570. The distinction between a sale which is void ab initio, in consequence of the incapacity of the parties to contract,-of some quality in the thing,-or of the existence of error, and a sale, which has once been perfected, although it is voidable and subject to be dissolved upon any of the grounds above mentioned, is, that in the former case, there being no contract at all, the transaction is ipso jure null, and cannot have the effect of transferring the property of the thing sold to the vendee, even in the first instance, although it should be delivered to him; while, in the latter case, the contract being perfect in the meantime, although subject to dissolution, is a habile title for transferring the property, and the delivery under it vests the property in the first instance in the vendee. This distinction is the foundation of a general rule in our law with regard to moveables, which has already been alluded to, and will be more fully explained in the sequel, viz. that although where a party has obtained delivery of a subject under a contract of sale which is void, he cannot make a valid sale of it to a third party, yet, where the contract is not void, but merely voidable, the vendee acquires, in the meantime, the property by delivery, and may effectually sell it to a third party, whose title, where he is in bona fide, will not be affected either by the vices of the former contract, which are personal to his author, or by conditions resolutive annexed to it. The reason is obvious, from the distinction last mentioned.

These various modes of dissolving or setting aside the contract will be explained in the following chapters, in the order in which they have now been stated.

ODL

CHAP. I.

OF THE DISSOLUTION OF THE CONTRACT BY CONSENT OF PARTIES.

571. WHEN the contract has not yet been executed on either side, it may be dissolved by the mutual consent of the parties; and the effect of this is to restore things on both sides to the same situation as if there had been no sale. 6 Emptio nuda conventione

'dissolvitur, si res secuta non fuerit,' l. 5. § 1. ff. de rescind. vendit. < Prout quidque contractum est, ita et solvi debet :-Æque cum ' emptio vel venditio, vel locatio contracta est: quoniam consensu ⚫ nudo contrahi potest, etiam dissensu contrario dissolvi potest,' l. 80. de solut. Domat, 1. 88. and 90; Poth. Contr. de Vente, No. 326.

572. It amounts to a departure from a former contract of sale, when the parties enter into a second contract concerning the same thing, as for example, when it is sold, for a greater or a smaller price, 1. 2. ff. de rescind. vend. Poth, Contr. de Vente, No. 327. or when that which had been sold under a condition is sold unconditionally, or vice versa.

573. When the contract has been executed on one side only, the parties may still by a simple consent depart from it; and he who had performed his part has a claim of repetition against the other *.

574. When the contract has been executed on both sides by delivery and payment of the price, any agreement between the parties to depart from the transaction would not be a dissolution of the contract of sale which had been entered into and executed, but rather a second sale by the vendee to the vendor, seeing, as is observed by Domat, the first seller does not take back a thing which is his own, since his sale of it had divested him of his ' right to it, but he buys in effect the thing belonging to another person,' Domat, 1. 90. § 15; Poth. Contr. de Vente, No. 329; 1. 1. Cod. quando lic. ab empt.

575. The application of these principles is not attended with any difficulty, where the parties continue solvent after the completion of the sale. In the event, however, of insolvency occurring, while the contract is in the course of being carried into effect, various questions of difficulty and importance may arise. These questions will be considered in treating of the effect of insolvency upon the Vide infra, Part 8. Cap. 3.

contract.

Poth. ut supra, No. 328. A simple consent to dissolve the contract in such circumstances was ineffectual by the Roman law, being nudum pactum, 1. 2. Cod. quando lic. ab. emption.

CHAP. II.

OF FORCE AND FEAR, AND FRAUD IN SALE.

576. I. THE rules of the law of Scotland with regard to the kind and degree of violence which affords a relevant ground for reducing a deed on the head of force and fear, have been fully stated by Lord Stair and Mr. Erskine, Stair, p. 78 and 701; Erskine, 3. 1. 16. and 4. 1. 26; and no cases have occurred in later times which afford materials for any further statement of this part of the law. Only, it may be observed, in addition to what is stated by these writers, that a deed obtained by force and fear is reducible equally where the violence has been exercised by a third party, as where it is exercised by the party himself with whom the injured person contracts, where the question is between the parties to the contract, Poth. Tr. des Oblig, No. 23. Thus more than one case has occurred, in which a sale made by a married woman of her separate property under compulsion exercised by her husband; has been reduced on the head of force and fear, although the purchaser was no party to the violence, and was ignorant of it, Cassie v. Fleming, 27th June, 1632; Woodhead v. Nairn, 24th June, 1662.

577. II. With regard to fraud, I propose in this chapter to explain the effect of fraud upon the contract of sale: In the first place, in a question between the parties to the contract themselves: In the second place, in a question between the injured party and the creditors of the other party claiming the benefit of the contract: In the third place, in a question with a bona fide purchaser. I have already touched upon this last matter in the preliminary discussion upon the nature of the plea of force and fear. I shall, in the present chapter, state the principle more fully, and also endeavour to distinguish the cases in which goods are purchased from a party who acquired them, by a sale liable to reduction on the head of fraud, from certain other cases in which goods are purchased from a party who does not hold them by a title of property at all. If the view which has been taken of the objection of force and fear is correct, the observations to be made upon the

two last mentioned questions will apply to sales which are subject to reduction on that head, as well as to those which are reducible on the head of fraud.

578. In considering by what kind and degree of fraud a sale is vitiated, there is considerable difficulty in marking the point of distinction between those frauds which are received in Courts of law, as grounds of reduction or exception to a contract; and those attempts on the one hand, to gain an advantage in a bargain by the exertion of superior acuteness and activity which are lawful and allowable, and those lighter and less tangible species of fraud, on the other hand, which although contrary to good faith, and sufficient to render a contract objectionable in foro poli, are not sufficient to vitiate it in a court of law.

579. With regard to attempts of the former kind, the Romans made a distinction between solertia or dolus bonus, and dolus malus, l. 1. § 3. ff. de Dol. Mal.; the latter only being prohibited. As to the former, the maxims of the law were: In pretio emptionis et venditionis, naturaliter licet contrahentibus se circumvenire, l. 16. § 4. ff. de Minor. vig. ann. Quemadmodum in emendo et vendendo naturaliter concessum est, quod pluris sit, minoris emere; quod minoris sit, pluris vendere; et ita invicem se circumscribere; ita in locationibus quoque, &c. 1. 22. § 3. ff. Locati.

588. With regard to those lighter breaches of good faith, of which courts of law do not take cognizance, Pothier says, Dans le for intérieur, on doit regarder comme contraire à cette bonne 'foi, tout ce qui s'écarte tant soit peu de la sincérité la plus exacte • et la plus scrupuleuse : la seule dissimulation sur ce qui concerne la chose qui fait l'objet du marché, et que la partie avec qui je contracte auroit intérêt de sçavoir, est contraire à cette bonne foi; • car puisqu'il nous est commandé d'aimer notre prochain autant que nous-mêmes, il ne peut nous être permis de lui rien cacher <de ce que nous n'aurions pas voulu qu'on nous cachât, si nous • eussions été à sa place.

.

Dans le for extérieur, une partie ne seroit pas écoutée à se ' plaindre des ces légeres atteintes que celui avec qui il a contracté • auroit données à la bonne foi; autrement il y auroit un trop ⚫ grand nombre de conventions qui seroient dans le cas de la rescision, ce qui donneroit lieu à trop de procès, et causeroit un dérangement dans le commerce. Il n'y a que ce qui blesse ouvertement la bonne foi qui soit, dans ce for, regardé comme un vrai dol, suffisant pour donner lieu à la rescision du contrat, tel que

toutes les mauvaises manoeuvres et tous les mauvais artifices

qu'une partie auroit employés pour engager l'autre à contracter; et ces mauvaises manœuvres doivent être pleinement justifiées. • Dolum non nisi perspicuis indiciis probari convenit; 1. 6. Cod. de dol. mal.' Poth. Tr. de Oblig. No. 30. Vide Contr. de Vente, Part 2. ch. 2. Part 3. sect. 2.

581. Similar distinctions between dolus bonus and malus, and between that kind and degree of deceit which is appreciable by a Court of law, and that which is objectionable in foro conscientiæ, seem to be recognized in our law, Stair p. 79. § 9, and 700, § 23. But it is not possible nor necessary to reduce them to precise rules, because, as is observed by Mr. Erskine, cases of this kind must, from their nature, depend wholly on circumstances, Ersk. 4. 1. 25.

582. It is only where fraud has been employed to induce a party to enter into the contract, into which he would not otherwise have entered, (ubi dolus dedit causam contractui,) that the contract is liable to reduction on the head of fraud. Where the fraud is merely incident to the contract, i. e. when a party intending previously, and of his own accord to enter into the contract, is merely deceived in modo contrahendi, the contract is not thereby vitiated, but the party deceived has merely a claim of damages to the extent of the injury he has suffered, Poth. Tr. des Oblig. No. 31.. This distinction was made in the Roman law, and has been adopted in the law of Scotland *.

583. It has been observed, that when a contract is sought to be reduced on the head of force and fear, it is not material whether the violence has been used by the other party to the contract, or by a third party. Pothier holds that it is otherwise in the case of fraud; and that it is only where the fraud has been committed

*The distinction is thus expressed by Voet: Causam dare contractui dicitur ⚫ dolus, cum animum contrahendi non habens ad contrahendum inducitur, nullatenus ⚫ contracturus, si dolus defuisset. Incidere verò in contractum tunc censetur, cum quis sponte quidem contrahit, sed in modo contrahendi, velut in pretio aut aliter 'decipitur,' Voet, Lib. 4. tit. 3. § 3. It may be observed, however, that Noodt, in his treatise de Forma Emendandi doli mali, Cap. 3 et 14, contends that this distinction has no foundation either in principle or in the texts of the Roman law; and if, as Mr. Erskine truly observes, every case of fraud must be a case of circumstances, it is not easy to see how an absolute distinction of this sort should be received in our law. But Noodt seems to stand alone among the Civilians upon this matter, (Vid. Hein. ad Pand. Lib. 4. tit. 3. § 481.) and the distinction is frequently alluded to and admitted, both by our institutional writers, and in the decisions of the Court. See Stair, p. 79. §9; Erskine, 3. 1. 16; Kilk. v. Fraud, No. 6 and 7.