commonly defended by saying that
in the case of a contract each of the parties is presumed to con-
template the possible breach of the contract. He has the power
to insist on stipulations framed with a view to prevent or diminish
the loss which he may suffer by the breach of contract. If he
insists on no special stipulation he may be presumed to have
trusted to the good faith of the other party. Each of the parties
in making his calculations takes into account the possibility of his
own breach of the contract, and estimates the amount of damages
which he may have to pay for this breach. On the other hand,
in the case of wrongs the injured party has not entered into any-
voluntary relation with the other, and there is no reason why he
should not recover all the damages he has suffered, whether they
could reasonably have been anticipated or not. (See Sourdat,
Responsabilite, 1, n. 691.)
Illustrations of the rule as to damages which might have
been foreseen.
A, who is bound subject to a penalty to deliver certain goods
to B, orders the goodis from C, without informing him of the terms
of his contract with B. C breaks his contract. A cannot recover
from him the penalty which he has to pay to B. (See Req. 27
fevr. 1894, D. 94. 1. 395.)
In consequence of delay on the part of a railway-company, the
sender of goods given to them for carriage is unable to fulfil his
contract with the consignee, and the contract is resiliated. In
DAMAGES RECOVERABLE FOR BREACH OF A CONTRACT. 259
default of proof that the railway-company could have foreseen
this result of their delay they are not liable for the loss caused to
the sender by the resiliation of the contract. T'ass. 21 now 1910,
D. 1911. 1. 208.)
A passenger who is intending to ride a horse in a race arrives
at his destination too late to do so. He cannot recover from the
railway-company the damages which he has suffered by not taking
part in the race, at least unless the railway-company knew the
object of his journey, and foresaw or might have foreseen the
special risk which they were incurring. (Cass. 29 janv. 1908,
D. 1910, 1. 280. Cf. Cas. 22 nov. 19U4, L>. 1907. 1. 415;
Cons. d'Etat, 20 avril, 1877, D. 77. 3. 73.) A railway-company
can foresee that passengers will carry with them in their luggage
articles of more or less considerable value. But they are not
expected to foresee that a passenger will carry in this way things
of quite exceptional value, having regard to the position of the
passenger, the object of the voyage and the price of the ticket.
They cannot expect that a trunk registered as passenger's luggage
contains merchandise worth 16,000 francs. (Cass. 20 dec. 1913,
D. 1916. 1. 117.)
We may compare a leading English case. Owing to delay in
the delivery of a piece of machinery which was in course of transit
a mill was kept idle. It was held the carrier was not liable for
the damages so caused,. (Hadley v. Baxendale, 1854, 9 Ex. 341,
96 E. B. 742. Cf. Bostock & Co., Ltd. v. Nicholson & Sons,
Ltd., 1904, 1 K. B. '725, 73 L. J. K. B. 523; Hammond v.
Bussey, 1887, 20 Q. B. D. 79, 57 L. J. Q. B. 58; Anson,
Contracts, 14th ed. p. 367; Mayne on Damages, 8th ed. p. 12.)
Distinction in other laws.
The German Code altogether rejects this distinction and makes
the person who is found liable in damages, whether it be for breach
of contract or for a wrong, bound to make good the whole loss.
He must " restore things to the position in which they would have
been if the event which made him liable had not happened*''
(art. 249. See Hindenburg, Eevue Critique, 1901, XXX*, p. 26;
Cosack, Lehrbuch des Deutsdhem hiirgerlichen Rechts, 6th ed.
1, p. 373.)
And in the English law ,the damages for breach of contract
are limited to compensation for such loss as a reasonable man
17 (2)
260 THE LAW OF OBLIGATIONS.
might have expected to result from the breach. (Hadley v. Baxen-
dale, ut supra.) But in the English law the liability of a defen-
dant, even in the case of tort, is similarly restricted. He is not
responsible for all the damage which he has caused, but only for
(1) damage which he intended, or (2) damage which is the natural
or probable consequence of the wrongful act. All other damage
is too remote. (See Salmond, Torts, 4th ed. p. 126; Pollock,
Torts, 10th ed. p. 30; Halsbury, Laics of England, vo. Damages,
p. 313; Mayne on Damages, 8th ed. pp. 54 seq.)
This rule of the English law as to the measure of damages for
torts is practically identical with the French rule under discussion,
for if a loss is the "natural and probable result" it is a loss.
"which could reasonably have been foreseen."
Clause of penalty.
The rules when the amount of the damage is determined by
the contract will be explained under Obligations with a Penal
Clause.
STIPULATIONS OF EXONERATION FROM LIABILITY. 261
CHAPTER XV.
STIPULATIONS OF EXONERATION FROM LIABILITY.
A contract may contain a clause that, iiiJjia_eveni_i}fJ.ts-jaot-
being duly performed by the debtor, he shall not be liable in
damages, and that, even though tin- breach of contract shall bo
caused by his fault, or by the fault of persons for whom he is
normally responsible. Stipulations of this kind arc commonly
spoken of in the French law as clauses $ exoneration or clauses
de non-responsabilite. To what extent are such stipulations valid
if they are clearly expressed? Few questions in the French law
have given rise to more dispute, and even now the law can hardly
be regarded as settled. (See Boutaud, E., Des Clauses de Non-
responsabilite ; Sourdat, Responsabilite, 5th ed. 1, nos. 662,
septies; Colin et Capitant, 2, p. 12; Becque, E., in Rev. Trim.
1914, p. 311; Rev. Trim. 1915, p. 176; Thaller, Traite Elemen-
tairc de Droit Commercial, 4th ed. p. 604; Josserand, Les
Transports, nos. 622 seq. ; Cass. 31 dec. 1900, S. 1901. 1. 401,
and note by M. E. Perreau; Req. 9 dec. 1902, D. 1903. 1. Ill;
Dissertation by M. Sarrut in note to Cass. 9 mars 1886, D. 90.
1.209.)
Restrictive interpretation.
Upon general principles of interpretation such clauses must be
interpreted restrictively. (Cass. 19 fevr. 1900, D. 1900. 1. 433.)
Debtor cannot stipulate against his own dol or faute lourde.
It is contrary to elementary notions of good faith to allow a
man who binds himself by a contract to stipulate at the same time
that if he breaks the contract intentionally he shall not be liable
in damages. As the Roman law said: Si convener it, ne dolus
prcestatur : hoc enim bonce fidei judicio conlrarium est. (Dig.
50. 17. 23.) And there is a degree of negligence so gross that
the law assimilates it to a wilful intention to break the contract.
262 THE LAW OF OBLIGATIONS.
If the debtor in the contract shows such negligence as to indicate-
complete indifference to the interests of the other party, it would
be against public policy to let him escape his liability by pleading
that he had stipulated for immunity. Culpa lata dolo equiperatur.
(See Dig. 16. 3. 32; Girard, Manuel, 5th ed. p. 654.) These
rules taken from the Roman law have always formed a part of
the French law. (Sourdat, RespotisabiUte. I.e.; B.-L. et Barde,
Oblig. 1, n. 360, and 4, n. 2869; Cass. 15 mars 1876, S. 76. 1.
337, Journal du Palais, 76, p. 833, and note by Labbe; .Req.
27 nov. 1911, D. 1913. 1. Ill: Rev. Trim. 1915, p. 176; Planiol,
2, n. 882.)
The Egyptian jurisprudence is in the same sense. (C. A.
Alex. 21 dec. 1894, B. L. J. VII, 11; C. A. Alex. 16 nov. 1898,
B. L. J. XI, 14; Trib. Mixte, Caire, 11 mai 1907, B. L. J.
XX, 131; Trib. Mixte, Alex. 15 juin 1912, Gaz. Trib. 4, n. 273.)
Even the donor or the lender in the contract of loan for use is.,
always liable for his dol or faute lourde, although his obligation
is gratuitous. (Baudry-Lacant. et Barde, Oblig. 1, n. 360.)
The Cow de Cassation stated the rule in these terms: Aitendu
qu.il n'est pas permis, au moyen d'un contrat d'assurance ou de
tout autre pacte, de stipuler d'avance Vimmunite de ses fautes
lourde s : que Vordre public s' oppose a la validite d'un tel pacte.
(Cass. 15 mars 1876, S. 76. 1. 337, D. 76. 1. 449.)
Indeed, there would be little virtue in contracts if the parties
were allowed to stipulate that they might play fast and loose
with them.
The reason for the prohibition in this case is in fact the same
which underlies the provision of C. C. F. 1174: Toute obligation
est nulle lorsqu'elle a etc oontraetee sous une condition potestative,
de la part de celui qui s' oblige. (Boutaud, Clauses de non-
responsabilite, p. 224.)
There are a few French writers who reject the assimilation
between dol and faute lourde, and maintain that a stipulation of
exoneration for faute lourde is valid, though one of immunity from
dol is void. (Boutaud, Des Clauses de non-responsabilitL p. 225; -
Sainctelette, Responsabilite et Garcmtie, 17. See Josserarid, Les
Transports, n. 624, p. 516.) But this opinion is contrary to the-
traditional view, and to the weight of modern French authority.
f,UJL hah* ft, >Wl WA <v<\*>wH
STIPULATIONS OF EXONERATION FROM LIABILITY. 263
Stipulations of exoneration for fault of prepose.
Does the same principle apply when the stipulation is that the
debtor shall not be responsible for the fault of his prepose ? The
view which prevails in France is in favour of the affirmative.
(Sourdat, Responsabilite, 2, n. 796; note by M. Sarrut to Cass.
18 juill. 1900, D. 1903. 1. 17.) If it is against public policy to
refuse to allow a man to stipulate that he may break his contract
at will or that he may show a negligence so gross as to be equiva-
lent to the intention to break the contract, why should he be
allowed to do these things by the instrumentality of others? The
French jurisprudence is in this sense.
In a' recent case the Chambre des Requetes stated the rule thus:
Attendu qu'il n'sst pas plus permis de s'exonerer par avanoe par
convention des fautes de ses preposes que de ses propres fautes ;
que, s'il pent en etre autrement, cest seulement lorsque le prepose
echappe en fait, dans Vexeroice de ses fonctions, a Vautorite du
preposant et de sa direction. (Req. 27 nov. 1911, D. 1913. 1.
111. Cf. Cass. 31 dec. 1900, S. 1901. 1. 404, D. 1903. 1. 17:
Rev. Trim. 1914, p. 315; Rev. Trim. 1915, p. 176.)
The principle has been followed in Egyptian jurisprudence.
(C. A. Alex. 16 nov. 1898, B. L. J. XI, 14.)
The reservation made by the Chambre des Requetes of cases
in which the prepose is not in fact subject to the control of
the preposant is illustrated by two well recognised exceptions to
the rule: —
(1 ) It is admitted that a commissionnaire de transport, or " for-
warding agent " as he is called in the Egyptian Commercial Code,
may, by a clause in the way-bill, exonerate himself for liability
for loss caused by the acts of the carrier or intermediate agent to
whom he consigns the goods. (C. Comm. F. 98; C. Comm. E.
92/97; Paris, 19 mars 1907, D. 1909. 2. 350; Lyon-Caen et
Renault, Traite de Droit Commercial, 4th ed. 3, n. 624; Jos-
serand, Les Transports, n. 736.)
(2) In the law of carriage of goods by sea the French juris-
prudence appears to be settled that the ship-owner may, by a
clause in the bill of lading, exonerate himself from his liability to
the shippers of goods for loss caused by. the captain and crew
of the ship. (O. Com. F. 216; Cass. 25 oct. 1899, S. 99. 1.
496; Lyon-Caen et Renault, Manuel de Droit Commercial 11th
ed. n. 881, Traite de Droit Comm., 4th ed. 5, n. 744; Boutaud,
264 THE LAW OF OBLIGATIONS.
Des Clauses de mm-responsabilite, pp. 267,429; Rev. Trim. 1914,
p. 314.
But in spite of the reasons above given against allowing a com-
mettant to stipulate immunity for the faute lourde of his prepose,
supported as they arc by the French jurisprudence, it must be
admitted that a clause of non-liability for the fault of one's agents
stands in a different position from aclause of non-liability for one's
own fault. It is contended by some French writers that there is
no public policy against a man stipulating that he will not be
responsible even for the faute lourde of his prepose. (Boutaud,
op. elt. p. 220: Sarrut, in note to Cass. 9 mars 1886, D. 90. 1.
212; Becque, Rev. Trim. 1914, p. 318. See Josserand, Les
Transports, n. 624, p. 516.) It will be mentioned presently that
this is the tendency in legislation.
In assimilating as it does the faute lourde of the prepose with
the faute lourde of the preposant himself, the French law goes
further than is reasonable. There are cases no doubt in which
the faute lourde of the servant or agent involves at the same time
the faute lourde of the master or principal. There may have
been gross negligence in the choice of a subordinate, or an entire
absence of reasonable supervision. But there are other cases in
which the faute lourde on the part of the subordinate is consistent.
with merely slight fault or no fault at all on the part of the
aster or principal. He may have taken every reasonable care
in the choice of his subordinate, and he may have exercised every
reasonable supervision over his conduct. In cases of this kind,
if the other party has been willing to contract that the preposant
shall not be liable, upon what reason of public policy must such a
stipulation be invalid, at any rate unless the contract is one which
involves the public health or safety? It may be reasonable to
say that the preposant shall be necessarily liable for the dol of his
prepose in order to prevent the possibility of connivance between
the'two. But the reasons for extending the same principle to the
faute lourde of the prepose are far from conclusive. (See Sarrut,
in note to Cass. 9 mars 1886, D. 90. 1. 209; Boutaud, Des Clauses
de non-responsabiUte, pp. 226 seq. ; Becque, E., in Rev. Trim.
1914, pp. 316 seq.)
Stipulation of immunity for one's own ordinary negligence
or the ordinary negligence of one's prepose.
According to the prevailing view in the French doctrine and
jurisprudence, such stipulations are valid if the debtor's duty to
STIPULATIONS OF EXONERATION FROM LIABILITY. 265
exercise care is derived solely from the' contract. The famous
distinction is made between faute contractuelh and jaute delic-
tuelle. The debtor may validly exonerate himself from his lia-
bility created by contract except as regards dol and faute lourde,
but he cannot exonerate himself beforehand for a delict or a quasi-
delict, for his responsibility in these cases is a matter of public
order. (Baudry-Laeant. et Barde, Oblig. 4, n. '28(5!); Sourdat,
Responsabilite, 5th ed. 1, n. 662 septies. See Josserand, Les
Transports, n. 866; C. A. Alex. 30 dec. 1908, B.L.J. XXr, 93.)
Before deciding whether the clause is valid or invalid, we must
examine the contract to see if it is one which involves any ques-
tion of public order. In some contrasts it is completely indiffe-
rent to the state whether the contract is performed or not; the
matter is one which interests the parties only. They were free
to contract or not to contract as they chose, and they may annex
such conditions as they like to the contract which they make.
Thus, for example, if a workman undertakes to repair a fragile
vase he may make it a condition of the contract that if he breaks
it, even negligently, he is not to be responsible. Dig- 9. 2. 27.
29. Or a mandatary or depositary may stipulate that he will
not be responsible for any risks to the thing entrusted to him.
(Pothier, Mandat, n. 50; Lyon-Caen et Renault, Traite de Droit
Commercial, 4th ed. 3, n. 626 bis; Dall. Supp. vo. Responsa-
bilitc, n. 253.) In such cases there was no antecedent duty on the
part of the workman, the mandatary, or the depositary. If he
chose to undertake the duty he could impose any lawful conditions,
and if he fails to keep his contract his failure is a breach of
contract, and nothing more.
But there are other contracts which stand in a different posi-
tion, lor example, an owner of property owes a duty to the
public that it shall not be dangerous to them. And if the lessee of
the property suffers personal injuries resulting from the giving-
way of a portion of the structure leased, the fault of the owner,
according to the better opinion, is not contractual, but delictual.
(See Dall. Hep. vo. Louage, n. 191; 32 Rev. Prat. pp. 558 seq. ;
Laurent, 16, n. 230; Vineberg v. Foster, 1903, R. J. Q. 24
S. C. 258.)
An employer has a duty to take care of his workmen, and if
one of them is injured by the negligence of the master or of a
fellow-w T orkman, the fault of the master is a faute delictudle and
not. a, faute contractuelh '. This, at any rate, is the view of the
French jurisprudence and of the greater part of the doctrine,
though there are important dissentients. (Rcq. 15 juill. 1896,
266 THE LAW OF OBLIGATIONS.
D. 98. 1. 141; D. N. C. C. IV, p. 9-34, n. 52. See Boutau,d,,.
Des Clauses de non-re$pomabiIiU\ p. 86; Sourdat, Responsabilite,
5th ed. 2, n. 913, quater, and n. 1487; C. A. Alex. 30 dec. 1908,
B.L.J. XXI, 93.)
A railway -company owes a duty to take care of persons who
are, with its permission, in its vehicles or upon its premises wdietlier
they have a contract with the' rail way -company or not. ('See
Josserand, Les Transports, n. 849. Cf. Toulouse, 4 mai 1900,
and Req. 18 mars 1912, S. 1913. 1. 430; Rev. Trim. 1914.
p. 500.)
These illustrations are sufficient to show that there are many
cases in which there is a duty owing to a person by law and at the
same time a duty owing to him under a contract. It does not,
however, follow that the person to whom the duty was owed may
not by his contract have released the other party from both duties
if it was competent for him to do so.
But, as already stated, the general view in France is that it is
not competent for him to release the other from the duty imposed
by law apart from any contract.
Concurrence of faute contractuelle and faute delictuelle in
other systems of law.
The principle that an act may be at the same time a breach of
contract and a wrong, so that a choice of remedies is presented to
the person injured, was admitted by the Roman law and is admitted
under the English law. The conditions of the two remedies may
be different as regards the period of prescription, the amount of
damages which can be recovered, the transmissibility of the right
of action to heirs and successors, and so forth, and it is, therefore,
an advantage for the victim that he has two strings to his bow.
The breach of the duty created by the contract and the breach of
the general duty which lies upon every one not to injure another
by his fault are clearly two different things . It is not correct to say
that when there is a contract between two persons one of them is
allowed to do to the other anything which is not forbidden by the
contract. In the Roman law there were various reasons which give
some importance to this doctrine, but these do not need to be
considered here. (See Dig. 44. 7. 34. 2; Dig. 9. 2. 27. 29;
Grueber, E., Roman Late of Damage to Property, pp. 24, 100,
210, 230; Vangerow, Pandelien, 7th ed. 3, s. 681, p. 590; Wind-
scheid, Pandekten, 8th ed. 2, s. 455, note 12.)
In the English law also it is a well-settled rule that the same
STIPULATIONS OF EXONERATION FROM LIABILITY. 267
facts may give to A both a remedy in contract and a remedy in.
tort against B.
" If a common law duty results from the facts the party may be
sued in tort for any negligence or misfeasance in the execution of
the contract." (Chitty, Pleadings, I, 135; Pollock, Torts, 10th
ed. p. 560; Gooiey, Torts, 3rd ed. 1, p. 155.) If the injury would
have been a tort if there had been no contract, the contract does
not take away the right to sua in tort. The simplest case is that
in which a man has bound himself to perform some duty which
lies upon him antecedently apart from the contract. A doctor or
a dentist who by negligence injures a patient is in this position;
his negligence is both a breach of a contract and a tort. {Edwards
v. Mallcm, 1908, 1 K. B. 1002, 77 L. J. K. B. 608.) But
there are more difficult cases which do not need to be considered
here. (See Salmond, Torts, 4th ed. p. 3.)
Thus, in a railway case, a mother was travelling with a young
child just above the age at which children were entitled to travel
free. The mother took a ticket for herself *only . The child was
injured by the negligence of the company's servants, and an action
of damages was brought by the child. It was held that the com-
pany was liable either on an entire contract to carry the mother and
the child, or independently of contract, because the child was
accepted as a passenger, and this cast a duty on the company to
carry him safely. (Austin v. Great Western Railway Co., 1867,
L.R.2Q.B. 442, 36 L. J. Q. B. 201.) But, apart from certain
special cases which do not need to be mentioned here, the English
law sees no difficulty in a man renouncing beforehand by contract
his right to claim damages for a tort. (See infra, p. 282.)
Is it a universal rule of the French law that a man by contract
cannot relieve himself from liability for a quasi-delict?
Many writers say* broadly, that all clauses of exoneration from
liability for quasi-delicts are null as being against public policy.
(Baudry-Lacant. et Barde, Oblig. 4, n. 2869; Sourdat, Responsa-
bilite, 1, n. 662, septies ; Dall. Supp. vo. Responsabilite,n. 253;
Rand. Frang. vo. Respanmbilite, nos. 2021 seq.)
The most recent jurisprudence of the Cour de Cassation appears
at first sight, at any rate, to be in this sense. (Cass. 31 dec. 1900,
D. 1903. 1. 17, S. 1901. 1. 401; Req. 27 nov. 1911, D. 1913.
1. 111.) But these cases must be taken with reference to their
particular facts and will be noticed later.
L\ ivf-AMM U fill „ t...
268 THE LAW OF OBLIGATIONS.
It does not seem that any considerations of public policy render
necessary the acceptance of so broad a principle. On the con-
trary, the carrying on of affairs would be difficult if parties were
not allowed to relieve themselves from such liability. What
public policy is there to prevent a man undertaking to do certain
work on condition that he shall not be responsible for damage
caused by the negligence of his workmen? Apart from contract,
his liability for their negligence would be quasi-delictual, but
thai term does not involve any personal fault of his. It may be
that there was a want of care on his part, but this is not necessarily
the case. The question has been discussed in France mainly in
regard to contracts with common carriers by land. Under the
commercial codes the carrier is held to warranty against the loss
and damage of the goods carried, unless the loss or damage pro-
ceed front defects inherent in the thing, from vis major, or from the
fault or negligence of the consignor. (C. Comm. E. 97/102;
C. Comm. F. 103.)
But if the carrier stipulates that he will take the goods on
condition that he will not be responsible for loss, what is the effect
of such a stipulation? The French law on this subject lias gone
through three stages: —
1 From the passing of the codes down to 1874, the courts
held that the clause was altogether null. It was contrary to public
order because it encouraged negligence and placed the shipper
of the goods entirely at the mercy of the carrier. (Thaller, Traite
Elementmre de Droit Commercial, 4th ed. n. 1200; Lyon-Caen
et Renault, Traite de Droit Commercial, 4th ed. 3, n. 626; Lyon-
Caen et Renault, Manuel de Droit Commercial, 11th ed. n. o24.j
(2) After 1874 the courts came to take a different view of the
matter. They held that the clause of exoneration was not null
but it produced only a restricted effect, namely, that of altering
the onus of proof. Apart from stipulation, if the carrier could
not produce the goods safely at the end of the transit, it-was for 1
him to prove that they had been lost or damaged without his
fault. If, however, the carrier stipulated immunity from his
liability, the effect of this was that if he failed to deliver the
goods safely to the consignee no damages were due unless it was
proved that the loss or damage was caused by the fault of the
carrier or his servants. The jurisprudence became absolutely
settled in this sense by a long series of decisions. (Cass. 7 juin
1904, D. '06. 1. 17-3; Req. 9 nov. 1898, S. 99. 1. 398. See the
cases collected in Aubry et Rau, 5th ed. 5, p. 624, note 10;
STIPULATIONS OF EXONERATION FROM LIABILITY. 269
and Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 3,
n. 626.) This interpretation of the clause of exoneration was
vehemently criticised by the doctrine, and it was indeed entirely
arbitrary. It might be logical, though unreasonable, to say thai
such stipulations were null, but it was neither logical nor reason-
able to pronounce them valid up to a certain point but to give
them a meaning which the parties never contemplated. More-
over, no great protection was afforded to the public by such an
arbitrary method of interpretation. If the owner of the goods
lost or damaged has to prove any specific fault on the part of the
carrier or his servants, it is seldom that he will be able to do so.
As a rule all that he knows is that the goods do not arrive at
their destination or arrive in a damaged condition.
(3) The third phase of the law was brought about by the hi de
17 mars 1905, called the loi Rubier, which has added to C. Comm.
F. 103 an alinea in these terms: —
Toute clause contraire inseree dans toute lettre de voiture, tarif,
ou autre piece quelconque, est nulle.
This law applies to all carriers except carriers by sea, but it
does not extend to the carriage of persons, though her.' the reasons
of public policy apply a fortiori. (Lyon-Caen et Renault, Traite
de Droit Commercial, 4th ed. 3, n. 715, and 5, n. 743; Caen,
7 juin 1907, Toulouse, 8 avril, 1908, S. 1908. 2. 125 and 144,
D. 1909. 2. 124. Cf . Besangon, 27 janv. 1911, D. 1913. 2. 114;
Req. 10 dec. 1907, D. 1913. 1. 45; infra, p. 272.) And the law
applies only to the loss of the goods or damage caused to them
and not to loss caused by delay in their delivery. (Lyon-Caen et
Renault, I.e.; Thaller, Traite Elementaire de Droit Commercial,
4th ed. n. 1203 . ) Moreover, the loi Eabier leaves the railway-com-
pany or other carrier free to make stipulations limiting the amount
of damages to be paid in the event of loss, though the courts might
annul such a clause if the damages were so small as to destroy the
responsibility of the carrier. (Lyon-Caen et Renault, I.e. The
soundness of this conclusion is doubted by M. Thaller, who con-
siders that on a correct interpretation of the law it annuls not only
clauses of non-responsibility but also clauses limiting the respon-
sibility tc a maximum sum (n. 1205).
Since the passing of the hi Babjer the railway-company in
France can escape its liability for loss of or damage to goods
carried, only by proving:
(1) That the loss was caused by a defect inherent in the thing,
vice propre; or
•
270 THE LAW OF OBLIGATIONS.
(2; bj force majeure; or
(3) by the fault of the consignor. (Thaller, I.e.; Josserand,
Les Transports, n. 609; and see the full note by M. Bourcart sous
Trib. de Paix de Saint- Vivien, 15 mai 1907, S. 1908. 2. 145.)
M;my French writers are of the opinion, in which I agree, that
the lm Habier is unreasonably strict and that it would be more
in the interest of public order to leave greater freedom to the-
parties. Lyon-Caen et Renault, Traite de Droit Commercial,
4th ed. 3, n. 626 bis; Josserand, Les Transports, n. 636.)
Egyptian cases in contract of Carriage.
In Egypt the rules of the French jurispruderlce as to the effect
of clauses of exoneration have been closely followed. It is agreed
that such clause* cannot liberate the carrier from his liability
for dolor faute lourde. (C. A. Alex. 31 janv. 1917, Gaz. Trib.
7. p. 73; Trib. Comm. Alex. 8 mai 1911, Gaz. Trib. 1, p. 133;
Trib. Somm. Alex. 4 janv. 1919, Gaz. Trib. 9, p. 48.)
But clauses exonerating the carrier from his liability for the
negligence of his employees, or limiting his liability to a fixed
amount in the event of loss, are not regarded as against public
policy. Following the French jurisprudence as it was before the
passing of the loi Rabier, .the Egyptian courts hold that such 1
clauses have the effect of inverting the onus of proof. In the
principal case the law was thus stated: Une pareille clause n'a
pas pour effet d'exonerer le voiturier des soins qxCil est term
d'apporter, suivant le droit commun, a la garde et a la conserva-
tion de la merchandise qui lui a ete confiee; elle tend uniquement
a limiter sa responsabilite a une ualeur qui a ete expressement
et tacitement fixee par les parties elles-memes, pour le cas ou
elles se tmuveraient dans Vimpossibilite de remplir les devoirs
d-e preuve qui lew incombent respectivement, en ce qui regarde
soit la faute de voiturier (dont it a necessairement a repondre,
nonobstant toute convention contraire, des quelle est etablie en
fait),smt la foroe majeure qui a pour effet de le decharger de
toute responsabilite. (C. A. Alex. 18 janv. 1900, B. L. J.
XII, 90.
In another case where goods of a very fragile nature Mere sent
by train and many of them were broken en route, it was proved
that they had been unloaded by mistake at the station of Cairo
and reloaded again to send to the station of Abul Ela to whicih
they were addressed. The bill of lading contained a clause of
non-warranty, and it was proved that the administration offered
STIPULATIONS OF EXONERATION FROM LIABILITY. 271
the sender of the goods an option either to send them under this
bill of lading with the clcwae de uon-garantie, or to have them
sent with a man to look after them, or to insure them foil a small
premium. It was held that seeing- that this option was offered
to the consignor of the goods the clause of non-warranty could not
be considered as unlawful, but that the Railway Administration
was liable inasmuch as fault had been proved by the fact of their
having unloaded the goods at the wrong station. (C. A. Alex.
16 mai 1900, B. L. J. XII, 251.)
In another case part of the goods sent had disappeared en route.
There was no reasonable explanation of this except that the goods
had been stolen by the servants of the railway or owing to their
grave negligence. In these circumstances it was held that the
Railway Administration was liable for the full value of the goods
stolen and could not rely upon the clause restricting its liability
to a certain sum. (Trib. Somm. Alex. 4 janv. 1919, Gaz. Trib.
9, p. 48. Cf. C. A. Alex. 18 fevr. 1914, Gaz. Trib. 4, p 108,
n. 273.)
In the two cases last cited there was proof of faute lourde,
and it was therefore not necessary to decide whether a clause of
non-liability would be a complete defence if the fault alleged was
ordinary negligence. But in the two cases decided by the Mixed
Court of Appeal (B. L. J. XII, 90, and B. L. J. XII, 251) the
question was as to ordinary negligence, and the French juris-
prudence, according to which the onus of proof is shifted by the
clause of exoneration, was followed in these cases. (See article
by present writer in Gaz. Trib. 1919, 9, p. 139.)
Special reasons of public policy in regard to contracts of
carriage.
.There are reasons which do not apply to contracts in general
why contracts made with common carriers should be regarded
with jealousy. (1) Negligence in the carriage of persons is likely
to result in loss of life or personal injury, and under modern,
conditions of society one can hardly say that persons are free to
travel or not as they like. Frequently, also, the carrier to whom
they trust the safety of their lives and limbs enjoys a monopoly.
It is in the public interest that travelling should be as safe as
possible, and any stipulations which tend to relax the diligence
of railway companies and other carriers by land in the exercise
of their duty to take care of life and limb are against public order.
Since the lot Rabier in France it can hardly be doubted that this
272 'i'HE LAW OF OBLIGATIONS.
is the French law, for, although that law doos not apply to the
carriage of persons, the reason of public policy which underlies
the law applies to that case a fgriiori. (2) If the carrier cannot
relievo himself from his fault in regard to the carriage of goods,
it would be strange indeed if he could do so in regard to the
carriage of persons. (3) It is contrary to public policy that one.
man should give to another the right to kill or injure him with
impunity even though it be without dot or faute lourde. Almost
all the French writers agree upon this point. (Sarrut, in note
to Cass. 21 nov. 1911, D. 1913. 1. 250; Labbe, in note to Cass.
ler juill. 1885, S. 1885. 1. 409; Josserand, L., Les Transports,
n. 915; Becque, E., in Rev. Trim. 1914, p. 319.)
According to the latest jurisprudence of the Cow d,e Cassation
the liability of the carrier of passengers is contractual and not
delictual, the contract being to carry the passenger safe and sound
to his destination. If the contract is not duly performed the
carrier is liable unless he prove that the accident was due to the
fault of the victim or to force majeure. (Cass. 21 nov. 1911,
S. 1912. 1. 73. Cf. Paris, 2 fevr. 1910, Pond. Frang. Periodi-
ques, 1910. 2. 223; Rev. Trim. 1913, p. 432; Rev. Trim. 1915,
p. 189.)
The Mixed Court of Appeal in one case appears to have
accepted this view. (C. A. Alex. 16 juin 1897, B. L. J. IX,
388.)
This question belongs to the law of responsibility, and cannot
be discussed here.
But it may be mentioned here that the history of article 1784
of the French Code, as well as the terms of that article itself,
make it very doubtful if the common carrier was intended to be
an insurer of passengers. (See Ripert, G., in Rev. Critique,
1913, p. 198; Josserand, Las Transports, n. 879.) *
And it is interesting to notice that in the English law the view
that he is such an insurer has been definitely rejected. (Gallin
v. L. & N. W. By., 1875, L. R. 10 Q, B. 212, 44 L. J. Q. B.
89; Redhead v. Midland By., 1869, L. R. 4 Q. B. 379, 38
L. J. Q. B. 169. See Beven, Negligence, 3rd ed. 2, p. 944;
Halsbury, Laws of England, s.v. Carriers, 4, p. 44; Leake, Con-
tracts, 6th ed. p. 502; Macnamara, Carriers by Land, 2nd ed.
p. 577.)
Whether the fault here is contractual or delictual, and whatever
may be the correct view with regard to the onus of proof of fault.
in cases of accidents to passengers the reasons against allowing
STIPULATIONS OF EXONERATION FROM LIABILITY. 273
them to discharge their claims beforehand arc very strong. Nor
does it seem that the carrier should be allowed to stipulate a
restriction of his liability to a certain sum in the event of injury
to the passenger. (Josserand, Les Transports, n. 915. Contra,
Lyon-Caen et Renault, Trfiite de Droit Commercial, 4th ed. 3,
n. 716.) Nor, as it seems to me, should it make any difference
that the carriage is gratuitous. If the carrier has undertaken to
carry the passenger at all he is bound to take care of him. (See
Trib. Lyon, 13 janv. 1912, S. 1912. Bull, des Sommaires, 2me
partie, 43; Lyon, 28 janv. 1913, S. 1913. Bull, des Sommaires,
2me partie, 27; Keq. 18 mars 1912, S. 1913. 1. 430; Rev. Trim.
1914, p. 500.)
And when the owner of animals or goods sent by train is
allowed to send his servants with them to take care of them during
the transit these servants ought to enjoy the protection given to
other passengers. Stipulations that they are to travel at their
own risk are against public policy. (See, in this sense, in America
the judgment of the Supreme Court of the United States, Rail-
road Co.x. Rockwood, 1873, 17 Wall. U.S. 357; Beven, Negli-
gence, 3rd ed. 2, p. 956.)
Different rule in England as to gratuitous passengers.
But in England it is held that if a passenger contracts to travel
at his own risk the company is not liable if he is injured, even
though this be the result of their gross negligence. {McCawley
v. Furness Rail. Co., 1872, L. R. 8 Q. B. 57, 42 L. J. Q. B.
4; Gallin v. L. & N. W. Ry. Co., 1875, L. R. 10 Q. B. 212,
44 L. J. Q. B. 89. See Macnamara, Law of Carriers by Land,
2nd ed. p. 588; Halsbury, Laics of England, v. Carriers, p. 55.)
But the carrier of passengers is not allowed to limit his liability
for negligence by notice, unless he quotes an alternative rate under
which the liability is not limited. (See Clarke v. W. Ham Cor-
poration, 1909, 2 K. B. 858, 79 L. J. K. B. 56.)
Public policy as to carriage of goods.
In regard to contracts for the carriage of goods the reasons why
supervision is necessary are quite different. Common carriers,
and more particularly, railway-companies, generally enjoy a
monopoly. They are in a position to impose unfair and un-
reasonable conditions upon the sender of goods. The sender
w. — VOL. II. 18
274 THE LAW OF OBLIGATIONS.
cannot get his goods to the market except through the instrumen-
tality of the railway-company, and the railway-company can say
to him " we will carry your goods only upon our conditions, and
if you do not choose to accept those, the goods can stay where
they are." The sender is in fact in a position of economic in-
feriority, and he cannot protect himself. It is in the public
interest to secure the transport of commodities upon reasonable
terms, and if the senders of goods are coerced by the railway-com-
panies to agree to unreasonable terms, they will manage to shift
the burden on to the shoulders of the consumers. It is for reasons
of this kind that the law regards these contracts with a jealous
eye. Even some systems of law, such as the English, which, as a
general rule allow the utmost freedom to stipulations of non-
liability for fault, apply a different principle to contracts with
railway-companies.
The question ought to be one of reasonableness.
The correct view of the matter would seem to be that the ques-
tion for the court to determine in the particular case is simply
whether the clause of non-liability was reasonable in the circum-
stances. It is against public order to allow a railway-company
to take advantage of a position of economic superiority, and in
this way to force the sender of goods to consent to terms to which
he would not otherwise have agreed. But if the railway-company
offers to the sender a free choice between sending the goods upon
ordinary terms, subject to the liability of the railway-company
for negligence, or of sending them at reduced rates at his own
risk, so that he will have no claim against the railway-company
except by proof of del or fmite lourde, and the sender with his eyes
open freely accepts the latter alternative, there is no reason of
public policy for holding such a stipulation to be void.
(Josserand, Les Transports, n. 631; Lyon-Caen et Benault, Traite
de Droit Commercial, 4tih ed. 3, n. 626 bis ; Boutaud, Des Clauses
de Non-re^ponsabilite, p. 215 and p. 264 and 297; Becque, in Rev.
Trim. 1914, p. 318. Cf. C. A. Alex. 16 nov. 1898, B. L. J.
XI, 14.)
English law.
The English law, as will be explained later, arrives at this
result by special legislation.
9 'MA/*
-STIPULATIONS OF EXONERATION FROM LIABILITY. 275
Clauses of exoneration in maritime law.
The validity of clauses in charter parties and bills of Lading
excluding the liability of the shipowner for the faults of the
captain and crew lias been the subject of much discussion in the
French law. The jurisprudence may be now considered as settled
in favour of the validity of such clauses. And this conclusion is
approved of by the majority of the writers. (Cass. 5 dec. 1910,
"S. 1911. 1. 129, and note by M.' Lyon-Caen; Cass. 11 fevr.
1908, D. 1908. 1. 214; Sarrut in note to Cass. 9 mars 1886,
D. 90. 1. 209; Lyon-Caen et Benault, Traite de Droit Com-
mercial, 4th ed. 5, n. 744.)
The Cour de < 'assation states as the principal reason that the
captain and crew of a vessel are, when the vessel is at sea, no longer
under the control of the shipowner. (Cass. 14 mars 1877, D. 77.
1. 449.)
The validity of the clause of exoneration here, as already stated,
applies even to the dot and jaute lourde of the captain and crew,
and the Egyptian courts have followed this rule. (Lyon-Caen
et Renault, 5, n. 745 bis; C. A. Alex. 2 avr. 1896, B. L. J.
.VIII, 198; C. A. Alex. 19 nov. 1902, B. L. J. XV, 7; C. A.
Alex. 31 janv. 1917, B. L. J. XXIX, 188; C. A. Alex. 9 avril
1919, B. L. J. XXXI, 236.)
The commercial community in France is not satisfied with this
state of the law, and there has been a long struggle to make such
stipulations unlawful. It has also been proposed to allow the
shipowner to exonerate himself from his liability for the f antes
nautiques of the captain, i.e., errors of navigation, but not from
his liability for fautes commerciales committed by the captain,
i.e., faults in loading, stowage, care of cargo and the like. This
is the distinction made by the American law and will be referred
to later. (Infra, p. 284.) A proposition de loi to that effect
was introduced on 10 nov. 1910, by M. Maurice Colin. But ,so
far the shipowners have succeeded in preventing an amendment
of the law. (See Revue Critique, 1912, p. 124; Lyon-Caen et
Renault, Traite de Droit Commercial, 4th ed. 5, n. 747 bis.)
But when the agents of a shipowner are in fact under his control,
as, for example, when the ship is in port, and is in charge of the
.shipowner or his agent, such clauses of exoneration become in-
applicable. (Req. 3 mars 1897, D. 97. 1. 556; Cass. 3 fevr.
1904, D. 1905. 1. 315; Lyon-Caen et Renault, 4th ed. 5, n. 745
bis; C. A. Alex. 19 nov. 1902, B. L. J. XV, 7.)
276 THE LAW OF OBLIGATIONS.
And the shipowner cannot stipulate immunity from his own
personal fault, and more particularly, he cannot exonerate himself
from liability for the unseaworthiness of the ship before its de-
parture. (C. A. Alex. 31 janv. 1917, B. L. J. XXIX, 187;.
Lyon-Caen et Renault, Traite de Droit Commercial, 4th ed. 5,
n. 747.) Nor are such clauses of exoneration from liability for
dol or faute lourde valid in cases of contracts for the carriage of
goods by river. The French law and the Egyptian law apply
different rules for navigation by sea and by inland waterways.
The Code of Maritime Commerce applies only to carriage by sea,
and the same is true of Book II. of the French Code of Commerce.
Both the French Code of Commerce and the Egyptian Code as-
similate the carrier by river to the carrier by land. (See C. Com.
F. 107; C. Com E. 101/106: Req. 28 feVr. 1900, D. 1900. 1.
286.) Subject to what has been said above, clauses of exoneration
in maritime law are valid in the case of the carriage of persons
as well as in the case of the carriage of goods.
Laws of other countries.
In many other countries the validity of clauses of this kind
in charter parties and bills of lading is admitted. (See a list of
them in Dall. Rep. Pratique, vo. Droit Maritime, n. 950. The
English law is stated later.)
Post-office and telegrams.
The transmission of letters is managed by a department of the
state in Egypt as in imost civilised countries, and, in Egypt, the
state likewise conducts the business of sending inland telegrams
which in many countries is carried on by private telegraph com-
panies. Telegrams from Egypt to foreign countries are sent by
private companies.
Post-office letters.
As regards the post-office the responsibility of the Egyptian
state is greatly limited by the special laws upon the subject. (See
Decret du 29 mars 1879 and reglement pour V execution du decret
du 29 mars 1879, Lamba, Code Administratis 497; Gelat, Rep.
1888, vo. Posies; Trib. civ. Alex. 18 mai 1907, B. L. J. XIX,
255.)
When personal fault can be brought home to an agent or servant
of the postal administration he is liable for the damage caused
by his fault, and cannot shelter himself behind the law which
frJAfi.i* f^
STIPULATIONS OF EXONERATION FROM LIABILITY. 277
protects the state from liability. This depends in Egypt upon
general principles. In France the distinction is made in the
administrative law between fairies cle service and fairies person-
nelles, and it is only for the latter that the agent or servant is
liable. (See Req. 3 janv. 1876, S. 76. 1. 113, Journal du Palais,
76, p. 267; Trib. des Conflits, 8 juin 1907, S. 1909. 3. 134;-
Req. 9 mai 1911, D. 1912. 1. 401; Geny, Lettres Missives,
.1, p. 112; Hauriou, Droit Administmtif, 8th ed. p. 495.)
Telegrams sent by private companies.
The question if a private telegraph-company can validly exone-
rate itself from liability does not seem to have arisen in Egypt.
It would appear that the same reasons of public policy apply hero
as in the case of the common carrier.
The company is in a position of economic^ superiority which
gives it the power to impose unreasonable conditions. If it offers
to the sender of a telegram the choice between sending a repeated
message for which the company accepts responsibility, or sending
an ordinary message at a lower rate at the sender's own risk, this
is reasonable enough. But if it exploits its monopoly by declin-
ing to send any message which it undertakes to deliver accurately
the court should consider such a condition as against public policy.
It has been held in one case in Quebec that where there is
evidence of negligence on the part of a telegraph-company or its
employees in the transmission of a message, the company is not
protected by a printed condition on the telegraph blank form
that it will not be responsible for errors in the transmission of an
unrepealed telegram. (Great N. W. Tel. Co. v. Laicrence, R.
J. Q. 1 Q. B. 1.) In the United States the authorities are con-
flicting. In many states such a condition is in the case of an
unrepealed telegram valid. Mr. Cooley sums up the decisions
thus: " It is customary for telegraph companies to send messages
subject to a condition that they shall not be responsible for errors
or delays, unless the message is repeated at the sender's cost.
Such conditions have frequently been supported as reasonable <
But the condition to be available must be brought to the know-
ledge of the party interested in the message, sender or receiver,
and in the absence of a provision requiring the message to be
repeated, it would be void as an attempt by the company to relieve
itself of the consequences of its own fault." (Torts, 3rd ed. 2,
p. 1484.) It has been held in some cases that a stipulation was
278 THE LAW OF OBLIGATIONS.
invalid by which the liability of the telegraph-company wag
limited to a fixed sum. See Hunt v. Railroad, 112 U. S. 331,
and cases in Bevi a, Negligetice, 3rd ed. p. 1121.)
This seems unreasonable. It would appear just to apply the
same rules as t<> carriers. If the telegraph-company offers a choice
between a cheap message at the sender's risk or a dearer message
at the company's risk, what is there in this which is against public
policy?
Telegrams sent by public service.
The situation is different when the service is in the hands of
the state itself. In this case there are special laws excluding or
defining the liability of the government. It is no longer a question
of stipulation.
In France by the loi du 29 nov. 1850, VEtat nest soumis a
aucune responmhiliU a raison du service de la correspondan
privee par la voie telegraphique. (See Panel. Franc, vo. Posies,
Telegraphes et Telephones, nos. 1317. 1637. 1640: Geny, Lettres
Missives, 1, p. 118.)
In Egypt there is a Reglement du Service Telegraphique in
terms which will be given later. But it is not by any means too
clear that this reglement was competently made.
Egyptian law.
In the Egyptian law, the question does not seem to have been
raised. The State Telegraphs are attached to the Ministry of
Public Works, and the Eailway Board is given power to make
rules for the management and working of the State Railways and
Telegraphs. Loi 25 of 190o, s. 5: Gelat, V. p. 97.)
That section gives the board power, in particular, to make rules
as to various matters. But these are all of an administratis-
character, such as defining the powers of the chief officer of the
Telegraph Department, prescribing the manner in which accounts
shall be kept, and the like. Upon the principle ejusdem generis,
it. might be argued that the board has no power under this section
to make rules limiting the responsibility of the administration.
There does not appear to be any other loi or decret giving such
power. From the Annuaire Statistique of 1914, p. 223, it appears
that the documents concerning the administration of telegraphs,
previous to 1889, have disappeared from the archives.
The Reglement d>< Si Wit • Telegraphique, printed in the Indiccir
STIPULATIONS OF EXONERATION FROM LIABILITY. 279
teur des Chemins de Far Egyptiens ,1919;, contain- a clause
headed Responmbilite which is in those terms:—
L' Administration n'accepte les depeches que sous la condition
expres.se qu'aucune responmbilite ne sera encourue par elle pour
les re funis dans lew transmission ou lew distribution. Elle n'est
non plus responsable de leur non-transmission ou non-distribution
ni d'erreurs (Vune nature ou cause quelconque.
If the reglement is not competently made, the question has to
be considered whether such a condition is against public policy.
The state not being protected by special law would be in the sami
position as a private company. Upon this basis the clause is
unfair and exorbitant. The Egyptian service does not offer the
choice to the sender of a telegram either to send a repeated message
for which the administration accepts responsibility for errors, or
to send an ordinary message at the sender's risk. No such option
being offered, and the administration having a monopoly, the
clause of exoneration is against public order.
Contracts by which a workman renounces beforehand his
right to claim damages for personal injuries.
It has been maintained above that it is against jmblic order
for a railway-company to limit its liability for accidents to pas-
sengers. Similar reasons ought to apply in principle to contracts
between an employer and his workman. It is against public order
to allow a man to deprive himself by contract of his legal right
to safety of life and limb. Life, health and physical safety are
not things in commercio. Moreover, in this case also, the employer
is usually in a position of economic superiority. The workman
who has to earn his bread is practically compelled to agree to
unfair provisions. It is for these reasons among others that almost
all European countries have now passed laws which not only for-
bid stipulations of this kind, but also make the employer respon-
sible for accidents caused to the workman in the course of the
work without proof of fault on the part of the employed-. (See
Sachet, Traite de la Legislation sur les Accidents du Travail :
Cabouat, Jules, Traite des Accidents du Travail ; Baudry-Lacant.
et Wahl, Louage, 3rd eel. 2, n. 1735 seq.; Colin et Capitant, 2.
p. 392; Walton, Workmen's Compensation Act of the Province of
Quebec; Boutaud, Clauses de Non-responsabilite, p^ 82 and p. 337 .
Cf. Josserand, Les Transports, n. 915; Labbo, Rev. Crit. 1886,
p. 448; Trib. de St. Etienne, 10 aoiit 1886, S. 87. 2. 48.)
UuaXt
280 THE LAW OF OBLIGATIONS.
In Egypt where there is no legislation like that of the European
states, the jurisprudence is much less favourable to the workman.
The jurisprudence both in the Native and the Mixed Courts is
settled in the sens.- that the risque professionnel falls upon the
workman. C. A. 2 dec. 1913, O. B. XV, n. 23; Trib. Civ.
Alex. 7 juin 1913. Gaz. Trib. 3, n. 439; C. A. Alex. 1 mai
1901, B. L. J. XIII, 269; C. A. Alex. 18 avril 1906, B. L. J,
XVIII, 203.)
The workman cannot succeed without proof of fault on the
part of the employer or of some person for whom the employer is
Monsible. C. A. Alex. 17 mai 1916, B. L. J. XXVIII, 334.)
But a renunciation by the workman beforehand of his right to
claim damages is not valid even when the employer undertakes
to give the workman rights under a pension scheme. (C. A.
Alex. 30 dec. 1908, B. L. J. XXI, 93. Cf. Trib. de Saint-
Etienne, 10 aout 1886, S. 87. 2, 48, and the note.)
Other cases in which advantage has been taken of a position
of superiority.
It is possible that the principle followed with regard to con-
tracts with carriers may be extended to other cases in which a
' y to the contract has exploited a position of economic superio-
rity. According to MM. Colin et Capitant, La clause d'irre-
s.ponsabilite est dans certains cas entierement prohibee. wit par
la loi, soit par la jurisprudence. Cela a lieu, semble-t-il, lors-
qu'il n a entre les cwvtraeUmts une inegalite qui rCa pax permis
au creancier <h disouter cette clause avec son. debiteur. (Cows
Elementaire, 2, p. 13.) In cpiestions of public policy it is neces-
Bary to Lave a wide discretion to the courts. They must be trusted
not to apply such a rule except in circumstances of a very >pedal
nature. > \
In other cases freedom of contract should be allowed.
If we eliminate the classes of contracts which have been dis-
cussed, in all of which there is a risk of one party abusing a
position of superiority, there is no reason of public policy for
prohibiting clauses of non-responsibility. It is from this point
of view immaterial whether the fault which caused the damage
was contractual or delictual. And it would make no difference if
.\.' adopted tin- doctrine of the r isque cree and treated the fault
as purely objective. See Charmont, Les Transformations du
STIPULATIONS OF EXONERATION FROM LIABILITY. 281
'Droit Civil, pp. 233 seq.; Colin et Capitant, 2, p. 356; Josserand,
Les Transports, n. 883.) Nor should the concurrence of faute
contractuelle and faute delictuelle, if it exists, affect the conclu-
sion. For, unless the ease falls within one of the exceptiona l
classes which have heen discussed above, there is no public policy
to prevent the parties determining beforehand the indemnity which
shall be paid in the event of breach of contract. If they have
agreed to substitute a contractual liability for the delictual lia-
bility which would exist if there had been no contract, why should
their agreement not receive effect? If the contract is lawful in
itself the parties may fix as they please the responsibility which
will result from its inexecution. Volenti non fit injuria. The
failure to perforin the contract does not affect public order, it
affects merely the pecuniary interests of the creditor, and if he
has chosen to take the risk of the inexecution why should the law
be more anxious to protect him than he is to protect himself?
As Al. Boutaud well says: La responsabilite delictuelle lors-
qu'elle prut faire Vobjet cVun tontrat devient par cela rneme con-
tractuelle; il est permis aux interesses a" en determiner librement
Vet endue. (Des Clauses cle Non-responsabilite, p. 227; in same
sense, Josserand, Les Transport*, n. 628; Saleilles, Theorie
Generate de V Obligation, n. 16, and n. 332; Becque, in Rev.
Trim. 1914, p. 318.)
Tendency of recent French jurisprudence.
It must be admitted that these conclusions are difficult to re-
concile with the most recent jurisprudence in France. In several
of the latest cases it is laid down in general terms that a party to
a contract cannot exonerate himself beforehand from liability for
his own fault or the fault of his subordinates, and no distinction
is made between faute legere and faute lourde. But these cases
must be taken with reference to their particular facts, and it is
doubtful if the courts intend to lay down an absolute rule of so
general a kind, and so much in conflict with the law as previously
understood. The first of these cases was one in which a munici-
pality, on the occasion of an industrial exhibition, had induced
the exhibitors to sign contracts by which they released the muni-
cipality from all liability in the event of damage to the exhibits
from fire, accident, theft, etc. The Cow cle Mont pettier decided
that the clause was a valid exoneration as regards f aides legere*,
and that as regards fautes lourdes it threw the onus of proof upon
the exhibitor. The Cow de Cassation appeared to draw no dis-
;
282 THE LAW OF OBLIGATIONS.
tinction between these two classes of faults, and stated the ride in
these terms: Attmcki qu'il n'est pas plus permis de s'exonerer
(i'lirtii/cr par convention des fautes de ses preposes que de ses
propres fautes; que s'il pent m etre autrement cest seidement
lorsque le prepose echappe en fait, duns Vcrercice de ses fonctionSj
a Vautorite da preposant et a sa direction. (Civ. 31 dee. 1900,
D. 1903. 1. 17, S. 1901. 1. 401.;* And the Chambre des Re-
quites adopted the same formula in a recent case. (See Rev.
Trim. 1912, p. 179. The question there was as to the validity
of a clause of exoneration imposed by an information bureau
upon its clients. The Agence de Bens&ignements had in that case
given information to a client as to the credit and position of a
certain individual. This information was highly misleading, and
there was gross negligence on the part of the agency in not dis-
covering it to be so. The case was undoubtedly one of faute
lourde, but the judgment was not rested upon that ground. (Req.
27 nov. 1911, D. 1913. 1. 111. See Rev. Trim. 1912, p. 179,
and p. 981.)
The exhibition case just mentioned may perhaps be explained
by saying that the court regarded it as one in which one of the
parties had abused a superior economic position. As MM. Colin
et Capitant put it: La solution serait evidemment excessive si on
ne Vexpliquait ici par ce fait que cetait, en realite, la ville qui
avait fait la loi des contrats passes avee les exposants. {Cows
Elementaire, 2, p. 13. See Rev. Trim. 1914, p. 316.)
Clauses of non-responsibility in other laws.
(1) English law.
The broad principle of the English law is that a man cannot,
claim damages for an injury to which he has consented— Volenti
non fit injuria. Before the Workmen's Compensation Act, 1897,
the principle was constantly applied in cases of industrial acci-
dents. It was not doubted that the workman might accept the
risk. {Smith v. Baker, 1891, A. C. 325, 60 L. J. Q. B. 683 .
See Beven, Negligence, 3rd ed. 1, p. 646.) The chief limita-
tions upon the rule in the English law are, (a) a man cannot by
his consent justify an act which is in itself criminal or " un-
warrantably dangerous." (See Pollock, Torts, 10th ed. p. 168,
and p. 226.)
(b) Workmen engaged in employments to which the Work-
men's Compensation Act, 1906, applies cannot relinquish any
STIPULATIONS OF EXONERATION FROM LIABILITY. 283
right of compensation from the employer for personal injury
arising out of and in the course of the employment, excepl in
exchange for a scheme of compensation certified as equally bene-
ficial. ,6 Edw. 7, c. 58, s. 3.)
(c) A common carrier may exonerate himself by special con-
tract from liability for loss or damage to goods. (The Carriers
Aet, 1830 (11 Geo. IV. & 1 Will. IV. c. 68;. See Beven, Negli-
gence, 3rd eel. 2, p. 1072.) But in the case of railway and canal
companies this freedom is restricted. The company can make
such conditions only " as shall be adjudged by the court or judge,
before whom any question relating thereto shall be heard, to be
just and reasonable." (Railway and Canal Traffic Act, 1854
(17 & 18 Vict. c. 31). See Beven, op. tit. 2, p. 925; Macnamara,
Can-ins by Land, 2nd ed. p. 152.) The contract must be in
writing, and the onus of proof that it is just and reasonable is on
the company. {Peek v. North Staffordshire Bij. Co., 1883, 10
H. L. C. 473, 32 L. J. Q.-B.-241.) In considering whether a
contract is just and reasonable an important element is if the
sender had an alternative option of sending the goods upon
ordinary terms or at lower rates subject to special conditions.
(31 an nhexter, Sheffield cmd Lincolnshire By. Co. v. Brown, 1883,
8 A pp. Cas. 703, 53 L. J. Q. B. 124; and see cases cited in
Beven, Negligence, p. 929; Macnamara, Carriers by Land, 2nd
ed. p. 156.)
In regard to the carriage of passengers the English law is that
a passenger who agrees to travel at his own risk is bound by this
stipulation. (Hall v. N. E. By. Co., 1875, L. R. 10 Q. B.
437, 44 L. J. Q. B. 164. Cf. Grand Trunk By. v. Robinson,
1915, A. C. 740, 84 L. J. P. C. 194, for same rule in Canada.)
But the Supreme Court of the United States has held such a
stipulation void, and for the reasons stated earlier it seems to be
against public policy. (See the cases in Beven, op. cit. 2, p. 956.)
By the maritime law of England there is nothing to prevent
the parties from agreeing that the shipowner shall not be liable
even for his own personal fault. An express exception might,
for example, relieve the shipowner from his legal duty to provide
a seaworthy ship, and that though the unseaworthiness was due to
his own negligence. (See Borthwick v. Elderslie Steamship Co.,
1904, 1 K. B. 324, 74 L. J. K. B. 338; Beven on Negligence,
3rd ed. 2, p. 1028.) Such clauses are unusual. On the other hand.
English bills of lading commonly relieve the shipowner from the
responsibility for the negligence of the captain or crew, and, a
284 THE LAW OF OBLIGATIONS.
fortiori, this clause is valid. {The Duero, 1869, L. E. 2A.&E.
393, 38 L. J.'Adm. 69; Westport Coal Co. v. McPhail, 1898,
2 Q. B. 130, 67 L. J. Q. B. $74; Carver, Carriage of Goods by
Sea, 5th ed. s. 101.)
American law is different.
Upon this important matter the law of the United States has
broken away from the English law. Under the law of the United
States by the Federal Act of 1893, commonly known as " The
Harter Act," the shipowner is exempted from liability for errors
of navigation if he has used due diligence to have the ship sea-
worthy and properly equipped. On the other hand, he is not
allowed to relieve himself from liability for the negligence of
the captain or crew in regard to the loading, stowage, care and
delivery of the cargo. (See the Act with a short commentary in
Carver, op. tit. n. 103a.) There is legislation on lines closely
similar in Australia and Xew Zealand. (See the Acts in Carver,
op. til. p. 998.)
Limitations of liability must be reasonable, and such a clause
- this is considered to be unreasonable.
(2) German law.
Under the German Code the rule is that the debtor can exonerate
himself from any liability except for an intentional act art.
276). As regards his preposes, he can even stipulate that he will
not be responsible for intentional acts on their part (art. 278.
Cosack, Lehrbuch des Deutschen burgerlichen Rechtsjl,
p. 346; Saleilles, Theorie Generate cle V Obligation, 3rd eeT p.
434). But this wide freedom is to some extent restricted by the
article which gives power to the courts to annul contracts by which
one part}- has obtained an exorbitant advantage by exploiting the
needs, thoughtlessness, or want of experience of the other party.
I'ntcr Ausbeutung der Soilage, des Leichtsinm oder der Un&r-
fahrenheit tines andern, art. 138; Cosack, 1, p. 232: and see
supra, p. 30-5.)
In the German law the compulsory insurance of workmen
against industrial accidents invalidates all stipulations of non-
liabilitv. See Boutaud, Des Clauses de A 'on-responsabilite, p.
343.) *
In regard to railways the German legislation is somewhat com-
plicated. The company may limit its liability by certain stipu-
STIPULATIONS OF EXONERATION FROM LIABILITY. 285
lations, but cannot exonerate itself altogether. (See for details,
Thaller, Ann-ales de Droit Commercial, 1, p. 37. Cf. Boutaud.
op. fit. p. 307.)
(3) Swiss law.
The Federal Code of Obligations contains two articles which
deal carefully with clauses of exoneration, and by special laws
railway companies, steamship companies, and manufacturers are
not allowed to exonerate themselves even from the ordinary negli-
gence — fante legere — of their employees. (See art. 3, Loi federate
sur la responsabilite des Chemins de fer et bateaux a vapeur, du
ler juillet, 1875; art. 4 du loi federate du 29 mars 1893, sur les
transports par chemins de fer et bateaux a vapeur; art. ler, loi
federate du 25 juin 1881, sur la responsabilite des fabrieants :
Boutaud, Des Clauses de Non-responsabilite, p. 309 and p. 343.)
The general articles upon the subject are as follows: —
Est nulle toute stipulation tendant a liberer davanoe le debiteur
de la responsabilite qu'il encourrait en cas de dot ou de faute grave.
Le juge peut, en vertu de son pouvoir d appreciation, tenir pour
nulle une clause qui libererait davance le debiteur de toute re-
sponsabilite en cas de faute legere, si le creancier, au moment ou
il a renonce a rechercher le debiteur, se trouvait a son service, ou
si la responsabilite resulte de Vexercice dune Industrie concedee
par Vautorite. Les regies partieulieres du contrat d 'assurance de-
meurent reservees. (Code Fed. Obi. art. 100.) Under the in-
dustries concedees fall raiiwaj^s and steamships, and certain pro-
fessions such as those of notary, advocate, innkeeper.
Celui qui, meme d'une maniere licite, confie a des auxiliaires,
tels que des personnes vivant en metiage avec lui ou des employes,
le soin dexecuter une obligation ou d'exercer un droit derivant
dune obligation, est responsable envers V autre partie du dommage
qu'ils causent dans V accomplissement de lew travail.
JJne convention prealable pent exclure en tout ou en partie I ■
responsabilite derivant du fait des auxiliaires.
Si le creancier est au service du debiteur, ou si la responsabilite
resulte de Vexercice dune Industrie concedee par Vautorite, le
debiteur ne peut s'exonerer wnventionnellement que de laresponsa-
bilite deemdant dune faute legiere (art. 101. ' See Rossel et
Mentha, Droit Civil Suisse. 3. p. 132
286 THE LAW OF OBLIGATIONS.
CHAPTER XVI.
NON-PERFORMANCE OF CONTRACT WITHOUT
FAULT OF DEBTOR.
(1) Exceptional cases.
(a) Express stipulation of warranty.
It may appear from the terms of the contract that the debtor
guaranteed its performance, in the sense that he bound himself to
pay the damages in the event of non-performance, whether this
non-performance was due to his fault or not'.
The validity of such a stipulation is recognised in many articles
of the French Code. (C. C. F. 1302, al. 2, 1772, 1825; C. C. E.
-393/480; Eeq. 31 oct. 1905, D. 1907. 1. 38; Aubry et Ran, 5th
(1. 4, p. 169; B.-L. et Barde, Oblig. 1, n. 463; D. X. C. C.
art. 1148, nos. 33 seq. ; C. A. Alex. 5 fevr. 1918, B. L. J. XXX,
209.) Such clauses, upon general principles, will be construed in
favour of the debtor if their interpretation is doubtful.
Conversely, by the contract the debtor may have exonerated
himself from his liability for n on -performance even caused by,
his fault, unless the case is one in which, upon the principles
explained earlier, such a stipulation must be considered as against
public policy.
(b) Implied warranty.
There are cases in which the courts will hold that without any
xpress clause to that effect the debtor has undertaken to be re-
sponsible for all risks. If, for example, a contract is made at a
time 'when a war is on the point of breaking out, it may Veil appear
that the parties took this risk into consideration, and that the
debtor undertook to perform his contract whether the war broke
out or not. Trib. Com. de la Seine, 10 oct. 1894, Journ. Droit
International Prive, 1895, p. 108; Wahl, A., in Rev. Trim 1915
p. 384.)
.
i^Aru
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 287
Some French writers contend that apart from express stipula-
tion the debtor can in no case be bound without fault. (B.-L. et
Barde, Oblig. 1, n. 463.)
But the code does not say so, and there is no reason why in this
case, as in others, the court should not give effect to the true
intention of the parties. (Planiol, 2, n. 233.)
(c) Warranty of carrier and hotel-keeper against theft.
Moreover, as will be explained later, the carrier and the hotel-
keeper are subject to a special liability in regard to loss by theft
of goods entrusted to them.
(2) General rule that damages are due.
Apart from these classes of cases the rules are —
(1) That the. debtor is liable to pay damages for non-perform-
ance due to his fault.
(2) That the debtor is relieved from his liability to pay damages
. if he prove that the non-performance was due to a cause for which
he was not responsible.
Supervening impossibility of performance.
The defence here is that a supervening cause, not imputable
to the debtor, which has occurred after the date of the contract
has prevented its performance. The case where the performance
was impossible ab initio has been explained under the head of the
object of obligations. {Supra, I, p. 78.)
The Egyptian Code states the rule thus: —
'Damages, as apart from restitution, are not recoverable for
entire or partial non-performtmce or for delay in performance,
unless such non-performance or delay is due to the fault of the
debtor. (C. C. E. 119/177. Cf. C. C. E. 178/241. See C. A.
Alex. 13 dec. 1916, B. L. J. XXIX, 107.)
The French Code has two articles on the subject: —
Le debiteur est condamne, s'il y a lieu, au payement de dorrt-
■mages et interets, soit draison de Vinexecution de V obligation, soil
a raison du retard dans I 'execution, toutes les fois qu'il ne justifie
pas que V inexecution provient d'une cause etrangere qui ne peut
lui etre imputee, encore qu'il ny ait aucune mauvaise foi de sa
part.
■■ (i j
288 THE LAW OF OBLIGATIONS.
11 n'y a lieu a aucuns dom mages et interets lorsque, par suite
dVune force majeure ou d'un can fortuit, le debit air a ete empeche
de donner ou de faire ce a quoi il etait oblige, ou a fait ce qui
lui etait interdit (arts. 1147, 1148).
The French Code contains no definition of either cas fortuit, or
force -majeure, but it is clear, reading the two articles together, that
the legislator meant to comprise under these terms collectively
all the causes, known and unknown, which have prevented the
performance of the obligation without fault on the part of the
debtor.
Fault and inevitable accident between them embrace every pos-
sible cause of innocent non-performance. Where fault ends
fortuitous event begins. (Of. Saleilles, Theorie Generate de
V Obligation, n. 24.) M. Josserand disputes this. He says, II
existe des causes d'iriex edition qui ne sont nullement imputable
au debiteur, et qui ne rentrent cependant pas dans la notion de
la force majeure ni dans celle du cas fortuit, a savoir, pour le
contrat de transport, le vice propre de la marchmdise. et le fait So
Vexpediteur ou du destmataire : la force majeure et le cas fortuit
nepuisent done pas tout le domaine de la non-re sponsabilite : its
ne sont pas, a &ux seuls, toutes les causes d- exoneration . (Les
Transports, n. 571.)
But this does not appear to be a sound view of the matter. It
is a term of the contract of carriage that the carrier is not held to
warranty against loss or damage to the goods caused by inherent
defects in them, or by the fault or negligence of the consignor/
(See C. Comm. F. 103; C. Comm. E. 97/102; Josserand, op. cit.
n. 609.) The carrier never undertook the safe delivery of goods
in these circumstances, and there is, therefore, no failure on his
part to perform what he has promised.
The two expressions, force majeure and cas fortuit, employed in
article 1148 are meant to correspond to the single term of article
1147, cause etrangere qui ne pent etre imputee au debiteur. It is
not easy to draw any clear line of distinction between cas fortuit
and force majeure, but, fortunately, this is not important, because
the legal effect is the same whether we consider the case as falling
under the one designation or the other. Aubry et Kau, 5th ed.
4, p. 167; B.-L. et Barde, Oblig. 1, n. 455; D. X. C. C. art.
1148, n. 2.) It is important to emphasise this point, because,
as will be shown presently, attempts have been made recently to
prove that force majeure and cas fortuit do not produce the same
leo-al effects. (See Josserand, Les Transports, n. 568, for the
£=*•• ■ ■'
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 289
bibliography. Cf. Salcilles, Theorie Generate de V Obligation,
n. 24.) Some modern codes express the rule by saying* that the
debtor is excused if he proves that the breach of contract is due to<
a cause not imputable to him, and they avoid using such terms as
force majeure and cas fortuit. (Swiss Federal Code of Obliga-
tions, art. 97; German Code, art. 275. See infra, p. 318.)
Other codes use these terms and attempt to define them.
Thus, the Spanish Code says: —
Bors des cas expressement jndiques pur la hi, et de ceux ou
V obligation le stipule ainsi, mil ne repondra des evenements qu'il
ria pu prevmr, ou qui, bien que prevus, ont ete inevitables (art.
1105). Arid that code, though in several articles it uses the term
cas fortuit, does not seem to employ the expression force majeure
at all. (See arts. 1096, 1183, 1488, 1575.)
The Code of Quebec sometimes speaks of cas fortuit alone, some-
times of cas fortuit or force Majeure, and sometimes of force
majeure alone, and it is clear that the legislator uses the two terms
indifferently. (See arts. 1050, 1072, 1650, 1767, 1768, 1815;
Mignault, Droit Civil Canadien, 5, p. 660.) And that code com-
bines cas fortuit and force majeure in a common definition.
A fortuitous event is one which is unforeseen and caused by
superior force which it was impossible to resist (art. 17, n. 24).
The latest code, that of Morocco, which came into force on
15 October, 1913, states the French law in a more satisfactory way;.
II n'y a lieu a aucuns dommages-interets, lorsque le debiteur
juslifie que V inexecution ou le retwd proviennent d'une cause
qui ne peut lui etre imputee, telle que la force majeure, le cas
fortuit ou la demeure du creamier.
La force majeure est tout fait que Vhomme ne peut prevenir,
tel que les phenomenes naturels (inondations, secher esses, orages,
incendies, sauterelles), V invasion ennemie, le fait du prince, et qui
rend impossible V execution de V obligation.
N'est point consideree comme force majeure la cause qu'il etait
possible d'eviter, si le debiteur ne justifie qu'il a deploy e toute
diligence pour s'en premunir.
N'est pas egalement consideree comme force majeure la cause
qui a ete occasionnee par une faute precedente du debiteur. (Dahir
formant Code des Obligations, arts. 268, 269.)
The Egyptian Code avoids using either of the terms force
majeure or cas fortuit in the general article as to liability for
breach of contract. (C. C. E. 119/177.) In other articles it em-
w.— VOL. II. 19
290 THE LAW OF OBLIGATIONS.
ploys both terms, though force majeure does not occur so often as
cas fortnit. (See arts. 342 427, 489/598, for force majeure; and
for cas jortuit (arts. 23/42, 218 283, 392/479, 417/509. 544/666,
562/686.)
In one article any accidental circumstance— toute circonstance
fortuite—is used as equivalent arts. 411/502).
In the French and Egyptian codes it is plain that the legislator
uses the terms cas jortuit and force majeure as equivalent, and
does not attempt to make any distinction between them. (Demo-
lombe, 24, n. 553; Baudry-Laeant. et Barde, Oblig. 1, n, 455;
Planiol,2, n. 231; D. N. C. 0. art. 1148, n. 3.)
And the jurisprudence applies to the same facts sometimes the
name of cas jortuit and sometimes that of force majeure. (See
Paris, 13 now 1903, D. 1904. 2. 73, and Dissertation by M.
Colin.)
Some writers consider that as a matter of correct language the
term cas jortuit is more appropriate to denote the action of natural
forces, such as fire and flood, while force majeure is more properly
applied to an act of man which creates an insurmountable obstacle
to the performance. fHuc, 7, n. 143.) Other distinctions have
been suggested, but there is no great value in them.
Force majeure in law of responsibility and in law of
prescription.
It is not only when the debtor in a contract claims to be
exonerated from the consequences of-iiis non-performance that the
question arises what amounts to force majeure. The same ques-
tion comes up when a defendant in an action of responsibility
maintains that the accident was caused by force majeure, and also
when a party pleads that his right to sue has not been lost by
prescription because he was prevented from suing by force majeure.
(Sec infra, p. 555.)
Cas fortuit and force majeure include both objective
impossibility and subjective impossibility.
The impossibility of performance may be either an absolute or
objective impossibility, that is to say, it is impossible for any one
at all to perform the obligation; or it may be a relative or sub-
jective impossibility, that is to say, it is impossible for the debtor
.(- perform the obligation, but it might be performed by another..
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 29]
If, for example, the debtor was bound to deliver a ship, and the
ship was torpedoed by a submarine and sunk, there would be ail
absolute impossibility. If, on the other hand, the debtor's duty
was to deliver a diamond, and the diamond was stolen by X, there
is a relative impossibility, because, although the debtor cannot
perform his obligation, it might be performed by X.
The German Code is careful to use different words to denote
these two kinds of impossibility. It calls objective impossibility
ZJnmoglichkeit, and relative impossibility Unvermpgen des
Schuldners zur Leistung. ^German Code. arts. 275, 279; Cosack,
Lshrbuch des Deutschen bilrgerlichen Rechts, 6th ed. 1, p. 394;
Windscheid, Pandekten, 8th ed. 2, s. 264.)
In the French law the impossibility which is created by cas
fortuit or force majeure is sometimes objective and sometimes
•subjective.
Attempted distinction between the legal effects of force
majeure and those of cas fortuit.
Some modern French writers attempt to make a distinction
between the legal effects of force majeure and of cas fortuit re-
spectively, more particularly in the contract of carriage of goods.
They contend that it is only loss or damage caused by force
majeure which the carrier does not have to make good. He is
responsible for the loss or damage caused by cas fortuit.
[Dissertation by M. A. Colin, in note to Paris, 13 nov. 1903,
D. 1904. 2. 73; Thaller, Traite EUmentaire de Droit Commercial,
4th ed. n. 1198; Josserand, Les Transports, nos. 570 seq. Contra,
Lyon-Caen et Benault, Traite de Droit Commercial, 4th ed. 3,
n. 598; Sarrut, Transport des marchandises, n. 751. See D. N.
C. C. Additions, 1913, art. 1148, nos. 1 seq.)
The chief arguments advanced in support of the new theory are
the following: —
(1) The tendency of the law is to abandon more and more the
old theory that there is no liability without fault actual or pre-
sumed. Liability is now admitted in many cases on the mere
ground that the person who for his profit creates a risk is bound
by law to compensate those who suffer damage thereby caused.
This theory, commonly called la theorie du risque cree, underlies
the French legislation for workmen's compensation for accidents
(Loi du 9 avril 1898), and it underlies also the jurisprudence
19 (2)
292 THE LAW OF OBLIGATIONS.
which makes a man liable without proof of personal fault for the
damage caused by an animal or by an inanimate thing which
belongs to him. Fault in the legal sense is becoming more and
more°an objective fact, for the estimation of which any inquiry
into the mind, intention, or moral condition of the author of the
wrong is irrelevant. The discussion of this doctrine belongs to.
the subject of Responsibility.
When the execution of an obligation is prevented by the happen-
ing of an event which the debtor was powerless to prevent, and
against the occurrence of which he could not have provided, this
fact does not in itself liberate him from his duty to pay damages,
for the accident may be due to a risk which the debtor has
created.
If an explosion takes place in a factory, or a railway embank-
ment slips. down, or the splitting of a rail causes a train to go
off the line, these are accidents inherent in the enterprise. They
are fortuitous events, if you will, but that is no reason why the
person for whose profit the enterprise is conducted should not
pay for them. It is, according to the writers above referred to,
only to accidents of this kind arising out of the enterprise carried
on for the debtor's profit that the law applies the term cos
fort nit.
(2) For6e majeure is something quite different; it is always a
force operating from without. It is caused by a risk which the
debtor has in no way created. The failure by the debtor to per-
form his obligation is due to a foreign cause, to what the French
Code describes as a cause etrangere qui ne pent lui etre imputee.
(C. C. F. 1147.) An earthquake, a flood, or a fire caused by
lightning are examples of the operation of the forces of nature
which may, according to circumstances, amount to force majeure.
They axe not necessarily so, for it may appear from the circum-
stances that they ought to have been provided against, and as to
fire caused by lightning, the character of the enterprise may have
increased the danger from lightning. So, likewise, the act of
man, such as an invasion of an enemy, the interference by the
sovereign {fait du prince), the theft by a third party of a thing
to be delivered, and so on, may be proved to be force majeure.
(See infra, pp. 298 seq.)
The criterion between cas fort u it and force majeure is found by
asking the question, was the accident caused by a risk which was
inherent in the enterprise or by a risk which was external to it?
(See B.-L. et Barde. Oblig. 4, n. 2972. y, and authorities in pre-
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 293
ceding note. Cf. in the German law, Cosack, Lehrbueh des
'Deutschen biirgerlichen Rechts, 6th ed. 1, p. 291.)
Criticism of new theory.
From the legislative standpoint there is something to be said
for this new theory, but as an interpretation of the codes it is
entirely unsound. It has not prevailed in the jurisprudence.
(See Req. 31 oct. 1905, D. 1907. 1. 38, note 1.) It is hopeless
to attempt to show that the French Code makes a distinction
between cm fortuit and force majeure, and the argument based
on the expression came etrangere in C. C. F. 1147 is not avail-
able in Egypt or in the Province of Quebec, where the codes do
not use that expression at all. (C. C. E. 119/177; C. C. Q.
1071.)
Accordingly, in the Egyptian law as it stands, this theory must
be absolutely rejected.
Essential characteristics of fortuitous event.
It is convenient to use the term "fortuitous event" to denote
the cause sometimes called cas fortuit, sometimes called force
majeure, which has prevented the performance of the obligation.
If it is to liberate the debtor it must always possess three qualities:
(1) It must not be imputable to the debtor;
(2) It must have been impossible to foresee;
(3) It must have been impossible to prevent.
These characteristics indicated by the Roman law have been
consistently regarded as the marks of a fortuitous event. Omnem
vim cui resisti non potest. (Dig. 19. 2. 15. 2.) Quce fortuitis
casibus accidunt, cum prcevideri non potuerant. (Code, 4. 24. 6.)
So the Spanish Code says: —
Hors des cas expressement indiques par la lot, et de ceux oil
V obligation le stipule ainsi, nul ne repondra des evenements qiCil
ria pu prevoir, ou qui, bien que prevus, ont ete inevitables. (Code,
Espagnol, 1105; B.-L. et Barde, Oblig. 1, n. 455; C. A. Alex.
20 dec. 1890, B. L. J. XII, 51; C. A. Alex. 8 fevr. 1911,
B. L. J. XXIII, 159.)
>-.- j . j - ■ ■
294 THE LAW OF OBLIGATIONS.
Event founded upon as force majeure must not have been
brought about by any act of the debtor.
The debtor will not be excused by proof of a fortuitous event
unless the fortuitous event was the sole cause of the non-per-
formance. If the event itself was due to tlie fault of the debtor
he cannot found upon it as an excuse. (B.-L. et Barde, Ohlig.
3, n. 1920, b; Rev. Trim. 1915, p. 184; Josserand, Les Trans-
ports, n. 601, 898.
Nor can the debtor defend himself successfully by the plea of
force majeure if the fact upon which he founds as an excuse was
brought about at his own request or by his own act, although that
act was not wrongful. (B.-L. et Barde, OlMig. 1, n. 462; Larom-
biere, art. 1148, n. 21; D. N. C. C. art. 1148, n. 31.)
So it was held that a railway-company could not relieve itself
from certain obligations upon the plea that its system had been
bought by the state, when the fact was that the railway-company
had not been expropriated against its will but had solicited the
expropriation and freely consented to it. (Cass. 18 avril 1888,
D. 84. 1. 25. Cf. Paris, 8 juin 1899, D. 99. 2. 477.)
And so it would appear that an employer of labour cannot
found upon a strike as being force majeure, when the strike was
brought about by his own fault in not treating his employees
fairly. (Req. 28 oot. 1907, D. 1909. 1. 282. See infra, p. 314.)
So, bankruptcy is not in itself a fortuitous event, being in fact
commonly due to causes over which the victim has some control.
In order to excuse himself on this ground from the execution of
his contract the debtor would need to prove, not only that he was
bankrupt, but also that his bankruptcy was brought about by
force majeure, that is to say, by causes which he could not have
prevented or avoided. (Alger, 2 dec. 1850, D. 54. 5. 373; Rouen,
27 aout 1873, D. 76. 2. 62; Paris, 17 fevr. 1892, D. 94. 2. 1,
and note by M. Boistel; C. A. Alex. 27 dec. 1899, B. L. J.
XII. 53.)
Event must be impossible to foresee.
If the event is one which might have been anticipated and
guarded against by taking due precautions,, the debtor who neglects
these precautions is not liberated.
A French post-office official had charge of securities which were
in course of transit. The value of the securities had been declared
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 295
by tin 1 sender, and in this case the French law makes the adminis-
tration liable for their loss up to their declared value but not
exceeding- 10,000 francs. (Loi da 25 avril 1873, art. 10;
Josser and, Les Transports, p. 692.)
The intervention of force majeure, however, liberates the
administration.
In this case the official had received warnings that an attempt
to rob him had been concerted, but he took no special precautions,
and he was, in fact, robbed of the securities by armed robbers.
The Coiir d'Aix held that in these circumstances the robbery by
an armed force did not amount to force majeure. (Aix, 20 dec.
1909. See Kev. Trim. 1910, p. 440.) The Cour de Cassation
rejected a ponrvoi against this judgment. (Cass. 9 mai 1911, S.
1911. 1. 576, D. 1911. 1. 401; Rev. Trim. 1912, p. 188. Cf.
Rev. Trim. 1913, p. 820.) And when the obligation is to pay a
sum of money the sudden illness of the debtor is not force majeure.
La maladie pouvant et devant etre prevue ne petit constituer mi cas
de force majeure en mature de payement. (Req. 15 juin 1911,
D. 1912. 1. 181, and infra, p. 302.)
For similar reasons, the vendor of an immoveable who suffers
an eviction which prevents his execution of the sale cannot escape
liability to pay a penalty stipulated for non-execution by plead-
ing that, the eviction was force majeure. (C. A. iUex. 14 mai
1908, B. L. J. XX, 220.)
A recent French case is a good illustration of the principle.
An electric light- and power-company stipulated in its contracts
with its customers that it would not be liable for temporary
interruption of the current when that was caused by force majeure
or by public works. Work was begun by a railway contractor
in the immediate proximity of the electric cable belonging to the
company. There was a probability that in the course of this
work the cable would be cut or damaged, and this in fact
happened. It was held that the electric-company in these
circumstances was not liberated: —
Qucmd ce.s travaux, dont Vexecution etait prevue depuis long-
temps, out exige le deplacement du cable de la compagnie, laquelle
devait done prevoir les consequences desdits travaux et prendre
toutes mesures utiles pour ev'iter les accidents, ce qu'elle n'a pas
fait. (Req. 23 avril 1901, D. 1903. 1. 347.)
296 THE LAW OF OBLIGATIONS.
Impossibility must be absolute.
The debtor cannot liberate himself upon the ground of force
majeure unless there is an absolute impossibility in the execution
of the obligation. It is not enough that in consequence of the
fortuitous event the execution has become more difficult or more
onerous, nor is the debtor excused when the impossibility is merely
because he miscalculated his own powers and promised to do some-
thing which is beyond his strength. B.-L. et Barde, Oblig. 1,
n. 408; Planiol, 2, n. 232; B.-L. et Wahl, Louage, 1, n. 376;
Req. 3 mai 1909, D. 1909. 1. 315; D. N. C. C. art. 1148,
n. 23, and art. 1126, n. 40; Cons. d'Etat, 9 dec. 1887, D. 88. 5.
497; Cass. 16 juin 1900, D. 1905. 1. 336; Req. 27 oct. 1908,
D. 1910. 1. 311; Cass. 4 aout 1915, D. 1916. 1. 22; Conseil
d'Etat, 30 mars 1916, D. 1916. 3. 25; Taris, 21 dec. 1916, D.
1917. 2. 33, and note by M. Capitant; C. A. Alex. 20 juin
1906, B. L. J. XVIII, 335; C. A. Alex. 8 fevr. 1911, B. L. J.
XXIII, 159; C. A. Alex. 7 juin 1916, B. L. J. XXVIII, 416;
C. A. Alex. 17 janv. 1917, B. L. J. XXIX, 157. As to the
possibility of reducing the damages when there is no absolute
impossibility of performance, see infra, War as Force majeure,
p. 307.)
The impossibility must continue.
Force majeure is only an excuse so long as it lasts. If the
impediment is merely temporary the execution of the obligation
is suspended until the impediment is removed. (Cass. 15 fevr.
1888, D. 88. 1. 203. See infra, under War as force majeure,
pp. 307 seq.)
Debtor who foresees the inexecution must do his best to
minimise its effects.
The debtor who wishes to excuse himself on the plea of
fortuitous event must show that he did his best to minimise its
• fleets and to do the most that was possible in the circumstances.
Req. 28 avr. 1901, D. 1903. 1. 347; D. N. C. C. art. 1148,
n. 26.)
If, after the date of the contract, the debtor foresees that he
will be prevented by a fortuitous event from its execution, ho
must do his best to cause his creditor as little loss as possible.
So, when a man had sold a future crop of cotton' calculated to
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 297
be so many kantars and he saw that the crop, owing to natural
causes, was going to be much less, it was held that he was bound
to notify his creditor without delay so that the damage to him
would be as small as possible. (C. A. Alex. 1 mars 1905,
B. L. J. XVII, 138.)
So there may be circumstances in which a carrier whose vessel
cannot proceed on account of a high flood in a river is bound to
send the goods by railway. (See Cass. 6 juin 1900, D. 1905.
1. 336.)
Debtor not bound to take an altogether unusual precaution.
On the other hand, in saying that the fortuitous event must be
something impossible to resist or to provide against, it is not
meant that the debtor must take precautions of an altogether
unusual kind. He must take all ordinary precautions such as
might be expected to be contemplated by the parties. If, after
doing so, he is prevented from performing his contract he will
be excused.
So, for example, where the contract is to supply water or gas
by means of pipes, the natural sinking of the ground may cause
a breaking of pipes and prevent the fulfilment of a contract,
and, if so, the debtor who is thus prevented will be excused if
he took ordinary precautions, taking into account the nature of
the ground. (Sce.C. A. Alex. 28 fevr. 1896, B. L. J. VIII,
322; C. A. Alex. 28 mars 1901, B. L. J. XIII, 221.)
Engineering skill might devise means of preventing such a
subsidence, but, if to do so would require measures altogether
unusual, the subsidence will be considered to be fortuitous as far
as the debtor is concerned. So, where provision is made for such
natural events as floods, a flood of an altogether exceptional
character may be regarded as a fortuitous event. -Thus in a
Canadian case, where a cellar had been flooded owing to the fact
that a sewer was not large enough to carry off the water during
an altogether exceptional storm of rain, it was held in an action
of damages that the loss was caused by a fortuitous event.
(Faulkner v. City of Ottawa, 1909, 41 Canadian Supreme Court
Reports, 190.)
It may be said that even a very unusual storm or a very high
flood can be anticipated, because such events do occur at rare
intervals, but, though this is true, the debtor will not in most
cases be expected to anticipate events so unusual.
298 THE LAW OF OBLIGATIONS.
Force majeure a question of fact.
The question whether the debtor who pleads that he is liberated
by force majeure has made out that defence is eminently one of
appreciation. It is for the court to decide it upon considera-
tion of the particular facts proved. (B.-L. et Barde, Oblig. 1,
n. 456; Aubry et Kau, 5th eel. 4, p. 168, note 35 bis; Req.
22 oct. 1895, D. 96. 1. 72: D. N. C. C. art. 1148, n. 45.)
The defence may be pleaded either in an action to enforce the
performance of contract or in an action of damages for its non-
performance.
Illustrations of force majeure,
(a) Events due to the forces of nature.
Ordinary climatic conditions such as may be expected to occur
will not as a general rule be regarded as fortuitous events. It
is true that they cannot be prevented, but they can be foreseen and
provided against. (See Larombiere, art. 1148, n. 4; Panel.
Franc, vo. Oblig. n. 1900.) The parties when they made their
contract had these conditions in mind. How far wind, rain,
frost, floods, and so forth, are ordinary conditions depends on
the particular locality. Frost in Egypt of fifty degrees below-
zero Centigrade, if it prevented the performance of a contract,
would undoubtedly be force majeure, whereas in certain parts of
Canada it would be an event to be expected at some seasons.
Floods occur in some rivers with remarkable regularity, whereas
in other rivers they are quite exceptional. Earthquakes, light-
ning, and shipwreck are events which in many cases may be force
majeure, but they are not necessarily to be so considered.
The earthquake might be in a place where earthquakes are
frequent, as for example in Japan, and it might have been jDOssible
by taking precautions to perform the contract in spite of the
earthquake .
The shipwreck might not have hapj>ened in spite of the storm,
but for faulty navigation on the part of the captain for whom
the debtor was responsible. (See Pau, 9 juill. 1872, D. 74. 2.
193.)
Lightning is generally a fortuitous event, but it may not be
so when the defendant has increased the risk of lightning.
Electric installation^ of some kind may have attracted the
lightning.
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 29f>
A fortiori, the rise and fall of many rivers being' a thing to
bo calculated upon, precautions might have been taken which would
have ensured the performance of the obligation. See Lyon,
22 juin 1855, D. 56. 2. 2; Rev. Trim. 191-3. p. 820.
Destruction of specific thing to be delivered.
The important case where the performance of the obligation is
rendered impossible by the destruction of a specific thing which
the debtor was bound to deliver will be explained later in the
chapter upon the extinction of obligations. It is true that this
is only an illustration of the general rules applying to force
majeure, but the French Code deals separately with the perte de
la chose due, and it is perhaps more convenient to follow this order.
(C. C. F. 1302.)
Alteration of physical conditions rendering performance
impossible.
It may be a part of the contract that the obligation is to be
performed in a certain place. From a cause not imputable to
the debtor this place is destroyed or put into such a state that
performance becomes impossible. For example, a workman is
engaged to paint a house and the house falls down or is destroyed
by fire before the work begins. In such a ease the other party is
liberated. (Dall. Rep. Louage d'Oavrage, n. 69; B.-L. et Wahl,
Louage, 3rd ed. 2, n. 2902; D. N. C. C. art. 1780. n. 559. Cf.
for same rule in the English law, Taylor v. Caldwell, 1863, 3
B. & S. 826, 32 L. J. Q. B. 164, 129 R. R. 573. See Pollock,
Contracts, 8th ed. p. 437, and infra, p. 321, for cases in which
the principle of Taylor' v. Caldwell has been extended.)
Fire as force majeure.
A fire which prevents the execution of an obligation by causing
the destruction of the thing to be delivered, or in some other way.
is not necessarily a fortuitous event, because the fire may have been
caused by the fault of the debtor or that of his servants. It is
not enough for the debtor to prove that he was prevented by a
fire from fulfilling his obligation; he must prove in addition that
the fire was not caused by his fault or that of persons for whom
he is responsible. (Baudry-Lacant. et Barde, Oblig. 3. n. 1923:
Aubry et Rau, 5th ed. 4. p. 196. note 36.)
L'incendie nest pas par lui-meme mi cas de force majeure.
300 THE LAW OF OBLIGATIONS.
11 n'y a force majeure, que si le debiteur n'a commis auciine
faute, aucune imprudence ou negligence, s'il rta pu ni prevoir
ni conjurer Vevenement. (Cass. 27 et 28 oct. 1913, D. 1916. 1.
85.)
The exact nature of the proof which the debtor must make in
order to exonerate himself has been the subject of much contro-
versy. Does he need to prove positively how the fire originated
in order to exclude the idea of his own fault, or is it enough for
him to prove that he took all reasonable precautions and that the
origin of the fire remains a mystery?
In considering this question, there are important differences
to be borne in mind between the French Code and the Egyptian
Code.
Presumption against lessee in French law.
Under the French Code the lessee of a house has the duty of
restoring it at the end of the lease, and is not released from this
duty by proving that it was destroyed or damaged by fire.
He must prove in addition that the fire occurred by fortuitous
event or irresistible force, or owing to a fault of construction, or
that it was communicated from a neighbouring house. (C. C. F.
1733; B.-L. et Wahl, Louage, 3rd ed. 1, n. 972; D. N. C. C.
art. 1733, n. 3.)
This article creates an exception to the rules of proof and it
ought not to be extended by analogy. In particular, the position
of the article in the French Code and the terms vice de construc-
tion and maison voisine show that it was not meant to apply to
the lease of a moveable thing. It is significant that the corre-
sponding article in the Civil Code of Quebec is limited to
"premises leased" (art. 1629). (Sic. Esmein, Dissertation in
note to S. 84. 1. 33; Aubry et Rau, 5th ed. 5, p. 326, and
note 28, 3rd ed. But many writers are of the opposite opinion,
B.-L. et Wahl, Louage, 1, n. 1004; Guillouard, Louage, 2, n.
680: D. N. C. C. art. 1733, n. 18.)
As applied to the lease of a house, the onus of proof is thrown
on the lessee, and the jurisprudence and especially the decisions
of the Cour de Cassation apply the rule very strictly. The
lessee is not exonerated merely if no specific fault is proved
against him, nor by proof that he took all reasonable care, and that
there are circumstances which make it likely that the fire was
caused by a fortuitous event, such as the fault of a stranger. He
must prove the precise manner in which the fire originated if ho
> W
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 301
is to show that he was free from fault. (Req. 25 oct. 1911,
D. 1912. 1. 225.;
Even the proof that the fire originated in a neighbouring
building is not conclusive, for it may appear that it would not
have arisen at all or would not have spread to the house occupied
by the lessee but for fault on his part. (Req. 30 janv. 1804,
D. 54. 1. 95; Cass. 27 oct. 1913, D. 1916. 1. 84. S. 1914. 1.
332.)
An example of the rigour with which the rule is applied is
afforded by a case in which it was held that the lessee was not
liberated by proof that a fire was caused by a short circuit in his
electric wiring. (Toulouse, 19 mai 1912, D. 1914. 2. 166. See
Rev. Trim. 1915, p. 182.)
Many of the authors approve of this jurisprudence. (Aubry
et Rau, 5th ed. 5, p. 318; B.-L. et Wahl, Louage, 1, n. 978;
D. N. C C. art. 1733, n. 168.)
On the other hand, other authors contend that the lessee may
prove that it was impossible for him to prevent the fire although
he fails to prove positively by what means it was caused. And
there are many arrets in this sense. (Laurent, 25, n. 279;
Planiol, 2, n. 1718; Douai, 28 mars 1901, D. 1901. 2. 233;
Lyon, 15 janv. 1907, D. 1908. 2. 207; D. N. C. C. art. 1733,
n. 151.)
No presumption against lessee in Egyptian law.
It is not necessary for us to decide between the two sysiernes
just stated, because in the Egyptian Code there is no article
corresponding with C. C. F. 1733.
In the Egyptian law, therefore, the general rules apply, and
the lessor cannot recover from the lessee damages for the loss
caused by the fire except by proving that the fire was due to the
lessee's fault. (C. A. Alex. 27 fevr. 1879, R. O. IV, 157;
C. A. Alex. 29 janv. 1880, R. O. V, 125; C. A. Alex. 27 mai
1880, Borelli, art. 463, 4; C. A. Alex. 9 mars 1899, B. L. J. V,
157; C. A. Alex. 1 juin 1904, B. L. J. XVI, 289; De Hults,
Rep. vo. Louage, n. 119; Grandmoulin, Contrats, n. 393. Contra,
C. A. 21 mars 1901, O. B. Ill, n. 23, p. 27.)
Rule in Egyptian law.
In the Egyptian law whether the question arises between the
lessor and the lessee or between other parties, the court is entitled
302 THE LAW OF OBLIGATIONS.
to rely on presumptions. It may well be that the court is
satisfied that the defendant has disproved his responsibility for
the lire although its precise origin remains obscure.
The nature of the proof required varies according to circum-
stances. When the defendant is a common carrier it is par-
ticularly hard for him to prove that the fire which prevented him
from performing his contract originated without his fault, seeing
that in such a business there are many possibilities of fire being
caused by the fault of employees. (Cass. 27 oct. 1913, D. 1916.
1. 84: Josserand, Les Transport*, n. 585; B.-L. et Wahl. Louage,
3rd ed. 2, n. 3535; Lyon-Caen et Renault, TraiU de Droit Com-
mercial, 4th ed. 3, n. 603; Rev. Trim. 1914, p. 131.)
Sickness or epidemic as force majeure.
The question whether the illness of the debtor, or some infirmity,
bodily or mental, supervening after the date of the contract, which
prevents him from performing his obligation is to be considered
as force majeure, depends upon the nature of the contract and the
implied intention of the parties.
When the contract is a contract for the hire of personal services
the Egyptian Code provides —
A contract for the hire of personal services is dissolced by
the death of the person employed or any accidental circumstance
which prevents him from working. (C. C. E. 411/502.)
The French Code has no words corresponding to " any acci-
dental circumstance." (C. C. F. 1795.) But it is a settled rule
of the French law that when without his fault the servant or
workman becomes physically or morally incapable of doing the
work promised the contract comes to an end, and no damages
are due on either side. (Dall. Rep. Louage d'Ouvrage, n. 66;
Beudant, Vente et Louage, n. 676: B.-L. et Wahl, Louage, 3rd
ed. 2, n. 2902; D. N. C. C. art. 1780, n. 552. See Cass. 7 juin
1905, D. 1908. 1. 74.)
And when the services to be rendered are strictly personal to
the master, his illness or infirmity might render the services use-
less. In all these contracts for the hire of personal services it is
an implied term that the party bound shall be liberated if he
cannot perform his obligation owing to an infirmity for which he
is not to blame. So, an actor who is prevented by illness from
performing is not liable in damages to the manager of the theatre.
(Dall. Rep. Theatre, nos. 195 seq.)
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 303
In a recent ease a dramatic author had bound himself to deliver
to a theatre-manager the completed manuscript of a play by a
fixed date subject to a penalty.
Ho was prevented from so doing by trouble with his teeth so
severe as to need a surgical operation which rendered intellectual
work impossible for him for some weeks. This was considered
to be force majeure. (Paris, 7 janv. 1910, D. 1910. 2. 292.)
But the illness of the debtor is not force majeure if it was
caused by his voluntary act or fault. (See Panel. Franc. Oblig.
n. 1783.)
And when it is a question not of performing personal services
but of paying money, the French law is very strict in refusing to
consider illness as force majeure. Where an insurance policy
provided that the policy should lapse if the premium was not
paid before a certain day, and the assured was struck "with apoplexy
on the day of payment, it was held that this was not force; majeure
which relieved him from the consequences of the non-performance.
The assured might have made provision for payment by another
on his behalf in the event of his being prevented by illness or
other incapacity from making the payment himself. (Req. 15
juin 1911, D. 1912. 1. 181. Cf. Cass. 16 mars 1864, D. 64.
1. 159.)
In some cases the fact that an epidemic exists in a locality may
be considered as force majeure. So it has been held that a theatre-
manager could not claim damages from an actor w r ho refused to
perform because there was an epidemic of typhoid fever in the
place. (Trib. Seine, 17 avril 1869, D. 69. 5. 221; D. N. C. C.
art. 1148, nos. 69 seq.)
(b) Events caused by the act of man.
The act of a third party which renders it impossible for the
debtor to perform his contract is a cas fortuit unless the third
party is a person for whose fault the debtor is responsible, or
unless the act is one which might have been foreseen and guarded
against. (Aubry et Rau, 5th ed. 4, p. 167; B.-L. et Barde,
Oblig. 1, n. 455; P. N. C. C. art. 1148, n. 126; Cass. 27
avril 1898, D. 98. 1. 421; Renncs, 31 dec. 1896, D. 99. 1. 74.)
For example, the theft of an article by a third party may
liberate a depositary or other person who had charge of the thing
from his liability in damages for its non-restitution. So, where
a creditor held a diamond necklace in pledge and it was stolen
301 THE LAW OF OBLIGATIONS.
by burglars, it was held that he was excused from returning it.
(C. A. Alex. 20 mars 1889, B. L. J. I, 83. Cf. Cass. 27 avril
1898, D.98. 1.421.)
Special rule as to paid depositary.
The theft of an article which is in the hands of a depositary i*
not force majeure which discharges him from his liability if the
thing was stolen by a person for whom he is responsible. And
the presumption is that it was stolen by such a person. The
Egyptian codes provide —
The depositary, who receives remuneration in respect of the
transactions which, have occasioned the deposit, as for instance
an innkeeper, carrier, etc., is liable for the loss of the thing
deposited, unless he proves that such loss was brought about by
vis major. (C. C. E. 489/598.;
The Egyptian article is in more general terms than the cor-
responding articles in the French Code under which the pre-
sumption of fault exists only against the carrier and the hotel-
keeper. (C. C. F. 1782, 1953. See Grandmoulin, Cmtrats,
n. 898.)
The theft from a carrier will not be considered as force majeure,
unless he proves that it was committed by a person outside his
employment. And a theft from an hotel is not force majeure
unless it was committed by burglars or by thieves who got into
the hotel without permission. It is probable, at any rate, that
the Egyptian legislator intends to maintain the rules of the French
law upon these points. Under the French Code, the hotel-keeper
is responsible for the loss of the thing if it was stolen by a guest
in the hotel. (C. C. F. 1953.) And the probability is that the
Egyptian law is the same, though there does not appear to be any;
jurisprudence in which this has been determined. (See Grand-
moulin, Contrats, n. 902; C. A. Alex. 6 juin 1894, B. L. J.
VI, 326; C. A. Alex. 13 mai 1895, B. L. J. VII, 318.)
By a recent loi in France, the hotel-keeper's responsibility is
limited to 1,000 francs pour Its especes monnayees, les Valeurs,
les titres, les bijoux et les objets precieux de toute nature non
deposes reellement entre les mains des aubergistes ou hoteliers.
{Loi du 8 avril 1911, amending C. C. F. 1953.)
The effect of this law is merely to remove the presumption
against the hotel -keeper as regards the excess over 1,000 francs.
He remains liable to the full amount if fault on his part or on that
NON-PERFOKMANCE WITHOUT FAULT OF DEBTOR. 305
of his servant is (proved. (B.-L. etWahl, Societe, 3rd cd. n. 1228;
Planiol, 2, n. 2222; Cass. 30 mars 1910, S. 1910. 1. 83.;
Hotel-keepers as a rule endeavour to exclude or to limit their
liability by putting notices in the rooms used by the guests
declaring that they will 1 not be liable for the safety of valuable
articles unless deposited in the office. Such notices are considered
by a part of the French doctrine as a sufficient limitation in
circumstances in which it is reasonable to presume that the guest
accepted the accommodation on these conditions. (Planiol, 2,
n. 2223; Dall. Supp'vo. Depot, n. 69; B.-L. et Wahl, Socictr,
n. 1234.)
But the better opinion appears to be that the guest cannot be
considered as having assented to such an exclusion or limitation
of the hotel-keeper's legal responsibility; L' expression des desirs
d'un wantr e d'hotel ne pent equivaloir a un contrat. (Rouen.
18 juillet 1889, sous Aix, 26 oct. 1899, D. 1901. 2. 303; Sourdat,
Responsabilite, 2, n. 935; Laurent, 27, n. 145; Gombert, Jules.
Des Rapports Juridiques entre Hoteliers, Aubergistes et
Voyagews, 1900, these, Lille, p. 151. See Rev. Trim. 1914,
p. 313.)
The fact that in France it has been necessary to create a limita-
tion of the liability by special laws supports this contention.
And it is noteworthy that both the German and the Swiss codes,
although they limit the hotel-keeper's liability, unless fault is
proved, do not allow him to decline his responsibility by putting
up notices of this kind. (German Code, art. 701; Swiss Code
Oblig. art. 489.)
Special liability of hotel-keeper not to be extended by
analogy.
In France the article which creates the presumption against
the hotel-keeper is limited to him, and is strictly interpreted.
The special liability of the hotel-keeper for one kind of
fortuitous event, that is, for loss caused by thefts committed by
a third party, is a traditional rule of the law for which various
reasons have been given, but this special liability will not be
extended by analogy. (Planiol, 2, n. 2225; D. N. C. C. art.
1952, n. 8.) It does not apply to people who do not supply
lodging, nor to those whose lodgers are of a permanent kind. So
the liability does not extend to a lodging-house keeper, at anv
rate when the lodger has taken the room for a considerable time.
w.— VOL. II. 20
MS l AlAJ tS ■
M l
306 THE LAW OF OBLIGATIONS.
(Cass. 25 juiii 1913, D. 1914. 1. 243. Contra, B.-L. et Wah'l,
Societe, n. 1238; D. N, C. C. art. 1952, n. 22, and n. 82.)
Still less does the liability exist in the case of doctors, dentists,
or others in regard to coats and similar articles left by patients in
the ante-room . If the doctor or dentist prove that he took ordinary
care he is discharged of his responsibility. (C. de Cass, de Rome,
13 mai 1913, D. 1914. 2. 65, and note by M. Valery.) But
when a want of reasonable care is proved the theft will not be
considered as force majeure. (Cass. 6 now 1907, D. 1909. 1.
13.)
But the terms of the Egyptian article are wider than those of
the French codes. By the Egyptian law any " paid depositary "
must prove force majeure if he is to be liberated. No doubt such
persons as cafe-keepers and restaurant-keepers will be included
under that head if the article was placed in their care. And
this means in the case of theft that such a depositary must prove
that the article was stolen by a third party in the sense above
explained, that is, not by one of the depositary's servants, and,
probably, that this third party was there without leave.
War, invasion, etc.
Such events as war, invasion by an enemy, blockadp, attacks of
brigands, riots and other disturbances of the public peace, if they
entirely prevent the execution of the obligation will be illustrations.
of force majeure. (B.-L. et Barde, Oblig. 1, n. 455; Pand.
Franc, vo. Obligations, nos. 1805 seq.: D. N. C. C. art. 1148,
nos. 77 seq.)
The plea that the debtor was prevented by war from fulfilling
his obligation will be more fully discussed later.
Fait du prince.
The passing of a law or regulation by a constituted authority,
or any command or prohibition issued by the public authority to
which the debtor is bound by law to submit, may prevent the
execution of a contract. When this occurs, it is a cas fortuit.
For this kind of fortuitous event the term fait du prince is the
consecrated expression in the French law. Acts of very various
kinds may present this character. The expropriation of property
by the state, or the requisition of supplies by the government,
the prohibition of certain industries or of certain exports, the
closing of a theatre by tin' public authority, or an order forbidding
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 307
;a manager of a theatre from allowing a certain actor to perform
are examples of fait du prince. (B.-L. et Barde, 1, n. 45-5, 1;
Pand. Franc, vo. Obligations, n. 1849 seq.; D. N. C. C. arts.
1148, nos. 113 seq.) If in a contract between a tramway-com-
pany and the syndicate of tramway workers certain hours of work
are agreed upon, and a law is passed under which it is impossible
for the workers to fulfil this contract, this is force majeure. (Req.
26 juill. 1909, S. 1910. 1. 71.)
Force majeure must create an impossibility.
But such events as war, invasion by an enemy, attacks of
brigands, riots, and so forth, do not amount to fortuitous event
unless they entirely prevent the execution of the contract. If they
merely make its execution more difficult they will not be con-
sidered as cas fortuit. (See B.-L. et Wahl, Louage, 3rd ed. 2,
n. 2900; Cons. d'Etat, 9 dec. 1887, D. 88. 5. 497; Req. 27 oct.
1908, D. 1910. 1. 311; C. A. Alex. 20 juin 1906, B. L. J.
XVIII. 335.) The defence of war as force majeure may be
taken as an example.
War as force majeure.
After the outbreak of the European war of 1914 this matter
became one of the greatest importance, but the principles
applicable to it have^ been long established. (See Schaffhauser,
M., Lois Nouvelles, 1915, pp. 25, 41, 65, and 81; La Guerre
consideree comme force majeure dans les ventes de Marchandises,
by M. A. Wahl, in Rev. Trim. 1915, pp. 355, 383, 518, 519;
Rev. Trim. 1914, pp. 442, 776; and in Louage de services,
Rev. Trim. 1917, p. 5; M. S. Serbesco, Effets de la Guerre sur
■ V Execution des Contrats, in Rev. Trim. 1917, p. 349; and the
rapidly growing jurisprudence indexed in Dalloz and Sirey under
Guerre de 1914; note to S. 1916. 1. 17; D. N. C. C. art. 1148,
nos. 77 seq.; Josserand, Les Transports, n. 586, and n. 898.)
War does not of itself suspend the operation of the ordinary
rules of law. As the Mixed Court of Appeal expressed it in a
recent case: En ce qui concerne les relations entre particuUers,
les principes superieurs du droit ri'ont pas ete aneantis par la
grande guerre. (C. A. Alex. 13 dec. 1916, B. L. J. XXIX,
107.)
Or, in the words of the Court of Paris, il n'est pas possible de
-dire en principe, que Vetat de guerre constitue par lui-merme la
'20 (2)
308 THE LAW OF OBLIGATIONS.
force majeure permettant de jaire echec a tous les contrats. (Paris,.
8 juill. 1916, D. 1916. 2, 169, 3me espece. Cf. Caen, 24 fevr.
1915, D. 1916. 2. 22.)
But the state of war may be, according to circumstances, force
majeure.
There are two classes of cases more particularly in which the
defence is common that the defendant is excused by war, viz.:
(1) actions by citizens against the state claiming indemnity for
losses caused to them by fait de guerre, a subject which falls
under the head of the responsibility of the state, and (2) the case
where a party to a contract pleads that he has been prevented
by war from executing his contract.
There are many ways in which war may render the performance
of a contract impossible. If, in consequence of the invasion of
the enemy, shops or places of business have to be closed, the
employer cannot be compelled to pay wages to his employees
during the period of necessary closing. In France special laws
have been passed as to the effect of war upon leases of houses and
leases of farms. (Loi du 9 mars 1918, baux a loyer, and lot du
17 aoul 1917, baux ruraux.) With these we are not concerned.
The French cases prior to these lois apply the principles of the
general law which are followed in Egypt. (Baudry-Lacan-
tinerie et Wahl, Louage, 3rd ed. 2, n. 2900; Trib. de
la Seine, 20 janv. 1915, S. 1916. 2. 52; Eev. Trim. 1915, p. 519.)
If the head of a business is mobilised it may be necessary for him
to close his premises at once, and he may be excused from giving
notice to his employees. (See Rev. Trim. 1915, p. 520.) So,
in the case of the employee. La mobilisation, fait exterieur et
independant de la volonte des parties rend impossible a Vouvrier
ou employe mobilise V accomplissement de son engagement, et, des
lors, constitue un cas de force majeure, tant que cette impossibilite
subsiste, mais elle rta pas pour effet la rupture definitive du contrat
de travail; elle en entraine seulement la suspension. (Trib. Civ.
de la Seine, 2 mars 1915, Trib. Com. de Nancy, 6 dec. 1915, D.
1916. 2. 101. If a theatre is closed by a public authority in
consequence of a war the lessee will not be bound to pay the rent.
(Trib. Seine, lor mai 1915; Rev. Trim. 1915, p. 517; Guillouard,
Louage, 1, n. 391.)
In a recent decision the Tribunal de la Seine goes further.
A theatre was closed by the public authorities during a certain
period, after which it was allowed to open under restrictions.
The performances were to be reduced, and so forth. Partly from
■^ ******* . . r
...
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 309
these reasons, and partly owing to the darkness of the streets and
the difficulties of transit, there was a great falling off in the
receipts of the theatre. In these circumstances, the court held
that the lessee was entitled not only to escape payment of rent
during the time that the theatre was closed but also to a reduction
for the subsequent period. (Trib. Seine, ut sup.)
If a city is bombarded and the inhabitants have to leave their
houses, they will not have to pay rent for them during this com-
pulsory absence. (Trib. de paix de Paris, 27 janv. 1871, D. 71.
3. 6. Cf. Paris, 28 aout 1873, D. 74. 2. 159; Trib. cle la Seine,
20 janv. 1915, S. 1916. 2. 52; Rev. Trim. 1915, p. 355, 1917,
p. 153.)
An order for the mobilisation and the requisitioning of all the
means of transport may relieve a railway-company of many of
its obligations to private shippers of goods. (See Montpellier,
15 juill. 1915, and the group of cases in D. 1916. 2. 49.)
In a recent Egyptian case of great importance, the defendant
had broken several contracts between himself and the plaintiff.
The defence was that it was impossible for him to perform the
contracts, because he was an enemy subject, and his business had
been put into the hands of a liquidator in conformity with the
proclamation of the military authority in Egypt. The Mixed
Tribunal of Alexandria rejected this defence and sustained the
liability of the defendant.
The grounds of this decision were that the measures prescribed
by the proclamations against enemy subjects were intended to
cause prejudice to these enemies and not to give them a defence
against actions, and that the orders to liquidate could' not be
considered as force majeure, because the military authority avail
erige en faute le fait seul d 'appartenir a une nation ennemic.
But this judgment was reversed upon appeal and the law was
thus laid down:
En ce qui conoerne les relations entre particuliers, les principes
superieurs du droit n'ont pas ete aneantis par les evenements de la
grande guerre.
Lorsque les sujets des pays ennemis se defendant devant eux,
les tribunaux dowent lew faire V application des dispositions des
codes, mais aussi l&Ur en conserver le benefice; par suite le res*
sortissant ennemi nest tenu de dommages-interets pour inexecu-
tion d'un contrat que s'il a commis une faute.
On ne peut retenir commie une faute a sa charge le seul fait
■quil appurtient a une nation ennemie.
310 THE LAW OF OBLIGATIONS.
Les actes de Vauforite militaire, tels qn'un ordre de liquider
une maison de commerce, dont un sujet ennemi est le premier a
soaffrir, peuvent etre im'oques par lui oomme un cos de force
majeure. (C. A. Alex. 13 dec. 1916, 13. L. J. XXIX, 107.)
Tho Mixed Court of Appeal pointed out that the compulsory
liquidation of the business of enemy traders was intended to deal
a blow at the general trade of the enemy country, but did not.
aim at inflicting a direct injury on individual traders.
It is in questions of sale, however, that the defence of war as
force majeure has been most frequently raised. It is settled by
the jurisprudence that war does not release the debtor from his-
liability in damages for his .non-performance, although the war
has rendered this performance more difficult and more expensive.
(Cass. 19 nov. 1873, D. 74. 1. 200; Trib. Comm. Seine, 9 mars,
et 15 juin 1915, D. 1916. 2. 22; Civ. 4 aout 1915, D. 1916. 1.
22, S. 1916. 1. 17; cases in Rev. Trim. 1915, p. 384; C. A.
Alex. 29 mai 1912, B.L.J. XXIV, 368.)
In an Egyptian case a merchant in Genoa had sold goods to be-
transported by sea to Alexandria. He excused his non-perform-
ance by alleging the outbreak of the Italian-Turkish war. It
was held that this was not force majeure .
The war made the performance of the contract more difficult,,
but it did not make it impossible. (C. A. Alex. 29 mai 1912,
ut supra.) The same principle was applied when a partner
pleaded that he could not execute his obligation to make his apport,
because, owing to the war, he could not realise certain securities-
which he had. This was held not to be an absolute impossibility.
(Q. A. Alex. 17 janv. 1917, B. L. J. XXIX, 157.)
In France where game-shooting was prohibited during the war,,
game multiplied upon lands belonging to the state and caused
damage to neighbouring owners. In an action against the state
for damage caused in this way by game increasing on domain,
lands, the state pleaded, (1) that the shooting was let to a lessee,.
and (2) that the interdiction of shooting was force majeure which
prevented them from keeping down the head of game. The court
repelled both defences. As owner the state was bound to prevent
the excessive multiplication of game, and there was no force-
majeure, because it was not proved that they could not have
obtained authorisation to destroy the game without the use of
guns. (Trib. de Rambouillet, 23 mai 1916, Rev. Trim. 1917,.
p. 130.)
Nor can the debtor excuse himself by pleading war if, in spite
NON- PERFORMANCE WITHOUT FAULT OF DEBTOR. 311
of the war, he could have performed his contract before the war
began. (Trib. Conmi. Seine, 2 janv. 1871, D. 71. 3. 17. See
Wahl, A., in Rev. Trim. 1917, p. 7 for illustrations.
Ami, as a general rule, the war does not put an end to the con-
tract, but only delays its performance. (See Rev. Trim. 1917,
p. 153.) So in the case of a lease of shooting rights, if, during
the war, shooting game is prohibited this suspends the lease. Rent
is not due during this period. (Paris, 16 oct. 1916, Rev. Trim.
1917, p. 153.") But whether the contract is merely suspended
or altogether terminated is largely a matter of circumstances and
of interpretation. In many cases of sale, for example, the courts
will hold that, according to the intention of the parties, the
delivery was to be made within a certain delay or not at all, and
they will not compel the buyer to take delivery if it is offered
after this delay, though the seller may be without fault. (Req.
7 mai 1872, D. 72. 1. 456; and cases in Rev. Trim. 1915,
p. 412.)
If a manufacturer has sold goods of his own manufacture, and
his factory is destroyed by the enemy, this will be force majeure.
But if his contract was to supply goods of a certain kind, but not
necessarily made by him, it will be his duty to get them elsewhere.
And it is no excuse for non-performance that a seller was reckon-
ing on getting the goods from a particular manufacturer, and that
this manufacturer, in consequence of the war, is unable to supply
them. (C. A. Alex. 7 juin 1916, B. L. J. XXVIII, 416. )
The seller will be excused if, after the sale, the exportation of
goods of that kind is prohibited. (Req. 15 nov. 1894, S. 96. 1.
142.)
The seller of goods may be excused by the fact that all goods
of the kind sold by him have been requisitioned by the military
authority, whether of his own state, or of an invading enemy.
(Req. 21 fevr. 1876, S. 77. 1. 157, D. 77. 1. 367.)
Or an enemy army may have compelled the seller to deliver
to them or to a third party the goods promised to the buyer.
(Req. 29 oct. 1908, D. 1910. 1. 311.)
In a case in Egypt the sale was of Welsh coal. The seller
pleaded that the exportation of this coal from Great Britain had
been prohibited, and that the military authorities in Egypt had
requisitioned all coal of that kind in the depots at Alexandria.
The Mixed Court of Appeal held that the plea of force majeure
was in these circumstances made out; il zacfit (Tun jail (hi prince
tres caracterise. (C. A. Alex. 10 mai 1910, B. L. J. XXVIII.
312 THE LAW OF OBLIGATIONS.
306. Cf. C. A. Alex. 11 avr. 1917, B. L. J. XXIX, 358;,
C. A. Alex. 2 mai 1917, B. L. .7. XXIX, 396.) In the case of
11 avril 1917, it was not necessary to decide this question because
the court held that the buyer had acquiesced in the request of the
seller to treat the contract as being resiliated.
The same reasons which justify non -performance will justify
delay in the performance; so, for example, a seller may be excused
for non-performance at the time promised, by proving that his
delay was caused by the railways being taken up with troop-trains.
(Trib. Comm. de Perpignan, 5 fevr. 1915, Rev. Trim. 1915,
p. 405.)
In spite of the weight of authority that war is not to be con-
sidered as force majeure when it merely renders the performance
of a contract more difficult or more onerous, some French courts
have been bold enough to break away from the tradition. Thus,
in one case it was held:—
Si les engagements contraries doivent etre executes conforme-
ment aux termes de la convention, il faut necessairement que cette
execution puisse soperer dans les circonstances courantes et in-
herentes a la vie economique normale, telle qiielle se deroulait
au moment des accords.
Par suite, Vetat de guerre actuel, ay ant trouble profondement
la vie economique du pays, et cree dans la commerce et V Industrie
des situations critiques et difficiles, qui ne permettent pas d'obligeY
ceux qui en sont victimes a remplir des engagements ruineux,
cette situation doit suspendre les engagements dans certaineS
branches commerciales ou faire nuitre entre les parties de nouveaux
accords a litre temporaire.
Specialement, doit etre deboute de sa demande en paiement,
pendant la guerre, des appointements quit touchait auparavant,
en vertu de son contrat avec son patron, le coupeur, employe chez
un mawhand-tailleur de luxe, s'adressant a une clientele speciale
que Vetat de guerre a dispersee et fait disparaitre en grande partie,
en paralysanl avnsi V exercice de m profession et en rrndamt muffles
les concours dont il setait entoure.
But the decision appears to be contrary to principle, and it is
unfavourably criticised by the arretiste. (Trib. Comm. de Tou-
louse, ler juin 1915, S. 1916. 2. 29. See note to C. A. Alex.
7 juin 1916, B. L. J. XXVIII, 416.)
And in another case, the court, without going so far as this,
reduced the damages on account of the difficulty of executing the
contract. The case was by a lessee of a flat against the lessor
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 313
who had bound himself to heat the apartment Let, and failed to
do so owing to the difficulty of procuring coal and to its high
price, these being effects of the war. v Trib. de la Seine, 30 nov.
1916, S. 1916, 2. 40. See Rev. Trim. 1917, p. 104.; Such
a decision is contrary to all traditional rules on the matter.
It has been decided that when the effect of the war is to dimmish
the profits of the lessee without depriving him of the possession
of the subject leased, this does not entitle him to a reduction of
his rent. (Cass. 21 janv. 1874, S. 1874. 1. 125, Journal du
Palais, 74, p. 288; Trib. de Cusset, 22 janv. 1915, S. 1916. 2. 53,
guests leaving hotel on account of outbreak of war, Trib. de la
Seine, 6 dec. 1915, D. 1916. 2. 83.)
Criticism of the jurisprudence and proposals to change
the law.
The law with regard to Avar as force majeure cannot be con-
sidered as equitable. It is not in practice possible for the parties
to commercial contracts to estimate beforehand the probabilities
of an outbreak of war.
War, as it is now carried on, interferes in the most violent
way even with neutral commerce. The effect of holding that the
party must execute his contract, even though it has become more
difficult and more expensive owing to the war, may be that this
party is ruined, while the other party finds himself unjustly en-
riched by obtaining at a low price products which have risen
enormously in value.
A. recent writer contends ingeniously that without a change in
the existing texts of the law the courts are entitled to grant the
dissolution of a contract although its performance has not been
rendered impossible.
He argues that this may be done when a supervening event has
rendered the performance more difficult or more onerous, provided
that this event combines the following conditions: —
(1) It must be an event which the parties could not have fore-
seen ;
(2) It must have been entirely independent of the will of the
debtor; and
• (3) It must create such a difficulty in the performance that the
party would not have contracted if he had foreseen it.
It is maintained that it is an implied term of any contract that
the debtor is to be freed by the happening of 'an event of this kind.
(Serbesco, M. S., in Rev. Trim. 1917, p. 349.)
314 THE LAW OF OBLIGATIONS.
So far this argument has not prevailed in the French courts.
But in certain classes of cases the English courts, as will be shown
later, have managed to arrive at pretty much the same result
as that for which M. Serbesco contends. (Infra, p. 321.)
In Italy the decret of 27 mai 1915, n. 739, has remedied this
inequity by enacting la guerre est consideree comme force majeure,
non settlement, lorsqu'elle rend impossible Vexecution, nun's aussi
lorsqu'elle rend Vexecution excessivement onereuse. (See article
by M. E. Piola Caselli, La Legislation de Guerre en Italic in
L'Egypte Contemporaine, 1917, p. 241.)
In France the association of manufacturers and merchants
petitioned the Government to pass a law in the same sense. A
pro jet de loi of a more general kind was introduced in the French
Chamber by M. Faillot on 12 August, 1915. (Journ. Off. Doc.
Pari. Chambre, p. 934.)
The proposition was that commercial contracts concluded before
1st October, 1914, for the delivery of products or merchandise or
for other successive or deferred prestations might be revised, sus-
pended, or resiliated, with or without indemnity, if the conditions
of execution, in consequence of the war, had undergone changes
which the parties could not have contemplated, and such, that if the
debtor had foreseen them, he would not have bound himself or
would have bound himself only upon different terms.
Such questions were to be decided by a court of arbitration,
composed of a judge and of two assessors; the procedure was to be
in writing and there was to be no appeal.
The law was to cease to have effect six months after the sign-
ing of peace. (Rev. Trim. 1915, p. 720, 1917, p. 258.)
But this law was not carried. Special laws were passed in
France in the latter part of the war as to the effect of war upon
baux a loger and baux ruraux. (Loi du 9 mars 1918, and Loi du
17 aout 1917.)
Strikes.
Whether a strike amounts to force majeure excusing the exe-
cution of the contract is a question of circumstances. If the strike
is general, including all the works of a certain kind, it may make
it impossible for the debtor to fulfil his obligation . But in other
cases the difficulty may be got over by going elsewhere. If the
contract was to deliver a product which is made only by one
maker, a strike in his works might be cas fortuity excusing a
merchant who had undertaken to supply goods of this manufac-
NON-PERFORMANCE WITHOUT FAULT OF DEB LOR. 315
turer. But if the strike occurs in the works of the debtor himself
it is not a cas fortuit if it was brought about by his own fault, or
if it rests with him to bring- it to an end. II y a lieu dans chaque
espece de rechereher si la greve a eu pour origin? une faute grave
del' entrepreneur, si elle pouvait etre evitec ou arretee par lui, et
si elle a constitue pour ltd un obstacle insurmon table a I 'execution
de ses obligations. (Conseil d'Etaf, 3 juill. 1912, D. 191G. 3. 3,
lere espece; Req. 22 avr. 1909, D. 1913. 1. 136; Req. 28 oct.
1907, D. 1909. 1. 282; note by M. A. Colin to Paris, 13 nov.
1903, D. 1904. 2. 73; D. N. C. C. art. 1148, nos. 204 seq., and
Additions, 1913, art. 1148, nos. 204 seq. ; C. A. Alex. 13 dec.
1899, B. L. J. XII, 39. See Rev. Trim. 1908, p. 613. As
to the question whether the workman who strikes commits a breach
of the contract which entitles his employer to resiliate the contract
of service, see Cass. 18 mars 1902, S. 1903. 1. 465; and Sirey,
Table, 1901—1910, vo. Louage de services, n. 105.)
Onus of proof of fortuitous event.
The debtor who pleads thai the reason why he has not executed
his contract is because W was prevented by a fortuitous event has
the burden of proof. He must prove the evemt and he must
prove also that it occurred without his fault. In some cases the
mere proof of the event will exclude the idea of fault. As a
general rule a debtor who proves that the inexecution was due to
such events as earthquakes, lightning, or floods, does not need to
prove positively that he could not prevent these occurrences. If
the creditor maintains that, notwithstanding the fortuitous event,
there was fault on the part of the debtor, it is for him to prove it.
(B.-L. et Barde, Oblig. 1, n. 466; Aubry et Ran, 5th ed. 4,
p. 169, note 36.) But there are other events such as fire, or theft
committed by a third party, which may have prevented the exe-
cution of the obligation, and yet are not necessarily fortuitous so
as to excuse the debtor from performance. The fire may have
been caused by the fault of the debtor, or the thing may have
been stolen by some person for whom he is responsible, or it may
have been stolen owing to his negligence.
In these cases the debtor must prove not only that the event
happened and caused the inexecution, but also that it happened
without his fault. (See, as to theft, Cass. 8 nov. 1881, S. 83. 1.
167.) The exact nature of the proof which he must make in the
case of fire has been discussed earlier. (Supra, pp. 299 seq.)
'''fa 7WK^
316 THE LAW OF OBLIGATIONS.
Effect of fortuitous event.
When the fortuitous event which the debtor proves in excuse
for the non-execution is of a kind merely to cause delay, and not to
prevent the execution altogether, the debtor will be excused only
for the damages caused by the delay, and will be bound to execute
his obligation when the obstacle is removed. (Cass. 15 fevr. 1888,
D. 88. 1. 208; Trib, Civ. de la Seine, 2 mars et 21 avril 1915,
Trib. Com. de Nancy, 6 dec. 1915, D. 1916. 2. 101.)
But when the effect of the fortuitous event is to make the per-
formance of the obligation altogether impossible the obligation is
rescinded, and the parties are put back as far as possible into their
former position. Tf any payment has been made or anything
delivered it must be returned by the debtor who owing to the for-
tuitous event cannot fulfil his part of the obligation. But the
debtor is not excused by proof of a fortuitous event if the impossi-
bility arose after he was in default, or if he had especially under-
taken to be responsible for fortuitous events. (B.-L. et Barde,
Oblig. 1, n. 461; Planiol, 2, n. 233; D. N. C. C. art. 1148,
nos. 32 seq.)
The rules on this subject are clearly stated in the Egyptian
Code: Obligations are extinguished by dissolution, when, after
they have come into existence, performance of them has become
impossible.
If performance has become impossible through the fault of the
debtor, or if the impossibility has ((risen while the debtor is in
default as regards execution, he is liable for damages.
When an obligation is dissolved in, consequence of impossibility
of performance, the correlative obligations are in like manner
dissolved, without prejudice to the right to indemnity, if cmy, due
from, the respective parties for any benefit acquired without cause.
(Arts. 177—179/240—242.) This means that there must be a
restitutio in integrum. The debtor' who cannot make the per-
formance which he has promised is excused, but he cannot retain
what, has been paid to him. (Dall. Rep. Obligations, n. 740;
Req. 14 mai 1872, D. 73. 1. 78.)
The Egyptian Code in saying the correlative obligations are
i)i like manner dissolved clears up a difficulty which arises under
the corresponding article of the French Code (art. 1302). That
article says that when a corps certain which a debtor was bound to
deliver perishes without his fault — Vobiigation est eteinte.
It does not say that the corresponding obligations of the creditor
tL J'toiAy fid M**>
NON-PERFOKMANCE WITHOUT FAULT OF DEBTOR. '517
are likewise extinguished. The French article is concerned only
with the obligation to deliver a specific thing and not with the
obligation to do or not to do. In regard to the obligation to do or
not to do, the French authors agree that if the debtor is prevented
by a fortuitous event from the fulfilment of his obligation the
obligation of the creditor is likewise extinguished. This rests
upon the theory that in the synallagmatic contracts the two obliga-
tions are reciprocal; each of them is the cause of the other, and the
extinction of one entails the extinction of the' other. (Planiol, 2,
n. 621: B.-L. et Barde, Obliy. 1, n. 445: Laurent, 18, n. -509;
Aubry et Rau, 5th ed. 4, p. 406.)
Article 1302 of the French Code lays down a different rule for
the obligation to deliver a specific thing. In this case, the debtor
alone is excused by the fortuitous event which makes it impos-
sible for him to deliver the thing, but this event does not affect
the correlative obligation of the creditor. This is because the
French Code in another place, when dealing with the obligation to
deliver a specific thing, says that the thing is to be at the risk of the
creditor from the date of the contract (art. 1138). But the
Egyptian Code has no corresponding article, and, in spite of the
difficulty of reconciling the articles in the Egyptian Code upon
risk in the contract of sale, it would appear that the Egyptian
legislator intends to lay down a universal rule. The fortuitous
event which relieves the debtor puts an end to the obligations on
both sides, and there must be a restitutio in integrum. In the
case of sale if the buyer has paid the price he can get it back again.
(C. C. E. 266/336, 297/371 . Contrast, in France, Pothier, Vmte,
n. 307; Guillouard, Vente, 1, n. 264.) This point will be more
fully explained later in discussing the extinction of an obligation
by the loss of the thing due. (Infra, p. 476.)
Fortuitous event in contract of lease.
In the contract of lease of a thing the code lays down special
rules as to the effect of a fortuitous event upon the rights of the
lessor and the lessee.
The fortuitous event may have altogether destroyed the thing
let, and in that case the contract is dissolved for the future, but the
rent paid for the period before the fortuitous event does not need
to be returned because the lessee has had the use of the subject.
(C. C. E. 370/454, 455; C. C. F. 1722. See Pans, 1 avril
1886, D. 68. 2. 85; B.-L. et Wahl, Lottaye, 3rd ed. 1, n. 352.)
■
|fAA«v -W^tvw
318 THE LAW OF OBLIGATIONS.
But ii* the fortuitous event lias nor destroyed the subject alto-
gether, but has deprived the lessee merely of a part of the thing,
the lessee has the option, according; to circumstances, of demand-
ing either the dissolution of the lease or a reduction in the rent.
Ho cannot oblige the lessor to restore the subject to its former
state. (Req. 12 janv. 1910, I). 1911. 1. 375.) The full dis-
cussion of this matter belongs to the law of lease.
Right to rebut defence of force majeure may be lost
by acquiescence in non-performance.
Acquiescence in non-performance.
Before the execution of the contract an event such as the out-
break of war may occur which renders its execution impossible, or,
at any rate, very difficult. If, in such a case, the debtor intimates
to the creditor that he cannot execute the contract and the creditor
makes no reply, the court may infer that he acquiesced in the
resiliation of the contract, and it may be unnecessary to decide if
there was force majeure, because the creditor by his conduct has
lost the right to insist on the performance of the contract by the
debtor. (C. A. Alex. 11 avril 1917, B. L. J. XXIX, 358.)
Comparison with other laws.
Swiss Code.
The SAviss Code in its general article on the liability of the
debtor for inexecution avoids using the terms cas fortuit or force
majeure. It says, Lorsque le orecmcier ne peut obtenir V execution
de V obligation, on ne peut Vobtenir qu'imparfaitememt, le debiteur
est tenu de r Sparer le dommage en resultant, a m'mns qu'il ne
prouve qiCaucune faute ne lui est Imputable. (Code des Obliga-
tions, art. 97.)
But in other articles the Swiss Code of Obligations speaks of
oas fortuit or force majeure indifferently . (Cf . arts. 103, 299, 306,
420, 447, 474, 487, 490. See Rossel et Mentha, Droit Civil
Suisse, 3, pp. 128, 154,)
German Code.
The corresponding article in the German Code is thus ex-
pressed: — Le debiteur se trouve liber e de Vobligation. d'effectuer
la prestation, des que celle-ci devient impossible par suite d'une
■
.
*f
NON-PKRFORMANCE WITHOUT FAULT OF DEBTOR. 319
circohstance survenue depuis la naissance du rapport d'obiiga-
tion el dont le debitew n'ait pus a repondre.
Est assimilee a um im/possibilite survenue depuis la naisscmce
du rapport d' obligation Vim/puissance du debiteur, ulterieurement
survenue, d'executer la prestation (art. 275).
In other articles the German Code uses the term force majeure
—hohere Gewalt. (See arts. 203, 212, 215, 701, 1996.)
According- to Cosack, the German Code intends to make the
distinction referred to above between accidents arising- out of the
enterprise, and accidents which are external to it -innerer Zufall
and aiiszerer Zufall. (Lehrbuch des Deutschen biirgerlichen
Rechts, 6th ed. 1, pp. 291, 317.)
The illustration he gives is the special liability of the hotel-
keeper, who, under the German Code, is liable for the loss of
goods belonging to his guests, unless the damage is caused
by the nature of the goods themselves or by forot) mwj&wm
(art. 701). In his view, the reason why the hotel-keeper must
pay for goods stolen by third parties who are neither his guests
nor his servants is because this is a risk which belongs to the
enterprise. Other German authorities, however, deny that the
criterion of force majeure is that it must be something external.
(See note in French translation upon art. 203.)
In the German law, as in the French, when the impossibility of
performance is caused by an event which happens after the date of
the contract it is immaterial whether the impossibility is objective
or subjective; the only relevant question is whether the debtor is
free from fault. (Windscheid, Pandekten, 8th ed. 2, s. 264, n. 2.)
In regard to the contract of carriage it is a significant fact that
the German law does not make the carrier's liability turn on
whether the accident was caused by a risk foreign to the enterprise.
Le voiturier est responsible du dommage resultant de la perte
ou de Vavarie survenue, depuis la remise jusqu'a la deliwance de
la merchandise, ou du retard dans la delivrance, a moins que la
perte, Vavarie ou le retard ne proviennent de circonstances que
naurait pu eviter la diligence d'un voiturier prudent. (Code de
Commerce Allemand, art. 429.)
In the German law ordinary carriers can modify the legal rules
as to their liability by special contracts, but the power of railways
to do so is restricted in various ways. (Code de Comm. Allemand,
art. 471.)
320 THE LAW OF OBLIGATIONS.
English law as to impossibility of performance.
Tn the English law when the performance of an agreement has
become impossible after its elate owing to a change in the law the
agreement is void. (Baily v. De Crespigny, 1869, L. R. 4 Q. B.
180, 38 L. J. Q. B. 98; Leiston Gas Co. v. Leiston-cum-Sizewell
V. D. C, 1916, 2 K. B. 428, 85 L. J. K. B. 1759.)
So, for example, the outbreak of war which makes traffic with
the enemy country illegal will excuse the non -performance of
contracts which involve such prohibited trading. (Arnhold Kar-
bcrcj d': Co. v. Blythe, Green, Jourdain & Co., 1916, 1 K. B. 495,
85 L. J. K. B. 665. See Barker v. Hodgson, 1814, 3 M. & S.
267, 15 R. R. 485; Clapham Steamship Co. v. Nawnlooze Ven-
noolschap Vulcacm, 1917, 2 K. B. 639, 86 L. J. K. B. 1439;
Baty and Morgan, War, Its Conduct and Legal Results, p. 422;.
Page, A., War and Alien Enemies, 2nd ed.; Campbell, H., The
Law of War and Contract, p. 64; Mackinnon, F. D., Effect of
War on Contract; McNair, A. D., War-Time Impossibility of
Performance of Contract, 35 Law Quarterly Review, 84; and
supra, I, pp. 123 seq.) When the supervening impossi-
bility is not one of law, but of fact, it does not excuse the
non-performance of the contract if the contract was an absolute
one. The English law does not admit as a general principle that
force majeure excuses the non-performance of a contract. So,
when a man agreed to deliver a cargo on board in the usual time,
and this became impossible owing to the freezing of the canal by
which the cargo would have been brought to the ship, it was held
he was not excused. (Kearm v. Pearson, 1861, 7 H. & N. 386,
31 L.J. Ex. 1,126R.R. 473.)
A nd if a foreign law prevents the performance the impossibility
is one of fact which does not excuse the failure. (Barker v.
Hodgson, id supra.)
The severity of the English law in not admitting force majeure
as a defence is, however, greatly mitigated by the fact that the
courts treat the question as one of interpretation. In many cases
it is held to be an implied term of the contract that the party was
to be discharged if the performance became impossible without
his fault.
This is so when the parties con tract on the basis of the continued
existence of a specific person or thing. The leading case is Taylor
v. Caldioell.
" Where from the nature of the contract it appears that the
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 321
parties must from the beginning have known that it could not be
fulfilled unless, whjen the time for the fulfilment of the contract.
arrived, some particular specified thing continued to exist, so that
when entering into the contract they must, have contemplated such
continued existence as the foundation of what was to be done."
{Taylor v. Caldwell, 1863, 3 B. & S. 826, 32 L. J. Q. B. 164 T ,
129 R. R. 573, where see note of the cases in which this principle
has been applied.)
In Taylor v. Caldwell the agreement was to let a music-hall
for four days, and before the first of those days arrived the music-
hall was burnt down. It was held that both parties were excused.
In Appleby v. Myers the plaintiffs had contracted to erect
certain machinery in the premises of the defendant and to pay a
specified sum for the whole work after completion. When the
machinery was only partly erected a fire accidentally broke out
in the premises, and, without fault by either party, destroyed both
the buildings and the machinery then erected thereon. It w r as
held that the plaintiffs were not entitled to recover anything for
the work done, and that both parties were excused from further
performance of the contract. (1867, L. R. 2 C. P. 651, 36
L. J. O. P. 331.)
Upon the same principle, when under a contract an agent was
entitled to a salary as a remuneration for his services in intro-
ducing clients to a stock-broker, and, owing to the war, the stock-
exchange was closed for several months, it was held that no re-
muneration could be claimed for this period. It was an implied
condition of the contract that the stock-exchange should remain
open. {Berthoud v. Schweder & Co., 1915, 31 Times Law Re-
ports, 404; Mews' Digest, 1911—1915, p. 1578. See Campbell,
H., Law of War and Contract, p. 169.)
Extension of this principle.
In recent cases the principle of Taylor v. Caldwell has been
extended. The new rule is thus stated by an eminent, judge: —
" When a lawful contract has been made, and there is no de-
fault, a court of law has no power to discharge either party from
the performance of it unless either the rights of someone else or
some Act of Parliament give the necessary jurisdiction. But a
court can and ought to examine the contract and the circumstances
in which it was made, not of course to vary, but only to explain it,
in order to see whether or not from the nature of it the parties
AV.— VOL. II. 21
322 THE LAW OF OBLIGATIONS.
must have made their bargain on the footing that a particular*
thing or state of things would continue to exist; and if they must
have done so. then a term to that effect will be implied, although
it be not expressed in the contract. In applying this rule it is
manifest that such a term can rarely be implied, except where the
discontinuance is such as to upset altogether the purpose of the
conl ract . Some delay or some change is very common in all human
affairs, and it cannot be supposed that any bargain has been made
on the tacit condition that such a thing will not happen in any
degree." {Per Lord Loreburn, in F. A. Tamplin S. S. Co. v.
Anglo- Mexican Petroleum Co., 1916, 2 A. C. 397, 85 L. J.
K. B. 1389,1394.)
Applying this principle, it was held in the following case that
a contract of service was terminated. A British ship was in the
port of Hamburg at the outbreak of war and was detained there
by the German authorities, and the crew were interned for an
indefinite time as prisoners. The plaintiff was the wife of one of
the officers of the ship.
Her husband's contract with the shipowner was to serve on the
ship on a voyage not exceeding two years' duration.
He had stipulated that the shipowner should pay part of his
wages to his wife. She claimed in this action payment of the
proportion of wages earned by her husband after he had been
interned as a prisoner. It was held that the shipowner was not
liable to pay wages after the date when the crew were interned.
[Horlock v. Bed, 1916, 1 A. C. 486, 85 L. J. K. B. 602.)
The voyage contemplated in the contract had been brought to
an end without fault on the part of the defendant, and there was
'"the failure of something which was at the basis of the contract
in the mind and intention of the contracting parties."
Instead of the destruction of a specific thing, there is " the
cessation or non-existence of an express condition or state of things
going to the root of the contract." Per Lord Shaw, 85 L. J.
K. B. 618.) But even when the parties have contemplated the
possibility of the termination of the contract without liability;
owing to the operation of certain causes, such as " restraint of
princes," this excuse does not avail unless the foundation of the
commercial enterprise contemplated by the parties has been
destroyed. If a ship has been chartered for five years and it is
requisitioned by the Government for use in war, this does not
terminate or even suspend the charter-party if it is still possible
that the ship may be released so as to be available for use by the
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 323
charterers for some months before the expiration of the five pears.
F. A. TampMn S. 8. Co. v. Angh-Meociocm Petroleum Pro-
tects Co., 1916, 2 A. C. 397, 85 L. J. K. B. 1389.
A recent writer states the result of the cases in these terms:
llic conclusion seems to be this: If, subsequently to the forma-
tion of a contract, an event of which the effects have not been
expressly provided for by the terms of the contract occurs, and
causes, or is reasonably likely to cause, such difficulty or delay in
performance as amounts to commercial impossibility, or destroys
the whole foundation of the contract, either [tarty may claim that
it was an implied term of the contract that on the happening of
th,' said event the obligations of the contract should be discharged.
And the court will assent to such claim if it holds, first, that as a
matter of construction the alleged implied term was a term of the
contract, and. secondly, that the event is of the nature above
stated." Mackinnon, F. D., Effect of War on Contract, p. 23.
Cf. article by A. D. McNair in 30 Law Quarterly Review, 84,
and, especially, at p. 9! I.
English law as to supervening incapacity to render personal
services.
A contract to render personal services, such as can be performed
by the debtor only, is subject to the implied condition that he
shall be alive and in a state of health to perform the services. If
without his fault the debtor should die, or if he should be disabled
from performance by illness, the non-performance of the contract
is excused. So where a musician contracted to play at a concert,
and, owing to illness, she was unable to fulfil her engagement it
was held that the illness was a valid excuse.
It is, probably, an implied term of such a contract that, if tho
person disabled by illness has an opportunity of so doing, he
shall give to the other party to the contract notice of the disability
within a reasonable time. {Robinson v. Davison, 1871, L. R.
6 Exoh. 269, 40 L. J. Ex. 172.)
Impossibility of performance does not cause the contract to
be rescinded ab initio.
According to the English law, the supervening impossibility
of performance may, upon the principles above explained, put an
end to the contract and release both parties from, further per-
formance. But there is not, as in the French law, any restitution
21 (2)
324 THE LAW OF OBLIGATIONS.
in integrum. The contract is valid up to the date when the
impossibility arose. If anything has been paid under the contract
it cannot be recovered, and if a legal right to claim a payment
has accrued before the date of the impossibility, this payment
may be claimed in spite of the impossibility.
The plaintiff agreed to let to the defendant a room for the
purpose of seeing the procession which was to have taken place
on the occasion of the King's Coronation. The procession had to
be postponed owing to the King's illness. The price for the use
of the room was, under the contract, payable before the date
fixed for the procession, and part of the price had been paid before
that date. It was held that the defendant was entitled not only
to retain the money paid on account but to recover the balance.,
{Chandler v. Webster, 1904, 1 K. B. 493, 73 L. J. K. B. 401.)
But if the price is not payable or the performance is not due
until after the time when the impossibility arises, it cannot be
claimed. (Kr&ll v. Henry, 1903, 2 K. B. 740, 72 L. J. K. B.
794.)
And when the existence of a particular state of things is merely
the inducement to one party to enter into the contract but is not
the basis of the contract between the two parties the doctrine of
Taylor v. Caldwell does not apply.
The defendant hired a steamer for the purpose of taking paying
passengers to see a Naval Review and for a day's cruise round the
Fleet. Owing to the King's illness the Naval Review had to be
abandoned, but it was held that this did not excuse the defendant
from his liability to pay the price agreed upon for the steamer.
(Heme Bay Stmmboat Company v. Hutton, 1903, 2 K. B.
683, 72 L. J. K. B. 879.)
It must be admitted that the distinction between this case and
such cases as Krell v. Henry is very difficult. (See Anson, Con-
tracts, 14th ed. p. 387; Pollock, Contracts, 8th ed. p. 440;
Leake, Contracts, 6th ed. p. 500.
In English law war does not in itself necessarily create
impossibility of performance.
Save in cases governed by the principle above stated, the out-
break of war is not admitted in English law as an event preventing
the performance of a contract unless the war creates an impossi-
bility in law, as when trading with the enemy is prohibited, or
unless the war renders the carrying out of the contract once for
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 325
all impossible, and from the nature of the contract it appears that
the intention of the parties was to make the contract conditional
on its performance continuing to be possible in fact. (See Leiston
Gas Co. v. Leiston-cum-Sizeivell Urban Council, 1916, 2 K. B.
428, 85 L. J. K. B. 1759; Horlock v. Bed, 1916, A. C. 486,
85 L. J. K. B. 602; supra, p. 322.)
But the danger to a ship of capture by the enemy may be an
excuse for a deviation, and j)erhaps it might entitle the ship to
discharge her cargo in a different port from that named' in the
contract. (See The Teidonia, 1872, L. R. 4 P. C. 171, 41 L. J.
Adm. 57; Pole v. Cetcovitch, 1860, 9 C. B. N. S. 430, 127
R. R. 705; Carver, Carriage by Sea, 5th ed. s. 290; Baty and
Morgan, War, Its Conduct and Legal Results, p. 414.)
There have been many English cases since the outbreak of war,
and the tendency of the courts is to apply the rule strictly that
the outbreak or the continuance of war does not in principle
excuse the defendant from performing his contract.
Thus, where a residential flat in England had been let before
the war for a term of years to an Austrian subject, and after the
outbreak of war, he was prohibited by law from residing in that
area, it was held that this did not terminate the lease. His per-
sonal residence in the flat was not the " foundation of the contract."
(London and Northern Estates Co. v. Kish-Schlesinger, 1916,
1 K. B. 20, 85 L. J. K. B. 369.)
In what is now the leading case it was necessary to consider
the legal effect upon a charter-party of the requisition of the ship
hy the Government. A steamer had been chartered for five years
from December, 1912, the charterers having liberty to sublet the
steamer. She was requisitioned by the British Government in
February, 1915, for use as a transport. No one could say how
long she would be required. It was held that the charter-party
remained in force. (F . A. Tamplin Steamship Co., Ltd. v.
Anglo-Mexican Petroleum Products Co., Ltd., 1916, 2 A. C.
397, 85 L. J. K. B. 1389. Supra, p. 323. See the cases to the
end of 1916 collected and discussed in Campbell, H., Law of War
and Contract; Mackinnon, F. D., Effect of War on Contract.)
Statutory power to avoid contracts.
In England by a recent amendment to the law, the Board of
Trade has power to order that a contract with an enemy shall be
cancelled either unconditionally or upon such conditions as the
32(3 THE LAW OF OBLIGATIONS.
Board may think fit if the Board considers that the contract is
injurious to the public interest. {Trading with the Enemy
Amendment Act, 1916 (5 & 6 'Geo. 5, c. 105), s. 2.) #
Force majeure compared with " act of God."
The liability in the English law of the common carrier of goods
whether by land or by sea is wider than that of the French law.
In the English law carriers are, in the absence of express stipula-
tions to the contrary, when such stipulations are lawful, absolutely
responsible for the loss of the goods unless they can prove that
it was due to the Kings enemies, or the act of God, or that it
was caused by inherent vice or by the negligence of the shipper.
(Peek v. North Staffordshire Railway Co., 1863, 10 H. L. C.
,473, 32 L. J. Q. B. 241.) And the "act of God" means that
the act must have been caused by the elementary forces of nature
as opposed to the act of man.
In a leading English case, James, L. J., thus expresses it:
" The ' act of God ' is merely a short way of expressing this pro-
position: a common carrier is not liable for any accident as to
which he can show that it was due to natural causes directly and
exclusively, without human intervention, and that it could not
have been prevented by any amount of foresight, pains and
care reasonably to be expected from him." (Nugent v.
Smith, 1876, 1 C. P. D. 423, at p. 444, 45 L. J. C. P. 697.
Tho question is not whether the accident could have been pre-
vented by any conceivable care, but whether it could have been
prevented by such care as was reasonable in the circumstances.
(See, for illustrations, Beven, Negligence, 3rd ed. 1, p. 81, and
2, p. 879; Pollock, Torts, 10th ed. p. 513; Salmond, Twts,
4th ed. p. 232.)
"Act of God" is a much narrower ' term than cas fort ait,
because cas fortuit includes many accidents which are caused either
in whole or in part by the agency of man. A loss caused by fir©
is not due to the act of God unless the fire was caused by lightning.
(See Gatliff v. Bourne, 1838, 4 Bing. N. C. 314, 3 M. & G. 643,
44 R. R. 714.)
And loss by theft committed by a third party for whom the
carrier is not responsible, or loss caused by the negligence of such
;i third party, is held in the French law to be due to a cas fortuit,
but in the English law it would not be regarded as the " act of
God." (See on the distinction between "act of God" and cas
NON-PERFORMANCE WITHOUT FAULT OF DEBTOR. 327
■fori nil, Nugent v. Smith, ut supra; Carver, Carriage, by Sea,
5th eel. p. 7; Holmes, Common Law, Lecture V, p. 201.)
One of the arguments used by the French writers who think
that the carrier oug'ht to be responsible for loss caused by accidents
such as are inherent in that business is that the English law holds
him liable unless the loss was caused by the " act of God." (See
Josserand, Les Transports, n. 582.) This may be a good reason
for changing the French law, but it cannot affect the interpretation
of the code.
The English law restricts the freedom of the carrier to limit
his liability by contract, but this subject cannot be treated here.
The liability of innkeepers for loss or injury to goods belonging
to a guest is in England governed by statute. The Act provides
that the innkeeper's liability shall be limited to thirty pounds
unless the goods have been stolen, lost, or injured through the
wilful act or neglect of himself or his servants, or the goods have
been deposited with him for safe custody. But the innkeeper
does not enjoy the privilege unless he exhibits the Act in a con-
spicuous part of the entrance to the inn. (26 & 27 Vict. c. 41.
See, for cases, Beven, Negligence, 3rd ed. 2. pp. 856 seq.)
328 THE LAW OF OBLIGATIONS.
CHAPTER XVII.
CONDITIONAL OBLIGATIONS.
Different kinds of obligations.
The chief kinds of obligations are conditional obligations, obli-
gations with a term, alternative obligations, facultative obliga-
tions, joint obligations, joint and several obligations, divisible
and indivisible obligations, and obligations with a penal clause.
The expression " condition " is sometimes used to describe any
term of a contract, as when a charge laid upon a donee is spoken
of as a "condition" of the gift. (B.-L. et Barde, Oblig. 2,
n. 743; Aubry et Rau, 5th ed. 4, p. 94, note 1.)
But when we speak of a conditional obligation the word " con-
dition " has a more technical sense. An obligation is conditional
when it is made to depend upon an event future and uncertain,
either by suspending it until the event happens or by dissolving
it according as the event does or does not happen., (C. C. F.
1168; C. C. Q. 1079.)
The Egyptian codes vary the language but not the sense, sub-
ject to what is said later as to the word " or."
They state: An obligation may depend on a future or un-
certain event, the occurrence of which shall bring it info existence
or confirm it/or shall prevent its coming into existence or extin-
guish it. (C. C. E. 103/157.) In the first case the condition
is called suspensive, and in the second resolutive. For example,
a seller may sell an article subject to the condition that it is not
to become the property of the buyer until the price has been paid
in full. Here the sale is subject to a suspensive condition. Or
he may sell it subject to the condition that he is to have the right
of buying it back at the same price within a year. Here the.
condition is resolutive.
CONDITIONAL OBLIGATIONS. 'Y29
Suspensive condition.
When the condition is suspensive it is as yet uncertain whether
the person to whom the right is given conditionally will ever be
able to enforce it. But, pending the settlement of this question,
the possibility of the right emerging alters the situation of the
parties, and the eventual right of the creditor is in certain ways
protected.
Resolutive condition.
When the condition is resolutive the right is acquired at the
date of the contract, but it is uncertain if the creditor will be
entitled to keep it. Thus, if an article is sold on condition that
the seller shall have a right of redemption, that is, that the buyer
shall be bound to resell the prioperty to the seller if he demands
it within a certain delay, there is a resolutive condition. This
distinction between the suspensive and the resolutive condition
does not go to the root of the matter/
In reality, as Ulpian says, there is always a suspensive con-
dition, but the question is whether it prevents the right coming
into existence, or allows it to come into existence but may put an
end to it afterwards. An obligation with a resolutive condition
is in reality an obligation pure and simple which, subject to a
certain suspensive condition, may be resolved. D. 18. 2. 2;
Baudry-Lacant. et Barde, Oblig. 2, n. 772.) Sale subject to
the condition that the property does not pass until payment of
the price, is perhaps the most familiar example of the suspensive,
condition, and, in this case, the condition is frequently implied.
A true condition takes effect only when the obligation depends
upon something which has yet to happen, and it has five charac-
teristics:—'!) the event must be future; (2) it must be uncer-
tain; (3) it must be possible; (4) it must be legal; (5) it must
not be destructive of the tie of the obligation. Taking these
points in their order.
(1) Event must not have already occurred.
When an obligation depends on an event which has actually
happened, but this fact is unknown to the parties, it is not con-
ditional. The obligation takes effect or is defeated from the time
at which it is contracted. For example, I sell you on August 1st
a cargo of wheat on my steamer provided the ship arrives safely
330 THE LAW OF OBLIGATIONS.
in Liverpool. On August 1st the steamer was already in dock
at Liverpool, though this fact is unknown to both of us.
There is nothing- here to suspend the obligation. It is either
an unconditional sale or it is no sale at all. We may possibly not
hear for some time on what day the vessel arrived in Liverpool,
but as soon as this fact is known, it becomes clear that there was
an immediate sale on August 1st, and the risk, according to the
French law, passed to you at that date. The Egyptian law differs
as regards the passing of the risk. (C. C. E. 297/371. Infra,
p. 480.) On the other hand, if, on August 1st, unknown to
both of us, the steamer was at the bottom of the Atlantic, there
is likewise no condition, because when this fact is ascertained it
becomes clear that there never was a sale at all, for at the date of
the agreement the object about which the parties were contracting
had ceased to exist. This was the Roman law and it has been
followed in the French law. (Inst. 3. 15. 6; Pothier, Obliga-
tions, n. 202; Aubry et Rau, 5th ed. 4, p. 97.
The Egyptian Code, however, does not say, as the French Code
does, that the event upon which the obligation depends must be
" future and uncertain." (C. C. F. 1168.) It uses the disjunc-
tive, and says "future or uncertain." (C. C. E. 103/157.;
But, probably, this is by mere inadvertence. An event which
has happened cannot make a condition in any ordinary sense. It
is the opinion of Fathi Pasha Zaghlool that the Egyptian legis-
lator did not intend to change the law. (Commentary, in Arabic,
on C. C. E. p. 14.) Mr. Halton suggests that "perhaps the
Egyptian legislator wished to employ language which would allow
a past but unverified event to be considered as a condition. But
the unusual drafting of the Egyptian article may simply be an
inadvertence." (1, p. 281.) The Mixed Court seems to take
the latter view. (C. A. Alex, ler mai 1907, B.L.J. XIX, 232.)
(2) Event future but certain.
There is no condition when the future event is certain though
the date when it will take place may be uncertain. The obliga-
tion in that case is not subject to a condition. It is an obligation,
with a term, and its character will be explained later under that
head. For example, a policy of life-assurance is not a condi-
tional obligation, it is an absolute obligation, because the assured
will die sooner or later. It may, however, contain obligations
which are truly conditional, such as, to par the sum in the policy
CONDITIONAL OBLIGATIONS. 331
if the assured shall attain the age of sixty, because this is an
event which is both future and uncertain.
(3) Event impossible.
The event must be possible. An obligation which is made to
depend upon the doing or happening of a thing' which is impos-
sible is void.
If I say, "I will give you L. E. 5,000 if you will jump ovei
the moon," I know that I am not taking any risk, and it is
immaterial whether the condition is that I or you or a third party
should do the impossible.
It is generally agreed that by "impossible," the code means
impossible for anybody.
A promise made, subject to a condition that the promisor or the
promisee or a third party shall not do something which it is
impossible for anybody to do, does not annul the obligation, be-
cause as it is certain that the condition can never be performed,
the promise is really an unconditional one. If I promise you
L. E. 1,000 if you do not jump over the moon this is an absolute
promise in spite of its form, for it is evident that you cannot
perform the condition. The French Code contains an express
provision to this effect. (C. C. F. 1173.; But this article is
useless, because the obligation is of necessity absolute and the
apparent condition is not one in reality, since it lacks the essential
quality of being uncertain. (Aub'ry et Rau, 5th ed. 4, p. 97;
Colin et Capitant, 2, p. 181; Req. 8 janv. 1894. D. 94. 1. 128.)
(4) Event unlawful.
The condition must be legal. The French Code says: Every
condition contrarij to law, or inconsistent with good morals, is
void and renders void the obligation ivhich depend* upon it.
(C. C. F. 1172; Cass. 27 avril 1906, D. 1907. 1. 97; Req. 8
janv. 1894, D. 94. 1. 128.) No damages can be recovered for
the breach of such a contract.
A promise to pay money to a man if he commits a crime or
does something illegal or immoral is not binding; and, according
to what seems to be the better opinion, a stipulation that a man
shall forfeit a certain sum if he does something illegal is likewise
null, though some writers think it ought to be supported as
encouraging morality. But the sufficient answer to this is that
given by Pothier, that it is contrary to good morals to allow a
332 THE LAW OF OBLIGATIONS.
man to stipulate for a reward for abstaining from an act from
which it is his duty to abstain in any event. (Oblig. n. 204;,
B.-L. et Barde, 2, n. 764; supra, I, p. 116.) The various kinds
of unlawful contracts have been already discussed in speaking
of the cause of obligations. In regard to impossible and unlawful
conditions there is an important difference in the French law
between wills or donations and onerous contracts. Such condi-
tions in a will are considered as not written. The legatee takes
the bequest and the condition is read out of the will. (C. C. F.
900.)
And the same rule applies to impossible or illegal conditions
attached to a gift inter vivos.
The French Code allows the donee to take the gift free of the
condition, in the same way as a legatee takes a legacy. (C. C. F.
900; Baudry-Lacant. et Colin, Des Donations, 1, n. 65: B.-L.
et Barde, 2, n. 753.)
But according to the French jurisprudence, this is a question
of interpretation. The rule that the condition shall be held pro
non scripta, i.e., that the legatee shall take the legacy free of the
condition, does not apply when the condition was la cause impul-
sive et determimmte cle la liberalite. (Req. 12 mai 1909, D.
1910. 1. 291; Cass. 19 oct. 1910, D. 1911. 1. 463. Cf. Lyon,
28 juill. 1904, D. 1908. 2. 30.)
(5) Event left to free choice of promisor.
The condition must not be destructive of the tie of the obli-
gation.
The French Code says: Toute obligation est nulle lorsqu'eMe
a ete contractee sons une condition potestative de la part cle cclui
qui s' oblige. (C. C. F. 1174.) This means that an obligation
conditional on the will purely of the party promising is void.
But if the condition consists in the doing or not doing of a certain
act, although such act be dependent on his will, the obligation is
valid.
It is clear that if I say " I will pay you so much if I choose,"
there is no obligation; I am as free as I was before. On the other
hand, if I say " I will pay so much if I do a certain thing, as,
for example, if I set up a certain kind of business in a particular
locality; or if I promise to pay so much " unless Ldo something,"
my will is no longer free; I can do or not do the thing in question,
but I incur a penalty if I exercise my choice in a certain way.
CONDITIONAL OBLIGATIONS. 333
Where the debtor has left himself perfectly free, by saying he is
only to be bound if he shall choose, this is called a potestative
condition, but it is in truth not a condition at all. It must not
be forgotten that in a synallagmatic contract one party may be
bound though the other is not bound, because his obligation is
purely potestative. (Pand. Frang. Oblig. n. 1113; Cas^. 25
now 1896, D. 97. 1. 34; Reg. v. Dem&rs, 1900, A. C. 10 -J.
69 L. J . P. C. 5.) For instance, in the common case of an option
of sale, I promise to sell a thing to you at a certain price within
a certain delay if you declare your acceptance. I am bound,
subject to the condition, but you are free to take it or not.
(Pothier, Vente, n. 478; Pand. Frang. vo. Oblig. n. 1114.)
Nor is there anything to prevent an obligation being formed
which is dissoluble at the will of one of the parties.
This is so, for example, in a sale subject to the right of redemp-
tion, or in a lease which, according to its terms, may be broken at
certain dates. (Larombiere, on art. 1174, n. 17.) So there is
nothing to prevent a clause in a contract with an employee that
he may be dismissed at pleasure. The contract is valid till the
power of terminating it is exercised, and a clause which permits
the power does not make the contract purely potestative. (Limoges,
11 juill. 1898, D. 1901. 2. 380.)
For instance, the director of a theatre may reserve to himself
the right to resiliate the contract with an actor at the end of a
month, though no corresponding right is given to the actor. (Cass.
2 mai 1900, D. 1900. 1. 392.)
It is sometimes a difficult question of interpretation to decide
whether the condition is purely potestative, that is to say, if it is
merely the equivalent of " I bind myself if I choose "—si mlum>.
(See Cass. 15 Janvier 1890, D. 91. 1. 30; Trib. Civ. Marseille,
21 nov. 1896, sous Eeq. 9 janv. 1900, D. 1903. 1. 321, and
note; C. A. Alex. 3 juin 1896, B. L. J. VIII, 313. Pothier
argues that a promise to pay " if I judge it reasonable " is not a
potestative condition because my judgment can be controlled by
the courts. (Oblig. n. 48.) But this reasoning is rightly rejected.
Such a clause would leave me the sole judge of what was
reasonable .
It would be otherwise if the condition were " if it is reason-
able." (Demolombe, 25, n. 318. See Lyon, 10 mars 1864, D.
64. 5. 255.) In a recent French case A sold to B the sole right of
manufacturing a certain product in consideration of receiving a
certain sum per kilogramme of the product sold. It was eon-
334 THE LAW OF OBLIGATIONS.
tended that this was a potestative condition, as the buyer might
reduce the manufacture to zero, but the Court of Cassation did
not take this view. They hold it was an implied term of tho
contract that the buyer should produce as much of the article as
was sufficient to supply the demand. (Cass. 5 mai 1905, D.
1906. 1. 360.
A condition to pay to an employee in addition to his salary a
bonus of a certain percentage, " subject to the recommendation of
the management," does not leave them free to give it or not by
ii re caprice. If they do not recommend the bonus they must
allege good reasons for not doing so. (Gravel Lumber Co. v.
■ ote, 1908. R. J. Q. 17 K. B. 398.)
Is a promise to pay "'when I choose" potestative? Pothier
held that it was, but the prevailing opinion is that this is not the
presumed intention. (Oblig. n. 47.) The debtor means to bind
himself, but to reserve liberty to execute his contract any time
before his death. But if he dies without executing it, the payment
becomes at once exigible from his heirs. (Toullier, 6. n. 498;
Larombiere, on art. 1174, n. 4; Pand. Franc. Oblig. n. 1083.
See Cass. 21 aout 1850, D. 50. 1. 346.)
On similar principles, such conditions as " when I shall have the
means," "when I shall sell the property," etc., are generally con-
sidered not to be purely potestative. In the first case the court
might be called upon to decide whether the debtor was in a posi-
tion to fulfil the contract, and in the second case the debtor is
bound if he decides to sell, so that .his will is not entirely free.
Larombiere, on art. 1174, n. 5 et n. 7; Aubry et Rau, 5th ed. 4,
p. 134; B.-L. et Barde, 2, n. 969; Paris, 19 nov. 1912, D. 1913.
2. 126.)
The presumption is against the creditor having left the debtor
free to perform the obligation or not. (C. A. Alex. 22 fevr. 1900,
B. L.J. XII, 126.)
A condition is not purely potestative, but is said to be mixed
when it depends partly on the will of the parties and partly on tho
will of a third party. C. C. F. 1171.) For example, "if you
marry my cousin Mary.' In this case you may do your best, but
the issue is not wholly within your power. In the Roman law
and iii the old French law there was an important distinction
between such a condition in a contract and in a legacy. If tho
condition was in a legacy it was enough if the legatee did his pari .
If it was no fault of his that the condition was not fulfilled he g it.
CONDITIONAL OBLIGATIONS. 335
the legacy, whereas if such a condition were in a contract its
fulfilment was a sme qua mm.
Pothier accepted this distinction. >Ohlig. nos. "213, 214.) But
the modern French law has rejected it. If such a condition is
imposed, whether it bo in a will or in a contract, it is a pure
question of interpretation whether the intention was to make the
fulfilment of the condition an absolute sine qua mm, or if the
intention was merely to impose upon the party the duty of doing
his best to fulfil it.
C. C. F. 1175 states that every condition must be fulfilled in the
way that the parties probably intended. Even in a contract it
may appear that the intention was merely that the parties should
do their best. (Paris, 4 fevr. 1891, D. 91. 2. 317.) And in a
legacy the courts will be more inclined to give a favourable con-
struction, that is, one which will make the legacy effectual, unless
the terms of the will show plainly that the testator meant to make
the fulfilment of the condition a sine qua non of the payment of
the legacy. (Baudry-Lacant. et Barde, Ohlicj. 2, n. 795; Mont-
pellier, 26 dec. 1892, D. 94. 2. 284.)
There are many cases in which conditions are implied, some-
times because this is the presumed intention of the parties, and
sometimes because the law says that a condition shall be implied.
For instance, in a contract with a photographer it is an implied
condition that he shall not sell copies of the photograph without
the consent of the sitter. The provisions made in a marriage
contract are all conditional on the marriage taking place. In
every synallagmatic contract the condition is implied that a party
who is himself in breach of the contract cannot call upon the
other party to perform his part. Many other illustrations might
be given, but this subject belongs rather to the interpretation of
contract than to the law of conditional obligations, and has been
discussed under that head. (Supra, L, pp. 378 seq.)
Effects of the condition.
Conditional right is not mere hope.
The code deals with the effects of the condition in a somewhat
fragmentary manner.
The French Code says, indirectly, that pending the condition
the obligation is "suspended.'' (0. C. F. 1185.) It might be
inferred from this that pending the condition the parties were as
before, and that the obligation produced no effect at all until the
336 THE LAW OF OBLIGATIONS.
condition either happened or failed. On the other hand, the code
gays: // the creditor be dead- before the fulfilment of the con-
dition his rights pass to his heir. (C. C. F. 1179.)
How can any "rights" exist if the obligation is suspended?
Pothier, following the language of Justinian's Institutes, says:
" Pending the condition there is nothing as yet due, but there is
only a hope that it will be due." (Inst. 3. 15. 4- ObUq
n. 218.)
But in other passages the Roman lawyers recognise that there
is more than a spes, and they use the expression creditor of
the party entitled conditionally. (D. 44. 7. 42.; The language
of the French Code shows that the codifiers take the view that
there is a right and not merely a hope. They use the word
"rights." (O. C. F. 1179, 1180.) If we compare a right with a
hope the difference is clear. A person who has no legal claim to
succeed to a share of another's estate at his death may have a very
reasonable expectation of doing so. The other person may have
encouraged him in this belief. But such an expectation is a mere
spes. It is indeterminate as to amount; it is not an asset which,
the expectant heir can deal with in any way, and he cannot take
any steps to protect it. In all these respects the " right " of the
conditional creditor is different. It is true he may never realise
it, for the condition may. fail, but in the meantime it is a deter-
minate value which is an asset of his estate and can be dealt with
by him. It passes to his heirs, if not assigned inter vivos, and
it may be protected by conservatory acts. It is better, therefore, to"
speak of it as a conditional " right," or a right which exists in
germ. (Laurent, 17, n. 87; Demolombe, 25, n. 356; Baudry-
Lacant. et Barde, Oblig. 2, n. 838; Colin et Capitant, 2, p. 183.)
Nothing yet due pending the condition.
Pending the condition nothing is payable, and, therefore, if the
conditional debtor has paid in error he has the action for repetition.
(Pothier, Oblig. n. 218; Baudry-Lacant. et Barde, Obliq. 2 r
n. 832.)
This is not so in the case of obligation with a term. The debtor
who has paid a debt which is not yet due under the mistaken
impression that it was due cannot repeat it in the French law.
(C. C. F. 1186; B.-L. et Barde, Olig. 2, n. 987.)
CONDITIONAL OBLIGATIONS. 3,'}7
Conditional creditor may do conservatory acts.
Tho conditional creditor may take conservatory measures, and
what these may be will depend upon the nature of his conditional
debt. Thus he may bring actions to obtain an acknowledgment of
his right, or to interrupt prescription, or to preserve evidence.
(Baudry-Lacant. et Tissier, De la Prescription, nos. 394 — 397.)
He may claim to be present at a partition, and may attack a
partition as in fraud of his rights. (Pothier, Oblig. n. 222;
Pintd. Franc. Oblig. n. 1252.) But. he cannot bring the Paulian
action nor the direct action, for these are more than conservatory
measures. (B.-L. et Barde, Oblig. 1, n. 629; Aubry et Rau,
5th ed. 4. p. 216, note 1, bis; D. N. C. C. art. 1167, n. 274.)
If the conditional debtor is administering the property in such
a manner as to endanger the conditional right, the creditor may
apply for an injunction against his so doing and ask that the
damages already suffered should be judicially ascertained, though
they will only be payable if the condition should be fulfilled. In
a strong case the court might even order sequestration of the pro-
perty, as, for example, if the object of the obligation was to
deliver a wood, and the conditional debtor were to begin cutting
it down, or if it was to deliver a house and the conditional debtor
was demolishing it. (Demolombe, 25, n. 372; Larombiere, on
art. 1180, n. 5.)
Conditional creditor's right protected if conditional debtor
is insolvent.
The conditional creditor cannot do any execution on the goods
of the debtor, but if execution is done by other creditors whose
claims are unconditional, the conditional creditor must be pro-
tected. He cannot claim to take a dividend, for the condition may
fail, but his chance must be preserved. This may be done either
by consigning the amount and waiting till it is seen if the condi-
tion is fulfilled, or by dividing the whole estate, but making the
creditors find security to repay the amount which will be due to
the conditional creditor if the condition is fulfilled. (Pothier,
Oblig. n. 222; Larombiere, on art. 1180, n. 3; Baudry-Lacant.
et Barde, Oblig. 2, n. 843.) Pending the condition the conditional
creditor may alienate the thing or create real rights over it, but
these acts will produce no effect unless the condition should be
fulfilled. If, however, this should bo the case they will be effectual
w. — vol. ii. 22
338 THE LAW OF OBLIGATIONS.
from their date. (CO. F. 2125; C. C. Q. 2038; Demolombe, 25,
n. 381.)
Conditional seller may revindicate if condition fails.
If in a sale subject to a suspensive condition the condition
should fail, the seller can claim back the goods.
So if goods are sold subject to the condition that they shall not
Income the property of the purchaser until the price is paid, the
seller can revindicate them if the condition fails, unless the buyer*
is protected by the rule possession vwit litre. (O. A. Alex. 4 dec.
1901, B. L. J. XIV, 31.)
Where the sale in such cases is for a price payable by instal-
ments, and the seller revindicates the thing, he must give back the
instalments received, unless there is a stipulation that the instal-
ments shall be considered to be the equivalent of rent, and that the
seller shall be entitled to retain them, or unless such an intention
appears from the term's of the contract. Such a stipulation is,
however, generally inserted in these contracts. (See Dall. Supp.
Write, n. 16; Req. 21 juill. 1897, D. 98. 1. 269; D. N. O. O.
art. 1582, nos. 22 seq. ; Cass. 29 janv. 1902, S. 1902. 1. 168;
Cass. 22 dec. 1909, S. 1910. 1. 191.)
The rule that the conditional creditor cannot give a better right
than he has himself is greatly limited by the provisions of law
for the protection of purchasers of moveables in good faith.
(C. C. E. 607, 608/733, 734.) If the conditional debtor b©-
•eomes insolvent, and the conditional creditor owes him money on
another account, he can refuse to pay this until it is seen if the
condition will be fulfilled, and this conduct will be regarded as a
conservatory act. An owner whose right is subject to a resolutive
condition can only give rights subject to the same condition,
though, in the case of moveables, the purchaser in good faith may
be protected otherwise by the rule possession vaut titre.
The fulfilment and the failure of conditions.
When an obligation has been contracted subject to the con-
dition that an event shall occur within a fixed time, this condition
is considered to have failed when the time has expired without
the event occurring. If no lime was fixed, the condition may
always be fulfill-ed, and it is not considered as having failed until
it has become certain that the ere, it will not occur.
When ait obligation is contracted subject to the condition
CONDITIONAL OBLIGATIONS. 339
that cm event will not happen within a fixed time, such condition
is fulfilled by the expiration of the time without th< event hmmig
occurred. It is fulfilled equally if, before the time has expired,
it becomes certain tJmt the event will not happen. If there be
no time fixed, the condition is not deemed to be fulfilled, until
it is certain that the event will not happen. (C. C. F.
1176, 1177.) For example I contract an obligation subject to the
condition, "If ray daughter docs not get married within two
years." If the two years expire without her marrying, or if she
dies within that period, the condition is fulfilled. Thus if the
condition is " if you marry," you may fulfil it at any time before
your death, for it is not certain until then that the condition may
not be fulfilled. But if the condition is " if you do not deliver to
mo a determinate thing within two years," and two years elapse
without your having made delivery, the condition is fulfilled.
And, equally so, if within the two years the thing" has perished,
for then it is certain that you cannot deliver it. (C. C. F. 1176,
1177; Pothier, Oblig. 209, 210.) The question if a condition has
been fulfilled in the manner contemplated by the parties is one for
the court to decide according to the circumstances of each par-
ticular case. (Eeq. 2 aoiit 1909, D. 1912. 1. 55.)
These rules are more obscurely expressed in the Egyptian Code:
// the, eiv'ent provided for is or becomes certain and the condi-
tion is resolutory, the obligation shall be void or be avoided; if,
in the like Cases, the condition is suspensive, such condition shall
be considered never to have existed. (C. C. E. 104/158.)
Conditions strictly interpreted.
Conditions are strictly construed and must be performed in
forma specified. Unless there is something in the terms of the
contract, taken in connection with the circumstances, which shows
that the party who stipulated the condition did not intend that it
must be fulfilled literally, the court is not entitled to introduce any
equitable extensions or modifications. For instance, if the condi-
tion is "if you marry, within two years," you do not fulfil it by
m;! irying the day after the term has expired. You cannot plead
that you were not put. in default, or that you were in prison, or
that you were insane and could not marry within the time.
The .simple question is was the condition fulfilled, and tjhe
court has no right to consider any possible excuse for non-fulfil-
ment. This rigour, be it always understood, will give way when
oo •)
340 THE LAW OF OBLIGATIONS.
it does not appear to have been intended by the parties. Thus, to
take Pothier's very simple illustration, the condition " if you give
the 100 gold louis " may very well be fulfilled by your giving
their value in other currency, unless there is reason to think special
importance was attached to payment in gold. (Oblig. n. 206;
Laurent, 17, n. 73; Demolombe, 25, n. 330; B.-L. et Barde, 2,.
n. 790.)
Condition that act shall be performed by particular person.
The same considerations apply to performance by a particular
person. If the act is one of a personal character it can only be-
performed by the particular person whom the stipulant had in
view. The condition "if you paint my portrait," or "if you
write a sonnet," can only be fulfilled by you. You cannot sub-
stitute another painter or poet, though his skill may be greater-
than yours. On the other hand, if the act is one which can be
performed in the same manner and equally well by any competent
person, the presumption is that the stipulant did not intend to.
insist on the other party doing it himself. For instance, " if you
cut down a tree on your land which blocks my view " is a type of
conditions of this kind. It is not intended that you should cut it
down in person, but that you or your heirs should get it cut down.
(Pothier, Oblig. n. 207; Pand. Fmng. Oblig. n. 1151; B.-L. et
Barde, 2, n. 791.)
What if no time is fixed for performance?
If no time is fixed by the parties, a time cannot be fixed by the
court unless this appears to have been the intention of the parties.
Pothier suggests two exceptions to this rule, and there has been
some controversy with regard to them: (1) According to Pothier,.
when the condition consists in the other party doing something,
and no time is fixed for the performance, the court maj r fix a
reasonable time, and hold that the condition has failed if the fulfil-
ment does not take place within the delay so fixed. Thus, for
example, I promise a sum to my neighbour if he cuts down a tree
which blocks my view . If he does not cut down the tree within a
reasonable time, I may bring an action asking the court to fix a
delay within which he must cut down the tree, or, failing his
doing so, to declare mo free of my obligation for the future.
(Pothier, Oblig. n. 209.) It would seem, in this ease, that this
is the implied intention of the parties. I could hardly have in-
tended that if at any time, even a hundred years hence, the heirs of"
CONDITIONAL OBLIGATIONS. 341
my neighbour cut down the tree, my heirs should be bound to pay
the sum which I had promised.
Many French writers accept the view of Pothier. (Demo-
lombe, 25, n. 348; Colmet de Santerre, 5, n. 96, bis II. In this
sense, Grenoble, 7 janv. 1873, D. 73. 2. 108.) But, according
to other writers, articles 1176 and 1177 of the French Code must
be literally applied, and they do not allow the court power to fix
any delay unless there is evidence that this was intended by the
parties. (Laurent, 17, n. 75.) MM. Baudry-Lacantinerie et
Barde hold that when the condition is a negative potestative con-
dition, for example, to pay a sum if I do not cut down a tree, it is
implied that I am to do it in a reasonable time. (B.-L. et Barde,
•2, n. 800.)
Tinder the Egyptian Code there is less difficulty in accepting the
view of Pothier, because that code does not contain an express
provision like that of C. C. F.'ll76: S'il riy a point de temps
fixe, la condition petit toujours etre accomplie.
(2) Similarly, if the condition were that my neighbour had
promised me a certain sum if he did not cut down the tree, the
intention of the parties here is clearly that this shall be done within
a reasonable delay. (Pothier, Oblig. n. 211.)
But if I promise a sum to a man on condition that he does an act
of a personal kind, as, for example, if I promise a sum to a
painter on condition that he paints my portrait, it would seem,
under the French Code, that he could claim the payment if he
painted the portrait at any time before his death. It is possible
to suppose that the parties intended to leave the painter free to
choose his own time, and there cannot be any question of the
liability of heirs. It would seem, therefore, that the article in the
French Code must be given its literal effect. (C. C. F. 1176;
B.-L. et Barde, 1. c.) Here also, in the silence of the Egyptian
Code, it seems possible to reach a better solution by adopting the
view advocated by Pothier.
Fraudulent prevention of fulfilment.
The French Code has an important article: La condition est
reputee accomplie lorsque c'est le debiteur, oblige sous cette con-
dition, qui en a empeohe V accompUssement . (C. C. F. 1178.)
This was borrowed from the Roman law and is obviously equi-
table. It might rest on either of two principles: (1) that damage
was wrongfully caused by the promisor in depriving the promisee
342 THE LAW OF OBLIGATIONS.
of the chance of the condition being fulfilled; or (2) that a party
by whose fault the fulfilment of the condition has been prevented
cannot take advantage of his own fault, or, in other words, is-
estopped from pleading the non-fulfilment for which he is himself
to blame.
The first explanation is the one. which is traditional in the
French law. (See Big-ot-Preameneu, in Locre, 12, n. 63, p. 339;
B.-L. et Barde, 2, n. 802.) And, seeing that it is a case of re-
paration, the general rule applies that there must be fault to create
liability. It is not necessary that there should be an intention to
prevent the fulfilment, but there must be, at least, negligence
which makes the fulfilment impossible. (Cass. 6 aout 1866, S.
66.' 1. 397, Journal du Palais, 66, p. 1074.)
So the principle does not apply when the debtor's obligation is
potestative. If he is free to do or not to do a certain thing his not
doing it cannot be imputed to him as a fault. (Pothier, 1. c;
Laurent, 17, n. 76; B.-L. et Barde, 2, n. 803.)
So if I undertake to sell you my house " if I should leave Cairo,"
my not leaving Cairo is no fault . A party who merely by using
his legal right prevents the fulfilment of the condition does not
fall under this article. Pothier gives this example: a testator
leaves a house to a legatee on condition that within a year the
legatee pays a certain sum to B.
The heir, who is a creditor of the legatee, seizes his property
and prevents his making the payment to B. 'The legatee cannot
plead that as against the heir the condition is fulfilled, for the
heir is merely doing what he is by law entitled to do. The heir
does not execute the seizure in order to prevent the fulfilment of the
condition, but in order to enforce in a lawful manner the payment
of what is due to him. (Pothier, Oblig. n. 212. :
If the interpretation of the contract is doubtful the presump-
tion is against the debtor being free to prevent the performance
of the condition. (O. A. Alex. 22 fevr. 1900, B.L.J. XII, 126.)
There are many illustrations of the rule that if the conditional
debtor wrongfully prevents the fulfilment of the condition i!t is
treated in a question with him as having been fulfilled. Thus^
where the creditor holds a promissory note, and, as security for
the payment of the note, property is pledged to him which he is
to return if he collects the amount of the note, then, if it is by
his own fault or negligence that he fails to collect the money he
must return the property pledged. His fault might be, for ex-
CONDITIONAL OBLIGATIONS. 343
ample, thai he had released one of the parties to the note and that
the other parties were insolvent.
In a French case where certain payments for work done were
to be paid only after the work had been approved of, and after
examination of certain statements by an official, and it was held
proved that the party conditionally liable had maliciously pre-
vented the necessary statements from being laid before this official,
it was held that the condition must be taken as fulfilled. (Cass.
2 avril 1873, D. 73. 1. 374.)
And when a price had to be fixed by two experts, and one of the
parties induced an expert to refuse to act, it was held that the court
might appoint another expert in his place. (See Larombiere, on
art. 1178, n. 11.) And when a man bound himself to pay a
certain sum after he had sold an immoveable, and he arbitrarily
refused reasonable offers to Jbuy the immoveable, it was held that
the condition must be considered as fulfilled. Chambery, 13
dec. 1897, D. 1900. 2. 213.)
The converse of C. C. F. 1178 is also true. If the party in
whose interest it is that a condition should be fulfilled, wrongfully
procures its fulfilment he cannot take the advantage. For
example, if you promise me L.E. 100 if you sell goods of any
manufaeture except mine, and I fraudulently mingle goods made
by others with your stock, so that you. sell them inadvertently, I
cannot claim the penalty. Similarly, if one person is to receive an
advantage, such as a legacy, or the sum in an insurance policy oil
the death of another and he brings about the death, he cannot take
the benefit. (B.-L. et Barde, Oblig. 2, n. 808; Larombiere, on
art. 1178, n. 1; Poitiers, ler fevr. 1881, S. 82. 2. 27, Journal du
Palais, 82, p. 201.)
Comparison with other laws.
This is one of those general rules of law which are recognised
under many systems.
The German Code, the Swiss Code of Obligations and .the
Morocco Code of Obligations all contain similar articles to
C. C. F. 1178. The German Code says: —
Lorsque hi realisation de la condition, contre toute loyaute et
canfiance reciproque, est empeehee par la partie au detriment d<
laquelle elle eut tourne, la condition vaut comme redlisee. Lors-
que la realisation de la condition, contre toute loyaute et von fiance
reciproque, est produitc par la partie a Vacant cup de laquelle ill,
344 THE LAW OF OBLIGATIONS.
doit tourner, cette realisation vaut comme ?ion avenue. (C. C.
Allemand, art. 162.)
The Swiss Code says: —
La condition est reputee accompiie quand Vane des parties en
a empeche Vevenement au mepris des regies de la bonne foi.
(Code des Obligations, art. 156.)
And the Morocco Code says: —
La condition est reputee accompiie, lorsque le debiteur, oblige
sous condition, en a sans droit empeche Vevenement ou est en
demeure de Vaccomplir. La condition accompiie ne produit aucun
effet, lorsque Vevenement a eu lieu par le dol de celui qui etait
inter esse a ce que la condition s'accomplit. (Code Marocain,
arts. 122, 123.)
And in the English law, too, if a party prevents the performance
of the condition its performance is dispensed with.
In a Scotch case in the House of Lords the principle was applied
in a contract of sale where payment of the price was conditional
on a certain thing being dona by the seller, land the buyer prevented
the possibility of the seller fulfilling the condition. Lord Black-
burn said: " I think I may safely say as a general rule that where
in a written contract it appears that both parties are agreed that
something shall be done which cannot effectually be done unless
both concur in doing it, the construction of the contract is that
each agrees to do all that is necessary to be done on his part for
the carrying out of that thing, though there may be no express
words to that effect." (Mackay v. Dick, 1881, 6 A. C. 251, 263.
Cf. Re Coleman's Dep. and Life and Health Assoc, 1907, 2
K. B. 798, 78 L. J. K. B. 865; Leake, Contracts, 6th ed.
p. 479.)
In Mackai/s case the buyer had bought a machine subject to
the condition that the seller should show that it could satisfy a
certain test. The buyer refused to give the seller an opportunity
of making the test, and it was held that he must pay for the
machine as if the condition had been fulfilled.
Another English case also illustrates this rule. The plaintiff,
a broker, was retained by the directors of a company to dispose
of the shares. He was to receive £100 clown and £400
more when all the shares had been allotted. By the act of the
directors, without any default on the part of the plaintiff, the
company was wound up before all the shares had been disposed
of. It was hold that the plaintiff was entitled to damages. (Inch-
CONDITIONAL OBLIGATIONS. 345
bald v. Western Neilgherry Coffee Co., 1864, 17 C. B. N. S.
733, 142 R. R. 603. See supra, I, p. 359.)
These rules are illustrations of the general principle that a man
cannot take advantage of his own fault or fraud.
The effects of the failure of the condition.
In the case of the suspensive condition the effects of failure
are easily stated. The contract becomes an absolute nullity and
can produce no effects. As the old brocard expresses it, actus
conditionalis dejecta conditione nihil est. That which has been
promised conditionally cannot be claimed. (Rouen, 3 janv. 1906,
D. 1906. 2. 242.)
If anything has been paid or delivered it must be restored.
(Aubry et Rau, 5th ed. 4, p. Ill; Baudry-Lacant. et Barde, 2, n.
849.) In the case of the failure of a resolutive condition, the risk
which hung over the contract has now vanished. The contract now
becomes irrevocable and unconditional. For instance, I sell you
my house, but stipulate a right of redemption at any time within
two years. I allow the two years to expire without exercising 1
my right of redemption. You are absolute owner as from the
date of the sale. If you have created any real rights such as
hypothecs over the house they stand good. If I have affected
to create any such rights they now fall to the ground. They never
had more than a contingent existence, and now that the right of
redemption upon the exercise of which they depended is at an
end they can never become effectual. (Aubry et Rau, 5th ed.
4, p. 123; C. A. Alex. 4 dec. 1901, B. L. J. XIV, 31.)
The effects of fulfilment of the condition.
The broad principle is stated in the Egyptian Code thus:
When the condition, is fulfilled, the obligation and the rights
which floiv from it shall be deemed to have been existent or void
from the moment when the event was made a condition of the
obligation. (C. C. E. 105/159.) Nevertheless, if perform-
ance has become impossible before the event, which was to bring
the obligation into existence, has taken place, such event shall
have no effect. (C. C. E. 106/160.) The French Code says :
The fulfilment of the condition has a retroactive effect to the
day on which the obligation was contracted. If the creditor be
346 THE LAW OF OBLIGATIONS.
dead before the fulfilment of the condition his rights pass to his
heir*. .< . ('. F. 1171). Cf. C. C. Q. 1085.)
When the condition is fulfilled it becomes clear that the condi-
tional right which passed to the heirs or representatives had a
substantial value. It is regarded as having been a present asset
at the date of the contract. Thus, if the conditional creditor
married pending the condition, and in the marriage-contract he
excluded from the community tons ses biens presents, this ex-
pression will include the property of which he was conditional
creditor, provided that the condition is fulfilled during the mar-
riage. (Larombiere, on art. 1181, n. 19.)
All alienations, hypothecs or dispositions of any kind made by
the conditional debtor fly off. They are all subject to the condi-
tion which goes to the root of his right. Similarl}-, such rights
created by the conditional creditor during the same period now
take effect as if he had been owner at the date of the grant. As
regards real rights, in questions with third parties, this state-
ment is subject to the rules as to registration; third parties in
good faith and for value whose rights have been registered being
entitled to rely on the register and to plead that rights unregis-
tered shall not affect them, and purchasers of moveables being
entitled to rely on the protection given them by the application of
the rule possession vaut litre. (C. C. E. 611/737, 615. 742,
617/744, 608/734.) The retroactive effect which the law gives
to the fulfilment of this condition may be illustrated by the
following Quebec cases. If a contract is made for a term of five
years with an option in favour of one of the parties to renew it
for a further term of five years, the option has the effect of a
suspensive condition as regards the second term of five years.
And if the option is exercised, the effect is the same as if the
contract had been made at the outset for ten years. So a party
who agreed to make certain payments till the expiration of the
contract is bound to do so for the whole period. (Wolf v. Brook,
1908, R. J. Q. 18 K. B. 17.^ A commercial traveller made a
sale of fungibles on condition that his employer signified his
approval. The employer wrote signifying approval. The effect
is that the contract is made at the place where the traveller made
it. The condition retroaets, and the contract becomes pure and
simple as from its date. (Gault v. Bertrand, 25 Lower Canada
Jurist, 340; Mignault, Droit Civil Canadien, 5, p. 444.)
CONDITIONAL OBLIGATIONS. 347
Discussion as to retroactivity.
In recent years a long- controversy has taken place, originated
by Windscheid, as to whether the principle of retroactivity is
fairly to be deduced from the texts of the Roman law or can be
supported upon logical grounds. Both propositions are denied by
Windscheid and by writers who have followed him. (Pandekten,
8th ed. 1, s. 91; Ginard, Manuel de Droit Romain, 5th ed.
p. 477.)
It is pointed out that in the French Code, and the same is true
of the Egyptian Code, the principle of retroactivity is not carried
to its logical conclusion; for, if it were, a sale would not be
invalidated by the destruction of the object pending the condition,
when this happened without the fault of the debtor. If the object
was in existence at the date of the contract that would be sufficient.
But the contrary is stated by the code. (C. C. E. 106/160;
C. C. F. 1182.) It is also argued that the results attributed to
the principle of retroactivity might just as well be assigned to
the familiar principle nemo plus juris transferre potest quam ipse
haberet. (Dig. 50. 17. 54.)
The grants made by the conditional debtor or the conditional
creditor are necessarily qualified by the condition which affects
his right. (See Baudry-Lacant. et Barde, 2, n. 809; Rev. Trim.
1907, p. 753, art. by M. A. Leloutre; Colin et Capitant, 2,
p. 184.)
But the question whether retroactivity is the best explanation
of the effect of fulfilment of the condition is for us not very
material, seeing that the codes expressly accept this theory.
(C. C. F. 1179; C. C. E. 105/159.) In these articles the codi-
fiers follow Pothier, their habitual guide on this subject. (Oblig.
n. 220.) There are some cases in which a special provision pre-
vents the principle from being applied. For instance, if an owner
sells his property subject to a condition, and, pending the condi-
tion, he remains in possession of it, and afterwards grants a lease.
and, thereafter, the condition is fulfilled does the lease at once
fall to the ground? The sound view seems to be that as the seller
remained in possession, the intention of the parties was that he
should have the powers of administration. Leases, like other'
acts of administration, will stand good if there was good faith.
(Aubry et Rau, 5th ed. 4, p. Ill; B.-L. et Barde, 2, n. 823.)
This argument receives strong support from the special provision
as to the effect of the exercise of a right of redemption. In the
348 THE LAW OF OBLIGATIONS.
French Cade where a seller who has a right of redemption exercises
the right he is bound to respect leases which have been made
without fraud by the buyer. (C. C. F. 1673.) And the Egyptian
Code contains a similar provision as to leases not exceeding three
years. (C. C. E. 345/431.)
There is another controversy as to whether when the condition
is fulfilled the party who has, pending the condition, been in pos-
session must restore the fruits.
It seems plain that we cannot resolve the question by saying
that he should be regarded as a possessor in good faith.
A possessor in good faith is always a person who is under a
mistake as to his true position, whereas here the holder knows the
nature of his right. But does it follow, therefore, that the prin-
ciple of retroactivity laid down in the code must be carried out
and the fruits restored? The question is almost academic, because
in most cases the title will indicate the intention of the parties.
When there is no such indication it is difficult to avoid applying
the principle of retroactivity. (In this sense, Aubry et Rau, 5th
ed. 4, p. 116; Hue, 7, n. 277.) The Egyptian Code seems to
make this principle govern the whole matter of conditional obli-
gations. Under the French Code it is possible to argue from the
analogy of other articles that the rule of retroactivity does not
apply to this case. (In this sense, B.-L. et Barde, 2, n. 824;'
Colin et Capitant, 2, p. 186; Chambery, 28 mars 1899, D. 1901.
2. 300; Cass. 13 mai 1873, D. 73. 1. 417; D. N. C. C. art. 1183,
n. 83.) It is noteworthy that the German and the Swiss codes
have rejected the fiction of retroactivity. (German Code, art.
158; Cosack, Lehrbuch, 1, p. 226; Code Fed. Oblig. arts. 151-
154.)
The risk.
The subject of the risk is treated in the French Code as follows:
When the obligation has been contracted under a suspensive
condition the thing which forms the object of the agreement
remains at the risk of the debtor who has bound himself to deliver
the thing only upon the fulfilment of the condition. If. without
the fault of the debtor, the thing have altogether perished, the
obligation is extinguished. If the thing be deteriorated without
the fault of the debtor, the creditor has the choice either of dis-
solving the obligation, or of receiving the thing in the state in
which it is, without diminution of price. If the thing be deterio-
rated by the fault of the debtor, the creditor mem cither dissolve
CONDITIONAL OBLIGATIONS. ;j49'
the obligation or exact the thing in the state in which it is, with
damages. (C. C. P. 1182.) When the condition is a resolu-
tive one the risk is on the person who owes the thing subject to
the condition. (B.-L. et Barde, 2, nos. 882, 892; Demolombo,
25, n. 463; Aubry et Rau, 5th ed. 4, p. 122.)
There are three points to be noted: —
(1) The loss or deterioration must be pendente emiditione. For
if the condition has been fulfilled, the obligation has ceased to be
conditional and has become pure and simple.
(2) The kind of obligation contemplated is a synallagmatic
one. In the case of a unilateral obligation the loss always falls
on the creditor unless there is a special stipulation to the contrary.
If I promise to give you something subject to a condition, and
the condition fails, the loss is entirely yours, unless there is some
special stipulation to the contrary. (Larombiere, on art. 1182,,
n. 3.)
(3) If the thing has altogether perished there is no obligation.
The French article says if the thing has entirely perished without
the fault of the debtor V obligation est eteinte. This is ambiguous
because it might mean that though the debtor's obligation was
extinguished, and he was no longer bound to deliver the thing,
the obligation of the creditor to make the payment on his side
was still subsisting.
The prevailing view in France is, however, in favour of the
sense that if the thing perishes without fault pending the condition
both parties are free. This was the Roman law and it was followed
by Pothier. (D. 18. 6. 8; Pothier, Oblig. n. 219; Pand. Franc.
Oblig. n. 829; Baudry-Lacant. et Barde, Oblig. 2, n. 853 a;
Aubry et Rau, 5th ed. 4, p. 111.)
And the Egyptian Code seems to adopt this theory and to
apply it even in the case of sale, difficult as it is to reconcile
the articles on the subject. (C. C. E. 266/336, 297/371; infra,
pp. 476 seq.)
350 THE LAW OF OBLIGATIONS.
CHAPTER XVIII.
OBLIGATIONS WITH A TERM.
An obligation with a term is one in which the debtor binds him-
self to pay or to perform something at a future date. The future
date may be one which is fixed beforehand, as in the case of a
bill of exchange payable three months after date, or it may be
one which cannot be determined as yet, as when the debtor binds
himself to make a payment on the death of a person living.
But, in either case, the term is a period which is certain to arrive,
though the time of its arrival may be as yet uncertain. There
is not consequently, in this case, as in the case of the conditional
obligation, a doubt as to whether the debtor will ever be bound to
fulfil what he has promised. He is bound from the beginning,
though the time of payment is postponed. In some cases the term
is indefinite, as, for example, " to pay when my means permit,"
and in such cases the French courts do not hesitate to fix a term
for the payment if satisfied of the debtor's ability to pay. (Paris,
19 nov. 1912, D. 1913. 2. 126.) The French Code gives a defini-
tion of a term which the Egyptian Code omits: A teim differs
from a (suspensive) condition inasmuch as it does not suspend
the obligation, but only delays the execution of it. (C. C. F.
1185.) The old maxim qui a terme ne doit rien is not literally
true; it means only that the debtor is not obliged to pay at present.
A term may be created by law, or by a judgment, as when] thef
defendant is ordered to make execution within a certain delay,
or b} r the agreement of parties. When a delay is fixed by a judg-
ment it is called by French writers terme de grace or delai de
grace. (See C. C. E. 168/231, 333/415; C. C. F. 1244; Planiol,
2, n. 369.) When the term is conventional it is frequently im-
plied. When the performance of the obligation by the debtor
necessarily requires some delay, and no time is fixed by the parties
for fulfilment, a reasonable delay is implied. And, on the other
hand, there are cases in which, though no term has been fixed by
OBLIGATIONS WITH A TERM. 351
the parties, the court can infer from the nature of the contract and
from the circumstances, that the performance was intended to be
made within a certain delay. (Sec supra, I, p. -364.) Pend-
ing the arrival of the term the creditor cannot sue for the debt,
but he would, no doubt, be entitled to do conservatory acts if he
could show that his interests were imperilled. For even a condi-
tional creditor has this right, and a fortiori, the creditor whose
debtor has the benefit of a term. (Baudry-Lacant. et Barde,
Oblig. 2, n. 993; Aubry et Rau, 5th ed. 4, p. 148.
It would appear, however, that the creditor whose right is
subject to a term is not entitled to bring an action in the name
of his debtor. This is more than a conservatory act, it is an act
of execution. (Baudry-Lacant. et Barde, Obliff. 1, n. 629;
Aubry et Rau, 5th ed. 4, p. 200; supra, p. 97.) And a creditor
in a debt subject to a term who is sued by his debtor upon another
debt which is due cannot plead compensation, because compensa-
tion requires that both debts shall be due. (C. C. E. 194/258;
C. C. F. 1291.)
Repetition of debt paid before the term arrives.
If the debtor pays the debt subject to the term before the time
of payment arrives can he bring the action of repetition? The
French Code has an article .which expressly answers this question
in the negative: ce qui n'est du qiCa tefrrte, ne pent etre exige
avant Vecheance du terime ; mais ce qui a ete paye d'avanoe, ne
peut etre repete (art. 1186).
The article, it is to be observed, does not say anything about
error. It states a rule in terms which are quite general. But
there are two cases to be considered:
(1) The debtor knows the debt is not yet due, but he chooses
to pay it.
(2) The debtor thinks that the debt is due and pays it under
that belief, whereas in reality it is not due.
The Egyptian Code has no corresponding article, and the
question must therefore be answered jn the Egyptian law by
consideration of general principles. There is no difficulty about
the case where the debtor voluntarily pays before the term. If
he, knowing that ho is entitled to a delay, chooses to pay the debt
at once, this is a clear indication that he waives his claim to insist
upon the delay. It is true that the law does not presume that a
man renounces any of his rights, but, on the other hand, it does
352 THE LAW OF OHLIGATIONS.
not lay down any general requirements of form for a renunciation..
A renunciation may be tacit as well as express, and here we have
a tacit renunciation which appears merely from the conduct of
the debtor. (B.-L. et Barde, Oblig. 2, n. 988; Aubry et Eau,
5th ed. 4, p. 135, note 10; D. N. C. C. art. 1186, n. 37.)
But what are we to say of the case when the debtor pays his
debt before it is due under the mistaken impression that it is due?
There can be no doubt that if this mistake is brought about by
the fraud of the other party the debtor can repeat what he has
paid. (Demolombe, 25, n. 368.)
But apart from this case, does the error of the debtor entitle
him to repetition? In France the prevailing opinion is against
his having such a right. The argument is that article 1186 is
expressed in unqualified terms making no distinction between a
payment in the knowledge of the term, and a payment in error,
and that we are not entitled to introduce a modification of the
plain words of the code. (Larombiere, on art. 1186, n. 34 ;.
B.-L. et Barde, 2, n. 988; Aubry et Eau, I.e.; D. N. C. C.
art. 1186, n. 41.)
Some French writers make a distinction. They say that art.
1186 forbids the repetition of the capital sum of the debt; it
does not say anything with regard to the interest. If the debtor
pays his debt before it is due the creditor who gets the use of the
money so much earlier is enriched without a cause, and the debtor
would be entitled to repeat the amount of this enrichment,
although the code forbids his repeating the debt itself. (Demo-
lombe, 25, n. 637.) But most French authorities rightly reject
this distinction. The language of art. 1186 is absolute, and if
the legislator had intended the inter murium to be recovered he
would have said so.
Moreover, the practical difficulties, if the other intei-pretation
be adopted, are very serious. How are we to reckon the advantage
that the creditor has received? He may not have invested the
money at all, or, if it was not money but a corps certain which
he had received he may have destroyed it, or have made no use of
it. (B.-L. et Barde, Oblig. 2, n. 989; Aubry et Eau, 5th ed. 4,
p. 135, note 10.) But these difficulties, perhaps, do not need to
trouble us, because the Egyptian Code contains no article corre-
sponding to art. 1186. Under the Egyptian law it seems that re-
petition of the capital should be allowed. The debtor has simply
paid in error what was not due, and according to the general rule
the creditor is bound to return it. (C. C. E. 145/206.)
OBLIGATIONS WITH A TERM. .353
Presumption that term is in favour of the debtor.
It is only when the term is in favour of the debtor that lie is
allowed to pay the debt before it is due without the consent of the
creditor. But the presumption is thai the term is in favour of
the debtor.
The Egyptian Code says: When an obligation is subject to
a term, the debtor may 'perform the obligation before such term
has arrived, provided such performance is not inconsistent with
the purpose of the obligation. (C. C. E. 101/155.) The French
Code says, more simply: Le terme est toujours presume stipule
cu faveur du debiteur, a mains qu'il ne result e de la stipulation,
on des cir Constances, qu'il a ete aussi convenu en favtur du
creancier. (C. C. F. 1187.) The practical importance of de-
ciding whether the term is in favour of the debtor only, is that
if this is the case he is free to renounce the term and to make
the performance at once.
For example, where no interest is stipulated for in a contract
of loan of money, the presumption is that the term is fixed solely
in favour of the debtor. And, in a voluntary deposit, although
it may have been agreed that the depositary should take care of
the thing for three months, the depositor can demand it back at
any time, because the depositary has no interest to refuse this,
and the delay fixed was solely for the benefit of the depositor.
(C. C. F. 1944; C. C. Q. 1810. Cf. C. C. E. 482/590.
But the terms of the contract, or the circumstances, may dis-
place the presumption that the term is solely in favour of the
debtor, and show that the term was in favour of the creditor also.
(C. C. E. 101/155; C. C. F. 1187; C. C. Q. 1091.)
Thus, in the case of a loan of money on interest, or of a deposit
of money with a bank, which, although it is called deposit, is
really a loan of money on interest, the term is very often for the
benefit of both parties. (Baudry-Lacantinerie et Barcle, Oblig.
2, n. 980; Aubry et Ran, 5th eel. 4, p. 142, note 21; Planiol, 2,
n. 2215.) And in the Egyptian law the presumption will be
that this was so, for we have not any article creating an adverse
presumption.
But it is a mere presumption of fact. It is a question of the
interpretation of the particular contract.
It may appear that the loan was not a business transaction,
but was an office of friendship, although interest was to be paid.
(Baudry-Lacant. et Barde, op. cit . n. 981. See Cass. 21 avril
w. — vol. ii. 23
;j;->4 THE LAW OF OBLIGATIONS.
L896, D. 96. 1. 484; note by M. Planiol to Trib. fed. Suisse,
ler mars 1890, D. 92. 2. 169; C. A. Alex. 24 dec. 1890, B.L.J.
Ill, 90; C. A. Alex. 2 mai 1895, B. L. J. VII, 245.) Although,
as a general rule, a creditor is not bound to take payment before
the term, yet when such payment is offered a few days before
the mat tiling of the obligation, and he refuses to accept it without
having any real interest to do so, the court may find that the
creditor is in bad faith in refusing payment, and that there has
been a valid tender.
Computation of the term.
In computing a term the dies ad quem is included, and the
dies a quo is not included. Thus, if the debtor has bound himself
to pay on the first of May he cannot be sued till the second of
May, because the whole of May 1st is included in the delay.
(Larombiere on art. 1186, n. 17; Pand. Franc. Oblig. n. 1379;
B.-L. et Barde, 2, n. 1003; Aubry et Rau, 5th ed. 4, p. 136,
note 11.) And when the debtor has bound himself on the 1st of
March to pay in ten days, the 1st of March is not reckoned, and
the obligation is not due till March 11th, and, seeing that the
debtor will not be in delay if he pay on the last moment of
March 11th, the action cannot be brought against him till March
12th.
When the delay J or an appeal is fixed bylaw and it expires on
a legal holiday the delay is extended to the day following. (C. A.
Alex. 14 avr. 1914, B. L. J. XXVI, 319.)
The risk during the term.
II the debtor has bound himself to deliver a specific thing after
lain delay, and it lias perished without his fault before the
arrival of the term, he is liberated from his obligation to deliver
it. But is the other party liberated also? In the case of sale it is a
settled principle of the French law that the buyer must still pay
the price, though the seller from no fault of his own cannot deli's i ■;•
that which he has undertaken to do. (Pothier, Vente, n. 307;
Hue, 7, n. 105; Colin et Capitant, 2, p. 128.)
This, however, may be explained as an application of the prin-
ciple res perit domino. But suppose it has been stipulated that
the buyer shall not become owner until delivery, or that, in spite
of the delivery, the buyer shall not become owner until the price
has been paid, doe- this not affect the liability of the buyer to pay
the price?
OBLIGATIONS WITH A TERM. 355
We cannot say here that he must, do so upon the ground that
-when the thing was lost he was its owner. This is in the French
laAv a disputed question. The French Code says: "The obliga-
tion to deliver a thing is completed by the mere consent of the
parties.
" It makes the creditor owner and puts the thing at his risk
from the time that it ought to have been delivered." 'C. C. F.
1138.)
This lends considerable force to the argument that the risk is
on the creditor only when he has become owner of the thing, and
this A r iew is supported by some considerable authorities, and
appears to be sound. (Baudry-Lacant. et Barde, Oblig. l,n. 424;
Colin et Capitant, 2, p. 1"29. Contra, Colmet de Santerre, 5, n. 58,
bis ill.
In the Egyptian law there is no doubt. If, in spite of the
transfer of ownership, the risk is on the seller until delivery, this
will be so a fortiori when the obligation to deliver lies upon a
debtor who remains the owner of the thing. C. C. E. 297/371.)
And in the Egyptian law both parties will be liberated by the
destruction of the thing without fault of the party whose duty it
was to deliver it. C. C. E. 170 /242."
Loss of right to claim the term.
An obligation, subject to a term becomes performable imme-
diately if the debtor becomes bankrupt, or if lie has by his own
conduct impaired the securities for performance. (C. C. E.
102 156; C. C. F. 1188; C. C.Q. 1092.)
There is what the French writers call a deehcance du terme.
There are two reasons commonly given for this rule as to the
effect of bankruptcy upon a debt subject to a term: —
1 Tin creditor gave the debtor a delay because he had con-
fidence in him. The basis of this confidence is destroyed if the
debtor becomes bankrupt.
(2) If such debts were not made exigible by bankruptcy great
complications would ensue. It would be impossible to divide
the estate of the bankrupt, because provision would need to be
made for these claims not yet due, and sums would have to be set
aside to meet them. B.-L. et Bardte, Oblig. 2, n. 1007; Aubry
et Kan, 5th ed. 4, p. 136.)
23 (2)
356 THE LAW OF OBLIGATIONS.
Does the insolvency of a non-trader produce the same effect
as the bankruptcy of a trader?
In France it is universally agreed that it does. The term
"bankruptcy" — faillite — in this article is used in a broad
sense. The Code of Quebec,, with greater precision, says the
debtor cannot claim the benefit of the term " when he has become a
bankrupt or insolvent." (C. C. Q. 1092.) In its strict sense,
" bankruptcy " belongs only to the commercial law and is dealt
with in the Commercial Code.
The Egyptian Commercial Code, like the French, says: Lc
jugement declaratif de la faillite rend exigibles a Vegard dn failli
les dettes non echues. (C. Com. E. 221/229; C. Com. F. 444.)
It is universally agreed that the word faillite in article 1188 of
the French Civil Code includes the deconfiture of a non-trader.
(B.-L. et Barde, 2, n. 1012; Aubry et Rau, 5th ed. 4, p. 137,
note 12; Cass. 12 dec. 1899, D. 1900. 1. 112; Bo urges, 10 mai
1892, D. 92. 2. 445; D. N. C. C. art. 1188, n. 24.)
It appears from the Travaux preparatoires that the suggestion
to leave out of the French Civil Code the reference to faillite and.
to refer for that subject to the Commercial Code was met by the
answer that on peat faillir sans etre marchand : a la verite, la
faillite alors est appelee deconfiture ; mai* peu importe-la de-
nomination lorsque la chose est la meme. (Locre. XII, p. 162,
n. 11.)
This shows that faillite is bene used in a broad sense. And
in the old French law also the deconfiture of a non-trader mad"
his debts at once exigible. ( Bo urj on. Droit Commun de la France,
liv. VI, tit. VIII, n. 34.)
The conclusion that in the Egyptian law " bankruptcy " here
includes the insolvency of a non-trader is made almost certain by
a comparison of article 102 156 of the Egj ptian Civil Codes with
art. 281 '353. The latter article gives the unpaid vendor the
right to retain the thing sold and not delivered, if the purchaser has
diminished the security accorded by him for the payment of the
\ or if he is dans un etat de deconfiture, or, as it is in the
English version, " in a state of insolvency which renders imminent
the loss of the price to the vendor." And the vendor is to have this
right of retention even if the term agreed upon for payment has
not arrived, unless security is given him. This is simply a special
application of the general principle laid down in C. ( . E. 102 '156,.
OBLIGATIONS WITH A TERM. 357
and, ii! a state of insolvency is enough in the one case, it must be
enough in the other.
And in the English version of the Mixed Commercial Code the
word "insolvency" is used instead of "bankruptcy." Chap.
III.)
The commercial codes contain another illustration of the rule
that bankruptcy creates a forfeiture of the term. "Where the
maker of a promissory note, the acceptor of a bill of exchange or
the drawer of a bill of exchange not accepted, becomes bankrupt,
the other parties liable shall be bound to give security for pay-
ment at maturity, unless they prefer to pay at once." (O. Com. E.
221/229.)
There is every reason to think that in the Egyptian law, as in
the French, the insolvency of a non-trader makes all his debts
exigible. But it must be a genuine insolvency, an etat de decon-
fiiure, or, as it is expressed in a case about the vendor's right of
retention, line decemfiture etabUe. (O. A. Alex. 9 nov. 1905,
E. L. J. XVIII, 10.)
How is insolvency to be determined?
Does it need to be declared by a judgment?
Where there is bankruptcy in the strict sense of the term there
is no difficulty in fixing the date at which it commenced. The
trader is a bankrupt from the date of the judgment which de-
clares him to be in a condition of insolvency — en etat de fcdMihe.
(C. Com. E. 195/202.)
The insolvency of the trader prior to the judgment has certain
legal effects, but he is not a bankrupt until he has been so declared
by a competent court. (See Thaller, Traite Elemmtaire de Droit
Commercial, 4th ed. nos. 1714, 1715.)
But the codes do not make any rules for determining from what
•date a non-trader is to be reputed insolvent.
Insolvency is a question of fact. A debtor is insolvent when
his assets are not sufficient to meet his apparent liabilities. The
fact that, he is in a state of temporary embarrassment and cannot
meet a particular payment does not necessarily prove that he is
insolvent. And the law does not attempt to give any precise
definition of insolvency or decon fit lire. (Demolombe, 25, n. 666;
Hue, 7, n. 287; Thaller, Traite EUmentaire de Droit Commercial',
4th 'ed, n. 1709.)
Who is then to decide when the debtor is in this condition?
358 THE LAW OF OBLIGATIONS.
Must there be a judgment which says that at a certain date the
debtor was insolvent? The decision of this question has great
practical importance in consequence of the rules of compensation.
The point may be made clear by illustration. A owes to B
L. E. 1,000. for which he has given him a hill at three months. B
buys goods from A to the value of L. E. 1,000. If B has reason
to doubt A's solvency, can he say " you are insolvent, and there-
fore the bill due according to its terms at three months hence has
become payable at once. It is a liquid and exigible debt, equal in
amount to the debt which I owe to you for the goods, and the two
debts are, therefore, compensated"? If B's argument is sound,
and if A is really insolvent, B will get payment of his debt in
full, because he has got goods equal to the amount, whereas A's
other creditors will have to be content with such a proportional
payment of their claims as can be obtained from the realisation of
A's assets. On the other hand, if there is no insolvency until a
court has declared it, there will not be compensation between the
two debts, because B's debt on the bill does not become due until
the judgment; and in the mi>antime A's other creditors can execute
seizures and take measures to protect themselves. If the insol-
vency is merely a matter of fact, then, although it may require to
be ascertained by the court, the judgment might find that it
existed from some particular date, even prior to the commencement
of the action. But the sounder view appears to be that insolvency
is a condition which does not exist until it has been judicially
declared, and that the judgment which declares it does more than
merely find that certain facts exist. The judgment does more than
declare: it creates a change in the legal position of the debtor. The
court, after appreciation of a combination of various facts, pro-
nounces that, in its opinion, the debtor is now in a state of
insolvency; the judgment modifies his status.
According to the jurisprudence of the Court of Cassation, the
insolvency cannot at any rate be placed earlier than the date on
which legal proceedings were commenced — the date of the demande
en justice. (Cass. 6 fevr. 1907, D. 1908. 1. 408; Cass. 30 mars
1892, D. 92. 1. 281, S. 92. 1. 481, where see the notes by Planiol
and Labbe, respectively.)
According to most writers, the insolvency cannot commence
earlier than the date of the judgment which pronounces it. It
was not necessary in the particular cases for the Cour de Cassation
to place the date later than the demande en justice, but probably
this will be the next step in the jurisprudence, as it appears to be
OBLIGATIONS WITH A TERM. 359"
the logical result. (Aubry et Rau, 5th ed. 4, p. 379, note 16;
B.-L. et Barde, Oblig. 2, n. 1013; Laurent, 18, n. 414.)
Diminution of securities by the debtor.
The second case in which, by the article under consideration,
the debtor loses the benefit of the term is if he has by his pwn
conduct impaired the securities for performance. (C. C. E.
102/156.)
This means no doubt the same as the French Code, which says
the debtor loses the benefit of the term when by his act he, has
diminished the securities which he had given by the contract to
his creditor. (C. C. F. 1188.) It is only when he is diminish-
ing a security specially given that the rule is applicable.
It does not apply to a debtor who, by his extravagance or
otherwise, is diminishing his estate which forms the general pledge
for the security of all his creditors. (B.-L. et Barde, Oblig. 2,
n. 1015: Aubry et Rau, 5th ed. 4, p. 138, note 14; Bourges, 10
mai 1892, D. 92. 2. 455; D. N. C. C. art. 1188, n. 55.)
What amounts to diminishing the security is of course a ques-
tion of fact. If a debtor who has given a hypothec over his house
pulls the house down, or if a debtor cuts down a wood on a pro-
perty which is hypothecated by him, there can be no doubt that the
security is impaired. If the debtor alienates an immoveable which
is hypothecated, is this an impairment? This is a very disputed
question. If it were not for the rules of the purge the alienation
would not seem to affect the creditor. The immoveable is still
liable for the debt in the hands of its new owner. And when the
alienation is a total alienation it does not seem that the creditor
suffers any loss. But a partial alienation may, owing to the
•purge, be prejudicial to him, as he would have to look to several
debtors for payment instead of to one. (B.-L. et Barde, 2, n.
1023; Demolombe, 25, n. 686; D. N. O. O. art. 1188, n. 102.
See C. A. Alex. 18 dec. 1890, B. L. J. Ill, 80, note.)
The diminution of the security must be by the debtor's own
act; he is not responsible for the diminution caused by a fortuitous
event, or by the crime or fault of a third party for whom he is not
responsible. B.-L. et Barde, Oblig. 2, n. 1025; Aubry et Rau,
5th ed. 4, p. 137, note 13; D. N. 0. C. art. 1188, no. 78.)
• But one important case is dealt with elsewhere in the code. If
an immoveable charged with a hypothec perishes or deteriorates
by fortuitous event in such a way as to render the security doubtful
360 THE LAW OF OBLIGATIONS.
the debtor must, at his option, either offer a sufficient hypothec
upon another immoveable or pay the debt before it falls due.
(C. C. E. 562/686; C. C. F. 2131; C. A. Alex. 17 nov. 1898,
B. L. J. XI, 17; Aubry et Rau, he. cit. and 3, p. 710.)
This provision applies only to the case where there has been a
material degradation of the particular immoveable.
It does not apply to a loss of value due to economic causes.
(Aubry et Rau, 5th ed. 3, p. 711; B.-L. et de Loynes, Privileges
et Hypotheques, 2, n. 1392. Contra, Guillouard, Privileges et
Hypotheques, 3, n. 1618.)
Another article of the code provides that a general obligation
to furnish a surety, whether contractual or judicial, involves the
obligation to procure a new surety, if the first becomes insolvent.
(C. C. E. 500/610; C. C. F. 2020.)
It would appear that the principle laid down in these articles is
a general one, and that whenever there has been an impairment
of securities brought about, not by the act of the debtor, but by a
fortuitous event, the creditor can call upon the debtor to pay at
once, or to restore the value of the securities. (Aubry et Rau, 5th
ed. 4, p. 137, note 13; Laurent, 17, n. 203; D. N. C. C. art.
1188, n. 82.)
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 361
OHAPTEE XIX.
OBLIGATIONS IN WHICH THERE ARE SEVERAL OBJECTS
AND SEVERAL SUBJECTS.
Obligations simple and composite.
Under this head fall to be considered three kinds of obligations,
namely:—
(1) Alternative; (2) Facultative; (3) Obligations with a
penalty.
A simple obligation is one in which there is a single debtor
and a single creditor, and in which the object of the obligation is
a single prestation; for example, I promise to deliver to you my
horse. The promise to transfer a group of things regarded col-
lectively is, in this sense, a single prestation. If I promise to
sell to you my whole stock-in-trade, or my whole crop of cotton,
or to pay you a sum of money with interest, this is a simple obliga-
tion just as much as if I promised to deliver to you my horse.
The various items which compose the stock-in-trade, or the sepa-
rate bales of cotton, are not regarded individually, and the obliga-
tion to pay the interest upon the capital sum promised is not a
separate obligation. The obligation is to pay the capital with the
interest as a single sum. (Aubry et Rau, 5th ed. 4, p. 68.) On
the other hand, an obligation is said to be composite when there
are several distinct prestations due, that is to say, several different
objects. And the composite obligation may be (a) conjunctive,
or (b) alternative. If, though there are several objects, I have
bound myself to pay them all at once, this is a conjunctive obliga-
tion. If I promise to deliver to you my horse and my ox, I enter
into two separate and distinct obligations, which are only, so to
speak, accidentally combined by being created together and by
the same title.
And if I promise to deliver to you my horse or my ox, seeing
that it is at present undetermined upon which the choice shall
fall, 1 am bound at first to two prestations, although when the
choice is made my obligation will be reduced to a single one. In
,",62 THE LAW OF OBLIGATIONS.
this typo of obligation, which is called the alternative obligation,
there arc two things due or two objects. C. C. F. 1189.) This
will be explained more fully later. In what is called a facultative
obligation there is only one thing- due. It is a simple obligation,
though its simplicity is disguised. The debtor is bound to one
prestation only, but he has the right, if he prefers it, to liberate
himself by substituting another prestation. The rather fine dis-
tinction between the facultative and the alternative obligation will
be dealt with later on.
Obligations simple and multiple.
When, instead of there being a single creditor and a single
debtor, the obligation is in favour of several creditors, or is due
by several debtors, the obligation is conveniently called a multiple
obligation to distinguish it from a simple obligation. Instead
of the obligation having a. plurality of objects it has a plurality;
of subjects. The definition of an obligation in the Egyptian
Code is somewhat incomplete upon this point. It says the object
of an obligation is to procure an advantage for one person by
constraining another. The French Code with greater fulness
says that in a contract une on plusieurs personnes x'obligent etnvers
une ou plusieurs a at res. [C C. E. 90/144; C. C. F. 1101.)
And this plurality of debtors or of creditors, as the case may
be, is not necessarily found at the date of the creation of the obliga-
tion. It may arise, and frequently does arise, subsequently, as.
for instance, when a creditor or a debtor dies and is succeeded by
several heirs. In this way an obligation which was at first simple
becomes afterwards multiple. See, on these distinctions gene-
rally, Aubry et Ran. 5th ed. 4, p. 16 and p. 68; Planiol, 2, n. 707
and 714; Panel. Frcmc. vo. Obligations, n. 127.)
Alternative obligations.
An alternative obligation is one in which the debtor is bound
to give or to do one of two things. For example, he binds himself
to do a piece of work, or otherwise to pay a sum of money. The
obligation is to be extinguished in one of these two ways. He
must do either the one thing or the other, but he cannot compel
the creditor to accept a part of one of these things and a part of the
other. Unless the creditor agrees, the debtor cannot say, "I will
pay half the money and do half the work/' This rule is expressly
stated in the French Code. C. C.F. 1191. Cf . C. C. Q. 1093.
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 363
The Egyptian law is undoubtedly the same although the code
is silent upon this poini .
Alternative obligation distinguished from conjunctive or
facultative obligation.
The alternative obligation must be distinguished from two other
kinds of obligations which bear a resemblance to it, viz., (a) a
conjunctive obligation, and (b a facultative obligation.
(a) A conjunctive obligation is one in which the debtor is
bound cumulatively to do two or more things, for instance, to pay
a sum of money and to do a piece of work. In this case there are
two separate obligations, though they may happen to be created
by the same title. One of the obligations may bo extinguished,
and the other may remain due. As the old lawyers said, there
are two things in obligutione.
(b) A facultative obligation is one in which the debtor binds
himself to do one thing only, but reserves to himself the choice of
substituting something else, that is, of liberating himself from his
obligation by doing something else than that which he primarily
undertook to do. In this kind of obligation there is in principle
only one thing due— unum est in obligatione — but when the time
of payment arrives the debtor can substitute something else. The
distinction between an alternative obligation and a facultative
obligation is a somewhat subtle one and will be best considered,
after the rules of alternative obligations have been explained.
(Infra, p. 378.)
In an alternative obligation who has the choice?
The Egyptian Code says: When an obligation is alternative,
the option, in the absence of any special provision of the law or pi
the agreement, belongs to the debtor. (C. C. E. 96/150.)
This is in accordance with the French law. (O. O. F. 1190.
Cf . O. C. Q. 1094.) It is, in fact, an application of the general
rule of interpretation of contracts that in cases of doubt the con-
struction shall be in favour of the party who incurs the obligation.
(C. C. E. 140/201; C. C. F. 1162; C. C. Q. 1019.)
It is not. necessary to use a sacramental form of words in order
to displace the presumption that the choice is with the debtor,
but the intention of the parties must clearly appear from the
terms of the agreement, interpreted in the light of the circum-
stances, and sometimes by reference to usage. (Aubry et Jtau,
364 THE LAW OF OBLIGATIONS.
oth ed. 4, p. 69, note 3 ter; Demolombe, 26, n. 38.) The Egyptian
Code gives as an example of an alternative obligation in which the
choice is with the creditor, the case of an obligation with a penal
clause. If I undertake to do certain work, or to pay a penalty,
my creditor can sue me for performance of the work when that is
possible instead of suing for the penalty. (C. C. E. 98/152.)
But the obligation with a penal clause is best considered sepa-
rately, as it has peculiarities which do not belong to alternative
obligations in general. When the debtor has the option, and the
creditor sues for performance, he must sue for either of the two
things alternatively; he cannot limit his action to one of them, for,
otherwise, he would be exercising the option which belongs to
the debtor. Pothier, Oblig. n. 248; B.-L. et Barde, 2, n. 1060.)
And when no delay is fixed within which the choice is to be made,
the debtor can only be deprived of his option by the expiration of
a delay fixed by a judgment against him, or by one of the modes of
performance becoming impossible. But when the debtor has a
choice of doing one of two things within a certain delay, and,
failing his doing one of them within the specified time, he is to be
bound to do the other, then, if the delay has expired, the creditor
can sue for performance of this other thing. For example, a
creditor may agree to take a dividend on condition that the debtor
pays instalments on fixed dates, on the terms that if the debtor is
in arrears with any instalment the creditor's right to sue for pay-
ment of the debt in full shall revive.
A Quebec case is a good illustration of this rule: It was con-
tracted between a newspaper and a trader that the trader should
furnish so many lines of advertisement in a year, and in con-
sideration of this quantity the rate was to be a specially low one.
But the contract provided that the advertiser was to pay by the
month, and that if each month's payment was not promptly made
the rate for the advertisements should no longer be the special
rate, but should be the ordinary rate for casual advertisers.
The trader having failed to pay at the time specified, the creditor
sued for payment on the higher scale, and it was held that there was
here a valid alternative obligation, and that failure to fulfil the
condition entitled the creditor to sue for the remaining alternative.
(Berthiaulme v. Kent, 1902, R. J. Q. 11 K. B. 312.)
Refusal to exercise the option.
If the debtor by refusing to exercise the choice prevents the ful-
filment of the obligation, the creditor can call upon him by an
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 365
action to make his choice, and failing his doing so, ask that the
court shall fix a delay within which he is to exercise the choice or,
if not, that the court shall make the choice for him. The same rule
applies in the case where the choice is given to a creditor, or when
by the death of the party entitled to make the choice the right of
making it has passed to several heirs and they cannot agree.
(Larombiere, art. 1191, n. 7 and n. 11; Demolombe, 26, nos. 39
and 41; B.-L. et Barde, Oblig. 2, nos. 1071—1073; Aubry et
Rau, 5th ed. 4, p. 69.)
German Code as to this.
The German Code contains two new rules upon this matter
which are worth noting: Si le debiteur, lorsqiiil a le droit d 'op-
tion, ne procede pas au choix avant le commencement de la pro-
cedure d'executian forcee, le creamier pent, a son choix, faire
porter V execution forcee sur Vune ou V autre des prestations;
toutefois, aussi longiemps que le creancier n'a pas regu en tout
ou en partie la prestation choisie, le debiteur pent se liber er de
son engagement en fournissant Vune des autres prestations. Si
le creancier, lorsqiiil a le droit d. option, est en demeure, le de-
biteur petit, sous condition de lui fixer un delai convenable, Vin-
viter a proceder au choix. A V expiration du delai, si le creancier
ii a pas procede an choix. en temps utile, le droit d'option passe
au debiteur (art. 264, Official French translation. Of . Code
Maroc. Oblig. art. 144).
Can the French or Egyptian courts transfer the choice to the
other party?
The rule accepted by the German Code that if the party entitled
to make the choice dioes not do so within the delay fixed, the choice
passes to the other party is a very reasonable one. And, accord-
ing to several of the French authorities, the French courts have
the same power, although there is no such provision in the code.
But under the French or Egyptian codes it is very doubtful if
this is competent. The court has no power to modify the contract
of the parties.
The debtor has bound himself to make one of two prestations
in his option. If he will not exercise his option, and specific
performance of the contract is demanded, the court cannot give
an effective judgment without indicating which of the two pres-
tations is to be made. The court must, necessarily, have the
366 THE LAW OF OBLIGATIONS.
power of exercising the option between the prestations, but in
the silence of the texts the court has no implied authority to
delegate this power to the plaintiff. (Sic, Aubry et Rau, 5th ed.
4. p. 69; Laurent, 17, n. 239; B.-L. et Barde, Oblig. 2, n. 1071.
Contra, Laromhiere, art. 1191, n. 7; Demolombe, 26, n. 39.)
Transmissibility of the option.
When the parly entitled to exercise the option dies before the
delay has expired during which the option was to be made, the
right of making the choice passes to his heirs, being a vested
right which is an asset of his estate. The right of making the
choice is indivisible by its nature. It is necessary that the heirs
should come to an agreement as to the manner in which the option
is to be exercised. In a French ease A let a laundry to B upon
a lease for a number of years.
It was stipulated that if B put up additional buildings at the
end of the lease, A was to have an option either to take the new
buildings at a valuation, or to sell the laundry to B for 1-3,000
francs. B erected new buildings, and, after A's death, it was
held that his heirs could exercise the option which he enjoyed of
taking over the buildings or else of making the lessee buy the
property. (Douai, 12 mars 1891, D. 92. 2. 380.; If it is the
debtor who has the option and his heirs cannot agree in which
way it is to be exercised, their want of agreement cannot inde-
finitely paralyse the right of the creditor.
He can ask the courts to fix a delay within which the heirs
must make their option, failing which the court will do so for
them. If, on the other hand, it is the heirs of the creditor who
cannot agree which of the two things they shall choose, this will
he as a rule so much the better for the debtor. He cannot be
called upon to pay until the creditors make up their minds. But
if he wishes to liberate himself from his obligation he will no
doubt have the right to apply to the court to put the creditors in
default to make their choice within a certain delay, failing which
it is to be made by the judge. (Colmet de Santerre, 5, n. 118, bis,
11; B.-L. et Barde, 2, n. 1073.
How is the option to be declared?
When the option is with the debtor, can he at any time after
the date of the contract declare to the creditor that he proposes to
exercise the option in a certain way, and, if he makes such a
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 367
declaration, does this transform the obligation from an alternative
one into a simple one? This is a poinl on which there has been
much controversy. If I sell you my black horse or my brown
horse at my choice, for a certain price, the option which I reserve
of selecting- between the two horses is a clause in my favour.
And if I declare to the buyer that I have decided to deliver to
him the brown horse has he any legal ground of- complaint?
According to the German Code he has not. The party entitled
to the option may exercise it by a mere declaration made to the
other (art. 263). Some French writers adopt the same view.
(Laurent, 17, n. 232; Hue, 7, n. 291.) But this does not appear
to be a correct interpretation of the presumed will of the parlies.
Although the option belongs to the debtor, the alternative obliga-
tion presents distinct advantages to the creditor also.
It gives him two strings to his bow. If, without the fault of
the debtor, one of the modes of performance becomes impossible,
the obligation still subsists. To take the illustration just given,
if my brown horse is killed by lightning I have no longer an
option, I am bound to deliver my black horse. Can the debtor
deprive the creditor of this advantage by a mere declaration of
will, or do the parties intend that the creditor shall continue to
enjoy this additional chance of payment until delivery is made?
The latter appears to be the sounder view. The only way in which
the debtor can exercise his option is by making an actual delivery
of one of the two things, or, if the creditor refuses to take it, by
making a tender, that is, by off res reelles. From the creditor's
point of view there would be no virtue in the alternative obligation,
if the moment after it was made the debtor could turn it into a,
simple obligation by informing the creditor that he meant to
exercise the choice in a certain way. B.-L. et Barde, 2, n. 1062;
Aubry et Rau, 5th ed. 4, p. 70; Colmet de Santerre, 5, 124,
bis, 1.)
When the option was left to the creditor there does not seem
any reason against his exercising the choice by a mere declaration
of will. If he calls upon the debtor to make one of the prestations
this should be sufficient. (Colmet de Santerre, I.e.; B.-L. et
Barde, Oblig. 2, n. 1067.) If he chooses to deprive himself .of
the advantage which the law gives him, and to determine the
object of the obligation before the actual delivery, why should he
not be allowed to do so? His declaration does not need to be
accepted because the debtor has already bound himself to pay-
that one of the two things which the creditor should select. Not-
368 THE LAW OF OBLIGATIONS.
withstanding this, same French authorities hold that the creditor
is not bound by his declaration, unless it is in the form of a
demande en justice or has been accepted by the debtor. (Sic.
Aubry et Rau, loc. cit.)
Does the alternative obligation operate an immediate
transfer of the property?
So long as it is still uncertain which of the two prestations will
be the object of the obligation there can be no transfer of the
ownership. Under the Egyptian Code as under the French law,
there can be no transfer of ownership except of a determinate
object. (C. C. E. 266, 261/336, 328; Laurent, 17, n. 221.)
The Egyptian Code is clearer upon this point than the French
Code. The latter lays down in general terms that the obligation
to deliver a thing is perfect by the mere consent of the contracting
parties, and that it rend le creancier proprietaire et met la chose
a ses risques des V instant ou elle a du etre livree, encore que la
tradition n 'en ait point ete faite. (C. C. F. 1138.)
But this article is only intended to apply to the case when the
object of the contract is a corps certain. If the object of the
contract, for instance, of a contract of sale, is a quantity of
fungibles, the transfer of ownership to the purchaser cannot take
place until the fungibles have been sufficiently determined.
(Beudant, Contrats, n. 338; Planiol, 2, n. 1343.) And, in the
general case, this determination or, as it is often called, this in-
dividualisation of the object is made by separating the fungibles
sold and delivering them to the purchaser. This subject, how-
ever, belongs to the law of sale. (See Thaller, Traite Elementaire
de Droit Commercial, 4th ed. n. 1008; B.-L. et Barde, OUig.
2, n. 1065.)
The Egyptian Code is quite clear as to this, because it says:
In the case of the sale of things determinate only as to ~kind r
tht ownership passes only, by delivery. (C. C. E. 268/338.)
alternative obligation is strictly analogous to this case. If
the debtor binds himself to deliver property X or property Y, as
he shall choose, there is no determination of the object, and there-
fore no transfer of the property can take place until the choice
has been made.
Retroactive effect of the choice.
When the choice is made does it retroact to the date of the
contract? This is a controversial question. According to one
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 369
view, seeing that the alternative obligation cannot transfer the
ownership, but merely gives to the creditor a personal right, the
transmission of property can take place only from the date when
the choice is made. (Larombierc, art. 1138, n. 18, and art. 1194,
n. 2; Laurent, 17, n. 221.) But, according to another view, when
the choice is made it retroacts to the date of the contract. Tho
position is the same as if the obligation had not been alternative,
but had been from the first a simple obligation to perform the
prestation upon which the choice has ultimately rested. It is
this view which is accepted by the German Code. La prestation
choisie est considered eomme m/fmt ete seule due, des VoHgine
(art. 263). Many French authorities hold that the French law
is the same, but they do not agree in their explanation of the
reason why it should be so.
According to some of them the alternative obligation conceals
a condition. The debtor who promises property X or property Y,
in his option, realty promises property X, subject to the condition
that he shall choose to deliver that property or else property Y,
subject to the same condition. (Colmet de Santerre, 5, n. 115,
bis, VI; Demolombc, 26, n. 19.) When the condition is fulfilled
it retroacts according to the general rule applicable to conditional
obligations. (C. C. F. 1179; C. C. E. 105/159.)
I am disposed to think that this is still the simplest and best
explanation. Some writers, however, consider it too artificial.
They say that an alternative obligation and a conditional obliga-
tion are two separate things, and Laurent carries the argument to
its logical conclusion by holding that, as there is no condition in
the alternative obligation^ it is not possible to admit the retro-
active effect of the option. (17, n. 221.)
But other writers who wish to retain the doctrine of retro-
activity, and are, at the same time, dissatisfied with the old ex-
planation of it, justify their conclusion in another way. 'They
say that it is an essential principle of the alternative obligation
that when one of the two objects promised alternatively is removed
from the scene, either because it becomes impossible to perforin it,
or because the choice has fallen upon the other one, the obligation
becomes a pure and simple one from its date. There is what has
been styled a concentration upon the object which remains.
(B.-L. et Barde, Oblig. 2, n. 1078; Colin et Capitant, 2, p. 194.)
In whatever way the retroactive effect of the choice is to be
defended it appears, at any rate, to be the sounder view that the
w.— vol. ii. 24
370 THE LAW OF OBLIGATIONS.
choice does produce a retroactive effect, and this has important
pract ical consequences : —
(1) If the debtor who has sold property X or property Y, in
his option, afterwards alienates property X to a third party and
then exercises his option under the alternative obligation in
favour of X, the creditor can revindicate X from the second pur-r
chaser, because it now turns out that he was the owner of it from
the date of the contract with him. If the choice had no retroactive
effect he would only have a right of damages against the vendor.
Of course the purchaser may, according to circumstances, be pro-
tected if X was a movable thing, by the rule en fait de meubles
la possession vaut titre, and if X was an immoveable property, the
second purchaser may be able to defend himself if the first pur-
chaser has not transcribed his title. (C. C. E. 611/737.)
(2) If the debtor who has sold property X or property Y
becomes insolvent, the creditor can revindicate whichever of the
two properties is chosen.
He does not need to content himself with a dividend. (Colmet
de Santerre, 5, n. 115, bis, VI; B.-L. et Barde, 2, n. 1077.)
Obligation may appear to be alternative without really
being so.
An obligation may be couched in an alternative form, and yet
may not be a true alternative obligation. The French Code says:
The obligation is pure and simple, although contracted in an
alternative form, if one of the two things promised could not be
the subject of the obligation (art. 1192). The use here of
the word "subject" is clearly erroneous. It is persons who are
the subjects of obligations, and things, or, as the Egyptian Code
prefers to say, acts, which are their objects.
This mistake is corrected in the Code of Quebec. It says that:
An obligation is pure and simple . . . if one of the two things
promised could not be the object of the obligation. (C. C. Q.
1095. See Planiol, 2, n. 709.) If one of the alternatives pro-
mised is the delivery of an article which is not an object of
commerce, or is the doing of an act which is unlawful, the obliga-
tion is not null as a whole, but it is not an alternative obligation:
it is a pure and simple obligation to do the thing which is lawful
and possible. For instance, I promise to sell you either my black
horse or my brown horse for a certain price. Unknown to both
of us, my black horse was dead at the date of the contract. In
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 371
spite of its alternative form, the obligation was in reality a simple
obligation from the first to deliver the brown horse.
When one of the alternatives is to do something illegal a dis-
tinction has to be drawn. If there are two separate things pro-
mised, one of which is lawful and the other unlawful, and both
the obligations are distinct and .principal obligations, the unlawful
obligation can be eliminated without affecting the validity of the
remaining obligation to do the thing which is lawful. But parties
are not to be allowed to take advantage of the rule stated in* the
code in order to give validity to an unlawful obligation. If I
promised to commit a crime, or in default to pay you a sum of
money, you would not be allowed to sue for the penalty upon the
•argument that the obligation to pay the sum of money was per-
fectly lawful, though the obligation to commit the crime was
unlawful. There are not here two principal obligations; the
obligation to pay the penalty is merely accessory to the other. It
is the business of the courts to interpret the contract and to dis-
cover if, in the intention of the parties, there were two distinct
objects, that is, two distinct principal obligations, or if, on the
other hand, one of the objects, which is unlawful, was the prin-
cipal object of the contract and the other was merely accessory to
it. When one of the things promised is actually unlawful, but it
might well be that the parties believed it to be lawful, the obliga-
tion to perform the other alternative may, very possibly, be a
valid principal obligation. But when the unlawful character of
■one of the prestations must have been manifest to the parties, the
presumption is that the other prestation was promised to secure
the performance of the first. (Demolombe, 26, n. 11; Colmet
<do Santerre, 5, n. 119, bis; B.-L. et Barde, 2, n. 1046.)
Effect of the impossibility of executing one of the
alternatives.
In the preceding paragraph we have considered the case in
which, in spite of an alternative form,, there was, as a matter of
fact, from the beginning, only one thing promised; because the
thing promised alternatively was null ab initio. We have now
to deal with the case where the obligation was really alternative
At first, but ceases to be so because it becomes impossible to per-
form one of the things promised. The Egyptian Code has three
.articles upon this subject which are not quite identical with the
24 (2
372 THE LAW OF OBLIGATIONS.
corresponding articles of the French Code. The articles in the-
Egyptian Code are: —
// one of the modes of performance becomes impossible, the
obligation subsists so far as the possible mode of performance is
concerned. (C. C. E. 97/151.)
When the option belongs to the creditor, and one of the modes
of performance has become impossible by the fault of the debtor,,
the creditor has the option of requiring performance in the pos-
sible mode or of claiming the indemnity due as a result of the
impossibility of performance in the other mode. (C. C. E.
99/153.)
// both modes of performance have become impossible by the
fault of the debtor, the creditor retains his option between the
two indemnities due for non-performance. (C. C. E. 100/154.)
In the French Code the articles are: —
L'obligation alternative devient pure et simple, si Vune des
choses promises perit et ne pent plus etre livree, meme par la faute
du debiteur. he prix de cette chose ne pent pas etre offert a set
place.
Si toutes deux sont peries, et que le debiteur soit en faute a
Vegard de Vune d'elles, il doit payer le prix de celle qui a peri la
dernier e (art. 1198).
Lorsque, dans les cas pre/vus far Varticle precedent, le choix
avait ete defere par la convention au creancier,
Ou Vune des choses seulement est perie ; et alors, si c'est san<s
la faute du debiteur, le creancier doit avoir celle qui reste ; si le
debiteur est en faute, le creancier peut demander la chose qui
reste, ou le prix de celle qui est perie ;
Ou les deux choses sont peries; et alors, si le debiteur est en
faute a Vegard des deux, ou meme a Vegard de Vune d'elles seule-
ment, le creancier peut demander le prix de Vune ou de Vauire,.
a son choix (art. 1194).
6'^ les deux choses sont peries sans la faute du debiteur, et
arant qu'il soit *en demeure, T 'obligation est eteinte, conformement
a Varticle 1802 (art. 1195).
Les wtemes principes s'appliqumt au cas o<u il y a plus de deux
choses comprises <i<nis Vobligution alternative (art. 1196).
The space assigned in the codes to this matter is out of pro-
portion to its practical importance. There is hardly any juris-
prudence.
The first rule on the subject is: —
If one of the modes of performance becomes impossible the
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 373
obligation subsists so far as the possible mode of performance is
concerned. (C. C. E. 97/151.)
The one mode of performance may have become impossible by
the fault of the debtor ; or by a fortuitous event, and this will make
a difference in the rights of the creditor if the option was with
him. It is necessary therefore to distinguish between the case
when the option belongs to the debtor, and the case when the
•option belongs to the creditor.
(a) When the option belongs to the debtor. *
If one of the two things which were promised alternatively
has perished, there is left a simple obligation to deliver the re-
maining thing. It still remains possible for the debtor to fulfil
his obligation literally, because he promised to deliver one of two
things in his option and this he can do. He is not allowed to say:
" I prefer to pay the Value of the thing that has perished," and it
is immaterial in this case whether the thing perished by a
fortuitous event or by the fault of the debtor. The right of the
•creditor was from the beginning only to receive one of the two
things, and if he gets the one which remains his claim is satisfied.
But let us suppose that both things have perished.
Here we must distinguish between the case where both things
perished simultaneously, and the case where one of them perishes
first and the other afterwards, and in both these cases it makes a
difference whether the debtor was in fault or not.
If the two things perished simultaneously without the fault of
the debtor, seeing that the loss necessarily comprises the object
of the obligation, because, although it was as yet indeterminate, it
was one of the two things and they have both gone, the obligation
is extinguished by impossibility of performance. (Colmet de
Santerre, 5, n. 123.)
If the creditor has paid the price the debtor must give it back.
For by the Egyptian law, .when an obligation is dissolved in con-
sequence of impossibility of performance, the correlative obliga-
tions are in like manner dissolved. (C. C. E. 179/242. The
French law is different . Planiol, % n . 621 ; D . N . C . C . art H 1 302,
n. 7; supra, p. 316, and infra, p. 476.)
If the two things had perished together, and this was by the
fault of the debtor, he can liberate himself by paying the value
of either of them, seeins: that the choice was with him.
374 THE LAW OF OBLIGATIONS.
But suppose the destruction of the two things was not simul-
taneous. The French Code says as to this case: —
Si toutes deux sont peries, et que le debiteur soit en faute a
regard dc rune d'ettes, it doit pay,er le prix de celle qui a peri la
derniere. (C. C. F. 1193. Suppose it was by the fault of
the debtor that the second thing perished. This is the clearest
case.
The destruction of the first thing made the obligation pure
and simple. He was bound to deliver the second thing, just as if
this had been the extent of his obligation from the beginning.
And, if by his fault he cannot perform his obligation, then, accord-
ing to the general principle, he must pay the value of the thing
which he was bound to deliver, and we must add that he will be
liable in damages over and above this value if such damages are
proved. (Larombiere on art. 1193, n. 5; B.-L. et Barde, Oblig~
2,n. 1089; C.C. E. 178/241.)
But what if it was the first thing which perished by the fault
of the debtor, and then afterwards, the second thing perishes
without his fault? Here there is more room for doubt. By the
perishing of the first thing the obligation became pure and simple.
It is now a simple obligation to deliver the second thing, and, if
this becomes impossible without the fault of the debtor, why are
we not to apply the rule that the debtor is liberated by an impos-
sibility of performance which has arisen without his fault?
There seems at first sight to be an inconsistency between the
rule stated in the French Code upon this point, and the statement
in the same article that the alternative obligation becomes pure
and simple if one of the things promised perishes. The provision
of the French Code in so far as it makes the debtor liable, is,
however, supported by satisfactory reasons which ought to prevail
in the Egyptian law, though the Egyptian codes are silent. It
is true that if one of the modes of performance has become impos-
sible the obligation is now a simple one to make the prestation
which remains possible, but, nevertheless, the fact that the obli-
gation was at first alternative affects the liability of the debtor.
The alternative character of the obligation was an advantage
to the creditor. He knew that if one of the things perished he
would still have a claim to the other. He had two strings to his
bow. The debtor is not entitled by his fault to deprive the
creditor of this advantage for which he stipulated. If the debtor
had not by his fault destroyed the first thing, then, in spite of
the loss of the second thing bv a fortuitous event, the creditor
SEVERAL OBJECTS AND SEVERAL SUBJECTS. 375
would have been paid. It is, therefore, in this ease also owing
to the fault of the debtor that the performance has become im-
possible, and, according to principle, he is bound to make good
the loss. (Aubry et Rau, 5th ed. 4, p. 74, note 13 ter ; Colmot
de Santerre, 5, n. 120, bis; B.-L. et Barde, Oblig. 2, n. 1090.)
But why should his liability consist in the price of the thing*
which perished the last as the French Code says that it does?
Pothier held that the liability of the debtor was to pay the prico
of the thing which perished by his fault, and not of the thing
which perished the last. (Oblig. n. 252.) Pothier's opinion
is supported by the high authority of Demolombe, as being sounder
than that adopted by the French Code. (26, n. 84.)
It is submitted that this is the Egyptian law. The liability of
the debtor is based upon his fault, and as regards the destruction
of the second thing he was not in fault. The French Code has
decided otherwise, apparently upon two grounds: (1) For prac-
tical considerations it is better to make the value of the thing
which perished last the measure of the damages, because it is
easier to ascertain what its value was. It may be difficult to
discover the value of the first thing which, perhaps, perished a
long time previously. (2) The debtor who has destroyed the
first thing by his fault thereby makes himself bound absolutely to
deliver the thing which remains.
It is by his own fault that he is deprived of an option, and he
must now be taken to have assumed all the risks. (B.-L. et Barde,
2, n. 1091.) Colmet de Santerre gives a third reason, viz., that
the debtor was within his rights in destroying the first thing, even
if he did so wilfully, and that if the first thing was of greater value
than the second it would be unfair to make the debtor pay this
greater value if the second thing happened to be destroyed later
by a fortuitous event (Joe. cit.).
This last argument, at any rate, does not seem to be convincing.
The debtor was not within his rights in destroying the first
thing.
It is true he had the right to choose whether he would deliver X
or Y, but, until he exercised this choice by delivering one of them,
the creditor had an interest in the continued existence of both
X and Y, and the debtor was not entitled to deprive him wilfully
or negligently of this advantage. The other reasons upon which
the provision of the French Code is justified are not without con-
siderable force, but, as the Egyptian Code is silent, the question
must be decided by general principles, and the solution of Pothier
370 THE LAW OF OBLIGATIONS.
and Demolombe is more logical than that which the French Code
has chosen to adopt.
(b) When the option belongs to the creditor.
The Egyptian Code has two articles upon this subject:
When the option belongs to the creditor, and one of the
modes of performance has become impossible by the fault of the
debtor, the creditor has the option of requiring performance in
the possible mode or of claiming the indemnity due as a result
of the impossibility of performance in the other mode.
If both modes of performance have become impossible by the
fault of the debtor, the creditor retains his option between the two
indemnities due for non-performance. (C. C. E. 99, 100/153,
154.)
When the creditor has the option, the loss of one of the things
by a fortuitous event gives him a simple right to claim the thing
which remains!. There is, as the German writers say, a concen-
tration of the obligation. But when the loss of one of the things
was caused by the fault of the debtor the situation is different.
The debtor cannot by his fault deprive the creditor of the option
which he has given him. If the creditor prefers to claim the
value of the thing which has perished, instead of taking the thing
which remains, this is within his right. And if both things have
perished by the fault of the debtor, the creditor still has his option
in the sense that he may claim the value of either of the two things,
with damages in addition, because the debtor was not entitled
by his fault to prevent the creditor receiving the actual thing
from him instead of its value. (B.-L. et Barde, Oblig. 2, n. 1094;
Colmet de Santerre, 5, n. 121, bis 1.) So far the Egyptian Code
is in accordance with the corresponding articles of the French
Code. But the French Code goes further. It says: Oil les deux
choses sont peries ; et alors, si le debiteur est en faute a Vegard des
deux, ou meme a Vegard de Vune d'elles seulement, le creancier
peut demander le prix de Vune ou de V autre a son choix.
(C. C. F. 1194.) The words ou meme a Vegard de Vune belles
seulement have been very properly omitted in the Egyptian Code.
Why should the creditor have the right to choose between the
two indemnities when the debtor was to blame for the destruc-
tion of one of the two things, but was not to blame for the
destruction of the other?
The creditor has lost his option, it is true, but this is not the
SEVERAL OBJECTS AND SEVERAL SUBJECTS. -'577
debtor's fault, and there is no reason why the debtor should com-
pensate him for this loss. It is the destruction of one of the things
by a fortuitous event which has deprived the creditor of the option.
Take the two possible cases: —
(a) The debtor is to blame for the destruction of the first thing,
and, afterwards, the second thing* perishes by a fortuitous event.
His liability ought surely to be the value of the first thing for the
destruction of which he was to blame. He had no right to deprive
the creditor of the option, and it cannot be said that he was exer-
cising a right in destroying the first thing. The creditor can,
therefore, claim the loss caused to him by the debtor's fault, and
the amount of this loss is the value of the thing destroyed.
(b) Or, suppose the first thing has perished by a fortuitous
event, the result of this is that the obligation becomes a simple one
to deliver the other thing. If, by the fault of the debtor, this other
thing perishes, he must compensate the creditor for this loss.
But there is no logical reason for allowing the creditor to claim,
if he prefer to do so, the value of the thing which perished without
the fault of the debtor. Under the Egyptian Code there is no
necessity to accept a solution in favour of which so little can be
said. (Colmet de Santerre, 5, n. 121, bis 1; Aubry et Rau, 5th
ed. 4, p. 75, note 13, quinquies.)
378 THE LAW OF OBLIGATIONS.
CHAPTER XX.
FACULTATIVE OBLIGATIONS.
Neither the Egyptian Code nor the French Code makes the
slightest reference to the facultative obligation, although in fact
this type of obligation is not uncommon, and it requires to be
carefully distinguished from the alternative obligation with which
it may easily be confused. M. Planiol, who speaks of the alter-
native obligation with a little spite, says that the facultative obli-
gations have a practical interest which is entirely wanting to the
alternative obligation, and he complains with reason that the
French Code devotes no less than eight articles to the alternative
obligation, and passes over facultative obligations without a word.
(2,n.711.)
Definition.
A facultative obligation is one in which a single prestation is
due, but the debtor has the right if he chooses to substitute another
prestation in its place.
Distinction between the facultative obligation and the
alternative obligation.
In the alternative obligation, as we have seen, there are two
objects; it is a composite obligation. There are, as the old writers
said, two things in obligatione. But in the facultative obligation
there is only one thing due. The debtor is bound only to one
thing. One thing only is in obligatione, but when it comes to the
payment the debtor can substitute something else. The other
thing which may be substituted is not in obligatione, but in facili-
tate solutionis.
The prestation which the debtor has the right or faculty to
substitute for that which he promised is a sort of accessory object.
He can use it as (a, means of escape from his obligation. (Pothier,
06%. n. 244; B.-L. et Barde, 2, nos. 1048, seq.; D. N. C. C.
art. 1189, n. 25.) To take an example from the Roman law:
If a slave had caused damage to a third party by his fault the
owner of the slave could be sued for damages.
FACULTATIVE OBLIGATIONS. :;?!>
But if he was found liable, he might, if he chose, instead of
paying the damages, hand over the slave to the plaintiff. This
was called making a noxal surrender. (Gaius, 4, 75; Dig. 47.
2. 62. See Girard, Manuel, 5th ed. pp. 94, 469, 682.)
Examples of facultative obligations.
Examples of facultative obligations are to be found in the codes.
One illustration is when an immoveable, upon which a hypothec
has been created, perishes or deteriorates by a fortuitous event in
such a way as to render the security doubtful. Here the debtor
must pay the debt although it is not due, but he can liberate
himself if he offers a sufficient hypothec upon another immoveable.
(C. C. E. 562/686; C. C. F. 2131; Planiol, 2, n. 713.) And
the obligation of the third-party holder — tiers detent eur — who is
sued by the hypothecary creditor, is likewise facultative.
He must give up the immoveable unless he prefers to pay the
debt. (C. C. E. 574/697; C. C. F. 2168.)
Another illustration can be taken from the commercial law:
The drawers and the endorsers of a bill of exchange engage jointly
and severally that it shall be accepted and paid at maturity. But
if the person upon whom the bill is drawn refuses to accept it, the
holder can get the bill protested for non-acceptance. The effect of
this is that the drawer and the endorsers become bound to find
security for the bill at maturity. But they may, if they prefer it,
pay the amount of the bill and expenses at once. (Co mm. C. E.
119, 125. See Com. C. F. 120; B.-L. et Barde, Oblig. 2,
n. 1049; Lyon-Caen et Renault, Manuel de Droit Commercial,
11th ed. n. 628.) Facultative obligations are not often created
by contract, but they are not infrequently created by wills. A
testator may, for example, leave a house to a legatee, but say that
if the heir prefers to pay to the legatee a certain sum of money
he shall not need to deliver the house.
Practical consequences of the distinction between facultative
and alternative obligations.
(1) In the alternative obligation, if one of the two things
promised is an immoveable and the other is a moveable, we cannot
say whether the obligation will be moveable or immoveable until
the choice is made.
But when the obligation is facultative, its character as moveable
or immoveable is clear from the first. If the thing promised — the
380 THE LAW OF OBLIGATIONS.
thing- in obligation* — is an immoveable, the obligation will be
an immoveable one without any regard to the quality of the thing
which is in facilitate solutionis.
(2) In the facultative obligation, if the thing in obligatione
perishes without the fault of the debtor, and before he is in default,
the obligation is extinguished, and the debtor is liberated, for he
has only promised one thing, and, by no fault of his, it has become
impossible to perform it. Whereas, as we have seen, if the
obligation had been an alternative one, and one of the things had
perished, the debtor would have remained bound to deliver the
other.
(3) If the thing promised in the facultative obligation could
not be the object of an obligation because it was unlawful or
impossible, the obligation is null ab initio. It is immaterial that
the prestation which was in facilitate solutionis was lawful and
possible. This was only a means by which the debtor oould
liberate himself from the other prestation, and ho does not, in this
case, need any such means of liberation.
(4) In an action by the creditor for fulfilment of the obligation,
he must sue for the single thing which is due, without mentioning
the thing by means of which the debtor can liberate himself, and
the defendant can only be condemned to pay the thing which is
due. But the debtor can liberate himself either before or after
judgment by offering the thing which is in facilitate solutionis.
(Douai, 21 mars 1891, D. 92. 2. 549.) In an alternative obli-
gation, when the choice is with the debtor, the creditor is bound to
sue for either of the two things alternatively, for otherwise he
would be exercising the choice which belongs to the debtor. (On
these distinctions generally, see Larombiere, art. 1196, n. 3;
Laurent, 17, n. 226; Aubry et Rau, 5th ed. 4, p. 72; B.-L. et
Barde, Oblig. 2, n. 1051.)
OBLIGATIONS WITH A PENAL CLAUSE. 381
CHAPTER XXI.
OBLIGATIONS WITH A PENAL CLAUSE.
It is very common for the parties to a contract to agree that, if
the contract is not fulfilled, or is not fulfilled within a certain time,
the debtor shall pay a certain determinate amount by way of
penalty .
This is called a penal clause, and the obligation to pay the
penalty is spoken of in the Egyptian Code as the penal obligation.
(0. C. E. 98/152.) Sometimes a testator or a donor inserts a
penal clause in the will or the gift in order to compel the heirs or
the donee to carry out some purpose which he has in mind. (See
Amiens, 26 fevr. 1896, S. 97. 2. 130.)
And, besides these cases, the non-performance of an obligation
casts upon the debtor the legal duty of performing other obliga-
tions, such as to pay the damages for its breach, or, in some cases,
to allow the creditor by the authority of the court to execute at the
expense of the party who has broken his contract that which he
failed to execute himself, or, when his obligation was a negative
one, to undo something which he did contrary to his agreement.
(Supra, p. 220.) The Egyptian codes regard these obligations
prescribed by law as analogous to the penalty which the parties
may have fixed by contract. It calls them all penal obligations.
(C. C. E. 98/152.) And there is, in fact, this similarity that in
all these cases the creditor has a choice between suing for per-
formance of the original obligation, if its performance is still
possible, or, instead of doing so, of enforcing the other obligation .
And in all these cases, also, the debtor may escape the payment
of the penal obligation if he performs the principal obligation
before he is in default, unless the penalty was provided for mere
delay- The Mixed Code is clearer upon this point than the Native
Code, but no doubt both intend to preserve the French law.
(C. C. E. 98/152; C. C. F. 1230 The means by which con-
tracts may be enforced apart from special stipulation of the parly
on the subject have been explained earlier, and we are here con-
382 THE LAW OF OBLIGATIONS.
cerned solely with the case in which the parties to a contract have
agreed upon a clause of penalty to ensure its execution. The
French Code deals separately with this kind of penal obligation
under the head of Obligations avec Clauses Penales.
Definition.
The French Code says: La clause penale est celle par laquelle
une personne, pour assurer Vexecution dune convention, s 'engage
a quelque chose en cas d'inexecution. (C. C. F. 1226.) The
Code of Quebec with greater precision says: A penal clause is
a secondary obligation by which a person, to assure the perform-
ance of the primary obligation, 'binds himself to a "penalty in case
of its inexecution. (C.C. Q. 1131.)
Where should this subject be placed?
The French Code treats of obligations with a clause of penalty
as one of the kinds of obligations which are affected by sonne
modality, such as conditional obligations, alternative obligations,
and the like. The modality here is that the parties to the contract
have fixed what the damages for its breach are to be, instead of
leaving this to be determined by the court. Most of the French
commentators follow the arrangement of the Civil Code. It is
of course quite correct to say that an obligation w T ith a clause of
penalty is an obligation subject to a certain modality.
But the clause of penalty is so closely connected with the sub-
ject of damages, and the ways in which they are to be determined,
that many writers treat of obligations with a clause of penalty
under the head of damages. (This is done by MM. Aubry et
Eau, 5th ed. 4, p. 187; by M. Planiol, 2, n. 253; and by MM.
Colin et Capitant, 2, p. 23.)
No form prescribed for clause of penalty.
There are no sacramental words prescribed for the creation of
a clause of penalty . The court can infer from the terms of a deed
taken as a whole that the intention was to create a penalty. (See
Paris, 6 dec. 1877, D. 78. 2. 81; Req. 21 juill. 1885, D. 86.
1. 326; Trib. Comm. Caire, 1 fevr. 1913, Gaz. Trib. 3, n. 160.)
Nor is it necessary that the word " penalty " should be used. In
a Quebec case, where a deed said that the vendor of a business
should not carry on a similar business within a certain radius
a moins de payer comme dommages la somme de . . . it was
OBLIGATIONS WITH A PENAL CLAUSE. :j83
held that this was a penal clause, and, therefore, that it was not
necessary for the plaintiff to prove actual loss if there had been
a violation of the contract. (Girardv. Rousseau, 1909, K. J. Q.
36 S. C. 79. Cf. Nancy, 21 oct. 1895, D. 96. 2. 180.)
Purpose of clauses of penalty.
(1) The great advantage and convenience of a clause of penalty
is to prevent litigation by making it unnecessary to ascertain
the amount of the damages. The parties agree once for all that
if the contract is broken the damages shall be taken to be the
amount of the penalty.
(2) In the cases of promises and stipulations for a third party
when the stipulator has no interest and promised nothing, the
clause of penalty serves to give an action to a person, namely, the
stipulator, who without it would not have one. But in this case,
the clause of penalty is really the principal obligation. (Planiol,
2, n. 254; supra, p. 54.)
Clause of penalty strictly construed.
According to general principles of interpretation, clauses of
penalty will be strictly construed by the courts. It must appear
clearly that the event has occurred for which the penalty was
provided. In a French case, under a contract of employment, the
employee was to be entitled to payment of a year's salary, if,
after three years' service, he was dismissed pour un motif quel-
conque. The employment came to an end after more than three
years owing to the bankruptcy of the employer. It was held that
the employee was not entitled to the year's salary. The intention
of the parties was to give him a claim to a year's salary as a
penalty if he should be dismissed in an arbitrary or capricious
way by his employer, but not when the loss of employment was
due to such a cause as the employer's bankruptcy. (Req. 2 janv.
1907, D. 1907. 1. 88.)
Clause of penalty cannot defeat legal restrictions on rate of
interest.
When the debt is a money-debt the penalty stipulated for delay
in payment will be reduced to the maximum rate of legal interest
if it exceeds that amount, otherwise the prohibitions as to usury
would be easily evaded. (C. A. Alex. 28 janv. 1914, B. L. J.
XXVI, 184.)
384 THE LAW OF OBLIGATIONS.
Position in the Egyptian Code.
The Egyptian codes contain only two articles on this subject,
and they are not placed together. One of them is among the
articles dealing with damages.
When the amount of the indemnity to be paid in case of
non-performance is determined by the contract or by law, the
judge may not award a smaller or a larger sum. (C. C. E.
123/181.) In this article the clause of penalty is regarded quite
correctly as a conventional liquidation of the damages. The
parties agree beforehand that if the contract is broken the damages
shall bo taken to be the amount which is stated.
The other article is interpolated rather strangely between two
articles dealing with alternative obligations.
In the case of a determinate obligation laid down by the law
or agreed upon as a penalty for the non-performance of another
obligation, the creditor, when the debtor is in default, has the
option of performance of the principal obligation or of the penal
obligation. (C. C. E. 98/152.)
The Egyptian legislator appears to have regarded the obligation
with a penal clause as a kind of alternative obligation. But it is
not correct to regard the obligation with a penal clause as an
alternative obligation. The debtor has not the choice between
performing his contract or paying the penalty. He can be made
to perform his contract if it is possible, unless it is a contract of
the kind which is not specifically enforced. And it is not an
alternative obligation in which the creditor has the option, because
he cannot sue for the penalty unless there has been a failure of
performance of the principal obligation. The penalty, as Planiol
well expresses it, is only a pis aller which presupposes a definite
non -performance of the principal obligation. (2, n. 259.)
An alternative obligation has two objects of which the party
who has the choice can select one. The objects are on the same
footing, they are both principal prestations, and if one of them
becomes impossible without the fault of the debtor, the other one
is still due. But in an obligation with a clause of penalty thene
is only one object: the obligation to pay the penalty is merely
accessory. And if the performance of the principal obligation
becomes impossible without the fault of the debtor, the accessory
obligation to pay the penalty falls to the ground. If I undertake
to deliver to you my black horse or my brown horse in your
option, the accidental death of my black horse leaves me still.
OBLIGATIONS WITH A PENAL CLAUSE. 385
bound to deliver the other. But if I undertake to deliver to you
my horse or to pay L. E. 100, the death of my horse without my
fault, and before I am in default to deliver it, will free me from
all liability. I am not bound to pay the penalty. (Aubry eit Rau,
5th ed 4, p. 190. No doubt the Egyptian legislator intends
the same, for, otherwise, he would not speak of the penal obliga-
tion as being attached to a ''principal obligation." (C. C. E.
98/152.) In the alternative obligation there is no principal
obligation to which another is accessory. Both obligations are
principal.
Obligation with penal clause distinguished from
facultative obligation.
Nor must the obligation with a penal clause be confused with
the facultative obligation. It resembles that form of obligation
in this respect that it has only one object, and that if this becomes
impossible, the obligation is extinguished. But in the faculta-
tive obligation the debtor is free to choose. He has reserved to
himself the right of substituting something in place of the pres-
tation promised. But when the debtor has bound himself under
a clause of penalty he cannot, as has already been stated, choose
to pay the penalty rather than to perform his contract. He must
perform his contract if it is possible. (Colmet de Santerre, V,
n. 162, Us 11; B.-L. et Barde, 2, n. 1361.)
Obligation with penal clause distinguished from
conditional obligation.
There is one kind of conditional obligation which may easily
be confounded with an obligation with a clause of penalty. This
is when the debtor promises to pay a sum of money in the event
of his not making- a certain prestation. By way of illustration,
I promise to pay you L. E. 100 if I sell my house to anybody
except you. Observe, I do not promise to sell jo\x my house, and
you have, to begin with, no right of action at all. It is only in
the event of my selling the house to another that you acquire a
right of action, and then it is only the right to claim the hundred
pounds. I am quite free to sell my house to another if I sacrifice
the hundred pounds.
Contrast with this another case. I promise to do a certain work
for you. subject to a penalty of L. E. 100 if I do not fulfil nry
contract ,
w.— vol. ii. 25 .
386 THE LAW OP OBLIGATIONS.
Here you acquire a vighi from the date of the contract. You
can sue me to make .me fulfil my contract, and I cannot say: "I
will not do what I have promised, but I will pay the hundred
pounds instead," unless, indeed, the contract is one of those the
specific performance of which cannot be enforced. (Colmet de
Santerre, I.e.; Laurent, 17, n. 431; B.-L. et Barde, Oblig. 2,
n. 1362; Cass. 14 juill. 1869, S. 69. 1. 411, D. 69. 1. 346,
.Journal du Palais, 69, p. 1072.)
Accessory character of the penal clause.
The French Code brings out clearly the. fact that the penal
clause is a. secondary or accessory obligation. It is "to ensure
the execution of a contract." (C. C. F. 1226.) This way of ex-
pressing it is perhaps open to criticism. In the Roman law the
penal clause was frequently attached to obligations which were
noi enforceable by the civil law. (Girard, Manuel, 5th ed. p.
661.) In such a case, it was quite correct to say that the penal
clause served to ensure the execution. But in the modern law the
principal obligation is obligatory in itself, and its execution can
be enforced. The penal clause is not to make it enforceable,
except in the sense that it gives an additional motive to the debtor
to perform his contract.
The principles which apply to obligations with a penal clause
are almost all of them consequences which result from its accessory
character.
(1) Must be valid principal obligation.
In the first place, there must be a valid principal obligation,
the non-performance of which would render the debtor liable to
pay damages. The penalty which the parties have agreed upon
is to come in place of these damages. If the principal obligation
is null, the penal clause is likewise null. If the principal obliga-
tion is rescinded, the penal clause cannot be enforced, for an
accessory obligation cannot exist without a principal obligation
to support it. If it were not so, it would be easy to evade the laws
which prohibit certain contracts. For instance, a promise of
marriage is not enforceable, and if a penalty is stipulated in the
event of failure to carry out the promise, the penalty cannot be
recovered by an action. (Aubry et Rau, 5th cd. 4, p. 188;
Colin et Capitant, 2, p. 23; Dijon, 27 mai 1892, D. 93. 2. 183;
D. N. C. C. art. 1227, nos. 1 seq.)
OBLIGATIONS WITH A PENAL CLAUSE. 387
The French Code has an express article: La nullite de V obli-
gation principale entraine celle de la clause penale. ('. C. F.
1227.)
To the rule that unless there is a valid principal obligation
there cannot be a valid clause of penalty there is no exception.
But there are certain cases which are so considered by many
authorities. Two of these apparent exceptions belong to the law
of stipulations pour autrui. If I promise that A shall perform a
certain prestation in your favour, you have no action either against
me or A, because A was no party to the contract, and I promise
nothing on my own account.
But if I promise that A shall do something for you, or, if not,
that I shall pay you a penalty, you will have an action against
me for the penalty if A fails to make the performance.
Conversely, if I stipulate that you shall pay something to A,
no right of action is created either in favour of- me or of A. But
if I stipulate that you shall pay something to A, or, in default,
that you shall pay me a penalty, I shall have a good claim for the
penalty in the event of your non-performance. (C. C. F. 1119,
and supra, p. 53.) In both these cases, there is apparently a
valid penal clause attached to an obligation which is null. There
seems to be an exception to the broad rule stated in the French
Code, la nullite de V obligation principale entraine celle de l<i clause
penale. (C. C. F. 1227.) Hiovv are we to explain these ap-
parent exceptions to the rule? According to the general view
they are really exceptions. If I promise that A shall do some-
thing, the reason why you have no action against me is simply
that I have promised nothing. But if I have promised to pay
a penalty I am in the same position as if I had guaranteed that
A should perform the prestation, and I make a promise in my
own name to pay the penalty if he fails to do so. And, in the
other case, if I stipulate from you that you shall do something in
favour of A, the reason why I have no action is because I have jno
pecuniary interest. This defect is cured, however, if you promise
to pay me a penalty if you do not make the performance to A.
As MM. Aubry et Rau express it: Where the inefficwy of
the principal obligation is due to a want of interest on the part
of the stipndator the addition of a penal clause 'is made with the
precise object of supplying this interest. (5th ed. 4, p. 188.)
This explanation is accepted in the Code of Quebec which provides
.the nullity of the primary obligation for any other cause than
'25 '2
388 THE LA.W OF OBLIGATIONS.
want of interest, carries with it that of the penal clause.
(C. C. Q. 1132.)
This way of regarding the matter is, however, not satisfactory.
If I promise that A shall do something in your favour, or that I .
will pay you L. E. 100, there is from the first only one obligation,
viz., the obligation on my part to pay L. E. 100 in a certain
event. It is a conditional debt but not an accessory one. It is
not an example of the penal obligation in the sense under dis-
cussion. You, the creditor, never have the option of claiming
performance from A. My promise to pay the L. £. 100 is a
principal conditional obligation. (Larombiere, art. 1227, n. 6;
Baudry-Lacantinerie et Barde, Oblig. 2, n. 1359.) Another appa-
rent exception to the rule that unless there is a valid principal
obligation there can be no valid penal obligation, is in the case of'
the sale by a vendor of a thing which he knew not to be his
property. In this case if the purchaser believed that the 'vendor
was the owner of the thing he can claim compensation, although
the sale is null. (C. C. E. 265/334; C. C. F. 1599.) And,
no doubt, in such a case, if a clause of penalty had been inserted,
the purchaser might claim the penalty instead of the damages.
But here there is a simple explanation. The sale is not void but
voidable; it may be validated by the real owner of the thing.
(C. C. E. 264/333; Planiol, 2, n. 1428; B.-L. et Saignat, Vente,
n. 118.)
(2) The nullity of the penal clause does not involve the
nullity of th3 principal obligation.
The French Code says so in so many words, and this does not
need much explanation. (C. C. F. 1227.)
The principal obligation can subsist without the accessory, and
if the penal clause is null, the creditor can claim damages for the
non-performance of the principal obligation. In a French caa
a mother, as tutrix to her daughter, made a contract binding the
daughter by a clause of penalty to carry out a theatrical engage-
ment as an actress. It was held that this was in excess of a tutor's,
powers, at any rate, when the penalty was, as in this case, out of
proportion to the remuneration of the daughter. The clause of
penalty was null, but the principal obligation that the daughter
should carry out the engagement was valid, and she might be
compelled to pay damages for its non-performance. (Paris, 27'
juin 1889, S. 89. 2. 159, D. 90. 2. 206.
OBLIGATIONS WITH A PENAL CLAUSE. !}89
(3) Creditor may claim performance of principal obligation.
The creditor is not obliged to sue for the penalty when the
debtor is in default. He can, if he prefer it, sue for the execul ion
of the principal obligation. (C. C. E. 98/152; C. C. F. 1228.)
(4) The penalty comes in place of the damages.
The French Code says expressly: The penal clause is the
compensation for the damages which the creditor suffers from the
non-performance of the principal obligation.
He cannot claim at the same time the principal and the penalty,
unless the penalty has been stipulated for simple delay. (C. C. F.
1229.) The penalty comes in place of the damages; it is a sum
which the creditor agrees to regard as compensation for the loss
in the event of non-performance. Consequently, he cannot claim
both the performance and the penalty, or he would be getting paid
twice over. There cannot be, as the French writers express it, a
cumulation of the principal and the penalty. The presumption
at any rate is against the parties having this intention. But there
is no rule of public order which prevents the parties from agreeing
that a penalty shall be paid in a certain event, although the con-
tract still stands. It may be agreed, for instance, under the
terms of a contract of compromise, that if one of the parties
•disturbs the other in the enjoyment of rights given to him by the
eon tract, he shall be liable to pay a penalty. And such an agree-
ment can be enforced, although the contract of compromise still
remains standing. In such a case it is said that under the contract
the penalty was to be paid rato manente pacto. But such an
intention must clearly appear. The presumption is that there
is to be no cumulation. (Colmet de Santerre, 5, n. 166, bis, 111.)
Penalty for delay.
It is very common in contracts to find a penalty stipulated for
delay in the performance. In a building contract, for example,
it may be stipulated that the work shall be finished by a certain
date, or if not, that a penalty shall be paid at the rate of so
much a day. In such a case, if the work is not finished within
the stipulated time the creditor can claim the penalty for the
delay, and also performance of the principal obligation. This
is not really an exception to the rule against cumulation of per-
formance and penalty. The obligation was not only to do the
work but to do it within a certain time, and the penalty stands
390 THE LAW OF OBLIGATIONS.
in place of the damages caused to the creditor by the delay itself.
It represents moratory and not compensatory damages. It is due
although no loss is proved. 'Trib. Comm. Cairo, 24 inai 1913,
Gaz. Tn'l). 3, a. 328, p. 107.
When a delay for performance has been fixed by a judgment
and, after all, the obligation is not performed, the creditor can
claim the penalty for the delay and can also claim the damages
caused to him by the non-performance. But this will be so only
if the delay has caused him prejudice distinct from that caused by
the inexecution. If he had known at the date fixed by the contract
itself for performance that the obligation would not be performed,
he would have been entitled to the compensatory damages. By
having to wait until after the date fixed by the court to see if the
obligation would still be performed, he may have suffered mora-
tory damages, and in lieu of these he can claim the penalty.
(Cass. 11 mai 1898, D. 99. 1. 310.)
It may be that a penalty is stipulated for non-performance
and another for delay, in which case, if there is non-performanoe
after delay the creditor can claim two penalties. (Req. 29 janv.
1874, S. 74. 1. 245, D. 74. 1. 387.) Or it may be that in
the contract a penalty is fixed for delay only, and no penalty is
stated for failure to perform the obligation. In this case the
court is free to fix damages for the loss which has been caused
by the non-performance. The penalty fixed for delay affords
here no criterium of the damages. D'apres une jurisprudence
constante, la clause penal e premie pour la simple retard devient
sans objet si V obligation n'a pas ete executee, et il appartient en
ce cas au juge aVarbitrer les dommages-interets qui sont dus pour
V inexecution. (Trib. Somm. Caire, 11 avr. 1914, Gaz. Trib.
4, n. 308.) For example, A undertakes to pay a penalty if he
does not finish the building of a mill by a certain day. The mill
is finished within the time stipulated, but six weeks later some
of the masonry is found to be defective, and the mill cannot be
worked till this has been reconstructed. The court can fix damages
for this unsatisfactory work. (Cass. 13 juill. 1899, D. 99. 1.
524, S. 99. 1. 464.)
Doubt as to whether penalty is for delay or for
non-performance.
Where the contract merely states that it is to be performed
subject to the payment of a penalty, there may be a doubt whether
OBLIGATIONS WITH A PENAL CLAUSE. 391
this means a penalty for non-performance or a penalty for delay.
This is a question of interpretation of the particular contract.
The amount of the penalty will as a general rule be a sufficient
guide. If its amount appears to be equal or superior to the
damages which the creditor would suffer by non-performance,
there will be a strong presumption that the penalty represents the
compensatory damages. If the penalty is of small amount com-
pared with the value of the performance of the obligation to the
creditor, the presumption is that it represents the moratory
damages. (Colmet de Santerre, 5, n. 166 bis II.; Aubry ct Ran,
5th ed. 4, p. 189, note 6.)
It is to avoid such difficulties that when the penalty is intended
to be for delay it is generally stipulated that it shall be at the rate
of so much a day or so much a month.
Penalty not due unless debtor is in fault or in default.
From the principle that the penalty is essentially a sum fixed
by the parties which is to come in place of the damages caused to
the creditor by non-performance, it follows that the creditor will
not be allowed to claim the penalty unless the conditions are
present which would have entitled him to claim damages. If the
non -performance or the delay is due to a fortuitous event, the
debtor will not be liable to pay the penalty, because he would
not have been liable to pay damages; and this is so a fortiori if
the non-performance is caused by the act of the creditor himself.
(Baudry-Lacantinerie et Barde, Obligations, 2, n. 1372; Aubry
et Rau, 5th ed. 4, p. 190; Planiol, 2, n. 255; Req. 3 dec. 1890,
S. 94. 1. 315.)
And, seeing that the rule is that damages are not recoverable
so long as the debtor is not in default, the same principle applies
also to the penalty, and this is so whether or not a term is fixed
for the performance. The French Code has an express article
upon this point: Soit que V obligation primitive contienne, soit
quelle ne contienne pas un terme dans lequel ette doivc etre
accomplie, la peine n'est encourue que lorsque celui qui s'est oblige
soit a livrer, soit a prendre, soit a faire, est en demeure. (C. C. F.
1230.) The Egyptian law is undoubtedly the same although
there is no corresponding article, as the principle is involved in
the nature of a penalty. (See Trib. Coram . Caire, 24 mai 1913,
Gaz. Trib. 3, n. 328, p. 157.)
The obligation de prendre which is mentioned in the French
article means the obligation to take delivery. The article does
392 THE LAW OF OBLIGATIONS.
not speak of the obligation not to do, because, as we have seen, if
the debtor has done that which he undertook not to do, there is no
necessity to put him in default.
And it is also clear that in other eases where damages are due
without the necessity of putting the debtor in default, the penalty
may likewise be claimed without putting him in default. And
this will be so when the debtor has bound himself to deliver or to
do something which could only be delivered or clone within a
certain time, and he has allowed this time to expire. (C. C. F.
1146; Baudry-Lacantinerie et Barde, Oblig. 2, n. 1370; Bourges,
14 nov. 1900, S. 1900. 2. 8. See supra, p. 211.)
The principle that, in the ordinary case, the penalty is not due
until the debtor has been put in default, has been applied in many
French cases of contracts to erect public works where penalties
have been stipulated for delay in their completion. (See Conseil
D'Etat, 18 mai 1888, D. 89.^3. 80; Conseil d'Etat, 8 aout 1896,
D. 98. 3. 10.)
Can the court fix a delai de grace?
When the debtor has been put in default the creditor has
acquired a right to claim the penalty. But the court has, no doubt,
power in the judgment to allow the debtor a moderate extension
of- time in which to jDerform his obligation, and, thereby, escape
paying the penalty. This j^ower will, however, be exercised only
in exceptional circumstances, and when the debtor's want of per-
formance is due to innocent misfortune. After the delay fixed
* by the court, if there has been no performance, the creditor can
claim the penalty. (Baudry-Lacantinerie et Barde, Oblig. 2,
ii. 1371; C. C. E. 168/231; C. C. E. 333 415: C. C. F. 1244.
See supra, I, p. 365; and infra, p. 452.)
Can damages be claimed in excess of the penalty stipulated
or can the penalty be reduced if excessive?
The parties are taken to have lixed once for all in the clause of
penalty tin amount to which the creditor shall be entitled as com-
pensation for the n on -performance. And the court has no power
to vary this amount upon evidence thai the loss actually sustained
was greater or less than the amount of the penalty. The codes
are explicit upon this point.
When the amount of the indemnity to be paid in case of
non-performance is determined by the contract or by law, the
OBLIGATIONS WITH A PENAL CLAUSE. 393
fudge may not award a smaller or a larger sum. (C. C. E.
L23/181; C. C. F. 1152. See Paris, 13 dec. 1000, D. 1903. 2.
253.
The old French law was different upon this point. (Colmet
de Santerre, 5, n. 165 bis.)
According to it and to the Roman law upon which it was based,
although the creditor had received the penalty it was still com-
petent for him to sue for damages which he had suffered in excess
of the amount of the penalty. (Dig. 17. 2. 41. 42; Girard,
Manuel 5th ed. p. 663.)
As explained by Pothier, the penal obligation could not lessen
or weaken the principal obligation. Consequently, if the penalty
did not make good to the creditor the loss which he had sustained
by the breach of the principal obligation, he was entitled to claim
the full damages and to take the penalty merely as a payment
on account. (Oblig. nos. 342 and 345.)
It is true that Pothier recommended the courts not to admit
too easily the claim of the creditor that he had suffered damages
in excess of the penalty. But, in his view, the courts had power,
according to circumstances, not only to give damages in excess
of the penalty, but also to diminish the amount of the penalty
if it appeared to be in excess of the damages suffered. The
intention of the codes is to reject both of these solutions of the old
law as being contrary to the intention of the parties. (C. C. E.
123/181; C. C. F. 1152.)
What the parties had in view was to avoid the necessity of
litigation. The damages were to be the sum stated as a penalty.
This intention would be defeated if the creditor could impose
upon the courts the duty of ascertaining the actual amount of
damages by pleading that the penalty was inadequate, or if the
debtor could do so by pleading that it was excessive. It is out of
respect for the true intention of the parties that the codes have
rejected the doctrine of Pothier, and have laid down the principle
that the courts are not entitled to award a smaller or a larger sum
than that fixed by the parties. (Colmet de Santerre, 5, n. 165
bis; B.-L. et Barde, 1, n. 490.)
So, for example, in a contract of lease of services it may be
stipulated that if the employee is dismissed before the end of the
period of the lease, he shall be entitled to the whole of the emolu-
ments which he would have earned if the lease of services had not
been broken. And this penal clause cannot be modified by the
court. (C. A. Alex. 6 mai 1913, Gaz. Trib. 3,'n. 387.)
394 THE LAW OF OBLIGATIONS.
Cases where amount of penalty may be varied.
Notwithstanding the unqualified terms of the articles in the
French and the Egyptian codes, there are three cases in which it
is well settled that the amount of the penalty can be altered by
the court. And in France, another exception is created by the
loi du 27 dec. 1890, amending C. C. F. 1780, which will be
noted later. {Infra, p. 397.)
(1) When the principal obligation is to pay a sum of money,
and a penalty is provided; if the penally is of greater amount than
the maximum legal interest, which is in Egypt nine per cent.,
the excess cannot be recovered. (Aubry et B,au, 5th ed. 4, p. 191 ;
C. C. E. 125/185. See supra, p. 244.) For otherwise, them
would be an easy way of evading the provision of the law which
fixes upon grounds of public policy a maximum rate of interest.
(2) When the non-performance has been caused by the wilful
act or dol of the debtor. It is against public policy that a man.
shall be allowed to exonerate himself beforehand either wholly
or partially from the consequences of his own wilful breach of
the contract. This wilful breach is called in the French law dol
or fraude, and in the English version of the Egyptian Code it
is called "fraud." (C .C. F. 1150, 1151; C. C. E. 122/180.)
Some writers prefer to confine the use of the word dol to denote
the kind of fraud which is committed in order to induce another
to contract, and to apply the word fraude only to the wrongful
infringement of another's vested rights. (Planiol, 2, n. 1069.)
If by stipulating a penalty, perhaps of small amount, the debtor
could escape all liability except for the penalty, although he had
wilfully broken his contract, the rule of public order would be of
little value. The law is clear, therefore, that a creditor who
proves that the breach of contract was due to the "fraud " of the
debtor, can claim damages Over and above the penalty stipulated,
up to the amount of his actual loss. (Aubry et Rau, 5th ed. 4,
p. 190; Baudry-Lacantinerie et Barde, Oblig. 1, n. 492, 2, n.
1373.)
And it is also a settled rule of the French law, which is followed
in Egypt, that there is a degree of negligence so gross that it is
assimilated to fraud. Culpa lata doJo cequipvpaiur . (Aubry et
B,au, 5th ed. 4, p. 190, note 7 bis; S'ourdat, Responsabilite, 1, n.
662 septies; Cass. 15 mars 1876, 8. 76. 1. 449, Journal du'
Palais, 76, p. 833, and note by M. Labbe.)
This principle has frequently been applied in France in cases
OBLIGATIONS WITH A PENAL CLAUSE. 895
of contracts for the carriage of goods at sea in which a clause was
inserted limiting- to a certain amount the damages caused by the
loss of a passenger's luggage. It is held that such a limitation
does not exclude liability for fauts lourde. (See Cass. 13 aout
1884, D. 85. 1. 78, and the note by M. Bourcart to Trib. de
paix de Saint Vivien, 15 mai 1907, S. 1908. 2. 145; Cass. 2 avril
1898, D. 91. 1. 34. Cf. Paris, 24 mars 1877, D. 77. 2. 181;
Josserand, Les Transports, n. 908. and, in Egypt. C. A. 10 Feb.
1901, O. B. XI, n. 92.)
(3) When there has been a partial execution of the obligation
the courts are entitled to reduce the penalty. This is expressly
so stated by the French Code: La peine peut etre modifiee par
le juge lorsque V obligation principals a ete exeeutee en partie.
(C. C. F. 1231.) There is no corresponding article in the Egyp-
tian Code, but its effect is implied in the article which speaks of
the indemnity to be paid in case of non-performance. When
there has been a partial performance one cannot say that there
is non-performance.
The principle is that the penalty which the parties agreed upon
"was for total non-performance. They did not decide beforehand
what should be the penalty in the event of partial performance.
This is, however, a question of interpretation. It is quite com-
petent for the parties to agree that even if there is a part-per-
formance the whole penalty shall be due. Or it is competent for
them to fix a separate penalty as that which shall be paid in the
event of part-performance. (Aubry et Rau, 5th ed. 4, p. 191,
note 8 Us; Cass. 4 juin 1860, S. 60. 1. 653.)
Such agreements are unusual. In most cases the parties in
fixing the penalty contemplate only the event of total non-per-
formance. Here, there is no doubt the court may modify the
penalty where there has been a part-performance. (C. A. 4 dec.
1912, O. B. XIV, n. 18; C. A. Alex. 17 avril 1912, B. L. J.
XXIV, 282.)
But it is not in every case where there has been part -perform-
ance that the penalty is to be reduced.
(1) It must appear that the creditor accepted the part-per-
formance, for the debtor cannot insist on performing his obliga-
tion in part, (C. C. E. 168/231; C. C. F. 1244; Baudry-Lacan-
tinerie et Barcle, Oblig. 2, n. 1350.)
(2) The part-performance must be to the benefit of the creditor.
The Civil Code of Quebec states the French law upon this
396 THE LAW OF OBLIGATIONS.
point more precisely than the French Code does: The amoivnt
of penalty cannot be reduced by the court. But if the obligation
have been performed in part to the benefit of the creditor, and
the time fbxed for its complete performance be not material, the
penalty may be reduced; unless there is a special agreement to
the contrary. (C. C. Q. 1135.)
The part-performance must have been to the benefit of the
creditor, or there will be no ground for any reduction. If the
contract were to cultivate so many feddans of land, at so much a
feddan, or to excavate foundations at so much a yard, subject to
payment of a penalty if the work were not finished at a certain
date, it is probable that a part-performance within the time
specified will have been for the advantage of the creditor, though,
even here, this is not necessarily so, because it may be that the
work done is useless to him, as it was essential to his purpose
that there should be complete performance within the specified
time. (See Cass. 23 mai 1898, D. 98. 1. 272.)
In a Quebec case a builder contracted to build two houses to
be completed by a fixed date, or to pay a penalty at the rate of so
much a day for delay thereafter. Both houses were commenced
and neither of them were finished by the date specified. It was
held that here there was no ground for reducing damages because
the work had been partly done. The unfinished building was of
no benefit to the creditor, unless he could have a useful occupation
of the part completed, which in this case was not possible.
(McDonald v. Hutchins, 1903, K. J. Q. 12 K. B. 499.)
There are, in fact, many cases in which a part-performance
will be of no advantage to the creditor. For instance, if a painter
leaves a picture half finished, the part-performance will, probably,
be of no advantage to his client. And when the penalty is acces-
sory tc an obligation not to do something, it would appear that
there is no room for the principle of reduction on the ground of a
beneficial part-performance. So, where a trader agreed to sell
certain articles made by a particular manufacturer, and bound
himself not to offer similar goods by any other maker, it was
held he must pay the penalty in full as he had broken his contract,
although he had sold some of the goods of the manufacturer with
whom the exclusive arrangement had been made. (Nancy, 21
oct. 1895, D. 96. 2. 180.)
Breach of an obligation not to do is in fact a case of total
non-performance. Even in the cases in which there has been
a part-performance to the benefit of the creditor which entitles
OBLIGATIONS WITH A PENAL CLAUSE. 397
the court to reduce the penalty, the penal clause is not to be Left
out of consideration.
(3) In estimating the value to the creditor of the part-perfor-
mance, the court should take as a guide the amount of the penaltj .
that is the value which the parties set upon the total performance,
and the judgment should be for such a proportion of the penalty as
corresponds to the work which has not been done. For example,
if the debtor was bound to dig a canal one hundred yards long,,
subject to a penalty of L. E. 100, and he has dug the canal for
fifty yards, he should be condemned to pay a penalty of L. E. 50,
seeing that half the work has been done to the benefit of the
creditor, although the court might be of opinion that according
to the ordinary price for such work, a yard would be worth more
than one pound or less than one pound, as the case might be.
(Colmet de Santerre, 5, n. 168 bis, 11; Demolombe, 26, n. 671;
B.-L. et Barde, 2, n. 1351.)
(4) The French Code, as amended by the loi clu 27 dec. 1890,
creates another exception to the rule that the court cannot vary
the penalty fixed by the parties. (C. C. F. 1780.) That law
provides that in a contract of lease of services the parties cannot
renounce beforehand their right to claim damages for resiliation
of the contract. This provision of law based on considerations
of public policy, cannot be evaded by fixing a nominal penalty in
the event of the broach. (B.-L et Wahl, Louage, 3rd ed. 2, n.
3087; Trib. Comm. Seine, 9 sept. 1892, D. 93. 2. 545.) But the
Egyptian codes have no article forbidding the renunciation of
such claims in advance.
Can the creditor claim the penalty if the debtor prove
that no damages have been suffered?
According to the French doctrine and jurisprudence, the credit <>;
is entitled to claim the penalty without proof that any actual
damage has been caused to him by the non-performance, and it
would be no defence on the part of the debtor to prove that no
such damage had been sustained. (Aubry et Rau, 5th ed. 4.
p. 190; Baudry-Lacantinerie et Barde, Oblig. 2, n. 1373; PlanioL
2, n. 255.)
This conclusion seems to follow from the provision of the code
that the court has no power to reduce or increase the penalty which
the parties have fixed for non-performance. (C. C. E. 123/181:
C. C. F. 1152.)
3U8 THE LAW OF OBLIGATIONS.
Ii may appear from the facts proved that the damage sustained
was insignificant, and yet, if the parties have agreed that a largo
penalty should be paid for non-performance, the court is bound
to give judgment for this sum, however disproportionate to the
damage they may consider it to be. (C. A. Alex. 19 mars 1913,
Gaz. Trib. 3, n. 287. J Seeing that this is the law, it is illogical
to contend that if no damages have been suffered no penalty can
be recovered. It is plain that the law does not consider the penalty
as a sum which is to be equivalent, even roughly, to the actual
damage. It is the sum which the parties in their discretion have
agreed shall be taken as the value to the debtor of the non -per-
formance. It may be exorbitant, but the parties have agreed to
it. It may be a bad bargain, but it is a bargain. Unless the
debtor can succeed in getting his obligation set aside on the ground
of a vice of consent such as fraud, or on some other ground for
annulling; contracts, he must pay that which he has agreed to pay.
Xo doubt such a rule leads to harsh results in some cases. In a,
French case, for example, a poor actor was condemned to .pay
3,450 francs as a stipulated penalty for the resiliation of his
contract with a theatre manager, though there was no proof of
damage. (Nimes, 17 mars 1890, D. 91. 2. 52. Cf. Bordeaux,
19 juin 1903, D. 1906. 5. 29.) In a Quebec case a milk dealer
sold his business— ronde de hit — to another, with a covenant that
he would not sell milk to any of the customers transferred under
a penalty of 25 dollars for each customer. It was proved that
the vendor afterwards sold milk to twenty-three of the customers
whom he had ceded to the plaintiff, and he was condemned to pay
twenty-three times 25 dollars, no proof of actual damage being
required. Fortin v. Perms, 1912, R. J. Q. 43 S. C. 313.)
Where no damage is alleged or proved it may appear inequit-
able to allow a penalty to be recovered. On the other hand, the
value of clauses of penalty would be greatly diminished if the
rule "no damages no penalty" were adopted. The very purpose
of the penal clause is to prevent litigation. The parties agree
that, if there is non-performance, a certain sum shall become,
instantly payable. They intend to withdraw from the court the
power to estimate the damages suffered, and this purpose would
be defeated if the debtor who had broken his contract could refuse
to pay the penalty on the plea that the breach had caused no
damage to the creditor. This view may be regarded as settled
in the law of France and of Quebec.
The Egyptian jurisprudence both in the Mixed and in the
OBLIGATIONS WJTII A PENAL CLAUSE. 399
Native Courts has been extremely inconsistent. The latest
decision of the Mixed Court of Appeal adopts the theory just
explained, and there is a recent judgment of the Native Court of
Appeal in Egypt in this sense, though the same court had pro-
nounced a few months earlier a judgment to the opposite effect;
and in its latest judgment the court has returned to its earlier
view of " no damages no penalty/' a theory which has now to be
considered. (C. A. 20 Feb. 1911, O. B. XII, n. 69. Contra,
C. A. 29 nov. 1910, O. B. XII, n. 24; C. A. 10 nov. 1915,
•0. B. XVII, n. 29.)
There is therefore, at present, a conflict between the Mixed
Court of Appeal and the Native Court of Appeal upon this point
which is considered in the following paragraph.
Conflicting opinion " no damages no penalty."
In spite of the considerations stated in the preceding paragraph,
there is a conflicting view upon this matter which is supported by
the following arguments:
(1) 'The penalty must be considered as coming in the place of
the damages suffered. It is an indemnity or compensation. (See
D. Rep. Oblig. n. 1595.) The French Code states expressly that
it is the compensation for the damages which the creditor suffers
from 'the non-performance of the obligation. (C. C. F. 1229.)
If no damages at all have been suffered, how can there be ;ui,\
such thing as compensation or indemnity? It is admitted that
the penalty is not exigible when the non-performance was due
to a fortuitous event, although the codes are altogether silent as
to this. And this conclusion is justified by arguing that the
penalty is by its nature not claimable unless there has been a
wrongful breach of the obligation. May we not with equal force
contend that the notion of a penalty involves the existence of a
loss which is to be made good?
(2) If the creditor has suffered no damage the obligation to
pay the penalty is without a cause.
(3) To award a sum of money to a person who has suffered no
damage is contrary to the general rule: Nul ne pent s'&wichir
sans cause aux depens d'autrui. These arguments have prevailed
with the Mixed Court of Appeal in several cases, but in the
most recent decision of that court they have been rejected. In
one case the rule is thus stated: La clause penale cesse de sortir
effet lorsque Vabsence de dommage pour le creancier resulte elaire-
ment des elements acquis am proces on de faits que le debitew est
400 THE LAW OF OBLIGATIONS.
a meme de prouver. (C. A. Alex. 17 avril 1912, B. L. J. XXIV,
282. Cf. C. A. Alex. 12 avril 1911, B. L. J. XXIII, 254;
C. A. Alex. 12 nov. 1908, B. L. J. XXI, 9; C. A. Alex. 1
mars 1900, B. L. J. XII, 140; C. A. Alex. 14 juin 1900,
B. L. J. XII, 347; C. A. Alex. 28 fevr. 1907, B. L. J. XIX,
139; C. A. Alex. 5 mars 1913, B. L. J. XXV, 206; Trib. Civ.
Alex. 22 fevr. 1913, Gaz. Trib. 3, n. 218; C. A. Alex. 6 jam.
1915, B. L. J. XXVII, 108.) And the latest judgment of the,
Native Court of Appeal is in favour of the view " no damages
no penalty." (C. A. 10 nov. 1915, O. B. XVII, n. 29.)
Even if we adopt this theory, it would seem clear, at any rate,
that the onus of proving no prejudice lies upon the debtor. Ho
has bound himself to pay a penalty for inexecution, and he has
broken his contract. If he wishes to escape his liability he must
show the reason. Upon this point it is submitted that the language
quoted above from the judgment of the Mixed Court of 17 avril
1912 is more correct than that used in another case when the same
court says: il est toujour s necessaire que la partie qui inwque
la clause penale justifie de V existence d'un dommage. (C. A.
Alex. 5 mars 1913, B. L. J. XXV, 206.)
But in a more recent case it was held that la preuve du defaut
de tout dommage incombe a la partie qui pretend se soustraire
an paiement de la clause penale stipulee. (C. A. Alex. 6 janv.
1915, B. L. J. XXVII, 108.)
But it is submitted, for the reasons stated above, that the view
that no penalty is recoverable when the absence of damages is
proved is a view which is erroneous. The Egyptian Code has no
article corresponding to C. C. F. 1229, which says, la clause
pen-ale est la compensation des dommages et inter -Us. And in
the latest case the Mixed Court of Appeal has rejected its former
theory on the subject. Celui qui a stipule line clause penale a son
profit n'est pas tenu, pour y avoir droit, de justifier d'une perte
quelconque : la clause penale fait la hi des parties, grace a son
caractere forfaitaire, sans qu'il y ait lieu de rechercJicr si le
creancier souffre on non un dommage par suite de V inexecution
de V obligation, la clause penale etant due des que le debit cur
est responsable de I 'inexecution . (C. A. Alex. 4 mai 1916,
B. L. J. XXVIII, 301.)
The argument that if no damage has been in fact caused to the
plaintiff, there is no cause for his obligation to pay the penalty,
and that to enforce its payment would be to enrich the plaintiff
without a cause, must be rejected.
OBLIGATIONS WITH A PENAL CLAUSE. 401
When the parties agree to a penalty they enter into a kind of
compromise under which whichever of them breaks the contract
is to forfeit the penalty. Neither of them knows at the time which,
of them will benefit by the clause of penalty. The obligation of
each of them to pay the penalty has for its cause the identical
obligation of the other party. It is misleading in such a case to
speak of unjust enrichment. The equitable claim to restitution
arises only when the enrichment is without a cause. But in this
case there is a sufficient cause in the contract of the parties. (See
B.-L. et Barde, Oblig. 2, n. 1373, note 1.)
Penal clause in other legal systems.
Under the German Code, and under the Swiss Federal Code
of Obligations, the view of the old law that the court may modify
penalties has been retained. The courts have the power to give
damages in excess of the penalty if the creditor proves that the
penalty does not afford him complete reparation, and they have
also power to reduce the penalty if th« debtor prove that it is out
of proportion to the loss caused to the creditor. (Code Fed. Oblig.
arts. 161, 163; German Code, 340, 343.) In England, also, the
courts at common law have the power to reduce the sum stipulated
as a penalty if it appears unconscionable or extravagant. {Clyde-
bank Engineering Co. v. Yzquierdo y Castaneda, 1905, A. C. 6 r
74 L. J. P. C. 1.)
But it 'must be a penalty and not liquidated damages. In
England, where the parties did not intend to secure performance
of the promise by fixing a penalty in excess of the actual loss
which was likely to be caused by a breach, but merely intended
to estimate beforehand the amount of the damages, the courts will
not interfere. This is a case of "liquidated damages" and not
of penalty, and "there is nothing illegal or unreasonable in the
parties, by their mutual agreement, settling the amount of
damages, uncertain in their nature, at any sum upon which they
may agree." (Per Tindal, C. J., in Kemble v. Farren, 1829 r
6 Bing. 147, 31 K. R. 366.) The question of intention may be
a difficult one. It is not concluded by the fact that the parties
used the words "liquidated damages" or "penalty," respectively,
(See Magee v. Lavell, 1874, L. R. 9 C. P. 107, 43 L. J. C. P.
131; Willson v. Love, 1896, 1 Q. B. 626, 65 L. J. Q. B.
474; Halsbury, Laws of England, s. v. Damages, p. 329; Leake
on Contracts, 6th ed. p. 796; Mayne on Damages, 8th ed. p. 170.)
w.— vol. n. 26
40*2 THE LAW OF OBLIGATIONS.
Indivisibility as applied to obligations with a clause of
penalty.
The French Code contains two articles which deal with the
difficulty which may arise from the fact that the principal obliga-
tion assured by a penal clause was indivisible. (C. C. F. 1232,
1233.)
The Egyptian Code is entirely silent upon this point. The
consideration of these articles in the French Code will be post-
poned until we come to the subject of indivisible obligations.
(Infra, p. 441.)
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 403
CHAPTER XXII.
JOINT AND JOINT AND SEVERAL OBLIGATIONS.
Obligations may bo divided into those which are simple, those
which are joint, and those which are joint and several. In a
simple obligation there is one creditor and one debtor. In a joint
obligation there are two or more obligations which are combined
together, but each obligation stands on its own legs, and, though
there is only one title, there are as many obligations as there are
debtors or creditors.
If I promise L. E. 100 to A and B jointly, this means that I
owe L. E. 50 to A and L. E. 50 to B. These obligations are
quite distinct. If I pay A in full, and afterwards I become
insolvent, B cannot claim that A shall communicate to him any
part of what he has got. The debt to A may be prescribed,
whereas B may have interrupted the prescription of the debt to
him. Similarly, if A and B promise me jointly L. E. 100, there
are two separate debts of L. E. 50 each; and if A is insolvent, I
cannot claim from B more than the L. E. 50 which he owes. If
one of the obligations is null the loss falls upon me, and so on.
(B.-L. et Ba-rde, 2, n. 1107; Aubry et Rau, 5th ed. 4, p. 17.)
When an obligation is joint the principle is that each of the joint
debtors is liable for an equal share. But this is a question of
intention. If three persons buy together a piece of land without
making themselves liable jointly and severally for the price, and
if their shares in the land are not to be equal, the liability of each
is, presumably, intended to be proportionate to his share. (C. A.
Alex. 18 juin 1914, B. L. J. XXVI. 447. See Aubry et Rau,
5th ed. 4, p. 17.)
When an obligation is joint and several different rules apply.
Instead of there being several debts, which for convenience are
created by the same title, we nave here only one debt, but it is
one debt which is due to several creditors or due by several debtors.
There is what French writers call solidarite or, as Pothier and the
older writers called it, solidite. The case of solidarity among
26 (2)
404 THE LAW OF OBLIGATIONS.
creditors is a much loss common and loss important case than
that in which there are several debtors bound jointly and severally.
French writers speak of active solidarity to describe the joint and
several interest of creditors, and passive solidarity to describe the
joint and several liability of debtors.
(a) Joint and several creditors.
The rules of solidarity among creditors are thus stated in the
Egyptian Code:
Creditors benefit jointly and severally wider an obligation
when the agreement creating the obligation constitutes each of
them a mandatary of the others to receive performance; and in
such case the rules regarding mandate apply. (C. C. E.
107/161.)
Under the Egyptian Code, in this respect differing in expression
from the French Code, the creditors are not joint and several,
unless, under the obligation, each of them is given a mandate to
receive performance. The French Code says the title must give
each of them the right to demand payment of the whole debt,
and that payment made to one of them liberates the debtor.,
(C. C. F. 1197.) Neither code intends to make it necessary
to use any special form of words. (Dall. Hep. Oblig. n. 1370.)
Each creditor may exact performance of the whole obligation
and may thereupon discharge the debtor. (See Req. 9 mai 1904,
D. 1910. 1. 332.) Unless one of them has instituted a suit, the
debtor may pay the whole debt to any one of the creditors.
(C. C. F. 1197, 1198.) Any one of the creditors who receives
payment may discharge the debtor, but a creditor cannot release
tin 1 debtor without payment, except to the extent of his own share
of the debt. In the .Roman law and in the old French law each
of the creditors might not only take payment of the whole debt
but might discharge the debtor of the whole debt without pay-
ment. (Dig. 45. 2. 2; 16. 1. 20; Pothier, Oblig. n. 260.) For
when there was solidarity, or, to use the Roman expression, cor-
reality among the creditors, each creditor was really a 'creditor
for the whole amount. It is true that, in most cases, at any rate,
if he received paymett of the whole amount, he needed to account
to the other co-creditors for their shares, Because he was either
their partner or their mandatary, but this necessity to account
depended upon the relationship between them and in no way
affected the debtor, and there may have been cases in which the
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 405
creditor who received payment did not need to account at all.
(Girard, Manuel, 5th ed. p. 746.)
But the kind of obligation in which there are several creditors,
any one of whom can sue for the debt in full, and if he receives
payment can keep it all for himself, and in which any one of the
creditors can release the debtor without payment and so defeat
the interest of the other creditors, is so unpractical a form of
obligation that it is difficult to believe it can ever have been of
much use. The Code Napoleon which our law follows, proceeds
upon the much more probable and natural view that there is an
agreement between the creditors under which each creditor may
take payment of the whole, but simply as a mandatary for the
others to whom he must account for their shares. And he cannot
release the debtor without payment except as regards his own
share, for if he did so he would be giving away what belongs to
his associates. It is plain that the code presumes that in joint and
several interest, if one creditor gets payment of the whole he
must divide, and the presumption is that the creditors have equal
shares, although this is a presumption that may be rebutted.
(B.-L.' et Barde, Oblig. 2, n. 1165.) This makes it clear that
one creditor cannot novate or settle an action or arbitrate about
the whole debt. He can deal only with his share.
Can the debtor sued by one of the co-creditors set up in com-
pensation a debt due to him by the creditor except to the extent
of the share of the creditor? No, for otherwise this would be to
allow a debtor to set up in compensation against the mandator a
debt which the mandatary owes to him. And the Egyptian Code
savs we must follow the rules of mandate. (C. C. E. 107/161.
See Dall. Rep. Oblig. n. 2693; Panel. Franc. Oblig. n. 5812.)
It would be to prejudice the other creditors. It is not a sufficient
answer to argue that seeing that compensation is a kind of pay-
ment— compmser rest payer, — the creditor who is suing for the
whole debt may be met by the plea of compensation for the whole
amount.
For the result as regards the other creditors is not neeessarily
the same as if he had been paid. This creditor if he could be
paid by compensation, may be insolvent, and his co-creditors will
not be able to recover their shares from hi*. If he were paid in
money they could take conservatory measures at once. In France
the question whether compensation to the extent of the whole
debt can be pleaded is much disputed. (See B.-L. et Barde,
Oblig. 2, n. 1145; Aubry et Rau, 5th ed. 4, p. 22; Laurent, 17,
406 THE LAW OF OBLIGATIONS.
n. 268. ) But the language of the Egyptian Code seems to remove
the difficulty.
Release.
The joint creditor has no mandate to release the debtor without
payment or to enter into a novation or a compromise of the debt.
Such acts can affect only his share of the debt. The debt remains
unaffected as to the shares of the other co-creditors. (Laurent,
17, n. 269; Hue, 7, n. 304; B.-L. et Barde, Oblig. 2, nos. 1152
seq.; C. C. F. 1198. See Req. 9 mai 1904, D. 1910. 1. 332.)
Interruption and suspension of prescription.
The only other provision in regard to joint and several creditors
which requires notice is in regard to the interruption or suspen-
sion of prescription. The French Code says: Every act which
interrupts prescription with regard to one of the joint and several
creditors benefits the others. (C. C. F. 1199.) This is quite
a natural rule. Each creditor being presumed to have an implied
mandate to do the bast for the others, an interruption of prescrip-
tion for the benefit of one of the creditors enures to the benefit of
all. It is the whole debt which is prevented from prescribing.
This principle does not apply to suspension of prescription. If
one of the creditors is a minor, prescription will not run against
him during the minority, but the shares of the others may be
lost by prescription. The theory of implied mandate cannot help
us here. It is reasonable to say that each creditor has an implied
mandate to interrupt prescription, but he has no mandate to be a
minor. The fact that the debt is joint and several is not the
same thing as its being indivisible, and there is no reason why a
special benefit which the law gives to certain persons who cannot
protect their own interests, such as minors, should be extended
to creditors who are of full age and in the enjoyment of their
rights. This seems to be the better opinion though there are
weighty dissentients. (Sic, Baudry-Lacant. et Barde, Oblig. 2 7
n. 1149; Laurent, 17, n. 264; Aubry et Rau, 5th ed. 4, p. 23,
note 11. Contra, Larombiere, on art. 1199, n. 3; Demolombe,
26, n. 171. The Egyptian law would appear to be the same as
the French upon both these points, though the Egyptian Code
is silent.
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 407
(b) Joint and several debtors.
This case is more common and more important than that of
joint and several creditors. It is dealt with in C. C. N. 108—116
and C. C. M. 162—172, with which we may compare C. C. F.
1200-1216 and C. C. Q. 1103—1120. The Egyptian articles
are: —
Debtors are not each individually bound for the whole of a
debt unless joint and several liability has been stipulated in the
agreement or pronounced by the law.
In such case the debtors are deemed to be reciprocal sureties,
each for the others, and also reciprocal mandataries for perform-
ance ; the rules regarding the contract of suretyship and of man-
date apply.
Debtors jointly and severally liable may be sued by the creditor
together or separately, except when some of them are liable only
at a fixed term or upon condition.
Default resulting from formal demand addressed to and pro-
ceedings taken against one of several debtors liable jointly and
severally take effect against all the rest.
No one of several debtors liable jointly and severally can in-
crease the obligation of the rest by his own act.
Each preserves the right of setting up such exceptions as are
personal to himself as well as those which are common to all.
One of several debtors liable jointly and severally cannot set
up a compensation to which one of his co-debtors is entitled. He
can only set up confusion of the obligation in respect of the share
of that one of his co-debtors whose joint liability has been extin-
guished by confusion.
He may not set up a release of the debt for more than the
share of that one of Ms co-debtors to whom the release has been
granted, unless the release be absolute, which shall not be pre-
sumed.
One of several co-debtors liable jointly and severally, who has
discharged the debt by payment or compensation, shall have a
right of recourse against each of the others for their shares. The
liability of such of them as are insolvent shall be divided among
those who are solvent.
The Egyptian Code does not state at the outset the general
character of the obligation as the French Code does.
There is a joint and several obligation on the part of the
co-debtors when they are all obliged to the same thing, in such
408 THE LAW OF OBLIGATIONS.
manner that each of them singly may be compelled to the per-
formance of the whole obligation, and that the performance made
by one only discharges the others towards the creditor. (C. C. F.
1200.) This article brings out two characteristics of the joint
and several liability of debtors, viz.: (1) each debtor may be
compelled to pay the whole— singuli solidum debent ; and (2) pay-
ment by one frees &l\—unum debent omnes. But the article does
not bring out a third characteristic, viz.: (3) that each of the
co-debtors has an implied mandate to represent the others in all
that concerns the performance of their common obligation. Each
of them can do anything to improve the position of the others or
to protect their interests, but he cannot do anything to make their
position worse. (Larombiere, on art. 1200, n. 4; Cass. 16 dec.
1891, D. 92. 1. 177.) The Egyptian Code is more distinct as
to the last point. The debtors are deemed to be reciprocal man-
dataries for performance ; the rules regarding the contract of
suretyship and of mandate apply. (C. C. E. 108/163, 161.)
The illustrations of this principle will be given later. In the
joint and several obligation there must be the same thing due by
all the debtors and upon the same cause.. But it is not one obliga-
tion to which several debtors are bound; there is no identite du
lien. There are as many obligations as there are debtors. Hence
the nullity of one obligation does not affect the others and the
obligations do not need to be all identical in character. The
French Code says: An obligation may be joint and several,
although one of the co-debtors may be obliged differently from
the others to the performance of the same thing ; for example, if
one be obliged only conditionally while the obligation of the other
is pure and simple, or if one has been allowed a term which is not
granted to the other. (C. C. F. 1201. See Pothier, Oblig.
n. 263; Baudry-Lacant. et Barde, Oblig. 2, n. 1117.)
The Egyptian article implies the same thing. (C. C. E.
109/165.) Accordingly, if the debtor who is bound purely and
simply pays the debt, he cannot sue in recourse the debtor who is
bound only conditionally, or after a term, unless the condition is
fulfilled or until the term has arrived. For he can have no higher
right than the creditor to whom he is subrogated. So, upon the same
principle, there is nothing to prevent two debtors being bound
jointly and severally, though the debt of one is for a larger amount
than the debt of the other, but in this case the joint and several
liability cannot exceed the smaller of the two amounts. For
example, by the same title A is bound to C for L. E. 1,000, and
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 409
B is bound to C jointly and severally with A for L. E. 500.
There is a joint and several obligation between A and B to the
extent of L. E. 500. By the same principle also two persons
may be bound jointly and severally though the debt of one may be
a commercial debt and that of the other a civil debt. So in France,
if a trader and a non-trader sign a bill of exchange or a promissory
note jointly and severally, the debt of the trader will bo a com-
mercial debt and that of the non-trader a civil debt. (Vand.
Franc. Oblig. n. 225.) In Egypt, however, bills are commercial
unless as against women non-traders, or simple cultivators. (C.
Comm. E. 2/2, 109/114; C. A. Alex. 26 avril 1893, B. L. J.
V, 188; C. A. Alex. 15 mars 1893, B. L. J. V, 10G.)
Presumption against joint and several liability.
Joint and several liability is either conventional or legal. There
are, as we shall see, a number of cases in which it arises by opera-
tion of law. Where it is conventional, there must be a clear
indication of the intention to create it. The French Code says:
An obligation is not presumed to be joint and several; it must
be expressly declared to be so. (C. C. F. 1202. See Cass. 31
mars 1909, D. 1910. 1. 19.) The Egyptian article though less
distinct, has the same meaning. The debtors " are not each in-
dividually bound for the whole of a debt unless," etc. (C. C. E.
108/162.)
Does the presumption against joint and several liability
apply to commercial matters?
This is a somewhat controversial point. The commercial codes
do not say that the presumption of the civil code is inapplicable,
or that in commercial matters there is a presumption of solidarity.
In Egypt, the Mixed Court of Appeal held in one case: En
matiere commerciale comme en matiere civile, la solidarite ne
pent residter que d"une disposition de la loi ou des conventions
des parties.
But according- to the prevailing view in France, when two
traders buy goods together for their joint account they are pre-
sumed to bind themselves jointly and severally for the price.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1175; Thaller, Traite
Elerwentaire de Droit Commercial, 4th ed. n. 1054; D. N. C. C.
1202, arts. nos. 37 seq.) And, in another Egyptian case, the
Mixed Court of Appeal held that solidarity is presumed when
410 THE LAW OF OBLIGATIONS.
commercial operations are entered into by several persons collec-
tively and for their joint account. (C. A. Alex. 10 juin 1903,
B. L. J. XV, 342.)
Many codes now lay down ;as a general rule that in commercial
operations the debtors are presumed to intend solidarity. (C. C. Q.
1105; C. Comm. Ital. 40; and other codes referred to in B.-L.
et Barde, Oblig. 2, n. 1175.)
Joint and several liability by law.
Before taking up conventional joint and several liability, let
us enumerate the cases in which it is created by law. Passive
solidarity by law is imposed in express terms in various cases'
falling under all branches of the law, civil, commercial, and penal.
But subject to what has just been said as to commercial matters,
it does not exist unless there is a provision of law which clearly
creates it. It must be "pronounced by the law." This does not
mean that the words "joint and several" or solidairement, must
be used. (Aubry et Rau, 5th ed. 4, p. 33; B.-L. et Barde, 2,
n. 1174.)
Examples of passive solidarity in the civil law are: (a) That of
the architect and the contractor for the destruction of a building
within ten years. (C. C. E. 409/500.) (b) That of the judicial
sureties. (C. C. E. 499/609.) (c) That of the joint authors
of a wrongful act which causes damage to another. (C. C. E.
150/211.) Upon this last matter the Egyptian Code, like the
Code of Quebec, (C. C. Q. 1106) has settled a long-standing con-
troversy.
The French Penal Code makes the joint authors of a penal
delict liable jointly and severally (art. 55), but the Civil Code
has no similar provision as to the joint authors of a civil delict or
of a quasi-delict.
The jurisprudence admits the principle of solidarity in this
case, reasoning by analogy from the Code Penal, but the doctrine
for the most part refuses to accept the view that there is here
solidarity in the full sense. (See Aubry et Rau, 5th ed. 4, p. 33;'
Planiol, 2, n. 903; Req. 26 nov. 1907, D. 1908. 1. 139; Cass.
17 mars 1902, D. 1902. 1. 541, and the note; Cass. 16 juill.
1902, D. 1903. 1. 401, dissertation by M. Capitant; D. N. C. C.
Additions (1913), art. 1202, n. 54—5°.)
It is not necessary for us to enter into this discussion as the
Egyptian Code is clear.
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 411
It is also clear under the Egyptian codes, that when the damage
is caused by a person for whom another is civilly responsible, as r
for example, by a servant acting- in the course of his employment,
the person civilly responsible can be made jointly and severally
liable together with the actual wrongdoer. (C. C. E. 150 —
152/211—214.)
The French jurisprudence is in the same sense. (Req. 22
juill. 1891, D. 92. 1. 335; Dijon, 4 juin 1902, D. 1902. 2. 279;
Cass. 11 fevr. 1889, D. 89. 1. 316; and the note to Cass. 16
juill. 1902, D. 1903. 1. 401.) The joint and several liability
of wrongdoers to the victim does not imply that as among them-
selves their liability is equal. The joint and several liability of
wrongdoers belongs more naturally to the subject of responsibility.
The Egyptian Code does not, like the French Code, make joint-
mandators liable jointly and severally to the mandatary (C. C. F.
2002) or make joint-borrowers of an article liable jointly and
severally to the lender. (C. C. F. 1887.)
In the commercial law the partners in a partnership en nom
collectif are liable jointly and severally for all the engagements
of the partnership, though only one partner may, have signed the
document provided he has done so under the firm-name. (C.
Comm. E. 22/28.)
And all persons who have drawn, accepted or endorsed a bill
of exchange are jointly and severally liable to the holder for
payment. (C. Comm. E. 137/144. See C. A. Alex. 22 avril
1914, B. L. J. XXVI, 342.)
In the penal law all the persons sentenced for the same felony
or same misdemeanour— delit — are jointly and severally liable for
the fines, the restitution, the damages and the costs. (C. Pen. M.
24. Cf. C. Pen. N. 44, which is less wide.)
Persons who without right use together, and in a common
interest, the property of another are liable jointly and severally.
(C. A. Alex. 19 mare 1903, B. L. J. XV, 207. Cf. Req. ler mai
1906, D. 1906. 1. 341.) So are the joint owners of a mitoyen
wall which falls and brings down a neighbour's house. (C. A.
Alex. 28 janv. 1903, B. L. J. XV, 111.)
So are the persons who fraudulently conspire to do an act which
causes damage. (C. A. Alex. 11 avril 1906, B. L. J. XVIII,
189; C. A. Alex. 17 mai 1905, B. L. J. XVII, 277.)
This will be so, for instance, in the case of co-vendors who
declare an immoveable free from all charges, when it is to their
412 THE LAW OF OBLIGATIONS.
knowledge burdened with a hypothec. (C. A. Alex. 17 mai
1905, B. L. J. XVII, 277.)
In many eases it is not possible to determine the share of blame
attaching to each of the offenders. They will be liable each for
the whole to the victim, and, as among- themselves, in ecpual shares.
(See Req. 26 nov. 1907, D. 1908. 1. 139.)
When an action is brought against several defendants in which
the conclusion is for damages against them jointly and severally,
and judgment is rendered against the defendants with costs, does
such a judgment imply that the liability for the costs is likewise
joint and several?
The general answer to this must be in the negative.
A joint and several debtor has no mandate to injure the other
debtors or to increase their liability.
If he wrongously defends the action he is a plaidew imprudent,
and the costs which he incurs by so doing cannot be considered as
accessory to the debts of the other debtors. (Larombiere, art.
1202, n. 23; Pond. Frang. vo. Oblig. n. 301; D. N. C. C.
art. 1202, n. 183; C. A. Alex. 3 mai 1900, B. L. J. XII, 235.)
But the court if it gives judgment against the defendants jointly
and severally, may, in awarding expenses, say that the expenses
are a titre de dommages et interets. (Aubry et Rau, 5th ed. 4,
p. 35; Cass. 2 fevr. 1910, D. 1910. 1. 533.) And when the
action is brought against persons as being jointly guilty of a
delict or quasi-delict, and they are found liable in damages jointly
and severally, they may be condemned, likewise, to pay costs
jointly and severally, seeing that such a condemnation is merely
accessory to the principal judgment. (Req. ler mai 1906, D.
1906. 1. 341; Req. 12 nov. 1907, D. 1908. 1. 87.)
The cases of joint and several liability arising by virtue of the
law have now been enumerated. They will not be extended by
analogy. The presumption against joint and several liability
applies both to the case where it is created by some provision of
law and to the case where it arises from agreement. Accordingly,
it is generally agreed that the joint and several liability of joint-
borrower:- under the French Code cannot be extended by analogy
to joint-lenders, and that joint-depositaries are not liable jointly
and severally, seeing that there is no provision of law to that effect.
(Demolombe, 26, nos. 252, 255; Pond. Frang. Oblig. n. 285.)
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 413
Conventional joint and several liability.
In order to create a joint and several obligation by agreement of
parties the Egyptian ( 'ode says: It must be stipulated in the agree-
ment (arts. 108/162). In saying that the obligation is not joint
and several, unless it is expressly so declared, the code does not mean
that the words "joint and several" — solidmrement — are indispen-
sable, though it is safer to use them when the intention is to>
create solidarity. But the parties may use other -words, such as
that " each is to be liable for the whole," or that they " renounce
the benefits of division and discussion," and, in such cases, there
is a joint and several obligation though this precise term is not
used in the agreement. (Baudry-Lacant. et Barde, Oblig. 2 r
n. 1174; Aubry et Rau, 5th ed. 4, p. 32.) But there must be
no ambiguity about the terms used. (Douai, 20 mars 1882, D.
83. 2. 20; Cass. 15 juill. 1896, D. 97. 1. 109, Journal du Palais,
1830-1831, p. 74: I). N. C. C. art. 1202, n. 20; C. A. Alex.
22 mars 1900, B. L. J. XII, 173.) So the obligation of the co-
purchasers of an immoveable to pay the price is not presumed to
mean that they are liable jointly and severally. (Cass, ler dec.
1908, D. 1909. 1 . 420.) On the other hand, when co-vendors bind
themselves to deliver a thing, this obligation, being in its nature
indivisible, implies, or may be held to imply, that they are bound
jointly and severally. (See C. A. Alex. 5 avril 1900, B. L. J.
XII, 198.)
Conversely, even when the words "jointly and severally" are
used, it is still possible for the court to find that there is not a
joint and several debt, because, on a fair interpretation of the
deed as a whole, it may appear that this was not the true intention
of the parties. The words "joint and several," or solidmrement T
may be controlled by other words which show that the parties
did not intend to be bound jointly and severally. Where, for
instance, although the word solidairement was used in a contract,
it was stipulated that the creditor should not attack one debtor
until he had first discussed the other, thus showing that one of the
parties intended to be bound only as surety and not as principal,
it was held there was no joint and several liability. (Bourges,.
7 mars 1831, D. 31. 2. 158; Cass. 4 dec. 1855, D. 56. 1. 58;.
Baudry-Lacant. et Barde, Oblig. 2, n. 1177. Cf. Cass. 15 juill.
1896, D. 97. 1. 109.)
414 THE LAW OF OBLIGATIONS.
Effects of joint and several liability among the debtors.
(a) Effects of principle that each debtor is liable
for whole debt.
The articles upon this subject in the Egyptian Code have been
already stated. (C. C. E. 109 — 115, 165 — 171.) As against the
creditor each of the debtors is a principal, and may be sued for the
whole debt. He cannot plead the benefit of division, that is, that
the creditor must begin by suing all the co-d.cbtors each for his
share. Nor, if the co-debtor" is a surety, can he plead the benefit
of discussion, that is, that the creditor must first take proceedings
against the principal debtor. Among themselves the debtors may
.be liable each only for his share, or the debt may be, as among"
themselves, the debt of one only, the others being merely sureties.
But from the point of view of the creditor the great virtue of joint
and several liability is that he can treat each of the debtors as if
he were the only debtor, bound to pay the whole debt. The
creditor is not concerned with their relations with each other.
(C. C. F. 1203; B.-L. et Barde, Oblig. 2, n. 1203; Aubry et
Rau, 5th ed. 4, p. 42.)
This right of the creditor to attack any one of the debtors and
to call upon him to pay the whole debt, does not, however, exclude
the debtor who is sued from the right of calling in the other*
debtors as warrantors. He may, by means of a dilatory exception,
obtain delay for this purpose. Pothier taught otherwise, though
he said that even in his time the debtor was, as matter of favour,
always accorded this right. {Oblig. n. 330.) It is obviously
equitable that this right should exist; the delay to the creditor
is merely of a few days, and the gain to the debtor is great. The
practice appears to be settled in this sense in France. (Demo-
lombe, 26, n. 316; B.-L. et Barde, Oblig. 2, n. 1204; Aubry et
Rau, 5th ed. 4, p. 43. Contra, Laurent, 17, n. 297. See D. N.
C. C. art. 1203, n. 11.) And even when the joint and several,
liability arises from a delict, as distinguished from a quasi-delict,
though the liability is of a penal character, the debtor who is sued
has an action in warranty against the co-offenders. For the
Egyptian Code makes no distinction. (C. C. E. 115, 150,
171, 211. Cf. C. Pen. E. 44/24.)
This is so in France also, though the liability in this ease is not
there generally regarded as a joint and several obligation in the
full sense. (B.-L. et Barde, Oblig. n. 1305; Aubry et Rau,
5th ed. 4, p. 49, note 36 quater.) And when one of the joint and
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 415^
several debtors is sued, the others, even although not called in, have
the right to intervene in the action at any time before judgment..
(Baudry-Lacant. et Barde, Oblig. 2, n. 1205; Aubry et Kau,
5th ed. 4, p. 43.)
The creditor cannot, without the consent of the co-debtors,
divide the debt, and if he sues a co-debtor only for his equal share,
and the debtor insists on paying the whole debt, the creditor must
receive this payment, and the judgment will have the effect of
liberating the other debtors as regards the creditor, and of subro-
gating the debtor who has paid in the creditor's rights against
them.
Laurent disputes this upon the ground that the exclusion of
division is wholly in the interest of the creditor, and he may,
therefore, waive it. (17, n. 298.) But the other view seems to
be settled in France, and is supported by the argument that the
effect of the joint and several liability is to place each of the
co-debtors in the same position as if he were the only debtor.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1209; Aubry et Rau,
5th ed. 4, p. 43; Cass. 25 mars 1896, D. 96. 1. 294.)
The creditor may sue one of the joint and several debtors, or
all of them together, or some of them only, as he chooses. And
if he sue several of them, they may all be brought before the
court of the district in which one of them has been summoned.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1212.)
(b) Effects of theory that each debtor has mandate.
The consequences of joint and several liability which have so
far been referred to, flow from the principle that the creditor has
the right to consider each of the debtors as liable for the whole
debt.
There are other consequences which flow from the principle
that each of the co-debtors has an implied mandate from the
others to represent them for certain purposes. The traditional
way of stating the extent of this mandate is to say that it extends
ad conservandam vel perpetnandam obligationem non ad align i-
dam. (Pothier, Oblig. n. 273; Baudry-Lacant. et Barde, Oblig.
2, n. 1213; Agen, 28 oct. 1891, D. 93. 2. 540.) According to
a modern decision of the Cow dc Cassation the extent of the
implied mandate given to each other by the joint and several
debtors is to do anything which ameliorates the condition of all
of them, but nothing which can injure the condition of any of
416 THE LAW OF OBLIGATIONS.
them, unless there is some exceptional provision of law which
allows this. (Cass. 16 dec. 1891, D. 92. 1. 177, S. 93. 1. 81.)
The Egyptian Code expresses the rule clearly enough: No one
of several debtors liable jointly and severally can increase the
obligation of the rest by his own act. (C. C. E. 111/167.)
Consequences of theory of mandate.
Default resulting from formal demand addressed to and pro-
ceedings taken against one of severed debtors liable jointly and
severally take effect against all the rest. (C. C. E. 110/166.)
When the object of the debt is a specific thing, and it has
perished, or can no longer be delivered, owing to the fault of one
of the co-debtors, or after he is in default, this does not free the
other co-debtors from their liability to pay its value.
But the debtor who is in fault is the only person liable to
pay damages over and above the value of the thing. For this
aggravation of the debt has been caused by him alone, and he had
no mandate to increase the liability of the others. If they were
all in fault, or in default, they would all be liable in damages as
well as for the value; and, conversely, if the thing perished without
the fault or default of any of them they would all be free from
any liability. (C. C. F. 1205; B.-L. et Barde, 2, n. 1224;
Aubry et Eau, 5th ed. 4, p. 47; De Hults, Rep. Obligations,
n. 127.) An act which interrupts prescription against one of the
joint and several debtors interrupts it with regard to all of them.
(C. C. F. 1199.) So, an action brought against one of the
debtors interrupts prescription as regards them all, seeing that each
of them has a mandate to represent the others. (C. C. F. 1206;
Baudry-Lacant. et Barde, Oblig. 2, n. 1214.)
An acknowledgment of the debt made by one of the co-debtors,
being an act of interruption, affects the other co-debtors as well.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1215; Req. 19 mai 1884,
D. 84. 1. 286; Agen, 28 oct. 1891, D. 93. 2. 540.)
But when one of the joint and several debtors has died, and
the act of interruption is in regard to one of his heirs, this does
not interrupt prescription as regards the other heirs, and it inter-
rupts prescription as regards the other co-debtors no>t for the whole
debt but only for the share of this particular heir who has acknow-
ledged his liability.
This is because if one of the joint and several debtors dies
leaving several heirs, each heir is liable only for a share of the debt
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 417
proportionate to his share in the succession. (' . ('. F . 2249;
B.-L. et Barde, Oblig. 2, n. 1218; Laurent, 17, n. 327. For
example, John and William are jointly and severally bound Lo
pay L. E. 10,000 to Thomas; John dies, leaving as his heirs in
equal shares, his two sons Henry and Robert. Thomas, the
creditor, sues Robert, and obtains an acknowL dgment of the debt.
This interrupts the prescription as regards Robert, and as regards
William also, because William is a co-debtor, but only to tin
extent of L. E. 5,000, because Robert as an heir was liable only
for half the debt. But it does not interrupt the prescription as
regards Henry, for he is not a co-debtor, and though he and Robert
are co-heirs, one co-heir has no mandate to represent another.
But this will not be the case when the original debt was indivisible
as well as joint and several, because in that case it must be kept
alive as a whole or extinguished as a whole. (C. C. F. 2249;
B.-L. ct Barde, Oblig. 2, n. 1218; B.-L. et Tissier, Prescrip-
tion, n. 559.)
A demand of interest made against one of the joint and several
debtors causes interest to run against them all. (C. 0. P. 1207.
See C. C. E. 110/166.)
Another consequence of the theory of mutual representation
will be noticed later under the head of chose jugec.
Exceptions which a joint and several debtor may plead
against the creditor.
Each of the co-debtors preserves the right of setting up such
exceptions as are personal to himself as well as those which are
common to all. (C. C. E. 112/168.) The French Code says:
Le codebiteur solidaire poursuivi par le creamier peut opposer
toutes les exceptions qui resultent de la nature de V obligation , et
toutes celles qui lui sont personnelles, ainsi que celles qui sont
communes a tous les codebiteurs. II ne pent opposer les exceptions
qui sont purement personnelles a qxelqnes-uns des autre* co-
debiteurs. (O. C. F. 1208.)
Personal exceptions.
He may plead such personal exceptions as, for example, his
minority or interdiction, or that he was led into the contract by
fraud.
w.— vol: ii
27
418 THE LAW OF OBLIGATIONS.
Exceptions common to all the debtors.
Ho may plead any defence which strikes at the root of the whole
obligation, such as that the creditor has received payment in full,
or that the debt has prescribed. For such a defence is in its nature
common to all the debtors.
In this class come such exceptions as unlawful cause, defect of
form, condition not fulfilled, term not expired, payment, nova-
tion, release, prescription.
Exceptions personal to another debtor.
But he cannot plead that one of the other co-debtors was a
minor or had been led into the contract by fraud, or the like.
Seeing that he has made himself liable for the payment of the
whole debt, it is immaterial, in a question between him and the
creditor, that another co-debtor would have a good defence.
" Personal exception " does not mean same thing here
as in case of surety.,
The French Code uses the same expression, purement person-
nelles, in speaking of the exceptions which a surety is not allowed
to oppose to the creditor. Le caution ne pent opposer les excep*-
tions qui sont purement personnelles au debiteur. (C. C. F.
2036, 1208.)
In spite of this, it is the prevailing view in France that the
words purement personnelles used in regard to the case of the
debtor and the surety do not mean quite the same thing as the
identical words used in the case of co-debtors.
It follows from the nature of suretyship that the surety can
set up the exceptions which the principal debtor might plead
himself when these exceptions are based on vices of consent.
He may plead that the principal debtor's consent was vitiated
by error, violence, or fraud.
And the surety may do so, even though he was bound jointly
and severally with the debtor. For his obligation as a surety is
an accessory obligation. Whereas, in the case of ordinary co-
debtors the situation is different. The vice in the consent of one
co-debtor is a defence which this co-debtor alone can take. It
is purely personal to him. The obligation of each of the other
co-debtors is a principal obligation, and its validity is unaffected
by the fact that the consent of a fello-vv debtor was vitiated.
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 419
(Baudry-Lacantinerie et Wahl, Contrats Aleatoires, etc. n. 948;
Planiol, 2, n. 2331; B.-L. et Barde, Oblig. 2, n. 1243; D. N,
O. C. art. 2036, n. 3.)
The Egyptian codes adopt this view and use somewhat different
terms in order to indicate the distinction. The co-debtor can
set up such exceptions as are "personal to himself," whereas the
surety "profits by the same exceptions as are open to the debtor,
save such as are essentially personal to the latter." (C. C. E.
112/168, 509/622. See Grandmoulin, Suretes, n. 80; Halton,
2, p. 222.)
Confusion.
The operation of confusion may create a personal exception.
The French Code says: When one of the co-debtors becomes
the sole heir of the creditor, or when the creditor becomes the sole
heir of one of the co-debtors, the confusion extinguishes the joint
and several debt only for the 'part and portion of the co-debtor or
of the creditor. (C. C. F. 1209.)
The Egyptian Code means to express the same rule more
shortly: lie can only set up confusion of the obligation in
respect of the share of that one of his co-debtors whose joint
liability has been extinguished by confusion. (C. C. E.
113/169.) One cannot combine in one's own person the antago-
nistic characters of creditor" and debtor.
Though the French article speaks only of the " sole heir," the
principle applies when the heir succeeds only to a share. In so
far as the debt, if it could be conceived of as still existing, would
be a debt which one of the co-debtors owed to himself, it is neces-
sarily extinguished. For example, John and William borrow
L. E. 9,000 from Thomas; John succeeds to Thomas as heir to
one-third of his estate. But for the principle of confusion he
could sue himself for one-third of L. E. 9,000. By the operation
of that principle the debt is extinguished to that extent. The
rule applias also when the same person becomes creditor and debtor
by the operation of a gift or of an assignment. (B.-L. et Barde,
2, n. 1241; Laurent, 17, n. 337.)
Compensation.
As regards the defence of compensation it might at first appear
that this was not a personal exception but one common to all the
co-debtors; for it is often said that compensation is a kind of
payment — compenser cest payer — and any one of the co-debtors
27 (2)
420 THE LAW OF OBLIGATIONS.
may plead that the debt has been paid. But in this case it is not
true that compensation is equivalent to payment. There is a
special provision on the subject: One of several debtors liable
jointly and severally cannot set up a compensation to which one
of his co-debtors is entitled. (C. C. E. 113/169.) This article
must be read in connection with a later article: A co-debtor
jointly and severally liable with others cannot set up in compen-
sation that which is due to his co-debtors, excepting to the extent
of the share of the Utter in the liability. (C. C. E. 201/265.}
For instance, A, B and C are co-debtors to D for L. E. 900;
D then becomes a debtor to B for L. E. 900. If D sues C, C
can plead that L. E. 300 is paid by compensation with B. To
allow C to plead that the whole L. E. 900 was paid would be to
make B advance the L. E. 600 in the first place. It would also be
inconvenient to allow one co-debtor to raise a question which would
involve looking into accounts between the creditor and another
co-debtor beyond the share of such co-debtor. (Larombiere,
Oblig. art. 1294, n. 5.)
But the Egyptian Code allows the co-debtor to plead compen-
sation as to the share of the other co-debtor. And the Code of
Quebec is in the same sense. (C. C. Q. 1191.) The French
Code does not even give this right. (C. C. F. 1294; B.-L. et
Barde, Oblig. 2, n. 1250; Planiol, 2, n. 766; Laurent, 17, n. 339;
Colin et Capitant, 2, p. 205; C. Cass', de Belgique, 13 juin 1872,
D. 74. 2. 128.)
Some French authorities resist this conclusion, but the terms
of the French article arc too clear for argument. (See, however,
Aubry et Rau, 5th ed. 4, p. 41. text and note 19.)
Chose jugee.
As regards the plea of chose jugee there has been much con-
troversy. If an action is brought against one of the co-debtors,
in what cases can he plead that the question has been decided
against the creditor in a previous action against another of the
co-debtors? It is clear that he cannot do so when the ground upon
which the other co-debtor succeeded was a personal ground, such
as the minority of that co-debtor, or that the other co-debtor was
induced to enter into the contract by fraud. But when the ground
of the judgment was common to all the co-debtors, as, for instance,
if the defence was sustained that the obligation was for an un-
lawful cause, is this judgment res judicata as to the others? The
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 421
prevailing view in France is in favour of the affirmative, though
some writers dispute its soundness. The great reason in support
of the view taken by the French courts, and by most of the writers,
is that, seeing that the creditor can sup each of the co-debtors for
the whole debt, if he sues any one of them, all questions as to the
legal liability created by the obligation are put in issue, and
ho is in the same position as if he had sued them all together:.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1231; Cass, ler dec.
1885, D. 86. 1. 251; D. N. C. C. art. 1351, nos. 1435 seq.)
Upon the same principle it is held that when the joint and
several debtors are all sued together, and a judgment is given
against them, and one of them takes the case to appeal and succeeds
in getting the judgment reversed or modified, this enures to the
benefit of the other co-debtors, although they did not join in the
appeal. (Baudry-Lacant. et Barde, 2, n. 1235; Caen, 5 mai
1894, D. 95. 2. 329; D. Rep. Appel Civil n. 585.)
Conversely, according to the French jurisprudence, if the
creditor has sued one of the co-debtors and has obtained a judg-
ment in his favour this judgment is opposable to the other co-
debtors. Char mi des codebiteurs solidaires doit etre considere
■comme le contradkteur legitime du creancier et le representcmt
necessairt de ses eooblig.es. (Cass. 28 dec. 1881, D. 82. 1. 377;
Cass. 25 mars 1902, D. 1905. 1. 325.)
But there are three qualifications to be made.
The creditor cannot enforce his judgment against the co-debtors
who were not parties to the action: (1) If they prove that there
was collusion betweeen the creditor and the debtor who was sued;
(2) if the co-debtor against whom the creditor seeks to oppose
the judgment has an exception personal to himself which he can
oppose to the creditor; and (3) if the debtor who was sued negli-
gently failed to plead an exception, such as prescription, which
was common to all co-debtors.
These cannot be deprived by the negligence of their co-debtor
of a defence available in favour of all of them. (See Req. 25 nov.
1903, S. 1906. 1. 345, and the note; Colin et Capitant, 2, p. 208;
B.-L. et Barde, 2, n. 1233.) It is submitted that the Egyptian law
is the same as to this matter, and that this is implied in C. C. E.
110/166. Against this opinion, it may be urged that by the terms
of the Egyptian Code the co-debtors are reciprocal mandataries
only "for performance." There is no mandate to represent each
other judicially. (De Hults, Rep. Obligations, n. 128/ And
in one case the Mixed Court of Appeal held: Les effets de In
422 THE LAW OF OBLIGATIONS.
solidwite nont pas pour consequence de rendre line decision de
justice, obtenue contre Vun des co-debiteurs solidaires, executoire
contre celui au regard duquel la decision ne renferme aucune con-
damnation on disposition quelconque. (C. A. Alex. 28 dec.
1904, B. L. J. XVII, 50.)
Release.
The Egyptian Code has only one article upon this subject, and
it leaves many questions unsettled. The code says of a joint and
several debtor: Re may not set up a release of the debt for more
than the share of that one of his co-debtors to whom the release
has been granted, unless the release be absolute, which shall not be
presumed. (C. C. E. 114/170.)
This article is dealing with a release of the debt, but it is
desirable, before speaking of that subject, to discuss the case of
release from the joint and several liability; — remise de la solidarity
— as to which the Egyptian Code is quite silent.
The creditor may, if he likes, agree that a certain co-debtor,,
instead of being liable for the whole debt shall be liable only for
his share. Such a form of release given to one of the co-debtors
does not affect the joint and several liability of the other debtors.
The solidarity was created primarily in the interest of the
creditor, and, therefore, he is entitled to renounce it as against one
of the debtors. But, as will be shown later, the creditor cannot
in this way increase the burden of another co-debtor. There is,
of course, nothing to prevent the creditor if he chooses from giving
a release to one of the debtors by which he agrees to release themt
all from the joint and several liability without releasing them
from the debt.
This is called absolute release of solidarity as distinguished
from the relative release in favour of one of the debtors.
But such an absolute renunciation of the solidarity hardly
occurs in practice; and is not mentioned by any of the codes.
There can be no difficulty about it, for unless the creditor declares
in very clear language that this is his intention it will not be
presumed .
But the relative release is important and common, and it raises
somewhat difficult questions. Such a relative release may be
express or it may be tacit, and it is, as a matter of fact, very
frequently tacit. The French Code states a number of facts from
which such a renunciation will be implied.
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 423
(1) If the creditor gives a discharge to one of the debtors in
which he says that it is in respect of his share— pour sa part—
this is held to imply that he releases him from the solidarity.
The fact that the creditor has taken payment from one of th,e.
co-debtors of his equal share of the amount of the debt and has
given him a receipt for it, is not a release from the solidarity..
The creditor may quite well intend to reserve his right of falling
back upon this debtor if he cannot get payment from the other
debtors. But if he distinctly states in the receipt that he takes
the money as the share or portion of the debt which this debtor
owes to him, it is quite reasonable to say, as the French Code
does, that this is a release from the solidarity. If he wants to
make it clear that this is not the case he must say in the receipt
that he reserves his rights, by using some such expression asi sans
prejudice de la solidmite or sans prejudice de mes droits. These
are the solutions of the Roman law and of the old French law
which are preserved in the French Code. (Pothier, Oblig. n. 277 ;
C. C. F. 1211; B.-L. et Barde, 2, n. 1283; Laurent, 17, n. 348.)
There can be no doubt the Egyptian law is the same. The Egyp-
tian Code says merely: A release granted to one of several
debtors jointly and severally liable is deemed to have been granted
for his share and extinguishes the liability as regards such share
only. (C. C. E. 182/245. See De Hults, Rep. vo. Obligations,
n. 99, seq.)
(2) If the creditor makes a demand for payment against one
of the co-debtors claiming a certain sum and alleging that it is
pour sa part, one might be inclined to suppose that this form of
demand was equivalent to a renunciation by the creditor.
But, according to the French law, the mere claim in this form
is not enough, because the renunciation needs to be accepted
before it is binding upon the creditor. If the creditor makes a
demand against one of the debtors "for his share," and the debtor
offers to pay it, there is a contract, and it will be too late for the
creditor to claim any more from that debtor. And if the creditor
obtains a judgment in the action against the debtor he will like-
wise be bound by it. (C.C.F.1211; B.-L. et Barde, 2, n. 1284;
Larombiere, art. 1211, nos. 7, 9, and 10; Aubry et Eau, 5th ed.
4, p. 54.)
No doubt the Egyptian law is the same as to these points also.
(3) The creditor, who receives from one of the co-debtors his
share of arrears or interest of the debt and gives a receipt stating
that it is for the share of this debtor, is held to renounce the
424 THE LAW OF OBLIGATIONS.
solidarity as regards past arrears or interest. But the discharge
does not in any way affect the liability of this debtor as regards
the capita] of the debt, or as regards future interest, unless the
creditor has gone on for ten consecutive years to receive payment
of interest in this way from one of the co-debtors.
In that case he is considered to have shown his intention not
to claim from this debtor more than his proportionate share of the
interest in any future year.
This period of ten years stated in the French Code is neces-
sarily somewhat arbitrary, and as the Egyptian Code has no
similar article the Egyptian courts would not be bound to insist
upon payments for ten years. They are entitled to consider in
each case upon the particular facts whether the conduct of the
creditor sufficiently shows his intention to release the debtor from
the solidarity. But, in judging of this question, it is natural
that the Egyptian courts should look to the French Code as a
guide. (C. C. F. 1211, 1212; B.-L. et Barde, 2, nos. 1285,
1286; Aubry et I\au, 5th ed. 4, p. 55.)
What is the effect of the release from the solidarity if
one of the co-debtors becomes insolvent?
This is a much disputed question. One of the principal objects
of joint and several liability, from the point of view of the
creditor, is that he can secure full payment of his debt if the,
co-debtors have got the money among them. The fact that one
of them can pay nothing, or can pay only the half of his share,
has the effect of throwing a larger burden upon the others. If
of three co-debtors two could pay nothing at all the third co-debtor
would still be liable for the whole amount. For the law declares
the liability of such of them as are insolvent shall be divided
among those who arc *ohe?it. (C . C. E. 115 17-1; C. C. F.
1214.)
As anion," the co-debtors themselves, if one of them is insolvent,
the sum which he cannot pay to the creditor is divided among the
other debtors according to their shares.
Now, suppose the creditor releases one of the co-debtors from
the solidarity, and, afterwards, one of the other co-debtors be-
comes insolvent, who is to bear the loss causxl by this insolvency?
Suppose, for example, the creditor has lent L. E. 9,000 to Zaki,
Ahmed and Mohammed jointlv and severally. He receives
L. E. t'3.000 from Zaki and gives him a receipt specifying that
JOINT AND JOINT AND SEVKEAL OBLIGATIONS. 425
it is for his share and without, reserving any rights. The effect
of (his is that Zaki is released from the joint and several Liability.
If, afterwards, Ahmed becomes insolvent, and his estate can pay
only 50 piastres in the pound, there i< a lo3S of L. E. 1.000 which
has to be borne by somebody .
Is it to be borne by the creditor or by Mohammed? If Zaki
had not been released from the solidarity by the creditor, this loss
of L. E. 1,500 caused by the insolvency of Ahmed would have
been divided between Zaki and Mohammed. And, assuming for
(he sake of simplicity, that the shares were equal, Zaki would have
had to pay L. E. 750 and Mohammed would have had to pay also
L. E. 750. But if the release given by the creditor' to Zaki is to
be considered as relieving him of this liability caused by the
insolvency of Ahmed, and if Mohammed has to pay the whole
sum of L. E. 1,500, the release given by the creditor to Zaki will
have caused a dead loss to Mohammed of L. E. 750. This result
is inadmissible.
As among the co-debtors themselves the joint and several
liability is for their mutual protection. They know, when they
become jointly and severally bound, that if one of them has to
pay to the creditor more than his share of the debt, he will have
a right of recourse against his fellow debtors. In entering into
the obligation they relied upon the solvency of each other. It
would be contrary to the understanding of the parties and to
equity to allow the creditor by a contract with one of the co-debtors
to cause a prejudice to the others. If we admit this, the conclu-
sion must bo either: (1) that the loss of L. E. 750 must fall upon
the creditor himself, as it would not have arisen but for his having
released Zaki; or (2) that in spite of the creditor having released
Zaki, Mohammed will have a recourse against Zaki for L. E. 750,
and further, that if Mohammed were himself insolvent the creditor,
in spite of the release, could sue Zaki for the whole debt.
The French doctrine is- divided upon this point.
According to Pothier and to some more modern writers it is
the creditor who must bear the loss.
(Pothier, Oblig. n. 275, at 4; Larombiero, art. 1215, n. 2;
D. N. C. C. art. 1215, n. 2.)
Applying the rule of Pothier to our illustration, the result
would be that the creditor could sue Mohammed for L. E. 3,750,
which, with the L. E. 3,000 he has got from Zaki, and the L. E.
1,500 he has got from Ahmed's insolvent estate, will make L. E.
8,250, leaving the creditor to bear the loss of L. E. 750.
426 THE LAW OF OBLIGATIONS.
This solution has been expressly adopted by the Civil Code of
Quebec. (C. C. Q. 1119.) The shares of those who are insol-
vent are made up by contribution by all the other co-debtors
except the one discharged, whose part in the contribution is borne
by the creditor.
But, unfortunately, the language of the French Code and of
the Egyptian Code will not bear this interpretation.
The French Code says: Dans les cas ou le creancier a renonce
a V action solidaire etnvers Vim des debiteurs, si Vun ou plusieurs
des autres codebiteurs deviennent insohables, la portion des in-
solvable* sera contributoirement repartie entre tous les debiteurs,
meme entre ceux precedemment decharges de la solidarite par
le creancier. (C. C. F. 1215.)
And the Egyptian Code says that when a co-debtor has been
released from his share of the debt the rest of the debtors can
recover from him only his contribution to the share of those of
them, if any, who are insolvent. (C. C. E. 183/246.) In spite
of the release, the creditor can still fall back on the co-debtor for
his share of this liability. (B.-L. et Barde, 2, n. 1262; Auhry
et Rau, 5th ed. 4, p. 52, note 43; Laurent, 17, n. 363; Req. 7
juin 1882, S. 82. 1. 321, Journal du Palais, 82, p. 774, D. 82.
1. 441.) The French Code is speaking of the case of release from
the solidarity, and the Egyptian Code of the case of release of his
share. But by the argument a fortiori, we may say that if the
co-debtor remains liable to contribute when he has been released
from the debt it must be so, still more clearly, when he has beeai
released merely from the solidarity. It is a general principle of
interpretation that renunciations are to be interpreted restric-
tively .
The presumption is always against a man giving up a right.
If therefore a creditor merely releases his debtor from the soli-
darity, and says nothing of what is to happen in case of the future
insolvency of one of the other debtors, the presumption is that he
does not intend the release to apply to this liability. (See De
Hults, Rep. Obligations, n. 103.)
The objection is sometimes made that if this is the case the
release from the solidarity does not produce any effect at all. But
this is not true; the debtor Avho is released from the solidarity
gains, at any rate, this advantage, that the creditor cannot pick
him out from among the debtors and sue him in the first place
for the whole debt. He can at the worst only sue him for his
share, and the probability is that if one of the debtors is solvent
JOINT AND JOINT AND SEVERAL OBLIGATIONS. 427
the creditor will begin by suing this solvent debtor for the whole
debt. (Pond. Frmig. Oblig. n. 513; B.-L. et Barde, Oblig. 2,
n. 1262. See the note by M. Aubry to Req. 7 juin 1882, D.
82. 1. 441.)
Is the effect of a release from the solidarity to oblige the
creditor to deduct the share of the debtor released?
This also is a controversial question in the French law. The
language of the French Code seems clearly in favour of the
affirmative.
he creancier qui consent a la division de la dette a Vegard de
Vun des codebiteurs conserve son action solidmre contre les autres,
mais sous la deduction de la part du debiteur qu'il a decharge de
la solidarite. (C. C. F. 1210.)
But this article is altogether unreasonable. If the creditor
merely wishes to release the debtor from the solidarity why should
he not be allowed to do so without at the same time releasing him
from his share of the debt? The release from the solidarity does
not prejudice the other debtors. Each of them was always liable
to be sued for the whole debt, and if one of them paid it he had
a recourse against the others for their shares. It is admitted that
the creditor cannot deprive them of this right of recourse, but
there does not seem any reason why he cannot agree if he chooses
to hold one of the debtors liable only for his share and not for the
whole debt. This is so obvious that some French authors argue
that we cannot take C. C. F. 1210 literally. We must understand
it to mean that it is only when the creditor has received payment
of a debtor's share, or has chosen to release him from it without'
payment, and thus make him a present of it, that he must deduct
this share from his claim when he sues the other co-debtors.
(Larombiere, art. 1210, n. 7; Aubry et Rau, 5th ed. 4, p. 52.)
But however desirable this conclusion may be, it is directly in the
teeth of C. C. F. 1210. (Demolombe, 26, n. 463, and n. 464;
B.-L. et Barde, 2, n. 1281.)
The Egyptian Code, however, has no corresponding article, and
we ought accordingly to adopt the more natural and logical view
that a creditor who has released a debtor from the solidarity does
not thereby abandon his right to sue the other debtors for the
whole amount of the debt. This is the solution adopted by the
Code of Quebec and by the Italian Code. (C. C. Q. 1114; C. C.
Ital. 1195.) We must, however, not forget that the debtor thus
428 THE LAW OF OBLIGATIONS.
released from the solidarity remains liable in recourse for the
amount of his share to the co-debtor who has been called upon to
pay the debt. And the debtor thus released also remains liable
to pay his share of the loss which arises from the insolvency of
one of the other debtors.
Release of the debt.
We have now considered the effects of the release from the
solidarity, and it remains to speak of the release of the debt itself.
Unfortunately, the Egyptian Code is not very satisfactory on
this subject.
Suppose Zaki, Ahmed and Mohammed owe L. E. 9,000 jointly
and severally. The creditor gives to Zaki a release in general
terms.
Under the Egyptian Code this is taken to mean that he releases
Zaki from his share. The release does not affect the liability of
Ahmed and Mohammed, except that, from the claim against them,
the creditor must deduct Zaki's share which has been paid or
released without payment. Zaki, in spite of the release remains
liable, as we have seen, for his share of the loss caused by the
insolvency of Ahmed or Mohammed. (C. C. E. 114/170, 182,
183/245, 246.)
The release here, as in the previous case, may be tacit; it
requires acceptance and may be proved by witnesses. The French
Code has the very unreasonable rule that a release in general terms
given to one of the co-debtors has the effect of liberating them all
unless the creditor in the release has expressly reserved his rights.
(C. C. F. 1285^ But the Egyptian Code, fortunately, has no
such article. (See infra, p. 497.)
Alleged imperfect solidarity.
Some French writers contend that the provisions of the code
as to joint and several liability apply in full only to the joint and
several liability which is created by agreement. They call this
xnlidaritc parfaite. The position of persons declared by law to
be jointly and severally liable apart from agreement is, according
to these writers, not quite the same. They describe their position
as sniid-arite imparfmte. (Aubry et Rau, 5th ed. 4, p. 30/
The difference between the two cases arises, it is said, from the
fact that when there is perfect solidarity the debtors are con-
sidered as mandataries one for the other, whereas when the soli-
JOINT AND JOINT AND SEVERAL OBLIGATIONS. t29
darity is created by the law we cannot say that they are reciprocal
mandataries. It is conceivable that three persons should be held
jointly and severally liable for a delict or a quasi-delict, although
they did not know each other and had made no agreement. How
can we say in such a case that there is anything like a mandate?
But, as Planiol says, the answer to this seems to be that the
solidarity is created by the law, not because the law presumes the
existence of a mandate, but because the debtors have such a
common interest that they are in a similar position to joint man-
dataries. (2, n. 778.) This distinction between perfect soli-
darity and imperfect solidarity does not seem to be gaining ground
in France, and has been rejected by the jurisprudence. (Paris.
28 mai 1900, D. 1902. 2. 453. See Colin et Capitant, 2, p. 210.
There would be no excuse for introducing the theory into Egypt,
because the Egyptian Code declares expressly that the debtors
are reciprocal mandataries, and makes no distinction between the
case when the joint and several liability arises from agreement
and the cases in which it arises from the law. (C. C. E. 108/162.
Two debtors may be liable each for the whole debt
without any solidarity.
It is quite possible for each of the co-defendants to be liable
for the whole debt to the plaintiff but upon two distinct and
separate titles, in which case there will be no solidarity. (C. A.
Alex. 29 juin 1916, B. L. J. XXVIII," 453; C. A. Alex. 15
janv. 1914, B. L. J. XXVI, 156.)
Effects of joint and several liability as among the
co-debtors themselves.
It is only in regard to the creditor that each of the debtors i&
bound to pay the whole debt. As among themselves, each is liable
only for his share, and, if he is compelled by the creditor to pay
more than his share, he has a recourse against the others for the
excess. In paying the whole debt, or anything in excess of his
share, he gets a right of recourse against each of the others for
their shares. (C. C. E. 115/171.)
As among the co-debtors themselves, the obligation is not joint
and several, but only joint; each is liable only for his own share
and portion. What this share is depends on the agreement be-
tween them if the solidarity arises from contract, or on their
respective culpability if it arises from a wrong. The presumption
430 THE LAW OF OBLIGATIONS.
is that the co-debtors arc liable in equal shares, but this presump-
tion can be rebutted. (See Liege, 3 mars 1886, D. 88. 2. 71.)
There would be a useless circuity of actions if the co-debtor
who had paid the whole debt could sue a co-debtor for the whole
debt minus the share which the plaintiff had paid, and leave him
in his turn to sue another co-debtor for the whole debt minus his
share. (Pothier, Oblig. n. 281, al. 2.) But a co-debtor who
has paid the whole debt may, in one case, have a claim against a
co-debtor for more than an equal share of the debt, though the
liability of the co-debtors was originally equal.
This is when one of the co-debtors is insolvent. For example,
A, B and C are joint and several debtors to D for L. E. 900.
D sues A for the whole debt, and A pays it; B becomes insolvent
and can pay nothing; A has a recourse against C for L. E. 300,
his equal share of the debt, plus L. E. 150, the half of B's share.
(C. C. E. 115/171.) As already said, however, it is perfectly
possible that, as among themselves, the liability is unequal, and
it may be that the debt was contracted solely for one of them.
(C. C. F. 1216; B.-L. et Barde, 2, n. 1272; Lyon, 6 fevr. 1890,
D. 91. 2. 377.)
Thus, in the case of a bill of exchange, the acceptor of the bill
is, as a rule, the principal debtor, and the drawer and endorser
are accessory debtors.
In such a case if the acceptor meets the bill when it is due he
has no recourse at all against the drawer and the endorser. As
among themselves, he is the only debtor and they are his sureties.
As against the holder of the bill they are all principal debtors.
(Thaller,' Traite Elemmtaire de Droit Commercial, 4th ed.
n. 1527.^1
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 431
CHAPTER XXIII.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS.
This difficult subject is treated of, by no means very adequately,
in tbe French Code in arts. 1217—1225. It is dismissed sum-
marily in a single article in the Egyptian Code: When the per-
formance of cm obligation cannot, whether in the nature of things
or in view of the purpose of the obligation, be divided, each of the
debtors is liable for the whole, subject to his right of recourse
against his co-debtors. (C. C. E. 116/172.)
Both in [the Eoman and in the French law this has always
been considered as one of the most obscure parts of the law. It
was dealt with at great length and with much acuteness by the
great French commentator Dumoulin, and Pothier does not do
much more than condense Dumoulin's views on the subject, while
the Code Napoleon in its turn condenses the doctrine of Pothier.
(Laurent, 17, n. 503.) Subsequent French writers have done
a good deal to place the matter in a clearer light. Toullier went
so far as to express the hope that the doctrine of indivisibility,
might some day be banished from the code as a piece of useless
theory. (6, n. 798.) But Eodiere rightly says that indivisible
obligations inevitably occur, and it is useless for the law to try to
change that which is founded in the very nature of things. {De
la Solidarite et de I'lndivisibilite, n. 389.) Indivisible obliga-
tions must be taken account of in every system of law. For
example, in the English law, Sir F. Pollock says: "A' contract
which can be fulfilled only as a whole, so that failure in any part
is failure in the whole, is said to be entire. A contract of which
the performance can be separated so that failure in one part affects
the parties' rights as to that part only is said to be divisible."
(Pollock on Contracts, 8th ed. p. 275.) And there are many
English cases in which the doctrine of an entire or indivisible
contract is elaborated. (See e.g., Cutter v. Powell, 1795, 3 E. E.
185, 2 Smith's Leading Cases, 1 : Appleby v. Meyers, 1867, L. E.
2 C. P. 651, 36 L. J. C. P. 331; Sumpter v. Hedges, 1898, 1
432 THE LAW OF OMLIGATIONS.
Q. B. 673, 07 L. J. Q. B. 545; Format/ & Co. v. Ship Liddes-
dale, 1900, A. C. 190, 69 L. J. P. C. 44.)
Indivisibility always means the same thing, viz., that it is
impossible for the debtor to perform his obligation in part; he
must perform it altogether or not at all. This impossibility may
arise in either of two ways: (1) from the nature of things; or (2)
from the intention of the parties.
(1) Obligations indivisible by nature.
In the first case, the object of the obligation is by its nature
not susceptible of division either materially or intellectually.
Conversely, when the object of the obligation is a thing which
in its delivery or performance is susceptible of division, either
materially or intellectually, the obligation is divisible. For
instance, a debtor who is bound to pay a sum of money, such as
L. E. 300, can fulfil his obligation in part if ho pays L. E. 100,
and a person who sells a horse can perform his obligation in part
if he gives the buyer a half -share in the horse. In this last case,
it is true, the division cannot be material, for a section of tho
horse would be of no value, but an intellectual division is per-
fectly possible and practical. Two persons may be joint-owners
of a horse as of other kinds of property.
It is true that the law does not allow the debtor in an obligation
to divide the performance in this way. He must perform the
obligation as if it were indivisible. A debtor cannot eomp 1 his
creditor to receive payment of his debt in part. (C. C. E.
168/231: infra, p. 451.) But this is not because the debt
is naturally indivisible. On the contrary, it is clearly
divisible. The reason why performance cannot be divided is be-
en us" the parties to the contract intended an entire performance.
A divisible obligation must b\ perfonwed between the creditor.
and the debtor as if it were indivisible. (C. C. F. 1220; C. C. Q.
1122.) As between the creditor and the debtor, therefore, there
is no importance in knowing whether an obligation is divisible
or indivisible. But the distinction becomes important when either
the creditor or the debtor dies and is succeeded by several heirs.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1312.) In this caso
if the debt is divisible the heirs of the debtor will be liable only
in proportion to their shares in the succession. (See Cass. 17 dec.
1907, D. 1908. 1. 140; Req. 13 janv. 1908, D. 1909. 1. 179.)
And, in like manner, the heirs of the creditor will be entitled
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 433
to claim each of them only his share, corresponding to his share
in the creditor's succession. One who is heir of the debtor to the
extent of two-thirds will be liable for two-thirds of the debt, one
who is heir of the creditor to the extent of two-thirds will be
entitled to claim two-thirds of the debt, and so forth. (See
C. C. F. 1220; C. C. Q. 1122.)
There are even here certain cases which are declared by the
code to be exceptions. (C. C. F. 1221; C. C. Q. 1123.) These
will be explained later, but the rule is that a divisible obligation
divides among the heirs either actively or passively. On the
other hand, when the obligation is indivisible by nature no such
division among the heirs of the creditor or the heirs of the debtor
is conceivable. The obligation must be performed altogether or
it must fail altogether. It is impossible to perform one-third of
it, or to divide the performance in any way. (Aubry et Rau,
5th ed. 4, p. 76.)
To take some familiar examples: If A binds himself to grant
a right of way to B, and A dies before the servitude has been
created, leaving three heirs, and B sues one of the heirs, this heir
cannot plead that he is liable only to the extent of one-third, and
that he is willing to grant the servitude to this extent. A right:
of way must exist or not exist as a whole.
The extent of the use may, of course, vary. A man may use a
road every day, or only once a week, and he might, conceivably,
have the right to use it only once a week, but that is quite a
different thing from a division of the right itself.
It is inconceivable that a man should have half a right of way
or a quarter of a right of way. He must have the whole of a right
of way whatever its extent may be. (Demolombe, 26, n. 524;
Aubry et Rau, 5th ed. 4, p. 77; B.-L. et Barde, 2, n. 1314.
Cf. Cass. 6 fevr. 1872, D. 72. 1. 101.) Similarly, where a debtor
is bound to communicate a title, or to deliver a specific thing, or
to render an account, or to perform a juridical act such as enter-
ing an appeal, or to register a hypothec, part-performance of such
an obligation is inconceivable. (D. Rep. Oblig. n. 1513.) In
like manner, an obligation by two dramatic authors to produce
an opera by a certain date is naturally indivisible. (Paris, 13
nov. 1888, D. 90. 2. 238.) In such cases as those enumerated
the obligation may be described as naturally or necessarily indivi-
sible, or, to use Pothier's language, the indivisibility is absolute.
In principle, actions are likewise divisible or indivisible accord-
ing to the nature of the object sued for. But this belongs to
W.— VOL. II. 2°
434 THE LAW OF OBLIGATIONS.
the law of procedure. (Cass. 30 dec. 1908, et lor mars 1911,
D. 1913. 1. 89; Cass. 29 avril 1895, D. 95. 1. 454.)
(2) Obligations indivisible by agreement.
The second group of indivisible obligations consists of those in
which the indivisibility does not arise from the nature of things;
for it would be quite possible to perform the obligation in part,
but, nevertheless, the obligation is indivisible, because the parties
contemplated and intended that it should be performed as a whole
and should not be divided.
Here the indivisibility may bo described as conventional. For
instance, a builder contracts to build a house, a sculptor to make
a statue, a painter to paint a picture. In such cases, and many
others, where what is contemplated is the production of an opus
or completed work, it may very well be that the intention of the
parties was that nothing was to be paid unless the work was
completed. The man who contracts to pay L. E. 500 or to
deliver 500 bushels of wheat, and pays L. E. 250 or delivers 250
bushels, makes a prestation of definite value, but the heir of a
sculptor would not be entitled to say, " my ancestor did one-third
of the statue, I am entitled to one-third of the price." An un-
finished statue or picture has, very probably, no value at all,
and the completion of the work was, or may well have been, con-
templated as a condition precedent to the right to sue. And,
although half a house may be of some value, yet the obligation to
build a house is an indivisible obligation if it was so intended by
the parties. (Demolombe, 26, n. 525; Cass. 23 juin 1851, D.
51. 1. 165; Rodiere, De la Solidarite et de Vlndwisibilite, n. 345.)
It is a question of intention.
The two kinds of indivisibility which have been discussed are
those which Dumoulin describes as: (1) the case where the in-
divisibility is contractu — an expression not very happily chosen
by him to denote the case of the indivisibility of the nature of the
object— and (2) the case where the indivisibility is obligatione,
that is, where it might be performed in part but the parties have
shown their intention that it is to be performed as a whole,.
(Pothier, Oblig. nos. 291, 292.)
It is better to distinguish these two kinds of indivisibility as
natural and conventional.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 435
English law as to this.
The English law offers interesting analogies. The rule, for
example, in building contracts is that if payment was to be made
upon the completion of the work, and the builder fails to complete,
he cannot claim the contract price. Nor can he charge for the
value of the work done unless there has been some ratification by
the other party which excuses him from completing the work.
(Sumpter v. Hedges, 1898, 1 Q. B. 673, 67 L. J. Q. B. 545.
See Leake, Contracts, 6th ed. p. 38.)
Indivisibility on one side only.
Dumoulin, and Pothier following him, give a third case of
indivisibility, which they describe as indivisibility merely as
regards performance-— solutione tantum. (Pothier, Oblig. n. 294.)
The thing due is here perfectly divisible, but the parties have
agreed that it shall be performed as a whole. What distinguishes
this case from the case of conventional indivisibility is that the
parties do not intend the obligation to be indivisible both actively
and passively. If the creditor dies, and is succeeded by several
heirs, each of these heirs cannot insist upon the whole performance.
On the other hand, if the debtor dies and is succeeded by several
heirs, one of these heirs, though not always each of them, may be
called upon to pay the whole debt. They are in fact cases of
conventional indivisibility on one side only. The French Code
does not regard these cases as examples of genuine indivisibility,
but as cases in which an obligation naturally divisible must, for
certain special reasons, be performed as if it were indivisible.
The three exceptional cases dealt with in article 1221 of the
French Code are the following: —
(1) When the object of the obligation is a certain specific thing
of which one of the heirs is in possession. In this case, where
the debtor has left several heirs that one of them who possesses the
thing due may be sued to deliver it. For example, John dies
leaving three heirs. In the partition of his succession, a picture
which was in his house falls to the share of William, one of these
heirs. It turns out afterwards that the picture did- not belong
to John at all, but had been left with him as a deposit. Its
owner is entitled to sue William to deliver it. Under the old
law a more common case was when the debtor had sold a specificl
thing, but had not delivered it before his death. In this case
28 '2]
436 THE LAW OF OBLIGATIONS.
the buyer could compel the heir into whose share it had fallen to
deliver it. Under the modern law he can do so upon a simpler
ground, viz., that the specific thing became his property at the
time of the agreement, and that he can therefore revindicate it
from the holder.
The holder will have a recourse against his co-heirs, if in the
deed of partition he was not charged with the entire payment of
this debt. (C. C. F. 1221; Baudry-Lacant. et Barde, Oblig. 2,
n. 1323, b.; Aubry et Rau,. 5th ed. 4, p. 87; Laurent, 17, n. 409.)
(2) When one only of the heirs of the debtor is charged by
the title with the performance of the obligation. For instance,
John leaves his estate equally to William and Thomas, but he
charges Thomas to pay a debt of L'. E. 10,000 to Henry. This
case presents no difficulty; Thomas can be sued for the whole
debt, saving his recourse against William, unless John intended
that Thomas was to bear this burden without any recourse as a
charge upon his share. (Pothier, Oblig. n. 313; Laurent, 17,
n. 416; Aubry et Rau, 5th ed. 4, p. 89; B.-L. et Barde, 1,
n. 222. See Civ. 16 fevr. 1858, D. 58. 1. 128.)
(3) When it results either from the nature of the contract, or
of the thing which is the object of it, or from the end proposed by
it, that the intention of the contracting parties was that the
obligation should not be performed in part. (C. A. Alex. 18
juin 1914, B. L. J. XXVI, 447.) This differs from the two
preceding cases in this respect, that each of the co-heirs may be
sued for the whole thing due. On the side of the debtor the
obligation is indivisible. But the heir who pays the whole will
have a recourse against his co-heirs for what he has paid in excess
of his share.
The cases contemplated in (3) are such as these:— The debtor
has promised a sum of money to the creditor to enable him to
meet a bill which is due on a certain date, or to exercise a right
of redemption.
Nothing is more divisible as a rule than money, and in the case
of an ordinary money-debt it would be natural that each of thie
heirs of the debtor should be liable only for his share. But in
this case the whole sum was required for a particular object which
was specified. (B.-L. et Barde, 2, n. 1327, b.; Laurent, 17,
n. 41.8; Aubry et Rau, 5th ed. 4, p. 90.)
But there are many other cases in which the intention of the
parties clearly is that the obligation shall be performed as a whole,
although there is no intention to give to each of the heirs of the
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 437
creditor a right to exact the whole of what was due to his ancestor.
This is so when the .object of a contract of sale is something which
was to be delivered as a whole. For example, if a suite of furniture
is bought, it may easily appear that the intention was that the
whole suite should be delivered as described, and if the seller
substitutes certain other pieces for those which belonged to the
suite the buyer can refuse to take delivery. In such a case if the
seller dies, each of his heirs could be sued fo,r delivery of the;
suite.
But if the buyer died each of his heirs would not be liable for
the whole of the price. (See Tobey Furniture Co. v. Macmmter,
1902, R. J.Q. 12K.B.34.)
The same article of the French Code which gives these three
cases in which an obligation is indivisible as regards the heirs of
the debtor only, also mentions two other cases: —
(1) The hypothecary debt; and (2) an alternative obligation
to pay one of two things of which one is indivisible and the other
is not when the creditor has the choice. (C. C. F. 1221.) But
these are not genuine exceptions.
(1) In the -case of a debt secured by a hypothec the debt itself
is divided among the heirs of the debtor.
It is true that the heir who possesses the immoveable hypothe-
cated may be sued for the whole debt.
But as to this, he is merely in the position of any third-party
holder. He can escape his liability, if he chooses, by paying his
share and by surrendering the immoveable. (Planiol, 2, n. 721;
Laurent, 17, nos. 407, 413; B.-L. et Barde, 2, n. 1322, a.)
(2) In the case of the alternative obligation all that is meant
is that the heirs of the debtor cannct, under the pretext that one
of the alternative prestations is divisible, prevent the creditor
from exercising his contractual right to choose the prestation
which is indivisible. (Aubry et Rau, 5th ed. 4, p. 88; B.-L. et
Barde, 2, n. 1324, c.)
As the Egyptian Code is silent as to these cases we are not
embarrassed by the inexactitude of the French Code on these
points.
The effects of indivisibility.
As previously explained, indivisibility makes no difference as
between the creditor and the debtor themselves, when there is only
one creditor and one debtor. In that case, every obligation may
438 THE LAW OF OBLIGATIONS.
be said to be indivisible, because the debtor cannot insist upon
making a partial payment.
It is when there are several debtors or several creditor- that it
becomes important to distinguish between a divisible and an in-
divisible debt, and it is generally, though not always, the death of
one. of the parties, and his being succeeded by several heirs, which
raises the question of indivisibility.
The nature and extent of the heir's liability for the debt of his
ancestor is a part of the law of succession, and is governed in
Egypt by the personal law of the deceased. (C. C. E. 54/77.)
The rules of the Mohammedan law are very different from those
of the French law. (See C. A. Alex. 14 fevr. 1900, B. L. J.
XII, 130.)
What follows is a statement of the French law.
When the obligation is divisible, and the debtor dies, his person
is, as it were, broken up into as many fractions as there are heirs.
Each heir is liable only for his share, and is not obliged to take
the risk of the dishonesty or insolvency of his co-heirs. (C. C. F.
870; Aubry et Kau, 5th ed. 9, p. 377.)
It might seem fair enough that each heir should be liable at
least up to the value of what he has received, but the French law
does not say so.
The creditor has certain ways by which he may protect himself:
(1) He may before the partition execute a seizure on the whole
or any part of the property of the de cujus. (Aubry et Rau, 5th
ed. 9, p. 379, note 8; B.-L. et Wahl, Successions, 3rd ed. 3, n.
3044.)
(2) He may claim that the property falling to the heir be
kept separate from the heir's other property. This is what is
known as la separation des patrimoines .
When it has been granted, it gives to the creditor a preference
over the property coming from the succession for payment of the
debt of the ancestor. The heir's share does not become available
for his own creditors until the debts of the ancestor have been
paid. (C. C. F. 878; Pothier, Oblig. n. 309; Aubry et Rau, 5th
ed. 10, p. 59; D. N. C. C. art. 878, nos. 185, seq. ; Cass. l 29 janv.
1900, D. 1900. 1. 269.)
But the general principle is that debts are divided among the
heirs in proportion to their share of the succession.
That is the governing principle as to all ordinary obligations
which can be thus divided.
But when the obligation is indivisible this is all different.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 439
Each of the debtor's heirs is liable for the whole, subject always
to the settlement of claims as among - themselves.
For we must remember that the articles we are considering
treat of the effects of indivisible obligations only as between the
creditor and the debtor. As among the debtors themselves, or the
creditors themselves, the profit or loss will be divided according- to
the relation in which they stand to one another, and it makes no
difference from that point of view whether the obligation is
divisible or indivisible.
But although each of the heirs of the creditor may exact in full
the execution of an indivisible obligation, because partial pay-
ment of it is impossible, the benefit of the payment does not
generally belong entirely to the heir who sues.
It belongs to him and to his co-heirs. And he has no right to
prejudice their interests.
Ho cannot, therefore, release the debt as a whole, nor can he
take something instead of the debt. If he does grant such a
release, or takes something as an equivalent for payment, this
will not prevent another co-heir from suing for the performance
of the indivisible obligation.
But if the other co-heir does so, he must pay the debtor .the
value of the share of the co-heir who made the release or received
the equivalent. The following is an illustration: —
John and William owe to Thomas and Edward a debt which
is indivisible.
Thomas releases John from his liability in consideration of
receiving L. E. 50. Thomas cannot now sue either John or
William. Edward can still sue either John or William for the
whole debt as it is indivisible.
But as Thomas, but for the release, would have been entitled to
his share, and Edward cannot keep this, if Edward exacts th'o
whole performance from John he must deduct the L. E. 50 or so
much of it as would have fallen to Thomas, and if he exacts-
performance from William he must deduct L. E. 50 which John
has paid or, at any rate, so much of it as belongs to Thomas.
(C. C. F. 1224; B.-L. et Barde, 2, n. 1331; Colmet de Santerre,
5, n. 159, bis II.)
When one of the co-heirs is sued for the whole of an indivisible
obligation he may demand delay to make the co-heirs parties to
the suit, unless the debt is of such a nature that he only can;
discharge it. (C. C. F. 1225; C. C. Q. 1130.)
440 THK LAW OF OBLIGATIONS.
In the case of the indivisible obligation the defendant's object
in demanding that the co-heirs should be mis en cause is that the
judgment should find all the co-heirs primarily liable. (Aubry
et Ilau, 5th cd. 4, p. 83; Laurent, 17, n. 392; Pand. Franc ,
Oblig. n. 713.) There are two advantages to be derived from
calling in the co-heirs: (1) If the creditor gets a judgment against
all the co-heirs, there is a chanoe that he may select another of
them for attack, and not the original defendant; and (2) even
if the creditor should still attack the original defendant, and he
should be condemned in damages for non-performance, this con-
demnation in damages is divisible, and, as the co-heirs are all
parties, he is liable only for his share, whereas if the others had
not been called in he would have been condemned to pay all the
damages. (B.-L. et Barde, 2, n. 1336; Laurent, 17, n. 392;
Pand. Frang. Oblig. n. 714.) It now remains to consider the
case stated as an exception in C. C. F. 1225, viz., that the co-heir
sued for the whole debt cannot demand delay to make the other
co-heirs parties to the suit if the debt is of such a nature that it
can be discharged only by himself. Upon this matter Pothier is
the safest guide, and he gives as an example the case where the
debtor had promised to create a servitude of passage and had died
before the servitude was constituted. In the partition the land
over which the right of passage was to exist fell to one of the
co-heirs. The creditor can sue this co-heir to grant the servitude.
The co-heir in this case cannot claim that his co-heirs should be
made parties, for a judgment condemning them to execute the
obligation would be ineffectual, seeing that he alone can do so.
But, even here, the defendant can get the co-heirs called in,
not, it is true, in order that the judgment shall be against them
all, but in order that by the same judgment which finds him finally
liable they may be condemned to the extent of their liability in
warranty to him. As a general rule, in such a case, there is no
recourse, and this dilatory exception is not therefore required,
because in the partition the burden of the servitude is taken into
account in estimating the shares. (Pothier, Oblig. n. 831;
Baudry-Lacant. et Barde, Oblig. 2, n. 1335. The cases to be
contrasted with this are:
(1) When the debt may be discharged indifferently, either by
the heir sued or by each of the others, as, for example, if the debtor
had contracted to erect a building upon land which belonged to
him. Such an obligation would be indivisible, but, so long as
the succession is undivided, each of his heirs can equally fulfil it.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. 441
If one of them is sued alone he will be condemned to perform the
whole or to pay all the damages, saving- his recourse, unless he
avails himself of his right to get the other heirs called in. (C. C. F.
1225; C. C. Q. 1130; Pothier, Ohlig. n. 333; Baudry-Lacanl . et
Barde, Ohlig. 2, n. 1337.)
(2) The debt may be one which can only be paid by all the
heirs jointly. For example, the debtor has contracted to create
a servitude of passage on a route to be afterwards fixed. He dies
before the servitude is constituted and his heirs are in indivision.
It needs the consent of all the co-proprietors to grant the
servitude, and if the action is brought against one of thorn he can
call the others in.
But if he does not do this he will be taken as having assumed
liability for all the damages, saving his recourse. (Baudry-
Lacant. et Barde, Oblig. 2, n. 1337.)
In this kind of case if one of the heirs pleads that he is willing
to perform his share of the obligation, but that another of the
co-heirs refuses, ought the heir who is willing to pay to be found
liable in damages? This is a controversial question. Pothier
answered it in the negative upon the ground that the co-heir who
offers to pay his share is not en demeure. (Oblig. n. 334.) And
this view is taken by many modern authorities. (Baudry-Lacant.
et Barde, Oblig. 2, n. 1337.)
There are, however, dissentients who argue that the refusal
of the co-heir is not either cas fortuit or force majeure, and that
nothing else will excuse the performance.
But they say that if the defendant pays the damages, he is
entitled to recover them from the heir by whose fault it is that the
obligation was not executed. (Colmet de Santerre, 5, n. 160, bis
IV; Pond. Franc,. Oblig. n. 721; Aubry et Rau, 5th ed. 4, p. 84,
note 20.) Pothier's view seems to be preferable. The heirs are
each of them liable for the whole, but this is because the debt is
indivisible, and not because they have bound themselves to pay
the whole. They are not responsible in any way for each other,
and if the obligation fails of fulfilment by the fault of one, there
does not seem to be any good ground for making the others
responsible for this.
Indivisibility as applied to obligations with a clause of penalty.
The French Code states that when an indivisible obligation is
accompanied by a penal 'clause, and one of the co-debtors breaks
the contract he alone can be sued for the whole penalty; the other
442 THE LAW OF OBLIGATIONS.
oo-debtors are liable only for their shares. But when the principal
obligation is divisible, the co-debtor who breaks his contract is
liable only for his share of the penalty, and there is no actiom
against the debtors who have performed their part. (C. C. F.
1232, 1233; Aubry et Kau, 5th ed. 4, pp. 85, 93; B.-L. et Barde,
2, nos 1374, seq.) The Egyptian law is the same though the
code is silent.
Comparison between indivisibility and joint and
several liability.
There are important differences between these two things, and.
the French Code and the Code of Quebec declare: The stipula-
tion of joint and several liability does not give to an obligation
the character of indivisibility. (C. C. F. 1219; C. C. Q, 1125.)
The Code of Quebec adds: —
Each one of those who have contracted an indivisible obliga-
tion is held for the whole, although the obligation have not been
contracted jointly and severally. (C. C. Q. 1126.)
A joint and several obligation is one which is contracted by
several debtors together or one which is in favour of several
creditors together.
The joint and several liability is on account of the combination
of several debtors. But the indivisible obligation is normally an
obligation contracted originally by one debtor, which, contrary
to the ordinary rule, is not like his other debts divided among his
heirs in proportion to their shares. The debt is indivisible not-
withstanding the fact that it is due by several heirs. The chief
practical differences between solidarity and indivisibility are:
(1) Solidarity does not prevent the division of the debt between
the heirs of the debtor or the heirs of the creditor, whereas in-
divisibility prevents the division of the debt among the heirs of
the debtor or of the creditor. (2) Interruption of prescription in
favour of one heir of a joint and several creditor or against one
heir of a joint and several debtor does not affect the other heirs,
but if the debt were indivisible it would do so in both cases.
(3) Solidarity implies the existence of a mandate by which each
of the co-de'btors represents the others to the extent above ex-
plained, whereas no such reciprocal mandate exists among co-
debtors jointly bound to the same indivisible prestation. (C. C. F.
2249, 1206; C. C. E. 110/166; B.-L. et Barde, 2, n. 1341;
Laurent, 17, n. 404.)
EXTINCTION OF OBLIGATIONS. 443
CHAPTER XXIV.
EXTINCTION OF OBLIGATIONS.
The Egyptian codes enumerate seven modes in which an obliga-
tion may become extinct —
(1) Performance.
(2) Dissolution, [in the sense of extinction by impossibility of
performance, j
(3) Novation.
(4) Release.
(5) Compensation.
(6) Confusion.
(7) Prescription.
(C. C. E. 158/221.)
The French Code gives nine modes of extinction of obligation.
Seven of them coincide with those of the Egyptian Code, except
that the French Code uses the expression " la perte de la chose"
instead of the term "dissolution" employed by the Egyptian
Code. But this is merely a difference of terminology, because,
as will be explained afterwards, the French Code means by " la
perte de la chose" the same thing that the Egyptian Code means
by "dissolution," namely, that the prestation promised has
become physically or legally impossible. Besides these seven
modes of extinction, the French Code gives two others, " la nullite
ou la rescision," and " Veffet de la condition resolutoire." (C. C. F.
1234.)
The Quebec Code attempts a more complete enumeration. To
the nine modes of extinction given in the French Code it adds:
(1) the expiration of the time fixed by law or by the parties for
the duration of the obligation; (2) the death of the creditor or of
the debtor in certain cases; and (3) special causes applicable to
particular contracts. (C. C. Q. 1138.) The effect of the resolu-
tory condition has been already considered, and the other modes
of extinction which are not mentioned in the Egyptian Code in
444 THE LAW OF OBLIGATIONS.
this place are not regular and normal modes, but exceptional ways
in which certain obligations may be extinguished. (See B.-L.
et Barde, 2, n. .1383.)
The hire of personal services, for example, is dissolved by the
death of the person employed. (C. C. E. 411/502.) A life-rent
or an alimentary provision comes to an end upon the death of the
person entitled to it. Mandate may terminate by the mandator
revoking the mandate, or by the mandatary renouncing the man-
date, subject in both cases to the rules expressly stated in the
law. As M. Hue says, the obligation is in such cases extin-
guished by a kind of performance. It comes to an end in one of
the ways contemplated by the parties. (Hue, 8, n. 2.)
There is no need to deal here with these special cases.
But there is one important general mode of extinction which
might have been mentioned in the enumeration, viz., resiliation
of the contract by the mutual consent of the parties. This has
been referred to earlier. (Supra, p. 5.)
The seven modes of extinction o-iven in the Egyptian Code
will now be explained seriatim: —
(1) Performance or payment.
The first mode of extinction of an obligation is its performance.
The French Code uses the word "payment." Payment as a
term of the French law means the fulfilment of the obligation
whatever it was.
It means not only the delivery of a sum of money in satisfaction
of an obligation, but the performance of anything to which the
parties are respectively obliged. It may, accordingly, consist in
giving something or doing something, or in abstaining from doing
something. (Aubry et Kau, 5th ed. 4, p. 244; B.-L. et Barde,
2, n. 1384.)
"Payment" in popular language is so much associated with
the payment of money that it is not such a good word to describe
the performance of the obligation as the word "performance"
or the term of the Eoman l&w—solutio — which preserves the figure
of the untying of the vinculum juris or lien de droit. (Dig. 50.
16. 176.) The Egyptian Code uses "payment" in the narrower
sense of payment of money or delivery of fungibles, and employs
the term "performance" or, in the French version, V execution,
as the general term. (C. C. E. 160/223, 170/233.)
The term payment in the sense of performance of any obligation
EXTINCTION OF OBLIGATIONS. 445
is, notwithstanding-, so consecrated by usage that it seems pedantic
to avoid it. Every payment presupposes a debt. What has been
paid where there is no debt may bo recovered. There can be no
recovery of what has been paid in voluntary discharge of a natural
obligation. (C. C. F. 1235.) The right to sue for repetition
of anything which has been paid without being due has been
explained under the head of quasi-contract, and the character of
natural obligations has also been explained earlier.
If a man whose debt has prescribed and who knows that it has
prescribed chooses to pay it, he is deemed to have voluntarily
paid a natural obligation and, therefore, he cannot recover what
has been paid.
By whom performance may be made.
" An obligation cannot be performed by any one but the debtor
if it results from the nature of that obligation that the creditor
has an interest that such should be the case."
" When performance consists in a payment, it may always be
made by a third person, even against the wish of the debtor or
the creditor:' (C. C. E. 159, 160/222, 223.)
It depends on the nature of the obligation and on the intention
of the parties whether the performance must be by the debtor
himself. In many cases it is obviously to the interest of the
creditor that the debtor should perform the obligation in person.
If I contract with a celebrated painter to paint my portrait he
cannot perform the obligation by getting another to paint the.
picture for him. All contracts in which the creditor relies on
the personal knowledge or skill of the debtor are of this nature.
No contract, then, in which performance by the particular debtor
was stipulated for, or is implied, can be performed by another,
unless, of course, the creditor consents to let a third party do so.
(See supra, p. 227.) But it is quite otherwise when
the contract is to pay a, sum of money, or to deliver go
much wheat of a certain quality, or to deliver a particular
thing. Here the only interest of the creditor is to get
his money, his wheat, or the thing for which he has stipulated.
It is immaterial to him where it comes from, that is, assuming
that the party from whom it comes can validly make the payment.
The right of the third party to pay does not depend on his having
any interest in the debt, and he may insist on making the payment
as-ainst the will of the creditor and without the knowledge of the
446 THE LAW OF OBLIGATIONS.
debtor. If the debtor cannot or will not pay his own debt, the
least ho can do is to allow his creditor to take payment where he
can get it. But what if both the creditor and the debtor are
opposed to the third party making- the payment? If they both
prefer to leave things as they are, why should a third party bo
allowed to interfere? The German Code expressly says that the
stranger to the obligation cannot make payment in this case
(art. 267, at. 2). This appears to be the French law also,
though the code is not explicit on the point. (Colmet de Santerre,
5, n. 175, bis X; Baudry-Lacant. et Barde, 2, n. 1394; Aubry
et Rau, 5th ed. 4, p. 245, note 2. See Req. 6 nov. 1907, D.
1908. 1. 86.)
But the Egyptian Code expressly allows it even in this case.
The debtor has no interest to object to the payment, because this
does not mean that the person who pays the debt which he does'
not owe steps into the shoes of the former creditor. The payment
extinguished the obligation, and the person paying cannot claim
to be subrogated in the rights of the creditor whom he pays except
in certain conditions named in the code. (C. C. E. 162/225;,
C. C. F. 1236.) He cannot be allowed to make the condition
of the debtor worse than it would have been if the debtor had
been left to the mercy of the original creditor. If he is not
subrogated his claim against the debtor whose debt he has paid
will be that of a mandatary if he was authorised to make the
payment, and if he had no such authority his action in recoursQ
will be, according to circumstances, the action of a negoiiorum
gestor or the action de in rem nerso.
He can recover only to the extent of the benefit which he has
conferred. (Baudry-Lacant. et Barde, 2, n. 1399; Laurent, 17,
n. 488.) The Egyptian Code is express upon the point:
Such payment made by a third person gives him a right of
recourse against the debtor in respect of the benefit obtained by
the latter, up to the ammmt of the sum disbursed. (C. C. E.
161/224.) The payer can never make a profit. And the debtor
is further protected by C. C. E. 163/226:
The debtor has the right, when payment has been made against
his wish, to decline to recognise in whole or in part any claim
against him by the person, who has made a payment on his behalf,
if he shows that he had any interest whatever in refusing pay-
ment. (See C. A. Alex. 24 dec. 1902, B. L. J. XV, 75.)
This article does not really add anything, but is intended to
make it clearer that the claim is only like that of a negoiiorum.
EXTINCTION OF OBLIGATIONS. 417
gestor. If the debtor, for instance, had the right to plead com-
pensation when another paid his debt, he was not benefited by the
payment. And, similarly, if the debt was on a contract which
was void, or was voidable at his instance. The third party who
pays another's debt may do so by compensation when the condi-
tions for this are present. (C. A. Alex. 12 mai 1914, B. L. J.
XXVI, 382.)
Under the English law the third party who paid the debt, would
have no claim at all against the person whose debt he had paid.
No man can make himself the creditor of another by paying!
that other's debt against his will or without his consent.
(Per Willes, J., in Johnston v. Royal Mail Steam Packet Co.,
1867, L. R. 3 C. P. 43, 37 L. J. C. P. p. 48. See Leake on
Contracts, 6th ed. p. 44; Anson, Contracts, 14th ed. p. 434.
Cf. Hirachand Punamchand v. Temple, 1911, 2 K. B. 330, 80
L. J. K. B. 1155; supra, p. 197.) But the French law is
different. It may, however, appear that the person who pays the
debt of another does so with the intention of making- him a free
gift, and not with the view of preserving any right of recourse
against him. This is a question of fact, and the presumption is
against it, but it maj^, nevertheless, appear from the circumstances
that it was so. If the facts indicate that a donation was intended,
and it was accepted by the other party, there will be no right of
recourse at all. (Baudry-Lacant. et Barcle, Oblig. 2, n. 1399;
D. Supp. Oblig. n. 680.) It may also be a question whether if
A pays the debt of B he is doing so with his own money., so as
to have a recourse against B, or whether he makes the payment
with the money of B, the true debtor. According to Larombiere,
the presumption is in favour of the second view, but according to
Demolombe the presumption is that the person who pays does so
with his own money. (Larombiere, on art. 1236, n. 7; Demo-
lombe, 2'7, n. 82.) And this is supported by a judgment of the
Cow de Cassation. (Cass. 18 fevr. 1901, D. 1901. 1. 303.)
In any case it is a mere presumption of fact which may be
rebutted by other presumptions.
Obviously, if the person making the payment proposes to sue
at once for the full amount this cannot be for the advantage of
the debtor.
He could not have been worse off if he had been left to the
original creditor. It is, generally, when the original creditor is
threatening to take proceedings, that it may be to his advantage
448 THE LAW OF OBLIGATIONS.
for a third party to intervene who is willing to give him time or
perhaps to release him.
Such a third party is not always at hand, but if he does present
himself there seems no good reason why the creditor should not
be bound to take payment from him, or why the person making
tho payment should not have a claim against the debtor, if it is
of an equitable kind such as that of a negotiorum gestor.
Person paying must have capacity.
The Egyptian Code says: For the payment to he valid, the
debtor must have capacity to alienate and the creditor capacity
to receive. (C. C. E. 165/228.) And this very obvious state-
ment is followed by: Nevertheless, the payment of that which
is due by a person not having the necessary capacity extinguishes
the obligation, provided that he is not prejudiced by such pay-
ment. (C. C. E. 166/229.)
The first of these articles is an improvement on the correspond-
ing article of the French Code, which says: —
Pour payer valablement, il faut etre proprietaire de la chose
don-nee en paiement, et capable de Valiener. (C. C. F. 1238.)
By the old law it was the payment or delivery of the thing
which in general passed the property. The payment was an
alienation and, therefore, could not be made except by a person
capable of alienating.
(Pothier, Oblig. n. 496.) But by the modern law a contract
for the alienation of a determinate thing makes the purchaser
owner before the delivery. (Supra, p. 30.) So that it is clearly
incorrect to say that a valid payment must be made by the owner
of the thing paid seeing that the seller has, in the ordinary case*
ceased to be the owner before that time. Even when the person
paying is a minor or other person incapable of alienation, except
subject to conditions which have not been fulfilled, the payment
extinguishes the obligation, provided the person paying is not
prejudiced by the payment. (C. C. E. 166/229.) The incapable
who pays a debt clue by him is not prejudiced. And if he pays
fungibles to a person to whom they are due, and that person
consumes them in good faith, he will not have a revindication.
(C. C. F. 1238.)
• EXTINCTION OF OBLIGATIONS. 449
To whom payment must be made.
The Egyptian Code says: Performance must be made to the
creditor, to his mandatary empowered to this effect, or to the
person holding the right to claim execution of the obligation,
(C. C. E. 167/230.)
The French Code has an article: Payment is not valid if
made to a creditor who is incapable by law of receiving it, unless
the debtor proves that the thing paid has turned to the benefit of
such creditor. (C. C. F. 1241.) There is no corresponding
article in the Egyptian Code, but there can be no doubt that the
law is the' same. These articles may be considered together. In
order to take payment the creditor must have the requisite capa-
city . So if a man who owes money to a minor, or to an interdicted
lunatic, pays the money to his debtor, he may be compelled to pay
it over again to the tutor or curator, according to the rule qui paie
mal paie deux fois. But he can escape from this necessity if ha
can prove that the payment has enured to the benefit of the creditor,
as, for instance, if the creditor had bought a house with the money
at a fair price.
And if part of the money has been beneficially applied, the
debtor will only need to pay the balance over again. But money
spent by the incapable person on luxury— en depenses voluptuaires
—has not been beneficially applied. (B.-L. et Barde, Oblig. 2,
n. 1434; Demolombe, 27, n. 197; Aubry et Rau, 5th ed. 4,
p. 256, note 18.)
As to payment made to a person having the authority of the
creditor, it is to be observed that the authority to take payment
may be express or implied. In principle, it is for the deibtor who
makes the payment to satisfy himself that the person to whom
he pays is authorised to receive the payment. When the contract
lays down that payment is to be made to a certain person on
behalf of the creditor, but only subject to certain conditions, the
debtor must comply strictly with those conditions. (Req. 30,
dec. 1912, D. 1915. 1. 53.) A statement in the contract tnat
payment is to be made in the office of a certain lawyer or notary
does not, in itself, imply that this lawyer or notary has authority
to receive payment on behalf of the creditor. (Cass. 19 fevr.
1913, D. 1913. 1. 200; Sirey, Table Becennale, 1901—1910,
s. v. Paiement, n. 1.) It is in many cases easy to find that such
authority was implied from the position of the parties and the
practice of business. And it must be remembered that although
w. — vol. ii. 29
-
450 THE LAW OF OBLIGATIONS.
an incapable person cannot give an agent a better title to take
payment than he has himself, yet there is nothing to prevent a
person who is himself capable from giving to a minor authority
to take a payment for him. (Laurent, 17, n. 522; Dcmolombe,
27, n. 136.) Thus a merchant may authorise a clerk who is a
minor to receive payment of debts due to the merchant, and such
an authority may be express or implied. And it is also a rule of
the law of agency that, even though the authority may have been
revoked, the payment to the agent is a good payment, if the
debtor did not know of the revocation and was in perfect good
faith. But he will not be considered to have been in perfect
good faith, if it appear that by the exercise of ordinary care he
would have discovered that he was paying to a man who had noi
longer any right to collect the debt. (Larombiere, on art. 1239,
n. 21.) The full discussion of this subject belongs to the law of
agency. (See C. C. F. 2005; C. C. E. 530/651; B.-L. et
Wahl, Contmts Aleatoires, n. 869; Keq. 21 dec. 1897, D. 98.
1. 382, note 4. Cf. C. A. Alex. 22 mai 1902, B. L. J. XIV,
325.)
»
Performance made to the person holding the right to claim
execution of the obligation.
This is the phrase used in the Native Code (art. 167). The
Mixed Code says: the person possessing the right to the obliga-
tion (art. 230).
What does the code mean by these words?
Mr. Halton interprets them to mean the assignee of the creditor
or the creditors of a creditor who has executed an attachment, —
saisie-arret . (1, p. 370.)
But though payment is valid if made to any one of these, J.
think this is not what the aitticle refers to. It is intended to
reproduce article 1240 of the French Code: Le paiement fait
de bonne foi a celui'qui est en possesion de lacreance, est valable,
encore que le possesseur en soit par la suite evince.
This does not mean the person who happens to be in possession
of the document of debt. It means the apparent or ostensible 1
creditor, the creancier putatif . Such, for example, is a person
who takes a succession as the nearest heir, and is afterwards
evicted by a nearer heir who has been discovered later.
A debtor to the succession who paj r s in good faith to the apparent
heir is protected, and his payment extinguishes his debt. (Planiol,
2, n. 416; B.-L. et Barde, 2, n. 1446; Laurent, 17, n. 545;,
EXTINCTION OF OBLIGATIONS. 451
Eouen, 28 avril 1874, S. 74. 2. 314; Cass. 10 dec. 1900, S. 1903.
1. 33, and note by M. Perron.) The Egyptian Government
made a payment to a person who was designed as the curator of
its absent creditor by a consular certificate, and was in possession
of the grosse of the judgment finding the government liable.
It was held that the payment was liberatory. (C. A. Alex. 30
nov. 1911, B. L. J. XXIV, 23.)
Payment cannot prejudice seizures.
According to the French Code: —
Payment made by a debtor to his creditor, to the prejudice
of a seizure or attachment, is not valid against the seizing or
attaching creditors, who may, according to their rights, constrain
the debtor to pay a second time, saving in such case only his
remedy against the creditor so paid. (C. C. F. 1242.) The
effect of seizure by garnishment or attachment is to order the
garnishee not to pay the debt to the debtor; it sequestrates the
debt in his hands. And the Egyptian law is the same. (See
C. Proc. E. 410/471.) Of course, the creditors who challenge
the payment on the ground that it was in defiance of their saisies-
arrets will not succeed if it is found that they were not really
entitled to make the seizures, and, further, they cannot recover
more than the loss they have suffered through the action of the
creditor. So each of the attaching creditors can recover only the
proportion of the debt to which he would have been entitled if the
seizure had been respected.
Performance must be of thing due and cannot be
made in part.
The performance must be that which the parties contemplated,
and must be at the time and place stipulated; it cannot be made
in part ; subject, however, to the power of the judges, in excep-
tional circumstances, to fix a time or times for performance or
to grant a moderate extension of time, provided the creditor is
not seriously prejudiced thereby. (C. C. E. 168/231.) The
French Code says: A creditor cannot be compelled to receive
any other thing than the one due to him, although the thing
offered be of equal or greater value. (C. C. F. 1243.) People
must be held to their bargains. If I buy a horse, the debtor
cannot say, " I will not let you have the horse but you can take
an elephant which is worth more." (Cass. 6 mars 1876, D. 76.
29 (2)
— "T
452 THtf LAW OF OBLIGATIONS.
1. 193, dissertation by M. Giboulot; Aubry et Rau, 5th ed. 4 r
p. 258; B.-L. et Barde, 2, n. 1459. See supra, p. 362.) But
it has been held that when an official copy of a document had been
lost, it "was permissible to deliver in its place a second copy seeing-
that this was of exactly the same legal effect. (Req. 20 mars
1912, D. 1913. 1. 247.)
Of course, nothing hinders the creditor from consenting to take
something different from the thing for which he had at hYst
stipulated. If he does so there is said to be not a payment but a
"giving in payment" — dation en paiement. (See Cass. 5 fevr.
1908, D. 1909. 1. 294.) By the French Code: A debtor cannot
compel his creditor to receive payment of his debt in part even if
the debt is divisible (art. 1244). Under the French law
the court has power to grant the debtor a moderate delay for
payment. (C. C. F. 1244.) The Egyptian Code in the article
under discussion* gives the same power. (C. C. E. 168/231.)
According to the Egyptian jurisprudence, it is only when the debtor
is prevented from executing his obligation by some exceptional
circumstances, or by an event unforeseen and independent of his
will, that the court will grant a deled de grace. (C. A. Alex. 5
mars 1902, B. L. J. XIV, 172.)
The power is to be exercised with great caution as the French
article expressly says. (C. A. Alex. 11 mai 1911, B. L. J.
XXIII, 315; supra, p. 365.)
4
Place of performance.
The place of performance is, in the absence of agreement to
the contrary, the place in which the specific corporeal thing to
be delivered is situated. (C. C. E. 169/232.)
/;,' the case of cadi ami things determined as to kind, payment
is presumed to hare been stipulated to be made at the domicile
of tli" debtor. (C. C. E. 170.) These articles are similar to
the article of the French Code though with slight differences.
The French article is: —
Le payement doit etre execute dans le lieu designe par la con-
vention. Si 1c lien ii'i/ est pax designe, Je pagrmcuf, lorsqu'U
s'agit d'un corps certain et del ermine, doit etre fait dans h lieu
ou etait. uu temps de V obligation, la chose qui en fait Vobfpt.
Hors ces deux cas, le payement doit etre fait au domicile du
debiteur. (C. C. F. 1247.
The place of payment depends on the intention of the parties,
but this intention may he implied as well as expressed. In the
EXTINCTION OF OBLIGATIONS. 453
case of a certain specific thing the law impii is thai il is to be paid
at the place where it was when the contract was mad", unless
there is a stipulation to the contrary. So it has b son held as to a
loan of specific things, la rent Hut ion d'objeU en nature qui ont
etc pretes doit, en Vabsence de convention contraire, s'operer au
lieu oil Vemprunt a ete realise. (Bordeaux, 29 avr. 1898. I). 98.
2. 228.) And likewise when fungibles had been .sold by a vente
a terme it was held the payment was to be at the domicile of the
debtor. (Bcsancon, 21 fevr. 1890, D. 91. 2. 140. ) And in an
Egyptian case where a contract of life-insurance had been made
with an English company through an agent in Egypt it was held
that the payment was due in London. (C. A. Alex. 2 dec. 1915,
B. L. J. XXVIII, 43.^ There are one or two cases as to which
there are special provisions. The rule is that, apart from- stipu-
lation, the creditor must seek out the debtor and demand payment
at his domicile. (Demolombe, 27. n. 266: Aubry et Ram 5th
ed. 4, p. 267; D. N. C. C. art. 1247, n. 31.)
A money debt is presumably querable and not portable. So
in the case of the lease of a house the landlord must send for his
rent. And the fact that the lessee has at the request of the lessor,
on several occasions, sent the rent to the lessor's domicile, docs not
amount to a renunciation for the future by the lessee of his right
to delay payment till it is demanded at his domicile. ;C. A.
Alex. 5 janv. 1905, B. L. J. XVII, 60.)
The fact that the previous instalments of a debt have been
taken by the debtor to the creditor, or paid at a place other than
the debtor's domicile, does not amount to a renunciation on his
part of his right to have the demand for payment made at his
domicile for the future. The renunciation of a right is not pre-
sumed. (Baudry-Lacant. et Barde, Oblicj. 2, n. 1510; Demo-
lombe, 27, n. 271; Laurent, 17, n. 593.)
If the debtor has changed his domicile between the date of the
contract and the time of payment it will be at his new domicile
that the demand must be made. (Pothier, Oblig. n. 549.) And,
even if the change of domicile involves some expense to the
creditor in following him to his new address, the better opinion
appears to be that he cannot claim this expense from the debtor.
The law creates the presumption that payment is to be at the
debtor's domicile, and it does not make any reservation of this
kind. (B.-L. et Barde, 2, n. 1508; Laurent, 17, n. 592.) Some
authorities, however, are of a different opinion as to the right to
recover such expenses. (Aubry et Rau, 5th ed. 4, p. 267, note 15.)
But if the agreement is that payment is to be made at the
454 THE LAW OF OBLIGATIONS.
domicile of the creditor, and the creditor changes his domicile*
the debtor is not obliged to follow the creditor to his new domicile
unless the agreement so declares. The presumption is that the
parties meant the creditor's domicile at the date of the contract.
The debtor may demand that the creditor should elect a domicile,
in this place to receive the payment. In questions of doubt the
law is in favour of the debtor. (Pothier, Ohlig. n. 549; Baudry-
Lacant. et Barde, Oblig. 2, n. 1505; Demolombe, 27, n. 273.)
Even when the agreement says that the debt shall be portable,
as, for example, when a policy of fire-insurance provides that the
premiums shall be paid at the office of the company's agent, it
may, nevertheless, be found that this right has been waived by
the practice of collecting the premiums as they fell due. (Cass,
4 nov.-1891, D. 92. 1. 313; Paris, 2 mars 1893, D. 93. 2. 256;
B.-L. et Barde, 2, n. 1511.)
Expenses of payment.
The expenses of performance must be borne by the debtor.
(C. C. E. 171/234.) It is the debtor's business to discharge
his debts, and, therefore, it is natural that the cost of doing so
should fall on him . The " expenses of payment " include accessory
expenses which the payment may entail, such as those of the
cancellation of a hypothec which secures the debt. (C. A. Alex.
30 dec. 1915, B. L. J. XXVIII, 85.) In regard to the payment
which consists in the delivery of merchandise, it is his business to
have it weighed, measured, and packed or prepared in such a
manner as to be ready for delivery. Unless it is otherwise stipu-
lated, or unless there is a usage to the contrary, the cost of con-
veying the thing from the seller to the buyer falls upon the
latter. (C. C. E. 283, 284/355, 356; C. C. F. 1608; C. C. Q.
1495. See D. Rep. Vente, n. 273; Cass. 3 juill. 1913, D. 1915.
1. 65.)
Proof of payment.
The proof of payment is subject to the ordinary rules, and if
the debt was a civil and not a commercial debt, and it exceeds
P. T. 1,000, its extinction by payment cannot be proved by parole..
(Laurent, 49, n. 457; D. N."'C. €. art. 1341, nos. 97 seq.; Eeq. 31
mars 1874, D. 75. 1. 229; D. N. C. C. art. 1247, n. 47.) But
payment of a commercial debt may be proved by parole. (Lyon-
Caen et Benault, Traite de Droit Commercial, 3, n. 47; D. Rep.
Oblig. n. 4963.) Whether when the debt exceeds P. T. 1,000,
a payment on account consisting of a sum less than P. T. 1,000
can be proved by parole has been disputed. Panel. Franc. Oblig.
EXTINCTION OF OBLIGATIONS. 455
n. 3644; D. N. C. Cart. 1341, n. 110.) When the object of such,
evidence is to interrupt prescription of a debt over P. T. 1,000,
proof by witnesses is inadmissible. The article in the Egyptian
Code must be interpreted in the -light of the French law. (C. C. E.
215/280; Aubry et Rau, 4th ed. 8, p. 306, n. 20. See C. A.
Alex. 9 janv. 1904, B. L. J. XVI, 86.) The delivery of the
title of the debt to the debtor affords a strong presumption of pay-
ment, but the creditor may still prove that the title was given to
the debtor for some other purpose; or that he got possession of it by
fraud, etc. (C. C. E. 219, 220/284, 285; C. C. F. 1282, 1283;
Aubry et Rau, 5th ed. 4, p. 341. See Cass. 26 fevr. 1901, S.
1901. 1. 493; D. Rep. Oblig. n. 2569; C. A. Alex. 13 fevr.
1896, B.L.J. VIII, 117.)
The delivery of a receipt for a later instalment of a debt raises
a presumption that earlier instalments have been paid. (D. Rep.
Oblig. n. 2592; C. A. Alex. 28 mai 1891, B. L. J. Ill, 360.)
The French jurisprudence is very strict in its requirement of
proof of payment. Proof that the creditor sent a post-office order
for the sum due is not sufficient; nor even proof that the order
was cashed in the regular way.
Le debiteur ne pent etre libere dans ce cas que par la produc-
tion d'un acquit emunant sans contestation possible de son crean-
cier. (Trib. Com.de la Seine, 9 fevr. 1912, D. 1914.5.2.) The
production by a bank of a cheque drawn upon the bank and
payable to bearer is proof that the bank has paid the sum. The
indorsement of the person who receives the money is not necessary
to prove payment. (C. A. Alex. 15 juin 1916, B.L.J. XXVIII,
431.)
Payment with subrogation.
When payment is made by the debtor the debt is extinguished,
and any accessory obligation which may exist, such as the obliga-
tions of sureties, and any real securities, such as hypothecs, fall
to the ground at the same time. The extinction of , the principal,
debt necessarily involves the extinction of all the accessory debts.
And this is the case, also, when the payment of the debt is made
not by the debtor, but by a third party, unless the extinction of
the accessories is prevented by what is called subrogation. Subro-
gation is specially dealt with in the Egyptian Code in two articles.
(C. C. E. 162, 164/225, 227.) The former of these articles in
speaking of the case of payment of a debt made by a third person
says: To such third persons pass, by way of security for the
456 THE LAW OF OBLIGATIONS.
new debt so created, the securities which attached to the discharged
obligation, but only in the following cases : —
(1) When the creditor has agreed, at the time of payment, to
transfer such securities to him;
(2) When such third person was liable for the debt with or
for the debtor ;
(3) When such third person has paid a creditor having a privi-
lege or hypothec ranking before him, or when, being the pur-
chaser of an immoveable, he devotes the price to paging creditors
having hypothecs over such immoveable;
(4) When the law expressly grants subrogation.
The second article deals with the peculiar case of subrogation
by the. debtor. It runs: The debtor may also, without the co-
operation of the creditor, transfer the securities attaching to the
original debt for the benefit of any one who supplies him with
that with which payment is intended to be made. The corre-
sponding article of the Mixed Code adds, as a restriction, pro-
vided the loan and its employment are verified by a legalised
document. (C. C. M. 227.)
These articles are based upon three articles of the French Code,
but differ from them in several points. It will be well to give the
French articles in full:
La subrogation dans les droits du creancier au profit cVune HerCe
personne qui le paie, est ou conventionnelle ou legale.
Cette subrogation est conventionnelle :
1°. Lorsque le creancier recevant son payement d'une tierce
personne la subroge dans ses droits, actions, privileges ou hypo-
theques contre le debiteur : cette subrogation doit etre expresse
et faite en meme temps que le payement ;
2°. Lorsque le debiteur emprunte une somme a Veffet de payer
sa dette, et de subroger le preteur dans les droits du creancier. II
faut, pour que cette subrogation soit valable, que Vacte d'emprunt
et la quittance soient passes devant notaires; que dans Vacte
d'emprunt il soit declare que la somme a ete empruntee pour faire
le payement, et que dans la quittance il soit declare que la paye-
ment a ete fait des deniers fournis a cet effet par le nouwau
creancier. Cette subrogation sopere sans le concours de la volonte
du creancier.
La subrogation a lieu de plein droit :
1°. Au profit de celui qui, cfant hd-meme creancier, paie un
autre creancier qui lui est preferable a reason de ses privileges ou
hypotheques ;
EXTINCTION OF OBLIGATIONS. 457
2°. Au profit de Vacquereur d'un immeuble, qui emploie le
prix de son acquisition au payement des creanciers anxquels cet
heritage etait hypotheque ;
3°. Au profit de celui qui, etant tenu avec aVautres ou pour
d'autres au payement de la dette, avait interet de I'acquitter ;
4°. An profit de Vheritier beneficiaire qui a paye de ses deniers
les dettes de la succession. (C. C. F. arts. 1249, 1250, 1251.)
Special points of difference between French and
Egyptian laws.
(1) The Egyptian Code speaks of a new debt being created,
whereas the French Code implies that the old debt is kept alive.
(2) Ths French Code requires an acte authentique when a
debtor subrogates a new creditor in room of the old creditor.
The Egyptian Native Code does not make this requirement
though the Mixed Code does. These jooints will be referred to
later.
Subrogation, according to the French law, is a fiction in virtue
of which a debt which is paid, and, therefore, extinguished quoad
the creditor, is nevertheless kept alive against the debtor.
It is a means by which a person who pays the debt of another
may obtain some security for its repayment to him. We have
already seen that even a stranger to a debt who pays it will have
a claim against the debtor according to the principles of
negotiorum gestio to the extent to which the debtor benefited by
the intervention. But in this case all that he has is a personal
claim against the debtor whose debt he has discharged. It may
be, however, that the creditor holds securities for the payment of
the debt, such as hypothecs, or pledges, or bonds of suretyship.
In such a case, if the person who pays the debt obtains from the
ereditor a transfer of these securities he will be in a much stronger
position. In the case of an unsecured debt, the person who pays
can have no more than an action against the debtor and subroga-
tion will be of no advantage. But where the debt is secured, it is
obviously an advantage to the person who pays the debt to get
the securities transferred to him. The creditor who gets his money
has no further need for the securities, and the sureties who were
liable to the original creditor are no worse off than they were
before by now becoming liable to the new creditor. Subrogation
is, therefore, an advantage all round. Take, for example, such
a common case as this. A debt is secured by a hypothec, and
being due and unpaid, the hypothecary creditor is threatening to
458 THE LAW OF OBLIGATIONS.
seize and sell the debtor's property. A friend of the debtor as
willing to advance him the money to pay off the hypothec, but
does not wish to lend the money on the personal security of the
debtor. If, when he pays the money, the creditor subrogates
him in his place in the hypothec, the lender gets the security which
he desires, and the debtor is relieved from the necessity of seeing
his property sold at what may be an unfavourable moment for
him. Subrogation bears some resemblance to the sale of debts
and rights of action— transport des creances or cession des creances.
(C. C. E. 349/435; C. C, F. 1689; C. C. Q. 1570.)
But there are, in fact, essential differences between the two
things; the object of subrogation is to come to the aid of the
debtor, whereas the object of a person who buys a debt is to make
a speculation. It follows from this difference that if the pea-son
subrogated got the debt discharged by paying less than the full
amount due, his claim against the sureties, etc., will be limited'
to what he has actually paid, whereas the person who buys a debt
of L. E. 1,000 for L. E. 500 can still sue the debtor for L. E.
1,000. And there are other differences which need not here be
explained. (Baudry-Lacant. et Barde, Oblig. 2, n. 1521; Aubry
et Eau, 5th ed. 4, p. 283; C. A. Alex. 28 nov. 1901, B. L. J.
XIV, 28.)
Sometimes it may be a question whether an agreement was of
the nature of subrogation or was' intended to be a sale of the debt.
If it appears that the payment was made when the debt was
not due, the presumption would seem to be that it was a sale of
the debt, but if the debt was due, and, especially, if legal pro-
ceedings had been threatened or taken, the presumption Avould
be that the person who made the payment did so to relieve the
debtor and with a view to subrogation. (Aubry et Rau, 5th ed. 4,
p. 286; Dijon, 18 juill. 1893, D. 94. 2. 405.)
Subrogation is commonly spoken of as being either (1) con-
ventional or (2) legal. (C. C. F. 1250, 1251.) But if we use
the term " conventional " in this connection, we must remember
that it does not imply the consent of both the debtor and the
creditor. Conventional subrogation may take place in consequence
of an agreement made with a third party either by the creditor or
by the debtor.
Conventional subrogation.
(1) Conventional subrogation occurs by the consent of the
creditor, when the creditor on receiving payment from a third
person subrogates him in all his rights against the debtor. This
EXTINCTION OF OBLIGATIONS. 459'
subrogation must be express and made at the same time as .the
payment.
(2) It takes place by the consent of the debtor when the debtor
borrows a sum for the purpose of paying his debt, and of subro-
gating the lender in the rights of the creditor. Under the Mixed
Code, it is necessary 'to the validity of the subrogation in this case
that the act of loan and the employment be verified by a legalised
document. (C. C. M. 227.) The Mixed Code probably intends
to retain the requirements laid down in the French Code, ;viz.,
that in the act of loan it be declared that the sum has been bor-
rowed for the purpose of paying the debt. The French Code
requires also that in the acquittance it be declared that the pay-
ment has been made with the moneys furnished by the new creditor
for that purpose.
The Egyptian Mixed Code does not make this requirement,
and we cannot consider it to be implied. (De Hults, Rep. vo.
Execution-pay ement, n. 102.)
This subrogation takes effect without the consent of the creditor.
There is, of course, nothing to prevent the two declarations being
made in one and the same deed.
The object of requiring a legalised document is to prevent
fraud of the following kind: a debtor whose immoveables are
charged with several hypothecs, amounting in the whole to more
than .their value, pays off the first hypothec. This greatly im-
proves the position of the hypothecary creditors who remain. But
if, subsequently, the debtor wants to borrow more money, and
cannot do so without giving security, he might antedate the deed
of loan, and declare in it that the lender had advanced the money
to pay off the hypothec already discharged. In this way he would
revive the old extinguished hypothec which would again take pre-
cedence of the later securities. (Planiol, 2, n. 487.) The Native
Code does not require a legalised document and under it the risk
of this fraud still occurs.
We see that there are two varieties of conventional subrogation:
(1) The subrogation which occurs when the creditor consents
to subrogate the person who pays him, and
(2) That which occurs without the consent of the creditor when
the debtor borrows money to pay his debts, and subrogates the
new lender in the creditor's rights. In the first case it is for the.
creditor to decide whether he will take the payment and subrogate
the person paid. He is bound to take payment from a third
person, but he is not bound to subrogate him. If he chooses to
460 THE LAW OF OBLIGATIONS.
do so, ho must expressly say so, though, as the law does not insisit
upon sacramental words, it is not necessary to use the word " sub-
rogation." Further, the subrogation must be made at the same
time as the payment, for, otherwise, the discharge of the debt
by a pure and simple payment would extinguish the debt with
all its accessories, and these could not be revived afterwards. The
subrogation generally is in all the rights, but this is not essential.
The creditor may subrogate the person who pays in some of his
rights, but not in all; for example, in a hypothec, but not in a
claim against a surety. (See Req. 30 dec. 1903, D. 1904. 1.
127.) Subrogation can in no case give the person subrogated
any greater rights than the former creditor had. (Liege, 3 mars
1886, D. 88. 2. 70.)
The French law makes no other requirements in this case; the
subrogation docs not need to be made by a legalised document;
it ma}- be made by private writing or even by a verbal declaration,
subject to the difficulties of proof. (Baudry-Lacant. et Barde,
Oblig. 2, n. 1525, 1; Demolombe, 27. n. 377.) And the Egyptian
Native Code is to the same effect. In practice, however, it is
almost always made by a legalised document, and this is much
safer because the subrogation contained in a private writing in a
question with third parties would have no certain date. The
Egyptian Mixed Code requires a legalised document in this case
also. (C. C. M. 225.)
Legal subrogation.
Subrogation takes place by the sole operation of law and without
demand: —
(1) In favour of a creditor who pays another creditor whose
claim is preferable to his by reason of privilege or hypothec;
(2) In favour of the purchaser of an immoveable property who
pays the price to a creditor to whom the property is hypothecated;
(3) In favour of a party who pays a debt for which he is liable
with others or for others, when he has an interest in paying it.
There are here three cases stated of legal subrogation, and they
are the only ones which the code recognises. (As to subrogation
in cases of insurance, see Planiol, 2, n. 2164, and n. 2174. note 3;
D. N. C. C. IV, p. 893, n. 1711.) The subrogation takes place
de piein droit, and the person who pays cannot demand from the
creditor any deed declaring him to be subrogated. (C. A. Alex.
14 fevr. 1912, B. L. J. XXIV, 138. See C. A. Alex. 17 avril
1912, B. L. J. XXIV, 286.)
EXTINCTION OF OBLIGATIONS. 461
(1) This is what the Roman law calls the jus offerendi.
(Girard, Manuel, 5th ed. 785.) The postponed creditor can
always pay off the creditor whose claim is prior to his own on
account of a privilege or a hypothec. So a creditor who has a
hypothec can pay off a creditor who has a privilege, because
privileges come before hypothecs. And the holder of a second
hypothec can pay off the holder of the first. The advantage of
this is that the prior creditor might be going to sell at a time
unfavourable for the postponed creditor. The only interest of
the prior creditor is to realise enough to pay himself. But the
postponed creditor may think that the property may rise in value,,
and that, if the sale is delayed, there will be enough to pay both
the creditors. The right to legal subrogation exists only when
the claim of the prior creditor is preferable by his " having a
privilege or hypothec ranking before him." These words are
strictly interpreted. A creditor who has a pledge enjoys a pri-
vilege. But a creditor who has merely the right of antichresis,
that is to say, the right to retain possession of an immoveable,
and to take the fruits in lieu of interest, has no privilege in the
sense of this article. He has the right to the property of the
fruits, but he has no privilege over the immoveable itself.
(Larombiere, on art. 1251, n. 9; Baudry-Lacant. et Barde, Ohlig.
2, n. 1546; Couture v. Gregoire, 1912, R. J. Q. 21 K. B. 488.)
But it is not necessary that the creditor who pays should have
either a privilege or a hypothec. The code makes no distinction,
and therefore a chirographic creditor who pays the debt of a
privileged or a hypothecary creditor is entitled to subrogation.
(B.-L. et Barde, 2, n. 1542, 1; Aubry et Rau, 5th ed. 4, p. 294;
Caen, 26 nov. 1870, D. 73. 2. 181.) Upon this point, the Roman
law and the old French law were different from the modern law.
(Girard, Manuel, 5th ed. 785; Demolombe, 27, n. 458.)
Purchaser of immoveable who pays price to
hypothecary creditors.
(2) This is the following case: John lends L. E. 1,000 to
William, who gives him a hypothec over his house, and also finds
a security. William sells the house to Thomas. Thomas, wishing
to get rid of the hypothec in favour of John, pays him the L. E.
1,000. He will be subrogated in all John's rights, and will ,
consequently, have a right to sue the surety.
Or, again, suppose there are several creditors holding hypothecs
462 THE LAW OF OBLIGATIONS.
■ of different; ranks. The purchaser if he pays the price to the
vendor will be liable to be sued by these creditors if the vendor,
has not paid them. If the price is enough to pay them all the
purchaser instead of paying- the vendor can pay the creditors
■ directly and thus avoid this risk.
But if the price is not enough to do this, he can pay off the
hypothecs in order of rank so far as the money will go. Suppose
die pays off a first and a second hypothec. A third hypothec still
remains. The creditor who holds it has the right to seize and sell
the immoveable. But, seeing- that, the purchaser is subrogated
in the place of the creditors paid off, there will be no advantage
to the third creditor in having the immoveable seized and sold,
unless it can be sold for a price more than sufficient to pay them.
The purchaser can always recover the price. This will generally
prevent the creditor from taking action.
Subrogation is useful to the purchaser in this way, but he
may prefer to adopt a still better method, viz., that of purge,
though this is not so common in Egypt as one would expeat..
(C. C. E. 075/698; C. C. Pro. M. 675; Grandmoulin, Suretes,,
n. 526; Planiol, 2, n. 498.)
"Purchaser" in C. C. E. 162/225, in the French version,
acquereur, is not limited to an onerous purchaser . A donee who
has paid out of his own pocket the hypothecary creditor, enjoys
the benefit of subrogation no less than an onerous purchaser. If
there were any doubt about this, it would be removed by the fact
that the donee obtains legal subrogation under the next head,
seeing that he is bound with others for the debt. (Baudry-Lacant.i
et Barde, Oblig. 2, n. 1555; Aubry et Rau, 5th ed. 4, p. 299.)
Persons liable with or for the debtor.
(3) John lends L. E. 1,000 to William and' Thomas, who
bind themselves jointly and severally to repay it. William pays
the whole debt. *He is subrogated in all John's rights against
Thomas. But there is no legal subrogation unless the party
paying was himself bound to pay the debt. It is not enough
that he has an interest to pay it. He must be liable with others
or for others. (Cass. 5 juin 1896, D. 96. 1. 468.) And there
can be no question of subrogation when the debt was not paid by
the person who claims to be subrogated. (C. A. Alex. 14 juin
1911, B. L. J. XXIII, 362; C. A. Alex. 8 mars 1917, B. L. J.
XXIX, 282.) It is not, however, necessary that the two debtors
should be bound in the same way to entitle the one of them who
EXTINCTION OF OBLIGATIONS. 463
pays to bo subrogated in the creditor's right against the other.
(B.-L. et Barde, 2, n. 1557; Aubry et Rau, 5th ed. 4, p. 300.)
A surety who is bound jointly and severally with the debtor and
pays the debt enjoys the benefit of subrogation. (Toulouse, 27
dec. 1911, D. 1913. 2. 65, and note by M. Donnedieu de Vabres;
C. A. Alex. 8 janv. 1914, B. L. J. XXVI, 134.)
Effects of subrogation.
Bv C. C. F. 1252; C. C. Q. 1157:' The subrogation declared
in the preceding articles takes effect as well against sureties as
against principal debtors. It cannot prejudice the rights of the
creditor when he has been paid in part only. In such case, he
mag enforce his rights for whatever remains due, in preference
to him from whom' he has received payment in part. (See Req.
8 dec. 1903, D. 1904. 1. 193.) The Egyptian Code has no
similar article, but, no doubt, it intends to preserve the same rule.
The principle is laid down in the case of suretyship, and it would
seem that it is a general rule. (C.,C. E. '505/617. See C. A.
Alex. 25 fevr. 1905, B. L. J. XVII, 110; C. A. Alex. 25 juin
1913, B. L. J. XXV, 468; C. A. Alex. 20 fevr. 1917, B. L. J.
XXIX, 235.)
The effects of subrogation are the same whether the subroga-
tion is conventional or legal. The person subrogated has all the
rights and the actions which the creditor had against sureties and
others, as well as against the principal debtor. If the creditor
had the right to the vendor's action of dissolution of sale for th,e
non-payment of the price the subrogate will have the right also,
(B.-L. et Barde, Oblig. 2, n. 1567; Aubry et Rau, 5th eel. 4,
p. 306; Orleans, 6 nov. 1891, D. 93. 2. 33.) If the tiers-
detenteur pays the hypothecary creditor he is subrogated in the
hypothec which may cover other immoveables as well as that of
which he is the holder. (C. A. Alex. 11 juin 1913, B. L. J).
XXV, 440.) But the sureties or other guarantors are securities
for the payment of the whole debt, and, therefore, if the third
person has paid only a part of the debt, the creditor is still entitled
to enforce his rights against the sureties, etc., for the part which
remains unpaid in preference to the subrogate. (C. A. Alex.
25 juin 1913, B. L. J. XXV, 468; C. A. Alex. 20 fevr. 1917,
B. L. J. XXIX, 235.) If the debt was an unsecured debt, and
the third person pays a part of it, the creditor will not enjoy any,
preference, because the person who has paid the part of the debt
464 THE LAW OF OBLIGATIONS.
will have a claim for reimbursement of it against the debtor, and
this is a simple chirographic debt as much as the claim of the
creditor. He and the creditor will rank equally if the debtor was
insolvent. Neither of them will have any preference, because
the person who has paid the part of the debt does not need to claim
in his character of subrogate, but simply as a negotiorum gestor.
(B.-L. et Barcle, 2, n. 1571; Aubry et Rau, 5th ed. 4, p. 313,
note 91.)
It is clear that subrogation cannot give to the person subrogated
any rights which did not belong to the person to whom he is
subrogated. (C. A. Alex. 30 mai 1912, B. L. J. XXIV, 375;
C. A. Alex. 10 dec. 1913, B. L. J. XXVI, 85.) And in one
case his right is more restricted. The joint and several surety who
pays the debt due to a creditor-pledgee cannot sue his fellow-
surety for the whole amount though the creditor could have done
so. (C. A. Alex. 8 janv. 1914, B. L. J. XXVI, 134.)
Various theories of subrogation.
It has already been mentioned that the Egyptian Code in
speaking of subrogation uses language which is consistent with
the French theory on that subject, and this point was reserved
for further consideration. The theory which is now almost uni-
versally accepted in France is that subrogation, whether legal or
conventional, is a legal fiction, according to which the obligation
which is extinguished as to the old creditor by the payment made
to him by the third party, is, nevertheless, kept alive as regards
the person making the payment. The person making the payment
is considered, as it were, to be one and the same person with the
old creditor. There is a transmission of the debt to him, though
it is extinguished as regards the relations between the debtor and
the former creditor. There is no new debt but an old debt which
is kept alive in spite of the change of creditor. This was the
theory of Pothier. (Oblig. n. 559.) And it is clear from the
Travaux preparatoires that the French codifiers intended to pre-
serve it. The French Code speaks in various places of subroga-
tion causing the new creditor to be substituted " in the rights "
of the former creditor, and this language can only mean that he
succeeds to him in the creance. (Aubry et Rau, 5th ed. 4, p. 277,
and note 2; B.-L. et Barde, Oblig. 2, n. 1518; Demolombe, ,27,
n. 320; D. N. C. C. art. 1249, n. 5; Cass. 22 nov. 1893, D.
94. 1. 153; C. Cass, de Belgique, 19 janv. 1905, D. 1906. 2.
EXTINCTION OF OBLIGATIONS. 465
412.) But, although this theory now holds the field in France,
there is another system which is supported by a few writers.
They argue that the law calls the operation " payment with sub-
rogation." This language implies that there is a genuine pay-
ment. Now, if there is a payment the debt must be extinguished,
and it can only be the accessories of the debt, — the securities
which attached to it — -which pass to the person making the pay-
ment. The nature of the operation is the extinction d'une creance
avec transport de ses garanties sur la creance nouvelle qui vient
la remplacer. (Marcade, sur l'art. 1236, 4, n. 672; D. N. C. C.
art. 1249,n. 3.)
Another way of treating the matter is to say simply that we
must apply the language of the code. Subrogation according to
the code is a hybrid operation and we must accept it as such.
There is no gain in resorting to legal fictions in order to make the
operation more intelligible. (Colin et Capitant, 2, p. 91.)
The obvious criticism of the theory of Marcade is that if the
debt is paid and extinguished the securities must fall to the
ground. As the Mixed Court of Appeal expresses it: cm ne
concevrait pas que I'accessoire subsist at apres V extinction du
principal. (C. A. Alex. 8 mars 1916, B. L. J. XXVIII, 187.)
Notwithstanding the fact that this theory has little in its favour,
it has been supposed that it is the theory which is accepted by the
Egyptian Code. That code speaks of the "new debt," and says
that the securities which attach to the " discharged obligation "
pass to the new debt. It is difficult to reconcile this language
with the prevailing theory of the French law, viz., that there is no
new debt at all. (C. C. E. 162/225; De Hults, Rep. vo. Execu-
tion-pay ement, n. 123.)
Practical consequences of the difference of theory.
If the debt itself is not transferred by the subrogation, the
third party who is subrogated cannot make use of an executory
title which the former creditor possessed. If he desires to pro-
ceed to execution on the property of the debtor he must get
judgment. Nor, in strict logic, ought the subrogate to have the
benefit of a privilege which attaches to the debt, for a creditor
is privileged by reason of the nature of his claim, and this privi-
leged character cannot be transferred to another claim. If the
claim itself is not transferred to the person subrogated it is
difficult to see why he should enjoy the privilege. (B.-L. et
w. — VOL. II. 30
466 THE LAW OF OBLIGATIONS.
Barde, Oblig. 2, n. 1519.) But there is an Egyptian decision
in the contrary sense, and this is in accordance with the intention
of the legislator. When the code speaks of paying a creditor
" having a privilege or hypothec ranking before him," it means
that the subrogate succeeds to this privilege or hypothec. (C. A.
Alex. 18 janv. 1894, B. L. J. VI, 194.) But upon the theory
of Marcade and others, the subrogate would not succeed to the
right of an action to resiliate the contract, for example, the right
to demand the dissolution of a sale for non-payment of the price.
For this is not a "security attached to the obligation." (De
Hults, Rep. vo. Execution, n. 126.) This theory makes sub-
rogation very similar to novation by change of the creditor, and
yet there are different rules laid down as to the transmission of
securities in that case. (C. C. E. 188/252; De Hults, Rep. vo.
Execution-pay ement, n. 121.)
Has Egyptian Code adopted new theory?
M. de Hults maintains that the Egyptian legislator has aban-
doned the traditional theory of the legal fiction, and has adopted
the theory of Marcade and others that there is a new debt. He
says that the Egyptian law considere la creance payee commie
definitiv ement eteinte, a Vegard de tout le monde {op. cit. n.
126). But, in spite of the use of the expression "new debt" in
the Egyptian codes, the Mixed Court of Appeal holds that the
Egyptian law is in accordance with the traditional view: En par-
lant de V obligation eteinte le legislateur a voulu dire qu'elle etait
eteinte a Vegard du creancier originairepnais il a entendu, evidem-
ment, que la dette continue a subsister avec les guaranties consenties
par le debiteur au profit de son obligation. (C. A. Alex. 8 mars
1916, E. L J. XXVIII, 187.)
Imputation of payments.
A debtor who owes several debts to the same creditor can, when
he makes a payment, declare to which of the debts the payment
is to be imputed. By the Egyptian Code: Payments are im-
puted to the debt indicated by the debtor, or, in the absence of
indication, to that which' he has the most interest in discharging.
(C. C. E. 172/235; C. A. Alex. 27 mai 1908, B. L. J. XX,
258; C. A. Alex. 5 juin 1912, B. L. J. XXIV, 382.) The
Egyptian Code is very meagre and, apparently, it intends to state
the French law in an abridged form. If this is so, we may apply
the French rules, and, according to the French Code, if the debtor
EXTINCTION OF OBLIGATIONS. 467
does not make such an imputation it may be made by the creditor,
and if neither the debtor nor the creditor makes it, the imputai iop
is made by the law. The rules of the French law on the subject
are based on the Roman law. (Dig. 46. 3. 1; Girard, Manuel,
5th cd. 690.)
As regards several debts equally due, the debtor has a choice
which of them he will pay. The creditor cannot without the
debtor's consent impute the payment to the earlier of the two
debts. And if a debtor has instructed an agent to make a pay-
ment for him imputing the payment to a certain debt, the agent
cannot alter the imputation. In making the imputation the debtor
will naturally want to pay first the debt which is the more onerous.
If one of the debts is unsecured, and for the other he is bound
together with a surety, it is quite open to him, if he choose, to
direct the creditor to impute the payment to the unsecured debt.
But the doctrine of imputation of payments implies always
that the debtor owes to the same creditor several debts of money
or of fungibles of the same kind. A debt of a corps certain
cannot be paid by delivering another corps certain.
And a debt of wheat cannot be paid by delivery of wine or
eoal. (Laurent, 17, n. 601; Aubry et Rau, 5th ed. 4, p. 272;
Demolombe, 28, nos. 28—30.) •
Debtor cannot injure rights of creditors.
In exercising this choice, the debtor cannot affect any right
which a creditor has. So if one of the debts is not due, and the
term was stipulated in favour of the creditor, the debtor cannot
impute the payment to this debt. (B.-L. et Barde, 2, n. 1579;
Aubry et Rau, 5th ed. 4, p. 273.) And if the debtor owes two
debts which are both due, and they are of unequal amount, one,
e.g., for L. E. 1,000, and one for L. E. 500, and he pays a sum
equal to the smaller debt, that is L. E. 500, he cannot oblige the
creditor to impute this to the debt for L. E. 1,000, for this
would be compelling the creditor to take a partial payment of a
debt, contrary to C. C. E. 168/231.
Exception to rule that debtor can make imputation.
An exception to this rule that the debtor can make an imputa-
tion at the time of payment is stated in the following article: —
Payments shall in the first instance be imputed to cost*,
■interest and instalments, and afterwards to the principal sum
30 (2)
468 THE LAW OF OBLIGATIONS.
due (C. C. E. 173/236.) The French Code says: The debtor
of a debt which bears interest or produces rent, cannot, without
the consent of the creditor, impute any payment which he makes
to the discharge of the capital in preference to the arrears of
interest or of rent. Any payment made on the capital and
interest, /'/if iehich is not entire, is imputed first upon the intej-est .
(C. C. F. 1254; Pau, 3 mars 1890, D. 91. 2. 117. See note by
M. de Loynes to Req. 8 juin 1901, D. 1907. 1. 473; Civ. 27 oct.
1908, D. 1909. 1. 60.) Interest comes before principal. The
rule does not apply to payments made in the course of the pro-
cedure of distribution. (C. A. Alex. 31 dec. 1918, B. L. J.
XXXI, 91.) Moreover, though the French Code does not ex-
pressly say so, it is universally agreed that if the creditor has
been put to expense in recovering his money, a partial payment is
imputed first to the expenses, second to interest, and third to
capital. (Baudry-Lacant. et Barde, Oblig. 2, n. 1580.) The
Egyptian Code makes this clear.
It may be agreed that payments made before the debt is due
shall be imputed to capital. (C. A. Alex. 26 nov. 1908, B. L. J.
XXI, 25.)
Imputation by the creditor.
By C. C. F. 1255: When a debtor of several debts has
accepted a receipt by which the creditor has imputed what he has
received in discharge specially of one of the debts, the debtor
cannot afterwards require the imputation to be made upon a
different debt, unless the debtor has been defrauded or taken by
surprise by the creditor. The Egyptian law is the same as to
this, though the code is silent. (C. A. Alex. 11 janv. 1900,
B. L. J. XII, 84.)
By taking without objection a receipt from the creditor in which
the latter states that he has imputed the payment to a certain
debt, the debtor is held to have assented to this imputation, and
he cannot challenge it except on such grounds as force, fraud, or
error. The French Code says: a moins qu'il n'y ail eu dot on
surprise de la part du creancier. And surprise is interpreted as
meaning a milder variety of fraud, in which it is not necessary
that there should have been artifices, or manoeuvres directed to
lead the debtor into error. B.-L. et Barde. 2, n. l-^So; Aubry
et Rau, 5th ed. 4, 274.
A fortiori, the creditor is bound by the imputation which he
has made and which the debtor has accepted. He cannot after-
EXTINCTION OF OBLIGATIONS. 469
wards change his mind and seek to make another imputation.
(Deniolombe, 28, n. 36; Aubry et RaU, 5th cd. 4, p. 274, note 8;
C. A. Alex. 13 jnin 1916, B. h. J. XXVIII, 423.) When other
creditors may be prejudiced by the imputation, the creditor who
alleges that the imputation was made with the debtor's •consent,
must bring satisfactory proof of this fact. (C. A. Alex. '31 dec.
1918, B. L. J. XXXI, 88.)
Legal imputation.
When the debtor has not made any special imputation of a
payment, and has not, by taking a receipt, assented to an imputa-
tion made by the creditor, the law makes the imputation for
him.
By C. C. F. 1256; C. C. Q. 1161: When the receipt makes
no special imputation the payment must be imputed in discharge
of the debt actually, payable which the debtor had cd the tim,e
the greatest interest in paying. If of severed debts one alone be
actually payable the payment must be imputed in disci targe of
such debt, although it be less burdensome than those which are
not actually payable ; if the debts be of like nature, the imputation
is made upon the oldest.
All things being equal, it is made proportionate 1 y on ca"h.
These rules are reasonable, and correspond to the presumed
intention of the debtor when he makes the payment, and it is,
therefore, to be assumed that the Egyptian legislator meant to
retain them, though the Egyptian Code says merely that the
payment is imputed to the debt which the debtor has the most
interest in discharging. (C. C. E. 172/235. See C. A. Alex.
28 mars 1918, B. L. J. XXX, 319.)
It is a question of fact which debt is the most onerous for the
debtor. But, in general, a debt secured by a hypothec is more
onerous than a chirographic debt. (C. A. Alex. 14 juin 1916,
B. L. J. XXVIII, 428.) A debt bearing interest is more onerous
than a debt which does not bear interest, a debt for which a surety
has been given is more onerous than an unsecured debt, and so on.
(Aubry et Rau, 5th ed. 4, p. 275, note 12; B.-L. et Barde, 2,
n. 1590.) But a debt in which the debtor is bound jointly and
severally with others is generally less onerous than a debt which
he owes alone, because in the latter case he has no recourse.
(Cass. 8 aoiit 1888, D. 89. 1. 283.)
V
470 THE LAW OF OBLIGATIONS.
Comparison with other laws.
The rule of imputation of payments being founded upon the
presumed intention of the debtor, it is natural to find very similar
provisions upon the subject in other laws. In the English law
the doctrine is called "appropriation of payments." (See Leake,
Contracts, 6th ed. p. 667; Halsbury, Laws of England, Con-
tracts, p. 449; Benjamin on Sale, 5th ed. p. 796.) The German
Code differs from the French law upon one point. If the debtor
has made no imputation, and there are several debts due, the
payment is imputed by law to the debt which offered the least
security for the creditor (art. 366). It is argued that this
corresponds best with the presumed intention of the parties. It is
presumed that the creditor if he refrains from suing for immediate
payment of the other debts does so because the most doubtful
debt has been paid. (See Note to the French translation.)
The Swiss Code applies this rule only when none of the debts-
is due: Si aucune des defies n'est echae, V imputation se fait
stir celle qui presente le moins de garanties pour le ereancier.
(Code Fed. Oblig. 87.)
Effect of the impossibility of finding the creditor in order to
pay him, or of the refusal by the creditor to take payment.
Tender and payment into court.
The creditor may be abroad, or have disappeared and have left
no one authorised to take payment. Or it may happen that the
creditor refuses to accept the payment that is offered to him. He
may say that the thing which was offered was not the thing which
was due; he may demand a larger sum than that which is offered:
or he may give some other reason for his refusal, or he may give-
no reason at all. The impossibility of finding the creditor, or
the refusal by the creditor to take the thing due may cause damage
to the debtor in a variety of ways. If the debt is a money-debt
he wants to put an end to the running of the interest. If he has
to deliver moveable things he wants to free himself from the
risk of having to take care of them, and, perhaps, to make room
in his warehouse for other goods, and the law must provide him
with some means of discharging his obligation, even if the creditor
refuses to accept the payment. The debtor who is prepared to
do his legal duty must not be prejudiced by the fact that the
creditor is in fault. The procedure which the law devises for this
purpose is what is called Tender, or Tender and Payment into
■\Aj>
EXTINCTION OF OBLIGATIONS. 471
Court, and, in French, Offres reelles and Consignation. The
full discussion of the subject belongs to the law of procedure, and
the details are given in the Codes of Civil Procedure. (N. C.
C. P. 685—699; M. C. C. P. 773—787; Garsonnet et Cezar-Bru,
Traite de Procedure, 2nd ed. 7, n. 2712; Lusena Boy, Elements
de Procedure Civile et Commerciale Egyptienne, 3rd ed. 2,
p. 360.)
But the articles in the Codes of Procedure deal only with debts
of money or moveables. (See Trib. Civ. Lille, 7 juin 1905, D.
1906. 5. 15.) Provision must also be made for the eases of an
obligation to perform an act and an obligation to deliver an
immoveable. The subject is dealt with in the Egyptian Civil Code
in articles 174—176/237—239.
I will give first the case of the obligation to pay a sum of
money, or a specific thing-, and then the other cases.
Obligation to pay a sum of money or to deliver a specific
corporeal thing.
The Civil Code merely refers to the Code of Procedure: Never-
theless, ivhen the performance consists in a payment or in a de-
livery of moveables, the debtor is discharged by making a tender
in the manner prescribed by the Code of Procedure. (C. C. E.
175/238.)
This is the case for which the codes of procedure make careful
provision. (C. C. Pro. N. 685 seq.; C. C. Pro. M. 773 seq.)
This procedure consists, broadly speaking, in requiring the debtor:
(1) To make a formal offer by a bailiff of the sum of money
or the thing, the bailiff making a proces verbal of the offer, and
of the refusal of the creditor to accept it . A debtor is not liberated
by making an informal offer which the creditor refuses to accept.
If the creditor sues him and gets a judgment he will be entitled
to his costs, even though the debtor had made an informal offer
of the same amount as that which he is now condemned to pay.
(C. A. Alex. 7 fevr. 1917, B. L. J. XXIX, 202. See the
common form of the proces verbal in Formulaire of Bairamoglou
et Eizzo, Formule 513.)
(2) To make a deposit of the money or the thing at the treasury
of the court, or, in certain cases, in the hands of a receiver
appointed by the court.
In France, the matter is dealt with partly in the Civil Code
472 THE LAW OF OBLIGATIONS.
and partly in the Code of Civil Procedure. (C. C. F. 1257 seq.;
C. C. P. 812 seq.)
The Egyptian Code differs in language from the French Code.
The details belong to the law of procedure, but the following
points may be noticed: —
(1) The procedure consists of two stages: (a) an offer or off res
reelles, and (b) a payment into court or consignation. It is
essential that the payment should have been preceded by the offer.
(C. A. Alex. 6 mai 1914, B. L. J. XXVI, 372; C. A. Alex.
26 nov. 1913, B. L. J. XXVI, 50; Cass. 17 dec. 1894, D. 95.
1.90.)
(2) By an offer is meant an actual tender, not a mere promise
to deliver, saving what is said later as to tender of a specific
thing which is undeliverable at the domicile.
(3) When the debt is of money, the tender must be made in
coin which is part of the currency, or is, as it is often called, a.
"legal tender." (Decree, 14 nov. 1885, Gelat, 3, p. 495.) But
this has been changed in Egypt by the Decree of 2 Aug. 1914,
which makes notes of the National Bank of Egypt "legal tender."'
Silver money is only legal tender up to P. T. 200 and bronze
or nickel up to P. T. 10.
(4) The tender must be unconditional. A conditional tender
is not equivalent to a payment; it is a mere proposal which the
creditor can accept or not. (C. A. Alex. 14 fevr. 1895, B. L. J.
VII, 136; C. A. Alex. 6 mai 1914, B. L. J. XXVI, 372; C. A.
Alex. 10 dec. 1914, B. L. J. XXVII, 58.) A tender is not
conditional merely because the debtor declares that the tender is
made subject to his getting a discharge. (Req. 20 juin 1899,
D. 99. 1. 591; Garsonnet et Cezar-Bru, Traite de Procedwe
Civile, 2nd ed. 7, n. 2715.)
(5) There are special rules as to the case of specific corporeal
things:
The tender of a specific corporeal thing which cannot be
delivered at the domicile of the creditor can be made by a simple
summons to take delivery.
The debtor has the right to obtain from the court the appoint-
ment of a receiver for the specific corporeal thing tendered.
(C. C. Pro. E. 698, 699/786, 787.)
The words " cannot be delivered at the domicile of the creditor "
cover, no doubt, the case when, although it is not physically
impossible to make the delivery, such a delivery would not be a
reasonable way of satisfying the obligation.
EXTINCTION OF OBLIGATIONS. 473
If the duty of the debtor was to deliver a locomotive engine,
or some other article difficult of transport and not intended to be
installed in the domicile, the law is not so absurd as to oblige
the debtor to convey it to the creditor's domicile. He can call
upon the creditor to take delivery of it where it is, and failing-
this, can ask the court to appoint a receiver to take charge of it,
or apply for authority to get it sold by the bailiff and the price
deposited in the caisse. (See C. A. Alex. 4 avr. 1900, B. L. J.
XII, 190. Cf. C. C. F. 1264.)
(6) A tender followed by the payment into court, and signi-
fication to the creditor, if he is absent, liberates the debtor from
the date of the consignation when it is established that the tender
was rendered necessary by the unjustifiable refusal of the creditor
to receive the payment. (See Cass. 3 dec. 1912, D. 1913. 5. 42;
Cass. 27 mars 1911, D. 1915. 1. 97, note by M. Cezar-Bru.)
(7) But the validity of a tender and payment into court depends
upon the following conditions: —
The tender must be to a person to whom payment could validly
be made, and it must be by a person capable of making a payment,
for, otherwise, the creditor who gets payment may be liable to an
action in repetition. The tender must be in full, just as payment
cannot be in part, and the debt must be due, unless the term is
in favour merely of the debtor, in which case he can waive the
benefit of the term. If the debt is subject to a condition which
has not been fulfilled, the creditor cannot be compelled to take
payment, and, therefore, a tender to him is not valid, because
if he took payment and the condition afterwards failed, he would
be liable in an action for restitution of what he had got. (C. C. F.
1258.)
The French Code contains very jn-ecise rules as to the offres
reelles.
Pour que les offres reelles soient valables, il faut :
Qu'elles soient de la totalite de la somme exigible, des arrerages
ou interets dus, des frais liquides, et d'une somme pour les fra&s
non liquides, sauf a la parfaire. (C. C. F. art. 1258.)
The rules must be literally complied with. (See Cass. 17 fevr.
1908, S. 1908. 1. 192; Garsonnet et Cezar-Bru, 2nd ed. 7,
n. 2715.)
The Egyptian Code is less strict:
.4 debtor who wishes to discharge himself shall cause the
thing or the sum, which he alleges to be owing jrom him, — la
chose ou la somme quit pretend devoir — to be tendered by a
474 THE LAW OF OBLIGATIONS.
bailiff, who sJiall draw up a proces-verbal of such tender. (C. C.
C. Pr. 685/773.)
And it has been held:
L'insuffisance tres modique d'un depot ne saurait en detruire
Veffet liber atoire, jusqu'a due concurrence. (C. A. Alex. 18
janv. 1893, B. L. J. V, 101.)
JJne off re reelle, inferieure d'une somme minime a la somme
reellement due, par suite d'une simple omission, ne saurait, par
cela seul, perdre son caractere liber atoire. (C. A. Alex. 21 dec.
1893, B. L. J. VI, 77.)
The practice is to offer:
(1) A sum for the principal;
(2) A sum for the interest;
(3) A sum for the costs. (See the Formulaire of MM. Baira-
moglou et Rizzo, Formule 513.)
Tender at bar of court.
Tenders may be made at the bar of the court, without further
formalitij. The thing or sum tendered shall be handed to the
registrar, who shall deposit it, provided it is not withdrawn by
the creditor. (C C. Pr. E. 697/785.)
The French law is the same, though there is no text. (Gar-
sonnet et Cezar-Bru, Traite de Procedure, 7, n. 2716; Aubry
et Rau. 5th ed. 4, p. 318, note 9.)
Action to have tender declared valid.
The debtor who wants to be certain that he has done all that
can be required of him, and that all has been regularly done,
must bring a claim to have the tender declared valid. (C. C. E.
Pro 695/783.)
Obligation to do or not to do.
The Egyptian Civil Code says: A person under an obliga-
tion to perform an act is not discharged ipso facto by a tender of
performance, but he has a right of recourse against the creditor
for the damage resulting to him from the rejection thereof at the
time of tender. (C. C. E. 174/237.) The code does not attempt
to indicate in what way a debtor whose obligation is to perform
an act may make what is equivalent to a tender. This depends
upon the nature of the obligation. If the performance cannot
be made without the concurrence of the creditor, the debtor can
EXTINCTION OF OBLIGATIONS. 475'
call upon him to lend his concurrence at a time and place stated,
and, if he does not then appear, the debtor can sue for dissolution
of the contract and for damages, unless the creditor prefers to
lend his co-operation to the performance. This procedure might
be followed, for instance, in such a case as where the contract was
to paint a portrait, and the creditor refused to sit for it. (Baudry-
Lacant. et Barde, Oblig.. 2, n. 1626; Demolombe, 28, n. 180.
See Trib. Civ. Lille, 7 juin 1895, D. 1906. 5. 15.)
Obligation to deliver an immoveable.
The Civil Code says: A discharge can be obtained from art
obligation to deliver cm immoveable by procuring the appoint-
ment of a judici-al receiver by a judgment given in a contested
suit or in a suit in ivhich the creditor has been sumynmied.
(C. C. E. 176/239.) Actual delivery of an immoveable is out
of the question and something equivalent has to be found. The
appointment of a judicial receiver or sequestrator whose duty it
is to take charge of the immoveable, and to receive the revenues
for the benefit of the creditor, is a procedure which meets the
requirements of the case.
The French law is the same, though there is no express provi-
sion in the code. (B.-L. et Barde, Oblig. 2, n. 1624; Garsonnet
et Cezar-Bru, Traite de Procedure, 2nd ed. 7, n. 2720. See
C. C. F. 1961, al.3.)
Obligation to deliver an indeterminate thing.
Neither the Egyptian nor the French codes deal with this case,
and it is not free from difficulty. According to some French
authorities, the fact that the codes provide for tender without
actual delivery only in the case of specific corporeal things, shows
that no such practice is permissible in other cases. If the debt
were, for example, to deliver 1,000 bushels of corn or 100 barrels
of wine, to be taken in both cases from a 'larger mass, the only
way in which the debtor could make a tender would be by carting
the goods to the creditor's domicile and back again.
For, if the debtor were to separate the goods and then call on
the creditor to take delivery he would be changing the character
of his debt, and transforming it into an obligation to deliver a
specific thing. (B.-L. et Barde, 2, n. 1625; Laurent, 18, n. 191 .)
But this seems a needlessly strict interpretation. The code
476 THE LAW OF OBLIGATIONS.
is silent, as to the case, but that is no reason why we may not
extend by analogy the rule stated as to the specific thing.
It would be a valid offer if the debtor called upon the creditor
to be present at a stated time and place in order to see th&
.separation made and to take delivery. (Garsonnet et Cezar-Bru,
Traite de Procedure, 7, n. 2720; Aubry et Rau, 5th ed. 4, p. 325;
Demolombe, 28, n. 176.)
And, probably, it would be competent to ask the court to appoint
an expert to see the individualisation made, failing the debtor's
concurrence. (See C. A. Alex, 4 avr. 1900, B. L. J. XII, 190.)
(2) Dissolution by the performance of the obligation
becoming impossible.
This is the second mode of extinction enumerated in the Egyp-
tian Code.
The general rules upon this subject have been explained under
the head of force majeure. (Supra, p. 316.) -The case which
remains to consider is that which is dealt with in the French Code
under the head de la perte de la chose due. (C. C. F. 1302 seq.)
The Egyptian Code has no special article on this point. It
treats it as a case falling under the general rule. Obligations
are extinguished by dissolution, when, after they have come into
existence, performance of them has become impossible. If per-
formance has become impossible through the fault of the debtor,
or if the impossibility has arisen while the debtor is in default
as regards execution, he is liable for damages. (C. C. E. 177,
178 240, 241.) But the only kind of impossibility we are now
considering is that which arises from the perishing of a specific
thing.
The obligation in this case cannot be performed on account of
the destruction of the specific thing which the debtor undertook
to deliver. An obligation to deliver something in genere, for
example, so many bushels of wheat, can hardly be extinguished
in this way: Genus nunquam peril. If I sell 1,000 bushels of
wheat, and all my wheat is destroyed, I can get other bushels
elsewhere. The contract is not to deliver any particular bushels;
if those which I had in my warehouse at the time of the contract
have perished, I can satisfy the obligation by procuring other
bushels. Demolombe, 28, n. 751; Laurent, 18, n. 515: Aubry
et Rau, 5th ed. 4, p. 408, note 7; B.-L. et Bardo, 3, n. 1917.
See Rev. Trim. 1917, p. 151.)
EXTINCTION OF OBLIGATIONS. 477
But, if I undertake to deliver a certain specific thing and it
perishes, I can never fulfil the obligation at all. I may deliver
something of equal value, but that would not be to fulfil the
obligation. If I buy a piano and it perishes before delivery,
the seller cannot say to me: " I will give you another piano
instead." When the obligation is to deliver a certain specific
thing, the law regards this obligation as always made subject to
the implied condition that the thing shall be in existence at the
time of payment. It might seem just that if the seller from no.
fault of his cannot deliver the thing sold, the bargain should be
off altogether, and the buyer should not bo bound to pay the
price. And the Egyptian law is in this sense, as will be explained
later.
But this is not the view which the French law takes. The
contract is completed by consent, and each party comes under
distinct obligations, the seller to make delivery, the buyer to pay
the price. The seller is freed from his obligation by the super-
vening impossibility of performance, if that impossibility is not
due to any fault on his part, and if he was not in default to deliver..
But, though this destruction of the thing extinguishes his obliga-
tion, it does not extinguish the entirely separate obligation of
the buyer to pay the price. This was the rule of the Roman law
and of the old French law, although under them the buyer did not
become the owner of the thing by the effect of the contract, but
only when it was delivered. (Inst. 3. 23. 3; Girard, Manuel,
5th ed. 547; Pothier, Vente, n. 307.)
For, in spite. of this, after the contract the thing lay at the
buyer's risk, though he was not its owner. In the modern law
the rule that the loss is that of the buyer is more easily justified
as an application of the principle r.es petit domino, that is, if a
thing perishes its owner must bear the loss. (Guillouard, Vente,.
1, n. 246, 1; Pand. Frang. Oblig. n. 6247; D. N. C. C. art. 1624,
nos. 1 seq.) The English law is the same, except when delivery has
been delayed by fault. "Unless otherwise agreed, the goods
remain at the seller's risk until the property therein is transferred
to the buyer, but when the property therein is transferred to the
buyer, the goods are at the buyer's risk whether delivery has been
made or not." (Sale of Goods Act, 1893 (56 & 57 Vict. c. 71),
s. 20; Benjamin on Sale, 5th ed. 404; Williston on Sales of
Goods, s. 300.)
-478 THE LAW OF OBLIGATIONS.
Contract may imply that risk was to be on seller.
But under the French law, in the sale of a thing to be delivered
: at a future date, the court may find in the circumstances of the
contract evidence of the intention to make the sale subject to the
implied condition that the thing should be' in existence at that
vdate. The courts in France are reluctant to find a buyer liable
for the price when the seller cannot deliver the thing, and in
recent cases they have been rather astute in reading such implied
■ conditions into the contract. For example, in the sale of a foal
to be delivered when weaned, it was held to be an implied con-
dition that the foal should be alive at the time fixed for delivery.
(Rennes, 24 dec. 1906, S. 1907. 2. 164. Cf . Cass. 8 janv. 1906,
. S. 1906. 1. 176; and see Rev. Trim. 1907, 819.)
The loss of thing due an instance of impossibility of
performance.
According to the French Code: When the certain specific thing
which is the object of an obligation perishes, or is put extra
commerciwn, or is lost in such a way that its existence is abso-
lutely unknown, the obligation is extinguished if the thing
perished or was lost without the fault of the debtor and before
he was in default. It is also extinguished although the debtor be
in default if the thing would equally have perished in the posses-
sion of the creditor, unless the debtor has expressly bound himself
for fortuitous events.
The debtor must prove the fortuitous event which he alleges.
In whatever way a thing stolen has perished or has been lost, its loss
does not discharge him who stole the thing from the obligation
to pay its value." (C. C. F. 1302; C. C. Q. 1200; B.-L. et
Barde, 3, n. 1916; Req. 20 mars 1912, D. 1913. 1. 247.) All
this is correct as a statement of Egyptian law.
In the case where the obligation is to deliver a certain number
'or quantity of things it may be specified that they are to be
taken from the stock of the seller, or that they are at present lying
in his warehouse. In such a case if the whole stock were to perish,
the seller might maintain that his obligation was extinguished
by the impossibility of performance. But even here the pre-
sumption is against him. It is presumed that the statement of
the place where the goods were was merely by way of description,
and that it was not intended as limiting the oblisration of the
EXTINCTION OF OBLIGATIONS. 479
seller to deliver from that stock only. It is a question of inter-
pretation. (Pothier, Oblig. n. 659; Baudry-Lacant. et .Barde,
Oblig. 3, n. 1917.)
It is according to the general rules of evidence that the debtor
who pleads that he has been released from his obligation to deliver
should be under the necessity of making proof of all that is
necessary to support his plea.
A fortuitous event by definition is one which it was impossible
to resist, and illustrations have been given earlier of the meaning
of this term. (Supra, pp. 287 seq.) So, it is not enough for the
debtor to allege that the thing which he bound himself to deliver
has been destroyed by fire or has been stolen, for it might have been
possible for him to prevent its loss in this way. He must prove in
addition that he could not prevent the accident. (Req. 9 mai 1911,
D. 1912. 1. 401.) But " impossibility ".mustbe taken in a reason-
able sense. If all ordinary precautions to prevent the accident
were taken, its occurrence will be regarded as one which it was
impossible to prevent. This has been held in many cases both
as to fire and as to theft. (See Cass. 16 mai 1904, D. 1905. 1.
189, and supra, pp. 297, 299, 303.) A man who leaves L. E.
1,000 in an open bag in his room while he goes to lunch can
hardly say, if it disappears, that this was due to a fortuitous
event .
The last paragraph of the article in the French Code states the
rule of exceptional severity based on disfavour to thieves. But
the rule is one which follows from general principles.
The thief, or the guilty receiver, must pay the value of the
thing, although it has disappeared by fortuitous event. He cannot
say he was free from fault, because it was through his fault that
the thing came into his possession. (Pothier, Oblig. n. 664;
B.-L. et Barde, 3, n. 1925.)
Application of rule against unjust enrichment.
The Egyptian Code says that when the correlative obligations
are extinguished this is to be without prejudice to the right of
indemnity, if any, due from the respective parties for any benefit
acquired without cause. (C. C. E. 179/242.) The Quebec
Code is more full: When the performance of an obligation to
do has become impossible without any act or fault of the debtor
and before he is in default the obligcdion is extinguished and
both parties are liberated; but if the obligation be beneficially
4
480 THE LAW OF OBLIGATIONS.
performed in port, the creditor is hound to the extent of the
benefit actual/// received by him. (C. C. Q. 1202.)
This is an important instance of the application of the general
principle against allowing an unjust enrichment which has been
fully explained earlier. (Supra, pp. 140 seq., 163 seq.)
In regard to the obligation to do or not to do, the two parties
are considered as having entered into correlative obligations. If
the work cannot be done the price does not need to be paid. If a
painter undertakes to paint a picture and, before he has done so,
he becomes blind, he is not bound to pay damages, and neither is
the client bound to pay for the picture. In, some cases an un-
finished work may be of value, and, in that case, a proportion of
the price must be paid corresponding to the value of the work
done. This is upon the general principle against unjust enrich-
ment which is explained under the head of quasi-contracts. In
the case of the picture if the artist had begun it, and had then
become blind, probably nothing would have to be paid, because
the unfinished picture would not be of any value. (Supra, p. 317.
Baudry-Lacant. et Barde, Oblig. 3, n. 1916.)
Theory of risk in the Egyptian law.
The Egyptian law is not the same as the French law upon the
important matter of the risk in the case of synallagmatic con-
tracts. As to unilateral contracts there is no difficulty.
There is here only one obligation, and if it is impossible to
execute it there is an end of the matter. For instance, if I deposit
my box of silver in your care, and it is lost by a fortuitous event,,
your obligation to deliver it is extinguished and the contract
comes to an end altogether.
But in a synallagmatic contract there are correlative obliga-
tions, and logically speaking, it is quite possible that one of them
should survive the extinction of the other. In the French law we
have seen that this is so in the case of sale; the purchaser is still
bound to pay the price although the obligation of the seller to
deliver the thing has been extinguished by fortuitous event.
(Supra, p. 477.)
This is stated in C. C. F. 1138. This article is badly expressed
and there is controvorsv with regard to its meaning:
L' obligation de timer la chose est parfaite par le seul consente-
ment des parties contractantes.
EJJr rend le creancier proprietaire et met la chose d ses risque?
I
EXTINCTION OF OBLIGATIONS. 481
des Vinstant ou elle a du etre livree, encore que la tradition rten
ait point ete faite, a moins que le debiteur ne soit en demeure de
la livrer ; auquel cas la chose reste aux risques de ce dernier.
The singular expression — des Vinstant ou elle a dil etre livree
— might very naturally mean that if it had been agreed that
the thing was not to be delivered for a certain period the risk
should not pass to the creditor until this period had arrived, but
from the so-called " preliminary works," that is the compilations
giving the reports and discussions of the commissions which pre-
pared the Code Napoleon, we know that this was not what was
meant. The expression means that the thing is at the risk of
the creditor from the time at which he acquires an action to sue
for its delivery. (Fenet, 14, p. 113; Locre, 14, p. 145, in fine,
n. 6; Baudry-Lacantineiie et Barde, Oblig. 1, n. 366.)
But suppose the parties have agreed in their contract that the
property is not to pass until delivery, who is to bear the risk then?
Upon this there is controversy. Demolombe and others say that
we should follow the principle of the Roman law under which,
the risk passed to the buyer by the contract, though the property
did not pass until delivery. (Demolombe, 24, n. 424; B.-L. et
Barde, 1, n. 424.)
Planiol and others contend" that the French Code means to lay
down the principle res per it domino. If, under the contract, the
purchaser is not the owner the risk remains with the seller. (2,
n. 1347.) Such an agreement is not common and the question
is not of much practical importance.
In Egyptian law the contract has the effect of transferring the
propertj', but the risk does not pass until delivery.
This was the theory of the Mohammedan law which the Egyp-
tian legislator meant to preserve. (Kadri Pacha, Statut reel,
No. 460.)
It is clearly stated as regards sale in C. C. E. 297/371: //
the thing sold perishes before delivery, even ivithout fault or
negligence on the part of the vendor, the sale shall be dissol/cvd
and the price, if necessary, refunded, unless the purchaser is in
default as regards taking delivery, resulting from formal demand
by summons or other equivalent process, or from the terms of the
agreement itself.
This clear statement must prevail over the more obscure lan-
guage of C. C. E. (266/336, which says that sale, "according to
circumstances," throws the risk of the thing sold upon the pur-
chaser. By "according to circumstances" we must hero under-
w. — vol. n. 31
482 THE LAW OF OBLIGATIONS.
stand the cases when the purchaser is in default to take delivery,
or where under the terms of the contract the risk was to be upon
him, or when by its terms the delivery was to be at the same time
as the contract. And the Egyptian law applies the same rule as
to the risk in the case of the partial loss or deterioration of a thing.
(C. C. E. 298/372.)
This principle of the Egyptian law of sale is not peculiar to
that contract. The code lays down the general rule: When an
obligation is dissolved in consequence of impossibility of perform-
ance the correlative obligations are in like manner dissolved.
(C. C. E. 179/242.)
This is the general rule of the French law also, though it does
not apply in the case of the obligation to transfer a specific thing,
and it is the only rule which is consistent with the theory of
synallagmatic contracts. The two obligations depend upon each
other. Each of them is conditional upon the fulfilment of the
other, and it is inequitable to require the one party to perform
when the other party cannot perform on his side. (Planiol, 2,
n. 1336. See supra, p. 316.)
The difference between the French and Egyptian law is that
the French law makes 6ale and the contracts assimilated to sale
exceptions to this general rule, whereas the Egyptian law applies
the same rule to all synallagmatic contracts.
Unfortunately, however, the Egyptian Code is not well drawn,
and some articles are inconsistent with the principle which the
legislator means to adopt. It is hard to see, for example, why
when goods are sold by weight, number, or measure, and they
have been weighed, counted, or measured, as the case niay be, the
risk should then pass to the purchaser. (C. C. E. 241/307.)
The Egyptian legislator seems in this article to have copied
C. C. F. 1585 without remembering that he had elsewhere adopted
a different principle from that of the French Code. And the;
article C. C. E. 424/516 is also inconsistent but does not concern
us. (See Grandmoulin, Contrats, n. 58; De Hults, Rep. vo.
Risques, n. 12; vo. Vente, n. 117; Halton, 2, p. 26.)
(3) Novation.
This is the third mode of extinction.
The Egyptian Code defines novation thus: Novatio?i extin-
guishes an obligation and establishes a new obligation which re-
places the former. It results from a contract. (C. C. E.
186/249.)
EXTINCTION OF OBLIGATIONS. 483
Novation is the substitution of a new obligation for an old one,
and it presupposes that the old debt is extinguished.
For this reason novation comes more naturally immediately
after payment, as it does in the French Code, than after release,
as in the Egyptian Code. (C. C. F. 1234; C. C. E. 158/221.)
The substitution of the new debt which is involved in novation
is equivalent to a payment of the old debt.
And what is called elation en paiement is in fact an example
of novation. This means that the creditor voluntarily accepts
another prestation in place of that which had been promised. If
I owe you L. E. 20, and you agree to accept my camel instead,
there has been a new debt created, viz., the debt to pay the camel,
though the debt was paid t as soon as it was made by my delivering
the camel. (Aubry et Rau, 5th ed. 4, p. 258, note 1; Planiol, 2,
n. 523; Demolombe, 27, n. 230.)
Novation is subject to five conditions: —
(1) The existence of an old debt;
(2) The creation of a new debt;
(3) A new element, making a difference between the new debt
and the old one, so that the new one is not a mere acknowledgment
of the old one;
(4) The intention to novate, and
(5) The capacity of parties.
(Baudry-Lacant. et Barde, Oblig. 3, n. 1690; Aubry et Rau,
5th ed. 4, p. 348.)
The novation may take three forms: —
(1) A change of the object of the debt;
(2) A change of the debtor; and
(3) A change of the creditor.
These three varieties are stated in C. C. E. 187/251.
Novation takes place: —
(1) When the creditor and the debtor agree to substitute a new
obligation for the original obligation which is extinguished, or to
change the consideration of the original obligation ;
(2) When the creditor and a third person agree that the latter
shall become the debtor in place of the original debtor, who is
discharged without his consent being necessary, or when the debtor
has procured the acceptance by the creditor of a third person as
his debtor, such third person consenting to pay in his stead ;
(3) When the creditor and the debtor agree that the latter
shall perform the obligation for the benefit of a third person umo
consents thereto.
y^Uwvvo (1
irl
484 THE LAW OF OBLIGATIONS.
(1) Simple novation.
As an example of the first kind, if I owe yon a hundred
bushels of wheat, and we afterwards agree that instead of the
wheat I shall owe you a sum of money, there is novation by the
change of the object of the debt.
This is the simplest kind, and may be called novation simpli-
citer. (Pothier, Oblig. n. 582.)
It is also frequently called objective novation in contradis-
tinction to the kinds of novation in which one Of the parties is
changed. These are known as varieties of subjective novation.
(Aubry et Ran, 5th ed. 4, p. 346; B.-L. et Barde, 3, n. 1697.)
(2) Delegation.
The second kind of novation is that in which there is the
intervention of a new debtor; I owe you "L. E. 1,000, and I get
you to release me and to accept Peter in my place. In this case
I am said to delegate Peter, and this variety of novation ia
specially called delegation. It cannot be effected, of course, with-
out the consent of the creditor and also of the debtor who is
delegated, for I cannot make Peter a debtor in a contract against
his will. (Dig. 46. 2. 11; Girard, Manuel, 5th ed. 700; Pothier,
Oblig. n. 600; C. C. F. 1275. See Douai, 13 nov. 1909, D.
1913. 2. 57.)
Delegation will be more fully explained later.
Expromission.
There is, however, another form of novation which likewise
falls under (2") and is known by the name expromissio.
This occurs, for example, when I owe you L. E. 1,000, and
another person comes forward spontaneously and without my re-
questing him to do so, and says to my creditor, "if you will
discharge your debtor I will become bound in his place," and the
creditor agrees to the substitution. Novation of this kind is
specially called expromissio. In this case, my consent is not
necessary, as the law makes the natural assumption that a debtor
is not likely to object to his debt being paid. (Pothier, Oblig.
nos. 583, 598; Aubry et Rail, 5th ed. 4, p. 347; B.-L. et
Barde, 3, n. 1715; C. A. Alex. 23 dec. 1915, B. L. J. XXVIII,
72.)
Novation by the substitution of a new debtor may be effected
EXTINCTION OF OBLIGATIONS. 485
without the concurrence of the former one. Just as a third party
can pay a debt without the consent of the debtor, so he may extin-
guish the debt of another by novation. (C. C. E. L87 251;
C. C. F. 1274.)
The effects of delegation will be stated later.
(3) Novation by change of creditor.
This requires the consent of all three parties; the old creditor,
the debtor and the new creditor. As the old creditor has to
renounce his claim it is natural that this can be done only by his
consent. (Aubry et Rau, 5th ed. 4, p. 351 ; Nancy, 21 fevr. 1877,
D. 78. 2. 14.)
There must be a clear declaration by the creditor of his intention
to renounce. The mere indication by the creditor of a person who
is to take payment for him is not novation. Such a person is
said to be adjectus solutionis gratia. (Dig. 46. 3. 95. 5. See
Cass. 11 janv. 1893, D. 95. 1. 179; B.-L. et Barde, OUig. 3,
n. 1725.) As to the consent of the debtor, it is required because
he is becoming bound to pay a new debt. He may lose by the
change of creditor the benefit of a defence which he had against,
the former creditor. (Colin et Capibant, 2, p. 103.) This form
of novation is not common in practice. It is generally more con-
venient and safer to make an assignment of the debt. (See
Laurent, 18, n. 299.)
Parties to novation must be capable.
The French Code says: —
Novation can be effected only between persons capable of
contracting. (C. C. F. 1272; C. C. Q. 1170.)
Novation extinguishes an obligation and the creditor who agrees
to novate renounces his right to sue on the old debt. It is, there-
fore, equivalent to an alienation, and can only be effected by a
person who has the right to alienate. Accordingly, a joint and
several creditor cannot novate a debt due to the creditors jointly
and severally except so far as concerns his share. {Supra, p. 406;
B.-L. et Barde, 3, n. 1728; 2, n. 1156; Aubry et Rau, 5th ed. 4,
p. 352.)
A person may be entitled to receive payment of the obligation,
and may yet be unable to novate it, for novation is an alienation.
(Demolombe, 28, n. 263; B.-L. et Barde, 3, n. 1727.) Further,
the person who becomes liable for the new debt which is sub-
stituted for the old one must have the capacity to bind himself.
486 THE LAW OF OBLIGATIONS.
But if the new obligation is voidable at his instance the novation
is good, unless and until he brings an action to have it set aside..
If he does so, then, according -to the view of most authorities, the
novation is annulled, and the former obligation revives, because
the intention was that it should only be cancelled by the substitu-
tion of a second valid obligation. The creditor did not renounce
his old claim purely and simply. He made the renunciatiota
subject to the implied condition that the new debt should 'be
substituted, and if this new debt is annulled, the creditor must
be restored to his right to claim the old debt. (Demolombe, 28,
n. 252; Baudry-Lacant. et Barde, Oblig. 3, n. 1696; Aubry et
Rau, 5th ed. 4, p. 352; D. N. C. C, art. 1271, n. 72.)
There are some dissentients. (Larombiere, on art. 1272, n. 2.
See D. N. C. C. art. 1271, n. 72.)
Novation not presumed.
The French Code says expressly: —
" Novation is not presumed. The intention to effect novation
must result clearly from the act." The Egyptian law is the
same, though the code is silent. (C. C. F. 1273; Cass. 8 aoiit
1900, D. 1905. 1. 262; C. A. Alex. 23 nov. 1911, B. L. J.
XXIV, 15; C. A. Alex. 23 dec. 1915, B. L. J. XXVIII, 72;
C. A. Alex. 19 avril 1916, B. L. J. XXVIII, 259.) When the
novation involves a renunciation by the creditor of his claim, this
is according to the general rule that there is a presumption against
a man renouncing any right which he has. When the novation
implies the assumption by a new debtor of the obligation of the
old debtor, there is likewise a presumption against this. (Douai,
13 nov. 1909, D. 1913. 2. 57.) So, where the proof is contra-
dictory, and the court is not satisfied as to the intention to novate,
the decision will be against it. But no sacramental terms are
prescribed; and the courts may in civil matters infer the inten-
tion to novate from presumptions if there is a commencement of
proof in writing. (Req. 27 nov. 1893, D. 94. 1. 60; Cass.
8 aout 1900, S. 1903. 1. 46, and the note; Req. 28 dec. 1908,-
D. 1909. 1. 214; Aubry et Rau, 5th ed. 4, p. 354; D. N. C. C.
art. 1273, n. 12; C. A. Alex. 22 janv. 1914, B. L. J. XXVI,
167: C. A. Alex. 30 janv. 1913, B. L. J. XXV, 155.^ And
in commercial matters no commencement of proof in writing is
required.
Tin- modification of an existing obligation is not novation.
EXTINCTION OF OBLIGATIONS. 487
It must be clear that the intention was to extinguish the old debt.
So there is no novation if the creditor merely stipulates that the
debtor shall give him a security for a debt previously unsecured,
or, on the other hand, if the creditor renounces a security which
he already holds. (Limoges, 15 juin 1898, S. 1901. 2. 134.
Cf. Cass. 13 janv. 1903, S. 1909. 1. 397; Cass. 28 juin 1904,
S. 1909. 1. 194; C. A. Alex. 15 juin 1916, B. L. J. XXVIII,
433; C. A. Alex. 31 janv. 1912, B. L. J. XXIV, 118; C. A.
Alex. 26 avril 1911, B. L. J. XXIII, 282; C. A. Alex. 23 mars
1910, B. L. J. XXII, 206.)
So in many cases it has been held that where a debtor wh,ose
debt is a simple contract debt, subsequently gives to his creditor
a bill or a promissory note, this does not effect novation unless
there is something which clearly shows that this was intended,
(C. A. Alex. 23 nov. 1911, B. L. J. XXIV, 15; C. A. Alex.
28 janv. 1914, B. L. J. XXVI, 187; Req. 5 aout 1878, D. 79.
1. 71; B.-L. et Barde, Oblig. 3, n. 1732.)
The importance of this rule is generally in regard to prescrip-
tion. If there is no novation the creditor retains his right to sue
on the old debt, which may be a debt which prescribes only in
fifteen years. The action on the bill prescribes in five years.
(C. Comm. E. 194/201.) And, therefore, though the bill or
note may have prescribed by five years, the creditor still has his
remedy if he can prove the debt, whereas if there had been nova-
tion his right of action would have been lost after five years from
the date when the bill was due. (C. A. Alex. 22 mars 1893,
B. L. J. V, 182; C. A. Alex. 5 mai 1898, B. L. J. X, 264.J
Upon similar grounds it is held that the renewal of a bill does
not effect novation unless the intention to do so is apparent.
(Laurent, 18, n. 292; Toulouse, 8 mai 1888, D. 89. 2. 208.)
A fortiori, the granting of a delay for payment or the pro-
longation of the term fixed does not import novation. (C. A.
Alex. 23 dec. 1915, B. L. J. XXVIII, 72; C. A. Alex. 13 avril
1916, B.L.J. XXVIII, 254; C. A. Alex. 23 mars 1910, B.L.J.
XXII, 206.) And the substitution of an official document as
proof of the debt in place of a private writing is not inconsistent
with the keeping alive of the old debt. (C. A. Alex. 13 avril
1916, B. L. J. XXVIII, 254.)
The rule of law that novation is not presumed does not alter
the general rules as to proof. So it has been held that proof by
testimony is not admissible tending to prove in contradiction of
a document the novation of a debt exceeding P. T. 1,000. (C. A.
488 THE LAW OF OBLIGATIONS.
Alex. 27 mai 1909, B. L. J. XXI, 364.) Novation of a com-
mercial debt may be proved by testimony irrespective of the
amount. (Cass. 4 janv. 1888, D. 88. 1. 37; Baudry-Lacant.
et Barde, Oblig. 3, n. 1733.)
Must be valid debt to novate.
There cannot be any novation unless there is a valid debt to
begin with. Accordingly, if the original debt was null, for
instance, as having an illegal cause, or if it had been extinguished
in any way, it cannot be novated. (Pothier, Oblig. nos. 585 —
586.) But there may be a novation of a natural obligation, and
it may be turned into a civil one by novation. For novation, like
payment, amounts to a voluntary acknowledgment by the debtor
of the debt, and may indicate his intention to make it a civil debt.
(Baudry-Lacant. et Barde, Oblig. 2, n. 1678.) This question
has been considered earlier in speaking of the effects of a natural
obligation. (Supra, I, p. 36.)
New debt must be substituted.
It is indispensable that there is a new debt created to come in
place of the old one. For otherwise the payment of the old debt
simply puts an end to it, and there is no substitution. (B.-L.
et Barde, 3, n. 1695; C. A. Alex. 30 mai 1917, B. L. J. XXIX,
461.)
Effects of novation.
These are dealt with in the articles C. C. E. 188—191/252, 255.
(Cf. C. C. F 1278—1281; C. C. Q. 1176—1180.)
The Egyptian Code says: —
The new debt is not guaranteed by the securities which
guaranteed the discharge of the original debt, unless that is the
intention of the parties as resulting from the agreement or the
circumstances of the case.
Nevertheless the scope of the agreement shall be limited as
follows : —
hi the first case above mentioned, the debtor and the creditor,
may agree that real securities, such as privileges, hijpothecs and
right Is of retention, shall be transferred to the new obligation,
provided that the burden of such obligation is not increased to
the prejudice of third persons.
In the second case, the creditor and the third person may agree,
EXTINCTION OF OBLIGATIONS. 489
even without the consent of the original debtor, that the real
securities shall be continued.
In the third case, the three contracting parties may make the
like agreement.
In each of the above cases, personal securities, such as surety-
ship or joint and several liability, shall be transferred only with
the consent of the sureties or the co-debtors.
The agreement which transfers such securities can have no effect
as regards third persons, unless it is made at the same time m the
novation and by means of an official instrument.
These articles must be considered.
Transfer of securities to new debt.
The privileges and hypothecs which attach to an old debt do
not pass to the one which is substituted for it unless the creditor
has expressly reserved them. Seeing that novation extinguishes
the old debt, just as payment would extinguish it, it would at the
same time put an end to all the accessory obligations such as
suretyship or hypothecs, unless means were taken to preserve them.
The law distinguishes between real and personal securities. Per-
sonal securities such as suretyships can never be transferred in the
literal sense of the term. The sureties may consent to guarantee
the new debt, but, if so, they make new obligations. They
guaranteed the old one in view of the character and circumstances
of the debtor. And it is for them to say if they are willing to
guarantee the new debt. (B.-L. et Barde, 3, n. 1742; Aubry et
Rau, oth ed. 4, p. 370.)
The transfer of the real securities to the new debt must be made
at the same time as the novation, for otherwise the securities will
have been extinguished and they cannot subsequently be revived.
Of course the creditor may expressly stipulate that the novation
shall be conditional on the sureties or others liable in the old debt
consenting to make themselves liable under the new one.
If the new debt is larger than the old one the transfer of the
securities to the new debt by the novation is not allowed to injure
third parties. The code says: provided that the burden of such
obligation is not increased to the prejudice of third persons.
(C. C. E. 189/253.) If, for example, I owe you L. E. 10.000,
which is secured by hypothec, and we agree to increase the debt to
L. E. 15,000, the hypothec to remain, this cannot be allowed to
prejudice the holder of a hypothec postponed to the one in your
490 THE LAW OF OBLIGATIONS.
favour and registered before the novation. (Pothier, Oblig.
n. 599; Baudry-Lacant. et Barde, Oblig. 3, n. 1740; Aubrj et
Rau, 5th ed. 4, p. 368, note 53.)
No transfer of securities to property of new debtor.
By C. C. F. 1279, when novation is effected by the substitu-
tion of a new debtor the original privileges and hypothecs cannot
be transferred to the property of the new debtor.
Obviously, the hypothec upon an immoveable of the old debtor
cannot be transferred to another immoveable; hypothecs cannot
be transferred from one immoveable to another. If an immove-
able of the new debtor is to be made liable, that can only be by
a new hypothec. If the new debtor consents to this, the hypothec
can of course only take effect from its date and registration, and
cannot prejudice his creditors who had privileges and hypothecs
over this property before. (B.-L. et Barde, 3, n. 1741; Aub'ry
et Rau, 5th ed. 4, p. 368, note 54.)
Is the old debtor's consent necessary to transfer securities?
The Egyptian Code does not require this in novation by change
of the debtor. (C. C. E. 187/251.) Why should the old debtor's
consent be required seeing that the novation cannot prejudice him
or make him liable to pay any larger amount than before? The
law stated by Pothier was otherwise, but the reason given is not
very convincing. (Oblig. n. 599; B.-L. et Barde, Oblig. 3,
n. 1378.)
In all cases except expromission the debtor takes part in the
transaction, and if" it is his immoveable which is hypothecated it
would seem that his consent to the novation is a tacit consent to
the ''reserve." C. C. E. 189, jal. 2/253, appears to lay down
the same rule for expromission.
In France the point is controversial, but this is largely because
if C. C. F. 1278 is to be read as not requiring the debtor's consent,
this article would be inconsistent with C. C. F. 1280, which says:
Lorsque la novation s'opere entre le creancier et Vun des debiteurs
solidaires, les privileges el hijpotheques de Vanciemie creance ne
peuvent etre reserves que sur les biens de celui qui contracte la
nouveUe dette. But as C. C. F. 1280 is not reproduced in the
Egyptian Code we are not confronted with this difficulty. (See
B.-L. et Barde, Oblig. 3, n. 1738; Aubry et Rau, 5th ed. 4,
p. 368, note 54.)
EXTINCTION OF OBLIGATIONS. 491
Protection of third parties.
The agreement which transfers such securities can have no effect
as regards third persons unless it is made at the same time as
the novation and by means of an official instrument. (C. C. E.
191/255.)
The novation extinguishes the securities unless they are reserved
or transferred. And how are third parties to know that they are
reserved or transferred except by the register? In the absence of
the registration they may acquire rights over the immoveables
after the novation, and it would be unjust to allow these rights to
be affected by a novation of which they were unaware.
Does the code intend to distinguish as to this point between the
case when the real security is " reserved," or, as the Egyptian
Code calls it, " continued," and the case when the real security is
" transferred," a case which, as we have seen earlier, involves the
constitution of a new real security.
The danger is less serious in the case of a reserve of a hypothec,
because the hypothec, being registered, it remains on the register
and third parties are protected.
If D's debt to C is guaranteed by a hypothec over his immove-
able, and X agrees to become debtor in D's place, it may be agreed
that the debt shall be secured as before by the hypothec over D's
immoveable. D is then a real security. In this case we may say
the hypothec is reserved or continued. But suppose, instead of
this agreement, it is agreed that the hypothec over D's immove-
able shall be extinguished, and in place of it X shall grant .a
hypothec over an immoveable which belongs to him. There is
here a new hypothec. According to the French law it is only in
this case that an acte. authentique is needed. (Demolombe, 28 r
n. 354; D. Supp. Oblig. n. 1053; Marcade, on art. 1279, n. 3.)
It is possible that the Egyptian Code intends to preserve this
distinction, but the language of the code is far from clear.
(C. C. E. 191/255.) More probably the word* " transfer " in
this article is used to include " reserves " as well as transfers in the
strict sense. (See De Hults, Rep. vo. Novation, n. 23; Halton, 1,
386.)
Novation in case of joint and several debt or debt
secured by a surety.
The French Code has two articles upon novation as effecting a
joint and several debt, or a debt secured by a surety.
492 THE LAW OF OBLIGATIONS.
When novation is effected between the creditor and one of
the joint and several debtors, the privileges and hypothecs which
attach to the old debt can be reserved only upon the property of
the co-debtor u>ho contracts the new debt.
Joint and several debtors are discharged by novation effected
betweeen the creditor and one of the co-debtors.
Novation effected with respect to the principal debtor discharges
his sureties.
Nevertheless, if the creditor have stipulated in the first case
for the accession of the co-debtors or in the second case lor that of
the sureties, the old debt subsists if the co-debtors or the sureties
refuse to accede to the new contract. (C. C. F. 1280, 1281;
C. C. Q. 1178,1179.)
The Egyptian Code intends to maintain the same rules, though
it states them less fully. (C. C. E. 190/254; De Hults, Rep.
Novation, n. 21.)
One of the joint and several debtors cannot create a hypothec
over the property of his co-debtors without their consent, and
this is what it would amount to if he could reserve a hypothec
over their property. If the creditor agrees to novation with one
of the joint and several debtors, he discharges the other joint and -
several debtors from their personal liability, and he discharges
their lands from hypothecs, if any there be, unless he takes steps
to prevent this result. This he can easily do by making his
consent to the novation conditional on the other joint and several
debtors giving their adhesion to the contract. The same rule
applies to the case of novation effected with respect to a principal
debtor, whose sureties will be thereby discharged unless precau-
tions are taken. (Pothier, Oblig. n. 599; Aubry et Rau, 5th ed.
4, p. 369; B.-L. et Barde, 2, n. 1739, and n. 1742.)
Delegation.
It is now necessary to examine in more detail the special caae
of delegation.
Pothier defined delegation as a kind of novation by which the
old debtor, in order to discharge his debt to his creditor, procures
a third person who binds himself to the creditor in his plaqe.
{Oblig. n. 600.) It is dealt with in C. C. E. 187, al. 2, 251, al.'
2. Il requires, therefore, the concurrence of three persons, the old
debtor who finds the substitute and is called in the French law
the delcgant, the person substituted or delegated, called the
delegue, and the creditor who, in consequence of the new debt
Lv>^m U
EXTINCTION OF OBLIGATIONS. 49&
which the delegue contracts with him, discharges the debtor who
makes the delegation. The creditor is known as the delegated™.
There can be no question of novation if it does not appear that
the delegue undertook to be substituted in place of the old debtor.
(C. A. Alex. 30 nov. 1911, B. L. J. XXIV, 25.) And it is
equally essential that the delegataire should have consented to
accept the delegue. (C. A. Alex. 26 juin 1912, B. L. J. XXIV,
418.) Delegation is a contract formed like other contracts by an
offer and an acceptance. When the delegataire accepts the offer
he acquires a direct right of action against the delegue. (C. A.
Alex. 13 mars 1913, B. L. J. XXV, 232.) Delegation of this
kind, which is the only one noticed by Pothier, is now called
"perfect delegation," and is distinguished from another form
called " imperfect delegation," in which, though a new debtor is
found, the old debtor is not discharged. According to the French
Code, the presumption is in favour of this imperfect delegation,
for the French Code says: —
The delegation by which a debtor gives his creditor a new
debtor who obliges himself towards the creditor, does not effect
novation unless the creditor Ms expressly declared that he intended
to discharge his debtor* who has made the delegation. (C. C. F.
1275; Toulouse, 4 avr. 1895, D. 98. 2. 337.) The same pre-
sumption exists in Egyptian law. (C. A. Alex. 30 nov. 1911,
B. L. J. XXIV, 25; C. A. Alex. 22 janv. 1914, B. L. J. XXVI,
167.) The distinction between perfect and imperfect delegation
must be explained.
Meaning of express discharge.
In saying that the delegation does not discharge the former
debtor without an express declaration to that effect, the French
Code does not mean that the word "discharge" must be used.
But language must be employed which clearly indicates the inten-
tion of the creditor to discharge this debtor. (B.-L. et Barde, 3,
n. 1744; Aubry et Bau, 5th ed. 4, p. 363; Paris. 14 dec. 1889,
D. 90. 2. 189.)
Delegation distinguished from novation.
Delegation does not necessarily involve novation. It is only
that variety of delegation which is called perfect delegation in
which there must be novation.
Delegation is a special contract analogous to mandate. Its
494 THE LAW OF OBLIGATIONS.
-object is the thing which is stipulated from the person delegated.
If the delegator was a debtor and his creditor releases him from
the debt and accepts the person delegated in his place, there is
novation. There can quite well be delegation without any nova-
tion. For example:
(1) A desires to promise a gift to B. Having no funds avail-
able he asks C to promise the gift, and C does so. There is no
novation here A will be bound to reimburse C on the principles
of mandate. (B.-L- et Barde, 3, n. 1754.)
(2) In what is called imperfect delegation there is no novation.
Distinction between perfect delegation and imperfect
delegation.
Delegation is said to be perfect when the creditor declares his
intention to liberate the first debtor when he accepts the new one.
He has no longer any action against the original debtor. The
perfect delegation produces the effect of a novation. (B.-L. et
Barde, 3, n. 1744; Aubry et Bau, 5th ed. 4, p. 363; Colin et
Capitant, 2, p. 108. See C. A. Alex. 23 dec. 1915, B. L. J.
XXVIII, 72; C. A. Alex. 26 janv. 1912, B. L. J. XXIV, 418.)
But, on the other hand, when the creditor has not declared his
intention to discharge the original debtor there is no novation.
The old debt is not extinguished; there is what is called imperfect
delegation, by which is meant that the creditor accepts the obliga-
tion of the new debtor without abandoning his claim against the
old one: (C. A. Alex. 22 janv. 1914, B. L. J. XXVI, 167;
C. A. Alex. 17 avril 1913, B. L. J. XXV, 320.) The creditor
is in much the same position as if he had accepted a surety for
the debt due to him. The two kinds of delegation are clearly
distinguished in the Mohammedan law. (Kadri Pacha, Statut
Reel, arts. 890—891.)
The distinction between perfect delegation and imperfect dele-
gation is important if the new debtor turns out to be insolvent.
If in this case the delegation was perfect, the creditor has no
recourse against the old debtor. Imperfect delegation is there-
fore preferable from the point of view of the creditor, and it is
in fact much more common than perfect delegation. (Planiol, 2,
n. 554; Colin et Capitant, 2, p. 109.)
Even when the delegation was perfect, and the delegate was
insolvent or bankrupt already at the date of the delegation, the
French Code allows the creditor a recourse. For it is reasonable
to presume that in this case there must have been fraud or error.
EXTINCTION OF OBLIGATIONS. 495
Who would voluntarily accept a bankrupt debtor? (C. C. F. 1276.)
The Egyptian law is probably the same.
Indication of person to pay or to receive payment.
C. C. F. 1277 states two other cases in which there is no
novation, though they resemble cases of delegation: The simple
indication by the debtor of a person who is. to spay, in his plaoe,
or the simple indication by the creditor of a person ivho is to
receive in his place, does not effect novation. And the Quebec
Code adds a third case: " or the transfer of a debt, with or without
the acceptance of the debtor." (C. C. Q. 1174.) The presump-
tion is that the person named by the debtor to make the payment
is his agent who is to make the payment on his account. The
mandate to make the payment can be revoked, and the creditor
is certainly not presumed to accept the agent as his debtor and
to discharge the principal. (Baudry-Lacant. et Barde, Oblig. 3,
nos. 1745, 1754.)
In like manner when the creditor names a person to receive
payment for him, the presumption is that this is merely as the*
creditor's agent. (See C. A. Alex. 13 mars 1913, B. L. J.
XXV, 232.)
Distinction between novation by change of creditor and
assignment of a claim.
There is considerable resemblance between novation by
change of the creditor and the assignment of a claim. But the
two things need to be carefully distinguished. The fundamental
differences are: —
(1) That novation extinguishes the old debt with its acces-
sories, unless it is agreed that the securities shall pass to the new
debt, whereas, in the assignment of a claim, the claim is trans-
ferred with its accessories to the new creditor.
In novation the new debt is not guaranteed by the securities
which guaranteed the discharge of the original debt, unless that
is the intention of the parties as resulting from the agreement
or the circumstances of the case.
(2) There is another difference, namely, that novation by
change of the creditor requires the consent of the debtor, whereas
an assignment of the debt can be made by the French law and, in
Egypt, by the Mixed Code, without his consent. (B.-L. et Barde,
3, n. 1722; Demolombe, 28, nos. 272, 330; Colin et Capitant, 2,
496 THE LAW OF OBLIGATIONS.
p. '102; Cass. 23 nov. 1898, D. 99. 1. 21; C. C. M. 251,
436; C. A. Alex. 20 mars 1913, B. L. J. XXIV, 203.) Bat
under the Native Civil Code this difference between novation and
assignment does not exist, because that code, following upon this
point the Mohammedan law, requires the consent of the debtor
in the case of assignment also. But this is without prejudice to
the rules of commerce in regard to the assignment of commercial
documents of title and instruments transferable by endorsement.
(C. C. N. 349; Grandmoulin, Contrats, n. 240; Halton, 2, p. 87.)
(4) Release.
This is the fourth mode of extinction.
In regard to release, or, as it is called in the French law, remise
de la dctte, the modern civil law is much simpler than the Roman
law on which it was based. In the Roman law there were many
technicalities as to the form of release, but in our law all these
subtleties have disappeared, and no special forms are required for
release. (See Girard, Manuel, 5th ed. p. 712; Pothier, Oblig.
n. 607.) By release is meant the gratuitous renunciation made
by a creditor in favour of his debtor of the right to claim the
whole or a part of the debt. There is no payment, or giving in
payment, or substitution of a new debtor, there is simply an
abandonment of the debt.
It is true that in novation or compromise there is frequently the
release of a debt as a part of the operation.
But release, in the sense here intended, means a gratuitous'
abandonment by the creditor of his right, and is, in fact, as Pothier
calls it, a gift. {Oblig. to. 619.)
Consequently, the release requires acceptance either express or
J&ciL (B.-L. et Barde, 3, n. 1767; Laurent, 18, n. 337; Aubry
et Rau, 5th ed. 4, p. 335. See, however, Larombiere, art. 1285,
n. 10. Cf. C. A. Alex. 30 dec. 1913, B. L. J. XXVI, 118,
Mohammedan law.)
It is perhaps singular that although release is in truth a dona-
tion, it is not subject to the conditions as to the formalities of
gifts. But the true character of release as a gift is shown by the
fact that although the forms of gifts are not required for its
validity, it is subject to the rules which apply to gifts as regards
the capacity to give and receive. (Baudry-Lacant. et Barde,
Oblig. 3, 1769; Aubry et Rau, 5th ed. 4, p. 336; Colin et
Capitant, 2, p. 124.)
EXTINCTION OF OBLIGATIONS. 497
The articles on release in the Egyptian Code are as follows
(C. C. E. 180—185/243—248;:-
Au obligation is extinguished by a voluntary release made
by the creditor, provided he has capacity to make a gift.
A release granted to the debtor discharges his sureties.
A release granted to one of several debtors jointly and severally
liable is deemed to have been granted for his share and extin-
guishes the liability as regards such share only.
The rest of the debtors so jointly and severally liable can re-
cover against the one to whom the release has been granted only
his contribution to the share of those of them, if any, who are
insolvent.
A release granted to a surety is deemed to be granted in respect
of his suretyship.
If the undertaking of suretyship entered into by the surety to
whom the release has been granted is not subsequent to that of
other sureties for the same obligation, he remains liable to the
recourse, if any, of such other sureties against him.
Most of these articles need no commentary here. The question
as to release in the case of the joint and several debt has been
fully discussed under that head. (Supra, pp. 422 seq.)
The articles upon release in the case of suretyship belong to
the contract of suretyship. (See Halton, 2, p. 222; Grandmoulin,
Suretes, n. 81.)
Release may be tacit.
So true is it that by our law no special form is required for
the release of a debt that it may be inferred from the conduct of
the parties.
In the Egyptian Code these rules are given in the chapter on
proof of obligations. The delivery to the debtor of the original
document of title or of a copy endorsed for execution is proof of
discharge. It is, nevertheless, open to the creditor to prove by
witnesses that the document of title is in the hands of the debtor
for some entirely different reason. (C. C. E. 219, 220/284, 285.)
The release of an obligation may be made either expressly or
tacitly by persons legally capable of alienating. It is made tacitly
when the creditor voluntarily surrenders to his debtor the original
title of the obligation unless there is proof of a contrary intention .
So if the creditor holds a promissory note for the debt and he
gives it back to the debtor without payment there is a presumption
that he intends to release the debtor. But this is merely a pre-
w. — vol. ii. 32
498 THE LAW OF OBLIGATIONS.
sumption which may be rebutted by proof of a contrary intention.
It may be proved that the note or other title to the debt had been
given to the debtor to copy, or for some other purpose, or had been
sent to him by mistake, or that he had got possession of it fraudu-
lently. It is only the voluntary surrender by the creditor of the
title which raises a presumption of intention to release the debt.
By the French Code, if the original title to the debt is a private
writing, and it is proved to have been voluntarily handed to the
debtor, it is not competent to prove that this was for any other
purpose than to extinguish the debt. (C. C. F. 1282.) If the
document is found in the debtor's hands he does not need to prove
that it came into his hands by the voluntary act of the creditor,
for the presumption will be that this was so. It is quite excep-
tional that a man should get possession of a document by error
or theft, or in any other way than by its being voluntarily given
to him. (Planiol, 2, n. 615; Baudry-Laeant. et Barde, Oblig.
3, n. 1781; Cass. 20 oct. 1890, D. 91. 1. 263.)
But the creditor may prove by any means of proof that delivery
to the debtor was not voluntary in this sense. For instance, when
it is proved that the debtor had been the tutor of the creditor, and
had after the termination of the tutorship continued to manage
the business of the creditor, the fact that he is in possess! ion of
the document of debt is easily explained. (Aubry et Rau, 5th
ed. 4, p. 340; Req. 6 aout 1894, D. 95. 1. 165.) On the other
hand, by the French law, if the original title is a notarial deed,
the voluntary handing of the grosse or copy of the title raises a
presumption of release, but a presumption which may be rebutted.
(C. C. F. 1283; Cass. 7 janv. 1907, D. 1907. 1. 40.) In our
law this distinction is not made.
By C. C. F. 1286: The surrender of a thing given in pledge
does not create a presumption of the release of the debt for which
it ivas pledged. The pledge being merely a security, and acces-
sory to the principal obligation, it is quite possible that the
creditor gave back the pledge because he was satisfied with the
personal security of the debtor. The Egyptian law is the same.
The code says, a pledge is cancelled if the thing pledged returns
into the possession of the pledgor. (C. C. E. 541/663.) But
this does not affect the debt secured. By C. C. F. 1284; C. C. Q.
1183, the surrender of the original title of an obligation to one
of joint and several debtors is available in favour of his co-debtors.
Two reasons may be given for this:
(1) That each of the joint and several debtors is the agent
EXTINCTION OF OBLIGATIONS. 499
of them all for the purpose of ameliorating their condition,
and
(2) That by giving up the title of the debt to one of them, the
creditor disarms himself as against the others, because he would
need the title if he were to sue them. This second reason is so
•conclusive that, probably, the presumption of release would exist
also where the debtors were not joint and several but merely
joint. (Baudry-Lacant. et Barde, Obiig. 3, n. 1800; Aubry et
Rau, 5th ed. 4, p. 340.)
The Egyptian law is no doubt the same.
The tacit release goes further here than express release, because
by the Egyptian law, express release is presumed to be only of
the debtor's share. (C. C. E. 183/246.)
This subject has been discussed fully under the head of joint
.and several obligations. (Supra, pp. 422 seq.)
(5) Compensation.
Compensation is the fifth of the modes in which an obligation
may be extinguished.
Compensation is the balance struck between two debts which
cancel each other either in whole or in part. It takes place when
I owe you a sum of money and you owe me another sum. If I
borrow L. E. 100 from you on Thursday, and on Saturday you
buy from me goods for cash worth L. E. 100, then I no longer
owe you the L. E. 100 for the loan. It has been wiped out by
the debt which you owe me for the goods which you bought and
did not pay for.
Where the one debt cancels the other in this way automatically
this is what is called legal compensation, and it is this form of
compensation which is treated of in the Civil Code:
Compensation is a mode of payment which takes place, by
effect of law, even without the knowledge of the parties, when
each, is both debtor and creditor of the other.
Compensation operates up to the \amount of the smaller debt.
(C. C. E. 192, 193/256, 257.) The French Code is to the same
effect. (C. C. F. 1289, 1290
But, on careful examination, it will be found that there are in
fact three varieties of compensation which are called by French
writers legal, facultative, and judicial or reconventional. The
first is that which takes place ipso jure, as in the illustration just
mentioned; the second is that which occurs when there is some-
32 (2)
500 THE LAW OF OBLIGATIONS.
thing to prevent legal compensation, but the obstacle is created
by law solely in the interest of one party and ho chooses to waivei
it, thus allowing the legal compensation to take place; and the
third is that which takes place when in a litigation the judge
compensates one claim with another, the claims not being of such
a nature as to compensate each other without any judicial investi-
gation and decision. (B.-L. et Barde, 3, n. 1807; Aubry et Rau,
5th ed. 4, p. 371.) Judicial compensation which occurs when
tin' validity of a demande reconventionnelle is sustained belongs
to the subject of procedure. (See C. C. Proc. E. 294/335; Lusena
Bey, Elements de Procedure Civile et Commerciale, 1, p. 346;
C. A. Alex. 9 fevr. 1899, B. L. J. XI, 125.) We need to speak
only of legal and of facultative compensation.
(a) Legal compensation.
This comes into operation only where both obligations are
for a liquidated amount, are due, and have for their object a sum
of money or any other things of the like nature which, having
regard to their kind and value, can be replaced by each other, and
which are payable or deliverable in the same place. (C. C. E.
194/258: C. C. F. 1291.) These conditions will be more fully
explained later.
When the conditions stated exist, and the two debts are of
equal amount, they are both extinguished without any agreement
of parties or the judgment of a court. If I owe you L. E. 100.
of which the payment is due, and, subsequently, you come to owe
me L. E. 100, which is likewise payable, the two debts cancel
each other and disappear. If we prefer to put it another way the
one debt pays the other, for, as French lawyers say, compenser
cest payer. And if, in the circumstances stated, my debt to you
is of L. E. 100, and your debt to me is of L. E. 50. then my
debt becomes automatically one of L. E. 50. Seeing that it is
the law which declares that this effect shall be produced, the
knowledge of the parties is not necessary, nor is it necessary that
they should have capacity to contract. (Laurent, 18, n. 382;
Planiol, 2, n. 579.)
Can court declare compensation ex officio?
In the French law there is a controversy as to whether the court
has the duty of declaring ex officio that compensation has taken
place.
EXTINCTION OF OBLIGATIONS. 501
According to some authorities, the compensation is not allowed
if the defendant has not taken the plea. (Aubry et Rau, 5th ed. 4,
p. 396.)
A recent decision of the Mixed Court of Appeal is in this sense.
(C. A. Alex. 12 janv. 1915, B. L. J. XXVII, 109.) Obviously,
the court cannot divine for itself that there is compensation. But
when it is seized of demands by both parties, the better opinion
seems to be that the court may find that compensation has taken
place though the plea is not formally taken. (Demolombe, 28,
n. 643; B.-L. et Barde, 3, n. 1861; Larombiere, art. 1290,
n. 1; D. N. C. C. art. 1290, n. 2.)
Compensation first pleaded in appeal.
Compensation may be pleaded at any stage of the proceedings,
and even on appeal, though the plea was not taken in the court
below. (Demolombe, 28, n. 645; Aubry et Rau, 5th eel. 4,
p. 396.) But it is only if the debt is truly liquid that it may
be for the first time pleaded in compensation upon appeal, the
plea not having been taken in the court below. S'il est vrai
qiien principe la compensation est un moyen de liberation qui,
comme le paiement, p&ut etre propose pour la premiere fois en
degre d'appel, il n'est pas moins vrai que, lorsque la compensation
implique au prealable la decision d'ime question qui pent, a elle
seule, former Vobjet d'une action separee, il nest pas permis a
une des parties de gctrder le silence en premier degre, et d'attendre
pour la proposer que la cause soit portee devant la Cour, privant
ainsi Vadversaire d'une des plus importantes garanties judiciaires.
(C. A. Alex. 16 janv. 1916, B. L. J. XXIX, 151. See Cass.
5 nov. 1901, D. 1902. 1. 92.)
What debts can be compensated.
This legal compensation takes place only in regard to certain
debts, and it is these which must now be examined.
(1) The debts must be reciprocal.
By this is meant that each of the parties must be creditor in
one of two obligations, and debtor in the other in his personal
character and as a principal. (See C. A. Alex. 4 fevr. 1903,
B. L. J. XV, 132; C. A. Alex. 25 nov. 1915, B. L. J. XXVIII,
35; Cass. 5 nov. 1901, D. 1902. 1. 92; Cass. 7 fevr. 1905,
D. 1905. 1. 432.)
502 THE LAW OF OBLIGATIONS.
If a tutor brings an action in his quality, it cannot be pleaded
that the debt is compensated by onie which the tutor owes as an
individual. If an heir who has accepted a succession subject to
benefit of inventory, sues a creditor of the succession for a debt due
to him as an individual, it cannot be pleaded that the debt was
compensated by a debt due by the succession to the defendant.
(Baudry-Lacant. et Barde, Oblig. 3, n. 1810.) Similarly a debtor
cannot set up compensation between the debt which he owes and
a debt due by the creditor to a third party on whose behalf the
debtor is entitled to act as agent. (C. A. Alex. 25 nov. 1915 y
B. L. J. XXVIII, 35.)
And, seeing that a partnership has a persona distinct from
those of the individual partners, a debt due to the firm cannot be
compensated with a debt due by a partner or vice versa. (Cass.
5 nov. 1901, D. 1902. 1. 92; Pand. Franc. Oblig. 5845.) So
it has been held, Le creancier personnel d'un associe, meme en
nom collectif, ne saw ait opposer une compensation a la societe.
(C. A. Alex. 20 avril 1910, B. L. J. XXII, 275.)
This principle that reciprocity between the two debts is neces-
sary is illustrated in the law of suretyship.
The surety may email himself of the compensation which takes
place when the creditor owes the principal debtor. (C. C. F.
1294; C. C. E. 509/622; Grandmoulin, Suretes, n. 80. See
C. C. E. 198/262.)
But a principal debtor cannot set up in compensation that
which is due to his surety. (C. C. E. 200/264.)
A. co-debtor jointly and severally liable with others cannot
set up in compensation that which is due to his co-debtors' ex-
cepting to the extent of the share of the latter in the liability.
(C. C. E. 201/265; C. C. F. 1294.)
Here the first case is perfectly obvious. If the creditor incurs
a debt to the principal debtor, the debt due by the principal debtor
is to that extent wiped out. It would not be equitable that
thereafter the creditor should continue to have a claim against
the surety. The surety can say, "you have been paid by the
principal debtor whose debt I guaranteed." The second case is
a good illustration of the point under discussion. If the creditor
incurs a debt to the surety, the principal debtor cannot say that
his debt to the creditor has been thereby discharged. The debt
which the surety owed to the creditor he did not owe as principal
but as surety. His debt was conditional on the failure of the
principal debtor to pay, and if compensation were allowed the
EXTINCTION OF OBLIGATIONS. 503
effect of this would be to make the surety pay before his time
had come, that is before the principal debtor had been tried aud
found wanting. (B.-L. et Barde, 3, n. 1813; Demolombe, 28,
n. 550.)
The third case is that in which there are joint and several
debtors. Here, if the creditor incurs a debt to one of the joint
and several debtors, this does extinguish the debt to the extent
of the share of the joint and several debtor, and this compensation
can be pleaded by the other co-debtors.
For the. joint and several debtors are, in a question with the
creditor, all of them in the position of principal debtors.
This case is not mentioned in the French article, and in the
French law no compensation takes place even to the extent of
the share of the co-debtor. (C. C. F. 1294; Baudry-Lacant. et
Barde, Oblig. 2, nos. 1249, 1250. See supra, p. 420.)
(2) The debts which are compensated must be of the same
kind, or be fungible.
The French writers express this by saying that the two debts
must possess the character of fungibility. They must be both
debts of money, or else both debts of a certain quantity of fungi-
bles of the same kind. There can be no compensation between
determinate specific things. One cannot set off a debt of a horse
against a debt of another horse, or even a debt of a certain quantity
of wheat of one quality against a debt of a certain quantity of
wheat of a different quality, for these things are not fungible
inter se. (See Req. 22 nov. 1899, D. 1900. 1. 14.) If com-
pensation were to be allowed in such cases it would be compelling
a creditor to receive in payment something different from that
which he had stipulated for, and, according to the law, a creditor
cannot be compelled to receive any other thing than the one due
to him, although the thing offered be of greater value than the
thing due. (C. C. F. 1243; C. C. E. 168/231. Supra, p. 451.)
Under the French Code there is an exception of a limited kind.
Where a debtor has promised to make payments or prestations
of a certain quantity of grain or other produce which has a fixed
market price officially determined on a certain date, such a debt
may be compensated with money. But our law has nothing of
this kind, and it is criticised by the French writers. (C. C. F,
1291; Baudry-Lacant. et Barde, Oblig. 3, n. 1828; Pothier,
Oblig. n. 626.)
504 THE LAW OF OBLIGATIONS.
(3) The two debts must both be demandable.
The third requirement for compensation is that the two debts
shall both be demandable, which means: (1) that both the debts
shall be exigible in their character; and (2) that each of them is
a debt which the creditor has the right to sue for at once. As
to (1) the English version of the Egyptian codes is not very
clear. In saying that the obligations must be "due," the code
might mean merely that the date of payment must have arrived.
But the French version says the debts must be exigibles. This
is the word used in the corresponding article of the French Code.
It clearly implies that the debt must be one the payment of which
could be demanded by the creditor.. A natural obligation, for
example, does not entitle the creditor to demand performance.
It is not an exigible debt, though it may be "due," in the sense
that the date fixed for payment has arrived. The French doctrine
is in this sense. (B.-L. et Barde, 3, n. 1839; Aubry et Bau, 5th
ed. 4, p. 377; Demolombe, 28, n. 536, 543.) The Egyptian
law is without doubt the same. (De Hults, Rep. vo. Compensa-
tion, n. 11.) ►
As to (2), if one of the debts is not due for three months, and
the other is actually due, compensation cannot take place between
them, because this would be depriving the debtor of the benefit of
the term or delay to which lie is entitled by the agreement or
by law. But the creditor in whose favour the term exists can, if
he chooses, waive the benefit of the term, and this will allow
compensation to take place.
For example, if I owe ypu L. E. 500 payable in three months
without interest, and you incur a debt to me of the same amount,
which is exigible now, I can insist that compensation shall take
place between the two debts, if I choose to waive the delay. This
is what is called facultative compensation and will be explained
later. (B.-L. et Barde, 3, n. 1883; Cass. 25 nov. 1891, D. 92.
1. 296.)
It does not apply where the term is in favour of both parties,
in which case it cannot be waived without their joint consent.
The term of a bill of exchange, for example, is of this kind'.
{Vernier v. Kent, 1902, R. J. Q. 11 K. B. 373.)
(4) The debts must be liquidated.
The fourth condition of compensation is that the debts shall
be liquidated — claires et liquides — and it is with regard to this
EXTINCTION OF OBLIGATIONS. 505
matter that most of the difficulty arises. According to the old
definition, a debt is liquid when it is certain that it is due and
what is its amount — cum cerium est an et quantum debeatur.
(Pothier, Oblig. n. 628.)
Debt uncertain.
Obviously one cannot set up in compensation a claim of which
the very existence is disputed. This would be in effect to make
the other pay at once a debt which he perhaps did not owe at all.
(Pothier, Oblig. n. 628; Aubry et Rau, 5th ed. 4, p. 374; C. A.
Alex. 10 dec. 1914, B. L. J. XXVII, 59; C. A. ALex. 16 mai
1918, B. L. J. XXX, 435; C. A. Alex. 20 mars 1913, B. L. J.
XXV, 250.) The creditor of a liquid debt against whom
there is set up in compensation a debt which, according to him,
is subject to rescission, must bring the action for rescission. The
plea has the effect of a mise en demeure. (Demolombe, 28, n. 545 ;
Aubry et Rau, 5th ed. 4, p. 380. See C. A. Alex. 10 dec. 1914,
B. L. J. XXVII, 59.)
Debt not liquid.
When the amount of the debt is disputed, and it cannot be
ascertained without serious investigation, the debt is not liquid.
(Cass. 7 fevr. 1905, D. 1905. 1. 432; C. A. Alex. 11 juin 1914,
B. L. J. XXVI, 425; C. A. Alex. 17 mai 1916, B. L. J.
XXVIII, 338; C. A. Alex. 20 mars 1913, B. L. J. XXV, 381;
C. A. Alex. 4 mai 1904, B. L. J. XVI, 233; C. A. Alex. 12
fevr. 1908, B. L. J. XX, 84.) So it has been held that com-
pensation ne peut avoir lieu lorsque la fixation dn montant de
Vune dcs creances depend du resultat d"une expertise, et qu'en
supposant quit appartienne au juge d'evaluer provisoirement ce
montant, les elements d 'appreciation lid font df.faut. (C. A.
Alex. 11 juin 1914, B. L. J. XXVI, 425.)
But the law, at least in France, does not require that for com-
pensation the debt should be absolutely determined or liquid. It
is enough if it is capable of being liquidated promptly and sum-
marily. As Pothier puts it, the party who opposes such a debt in
compensation must have la preure a la main. (Oblig. n. 628;
B.-L. et Barde, Oblig. 3, n. 1833, 1. See C. A. Alex. 16 janv.
1917, B. L. J. XXIX, 151.)
This view is settled in the jurisprudence in France, though it
is criticised by some writers as contrary to the text of the code.
506 THE LAW OF OBLIGATIONS.
Laurent, for example, says: " The 'moment a liquidation is neces-
sary, whether it is easy or not, the claim is not liquid. It will be
so only after the liquidation; till then legal compensation is in-
conceivable. In effect, to compensate is to pay. Now, how is
it conceivable that the debtor should pay without knowing the
amount of his debt? Legal compensation is impossible. The
compensation can only be judicial, that is, it will come into
existence only when the judge has decided what is the amount of
the claim;' (18, n. 404.)
But although there is a good deal of force in this criticism, the
contrary view is settled in practice in France.
(5) The debts must be payable in the same place.
The Egyptian codes add another condition, viz., that the debts
shall be both payable or deliverable in the same place.
(C. C. E. 194/258.)
This condition is extremely puzzling, and it looks very like a
pure mistake. The rule as regards money-debts is that they are
payable at the domicile of the debtor. If Zaki living in London
owes L. E. 100 to Ahmed in Cairo, and Ahmed incurs a debt
of the same amount to Zaki, what reason is there for npt allowing
compensation?
To apply strictly the words of the article would be to exclude
compensation in a great number of cases where upon grounds of
equity compensation ought to be allowed. The only possible
objection to allowing it is that to pay Ahmed's debt in London
instead of at Cairo may put him to some expense or cause him
some loss. The French Code has an article in the following terms
to provide for this: —
When the tiro debts are not payable in the same place, com-
pensation cannot be set up without allowing for the expenses of
the remittance. (C. C. F. 1296; C. C. Q. 1193.) This is
entirely reasonable. Ahmed in the illustration given, bargained
to bo paid in Cairo. If he is paid in London he will lose the
costs of the exchange between London and Cairo, or, in other
words, the expense of sending the money from the one place to
the other. But that is not sufficient reason for refusing altogether
to allow compensation to operate. It is contended by some writers
that the Egyptian legislator means only to reproduce the provi-
sions of the French Code as to the payment of the costs of remit-
tance. (Halton. 1, p. 387; Do Hults, Rep. vo. Compensation,
EXTINCTION OF OBLIGATIONS. 507
11. 14.; If this be so, it must bo admitted that the Egyptian
Code is expressed in a singularly unfortunate way.
It must be pointed out that this payment of the costs of re-
mittance may not always be a complete indemnity. The pari \
who relies on payment in a particular place may have made some
arrangement to employ the money there and at once, and this
arrangement may be defeated by the payment at another place.
The German Code with good reason says that the party who
invokes the compensation must make good the damage suffered
by the other party (art. 391. See note by M. Saleillos to
French Translation).
Exceptional cases in which legal compensation is not
permitted.
When the conditions above explained are fulfilled, compensa-
tion takes place whatever be the cause or consideration of the
debts, or of either of them, except in the following cases: —
(1) The demand in restitution of a thing of which the owner
has been unjustly deprived;
(2) The demand in restitution of a deposit of a sum of money
or of a quantity of fungibles;
(3) A debt which has for its object a thing not liable to seizure..
Two of these exceptions are stated in C. C. E. 195/259.
Compensation does not operate where ivhat is owed on the
one side is not a thing liable to seizure, or is the restitution of a
deposit of a sum of money or of things which can be replaced
by each other. (Cf. C. C. F. 1293; C. C. Q. 1190; German
Code, 393; Swiss Code des Obligations, 125.)
(1) The first of these exceptions is an application of the old
maxim spoliatus ante omnia restituendus. (Pothier, Oblig.
n. 625; Req. 24 avril 1903, D. 1904. 1. 115.) It is contra rv
to public policy to allow a man who has a claim of any kind to
enforce it by his own hands against opposition except in the casi
where he is himself recapturing something which has been taken
away from him wrongfully and by force. If he seizes the pro-
perty of his debtor without judicial authority he is not allowed
to keep it, although his claim may be a good one. He must first
give back what he has improperly taken, and then, if he chooses,
he may make his claim in a legal manner.
And the same rule applies to cases in which the possession has
been obtained by fraud or accident. If the thing of which the
508 THE LAW OF OBLIGATIONS.
owner has been unjustly deprived is a specific thing — a corps
certain — there could not in any case be compensation, because, as
we have seen, compensation is only between debts of money or
fungibles. And if a bag of money were stolen and the money
left intact in the bag, this would still be a corps certain. The
kind of case in which there might be compensation, but for the
prohibition in this article, is the case where the spoliator had
got possession of a sum of money and had consumed it, or mingled
it with his own money so that it could no longer be identified.
In such a case if he were sued for it he could not plead in
compensation that the plaintiff owed him a debt. (Baudry-
Lacant. et Barde, -Oblig. 3, n. 1854; Aubry et Rau, 5th ed.
4, p. 388; Demolombe, 28, nos. 588, 590.)
The Egyptian Code omits this case, but it can hardly be doubted
that the Egyptian law is the same as the French law upon this
point. (See, however, De Hults, Rep. vo. Compensation, n. 25.)
(2) The second rule, like the first, is a traditional rule of the
French law. It is taken from the Roman law. In causa depositi
compensation i locus non est, sed res ipsa reddendo, est. (Paul,
Sentences, 2, 12. See Girard, Manuel, 5th ed. p. 708.)
As Pothier says, it would not be necessary to state the rule in
the case of a deposit of a corps certain, such as a box of (silver,
or a bag of money sealed up and labelled.
In such a case, there could not be compensation under the
French law even without this article, upon the general principle
that compensation does not apply to specific things. It could
only be in the case of irregular deposit, that is, the form of deposit
in which the depositary becomes the owner of the thing deposited
subject to the obligation of returning an equivalent amount, that
the rule here stated would apply. (Pothier, Oblig. n. 625. See
Trib. Civ. de Saint-Omer, 6 dec. 1901, D. 1903. 2. 193, note 2;
D. X. C. C. art. 1932, nos. 42 seq.)
The Egyptian Code is upon this point more accurate than the
French Code. The French article speaks of "deposit," generally,
though it does not allow compensation between debts of corps
certains, whereas the Egyptian article speaks only of a deposit
of money or fungibles, that is of " irregular deposit." C. C. E.
195 259; C. C. F. 1293.)
According to some French authorities the rule would apply to
a deposit with a bank. The bank would not be entitled to com-
pensate a debt due by its customer to the bank with a debt due
by the bank to him, if the bank's debt is to restore money
EXTINCTION OF OBLIGATIONS. 509
deposited by the customer. (Baudry-Lacant. et Barde, Oblig.
3, n. 1856.
But the prevailing view seems to be against this, and rightly
so. A deposit with a bank, although in popular language it bears
the name of deposit, is in reality a kind of loan.
The customer lends his money to the bank in order that the
bank should make use of it and make it productive, and should
return it to him on demand, or subject to certain conditions as to
notice, etc.
The money deposited becomes for the time being the property
of the banker, and the claim of the customer against the banker
is not a " demand in restitution," but is a simple claim for so
much money. This being the true view of the matter, if the
customer owes the banker a debt upon another account, it is
obviously equitable that compensation should be allowed between
the two debts. (Larombiere, on art. 1293, n. 3; Hue, 8, n. 160;
D. N. C. C. art. 1293, n. 32; B.-L. et Wahl, Societe, etc., n.
1097, 1102, 1117; Panel. Franc. Oblig. n. 5911.) An opinion in
this sense has been pronounced by the Court of King's Bench of
Quebec. {Vernier v. Kent, 1902, R. J. Q. 11 K. B. 373.)
Rule not necessary in case of loan for use.
The French article adds here to the case of deposit the case of
loan for use, and says compensation is not allowed in the case
de la demande en restitution dVun depot et du pret a usage.
(C. C. F. 1293.)
Pothier limited the exception to deposit, and the French eodi-
fiers were not well guided in adding loan for use. For loan for
use is a loan of specific things and not of fungibles, and compen-
sation therefore would be excluded in any case. (Larombiere,
on art. 1293, n. 4; Baudry-Lacant. et Barde, Oblig. 3, n. 1856.)
In saying that the depositary called upon to return the deposit
cannot claim compensation with a debt due to him by the de-
positor, it is not, of course, intended to exclude his right to retain
the thing deposited until he has been paid the expenses incurred
by him on account of the deposit, or any loss which the deposit
may have caused to him. (Pothier, Oblig. n. 625; C. C. E.
488/596, 597: C. C. F. 1947, 1948; C. C. Q. 1812.) And as
regards such claims as we have seen above, he can plead compensa-
tion when the deposit is " irregular deposit." (Pothier, I.e.)
510 THE LAW OF OBLIGATIONS.
Debt not liable to seizure.
The third exception that compensation does not operate when
one of the debts is not liable to seizure is given in the Egyptian
Code in more general terms than in the French Code. The
French Code speaks only of alimentary allowances. Certain pro-
visions are by law alimentary and exempt from seizure. Such
are alimentary allowances granted by the court. If this provision
in the hands of the debtor is unseizable, the meaning of this is
that it is not liable for his ordinary debts, and the object of the
rule would be defeated if a creditor could take payment by way
of compensation. (See Cass. 3 juill. 1912, D. 1913. 1. 110.)
The Egyptian Code. applies the same principle to a "thing liable
to seizure." This is an unhappy expression. If it were a specific
thing compensation would be excluded by the preceding article.
(C. C. E. 194/258.) The rule that compensation is prohibited
when one of the debts is unseizable applies to pensions and other
debts declared by law to be not subject to arrestment or so subject
only up to a certain amount or upon certain conditions. (See
C. C. Pro. 434/496; Lusena, Elements de Procedure Civile, 2,
p. 73.)
Up to the proportion specified by the law and subject to the
conditions therein stated compensation is allowed. So, for
example, if an Egyptian Government official were in arrears with
his land-tax, the Government could not deduct the amount of his
tax from his salary. But if the official owed the Government a
debt arising out of the exercise of his official duties, they could
make a deduction to the extent of one-fourth of his salary.
(Decree of Feb. 25, 1890; Gelat, 2, p. 555.)
Effects of legal compensation.
When compensation takes place the position is the same as if
the two debts had been paid. If the debts are of equal amount
they are both entirely extinguished with their accessories, and
interest ceases to run upon them. If they are of unequal amount
the lesser one is extinguished, and it is only the balance of the
greater one which remains due. There is one case in which this
would do an injustice, viz., if the debts are not payable at the
same place. And we have explained earlier how any injustice
that might arise from this case is prevented. If we remember
the rule compenser cest payer the consequences which follow from
EXTINCTION OF OBLIGATIONS. 511
compensation are obvious. (Pothier, Oblig. n. 636; Demolombe,
28, n. 649; B.-L. et Barde, 3, n. 1864.)
Imputation.
Imputation takes place in the case of compensation in the
same way as in the case of ordinary payment. (C. C. E.
196 — 260.) This is very simple. We have to suppose a debtor
who owes two debts to the same creditor. The creditor then incurs
a debt to him. With which of the twq debts does compensation
take place? If John owes William two debts of L. E. 500 each,
of which one is secured by a hypothec and bears interest, and the
other is for rent or for goods sold, and William becomes debtor
to John for L. E. 500, this do/bt will be compensated by pre-
ference with the L. E. 500 which John owed on the loan secured
by the hypothec, because it is more for his interest that this debt
should be extinguished than the other. The French law is the
same. (C. C. F. 1297; B.-L. et Barde, 3, n. 1864; Req. 3 mai
1860, D. 61. 1. 104; supra, p. 469.) The question to ask is
which debt would have been extinguished, according to the rules
of imputation, if John had paid L. E. 500?
Compensation not to prejudice third parties.
This matter is treated of in the Egyptian Code in these terms:
A debtor who has consented to the assignment of a claim
against him, which is subject to compensation, may no longer set
up compensation as against the assignees; he can only enforce
his original claim against the assignor.
When a creditor has paid a debt against which he might have
set up a claim in compensation, sureties, co-debtors jointly and
severally liable, creditors with a privilege or hypothec ranking
after the claim, and a third party,, owner of a .thing given in
'pledge to secure it, may always set up compensation, unless the
creditor had, when paying the debt, goad grounds for being
ignorant of the existence of the claim which he could have set up
in compensation. (C. C. E. 197, 198/261, 262; C. C. F. 1295,
1299; C. C. Q. 1196, 1197.)
If the debtor who had a right to plead compensation does not
avail himself of his right, but pays the debt, the debt is extin-
guished and the hypothecs or suretyships by which the debt was
guaranteed fall of necessity to the ground. By paying the debt
when he might have claimed compensation, the debtor is held
512 THE LAW OF OBLIGATIONS.
to have renounced his right to that plea, and to have relied for
payment of the debt due to him on the personal security of hie
debtor.
Kamel owes Zaky L. E. 100, and Zaky, likewise, owes Kamel
L. E. 100, for which Ahmed is surety. Zaky demands payment
from Kamel, and Kamel instead of pleading compensation, pays
the debt. Kamel can now claim his debt from Zaky, but he
cannot fall back upon Ahmed if Zaky does not pay. Ahmed
can say, "you got payment if you had been sensible enough to
take it."
But this rule is subject to an equitable exception. That is
when the plea of compensation was not taken in consequence of
error, and because the debtor who might have taken the plea did
not know that his creditor owed a debt to him, and his want of
knowledge of this fact was excusable, or when, as the article says,
he had good grounds for being ignorant of the existence of the
claim .
In that case when he sues for the debt due to him he can
plead that, the privileges and hypothecs which attach to it are
still in force. The classical illustration is this: I pay you a debt
and I discover afterwards that you are debtor to a succession to
which I have succeeded. At the time of my payment I was not
informed that this succession had fallen to me. My ignorance
is, therefore, excusable. If your debt to the succession was secured
by hypothecs, etc., I am, in such a case, entitled to plead that
these securities have not been extinguished by my failure to set
up the compensation. (Pothier, Oblig. n. 639; Baudry-Lacant.
et Barde, Oblig. 3, nos. 1870 seq. See Aubry et Eau, 5th ed. 4,
p. 400, note 5.)
Assignment.
Another illustration of the rule that compensation is not to be
allowed, to cause injustice to third parties who have acquired rights
is in the case of assignment. This is stated in C. C. E. 197/261:
A debtor who has consented to the assignment of a claim against
him. which is subject to compensation, may no longer set up
compensation as against the assignees, he can only enforce his
original claim against the assignor. (See C. A. Alex. 15 mai
1913, B. L. J. XXV, 379; C. A. Alex. 20 mars 1912, B. L. J.
XXIV, 203.)
The French Code adds: —
An assignment not accepted by the debtor, but of which due
notification has been given to him. prevents compensation only
EXTINCTION OF OBLIGATIONS. 513
of the debts due by the assignor posterior to such notification.,
(C. C. F. 1295.)
This is another case of tacit renunciation of the right to claim'
compensation. By accepting the- transfer purely and simply, that
is, without making any reservation of his rights, the debtor agrees
to become debtor to the new creditor, and the new creditor ia
entitled to look to him for payment. If the debtor is going to
claim that he does not owe the debt or some part of it, this is
the moment for him to say so. If he does not say so now it
will be too late for him afterwards to maintain that he did not
owe the debt, because it was compensated with a debt which the
old creditor owed to him. But this result is not produced unless
there is an express acceptance on his part of the assignation.
The mere signification to the debtor of the assignment does not
prevent him from pleading that his debt is compensated in whole
or in part by one which the old creditor owed to him before the
signification. The signification, however, even without accept-
ance does, by the Mixed Civil Code as by the French Code,
produce this effect, that it prevents the compensation between his
debt and a debt which the assignor incurs to him after the signi-
fication. (C. C. M. 263.) By the Native Code an assignment
always needs the consent of the debtor. (C. C. E. 349/436. See
Halton, 2, p. 88.)
Arrestment.
An arrestment burs a compensation which could not have
come into operation until subsequently thereto. (C. C. E.
199/263; C. C. F. 1298.) After the arrestment the tiers-saisi
is not entitled to pay the debt to the creditor. He holds it for
the arrestor. If he were to compensate it with a debt subsequently
incurred by the creditor to him this would be in reality a payment
to the creditor. (B.-L. et Barde, 3, n. 1844; Laurent, 18, n. 429.)
Bankruptcy.
If after the bankruptcy of a trader one of his debtors acquires
a .claim against him, there cannot be compensation between these
debts. For, after the declaration of bankruptcy, all the creditors
of the bankrupt must be treated equally and paid proportionately.
To allow one of them to pay himself by compensation would be
to give him a preference over the other creditors. Accordingly,
the debtor of the bankrupt must pay his debt in full to the
syndic, and, as regards his claim against the bankrupt, he must
w. — vol. ii. 33
514 THE LAW OF OBLIGATIONS.
present it, like other creditors, and take the dividend to which he
is entitled. (B.-L. et Barde, 3, n. 1845; Lyon-Caen et Renault,
Traite de Droit Commercial, 4eme ed. 7, n. 216; Thaller, Traite
Elem. de Droit Commercial, 4th ed. n. 1984; Cass. 22 oct. 1907,
D. 1907. 1. 508; C. A. Alex. 26 nov. 1913, Gaz. Trib. IV,
p. 38, n. 89; C. A. Alex. 1 mare 1917, B. L. J. XXIX, 267.)
But this rule does not apply when the two debts both form part
of a current account between the parties. (C. A. Alex. 26 nov.
1913, B. L. J. XXVI, 48. Cf. C. A. Alex. 25 fevr. 1914,
B. L. J. XXVI, 253.) The details belong to the commercial
law. (See C. A. Alex. 25 fevr. 1914, Gaz. Trib. IV, p. 105,
n. 255.)
Right to renounce compensation.
Where there are no rights of third parties in question it is
hardly open to doubt that the parties may, if they choose, renounce
a compensation which has taken place, and leave the two debts to
be enforced independently the one of the other.
Renunciation not being presumed, it will have to be clearly
established.
But that express renunciation is permissible would seem to be
sufficiently clearly shown by the fact that the code itself states,
as we have seen, two cases of tacit renunciation, viz., those given
in C. C. E. 197, 198/261, 262; C. C. F. 1295, 1299. (Baudry-
Lacant. et Barde, Oblig. 3, n. 1867.)
The question whether a person may renounce beforehand the
right to plead compensation has been doubted, and it has been
argued that it was a matter of public order that parties should
not deprive themselves of this right.
In support of this argument reliance has been placed on the
rule that prescription cannot be renounced by anticipation.
(C. C. E. 80/108.)
But the two things are not really analogous. If it were possible
to renounce by anticipation the extinctive prescription of debts,
lenders of money would, as a matter of course, insist that their
debtors should become bound for ever. This would be extremely
against public policy. In the case of compensation it is
difficult to see that any public policy is involved. The prevailing
opinion is that the right to plead compensation may be renounced
by anticipation. (B.-L. et Barde, 3, n. 1881; Aubry et Rau,
5th ed. 4, p. 394; D. N. C. G. art. 1293, n. 87.* Contra,
Toullier, 7, n. 393.)
EXTINCTION OF OBLIGATIONS. 515
(b) Facultative compensation.
When compensation by the sole operation of law is prevented
by any cause, the party in whose favour alone the cause of
objection exists may demand the compensation. And in such a
case the compensation takes place from the time of pleading the
exception only. Thus, if John owes William a debt which is not
exigible for three months, and William incurs a debt to John of
the same amount, the two debts are not compensated by operation
of law, because they are not equally liquidated and demandable.
But if John chooses to regard the debt which he does not owe
for three months as being already due, and if the term which has
been fixed is merely a delay in his favour, he is allowed to waive
it and compensation can take place. So if the person who has
been wrongfully despoiled of his thing, or if the depositor, or the
person whose claim is unseizable, chooses to waive his right to
prevent compensation there is no reason why he should not 'be
allowed to do so. (Demolombe, 28, n. 656; B.-L. et Barde, 3,
n. 1883; Aubry et Rau, 5th ed. 4, p. 371.) It would seem that
it is only a debtor whose debt is equal to or greater than the debt
which is due to him who can set up this kind of compensation. For,
otherwise, we should be allowing a debtor to make a part-payment
of his debt, which is contrary to the general principle of the law.
(C. C. E. 168/231; C. C. F. 1244.) It is true that the law
allows this in the case of legal compensation. (O. C. E. 193/257;'
C. C. F. 1290.) But this requires an express provision, and no
such provision as to facultative compensation is found in the code.
(Demolombe, 28, n. 664; B.-L. et Barde, 3, n. 1884. Contra,
Larombiere, on art. 1293, n. 14.)
Compensation in other laws.
The Swiss and the German codes do not admit legal compen-
sation operating automatically. There must he a declaration made
by the party invoking compensation. And, under both these
codes it is not necessary that the debt should be liquidated in
order to be set up in a compensation. (Code Fed. Oblig. 120 —
126; German Code, 387—396.)
Under the English law there is, likewise, no such tiling as legal
compensation. But if a defendant pleads a set-off or counter-
claim, the court may take account of the set-off. But the court
has discretion on the application of the plaintiff to refuse the
33 (2)
516 THE LAW OF OBLIGATIONS.
defendanl permission to plead the set-off. (See Leake, Contracts,
6th ed. 735.)
(6) Confusion.
Confusion is the sixth mode of extinction of obligations.
( onfusion is the uniting in one and the same person of the two
capacities of principal debtor and creditor of the same debt,
whereby both capacities become extinguished. Sureties are dis-
charged by confusion; co-debtors are only discharged in respect
of the contributive share of the debtor in whose person confusion
has taken place. (C. C. E. 202, 203/266, 267.) The Quebec
Code adds: The confusion which takes place by the concurrence
of the qualities of surety and creditor or of surety a)id principal
debtor does not extinguish the principal obligation. (C. C. Q.
1199. Cf. C. C. F. 1301.)
In these articles of the Egyptian Code there are a few verbal
changes, correcting the language of C. C. F. 1300 — 1301, but
the French law is the same as ours. The French Code says that
when confusion takes place the two debts are extinguished, but
this is evidently a mistake. In confusion there is no question of
two debts, as in the case of compensation, and, therefore, it is
more correct to say, as the Egyptian Code does, that the capacities
of the creditor and debtor are extinguished, or, as the Quebec Code
says, that confusion extinguishes the obligation, instead of the
two obligations. (C. C. Q. 1198; Demolombe, 28, n. 697; B.-L.
et Barde, 3, n. 1897. See Paris, 5 nov. 1901, D. 1902. 2. 89.)
Every obligation presupposes two parties, a creditor and a
debtor.
As soon as it comes about in any way that these two parties
become one and the Bame person, the obligation comes to an end
by confusion, or, at any rate, the right to sue is paralysed. A
man cannot sue himself. One cannot be one's own debtor. This
principle is of universal application and extends to real as well
as to personal rights. The moment a man becomes the owner of
a thing in which 'lie had previously a real right of a lesser kind,
the lesser right is swallowed up in the greater right of property,
or is confused with it. For example, if I hold a watch as a pledge,
and I afterwards become the owner of the watch, my previous
right of pledge is extinguished. A thing cannot be pledged to
its owner. If I have a hypothec over a house, and I become owner
cf the house, the hypothec comes to an end, or is paralysed.
Aubrv et Ran. 5th ed. ■">. p. 812; B.-L. el de Loynes, Privileges
EXTINCTION OF OBLIGATIONS. 517
et Hypotheques, 3, n. 2253; C. A. Alex. 30 nov. 1915, B. L. J .
XXVIII, 32.) Likewise, if I have a right of way over a field,
and I become owner of the field, the right of way is extinguished:,
In regard to servitudes the rule is laid down expressly in the
French Code. (C. C. F. 705.) Every servitude is extinguished
when the land to which it is due and that which owes it are united
in the same person by right of ownership. And the same prin-
ciple applies to usufruct, in which case the term consolidation
is commonly employed instead of confusion. (C. C. F. 617;
B.-L. et Chauveau, Biens, n. 737.)
It is the same also with obligations of a personal kind. Che
debt is not extinguished in the same sense as it would be by
payment, or by compensation, or novation. It would be more
correct to say that the obligation is paralysed, for the reason that,
while the debtor and creditor are one and the same person, its
execution is impossible. But the debt still exists. One conse-
quence of this fact will be referred to later in speaking of the
case of the surety. (Baudry-Lacant. et Barde, Oblig. 3, n. 1905;
Demolombe, 28, n. 715; infra, p. 519.)
Confusion usually caused by succession.
When confusion of two obligations takes place this is almost
invariably due to succession, and to the fact that the creditor
becomes the heir or universal legatee of the debtor, or vice versa.
And, for this reason, confusion is less important in our law than
it is in the French law, because, as will be explained later, when
the succession is regulated by Mohammedan law, no confusion
takes place. What follows applies only to successions governed
by the French law, or by some laAv which agrees with it on this
point. For instance, a man makes a gift of an immoveable to
his son subject to the payment of certain annual charges.
On the death of the son, the father accepts his succession ^impli-
cit rr. He succeeds to the immoveable, but the son's widow has
the usufruct. The father cannot claim payment of the charges
from the widow; they formed a debt due by the son, and the
father as the son's heir is liable to pay his debts, and, therefore,
he would be both debtor and creditor. It is only to the extent of
the impossibility of enforcing payment of the debt that confusion
takes place. If my father owes me L. E. 1,000, and he leaves
me all his estate, or he dies intestate and I am his sole heir, and
I accept his succession without benefit of inventory, the debt is
518 THE LAW OF OBLIGATIONS.
extinguished by confusion. If I succeed to half his estate then
half the debt, that is, in this case, L. E. 500, is so extinguished,
because by taking- half the estate I become liable for half the
liabilities. (C. C. F. 873, 1220; Aubry et Rau, 5th ed. 4,
p. 405.") But the confusion ceases to exist if, after his acceptance
of the succession, the heir is successful in challenging his accept-
ance on the ground of fraud, fear, or violence, or if a minor, on
the ground of lesion. (C. C. F. 783.)
And the confusion is likewise ended if the heir who has accepted
it is excluded from the succession as unworthy. (C. C. F.
727—729.)
And the same result would folloAv if the will which created the
confusion were set aside upon any legal ground. (Bauclry-Lacant.
et Barde, Oblig. 3, n. 1914.)
In all these cases the rule applies which is stated in C. C. Q.
1198: —
In certain cases when confusion ceases to exist its effects
cease also. (Planiol, 2, n. 602: B.-L. et Barde, 3, n. 1914;
Demolombe, 28, n. 740.)
No confusion when benefit of inventory.
- Confusion occurs only when the heir accepts purely and simply.
The object of benefit of inventory -is precisely to prevent the
confusion of the property of the deceased with that of the heir or
legatee. The estate of the succession is to be applied 'first in
payment of debts.
So, if my father dies owing me L. E. 1,000, and I am the sole
heir, and I accept, .subject to benefit of inventory, I am entitled
to claim payment of the L. E. 1,000 if his estate is solvent.
If it is not solvent, I rank equally with other creditors for such
a proportionate share as the estate can pay. There is no con-
fusion, for I remain always in the same position as a stranger
to whom my father owed L. E. 1,000. I never become debtor
to myself. (C. C. F. 802: Aubry et Rau, 5th ed. 9, p. 572.
and p. 588.)
Extinction of principal debt by confusion extinguishes
accessory debt.
The Egyptian Code says: Sureties are discharged by confu-
sion. C. C. E. 203 267/ This is less clear than the French
article: La. confusion qui s'opere dans Ja personne du debiteiir
EXTINCTION OF OBLIGATIONS. 519
principal, profile a ses cautions; celle qui s'opere dans la personne
de la caution, rientraine point V extinction ck Vobligatixm prin-
cipal. (C. C. F. 1301.)
If the principal debt is extinguished by confusion, the accessory
debt of a surety necessarily falls to the ground, for, otherwise,
the surety who had paid the debt would have a recourse against
the principal debtor, to whom in his new character of creditor the
debt has been paid. For example, Kamel owes Zaky L. E. 100,
and Ahmed is surety for the debt; Zaky dies and leaves Kamel as
his heir. Kamel is now debtor in the L. E. 100 in his individual
quality, and creditor for the same amount in his quality as Zaky's
heir. If Kamel as heir were to sue Ahmed, Ahmed could plead
that the debt was extinguished by confusion. If Ahmed paid
Kamel in his quality of heir, he would have an action in recourse
against him in his individual quality as- the principal debtor.
If the surety succeeds to the principal debtor, or conversely,
tho accessory obligation is extinguished, because a man cannot
be surety for his own debt. (B.-L. et Barde, 3, n. 1907; Deimo-
lombe, 28, n. 724.) But as the French Code states in another
place, if the obligation of the surety is itself secured by some one
who is the surety of the surety, the confusion which takes place in
the person of the principal debtor and the surety does not destroy
the action of the creditor against the surety of such surety.
(C. C. F. 2035.)
This supports the doctrine that the effect of confusion is not
actually to extinguish the obligation but merely to paralyse it.
If it were extinguished altogether the accessory obligation of the
surety would necessarily fall. But it appears by this article that
the obligation of the surety is not extinguished; it survives for
the purpose of acting as a support for the obligation of the sub-
surety. (Baudry-Lacant. et Barde, 06%. 3, n. 1910; Demo-
lombe, 28, n. 735.)
And another confirmation of this view is found in the article
which says, co-debtors are only discharged in respect of the
contributive share of the debtor in whose person confusion has
taken place. (C. C. E. 203/267 : ; C. C. F. 1301.) When
there are joint and several debtors, and confusion takes place
between one of them and the creditor, this extinguishes only the
part of the debt for which that co-debtor was liable.
If confusion were regarded as a complete extinction of the
debt, like payment, all the debtors would be liberated. For
520 THE LAW OF OBLIGATIONS.
instance, Kamel, Zaky and Ahmed are joint and several debtors
to Aly in a debt of L. E. 3,000.
Aly dies and Kamel is his heir. Kamel as heir can sue Zaky
and Ahmed, but only for L. E. 2,000. If he sued one of them—
say Zaky— for L. E. 3,000, and Zaky paid it, Zaky would have a
recourse against him for L. E. 1,000, namely, Kamel's share, and,
accordingly, the principle applies: Qui doit garcmtir ne peut
evincer. (B.-L. et Barde, 3, n. 1908; Demolombe, 28, n. 729.)
French law as to confusion does not apply in the case of
Mohammedan successions.
In regard to the liability of .the heir for the debts of the deceased,
there is an important difference between the Mohammedan law
and the French law.
Seeing that succession is in Egypt governed by the personal
statute, the question whether there is confusion between the estate
of the heir and the estate of the deceased is a question which must
be answered by the personal law applicable.
If the succession is to a French national, the French rules as
to confusion will apply. And in other cases, if the succession is
to a foreigner, not being a Mohammedan, and the heir by his
personal statute is personally bound to pay the debts, this per-
sonal law will govern the case.
But when the succession is to a Mohammedan no confusion
takes place. According to the French law, the fundamental rule
is that the heir who accepts the succession without benefit of
inventory continues the personality of the deceased. (Planiol, 3,
n. 1780, bis; Aubry et Rau, 5th ed. 9, p. 373. See, for the
history of this rule in the French law and for a criticism of it,
articles by M. Saleilles in Bulletin de la Societe d 'etudes legisla-
tives, 1910, p. 296, and 1911, p. 56, and the discussions as to
reform in the same volume, 1910, p. 69, and 1911, p. 25.)
The heir succeeds to the assets and is liable to pay the debts.
There is complete confusion between his patrimony and that
of the deceased.
But the heir can avoid this result by accepting the succession
only subject to benefit of inventory. (Planiol, 2, n. 600; Aubry
et Rau, 5th ed. 9, p. 588.)
In the Mohammedan law all this is different. According to
that law, there is complete separation between the estate of the
deceased and the estate of the heirs.
EXTINCTION OF OBLIGATIONS. 521
Before any division is made of the estate of the deceased it is
necessary to pay the debts, and if, owing to creditors not sending
in their claims, or otherwise, the distribution takes place while
there are debts still outstanding, each heir is liable to each creditor
of his ancestor to the extent of the assets which have come into
his hands for a share of the debts proportionate to his share of
the succession.
But the liability of the heir is limited to what he has received.
He is by law in the same position as the French heir who has
accepted, subject to the benefit of inventory, and, therefore, no
confusion takes place. (See Mohammedan Personal Laiv, Kadri
Pacha, trans. Sterry and Abcarius, sect. 583, and p. 172; Ibn
Abdeen, v. 4, p , 471, in fine ; Statut Reel, sect. 94; Native Code oi£
Appeal, 20 nov. 1906, Mizaan al Eitedaal, 4th year, p. 41; article
by Abdel Hamid Badawy, Bey, Du principe qu'en droit Musid-
man la succession n'est ouverte qiiapres acquittement des dettes,
VEgifpte Contemporaine, 1914, p. 14, 21, 23, 30, and appendice,
p. 40; Wilson, Digest of Anglo-Mohammedan Law, 4th ed.
p. 224; C. A. Alex. 14fevr. 1900, B. L. J. XII, 130.)
•
(7) Prescription.
Acquisitive prescription and extinctive prescription.
This is the seventh and last of the modes of extinction of
obligations enumerated in the Egyptian codes. •
Prescription in the modern law has two senses which require
to be carefully distinguished from -one another. It is either: —
(1) A means of acquiring ownership or real rights by posses-
sion, provided the possession has certain characters; or
(2) A means of extinguishing an obligation by the inaction
of the creditor for a certain time fixed by the law .
The first is called acquisitive or positive prescription, and the
second extinctive or negative prescription. In the French Code
these two kinds of prescription are treated of in the same title,
and there are some conveniences in this, because there are a number
of rules which apply to both kinds of prescription. (Arts.
2219—2281.)
The Egyptian Code has a different and more logical arrange-
ment. It deals with positive prescription in a section by itself as
one of the modes of acquiring ownership and real rights. (C. C. N.
76—87; C. C. M. 102—116.) It has another section devoted
to extinctive prescription in the chapter which enumerates and
522 THE LAW OF OBLIGATIONS.
explains the various modes of extinction of obligation . (C. C. N.
204—213; C. C. M. 268—277.) Some French authors adopt
this arrangement of treating of extinctive prescription in a separate
place from acquisitive prescription. (Pothier, Ohlig. n. 678;
Aubry et Rau, 5th ed. 2, p. 475; Colin et Capitant, 2, p. 142.)
It would greatly conduce to clearness if the term prescription
were confined to extinctive prescription, and if some other term,
such as usucapion, were used instead of acquisitive prescription.
Law of prescription based upon public policy.
The rules both of acquisitive and extinctive prescription are
founded upon considerations of public j)olicy.
The principle that a creditor who fails to bring an action to
enforce his right within a certain period fixed by law cannot
succeed in his action, if the debtor takes the plea of prescription,
is a principle which rests upon the same considerations of public
policy as those upon which acquisitive prescription is based. For
the sake of the general peace, and to prevent dishonest actions,
the law provides that after a certain length of time obligations
shall not be enforceable if the objection is taken that the right
has prescribed. Documents may be lost, witnesses may be dead,
or the recollection of events long past may have become dim.
But for the rule of extinctive prescription or, as it is well called
in the English law, the rule of " limitation of actions," it would
in many cases be impossible to defend oneself against an action
laid on facts alleged to have happened long ago. (Pothier, Obli-
gations, n. 679; B.-L. et Tissier, Prescription, 3rd ed. n. 27.)
It is for these reasons that the law comes to the aid of the debtor
by creating a presumption of payment.
When the time fixed by law for prescription has expired the
obligation is extinguished and a presumption, of discharge created,
if the debtor invokes prescription. (C. C. E. 204/268; C. C. F.
2219.)
Full explanation of acquisitive prescription belongs to
law of property.
This is not the place for a full discussion of the law of acquisitive
prescription. It has seemed convenient to state in general terms
its nature and effects, because it is important to bring out the fact
that acquisitive prescription and extinctive prescription rest upon
the same foundation of public policy, and many of the rules
EXTINCTION OF OBLIGATIONS. 52$
which apply to one of them apply to the other also. They may
both be said to illustrate the very broad rule that the law helps
those who help themselves, or, as it is expressed in the old broeard,.
vigilantibus non dormientibus jura subveniunt.
Rules common to acquisitive and extinctive prescription.
The Egyptian Code says: The rules of acquisitive prescrip-
tion concerning the causes of interruption and suspension are also
applicable to extinctive prescription. (C. C. E. 205/269.) But
these are not the only rules which are similar in both cases. The
rules with regard to renunciation of prescription and to the mode
of calculation of the prescriptive period are the same. It may
be convenient to consider first these general rules which apply to-
both kinds of prescription before taking up extinctive prescrip-
tion specially.
The delays of prescription.
The delays fixed in the Egyptian codes are taken from the
Mohammedan law, and are, in general, shorter than those of the
French law.
Long prescription.
Subject to the exceptions hereinafter mentioned, and those
specified by the law in particular cases, the term of prescription
for obligations is fifteen years. (C. C. E. 208/272.)
The maximum delay of prescription is fifteen years, except
in regard to ivalcfs and successions, in which cases there is a long?
prescription of thirty-three years. (JReglmwnt sur les Mehkemehs
of July 3rd, 1910, hi, n. 31, s. 376; Kadri Pacha, Statut Reel r
arts. 151 in fine, 152. See C. A. Alex. 23 fevr. 1905, B. L. J.
XVII, 123; C. A. Alex. 30 mars 1899, B. L. J. XI, 172; C. A.
Alex. 24 dec. 1914, B. L. J. XXVII, 84; C. A. Alex. 17 avril
1913, B. L. J. XXV, 310.) This long prescription in regard
to wakfs is for their benefit. It cannot be invoked against them by
a creditor. (C. A. Alex. 15 janv. 1914, B. L. J. XXVI, 134.)
The fifteen years' prescription of the Egyptian Code corresponds-
to the thirty years' prescription of the French Code. It is taken
from the Mohammedan law. (Kadri Pacha, Statut Reel, art.
256.)
The public policy here is mainly to prevent contests which.
arise long after the obligation was formed.
The reason for the extinctive prescription is much the same as
521 THE LAW OF OBLIGATIONS.
that for the acquisitive prescription. The creditor who has
remained inactive for so long a period is regarded as having lost
his right. There is a presumption of payment. (C. C. E.
204/268; C. C. F. 2219.)
Prescription of five years.
The term of prescription for rents, instalments, allowances for
maintenance, payments for hire and interest, and, in general, any
sums payable by the year or at shorter recurring intervals, is
five years, reckoned according to the Arab calendar. (C. C. E.
211/275.)
This prescription applies only to regular payments of a fixed
sum at periodical intervals. The courts insist on the two qualities
of regularity and periodicity. (Laurent, 32, n. 435; B.-L. et
Tissier, Prescription, n. 773, and n. 786; Req. 20 fevr. 1911,
D. 1913. 1. 364. See Riom, 17 avril 1907, D. 1907. 2. 376.)
The prescription is taken from the French law. (C. C. F.
2277.)
The motive of public policy which underlies it is not quite the
same as in the long prescription. It is based not so much upon
the presumption of payment as upon the principle that periodical
payments of this kind are expected to be met out of revenue.
If the creditor is so negligent as not to sue for them for five years
it would not be fair to compel the debtor to pay what might be a
large capital sum. It is not so much that the law presumes the
creditor has been paid as that it punishes him for his negligence.
(B.-L. et Tissier, Prescription, n. 768. See C. A. Alex. 12 dec.
1889, B. L. J. II, 209.) Even a debtor who admits that he
has not paid the debt may, nevertheless, invoke this prescription.
(B.-L. et Tissier, op. cit. n. 769; Rouen, 11 aout 1890, D. 91.
5. 407; C. A. Alex. 3 janv. 1895, B.L.J. VII, 73.)
Restitution of fruits not governed by five years'
prescription.
The possessor in bad faith called upon to restore the property
together with the fruits or revenues which he had received during
his possession cannot plead that he is bound only to restore the
fruits of the last five years. If his possession has co t ntinued for
fifteen years or more he must account for the fruits for fifteen
years. Upon this point the Egyptian courts adopt the rule which
has been followed in France. (C. A. Alex. 20 mai 1897, B.L.J.
EXTINCTION OF OBLIGATIONS. 525
IX, 357; C. A. Alex. 27 janv. 1892, B. L. J. IV, 80; C. A.
27 mars 1912, O. B. XIII, n. 92; B.-L. et Tissier, Prescription,
3rd ed. n. 791; Aubry et Rau, 5th cd. 2, p. 568; Cass. 21 juiu
1897, D. 98. 1. 35; D. N. C. C. art. 2277, nos. 213, 214.
Centra, C. A. 22 dec. 1910, 0. B. XII, n. 50.)
There is no reason why the possessor in bad faith should be
allowed the benefit of the five years' prescription. His obligation
to restore the fruits is ancillary to his obligation to restore the
property itself. He never ought to have received any of the
fruits, and he was aware of this fact. He must restore every
piastre which he has received simply because he never ought to
have got anything. He must restore the fruits in a lump sum,
and it is a mere accident that he has received them annually.
There is no analogy between his duty to restore the fruits and
the payment of a sum payable by the year, to which alone the
five years' prescription applies. Accordingly, the Mixed Court
of Appeal has held that the term of prescription for rents is
established for the benefit of the lessee, and has no application to
a case in which rents have been received by a person who was not
entitled to them. (C. A. Alex. 25 mai 1905, B. L. J. XVII,
298.)
It is true that in one case the Native Court of Appeal pro-
nounced a decision in the contrary sense. The court held that
the object of this prescription was to penalise the negligence of
the creditor and to prevent the debtor from being unduly im-
poverished. They held that the claims for the fruits of property
wrongfully detained fell within the application of these principles,
and were therefore prescribed after five years. (C. A. 23 dec.
1910, O. B. XII, n. 50.) But this decision must be considered
as erroneous, and as overruled by the later decision of the same
court. (C. A. 27 mars 1912, O. B. XIII, n. 92, p. 68.)
The five years' prescription applies to moratory interest.
It is now the generally accepted view in France that moratory
interest which the law fixes as the damages for non-performance
of a money-debt, is governed no less than conventional interest by
this rule and prescribes in five years. (B.-L. et Tissier, Pre-
scription, 3rd ed. n. 785; D. N. C. C. art. 2277, n. 96.)
The language of the article under discussion in the Egyptian
codes is intended to express the same law. In so far as it differs
from the words of the French article, it is if anything 1 more
526 THE LAW OF OBLIGATIONS.
favourable to the construction which would make it cover mora-
tory interest, for the Egyptian Code speaks of " payments for
interest " generally, whereas the French article refers only to
les interets des sommies pretees. (C. C. E. 211/275.) In France,
the point has been disputed, and there are old French decisions in
support of the view that moratory interest prescribes only by the
long period of prescription. (D. Rep. Prescription Civile,
n. 1080.) This view was taken in one case in Egypt by the
Mixed Court of Appeal. (C. A. Alex. 7 mai 1890, B. L. J.
II, 286.)
In favour of this opinion the following arguments are used: —
(1) The articles do not refer to moratory interest, and the word
"interest" must be construed narrowly as referring only to con-
ventional interest. The cases to which the five years' prescription
applies are all exceptions to the general rule, and, according to the
ordinary canon of interpretation, we must not extend by analogy
the number of exceptions.
(2) If we say that although the word " interest " does not cover
moratory interest this is immaterial, because moratory interest is
covered by the subsequent words: "in general any sums payable
oy the year or at shorter recurring intervals." The answer is
that this is not so. If a defendant is condemned to pay a capital
sum, plus the interest for all the years during which he has been
in delay, how can we say that this interest is a sum payable by
the year? It is paid as a lump sum together with the capital.
In fact, moratory interest is seldom paid in any other way than
this.
(3) Moratory interest is, as a matter of fact, not interest at
all in the strict sense of the term. When we say that a man is
liable to pay moratory interest, what we actually mean is that he
is liable to pay damages which are to be calculated in a certain
way prescribed by the law. What is called " interest " is in reality
■damages for the non-execution of the contract. (D. Rep. vo.
Prescription Civile, n. 1080; Duranton, 21, n. 434; D. N. C. C.
art. 2277, n. 95.)
These arguments are not without considerable force, but on
the whole the sounder view appears to be that the articles intend
to cover moratory interest.
The reasons which have prevailed in France are: —
(1) The policy of the law in introducing a short prescription
for such payments is to prevent the debtor from being ruined by
the accumulation of interest added each year to the capital. And
EXTINCTION OF OBLIGATIONS. 527
it was also intended to penalise a creditor who negligently or
intentionally delayed for a long period to claim payment of his
debt. These reasons apply just as fully to moratory interest as
to conventional interest.
(2) Although in practice moratory interest is generally paid
in a lump sum, it is nevertheless true that moratory interest accrues
from year to year, and that each year's interest is a separate sum,
the right to which is not acquired by the creditor until the end
of the year. The creditor would have a perfect right to sue for
payment of the moratory interest for each year without suing
for the capital.
The true rule is that every accessory debt which accrues periodi-
cally to the principal debt is subject to this prescription. It
seems therefore that the Egyptian courts should follow what is
now the prevailing opinion on the subject in the French law.
(Rennes, 12 fevr. 1880, D. 80. 2. 221; B.-L. et Tissier, Pre-
scription, 3rd ed. n. 785; Colmet de Santerre, 8, n. 385, bis II;
Aubry et Rau, 4th ed. 8, p. 436; Colin et Capitant, 2, p. 145;
D. N. C. C. art. 2277, n. 96; De Hults, Rep. vo. Prescription,
n. 186.)
Prescription of 360 days.
The term of prescription is three hundred and sixty days for
sums due to physicians, advocates and engineers for their fees, to
tradesmen far goods supplied to private persons, to teachers and
instructors for money owing by their pupils, and to domestic
servants for their wages, even though new debts of the same nature
have arisen during such three hundred and sixty days.
The term of prescription for sums due to bailiffs and registrars
far the cost? of legal documents is likewise three hundred and
sixty days, running from the termination of the proceedings in
which such documents have been prepared, or, if no proceedings
have been commenced, from the drawing up of the documents.
(C. C. E. 209, 210/273, 274.)
This prescription corresponds roughly with some of the short
prescriptions of the French Code, but the periods in the French
Code are not the same in all these cases. (C. C. F. 2271 — 2272.)
The prescription here is based upon presumption of payment.
Obligations of this kind are commonly contracted without writ-
ing, and, frequently, when they are discharged by payment no
receipt is taken, or, if a receipt is taken, it is not preserved.
(B.-L. et Tissier, Prescription, n. 741; Aubry et Rau, 4th ed.
528 THE LAW OF OBLIGATIONS.
8, p. 447; Cass. 31 juill. 1899, S. 99. 1. 521.) Some points
in regard to the prescription of accounts consisting of a number of
items will be referred to later.
Debtor must be put upon his oath.
In cases ivhere the term of prescription is three hundred and
sixty days and under, the party invoking prescription shall only
be discharged if he declares upon oath that he is in fact liberated
from the debt. (C. C. E. 212/276. See C. A. Alex. 18 mars
1909, B. L. J. XXI, 257.)
Difference between French and Egyptian law.
In regard to the debtor's oath the Egyptian law is not the
same as the French law.
Under the French law the creditor may refer the matter to the
debtor's oath, but he is not obliged to do so. If the debtor refuses
to take the oath he will be condemned. If, however, the creditor
does not refer to the debtor's oath, the court is bound to give effect
to the plea of prescription.
No other proof can be admitted to show that the debt is still
owing. (B.-L. et Tissier, Prescription, n. 749; Aubry et Rau,
4th ed. 8, p. 447; Guillouard, Prescription, 2nd ed. 2, n. 782;
D. N. C C. art 2275, n. 2; Grenoble, 23 dec. 1898, D. 1903, 5.
572.)
Under the Egyptian law it is the debtor who is bound to take
the oath if he is to be liberated. It is not enough for him
to invoke prescription, he must supplement this plea by declaring
on oath that he does not owe the debt. (C. C. E. 212/276; Be
Hults, Rep. vo. Prescription, nos. 200 seq.)
Accordingly, if the creditor does not refer the matter to the
debtor's oath, and if the debtor does not offer to take the oath, but
contents himself with pleading prescription, it is the duty of the
court to call upon him to take the oath, and, if he fails to do so,
the court must condemn him to pay the debt. (Alex. 25 avril
1903, Role general, 3799, XXXIII; Sayour, Rep. n. 838. Cf.
ib. nos. 833—837.)
Serment de credulite.
Widoivs and heirs or their tutors shall declare .upon oath
that they do not know whether what is claimed is due. (C. C.-E.
213/277; C. C. F. 2275.) This last case is what is called the
serment de credulite. The debtor is dead, and it would not be
EXTINCTION OF OBLIGATIONS. 529
fair to call upon his successors to swear that their author had
paid the debt, because this fact may very well not be within
their knowledge. If the action was brought in the debtors life-
time, and in the court of first instance he did not take the plea
that the debt had been paid, his heirs cannot upon appeal avail
themselves of this plea. (C. A. Alex. 23 juin 1910, B. L. J.
XXII, 387.)
Prescription may be pleaded at any stage of the
proceedings.
The French Code contains an article which declares that the
plea of prescription may be set up at any stage of the proceedings
en tput etat de cause, and may even be pleaded for the first time
in the Court of Appeal. (C. C. F. 2224.)
There is no corresponding article in the Egyptian codes, but
it is clear that the law is the same. As regards the acquisitive
prescription, the party who has begun by founding upon some
other title of ownership, may at a later stage, and even in appeal,
plead that he is by prescription owner of the thing claimed.,
This is not the introduction of a new demand, which is prohibited
in appeal by the Code of Procedure. (N. C. P. 368; C. C. P. M.
412.) The demand is still for the same object, viz., the property,
but it is made upon new grounds, and the addition of new ground's
is always permissible. (N. C. P. 369; C. C. P. M. 413; C. A.
Alex. 13 nov. 1884, Lantz, Rep. General, n. 874; C. A. Alex.
10 mai 1917, B. L. J. XXIX, 414.)
And as regards the plea of extinctive prescription, this is in
its nature a peremptory exception and can be made at any stage
of the proceedings. (C. A. Alex. 15 janv. 1914, B. L. J. XXVI,
154; Do Hults, Rep. vo. Prescription, n. 19.) But a party will
not be allowed to plead extinctive prescription when the circum-
stances clearly show that he has renounced that plea. And among
the circumstances to be considered will be his pleadings in the
suit itself. What facts amount to such a tacit renunciation of
the right to take the plea of prescription will be explained later
in speaking of renunciation. The rule itself is stated in the
French Code, and the Egyptian Code, no doubt, intends to retain
it. (C. C. F. 2224.)
w. — vol. ii. 34
630 THE LAW OF OBLIGATIONS.
The judge cannot ex officio give effect to prescription.
Seeing that the rules of prescription are based upon public
order, it might appear at first sight, that the courts ought to be
entitled to find that a right had been acquired or lost by the
expiration of the legal period, although this was not pleaded by
the party who would benefit by the prescription. But further
consideration shows that such a conclusion would be highly in-
equitable. The possessor may not choose to take advantage of
his right to deprive the owner of his property, or the debtor may
not wish to evade paying his debt though he has a legal excuse.
The law quite rightly respects these scruples. The French Code
says: Les juges ne peuvent pas suppleer d' office le moyen re-
sultant de la prescription. (C. C. F. 2223. See Cass. 17 mars
1897, D. 97. 1. 279; Req. 23 janv. 1901, D. 1901. 1. T02.)
The Egyptian Code, speaking of extinctive prescription, says that
it extinguishes the obligation if the debtor invokes prescrip-
tion, as the Native Code expresses it, or in the language of the
Mixed Code, when the parti/ bound expressly relies upon it.
(C. C. E. 204/268.) There is no doubt that the rule in Egypt
is. the same as in France: L' exception de prescription ne peut pas
etre soidevee d' office. (C. A. Alex. 14 nov. 1907, B. L. J.
XX, 7.)
According to the French law it is not necessary that prescrip-
tion should be expressly pleaded if the conclusions of the party
sufficiently show that he is in effect setting up the plea of pre-
scription. (B.-L. et Tissier, Prescription, 3rd ed. n. 42; Cass.
3 aout 1870, S. 71. 1. 72, Journal du Palais, 71, p. 197; D. N.
C. C. art. 2223, n. 20.)
In Egypt, under the Native Code, this would no doubt be so
also, and, probably, the words of the Mixed Code, "When the
party bound expressly relies upon it," would not be interpreted
so literally as to make it indispensable that the word " prescrip-
tion " should be used.
Calculation of prescriptive period.
Although the Egyptian codes are silent upon the matter, there
is no reason to doubt that they intend to retain the traditional
principle of the French law that the period of prescription is to
be reckoned from the beginning of the first complete day after
the day upon which possession has been acquired in the case of
EXTINCTION OF OBLIGATIONS. 08 1
acquisitive prescription, or after the day upon which the right
of action has accrued in the case of extinctive prescription. See
C. A. Alex. 2-4 dec. 1914, B. L. J. XXVII, 84; 0. A. Alex.
7 mars 1901, B. L. J. XIII, 187.) The law reckons tinie by
days and not by hours or minutes. It is, as a rule, easy to preserve
evidence of the date of the transaction, but if it were necessary
to prove the hour of the day, innumerable difficulties would arise
from the differences of local time or the variations between time-
pieces.
The day upon which the right is acquired, whether it be the
right of possession or the right of action, is necessarily an incom-
plete day. If the right were acquired, for instance, at ten o'clock
in the morning, and the prescriptive period were five years, that
period would not run out until ten o'clock in the morning on the
corresponding day of the month five years thereafter. In order
to prevent such troublesome calculations, the Roman law and the
French law which was based upon it, laid down the rule that the
dies a quo was not to be reckoned in calculating the period of
prescription.
The period was to begin to run from the first moment of the
day after. And it is a further consequence of the rule that time
is reckoned by days, that the prescriptive period does not expire
until the last moment of the last day of the term. These rules
are laid down in two articles of the French Code:
La prescription se corrupt e par jours et non par heures. Elle
est acquise lorsque le dernier jour du terme est accompli. (C. C. F.
2260, 2261.)
Accordingly, if the possession has been begun, or the right of
action has been acquired, on the 29th of July, 1914, prescription
does not begin to run until the first minute of the 30th of July,
and if the prescriptive period is fifteen years, it will not be com-
plete until the first minute of the 30th of July, 1929.
Official holidays are included in the delay. (Aubry et Rau,
5th ed. 2, p. 480; B.-L. et Tissier, Prescription, n. 583; Guil-
louard, Prescription, 1, n. 88.) There is no doubt that the Egyp-
tian codes intend to retain these rules. (C. A. Alex. 17 dec.
1908, B. L. J. XXI, 78; C. A. Alex. 30 dec. 1913, B. L. J.
XXVI, 113; De Hurts, Rep. vo. Prescription, n. 67; Halton,
1, 203.)
34 (2)
532 THE LAW OF OBLIGATIONS.
Point of departure of extinctive prescription.
Extinctive prescription depends upon throe conditions: —
(1 A right of action accrued, that is, the obligation must be
exigible before the action upon it begins to prescribe;
(2) No action raised; and
(3) The lapse of the period fixed by law without the prescrip-
tion being interrupted. (Pothier, Obligations, n. 680; Aubry
et Rau, 5th ed. 2, p. 482; B.-L. et Tissier, Prescription, nos. 381,
384; D. N. C. C. art. 2261, n. 3.)
So long as the creditor has no right of action it would be
unreasonable to infer from his inaction any intention to abandon
his right, and, as will be explained later, the same principle applies
to the case in which, though the right of action has accrued, the
creditor cannot exercise it for a reason which suspends the pre-
scription. Accordingly, if the creditor's right is subject to a
suspensive condition or to a term, it will not begin to run until
the condition has been fulfilled or the term has arrived. These
rules are laid down expressly in the French Code:
La prescription ne court point : —
A Vegard (Tunc creance qui depend d'une conditio)/, jiisqvCa
ce que in condition arrive;
A Vegard d'une action en garantie, jusqu'd ce que V eviction
ait lieu;
A Vegard d'une creance a jour fixe, jusqua ce que ce jour soil
arrive. (C. C. F. 2257.)
The Egyptian Code has no such article, but it is not necessary,
as it is a logical consequence from the legal nature of prescription.
Pour que la prescription liberatoire puisse courir, it iaut que
^obligation a laquelle elle se refere soil nee et exigible; si elle
depend d'une condition, on applique hi regie contra non valentern
agere non currit prescriptio; tel est le cas on le paiemeut dVun
legs depend du resultat d'un proces. (C. A. Alex. 13 mai 1909,
B. L. J. XXI, 342. Cf. C. A. Alex, ler mai 1895, B. L. J.
VII, 236; C. A. Alex. 2 mars 1910, B. L. J. XXII, 158; De
Hults, Rep. vo. Prescription, n. 160.) The rule is the same in
Mohammedan law. (Kadri Pacha. Statut Reel, art. 258, al . 1.)
Conditional debt.
The expression in the French Code -une creance qui depend
d'une condition — obviously refers to a Mi>pensive condition. The
EXTINCTION OF OBLIGATIONS. -V!:',
creditor who has a right subject to a resolutive condition can
claim his right at once, and, therefore, prescription will run againsl
him if he does not do so. (B.-L. et Tissier, Prescription, n. 391 :
Guillouard, Prescription, 1, n. 132.)
Action in warranty.
The action in warranty which the French Code specially
mentions is merely an illustration of the general principle. The
vendor warrants the purchaser against disturbance in his enjoy-
ment. But the purchaser has no right of action against the vendor
until there has been an eviction, or what the law regards as
equivalent thereto. And, therefore, it is riot until this condition
has been fulfilled, that prescription begins to run in favour of the
vendor. As regards the action in warranty, there is controversy
as to what the law means by " eviction." In one view there is an
eviction when there is a disturbance of possession. (Aubry et Rau,
5th eel. 2, p. 484; B.-L. et Tissier, Prescription, n. 393.) Accord-
ing to what seems the better view, the " eviction " only takes place
from the date of the final judgment pronouncing it. (Guillouard,
Prescription, 1, n. 135; Cass. 18 juill. 1876. D. 77. 1. 232.)
The Mixed Court of Appeal has decided iu this sens.e. C. A.
Alex. 24 mai 1910, B. L. J. XXII. 223.
Debt subject to term.
The same principle applies to the case where the deb: is sus-
pended by a term. The creditor cannot act until the term arrives,
and, therefore, this inaction cannot deprive him of any right.
(See Req. 9 janv. 1899, D. 1900. 1. 103.) Although the French
article refers only to a term of which the date is certain — une
creance a jour fixe — it is agreed that the same principle applies
to a term of which the date is uncertain, such as, for instance, a
debt payable when a third party shall die. (B.-L. et Tissier,
Prescription, n. 390; Guillouard, Prescription, 1, n. 138; Kadri
Pacha, Statat Reel, art. 258, al. 1.)
It is even more clear in this case than in that of the fixed date,
that the creditor has no right of action till the expiration of the
term. But we must not confuse with a debt subject to an uncertain
term a debt for the performance of which no time has been fixed,
but which is exigible when the creditor chooses to demand pay-
ment. (B.-L. et Tissier, Prescription, 1. c; Alex. 27 avril 1907,
Savour, Rep. n. 846.)
534 THE LAW OF OBLIGATIONS.
It must be remembered that the granting of a term for payment
does not need to be made in express terms; it may be made,
tacitly, and the court, in many eases, is entitled to infer from the
circumstances that a term has been granted.
Prescription does not run till debt is exigible.
It may be a difficult question of interpretation to determine at
what momeni of time according to the intention of the parties the
debt became exigible. But this is a question of fact, the solution
of which d spends upon the particular circumstances. Proscription
docs not begin to run until the debt is exigible. B.-L. et Ti>>kt.
Prescription, n. 390; Guillouard, Prescription, 1, n. 137. See
supra, p. 350.)
When the debt is divided into fractions or into separate
items.
When it has been agreed that a capital sum is. to be paid Ir-
regular instalments of a certain amount, each instalment is. for
the purposes of prescription, regarded as a separate debt. If I
borrow L. E. 5,000 from you, and it is agreed that I am to
•repay you at the rate of L. E. 1,000 a year, your claim to the
fifth instalment will not become exigible till the end of the fifth
year, and extinctive prescription would not be completed in my
favour as regards this instalment until the end of twenty years
from the date of the loan. Similarly, where rent is to be paid at
so much a month or a year, or according to some other unit of
time, or instalments of interest or wages of servants arc to be so
paid at stated intervals, each payment is regarded as a separate
debt. Pothier, Oblig. n. 679; Aubry et Rail, 5th cd. 2, p. 484;
Guillouard, Prescription, 1, n. 76; B.-L. et Tissier, Preservation,
n. 382: D. X. C. C. art. 2261, n. 11.
The same principle applies according to the Egyptian Nativti
( ode i" sums due to physicians, advocates, and engineers for
their fees, In tradesmen lor goods supplied to private persons, to
teachers and instructors for money owing by Heir pupils, and to
domestic servants for their wages, even though new debts of the
same nature have arisen during such three hundred and sixty
days, that being in this case the prescriptive period. (C. C. E.
209." The Mixed Code does not mention advocates and engineers.
(C. C. M. 273.
These nil:- are of great practical importance.
EXTINCTION OF OBLIGATIONS. 535
If goods are supplied by a tradesman upon a running account,
the receipt of each separate article would, but for such a provision
of the law, keep alive the whole debt, and the result would be that
customers would have to pay for items of debt alleged to have
been incurred years before, the accuracy of which it would be
impossible to verify. It is in the public interest that accounts of
this nature as well as rents, instalments and wages, should be
liable to a short prescription, and that persons should know that
if they allow such payments to get into arrears they do so at their
own risk. (Guillouard, Prescription, 2, n. 726, and n. 762;
B.-L el Tissier, Prescription, n. 722; Alex, ler avril 1905,
Sayour, Rep. n. 849.) In France, by recent legislation amending
C. C. F. 2272, the period of prescription as 10 sales by marchands
to particuliers has been extended to two years. (Loi 26 fevr.
1911.)
By "private persons" the Egyptian Code means the same as
the French Code means by the words particuliers non marchands
in the corresponding article. (C. C. F. 2272.) It means those
who buy goods not to sell them again, but to consume them.
And by " tradesmen " — marchands— the law means those whose
business it is to buy goods in order to sell them again either in
the same form or transformed by manufacture.
Tradesmen are such people as butchers, bakers, grocers, drapers,
confectioners, and the like. (B.-L. et Tissier, Prescription,
n. 722; Guillouard, Prescription, 2, n. 730.) A man whose
business it is to let out horses and carriages is not a tradesman.
(Trib. Civ. Seine, 24 janv. 1905, D. 1905. 5. 11.)
Hotel-keepers are not tradesmen. Nor is a building contractor
a tradesman, though it may be that he furnishes materials. For
this is merely accessory to his business, which is to do certain
work. (B.-L. et Tissier, Prescription, n. 724; Guillouard,
Prescription, 2, n. 733; Caire, 17 nov. 1913, Sayour, Rep.
n. 850.)
A manufacturer who has no shop but makes things for orders
is not a tradesman. (Caire, 6 avr. 1903, Sayour, Rep. n. 847.)
Nor is a barber a tradesman in this sense. He is an artiste, and
his claim for the amount due to him— often an abonnement for
shaving or hair-cutting— is not subject to this prescription.
(Trib. Civ. Bordeaux, 9 nov. 1903, D. 1904. 2. 187.)
536 THE LAW OF OBLIGATIONS.
Doubt with regard to sums due to physicians.
French law.
In France the principle is applied, with a certain difference, to
the case of physicians and surgeons. A doctor's account is gene-
rally calculated at the rate of so much a visit. If he is called in
to attend a patient, is he engaged at so much a visit, in the sense
that his fee for each visit forms a distinct separate debt which
has an independent period of prescription, just as each parcel of
goods sent by a tradesman to a customer creates a separate debt?
Or, is the true view that the doctor is called in to take charge of
a case, and that his account, when he sends it in, is a single account
by which he claims a lump sum for his services from the beginning
to the end of the case? The fact that the amount is fixed by
adding up the number of visits and assigning a certain fee to
each visit is immaterial. This is merely the professional way
of arriving at the amount which is considered as a reasonable
professional charge. According to custom this view is firmly
established in the French jurisprudence, and is in accordance with
a long settled tradition. (Chambery, 28 fevr. 1873, D. 73. 2.
153; Pothier, Oblig. n. 715; Planiol, 2, n. 656; B.-L. et Tissier,
Prescription, n. 733; Guillouard, Prescript ion, 2, n. 720: D.N.
C. C. art. 2272, n. 89.)
Prescription does not begin to run against the doctor until the
case* is at an end by the patient dying or being cured, or by the
doctor being dismissed or giving up the case. If he is called in
again to attend the same patient for another illness this creates a
new debt. (Caen, 21 avril 1868, D. 71. 2. 180.)
Egyptian law.
It is more doubtful whether the same result can be reached in
Egypt upon the interpretation of the Egyptian Code. There is
a difference between the Native Code and the Mixed Code. The
Native Code classes together " physicians, advocates and en-
gineers,"' while the Mixed Code does not mention advocates and
engineers. (C. C. E. 209/273.) It might be argued that there
is a good reason for putting advocates and engineers in the same
class as doctors, seeing that they are commonly engaged to perform
not a single act but a series of acts. If, for purposes of prescrip-
tion, we are not to treat each visit of a doctor as creating a
separate debt, the same rule should apply to the case of an advocate
or an engineer who is called in to carry out a particular piece of
EXTINCTION OF OBLIGATIONS. 537
work, such as to conduct a litigation or to construct a bridge. The
French Code does in fact apply the same principle to avoues by
declaring that their action prescribes in two years a compter du
jugement du proces. (C. C. F. 2273.)
And the Egyptian Code does the same in regard to bailiffs and
registrars, when it says that the term of prescription for sums
due -to them for the costs of legal documents is three hundred and
sixty days ''running from the termination of the proceedings in
which such documents have been prepared." (C. C. E. 210 274.)
And it may further be said that the language of the Egyptian
codes "for their fees" is more naturally interpreted as meaning
a Lump sum than is the language of the French Code — Vaction
dcs medccins pour leurs visites.
The Mixed Courts would probably follow the rule of the French
jurisprudence in the case of physicians.
The Mixed Code, as we have seen, fixes the period of prescrip-
tion for sums due to physicians at three hundred and sixty days,
and is silent with regard to advocates and engineers. (C. C. M.
273.)
In the Mixed Courts it would be held, presumably, that pre-
scription does not begin to run against a doctor until his services
have terminated or until he has sent in an account, unless the usage
was to pay the doctor at the time, for each visit. This is not a
common practice. It is common for doctors to send in their
accounts annually, and it is reasonable to hold that unless the
account has been presented or the relation between doctor and
patient has terminated, there is no definite debt due. (De Hults,
Rep. vo. Prescription, n. 193.)
What rule would apply in the Native Courts.
Under the Native Code the short prescription of three hundred
and sixty days applies to "physicians, advocates and engineers."
(C. C. E. 209.) Under this article it does not seem possible to
make a distinction between physicians, advocates and engineers;
they are evidently classed together.
The question therefore comes to be whether we can apply to all
these classes of persons the same rule as the French jurisprudence
applies in the case of physicians. As already stated, one view is
that, just as a physician is engaged to take charge of a case which
involves a series of visits, so an advocate may be engaged to con-
duct a litigation, or an engineer to do a particular piece of work,
538 THE LAW OF OBLIGATIONS.
and that the law regards the series of operations that may be
necessary as forming a single transaction. But against this con-
struction there are three- arguments : —
(1) The physicians, advocates and engineers are mentioned in
connection with tradesmen, teachers and domestic servants, and it
is said of all of them that the short prescription applies " though
new debts of the same nature have arisen during such three hun-
dred and sixty days." The intention appears to be that as soon
as a definite sum becomes due to any of these persons it is a
separate debt which prescribes in three hundred and sixty days.
(2) In regard to bailiffs and registrars it is said that the term
of prescription for sums due to them for the costs of legal docu-
ments is three hundred and sixty days, running from the ter-
mination of the proceedings in which such documents have been
prepared, or if no proceedings have been commenced, from the
drawing up of such documents. (C. C. E. 210/274.)
Upon the principle expressio unius est exclusio alterius we
cannot extend to the physicians, advocates and engineers, a favour
which is given by exception to bailiffs and registrars.
(3) The general rule of interpretation that in case of doubt
the construction shall be in favour of the debtor applies to this
case; and the shorter the prescription the better for the debtar.
Notwithstanding these arguments, it rather appears that the
courts might apply the French rule as to physicians, and extend
it to advocates and engineers when they were not engaged for a
single act. There is no "sum due" until the whole business is
completed. But the point is by no means free from difficulty.
Retroactive effect of prescription.
Prescription has a retroactive effect in favour of the person
benefited by the expiration of a prescriptive period. In the case
of acquisitive prescription, when the possessor has held for the
prescriptive period, he is in the same position as if he had been
owner during the period of his possession, and therefore he is not
obliged to account for the fruits. (Planiol, 1, n. 2708; B.-L. et
Tissier, Prescription, n. 103; D. N. C. C. art. 2220, n. 22.)
And in the case of extinctive prescription the debtor is not only
freed from the obligation to pay the capital sum, but also from
that to pay the interest which has been running. The law does
not regard prescription as a new title acquired at the expiration
of the prescriptive period. It presumes that the debt was dis-
charged at the date when the prescription began to run. (B.-L.
EXTINCTION OF OBLIGATIONS. 539"
et Tissier, Prescription, n. 103; Guillouard, Prescription, 1,
n. 51; Laurent, 32, n. 4, and n. 6.)
According to what calendar is the prescriptive period
reckoned?
In Egypt two calendars are in use, the Arab calendar and the
Gregorian calendar. When the codes speak of a " year," do they
mean a year according to the Arab computation or according to
the Gregorian calendar? There has been in the past much doubt
upon this point. The codes are entirely silent, and the juris-
prudence of the Mixed Court has been very conflicting. In the
Native Courts it has always been taken for granted that the Arab
calendar is intended. The Mixed Courts, after much hesitation,
have come round to the same view. The law may, pro-
bably, be regarded as now settled in this sense. (See Ch. Testoud,
article entitled Observations sur la mode de Calcul des Annies,
reprinted in I'Eyypte Contemporaine, 1916, p. 315; De Hults,
Rep. vo. Prescription, n. 68; Halton, 1, p. 203.)
In recent cases in which the question has arisen as to
extinctive prescription, the Mixed Court of Appeal has held that
the Arab calendar was to be applied. (C. A. Alex. 30 nov.
190-1, B. L. J. XVII, 26; C. A. Alex. 27 juin 1917, B. L. J.
XXIX. 490.)
And the same court has held that in the case of acquisitive
prescription the period should be computed according to the Arab
calendar, whether the possessor is a foreigner or an Egyptian.
(C. A. Alex. 4 avril 1895, B. L. J. VII, 214. See C. A. Alex.
2 fevr. 1893, B. L. J. V, 118; C. A. Alex. 24 fevr. 1892,
B. L. J. IV, 212.)
But it has been held that the delay of ten years for the re-
newal of a hypothecary inscription was to be calculated by the
Gregorian calendar. (C. A. Alex. 28 dec. 1898, B. L. J. XI, 69.)
The principal arguments in favour of applying the Arab calen-
dar are: —
(1) The periods of prescription being for the most part bor-
rowed from the Mohammedan law, according to which they were
of course calculated by the Arab calendar, it is to be presumed
that the legislator intended to continue them without change.
(2) The codes never mention the Gregorian calendar.
The Arab calendar is specially mentioned in regard to the term
of prescription for the periodical payments. (C..C. E. 211/275.)
It is referred to also in the Code of Criminal Investigation upon
540 THE LAW OF OBLIGATIONS.
the question as to the calculation of prescription of a penalty.
(C. Crim. Inv. 276/271.)
(3) Doubts being interpreted in favour of the debtor, the Arab
calendar should be preferred, as under it the year is shorter. (See
C. A. Alex. 30 nov. 1904, B. L. J. XVII, 26.)
(4) If the legislator had intended to adopt the Gregorian
calendar he would have fixed the period for short prescription at
three hundred and sixty-five days instead of at three hundred
and sixty days, an arbitrary period which does not correspond with
either the Arab year or the Gregorian year.
(5) Where the Gregorian year is intended by the Egyptian
legislator, it is specially named, as in the Decree of 26 March,
1900, article 8, which provides that taxes shall prescribe in three
years according to the Gregorian calendar. (C. A. Alex. 17 dec.
1908, B. L. J. XXI, 78.)
Before this Decree the jurisprudence held that in this ease the
time was calculated by the Arab year. (C. A. Alex. 17 janv.
1895, B. L.J. VII, 89. Cf. Decree of 28 nov. 1904, lot n. 17,
art. 64. See Testoud, Observations sur la mode de Calcul des
delais an point de vue de la legislation Egyptienne, reprinted in
VEgypte Contemporaine, 1916, p. 315; Halton, 1, p. 203.) The
only serious argument on the other side is that we should apply
the rule cxpressio unius. Seeing that the codes in some instances
expressly mention the Arab calendar we must conclude that, when
they are silent as to which calendar is to be applied, they must
mean the Gregorian calendar. But this argument is not enough to
justify the conclusion- when we consider the arguments on the
other side.
Renunciation of prescription.
The French Code contains several articles on this matter which
apply both to acquisitive and to extinctive prescription. (C. C. F.
2220 seq.) The Egyptian Code has one article in the section upon
acquisitive prescription, stating the main rule, and two articles
in the section on extinctive prescription as to renunciation by an
insolvent debtor or by a joint and several debtor.
No one can renounce by anticipation his right to claim by
prescription. A person not subject to incapacity may renounce
a right to claim by prescription after it has vested. (C. C. E.
80 L08. < f. C. C. E. 206, 207/270, 271.) The principle
which governs this matter is one which applies to extinctive
prescription and to acquisitive prescription alike, and though we
are concerned here with extinctive prescription only, the principle
EXTINCTION OF OBLIGATIONS. 541
will he made clearer by explaining its application in both these
cases. The French law deals more fully with the subject, and
it is certain that the Egyptian legislator intends to retain the
French law.
Renunciation in advance is contrary to public policy.
In speaking of the nature of prescription in general, it has
been explained already, that the rules of proscription are based
upon considerations of public policy. It is in the public interest
to lix a period within which actions may be brought, and to
declare that if no action is brought within the stated period all
rights shall then be definitely determined. This purpose of the
law would be defeated if persons were allowed to deprive them-
selves by agreement of the right to claim the benefit of prescrip-
tion .
It would become common for creditors to insert conditions that
their right of action should not prescribe at all. And what
applies to a total renunciation applies to partial renunciation,
that is, to a prolongation of the legal period of prescription, such
as an agreement that the right of action shall prescribe in twenty
years instead of fifteen years. Such renunciations are expressly
prohibited by the codes. (B.-L. et Tissier, Prescription, 3rd ed.
n. 53, and n. 62; Planiol, 2, n. 649; Guillouard, Prescription, 1,
n. 318, and n. 321. Cf., however, Nancy, 16 nov. 1889, S. 91.
2. 161, and note by M. Bourcart.)
But although public policy requires that the right of action
shall expire within a certain period, it is not equally clear that
public policy requires that a creditor shall enjoy a right of action
for the normal period. If the creditor chooses to agree that unless
he brings his action within a certain period which is shorter than
the delay to which he would otherwise be entitled, there is nothing
in this which is contrary to public policy. (B.-L. et Tissier,
Prescription, n. 96; Guillouard, Prescription, 1, n. 323. Contra,
Planiol. 2, n. 648.)
The Egyptian law is no doubt the same as the French. Les
delais de prescription sont edictes dans un inter et de protection
sociale your mettre fin aux contestations, et dans ce sens, Us
tiennent a Vordre public; il pent etre loisible aux parties, pur un
accord entre elles, de faciliter les conditions de la prescription,
mais elles n'ont pas la faculte de les aggraver en stipulant d'avance
un delai plus long. (C. A. Alex. 22 fevr. 1905, B. L. J. XVII,
124.)
542 THE LAW OK OBLIGATIONS.
The German Code has an express declaration in the same sense
(art. 225). But in practice such an abridgment of the usual
period of prescription is rarely met with except in the kind of
contracts to which French writers give the name of contrats
& adhesion. These are those contracts in which there is no dis-
cussion of the terms between the parties. One of the parties
•dictates the conditions and the other has simply to take them or
leave them . See Saleilles, Declaration^ cle Volenti, p . 229 ; Planiol,;
2, n. 972.) For instance, a clause is frequently found in policies
of insurance which provides that unless the action is brought
within a short period, such as a year from the date of the loss,
the right of action shall expire.
According to the French jurisprudence such conditions are valid,
though there is no doubt that conditions of this kind lend them-
selves to abuse. (Cass. 2 fevr. 1898, D. 98. 1. 561; Cass. 4 dec.
1895, D. 96. 1. 241, and note by M. Sarrut; authorities cited by
B.-L. et Tissier, Prescription, n. 96, note 1; Colin et Capitant,
2, p. 150.)
Is the rule prohibiting renunciation an absolute one?
There is considerable French authority for the proposition that
in spite of the prohibition of renunciations of prescription, there
are, notwithstanding, certain cases in which an agreement to pro-
long the prescriptive period will be sustained by the courts. The
provisions of the code which lay down the period of the long
prescription or fix the quinquennial prescription for periodical
payments, are undoubtedly based upon public policy, and no re-
nunciation beforehand of the right to take advantage of these
provisions can be permitted. But this is by no means equally
clear in regard to certain of the short prescriptions of a more
. special kind.
If the law of sale says that an action on a warranty against
latent defects must be brought within eight days of the discovery
of the defect, it does not seem that there is any reason of public
policy which would exclude an agreement giving the buyer a
longer delay. (C. C. E. 324/402; B.-L. et Tissier, Prescription,
n. 65; Guillouard, Prescription, 1, n. 322. And it has been
held in France by the Conseil d'Etat that an agreement by which
the liability of the architect and the contractor was extended,
was not contrary to public policy. (Cons. d'Etat, 3 janv. 1881,
S. 81. 3. 34, D. 82. 3. 119.)
EXTINCTION OF OBLIGATIONS. 543
If the contractor, for instance, agrees that instead of being
liable for ten years he will be liable for twenty years for defects
in the building, this is surely in the interest of public policy.
And it does not appear that an agreement like this is such a
renunciation of prescription as the law intends to prohibit.
(B.-L. et Tissier, Prescription, n. 65; Aubry et Rau, 5th ed. 5,
p. 677, note 30; Guillouard, Prescription, 1, n. 322; D. N. C. C.
art. 1792, n. 294.)
Is an agreement to suspend prescription a renunciation
in advance?
The tendency of the French law is to interpret strictly the
prohibition on ne peut d'avance renoncer a la prescription. % An
agreement by the parties to suspend prescription for a certain
period is not a renunciation. If a party binds himself by an
agreement not to take advantage of the law of prescription during
a certain delay, his agreement does not fall within the prohibition
and is not against public policy. If, for example, the parties
agree to submit their differences to arbitration, they may naturally
and properly agree at the same time that during the arbitration
prescription shall be suspended. If an action had been raised
prescription would have been suspended during the action, and
why should a party who is willing to settle his dispute amicably
be discouraged by knowing that prescription is running against
him? (Toulouse, 18 mai 1868, S. 71. 1. 156, Journal du Palais,
71, p. 530; C. Cass, de Belgique, 7 oct. 1894, D. 96. 2. 169;
B.-L. et Tissier, Prescription, 3rd ed. n. 63; Guillouard, Pre-
scription, 1, n. 323.)
It is for the courts to say when an agreement to suspend pre-
scription amounts to a prohibited renunciation. If there is a
sufficient reason in the circumstances for such a step the parties
will be allowed to stipulate the suspension. (B.-L. et Tissier,
Prescription, n. 63; Guillouard, Prescription, 1, n. 320.)
Renunciation of acquired prescription.
Public policy does not prohibit a person from renouncing a
right to claim the benefit of a prescription which he has acquired.
The law guarantees him the right, but when he has acquired it
he can dispose of it as of any asset of his estate. The codes
state this rule:
A person, not subject to incapacity may renounce a right to
544 THE LAW OF OBLIGATIONS.
claim by prescription after it has vested. (C. C. E. 80, 108;
C. C. F. 2220.)
Renunciation during the course of prescription.
It is also permissible to renounce the benefit of part of a pre-
scriptive period which has elapsed. The Egyptian codes are
silent upon this point, but the French law is clear, and it is
expressly stated in the Civil Code in Quebec: Prescription
cannot be renounced by anticipation. That acquired may be
renounced, and so may also the benefit of any time elapsed by
which prescription is begun. (C. C. Q. 2184.)
A renunciation of this kind during the course of prescription
is. in the case of extinctive prescription, equivalent to an acknow-
ledgment of the right of the other. It is an interruption of pre-
scription. The person who has made the acknowledgment loses
the benefit of the time elapsed, but the" prescription begins to
run again in his favour. (B.-L. et Tissier, Prescription, n. 93;
C. A Alex. 11 janv. 1900, B. L. J. XII, 84.
And a tutor or curator who has power to pa}' the debt of the
ward may, by giving the creditor an acknowledgment of the debt,
prevent prescription being completed against him. (Pothier,
Oblig. n. 699; B.-L. et Tissier, Prescription, 3rd ed. n. 94.)
This point will be more fully considered under the head of inter-
ruption. (Planiol, 2, n.700.)
Renunciation may be tacit.
The French Code says that renunciation of prescription is either
express or tacit, and that la renonciation tacite resulte d'un fait
qui suppose V abandon du di-oit acquis. (C. C. F. 2221.)
The Egyptian Code has no similar article, but no doubt the
intention is to preserve the old law. The law does not prescribe
that renunciation shall be made in any particular form, and,
therefore, according to general principles, it may be inferred from
any conduct on the part of the person entitled to claim prescription
which clearly indicates his intention to renounce the benefit of the
prescription which has been acquired in his favour.
But there is always a presumption of fact against a man
gratuitously abandoning a right, and, therefore the court will
not be entitled to find that there has been a tacit renunciation
unless this is the only reasonable inference which can be drawn
from the facts proved. If his conduct, although suggestive of
EXTINCTION OF OBLIGATIONS. 545
renunoiation, is, nevertheless, reasonably capable of another ex-
planation, he will have the benefit of the doubt. (Aubry et Rau,
4th ed. 8, p. 452; Guillouard, Prescription, 1, n. 334; Cass.
6 dec. 1899, D. 1901. 1. 299.)
Among the facts to be considered will be the pleadings in the
action, but, as we have seen, the plea of prescription docs not
need to be set up at first, and the fact that the defendant first
states other defences, such as the non-existence of the debt or its
payment, does not in itself amount to a tacit renunciation of the
right to plead prescription at a later stage. He may not have
known that he was entitled to the plea of prescription, or he may
have had conscientious scruples against relying upon a technical
rule of law so long as he thought that he might succeed upon other
grounds. (Planiol, 2, n. 701; B.-L. et Tissier, Prescription,
3rd ed. nos. 51, 77; Guillouard, Prescription, 1, n. 337; Grenoble,
12 janv. 1904, D. 1907. 2. 289. But see Paris, ler mars 1893,
D. 93. 2. 296. C. A. Alex. 19 janv. 1899, B. L. J. XI, 96.)
But the conduct of the party in appeal may be such as to point
unmistakeably to renunciation. (Req. 5 nov. 1907, D. 1908.
1. 132.)
It is not possible to lay down general rules as to what will
amount to tacit renunciation. The question is one which depends
upon the facts of each particular case. The facts relied upon must
be subsequent to the date when prescription was acquired, for,
otherwise, they would be unavailing. They might amount to a
renunciation of the period of prescription which had already run,
but no more. (B.-L. et Tissier, Prescription, n. 70. See Cass,
ler mars 1905, D. 1907. 1. 376; Grenoble, 12 janv. 1904, D.
1907. 2. 289.)
The following are examples of facts from which tacit renun-
ciation may be inferred. The payment of a debt which is pre-
scribed raises a strong presumption of renunciation of the pre-
scription. According to some writers it is so conclusive that even
if the debtor pays under protest, and subject to reservation of all his
rights, he will still be considered to have renounced the prescrip-
tion. (B.-L. et Tissier, Prescription, 3rd ed. n. 71.)
But this appears to be unreasonable.
A payment on account is likewise a tacit renunciation of pre-
scription of the whole debt, unless the debtor declares at the same
time that he only admits liability to the extent of the amount
which he pays.
w. — vol. ii. 35
546 TUB LAW OF OBLIGATIONS.
The payment of interest of a debt or of the arrears of an
annuity is a renunciation of prescription as regards the whole
liability, unless the debtor has expressly reserved his right.
(Poitiers, 30 juill. 1877, D. 78. 2. 60.) An acknowledgment
of the liability, a promise to pay the debt, a request to be allowed
time, the giving or offering of a security, the claim that the debt
has been paid by compensation, the agreement to submit to a
compromise, are facts from which renunciation will be inferred
unless the debtor reserved his rights. (Guillouard, Prescription,
1, nos. 335 seq.: B.-L. et Tissier, Prescription, 3rd ed. nos. 71
seq.; D. N. C. C. ,art. 2221, nos. 10 seq.- Cass. 3 mars 1885,
S. 86. 1. 360; Cass. 6 juin 1896, S. 97. 1. 407; C. A. Alex.
11 janv! 1900, B. L. J. XII, 84; C. A. Alex. 31 janv. 1901,
B. L. J. XIII, 132.) On the other hand, the declaration by the
debtor that he does not owe the debt, or an offer to pay what he
shall be found to owe after an investigation of the accounts does
not amount to renunciation.
Tacit renunciation must be en connaissance de cause.
Renunciation is the voluntary abandonment of a right, and
a person cannot renounce a right unless he knows that it exists.
Accordingly,* if it appears that although prescription has been
acquired the debtor was unaware of this fact, his conduct may not
be held to prove renunciation of the right to claim prescription.,
(Orleans, 16 fevr. 1865, D. 65. 2. 60.)
But it does not follow from this that a debtor who has paid a
debt against which he might have pleaded prescription, can recover
what he has paid by proving that he was ignorant of his right to
claim prescription. He has made a voluntary payment in dis-
charge of an obligation, and what the creditor has received was
legally due to him. The debt was not extinguished ipso jure by
the lapse of the prescriptive period; it might have been extin-
guished if the debtor had invoked prescription, but as he did not
do so, there was a subsisting debt, not a natural debt but a civil
debt, and the payment accordingly was not a case of payment of
something not due, nor was it a payment in error of a natural
obligation. The right of repetition, therefore, does not exist.
(B.-L. et Tissier, 3rd ed. n. 71, and n. 104.) The German Code
takes this view. (Art. 222; see not^ by M. Saleilles. In this
sense, Trib. Suram. Muski, 18 mars 1906, O. B. VII, n. 68.
Contra, Guillouard, Prescription, 1, n. 335.)
EXTINCTION OF OBLIGATIONS. 547
Renunciation of prescription is not an alienation.
It might appear at the first glance that the person who renounces
his right to claim a prescription which has run in his favour
thereby effects an alienation of property/. But this is not an exact
view of the matter. The possessor who has had a sufficient pos-
session does not become the owner of the property until he has
invoked the prescription. And the debtor whose creditor has
remained inactive during the prescriptive period is not liberated
from his liability until he has invoked the prescription. Pre-
scription does not operate ipso jure.
The right in the case of acquisitive prescription is a right to
claim by prescription. (C. C. E. 80/108.) And in the case
of extinctive prescription the obligation is extinguished if the
debtor invokes prescription. (C. C. E. 204/268.) From this
principle it follows that the renunciation of the claim does not
constitute an alienation. Upon this point the Egyptian Native
Code is clearer than the French Code, for the French Code says: —
La renonciation tacite resulte d'un fait qui suppose Vabandon
4u droit acquis. (C. C. F. 2221.) And it has been maintained
that the expression droit acquis implies a right of property. But
it is generally admitted by French writers that this is not so.
The droit acquis is not the property but the right to set up the
plea of prescription. (Planiol, 1, n. 2714; B.-L. et Tissier,
Prescription, n. 82; Guillouard, Prescription, 1, n. 324.) The
Mixed Code uses the rather ambiguous phrase renounce a pre-
scriptive right. (C. C. M. 108.) But the Native Code with
greater precision speaks of the right to claim by prescription.
(C*. C. E. 80.)
The distinction between a renunciation and an alienation has
important practical consequences. The renunciation is a unilateral
act which does not need any acceptance. (C. A. Alex. 25 mai
1916, B. L. J. XXVIII, 365.) The possessor who renounces his
right to claim an immoveable does not thereby create a new title
which requires registration, and a renunciation of acquired pre-
scription, whether acquisitive or extinctive, is not a gift, and
therefore is not subject to the rules as to gifts. The person who
renounces his right to claim prescription does not make a gift
which is offered to him by the law. (Bufnoir, Propriete et Con-
trat, p. 164; B.-L. et Tissier, Prescription, n. 83. See, however,
Cass. 22 juill. 1895, D. 96. 1. 569.)
35 (2)
548 THE LAW OF OBLIGATIONS.
Renunciation of the right to claim acquisitive
prescription requires capacity to alienate.
Although the renunciation is not, strictly speaking, an aliena-
tion, it is a dangerous act. If it does not make the person poorer
it prevents him from becoming richer, as he would have been if
he had availed himself of his right to claim 'the prescription.
Accordingly, the right to renounce is given only to persons having
capacity to alienate. A person not subject to incapacity may
renounce a right to claim by prescription after it has vested.
(C. C. E. 80.) Any person, who is sui juris, may renounce a
prescriptive right already acquired. (C. C. M. 108.) Celui
qui ne peut aliener ne pent renoncer a la prescription acquise,
(C. C. F. 2222.) So in the French law minors and interdicted
persons, or their tutors acting alone, cannot renounce a prescrip-
tion. (B.-L. et Tissier, Prescription, n. 87; D. N. C. C. art.
2222, n. 5.)
And in the Mohammedan law such a renunciation, being neces-
sarily injurious, would be absolutely null. (Mohammedan Per-
sonal Law, Kadri Pacha, s. 484.) Whether a tutor or other
administrator may renounce a prescription if he complies with
the formalities which would be necessary for an alienation, is a
much disputed question in the French law. According to one
view, to make a gratuitous aliejnation can never be within the
powers of an administrator. (Guillouard, Prescription, 1, n. 327;
Aubry et Eau, 5th ed. 1, p. 712; Laurent, 32, n. 202.) But,
surely, the minor is sufficiently protected by the formalities re-
quired for an alienation. And why in the case of extinctive pre-
scription when the tutor knows that the debt has not been paid
should be compelled to allow his ward to be unjustly enriched by
escaping the necessity of paying it? (B.-L. et Tissier, Prescrip-
tion, 3rd ed. n. 87; D. N. C. C. 2222, nos. 12 seq.)
Capacity for renunciation of extinctive prescription.
The codes are silent upon this point, but it is clear that the
debtor who declines to avail himself of the prescription which has
run in his favour, does not alienate anything. He simply consents
to be liable as he was before. The capacity on his part which is
required for such a consent must, accordingly, be the same as the
capacity to contract an obligation affected by the prescription.
If he has the capacity to make Buch a contract, he has the capacity
EXTINCTION OF OBLIGATIONS. 549
to agree to continue to be liable under it. '(B.-L. et Tissier,
Prescription, 3rd ed. n. 88; Aubry et Rau, 4th ed. 8, p. 452;
Bordeaux, 31 dec. 1895, D. 97. 2. 97, note 2.)
Right of creditors and other third parties to revoke a
prescription which has been renounced.
Extinctive prescription may be invoked by the other creditors
of a person bound by an obligation, even when 'the latter has
renounced the benefit thereof, if such renunciation has bean made
in fraud of their rights. '(0. C. E. 206/270; C. C. F. 2225.)
There are two questions which may arise in regard to the right
of creditors. If their debtor owes a debt which has prescribed,
but he does not take the plea of prescription and remains inactive,
can his creditors take the plea for him in virtue of the oblique
action? It might be argued that his right to plead prescription
is a purely personal right depending upon moral considerations.
If he believed himself bound in honour to (pay the debt his creditors
could not set up the plea of prescription, according to the general
principles which apply to the oblique action. (C. C. E. 141/202.
See supra, p. 100.)
The article under consideration intends to remove this doubt
by declaring that the creditors can act in their debtor's place if
he refuses to do so. The right to plead prescription is not a right
which is "purely personal" to the debtor. (B.-L. et Tissier,
Prescription, 3rd ed. n. 111.)
Again, if the debtor has expressly renounced the prescription,
or has tacitly renounced it by his conduct, have his creditors the
right to set aside the renunciation by the Paulian action? Further,
if so, do they need to prove that the renunciation by their debtor
was in fraud of their right? Or is it sufficient to prove that the
renunciation was to their prejudice? The general rule of the
Paulian action is that creditors can procure the avoidance of the
abandonment of a right to their prejudice without proof of fraud.
(C. C. E. 143/204. See supra, p. 108.)
The present article makes it clear that the renunciation of pre-
scription is a special kind of abandonment of a right as to which'
the creditors must prove both facts, viz., that it was to their
prejudice, and that it was in fraud of their rights. If the debtor
renounces the benefit in good faith and honestly, his creditors
have no remedy. (Halton, 1, p. 394. See, however, De Hults,
Rep. vo. Prescription, n. 34.)
550 THE LAW OF OBLIGATIONS.
The French article is not clear upon this point, and there is
controversy in the French law about it. (B.-L. et Tissier, Pre-
scription, n. 114; Guillouard, Prescription, 1, n. 344; Planiol, 1,
n. 2716; D. N. C. C. art. 2225, n. 16.) According to most
authorities and to the most recent jurisprudence the creditors do
not need to prove fraud, but they must prove that the renunciation
a cause un prejudice au.r creanciers en creant ou en augm&nicent
Vinsolvabilitc de lew debiteur. It will generally be easy for
them to prove this. (Cass. 23 juill. 1912, D. 1914. 1. 30.)
Can parties other than creditors sometimes invoke
prescription which has been renounced?
Upon this point the French article says, creditors or any other
person having an interest in prescription being acquired maty set
up the plea. (C. C-. F. 2225.) A surety, for example, may
set up the prescription which his principal has renounced, or a
co-debtor the prescription which has been renounced by his fellow-
debtor. (B.-L. et Tissier, Prescription, n. 106; Guillouard,
Prescription, 1, n. 309. See Cass. 13 fevr. 1911, D. 1911. 1.
391.)
The benefit of prescription exists by law in favour of these
persons each of whom 1 has a proper right of his own, distinct from
the right of the principal debtor or of the co-debtor respectively.
So far as these cases are concerned the Egyptian Code is more
explicit than the French Code.
A renunciation by one of severed persons liable jointly and
severally, or by a person liable as principal, does not prejudice the
rest of the persons bound jointly with him, or his surety, if they
are entitled to set up prescription on their own account. (C. C. E.
207/271.) But it is generally agreed that in the French law
these are not the only cases. C. C. F. 2225 applies also to other
persons having an interest in setting up prescription.
Probably the Egyptian Code in referring specially to the
surety and the co-debtor, does not intend to exclude such other
persons. An example would be that of a person who has granted
a hypothec to secure the debt of another. (De Hults, Rep. vo.
Prescription, n. 38.)
EXTINCTION OF OBLIGATIONS. 551
Interruption of prescription.
A prescription which is in the course of running may be inter-
rupted, that is to say, a fact may occur which renders useless for
the purposes of prescription, the time which has already expired.
In regard to acquisitive prescription this may happen in either
of two ways: —
(1) If the possessor loses his possession, in which case there
is said to be a natural interruption of prescription; or
(2) If the owner makes a demand upon the possessor to give
up his possession, in which case there is said to be a civil inter-
ruption.
In regard to extinctive prescription there can be no cmestion
of loss of possession, and the only kind of interruption possible
is civil interruption. Extinctive prescription is based upon the
inaction of the creditor. If this inaction comes to an end by his
claiming his right in certain formal ways, the prescription is
interrupted, and, further, an acknowledgment on the part of the
debtor of the right of the creditor interrupts the prescription.
But it is only the creditor whose action interrupts the prescription
which is running against him. He cannot claim that the pre-
scription was interrupted by some legal proceeding at the instance
of a third party. (C. A. Alex. 26 dec. 1912, B. L. J. XXV,
88; C. A. Alex. 3 avril 1912, B. L. J. XXIV, 248.)
Acts of interruption.
(1) A" citation to appear is a distinct claim by the owner which
interrupts prescription, and, according to the Egyptian jurispru-
dence, this is so even if the citation is to appear before an incom-
petent court. The French article says so in express terms.
(C. C. E. 82/111; C. C. F. 2246; C. A. Alex. 23 mars 1911,
B. L. J. XXIII, 237; C. A. Alex. 12 janv. 1911, B. L. J.
XXIII, 105; C. A. Alex. 30 mai 1895, B. L. J. VII, 314;)
C. A. Alex. 11 dec. 1902, B. L. J. XV, 43.)
It has also been held in Egypt that a citation interrupts pre-
scription, although the citation is null in point of form. (C. A.
Alex. 12 janv. 1911, B. L. J. XXIII, 105. Contra, De Hults,
Rep. vo. Prescription, n. 99.) The French Code lays down the
opposite rule as to this, but this is disapproved of by some writers
as being difficult to reconcile with the preceding article, and as
552 THE LAW OF OBLIGATIONS.
making the party suffer for -the fault of the huissier. (Planiol, 1,
n. 2691. Contra, Aubry ct Ran, 5th ed. 2, p. 507.) A citation
null in point of form is just as much a declaration of intention
to make the claim as a citation before an incompetent court. As
the Egyptian Code is silent there is no reason for npt applying
the same rule in both cases. (C. C. F. 2247.) If the action is
dismissed, the interruption is as if it had never taken place— k
regardee comme non avenue. (C. C. F. 2247; B.-L. et Tissier,
Prescription, n. 504; C. A. Alex. 18 mai 1911, B. L. J. XXIII,
330.) But mere declarations or protests do not interrupt pre-
scription. (C. A. Alex. 12 mars 1913, B. L. J. XXV, 223.)
Nor is prescription interrupted as against X by the fact that in an
action by A against B, B reserves all his rights of recourse!
against X. (C. A. Alex. 29 oct. 1918, B. L. J. XXXI, 4.
(2) A monition of execution in proper form, even though not
followed up, likewise interrupts prescription. The jurisprudence
applies the same rule to other acts of execution, such as a saisie-
arret. (C. A. Alex. 29 fevr. 1889, B. L. J. I, 72; C. A. Alex.
12 janv. 1915, B. L. J. XXVII, 109; Halton, 1, p. 208.)
Naturally, if the plaintiff allows his action to be extinguished
by peremption it is as if it had never occurred. (C. C. E. 82/111 ;•
C. C. F. 2247.)
Acts of acknowledgment.
An acknowledgment by the debtor that he is liable for the
debt interrupts the prescription in his favour, and such an acknow-
ledgment may either be express or tacit. Such a tacit acknow-
ledgment of the debt is frequently found when the debtor pays
a sum on account of the debt or pays interest upon it. (C. C. F.
2248; B.-L. et Tissier, Prescription, n. 529; Guillourd, Pre-
scription, 1, n. 245; Planiol, 2, n. 665; C. A. Alex. 5 dec. 1889,
B. L. J. II, 59; DeHults, Rep. vo. Prescription, n. 102; Halton,
1, p. 209. See C. A. Alex. 18 mai 1911, B. L. J. XXIII, 330.)
Such an acknowledgment is a unilateral act, and is valid with-
out any acceptance. A fortiori its validity does not depend upon
the presence of the other party. (B.-L. et Tissier, Prescription,-
n. 83; Planiol, 1, n. 2713; C. A. Alex. 25 mai 1916, B. L. J.
XXVIII, 365.) This is true also in the Mohammedan law.
(C. A. Alex. 25 mai 1916, B. L. J. XXVIII, 366.)
EXTINCTION OF OBLIGATIONS. 553
Effects of interruption.
Interruption applies only to the past, it does not affect the
future. It does not hinder a new prescription from beginning
to run, and the new prescription will be of the same kind and
subject to the same rule as the old one. (B.-L. et Tissier, Pre-
scription, n. 551; Aubry et Hau, 5th ed. 2, p. 527.)
But there is one important exception to this rule. When the
prescription is of three hundred and sixty days for sums due to
tradesmen, and the tradesman has got a written acknowledgment
stating the amount of the debt, this not only interrupts the pre-
scription, but from this time the debt will be prescribed only by
fifteen years. This rule that the long prescription is here sub-
stituted is laid down in the French Code as to this short pre-
scription. (C. C. F. 2274; Cass. 7 mai 1906, D. 1908. 1. 65;
B.-L. et Tissier, Prescription, n. 755; Planiol, 2, n. 673.)
The reason of this short prescriptive period is that debts of
this kind are usually made without writing. If the parties make
them in writing, or if the creditor gets a written acknowledgment
of the debt, this shows sufficiently that the parties intended to
make their contract subject to the ordinary rule of fifteen
years' prescription. These reasons apply in the Egyptian law,
although the code is silent. (C. A. Alex. 9 mai 1894, B. L. J.
VI, 278; De Hults, Rep. vo. Prescription, n. 107.)
Suspension of prescription.
Prescription is suspended when the law says that owing to
certain special circumstances, or in order to protect certain classes
of persons, it is not to run during a certain time. The period
during which the suspension continues is not counted, but the
period before the suspension begins is counted, and so is that
which comes after the cause of suspension has been removed.
The suspension does not, like interruption, wipe out and annihilate
the benefit of a period which has passed. It applies only to the
present. It does not, like interruption, originate in the act of a
person by his bringing a claim or making an acknowledgment;
it is a favour given by the law for reasons of equity. And it is
given to certain persons precisely because they are not in a posi-
tion to interrupt prescription by themselves. It does not run
against minors until majority. (C. A. Alex. 3 juin 1909,
B. L. J. XXI, 373.)
554 THE LAW OF OBLIGATIONS.
When one of the co-creditors in a joint and several debt is a
minor and prescription is suspended in his favour, this does not
benefit his co-creditors. (See supra, p. 406.)
Causes of suspension.
Prescriptions, the terms of which are more than five years, do
not run against persons subject to incapacity. (C. C. E. 85/114;
C. C. F. 2278; C. A. Alex. 30 dec. 1913, B. L. J. XXVI, 118.)
But, prescription against a lunatic is not suspended unless he
has been formally interdicted. Although a man is notoriously
a lunatic and resides in a lunatic asylum, prescription will run
against him if he has not been interdicted. The incapacity must
lie ime incapacity legalement constatee. (C. A. Alex. 22 mai
1902, B. L. J. XIV, 325.) This is in accordance with the
French law. The suspension is by the terms of the French Code
in favour of minors and interdits. (C. C. F. 2252, 2278. See
Cass. 31 dec. 1866, S. 67. 1. 153, Journal du Palais, 67, p. 366;
B.-L. et Tissier, Prescription, n. 423; Aubry et Rau, 5th ed.
2, p. 497.) The Egyptian law is the same. (C. A. Alex. 30 dec.
1916, B. L. J. XXVI, 118.)
May there be other causes of suspension?
According to the old French law the court was entitled to find
in any particular case that prescription was suspended against
a person by reason of special circumstances. If he was able to
prove that as a matter of fact it had not been possible for him to
claim his right, the court applied the rule contra nan valentem
agere non currit prazscriptio .
A man who could show that he had been absent from the
country, that he was ignorant of his right, and so on, was relieved
from the prescription which had run against him.
This led to abuses, and the French Code laid down a new rule:
Prescription runs against all persons unless they fall within an
exception established by laic. (C. C. F. 2251; BrissaucU
History of French Private Law, p. 364, note 8; B.-L. et Tissier,
Prescription, n. 367; Guillouard, Prescription, 1, n. 153.)
But the law did not provide for some cases in which equity was
strongly in favour of allowing suspension. If, for example, owing
to war, the courts were not sitting and an action could not be
brought, it would be very hard to hold that the plaintiff had lost
his right. The French jurisprudence, accordingly, has held that
EXTINCTION OF OBLIGATIONS. 555
C. C. F. 2251 does not apply to causes of suspension which do
not depend upon the capacity of the plaintiff. The rule applied
by the courts is la prescription ne court point \contre celui qui
est dans V ' impossibilite absolue d'agir, par suite d'un empechement
quelconque resultant de la loi, de la convention ou He la force
majeure. (Cass. 28 juin 1870, D. 70. 1. 309; Req. 2 mai 1900,
D. 1900. 1. 422.)
The jurisprudence is disapproved of by almost all the writers.
The courts apply the maxim contra non valentem agere non currit
prcescriptio as if it were adopted in the French Code, Avhereas the
codifiers intended by this article C. C. F. 2251, to limit the
application of this rule to the cases expressly specified in the code.
(Laurent, 32, n. 38; Planiol, 1, n. 2701; B.-L. et Tissier, Pre-
scription, n. 375.) MM. Aubry et Rau contend that prescription
is suspended only when there is a legal obstacle to the exercise of
the action. When the obstacle is merely one of fact, such as
imprisonment, difficulty of communication and the like, there is
no suspension of prescription in the true sense of the term. But
the judge has poAver to relieve the creditor from the effects of the
prescription which has run against him, if the creditor took his
action promptly when the obstacle was removed. (5th eel. 2,
p. 500. See C. A. Alex. 11 fevr. 1909, B. L. J. XXI, 189;
C. A. Alex. 27 avril 1899, B. L. J. XI, 211.) There is much
to be said from the legislative point of view for this opinion,
but it is impossible to find support for it in the French Code. (Cf .
German Code, arts. 203, 215.)
The Egyptian Code has no article like C. C. F. 2251, and!,
according to the Egyptian jurisprudence, a person who shows that
it was absolutely impossible for him to bring an action is relieved
from the prescription, and a suspension of this kind applies even
to the short prescription of five years. In one case the widow of
a soldier killed in the Sudan in 1883 had been kept a prisoner
in Khartum till 1898, when that town was retaken. It was held
that she was entitled to claim arrears of pension from 1883, and
could not be met by the plea of five ylears' prescription applicable
to such payments.
L'impossibilite absolue d'agir constitue un cas de suspension
de toute prescription. (C. A. Alex. 13 dec. 1900, B. L. J.
XIII, 53; C. A. Alex. 3 janv. 1895, B. L. J. VII, 72; C. A.
Alex. 9 dec. 1896, B. L. J. IX, 53; C. A. Alex. 27 avril 1899,
B. L. J. XI, 211; Halton, 1, p. 212; De Hults, Rep. vo. Pre-
scription, n. 63.)
556 THE LAW OF OBLIGATIONS.
Upon the point whether absence from the country suspends
prescription the decisions are not harmonious. It has been so
considered. (C. A. Alex. 13 avril 1882, 11. O. VII, p. 140.)
On the other hand, it has been held that acquisitive prescription
runs against a person .who had been declared an absentee by a
judgment of the Mehkema Sharia. (C. A. Caire, 13 dec. 1910,
0. B. XII, n. 35.) In the Mohammedan law absence suspends
prescription. (Kadri Pacha, St at ut Reel, art. 256; C. A. Alex.
25 mai 1882, K. O. VII, p. 166.) But the Egyptian Code gives'
the benefit of suspension of prescription to persons subject to
incapacity. (C. C. E. 85/114.) The Mohammedan law, like
the old French law, admits to this benefit any person who can
prove a good excuse for his inaction. (Statut Reel, art. 256;
C. A. Caire, 13 dec. 1910, 0. B. XII, n. 35.)
Other modes of extinction.
The seven modes of extinction of obligations which the Egyp-
tian codes enumerate have now been explained.
It has been mentioned elsewhere that these are the regular and
normal modes in which any obligation may be extinguished. A
word may be said about two other modes of extinction to which
the code does not here refer.
(1) Expiration of the time limited by the parties for its
duration.
An obligation entered into for a certain time naturally ter-
minates when that period expires. It has in fact then been paid,
and, therefore, it is hardly necessary to add this as a separate
mode of extinction of obligations, though this is done in some
codes. (C. C. Q. 1138.) For example, if I grant a lease for
ten years, at the end of the ten years the lease comes to an end
by efflux of time.
(2) Death of the creditor and debtor in certain cases.
The cases in which an obligation is extinguished by the death
of the creditor or of the debtor have been discussed under the head
of the representation of a party to a contract by his heirs and
successors. (Supra, p. 16.)
Some obligations are strictly personal both as to the creditor
and the debtor, such as a contract with a barber to shave one for
EXTINCTION OF OBLIGATIONS. 557
a certain period, or, a contract with a sick-nurse for her services
during an illness. Others are (extinguished by the death of the
debtor, but survive the death of the creditor, such as the contract
with a clerk or domestic servant, while the majority of debts
transmit in favour of the heirs of the creditors and against tho
heirs of the debtor. (Pothier, Obligations, nos. 673 — -675.)
And in some of the special contracts the code contains a provi-
sion on the subject.
So, a civil partnership is dissolved by the death of one of the
partners, because in this contract one chooses a partner from con-
fidence in his integrity and ability, and one has not necessarily
the same reliance on his heir or representative.
But it may be stipulated that the heir of a deceased partner
shall step into his shoes. (C. C. E. 445/542; C. C. F. 1865.)
So also mandate terminates by the natural death of the mandator
or mandatary. (C. C. E. 529/650; C. C. F. 2003.)
( 559 )
CONCORDANCE OF ARTICLES OF CODES CITED
WITH PAGES OF VOLUME II.
Egyptian Native Civil Code.
Art. page
23 290
30 202
46 34, 45
48 30
54 438
(35 142, 1G6
76 521
80 514, 540, 544, 547, 548
82 551, 552
85 554, 556
87 34, 45, 521
90 .- 362
91 2, 30
92 30, 31
94 189
96 363
97 372, 373
98 364, 381, 384, 385, 389
99 372, 376
100 372, 376
101 353
102 355, 356, 359
103 328, 330
104 339
105 345, 347, 369
106 345, 347
107 404, 405
108 407, 408, 409, 413, 429
109 408, 414
110 416, 417. 421, 442
111 416
112 417, 419
Art. page
113 419, 420
114 422, 428
115 414, 424, 429, 430
116 407, 431
117 219, 227, 230, 234
118 219, 232
119 206, 287, 290, 293
120 206, 215. 216
121 237, 250, 251, 252. 255
122 251. 257, 394
123 215, 250, 384, 393, 397
124 :216. 244. 245
125 394
126 248
127 244, 248
131 142, 166
137 12, 26. 53, 69
140 363
141 ...1, 12, 24, 26. 93. 94, 100,
549
142 12, 27
143 1, 87, 109, 122, 549
144 141, 142, 144, 153, 155,
156, 168, 177
145 166, 187, 213, 352
146 213
147 192, 194
148 187, 190. 191. 194
150 410, 411, 414
151 258
152 411
154 201
560
CONCORDANCE OF ARTICLES OF CODES CITED.
Egyptian Native Civil Code — continued.
Art.
15-5
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
182
183
185
186
187
187
188
189
189
190
191
192
193
194
195
196
201.
443,
9,9
444.
446,
455,
462,
414,
166.
449.
350,
392,
452,
395,
467,
432,
503,
444,
414,
466,
471,
471,
316.
217.
355
287,
373,
374,
316
479,
423.
426,
428,
9,9,
483,
al. 2 ...
466,
al 2
488,
499.
351.
500,
506
507
PAGE
203
203
203
483
445
445
446
465
446
455
448
448
450
451,
515
452
452
454
469
468
474
471
475
476
476
482
497
428
499
497
482
490
492
488
489
490
492
491
499
515
510
508
513
Art.
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
215
218
219
220
222
232
241
261
264
265
266.
268
270
279
281
283
284
297
298
307
324
332
333
342
344
PAGE
511, 512, 514
502, 511, 514
513
502
420, 502
516
516, 518, 519
522, 524, 530, 547
523
540, 549
540, 550
123, 523
527, 534, 536, 537
527, 537, 538
414, 524, 526, 539
528
522, 528
146, 148. 192, 455
290
455, 497
455, 497
192
122
482
368
34, 388
388
.32, 217, 317, 349, 368, 481
368
41
222
356
454
454
32, 217, 317, 330, 349,
355, 481
482
257
542
.350, 392
290
142
CONCORDANCE OF ARTICLES OF CODES CITED.
561
Egyptian Native Civ
Art.
345
PAGE
348
349
357
458, 496, 513
30
366
55
370 183, 317
378 183
389 23
392 290
393 286
407 10
409 22, 410
411 19, 290, 302, 444
414 168
417 290
424 482
426 247
444 167
445 10; 557
470 214
482 353
488 167, 509
489 290, 304
499 410
500 360
il Code — continued.
Art. page
505 247, 463
509 419, 502
514 162
521 150
522 10
524 13, 52
526 213
527 14
529 10, 557
530 450
541 498
544 290
555 94
562 290, 360, 379
574 "379
575 462
607 338
608 44, 338, 346
611 20, 27, 37, 39, 346, 370
613 23
615 20, 133, 346
617 21, 40, 346
652 290
Egyptian Mixed Civil Code.
Art. page
42 290
51 202
68 34, 45
70 30
77 438
90 142, 166
102 • 521
108 514, 540, 544, 547, 548
111 551, 552
114 554, 556
116 34, 45, 521
144 362
145 2, 30
146 30, 31
148 189
W. — VOL. II.
Art.
150
151 372,
152 364, 381, 384, 385,
153 372,
154 372,
155
156 355, 356,
157
158
159
160
161
.328.
.34;
347,
345,
404,
162 407, 409, 413,
163
164
36
PAGE
363
373
389
376
376
353
359
330
339
369
347
405
429
408
408
562
CONX'ORDANCE OF ARTICLES OF CODES CITED.
Egyptian Mixed Civ
Art. page
165 408 !
166 416. 417. 421. 442 |
167 416
168 417. 419
169 419. 420
170 422. 428
171 424, 429, 430. 431
172 407
173 219. 227, 230, 234
174 234
175 232
176 219
177 206, 287, 290, 293
178 206, 215
179 237, 250, 251, 252, 255
180 251, 257, 394
181 215, 250, 384, 393, 397
182 216, 244
185 394
186 248
187 244, 248
191 142, 166
197 117, 136
198 ....? 12, 26, 53, 69
201 363
202 ...1, 12, 24, 26, 93, 94, 97,
100, 549
203 12, 27
204 ...1, 87, 105, 109, 122. 549
205 141, 142, 144, 153, 155,
156, 168, 177, 187
206 166, 213, 352
207 213
208 192, 194
209 187, 190
211 410, 411
212 258
214 411
216 201
217 203
218 203
219 201. 203
220 203
il Code — continued.
Art. page
221 443, 483
222 445
223 29, 444. 445
224 446
225 446, 455, 460, 462, 465
226 446
227 455, 456, 459
228 448
229 166. 448
230 449. 450
231 350, 392, 395, 432, 451,
452, 467, 503, 515
232 452
233 444
234 454
235 466, 469
236 468
237 471, 474
238 471
239 471, 475
240 316, 476
241 217, 287, 374, 476
242 316, 355, 373, 479, 482
243 497
245 423, 428
246 426, 428, 499
248 497
249 482
251 29, 483, 485, 490
251 ol. 2 492, 496
252 466, 488
253 489, 490
254 492
255 488. 491
256 499
257 499, 515
258 351, 500, 506, 510
259 507, 508
260 511
261 511, 512, 514
262 502, 511, 514
263 513
264 502
CONCORDANCE OF ARTICLES OF CODES CITED.
56:)
Egyptian Mixed Civil Code — continued.
Art.
PAGE
Art.
PAGE
265
.420. 502
436
496, 513
266
516
449
55
267
516,
518, 519
453
183
268
522,
524,
530, 547
454
317
269
523
455
317
270
.540, 549
463
183
271
.540, 550
474
23
272
.123, 523
479
290
273
527,
534,
536, 537
480
286
274
527,
594
537, 538
526, 539
495
10
275
500
22, 410
276
528
502
....19, 290, 302, 444
277
.522, 528
506
168
280
146
148, 455
509
290
283
290
516
482
284
.455, 497
518
247
285
.455, 497
541
167
297
122
542
10, 557
307
482
572
214
328
368
590
353
333
...34, 388
596
167, 509
334
388
597
509
336..
.32, 217, 317
349,
368, 481
598
290, 304
338
368
609
410
341
41
610
360
350
222
617
247, 463
353
356
622
419, 502
355
454
628
162
356
454
638
150
371
32, 217,
317,
330, 349,
640
10
355, 481
643
13, 52
373
482
646
213
380
192
648
14
381
257
650
10, 557
387
192
651
450
402
542
663
498
413
88
666
679
290
415
350, 392
290
." 94
49,7
686
290, 360, 379
430
142
697
379
431
348
698
462
435
458
733
338
36 (2)
564
CONCORDANCE OF ARTICLES OF CODES CITED.
Egyptian Mixed Civil Code — continued.
Art. page Art. page
7:54 44. 338, 346 742 20. 133. 346
737 20. 27. 37. 39, 346, 370 744 21. 40. 346
740 23
Egyptian" Native Code of Civil and Commercial Procedure.
Art.
291
294
368
369
384
410
434
.95.
Art.
126
668
500
674
529
685
529
695
208
697
451
698
510
699
.471.
95
95
474
474
474
472
.471. 472
Egyptian Mixed Code of Civil and Commercial Procedure.
Art. page
332 126
335 500
412 529
413 529
437 208
471 95, 184. 451
496 -. 510
675 462
Art. page
760 95
764 95
773 471, 474
783 474
785 474
786 472
787 471. 472
Egyptian Native Commercial Code.
Art.
2
22
48
82
92
97 268. 288
101 276
109 409
119 379
125 379
PAGE
409
411
28
14
263
Art.
137
148
162
180
194
195
221
228
:m
.356.
PAGE
411
105
210
248
487
357
357
107
16
CONCORDANCE OF ARTICLES OF CODES CITED.
Egyptian Mixed Commercial Code.
565
Art.
2 ;
28
54
86
97
102 268, 288
106 276
114 409
144 411
PAGE
Art.
409
169
411
187
28
201
14
202
26:3
PAGE
210
248
487
357
229 356, 357
235 107, 110
236 107
338 16
French Civil Code.
Art.
6
187
191
548
•">•"> .">
617
705
725
727
72!)
7S3
802
870
873
878
896
900
906
9:38 :....30, 31
957 70
1048 84
1071 41
1088 188
1101 362
1119 12, 46, 49, 51, 387
1120 12, 46
1121 12, 46, 53, 64, 69
1122 16
1126 442
1131 189
.56
PAGE
7
. 101
, 101
. 170
. 166
. 517
. 517
. 84
. 518
. 518
. 518
. 518
. 4:38
. 518
. 438
. 84
. 332
84
Art.
1134
1138.
1139
1141
1142
1143
1144
1145
1146
1147
1148
1149
1150
1151
1152
1153
1154
1157
1162
1165
1166
1167
1168
1171
1172
1173
1174
1175
1176
1177
PAGE
1, 2, 9
.30, 32, 317, 355, 368, 480
208
45
220, 225
230
220
211
206, 211, 392
206, 288, 292, 293
288
250, 252
257, 394
255, 394
215, 393, 397
....244, 245, 246, 247, 250
248
50
363
1, 9, 12, 26, 66, 67
92, 94, 100
1, 87, 92, 105, 121
328, 330
334
331
331
262, 332
3:35
339 341
339, 341
566
CONCORDANCE OF ARTICLES OF CODE6 CITED.
French Civil Code — continued.
Art. page
1 178 341, 343
1179 336, 346, 347, 369
1180 97, 336
1182 347, 349
1184 10, 219, 221
1185 335, 350
1186 336, 351, 352
1187 353
1188 355, 356, 359
1189 362
1190 363
1191 362
1192 370
1193 372, 373
1194 372, 376
1195 372
1196 372
1197 404
1198 404, 406
1199 • 406, 416
1200 407, 408
1201 408
1202 409
1203 414
1205 416
1206 416, 442
1207 417
1208 417, 418
1209 419
1210 427
1211 423, 424
1212 424
1214 424
1215 426
1216 407, 430
1217 431
1219 442
1220 432, 433, 518
1221 433, 435, 436, 437
1224 439
1225 431, 439, 440, 441
1226 382, 386
1227 387, 388
Art. page
1228 389'
1229 389, 399, 400
1230 381, 391
1231 395
1232 ...402, 441
1233 402, 441
1234 443, 483-
1235 445
1236 29, 446
1238 195, 448
1240 450
1241 449
1242 451
1243 451, 503
1244 350, 392, 395, 452, 515
1247 452
1249 457
1250 457, 458
1251 457, 458
1252 463.
1254 468
1255 468
1256 469
1257 472
1258 473
1264 473
1272 485
1273 486
1274 29, 485
1275 484, 493
1276 495
1277 495
1278 488, 490
1279 490-
1280 490, 492
1281 488, 492.
1282 455, 498
1283 455. 498
1284 498
1285 428
1286 498
1289 499
1290 499. 515.
CONCORDANCE OF ARTICLES OF CODES CITED.
567
French Civil Code — c
Art.
1291
1293
1294
1295
1296
1297
1298
1299
1300
1301
1302
1302
1312
1321
1328
1348
1351
1370
1371
1372
1373
1374
1375
1376
1377
1378
1381
1388
1395
1583
1585
1589
1599
1608
1612
1624
1633
1654
1673
1689
1690
PAGE
351, 500, 503
507, 508, 509
420, 502, 503
511, 513, 514
506
511
513
511, 514
516
516, 519
....195, 213, 217, 299, 316,
317, 476, 478
al. 2 286
166
130, 131, 132, 133, 135,
136
27
146, 192
122
144, 201, 202
140, 144
148, 150, 152, 157, 177
148, 153
148, 154
148, 156
166, 187
190
195, 213
187
196
9
30, 31
482
228
34, 388
454
222
217
257
348
458
46
ontinued.
Art. page
1703 31
1717 55
1722 317
1733 300, 301
1743 23
1772 286
1780 394, 397
1782 304
1792 22
1794 10
1795 19, 302
1798 168
1825 286
1846 247
1864 167
1865 10, 557
1881 214
1887 411
1889 11
1944 353
1947 509
1948 167, 509
1953 304
1961 al. 3 475
1991 153
1992 150
1996 213
1997 13, 52
1998 14
2002 411
2003 10, 557
2005 450
2007 10
2020 360
2028 247
2035 519
2036 418
2093 24, 94
2125 135, 338
2131 360, 379
2168 379
2219 521, 522, 524
2220 540, 544
568
CONCORDANCE OF ARTICLES OF CODES CITED.
French Civil Code — continued.
Art. page
2221 544, 547
2222 548
2223 5,30
2224 529
2225 549, 550
2246 551
2247 552
2248 552
2249 417, 442
2251 554, 555
2252 554
2257 532
PAGE
531
. 531
. 527
Art.
2260
2261
2271
2272 527, 535
2273 537
2274 553
2275 528
2277 524
2278 554
2279 34, 44
2280 34, 45
2281 521
Quebec Civil Code.
13
17
155
156
765
795
838
983
1019
1022
1023
1025
1027
1028
1029
1030
1031
1032
1033
1036
1039
1040
1041
1042
1043
1044
1045
n. 24
/
289
101
101
56
30
56
142
363
1, 2
12
31
37, 45
12, 26, 47
..12, 53, 64, 66, 69
16
93, 97, 100
106
122
110, 121
106
1, 123
144
158
.140, 148, 152, 157
153
154
1046
1047
1048
1049
1050
1052
1057
148
187
191
195
289
187
201
1065 10, 220
1066 220
1067 206
1069 218
1070 206
1071
1072
1076
1079
1085
1091
1092
1093
1094
1095
1103
1105
1106
1114
1119
293
289
215
318
346
353
.355, 356
362
363
370
407
410
410
427
...... 426
CONCORDANCE OV ARTICLES OF CODES CITED.
i69
Art. page
1120 407
1122 432, 433
1123 433
1125 442
1130 439, 441
1131 382
1132 388
1135 396
1138 443, 556
Quebec Civil Code — continued.
Art.
1141
1143
1157
1161
1170
1172
1174
1176
1178
1179
1180
1183
1190
1191
1193
1196
1197
29
195
463
469
485
29
495
488
492
492
488
498
507
420
506
511
511
1198 516, 518
1199 516
1200 213, 217, 478
1202 480
1212 130, 131
1225 27
1241 122
1260 9
1472 30
1476
1487
1495
1570
1571
1596
1604
1638
1650
1663
1688
1691
1692
1709
1716
1717
1720
1755
1759
1767
1768
1774
1810
1812
1815
1895
1981 24, 94
2038 135, 338
2085 41
2098 21, 27, 39, 40, 41, 133
2184 544
2268 44, 45
2359 31
2362 31
PAGE
, 228
. 34
. 454
. 458
. 46
. 30
. 289
. 53
. 289
. 23
. 22
. 10
. 19
. 153
. 14
. 13
. 14
. 10
. 10
. 289
. 289
. 11
. 353
. 509
. 289
. 10
( 571 )
INDEX TO BOTH VOLUMES.
ABSENTEE,
is prescription suspended against... Vol. II., 556.
ACCEPTANCE. See Contract.
ACCESSOEY OBLIGATIONS. ..Vol. I., 43, 100.
may survive principal obligation... Vol. I., 101.
See Penal Clause, Obligations with a.
ACQUIESCENCE. See Modification of Contract by Parties.
ACT,
obligation resulting from an. See Table of Contents, Vol. II.,
Chapter VII.
'"ACT OF GOD "...Vol. II., 326.
ACTES BEGUISES. See Simulation.
ACTIO BE IN REM VERSO. See Table of Contents, Vol. II.,
Chapter VIII.
against occupant of immoveable without lease... Vol. II., 169,
170.
benefit created not enough to give action. ..Vol. II., 164.
building on another's land... Vol. II., 166.
conditions of... Vol. II., .179 seq.
for payment of tilings requisitioned by enemy forces... Vol.
II., 171.
for payment to incapable person. ..Vol. II., 166.
for value added to property of defendant... Vol. II., 170.
genealogist, claim by... Vol. II., 170.
general average losses fall under... Vol. II., 172.
gestion d'affaires, action on, distinguished... Vol. II.. 175.
name, origin of. ..Vol. II., 168.
partner, contract by, in his own name. ..Vol. II., 167.
partner, secret, claim against... Vol. II., 174.
payment of another's debt... Vol. II., 446.
various theories of. ..Vol. II., 175 seq.
See English Law; German Law: Swiss Law.
ADVOCATES,
prescription of sums due to... Vol. II., 536 seq.
AGENCE BE RENSEIGXEMENTS... Vol. II.. 282.
572 INDEX TO BOTH VOLUMES.
AGENT. See Mandate.
ALEATORY CONTRACT. See Contract; Gaming Contract.
ALIMENT. See Gestlon d'affaires.
ALIMENTARY PROVISIONS. ..Vol. II., 201.
as natural obligations... Vol. I., 26.
renunciation of, invalid... Vol. I., 156.
rules as to persons bound to furnish, and as to persons en-
titled to claim. ..Vol. II., 203.
See English Law.
ALIMONY. See Alimentary Provisions.
ALTERNATIVE OBLIGATION. ..Vol. II., 362.
See Table of Contents, Vol. II., Chapter XIX.
choice, does it ever pass over to party not originally entitled
to it... Vol. II., 365.
choice, has it retroactive effect... Vol. II., 368.
how declared... Vol. II., 366.
right to make... Vol. II., 366.
when can Court make. ..Vol. II., 364.
when can debtor make... Vol. II., 363.
distinguished from conjunctive or facultative... Vol. II., 363.
impossibility, supervening, of performing one alternative...
Vol. II., 371 seq.
no alternative if one of things promised is unlawful or im-
possible ab Initio.. .Vol. II., 370.
obligation with penal clause is a special kind of... Vol. II.,
364, 384.
See German Law.
AMERICAN LAW,
relativity of contract, in. ..Vol. II., 91.
stipulation of non-liability by shipowner... Vol. II., 284.
ANTICHRESIS,
creditor has not a privilege... Vol. II., 461.
APPORT. See Partnership.
APPROPRIATION OF PAYMENTS. See Imputation of Pay-
ments.
ARBITRATION. See Compromise.
ARCHITECT AND CONTRACTOR,
joint and several liability of... Vol. II., 410.
liabilitv of, may, by agreement, be for more than ten years
...Vol. II., 542.
warranty of, passes to sub-purchaser... Vol. II., 22.
ARMY,
contract not to serve in. ..Vol. I., 150.
INDEX TO BOTH VOLUMES. 573
AETIST. See Painter.
ASSIGNMENT OF CLAIM,
differs from subrogation... Vol. II., 458.
distinguished from novation... Vol. II., 495.
its effect on right to plead compensation... Vol. II.. 512.
ASSOCIATIONS,
are they persons... Vol. I., 342.
ASSOCIATION EN PARTICIPATION. See Partnership.
ASSURANCE. See Insurance.
ASSURANCE COLLECTIVE. See Stipulation pour autrui.
ASTREINTES,
Court, can it modify... Vol. II., 240, 242.
Court, when it may compel performance by... Vol. II.. 234.
fait personnel, may be enforced by... Vol. II., 239.
whether from date of first judgment or that of judgment in
appeal... Vol. II., 239.
See English Law; German Law.
AUTHOR,
nature of contract of, with publisher... Vol. I., 384.
AV ARIES COMMUNES. ..Vol. II., 172.
See Actio in de rem verso; General Average.
AY ANTS CAUSE. ..Vol. II., 17. 19.
BANKRUPTCY,
compensation, its effect on... Vol. II., 513.
term, debt subject to a, becomes instantly exigible... Vol. II.,
355.
non-trader cannot be bankrupt... Vol. II., 107.
BEARER,
instruments payable to. See Commercial Law.
BET,
money paid cannot be repeated... Vol. I., 31, 177.
See Gaming Contract.
BILATERAL CONTRACT,
impossibility of performance, effect of. ..Vol. II.. 316. 333.
476.
nature of... Vol. I., 83.
resolutory condition implied in. ..Vol. I., 88.
BILL OF EXCHANGE,
acceptor who pays has not in general any recourse... \ ol. II.,
430.
574 INDEX TO BOTH VOLUMES.
BILL OF EXCHANGE— continued.
accommodation... Vol. I., 50.
giving bill does not novate debt. ..Vol. II., 487.
protest for non-acceptance creates facultative obligation... Vol.
II., 379.
BOl'LE DE XEIGE,
contract of... Vol. I., 50.
BREACH OF CONTRACT,
Court not bound to grant rescission for... Vol. II., 222.
plaintiff may keep part performance and claim damages...
Vol. "II., 224.
remedies for. See Table of Contents, Vol. II., Chapter XII.
right of rescission for... Vol. II., 221 seq.
■when judgment is equivalent to performance... Vol. II., 227.
See Specific Performance; Substituted Performance.
BREACH OF PROMISE OF MARRIAGE,
damages for... Vol. II., 253.
See Marriage.
BROTHEL,
contracts for lease of. ..Vol. I.. 115, 180.
BUILDER. See Architect.
BUILDINGS,
erected on land of another... Vol. II., 166.
CAPACITY. See Table of Contents, Vol. I.. Chapter XVII.
.ivil death abolished... Vol. I., 352.
incapable person cannot keep unjust enrichment... Vol. I., 355.
contract by. ..Vol. I., 212.
of moral persons... Vol. I., 342.
CARRIER,
acceptance of ticket, effect of. ..Vol. I., 196.
bound to carry at fixed prices... Vol. I., 164.
change of order given to... Vol. II., 10.
liability for damages which might have been foreseen... Vol.
II., 258.
owes dutv to persons in vehicles Avithout tickets... Vol. II.,
266.
presumption of fault in case of theft. ..Vol. II., 304.
shipowner may exonerate himself from liability for fault of
captain and crew. ..Vol. II., 263.
war as excuse for non-performance of contract... Vol. II., 307.
See English Law; Exoneration from Liability, Stipula-
tions of; Forwarding Agent.
€AS FORTVIT. *
explained... Vol. II., 288.
See Fortuitous Event.
INDEX TO BOTH VOLUMES. 575
CAUSE,
compared with motive and object... Vol. I., 104.
See Unlawful Contracts,
continuing... Vol. I., 49.
effects of illegality of... Vol. I., 175.
failure of, in bilateral contracts... Vol. I., 48.
false, meaning of. ..Vol. I., 52.
in bilateral contracts... Vol. I., 60.
partial want of. ..Vol. I., 51.
presumption of lawful... Vol. I., 48.
simulate... Vol. I., 53.
theory of. ..Vol. I., 55.
unlawful... Vol. I., 45.
See Unlawful Contracts,
want of. ..Vol. I., 50.
€ AVE AT EMPTOR...Vo\. I., 272.
CERT AT BE DAMNO EVITANBO.. .Vol. II., 21, 114, 119.
CERTAT BE LUCRO CAPTANBO...Vo\. II., 114, 119.
CESSION BES CREANCES. See Assignment of Claims.
CHARITABLE FOUNDATIONS,
by gift subject to charge... Vol. II., 84.
effected by stipulations pour autrui... Vol. II., 56.
modification of.. .Vol. II., 3.
CHIROGRAPHIC OBLIGATIONS... Vol. I., 42.
See Creditors.
CHOSE JUGEE,
when defence of, is available to joint and several debtor... Vol.
II., 420.
CIVIL DEATH. See Capacity.
CLAQUE,
contract of... Vol. I., 122.
CLUB,
appeal from rules of. ..Vol. I., 147.
nature of contract by member. ..Vol. II., 8.
CODES, EGYPTIAN,
Arabic version of. ..Vol. I., 316.
COFERE-EORT. See Strong-box.
COMBINATIONS,
of traders, illegal... Vol. I., 171.
COMMERCIAL LAW,
bankruptcy confined to traders... Vol. II., 107.
putting in default, in... Vol. II., 207.
576 INDEX TO BOTH VOLUMES.
COMMERCIAL LAW— <xm1mued.
rule possession vaut litre applies to negotiable instruments to
bearer... Vol. II., 44.
when is joint and several liability presumed... Vol. II., 409.
See Bill of Exchange; Carrier; Concordat ; Default, putting
in: Factors and Brokers.
COMMISSION NAIRE BE TRANSPORT. See Forwarding
Agent.
COMMISSION N AIRES. See Factors and Brokers.
COMPANY. See English Law; Persons.
COMPENSATION,
assignment, signification of, when it prevents... Vol. II., 512.
barred by arrestment or bankruptcy... Vol. II., 513.
cannot be pleaded if one of debts is subject to a term in favour
of debtor... Vol. II., 504.
Court, can it declare, ex officio... Vol. II., 500.
debts must be payable in same place... Vol. II., 506.
debts subject to... Vol. II., 501 seq.
facultative, when it takes place. ..Vol. II., 515.
imputation, rules of, apply to. ..Vol. II., 511.
in case of demcnnde reconventionnelle . . . Vol. II., 500.
joint and several debtor, how far he may plead. ..Vol. II., 419.
"liquid" debt, meaning of. ..Vol. II., 505 seq.
natural debt cannot be compensated with civil debt... Vol. II..
504.
nature of... Vol. II., 499.
of debt subject to a term when debtor becomes bankrupt
or insolvent... Vol. II., 358.
plea of, may be renounced beforehand... Vol. II., 514.
plea of, may be taken on appeal... Vol. II.. 501.
specific things, no compensation between... Vol. II.. 503.
surety may plead... Vol. II., 502.
unseizable debt, no compensation with. ..Vol. II., 510.
when excluded... Vol. II.. 507.
See Deposit; English Law; Joint Obligations and Joint
and Several Obligations; Swiss Law.
COMPOUND INTEREST,
conditions under which it is allowed... Vol. II.. 248.
COMPROMISE,
clause of... Vol. I., 145.
mistake of law in. ..Vol. I., 255.
sale of land after compromise... Vol. II., 19.
strictly interpreted... Vol. I., 397.
CONSENSUAL CONTRACTS. ..Vol. I.. 101. 103.
CONCORDAT,
binds all creditors... Vol. II., 16.
INDEX TO BOTH VOLUMES. 577
CONCUBINE,
payments to, not recoverable. ..Vol. I., 180.
promise fco make compensation to... Vol. I., 115.
promise to pay, when unlawful... Vol. I., 34, 114.
CONDICTIO CAUSA DATA CAUSA NON 8ECVT A.. .Vol. II..
188.
CONDICTIO
ob tiirpem causam... Vol. I., 59.
sine causa... Vol. I., 58.
CONDITION,
definition of... Vol. II., 328.
fulfilment and failure of. ..Vol. II., 338.
fulfilment fraudulently pre vented... Vol. I., 359; Vol. II..
341.
fulfilment, if no time fixed for, can Court fix a time... Vol. II..
340.
fulfilment of, has it retroactive effect... Vol. II., 345 seq.
implied... Vol. II., 335.
in gifts and legacies when held pro non scripta...Wo\. II..
332.
in restraint of marriage. See Marriage,
is strictly interpreted... Vol. II., 339.
nature of event on which obligation must depend... Vol. II.,
329 seq.
potestative, must not be... Vol. II., 332 seq.
resolutory, express... Vol. I., 90.
resolutory, tacit... Vol. I., 88; Vol. II., 221.
suspensive and resolutive... Vol. II., 329.
See English Law; German Law; Swiss Law.
CONDITIONAL OBLIGATIONS. See Table of Contents, Vol.
II., Chapter XVII.
creditor has certain rights. ..Vol. II., 336 seq.
prescription of. ..Vol. II., 532.
risk in... Vol. II., 348.
See Condition.
CONFIRMATION. See Contract.
CONFUSION,
acceptance of succession with benefit of inventory prevents...
Vol. II., 518.
accessory .obligations, when discharged by... Vol. II., 518.
does not take place in Mohammedan law of succession... Vol.
II., 517.
in case of joint and several debtors... Vol. II., 419.
in case of joint and several debtors extinguishes share of one
co-debtor only... Vol. II., 519.
CONSENT. See Contract; Duress; Fraud; Interpretation jof
Contracts ; Mistake ; Simul ation .
w. — vol. ii. 37
578 [NDEX TO BOTH VOLUMES.
CONSERVATORY ACTS,
conditional creditor may do. ..Vol. LI., 337.
CONSIGNATION. See Tender and Payment.
CONSOLIDATION. See Confusion,
CONTRACT,
acceptance inferred from silence... Vol. I., 197.
acceptance may be tacit... Vol. I., 196.
accessory... Vol. I., 100.
agreement to put in writing-... Vol. I., 361.
aleatory... Vol. I., 28. 91.
are provisions in marriage contract onerous... Vol. II., 115.
between third parties may lie proved for collateral purpose...
Vol. II., 29.
bilateral. ..Vol. I., 83 seq. ; Vol. II., 316, 333, 476, 480.
bonce fidei... Vol. I., 83, 358.
characteristics of, and kinds of. See Table of Contents, Vol.
I., Chapter IV.
commutative... Vol. I.. 91.
completion of... Vol. I., 199.
conditional. See Conditional Obligations,
confirmation of voidable... Vol. I., 215.
consensual... Vol. I.. 101.
creditors, how affected by contract of debtor... Vol. II., 24.
damages for revoking offer... Vol. I., 188.
definition of. ..Vol. I., 81.
effects of. See Table of Contents, Vol. II., Chapter I.
effects of translatory, as between parties... Vol. II., 30.
effects of translatory, as regards third parties... Vol. II., 37.
formal. ..Vol. I., 101.
formation of. See Table of Contents, Vol. I., Chapter VII.
fraudulent prevention by debtor of fulfilment of condition...
Vol. II., 341.
gratuitous... Vol. I., 95.
heirs and successors, when bound by... Vol. II., 16 seq.
imperfectlv bilateral... Vol. I., 86.
implied... Vol. II., 146.
incapable party who rescinds, must account for benefit... Vol.
II., 166.
inexistent...Vol. I.. 209.
innominate... Vol. I., 98.
inter prcesentes or inter absentee... Vol. I., 186.
involuntary representation in... Vol. II., 15.
lapse of offer.. .Vol. I., 193.
law governing... Vol. I.. 374.
makes law between the parties... Vol. II., 2.
modification of, its effect as between parties and against third
parties... Vol. II., 5 seq.
name given to, by parties, is not conclusive... Vol. I., 369.
nominate... Vol. I.. 98.
offer and acceptance... Vol. I., 186.
offer, revocation of... Vol. I.. 188. \
offer to public. .Vol. I., 187.
INDEX TO BOTH VOLUMES. 579
OONTBACT— continued.
onerous... Vol. I., 97.
parties to, who are... Vol. II., 13.
partly executed. See Breach of Contract.
principal... Vol. I., 100.
real. ..Vol. I., 102.
relativity of... Vol. II., 12.
renewal of. ..Vol. II., 8.
revocation of acceptance... Vol. I., 204.
singular successor not affected by... Vol. II., 20.
synallagmatic... Vol. I., 83, 88; Vol. II., 316, 333, 476, 480.
telephone, contract made by. . .Vol. I., 204.
theories of declaration, expedition, and information... Vol. I.,
200.
things essential, natural and accidental in. ..Vol. I., 183.
undertaking to keep offer open ...Vol. I., 191.
unilateral... Vol. I., 83.
void and voidable... Vol. I., 207. 210.
voidable, confirmation of. its effects. ..Vol. I., 220.
tacit. ..Vol. I., 219.
See Breach of Contract; Carrier; Canal; Duress; English
Law ; Exoneration, Stipulations of ; Fraud ; German
Law; Interpretation of Contracts; Lease of Work; Loan
for Use; Mandate; Mistake; Non-performance of Con-
tract without Fault of Debtor; Nullity of Contract; Obli-
gations ; Partnership ; Paulian Action ; Proof ; Sale ;
Stipulation pour autrui ; Swiss Law; Unlawful Contracts.
CONTRACTOR. See Architect.
CONTRA NON VALENTEM AGERE NON CURRIT PRE-
SCRIPT 'IO... Vol. II., 5.35.
CONTRE-LETTRES.. .Vol. I., 391; Vol. II.. 124, 129.
effect of. ..Vol. II., 129.
CONVENTIONS... Vol. I., 14.
CORPORATION. See Person.
COPYRIGHT. See English Law.
COUNTER-LETTERS. See Contre-letires.
CREDITORS,
chirographic, privileged ami hypothecary... Vol. I., 42.
not ayants cause of debtor... Vol. II., 24.
not third parties when they sue in debtor's name. ..Vol. II.,
92.
See Concordat; Contract; Oblique Action ; Paulian
Action.
CULPA IN CONTRAHENDO... Vol. L, 189. 259, 337.
CUSTOM. See Interpretation of Contracts.
•37 (2)
580 INDEX TO BOTH VOLUMES.
CUSTOMARY CLAUSES. See Interpretation of Contracts.
CY-PRES,
doctrine of. See Phiglish Law.
DAMAGES.
compensatory and moratory... Vol. II., 250.
elements of... Vol. II., 251.
for breach of contract not. being a contract to pay a sum of
money. See Table of Contents, Vol. II., Chapter XIV.
for breach of money-debt. See Table of Contents. Vol. JL.
Chapter XIII.
for direct consequences of breach... Vol. II., 255.
for moral prejudice... Vol. II., 252.
for revocation of offer... Vol. I., 188.
for what could reasonably have been foreseen... Vol. II., 257.
"fraud" of debtor, meaning of. ..Vol. II., 256.
"liquidated." See English Law.
measure of, in alternative obligation... Vol. II., 374.
moratory. See Penal Clause, Obligations with a.
not due till debtor is in default... Vol. II., 215.
when fraud on part of debtor... Vol. II., 251, 256.
See Astreintes ; English Law; Exoneration, Stipulations
of: German Law; Non-performance of Contract with-
out Fault of Debtor; Nullity of Contract; Penal Clause r
Obligations with a; Specific Performance; Swiss Law.
DATE CERTAINE.
when deed of sale requires... Vol. II., 27.
when title must have... Vol. II., 21.
when required in lease.. .Vol. II., 23.
DAT10N EN PAIEMENT.. .Vol. II.. 452. 483.
DEATH,
extinguishes certain obligations... Vol. II.. 556, 557.
DEBTOR.
exercise of his rights by his creditor.-. See Table of Contents,
Vol. II., Chapter IV.
fraudulent agreement with... Vol. I., 112.
See Oath: Oblique Action: Paulian Action.
DECEIT.
action of. See English Law.
DECLARATION OF WILL... Vol. I.. 16.
DXCONFITURE. See Insolvency.
DEFAULT.
conventional, penalty not due until debtor is in.. .Vol. II., 391.
effect of default of joint and several debtor... Vol. II., 416.
INDEX TO BOTH VOLUMES. 581
DEFAULT, PUTTING IN. See Table of Contents, Vol. LL,
Chapter XI.
causes risk to lie on debtor... Vol. II., 216.
fixes time from which damages are due. ..Vol. II., 216.
in. commercial matters, usage as to. ..Vol. II., 209.
modes of. ..Vol. II., 208.
when dispensed with... Vol. II., 210 seq.
See Damages; English Law; German Law; Swiss Law.
DECLARATION,
theory of. See Contract.
DELAl BE GRACE... Vol. 1., 364; Vol. II., 452.
when clause of penalty... Vol. II., 392.
DELEGATION... Vol. II., 484, 492.
distinguished from novation... Vol. II., 49.3.
indication of person to pay or take payment is not. ..Vol. II.,
495.
perfect and imperfect. ..Vol. II., 494.
DELIVERY,
of determinate thing can be specifically enforced... Vol. II.,
232.
See Sal<\
DEMANDE RECONVENTIONNELLE. See Compensation.
DEMOLITION OF WORK,
can creditor insist on... Vol. II., 229.
DEFENSES UTILES. See Payment not due.
DEPOSIT,
a real contract. ..Vol. I., 103.
deposit with a bank is a kind of loan... Vol. I., 183.
depositary cannot plead compensation... Vol. II., 508, 509.
essentials of contract. ..Vol. I., 183.
in strong-box. See Lease.
term, when it is in favour of debtor... Vol. II., 353.
DEPOSITARY,
presumption of fault in case of theft from paid depositary...
Vol. II., 304.
DESSAISINE-SAISINE,
clause of. See Sale.
DESTRUCTION OF THING PROMISED. See Alternative
Obligation.
DIRECT ACTION. See Paulian Action.
DISSOLUTION OF OBLIGATION,
impossibiUty of performance... Vol. II., 476.
theory of risk... Vol. II., 477, 480.
unjust enrichment must be returned... Vol. II., 479.
582 INDKX TO BOTH VOLUMES.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS. See Table
of Contents, Vol. II., Chapter XXIII.
co-heir sued to pay indivisible obligation may call in other
co -heirs... Vol. II., 439 seq.
comparison between indivisibility and joint and several
liability... Vol. II., 442.
effect of breach of indivisible obligation with clause of penalty
when committed by one of co-debtors... Vol. II., 441.
obligations indivisible by nature... Vol. II., 432.
obligation to produce a completed work is often indivisible...
Vol. II., 434.
obligations which are indivisible as regards performance by
debtor only... Vol. II., 435.
See English Law.
DIVORCE,
law of, cannot be varied by contract. ..Vol. I., 152.
DOL,
man cannot stipulate immunity for. ..Vol. II., 261.
See Fraud.
DOMMAGES-INTERETS. See Damages.
DONATIO SUB MODO.. .Vol. II.. 54.
DONATION. See Gift.
DOWRY,
is obligation to provide, gratuitous or onerous. ..Vol. I.. 97;.
Vol. II., 115.
is obligation to provide, a natural obligation. ..Vol. I., 33.
DROITS. See Rights.
DROIT AU SECRET... Vol. I., 388.
DROIT DE SUITE... Vol. I., 9.
DROIT PROPRE,
theory of. See Stipulation pour autrui.
DURESS. See Table of Contents, Vol. I., Chapter XII.
extortionate claim for salvage... Vol. I., 301.
threat to cut off gas or water... Vol. I., p. 295.
EFFET DE COMPLAISANCE. See Bill of Exchange.
ENEMY,
alien, who is... Vol. I., 125.
trading with... Vol. I., 123.
See English Law; Moral Person; War.
ENGAGEMENTS... Vol. II.. 142.
INDEX TO BOTH VOLUMES. 583
ENGINEERS,
prescription of sums due to... Vol. II., 536, 538.
ENGLISH LAW,
actio de in rem verso, analogies with... Vol. II., 197.
acts ultra vires... Vol. I., 351.
alimony supplied by person not liable for it... Vol. II., 199.
alleged agent who had no authority... Vol. II., 52.
arbitration, clause of... Vol. I., 147.
carrier, can passenger by railway travel at own risk. ..Vol. II.,
283.
carrier of passengers is not an insurer. ..Vol. II., 272.
carriers liability to passenger without a ticket. ..Vol. II., 267.
compensation of debts not automatic... Vol. II., 515.
condition, fulfilment of, prevented by debtor.. .Vol. II.. 344.
conditions in restraint of marriage... Vol. I., 161.
contract, affects parties only... Vol. II., 89.
breach of, when concurring with tort. ..Vol. II., 266.
bj r insolvent debtor, giving preference... Vol. I., 113.
completion of... Vol. I.. 203.
'■consideration'' in... Vol. I., 63.
contained in several writings... Vol. I., 391.
effect of impossibility of performance... Vol. II.,
320 seq.
estoppel in. ..Vol. I., 270. 274, 276, 284.
ma}' be an implied term of, that some specific person
or thing shall continue to exist. ..Vol. II., 320.
measure of damages for breach of. ..Vol. II., 255,
2-VJ.
not to prosecute... Vol. I.. 137.
requires good faith... Vol. I.. 359.
rescission of, for fraud... Vol. I., 329.
to resign official post.. .Vol. I., 134.
To surrender parental rights... Vol. I., 155.
unlawful motive in... Vol. I., 62.
contracts, indivisibility in... Vol. II., 431.
in restraint of wills... Vol. I., 163.
uberrima fidei...\~o\. I., 330.
voidable, confirmation of... Vol. I., 224.
void, voidable, and unenforce able... Vol. I., 214.
copyright in letter... Vol. I., 388.
cop3 T rig"ht of photograph... Vol. I., 381.
covenant by vendor of business not to compete, available
for sub-purchaser... Vol. II., 23.
culpa in contrahendo, not recognised in... Vol. I.. 340.
cy-pres, dootrine of. ..Vol. II., 3.
damage wrongously caused, must it always be made
good... Vol. I., 336.
damages limited to pecuniary loss. ..Vol. II., 55.
"liquidated," cannot be varied by Court.. .Vol. II.,
401.
deceit, action of... Vol. I.. 322.
default, not necessary to put debtor in... Vol. II., 218.
384 INDEX TO BOTH VOLUMES.
ENGLISH LAW— continued.
duress in... Vol. I., 305.
enemy, trading- with... Vol. I., 124.
equitable power to rectify instruments... Vol. I., 275.
equity, fusion of Courts of, with Courts of common law...
Vol. I., 321.
fraud and misrepresentation. See Table of Contents, Vol. I.,
Chapter XIV.
fraud in Courts of equity... Vol. I., 352.
funeral expenses, payment of, by person not liable... Vol. II.,
199.
gaming- contracts... Vol. I., 31.
general average, in. ..Vol. II., 173, 197.
gestion d'affaires, not a rule of... Vol. II., 197.
imputation of payments in... Vol. II., 470.
indivisible obligation to produce complete work... Vol. II.,
435.
innkeeper, liability for goods of guest. ..Vol. II., 327.
insurance for wife and children... Vol. II., 86.
interest on money debt. ..Vol. II., 249.
lease of house for prostitution... Vol. I., 116.
lecture, right to restrain publication of... Vol. I., 389.
marriage brokage contracts... Vol. I., 120.
marriage, conditions in restraint of. ..Vol. I.. 161.
marriage, promise of, made by married man... Vol. I., 116.
marriage, separation deed between spouses... Vol. I., 153.
misrepresentation. See Fraud and Misrepresentation,
mistake. See Table of Contents, Vol. I.. Chapter IX.
mistake in telegram... Vol. I., 265.
mistake of one party to contract... Vol. I., 237.
Moneylenders Acts... Vol. I., 363.
natural obligation not known to... Vol. I., 39.
offer to contract, revocation of. ..Vol. I., 191.
tacit acceptance of... Vol. I., 197.
lapse of. ..Vol. I., 194.
officials, contract to bribe. ..Vol. I., 133.
passenger may agree to travel at own risk... Vol. II., 273.
penalty stipulated may be reduced... Vol. II., 401.
possessor of immoveable, money spent by... Vol. I., 39.
prescribed debt, payment of. ..Vol. I., 39.
prospectus, false statement in. ..Vol. I., 327.
quasi-contracts in. ..Vol. II., 197.
railway companies, can only impose reasonable conditions...
Vol. II., 283.
sale and lease combined... Vol. II., 36.
sale of business... Vol. II., 23.
sale, risk in. ..Vol. II., 477.
salvage... Vol. II., 162, 198.
set-off, plea of... Vol. II., 515.
shipowner may exonerate himself from liability for captain
...Vol. II., 283.
specific performance, how en forced... Vol. II., 243.
stipulation pour autrui not part of. ..Vol. II., 89.
stipulations of oxonnration by employer... Vol. II., 282.
INDEX TO BOTH VOLUMES. 085
ENGLISH LAW— -continued.
third party who pays debt lias in general no recourse... Vol.
II., 197 seq., 447.
trade, agreements in restraint of. ..Vol. I., 170.
traders, combinations of, illegal... Vol. I., 174.
trading with enemy. ..Vol. I., 125, 131.
trust compared with stipulation pour autrui... Vol. II., 90.
undue influence... Vol. I., 305, 3'66.
waiver of tort in... Vol. II., 200.
war as excuse for non-performance of contract... Vol. II., 320,
321, 322, 324.
Workmen's Compensation Acts, contracting out of, prohibited
...Vol. II., 282.
EPIDEMIC. See Sickness.
EQUITY. See English Law.
ERROR. See Mistake; Payment not Due.
ESTOPPEL. See English Law.
EVICTION,
what amounts to, as point of departure of prescription of
action in warranty... Vol. II., 533.
EVIDENCE. See Proof.
EXCEPT10 iVOA' ADIMPLETl CONTRACTUS... Vol. I., 88;
Vol. II., 4, 222.
See German Law.
EXECUTION. See interpretation of Contracts; Performance.
EXONERATION FROM LIABILITY, STIPULATIONS OF.
See Table of Contents, Vol. II., Chapter XV.
ayence de renseignements... Vol. II., 282.
carrier, French jurisprudence as to... Vol. II., 268.
forwarding agent... Vol. II., 263.
gross negligence of self or prepose... Vol. II., 261, 263.
negligence, may one stipulate immunity for, or that of pre-
pose... Vol. II., 264.
post-office, can it make as to letters... Vol. II., 276.
quasi-delict, may one stipulate immunity for. ..Vol. II., 267.
shipowner... Vol. II., 275.
telegraph company, can it avail itself of... Vol. II., 277, 278.
workman, can he contract out of right to claim damages for
industrial accident... Vol. II., 279.
See American Law: English Law; German Law; Swiss
Law.
EXPEDITION,
theory of. See Contract.
EXPENSES. See Actio de in rem verso; Payment not Due.
686 INDEX TO BOTH VOLUMES.
EXPRESSIO UNWS EST EXCLUSIO ALT ERIUS... Vol I.,
399 .
EXPROMISSION. ..Vol. LJ., 484.
EXTINCTION OF OBLIGATIONS. See Obligations Extinc-
tion of.
FACTORS AND BROKERS. ..Vol. II., 14.
FACULTATIVE OBLIGATION. See Table of Contents, Vol.
II., Chapter XX.
its .effects... Vol. II., 379. .
obligation with penal clause is not. ..Vol. II., 385.
FAILLITE. See Bankruptcy.
FAIT DV PRINCE. ..Vol. II., 306.
FAIT PERSONNEL. See Astreintes ; Specific Performance.
FAULT. See Breach of Contract; Damages; Faute Contractu-
elle ; Fortuitous Event ; Non -performance, of Contract
without Fault of Debtor.
FAUTE CONTRACTU ELLE\
distinction between, and faute del ietaelle... Vol. II., p. 265.
in law of carriage of passenger... Vol. II., 272.
See English Law.
FAUTE LOURDE. See Gross Negligence.
FAUTE BE SERVICE... Vol. II., 277.
FIRE. See Fortuitous Event; Lease of House.
FORCE MAJEURE,
explained... Vol. II., 288.
FORTUITOUS EVENT,
compared with "act of God "...Vol. II., 326.
effects of proof of... Vol. II., 316.
event not fortuitous if brought about by act of debtor... Vol.
II., 294.
fire is not necessarily fortuitous... Vol. II., 299.
force majeure, must it be distinguished from... Vol. II., 291.
German law as to... Vol. II., 289.
onus of proof of... Vol. II., 315.
See Theft; Fire.
Quebec law a-- to. ..Vol. II., 289.
strike not always a. ..Vol. II., 314.
sudden illness is not, when obligation is to pay money...
Vol. II., 295, 303.
Swiss law as to. ..Vol. II., 289.
INDEX TO BOTH VOLUMES. 587
FORTUITOUS EVENT— continued.
war is not necessarily... Vol. II., 307.
what is... Vol. II., 288.
when does war amount to... Vol. II., 308 seq.
See German Law; Quebec Law; Swiss Law.
FORWARDING AGENT,
may stipulate his non-liability for acts of carriers. ..Vol. II.,
263.
FRAUD. See Table of Contents, Vol. I., Chapters XIII., XIV
meaning of term in breach of contract... Vol. II., 256.
vendor's praise of wares is not... Vol. I., 310.
See English Law.
FREEDOM OF CONTRACT,
law favours... Vol. I., 105, 362.
FREEDOM OF TRADE. See Trade.
FUNERAL EXPENSES,
claim for repayment of, in English law... Vol. II., 199.
See G est ion d'affaires.
FUNGIBLES. See Sale.
FUTURE CROPS,
sale of... Vol. I., 69.
GAMING CONTRACT,
does it create natural obligations... Vol. I., 28.
in English law. ..Vol. I., 31.
right to repetition of payments under. ..Vol. I., 31, 177.
See Aleatory Contract.
GENEALOGIST. See Actio de in rem verso.
GENERAL AVERAGE,
is principle of, confined to maritime law... Vol. II., 173.
See Actio de in rem verso ; English Law.
GENUS NUNQUAM PERIT... Vol. II., 47<;.
GERMAN LAW,
actio de in rem verso in... Vol. II., 185.
alternative obligation, effect of refusal to make choice in...
Vol. II., 365.
alternative obligation, retroactive effect of choice in... Vol. 11..
369.
associations in... Vol. II., 313.
astredntes in... Vol. II., 243.
carrier, liability of. ..Vol. II., 319.
compensation of debts, not automatic... Vol. II., 51-5.
condition, fraudulent prevention of fulfilment of... Vol. II.,
343.
588 INDEX TO BOTH VOLUMES.
GERMAN LAW— continued.
contract, completion of... Vol. I., '203.
in restraint of will... Vol. I., 163.
payments under, unlawful... Vol. I., 176.
power to vary exorbitant... Vol. I., 365.
to procure marriage... Vol. I., 121.
damages for breach of pecuniary obligation, may be special
...Vol. II., 246.
damages for nullity of contract... Vol. I., 341.
damages, measure of... Vol. II., 246, 259.
default, putting in. ..Vol. II., 217.
duress in. ..Vol. I., 304.
ejixeptk) lion adimpleti contractus... Vol. II., 222.
fortuitous event... Vol. II., 289, 319.
hotel-keeper's liability for goods of guest. ..Vol. II., 305.
imputation of payments... Vol. II., 470.
interpretation of contracts... Vol. I., 358.
mistake. See Table of Contents, Vol. I., Chapter XI.
mistake in marriage... Vol. I., 245.
mistake in telegram... Vol. I., 283.
offer, binding effect of... Vol. I., 192.
offer, lapse of. ..Vol. I., 196.
payment of debt by third party... Vol. II., 446.
penalty, Court may modify conventional... Vol. II., 401.
quasi-contract, does not use term... Vol. II., 145.
stipulation of non-liability... Vol. II., 284.
stipulation pour autrui... Vol. II., 68, 72, 89.
GESTI0:\ D'AFFAIRES. See Table of Contents, Vol. II.,
Chapter VII.
aliment, furnished by party not liable... Vol. II., 159.
capacity, person benefited does not need. ..Vol. II., 157.
conditions of... Vol. II., 150 sea.
gercvnt, limits of claim by. ..Vol. II,, 155.
yerant, must have capacity... Vol. II., 158.
mandate, analogy with. ..Vol. II., 149.
no claim for, if mone}' was paid ammo do nan di... .Vol. II.,
159.
payment of funeral expenses for which defendant was bound
...Vol. II., 160.
payment of debt of another... Vol. II., 446.
ship in peril, assistance to... Vol. II., 160.
term not used in Egyptian Code... Vol. II., 140.
See Actio de In rem verso.
GIFT,
capacity to take... Vol. II., 84.
concealed simulation in. ..Vol. I.. 54.
informal... Vol. I., 27.
i^ informal gift an inexistent act... Vol. I., 209.
possible liability in damages of giver... Vol. I., 87.
GOOD FAITH,
contracts require.. .Vol. I., 358, 379.
See Transcription.
INDEX TO BOTH VOLUMES. 589
GRATUITOUS CONTRACTS.
distinguished from onerous... Vol. I.. 95.
See Paulian Action.
GROSS NEGLIGENCE,
man cannot stipulate immunity for his own... Vol. IT., 261.
or for gross negligence of prepose... Vol. II.. 20:',.
See English Law.
HARTER ACT. See American Law.
HEIRS,
right to make choice in alternative obligation passes to...
Vol. II., 366.
their liability for an indivisible debt of ancestor... Vol. II..
438.
See Confusion.
HEIRS AND SUCCESSORS. See Contract.
HOTEL-KEEPERS,
presumption of fault in case of theft. ..Vol. II.. 304.
See English Law: German Law; Swiss Law.
HOUSEKEEPER,
claim for payment without contract... Vol. I., 34.
HYPNOTIC SUGGESTION. ..Vol. I.. 291.
HYPOTHEC.
creditors who have inscribed hypothec protected by Mixed
Code. ..Vol. II., 117.
destruction of immoveable hypothecated creates facultative
obligation... Vol. II., 379.
in voidable contract, confirmation of... Vol. I., 223.
judgment cannot avail as conventional hypothec... Vol. IT.,
228.
purchaser of immoveable who (discharges hypothec enjoys sub-
rogation... Vol. II., 461.
HYPOTHECARY OBLIGATIONS... Vol. I.. 42.
IGNORANTIA JURIS NEMINEM EXCUSAT...Vo\. I., 253.
IMPOSSIBILITY OF PERFORMANCE. See Dissolution of
Obligation.
IMPROBATION. See Inscription en faux.
IMPUTATION OF PAYMENTS,
as applied in case of compensation... Vol. II., 511.
rules of... Vol. II., 466 seq.
when debtor ;t taken by surprise "...Vol. II., 468.
which debt is most onerous... Vol. II., p. 469.
See English Law; German Law; Swiss Law.
£,<)() INDEX TO BOTH VOLUMES.
INCAPABLE PERSON. See Capacity; Actio de in rem verso.
INCAPACITY. See Capacity.
INDIRECT ACTION. See Oblique Action.
INDIVISIBLE OBLIGATIONS. See Divisible and Indivisible
Obligations.
INFORMATION,
theory of. See Contract.
INNKEEPER. See Hotel-keeper.
INNOMINATE CONTRACTS... Vol. I., 97.
examples of... Vol. I., 99.
IN PARI CAUSA POSSESSOR POTIOR HABERI DEBET
...Vol. II., 115.
IN REM VERSUM... Vol. I., 355.
IN RE OBSCURA MELIUS EST FAVERE REPETITION!
QUAM ADVENTITIO LUCRO... Vol. II., 193.
INSCRIPTION EN FAUX..No\. II., 126.
INSOLVENCY,
effect of insolvency of one of co-debtors after release of the
debt.. .Vol. II., 424 seq.
of non-trader makes debt with a term instantly exigible...
Vol. II., 356.
protection of rights of conditional creditor... Vol. II., 337.
INSURANCE,
insurance money, when it forms part of succession... Vol. II.,
64, 71, 75 seq.
is policy interpreted against insurer... Vol. I., 396.
life-insurance for benefit of third party is stipulation pour
autrui. . . Vol. II., 63.
modification of clause that premiums shall be portables...
Vol. II., 5.
of ship lost or not lost... Vol. I., 93.
See Aleatory Contracts,
subrogation in... Vol. II., 460.
waiver of right to claim without mise en demeure...Vol. II.,
214.
See Stipulation pour autrui.
INTEREST.
necessary for action... Vol. I., 80.
See Compound Interest; Damage^; Moratory Interest;
Usurv.
INDEX TO BOTH VOLUMES. 091
INTERPRETATION OF CONTRACTS. See Table of Con-
tents, Vol. I., Chapter XVIII.
clause may be read out of contract... Vol. I., 391.
contracts require good faith... Vol. I., 358.
customary clauses implied... Vol. I., 377.
execution best guide to... Vol. I., 371.
is question of fact. ..Vol. II., 4.
usage as guide to... Vol. I., 374.
JHERING,
theory of culpa in contrahendo. . . .Vol. I., 189.
JOINT OBLIGATION AND JOINT AND SEVERAL OBLI-
GATION. See Table of Contents, Vol. II., Chapter XXII.
acknowledgment of debt by joint and several debtor...
Vol. II., 41G.
characteristics of joint and several liability... Vol. II., 408.
compensation, failure of co-debtor to plead... Vol. II., 511.
when pleaded in action by joint-creditor...
Vol. II., 405.
conventional joint and several liability... Vol. II., 413.
creditor can sue joint and several debtor for whole debt...
Vol. II., 414.
debtor sued by co-creditor can set up compensation only to
amount of plaintiff's share... Vol. II., 405 .
default of co-debtor, its effects... Vol. II., 416.
defences or " exceptions " available to joint and several debtor
...Vol. II., 417 seq.
interruption of prescription as against one of joint and several
debtors... Vol. II., 416.
interruption of prescription as to one creditor benefits them
all, but otherwise as to suspension... Vol. II., 406.
joint and several debtor may call in other debtors in warranty
...Vol. II., 414.
joint and several debtor who pays debt has generally a right
of recourse... Vol. II., 429.
joint and several liability by law... Vol. II., 410.
joint and several liability compared with liability in indivi-
sible obligation... Vol. II., 442.
liability for costs of action not' necessarily joint and several
...Vol. II., 412.
novation, effect of. ..Vol. II., 491.
" personal exceptions "...Vol. II., 417, 418.
release of the debt... Vol. II., 428.
release from solidarity... Vol. II., 424.
renunciation of prescription by one of joint and several
debtors does not prejudice others... Vol. II., 550.
share of liability extinguished by confusion... Vol. II., 519.
JUDGMENT,
when it is equivalent to performance... Vol. II., 227.
JURE NATURE .EQUUM EST NEMINEM CUM
ALTERIVS DETRIMENTO ET INIURIA FIERI
LOCUPLETIOFEM . . .Vol. II., 163.
592 INDEX TO BOTH VOLUMES.
JURISDICTION,
od.nfcracts( to give... Vol. I., 139.
contracts to oust... Vol. I., 142.
See Prorogation of Jurisdiction.
JUS OFF ERENDI... .Vol. II., 461.
LATENT DEFECTS. See Sale.
LAW. OBLIGATIONS RESULTING FROM THE LAW
SOLELY. See Table of Contents. Vol. II., Chapter X.
LAWYERS. See Advocates; Pactum de quota litis.
LEASE,
and sale combined... Vol. II., 36.
assignment of, contrasted with sub-lease... Vol. II.. 55.
cannot be for life. ..Vol. I., 165.
claim against occupier who has no. ..Vol. II., 169.
destruction of thing let by fortuitous event... Vol. II., 317.
grant, of rights to extract products from soil is not lease...
° Vol. I., 370.
lessee must make use contemplated... Vol. I., 378.
lessor's obligation continuous... Vol. I., 49.
of house, repairs by lessee... Vol. I., 185.
of strong-box... Vol. I., 184.
of thing, not perpetual... Vol. I., 7.
purchaser, when bound by. ..Vol. II., 23.
tenant's repairs... Vol. I., 373.
war as fortuitous event excusing perfo nuance of. ..Vol. II.,
308, 309, 310, 311, 312.
LEASE OF HOUSE,
presumption in France that fire is by fault of lessee... Vol. II.,
300.
presumption, no such in Egypt. ..Vol. II., 301.
LEASE OF WORK,
terminates by death of workman... Vol. II., 19.
war as excuse for non-performance... Vol. II., 308, 312.
when contract may be cancelled... Vol. II., 10.
LECTURER,
right to restrain publication of lecture... Vol. I., 389.
See English Law.
LEGITIMACY,
contract to abandon claim as to... Vol. I., 156.
LESION,
enorme lesion not ground of challenge... Vol. I., 94.
minor's action for supplement of price... Vol. I., 94.
See Minors.
INDEX TO BOTH VOLUMES. 59o
LETTEK,
contract formed by... Vol. I., 186 seq.
rights in... Vol. I., 385, 386, 387.
See English Law; Exoneration from Liability; Stipula-
tions of; Mistake.
LIQUID OBLIGATIONS... Vol. I., 44.
LIQUIDATED DAMAGES. See English Law.
LOAN,
when is term in favour of debtor. ..Vol. II., 353.
LOAN FOE USE,
a real contract... Vol. I., 103.
borrower who has made improper use is liable for loss without
being put in default... Vol. II., 213.
liability of lender... Vol. I., 86.
right of retention... Vol. I., 90.
lender can claim thing for urgent need... Vol. II., 11.
LOCATION -VENTE. See Lease.
LOI RABIER... Vol. II., 269.
LOTTERIES,
contract of partnership in... Vol. I., 111.
LUNATICS,
contracts by... Vol. I., 25, 348.
•MANDATE,
gratuitous mandatary's liability for gross fault... Vol. I., 96
implied, of joint and several deb tors... Vol. II., 415, 421.
is it confined to juridical acts... Vol. II., 162.
is often implied... Vol. II., 146.
its relation with gestion d'affaires... Vol. II., 149.
mandatary who employs sums for his own profit is liable
without being put in default... Vol. II., 213.
may be revoked or renounced... Vol. II., 10.
power to vary remuneration... Vol. I., 364-.
right to renounce... Vol. I., 7.
tacit mandate of wife in French law... Vol. II., 169.
telegraph company as mandatary... Vol. I., 261.
terminates by death of either party... Vol. II., 557.
when is mandatary bound personally... Vol. II., 13.
MARITIME LAW. See Carrier; English Law; Exoneration;
Stipulations of; General Average; Gestion d'affaires;
Salvage.
MARRIAGE,
conditions in restraint of... Vol. I., 157.
second marriage . . . Vol . I . , 160.
contract cannot alter law of... Vol. I., 151; Vol. II., 9.
w. — vol. ii. 38
594 INDEX TO BOTH VOLUMES.
MARRI AG E — continued.
contract restricting... Vol. I., 157.
contract to procure... Vol. I., 117.
mistake as to person in... Vol. I., 241.
See English Law; German Law.
MARRIED WOMAN,
loan to, without husband's authorisation, in French law... Vol.
II., 163.
See Mandate.
MEDICAL MAN,
contract with, for life... Vol. I., 166.
See Physician.
MINORS,
contracts by... Vol. I., 25, 347 seq.
proof of lesion not necessary in Mohammedan law... Vol. I.,
353.
renunciation of prescription by... Vol. II., 548.
when they can confirm contract... Vol. I., 218.
See Capacity; Mohammedan Law.
MISE EN DEMEVBE. See Default, Putting in.
MISREPRESENTATION. See English Law.
MISTAKE. See Table of Contents, Vol. I., Chapters IX., X.,
XI.
as ground of nullity of contract... Vol. I., 228.
as to substance... Vol. I., 230.
is it cause of nullity in unilateral contract... Vol. I., 235.
of one party only... Vol. I., 236.
See English Law; German Law: Swiss Law.
MODALITIES,
of obligations... Vol. I., 40.
MODIFICATION OF CONTRACT BY PARTIES... Vol. II., 7.
MOHAMMEDAN LAW.
alimentary provisions... Vol. II., 203.
minors, acts of... Vol. I., 353.
no confusion between estate of heir and estate of ancestor...
Vol. II.. 520.
renunciation of prescription by minor. ..Vol. II., 548.
suspends prescription when good excuse for inaction... Vol.
II., 556.
u-alxfs and successions, special period of prescription as to...
Vol. II., 523.
MONEY DEBT. See Table of Contents. Vol. II., Chapter XIII.
MONEYLENDERS ACTS. See English Law.
INDEX TO BOTH VOLUMES. 59.5
MORAL PERSON,
can it be alion enemy... Vol. I., 127.
exists for certain purposes only... Vol. II., 166.
See Capacity; Persons.
MORAL PERSONALITY,
criticism of theory... Vol. I., 349.
MORATORY INTEREST,
prescribes in five years... Vol. II., 525.
MORTGAGE. See Hypothec.
MUNICIPAL COMMISSIONS,
are they persons... Vol. I.. 344.
^NATURAL OBLIGATIONS IN EGYPTIAN LAW... Vol. I.,
21 seq. •
See Table of Contents, Vol. I.. Chapter I.
no repetition of payment under... Vol. I., 177.
See Accessory Contract; Dowry; Gaming Contract; Nova-
tion; Payment not Due; Suretyship.
NECESSARIES. ..Vol. II., 199.
See Aliment.
NEGATIVE INTEREST.. .Vol. I., 339.
theory of... Vol. I., 286.
NEGLIGENCE.
stipulations excluding liability for. ..Vol. II., 264.
See Gross Negligence.
NEGOTIORUM GESTIO. See Ge.slhu d'affaires.
NEMO AUDITUR TURPITUDINEM SUAM ALLEGANS...
Vol. I., 177.
NEMO PLUS JURIS TRANSFERRE POTEST QUAM IPSE
HABERET...\o\. II., 20.
NEMO POTEST PEMCISE COGl AD FACTUM. ..Vol. II.,
230.
NOTARY,
improbation of deed by... Vol. II.. 126.
NOVATION. See Table of Contents, Vol. II., Chapter XXIV.
distinguished from assignment of claim. ..Vol. II., 495.
its effect on joint and several debt... Vol. II., 491.
its nature... Vol. II., 482.
not necessarily involved in delegation... Vol. II., 493.
of natural obligation... Vol. I., 35.
proof of... Vol. II., 486.
38 (2)
596 INDEX TO BOTH VOLUMES.
NOVATION— continued.
transfer of securities... Vol. II., 489.
when is official instrument necessary to affect third parties...
Vol. II., 491.
See Delegation; Expromission.
NON-LIABILITY, CLAUSES OF. See Exoneration, Stipu-
lations of.
NON-PERFORMANCE OF CONTRACT WITHOUT FAULT
OF DEBTOR. See Table of Contents, Vol. II., Chapter
XVI.
debtor who foresees impossibility must do his best. ..Vol. II.,
296.
See Fortuitous Event.
NUL NE DOIT S'ENBICHIB INJUSTEMENT AVX DEPENS
D'AUTBUI... Vol. II., 140. 142, 163.
NULLITY. See Contract,
NULLITY OF CONTRACT, DAMAGES FOR. See Table of
Contents, Vol. I., Chapter XV.
effect of annulling- contract for mistake... Vol. I.. 259.
OATH,
of debtor who invokes short prescription... Vol. II., 528.
OBJECTS OF OBLIGATIONS,
character of. ..Vol. I., 17.
determination of, in contracts other than sale. ..Vol. I., 77.
distinguished from object of contracts... Vol. I., 64.
future succession... Vol. I., 71.
future things. ..Vol. I., 68.
lawfulness of. ..Vol. I., 79, 104.
must be an act... Vol. I., 65.
object of commerce... Vol. I.. 72.
of aleatory contracts... Vol. I., 93.
possibility of... Vol. I., 78.
qualities of... Vol. I., 66.
OBLIGATION DE BONNER.. .Vol. I., 17: Vol. II., 30.
OBLIGATIONS,
arising- without agreement, ..Vol. I., 14; Vol. II.. 140 seq.
See Quasi-contract,
cause of... Vol. I., 48.
See Cause,
civil and natural... Vol. I., 20 seq.
See Natural Obligations,
conditional. See Conditional Obligations,
conjunctive and alternative... Vol. II., 361.
effects of. distinguished from effects of contracts... Vol. II., 1.
INDEX TO BOTH VOLUMES. 597
OBLIGATIONS— continued.
extinction of. See Table of Contents, Vol. II., Chapter XXIV.
See Compensation ; Confusion ; Dissolution ; Novation ;
Payment; Performance; Prescription; Release.
how created... Vol. I., 13 seq.
in which there are several objects and .several subjects. See
Table of Contents, Vol. II., Chapter XIX.
objects of. See Objects of Obligations,
obligation defined... Vol. I., 1.
obligation not to do... Vol. I., 18.
obligation to do... Vol. I., 18.
See Specific Performance,
obligation to give... Vol. I., 17, 67.
obligation to transfer... Vol. I., 17. 67.
See Contract,
of conscience... Vol. I., 20.
are not legal obligations... Vol. I., 21.
See Natural Obligations,
resulting from the law solely. See Table of Contents, Vol.
II., Chapter X.
simple and composite... Vol. II., 361.
simple and multiple... Vol. II., 362.
sources and classes of. See Table of Contents, Vol. I.,
Chapter I.
See Alternative Obligations; Conditional Obligations ;
Contract ; Divisible and Indivisible Obligations ;
Facultative Obligations; Joint Obligations and Joint
and Several Obligations; Natural Obligations; Penal
Clause, Obligations with a; Personal Eights; Term,
Obligations with a; Unlawful Contracts.
OBLIGATIONS SOLIDAIRES. See Joint Obligations and
Joint and Several Obligations.
OBLIQUE ACTION. See Table of Contents, Vol. II., Chapter
IV.
creditors can bring without judgment against debtor... Vol.
II., 96.
creditors can plead prescription in favour of their debtor...
Vol. II., 549.
creditors cannot bring action which is purely personal... Vol.
II., 100 seq.
creditors do not need to be subrogated... Vol. II., 96.
creditors do not need to have anterior claims... Vol. II., 98.
must be to increase assets of debtor... Vol. II., 97.
not essential that debtor shall be mis en cause. ..Vol. II., 96.
See Debtor.
OFFER. See Contract.
OFFICIALS,
bribes of, whether recover able... Vol. I.. 180.
contracts to bribe. ..Vol. I., 133.
contracts to resign post... Vol. I., 133.
OFFTtES REELLES. See Tender and Payment.
598 JNDEX TO BOTH VOLUMK8.
PACTS,
in Roman law... Vol. I., 58.
PACTUM DE QUOTA LITIS... Vol. I., 134.
PAINTER,
cannot be compelled to complete picture... Vol. II., 231.
nature of contract for picture... Vol. I., 380, 381.
See Astreintes; English Law; Picture.
PARTNERSHIP,
contract by partner in own name... Vol. II., 165.
dissolved by death of partner... Vol. II., 557.
lender to partner is not necessarily partner... Vol. I., 370.
may be renounced... Vol. II., 10.
no compensation between debt due to, and debt due by-
partner... Vol. II., 502.
publication of, when necessary... Vol. II., 28.
right to retire from... Vol. I., 7.
secret, claim against partner's who have received benefit...
Vol. II., 174.
when partner is liable to pay damages in excess of interest
for delay in contribution... Vol. II., 247.
when partner liable jointly and severally... Vol. II., 411.
See Persons.
PATERNAL AUTHORITY,
contract to infringe... Vol. I., 153.
is legal administration essential part of... Vol. I., 155.
PAULIAN ACTION. See Table of Contents, Vol. II.,
Chapter V.
challenge of premium on insurance... Vol. II., 87.
conditions required for... Vol. II., 107.
creditors may challenge debtor's renunciation of a prescrip-
tion if in fraud... Vol. II., 549.
distinction between onerous and gratuitous acte... Vol. II., 114.
does it affect sub-purchaser... Vol. II., 116.
fraud presumed in gratuitous alienation by insolvent... Vol.
II., 108.
is it action of nullity... Vol. II., 117, 121.
preferential payment is not " fraud "...Vol. II., 110.
prescription of... Vol. II., 123.
rules of, differ from those of action to find deed simulate...
Vol. II., 137.
subsequent creditors cannot bring 1 . ..Vol. II., 112.
what is fraud on creditors in onerous contract... Vol. II., 113.
who takes benefit of... Vol. II., 120.
PAYMENT. See Table of Contents, Vol. II., Chapter XXIV.
cannot prejudice a seizure. ..Vol. II., 451.
if without reserve is renunciation of prescription... Vol. II. ,
545.
INDEX TO MOTH VOLUMES. 599
P A Y M ENT— torttmusd .
meaning- of, in Egyptian codes... Vol. II., 444.
proof of. ..Vol. II., 454.
to incapable person. ..Vol. II., In6, 449.
See Ballon en paiement ; English Law; German Law;
Imputation of Payments; Performance; Tender and
Payment.
PAYMENT NOT DUE,
claim of receiver for necessary and beneficial expenses... Vol.
II., 196.
payment of natural obligation by debtor who thinks he is
bound civilly... Vol. II., 194.
quasi-contract arising- from. See Table of Content's, Vol. II.,
Chapter IX.
receiver in good faith can keep fruits... Vol. II., 19.3.
when error was cause of payment... Vol. II., 189.
PAYMENT WITH SUBROGATION. See Subrogation.
PECUNIARY OBLIGATION. See Table of Contents, Vol. II.,
Chapter XIII.
PENAL CLAUSE, OBLIGATIONS WITH A. See Table of
Contents, Vol. II., Chapter XXI.
are accessoiy...Vol. II., 386.
are not alternative... Vol. II., 384.
cannot be used to evade law as to maximum rate of interest...
Vol. II., 394.
damages in excess of penalty may be given in cases of
''fraud" or gross fault... Vol. II., 394.
definition of penal clause... Vol. II., 382.
is penalty recoverable if creditor has suffered no damage... Vol.
II., 397 seq.
nullity of penalty does not annul principal obligation... Vol.
II.,' 388.
penalty cannot in principle be modified... Vol. II., 392.
penalty comes in place of damages... Vol. II., 389.
penalty fixed for delay... Vol. II., 389.
penaltv may be reduced in case of part-performance... Vol.
II., 395.
penalty nut due without fault or default... Vol. II., 391.
what if obligation is indivisible and one of co-debtors fails
to perform it... Vol. II., 441.
See English Law; German Law; Swiss Law.
PENALTY. See Astreintes; Penal Clause, Obligations with a.
PERFORMANCE,
impossibility of, may be objective or subjective... Vol. II.,
290.
made to person holding- the right to claim execution... Vol.
II., 449.
600 INDEX TO BOTH VOLUMES.
PERFOEMANCE— continued.
must be of thing due and cannot be made in part... Vol. II.,
451.
supervening' impossibility of. ..Vol. II., 287.
what is... Vol. II., 144.
when it must be made. ..Vol. II., 452.
"who can make. ..Vol. II., 445.
See Breach of Contract; Non-performance of Contract with-
out Fault of Debtor; Payment; Specific Performance;
Substituted Performance; Tender and Payment.
PERSONS. See Table of Contents, Vol. I., Chapter XVI.
of the public law... Vol. I., 344.
partnership is a person. ..Vol. I., 341.
restricted capacity of moral persons... Vol. I., 350.
See Capacity; Moral Persons.
PERSONAL RIGHTS,
ambiguity of term... Vol. I., 12.
can they be perpetual... Vol. I., 7.
explanation of... Vol. I., 5.
PHOTOGRAPHER,
nature of contract with. ..Vol. I., 99, 380, 381, 382, 383.
PHYSICIAN,
prescription of sums due to. ..Vol. II., 536.
PICTURE,
declaration of authorship of, by vendor... Vol. II., 22.
mistake as to painter of... Vol. I., 237.
See Painter.
PL EDO E,
contract of, is accessory... Vol. I., 100.
delivery essential... Vol. I., 183.
pledgee protected by rale possession vaut titre...\o\. II., 45.
requires delivery... Vol. I., 370.
surrender of thing pledged is not release of debt... Vol. II.,
498.
PORTE-FORT,
compared with agent who exceeds authority... Vol. II., 52.
contract of. See Table of Contents, Vol. II., Chapter II.
contract of, distinguished from surety ship... Vol. II., 49, 50.
PORTRAIT,
nature of contract to paint. ..Vol. I., 99.
See Painter.
POSSESSIOX VAUT TITRE...Yo\. II., 34, 43, 44, 133, 338.
INDEX TO BOTH VOLUMES. (301
POSSESSOR IN BAD FAITH,
liable for loss of thing - without being put in default. . .Vol. II.,
213.
may have to restore fruits for fifteen years. ..Vol. II., 524.
POSSESSOR IN GOOD FAITH. See Payment not Due;
Possession mut litre.
POST OFFICE. See Letter; Telegram.
PREPOSE. See Exoneration from Liability, Stipulations of.
PRESCRIPTION. See Table of Contents, Vol. II., Chapter
XXIV.
acquisitive and extinctive... Vol. II., 521.
by five years... Vol. II., 524.
360 days. ..Vol. II., 527.
fifteen years... Vol. II., 523.
creditors can take plea of... Vol. II., 549.
extinctive, none of right of property in immoveable... Vol. I.,
212.
interruption of... Vol. II., 551 seq.
as against one of joint and several debtors...
Vol. II., 416.
as to one joint creditor benefits all... Vol. II.,
406.
its effects... Vol. II., 553.
must bo pleaded... Vol. II., 530.
oath, when debtor must take. ..Vol. II., 528.
of challenge of voidable contract... Vol. I., 211, 213.
of conditional debtor, or of debt subject to a term... Vol. II.,
533.
of debts to "tradesmen "...Vol. II., 534.
of obligation by possessor to restore fruits... Vol. II., 524.
of Paulian action... Vol. II., 123.
of purchaser's action in warranty, runs from "eviction"...
Vol. II., 533.
of sums due to advocates and engineers... Vol. II., 536 seq.
of sums due to physicians... Vol. II., 536.
period of, how reckoned... Vol. II.. 530.
not changed bv debtor giving bill of exchange...
Vol. II., 487.
reckoned bv Arab or by Gregorian calendar...
Vol. II., 539.
pleaded at any stage... Vol.. II., 529.
renunciation of, agreement to suspend, is not. ..Vol. II., 543.
as to time already run. ..Vol. II., 544.
by one of joint and several debtors does
not prejudice others... Vol. II., 550.
cannot be made in advance... Vol. II., 541.
capacity required for. ..Vol. II., 548.
is not alienation... Vol. II., 547.
ma}- be tacit... Vol. II., 544 seq.
may creditors challenge... Vol. II.. 549.
602 INDEX TO BOTH VOLUMES.
PRESCRIPTION— continued.
retroactive effect of... Vol. II., 538.
serment de credulite...Vo\. II. , 528.
suspension of... Vol. II., 553.
;i^ against one joint creditor does not benefit
the others. ..Vol. II., 406.
by fortuitous event. ..Vol. II., 290, 555.
is it created bv impossibility to sue... Vol. II.,
554.
wdkj* and successions in Mohammedan law. ..Vol. II., 523.
PRET A LA GROSSE.. .Vol. I., 92.
PRETE-NOM. See Simulation.
PRICE,
mistake as to... Vol. I., 246.
PRINCIPAL OBLIGATIONS... Vol. I., 43, 100.
PRIVILEGE OF VENDOR,
does beneficiary in stipulation pour autrui enjoy it... Vol. II.,.
72.
PRIVILEGED OBLIGATIONS... Vol. I., 42.
PROCEDURE,
renunciation of rights connected with... Vol. I., 138.
when debtor's oath required... Vol. II., 528.
See Prescription; Proof.
PROMISE OF SALE. See Sale.
PROOF,
by witnesses, of clerical mistake.:. Vol. I., 250.
by witnesses, renunciation of objection to.. .Vol. I., 148.
clause of exoneration considered as shifting onus of... Vol. IL,
268.
exclusion of, by contract... Vol. I., 150.
fraud proved by witnesses... Vol. I., 319.
not allowed of negotiations prior to contract... Vol. I., 367.
of a payment not due... Vol. II., 191.
of circumstances in which contract was made... Vol. I., 369.
of contract between third parties, when alio wed... Vol. II., 29.
of novation... Vol. II., 486.
of payment... Vol. II. , 454.
of quasi-contracts... Vol. II., 146.
of simulation of deed... Vol. II., 127.
PROPERTY,
transfer of, in alternative obligation... Vol. II., 368.
when it passes by contract... Vol. I., 73, 75; Vol. II., 30, 37.
See Sale.
PROPOSITION '. See Offer.
INDEX TO BOTH VOLUMES. 603
PROROGATION OF JURISDICTION,
contracts as to... Vol. I., 139.
PROSPECTUS,
false statement in... Vol. I., '-V11 .
PROSTITUTION,
lease of house for. ..Vol. I., 115, 180.
PUBLIC OFFICIALS,
promises of reward to... Vol. I., Ill, 180.
PUBLIC POLICY... Vol. I., 45.
in law of carriage of goods... Vol. II., 273.
in regard to contracts with carrier... Vol. II., 271.
rights given by law based on, cannot be renounced... Vol. I.„
107 seq.
See Cause; Unlawful Contracts.
PUBLISHER,
contract that he is not to be liable for libel... Vol. I., 111.
See Author.
PURGE. ..Vol. II., 462.
its effect when debtor alienates immoveable hypothecated...
Vol. II., 359.
QUASI-CONTRACTS... Vol. I., 15; Vol. II., 140.
compared with obligations resulting from the law solely...
Vol. II., 201.
criticism of term... Vol. II., 143.
proof of... Vol. II., 146.
See Actio de in rem verm; English Law; German Law;
Gestion d'affaires; Payment not Due.
QUASI-DELICTS. ..Vol. I., 15.
QUEBEC LAW,
mistake... Vol. I., 232.
unlawful contracts, right to repeat payment... Vol. I., 181.
QUI DOIT GARANTIE NE PEUT MINCER. ..Vol. II.. 520
QUI FACIT PER ALIUM FACIT PER SE... Vol. II., 13.
QUI HAERET IN LITERA HAERET IN CORTICE... Vol. I.,
367.
QUI PAIE MAL PAIE DEUX FOIS... Vol. II., 449.
RAILWAY,
no action by railway company for increased value created by
construction of. ..Vol. II., 164.
See Carrier.
(J04 INDEX TO BOTH VOLUMES.
.RATIFICATION. See Confirmation.
REAL CONTRACTS... Vol. I., 102.
REAL RIGHTS,
can be set up against successors of author of. ..Vol. II., 26.
RECEIVER IN BAD FAITH. See Possessor in Bad Faith.
RELEASE FROM JOINT AND SEVERAL LIABILITY,
to what extent it may be pleaded by joint and several debtor
...Vol. II., 422 seq.
RELEASE OF DEBT,
its nature. ..Vol. II., 496.
joint creditor cannot grant... Vol. II., 406.
one of co-heirs of creditor in indivisible obligation cannot
grant release of debt... Vol. II., 439.
when implied... Vol. II., 497.
See Joint Obligation and Joint and Several Obligation.
REMISE DE LA DETTE. See Release of Debt,
REPETITION,
of money paid under gaming contracts... Vol. I., 31.
of payment not due. See Table of Contents, Vol. II., Chapter
IX.
of payments on contract with unlawful cause... Vol. I., 175
seq.
REPETITION DE LTNDU. See Payment not Due.
REPRESENTATION. See Contract,
RESCISSION,
of contract, for breach... Vol. II., 221.
See Capacity; Duress; English Law; Fraud; Mistake.
RESOLUTION. See Rescission.
RESOLUTORY CONDITION. See Condition.
RESPONSABILITE DU TIERS COMPLICE... Vol. II., 28.
RETENTION,
has negotmmm gestor right of... Vol. II., 157.
right of... Vol. I., 90.
RETROACTIVITY. See Alternative Obligation; Conditional
Obligation.
RIGHTS,
absolute and relative... Vol. I., 5.
legal... Vol. I., 3.
of preference... Vol. I., 9.
personal and purely personal... Vol. I., 13.
INDEX TO BOTH VOLUMES. 605
RISK,
debtor may have undertaken all risks. ..Vol. II., 2«<;
in conditional obligations... Vol. II., 348.
in obligations to transfer... Vol. II., 477 seq.
of thing paid which was not due... Vol. II., 195.
on debtor who is in default. ..Vol. II., 216.
theory of, in Egyptian law... Vol. II., 217, 480.
See Dissolution of Obligation; English Law; Exoneration
from Liability, Stipulations of.
RISQUE CREE,
theory of... Vol. II., 291.
RISQUE PROFESSIONNEL... Vol. II., 280.
SALE,
combined with lease... Vol. II., 36.
condition of, fraudulently prevented by debtor... Vol. II., 348.
contract of, when interpreted against seller... Vol. I., 393.
co-vendors liable jointly and severally for fraudulent declara-
tions. ..Vol. II.,' 411.'
co-vendors' obligation to deliver may be joint and several...
Vol. II., 413.
damages for loss of profit... Vol. II., 251.
damages in case of sale of property not .seller \s...Vol. I., 339.
date certaine, when purchaser must have deed with... Vol. II..
27.
delivery, buyer who claims, must tender price unless credit
given... Vol. II., 222.
delivery not needed to pass property... Vol. II., 32.
dessaisine-saisine, clause of... Vol. II., 32.
destruction of one or both of two things sold alternativelv...
Vol. II., 375.
destruction of thing sold. ..Vol. II.. 476 seq.
determination of object of... Vol. I., 73.
essential mistake in... Vol. I., 233.
essentials of... Vol. I., 183.
innominate contract resembling... Vol. I., 100.
judgment may be equivalent to deed of. ..Vol. II., 228.
latent defect in thing... Vol. I., 266.
minor, action by, for supplement of price... Vol. I., 94.
misrepresentation in English law... Vol. I., 325.
mistake as to person in... Vol. I., 239.
nature of contract of, in Roman law... Vol. I., 73.
not essential that property should pass at once... Vol. II., 35.
object not existing at date of... Vol. I., 49, 67.
obligations of vendor and purchaser reciprocal... Vol. I., 49.
of book debts... Vol. I., 95.
of determinate thing... Vol. I., 74.
of fungibles... Vol. I., 75.
of future successions... Vol. I., 71.
of future things. ..Vol. I., 68,94.
of land after contract to grant servitude... Vol. II., 19.
4j<)6 INDEX TO BOTH VOLUMES.
SALE — continued.
of property leased... Vol. II., 23.
of right to extract products from soil. ..Vol. I., 371.
of ship, proof of... Vol. II., 31.
of thing not belonging to seller... Vol. II., 34.
passing of property in.. .Vol. I., 73, 75; Vol. II., 30, 37.
privilege of vendor, does beneficiary under stipulation pour
antral enjoy... Vol. II., 72.
purchaser succeeds to action against architect... Vol. II., 22.
risk in... Vol. II., 217, 477, 480.
seller must declare latent deled*... Vol. I., 312.
subrogation, when purchaser of immoveable enjoys... Vol. II.,
461.
unilateral promise to buy... Vol. I., 85.
unpaid seller cannot sue donee of purchaser... Vol. II., 165.
vendor's promise in sale of business not to compete with pur-
chaser available for sub -pur chaser... Vol. II., 22.
war as fortuitous event excusing performance... Vol. II., 310,
311.
warranty, action of, passes to sub-purchaser... Vol. II., 22.
warranty, seller may giant longer period than legal delay...
Vol. II., 542.
See Assignment of Claims; Duress; English Law; Fraud;
Mistake; Paulian Action; Eisk; Trading; Trading with
Enenry ; Transcription .
SALES BY AUCTION,
illegal interference with... Vol. I., 171.
SALVAGE. See Duress; Ges-lio)t d'affaires; English Law.
sECUEITIES,
impairment of, by debtor... Vol. II., 359.
SEIZUEE,
payment cannot prejudice... Vol. II., 451.
SRXATUSCONSULTUM MACEd6nIANUM...VcA. I.. 23.
REPARATION DBS PATRIMOINES,
its effects... Vol. II.. 438.
SERMENT DE CREDULITE. See Prescription.
SEEVICE,
contract of... Vol. I., 6.
<KEVITUDE,
exclusion of warranty as to. ..Vol. I.. 372.
of public interest, cannot be renounced... Vol. I., 108.
promise to grant can be enforced specifically... Vol. II., 232.
servitude of passage i< indivisible... Vol. II.,
433.
so-called "legal " servitudes, criticism of worn. ..Vol. II., 202.
See Sale.
[NDEX TO HOT!! VOLUMES. 607
SETTLEMENT,
scheme of, binds creditors who did not consent... Vol. II., 16.
SET-OFF. See Compensation; English Law.
SHIP. See Gesticm d'affaires; Maritime Law; Sale.
SHIPOWNERS. See Carrier.
SICKNESS,
when it is fortuitous event... Vol. II., 302.
SIMULATION. See Table of Contents, Vol. II., Chapter VI.
action of, differs from oblique action. ..Vol. II., 139.
does judgment affect sub-purchasers... Vol. II., 135, 136.
effect of judgment upon hypothecary creditor... Vol. II., 134.
not in itself cause of nullity... Vol. II., 125.
proof of.. .Vol. II., 127.
rules different from those of Paulian Action. ..Vol. II., 137.
who are third parties... Vol. II., 131.
SINGULAR SUCCESSORS. See Contract.
SLAVE,
contract by, in Roman law. ..Vol. I.. 23.
SOLIDAR1TE. See Joint Obligation and Joint and Several
Obligations .
SOLIDARITY, IMPERFECT,
theory of... Vol. II., 428.
SOLVENCY,
mistake as to... Vol. I., 241.
SPECIFIC PERFORMANCE,
can creditor always claim demolition of works. . .Vol. II., 229.
not of fait personnel.. Vol. II., 225, 229.
of promise to deliver... Vol. II., 232.
of promise to grant lease. ..Vol. II., 233.
of promise to grant servitude... Vol. II., 232.
of promise to sell... Vol. II., 228.
of promise to transfer shares... Vol. II., 233.
See Astreintes.
SPOLIATUS ANTE OMNIA RESTITUENDUS... Vol. II., 507.
STATUS,
mistake as to.... Vol. I., 242.
natural obligations arising from... Vol. I., 32.
obligations of, result from the law solely... Vol. II., 202.
rights of... Vol. I., 4.
STIPULATION FOR BENEFIT OF THIRD PARTIES. See
Stipulation pour autrui.
608 INDEX TO BOTH VOLUMES.
STIPULATION POUR AVTRVI. See Table of Contents, Vol.
II.. Chapter TIL
are "heirs" determinate perspns...Vol. II., 82.
assurance collective... Vol. II., 79.
effecd <>(' stipulation for payment to third party, or, in default,
for payment of penalty to stipulator... Vol. II., 387.
in contracts for public works. ..Vol. II.. 56.
in contracts of public utility... Vol. II., 57.
in insurance... Vol. II., 55.
lease, assignment of, is... Vol. II., 55.
may beneficiary lie indeterminate or future. ..Vol. II., 76 seq.
public subscription may be. ..Vol. II., 58.
theories of, discussed... Vol. II., 60 seq.
See English Law.
STOCKBROKERS. See Factors and Broker-.
STOCK EXCHANGE,
gambling on... Vol. I., 30.
STRIKE,
not necessarily valid excuse for non-performance of contract...
Vol. II., 314.
STRONG-BOX,
contract to lease... Vol. I., 184.
SUBROGATION,
differences between French and Egyptian laws... Vol. II., 457.
differs from assignment of claims... Vol. II., 458.
effects of.. .Vol. II., 463.
is there a new debt... Vol. II., 464 seq.
legalised document not required by Native Code... Vol. II.,
459.
nature of... Vol. II., 455.
when legal subrogation occurs... Vol. II.. 460.
SUBSCRIPTIONS. See Stipulation pour autrui.
SUBSTANCE,
difference between mistake as to substance and latent defect...
Vol. L, 266.
See Mistake.
SUBSTITUTED PERFORMANCE,
must Court grant, if demanded... Vol. II., 227.
when available... Vol. II., 227.
SUCCESSION SEARCHERS... Vol. I., 121.
SURETY,
can he claim damages in excess of interest... Vol. II., 247.
can plead compensa f ion with debt due by plaintiff to prin-
cipal debtor... Vol. II., 502.
• Index to both volumes. 609
SURETY— continued.
can secure natural obligation... Vol. I., 100.
discharged if debt is extinguished by confusion... Vol. 11.. ,")18.
exceptions which he can plead. -..Vol. II., 418.
judicial, joint and several liability of... Vol. II., 410.
See Release of Debt.
SURPRISE,
imputation when debtor was "taken by surprise "...Vol. II.,
468.
SWISS LAW,
an actio de in rem verso in... Vol. II., 185.
compensation, no automatic, in... Vol. II., 515.
completion of contract... Vol. I., 203.
condition, effect of preventing fulfilment of... Vol. II., 343.
damages for breach of money -debt... Vol. II., 247.
damages for mistake in contract... Vol. I., 262.
default, putting in... Vol. II., 218.
fortuitous event in.. .Vol. II., 318.
hotel-keeper's liability for goods of guest... Vol. II., 305.
interpretation of contracts... Vol. I., 358.
mistake in marriage... Vol. I., 245.
mistake in transmission of offer or acceptance... Vol. I., 262,
283.
offer, binding effect of... Vol. I., 192.
offer, lapse of... Vol. I., 195.
penalty, Court may modify. ..Vol. II., 40l.
stipulation pour autrui...Vo\. II., 72.
stipulations of non-liability... Vol. II., 285.
threats by third party.. .Vol. I., 299, 303.
SYNALLAGMATIC CONTRACT. See Bilateral Contract.
SYNDIC AT. See Trades-Union.
TAX,
payment of tax illegally imposed... Vol. II., 189, 190.
TELEGRAM,
damages for mistake in. ..Vol. I., 259.
stipulations of non-liability... Vol. II., 277.
See English Law; German Law.
TELEPHONE. See Contract.
TENDER AND PAYMENT,
made at bar of Court... Vol. II., 474.
of specific corporeal thing... Vol. II., 471 seq.
when necessary... Vol. II., 470.
when obligation is to do, to deliver an immoveable, or to
deliver an indeterminate thing... Vol. II., 474 seq.
w. — vol. ii. 39
610 INDEX TO BOTH VOLUMES.
TERM, OBLIGATION WITH A. See Table of Contents, Vol!
II., Chapter XVIII.
cannot be compensated with exigible debt if term is in favour
of debtor... Vol. II., 504.
definition of. ..Vol. II., 350.
diminution of securities by debtor, effect of. ..Vol. II., -350.
bow right to claim term may be lost. ..Vol. II., 355 seq.
bow term is computed. ..Vol. II., 351.
if debtor pays lias be right to repetition... Vol. II., 351.
implied in contracts... Vol. I., 363.
prescription of... Vol. II., 533.
risk during term... Vol. II., 351.
what acts can creditor do... Vol. II., 351.
when is term presumed to be in favour of debtor... Vol. II.,
353.
TESTAMENT. See Wills.
THEFT,
may be fortuitous event. ..Vol. II., 303.
See Carrier; Depositary; Hotel-keeper.
THIEF,
bound to restore without being put in default. ..Vol. II., 213.
THIRL) PARTIES. See Contract; Transcription.
THREATS. See Duress.
TITLE TO DEBT,
effect of destruction of, by creditor... Vol. II., 190.
TRADE,
contracts in restraint of... Vol. I., 163.
refusal to trade, when unlawful... Vol. I., 164.
See Trading.
TRADE SECRET,
disclosure of... Vol. I., 360.
" TRADESMEN,"
meaning of term in law of prescription... Vol. II., 535.
TRADES-UNION,
contract that workman shall not belong to... Vol. I., 167.
TRADING,
restrictions as to, in sale of business... Vol. I., 166.
TRADING WITH ENEMY... Vol. I., 123 seq.
See Enemy.
TRADITIONIBUS ET USUCAPIONIBUS DOMINI A RERUM,
NON NVDIS PACTIS TRANSFERUNTUR...Vo\. II.,
32.
Index To both volumes. km
Transcription,
does not cure vice of title... Vol. II., 110.
of lease, when necessary... Vol. II., 23.
protection of purchaser in good faith. ..Vol. II., 20.
protects against contre-lettre not registered... Vol. II., 133.
what purchasers are protected by. ..Vol. II., 39.
when is purchaser in good faith. ..Vol. II., 41, 42, 43.
TRUST. See English Law.
TUTORSHIP,
law of, cannot be varied by contract... Vol. I., 154.
ULTRA VIRES. See English Law.
UNDUE INFLUENCE. See English Law.
UNJUST ENRICHMENT,
incapable person must account for... Vol. I., 355.
See Actio de in rem verso; Dissolution of Obligation.
UNLAWFUL CONTRACTS. See Table of Contents, Vol. 1.,
Chapter V.
contract against public policy by lex fori not enforceable...
Vol. I., 370.
contract not unlawful because exorbitant... Vol. I., 105.
right to challenge cannot be lost by acquiescence... Vol. II., 7.
See Exoneration, Stipulations of; Gaming' Contract.
USAGE. See Default, Putting in; Interpretation of Contracts.
USURY,
laws against... Vol. I., 28.
laws as to, cannot be evaded by penal clause... Vol. II., 383,
394.
payment of usurious interest, when recoverable... Vol. I., 178.
See Damages; Compound Interest.
VENTES 2 TEMPJERAMENT ...\o\. II., 30.
VERBA CONTRA STIPULATOREM INTERPRET AN DA
SUNT. ..Vol. I., 394.
VIOLENCE. See Duress.
VOLENTI NON FIT INJURIA.. .Vol. II., 281, 282.
WAIVER OF TORT. See English Law.
WAR,
debtor may have taken risk of war into account... Vol. II., 280.
See Enemy; Fortuitous Event.
612 INDEX TO BOTH VOLUMES.
WIFE. See Married Woman.
WILL,
contract in restraint of... Vol. I., U>2.
damage* for preventing... Vol. I., 289.
informal... Vol. I., 27/
WORKMEN'S COMPENSATION ACT. See English Law.
WRONGDOERS,
when liable jointly and severally... Vol. II., 410.
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