Putnam's Handy Law Book for the Layman

When there is a contract to sell, or a sale of goods by description, there is an implied warranty that they shall correspond with the description; and if the contract or sale is by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if these do not also correspond with the description. The Sales Act contains elaborate provisions relating to implied warranties of the quality of things sold. There is no implied warranty of the quality or fitness of goods for any particular purpose unless the buyer makes known to the seller the purpose for which they are required, and he also relies on the seller's judgment of their fitness for the use he intends to make of them. Again, if the buyer has examined the goods there is no implied warranty of the defects which such an examination ought to have revealed. An implied warranty as to quality or fitness for a particular purpose may also be annexed by the usage of trade. There is an implied warranty that the bulk shall correspond with the sample in quality, and that the buyer shall have a reasonable opportunity of comparing the bulk with the sample.

When does the transfer of ownership occur? When there is an unconditional contract to sell them the property therein passes to the buyer on the making of the contract, regardless of the time of payment or delivery or both. When goods are delivered to the buyer "on sale or return," giving the buyer an option to return them instead of paying the price, the property passes to the buyer on delivery, but the property may go back to the seller by returning or tendering the goods within the time specified in the contract. When the goods are delivered to the buyer on approval or on trial or other similar terms, the property passes to the buyer, (1) when he signifies his approval or acceptance of them, (2) or if he retains them beyond the time fixed for their return, or if none has been fixed, beyond a reasonable time.

It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale. Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, the seller, therefore, must be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be willing and ready to pay the price in exchange for the possession of the goods.

Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer, is a question depending in each case on the contract, express or implied, between the parties. Apart from contract, or usage of trade to the contrary, the place of delivery is the seller's place of business, if he have one, and if not, his residence. Again, when by the contract of sale of goods no time for sending them has been fixed, the seller must send them within a reasonable time.

Vast quantities of goods are bought and sent forward to buyers, which are not to be delivered until payment. The Sales Act provides that where goods are shipped and by the bill of lading that is given for them they are to be delivered to the order of the buyer or of his agents, but possession of the bill of lading is to be retained by the seller or his agent, he thereby reserves his right to the possession of the goods as against the buyer. Very often a buyer of wheat, for example, will draw a bill of exchange on his principal or company living in the place where the goods are to be delivered and will have it discounted by a bank using the money to pay the seller. The wheat may be in an elevator, or it may be in transit. In either case the bank receives a document, elevator receipt, or bill of lading, and thus becomes the real owner of the wheat, and can control it afterward until it is actually delivered to the consignee, whoever he may be. This is the bank's security for making the loan. The bank sends forward the bill of exchange to its correspondent bank in the place where the consignee lives and the wheat is to be delivered with instructions to deliver it when the bill is paid.

With respect to speculative sales of stock, so well known by every one, a contract, says Williston, giving one party or the other an option to carry out the transaction or not at pleasure, is not a wager, unless forbidden, as in some states is done by statute. A contract to sell goods in the future, which the seller does not own at the time is, aside from the statute, not only legal but common. "The test," says Williston, "adopted in the absence of statute, distinguishes between contracts to buy and sell in which the actual delivery of the property is contemplated, and similar contracts in which it is contemplated merely that a settlement shall be made between the parties based on fluctuations in the market price. A contract of the former kind is legal; one of the latter kind is a wagering contract, and illegal."

Shipping.– The federal statutes require that every ship or vessel of the United States shall be registered or enrolled in the office of the collector of customs of the district that includes the home port of the vessel. None but citizens of the United States can have their vessels registered. Consequently the sale of a vessel to a foreigner denationalizes her. If sold to an American, she must be registered anew. On arriving at a foreign port masters of vessels must deposit their registers with the consul or commercial agent at that port.

Enrollment is the term used to describe the registry of a vessel engaged in coastwise or inland navigation or commerce. Registration is applied to vessels engaged in foreign commerce. License means the same as enrollment, but is applied to small vessels of twenty tons burden or less. The federal laws on this subject do not apply to vessels that are used on nonnavigable waters of the country.

The title to a vessel may be acquired by purchase or building. If a vessel is built for a party no title thereto passes until she is ready for delivery and has been approved and accepted by him. This, however, is no arbitrary rule, and is often modified especially when payment is made in installments and during the construction of the vessel.

Nowadays many vessels are owned by corporations, and the rules that apply to corporations of course determine the ownership of their property. In other cases the several owners of a vessel are tenants in common, and not co-partners, unless by agreement they have established other relations among themselves. They may, of course, become partners and be governed by the rules that apply to persons thus related. When they are related as tenants in common one part owner has no power to bind the others in any way beyond the necessary and regular use of the vessel. He cannot sell or mortgage the interests of the others, draw drafts or notes in their name, apply the freight money earned to pay his individual debt, or procure insurance for the other owners.

The majority rule governs in employing the vessel. The majority therefore have the right to control the use of the vessel on giving security to the minority, if required, to bring back and to restore to them the vessel, or if lost to pay them for the value of their shares. The minority owners in like manner may use the vessel if the majority are unwilling to employ her. A court of admiralty will in such a case act for the parties.

Each part owner is entitled to his share of the profits, and is also liable for the expenses of the vessel unless he has dissented from the voyage. But part owners who dissent from the voyage and take security for the safe return of the vessel are not entitled to share in the profits, nor are they liable for the expenses.

A part owner may bind the others for necessary supplies and repairs required that are procured on credit, unless his general authority to do this has been restricted. The ship's husband or managing owner has authority to do whatever is necessary for the prosecution of the voyage and earning the freight money. For such purposes he is the agent of the owners and can bind them by his contracts, unless his authority is revoked or modified.

Any owner can sell his interest whenever he pleases, and all of them may authorize the sale of the entire vessel. A writing is required to pass the title, but as between the parties an oral sale and delivery will suffice, at common law. In many cases a bill of sale is required by statute. The writing should describe what things are transferred, but general terms such as appurtenances and necessaries have a fixed meaning which are understood. Intention is the guide to determine what passes in such a sale, as in cases of fixtures already considered.

When the bill of sale is executed the purchaser becomes entitled to all the benefits of ownership, and incurs all the liabilities. If the sale is unconditional, the purchaser is liable for supplies though he may never have taken possession of the vessel, and neither the master nor the merchant furnishing the supplies knew of the sale. The purchaser is not liable for repairs made and supplies furnished before the sale, unless he has agreed to pay for them, or the vessel was at sea at the time. If she was, the purchaser takes her subject to all encumbrances on her, and to all lawful contracts made by the master before learning of the purchase.

A vessel may be mortgaged, and the federal statutes state how this shall be done. A shipbuilder may make a contract whereby he mortgages the vessel to be built in advance of its construction, and a lien attaches as it comes into existence. Such a mortgage is postponed or comes after a maritime lien, that will soon be explained, but comes before the debts of general creditors.

The mortgagor, so long as he retains possession, has all the rights of ownership, and all contracts made by him are valid which do not impair the security of the mortgage. When the mortgagee takes possession of the vessel he is entitled to all the earnings that accrue, but not to those which the mortgagor has reserved, even though they are for the current voyage. Furthermore, his interest may be attached by his creditors. The discharge and foreclosure of mortgages on vessels are governed for the most part by the rules that apply to chattel mortgages. A mortgage on a vessel should be recorded, and many of the rules and usages that apply to the recording of deeds apply also to such mortgages.

A contract may be made for a loan of money on the bottom of a vessel at a rate much greater than the usual rate of interest. Such a loan is sanctioned to enable the master to obtain money for supplies or repairs at some foreign port where they could not be otherwise obtained. The loan is on the security of the vessel and if she never arrives, the lender loses his money. If she does arrive at the port of her destination, the borrower personally, as well as the vessel, is liable for the repayment of the loan with the agreed interest thereon. This maritime loan is highly regarded in legal tribunals, and is liberally construed by them to carry into effect the intention of the parties.

Such a loan or bond can be given by the master of the vessel only in case of necessity and great distress in a foreign port, where the owner is not present and has no representative with funds, and where the master has no other means of getting money. The master has a large discretion. "The necessity must be such as would induce a prudent owner to provide funds for the cost of them on the security of the ship, and that if the master did not take the money the voyage would be defeated or at least retarded." The general purpose of the loan is to effectuate the objects of the voyage and the safety of the ship.

The appointment and employment of a master is wholly within the discretion of the owners. On his death or removal in a foreign port a successor may be appointed by the consul resident there of the country to which the vessel belongs, or by an agent of the owners, or by the consignees of the cargo who have advanced money for repairing the vessel. The registry acts of the United States require the putting of the master's name in the register, but if this is not done his authority is not impaired; and the one to whom the navigation and control of a vessel is entrusted is considered her master, although the name of another appears on the register. His contract may contain any stipulation to which the parties may agree. The right of a master to command his vessel is personal to him; and a sale by a master who is part owner of the vessel of his interest therein transfers no right to the command of the vessel which the other owners are bound to respect. Whenever he becomes incapable of commanding by reason of sickness, insanity, or other reason, the command with the duties pertaining thereto devolves on the first mate until the appointment of another master; should he be absent or incapable of acting, then the second mate and so on down the rank of officers.

The master must do all things for the protection and preservation of the several interests entrusted to him, the owners, charterers, cargo owners, underwriters. He must render a full and satisfactory account to the owners of the vessel of moneys secured and his disbursements before demanding any wages. At sea he is the supreme officer, has sole authority over both officers and crew to do justice to all persons under his command, and to protect passengers and seamen from bad treatment while they are on board. It is said that in respect to passengers he owes a higher and more delicate duty than he owes to the crew, but at the same time he has the necessary control over his passengers and may make proper regulations for their government to ensure their safety, promote their comfort and preserve decent order.

He has authority to bind the owners when they are not present for expenditures needful in the way of repairs, supplies and other necessaries reasonably fit and proper for the safety of the vessel and the completion of the voyage.

As the seamen who serve on a vessel are generally ignorant and improvident, the execution of shipping articles are required by federal statute where the vessel is bound on a foreign voyage, or from a port in one state to a port in another. If these articles are not made seamen have the right to leave the vessel at any time, and may recover the highest rate of wages paid at their shipping port. The articles must be signed by the seaman and by the master, and the contract must be executed before the vessel proceeds on its voyage. The seaman is not bound by any new or unusual stipulation put into the articles affecting his rights without full knowledge of it, and especially when he cannot read and the stipulation is not read and explained to him. Once executed, the articles cannot be varied by a verbal agreement between master and seaman.

The articles must specify clearly and definitely the nature of the intended voyage, the port at which it is to end and its duration. Indefinite articles, leaving to the option of the master whether the voyage shall be long or to one or more foreign ports, or short to nearby domestic ports, are void. The articles must also state the amount of wages each seaman is to receive. Articles are void that fix a forfeiture of wages in excess of the amount named in the statute, or restrict the time in which seamen must sue for their wages. The contract may be dissolved by cruel treatment by the master and by an abandonment of the vessel without the master's consent, but not by the death, disability, removal or resignation of the master and the substitution of another. Besides the wages a seaman may recover, should the master break the contract, are his expenses in returning to the port of shipment including also general damages.

Claims for wages are "highly favored in admiralty courts," and discharges are not justified for trivial causes, nor for a single offense unless it is an aggravated one. Such causes are continued disobedience or insubordination, rebellious conduct, gross dishonesty, embezzlement or theft, habitual drunkenness, habitually stirring up quarrels, or by his own fault rendering himself incapable of performing duty. The master must receive back a seaman when he has thus been discharged who repents and offers to return to his duty and make satisfaction, unless the offense was of an aggravated character. This is the general rule, though from its nature there is much room for its application.

Statute of Frauds.– Some contracts must be in writing to comply with a statute called the Statute of Frauds, which has been enacted with variations in all the states. One of the most important sections relates to the conveyance of real estate. This requires that the agreement for its sale must be in writing. (See Agreement for Sale of Land.)

Another section relates to the sale of goods, wares and merchandise. This has not been enacted in every state. If the amount is above that mentioned in the statute, thirty to one hundred dollars, there must be a written contract or delivery and acceptance of the goods to constitute a contract. If A sells a bill of goods to B, who declines to receive them, and the contract is wholly verbal, he can shield himself behind this statute wherever it prevails. Many questions therefore arise, what is a delivery and acceptance? A delivery of a key of a building containing the property is sufficient. The delivery of a bill of lading of goods properly indorsed, making entries of the goods sold, pointing them out or identifying them is enough to comply with the statute. Whenever there has been a transfer of possession and control by the seller to the purchaser to which the latter has assented there has been a sale. Or, more broadly, whenever there has been such action as to show clearly an intention to sell and accept the property the sale is complete. Part payment of the purchase money for personal property is generally regarded as showing such intention.

To a contract for the manufacture of a thing the statute does not apply. Simple as this answer may be, the law soon gets into difficulties in deciding whether a contract is for the making of a thing, or for the thing itself; whether the important element is the skill or labor that is to be expended, or the thing without regard to the process of making. Thus, if a contract is with one to paint a portrait, the statute would not apply, for the skill of the artist is the important thing purchased, and not the canvas, paint, etc., he must use. To a contract for a locomotive the statute would apply. "If the contract states or implies that the thing is to be made by the seller, and also blends together the price of the thing and compensation for work, labor, skill and material, so that they cannot be discriminated, it is not a contract of purchase and sale, but a contract of hiring and service, or a bargain by which one party undertakes to labor in a certain way for the other party," and the statute does not apply to it.

Statutes of Limitation.– In all the states statutes have been enacted which provide that if the rights of parties to legal redress are not enforced within a specified period, the courts are closed to them. Thus, in most states a statute provides that a holder or owner of a promissory note who neglects to sue the debtor within six years from its maturity cannot do so afterwards. The note is not absolutely void, though the law presumes it has been paid. As the note is not void, payment may be effected as we shall soon learn.

Suppose one is indebted to a merchant, if the debt is not paid within six years in most states and nothing has happened, the debt in popular language is outlawed, in other words cannot be collected by resort to law. The time begins to run as soon as the debt has accrued; if it be a debt to a merchant, as soon as one has stopped trading with him. To the operation of this rule are some important exceptions. It does not run in favor of a minor, married woman or insane or imprisoned person; or not whenever or wherever they are not capable of contracting. But a disability arising after the statute has begun to run in his favor will not prevent it from running.

The Statute of Limitations generally bars the remedy or right to pursue the debtor in a court of law, it does not extinguish the right or debt, and therefore the right to pursue a debtor may be revived by a new promise to pay. One may ask, is not a debtor a foolish man to acknowledge that he is a debtor after the law has released him from his debt? Yes, from a purely selfish point of view. Nevertheless, the moral obligation remains, and happily all morality has not yet fled from the world. One may ask, is not such a promise void because there is no consideration received for it? No, for the reason that there was a consideration for the original obligation, and this is sufficient to sustain the renewed promise to pay it. In some states the statutes provide that such an acknowledgment to pay a debt after the statute has barred it, must be in writing, and signed by the debtor or his agent. The most general rule is, to remove the bar of the statute, there must be either an express promise to pay, or an acknowledgment of the debt accompanied by an expression of willingness to pay it. To simply acknowledge the existence of a debt is not enough, there must be indicated or expressed a willingness to pay.

A debt may also be revived by part payment. Payment on account of the principal, or payment of interest on the debt will prevent the statute from running against it. Payment to have that effect must be made with reference to the original debt and in such a way as to effect an acknowledgment of it.

While a debtor may always apply a payment to any one or more of different debts he owes his creditor, if he fails to do so the creditor can make the application even to a debt which is already barred by the statute, but his application will not remove the bar to the remainder of the debt. To have that effect the appropriation must be made by the debtor himself.

Statutes of limitation apply to many obligations, and the times or dates at which they become outlawed or outside the scope of legal redress, vary in the different states. In many of them an ordinary book account or negotiable note is outlawed after six years, and cannot be enforced after that time unless the debtor has revived it by a new promise or part payment. A judgment against one usually runs twenty years.

Telegraph and Telephone.– Though the business of a telegraph company is public in its nature, it is not a common carrier, and it may therefore set up reasonable regulations for the reception, transmission and delivery of messages. As it is a quasi public corporation, it must extend its services to all that apply therefor and offer to pay the charges. And if refusing it may be compelled to do these things. The company may charge more to one person than to another when the service is unlike, though not enough to amount to an unjust discrimination. The difference in charges must bear some relation to the different services rendered.

A telephone company cannot legally discriminate between two competing telegraph companies by giving one the telephone call word "Telegram" and thereby depriving the other telegraph company of business. Nor can a telephone company legally charge a higher rental for a telephone to a telegraph company than to any other patron. Nor can a telegraph company discriminate against another in refusing credit which is given to other responsible parties.

A strike may be a sufficient excuse for failure to have sent messages promptly, though not excusing a railroad company for failure to deliver freight as if no strike had happened. A state may impose a penalty on a telegraph company for failure to deliver promptly in the state messages coming from other states. And a state may impose a penalty on a telegraph company for failure to perform its clear common law duty to transmit messages without unreasonable delay, and this statute applies to messages to points outside the state if it relates to delay within the state. A state statute prohibiting telegraph companies from limiting their liability for the transmission of telegrams within the state is constitutional. The state may prohibit a telegraph company from transmitting racetrack news. A telegraph company must transmit a message unless it contains indecent language. Nor is it liable for libel in transmitting a telegram stating that a person had been bought up.

It is reasonable for a telegraph company to close its office on holidays, except two hours in the morning and two hours in the afternoon, and therefore is not liable for delay in transmitting a message because of this delay. The unauthorized writing out and sending of a telegram in another person's name is a forgery.